← CNBC's "Fast Money"
CNBC's "Fast Money"
Stocks Drop As Nvidia Slides… And Powell Warns Of Tariff Impact 4/16/25
00:42:52
Stocks dropping as Nvidia gets hit, and a tariff warning out of Fed Chair Powell only made things worse. And while Gold hits fresh records, the disconnect between yields and the dollar is breaking down. Plus, as volatility stays elevated, investors are seeking shelter. The latest read on investor sentiment, and the top concerns impacting their portfolio moves. Fast Money Disclaimer
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- [00:00]
Melissa Lee
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Pippa Stevens
Washington prioritizing long term solutions, partnering with.
- [00:38]
Melissa Lee
Local communities and expanding access to care. Together, we're building a healthier future.
- [00:45]
Pippa Stevens
Learn more@mycare.org Life in the Nasdaq Markets.
- [00:49]
Melissa Lee
In the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight, a sell off on the street as Fed Chair Powell warns of continued volatility, saying tariffs are even higher than the central bank expected. All the headlines is market moving. Comments straight ahead. Plus, gold's dark side, the precious metal hitting yet another new high today. But one of our traders says the magnitude of the move is actually a potential cause for concern. And later, mining the moment for critical minerals. A credit check on American Express and will Dr. Horton be another bummer for the builders? I'm Melissa Lee coming to you live from Studio B at the Nasdaq. On the desk tonight, Tim Seymour, Karen Feinerman, Steve Grasso and Guy Adami. We start off with the markets taking a massive leg lower after some big headlines out of the Fed. Chair Jerome Powell speaking policy at the Economic Club of Chicago saying government policy could put changes to the central bank's monetary policy on hold.
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Tim Seymour
The level of tariff increases announced so.
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Karen Feinerman
Far is significantly larger than anticipated and.
- [01:48]
Tim Seymour
The same is likely to be true of the economic effects, which will include.
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Karen Feinerman
Higher inflation and slower growth.
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Steve Grasso
Both survey and market based measures of.
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Karen Feinerman
Near term inflation expectations have moved up.
- [02:00]
Melissa Lee
Significantly with survey participants pointing to tariffs. Major averages finishing sharply lower though off their worst levels of the day. The Dow down 700 points, the S&P 500 falling more than 2% and the Nasdaq dropping more than 3%. The 10 year yield also taking a hit on the back of today's comments, falling back below 4.3%. So what should we make of the Fed's comments?
- [02:22]
Guy Adami
Guy well, they're not going to bail out the stock market. I think that's pretty clear and not going to bow to the will of the administration in terms of lowering yields anytime soon because quite frankly, nothing out there justifies it, I don't think. I mean, if you think the stock market is scaring the Fed, I think you're wrong. I don't think they're focused on that. I think the bond market last week absolutely probably scared them, but that's not their mandate either. So to me, he said everything that he's been saying for quite some time and the market's just starting to listen to him.
- [02:49]
Melissa Lee
Yeah. Karen, you made that point too. Like, what did we hear that was new today?
- [02:52]
Peter Bookmark
I know if you were waiting for, if you were there out there expecting a cut from him, I think that didn't make sense because we know he has this dual mandate. One side of it is in pretty good shape. Right. The labor market is really in good shape. The other has a huge question mark overhanging it. And he really doesn't want to make the same mistake again and letting inflation sort of potentially run amok. So I didn't think there was anything that was surprising and yet I was surprised that the market was surprised.
- [03:20]
Melissa Lee
Yeah. Although he did it did seem like there was a little bit more acknowledgement of sort of the, the bad outcomes of all this. The dual mandate goals being intention, I thought was an interesting phrase and also the need for price stability in order to have a strong labor market.
- [03:34]
Peter Bookmark
But that says maybe I'll do something at that, at that point.
- [03:37]
Melissa Lee
Right.
- [03:38]
Peter Bookmark
Not right now, I think.
- [03:39]
Melissa Lee
Right.
- [03:40]
Tim Seymour
Yeah, I heard that. Now I heard, first of all, I heard a Fed that I thought was digging in a little bit more today into their stance and that basically current policy is forcing them away from their goals or at least and that won't be forced away from their goals. And in fact, this, this was, there was a preview Fed's hammock was, was speaking earlier in the day and this was at 12:00. And I think it was really setting the table for this, which is that we are not going to, I think something about respond to the twists and turns of the market, I think was a quote. And I think the dynamic here, it's kind of funny or ironic or not at all. But I would make an argument that our treasury secretary is somebody that probably for a long time wanted the Fed lived in a world where I think was very critical of a Federal Reserve. I'm not, you know, maybe I'm putting policy words in his mouth, but I think Scott Besson historically was someone that probably Felt the Fed was always too quick to jump to the market's rescue. There's a lot of people that have been kind of fiscal hawks on the investor side in the hedge fund community. And I think this is exactly what you probably want to hear the Fed saying, except for if we are at a time where it's an unprecedented dynamic in terms of what we're seeing and what the market has to respond to and uncertainty. You know, you get this place where if the Fed's not going to move, tells the market no go, it also.
- [04:56]
Steve Grasso
Tells you there's no stagflation. Right. So if he's not worried about the employment side, there can't be stagflation. If he's not worried about saving the market, then who knows where inflation is going right now. If he's talking about tariffs, how can you talk about tariffs without knowing what the after effect is? He's only there to react to the after effect, not the pre tariff. Would you agree with that?
