← CNBC's "Fast Money"
CNBC's "Fast Money"
Stocks Drop As Iran Conflict Lingers On… And Latest Punch To Private Credit 3/12/26
00:43:22
The Dow, S&P, and Nasdaq all dropping more than 1% as oil spikes. The latest developments out of the Middle East pushing crude back towards triple digits, and how the Fast Money traders are handling the latest swing in stocks. Plus the latest black eye in the private credit crunch, Adobe results moving the software stock after hours, and how the supply chain disruptions in the Strait of Hormuz could impact your next grocery bill. Fast Money Disclaimer
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- [00:00]
Melissa Lee
What does it mean to live a rich life? It means brave first leaps, tearful goodbyes and everything in between. With over 100 years experience navigating the ups and downs of the market and
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Leslie Picker
of life, your Edward Jones Financial advisor
- [00:18]
Melissa Lee
will be there to help you move ahead with confidence. Because with all you've done to find your rich, we'll do all we can to help you keep enjoying it. Edward Jones, Member, SIPC this segment is
- [00:32]
Dan Nathan
brought to you by guilt. If you're a business owner wondering whether your CPA is just filing forms instead of helping you use taxes strategically, GHELT was built for you. Their expert CPAs and innovative AI tools help optimize entity structure, deductions and retirement contributions with proactive year round tax planning. SiriusXM listeners receive 10% off their first year of service when they sign up. Visit join gilt.com to schedule a discovery call. That's join g lt.com join gilt.com
- [01:03]
Melissa Lee
live in the NASDAQ Marketsite in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight. Stocks dropping today and oil settling at its highest level in nearly four years. All the headlines driving the market moves and how to position for what's to come. And Adobe dropping after earnings and announcing a CEO transition with reporting season in the books for big software. What have we learned? What's next for these stocks? Plus 10 year yields hit 1 month highs. Eli Lilly sends a warning over its compounded GLP ones and just don't do it. Nike trading at its lowest level since last April. What's weighing on the longtime leader in athletic wear and can the stock find its footing now? I'm Melissa Lee. Come to you live from Studio B at the nasdaq. On the desk tonight, Tim Seymour, Dan Nathan and Guy Adami, the trio three musketeers. We start off with the sell off in stocks as energy shockwaves ripple through the markets and major indices seeing their lowest closes of 2026 after Iran's new supreme leader said the Strait of Hormuz would remain closed as a way to quote pressure the enemy. The Dow and S and P each off by a percent and a half while the Nasdaq fell almost 1.8%. Brent crude topping $100 a barrel as shipping disruptions continue settling at its highest level since August 2022 while WTI closed above $95. Energy stocks meantime continue to rip higher. The XLE closing up nearly a percent at all time highs. China Treasuries meanwhile selling off. With the 10 year yield ticking to 4.26%, that moves sending rate sensitive sectors, lower homebuilders and banks among the hardest hit groups today. For the latest on the Iran conflict, let's get to Eamon Jabers in Washington.
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Dan Nathan
Eamon hey there, Melissa. We've got some updates here from Treasury Secretary Scott Bessen. He sat down with Sky News. Wilfred Frost, who you may remember from his years on cnbc and the Treasury Secretary said two important things worth flagging here. One is that he said that we know that the Strait of Hormuz is not mined presently because they can watch Iranian oil tankers that are able to make their way through the strait. So that indicates that it is at least passable via the mines. He also said that the US Navy will begin to escort ships through the Strait of Hormuz when that's militarily practical. Now, when that might be, that's another question we heard from the secretary of Energy on CNBC earlier today. He said that it might not be anytime soon. Take a listen.
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Guy Adami
It'll happen relatively soon, but it can't happen now. We're simply not ready. All of our military assets right now are focused on destroying Iran's offensive capabilities and the manufacturing industry that supplies their offensive capabilities.
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Dan Nathan
You know, we don't want this to
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Guy Adami
be a brush off for a year or two. We want to permanently destroy their ability to build missiles, to build drones, to have a nuclear program.
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Dan Nathan
And Melissa, we also saw these dueling statements really this morning from the President of the United States and then this afternoon from the new supreme leader in Iran, both men doubling down on their strategy. The president focusing on oil prices, saying actually high oil prices are good for America because America is a net exporter of oil. And the supreme leader in Iran doubling down on that strategy of trying to close the Strait of Hormuz, saying he's instructed the Iranian military to keep that up. So no end to this jam anytime soon. And what's unknowable here, sort of in the fog of war, Melissa, is how long it might take the US Military to be able to clear the strait and get that traffic moving again.
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Melissa Lee
All right, Eamon, thank you. Amen. Javers, let's get more on the move in oil prices. CNBC's Pippa Stevens has been following energy, of course. Pippa.
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Subhadra Japa
Hey, Melissa. So oil prices are grabbing all of the headlines, but this is quickly becoming a product story specifically for the middle of the barrel, which is diesel and jet fuel, about 6 million barrels per day. Petroleum products flow through the Strait with Europe getting 25% of its diesel and 45% of its jet fuel from the region. Gas oil, which is European diesel, jumping 51% this month with RBA and heating oil futures both up more than 40%. There is no strategic reserve for consumer fuels and there is a more limited inventory cushion relative to oil now that is pushing up crack spreads. With the US diesel crack topping $70, more than doubling since the start of the year. Refiners Marathon Petroleum, Valero and Philips 66 all outperforming the broader energy sector this year. Their input cost is rising, but product prices are rising even faster. Now the issue isn't just refining capacity in the Gulf. Refiners outside the region, notably in Asia, will be forced to cut runs if they can't get crude, further tightening those markets.
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Melissa Lee
Melissa Pippa, thank you, Pippa Stevens. So what we make of the market action today in light of all of this new, most notably $100 barrel of oil?
