B (2:40)

That's I, you rolled in the top. You rolled in the who. Tim Seymour is not even here. So let's start with that. And a stock that has been decidedly off Target. Target shares falling nearly 11% at the low of the day, closing down, call it only 6% now. They did beat second quarter sales and profit estimates. But here's the question, guys, that earnings even matter because Target unveiling its new CEO and it's a longtime insider, really. It's the current number two to the current CEO, Brian Cornell with shares more than cut in half on the all time high it hit during the pandemic. Can Target's next CEO really turn things around? Guy Adami, do you think this insider, the market didn't like it today, but what do we know and what do we think?

C (3:28)

Welcome. Obviously, number one, the market is saying they wanted an out, they wanted something new, they didn't want more of the same. And that's the problem. And I think you just hit the nail on the head. The, the quarter wasn't an abject disaster. It wasn't particularly good, but it wasn't bad by Target standards. I actually thought inventories, they're starting to get them under somewhat of control. But the market is saying we need a new voice, we need a new vision for this company and you're not going to get it internally. I mean, you just said it. Go back to a four year chart. This is a company that made its all time high, I think in the fall of 2021. And over that same course of time, Wal Mart's done nothing but go lower left, upper right. Target's been the exact opposite. Now it is somewhat Target specific, but at a certain point you got to start finger pointing. And the market pointed its finger at management. Management didn't change.

B (4:15)

Okay. On that same album they said nobody knows what it's like to be the bad man.

D (4:19)

Yeah.

C (4:19)

To be the sad man.

B (4:21)

Okay. I don't know this guy, Karen.

E (4:23)

Yep.

B (4:24)

I think about AT&T. AT&T had a CEO, Randall Stephenson. Market didn't like him. He leaves his number two, gets promoted. Market was shaky on him. Guess what? Stock has soared since he took over. Are we being too hard on a guy that most of us probably don't know anything about?

E (4:42)

Well, that's probably true. Stanky probably did some bold things though it seemed. But anyway, going back to Target, I looked and said, you know, the board unanimously chose him. I looked at the board the board is a Hughes who's who of a lot of corporate America.

B (4:55)

Right.

E (4:55)

Head of Safeway, Elevance, ups, Clorox, cdw. A lot of great names there. One, one sort of thing that was missing to me was somebody with real retail experience, like somebody from, from somewhere. Like let's say a Pottery Barn CEO from that division, something like that. So that was sort of surprising to me. I like to give the guy a chance. But I agree completely. That was the problem with the stock today.

B (5:18)

Stocks down to lows, Steve. Not seen since July of 2019. So really call it a six year, little bit more than six year lows, but two ways to look at it. It should have never been as high as it was during the pandemic when everything got stupid. We were all just, you know, ordering stuff online. The valuation isn't out of line compared to a lot of other names. Yeah, I think people have just lost their trust in the name. And it's an approved ME state. When you promote the old, you get nothing new. Reverse of out with the old, in with the new. And when you look at what he's done, he was there for the collapse. Did he make the decisions that caused the collapse? I have no idea. But when you look at Walmart, guy said it before, the stock has doubled in four years. Targets down 64%. Right. So somebody's doing it right now. Granted, Walmart's much bigger, much more powerful, but you have to get someone from the outside. I'll leave you with this last thing. Nike did the same thing, suffered. They brought in someone who's been there forever. You need new blood in this type of situation. Julie. The only point I was trying to make, and we got Courtney coming up on the story too, is that I don't know who this guy is. We don't know what this guy is about. We just know he's from the inside. So it's kind of a sell first by later. If I had to make the bull case on Target, I would say number one, they got thousands of locations. Number two, 13 times forward earnings, that's near a 10 year or even more than a 10 year low. And they pay a 4.6% dividend yield. You, you could start to make the case for Target maybe.

F (7:01)

Yeah, I think you can make the case from a valuation standpoint, particularly the dividend yield. I wouldn't necessarily do it off of forward earnings because this seen its earnings evaporate in a way that is pretty alarming. And it's why it's where it's at right now. But I really agree with everyone on the panel and particularly Karen's point. There's no one on that board that has really deep retail experience. And this is a clear retail turnaround story that needs to happen, particularly for Target. Target's way of differentiating was delighting people with cushions and lamps and things that they absolutely do not need. That takes a real merchant prince kind of a personality to change. Not a coo. Co, cfo. That's not what's really going to get it done. And I think until you inject a lot more enthusiasm for the actual merchandise, you're going to have a hard time convincing shoppers to come back after you've upset them for so many months.

B (7:58)

And they have upset them. Guy Adami. And so look, I know this is a stock show, but if we were just kind of. I want you to be Guy Adami the consumer, not Guy Adami the stock analyst.

