← CNBC's "Fast Money"
CNBC's "Fast Money"
Stocks Rally On Optimism For End Of Iran War… And Apple’s Mag-7 Outperformance 3/31/26
00:43:33
Stocks surge and oil falls on reports the Iran War could be nearing an end. The sectors and stocks seeing the biggest jumps, and how Nike is faring after reporting results. Plus the latest semi investment from Nvidia, all the M&A action in the pharma space, and the massive layoff announcement from Oracle as the software maker ramps up its AI spend. Fast Money Disclaimer
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- [01:01]
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. Stock markets spiking midday and Brent crude taking a steep leg lower on hopes that an end to the Iran war could come soon. Did investors get ahead of themselves or have we put in the bottom for equities? And Nike shares dropping even as the athletic wear giant scores their earnings Beat the details on those numbers. And what's next on the agenda? CEO Elliot Hill plus Nvidia's latest $2 billion investment. Oracle plans another massive round of layoffs in Tim Spizer. Karen Spicer too high. Yes. What is driving the gains? How much more upside is left in the health care trade? I'm Melissa Lee, come to you live from Studio B at the nasdaq. On the desk tonight, Tim Seymour, Karen Feiderman, Dan Nathan and Guy Adami. And of course, we start off with that midday surge that sent stocks to their best day since last May. The S&P 500 climbing nearly 3% after Axios, a potential breakthrough in the war with Iran. The Dow added more than 1100 points while the Nasdaq jumped almost 4%. Meanwhile, Brent crude fell more than 3%, though still settled above the $100 mark. Let's get to Eamon Javors who's got the very latest on all of this. Eamon.
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Eamon Javers
Hey there, Melissa. China and Pakistan are floating a new proposal to end the war in Iran. Essentially a cease fire in exchange for safe passage in the Strait of Hormuz. President Trump has said publicly that negotiations are ongoing and if Iran doesn't cut a deal that he likes by April 6, he's going to bomb civilian infrastructure such as power plants. Now, the president took to social media this morning to hurl some criticism at American allies who he argues have been insufficiently supportive of the United States. He wrote that France has been very unhelpful and he warned that the USA will remember. And he wrote of the UK I have a suggestion for you. Number one, buy from the U.S. we have plenty. And number two, build up some delayed courage, go to the Strait and just take it. You'll have to start to learn fighting for yourself. The USA won't be there for you anymore, just like you weren't there for us. But what many countries appear to be doing, Melissa, is cutting side deals to pay Iran for safe passage of their ships, creating a significant new revenue stream for the Islamic Republic that did not exist before this war. Now, we are expecting to see the president here momentarily at the White House on camera so if he makes any additional news there, we'll bring that to you right away.
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Melissa Lee
And I know we discussed this on the four o', clock, Eamon, but in terms of the report that actually sent the markets moving in the 12 o' clock hour, that is a report that had information on it that you had said existed out there before. So, I mean, this was just this notion that there could be an end to the war even without regaining control of the Strait.
- [03:42]
Eamon Javers
Yeah, I mean, the Iranians have said, you know, we have terms for the end of the war. We will agree to an end of the war if our terms are agreed to. They've said that for, you know, well over a week now. You know, but their terms include things that Washington presumably won't agree with, like permanent control and sovereignty over the Strait of Hormuz and reparations and payments from the United States for damage that American missiles have done in Iran. Those are the kinds of things that make it, you know, sort of a no go deal proposal. So for the Iranians to say, you know, yes, there are conditions under which we would end the war is one thing, but it really depends on what those conditions are and if they're realistic for the US Administration to agree to them.
- [04:23]
Melissa Lee
Right, Eamon. Thanks. Amyn Jabbers in Washington. Even with today's pop markets still Sharply lower in Q1, the S& P, Dow, Nasdaq all seeing their worst quarter in four years, all three, in fact, are only back to where they were last week. Thursday to be Exact. So how do you make sense of today's headlines? Does that euphoria last? What are we looking at here? What do you think?
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Tim Seymour
Well, I thought, I thought the VIX was impressive and I think we've talked a lot about the quarter end dynamics that have also been in the VIX and the options expiry that we had recently. That also I just, it's hard for me in a world where peace is still not really defined what it is the US or how do we view Trump's approach to just saying, you know what, I'm tired of this and it may be time just to kind of move on. I mean that, that's a dynamic that I think is pretty clear. Whatever has been negotiated and I'll lead politics to other places. I just think for the markets what was most profound to me was for example, looking at banks. Banks rallied to me on a relative basis. On an update, you know, Citibank's five and a half percent move back above the 50. This was really powerful. This is some sense that if you can actually begin to get some kind of a settlement that, that the cyclicality of the market is, is actually got a shot here. And I think as we go into earnings season, it really is very important because I think we've all speculated that it's going to be very difficult for companies not to take advantage of this and downgrade.
- [05:49]
Melissa Lee
Right. And to that point, I mean the rally that we saw in semiconductors, very strong, about 6% on the SMH.