- [05:22]
Melissa Lee
I mean, yeah, I thought it was clear, yes, the Fed is going to wait to see the impact on the economy. I thought that there was an acknowledgment of stagflation when he said that they could be in the challenging position of finding that the goals of the dual mandate would be intention. So in other words, employment and labor, and that there is going to be inflation, I hear, because of the tariffs. And so therefore you put those two together and those seem to be the.
- [05:42]
Steve Grasso
Ingredients, then unemployment, then jobs, then jobs will drop. But if you had to pick between the two out of those mandates, I would say he's got to save jobs versus attack inflation. That's my opinion.
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Melissa Lee
Well, it seems like he's saying that he's got to get a hold of price stability in order to address weakness in the labor market. I don't know. That was my interpretation.
- [06:03]
Guy Adami
Well, it's 12 months ago almost, I think it was 12 months ago that he said in response to a question, this is Jerome Powell. I see neither the stag nor deflation. And that's coming back to bite him. And you know what? Because that's we're in the midst of right now and if you start to see an uptick in the unemployment rate, which I think in this environment it's almost inevitable, then you have stagflation right in front of you. And regardless of what they do, it's going to be the wrong thing. So they're better off just sitting on their hands.
- [06:25]
Melissa Lee
We may all have heard for a long time that Fed Chair Powell is not going to do anything for a lot, but the markets were pricing in a move pretty soon. If not May, then probably. I mean, June was fairly high. So there has to be some recalibration in terms of expectations. Even if you guys didn't think anything was going to happen.
- [06:43]
Peter Bookmark
A couple. To be fair to Jerome Powell the year ago, the mandate wasn't on the table at the time that he said that fair.
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Tim Seymour
There was no stag, there was no inflation, was there?
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Guy Adami
And we were, we were on the precipice of a bit of a slowdown. These tariffs just sort of put the match on the top of the tinderbox. But, you know, that's just me. Okay. You want to give them a pass, that's fine. But you shouldn't make glib comments like that sitting in that seat, understanding that you don't know what's down the road.
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Peter Bookmark
As Jamie Dimon can, you know, right. Say, yeah, I shouldn't have said get over it. Right, right. But maybe there's something else to do beside address some way to address financial conditions.
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Steve Grasso
Balance sheet.
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Peter Bookmark
Right.
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Steve Grasso
He still has 35 billion rolling off per month of MBS. That's the way to actually go right out. What they're trying to go right out, which is mortgage rates, they're down to 5 billion of treasuries. That's okay, that's a little, little number or insignificant to the greater scheme of things. But 35 billion, they have not adjusted yet. If they adjust that, it could have a dramatic effect on bringing down rates.
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Tim Seymour
And Look, Powell at 130. You can, you can look at your intraday chart of the S and P and you can see what it did. It went down almost straight down 2% for recovering a little bit at the end of the day. But I'll also say this wasn't really about the Fed today. We were looking for any reason to sell this market. Okay. We came to, we rallied back to the top end of a downtrend that basically started depending on when you will look at it. Most of it's, you know, really February 20th, February 21st. We've had, we have bear crosses, death crosses, whatever you want to call them. They're not, they're not a rule. But, but they were very foreboding, foretelling in the case of the semis only two weeks ago. So you've got the S and p where the 50 day is crossing over the 200 days, basically telling you the longer term trend is down. Same thing in the Nasdaq and the market have rallied up to a level where, look, I just think that the market was looking for this opportunity today. We had a start last night with the comments on Nvidia. It played into today and all you needed was the Fed to say I'm not, you know, I'm not your answer here. So I, yes, the Fed comments, as we've all said, were important but not necessarily different than what one might have expected to hear. This was a market that is not ready just very early into early earnings season. And all we hear from everybody, whether it's corporate CEOs, even the bank of Canada today said we are no longer giving forecasts, we're giving scenarios. We actually think that based upon trade policy, what we formerly always done is no longer what we can do. This is central bank saying that, you know, yesterday we heard about scenario analysis in some of the after hours common difference.
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Melissa Lee
Range versus the bottom of the case range. I mean that's almost useless.
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Tim Seymour
And that's. Those are, those are the terms. I think that was the term that the bank of Canada said.
- [09:27]
Melissa Lee
Right.
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Tim Seymour
Forecasts right now are useless.
- [09:29]
Melissa Lee
Yep. For more on all this, let's bring in Blakely Financial Group Chief Investment Officer Peter Bookmark. He's also a CNBC contributor. Peter, always great to get your take on things. You say the economy and the stock market are tied at the hip. We've had quite a rollercoaster ride. Is there anything, I mean, in chair, Powell doesn't sound like he's going to do anything to save the market. So what's your take on what was said today and the market reaction?
- [09:53]
Caleb Silver
Well, I think you said it right earlier. He specifically said that you need price stability first in order to lay the foundation for a healthy labor market. And that's what he said as he was raising interest rates a few years ago. That was the reason. So that tells me that while maybe at some point they respond to an unemployment rate that's going to 5 or 6%, if at least right now inflation is still their main focus. He retires in May 2026. He's known as Mr. Transitory and he's not going to give that up. But if the markets froze up and there was a big problem, I think they would use the standing repo facility or temporary QE like the bank of England did. That would be their first sort of use of a tool. But they're not cutting interest rates to save tariff policy. That gets us into trouble.
- [10:47]
Melissa Lee
Do you agree with that tack? I mean, I'm just curious because there are some people who say the, the Fed should be more proactive, knowing that the tariffs were much bigger than we had expected, seeing the reaction the markets already seen the, not just the reaction the financial markets but also the sentiment surveys which, which Chair Powell acknowledged that steep declines in sentiment when it comes to businesses as well as households.
