← CNBC's "Fast Money"
CNBC's "Fast Money"
The Market’s Final Hurdle… And Housing Sector Slump 5/22/25
00:43:51
Markets fading late in the session as investors digested President Trump’s tax bill passing in the House. Was it the final hurdle on the path to new highs? Where Morgan Stanley’s Mike Wilson sees stocks heading next and where he’s seeing the most opportunity. Plus, the housing sector slumping as April home sales drop to the slowest pace for that month since 2009. But could the spring market malaise be about to turn around? Fast Money Disclaimer
Loading summary
Transcript145 lines
- [00:00]
Melissa Lee
What does it mean to live a rich life? It means brave first leaps, tearful goodbyes.
- [00:08]
Tim Seymour
And everything in between.
- [00:10]
Melissa Lee
With over 100 years experience navigating the ups and downs of the market and.
- [00:15]
Karen Feiderman
Of life, your Edward Jones financial advisor.
- [00:18]
Melissa Lee
Will be there to help you move ahead with confidence.
- [00:22]
Tim Seymour
Because with all you've done to find.
- [00:23]
Melissa Lee
Your rich, we'll do all we can to help you keep enjoying it. Edward Jones, Member, SIPC Are you still.
- [00:32]
Dan Nathan
Quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places.
- [00:45]
Mike Wilson
That take credit cards nationwide.
- [00:47]
Dan Nathan
And every time you make a purchase.
- [00:48]
Katie Stockton
With your card, you automatically earn cash back.
- [00:51]
Dan Nathan
Welcome to the now it pays to Discover.
- [00:53]
Katie Stockton
Learn more@discover.com credit card based on the February 2024 Nelson Report.
- [01:01]
Tim Seymour
Live in the NASDAQ marketsite in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight. Hurdle cleared the House approving President Trump's tax bill in the early morning this morning. Was this the final step to unleash a market rally in the back half of the year? We'll debate that. And housing headaches. The homebuilder ETF posting its fourth straight day of losses on more disappointing data for the sector. What will it take for the group to rebound? We'll look for some answers. Plus another bitcoin record do the charts, they can go even higher. Retail stocks in recovery today. But are consumer concerns really behind us and will open AI's big bet on Johnny? I've helped keep it out of the tech graveyard. How it hopes to avoid the fate of some competitors. I'm Melissa Lee, come to you live from studio. Be at the nasdaq. On the desk tonight, Tim Seymour, Karen Feiderman, Dan Nathan and our guest trader for the night, Mike Wilson, CIO and chief equity strategist at Morgan Stanley. Welcome, Mike. And we start off with what might be a green light for the markets. House lawmakers last night narrowly advancing President Trump's tax bill by a vote of 215 to 214. And while it still faces a tough road in the Senate, yields pulled back from yesterday's highs as investors seem to sense some clarity on fiscal policy in Washington. Stocks, though, lost some steam into the close, dropping from their highs of the session to end the day basically flat. The Nasdaq though, did manage a gain. It's now up nearly 30% from its April lows. So what does today's action say about stocks direction in the second half? Have we just cleared a hurdle, so to speak?
- [02:23]
Mike Wilson
Tim Well, I think there's always a sense of certainty is better for markets. I think you have the, the jury is still out because I think there's a lot of interpretations from the bond market that this tax bill is deficit negative, certainly deficit negative. Over time I realize there will be offsets to that and there's, there's, there's a lot of, there's a lot of conversation there. I think you have the last couple of days for, for the stock markets have really been somewhat directionless, frankly. I mean, and it's interesting because today felt a lot better for most of the day and then in the last half an hour of trading we gave up 45s and P handles 75 basis points on the NASDAQ, almost 1% on semis. I get back to I think if you look at the market year one, I would go back to kind of around April five through nine, but around, through some of the lows and then the rebounds. Most of the repositioning came two weeks earlier from institutions, from hedge funds, from CTAs and I think retail has been kind of long and strong here. I think the pain trade still remains higher. The things that should give investors some conviction is that I think you look at the sectors that don't get a lot of credit, industrials, financials, they've been outperforming. Industrials keep making relative highs to the S and P at least over the last six to nine months. And that's actually a pretty good sign. But I think the bond market still reigns supreme. I think there's a lot of conjecture out there. The, the bond vigilante language and rhetoric is getting louder and I think the answer is still unknown.
- [03:45]
Orfe Divangui
So we'll see how the Senate comes out, right? That is a giant, giant question mark. I actually think it'll end up being worse for the deficit than where we currently are. And to try to offset that, they're going to be as pro growth, right? I think so. I mean we'll see how the bond market reacts to that. The growth takes time to come. The, you know, the bill will see what they decide. So, you know, I've been a little more cautious. I feel like this run has been huge. I've got big Mag 7 exposure. I've been trying to hedge a little bit of that. I'm always, always long, so that's not going to change. But it does feel like things are a little ahead of themselves.
- [04:23]
Tim Seymour
Yeah, yeah.
- [04:23]
Katie Stockton
I'd just say on the mag seven, you know, you think about what we heard in late January and early February from all of them and the way the stocks sold off afterwards and they started selling off before the S and P really topped out if you think about it. And I think that that was probably a concentration thing, a positioning thing and you know, coming out of Q1 earnings again if you were beared up into it, I was definitely a bit skeptical. I was in the mindset that if they did cut capex that probably meant something else about their businesses and for the most part they're all pretty good and they all reiterated their capex. So you see right now you just said the nas that's up 30% off the lows. It couldn't be more different as far as from a sentiment standpoint right now, especially like look at a name like Google over the last couple of days they had their user conference, the sentiment was really bad and then they don't actually say anything horrible and they say enough about the way that their products are rolling out relative to some of their competitors and the stock goes up six and a half percent.