C (8:08)

I can do that.

B (8:09)

Right. Because Costco and Walmart know exactly what they are. Costco doubled down on it. We're Costco big bulk. We believe in this, we're going forward. Walmart, they never even engaged in this political stuff because they said we're all about low prices, period. That's it. Target sort of veered one way, then they tried to veer back hard the other way. And I just wonder, to Julie's point, if they've ticked off consumers too much to come back.

C (8:34)

That's part of it. No question about it. The product mix is a big part of it as well. If you're in the middle in the world of retail, in this environment, you're absolutely nowhere. And I think that's where they found themselves. There's no compelling reason to go to Target at this point and they haven't given people reason for it. Now, as you aptly said, wait for it. You look at the stock on valuation, you say it's a what, Brian? A bargain. See what I did there? Yes, but it's been a bargain for the last two and a half or three years in terms of valuation. So if you're playing that game, it's not the right game. What I will tell you, though, if you go back and look, I mean, it's at a moving average level. I think the 200 day or 200 month moving average is a level that has not breached. And we're right there now, so maybe that finds some support there.

B (9:19)

I saw a poll that 40% of target workers lacked confidence in the company's future, 40% of the employees. So we're sitting around a desk trying to trade the stock that comes through. Investors have lost confidence, period. End of story. But I guess the point I'm trying to make, Karen, is that it's. You keep trying to make it. Well, because I feel like we've been doing. We've all been doing this a long time. It's always darkest right before dawn, right? That's that 40% stock valuation, 10 plus year low. Everybody hates Target, they don't like the new CEO, blah, blah, blah. Sometimes that's when you want to buy a company, when it's hard to make any positive case.

E (9:59)

Right. I always say, though, it's always darkest right after the time it was the darkest up until that point. But I understand what you're saying. At some point it gets so, you know, it's so cheap that everything's sort.

B (10:09)

Of in there already or just goes to zero.

E (10:11)

Also, though, I wonder, when a new CEO comes in, I. What's the first thing they do? I think they kitchen sink it.

B (10:17)

Right.

E (10:18)

Why have the bar be high when you go in when you kind of have a free quarter? It's not quite the same, clearly, as bringing in a whole new CEO. Because this CEO can't say, well, I wouldn't have done any of those things because they were the CEO for a long time. So all that having been said, I'm long Walmart.

B (10:35)

Okay. So there was long Walmart. Yeah. So let's bring in somebody that might know what's going on inside the company. That is our friend, Courtney Reagan. I walked in on you on the phone. I apologize.

G (10:45)

Okay. It's okay.

B (10:47)

It sounded like a very sort of in depth conversation.

G (10:49)

It was.

B (10:50)

First off, what do we know?

G (10:52)

Is it fiddle key Fidelke?

B (10:54)

Fidelke, yes. The new CEO. Michael Fidelke.

G (10:57)

Yes.

B (10:57)

Michael started as an intern. Yeah. He's been there his entire one job.

G (11:01)

Big Ten guy. Went to the University of Iowa Engineering.

B (11:04)

Okay.

G (11:04)

Northwestern for his mba.

B (11:06)

Okay.

G (11:07)

Took the job. I know. Took the job at Target in between. So he knows the company really well. Yes, he CEO. He's also heading up this. Accelerating this enterprise acceleration office, trying to sort of fix. What is that sort of Target's way of saying we know things aren't going well? Michael Fidelke has been running this since 2/4 or so. Basically saying, here, fix it. Kind of giving him his own strategy office and team to focus on moving it forward. So almost like a trial run actually for a couple of quarters here. He's CEO now. He was cfo. He's worked in human resources. He knows a lot about this company. I understand people were disappointed. You can see that in the stock price, that it wasn't an outsider. Brian Cornell was an outsider. He was the first outside CEO Target has actually ever had. And people really loved when he did. In the beginning, the peak stock price was about 266, I think in November of 2021. Peak operating margins then to at about 8.4%. That was under Cornell. They had a really great pandemic and then it's been a tough couple of years. So Cornell's done some good things and he's done some things that maybe he'd like to do differently. And we don't know to your earlier point, how much of that was Fidel Key's influence, How much of it would he have done differently? But he wasn't in that seat to do it. So we don't know. But I understand the frustration with the market.

B (12:16)

Let me ask a more macro question, cuz I see that guy Adami is champing at the bid. It's not chomping, by the way.

A (12:22)

It's chomping.

C (12:23)

You said that to me. Like I said it incorrectly.

B (12:27)

It'S champing at the bit.

C (12:29)

That's a horse reference.

B (12:30)

Thank you. Where does Target fit into the retail landscape? Okay. Because we just assume it's Target, everything's gonna be fine. Well, guess what, Amazon is there now, right? You wanna buy a lot of stuff you do on Amazon. Costco's got their own thing. Walmart.