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Tim Seymour
Yeah, a lot to decipher. There are a couple of things America doesn't win for higher prices. American energy companies win but they're not state owned enterprises. So I think that's an important distinction, number one. Number two, I'm actually surprised at how well actually hung in there on the back of what was another significant move. But what I'll say is and we've continued to talk about this, Valero, Marathon Petroleum, psx, all the names that went to the crack spreads continue to win in a major way and I don't see that abating anytime soon.
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Guy Adami
Fascinating day. So right lowest close in the S and P since this began. Let's not lose that lower lows vix. I know we had some Sunday night spikes and whatnot, but we really haven't been above that 2930 level and it feels like we haven't had the washout that we need. So market dynamics highest close in oil, lowest close in the S and P. The rotation that has continued just you know, to me the duration of this war is what equities are pricing and we've got a huge PC number tomorrow and the inflation while CPI and all these other things have been fantastic, it does feel like the market is taking the Fed's cuts, any cuts and actually that's what we can see in the futures curve have been taken out of the market. So the duration of this look, this is something that the theoretical dynamic of before this conflict did the world really think that Iran controlled the world's energy markets and that's where we are. And the fingerprints of Russia are all over their drone attacks and how they've been playing this. And it does appear as if we're in a place where you have a broadening conflict and markets need to price that in. Markets have not begun to price this. We've talked for weeks about this range boundaries, indices story with a lot of pain below the surface. Today was the day for me that it felt like the pain is getting ready to price.
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Melissa Lee
Yeah, I thought the same thing when I was talking to Santoli earlier the last Mike, of course, Mike Santoli of Closing Bell overtime. Yeah, that today felt like the first day where the markets actually were taking things more seriously. We saw the spike in the vix. We saw the typical grabs for safety except of course for the bond market which is another puzzle we'll we'll will get at. But we sort of saw that as opposed to this complacency of the overall index.
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Dan Nathan
Yeah, it felt kind of orderly on the index level though. If you kind of look under the hood though, what was going on with banks and then these private equity alternative, I mean there's panic there. It really does feel like if you look at a Blackstone Apollo, a Blue Owl, so there's something going on there at least the way investors are seeing it. And this has been going on now for a couple of months and I just think the banks kind of like joining it. I know we talk about this every night, but we've also been talking about the fact that the S and P is has kind of been stuck in this range. The Nasdaq, which is down more than the S and P but not that much more, you know, is also stuck in a range. So we're not seeing things fall out of bed on the index level. But then if you were to look at semis today and this is really interesting, we brought this up earlier in the week and I know Tim was looking at this Taiwan semi had 30% year over year revenues that they reported. And you know the thing now is down 5% today. And you know, you read those headlines, it's like it supports the trade and this now whatever, sooner or later if you look at their major customers and they those stocks can't get out of their own investors are saying something about these big secular shifts in the markets over the last couple of years or so. And I just think that, you know, if you're just going to stare, we don't talk about the Dow Jones but you know, if you're just going to stare at the Dow Jones, you're going to stare at the s and P500, you better be careful because what's going on under the hood, you know, it's yes, it's been isolated to some of these groups but in a market like this you have the risk of correlations going to one and you also have investors who are going to start to get nervous and receive volatility and all of these other risk assets and they're going to say, you know what, I'm only down a few percent from those all time highs, I might as well sell.
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Guy Adami
Thing is they, they're feeling pain, I think a lot more pain. And this is, I mean just the sense I get from the retail, you know, high net worth community is that people are feeling it and they're seeing a lot of gains go out the window for stocks that they had. But you're right on Taiwan semi. Taiwan semi is just beginning to break the 50 day. So if you want to switch into your charts, part of the conversation and where the relative outperformance of semiconductors and the SMH and whatever you want to look at. If you look at that relative chart to the S and P, it almost looks like we're in the right shoulder of a head and shoulders that wants to trade now lower. But Taiwan semi, which is here's the other thing. For all those people that are investing around the world at least in a greater weighting than they have in a long time in the last year, it's the biggest stock outside of the United States. It's the biggest weighting and everything else. And I think it's only just begun to look. I'm not making a call on crowd 70. Well, I'm just telling you that if markets are starting to give some ground when the biggest name in the global market outside of the US is starting to break down and it's only just hitting the 50. Look at everything else. Most of the stocks we're talking about are breaking the 200 for the first time. S and P is kind of a whisper away from that 6,600. So I mean that's why today felt a little bit different. And again, just the rhetoric that's going on because it feels like it changes every day. And you know, I mean it's just, it's interesting to me also. I mean I don't know why the treasury secretary is making comments about naval, naval escorts.
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Dan Nathan
That's a Treasury why, because he was interviewed by one of the best, Wilfred Frost. Wilfred Frost, Love Sky News, formerly of Overtime Closing Bell, that sort of master investor podcast.
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Melissa Lee
There's only one Wilfred Frost.
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Guy Adami
Okay. All right.
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Tim Seymour
Yeah.
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Guy Adami
This handsome question was answered.
- [11:14]
Dan Nathan
Breaks news.
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Tim Seymour
I mean, the vix, you know, Tim talked about a lot. The VIX to me is the story. And you know, he said that you didn't feel the pain yet in the vix. And the fact that it closed on the highs today I think is something you have to watch out for. And it feels as though you need another move into the low 30s before, before things get resolved. And the rollover in the banks I also think is noteworthy. XLF, down from 55 to 48 pretty much in a straight line speaks to forget about yield curve. It speaks to other things, credit concerns and I think, I think a labor market that might be on the verge of deteriorating a bit.
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Melissa Lee
All right, well meantime, the oil surge contributing to stagflation concerns. For our next guest, let's bring in Subhadra Japa, head of research at Societe General, about it. Great to see you.
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Subhadra Japa
Good to see you too.
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Melissa Lee
So stagflation, how much of a risk is it right now?