- [11:10]
Caleb Silver
I understand that, that, that, that belief. I think the economy is on very weak knees right now. But on the other hand, if they did start to cut and then we completely rolled back all the tariffs, then what does he then take back what he just cut? So I think he's really left in a very difficult situation and he has no choice but to wait to see what the end game is with tariffs, what the actual rates are, particularly with China and what these deals are like. Because how do you sort of get ahead of that until you know what the playing field looks like?
- [11:44]
Guy Adami
Peter Last week the bond market rightly so scared a lot of people. Did we dodge a bullet or is that just a tremor?
- [11:52]
Caleb Silver
I think it's a tremor. I think the downward Trend in the dollar Treasuries, foreigners that owned about $30 trillion of stocks, Treasuries and corporates, they are deciding to find other homes for that money and if we're going to truly cut the trade deficit will obviously have less capital flows that come back into the US So I think this is just more tremors, as you say, and that I can't rule out another test of 5% at some point in the 10 year yield.
- [12:24]
Peter Bookmark
Peter, it's Karen, thanks for being on. Is there a point that the unemployment numbers, what point would you think that would be that would force him to move even without clarity on the tariff and inflation situation?
- [12:38]
Caleb Silver
I think if we started to see, call it 2 to 3, 10 increases in the unemployment rate for a couple of months in a row, he's going to respond. I mean he doesn't want to see a dramatic slowdown and he's sitting there doing nothing. But he'll do something. But there are a couple of risks here. Let's just say he cuts three or four times as the market's priced in right now. Well, there's risk that the 10 year yield goes higher just as it did after he cut 100 basis points. Well, we've already seen some vulnerability in the dollar, but what if he cuts and follows through and the dollar index instead of being at 100 goes to 90 or 85 and then oil goes to $100 and you see other types of inflation picking up because of that weakness in the dollar. So there's no free lunch here that the Fed can present to us just by cutting short term interest rates. There are a lot of other possible negative consequences that can come of that.
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Melissa Lee
Peter, thanks for your time. Good to see you.
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Caleb Silver
Thanks, Melissa.
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Melissa Lee
Peter Brook for Leakley Financial. So Drum Powell is really in a box. I mean there are really no alternatives here except to stand pat at this point it sounds like.
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Guy Adami
I think that's exactly. I don't see any. I don't. Unless the external pressure is such that he's forces his hand, which I don't think is going to happen, there's no reason to move here. I mean if it's, if it's a stock market thing, you're barking up the wrong tree, I think.
- [13:58]
Steve Grasso
But aren't they always late? They have to be late by their nature. It's not an insult. They have to be late because they have to react to something. They can't react in thinking where the puck is going. They have to just skate to where the puck is. Now, by the way, tariffs can be deflationary, right? Demand destruction.
- [14:17]
Melissa Lee
If you're in a recession and nobody's buying, they can't afford it.
- [14:20]
Steve Grasso
So both sides of that dual mandate work in tandem. So you really can't attack one or the other. And what we left out was the basis Trade is an $80 billion trade with 100 times leverage. So when we see a rise in Yields, that's an $80 trillion effect in the treasury market when it's maximized. That's the reason why yields are rising.
- [14:43]
Tim Seymour
Well, you know, today if you're looking for a glass half full, it's actually that the treasury market kind of behaved as it should have. In other words, you saw a flight to quality. It was only 32 basis points of a rally, not 32 basis point 32 points of a rally. I don't know what that translated into. It probably rallied five or six basis points but, but this is the type of a day when you saw equities in freefall. The dollar sold off almost 1% by the way. Euro hit 38 month highs against the dollar Swiss franc, the all time gold standard. We're going to talk about gold in a second but you know that which represents gold went to all time highs. Good prelude to that conversation, but I'll just get back to the retail sales number we had this morning, which looked great on the surface is once again defines the Fed in a box. It tells you that some of the numbers and some of the pull forward here means very little to what we really have and that in fact, because of tariff policy, people did something they're not going to do next month, which was buy.
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Melissa Lee
All right, let's get to dollar gold and yields. Another warning sign potentially developing in the market. The traditional relationship between the dollar and rates appears to be breaking down. The yield on 10 year treasuries markedly higher in April even as a greenback comes under pressure. At the same time, gold prices continue to soar with the precious metal popping more than 3% today to set its 22nd record of this year. So what do these things taken together tell you about where we are, Guy?
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Guy Adami
I think this is collectively something we've been talking about for over a year and a half now, easily. And the environment that the debt problem out there is such that people are starting to figure out you need to be in gold. Central banks over the last four years have bought gold in record amount. And we also said that there's going to be a point in time where the dollar starts to fall and yields start to go higher and people will be looking around, scratching their head. Janet Yellen over the weekend was discussing that pull up a dollar yen chart below 142 today. The lowest level we saw since August of last year. I think we all remember what happened on August 5th. So these huge dislocations, as Tim just said, in currencies, global bond markets, people are figuring out that gold is the place to be. And it makes a lot of sense to me. This is exactly the environment that gold works and it's telling a really dangerous story, I think.
- [16:49]
Peter Bookmark
Yeah, kudos to you and Tim for totally being on the gold gravy train, I guess. But bitcoin has also performed and you know, we had been concerned that bitcoin had really been a momentum, you know, risk on, risk off, but it's proving to be something else.
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Melissa Lee
Yeah, you're, you're mentioning all the sort of highs against the US Dollar.
- [17:11]
Tim Seymour
Yeah.