G (12:44)

I know and I.

B (12:44)

What is that?

G (12:45)

Well, I love your point earlier. Right. Walmart knows what it is. Costco knows what it is. I would argue Amazon knows what it is. Does Amazon have this magical sort of cachet that the Target had? No, but they can get you stuff pretty cheap and pretty fast. And that's sort of what they do. And I don't think that's what Target should do. Target should find that Target again. But it's a really hard thing to do. And I think when Bed, Bath and Beyond hired Mark Trenton, who had given Target some of that. Target, whatever you want to say that.

A (13:15)

Cachet.

B (13:16)

Tar Jay, cachet.

G (13:17)

Right, I know. And then they put him at Bed, Bath and Beyond. Look what happened there. Right? So like you don't have a leader that has everything, I don't think. And they have to choose what they want. And Fidelity did come out and say we have to lead with merchandise. And it has to be more than just these, you know, occasional sort of design partnerships. Everybody knows that though. So who can do it? Can he? I don't know, I guess we got to give him a chance, right?

C (13:38)

Market's going to give him a chance. You know, we have lost our way. I've been at Target my entire career. It is clear that we alienated half our customer base. We take full responsibility, but going forward we're going to be the Target that you all loved five or six years ago. I mean this is not complicated stuff. This is crisis management. I think people want to give them a crisis management. I think it, it's not. You tell me I didn't say Walmart chart and pulpit Target chart go back to back.

B (14:05)

Let's get a five year back to back Walmart.

G (14:07)

I mean that's also that comparison. Can I also say people like to compare Walmart to Target and we know that the mix is different so it's not always an apples to apples comparison. And as people are saying, oh, bring in an outsider. Guess who wasn't an outsider. Guess who else has been at the company their entire career? Doug McMillan at Walmart. And look what he's done.

B (14:24)

He's dropping bombs. Julie Biel here's the thing. We compared Apple to Apple. I'll bet you. I bet you. Corny. Tell me if I'm wrong. 95% of the products are exactly the same at where? Between Walmart and Target.

G (14:34)

No, that's not true.

B (14:35)

Gillette. Shaving cream, towels, apples. Groceries. Groceries. Groceries.

G (14:40)

Yeah, but no, they're not the same.

F (14:42)

They're not the same.

G (14:42)

They're not what we make of the.

B (14:44)

Company in the stock.

G (14:45)

Thank you, Julie.

F (14:47)

Look, I think that they're not the same. They can do some of the same things. And for a while people were actually pretty worried, worried about Target expanding into Grocery the way that it did because they were worried it was going to come after Walmart. They were getting people in shopping for their makeup and their duvet covers and whatever else they get and actually being like, oh hey, I can like get groceries while I'm here. And that was a real threat to Walmart and now we're kind of in the reverse situation. And I just really don't think that like the person that was overseeing the organization as it made its transition away from DEI when it had been one of probably the forefront leaders of celebrating pride. I really think the company's lost its way and it's not just its actual cachet, it's what the brand stands for. And I think that's what that 40% of employees who are saying, no thanks, I'm really not excited about the direction of the company. I Think that's what that's about.

B (15:41)

Good points. Julie and Courtney want to say thank you. I know you've done some great reporting on this. Julie Beal, thank you as well. I will say this, not about Target in general. Guy Dami, you mentioned bargain. I'm going to throw two other words at you, value trap. Because just in retail you got to be careful. Right, Karen, where people say well it's this, it's Sears or it's Montgomery Ward or it's Walgreen. It has to come back like they.

E (16:04)

Did is what you're saying. Yes, yes.

B (16:06)

Did I make a point there?

E (16:07)

Yes, you did.

B (16:07)

Of course you often do. Often do.

C (16:09)

Just because you know what's interesting, what happens. Julie mentioned duvet covers. One of the most difficult things to do in a household put that duvet.

G (16:17)

Cover back on is to put the.

B (16:19)

COVID There's a trick where you do.

G (16:20)

It like inside out. Have you seen this? I have not turn it inside out. It's a whole thing. Watch a video.

B (16:25)

TJX the Paraca Max a bright spot for retail today. Tjx unlike Target, closing at an all time high up almost 3% after beating earnings estimates and raising full year guidance which assumes current tariff rates. Will Karen remain in place?

E (16:44)

This was a delightful quarter from tjx. I mean the numbers were great, the call was great. They managed to manage to do everything right. One of the things that they did was get a lot of inventory that they could sell at good margins. They also leave the quarter with more inventory which you got it for. You know, they're long inventory. Nobody's better at managing inventory than they. So this was. There's a lot to like here. The only thing, the only thing not to like is that it's expensive but it deserves to be. They've done an extraordinary job.

