← CNBC's "Fast Money"
CNBC's "Fast Money"
Tech Leads Market Bounce… And The Next Move In Rates 3/12/25
00:43:47
The S&p 500 snapping a 2-day losing streak, with Tech leading the market bounce. What the reprieve in selling could indicate as Tariff headlines continue to spark volatility. And Rates whipsawing this week, as another Fed decision draws near. What our next guest sees in store for the bond market, and why she says recession risks are overblown. Fast Money Disclaimer
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- [00:01]
Melissa Lee
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- [00:03]
Karen Feiderman
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- [01:04]
Melissa Lee
Live in the NASDAQ Markets in the heart of New York City's Times Square. This is fast money. Here's what's on task tonight. A tech led rebound on Wall street with a number of beaten down names like Nvidia and Tesla leading the charge. But one mega cap did not come along for the ride. Why the divergence and what it means for the future of Apple. Plus inside intel embattled semi stock finally tapping a new CEO. Shares are soaring after hours. All the details straight ahead. And easing inflation. CPI coming in cool. Expected in February. But what will more tariffs mean for pricing pressures? We'll debate that and later, Adobe on the move after earnings. How do you know when it's time to buy Novo Nordisk and target at 15 month lows. What's next for the retail giant? I'm Melissa Lee coming to you live from Studio B at the nasdaq. On the desk tonight, Seagrass, Karen Feiderman, Courtney Garcia and Guy Adami. We'll get to Wednesday's tech turnaround boost in the markets in just a moment. But first we want to start with intel shares. They are soaring after hours. The chip maker name me a brand new permanent CEO. It's fourth in the last seven years. Our Christina Parts Neville joins us now with the details.
- [02:05]
Christina Parts Nevel
Month long or several months I should say. They've been searching for a CEO they found. Lip Bhutan. He's no stranger. He's, you know, he's a tech investor. He's worked at Cadence Design, which is a chip automation software firm. He used to be on Intel's board but stepped down back in August. Rumors were that he clashed with former CEO Pat Gelsinger. So now he's back the current or the CO CEOs, you have David Zisner, he's going to keep, keep at it as cfo. And then Michelle Holthouse will remain the CEO of Intel products. But I guess that's one bright spot for intel given the other issues they've had. Product delays with their AI chip. We know the spending. I think they're burning through about $25 billion a year on the Foundry business. And then competition, they're losing continued market share to AMD and even to the likes of Nvidia at this point.
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Melissa Lee
I mean, it seems that, you know, if you wanted to pick the perfect CEO for Intel at this moment in time, Lip Bhutan is the perfect guy because he's like the anti Pat Gelsinger. I mean he left in August reportedly because he clashed with Gelsinger. He said that intel didn't have a clear AI strategy, its workforce was bloated, he just disagreed with management style. And so those are exactly the things shareholders want addressed.
- [03:18]
Christina Parts Nevel
Precisely why they're reacting more positively to this news as opposed to somebody like a David Zisner, no offense, like he's worked with the company, but his background is finance, it's not necessarily semiconductors. And Pat filled that role, but maybe not strategically trying to do too much all at the same time.
- [03:33]
Courtney Garcia
So let me ask you, what is the mandate, do you think, for his CEO ship? You know, we have lots of discussions of looking to sort of carve up intel by various buyers, looking is it custodian until that happens or is it something very different?
- [03:49]
Christina Parts Nevel
Excellent point. I think with lots of buyers, you're referring to the Foundry business and whether TSMC is going to be less than 50% owner AMD Broadcom. Those rumors have been, I know it came out today, the stocks for all of those shares popped, but those rumors have been milling about for quite some time. It seems like something has to happen with the Foundry business. I don't know what Tan's role would be in that case, but something needs to, especially with President Trump really pushing for more help specifically to that business that's burning cash. Burning cash. And they're still not getting the number of customers up there to even compete at the same level as tsmc. Not saying that they can't eventually and that they have, you know, the know how and all the wonderful talent here in the United States, but they're still so far behind and that is a big drag on margins. So it's a possibility of a separation.
- [04:34]
Steve Grasso
Christine, I don't know the answer to this. You may. I mean they're supposed to report the end of April. Any chance that they sort of in the next couple of weeks come out preannounced, kitchen sink, clean slate. We've seen things like that before.
- [04:45]
Christina Parts Nevel
I. I don't. There's an Intel Foundry day at the end of April, so I wonder if they're going to hold off on doing something that drastic given the proximity to the Founder Day. We probably, you know, there's a lead up, you know, with like Nvidia for example, gtc, they waited or they're going to wait to announce products and stuff like that. So to your point, it may not be beneficial to jump the gun with the earnings report just so soon, given they have that update. They have an AI event this month, but a Foundry one that should be bigger at the end of April.
- [05:12]
Melissa Lee
Intel has an event.
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Christina Parts Nevel
Yeah. Something I saw more at the end of March, which I'm not going to, but I should be going to the foundry on because I was expecting some news coming out of that at the end of April.
- [05:22]
Melissa Lee
Right.
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Christina Parts Nevel
So another catalyst for the stock potentially potential.
- [05:26]
Melissa Lee
Christina, thank you. Good point. Christina. Parts to nebulous. All right, so the biggest overhang in the stock, no CEO that's now resolved. Courtney, does it look interesting?
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Karen Feiderman
Well, I think that's the one overhang but the other thing is just the foundry business.
- [05:38]
Melissa Lee
Right.