- [05:12]
Mike Wilson
Make an argument that Google is though really a microcosm of how the market because people get all on one side of the boat on Google suddenly and we forget this is one of the, the I think most diversified. I know search is what anyway. But the market that people have been that way.
- [05:27]
Katie Stockton
It's good. Tim, I mean I agree with you and the one thing I would say is that like in your camp the S and P probably fills in that gap from last. You know that would be a 4% move and maybe that's the sort of check back you kind of need. And I don't think there's going to be panic. I don't think you're going to see a 25 Vix if we're down 4% from that. But the one thing I'd say is at some point a 10 year at 4, 53 and maybe that's on its way to 4, 75 and you have a dollar that's about 100 on the US dollar index. I mean there are some components there. If you don't get some of the right news on the macro front there's stuff maybe going on in Japan. I don't understand it. Maybe Mike can help us out there but there's something that's going to come out of nowhere that's going to test the mettle of the rally and you know, who knows when that is?
- [06:08]
Tim Seymour
I mean, I think you said it in terms of what will test the metal of the rally. Yields going higher. And we've seen that in the past couple of days here. Mike, you are though bullish. You have. You're one of the few Wall street firms that have stuck by your forecast. 6500 is 12 month forecast for you.
- [06:23]
Dan Nathan
We did trim our earnings. I mean, let's be honest. I mean the tariff announcement was a bit of a shock and I think we priced in basically a mild recession at 4800 and I'll stand by that. So our call is not for a recession. But I don't think you can write it off. I don't think that's the concern right now. I think it's rates. I think it's this issue with the deficit, the deficit getting bigger because of this tax bill. But what's encouraging is, I mean we had a, a debt downgrade by Moody's last week. Then we have a tax bill pass which basically blows out the deficit further. The bond market kind of wobbles a bit. The JGB market is actually looks in more trouble quite frankly. It's a global bond market and yet equities closed, you know, basically flat on the day today and barely down yesterday. So I think that, I think what's going on now is there's so much money coming into the market still. So our math tells us that retail is buying about $5 billion a day. Okay. CTAs and systematic strategies are buying about 5 billion a day. And corporates are now buying because earnings season is over. That's just a lot of money. And so like where's, like if you get any selling, it just gets stopped up in the near term and I think that probably can persist for another 30 days unless we go down by more than 5%. It doesn't like the best shot on goal for that was rates and it didn't seem to matter.
- [07:35]
Tim Seymour
Yeah, Japan, I'm sorry. Surprised you didn't bring that up because yields there, JGB.
- [07:39]
Mike Wilson
Yeah, they kept going higher.
- [07:40]
Tim Seymour
Yeah, they're going to 99.
- [07:42]
Mike Wilson
Yeah. Look, I think there's a real battle and I think there's, there's, if people want to look at relative concerns around the world, you can make an argument that Japan's a bigger problem. And then you can go to the European Union, you can say that they have some issues. I mean I, I think the, the, the good news for everyone is that central banks have spent 15 years gorging in terms of raising their balance sheets. And some of this is a function to fund fiscal policy. And, and then central banks everywhere have also been somewhat out of control. So that's probably good on a relative basis to the US I think, I don't think you can discount the fact that the rest of the world and the idea of US exceptionalism, while it doesn't end overnight, I think we are also at peak US exceptionalism. So you can't argue that there aren't, you know, repatriation flows. And I mean, in other places, back to places where it's patriotic there to bring your money back home, that's not en masse, that's not overnight. Except for the fact that we are seeing some of the data, some of the treasury, treasury flow data in terms of, in terms of Japan, in terms of China, and as rates go higher in Japan, there's no question that a couple basis points pickup is a lot more attractive for those insurance companies. So I just think it's all part of a mosaic that. And I think, Mike, even, you know, in a world where you say EPS has come in a little bit, you've had to make some revisions. We all would be getting back, I think, to the question of the multiple of the market. Right. I mean, and that's, that's the place that it's probably the toughest place to be bullish.
- [09:09]
Dan Nathan
Yeah. I think the valuation is all always relative. And I would say two things about that. Number one, your starting point matters. And if the Fed's going to be cutting rates over the next 12 months and earnings don't collapse like we grow 6, 7, 8%, which I think is pretty doable, particularly with these new tax breaks. Okay. And we can talk about that in a minute. It's very unlikely that multiples are going to come down. And that's what we're forecasting. We're not forecasting multiples to really expand, but 21/2 times, you know, if the Fed's cutting, it's hard to imagine multiples coming in much and that the earnings play through, that's 10%. That's how you get to 6,500.
- [09:40]
Orfe Divangui
So how much do you think the Fed cuts? What do you have to in there? What do you think?
- [09:43]
Dan Nathan
So our, our house call is no cuts this year, but then 175 next year.
- [09:47]
Orfe Divangui
Really?
- [09:48]
Dan Nathan
Okay. And that's with no recession. So look, I think we don't know. I mean, at the end of day, nobody really knows. I would suspect there could be one or two this year with the market saying and we'll get more next year. There's, there's capacity to probably cut at least 5, 6 times over next 12 months even without a recession as inflation comes down. This is somewhat transitory on the tariffs in my view. And growth is still below, below kind of target. And that to me is the most bullish thing I can say about multiples. If the fed's cutting rates 3, 4, 5, 6 times, it's hard for multiples come in.
- [10:19]
Tim Seymour
So 175 is just based on inflation coming down.
- [10:23]
Dan Nathan
Well, our forecast from economics team is for growth to slow down even further next year. And that's why they're, they're forecasting 175 basis points. So you know, if it's 175 basis points next year, that's going to feel like a recession. Okay, that's not. But from an earnings standpoint, that's not what we're modeling. Our, our forecast is that we're going to grow 7, 8% earnings this year. And it could be more with the retroactive kind of adjustments for the deductions for research and development and for the depreciation, it could actually be closer to 1012. And then next year we could easily get 9, 10% growth if the economy doesn't fall apart.