- [05:55]
Karen Finerman
Well, it was interesting that, you know, the move in oil itself, the underlying which you'd think would be as good a proxy as, as the move in the market would be. And I'm sort of leaning towards the oil is telling the truth of the situation. I think a lot of what happened here oversold for sure. But I got to think a lot of this is window dressing. We are at the end of a really difficult quarter. And so that was. That'll help a little bit. But I don't know that that's something that has follow through. Some things I do believe are just oversold. Could they go down more? Of course, but. So there was a little bit of a bounce there. Some things bounced like you know, three sigma moves that are, you know, I don't know if that's something that can, can survive longer term, but I don't. It's nice. I'm always long. So a day like today is certainly better than 20 of the last days. But I don't know that the situation has really changed.
- [06:53]
Melissa Lee
Yeah, I agree with you on the oil movement. It was surprising that it's still solidly above 100. I mean, the collapse. There wasn't a collapse in oil that you would think you would see if you really believe that there was an end to the war in sight and you didn't see the reaction bonds as sharply that you would think you would see if you thought the end to the war was in sight.
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Guy Adami
Yeah, I agree with Karen. I mean, stocks up, bonds up, oil up, I mean, just gold up. It just seemed like one of those days where it really did feel like month end, quarter end, that sort of thing. I mean, I think that got going. I mean, we opened up on news that didn't seem particularly new and then obviously it got pushed midday or so. You know, the, the semi move is interesting. I mean, the semis have shown this great relative outperformance. But I think a lot of things that were going on prior to the war are probably still intact. If anything, they're probably a little bit worse. And you know, a cease fire doesn't mean a whole heck of a lot unless you have the Israelis participating, unless you have some sort of guarantees that it's going to go a bit of a distance here because you do need to get some things back in equilibrium as it relates to, you know, the Strait of Hormuz. I can't imagine it's just going to reopen tomorrow and everything's going to be, you know, flowing again, that sort of thing. And then the other thing is, let's just call what it is. I mean, Amen said this. You know, the president is threatening war crimes. I mean, you basically cannot target civilian infrastructure like power plants and the like. So how do you trust an actor like this? And this is coming from one of the most untrusted, you know, like, worthy, you know, countries that exist in the world, you know. So to me, I just feel like this was a snapback a little bit. I think probably if you get a follow through tomorrow morning and there's no new news, I think you faded. I think you fade the semis. I think you fade the S&P 500 right here and the NASDAQ in particular. A lot of technical damage has been done over the last few weeks.
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Dan Nathan
People learn lessons. I mean, it was last April we were just talking about a few minutes ago on your other fine show C
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Melissa Lee
bot, I believe, Closing bell over time.
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Dan Nathan
I like that about the V bottom in April and how I think people have the memory that I'm not going to get caught again. This Time trying to fade it because they saw how powerful can be. I think it is a little bit different in terms of some of the setups and some of the valuations around what we're seeing now. But I think in this environment people want to get left behind. I still point to the same things that we're pointing to. A Vix at 25 I think is problematic. Oil did not collapse. It's still a triple digit commodity at least for today. We'll see what happens tomorrow. And a 4% move for the NASDAQ is great. Over the course of a week or seven, eight trading days, over the course of four hours. I don't think that's all that healthy.
- [09:18]
Melissa Lee
And I have a question in terms of getting back where we were. Yes, that is my job.
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Tim Seymour
In fact,
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Melissa Lee
let's, let's say, let's say the war is done and things go, go through the straits. Still, in theory, there should be a higher risk premium embedded in the price of oil from now for the foreseeable future. I mean the insurance costs will be much higher and just the threat of war is that much more real. And so won't we still see higher for longer oil prices which will of course impact the price of WTI too?
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Karen Finerman
Yeah, I think so. Plus you would also want to see surplus building. Right?
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Melissa Lee
Right.
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Karen Finerman
So aside from whatever the, you know, what did we used to have one hundred and something teens million dollar million barrels per day demand worldwide. Maybe it gets a little bit higher than that. Maybe there is some destruction of those that can use oil right now because things have been destroyed. But I would think that there would be a persistent, you know, demand for oil above where it had been.
- [10:21]
Tim Seymour
There's no question. And I think if you also look at what's gone on in the AG space and what we've seen in terms of spikes in palm oil and rice in soy. I mean these are dynamics and we've talked a lot about the AG impact. So it's, it's, there's no question. And I would also go back to, I say, I've said this a few times and it's, it's even more clear now as you ask that question, which is that $65 oil is certainly not something we're going Back to. And $65 oil was a boom to the US consumer and in hindsight it looks a lot better and a lot clearer than it did at the time. And I think that's something we need to think about as we evaluate where we are. Even if we settle tomorrow for more
- [11:03]
Melissa Lee
on the market rally and what to expect in Q2. Let's bring in Wall street bull Venu Krishna Barclays, head of U.S. equity strategy and Global Equity Linked Strategies. Venu, great to have you with us. What did you make of, of the action today?