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Subhadra Japa
The market starting to look towards that risk? I mean, typically we've never had kind of a stagflationary episode. For the first time in a while, we're starting to look towards that. To me, what, you know, in, in line with what you guys were discussing earlier, the front end of the treasury curve feels a little bit unhinged. I was not expecting the two year yield to, to climb to 375. The market's not pricing in any more cuts for this year. This was something that happened overseas. We saw this happen with the ECB as well as, you know, some other countries where the market started to look towards pricing in hikes, but now we're not pricing in any more cuts for this year.
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Melissa Lee
Stagflation risk would imply that you think that this is not just an inflation spike, but that this is going to be a longer lasting inflation period. Is that correct?
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Subhadra Japa
Yes. You're talking about sticky inflation, perhaps even higher inflation. And what that does, especially in an environment like this, what you're going to see is the consumer is going to come under pressure because of higher oil prices. Disposable income is going to decline. That's going to have an impact on, on, on growth. We typically look at the US and say, you know what, we are an oil producer. There's, you know, the oil companies are going to benefit from higher oil prices, but it's also going to be a tax on consumers.
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Melissa Lee
But the argument against that, you know, we've been hearing people come left and right saying it's only 1.8% of consumer spending. This is not your daddy's oil crisis or your grandfather's oil crisis because we're so much less reliant on oil these days in our daily life. How do you counter that then?
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Subhadra Japa
Well, like I said, it's, it's, it's, it's a disposable income and we're at a point where the savings rate is very, very low. So there's just not much room for the consumers to really maneuver out here. And you have a dicey job market where, you know, hiring has really been flat. You're looking at, you know, the pace of job creation is slowing quite dramatically and there aren't that many job openings. So it's, it is kind of a moderating employment outlook. I think investors in general consumers are very cautious and this is going to be an additional burden.
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Tim Seymour
Barger we talk about every new Fed chair is challenged by the market. And Kevin Wash again, if it is, Kevin in May is walking into employment picture that's deteriorating, an inflation picture that seemingly it continues to be a problem. And he has a president that today, I think and you and Mike were talking about it was talking about Jerome Powell yet again, time to lower rates. So that's a bit of a buzz saw that he's walking into.
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Subhadra Japa
Yeah, and he's going to be in a tough situation in the fact that he has to convince the entire committee to get on board with cuts. The whole premise for his pitch for lower cuts was mean cuts was the fact that productivity would go up. You'd have this boom that would lead to lower inflation, that would give the Fed room to, to cut rates. This is a completely different scenario that came out of, out of nowhere that nobody really had in their bingo card. I must say we typically look at a different set of scenarios for how the economy is going to play out. Stagflation was not one of those scenarios.
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Guy Adami
And something else that might not have been on the bingo card is the dollar going through the roof. So let's talk about that because you know, you and your notes referenced also the impact obviously that's, that's, that could be very equity negative at some point, obviously for those multinationals. But just talk about, I'm curious the positioning you see in your clients and how they've turned around and are they coming in with a bullish dollar call? What are you hearing, seeing because this is not consensus as of a month ago and now this is a dollar that, that's an uptrend from not just Pre Iran, that's an uptrend from about six to eight weeks ago and is something that looks like it might have some more sustainability.
- [15:34]
Subhadra Japa
Yeah. And I think a lot of investors were caught off guard again because the expectation coming to the year was that the dollar would continue to weaken. And we saw the exact opposite in this whole unraveling. There's been one flight to quality asset and that's been the dollar and gold. So investors have been flocking to the dollar, investors have been flocking to gold, and a lot of the money is actually moving to money market funds. If you look at the a money market funds that's been going up. So you're starting to see this kind of drift towards safe haven assets and this fewer of them because Treasuries are not behaving like a safe haven asset.
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Dan Nathan
You know, you just mentioned this productivity gain that was expected from AI. Right. And so we've had the major hyperscalers, you know, announced $700 billion. It's like a handful of companies. Right. To kind of spend here in the US what do you think if that were to pull back? Right. If we get into a stagflationary environment, you're not seeing the uptake of some of these prices products. It would make perfect sense for these companies to kind of pull back 20, 30, 50 billion, whatever the number is. What would that mean to gdp which is expected to be down, let's say for the third year in a row under 2%. Like it's been a big contributor of growth over the last couple of years, hasn't it?
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Subhadra Japa
Yeah, at least in the last six to eight months it's been a contributor to growth. And the expectation is that they will continue to invest in 2026 and 2027. That will continue to contribute to growth this year and even perhaps into well into next year. I mean that's really where it gets a little bit confusing because I don't see an easy off ramp for them to stop their investments. So they've committed to the spend. I think they stick to the plan. And the companies that are spending are generally cash flow rich. So these are not companies that are really struggling to have a build out of this magnitude and all of the corporate bond supplies being absorbed very well. What I'd again be looking to see is if those corporate bond spreads start to widen, then their cost of financing starts to go up and then that's when the dynamic starts to change a little bit.
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Melissa Lee
If stagflation is the concern here in the United States, Badger, what is the concern, if any, outside of the United States, where there are countries that are much more hurt by higher energy costs and we'll see that in inflation in a much bigger way. And I know, you know, you're not necessarily a global strategist, but you know, as it pertains to the relative trade
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Subhadra Japa
with the United States, I work for a French bank. I look at global bond yields all the time.
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Melissa Lee
Perfect.
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Subhadra Japa
So I mean, if you look at what's happening overseas with, you know, with bond yields as well as all the other counterparts, you know, both UK as well as, you know, in Australia and New Zealand, you are starting to see yields rise. If anything, Treasuries are outperforming relative to all of the other global bond yields. And in the case of the ecb, what was really interesting the last couple of weeks is we were pricing in for cuts and now we're pricing in for hikes. That's just been a kind of a seismic shift in, in here. That's where I think it gets a little tricky. It's a very good question, Melissa, because I am not in the camp that the Fed is going to flip two hikes. There are some members in the committee that in the last minutes, if you, if you, if you read through the minutes, they are flipping favoring or amenable to hiking. But that's still a, you know, I'm just not ready to make that beep yet.