B (17:15)

Too expensive.

E (17:16)

I'm long so I'm going home long. Could it get it today?

B (17:20)

Could it get better than this? To your point? Your point? They, they every. They optimized on people over ordering goods to get ahead of tariffs. So they were able to capture the more they over. The more they get people's over orders, the better they do on their spreads and their margins. Is this the peak of the over ordering? I would probably say yes. So this was a great quarter. They shined. But I don't know if they could top this because what you're saying, I think Steve is that if people don't know what you mean by over ordering tjx which is TJ Maxx, they get a lot of their goods because they buy excess inventory from other companies. They go in, they say, I'll give you 30 cents, 20 cents, whatever on the dollar. I'll buy all that stuff and then they'll sell it with a markup. Everybody wins. Theoretically. Correct. Yep.

C (18:08)

They win.

B (18:09)

I mean, 30 times forward earnings.

C (18:11)

Okay, 30. I got 28. Okay. We'll call it 29 just to be fair. But that's, but that's not unreasonable given what they've been able to do. They're great operators and they're getting the benefit of the doubt. Market is willing to pay up in the retail space for people to get it right and they're not willing to pay up for people like Target.

E (18:29)

Let me just add one thing. These are under promise over deliverers. So they talk about having a good quarter. They will have that good quarter or better and beat like they do every time.

B (18:38)

Anybody love Ross? You like Ross samples?

E (18:41)

They've done a good job as well. But long tjx.

B (18:43)

Long tjx. All right, coming up, Tex Tumble continues, but one analyst doesn't think the pullback is throwing a real wrench in the AI rally. We're going to make the bull case on that coming up. Plus groceries, clothes, health care, you can find everything. Maybe not Target. We're talking about Amazon. Including buying a car. That's right. Amazon and Hertz tying up to help you find your next ride. Fast Money rides on right after this short break. You're watching Fast Money here on cnbc. We'll be right back. And now a next level moment from ATT Business. Say you've sent out a gigantic shipment of pillows and they need to be there in time for International Sleep day. You've got AT and T5G so you're fully confident, but the vendor isn't responding. And International Sleep Day is tomorrow.

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B (21:35)

Welcome back to Fast Money. Palantir shares sliding for a six straight day, notching its longest losing streak since April of 2024. Now before we get too upset about this, the stock is still the best performing stock in the S&P 500 this year by a lot. But it is down nearly 18% from its record high just hit last week. But Wedbush's Dan Ives says it is time to buy this pullback. In a new note today, Ives writes, quote, tech sell offs are opportunities to own core winners and that the bull cycle will be intact for at least another two to three years. Joining us now, the aforementioned Dan Ives of Wedbush Securities. Dan, what do we make of the the pullback on Palantir? Do you welcome it?

H (22:26)

I mean look, I think these pullbacks are almost healthy. I mean that's been our view of Palantir. I mean if you go back since you know, whatever, 10, $15, like you're going to have these pullbacks. But I just continue to focus on the opportunity and I think they're really transforming and disrupting software and tech and it's my view and I get the valuation next two, three, four years. I think this is going to be a trillion dollar mark cap. They will grow into it and they are the poster child of the AI revolution. The nervousness I get but it doesn't in any way change our view fundamentally. What's happened with the AI revolution where messy of AI Palantir sits all right.

C (23:04)

So trillion dollars Dan, by the Way, love your work. You know this, that's three times what it is now. Ish. They're going to do and I'm going to round up $6 billion of revenue. What does that revenue line need to look like in order to justify a trillion dollar valuation in your opinion?

H (23:21)

Yeah, I mean Guy, my view is that, and it's great to see it, you're ultimately going to be looking at 12, 15, 20 billion. My view, when you look out the next three, four years for Palantir and a free cash flow margin that could ultimately be 40, 50%. So I get the valuation today, but our whole view is when you have the 2 to 3 trillion that's going to be spent, I think Palantir, I mean in 20, 30% of that palantir could win. So that's my view of it. When you look out and that's why pullbacks like this I get. But to me it's not the time to run for the hills. It's actually I view these as opportunities to own it as well as a lot of these other tech names.

B (24:02)

So Dan, to echo Guy's sentiment, you have been on so spot on on all these buying the dips, but let's look more micro, let's look more trading wise when you, is it, is it a tailwind or a headwind that they get 55% of revenue from governments with the bulk of that obviously being from the usa?