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Melissa Lee
Swiss, the JPY Euro. This really puts pressure on those banks though to start cutting.
- [17:18]
Tim Seymour
Well, it's interesting. So the ECB basically is going to resume cutting. They kind of told you that today. And historically this is what's, what's fascinating about right now. Dollar Euro, Dixie Basket dollar yen was trading on central bank differentials. You had a Bank of Japan that was playing around for four years. So of course the yen went weaker and weaker. The, the central bank differentials between the ECB and the Fed were such that the dollar was strengthening. And it was pretty clear. Now ECB is still telling you they're going to ease. And yet the euro rallies 1% today. So it is getting back to, I think kind of. I wouldn't go as far as to say regime change, but this is clearly we're seeing a lot of repatriation of assets, not just people leaving the United States, but also I think you're seeing a lot of US investors moving to other places around the world. So I think that's fascinating and I don't think that that abates necessarily. It's surprising that we hit fresh levels when in fact markets had rallied back a lot. You think that would be at the peak of a market low. So maybe if you go back to.
- [18:16]
Steve Grasso
2000, 2018, we had Trade War 1.0. Gold rallied aggressively during that. This is much worse or much more impactful than that. So you would expect gold to rally much more than it did in 2018. And it is, if you look at those correlations, if you have the dollar and gold, that makes sense. The only outlier yields. If you put in the basis trade over yields, that makes sense why that's the only outlier. There's got to be an unwind that we're not looking at because the dollar and gold to everything that guy just said makes sense why the dollar is underperforming and gold is outperforming. Yields don't make sense. That's the basis trade.
- [18:56]
Melissa Lee
All right, meantime, Semis among the biggest losers in today's sell off, Nvidia dropping nearly 7%. It had been down more than 10% at its lows. That after the company warned last night of a more than $5 billion charge tied to chip exports to China, Taiwan, Semi and ASML holdings also under pressure today thrown AMD which also said it would have a write down because of its exposure in terms of a chip specifically made for the China export market. We also got a headline from Nvidia indicating that it had received $18 billion in orders at the beginning of Q1. So that five and a half billion dollar write down reflects that $18 billion in, in orders at the beginning of Q 1.
- [19:34]
Peter Bookmark
Yeah, we were talking about just before the show. That would have been a nice margin. A little bit higher margin on those chips than I would have thought because their highest margin chips are in the low 70 range. So, so it's, it's, it's not surprising that it's hold off more than that because you don't get the feeling like okay, that now we know exactly where we are.
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Melissa Lee
Right?
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Peter Bookmark
We have no idea. So it's understandable why it's trading so poorly.
- [19:59]
Tim Seymour
The technicians are, and I'm not one of them, but I do care about technicals as part of an overall mosaic or whatever you want to say. It sets up, it sets up a picture. If you look at a 10 year chart of AMD, this has been one of the great growth stories over that last decade. We're at some really key long. If you look at long term uptrend on a monthly Chart Going back 10 years, we're right there at support. If you look at a lot of semis, the damage that's been done, the question is, has technical damage been done in a way that these things need to go lower here? This is a very important level. And you mentioned amd. That's a fascinating chart.
- [20:34]
Steve Grasso
When you look at the chart in Nvidia, looks like it got down to $92. I think the next level you have to go back to that $75 level that was back in April of 2024. I think you definitely trade down to that level. This licensing that they have to apply or pay for, that's never going to take place. That's a negotiating tactic that'll never happen. It has never happened. Or you can count on one hand or only using one finger how many times it has happened. It's not happening.
- [21:00]
Peter Bookmark
Which finger?
- [21:04]
Melissa Lee
Coming up, more on today's sell off as volatility continues to grip below global markets where investors are seeking shelter from the storm and their top concerns during all the stock swings. But first, minerals on the mind, the latest tariff target from the Trump administration. The names that could feel the impact next do not go anywhere. Fast Money's back in two.
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Tim Seymour
For 140 years MultiCare has been in.
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Pippa Stevens
Washington prioritizing long term solutions, partnering with.
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Melissa Lee
Local communities and expanding access to care. Together, we're building a healthier future. Learn more@ multicare.org Introducing CNBC, the new streaming platform from the number one source in business news. Watch live or on demand. Access any market, anytime, anywhere.
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Tim Seymour
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Go to cnbc.com stream now.
- [22:26]
Melissa Lee
Welcome back to Fast Money. President Trump opening an investigation to potential new tariffs on imports of all U.S. critical minerals, which go into batteries and consumer electronics. U.S. rare earth companies MP Materials and Albemarle during among the names. Moving on today's news, CNBC's Pippa Stevens is looking at the money and the movers in the space. Hey, Pippa.
- [22:45]
Pippa Stevens
Hey, Melissa. While increasing domestic production of critical minerals has become a goal of this administration, with Interior Secretary Doug Burgum calling to, quote, mine a baby mine. But it's not that easy because while the US does have mineral reserves, they're expensive to get out of the ground. Still, there is some domestic activity. MP Materials mines, rare earths. Out in California, the stock is jumping because China, the dominant player, has halted exports. Albemarle has domestic lithium operations, while London operates a nickel mine out in Michigan. And then Rio Tinto and Freeport also have copper mines out west. But it's not nearly enough to meet domestic demand. The US is 100% dependent on imports for 12 critical minerals, including graphite, and more than 50% dependent for another 31, including rare earths, cobalt, uranium, and nickel. That's according to the WRI. Plus, as Brian Beale from Benchmark told me, tariffs alone will not be enough to bolster domestic production. There's got to be permitting reform as well as stable price signals that mobilize Wall Street. Melissa.