- [10:57]
Katie Stockton
Yeah, so we started talking about this little leg of the conversation with multiple. And you know, the multiple didn't matter in February 19th until it did matter when the stock market started selling off and some of these other risk assets started going in different directions. And you know, to Mike's point about these tax cuts, I mean, they're likely to pass. And we know from the first administration when they cut, you know, taxes by one and a half trillion dollars over the next two years, corporates bought back one and a half trillion dollars. It obviously didn't go just to corporations. But now if you're thinking about the size of this over a 10 year period that they're talking about, you can expect a lot of money to go in the stock market then if you just only have 7% earnings growth and you see, you know, growth slowing down in general, that's going to push the multiple. If you do see $15 billion a day like you're talking about, and then you have this out of incentive to start buying stock. If you're a corporation, I mean you could see a 20 to 23 and if you're only calling for high single digits, EPS growth, there's going to be a disconnect at some point, especially if there's some sort of Global growth care.
- [11:53]
Mike Wilson
It's great having a mic here because I mean when you start talking about you think 9, 9, 10% EPS next year is not, not that difficult, how dependent is that? And I think we kind of know from the weightings of the market how dependent that is on mega cap tech. And it's been kind of a rubber stamp, right? I mean this has been a group that's been extraordinary whether it's been, I mean that has been given 20 to 30% and outperforming. We know what Nvidia has done does is any of that like some variability for how you're looking at the world here?
- [12:22]
Dan Nathan
Well it's multinationals. It's not just you know the Mag 7 there's, there's 50 companies that are really just doing a bang up job on managing earnings and getting earnings growth out of what this economy is giving them. The one thing we haven't talked about yet is the dollar. The dollar is in a much different place than it was six months ago. And a year over year rate of change adds about 4 or 5% growth to S and P earnings. Just that alone. So even if the economy is only growing 1 or 2% you can get double digit earnings growth because of the tax benefits and the dollar being weaker which by the way we are forecasting to get even weaker because of those rate cuts. So there's, there's a good earnings story even though I'm not that bullish on the economy roaring here. It's. But you know the economy is not the market and earnings tend to not necessarily perform in line with the economy. Always last year, last two or three years, the earnings picture underperformed the economy and I would suspect the next two years earnings are going to outperform the economy for some of those reasons I mentioned.
- [13:13]
Orfe Divangui
Guys, Mike, another question of course so the 175 sort of blows me away a little bit. But what about in your earnings growth? Do you have some productivity efficiency enhancement? What's in there?
- [13:26]
Dan Nathan
We got about 50 basis points of productivity built into our 2026 number. And that's another thing I want to come back to is just our forecast now is we're focused on the rate of change. We were not that bullish coming into this year because for the first half because the rate of change on a lot of different things was going the wrong way. Starting with earnings revision breadth, starting with the dollar was actually strong. At the end of last year we had doge and fiscal constraints potentially hanging on growth and now we're seeing all Those rates of change go the other direction. The last one was AI Capex. Capex rolled over from a growth standpoint. But now if you look forward, all that Capex has been spent. We can get the productivity gains in 2026. That was always my views that the productivity would come later. But it can add about 50 basis points. We think so.
- [14:10]
Tim Seymour
I'm curious Mike, is there a scenario where the Fed can cut a lot yet? 175, whatever it is, but yields will still go higher, in which case 6500 is out the window. I mean if yields are really going to be a problem here and put some sort of a cap on the market or at least be grit so the market can't go that much higher, that much faster. At what point do you get worried?
- [14:34]
Dan Nathan
Well, I get worried at 5%. I think 5% is where, I mean for, at 450 we start to see a headwind for multiples. That's, that's worked for the last several years and we saw that earlier this week just for a day or two. But now it seems to be getting its footing again at 5% though. Think about this way, at 5%. I also know that treasury and Fed are going to act that in the last three years when it got to 5%, that's when we saw them do things whether it was reverse repo at the time. I mean they can twist the curve. We can see, you know, participation in auctions, you know, non qe, qe, whatever you want to call it. The Fed will start to jawbone rates down no different than 23. So in many ways if we get to 5%, it'll be a hit to the market. Bobby buying that dip because I know what's coming next.
- [15:20]
Mike Wilson
It's, it's, it's fascinating though because again you could come back to and just say that's in a world where we weren't throwing, you know, more deficit on the fire. And it's kind of, it's strange here we are talking about cutting, you know, in certain parts of the government and yet we're really talking about doing a lot of things that are going to make the fiscal side worse. The other side to this that I would like to support at least what Mike San on both the dollar side. Let's talk about energy prices also. Oil, Oil's down. You know, we're down another couple of bucks today on Brent. You've got OPEC threatening to do another 104 and 410,000 barrels on June 11. You've got supplies we saw basically supply dumbers today, which are really showing that there's too much supply out there. And I would then take this again to other parts of the world where their energy import costs are a really significant drag on their economies, especially Europe. I mean, this is great news for Europe. It's great news for China, who's a significant net importer. So I give the Trump administration credit. They said they wanted a few things. I mean, they said they wanted a weaker dollar. They said they wanted a weaker oil. I don't know if they're going to get lower rates, because again, I think at some point this becomes out of their control. And part of the other side of what they're doing may push rates higher, but those are big benefits to the economy.
- [16:35]
Katie Stockton
Mike, can I ask him a question? Employment, we haven't talked about that in this whole conversation. I keep hearing about companies firing people. Maybe it's a productivity thing, like you said. Generally, how are you thinking about that?