H (24:25)

Yeah, I think it's been to some extent a tailwind, foundationally speaking, because that's really how they, they've really become that golden child in AI because they've taken that technology into the enterprise aip and that's how it's all transformed in terms on the commercial side. But I do believe from a valuation perspective you're going to get the value on what you do on the commercial side. But government, as we see transformations on sovereigns, we're seeing in the us you're going to see it around the world. Palantir, along with Nvidia, Microsoft, and they're going to be some of the first calls and I think that's not being factored in to what I view as a sovereign as well as a commercial opportunity.

E (25:09)

Dan, it's Karen. Thanks for being on with us. So aside from Palantir, Nvidia and elsewhere, I would assume that same two to three year timeframe would hold for those as well. How do you, how do you sort of think this plays out? Why do you get two to three years?

H (25:24)

Yeah, look, I mean two or three years is A minimum. Because it's my view that ultimately this is the, so it's the second inning of this game and we've talked about is that the use cases on enterprise, they're multiplying, they're up 30, 40% even when we look back over the last few months and you only have 4% of enterprises that have even gone down the path in the US you think about what that's going to happen in Europe eventually, what's going to happen in Asia, ex China. And that's why from Nvidia to Microsoft to Palantir to my view of, of Alphabet as well as the software names, you look at autonomous, you look at names like Aqua. I mean that's our thesis. Our thesis. It's, it was 9pm, it's now 10:15pm at the AI party. That party goes to 4am and I think these are always opportunities. Even though the DJ could stop playing the music for, you know, a few minutes.

B (26:20)

You got the musical references, you had the Messi reference in there. But let me ask you this, even Messi has bad games. Dan, what is the risk profile on Palantir?

H (26:29)

Look, obviously high risk profile. If you have any hiccup, any speed bump, stock gets crushed. But, but Brian, my view is like that's why we spend so much time in the field in terms of what we see. And they're, they're really, they're seeing, I think it's 10, 15 to 1 demand and supply relative to what they could do with no direct sales force. And that's why I think this will ultimately be a trillion dollar company. I think Karp has the vision.

B (26:57)

Karp has the vision. He definitely is an interesting interview, as are you, Dan Ives. Dan, thank you very much. Dan Ives, Wedbush Securities. Julie. Bill, you got a comment on Palantir? Whether it's move up or its 18% fall off its record high.

F (27:12)

I mean 100 times sales is a big number, 200 times forward EPS is a really big number. And I just, I continue to believe there's no asset that's so good that price doesn't matter. Even if AI turns out to be as spectacular as it is, you have so much multiple in there, it's really hard to see how a long term return is going to be there. I think you can continue to trade in and out based on the sentiment of AI, but I really struggle with some of these valuation multiples because what valuation really is about is about expectations. And the expectations here are incredibly lofty. If there is even a whiff of a miss, it's really going to be very difficult to climb out of that.

B (27:54)

Yeah. And I think, to be fair, I think that's what Dan was saying, basically that if there is a slight miss, the stock's probably going to move down and move down quickly. But he still remains very bullish. All right, folks, we're about halfway down. There's a lot more fast money coming up. In fact, here is what's coming up next. Adding a car to your cart, how Hertz and Amazon are teaming up to sell you your next set of wheels. Plus Fed minutes pointing to a divided central bank. What's that mean for the next move in rates? And how does inflation and the labor market factor in? You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this.

C (28:39)

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B (29:41)

Welcome back. It was a nice day for Hertz. That stock up 6%. The car rental and sales company announcing it'll start selling pre owned vehicles used on Amazon autos. The company looks to bolster retail operations and bring in more revenue. The news also sending shares of Carvana lower. Karen, you flagged this story for us. Why?

E (30:04)

I just thought it was really interesting. It didn't on its own face. It didn't quite make sense to me.

B (30:10)

Why?

E (30:12)

I don't know that this is another, I guess another Amazon and another business. I don't really understand exactly how the mechanics work, who owns what, but you can see why Carvana would be afraid to have Amazon and anybody partner.

B (30:27)

Well, Hertz sells. You can buy a car in Hertz, but my guess is that's not their core business. But neither it is the Neither.

E (30:34)

Amazon's. Right.

B (30:35)

So you know what, you know what, the way to value rent a car companies is their value of their fleet. That's the number one thing. If you don't know anything about the company, just know what the fleet is worth and how they manage it. They used to have an agreement with Carvana a couple of years back, Hertz did. Now they're with Amazon because they think Amazon has tremendous scale. They've made it an easier process. If I said to you buy a car from Hertz, Brian, what's the first thing you do? You don't know where to go? Well, Hertz. Yeah, I'd probably Google because I was selling a bunch of Teslas about a year ago.

E (31:12)

Yeah.