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Karen Feiderman
I mean they're expected to still be showing losses there through 2026. And that's the question is when can happen in the meantime, you know, when is that turnaround going to be there? So I would actually still be cautious. I think this is good news, like maybe a reason to dip a toe in. I wouldn't be going in with two feet at this point in time.
- [05:53]
Tim Seymour
Where he came from, Cadence Design was one of the most innovative companies are seen as one of the most innovative companies. When he was there, if you look at a stock chart, he's coming in at just the right time. It ran up, dipped. Now it'll pop again. It already popped today. I would be a buyer.
- [06:12]
Steve Grasso
It's interesting pulpit long term. Cadence Design, since we're talking about it, this stock did nothing for 20 years. I think he stepped in in January of 09, got a year or so under his belt and the stock went parabolic over the next 10 or 15 years. I think he stepped down in 18 or 19. So this is the right person for the job. And if I could change my acronym and jam and I into my Two sounds painful, but it is extraordinary. But tweeb is not a word so I want to play by the rules.
- [06:39]
Melissa Lee
That doesn't stop. Anybody else?
- [06:40]
Steve Grasso
No, it's stop.
- [06:43]
Melissa Lee
All right.
- [06:45]
Courtney Garcia
Okay. We'll leave it at that.
- [06:46]
Melissa Lee
Meanwhile, stocks rebounding off today's lows. The S and P whipsawing in early trade but ending the day up half a percent. Leading the charge. Not banks. Nope. Not health care. Not utilities. It was technology. The NASDAQ surging almost one and a quarter percent with big moves higher in Tesla, Micron, Palantir and Nvidia. All but one member of the MAG7 was up today. Some investors seeing recent weakness as an opportunity to buy a bargains. Take a listen to Altimeter Capital founder Brad Gerstner on Squawk Box this morning.
- [07:14]
Tim Seymour
We've seen the markets come back in.
- [07:16]
Melissa Lee
And I have to tell you we.
- [07:17]
Tim Seymour
Were buying some yesterday because now you see in video at 18 or 19 times next year's earnings. Now you're getting paid.
- [07:26]
Melissa Lee
So do you believe the bounce? Do you think the tech trade was de risked and do you think things like financials and transports have not been in? Yeah.
- [07:35]
Steve Grasso
So it's interesting. I think Brad's got a much longer term view than this show probably. So he looks at this move and like, you know, if I'm bullish in video for the next couple of years, this is as good an entry point is any and it's probably true. I don't think it's over though. And still with the Vix north of 24, even with today's sell off in the Vix, it suggests we're going to see some more volatility. I mean just look at the intraday chart of the S&P 500, probably at 150 handle move up and down and close slightly higher on the day. So I get the bounce. We actually discussed there potentially being a bounce in the space over the next couple of days. So it's not surprising. But to answer your question, I don't think the downside is over.
- [08:10]
Courtney Garcia
That may be. I mean I don't really trade around so I'm not trying to pick the bottom here. And I've sort of held going down. Held going up. I am looking to find some places to add. I did add some banks. Right. Add some JP Morgan call spreads. I had been thinking that the banks at the moment, now that we're into March are out of the market in terms of buying back their own stock if they were inclined to because we're getting too close to the end of the quarter. So. But I agree with you on the vix. I wish it had gone a lot higher and then come down and not settled in here because I find it doesn't really live at 24, 25. Right. It goes somewhere else and so I don't think the end is. I don't. I could think we could see more pain but I'm not going to sell and then try to buy back later.
- [08:56]
Tim Seymour
I look, I look at the tech stocks through the prism of where were they pre deep seeking. And if you go back to the pre headline that was January 24th, Apple is only 2% lower and was 10% higher than where it started before the pre see deep precinct deep seek headline. If you look at Nvidia, 18% lower Microsoft, so all these are somewhere between 12 and 18%. Even Netflix is down 6%. Apple has had the best turnout of all those names. If you look at one other one, Metta met is down 6%. There's no reason why any of these stocks, or I should say half of them should be down what they are. But we have to reassess. I'm big on they spent too much for AI. They're trying to spend too much more on AI. 80 to 105 billion, way too much. It's got to be reassessed. Apple's not doing that. Apple is working on AI in a different way. Apple's looking at it through a device prism and they'll figure it out. It's more of augmented reality versus AI. They might be using AI to do it, but they're spending 5 billion, 10 billion max where the other ones are spending 85 to 105 billion. So I don't think it's over. I think they're going to be penalized and they're all going to have to come up with a couple of years of efficiency led by Nvidia. I think Nvidia still goes much lower.
- [10:22]
Melissa Lee
I mean the thing that we have not talked about head on within this tech discussion whether or not these names have been de risked because the overlay of the increasing recession odds that Wall street is starting to price it. I mean you have Goldman Sachs coming and saying it's about a 40% chance of recession up from 30% which they estimate at the end of 2024. So three months ago, I mean it wasn't too long ago where they're saying 30 now it's 40%. So I mean that's got to put some concern. I mean there's an asterisk I think next to all of those CapEx plans that were outlined in January, it's a very different environment. I mean, CEOs, right? We talk about it all the time. CEOs, they feel very differently now versus the beginning of January when a lot of those CapEx plans were unveiled.
- [11:03]
Courtney Garcia
Well, let me ask you. We would play the game, sure.
- [11:05]
Melissa Lee
Not.
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Courtney Garcia
It's not.
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Tim Seymour
We are playing a game.