- [16:48]
Dan Nathan
So we've had a kind of a rolling recession now for really two or three years where each industry kind of goes through a layoff cycle. We saw tech, the biggest one in 2022, kind of kicked us off, and they're still laying people off. If you think about the hiring that's been going on in the last couple of years, it's mostly been in the government. And this is another part of the story, I think, that doesn't get enough credit, which is now people might say doge has failed initially. I'm not in that camp. I think that they've revealed a lot of fraud and waste, and I think every American wants to see that curtailed. So if we can just shrink the government, not necessarily cut it in half, but just stop it from growing, and then that actually leads to a more kind of liberated private economy. Right? The crowding out feature goes away. We could see hiring actually pick up again in the private economy. And that, to me, is a story for 2026, not this year is a story for 2026.
- [17:37]
Tim Seymour
All right, meantime, let's get to bitcoin. Hitting another record, passing $111,000 today. Investor optimism around regulation and accelerating institutional adoption driving the cryptocurrencies move. Just this year, publicly traded companies have increased their bitcoin holdings by 31% to about $349 billion. That's 15% of the total global supply. Our next guest is still bullish on Bitcoin, but says you may not want to buy, at least not today. Let's go off the charts of fairlead strategy founder and managing partner Katie Stockton. Katie, what do you see in the charts here?
- [18:09]
Melissa Lee
Well, we do have new all time highs and that means bitcoin has cleared final resistance. On the chart it was right around 108,000. And in our work we really hold importance on confirmation, meaning that bitcoin and any breakout for that matter holds not only in price but also in time. So we want to see a couple weeks out of bitcoin above this threshold to confirm the breakout. It's important because these breakouts, especially after such a strong up move, they can be sort of false breakouts, especially when emotions are running very high. And I would argue that there are certainly those emotions out there right now. We also have with bitcoin with this run up a potential short term counter trend sell signal as of tomorrow. And that's all the more reason that we want to wait for that confirmation, make sure it's a real breakout before acting upon it. Right now we're more neutral in our bias. We don't want to chase this up move, not unless it's confirmed.
- [19:11]
Tim Seymour
Once it is confirmed, Katie, what's the next level you're watching?
- [19:15]
Melissa Lee
So the best way we can discern an upside objective is through a measured move projection which essentially assumes that the uptrend will maintain its trajectory. So that would put Bitcoin around 134,000 with a time horizon of about six months plus. So definitely would be worth buying if we can assign that target based on a confirmed breakout. But otherwise I think we should still be thinking of managing risk because we have a meaningful loss of short term momentum behind risk assets more broadly, including the S&P 500. And when you look at the initial support levels for cryptocurrencies in general and bitcoin in particular, they're really well below current levels. So it's still not the best risk reward until we see the confirmed breakout.
- [20:01]
Tim Seymour
Katie, thank you. Great to see you. Katie Stockton Fair lead strategies so those are the technicals, the fundamentals. Every single case of the bull still exists is still as strong as ever. Fiscal irresponsible.
- [20:14]
Orfe Divangui
Fiscal irresponsibility is sort of right now as its use case as a transaction, really not so much. I mean, and we have never had a president remotely interested in crypto, certainly not one who had their own coin. Right this. So I mean that's how you get.
- [20:32]
Mike Wilson
Interested in a hurry.
- [20:33]
Orfe Divangui
Yeah, I mean that makes an enormous difference. So I'm staying low.
- [20:38]
Tim Seymour
Whether you like it or not, the incentives are aligned. Well from an investor standpoint that's a good thing from an investor standpoint.
- [20:44]
Mike Wilson
As someone that's been very, very bullish on gold for a long time, I get that part of it. And I certainly think that there's an element of Bitcoin that has, has been born out of that. But I don't, you know, it's not a store of value. It's, I still don't buy the same dynamic. I think it's going higher as well. And I would argue that there's an even bigger feeding frenzy across crypto assets in other parts of the digital world right now. And that's, you could make an argument that that should be concerning if you think that there's over speculation out there.
- [21:14]
Tim Seymour
All right, we got breaking news here out of the Supreme Court. Let's get to Amy Javors for the details. Amen.
- [21:19]
Katie Stockton
Hey, Melissa.
- [21:20]
Angelica Peebles
We've got a Supreme Court decision here that might have some impact on President Trump's clash with the Federal Reserve. In this case, what the Supreme Court is doing is granting a stay requested by the government, a stay of orders by a lower court that blocked the president's ability to fire some members of these outside boards, like the National Labor Relations Board and one other board. And so the president now will be able to fire those people. People. And one of the arguments in this case had been that if the president gets the ability to fire those people, then he might have ability legally then to fire people from the Federal Reserve. But, but, and this is a big but in this decision by the Supreme Court, the Chief justice is writing that the respondents here contend that arguments in this case necessarily implicate the constitutionality of removal protections for members of the Federal Reserve Board of Governors or other members of the Federal Open Market Committee. We disagree. The Federal Reserve is a uniquely structured quasi private entity that follows in the distinct historical tradition of the first and second Banks of the United States. So what the Supreme Court is saying here is even though they're granting the President this authority, this stay, which is temporary, in this case, it doesn't, they say, have anything to do with the overall argument about whether the president does or does not have the authority to fire people at the Fed, they're saying the Fed is structured differently, has a different history, and therefore, that's an entirely different issue. So that is interesting and may have some implication on the president's fight with Jay Powell over the Federal Reserve. Guys, back over to you.
- [22:56]
Tim Seymour
All right, Eamonn, thank you. Eamon Jabers at the White House. So that's interesting. Jay Powell is safe, according to the Supreme Court, at least for now. Mike. I don't know. It feels like it was never on the bingo card that he would actually be removed. But it certainly gives that fight the tension between Trump and Powell. It sort of takes the edge off of that. Right. Because Trump could say whatever he wants. Doesn't make a difference. There is no ability to fire him.