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Melissa Lee
All right, Subhadra, thank you.
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Subhadra Japa
Thank you.
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Melissa Lee
Barger Japa. You know who wrote about it this afternoon? BNP Paribas, saying that there's a significant underappreciated tail risk that FOMC moves towards symmetric policy bias, which is equal chances of hike or cut markets doing a
- [19:03]
Tim Seymour
form though, right before our eyes. Right?
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Melissa Lee
Yeah.
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Tim Seymour
I think that's something you continue have to watch to mention the stronger dollar. I don't know if it's on the flight to quality stronger dollar or something else going on, but it doesn't matter because it's here. And that's something else the administration doesn't want. So you got rising yield, stronger dollar, no bueno. A market that's under pressure. Oil prices we talk about now relentlessly. I mean there's a lot of things to try to navigate here. And I'll throw one more in the hwig, which we rarely talk about because there's no reason to to talk about it because it typically just flatlines over the last couple of weeks. Finally you're starting to see some cracks there. It's worth.
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Guy Adami
Yeah. You know, Mel, you brought up that bund 10 year bond spread is blown out more than Treasuries. And so the Germans are certainly the place where we saw this right away. It's also interesting. You get back to my last kind of potpourri. You get back to private credit. Why is Deutsche Bank's name always seem to come up? Today they had an announcement about 30 billion. It does seem like they're always out there and it just seems that if you look at the higher the cost of war and how this extends out, unfortunately I think it hurts Europe more and I think this is a place where a lot of people are looking.
- [20:09]
Dan Nathan
Yeah. If you think you're having a hard time in this market making sense of it, you know, you got to look at some of the hedge fund returns that we've seen over the last month or so. I mean, in February.
- [20:18]
Guy Adami
That's not my phone. Sorry. Everyone looks at me when the phone goes off. Sorry to cut you off.
- [20:21]
Melissa Lee
You have a history anyway.
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Dan Nathan
You do have a history, you know. But hedge funds are having a really hard time in this market. And so you hear people say all the time it is a stock pickers market. It's even hard for that I think because you also have this macro that's so uncertain. So again, we feel for you people.
- [20:37]
Melissa Lee
Coming up, we are watching shares of Adobe After Hours, a software company just out with results and numbers and details out of the quarter. Next. Plus compounded caution, the health risk. Eli Lilly is flagging compounded versions of its weight loss drug and why it is weighing on the stock. Don't go anywhere. Fast Money's back.
- [20:53]
Tim Seymour
Weighing on the stock.
- [20:58]
Dan Nathan
This is Fast Money with Melissa Lee right here on cnbc. The world of business is constantly evolving and Comcast business keeps you totally in step with secure AI backed networking in more than 100 countries. They're powering over 90% of the Fortune
- [21:16]
Guy Adami
500 and millions of small businesses. That's a lot of muscle.
- [21:20]
Dan Nathan
And behind it all, thousands of experts answering your call at 2am like it's 2pm One partner powering how business gets done for companies around the globe. When you add it all up, no one does business like Comcast business. Finding the music you love shouldn't be hard. That's why Pandora makes it easy to explore all your favorites and discover new artists and genres you'll love. Enjoy a personalized listening experience simply by selecting any song or album. And we'll make a station crafted just for you. Best of all, you can listen for free. Download Pandora on the Apple App Store or Google Play and start hearing the soundtrack to your life. This segment is brought to you by Gelt. If you're a business owner wondering whether your CPA is just filing forms instead of helping you use taxes strategically, GHELT was built for you. Their expert CPAs and innovative AI tools help optimize entity structure, deductions and retirement contributions with proactive year round tax planning savings. Sirius XM listeners receive 10% off their first year of service when they sign up. Visit joingelt.com to schedule a discovery call. That's joinglt.com join gilt.com welcome back to Fast Money.
- [22:28]
Melissa Lee
We've got an earnings alert on Adobe shares dropping despite a top and bottom line beat. The company also announcing its CEO will step down when a successor has been named. CNBC's Kate Rooney's got the details.
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Subhadra Japa
Hi Kate, I'm Melissa. So Adobe's beat on quarterly numbers is being overshadowed by that CEO transition you mentioned. Longtime leader Shantanu Narayan announcing that he's going to be stepping down after almost two decades in that role. The company still looking for a successor and Orion says he's going to be staying on as chairman of the board. For quarterly earnings though you had $6.06 that was a 19 cent beat. Revenue stronger than expected coming in at $6.4 billion. Also beat in an annual recurring revenue. That's a key metric Wall street was looking for that was slightly higher than consensus. And then subscription revenue key for Adobe a beat at 6.17 billion that grew
- [23:17]
Melissa Lee
about 13% in the quarter.
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Subhadra Japa
Also record Q1 results in what they
- [23:21]
Melissa Lee
call AI 1st ARR more than tripled
- [23:24]
Subhadra Japa
although they didn't give a number behind that. The guidance also better than expectations at the midpoint of the range at least they did reaffirm prior full year EPS and revenue guidance are looking for around $26 billion for the full year.
- [23:37]
Melissa Lee
Mel, thank you Kate. Kate Kate rooney on Adobe down 7 0.4% we spoke to an analyst in the last hour on Adobe and he said they basically don't have any growth drivers right now. They don't have the right drivers.
- [23:51]
Guy Adami
Well and their their discussion about having the ability to help empower everyone to create I think is their slogan. The question is are they going to be creating and empowered through Adobe or just through AI? They have not proven that their that AI tools that are empowered through Adobe are the way through even with their as they emphasized and surpassed more than 50 million monthly average users. So a CEO change, you know this may be long overdue not to Point out the quality. This is one of the highest quality companies in the tech space for a long time. But this Stock's more than 65% off its all time high at a time when innovation is running wild. And I think the market tells you
- [24:32]
Melissa Lee
generative AI, generative A I specifically are is hundreds of millions of dollars versus a RR of $26 billion. It's a drop in the bucket.