B (31:12)

So I wanted to see how cheap they were getting. So I was looking at poking around there. But not as easy as going to Amazon. And that's what, that's what they're going to streamline the process. They're going to be able to finance cars better, they're going to be able to locate better. Carvana was a good partner. They found a better one on Amazon, I think one of the hottest stocks in the world. Yeah. I mean not the last couple of weeks but like it went from like seven to. Yeah, whatever. Yeah. So do we worry about Carvana on this news or are we just like whatever Because Hertz is not selling that many car. To be clear, they're going to sell that many cars anyway.

C (31:45)

I think the sell off in Carvana will probably be somewhat short lived, but it's had a huge run. So I think, you know, people took this as an opportunity to take some profits. But I don't, this is just me. I don't think this is an E2 importantly into Carvana's core business in my opinion.

B (32:00)

There we go. And by the way, Amazon's got a huge partnership with Hyundai. Who knew? All right, coming up, a Federal Reserve divided with the central bank's latest minute show and why officials are split when it comes to inflation and the labor market. Fast Money back in two minutes. Missed a moment of fast. Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this. All right, welcome back to Fast Money. Here's the good news. Stocks finished well off their lows of the day and in fact the Dow Jones Industrial Average and another barn burner of trading eked out a small gain. It was up 16 points. The S and P though lost a quarter percent. Not a lot, but it is now on a four day losing streak. The NASDAQ down nearly 7.10 of a percent today. Shares of Lowe's in the Green, the home improvement retailer beating quarterly earnings expectations this morning and announcing it'll buy another home. Pros business looking to drive sales by going through contractors. What about Bitcoin? Bitcoin rebounding back above 114,000 after a recent sell off from records. The rest of the crypto space higher as well. Solana up nearly 5%. In the meantime, minutes from the July meeting of the Federal Reserve reflecting a rather divided central bank, one that is worried about tariffs and inflation and another one also worried about jobs and the labor market. Let's tie it all together and get reaction from Mike Schumacher. He is the head of Macro Strategy at Wells Fargo Securities. Mike, good to have you on.

D (33:49)

Thanks, Brian.

B (33:49)

It is a so the minutes today, which are normally pretty boring, let's all just admit that today they were not. Because on one hand it was a Fed that was saying, well, tariffs may drive inflation. That says to me why would you cut rates? But on the other hand they also said worried that, you know, tariffs and I are going to hurt jobs. That's a case for a rate cut. How do you read the Fed right now?

D (34:12)

You know, it's interesting. There was a lot of talk and I think the big takeaway is more committee members are concerned about inflation and unemployment. But you had two dissents by governors, first time in 30 years. So very clearly unusual circumstance for the Fed. I think Jay Powell is trying to pull this together and say, look, can't we all just row in the same direction for a while? But the, the problem is the whole tariff thing is very tough to assess in the developed world. In the US there's very little experience with tariffs. No one's terribly confident about modeling them. Not the Fed, not us, really nobody. So it makes it a really tough call. So Powell said consistently he wants more data, he wants to wait. There really increases the chance they wait too much.

B (34:51)

What he says matters, the speech matters. I think it's 10 o' clock Eastern Time on, on Friday. That said, how much does it matter, Mike? Because number one, he's kind of a lame duck. He's going to be out in about eight months. So it's kind of like hard to gauge how relevant this is. But number two, if we get a 25 basis point, 1/4% rate cut and then no talk of more rate cuts, does that matter to the market?

D (35:17)

It does matter the market. Here's why. Let's say the Powell comes out, not Friday, but Sep17, Fed goes 25 he takes the podium at the press conference and says, well look, we're not going to do this too many more times. Trust me, nobody's that good a salesperson. The market's going to say hey guess what, now we have an easing cycle. They're going to be more, two, three, four more rate cuts. Whatever the number is, we in the market will price more of that. Bonds will run, equities do. Well, I don't think Powell can really put that genie back in the bottle. The Fed may turn out to only do one cut, but that's not the initial market move. It's a big rally.

C (35:52)

Michael, let's go to Europe for a second. ECB rate cuts, German boons are at.

B (35:57)

Like 30 year high.

C (35:58)

I mean you have rate moving to the upside. Germany, Italy, Spain, Japan, Japan on the other side of the world. But without question there are things happening that rate cuts are not solving for. Thoughts on that?

B (36:10)

I agree.

D (36:11)

Basically Guy, it's the tale of two bond markets. So you think about you can draw a line right down five, seven year points, something like that. Five years and in bonds look pretty good. And that's the part of the curve that's driven by central banks. The long term rates, they're driven by fiscal policy. US massive deficit, Germany spending more money on defense, Italy profligate. All those things are bad for long term yields. So there's effectively a buyer strike right now on 30 year bonds. Is it healthy? No. Can the Fed fix it? Probably not.