- [11:15]
Venu Krishna
It all depends on what you think about the war situation and clearly today the news was good, but I recognize that it all depends on the next tweet and what's going to happen. But clearly, I mean the single biggest overhang in the market is to for how long this crisis lasts and then, and then what is the sort of when you come out of it, what are the implications. So I think broadly speaking our view is that in the history of geopolitical risks over the last 10, 15 years has been that most of it has been generally contained geographically and it's been, it's normalized relatively soon. So I think you can argue that the market has been somewhat pampered to follow that view. And already the Middle east crisis is broader in terms of Saudi Arabia, you know, Oman, Bahrain, Kuwait, the list goes on. But, but I think the view is that there will be a resolution and that's our base case and that's why we have approached it from a scenario analysis standpoint. So things will go wrong. We have a downside case of 5,900 for the S and P, but we raised our price target and we raised our earnings estimate last week and that's why we're getting all the attention.
- [12:29]
Melissa Lee
So let's just say it ends, let's say it's the best case scenario, it ends tomorrow, the straight is open, there's no tolls and nothing. Everything goes goes back to the way it was, except that maybe oil prices remain high for some. Is that the scenario that gets you to your new higher EPS and price target estimates on the S&P 500 at
- [12:49]
Venu Krishna
the core of it, I think the view is that the US economy is a lot more immune to this crisis compared to the rest of the world. Asia is the most exposed, so is Europe to a great extent. But US as a net energy exporter is in pretty good shape.
- [13:07]
Melissa Lee
But if 20% of S& P earnings come from overseas, can we really be immune if those earnings are in question in any way because of higher oil prices because those economies are much more impacted?
- [13:21]
Venu Krishna
Sure. The question is how high is the oil level? You're talking about 85 to 100. We think the US economy can absorb it will make some impact in consumption and in fact in getting to our 7650 we do assume that consumption declines and we do assume that global economic growth takes a hit. But we also assume that the US Economy is going to be relatively more resilient. And that's how we get to those numbers. Part of the reason is one of the most interesting facts we see right now is for the first time in ages, at this point in time, normally the earnings revisions go down about 150 basis points. Right now it's up 400 basis points. That's a 550 basis point Delta in good part, driven by the part of the market which is derated the fastest, which is technology. Right, yeah.
- [14:06]
Tim Seymour
Well, I'm sorry to interrupt. And so I get that when we look at mega cap tech, it looks very attractive. And again, if you, if you look at NASDAQ 100 relative to S and P, you know that discount or trading down to a relative discount relative to where we've been. But help for the folks that haven't read your report, help people understand how you're upgrading EPS here. In other words, how do you get to a scenario where things look rosier today than they did, you know, quote unquote, yesterday?
- [14:34]
Venu Krishna
Yeah, I think how it looks rosier is first on the earnings front.
- [14:37]
Tim Seymour
Yeah.
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Venu Krishna
So if you look at the earnings momentum 3Q to 4Q, it is tremendous. So we were expecting S and P earnings to be 11% at the beginning. For last year, we ended at almost 14 and a half percent. And right now for this year we're expecting 15 to 16% earnings growth, which is where even consensus is. In fact, for the first time in five years, we were actually below consensus. And then by the time we upgraded in numbers, consensus ran ahead of us. Right. So I think it is that earnings momentum, it's an important question where that's coming from. It is still predominantly coming from broader tech. But when you think about what broader tech means, that is 45% of the market. Because we do include names like Amazon, Meta and Google in tech, not in consumer discretionary or not in communication. Communication services. So if you define broadly what tech is, software is under trouble. But even software earnings are up, revisions are up, but they have deviated because of the disruption risk. So I think that's one. On the other hand, what's interesting is to get to 7650, we've actually reduced our multiple assumptions compared to the beginning of the year to recognize that we are in a very different macro environment. So we take a sum of the parts approach where we break the market into tech and rest of S and P tech itself, we break down into big tech, rest of tech and rest of S and P. We've taken down the multiples for big tech and tech and we've kept reasonably close to fair value estimate for the rest of S and P. And still when you do that you get to 7650. So but the base case view depends on this Middle east crisis getting resolved over the next two months. If it doesn't, we have a downside case of 5900 and clearly the downside is a lot higher than an upside case of 8200, for example. Right. So the risk reward is tilted. We recognize that the left tail is fatter than before. But there is no doubt that the US economy is its upswing and it is all dependent on the tech cycle we are in today. And that's a valuation note we wrote today. Also looking at in a cape as one of the metrics, for example, and that is the biggest driver in the U.S. economy is transformative. And we believe that. And the rating is tremendous. I mean big tech as a group was trading at 31 times forward earnings. We ended last year at 28 times. Yesterday we were at 22 times. That is approaching the rock bottom for that. We would be a buyer of that any day as long as the rate of earnings growth far exceeds the rate at which the multiple is compressing. You saw that last year they returned 23% S&P returned 18%, 30 plus percent earnings growth, 10% multiple compression, you got double digit earnings growth. We think that repeats itself but to a scaled out version.
- [17:17]
Melissa Lee
Venu, great to see you. Thank you very much. Venu Krishna. What do you think, Karen? Makes sense.
- [17:22]
Karen Finerman
It does, it does. I like the way you laid it out. You know, it's hard to not be swayed by the noise of what's happening now when I try to do that. And I'm still pretty mag7 heavy.
- [17:33]
Dan Nathan
You co hosted the Squawk box this morning?