- [11:07]
Courtney Garcia
It's not a. Would you rather I'm playing the game. If I had told you that Microsoft's capex numbers were too high. They're bringing them down. And Meta rallied on its CapEx news, but the other ones did not. Amazon and Microsoft, I told you, all right, their CapEx is coming in by 15% with the stocks rally or not.
- [11:29]
Tim Seymour
Are they doing the same thing that they were doing with the 15% higher? Are they doing the same? Are they, Are they cutting back on spending just to cut back on spending? Or were they able, through efficiencies, through deep seek, through the idea of deep seek, are they able to get to the same.
- [11:45]
Courtney Garcia
Well, you're getting to a recession question, right? And it would be that we're not sure that the opportunity is as big we're to decrease our spending.
- [11:52]
Melissa Lee
I think, I mean, I don't know. I don't, I don't play games, you guys. I would, I would think that there is a decent chance that a stock like a Microsoft would in fact go higher on a, on a pullback in CapEx, because the narrative could be, we're in uncertain times, we just think it's prudent to do that. And, and in the future, we can ramp that number back up easily.
- [12:13]
Tim Seymour
What she said. What she said.
- [12:15]
Melissa Lee
I think that you can make that argument, right? I don't know if that's, you know, would be the case, but I think there's an argument to be made.
- [12:21]
Karen Feiderman
Yeah, I think that is the question. But what's happening is as more and more people are talking about recession, it's not just CEOs who are getting nervous about the economy. It's consumers and investors who are also pulling back and getting nervous. And that's where you're seeing this big trade kind of rotation happening into your defensive names and your value names out of the US and into abroad. So I think days like today shows people are willing to come in and buy these dips, which probably means, yeah, it might not be over. You're not seeing this mass selling that's been, that's been happening. But I would make sure you stay diversified here. I still own the tech names. But I'm not like jumping in, you know, with Sufi right now.
- [12:51]
Steve Grasso
Few things. I think our audience has gotten to know you over the last 16 years. By the way, it's almost your anniversary.
- [12:57]
Melissa Lee
That is true.
- [12:59]
Steve Grasso
And I think they realize that you're an avid game player. But I will play your game and say, you know what if capex is going. When I was a kid I used to watch the Flintstones and Fred used to get his contracts and like a big slate and they would. But these capex numbers are not etched in that same stone. And if they feel there's a slowdown coming they will ratchet it back. And Karen makes a good point. What will happen to the stocks? I think in this scenario it's going to hurt a lot of these names.
- [13:26]
Melissa Lee
Well, let's dive deeper into Apple. That was the one MAG7 stock in the red today. The iPhone maker is down 9% already since Monday, pacing for its worst week since November 2022. Morgan Stanley lowering its price target on the stock from 275 to 252, citing the delayed rollout of a more advanced Siri. For more let's bring in Fast Money French Munster of Deepwater Asset Management. Gene After Apple revealed Apple Intelligence at WWC last June, here's what you had to say.
- [13:56]
Gene Munster
This is about getting people to recognize that their current phone isn't nearly good enough. And I think that they hit it. This is the biggest day for Apple since the iPhone, full stop.
- [14:10]
Melissa Lee
Do you feel the same way?
- [14:12]
Gene Munster
I think the biggest day is coming Melissa and ultimately this has been a disappointment in terms of the rollout of Siri. There's it's as big of a disappointment as covering this company and investing in it for 20 plus years that I've seen a one year delay on something that's so critical. And so I don't want to pile onto the naysayers related to where this product ultimately can go. But to answer your question as we stand here today, very different place than what I thought we were going to be at back at wwdc. At the end of the day the question still is relevant is will they get Apple Intelligence right? And as it stands they're essentially just holding on too much to how the whole ecosystem that's powered by Apple Intelligence is put together. They really need to expand it, allow developers more to build onto it, to accelerate the features. When I made those comments before, it was a belief that they would be in a unique place to bring personalization and automation to a device that are over 2.3 billion active devices. So that central view is unchanged, but it's going to take much longer than what I thought. I do stand by this belief that a year from now we're going to see meaningful acceleration in iPhone on the back of these new features getting rolled out.
- [15:36]
Melissa Lee
I was curious about how Apple was valued because I think there's a question here in this kind of market environment, are you overpaying for Apple given its delay in AI features pre wwdc? So just before June or so it was trading at a 30 p. E. Right now it's trading at a current 34 p. E. Not forward PE, just p. E. So I mean just on that basis, how should we think about it? Is Apple still worth more than it was worth before the announcement? Should it actually have even more of a discount than being four turns, you know, four having to go four turns lower to go back to pre WWDC because it's sitting out as for instance its competitors in China are launching phones that are, you know, the same price point or lower with AI features.
- [16:25]
Gene Munster
So I think the multiples in the right place and I think investors are still giving Apple the benefit, largely the benefit of the doubt and terms of how they can roll this out. So I think an above average multiple is justified just given how important these products are. They're not going anywhere. People are not going to get rid of their iPhones for example, if an Android phone comes out with some impressive AI feature. And so that lock in is really valuable to investors. They can sleep well at night knowing that the flywheel is in place. And so the multiple makes sense to me. The move higher in the stock here has to come from the substance of these features driving revenue and ultimately earnings. And when I look at that, I mean that's the question. I'm still optimistic, still positive, still own this stock. On a belief that the iPhone estimates for this year are conservative, the street's looking for about 1% growth steps up to 6% for calendar 26. So it's a nice step up. I think that those are probably conservative. But to answer your question, I do think there is some benefit of the doubt that's being given right now. But I think the upside in the stock comes from earnings upside based on in part these features. But also keep in mind there is this huge upgrade pool that is ultimately going to have some positive impact this year and next year.
