A $500 billion AI mega-deal... and whether Wall Street is getting Kevin Warsh all wrong 8/10/26

21:10So what are you waiting for? Come see all that's in store. Visit the Wayfair store today at Edens Plaza and Wilmette.

21:18Mike Schumacher:Wayfair, every style, every home. Welcome back to Fast Money. Apple getting a downgrade today from hold to underperform. That's basically a sell call. Jeffries analysts saying the company may no longer debut its all glass iPhone next year, and that is casting doubts on their ability to command more cash from its consumers for premium products. Apple shares in the red today. It is the stock's first down day in five. It was off a percent and a half. Courtney, look, it got to a premium valuation. It was a port in a storm when the rest of tech was for sale. But how do we think about this call? Yeah, I think valuation really is the biggest thing here because this is trading over 33 times forward earnings.

21:58And when you're paying that kind of a premium to a valuation, I think you want some sort of justification as to what you're paying for. And I think they don't have the kind of AI story, a monetization path that some of the other competitors do. But you're also looking here, and they have the memory chip cost. And this is going to be a real problem for them, where a lot of this call had to do with the fact that they were going to have some all-glass iPhone, which I think the question is, was that the case or not? But the bottom line is, like, do they have a good enough product to raise prices, and are customers actually going to be willing to pay that?

22:28I think that's the question here. I think the bigger question is just the valuation, and what are you paying for at this point? That's, I think, where you want to be.

22:33Mike Schumacher:Yeah, worth mentioning the company's never kind of said we intend to make an on-glass iPhone. This is all a kind of channel check and checking with suppliers. But, you know, Guy, I feel like there's sometimes you have an analyst that just kind of has a feel for how the stock might be leaning. Now, I should also say Jeffries has not had a buy on the stock for like a couple of years. They've been a hold or an underperform. So the point is it's not somebody who is all bullish on the way up and just turned. So I wonder how you. No, I think that's a great call. So playing a little stock market to your point, I think what the hope here is it gets to a level where they can then turn and pivot, which makes sense.

23:09And, you know, Courtney mentions valuation. She also mentioned it's Apple's talking to CXMT, which is a Chinese memory chip maker in terms of all the things we're talking about. I mean, their costs are going higher. They're looking for a way to sway some of those concerns. You wonder what happens with Micron in this. Now, I was fortunate enough to be offstage when you walked by and you said Micron should be higher on all the news we just heard 45 minutes ago. It ticked a little bit off. But not as much as you would think, given the sell-off it had today. So there's just something to watch there for sure.

23:37Mike Schumacher:Yeah, and I guess that also is the market is not moving fast to sort of price in anything fresh in terms of new money from this NVIDIA financing type agreement. Tim, Apple, you know, it's funny because it does act as defense when necessary. And, you know, if you just look at it versus like Microsoft, they've just gone in opposite directions in like the last 10 days. Well, the question is, is this kind of a market call? I mean, I haven't looked to see the other names in his sector. But if you're getting, let's just say, less optimistic on Apple. By the way, as you said, any underperform is equivalent to a sell in the markets these days.

24:14Mike Schumacher:And that's actually not mailing it in. I mean, that's, you know, I'd like to see a lot more of that. I almost feel that this is a market call, though, because, as you said, port of port of lighthouse in the storm, that kind of thing. If the headline is the all glass is not is not ready in time, that's the wrong reason. It's the ASP. Remember, Apple's had three down days of significance in the last six weeks. And they have been the ASP announcement. So sorry, the the well, the price increase based upon a memory cost increase. It was an earnings number that was fine but wasn't good enough, and it's a downgrade or two.

24:49Mike Schumacher:I wouldn't be selling on this news. Yeah, and going into, of course, the whole fresh upgrade model, all the rest of it. We'll see how that fits in. All right, up next, shares of Berkshire Hathaway hitting their highest level since Greg Abel took over from Warren Buffett. How's the new CEO putting the company's cash to work and driving gains? You're watching Fast Money Live from the NASDAQ market side in Times Square. We are back right after this.