- [24:44]
Tim Seymour
No, I get it. And the drought, I understand everything about that. But Tim just said, I mean think about this. The company made its all time. I just want to make sure in the fall of 2021 we recently made three or four year lows, but we're at four year lows, the last levels we saw in the fall of 2022. So all those things are taking into consideration the quarter was not a disaster, the guide was not a disaster. They talk about record cash flow, record across the board and a lot of things, but the market is saying we don't care about any of that because to your point and then Tim's point, we don't see the growth opportunities for you. And. But at a certain point, I mean valuation just gets in the way at current levels, even if you discount stuff, I mean 10 times next year's numbers, I mean it's incredible.
- [25:28]
Melissa Lee
I did think for a split second that maybe the stock would see a little bit of relief knowing that the CEO was going to be replaced. And yet that did not happen at all.
- [25:36]
Dan Nathan
You know, this is one of those ones. I think these guys adequately frame it from a financial standpoint. And your point about actually the revenue and the contribution is tiny, right? But if you look at the numbers and you look at, I mean they've been bringing down numbers every quarter for like the last two years, right? So they keep maybe coming in line, but the stock keeps going lower and lower. And you say to yourself, sooner or later there's no one left to sell it. Like I wouldn't be surprised if you see buyers come in back towards those prior lows. The stock did run into it a little bit, but you got to start thinking about and I think a lot of investors who know software really well, what are the moats to this business, right? What are some of the companies that are in private markets that have actually been disintermediating quietly for a while. Canva is one of them. Obviously when you see some of these image generation like Sora from Open Air and you say to yourself, wow, that's really cheap to get my hands on. And I see my creatives using this sort of stuff. And I don't have to pay a seat license there the way I used to too. It's kind of hard to make a case why to buy this. And the last thing, remember three and a half years ago they tried to buy Figma. That was going to be their answer to this. They're actually really lucky. That deal got struck down for $20 billion. I'll bet you the stock would be lower if they owned it.
- [26:36]
Melissa Lee
And last quick question. This is the last software company to report in this reporting season. Was this an Adobe specific quarter or does it still underscore the dangers lurking in the igv?
- [26:47]
Guy Adami
I think it does. By the way, that bounce in software was soft. I mean you failed at the 5076-86. Yeah.
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Melissa Lee
Span of two weeks. That's soft.
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Guy Adami
I do, I do. Given, given the fall, given the earnings that they all reported. They were solid quarters. They all had solid quarters. The look forward on that core business. And again technically on the charts it failed at the 50 on the way back up. So yeah, soft, soft software.
- [27:14]
Melissa Lee
All right, a lot more fast money to come. Here's what's coming up next.
- [27:19]
Dan Nathan
A warning in the weight loss drug space.
- [27:21]
Guy Adami
The health risk Eli Lilly is flagging
- [27:23]
Dan Nathan
for the compounded version of its obesity
- [27:25]
Guy Adami
drug and what it's doing to the stocks in the space. Plus digging into the credit crunch. Another big bank reigning in redemptions as the impact ripples into areas outside the private equity space. The financial fallout next. You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this.
- [27:52]
Dan Nathan
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Guy Adami
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Dan Nathan
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- [29:09]
Melissa Lee
Welcome back to Fast Money. Eli lilly more than 2% lower today. The pharma giant sending a letter to the FDA warning of health risks from impurities related to compounded versions of its weight loss and diabetes drug Tirzepatide. Lilly has been trying to combat compounders which it says are marketing illegal copies of its Zepbound and Mounjaro. They basically did their own studies and found that there is a chemical reaction that yields these impurities. And they're asking the FDA in that letter to, to recall all of the compounded versions of tirzabatide that is compounded with B12.
- [29:40]
Tim Seymour
You know that game we like to play. If you had told me this yesterday.
- [29:44]
Melissa Lee
Right. What would the stock do given what
- [29:46]
Tim Seymour
the market did today, given where Eli Lilly is traded up to stocks down 8 to 10% on the back of that, given the run this had and given the tape today and it wasn't, I mean it hung in there relatively well. So it says to me that, yeah, people get a little, they're a little concerned about this around the edges, but on a day where the market sold off significantly, on a day where Eli Lilly a week or so ago is making all time highs with this letter, it should have been a lot worse. I guess I would have thought this
- [30:12]
Melissa Lee
would be positive though.
- [30:13]
Tim Seymour
Yeah.
- [30:14]
Melissa Lee
Lilly, because you're saying that those counterfeit versions are bad for you and there's a reason to not do it even though it's a lot cheaper.
- [30:21]
Guy Adami
Look, the compounders have been kind of gnats around the edges of this. They've also been driving price deflation. And I think if you can, I think they're playing offense by playing defense here. So. Yeah, I agree. But that may be exactly why you got that reaction guy to tell me the news. I can't tell you what the stock looks like.
- [30:38]
Tim Seymour
Good game.
- [30:38]
Melissa Lee
That's the worst name game, by the way. We should come up with it.
- [30:41]
Tim Seymour
I didn't think of it that way. Now that you say that, it actually makes a little sense.
- [30:44]
Guy Adami
What's that?
- [30:45]
Melissa Lee
What?
- [30:45]
Tim Seymour
I looked at its initial as a negative. And you two, the glass half full
- [30:50]
Guy Adami
side of the Lonnie.
- [30:51]
Melissa Lee
I learned that from Dan.
- [30:52]
Tim Seymour
Yeah, something from Dan.
- [30:56]
Melissa Lee
The latest bunch of private credit shares in Morgan Stanley sinking as it becomes the latest bank to rein in redemption. How deep can the financial fallout go and who's most at risk right now when Fast Money returns?