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Melissa Lee
Yes, I did.
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Dan Nathan
And why were you there? In replacement of Becky and Andrew.
- [17:41]
Melissa Lee
Becky Quick, who is where In Omaha with Warren Buffett.
- [17:44]
Dan Nathan
Of course she was. And did you watch the interview? I know you did. And he said a 5% sell off that we're currently in the midst of is nothing. And he's waiting for more. And the $380 billion or so on the balance sheet now a trillion dollar market cap companies suggest that's exactly what he's doing. So listen, I understand the optimism, enthusiasm, he made great points. But you know that interview, I think if you didn't See it, you should watch and hear what Warren had to say.
- [18:08]
Guy Adami
You know, math, that was great, right. You know, the thing is, is that we do see signs of decelerating earnings, right? So 14 and a half, it kind of, you know, beat expectations in 2025. I think that, you know, there's no way that you see an acceleration from the period that we've had. Especially you just to ask the question earlier, you know, it's not like you're going to flip the switch and things are going to get back going. And I think it's just also important to remember we had a big GDP miss, we had a really disappointing labor report, you know, the nonfarm payrolls last month. So I don't get a sense that things were actually, you know, accelerating the economy. And the other thing is, yeah, earlier this year we heard about 2026 CAPEX for the hyperscalers. But man, if these stocks continue to go down, if we continue to see just some of this squishy action in and around tech, I just can't, I can't imagine they live up to that. And we know that that's been a good part of GDP growth for the last two years.
- [18:56]
Melissa Lee
Meantime, we do want to get to Nike. Those shares running lower. Sportswear giant dropping despite a top and bottom line beat. China revenues and gross margin coming in ahead of Wall street expectations. But North America revenues fell short. The stock was up more than 3% in today's regular session. It is down at after hours session lows down 4.2%. The conference call is underway right now. It's 18 minutes in. But what was your take on this quarter?
- [19:22]
Karen Finerman
Well I think with Nike they don't, I don't know if they reported guidance yet which is really. Yeah, that doesn't happen for the call. So you know, it could be anything. In the past couple of years it's been bad but I don't know, there was a couple of green shoots. They're not a terrible quarter but I think I got a lot of wood to chop to get back remotely close where they were.
- [19:44]
Dan Nathan
The growth, you know, the growth is, the numbers were not bad. China I think was great but it probably better than people expected. But I think it comes down to they're not showing, they're not gaining on the competition. This quarter just suggests to me the competition is still a problem and that margins are still seemingly under pressure. It's seemingly got their inventories in line, good for them. But you know, the margin pressures are real and the valuation might still be a little bit too rich. And listen, I think we're, I think we're trading at 10 year lows right now in this, in the after hours which is significant.
- [20:14]
Melissa Lee
The optimism on the street about this name and about Elliot Hill has been increasing, yet here we are.
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Tim Seymour
I think that's right and I was pretty bullish and I think I remain despite this, these numbers and North America is, is a huge disappointment. I mean it was up, it was up 8%, 9% in last quarter. The expectations were they were going to say they were starting to see inventory dynamics really turn around. I'm less focused on China here than their core business. So yeah, disappointing. But I do think that this is a story that largely has been de risked. Let's wait and see where she trades tomorrow and the call she.
- [20:54]
Melissa Lee
Yep, she and we'll keep an eye on how her, she trades in the after hours session. We'll also bring you the headlines from the conference call as we have them. Again, we're about 20 minutes into the conference call. Hopefully we'll get some guidance too. Plus the details out of Nvidia's latest investment. What the CEO had to say about the new stake in Marvell and the growing AI ecosystem it is building for itself. Do not go anywhere. Fast money's back in two.
- [21:23]
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- [22:22]
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- [22:51]
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- [23:13]
Tim Seymour
Sometimes AT&T business Wireless connecting changes everything. Keep it down.
- [23:20]
Karen Finerman
Go to Tim.
- [23:22]
Melissa Lee
Maybe Tim was eating a three musket Tears right stuck in his teeth. Anyway, welcome back to Fast Money. Nvidia inking a $2 billion deal with Marvell for the next stage of its custom AI chip buildout. Marvell shares jumping nearly 13% their second best day of the year. Christina Parts Navalis here on set with all the details.
- [23:38]
Christina Parts Navalis
Christina well, the deal really centers on Nvidia's platform that lets custom chips plug into its infrastructure system. Marvell designs those custom AI chips for major tech companies like Amazon. They also compete with Nvidia's GPUs. But this partnership kind of flips that dynamic, giving Nvidia a shot at a much bigger market because it's opening it up to competitors, something that actually was news last May and then also giving Marvell a capital infusion and positioning Marvell as a core infrastructure peer. Marvell is just the latest investment though, for the chip giant. This month alone, Nvidia has committed $2 billion each to nebulous momentum coherent. Before that, 2 billion into synopsis, a billion into Nokia, stakes in XAI OpenAI Intel. The money just keeps going out. So why the spending spread free? Well, Nvidia isn't just selling chips anymore. The CEO often reminds investors at every event that it's not a chip company anymore, but rather an AI infrastructure firm really trying to own the entire factory or ecosystem. Locking in the suppliers that build the optical networking, the custom silicon and the interconnects. Those companies become financially and strategically tied to Nvidia's ecosystem. The takeaway though is Nvidia is definitely spending aggressively to make sure the air build out runs through its ecosystem, no matter whose chips end up on their racks.