- [23:19]
Dan Nathan
No, I don't think there's a need to either because we're going to have a new fed chairman in 1012 months. So and that'll be discussed, by the way, starting at the end of this, end of the year, which will then kind of go into the next whoever the next Fed chair is. So I think as you rightly said, he's just trying to create tension there. He's trying to create pressure and maybe a scapegoat if we do slip into recession. You know, he has somebody who can say, well, they should have cut rates. So that dynamic I don't think is going to change by the way, based on this ruling that terrible for the bond market.
- [23:48]
Mike Wilson
I mean, here we are, we're talking about the bond market and concerned about yields. Go try to can fire, go try and fire the Federal Reserve chairman. See what happens.
- [23:56]
Orfe Divangui
That would be too.
- [23:56]
Tim Seymour
Right.
- [23:57]
Mike Wilson
Have fun with that. It's not going to go well.
- [23:59]
Tim Seymour
Coming up, some retail stocks catching our attention. Williams, sonoma, Ralph Lauren, BJ's all on the move. Advance auto parts jumping nearly 60%. What our traders think of the latest results next plus pharma and focus. We dig into the fresh data drop out of Asco, the details and the names being impacted when fast money returns back into.
- [24:20]
Katie Stockton
With leading networking and connectivity.
- [24:22]
Tim Seymour
Advanced cybersecurity and expert partnership.
- [24:25]
Mike Wilson
Comcast business helps turn today's enterprises into engines of modern business Powering the engine of modern business powering possibilities.
- [24:33]
Katie Stockton
Restrictions apply.
- [24:36]
Tim Seymour
Ten years from today, Lisa Schneider will trade in her office job to become the leader of a pack of dogs as the owner of her own dog rescue. That is a second act made possible by the reskilling courses Lisa's taking now with AARP to help make sure her income lives as long as she does. And she can finally run with the big dogs and the small dogs who just think they're big dogs. That's why the younger you are, the more you need AARP. Learn more at aarp.org skills.
- [25:07]
Karen Feiderman
Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single purpose making our communities healthier. That comes from making courageous decisions, partnering with local communities to grow programs and services and expanding healthcare access to those.
- [25:28]
Tim Seymour
Who need it most.
- [25:30]
Karen Feiderman
Together, we're building a healthier future. Learn more@mycare.org.
- [25:41]
Tim Seymour
Welcome back to Fast Money. More retailers reporting results this morning. Williams Sonoma lower despite better than expected earnings and revenue. The company posting disappointment, pointing gross margins. Ralph Lauren climbing out of the red. The apparel company topping EPS and revenue expectations and said it was considering price hikes. BJ is missing estimates for comps Comp Club sales and shares of Advanced auto parts surging 57%. That is right, 57% after reaffirming its full year guidance despite the impact of auto tariffs and some after hours retail earnings as well. Deckers outdoors beat EPS and revenue estimates but sales of its HOKA brand disappointing and Ross stores doing the same. But lowering Q2 EPS guidance and wow, those declines are steep. Right away. Karen, you looking at both these?
- [26:24]
Orfe Divangui
Yeah, well, let's just look at Ross stores. I mean we saw TJX was down a little bit yesterday, quarter was five. It was the guidance that was a little light. They had this very wide range of tariffs being an 11 to 16 cent hit to the second quarter. And then they withdrew guidance completely. Why they even give any guidance at all? I don't know why any retailer does it right now would seem like a free pass. How can you possibly know? The idea that someone would give me guidance would make me think, well that, how do you possibly do that? So also no guidance, but a big buyback. They did announce a big buyback. Three and a half billion dollars. The balance sheets in great shape. That one's sort of interesting to me. I wonder if this is a bit of an overreaction here.
- [27:05]
Mike Wilson
This Decker's move to me is a harbinger of other things for other discretionary apparel. And I'm talking about Birkenstocks. I'm talking about on arms, I'm talking about these things that have had 40% moves off of those lows. You have, you have headwinds for the consumer that are independent of what's going on for these companies in terms of where their stuff's made and the cost there. And just I, you know, I think the multiples that they're trading at, they can't hold.
- [27:33]
Orfe Divangui
What I just said about the buyback was Deckers. I'm sorry. Yes.
- [27:38]
Katie Stockton
You know, Home Depot was the more interesting retailer to me. You know, you think about what's going on the housing market, you think about what mortgage rates are stuck at 7%. You think about this cold supply demand sort of thing and people are not likely to kind of trade up. And you know, you look at this name and you know, initially people like the results, they like the kind of commentary around it and gapped up and it gave it all back closing lows and it's gone down for the next couple of days. And so it tells me a little bit, maybe it's kind of where Tim's going from a, you know, a discretionary standpoint. I don't know if you kind of throw that in 100% indiscretionary, but this is a name that probably should be acting better in my opinion. But it doesn't act particularly well. And I'm really focused on a lot of these stocks that have gone back or whether it's an indices who filled in the gaps from last, you know, Friday or Monday I guess it was right. We walked in and we had, you know, a framework for some sort of deal or so I think technically I think there's some problems here. I think that the, some of the transports look this way. I think the housing, if you look at the xhp, it's kind of broken that uptrend off the April lows. So I think mind the gaps here people.
- [28:37]
Tim Seymour
Coming up some big moves in the pharma space after the latest data out of asco, the trial result details and the names impacted next. You're watching Fast Money live from the NASDAQ markets at in Times Square back right after this. Imagine what's possible in your business career when learning doesn't get in the way of life. At Capella University, our game changing Flexpath learning format is available in select business programs and lets you learn at a time and pace that works for you. That means you don't have to put your life on hold while earning your business degree. Instead, enjoy learning your way and earn your degree without missing a beat. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo need money for college?