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26:34Visit the Wayfair store today at Edens Plaza and Wilmette.

26:39Mike Schumacher:Wayfair, every style, every home. Welcome back to Fast Money. Berkshire Hathaway shares closing out the day up 1 % after reporting earnings on Saturday. Newly-mitted CEO Greg Abel starting to put the company's cash stockpile to work, buying nearly$20 billion in U.S. equities on a net basis. Operating earnings for Berkshire rose to nearly$13 billion in the second quarter, with Berkshire Hathaway Energy leading the gains in their holdings. So, Tim, you know, it's not a huge move in the scheme of things in terms of how big the cash pile is, how big the market cap is. But also, you know, maybe it's a new mode because it wasn't as if there was some dislocation in the market and Abel came in there as a buyer.

27:21Mike Schumacher:No. In fact, this may be a slight, you know, I wouldn't call this style drift, but I would I would call it, you know, feels a little different. And meanwhile, when you're buying Berkshire and this is the same Berkshire that's in the financials XLF. I mean, you're buying banks and you're buying energy. And I think this is a market that obviously has rewarded those two sectors over the last 12 months, but I think will continue to based upon the trends we have. The company also bought back$4.5 billion in stock. You know, that's been a big element there of like, you know, some investors want them to do a lot more of that.

27:50Mike Schumacher:It's not as if the stock's super cheap, but I guess cheap enough that people are happy to. No, the cash hoard got, you probably have it in front of you, Michael, I think it got up to$380 billion. Like$360, yeah. $360, which against a trillion dollar company is obviously significant. And the word you all used earlier in the show was patience, which is something I think that Berkshire Hathaway pre this sort of change. Be some song by Guns N' Roses, by the way. Not really. I mean, it was, you know, they had to put that one out. They needed to get one out. What was that off of Use Your Illusion? No.

28:17Mike Schumacher:It was in between AppSite for Destruction and Use Your Illusion. I'm sorry, I'm sorry, Michael. No, this is much more important. It is, actually. But as I say, it was. So now they're putting money to work. Are they doing it at the right time? Yeah. Are they doing it historically with that Buffett indicator at levels we haven't seen maybe ever? Are they doing it the wrong time? The market is rewarding them today. I would say even Warren Buffett has said, listen, that Buffett indicator thing was an observation in time. It's not as if he feels like it's determinative of whether stocks are in a bubble or not.

28:45Mike Schumacher:But, Courtney, if you look at Berkshire Hathaway, it's got a lot of housing related. It's got the energy. Insurance is on a little bit of a downswing just because of underwriting profits in the industry. You see things like Progressive and Allstate not doing that well. But it is this collection of, look, if the economy is good, Berkshire should capture a lot of that. Absolutely. And I think there's been a lot of talk about that. You still want to own the AI trade, but there's this broadening that's happening. I think Berkshire is a really good way of doing that. And if you look at the stock, it actually has been underperforming the S &P 500.

29:14Today, it outperformed the S &P. And I think what investors are liking to see is them buying on that underperformance. And they're finally starting to deploy some of that cash. I think investors are going to continue to reward them for that.

29:23Mike Schumacher:Yeah, they never did get credit in the market really for all that cash. We'll see if it does represent a change in strategy. All right, coming up, gaming out the Fed's next move. What the latest uptick in Treasury yields is signaling. And one of our traders says markets could be getting Fed Chairman Kevin Warsh all wrong. Fast Money is back after this. Missed a moment of Fast? Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this.

29:56Mike Schumacher:Welcome back to Fast Money. Stocks with a muted session to kick off the week. The Dow losing just 60 points, the S &P ending virtually unchanged, and the Nasdaq off by about a third of a percent. Trade Desk dropping 3 % for a fourth straight down day. Shares have now lost two-thirds of their value this year. Airbnb, meanwhile, jumping almost 4%, building on Friday's 17 % gain. The company handily beating estimates and giving a strong forecast last week. Stock up 3.7 percent. The SpaceX also rising over 4 percent on the day. Today's move, bringing the stock back above its IPO price of$135 a share.