- [24:54]
Melissa Lee
A lot of these investments though are in exchange for revenue back, correct?
- [24:59]
Christina Parts Navalis
Not this case. Not with Marvel. Unless there's going to be more details inked out over the next little while. But this was just a $2, a $2 billion investment and the news about using Marvell's custom chips in Nvidia systems that actually came out last May. So that's not the newsy part for this.
- [25:15]
Melissa Lee
But piece, how do you think about, as an Nvidia shareholder, all the different stakes it has in other companies and the valuation of Nvidia itself?
- [25:23]
Karen Finerman
Well, they're generating so much money that they have plenty of money to do this. I never loved the idea of investing in your, you know, supplier or your customer. That seems to be the way it happens now. I do think that in video at this price, if I owned none, I would buy some here. I think it's, it's, you know, the sentiment around it is pretty bad and
- [25:48]
Dan Nathan
I don't think that it should be 165ish. If you go back to July of last year, that's where basically the floor has been a few times over the last effectively nine or ten months. So we held where we needed to hold. With that said, I mean it's still below the 200 day moving average which is now sloping lower for you technicians out there. And I get it, the optimism around quarter end and stuff. But I think we can all say that on what's been a decent tape until recently in video, since October, November has been an underperformer.
- [26:16]
Guy Adami
Yeah, I just say that, you know, this is either going to go really well or really poorly. And just again, we have a sense of history when you kind of create these sorts of ecosystems based on investment. Right. I don't know if you have the sort of deals, you have this sort of interlocking activity if you don't have the investment. And so when I think about, you know, Karen just said this, 90% of their revenues come from GPUs and I think the lock in is really important. But when they're doing these deals, let's say these custom silicon with Marvell and you're keeping it locked in, it is with their other core customers. Right. And then when you think about that 75, 76% gross margin, what I hear, what I see is that there's going to be pressure on the gross margin. So they have to kind of broaden out their appeal to a whole heck of a lot of folks that are, you know, going to be, you know, doing the custom. And the other thing is it's like they just announced this, you know, lower power, the Groq chip and everything like that. Well, they've invested in intel for CPUs and everything. It just seems very complicated and I think the slightest downturn and I just have to imagine that no one's going to be valuing in video on the, you know, the valuation of their investments or the quality of their investments.
- [27:18]
Tim Seymour
But that's the point. And what they're doing is they're making a holding company. Holding companies trade at a discount some of the parts. It also sounds like they're vertically integrated and this sounds like a big industrial company from the 1900s. I know that's not what's going on here, but they're trying to have footprints all over the growth of what was at one point the Industrial Revolution. So, you know, I get it. I don't think it's good for valuation.
- [27:41]
Melissa Lee
Thank you, Christina. Christine, of course. Neveless Coming up, we're keeping an eye on shares of Nike after hours of the conference call underway where the company has to say about guidance plus the results moving shares of RH as well. You're watching Fast Money live from NASDAQ market site in Times Square. Back right after this.
- [28:06]
Jennifer
Oh, could this vintage store be any cuter?
- [28:09]
Melissa Lee
Right?
- [28:10]
Karen Finerman
And the best part?
- [28:11]
Melissa Lee
They accept Discover. Except Discover in a little place like this? I don't think so.
- [28:16]
Jennifer
Jennifer.
- [28:16]
Melissa Lee
Oh yeah, huh? Discover's accepted where I like to shop. Come on, baby, get with the times.
- [28:22]
Narrator/Disclaimer Voice
Right. So we shouldn't get the parachute pants.
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Karen Finerman
These are making a comeback, I think.
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- [28:36]
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Melissa Lee
Welcome back to Fast Money. Stocks surging to wrap up the first quarter in hopes of a breakthrough in the Iran war, the Dow climbing more than 1100 points, the S&P jumping nearly 3%, its best day since May. And the Nasdaq leading the gains up nearly 4%. Oil meantime, settling lower but still above $101 a barrel. Despite today's rally. Stocks closing out a rough quarter. All three indices selling off. The Dow falling three and a half percent. The S&P nearly 5%. The Nasdaq dropping more than 7%. Take a look at shares of matter jumping more than 6% its best day since January. The social giant beginning to test premium subscriptions on its platforms, giving users more functions on Instagram, Facebook and WhatsApp. The company looking to add new revenue streams to offset AI costs. And a condiment combination in the grocery aisle. Yep. Spice giant McCormick announcing it will buy Unilever's food business, which includes brands like Hellman's mayonnaise. McCormick will pay a combination of cash and equity in a deal that values a portfolio at nearly $45 billion. And another after hours mover, shares of RH. What a drop here after missing estimates on the top of the bottom line. The company also lowering Q1 for full year revenue growth guidance. That Stock is down 16.3% which is off the after hour session lows. Actually.