- [23:44]
Melissa Lee
I mean, there has to be just entire sort of chains built, supply chains, in effect, because, for instance, mp, they're really heavy on heavy focus on light rare earths as opposed to the heavy rare earths, which are very expensive and difficult to separate.
- [24:01]
Pippa Stevens
Yeah. And not to mention that a lot of that is ultimately going to China to be refined, because China was very strategic in the sense that when they, they do have a lot of rare earths, but they don't have things like lithium. So instead they focused on getting their refining and processing and smelting for copper up and running. And so a lot of the ore that's mined around the world goes to China. So in the case of np, materials that's mined here goes to China, then comes back here. But it really is about creating all these new supply chains. And in the US our challenge, of course, is permitting it takes 29 years on average for a new mine to come online that is the slowest in the world, behind only Zambia. And so the administration is talking about mining, but the reality is much different on the ground.
- [24:40]
Melissa Lee
Yep. Pippa, thank you. Pippa Stevens. Got to go to you, Grass. You've been on MP for a long.
- [24:45]
Steve Grasso
Time since the start of the year. And China does 70% of the extraction for the globe. MP provides 12 to 15% of global supply. But as people were saying, it all get the refining process. China does 85% of it. The key to this stock play is that MP is the most direct, the only direct rare earth mining company that you can buy here and feel comfortable with. The stock is basically doubled. I'm half out of my position. I'm probably going to roll the dice on the balance of the 50. I think it has room to go higher.
- [25:16]
Melissa Lee
Yeah. But of course it's more than just rare earth. As Pip had mentioned. There's lithium, there's nickel, there's copper and all of this.
- [25:21]
Tim Seymour
I think copper is fascinating here, right, because it's called Dr. Dr. Copper because it 10 to be a gauge of the economic dynamics. And if we're so worried about it, but copper prices after tanking a couple of weeks ago have really held and kind of supported I think pgm. So precious metals, platinum plate, I mean don't, don't quit on silver. I think silver's rallied 15% and outperformed gold in the last, last two weeks.
- [25:43]
Guy Adami
Look up at an Albemarle chart. We're trading levels we saw in 2020, the roundtrip, and it's been extraordinary in a word. But they're about 17% of the lithium processing in this country. So if you think lithium is part of this whole thing, Albemarle here just on a technical level is pretty interesting.
- [25:58]
Melissa Lee
Coming up, some earnings action to bring you SL Green CSX now all reporting results of details and the numbers from the quarters next. Plus, stocks getting hit. Another rough day for markets. And as volatility spikes, so does investor anxiety. The latest sentiment read from Investopedia and how people are managing their money through all these market swings. You're watching Fast Money live in the NASDAQ markets and Times Square. Back right after this. Introducing CNBC plus the new streaming platform from the number one source in business news.
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Tim Seymour
Start Streaming.
- [26:34]
Melissa Lee
Go to cnbc.com stream now. Welcome back to Fast Money. A check on some stocks moving after hours. SL Green reporting a miss on revenue for its latest quarter rail operator csx. Missing on the top and the bottom line. Citing operational challenges in the beginning of the year. And Alcoa surpassing earnings estimates but missing on revenues. The company also reaffirming its full year guidance and checkout shares of Hertz notching its best day ever after a source told her own Scott Wapner that Pershing Square stake in the company is significantly higher than previously disclosed. The nearly 20% stake makes Pershing the company's second largest shareholder. That's an interesting twist here. What do you want to trade?
- [27:14]
Peter Bookmark
It is an interesting twist. It hurts. I mean, we've seen Bill Ackman do these sort of, I guess, capital structure positions. This is one highly indebted. Right. And that's worked out well for him. He's a pretty shrewd investor, I think. I'm not surprised people would follow him in. It's a big pop, but it's left, right, right.
- [27:33]
Guy Adami
Huge level in csx. I mean, it's the levels we saw to the downside. I think the fall of 2022, the rails, the transports have been under pressure now for the last nine months at least, if not longer. I think that's telling its own story. I think CSX has to hold right here. 27ish.
- [27:50]
Melissa Lee
Coming up, volatility, inflation, a recession, the fear sweeping over the market and investors and how they are handling their money and all this volatility. The latest read on sentiment and how much trust traders have in this market when fast money returns. Welcome back to Fast money. Stocks sharply lower after Fed Chair Powell reiterated concerns over the economic impact of tariffs. The S and P down more than 2%. The Dow shedding 700 points in the Nasdaq, leading losses dropping over 3%. Individual investor anxiety is running high amid the tough tape. No surprise according to a new survey from Investor PD Editor in chief Caleb Silver joins us here on set with the latest findings. Caleb, always great to see you. It's interesting to read the results because it sounds like people believe that we are in a recession, but they're somewhat worried right now about what's going on. You would think they'd be much more worried if they thought we were in a recession.
- [28:40]
Karen Feinerman
Yeah, 44% say they're extremely worried. About 73% say they're somewhat worried. What's really interesting though is you get this high anxiety on the one hand and then you got this won't stop believing on the other because a lot of them, 30% or so, are still trying to buy the dip in their favorite stocks. We've seen that behavior. If you look at results from Fan Van Detrack and others, retail investors have been trying to catch the falling knife here in a lot of different other favorite stocks. Meanwhile, there is word as they've been about inflation or recession relations with China, tariffs, everything has got them concerned. Just not doing too much about It.
- [29:12]
Melissa Lee
And let's be clear, when was this survey taken? Did it capture all of the turmoil?