- [17:43]
Karen Feiderman
Hey Jean, it's Courtney here. So just geographically where should we see that growth coming from for Apple? So there's been a lot of disappointment when it comes to China sales. And I know there is some optimism with some other emerging markets like India or hopefully we'll see that pick up in the US but also with tariffs ongoing, like is that going to be in effect for Apple and how should you look at that as an investor?
- [18:02]
Gene Munster
So a couple of topics on the, maybe start with the latter on the tariff side is I think that they're going to sidestep these tariffs. I think Apple's announcement about this $500 billion investment into the U.S. it wasn't all incremental. It was probably more like 30 billion was incremental. But I think that was the politicking around this. And I think that Cook and Trump are in a good spot. So I think that Apple will find a way to avoid these tariffs. As far as where the growth comes from, the China piece there is, it just doesn't impact Apple. It impacts Tesla too. I mean, those two hardware companies, you're seeing, this move to buy China, this nationalism, consumer behavior that is I believe in part fueled by some of the messaging from Chinese leadership. And so I think that that's going to be a harder one to turn. Where the upside comes from, it's the old strengths of the US Europe and to a lesser extent India. It's about 3% of revenue today. I think longer term that can be 10% of revenue. And that's just kind of a slow build.
- [19:00]
Melissa Lee
Gene, we're out of time. But I got to ask you this one question. This is the question that we are sort of bandying about on the desk just before going to you. And that is if the, if the Mag 7 came out and said we're going to, we're going to trim our capex spend for the year because of macro uncertainties, etc. It's just a prudent thing to do at this point. Do the stocks go higher or lower in your view?
- [19:21]
Gene Munster
I think measurably lower. That would be a very bad day for these companies and a bad day for the broader trade. I think it would be. It would take many quarters for investor psychology to recover from that.
- [19:34]
Melissa Lee
All right, Gene, always great to speak with you. Thank you.
- [19:37]
Gene Munster
Thank you.
- [19:38]
Melissa Lee
Gene Munster. Lots on the shoulders of the CEOs of the big tech companies.
- [19:43]
Courtney Garcia
Why my agene coming on to take, you know, take a bullet. Right. Good for. He's been writing this for a really long time. I just, I'm, even though it's down somewhat, it's still not close enough for me to buy.
- [19:54]
Melissa Lee
All right, coming up, way off target, shares of the retailer hitting levels not seen in over a year. What is weighing on shares now? Tariff turmoil is impacting the retail space ahead. But first some after hours action to bring you Adobe on the move on its latest results. The details and numbers from that quarter next do not go anywhere. Fast Money's back into say you've always wanted to take a spontaneous trip to the Caribbean. Here's the thing, if you get smart with your money, you can do things like that. With Empower, you can start making the most out of your money so you can get out and live a little. Isn't that why we work so hard to have some fun with our money? Like treating yourself to something special or.
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- [22:22]
Melissa Lee
Welcome back to Fast Money. Canada and the European Union imposing new taxes on US Goods in reaction to the Trump administration's levies on aluminum and steel imports. CNBC's Megan Cassell has got the latest hi Megan, Hey Melissa.
- [22:34]
Christina Parts Nevel
So those sweeping 25% tariffs on all.
- [22:36]
Melissa Lee
Imports of steel and aluminum took effect first thing this morning.
- [22:40]
Christina Parts Nevel
And with that, take a look now.
- [22:42]
Melissa Lee
At all of the tariffs now actually in effect. Besides the metals tariffs, we have the.
- [22:46]
Christina Parts Nevel
25% duties on Mexican and Canadian goods.
- [22:49]
Melissa Lee
That are not USMCA compliant. A White House official told us that's about half of what we buy from Mexico, two thirds of what we buy from Canada that will still see those tariffs. We also have the lower 10% tariff on Canadian energy and the extra 20, 20% tariff on all Chinese imports.
- [23:04]
Christina Parts Nevel
And it's hard here to estimate the total value of goods being hit.
- [23:08]
Melissa Lee
But by one analysis, more than 30%.
- [23:11]
Christina Parts Nevel
Of all US imports have seen tariffs added in the last month.
- [23:14]
Melissa Lee
Another analysis put that at well over $1 trillion worth of goods. And there's more to come. April 2nd is the next date to watch. That's when the White House says they'll start rolling out customized reciprocal tariff rates on a country by country basis.
- [23:26]
Christina Parts Nevel
And the sky seems like the limit from there.
- [23:28]
Melissa Lee
The Commerce Department, we know, is investigating.
- [23:31]
Christina Parts Nevel
Imports of copper and lumber for national security threats.
- [23:34]
Melissa Lee
That paves the way for additional tariffs there.
- [23:37]
Christina Parts Nevel
And we've also heard the president threaten tariffs on cars, semiconductors and pharmaceuticals.
- [23:42]
Melissa Lee
No details on any of those yet.
- [23:44]
Christina Parts Nevel
But the only certainty, it seems like from here, is that the level of.
- [23:47]
Melissa Lee
Uncertainty is likely to stay elevated for.
- [23:49]
Christina Parts Nevel
What could be months to come.
- [23:50]
Melissa Lee
Melissa? All right, Megan, thank you. Megan Casella, so let's overlay that with what happened in the markets today in terms of the tech rebound guy. For that reason, the certainty of uncertainty, was this just a one off?