- [31:11]
Dan Nathan
Missed a moment of fast Catch us anytime on the Go Follow the Fast Money podcast. We're back right after this.
- [31:26]
Melissa Lee
Welcome back to FAST money. Stocks dropping as oil prices surge yet again today. The Dow tumbling more than 700 points. The S and P and Nasdaq both falling more than a half 1 1/2% for their worst day in a month. Down S&P 500 now on three day losing streaks. And WTI crude settling 10% higher. Shares of Dollar General falling 6% despite topping earnings and revenue estimates this morning. The discount retailer forecasting slower growth this year. Dollar General now down 13% in March alone. And shares of Boeing falling 4% today, now down more than 11% since Monday. Earlier this week the planemaker announced one wiring flaws in its 737 Max planes will slow March deliveries heading in the other direction this week. Bloom Energy up as much as 4% earlier today before turning lower but still up more than 16% since Monday as the infrastructure boom increases demand for its fuel cell systems. Of course a good print from Oracle really helped it. And some more after hours action. Rubrik higher after topping EPS and revenue estimates. Sentinel 1 beating earnings expectations with the revenues in line with estimates the company did lower. Q1, EPS guidance and Lennar missing expectations on the top and the bottom line. Ulta, another one we're watching dropping after missing earnings expectations. But big reactions when it comes to some of the ones in the after hour recession like Ulta. I mean Ulta is down 7%.
- [32:42]
Tim Seymour
Yeah, just like let me go to Dollar General. It's had a huge run over the last six months. Recently it sold off. So but what they said I think is really important. The consumer seemingly is in a little bit of distress. I think that's the word they use. And consistent inflation problems, which is something we've been talking about for a while. So when you hear it at that end of the curve from a Dollar General, you have to start doing the math and say ok, maybe the consumer is not in good shape as we thought it was.
- [33:05]
Guy Adami
You know, I know we're going to have a conversation about Nike, but that's company specific. So let me talk about discretionary because you know, who needs to buy again another something. So when you get to beauty and health care, Alta is a story that has been a great story it's been a fantastic story. But then again, I go back to some of the names, whether it's Guys Birkenstock, whether it's Crocs, I mean two of his favorite forms of footwear, by the way. But again, all of these Lulu about to hit fresh new lows. The entire discretionary space is under attack and it should be because again, we're at a place here where the consumer is under pressure. These were stocks that were to me two years ago vulnerable, vulnerable from the long cycle Covid rebound. And I think it's a case where they're going to test even lower.
- [33:48]
Tim Seymour
Hold up. There might be people watching for the first time.
- [33:51]
Melissa Lee
Guy doesn't show his feet under the circumstance.
- [33:54]
Tim Seymour
So if you think that I'm actually wearing. I do not.
- [33:58]
Guy Adami
Wow, Sounds like we had obviously he wears obviously on a Saturday around your house. He wears some borks with socks.
- [34:05]
Melissa Lee
Anyway. Meantime, let's talk about serious things now. The turmoil in the financials continuing. Morgan Stanley now reigning in redemptions from its price private credit fund amid surging withdrawals. Leslie Picker's got the details on this. Leslie.
- [34:18]
Leslie Picker
Hey, Mel. Yeah. The big focus today in private credit land is the huge surge of redemptions we've just seen across many of these non traded private credit funds. Cliff Water and as you mentioned, Morgan Stanley reporting redemption rates of 14% and 11% respectively. But the managers only fulfilled about half of those requests. The rest were gated per fund agreements. And these numbers come after last week's disclosures from BlackRock and, and Blackstone. Now, these gates are a feature of these semi liquid fund structures and they exist to prevent forced asset sales and losses on illiquid assets. However, the fact that we're seeing investors get cut back on their requests means it's likely that they're going to try again in the second quarter, perhaps by an even greater magnitude if they expect to be capped again. However, analysts at KBW point out that this dynamic is driven by a mismatch between the quote, liquidity liquidity of private credit assets and investor expectations of liquidity from these funds and not a signal of credit quality. In other words, Mel, this is a headwind and a reputational blemish for these funds that have been courting the high net worth retail channel for growth. But it's not necessarily at this point in time reflective of a bigger systemic risk according to these analysts. Mel.
- [35:35]
Melissa Lee
It seems like we're in a vicious cycle though, Leslie, because the more redemptions that are requested, the more forced asset sales we have. So any Marks that were established by previous sales don't really hold up anymore. I would think that those marks that were created from the Blue Owl sale of its assets, they don't hold as any kind of a floor at this point, given what we're seeing happening in the space.
- [36:00]
Leslie Picker
Yeah, I mean desperation is never a good thing, especially when you're dealing with illiquid assets. And then it kind of begs the question, okay, what happens to those investors who didn't redeem already who were like, you know what, we're going to wait this out. The fundamentals look ok, and then they are the ones who are more affected by the potential future fire sale for the assets, especially if the whole software notion and revaluation comes to fruition. In terms of the markings, we haven't seen those quite yet in the private credit space, which does tend to mark with a lag. If that does come to fruition, it's going to be the ones who remain that are most affected. That's the dynamic we're going to. You're seeing this rush for the exit. Not everybody is able to exit and therefore what does it mean for those who are still there in the forthcoming quarters?
- [36:43]
Melissa Lee
And Leslie, Apollo is now moving towards more transparency when it comes to its marks.
- [36:50]
Leslie Picker
Yeah, so that was interesting. That was from an interview yesterday on Bloomberg where the co president said, like we hear your criticisms, we hear that you want more transparency. So they're going to start with monthly marks and then move over time toward daily marks in order to give people a greater sense of real time net asset value, which would be an interesting change of pace. I think a lot of that requires participation from third party assessments and perhaps some technology. They've definitely heard the criticism and it sounds like they're taking moves to rectify it.