- [29:16]
Karen Feinerman
Absolutely. We ran it from Friday to last night because I wanted to capture everything after the reversal on the tariffs, after the smartphone stuff, after all of it, just to see where people stood. And people are worried but don't know what to do except either wait or try to buy some of their favorite stocks on discount. Today might have been a good day to do it. Really rough out there and just getting more and more anxious as we get, you know, more and more cloudiness around the policy.
- [29:39]
Guy Adami
When I know you're coming on, I try to guess what's going to be the top concern. I never would have guessed inflation's back on top. Where do you think that came from?
- [29:46]
Karen Feinerman
Well, it comes from tariffs and people have heard the drumbeat louder and louder enough about, you know, tariffs lead to inflation full stop, whether it's consumers that are going to get the prices passed on to them or businesses that are going to have to pay more, which makes our put our hands in our pockets when it comes to spending. You've seen the sentiment numbers, you've seen the inflation expectation numbers. This is in people's psyche right now. And if you listen to the deltas of the world, the Walmarts of the world, they're telling you people are just not spending like they were on the discretionary stuff. They're getting the needs, but they're even cutting back on those.
- [30:14]
Melissa Lee
Now you do find some readers getting a little bit more defensive. They are going to cash or cash equivalents.
- [30:20]
Karen Feinerman
Yes. About one in ten say they're going to cash or cash equivalents. That CDs, money markets, piggy bank, cash, call it what you want. And some people also pulling back a little bit into some ETFs. But what we're not seeing is this outright capitulation by retail investors. Not at all. And really haven't seen that in any of these downturns they've kind of tried to buy back in. Not everybody, but a good percentage are still trying to find the bottom here, see if they can get their favorite stocks on discount. It's just they don't know where that bottom is.
- [30:47]
Melissa Lee
I like the word cloud because it really shows you who likes what. Right. And so when you say favorite stocks, you're talking Amazon, Palantir, Tesla, Microsoft, Apple. They're really stocks sticking to the NASDAQ 100.
- [30:59]
Karen Feinerman
Yeah, they love the NASDAQ 100. These are their favorite stocks. We've been talking about this for years. They just keep buying the same stocks. And if you look at retail investor portfolios and some of the biggest ETFs, they look just like this. So they can't believe that they've fallen this far and just don't know when they're going to bottom out. But there's still some of them trying to buy them, some of them standing on the side.
- [31:17]
Melissa Lee
Right.
- [31:18]
Tim Seymour
Camp don't stop believing, won't stop believing journey. Right. I mean you have to go that was a layup. But. But it really has been such a journey for the investors here that they haven't had reason to fear buying any dips for a long time. Even going back to the Fed induced. I mean that was the greatest time to buy stocks really probably in 20 years. It seems as if they've really gotten scared by this. Is there some is it is it something existential with us kind of status in the world? I mean you've got depression on here is weighing in at a pretty Are we defining this in different ways?
- [31:51]
Karen Feinerman
Yeah. We also like to look at what our readers are searching for on our sites. They're looking up that they're looking up 1987. They're looking up what happens in an extended recession to their portfolios, how to protect and then you have people on the wild side saying how can I buy inverse ETFs that will take advantage of this or bet the opposite way. So you got some promiscuity along with a lot of people being very guarded right now. A fascinating time for us.
- [32:13]
Melissa Lee
An extra $10,000 is still going to individual stocks.
- [32:16]
Karen Feinerman
Individual stocks. But right under that you see they're going to get a lot more cautious with money market funds. So it's either I'm going to take a flyer or I'm going to put it in the bank for now or cashier cash.
- [32:26]
Melissa Lee
What a choice. Caleb, always great to see you. Thank you. Caleb Silver, Editor in Chief of Investor PD what do you make of this sticking to the NASDAQ 100?
- [32:33]
Peter Bookmark
Well, I'm not that differently positioned than that. I mean I like to buy not with the vix is right around no man's land. You know, I'd much rather buy in the 40s or like to hedge when it's down in the 20. It close to that on a 30 trade up to 35 and change today. So I'm kind of no man's land not doing anything.
- [32:52]
Steve Grasso
And I think you use this as a contraindicator when everyone gets on that side of the boat at a certain point. This seems pretty universal negative. You pointed out the percentages of people that are worried, and it was up to 77 or 73% as a whole. I think we're getting close to that capitulatory moment. Not there yet. I think we could wallow around these levels sideways.
- [33:14]
Melissa Lee
All right. We want to note some worthwhile Fast Money content available to you. There's a new CNBC.com article out today based on Tim's four money traps to avoid in a volatile market. You can find it on the Fast Money homepage after the show. Of course, you'll also have insights like how to avoid money mistakes and a whole lot more. If you join us on June 5th for our next Fast Money Live event, scan the QR code on your screen or head on over to CNBC events.com fast money to get your tickets. Give us a clue.
- [33:44]
Tim Seymour
Money traps, well, some of them we talk about all the time, which is that the wrong thing to be doing in a market is is to be investing where you are overly anxious and you have money in the market you can't afford to lose. You make bad decisions and ultimately it really comes down to invest in stocks. Karen, what do you say? Almost all the time when you go.
- [34:02]
Peter Bookmark
Home long, it's as if you bought.
- [34:04]
Tim Seymour
It at the close. As if you bought it at the close. Don't be waiting around for a better level on a stock you should be getting out of today.
- [34:09]
Melissa Lee
And if you want to find out what guy's money traps are, you can join us on June 5th.