- [24:03]
Steve Grasso
No, I think the market, I think the market's learning how to deal with the I think they understand there's going to be ebbs and flows of this. The rhetoric's got ratcheted up, ratcheting down depending on where the market is. And at a 25 Vix, you understand that you're going to see rallies of this magnitude or even greater. But with that said, none of this is particularly bullish, I think. And if you want to look at one thing today, I still think it's the bond market and the form of yields. You saw that CPI number today. A lot of people said it was cool. That's what the market needed. One would think given the trajectory of yields recently, yields would continue to go down. They're actually about 21 basis points higher than they were about a week and a half or so ago. That's what you have to be watching, I think.
- [24:42]
Melissa Lee
Meantime, we've got an earnings alert on Adobe shares are sinking despite a beat in the top and the bottom line. Conference calls underway. Cnbc. Sima Modi is dialed in, joins us now for all the details. Hey Sima. Melissa. Slightly weaker second quarter guide from Adobe. That's why the stock is down right now. CEO Shantanu Narayan, he's on the call, but he also joined CNBC's John Ford in the last hour and said that Adobe's artificial intelligence products are creating new revenue streams from AI assistants Acrobat readers that are also creating new subscription tiers. Narayan also downplayed any signs of a pullback, reaffirming Adobe's targets for the rest of the year. The question is whether the street is convinced Adobe is an artificial intelligence software winner and should be in the same category as Salesforce and ServiceNow that are deploying these AI agents or even Oracle that is standing up AI data centers. You'll see that shares have underperformed the broader IGV software ETF over the past six months. Morgan Stanley's team says competition is to blame, but they do think that the.
- [25:37]
Subhadra Rajapa
Company'S upcoming summit next week will give.
- [25:40]
Melissa Lee
The street better read on enterprise demand and maybe more metrics as to how AI is playing out for this company. Melissa Seema thank you. Sima Modi. So that's a good question. Should it be in the same category as an Oracle? As a Salesforce?
- [25:54]
Tim Seymour
I think the key for them is Photoshop and is photo their whole digital, digital digital revenue sector and the problem is will open source take that away from them? I think they should be in the same category but they should have a bigger tailwind because it's hard to replicate the benefits of Adobe Guy.
- [26:16]
Steve Grasso
I think valuation you can make a case for the stock and it's nowhere. Not that it matters by the way but I mean this stock was north of $600 a couple of years ago. I mean valuation has gotten reasonable. I didn't think it was a bad quarter and I think the guidance was particularly draconian either. So I'm surprised at the move. I think you're looking for a place to buy Adobe, not sell it.
- [26:34]
Melissa Lee
All right. There is a lot more fast money to come. Here's what's coming up next. Retail feeling the tariff impact target trading.
- [26:42]
Tim Seymour
At more than 52 week lows and.
- [26:44]
Melissa Lee
Walmart looking to offset supply costs in China. What will trade talks mean for the space next plus the next move in rates, Treasuries whipsawing this week on recession fears, tariff pressure and the latest inflation report where our next guest sees the Bond market heading and what it'll mean for the Fed. You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this.
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Melissa Lee
Edu. Welcome back to Fast Money. Shares of Target slipping to their lowest level since November 2023 today. The company, just one of many across the retail space, feeling the pressures from tariffs. China's Commerce Ministry holding talks with Wal Mart meantime, after the US Retail giant reportedly requested price cuts from Chinese suppliers to offset increased costs. The country warning the company not to shift higher expenses to Chinese retailers as it could violate commercial contracts. All these headlines dragging the retail trade today down. The XRT hitting a new 52 week low, down over a percent. And consumer staples, the worst performing S and P sector today down more than 2%. What's up with Target? Karen, what do you think?
- [29:00]
Courtney Garcia
I don't know. I mean, you know, their quarter obviously had some problems. I thought, as I said at that time, they didn't give guidance for the next quarter, but they did for the full year, which I found kind of hard, hard to believe. I mean they're just, even though they do have a big top line, they're just really behind Amazon and Wal Mart is doing a great job and Costco and DJs, it's cheap, but that's not enough.
- [29:26]
Karen Feiderman
The big problem is is the consumer deteriorating or not? That's what everyone's trying to figure out. And they have a much larger mix of discretionary goods than say a Walmart, which is where you know, you have things like today people are willing to come in and buy certain areas. But there's still a lot of questions about the consumer. So that's where you're seeing the likes of a Target are still under pressure here and then add the tariffs on top of that and I think you're likely going to see some of this. So I don't know if the consumer is as under as much pressure as is currently getting priced in. So I think that's maybe something to consider. But it's going to continue to pressure.
- [29:55]
Tim Seymour
Even so, even if you go year to date or you go one year back, Wal Mart and Costco have definitely outperformed Target. They just can't seem to get their act together. Guy used a term with Adobe you should be looking for a spot to be a buyer. That's what I would be of Wal Mart and Costco. You can't touch Target until they prove themselves.
- [30:14]
Steve Grasso
Do we have a crackstaff? And that's a rhetoric they're always on. They could pull up a longer term chart at Target. And by the way, I think as wrong as I am most of the time Target's one we've gotten right. I think telling people to avoid it. And this was a $260 something dollars stock a few years ago. So you can do the math and see how much it's lost under a broader market that's been extraordinary. But this 105 level was the low we saw in November of 2023. So if you can flush this thing on like 50 million shares of volume over the next week or so, there's your level I think to try to play it from the long side.