30:35Mike Schumacher:So, Tim, let's hit Airbnb here. A little bit of a perk up. It just it just feels like the poster child for all that were not software companies that became software companies when software is being sold. and all those trades that actually have been extraordinary, especially, and they shouldn't be related, but kind of correlated to the Microsoft earnings print. Now, Airbnb was based upon their print, and their print where not only did they show double-digit back-to-back night gains and kind of up 25 % year over year, up almost 30 % in revenues, but they talked about the AI features of their offering and how that's allowing people to do things on Airbnb they never could have done.

31:11Mike Schumacher:By the way, where else are you going to go? I mean, it does kind of feel like they're one of those places. Yeah. I mean, obviously, there was a line that said all the booking services and anything that was a walled garden is going to get penetrated or kind of competed away from AI. But it's not happening just yet. Meantime, let's get to some energy. Oil in the U.S. Strategic Petroleum Reserve falling below 300 million barrels at its lowest level since 1983, as the Iran war continues to put pressure on global inventories. Energy stocks pushing higher today, along with the commodity price. So, Courtney, on the one hand, it's obviously getting toward critical levels.

31:45Mike Schumacher:On the other, this is what was kind of authorized when the president said we're going to, you know, use up to 175 million barrels, get released. Yeah, and I think the big question is where the energy prices go, because this is part of the inflation story. This was part of the reason the markets came down earlier this year, because if oil is high, that can lead to higher inflation, higher interest rates. I don't think at these levels is necessarily concerning. I think that the energy companies can do well. I don't think this is going to be too problematic for inflation here. But it's going to continue to be a question.

32:15And even now, we're still much below the levels we were at the peak of the geopolitical concerns. So I think we're just still waiting for a resolution there. And I think you're going to see things stay at a certain level until you actually get that. So we keep almost having one, and then it's not going through. We'll probably stay here. But ultimately, I don't think it's going to be an issue moving forward.

32:33Mike Schumacher:Guy, at every step along the way since February 27th, since the Iran conflict began, oil arguably has undershot what people thought might be a likely reaction, right? Whether it was the risk of the closing of the strait, inventory is getting worked down, there's no more cushion. I mean, I guess one, why might that be? Is the market just kind of whistling past the graveyard? Or are we finding ways around the tightness? I'll answer the first part of the question. Historically, being long crude on geopolitical stuff, as you know, has always proven to be a loser in the long run. So I think commodity traders have sort of figured that out.

33:08in any sort of semblance of resolution. You see how quickly people sell the commodity. But the flip side of the coin is where you're going. I think people are underestimating what's going on here. And I agree with that, not only in terms of the commodity, but in terms of the stocks. And say what you want, but XLE is held in like a champ despite crude oil being sold off in a material way. OIH continues to bounce off the 200-day moving average really well. And these refiners continue to make all-time highs. So people are not realizing, I don't think, what's going on with these energy stocks. I still think they're biased here.

33:40Mike Schumacher:Yeah, I mean, it's a comfortable level for crude and then refining margins are fat as can be at this point. So I guess the companies can do fine. Well, now to the markets and the Fed. There may be a major disconnect between Fed Chairman Kevin Warsh and the market. So, Michael, you said earlier on our call you think the street's misreading the new Fed chair. And, you know, I guess there was a lot of kind of conflicting kind of takeaways from the last press conference. What do you think the market's missing? I think the markets are actually applying things to Warsh that he hasn't really said. He hasn't said a heck of a lot in terms of his own views, next to nothing, frankly.

34:15He's talked about the committees, the task forces, et cetera. But as far as Kevin Warsh's own views about monetary policy, the thing that I keep hearing is he says, look, we've got one target on inflation. It's 2 percent, period. There's not a shadow target. There's not a fake target. We don't have a pizza and talk about 2.5 percent. We don't do that. So that, to me, sounds like a fairly hawkish guy. Now, he's just not ready to move quite yet. And the market said, no move last month in July. Therefore, somehow it's dovish. I think that's backward.