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Karen Finerman
Yeah, that, I mean this is sort of a disaster. I mean the quarter was really terrible. The guidance was also really terrible, understandably. Maybe there's some conservatism in there. Why not? But also it seems unfortunate, the timing of their growth in Europe, which they spent a ton of money and I'm sure it looks fantastic. Europe is clearly under some stress right now. So, you know, over time that'll work out. But this, it'll be interesting to hear the conference call. You know, Friedman's a character. He's very colorful.
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Dan Nathan
What's okay, this is what I find. Inventories are down almost 20% year over year against sales growth of maybe up 4%. So what it appears to be given the margin compression is they just basically put everything out for sale and got rid of their inventories, which I think think given that we're in an eight year low and valuation is actually somewhat reasonable, you might be actually looking at a pretty short term bottom here in restoration or whatever the RH core.
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Melissa Lee
All right, coming up, oil pulling back. Crude and Brent both taking a leg lower today on the latest developments out of the Middle east where the energy trade is heading next and what we can expect in the oil fields. And fast money returns. Welcome back to FAST money. Crude oil prices retreating from their highs following reports that U.S. and Iranian leadership have both signaled openness to ending the war. But even with today's pullback, Brent and WTI each closing out March firmly above.00 a barrel. WTI up more than 50% putting its best month since May 2020, while Brent surged over 60% for its best month going back to its inception in 1988. For more and more prices go from here, Lipo Lipow Oil Associates President Andy Lipow joins us now. Andy, great to see you.
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Andy Lipow
Thanks for having me.
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Melissa Lee
Melissa, let's say the war ends tomorrow. Where do oil prices go? Do they go back to 65?
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Andy Lipow
Well, I think if the conflict ended tomorrow, you'd see it immediate drop in oil prices of 10 to $15 a barrel. But I don't think we're going back to Pre conflict levels of $65 a barrel because the market is going to be pricing in greater geopolitical risk throughout the Middle East. If Iran was able to close the Strait of Hormuz once, they probably can do it again. But I would say that the energy shock of today could actually lead to a deep economic downturn in the future and that would cause demand destruction, pressuring oil prices perhaps below $65 a barrel. We've seen that in the past.
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Tim Seymour
Andy, talk about energy independence and where you think there was going to be real progress in the back of this timelines and obviously in what part of the call it renewables alternatives. Where is this going to happen?
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Andy Lipow
Well, if we think about energy independence in the US it really depends on where you are since we continue to import crude oil and refined products to the east and west coast while we're exporting crude and products off the Gulf Coast. I think now with the events in the Middle east, people are going to be looking at all sorts of alternatives, you know, including nuclear power, coal, wind, solar for electrical generation. But for transportation fuels, there's going to be renewed interest in ethanol, renewable diesel and biodiesel. And we saw on Friday the administration unveil its renewable fuel standard for 2026 which was an all time record demand for biofuels. So you can kind of see biofuels coming into the solution of reducing our dependence on fossil fuels or being part of the all of the above approach?
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Dan Nathan
Andy, the US Economy is pretty resilient. Can it adapt to a prolonged period of time of $95 plus oil or does at some point just have a huge negative impact on the economy?
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Andy Lipow
Well, I think eventually it would have a negative impact on the economy because our economy is tied to the rest of the world. And when I do look at what this energy shock is doing to economies in Asia, whether it's fuel rationing or price caps or other measures to reduce energy throughout that region, I think that eventually impacts on the U.S. given our trade with these various different geographic regions in the world, whether it's Southeast Asia or Africa or South America. And what happens there, I think ultimately impacts on the US you were talking
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Melissa Lee
before about a higher risk premium that would be embedded per barrel of oil. Andy, how should we think about how long that premium lasts? When it was sort of a, you know, the unthinkable happen here, the closure of the Strait of Hormuz. And so does that make that premium stickier and longer lasting?
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Andy Lipow
I think it does. I think it couldn't stick around for several years. In fact, you know, if Iran were to succeed and become the toll taker for vessels transiting through the Strait of Hormuz, that of course is already going to increase costs and make people, you know, look for other ways around that region. It also increases freight costs and ultimately the price of crude oil and refined products that's delivered around the world. So I don't think the geopolitical risk is going away anytime soon, especially since Iraq, Iran, excuse me, attacked its neighbors. You know, there's a lot of bad feelings around that's going to take years, if not decades to overcome.
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Melissa Lee
Wow. Andy, thanks for joining us. Appreciate it, Andy, thanks for having me. Lipow Oil Associates. I mean, that's several years for an elevated price per barrel. That's a long time.
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Tim Seymour
Well, again, the futures curve, the term structure has changed a little bit over the last month and we'll see. I think we have to settle into higher oil prices. I think we also, if you look at the energy equities, I thought they performed a lot better today than they might have. And it goes back to what we've been saying. I just think the view is that that prices stay higher for longer. There are those that are really well positioned in different parts of either the refining space, different parts of the product space. And I think don't just assume that these are places you should be running away from.