- [30:46]
Melissa Lee
Coming up, a rate rally. 10 year yields heading higher after this morning's CPI print where our next guest sees rates heading with the Fed decision coming next week and how she is positioning in the face of heightened volatility. Fast Money's back into missed a moment of fast. Catch us anytime on the go follow.
- [31:06]
Gene Munster
The Fast Money podcast. We're back right after this.
- [31:17]
Melissa Lee
Welcome back to Fast Money. The S and P snapping a two day losing streak thanks in part to this morning's soft inflation report. The index closing half a percent higher. The Nasdaq faring better, up more than a percent. But the Dow shed about 80 points. The transport trade in rough shape. CSX, JB Hunt and Old Dominion hitting multi year lows. FedEx index at its worst level in more than a year. And while Tesla shares were up today, JP Morgan sees more downside. Analysts cutting their price target to a new street low of $120 more than 50% downside from current levels. Tesla already down nearly 50% from its record high. Well, treasury yields rising today after softer than expected inflation Data and a $39 billion auction of 10 year bonds. For more on the treasury move and inflation risk risks, let's bring in Subhaja Rajapa, Societe General's head of US Rate strategy. Subhadra, great to have you with us.
- [32:06]
Subhadra Rajapa
Thank you.
- [32:07]
Melissa Lee
The markets cheer the softer than expected data. But you say you're not buying into that.
- [32:11]
Subhadra Rajapa
Yeah, because if you look beneath the hood, you get a very different picture. I mean, you look at a broad variety of metrics. I mean, airfares went down, but you saw things like used car prices start to go up. You seen other categories within the CPI basket. Recreation, apparel, all of that went up. So you kind of have this haves and have not story, if you will. Although the headline was, you know, lower than expected point to headline and core overall, I thought that some of these underlying, you know, parts of the basket showed, you know, that inflation was still quite sticky.
- [32:53]
Courtney Garcia
So spot, thanks for being here. We haven't seen tariffs yet. How do you factor that into your expectation for rates and inflation?
- [33:01]
Subhadra Rajapa
Not as of yet. I mean, we're still looking for details. We just don't have much by way of information from, from the administration on what exactly is going to get passed. But if you look at, you know, the bond market, I would argue that the bond market is actually looking at, you know, somewhat of a softer CPI print. But looking past that and saying, you know what, we haven't really seen the impact of tariffs yet. So once we start seeing the impact of tariffs, that would mean higher inflation prints and a Fed that's going to be on pause for a lot longer. That's part of the reason why you saw the market start to price out cuts that were priced in ahead of the CPI print.
- [33:40]
Steve Grasso
President Trump's first administration, they talked about the stock market being a report card. This one, they seem more focused on the bond market and they want interest rates to go lower. Treasury Secretary Bessen has talked about it. President Trump, can they do anything to get bond yields lower?
- [33:57]
Subhadra Rajapa
Well, they can. Jawbone. For his part, I think Bessen as well has told us very, very clearly that Bessen and Trump don't want 10 year yields going above four and a half percent. They want to see borrowing costs contained. They want to see a pickup in the mortgage market. The mortgage market, it's been pretty much in stasis for a while now. So they really want to see that pick up in these consumer led areas. And really the way to do that is by keeping 10 year yields low. If 10 year yields get to around 4%, you're going to see a pickup in the mortgage market. That's great for the economy.
- [34:33]
Melissa Lee
Given what the administration has said about the 10 year yield though, where do you expect it to go? Last time you were in fast back in January you said 5%. We totally see 5%. Where are you now?
- [34:43]
Subhadra Rajapa
I think Besson has really capped the rise in ten year yields. I mean four and a half percent is probably as high as it gets and if anything I think that the risk to yields are skewed to the downside. So I can see 10 year olds actually head towards 4%. If we start seeing any sort of weakness in the data, the Fed's going to keep policy on hold for the foreseeable future, at least for the first half of the year. Beyond that, I think you're going to see the long end yields actually gradually decline and the yield curve flatten. And you know, that's because the market's going to start looking towards tariffs and potentially the impact of tariffs on growth.
- [35:18]
Melissa Lee
It's a tough though sort of dual mandate to navigate here. If prices are going to go higher because of tariffs and we haven't seen the full effect yet, et cetera, et cetera, but the job market will certainly soften, at least from the last print that we got. Even if you just say government jobs, jobs are going to be reflected, you know, the cuts in government jobs will be reflected in the numbers going forward. How do you view that dual mandate and what wins out? And is that why you think the Fed will just be on pause as opposed to actually doing something in response to these two mandates?
- [35:50]
Subhadra Rajapa
So after today's CPI print, I would argue that the Fed would be much more focused on what happens on the employment front because inflation has been trending lower. You've had this, you know, disinflationary trend for the last year or even longer. And now if there's any sort of weakness in the job market, I think that the Fed is going to be prepared to cut rates. I mean, if you look at what Powell was saying last Friday, he was saying that, you know, they are okay to be on pause because they can cut rates quickly if they need to.
- [36:24]
Melissa Lee
Okay. Subhadra, thanks for coming by. Appreciate it.
- [36:26]
Subhadra Rajapa
Thank you.
- [36:27]
Melissa Lee
Roger. Dropped association role four and a half percent. Let's play the game.
- [36:31]
Steve Grasso
Yeah, well, I thought you were playing. You just said 18 minutes ago you doesn't play it.