- [37:25]
Melissa Lee
Leslie, thank you. Leslie Picker. It's been all over the story. What do you think Dan?
- [37:31]
Dan Nathan
You know this is a very curious case when you look at like a Blackstone or Apollo. These are two of the best global franchises if you think about across financial services. And over the last 10 years or so, all you got to do is look at a chart. With Apollo, it's had like four 40% peak to trough declines. You know, Blackstone has had five of those. This is literally over the last 10, 11 years. So I say to myself, if this is overblown, then you might be having an opportunity in some of these franchises that maybe, just maybe, you know, a lot of folks are shooting first, asking questions later because we've had a lot of strategists come on and say there's a huge disconnect between the loans that they made or the assets they own and what the publicly traded equities are trading at. So I'm not there yet, but like an Apollo, I mean, or a Blackstone. They could be really interesting if things get really, really oversold. They are right now, but who knows?
- [38:19]
Melissa Lee
What if investors don't want to buy these vehicles anymore? Because if you're, you're, if you're a high net worth or an institution, you're looking at this and you're like, I don't want any part of that right now.
- [38:28]
Guy Adami
Look, people need to look at themselves in the mirror. You made this investment and you probably, you know, if you didn't know what your liquidity, I mean, hearing about a mismatch between investor expectations and the product, I don't care. Okay? That's. That product should have been sold correctly, by the way. Someone probably got paid to put them into that product. You should talk to those people. I do think it's a case where, you know, this is the first time for a lot of high net worths that they got into an alt product. And it Also, the last two or three years, they were making 10 to 12 to 13% in credit and they did really well. So some of them who hang through this, I think are going to continue to do well. But I, I do think that there's a lot of sensation here. I also think, though, this is what you get when you put people that aren't, they're not institutional investors, they're retail investors that own something that traditionally institutions have.
- [39:22]
Tim Seymour
Great point. And you wonder at what point do they get dragged up to Capitol Hill to talk about, you know, you put out these products retail, which, as Tim mentions, by the way, buyer beware. But you know, that at certain point that's going to be under the microscope.
- [39:35]
Melissa Lee
As soon as they started opening these things up to retail, investors, you know, think they're going to be caught holding the bag. Do we have another case of this here? I don't know. Coming up, the Iran war's impact on your grocery bill. How disruption in the Strait of Hormuz is impacting food prices and why fertilizer shipments could be an underappreciated inflation threat. Fast Money is back into. Welcome back to Fast Money. Fertilizer stocks CF Mosaic Nutrien have risen more than double digits since the start of the Iran war, the conflict disrupting more than just oil shipments for the Strait of Hormuz, which could lead to a rise in food prices. CNBC's Brandon Gomez is here with all the details. Brandon?
- [40:17]
Tim Seymour
Hey Melissa.
- [40:18]
Dan Nathan
Yeah, look.
- [40:18]
Tim Seymour
Oil rightfully in focus. But more than one third of the
- [40:21]
Dan Nathan
world's fertilizer passes through the Strait of Hormuz.
- [40:24]
Tim Seymour
With traffic largely halted, supply could get tight and timing couldn't be worse. The spring growing season is here raising concerns farmers could cut back application and see lower yields for crops like corn,
- [40:34]
Dan Nathan
soybeans, wheat, wheat and rice.
- [40:36]
Tim Seymour
Now those higher crop costs are already getting priced in. Food companies that rely on feed for livestock like Tyson Foods and Hormel have seen shares fall recently.
- [40:45]
Dan Nathan
Now on the flip side, fertilizer producers
- [40:47]
Tim Seymour
as you note are benefiting CF industries
- [40:49]
Dan Nathan
leading the S and P today hitting
- [40:51]
Tim Seymour
a new all time high.
- [40:52]
Dan Nathan
Mosaic Nutrien also higher.
- [40:54]
Tim Seymour
Nutrien actually told me the situation is quote fluid and they remain closely engaged with customers. But if this goes on much longer and we heard today from Iran's supreme leader about keeping the straight closed, that
- [41:07]
Dan Nathan
is when we will start to calculate
- [41:08]
Tim Seymour
price hikes at grocery stores.
- [41:10]
Dan Nathan
Wolf research estimating US food at home
- [41:12]
Tim Seymour
inflation could rise by about 2 percentage points adding to existing pressure from energy. So we'll have to see how long this plays out and really how long, how much of an impact that has.
- [41:21]
Melissa Lee
The things like urea that's not there's no long term contract or there are no contracts like locked in prices for them.
- [41:26]
Dan Nathan
So locked in prices. But then also you have to think
- [41:28]
Tim Seymour
about when they're getting their supply to.
- [41:30]
Dan Nathan
Right.
- [41:30]
Tim Seymour
I mean a lot of the companies that are looking to have their supply
- [41:34]
Dan Nathan
may already, already have it.
- [41:35]
Tim Seymour
The big companies, the smaller players who rely on last minute shipments, those are the ones that are really going to be impacted here.
- [41:40]
Melissa Lee
Brandon, thank you. Brandon Gomez, what do you think about the fertilizer? Fertilizers but also if farmers have less money to spend, they're less likely to buy new equipment that's traditionally been historically 100%.
- [41:53]
Tim Seymour
Then you have to look at a company like Deere Cat. Well cat to a certain extent deer more but yes. Yeah I'll say this. I mean Brandon, he makes a great point and people just think it's energy specific. It's the gasoline economy. No it's not. It's just about everything you see, touch and use on a daily basis. It's impacted by this. So stock specific. These, these, these fertilizer stocks can continue to go higher in this environment without question.
- [42:17]
Dan Nathan
Yeah. These are farmers dealing with this, you know, a year after the tariffs and the tariff things not fixed. So like it really sucks to be a US Farmer, especially if we see, you know, things not get better with China. I mean we need them to buy our soybeans.