- [29:25]
Mike Wilson
Down payment for a house. A nest egg. I started the club for you. The investing club is about allowing you to be in control of your own money.
- [29:35]
Katie Stockton
We do something nobody else does.
- [29:37]
Mike Wilson
We tell you what we're going to.
- [29:39]
Katie Stockton
Do before we do it.
- [29:41]
Mike Wilson
We're not traders. We're about creating long term value. You want to be a better investor? Join the club.
- [29:48]
Katie Stockton
Join the join the club and save.
- [29:49]
Dan Nathan
At cnbc.com/join gym terms and restrictions apply.
- [29:57]
Tim Seymour
Welcome back to Fast Money. ASCO abstracts are out marking the latest major data dump in the oncology space ahead of next week's annual meeting in Chicago. Angelica Peebles has been combing through all the reports, joins us now with more. Angelica?
- [30:08]
Karen Feiderman
Yeah, Melissa, there's always a lot to go through, but today we're focused on two names working on drugs for head and neck cancer. First up is Marisol. So that abstract is showing an overall response rate of about 60% and that's slightly lower than what we saw last year at Asco, but it's still above what Lyric was looking for. But there is an investor call that's just getting underway. They just posted some additional results. So they will be sharing the full results from that phase 12 trial on this call that's ongoing. That stock up about 2% right now. And then on the other hand you have Bicara and that's down about, you can see 37%. This is a much smaller, smaller rival. The market cap is about 800 million today before the close. But that drug Producing about a 64% objective response rate and a median progression free survival of nearly 10 months and 12 month overall survival was about 61%. And those full results will be presented next weekend at Asco. But clearly investors not liking what they're seeing here. So more to come and we'll come back with any headlines from that Marist call.
- [31:07]
Tim Seymour
Now just taking a look at the, the ASCO conference from a, you know, a broader, more macro sort of standpoint. Angelica, I mean is this year a little bit different? We've heard about so many pharmaceutical companies having difficulties with their pipelines, wanting to do deals. Now they've got cash, the sector has been beaten down and there's not a lot of confidence in the companies in general, the big cap companies. So a lot of these smaller mid cap companies I would imagine are basically trying to sell themselves, you know, partners.
- [31:36]
Karen Feiderman
This of course is always a big meeting where people can present the data, make the case why they should be bought. But like you said, there is so much uncertainty out there and you know, talking to different investors, bankers in the space, there is this sense that until we get more certainty, whether it's on tariffs, whether it's on that tax bill that just passed today that you might see a little bit of a hold. But of course people still want to see what the latest and greatest is. We don't have, you know, the results for next weekend, those late breaking abstracts, really the bigger data presentations. So there's more to see from the big pharmaceutical companies as well. As we dig through some of these results, they might not seem as exciting as typical Years just based on some of the moves that we really haven't seen so far tonight. But it's always a good moment to pay attention to what's happening in that innovation in the cancer space.
- [32:21]
Tim Seymour
Yep. Angelica, thanks. Angelica Peebles with the ASCO data dump which happens every year, what do we think in terms of the space? And obviously there's a big difference in the biotech players or the oncology. Right. And oncology specifically versus some of the big cap harmony.
- [32:36]
Mike Wilson
I think on college safe. I mean I think it's a place that I think of people like Gilead who've made big investments there. But J and J, who has a very strong oncology pipeline are places. Yeah, well these are, these are places where those investments were made in, in by, by at least mega cap pharma companies that I think in some sense have been believed. Gilead, I mean look at that chart over the last three years. This is a company that first of all at one point was very cashed up, had a lot of risk attached to making bad acquisitions that that really is performed and has outperformed the biotech group. So and I think that's when you stay long.
- [33:09]
Tim Seymour
Yeah. Mike, is this seen at all as a safer, safer sector?
- [33:14]
Dan Nathan
Well, I mean biotech is very interest rate sensitive so it's weighing out now the pharma sector is very cheap. Even if you look at the existing drug companies. I think RFK Jr. Has kind of put a wall in there and until, until he flips kind of more positive. I think the group's going to be under pressure but it could be a really good 26 story.
- [33:35]
Tim Seymour
Coming up, home sales dropping, mortgages rate, mortgage rates rising, how the housing sector will hold up and whether the market can shed its recent struggle to debate that best money returns. Welcome back to Fast Money. Stocks losing steam in the final minutes of the session. The Dow and S&P 500 virtually unchanged. The NASDAQ with a small gain up about a quarter of a percent. Two IPO surging today. Shares of Hinge Health, a digital physical therapy company jumping more than 17% in its market debut. And the Ryan Reynolds linked ad tech platform mountain surging nearly 65%. Some after hours action to bring you Autodesk topping expectations, raising guidance and workday and Intuit both beating top and bottom line estimates.
- [34:23]
Mike Wilson
Ryan Reynolds, by the way. I mean it just needs to be said that guy's got the Midas touch.
- [34:27]
Tim Seymour
He really does.
- [34:28]
Mike Wilson
There's a lot of bromance here. I mean that guy, he won the stock draft a Couple of times. I mean, he's Ryan Reynolds. We're watching you.
- [34:34]
Tim Seymour
I feel like there's a little bit of, I don't know, jealousy.
- [34:37]
Mike Wilson
Yeah, I said bromance. I mean, I didn't, I didn't hide from.
- [34:42]
Katie Stockton
Most of us are.
- [34:43]
Tim Seymour
It's okay. Nothing wrong with that. Ryan Reynolds. Why not? You're going to pick a man crush. All right. More bad news for the housing market. Existing home sales seeing their slowest April since 2009. The National association of Realtors reporting sales fell 2% from a year ago. Economists were expecting a nearly 3% gain. Let's get reaction from Zillow senior economist Orfe Divangui Orfeh. Great to have you with us.