- [36:36]
Melissa Lee
You know you're going to play the game instigator. But if I were to tell you that that yields would stay capped at 4 and a half percent, the highest, is that good for equities or bad for.
- [36:46]
Steve Grasso
I think on the margins that's good for equities. I'll play the game correctly and say if the, if you told me four and a half percent is a ceiling and we're probably the skew is lower, that's good. But I'll say this as well. If yields are going down because things are slowing in a meaningful way, that's not particularly good for equities. So there's my caveat.
- [37:02]
Tim Seymour
10 year was at 490 on January 13th, it dropped down to 417. It's rallied back around above 4.3. But when you look at it, the housing market shelter costs are 30% of CPI. Once that it gets unlocked, you'll see inflation really dissipate from the economic backdrop. I think it's a positive the lower we go on the 10 year right.
- [37:27]
Melissa Lee
Coming up, Starbucks under pressure as investors pour over updates at the company's annual meeting. What CEO Brian Nicholl had to say about tariffs, turnaround plans and much more next. But first, a no go for Novo stock down over 17% already this month as competition in the weight loss drug space beats up last, the top strategist what it'll take for shares to bounce back when fast money returns. Welcome back to Fast Money. Novo Nordisk sending a losing streak down four and a quarter percent for its fifth straight day of decline. The stock is now trading at March 2023 lows with concerns mounting over the company's competitive edge in the weight loss drug space. For more, Mizuho health care strategist Jared Holz joins us here on set. Jared, great to have you with us. It's like Cargill Sema happened the second phase of carrier summer. Every single headline in the obesity space, even if it's not Novo, it's bad for Novo. The sentiment is so terrible. Is a stock where it should be right now or is it overdone?
- [38:35]
Jared Holz
It's been horrifying to watch. It basically been cut in half since last summer. Right. They had that big analyst day. They excited the street and now we're sitting here at multi year lows. So it feels fair and not fair. I mean the news flow out of the company and out of the field has impacted it dramatically. So in some respect, yes. But they're still going to grow 15 to 20% this year and it's a growth entity for the next few. So when you compare it to some of the other names in pharma, it's amazing that I was talking to some investors today. I think the sentiment on Novo is the worst in all of large cap pharma.
- [39:10]
Melissa Lee
Wow. Yeah. You bought some?
- [39:12]
Courtney Garcia
I did. I bought some today. I mean, I had owned it a couple of years before, sold it too early and I thought, oh wait, one day I'll get back in. When you think about the next few years, like this Roche thing, they're talking about 2029 at the earliest, Right. So when you think about the profitability that's available potentially for Novo between here and there at least, how far does that get?
- [39:36]
Jared Holz
They can go for the next five plus years without really doing much. Right. They're going to be the market leader. It's a two, I still believe it's a two player market in this injectable market for the foreseeable future, if for no other reason than the cost that you have to kind of take in order to be in it, the manufacturing spend, all of those things. It's interesting because this cagra sema data the street wasn't that excited about yet. They're excited about this Roche plus Zealand asset, which is essentially the same thing as Cagresema, but investors like it. So I think we've kind of, we've gone so far in terms of the pendulum swinging out of their favor that maybe you're right. Karen, it's time to buy a little bit.
- [40:20]
Steve Grasso
Well, that news was interesting and it brings me back to Viking, which as I said last night, that move, I thought the stock would double from 50. I looked really smart for a while. Now I look really dumb, which is typical cycle. But here we are with the stock. There's scarcity in the space in terms of assets. Yesterday's news people suggest, you know, maybe they're going to go it alone. Mel, read it differently. Karen, read it differently. How do you read it?
- [40:43]
Jared Holz
I don't think it really changes anything. I think if you are a publicly traded company, you've got to do things that essentially allow you to keep on going as an independent entity. And so they could get acquired tomorrow. I don't think anyone would be ultimately surprised. I mean, there's this whole thought around Wall street that the competitive dynamic and you know, there are so many assets in China. Why would you buy Viking when you can buy things cheaper? But the market caps have gotten obliterated. This and structure and a few others are trading where no one thought they would because the barriers to entry seem minimal. But I kind of like it here. I mean, I haven't been the biggest bull on Viking nor structure in a while, but now with the equity values where they are, you've got to take a look. I mean, these could be swiped up for a couple billion dollars. Even if it winds up not being great for pharma. That's a small write off.
- [41:33]
Melissa Lee
When you say it is, it might be time to buy Novo. Is that a pound the table? This is a point in time where we're going to look back, we're going to think, wow, you could have bought this name at 18 times or so for where it is in terms of being a market leader in the obesity space for the next three, four, five years. Or are we going to say, you know what, the sentiment is so bad, and you know what, Eli Lilly is going to have a headline on its oral and that's going to drive Novo even lower.
- [41:59]
Tim Seymour
Take your time because we're going to replay this.
- [42:01]
Jared Holz
Okay.
- [42:02]
Tim Seymour
When you're right or wrong, it's.
- [42:04]
Jared Holz
It's not a pound the table. I think it's more of a trade. I don't think there's anything pound the table like in large cap pharma. Sadly, I think most of these are, you know, sentiment or valuation calls for the most part. The thing that bothers me about Novo is essentially what happened to Moderna. Even though they're not analogous. Moderna $500 stock. A few years ago, everything was going right. They didn't do anything. They basically watched the world end out of their favor. And they could have done a lot in terms of strategic development and buying assets and really milking it. They did not. They stood still. And that's kind of what Novo has done here.