E (36:40)

So you talked about the thing that was most important was the talk about interest rates or I'm sorry, inflation being a little higher as opposed to the labor part. Do you think that that's what Powell is going to focus on on Friday?

D (36:54)

I think on Friday what he'll talk about, Karen, is basically go through all the challenges and the accomplishments the Fed's had since 2018. That would be probably the right thing to do. He'll also talk about the Fed's new five year framework. They had this thing called average inflation targeting. No one really understood what it was. The Fed didn't describe what the averaging really was in terms of, of the time frame. So get rid of that. Good riddance. I suspect he'll talk very little about policy for the next few meetings. If he does, the market will react in a big way. So I suspect that gets very little airtime. But if I'm wrong and if he opens the door, it'll be a big reaction.

B (37:27)

So Michael, tell me why Treasury Secretary Bessant is wrong with his simple analysis. He's got intricate analysis, but the simple analysis, that Fed funds rate is about 60 bips or so higher that actually it's less now, but higher than the two year yield. And that's. The Fed says that they're moderately tight. He says that they're more than moderately tight.

D (37:51)

I think it all boils down to what's the neutral rate. And the Fed doesn't really know. With a lot of confidence. The Fed has told us it's 3%. I suspect that number probably goes up. The Fed's going to introduce its new number on September 17th. Maybe it's three and an eighth, maybe it's three and a quarter. My colleagues at Wells Fargo on the economics team think it's a little bit higher. Three and a quarter, three and three eighths. But the point is the market's priced for about 3% at the end of the cycle. This is an easing cycle. In an easing cycle, the terminal rate is supposed to be way below neutral. That's the whole point. It's not there yet. So I would say that right now policy is somewhat tight. But the reason it's tight is the Fed doesn't really know with a lot of certainty what that neutral number is. So think about it. If you knew with absolute certainty it was 3%, you'd say great, we'll be right in the screws. But if it could be to 75, it could be 350. You can't go as quickly. And I think that's why the Fed's been reluctant.

B (38:44)

Michael Schumacher, Wells Fargo. Michael, great, great analysis. Always. Thank you for coming on. Appreciate that.

D (38:49)

Brian, always a pleasure.

B (38:50)

All right, so, so Julie, listen, I mean this is a Fed that a lot of people will argue left rates too low. They eased for too low for too long. Then they tried to kind of slam on the brakes. There's a lot of political back and forth. How much are we listening, listening to Jay Powell right now?

F (39:08)

I think people are listening to Jay Powell. I think that people recognize that at least directionally, these moves feel really important. And so he is at the helm of it. We have two directors who are trying out for Fed chair right now. Those dissents is really what those were. And I think looking forward, what is really critical is exactly this concept of neutral rate. The biggest challenge that we have really is that we've all gotten used to this idea that 0% interest rates are fine and normal and great and they're not. They're just not realistic and it's going to take time to unwind. Some of that expectation out of all markets, right. Not just corporate bonds, but also just the housing market. I think people are waiting for, you know, their mortgage rates to get mortgage rates to get back down to 3%. And it's just like, I don't think that's happening, kids.

B (39:57)

No, they're not. It's a great point, Julie. Guy. Domi. This, this is what kind of annoys me about the Federal Reserve. I'm sorry about me. I'm gonna be here for like a week and a half too. So I got to take it easy. This is the Federal Reserve that kept rates too low for too long and now they've hurt the housing market. And I'm not being political here, but because Everybody refied at 3%. No one's moving now because nobody. You can get what, five and a half, six percent, I guess, if you're lucky.

E (40:24)

Six.

B (40:25)

Yeah, right, right. Do you have faith and confidence in this Fed?

C (40:31)

No, I have no faith and confidence in any global central bank. I think central. I've said this for a while. I think of many villains of the 21st century. Central bankers can be at the top of the list. So the short answer is no. With that said, I do think Jerome Powell has been doing a good job over the last six to nine months. I think he sees what I think the market is seeing. And listen, you want to cut rates, knock yourself out. They cut rates in September, as you know.

B (40:56)

Yeah.

C (40:57)

10 year yields were 3.6%. They proceeded to go up 100 basis points. So they control the front end. They don't control anything else.

B (41:05)

They don't. And this sector. Sector, brought to you by the authors of the Creature from Jekyll Island. All right, coming up, the bundle is back.

C (41:13)

Who is that author? Do you know?

B (41:15)

I can't remember. ESPN's new streaming service and how Disney is trying to lock in you as a subscriber. All right, welcome back to Fast Money. Disney's ESPN gearing up to launch its new streaming platform tomorrow with all eyes on how the new service might shake up the streaming business. Going to kick the stock Disney stock into high gear. Julia Boorstin with more on this big news tomorrow. Julia.