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Guy Adami
Yeah. You know, if you're looking at the consumer impact, like let's just look at California. This is the fourth largest economy in the world. Right. You have us, you have China, you have Germany, then you have California. Right. So we talk about the price of gas at the pump. I think it was like 480. This was like a month ago or something. It's up a dollar. Right. But diesel I think is really important too, because if you are, you know, charging, you know, it goes from five bucks to seven and a half bucks for a gallon of diesel, which is what has happened over the last month or so. I mean, some of that increased costs is going to be passed through to consumers. So it's not just what you're paying for your own gas at the, you know, so like, to me, I just think that there's a really neat way you can say, well, this is like all done. But like you got to think about this also is like how many of our objectives have we actually achieved over there, Right? So the notion that we're just going to have a cease fire and we're not going to actually get some resolution on those objectives. So again, no one's wishing this. It's just like the unrealistic aspect of seeing this not even on Twitter, on some other network where there's a lot of other people, you know, a lot of other people aren't even looking at it just seems like a kind of goofy way to run a war.
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Dan Nathan
Energy stocks should have been down a lot more today as should have the commodity if there is any veracity to this. And so I take, I think you've got to be encouraged by the relative performance of energy stocks today.
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Melissa Lee
Coming up, two major takeout deals driving the action in biotech today. We are tackling the latest multibillion dollar buys from Lilly and Biogen and where the sector is headed from here. More fast money right after this. Welcome back to Fast money. Let's get another check on Nike taking another leg lower now down by 8.6% after our session lows. We are getting some guidance from the call cnbc.com retail reporter Gabrielle Fonrouge has got these headlines. Gabby.
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Jennifer
Yeah. So Nike's conference call is underway and the company just reported weak guidance for the fiscal fourth quarter. Finance chief Matt Friend said he expects sales to be down between 2% and 4% while analysts had expected sales to be up 1.9%. That's going to include some modest growth in North America, but that's going to be offset by an expected 20% decline in China. We also got some color for the duration of the calendar year, which is a bit harder to compare to expectations. Nike expects sales to be down in the low single digits through the end of the year with again gains in North America offset by declines in China. And the first quarter of fiscal 2027 is expected to be the final quarter of higher year over year tariffs with gross margin expansion expected for the following quarter. Now for in caution, this guidance is where Things stand with the macro as of today. Today he warned more volatility could come due to the war in the Middle east, rising oil prices, higher input cost and shifting consumer behavior.
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Melissa Lee
Melissa was there any nuance, Gabby, in the commentary about the consumer, whether it be the consumer in North America or the consumer in China as the war has progressed?
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Jennifer
You know, we haven't heard that yet but we do know that this could potentially lead to higher prices. Shoes are made with lots of plastic. You've already had a lot of slowdown on the consumer overall. So this is something that they could weigh but they didn't really share with any sort of specific consumer commentary. Neither China or North America.
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Melissa Lee
All right, Gabby, Thanks Gabrielle. Fon Rouge I guess again Nike shares down by eight and a half percent at this point. Remember China's decline in the quarter that they just reported was down 7%. The prior quarter was down I think was like 17% or something like that. So down 20 is a departure and then North America still is not.
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Karen Finerman
You know, I mean there's nothing to like here. This is a lot of, this is, I feel like there's a kitchen sink once with some, I don't know, like
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Melissa Lee
after quarters, after the new CEO is
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Karen Finerman
come on and there's a new kitchen sink and this is, you know, says we'll return to providing long term guidance this fall. They should be out of the guidance business entirely. I mean, you know, this, I don't think he's doing himself any favors but this is, yeah, not good.
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Tim Seymour
And you're getting maybe a little look into just you know, the guide on what's going on Middle east wise and then the impact, impact and with the impact on demand and that's, that's not good for more broadly what people are looking at.
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Melissa Lee
Right. I mean the commentary that Gabby had mentioned about the input costs going higher, pressuring margins, I mean we're going to hear that repeatedly across many different sectors.
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Dan Nathan
Margin compression, competition in the spread means a lot of things working against them. The lack of growth. This is a, I think this 48 and a half is a 12 or 13 year low in the stock and some point you're going to look at it and say okay, just valuation alone and the brand suggest. But I don't think it's, I still don't think it's yet.
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Tim Seymour
Well the brand is, the brand is top of the shelf I think but the valuation is not good.
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Melissa Lee
I think after all these quarters of, and years maybe of lack of having the newest greatest thing that there's not any Sort of brand equity damage in the mind of the newer consumers. We all grew up with Nike as being the coolest shoe out there. But there's a whole other generation that do not think that, well, that's fair.
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Tim Seymour
I mean their whole running, the strategy in running shoes, it seems to be working. The innovation seems to be back. But again the EPS story and how this translates into evaluation, this is right now like north of 50 times and I don't know what this guide tells you about the coming quarter.
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Guy Adami
I think what Mel says, you got to get back to basics. This company has like 25,000 SKUs globally. Just think about that. That's across sizes. Go to their website and you look at this stuff and you say to yourself, how do you appeal, you know, to brands all over the world? We have 25,000 SKUs. But if you're having brand degradation in some of these places, you know, like China, the Middle east or whatever, like I get back to basics here, man. Like they have some great, great brand loyalty to your point, but it just seems they're trying to be, you know, everything to all things.