- [34:15]
Guy Adami
I'll fill you in on my traps.
- [34:16]
Tim Seymour
Oh, boy.
- [34:18]
Melissa Lee
Coming up, Lulu stretched thin, how the retailer is losing market share in one key market and why it could mean more downward pressure for the stock and a big day of earnings. On deck, we're homing in on two names that will give us a read on the consumer and the housing market, what to expect from those results when Fast Money returns. Welcome Back to Fast Money. Shares of Lululemon dropping today and down nearly 35% this year. Jefferies publishing a note yesterday warning that Lulu is losing market share to private competitor Alo Yoga in a key region, Miami. They go on to say fashion trends start on the coast and move inward. We anticipate lower sales and earnings in the US for 2025. The analyst behind the note, Randy Connick, joins us now. His $220 price target on Lulu is one of the lowest on the street. You've been a bear on this one for quite some time, Randy, and it's been a good call. You also point out that in addition to the trends moving from the coast inward, and so the assumption is that they're going to continue to lose market share as you go into the United States, that that belt bag was really an artificial boost to earnings that's just not going to be replicated.
- [35:23]
Randy Connick
Yeah, this company has, I think, a major problem. Look, we have to take a step back and think about what has transpired over the last few years. If you think about during COVID Lululemon was the it brand. In the it space of Athleisure, you saw that company dramatically catapulted its revenue base upward. And on top of that, the company got helped by that belt bag trend that you talked about that lasted for a couple of years. But now, you know, since our bearish call over the last couple of years, what we've seen is this idea that the company's hitting a growth wall. And in order to continue that growth to across the board and maintain that high PE multiple that Wall street loves, because Wall street loves growth, the company started to go into non core categories like the belt bag, like long ankle length skirts, sweatshirts with logos on top of it, even sweaters. This is not what, what made Lululemon famous 20 years ago. The company's just trying to stretch itself thin and that's why we think there's a problem ahead.
- [36:26]
Melissa Lee
Yeah. And there are also other missteps like the color palettes are all off. Right. And that stuff ends up on the markdown rack. That guy likes to shop.
- [36:33]
Tim Seymour
You notice that the crazy.
- [36:36]
Melissa Lee
What does management need to do? Because they do want to emphasize newness, but you're just saying the newness that they are trying to emphasize at this point is the wrong kind of newness.
- [36:46]
Randy Connick
Look, I think this is just kicking the can down the road. The CEO of the company has proverbially talked about newness for literally about six months. And I think where the problem lies with the company is this. You have to kind of. They're in denial. Right. So I think the fact on the ground from all of our research is that the company's losing market share. It's pretty obvious, right? Especially in markets like Miami. I was, I was actually in China last week. The company is, got growth there, but it may not be for long. But, but at the end of the day, what the company is trying to tell the market is look, our numbers are slowing, but the reason they're slowing is because of self inflicted wounds of, of not. We don't have enough newness. Whether it's color, whether it's pattern and whether or whether it's new categories. Right. So the problem is the newness has been in place for the last few months and numbers continue to slow. In fact, if you look at the holiday numbers, they're actually pretty scary because the company posted about a flattish type of number in the United States market during a holiday. Their e commerce business was only up percent during the fourth quarter. That is in the space of the best holiday season we've seen in 20 years. So something's wrong here and I think it's just market share. They're losing market share. They're losing it quick. Their core customers going elsewhere to these competitors and that's a problem going forward.
- [38:05]
Peter Bookmark
Brandy's Karen, thanks. Good call so far. What about some of their back to work stuff for men? I actually thought they were getting some traction there. People going back to the office in their pants. Tim.
- [38:17]
Melissa Lee
Well Tim shirts on now but Randy.
- [38:21]
Tim Seymour
Yes but my color palette I know is right on. I'm just not wearing the stretchy one that says let him cook.
- [38:29]
Randy Connick
Exactly. Great looking side. So look, I think the men's business has been great. Although the men's business is growing, it's not accelerating any any longer. So what does that mean? It means that men have had their fill of the pants thus far in the last few years but now we're kind of starting to play that out right. And there's, there's competition in that space obviously the ore and others roan etc. So I think the problem with Lulu and people forget is Lulu is not just competing with other sportswear brands and other activewear brands. Lululemon is competing with hundreds thousands of other apparel companies around the world and that's the biggest issue here. So you know men's has been great. It's not going to last. Belt bag has been great. It's already starting to fade. The core is slowing. International is great but not accelerating any longer either. And now this company's at peak sales per foot, peak margins, peak earnings. We think that all comes crumbling down in 2025.
- [39:23]
Melissa Lee
Wow. Randy, thanks so much for joining us.
- [39:27]
Randy Connick
Thanks guys.
- [39:28]
Melissa Lee
Really connect.
- [39:30]
Tim Seymour
I know you won't you'll bag I got you for Christmas. Christmas every opportunity good thing they don't show below deck.
- [39:39]
Guy Adami
Listen real first of all congratulations. I mean they've been spot on to 26 was the August low probably headed there big inventory build last quarter margins have been deteriorating and this is on the cusp of becoming this generation's under armour.
- [39:53]
Steve Grasso
It feels like too many private companies too Much competition. Men's, there's vineyard vines, there's vire, there's aloe for that. But, but men's have their own stretchy golf pants and everything else that they're wearing.
- [40:05]
Melissa Lee
Competitors, there's a million competitors.
- [40:07]
Steve Grasso
The same thing with Nike. It's too fragmented. You can't look at the stock. You're catching a falling knife. Oddly enough, China has been growing for them between 25 and 40%. But that only makes up 12 to 15% of total sales. If they fail in North America, the.