- [35:05]
I
Thanks for having me.
- [35:06]
Tim Seymour
So we've just spent, you know, the first half hour of the show or so talking about all the uncertainty that companies, consumers face. We're seeing this in the housing market. What is going to get people off the sidelines? Is it only lower mortgage rates? Because you might have to wait a very long time if that is the only thing that's going to get people moving.
- [35:24]
Katie Stockton
Yeah.
- [35:25]
I
So last year was mortgage rates.
- [35:27]
Tim Seymour
Right.
- [35:27]
I
We saw mortgage rates affecting seasonal patterns. This year it's all about policy uncertainty. We had the big stock market decline first midway through February, heading into March, and then we had that again in April.
- [35:43]
Mike Wilson
Right.
- [35:43]
I
And I think the slight decline in home sales in April shouldn't be too big a surprise. But we're likely to see another slow month next.
- [35:54]
Tim Seymour
Right.
- [35:55]
I
Next month before seeing a rebound in.
- [35:58]
Tim Seymour
In activity, which is interesting because obviously it's a spring selling season, so you would think that it would be seasonally stronger, there would be some pickup as opposed to decline in the next month. Or when you say policy uncertainty, do you mean that there's uncertainty surrounding people's. The impact of the policy on the economy and perhaps a person's employment status? What sort of policy uncertainty is translating into consumers reluctance?
- [36:22]
I
It's the fear.
- [36:23]
Tim Seymour
Right.
- [36:23]
I
So you look at all the consumer surveys. It's the fear, you know, that seized kind of everybody in March and April. And so that's causing people to sit back. When you're afraid about where your future income, when you see the value of your 401k dropping, you pull back, you sit on your wallet, you don't go out and buy a new home, for example. That's what we're seeing in March. In our April data, we also saw the number of homes going pending, going under contract fell was 2.5% lower than it was a year ago. And so I expect that we should see another slow month in the nor home sales account data. But early indications from Zillow data suggest that there's a rebound in the homes going under contract in the first two weeks of May.
- [37:22]
Orfe Divangui
Orvi it's Karen, thanks for being on. So one thing that would help high mortgages is lower housing prices, which has to be some supply and some people just changing their expectation of price. Any sign of that at all?
- [37:35]
I
Absolutely. With inventory rising, we had the most homes on the for sale market since August of 2020. Right. Inventory is up 20% relative to a year ago. And with inventory rising, we're seeing more and more price cuts. You know, in fact, we had a record number of price cuts for the month of April, you know, on our, in our data. And so I think that's good news. Mortgage rates not expected to come down very much, but buyers have more options, they have more bargaining power than they've had in a very long time and I think that's going to be helpful. Our forecast in terms of prices is going to be price prices falling slightly in 2025, but we expect sales to rebound by about 1.4% when compared to 2024.
- [38:26]
Tim Seymour
Wow. Or thanks for joining us. Always great to hear from you. Or so where we expect that's good. It sounds like there's going to be some movement in housing.
- [38:37]
Dan Nathan
Well, this is a great example of where we've been in a recession. I mean we're at home sale levels of post a gfc. I mean like it's like so if you have a recession, they're going to fall out of the basement window, you know, so this is an area, I think, where when rates come down and I do think that's a big part of it, affordability is the other one. I mean we just need prices to come in and it is about the existing supply. So in Florida and Texas we're seeing some existing supply, particularly in Florida because of the cost of ownership. So it's starting, it's starting to percolate. But you know, as you know, these, these homebuilder stocks will sniff out the rate cuts before it actually happens. I think what Dan said earlier is right, they kind of failed a little bit here. I don't think it's quite time to make the housing call trade. But I do think this could be a big economic call and it could be a good stock market call probably in the third, fourth quarter.
- [39:21]
Mike Wilson
I think that the housing stocks had their boost when rates got weaker really late last year. And it was almost as if they outperformed the period when actually the market was in their favor. So, you know, I'm in agreement. I don't think you need to go near them right now.
- [39:36]
Katie Stockton
Yeah, you know, two things I just heard from Mike over the last 20 minutes though. He's looking at some cheap groups that will benefit from lower rates. You said you know, pharma and you're saying, you know, homebuilders. And I think that's kind of interesting because as we get further into the year, you're going to be looking for things that if, you know, we believe that or you believe that we're going to have high single digit earnings growth, you're probably going to want to pick up some cheaper groups that should do better in a lower, you know, interest rate environment.
- [40:00]
Tim Seymour
Coming up, a crude reality. Energy in focus as OPEC waves another output hike as millions gear up for an above average hurricane season. The impact on energy prices next. Don't go anywhere. Fast money's back into. Welcome back to Fast Money. Oil prices slipping today after a report that OPEC is considering a production increase in July even as global oil demand weakens. The NOAA also releasing its official 2025 hurricane forecast today predicting a 60% chance of above average activity in the Atlantic Basin this season. So what's the play on oil here? I mean prices seem to be destined to go lower based on OPEC alone. They're willing to, you know, not defend price anymore for market share.
- [40:47]
Mike Wilson
It's fascinating and I think the politics here really are a lot more important to the Middle East. Look at, look at the relationship between the Middle east and the US right now and there's a lot of different from tentacles to it and I think it's going to continue here. I think Saudi has to defend 50 but the, the, the cooperation with OPEC is at a place where I think it's, it's pretty low. What do you do here? Because I think the oil services are going to be even most sensitive. I, I like midstream. I continue to like some of the utility type plays. Energy Transfer is a name that I owned and I think the balance sheet is excellent. I think people underappreciate the resiliency of these companies who have gone through couple horrendous cycles and I think I've learned from it.