34:43Mike Schumacher:Well, he certainly has said 2 % is the target, absolutely. And then he also said, yeah, PCE is still our target, but maybe it's not the best benchmark of what inflation is doing. And then when he said, yes, we have to, you know, kind of move policy to make sure we get price stability, He then questions in the press conference, maybe the policy rate's not really the thing we have to go to. So you understand why the market can basically see whatever it wants, right? You're looking through a narrow window. It's kind of dim out there. Dust can be mistaken for dawn and vice versa. That's right. So the market said we want to see somebody who's not really as hawkish as we thought.

35:19Consequently, we're going dovish. And I think you make a great point, Mike, when you think about the tradeoff between Fed funds and balance sheet. Walsh's balance sheet views are pretty clear. But he said several times, we don't really have a good way of trading off those two tools. If we change our balance sheet size, how many basis points he's had in Fed funds, we don't know. The Fed doesn't know. I don't know. You don't know. It's just not clear. And he'd like to have a much better idea with some rigor behind it what that might be, I think, before taking a big move. So I think the market has leapt ahead of what Warsh has actually said.

35:49Mike Schumacher:So if you think there should be maybe more hikes in the market at this point, what does that mean for longer end? Because last time we put more hikes in, long-end yields came down a little bit. Yeah, I think that's not going to happen this time. I mean, you think about what the market price is now, let's say, to the midpoint of next year, 40-odd basis points of rate hikes, give or take. I think it probably should be 75 plus or minus. You can look at various mathematical tools and say, oh, it might be 25 basis points in the two-year. But to your point about the 10-year, maybe it's 15, maybe it's 20.

36:20But the thing that concerns me about the back-end is it's a compounding series of events. You've got this massive CapEx surge. We talked about that at length. The last panel was amazing. That's not going away. It's not going away this year, next year, the year after that. That's out there. Defense spending, that has not come up today. And yet that's out there, too. That's not going away either. You've got government deficits growing pretty substantially. I don't see a lot of restraint. And on top of that, we've got this issue of inflation. It was low last month in the U.S. Is it going to be low Wednesday?

36:50I hope so. That would be nice. But I wouldn't count on it. He's through the roof, though.

36:53Mike Schumacher:I mean, again, on a relative basis. Right. So is it just one good print? That's not a trend, in my opinion. I also think we're forgetting, you know, we talk about the two sides of the Fed mandate. How about the two sides of what causes inflation? I mean, the global economy hasn't been this strong in unison in a long time. You just saw GDP numbers coming out of Europe. I think second half China is better. I mean, we have a world that can not only take higher rates, except for credit that's gone wild, and we could bring it back to the A block. But I think we're in a place here where you have to understand that the economy on top of liquidity conditions, markets at all-time highs, the Fed's behind the curve.

37:28Mike Schumacher:They are. I agree with that. Ten-year Treasury, long rates. You asked about that. Should be north of 5 % pretty quickly, in my opinion. All right. Then it sounds like everyone thinks we should behave as if we're in overheat mode. I can't go for that. No can do. That's a nice job by you. Yeah, move. There you go. Still with all the notes. All right. A quick news alert. New York Mayor Zoran Mamdani's Piatta tear tax has been temporarily halted by a state court judge in Staten Island. Bummer. Judge Wayne Ozzie granted a temporary restraining order to a group of homeowners who argued that City Hall's publication of a list of homes that could be affected by the tax caused mass confusion.

38:03Mike Schumacher:City is now blocked from taking further actions until the August 31st or in August 31st court date. All right. Coming up, shares of hims and hers on the move after second quarter results. We'll dig into the numbers and the state of play for the telehealth giant. Fast Money Returns.

38:27Mike Schumacher:Welcome back to Fast Money. We have an earnings alert on Trump Media. Eamon Jabbers has the details. Hey there, Mike. That's right. First ever earnings call for Trump Media and Technology Group here today. The company reporting a net loss of more than$238 million in the second quarter on revenues of less than$2 million. Remember, this is the company that owns the president's Truth Social social media platform. and officials from the company there on the call answering some questions they said they'd received about this new API product. We've talked about it a lot on CNBC. That's the high speed trading product that allows customers to buy high speed access to true social posts, including the president's posts.