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Karen Finerman
I think with this, this wholesale retail problem, what they've had is really, it's persistent. Yeah, the wholesale, ultimately the gross margins aren't as good, but the operating margins are better. I think they got to try to change the mix more.
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Melissa Lee
And by the way, this break below 50, I mean Katie Stockton was here yesterday, Katie of Fair Lead strategies and said 50 had been support for a very long time. But yet here we are at 48.
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Dan Nathan
We discussed it last year, the Nike.
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Melissa Lee
The Nike, yep.
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Dan Nathan
It's, it's, yeah, breaking now. You need a big volume. Maybe you'll get that three, four time volume day where you flush whoever's left in it out. And maybe there's some capitulation but I don't think you've seen it yet.
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Melissa Lee
Down eight and a half percent right now. Coming up, more wheeling and dealing at the farm in the pharma space. The details on two big deals. That's next. More fast money into. Welcome back to Fast Money. Pfizer rising a percent to hit its highest levels going back to November 2024. Today's move bringing the pharma stocks year to date gains to almost 13%. Biotech stocks also surging with the SBI up the 7 and a half percent for its best day going back to 2022. So of course Pfizer is Karen and Tim's Pfizer. So they both are rejoicing over this revival.
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Tim Seymour
Shares I've been Adding to the position and I've been adding to it because we've been continuing to get pretty decent data. And this, you know, this Lyme disease data they had this morning, it's not really got reason to go buy the stock pad sav and some of their oncology. I think the impact and the size of these pipelines are pretty, pretty interesting. A 6% dividend yield is not off of powerful and a chart that really, I mean frankly it's, it's solidly put in a base. For a long time it's been slow and steady and I do think it's under owned and I think it's been de risked.
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Melissa Lee
We got two big biotech deals driving some action today. But the headlines sending buyers Lilly and Biogen in opposite directions. Angelica Peebles joins us with the details here. Angelica.
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Angelica Peebles
Hey, Melissa. Well, these two deals have very different strategies behind them. So you have Lilly diversing its, diversifying its pipeline. And then you have Biogen which is trying to fill some revenue holes. So let's start with Lilly, right? This is a company that is spending up to $7.8 billion to buy Sentessa and its pipeline of experimental drugs for sleep disorders. So this company is working on a new class of drugs that could transform the treatment for narcolepsy and other sleep conditions that cause drowsiness. And I talked exclusively with Lilly CEO Dave Ricks today who said that this new class called Orexin agonist, could lead to a multitude of uses similar to what we see with GLP1s. Now, Centessa's most advanced drug is about to enter phase three. So it will be at least a few years before this deal pays off. And Lilly isn't in any rush. It can afford to take those risks. And then you have Biogen, right. They're buying apellas Pharmaceuticals for $5.6 billion up front. And this gives Biogen two approved drugs, one for a rare kidney disease and another for an eye condition. And Biogen's been trying to find new drugs that can offset that shrinking multiple sclerosis business. Remember, Biogen bet big on Alzheimer's and that really hasn't worked out for them. So this is forcing them to go out and look to find new drugs that can help turn the company around. And this is one attempt to do that.
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Melissa Lee
Guys. All right, Angelica, thank you. Angelica Peebles. And of course Lilly. We were just talking about Lilly and another deal yesterday. I mean they have been on a string in terms of, in terms of bolstering their, their pipeline sweet spot for these deals.
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Dan Nathan
Six to $10 billion. So you look at Karen's structure, which is either the S in her stash or the G in her. I'm not sure, but that's something. And then you look at Viking. Big day. Ins Med, which is not going to get bought, but that had a big day. These biotech stocks, I know they're painful at times, but I think these are three names you want to still own.
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Karen Finerman
Well, I think the sleep drug thing is just interesting to me personally. I mean, good for Lilly, for they have, you know, they're making enough money, they can be buying whatever they want. That's sort of a nice position to be in. Good for them.
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Melissa Lee
Up next, final trades, Final trade time.
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Tim Seymour
Timbo, by the way, that was a good three muskie tears. I'm just going to say, you got health care. Xlv.
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Andy Lipow
New guy.
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Melissa Lee
Karen.
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Karen Finerman
Yeah, sticking with the health care. Glad you enjoyed it. Novo Nordisk.
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Guy Adami
Yeah, Nike might get that capitulation the guy's talking about. Looks like he'd be a buy guy.
- [47:08]
Dan Nathan
I thought I'd bought $100,000 bars for the team. It turns out I did not.
- [47:13]
Tim Seymour
It's too bad.
- [47:14]
Dan Nathan
Which is why you were relegated to a Milky.
- [47:17]
Melissa Lee
I got to get.
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Tim Seymour
Something wrong with what I had.
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Zepbound Advertisement
Letter B.
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Dan Nathan
Used to be Barnes, now it's Barrick.
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Melissa Lee
All right, thanks for watching. Fast Mad Money starts right now.
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Narrator/Disclaimer Voice
All opinions expressed by the Fast Money 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 Fast Money participants consider reliable, but neither CNBC nor its affiliates and or 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 Snoring, gasping during sleep?
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