- [41:23]
Tim Seymour
Senior acronym.
- [41:24]
Orfe Divangui
It is I don't know one of those letters. Yeah, I'm concerned about the, oh, I had to check to see it can't go negative like that for that contract in May of whatever it was 2022. No, I mean the services space has just been awful. We talked about this yesterday with, with the shale. Are we at peak shale and, and God forbid, if we get below whatever they decide the number is, they can not going to drill anymore.
- [41:51]
Katie Stockton
All right, Mike, can I ask a question again, Mel? Does this fall into again if you're like, you know, growth accelerating into 2026, cheap sector underperform. Yeah. Does that, do we, are we putting energy in there?
- [42:04]
Dan Nathan
Yeah, but it's, but it's very bifurcated. So we have a negative view on oil. Okay. For the reasons that Tim mentioned. I just think there's too much supply and now, and by the way, if there's a deal with Russia in Ukraine, eventually that supply hits the market. So. But the natural gas apparatus.
- [42:16]
Katie Stockton
Right.
- [42:16]
Dan Nathan
That whole supply chain I think looks very exciting whether it's, you know, the producers themselves, the, the processing plants, the midstream, and then of course building more plants. I mean that's one thing we know we're going to get is more natural gas fire plants not only here but in the Middle East.
- [42:30]
Tim Seymour
Coming up, a look at big tech's graveyard. Failed. Failed devices will open a recent megadeal help it avoid making the same stumbles as some of its competitors. Got that debate Next, more fast money into. Welcome back to Fast Money. Apple shares falling for the seventh day in a row just one day shy of its longest losing streak ever. The fall this week coming in part because of Apple's former design guru. He's joined forces with OpenAI Sam Altman. The duo says they're going to create breakthrough hardware for AI. But can they deliver? Kate Rooney is set here to take us down the tech road littered with broken dreams.
- [43:11]
J
Kate, Mel, that is the big question. Can they deliver? Building devices we know is very hard to do. There is a long list of failures that we've seen in this space and the pressure right now is on for OpenAI to prove that. Jony, I've can bring that same iPhone magic to these new AI devices. So OpenAI is going to be paying $6.5 billion for the tech designer startup. It is barely a year old, no product out there yet. OpenAI CFO Sarah Fryer telling me earlier, IO was hard to value because it is so young. She says, quote, you're really betting on great people. But she does think devices are going to help drive those chat GPT subscriptions at some point. Let's take a look though at some of those device whiffs from the past. Despite having Some of the best and brightest working on those teams. You've got Google Glass, if you remember that. Amazon with a fire phone, Microsoft Zune, that was sort of an ipod competitor at the time. Facebook Portal, those are all on that list. Private startups have now tried in the more modern AI devices, Humane and Rabbit. Jony, I've called those, quote, poor products. Humane was acquired by HP and then shut down. And Rabbit is still going. But the pressure is on right now for big tech as well. Amazon got Alexa plus Meta and Google of their smart glasses plus Bloomberg now reporting that Apple does plan to unveil glasses next year as part of its AI pushmill.
- [44:30]
Tim Seymour
All right, Kate, thanks. Kate Rooney. Dan Nathan. Do you think I was going to.
- [44:35]
Katie Stockton
Pull it off something? I mean, the guy has been a genius. If you think about the last few hits that Apple had and going back to the watch and then prior to that, a lot of the stuff that he's done, he actually built the design the spaceship where they work and stuff like that. The six and a half billion dollars is like a crazy thing, but open air, how about it? I mean, they're raising hundreds of billions of dollars or whatever the heck they are at whatever prices. I mean, the one thing I'll say is like the bar is not particularly high on the glass front. I have these meta eye glasses. They're very nice. They work with, you know, like better AI, which actually kind of sucks right now. I mean, like, at some point it might be better. So if they were to come out with something that they could do mass market, that comes with maybe a subscription, because at some point the subscriptions for these chatbots and stuff, they're just going to plateau. People are just not used to paying for these sorts of things. So you're going to have to add some hardware and some other services to kind of justify the cost.
- [45:22]
Tim Seymour
All right, we've got a news alert here on U.S. steel. Shares initially higher on this news. On a report that President Trump will review CFIUS recommendations on the Nippon deal. Most agency members believe national security concerns can be addressed. A final decision on the deal is expected June 5. They were not unanimous at all in terms of whether security measures, security issues were an issue. So we do see the shares up by about 1 1/2 percent. They're up 2% on the back of this headline here.
- [45:50]
Mike Wilson
I think the need was for some type of an olive branch to come in off the ledge on a deal that was not going to be harmful to the workers, was not going to be harmful to the company. And their footprint. In fact, it was capital that they need and I think Nippon Steel is a good partner.
- [46:03]
Tim Seymour
Up next, final trades, final trade Mike.
- [46:13]
Mike Wilson
Wilson Walmart Tim Nice having Mike Gilead.
- [46:18]
Orfe Divangui
Karen Deckers wait three days at least.
- [46:21]
Katie Stockton
Dan I'm long Mike Wilson 6500 call in the next year.
- [46:24]
Tim Seymour
All right, thank you for watching Fast Money. Nice to have you Mike. Mad Money with Jim Cramer starts now. 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 need money for college?
- [47:11]
Mike Wilson
Down payment for a house? A nest egg? I started the club for you. The investing club is about allowing you to be in control of your own money.
- [47:21]
Katie Stockton
We do something nobody else does.
- [47:23]
Mike Wilson
We tell you what we're going to.
- [47:25]
Katie Stockton
Do before we do it.
- [47:27]
Mike Wilson
We're not traders. We're about creating long term term value. You want to be a better investor? Join the club.
- [47:34]
Dan Nathan
Join the club and save@cnbc.com join gym. Terms and restrictions apply.