A (41:46)

Well, Brian, the launch of ESPN's Unlimited app for $30 a month marks the start of Disney's aggressive rebundling. Subscribers to ESPN also get Disney plus and Hulu for no additional fee for $30 for the first year. Now $30 a month for the first year. Disney is also bundling its new unlimited ESPN app plus Fox One for 40 bucks a month. And it's pairing its ESPN app with NFL plus, also for $40 a month. Disney is working to supercharge its streaming bundle to make those subscribers as loyal as cable subscribers were for decades with the highest fees in pay TV. ESPN's TV subscriber base peaked at 100 million back in 2011. That number dropped down to 61 million as of this June. So will unlimited streaming ESPN accelerate cord cutting? Moffitt Nathanson say they don't exclude expected to, in part because the price is so high and in part because you would need eight streaming subscriptions to watch every major US sporting event. Plus YouTube Sunday Ticket for out of market NFL games. ESPN chairman Jimmy Pitaro telling us, quote, there are more bundling opportunities out there. We're in conversations right now. So look out for Peacock, which of course has the NBA and the Olympics as well as Paramount plus with more NFL to be potential bundling targets. Ryan?

B (43:08)

Yeah, big rollout could have big implications for the bundle. Julia Boorstin, thank you very much. But Steve Grassler will let him. Big implications for Disney. Yeah, I think Disney has. If you look at the stock chart, it's recovered extremely well. People thought after Covid that parks were never coming back. Those have come back. And now with the bundle, the bundle ultimately will cost more than we're all paying for cable. I'm a firm believer in that. But when you look at what they acquire, they get more NFL games. Disney's worked on the WWE live sports. This chart tells me it can go higher from here. The chart on Disney says it can go higher. Well, listen, it's all fodder because tomorrow morning on Squawk on the street at 10:00am Eastern time, big interview you got. Disney CEO Bob Iger and ESPN chairman Jimmy Pitaro live at 10:00 clock hour with David Faber. Tomorrow. That's going to be a big, big must watch television. That is must watch tv. We're back right after. I got some breaking news happening right now. Federal Reserve Governor Lisa Cook responding to calls from FHFA director Bill Pulte for her to resign. Here's her statement. Quote, I learned from the media that FHA Director William Pulte posted on social media that he was making a criminal referral based on a mortgage application from four years ago before I joined the Federal Reserve. I have no intention of being bullied to step down from my position because of some questions raised in a tweet. I do intend to take any questions about my financial history seriously as a member of the Federal Reserve. And so I am gathering the accurate information to answer any legitimate questions and provide the facts. Earlier today, Pulte alleged that Cook committed mortgage fraud, saying she claimed two separate properties in different states, both as her primary residence. In an interview on CBC this morning, he said he thinks that she will have to resign or that she will be fired. President Trump also said she should resign. And there are reports, guys, that he may indeed fire her. The implication would be, Guy Adami, that she is seen more as a hawk. And if you replace her for this reason on the Fed, you put in another dovish member of the Federal Reserve.

C (45:31)

Yeah, well, I missed law school that day, so I can't speak intelligently about a lot. I will say this though, last I looked in this country, you were innocent until proven guilty, number one. Number two, I think it is somewhat political and the hawkish of members of this Fed, they have a bull's eye on their back collectively. And those others that are seemingly interviewing for a job do not. And that's problematic, I think for a lot of different reasons, but through our lens. Specifically for the bond market.

B (45:59)

Yeah. And for the bond market, it is a, it is a story with a lot of allegations. But Lisa Cook firing back, responding back to Bill Pulte as well, saying she will provide any information that they might need, or at least she will be looking into providing any information they might need and noting that she bought this home or homes prior to her time on the Federal Reserve. I'm sure we'll get more on that story tomorrow morning on cnbc. But up next, final trades. All right, Julie Beal, kick off final trades.

F (46:38)

Yeah, I think TJ's results show us that consumers are desperate for value and Ollie's is a great place for that.

B (46:44)

All right, Steve, I think it might be time to have an entry in Baidu. I've never, I don't think I've used it as a final trade in years, but I think it might be time. Karen. Yes.

E (46:54)

Meta down about 52 bucks from its top. It's 27 times earnings.

G (46:59)

I like it.

C (47:00)

Guy Tim is not here this evening. You will see that if you're watching the show. However, his father, Michael seymour is turning 90 years old. So we want to give Mr. Seymour a very happy birthday.

E (47:12)

Congratulation guest to the show.

B (47:15)

I met him last year. Great guy.

C (47:17)

I'm sure he was thrilled. Gdx gdx.

B (47:20)

Thank you folks. Thank you very much for watching Fast Money. Mad Money starts right now.

A (47:28)

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 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 trading@schwab is powered.

C (48:09)

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