- [42:43]
Melissa Lee
So in part, you're making the analogy with Moderna. Wow. Yes.
- [42:47]
Jared Holz
I mean, indictment versus where the stock was a year ago. They've essentially watched the entire world shift. So many different things have happened in terms of this category since that time over the last 12 months. Whether it be other competitive data sets or different assets that have popped up or different deals that pharma companies have done, they've essentially stood still. So I think, I think it's unfair to put them in the same category. But it reminds me of Moderna during the height of COVID when they were kings, and they essentially let it slip all away. And here we are at $35 a share versus 500. So it's just very. It is reminiscent in a way.
- [43:26]
Melissa Lee
Jared, always good to see you thank you. Of Mizuho. Steve, where do you stand on Novo?
- [43:31]
Tim Seymour
You know, sometimes sentiment is there for a reason. So I agree with Karen. I think you can get a pop off for a trade. But when you really look at these things, sometimes in six months, three months, a month away from the trade, you realize why sentiment was so negative. So I would be, I would have a short stay in some of these. But when you look at a name like Regeneron, totally different story. When you look at that, the market has given you the, the, the possibility of making a pop or a bounce in a lot of these different names. So I think all of them short term buy. Don't overstay your welcome.
- [44:07]
Karen Feiderman
Yeah, and I think some of this too, you've been seeing this big shift toward Europe in general. And I think one thing to consider with Nova is one of the largest holdings in one of your European ETFs. So I think some of that you are actually are going to get some like money flows that move in there. And I do think this is, there's a lot of opportunity in the space in general. It still really is them and Lilly. So I don't know, I think there might be some opportunity here.
- [44:26]
Melissa Lee
Would you rather I like this game.
- [44:28]
Steve Grasso
That's a. Twice now in eight minutes you're playing again. Yeah. Well, go ahead.
- [44:31]
Melissa Lee
Lilly or Novo?
- [44:34]
Steve Grasso
Novo. I heard, I just listened to everything he just said. But I think, you know, just valuation alone, I think you take a shot here. Lilly has shown its colors over the last couple of weeks. Novo.
- [44:43]
Melissa Lee
All right, coming up, shares, the Starbucks getting roasted this month. Is there a comeback percolating for this name or is another turnaround too tall an order? The trade and the details from their latest annual meeting. Next, more fast and to. Welcome back to fast Money. Starbucks shares falling as much as 2.6% today as the coffee chain holds its annual shareholder meeting. The stock, which hit a more than three year high at the start of the month, is now down nearly 16% from those levels. It was the first shareholder meeting since Brian Nicholl took over as CEO in September. The coffee is still expensive and in this environment, maybe that's not the environment you want.
- [45:25]
Steve Grasso
Hundred percent. And there's a consumer confidence number on Friday that's not going to be good. And when people again when the stock markets the lead story every night people start looking around what can we cut? And the first thing they're going to cut is Tim Seymour's soy latte that he gets seemingly three or four times a day. So Starbucks is Sold off. I think there's more room. To the downside, what's more expensive, the.
- [45:44]
Courtney Garcia
Coffee or the stock? I mean, they're both expensive. Right. Although I do think some of the things that Brian Nichols been doing really makes sense. Cutting out those 20% of the drinks that are 80% of the labor, the.
- [45:55]
Melissa Lee
Kind of drinks that they still have on the menu.
- [45:57]
Courtney Garcia
Right. So. But I feel like a lot of good things that he's done is priced in already. I don't own it here.
- [46:02]
Melissa Lee
Yeah.
- [46:03]
Tim Seymour
Too big to. Too great of an operator to bet against you. It's. If you look at it on a chart, it's still at the level where you could keep that uptrend intact. I wouldn't want to bet against him. He's one of those CEOs that anyone in this space would be lucky to have. He could write his own ticket. Hard to bet against them. And once again, the market gave you an opportunity here, I think through efficiencies. Yes, the coffee's expensive. Yes, everyone has their own little cup to make inside their own house. But I think this one will be a survivor.
- [46:35]
Melissa Lee
Up next, final trades, final trade time. Stephen.
- [46:45]
Tim Seymour
Apple with a 2.35 billion installed base, can't bet against it.
- [46:49]
Melissa Lee
Karen?
- [46:50]
Gene Munster
Yes.
- [46:50]
Courtney Garcia
So I took a shot in Novo today. Is it the bottom?
- [46:53]
Melissa Lee
Bottom? Who knows?
- [46:54]
Courtney Garcia
I don't know. Seems to correct.
- [46:55]
Karen Feiderman
Courtney, Adobe reported today. I think it has a good evaluation. It's one of the very few actually utilizing. I think it's something worth taking a look at.
- [47:03]
Steve Grasso
Guy, you should hear what we just saw about in a commercial. We don't have a lot of time to discuss that.
- [47:07]
Melissa Lee
Interesting. Moran. Melissa, thanks for watching Fast Money. See you tomorrow. Mad Money with Jim Cramer starts right now.
- [47:15]
Guy Adami
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 School's in session and today's lesson, how you can join a fast growing $71 billion childcare industry with a premium brand that parents trust. As a Goddard School franchisee, you'll benefit from a proven financial model backed by 37 years of industry experience and over 640 preschools nationwide. Plus, we'll support you with financing assistance, real estate, construction, marketing and operations. Now's the time to grow with us. Visit ownagoddardschool.com to learn more. This is not an offer to sell a franchise. Franchises are offered only through a franchise disclosure document and in compliance with applicable laws.