- [40:21]
Melissa Lee
Stock fails with tariffs, who knows?
- [40:22]
Peter Bookmark
Yeah, no, I wanted that China point. This has been a big push for them somewhere. They hope international as well. But China, you got to think that's hampered a lot.
- [40:30]
Melissa Lee
There are no buyers here aside from buyers of those Lulu stretchy men's shirts.
- [40:34]
Tim Seymour
My issue with Lulu is not necessarily the competitive and the loss of, of their, their it factor. I mean, I just think it's discretionary spend is, is, is going to hit a wall. I thought it was discretionary spend was going to hit a wall. A year ago. I was short Lulu for a while, short Nike for a while. I ultimately, in Lulu's case, I think I sold it the day, the day before it dropped in a massive way. Give Randy a ton of credit. He's not been short this stock for a couple of weeks. I mean, he's, he's had this call for probably a year and a half. Good for him.
- [41:03]
Melissa Lee
Coming up, earnings season up and running. And it's not just Netflix. On deck tomorrow, how Dr. Horton will give us a pulse check on the economy. More fast money. And to welcome back to Fast Money, a couple of key earnings reports before the bell tomorrow could give us more clues about the direction of the economy. So let's start with Dr. Horton. Shares of the homebuilder down 16% this year as high mortgage rates keep pressure on the housing market. Of course it's going to be spring selling season soon, so any commentary on that should be very interesting. Tim?
- [41:31]
Tim Seymour
Well, we got the NAH B survey this morning. The numbers weren't great. And really what we're seeing in terms of tariffs already is an impact on home prices. It's probably been almost a 7% hit in terms of the average home price, which somewhere over $10,000 sentiment right now, both with rate uncertainty and obviously just the economy. I think it's going to be in the guide, it's not going to be in the numbers they tell you.
- [41:55]
Steve Grasso
And nothing's going to happen, notably for this whole sector until mortgage rates Come down. DHA actually builds spec homes. So when there's nothing on the market they have an advantage. But when there are high rates and no one's buying, they have a disadvantage because they're outlaying too much money. So I don't think anything significant is going to happen within this marketplace until mortgage rates come down. Maybe you go to a Home Depot or a Lowe's, but to ask for the homebuilders to really do the heavy lifting with mortgage rates where they're at is probably not.
- [42:24]
Melissa Lee
And they buy down mortgages so the incentives could be high. American Express also out with results tomorrow expected to give a read on the higher end consumer spending power. The stock is down more than 20% from its all time high made back in January. Guy, what are you thinking for this valuation cushion?
- [42:39]
Guy Adami
Number one? I mean it's not expensive at these levels. But you have concerns, I think in, in terms of maybe delinquencies and you know, on the rise clearly. And America's American Express does not win to that. You know, obviously they take credit risk. I don't think the credit picture is getting better anytime soon. So I'm hard pressed to believe they're going to say something good enough to get the stock back on its horse.
- [42:59]
Peter Bookmark
So given how high in the income structure that that customer is in American Express, those Louis Vuitton numbers were just so bad. Now I know some of it, a lot of it was China, but a lot wasn't. The US wasn't great. That can't bode well for that consumer.
- [43:15]
Melissa Lee
So, you know, there's a pull forward as we saw in the retail sales numbers. A pull forward of spending in the first quarter.
- [43:22]
Peter Bookmark
No, I don't. For high end.
- [43:23]
Melissa Lee
For the higher end consumer.
- [43:25]
Peter Bookmark
Yeah.
- [43:25]
Melissa Lee
They're not hoarding goods or belt bags.
- [43:30]
Peter Bookmark
Certainly not hoarding spirits.
- [43:32]
Melissa Lee
Right?
- [43:33]
Peter Bookmark
For sure.
- [43:33]
Melissa Lee
Yeah. All right, up next, final trades. Time for the final trade. Let's go around the horn.
- [43:40]
Tim Seymour
Tim AT&T is defensive here, but it's really time to talk about Liz Goldstein. I mean, who's next?
- [43:46]
Peter Bookmark
I want to say hello to Liz Goldstein also.
- [43:48]
Tim Seymour
Yeah.
- [43:49]
Peter Bookmark
In addition, I've been swapping some interest rate risk for credit risk on the short side.
- [43:53]
Steve Grasso
So short hygiene outside of saying hello to Liz Goldstein.
- [43:56]
Tim Seymour
Yeah, you've been doing that.
- [43:58]
Steve Grasso
It's incredible. MP materials. That's where I'm staying. But remember, scale sell is been a winning position.
- [44:04]
Melissa Lee
Guy, you're going to say hi to Liz.
- [44:05]
Guy Adami
Hello, Lizzie. In case you're wondering, it's ASA Lawson that sort of teed you up. Hope you're well. Thanks for watching.
- [44:11]
Melissa Lee
Definitely.
- [44:12]
Guy Adami
GDX Melissa Lee I think it continues to go higher.
- [44:15]
Melissa Lee
Thank you Liz thank you all for watching Fast Money all opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their 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 Fast Money participants consider reliable, but neither CNBC nor its affiliates andor subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer Introducing CNBC, the new streaming platform from the number one source in business news.
- [45:04]
Randy Connick
Watch live or on demand.
- [45:06]
Melissa Lee
Access any market, anytime, anywhere.
- [45:09]
Tim Seymour
Start Streaming.
- [45:10]
Melissa Lee
Go to cnbc.com stream now.