39:10Mike Schumacher:They said that they've got more than 10 clients now for that product and they are selling that service at between 60 and 100 thousand dollars a month. So they defended themselves from criticism, Mike, about this, saying that a lot of the information out there is misinformation about it. They said this is an established business practice and said, effectively, this is what they're doing. It's the same as what other companies in the space doing, and they're going to continue to do it. All right. Yeah, I guess, you know, even with just 10 customers, that's a material revenue number based on what they've been producing here.

39:44Mike Schumacher:Still a two and a half billion dollar market cap at Trump Media. Eamon, thank you very much. Let's get to another earnings alert on hims and hers. Shares falling despite the company beating on revenue, as well as subscriber count growing by nearly 2.9 million, up 19 percent year over year. CBC's Brandon Gomez has more. Hey there, Mike. Yeah, the Beyond Subs was particularly interesting, especially since there was some concern of melt off with the removal of compounded weight loss drugs. This was one of the biggest subscriber growth quarters, but that was in part because subscribers from Eucalyptus, an international telehealth platform, are rolled in after that acquisition.

40:17Now, it's likely weighing on the stock a significantly wide loss of 37 cents. I asked the company's CFO about that. He mentioned several one-time costs, the close of that eucalyptus acquisition, restructuring business expenses, legal parameters set aside for a new FTC litigation, looking into the company's use of member data and cancellation practices, the company planning to defend itself vigorously. And then you also have a$30 million investment to learn about peptide manufacturing. CEO Andrew Dudham on the call saying they are awaiting clinical guidance on peptides, but will offer access to already allowed peptides.

40:50The company's next hedged blockbuster, raising Q3 revenue guidance significantly and in turn fiscal year guidance to north of three billion, Mike.

40:59Mike Schumacher:All right, Brandon. I mean, Tim, this is a stock with a beta of three. It swings around all over the place based on what people think their next little bonanza is going to be and how they're sidestepping the regulatory. And then when you get some of the granularity around numbers, it's not all that great. I mean, talking about peptides and wanting to be there, I mean, this seems to be where everybody wants to be. It's certainly a place that taps you into the same kind of euphoria that was around GLP. So, yeah, look, if I want exposure to this stuff, I think there are world-class drug companies.

41:31Mike Schumacher:I'm a little more worried about those folks that are in the fringe of the GLP market. On the other hand, Courtney, I mean, if we do have kind of a regulatory approach that's just sort of allowing people to do a little more than they did before, hims and hers probably, as a marketing engine, probably can make some hay with that. Yeah, that's probably true. But I think when it comes to this company, too, I mean, they keep trying to reassure people that their compounded GLP-1s were just a fraction of their business. But people are really still trying to figure out what is going to be their next revenue source, that that's not going to be the GLP-1 story anymore.

42:04And so I think until they can really show that and prove that, I don't know if they're going to have the same kind of demand that they have in the past. $40 million profit this quarter last year. They lost basically$90 million this year on higher revenues. So the market says, wait a second, your revenue is going higher. You're losing more money, which is obviously never a good thing. So we can talk about the bells and whistles, the relationship with Novo Nordisk. The bottom line is more revenues, less profit is not a winning strategy.

42:30Mike Schumacher:Yeah, and of course, we're showing the stock down 42 % over the last 12 months. All right, coming up, Dick's Sporting Goods laces up the bullish call on Wall Street, giving shares a boost today. And the next leg for the retail trade. That's next. More Fast Money in two.

42:51Mike Schumacher:Welcome back to Fast Money. Shares of Dick's Sporting Goods rising 2.5 % today after Wells Fargo upgraded the stock to an overweight. Analysts growing more confident on the company's long-term trajectory driven by recovery in Foot Locker. Wells'$240 price target implying 12 % upside from today's close. It also said it's maybe the best way to play a Nike recovery. I agree. First of all, yes. Second of all, valuation, despite the run the stock has had, is very reasonable given their EPS growth. So good on them. I think the average price target at Analyst is about$255. I think it goes there very easily.