- [42:31]
Guy Adami
I, you know, this, this, a lot of this feels like CRB and some of the 2008 when we were looking at different pieces of the it's all part of the same trade. We're long, nutrient and ideal. So I mean again, it's been about finding some of these trends. I think prices stay elevated for a while, but the greatest response is always more supply. And that I think happens in ag at some point.
- [42:49]
Melissa Lee
Coming up, the next shoe to drop. Shares of Nike getting tripped this week up despite a bullish call on Wall street street where the traders see this one swooshing to next. And here's a sneak peek at the Kramer cam. Jim is chatting exclusively with the CEO of optical networking company Lumentum as it gets ready to join the S&P 500. Catch the full interview. Top of the hour on Mad Money. More fast Money into. Welcome Back to Fast Money. Nike swooshing nearly 3% lower today, hitting levels last seen in April. The Stock now down 10 days in a row in its second longest losing streak on record. That even as Barclays upgraded the stock yesterday to overweight. Here's what the lead analyst told me about why she likes the stock. And they have successfully reclaimed that run space in the US Market. They're up strong double digits in the run category in all channels globally. They're up double digits in all channels and all geographies that says that when they do put their money and their innovation dollars where they say they will, they come out on the other side of this with some results. So are they doing the right thing? That's question number one. And number two, will the stock respond to that in this environment because you can do the right things and the
- [44:05]
Guy Adami
stock still I think they are doing the right things. And no, the stock won't and is the expression is you can't invest in a bad neighborhood. And I think, I think apparel foot, you know, athleisure whatnot remains a bad neighborhood. It doesn't mean though that Nike didn't they led them all, Nike led all of those names to this point. In other words, Nike's been underperforming now for almost three years. I think this is a bottom up story that long term investors should own here. And I would put new money into
- [44:33]
Tim Seymour
this name get to levels that we last saw, I want to say eight years ago. Think about that which is pretty, I mean you can't say that about a lot of stocks valuation, it's still not cheap. However, if you think that competition is priced in, if you think that margin pressures are priced in and all the things that come with it, you take a flyer here just on the fact that it's levels we haven't seen in a long time.
- [44:54]
Guy Adami
You might have been wearing that exact same outfit 8 years ago. Talking about this.
- [44:59]
Tim Seymour
I might have. You know, Tim mentioned growing up in a tough neighborhood and I got a little upset because I did grow up in a tough neighborhood and we would have to wear a lot of the same clothes every day. That's why I got a little melancholy during that that portion of the story.
- [45:13]
Guy Adami
Guy.
- [45:13]
Melissa Lee
But there is that the Nike fundamental story. But then there's just the context of the consumer under pressure. And so is this the time to be in even a turnaround story that's doing well, you know, where management's doing the right things?
- [45:25]
Dan Nathan
Yeah, I think Tim made the case before. I mean some of this consumer discretionary stuff is a really hard place to be. And just go look at like the capital one. I mean, that stock's down 32% from an all time high just in the last couple of months or so and we talk about this K shape. I know I said the exact same thing last night. But then if you look at the upper part of that K, you look at American Express, that stock's down 22% from an all time high. So there's something going on, at least the way investors are perceiving the consumer.
- [45:50]
Melissa Lee
Up next, final trades, Final trade time.
- [46:00]
Guy Adami
Tim that was insensitive. Neon guy's hometown and his outfit.
- [46:05]
Melissa Lee
Excuse me, J and J and his footwear.
- [46:07]
Dan Nathan
Dan Xle Parabolic move faded Guys, unless
- [46:11]
Tim Seymour
your name is Jesus, you should not be wearing sandals to get my drip mosaic mos. Whoa.
- [46:18]
Melissa Lee
Thank you for watching Fast Money Mad Money with Jim Cramer starts right now.
- [46:28]
Leslie Picker
All opinions expressed by the Fast Money
- [46:30]
Melissa Lee
participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, Internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the
- [46:48]
Leslie Picker
Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries
- [46:52]
Melissa Lee
warrant its completeness or accuracy, and it
- [46:54]
Leslie Picker
should not be relied upon as such.
- [46:55]
Melissa Lee
To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer Snoring, gasping during sleep Feeling fatigued?
- [47:03]
Guy Adami
Wake up to Zepbound Tirzepatide, the first and only FDA approved prescription medicine for mock moderate to severe obstructive sleep apnea in adults with obesity. Zeb Bound is an injectable prescription medicine that may help adults with moderate to severe obstructive sleep apnea and obesity to improve their osa.
- [47:21]
Dan Nathan
Zebound should be used with a reduced
- [47:22]
Guy Adami
calorie diet and increased physical activity. Zebound is Approved as a 2.5, 5, 7.5, 10, 12.5 or 15mg injection. Zeb Bound contains Tirzepatide and should not be used with other Tirzepatide containing products or any GLP1 response receptor agonist medicines. It is not known if Zepbound is safe and effective for use in children. Do not share needles or pins or reuse needles. Don't take zetbound if allergic to it or if you or someone in your family had medullary thyroid cancer or multiple endocrine neoplasia Syndrome Type 2.
- [47:50]
Dan Nathan
Tell your doctor if you get a
- [47:51]
Guy Adami
lump or swelling in your neck. Stop Zepbound and call your doctor if you have severe stomach pain or a serious allergic reaction. Severe side effects may include inflamed pancreas or gallbladder problems. Tell your doctor if you experience vision changes, depression or suicidal thoughts before scheduled procedures with anesthesia. If you're nursing pregnant, plan to be or taking birth control pills. Taking Zepbound with a sulfonylurea or insulin may cause low blood sugar. Side effects include nausea, diarrhea and vomiting, which can cause dehydration and worsen kidney problems. Talk to your doctor, call 1-800-545-5979 or visit zepbound.lilly.com Zepbound and its delivery device, Base and QuickPen are registered trademarks owned or licensed by eli Lilly Co. Its subsidiaries or affiliates.