43:25Mike Schumacher:Mike, the consumer, I think it's another eye of the beholder situation in terms of whether it's purely K-shaped, whether it's hanging in there. Obviously, unemployment is still benign. But what's your take about the trajectory of consumer spending in general where it sits? Pretty good, but very concentrated. So I think that's the risk. I mean, if you're long assets, if you're long, take your pick of any of the hot stocks out there for the last few years or real estate. It's been a phenomenal run. But the risk, I think, is that if there's a little bit of a downturn, the economy goes pretty quickly.

43:54So the concentration risk, I think, is a big one right now.

43:56Mike Schumacher:You know, and Tim, there's one area that really is outside the AI trade obsession. It seems to be traditional retail. Obviously, they can utilize AI and all the rest of it. But I wonder if that means it's kind of being neglected and people are overlooking a little value there. Or is it just like, look, it's safe to ignore it? I think there have been parts of retail that have done really well. You know, the part of retail and discretionary spend that I've been very critical for the last year and a half has been in the athleisure footwear part. And while that's probably been the right call, I actually think that some of them are starting to look somewhat interesting here.

44:30Mike Schumacher:That's why this call on Dix is interesting, because the dynamic on the outlook for Nike, of which used to be at their peak with 75 percent sales, and now it's a little bit less. But in North America, if Nike outperforms, Dix will. Or maybe it's the opposite, I think, is kind of what they've said. But it's a margin story for a lot of retail. So back to value meets retail. I just think you have to be very careful about what street you're on. And I mean, you can't invest in a bad neighborhood in retail either. I think they tend to be very highly correlated. And even though overall, the market has really been a great stock pickers market.

45:02Mike Schumacher:So it's a long way of saying I actually think there are some value opportunities in there. And I think in the discretionary spend in the athleisure space after being bearish for a long time, some of those charts are also starting to turn. And Courtney, I guess we got, you know, tariff refunds coming through, you know, other elements that maybe are going to allow some of these companies to deal with a more inflationary environment. Correct. That's exactly right. And I think also when you talk about the consumer here, back to school spending is expected to be about$150 billion, which is one of the records there, which I think will benefit something like a Dix as well as something like a Target.

45:33But you're asking who benefits here. One thing that's interesting about Dix is you're seeing a more active retiree who's spending more at Dix and also spending on their grandkids. And that's actually a cohort which isn't as affected by inflation, specifically interest rates changing, where they have fixed mortgages or no mortgages. So they've been holding up better, and I think that's pretty interesting.

45:53Mike Schumacher:I do remember during the pandemic it was a golf trade from Dix as well. All right, up next, we'll have your final trade.

46:06Mike Schumacher:It is time for the final trade. Let's go around the horn. Mike Schumacher. Yep, 10-year treasury yield, 5 % by SEP30. All right, so sell the tens. CLF resource trade, Michael. All right, Courtney. Berkshire Hathaway. We talked about broadening at play this year. All right. And Tim. Mike, thanks for joining us. Mike Schumacher, thanks for joining us. Long haul notes of the 70s, very short haul notes of the 80s, and SLB. I mean, totally very confident about that SLB. Rich girl, she's gone. All right. Thanks for watching. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, internet, or another medium.

46:44You 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 forward slash Fast Money Disclaimer. Hey, Chicagoland! The Wayfair store is in your neighborhood at Edens Plaza in Wilmette.

47:11Finally, you can feel the fabric, sit on the sectionals, and even open the refrigerators. refrigerators. Plus, our in-store designers will help you bring it all together with free one-on-one design support for any project on any budget. Yep, we said free. Oh, and did we mention the cafe? So what are you waiting for? Come see all that's in store. Visit the Wayfair store today at Edens Plaza and Wilmette.

47:34Mike Schumacher:Wayfair, every style, every home.