Apple Shares on the Move After Latest Results and S&P’s Best Gain Since May 11/2/23

21:38And then the customer base that seemingly seems unfazed. I don't know. I wish I think everyone wishes that they had the Starbucks customer. Inflation, what? Pressure on the consumer, what? Undeterred, continuing to spin. And I really think that this is like a blowout quarter. So this is what I'm kind of looking for when I look at, you know, a bellwether within the portfolio. And so for that, for all of those reasons, I don't think they deserve to be discounted with their China president. Although I will expect there to be, you know, some cash drag in terms of investment. By the way, we should point out that Apple shares are down by almost 4 percent, three and three quarters percent.

22:13Expects year over year fiscal first quarter revenue to be similar to last year, according to the CFO. So it appears we're getting some guidance here and it's not what the markets want. Apple expects iPhone revenue in the fiscal first quarter to grow on an absolute basis. We're getting some more of these headlines. We're obviously seeing the stock react immediately on these on this news down about three point five percent here as we're digesting it. So talk about changing just the tenor of what we saw over the last call at two trading sessions. I mean, I know we're going to get into some of the stocks and some of the way these things move to better than expected results with expectations not particularly high.

22:47And I think this is the one that could actually do that. And if you think about it, again, from a technical level, Guy talked about the S &P where it got to right to that downtrend. Apple did, too. I think that a lot of stocks, especially if we have some hot data tomorrow and we have rates going higher, I think they probably give back a bunch of these gains. The one thing I'll say to you, Tim. Oh, sorry. Matcha. Matcha. Matcha. That is what she is buying. Yeah. Matcha. Yeah, the green stuff. It's strange. So I'll just say that the way Starbucks gapped up, we have not seen that in a while on a move on a stock like that.

23:18It doesn't. It closed on the low. I suspect it fills in a bit of that gap, Guy. North America is a North America story. Bono and Tim said it in terms of revenues. I don't know what they're doing to the consumer. Clearly, I just learned because of what margins and operating margins were 23.2 percent, up from 18 and a half percent this quarter year ago. So how much do you extra do you pay for your soy, your soy? I don't. I don't. I don't. Listen, I buy coffees for other people, as you know. But with that said, I mean, how sustainable is that? That to me, that's the story. Margins are great. Comps and actually China weren't terrible.

23:54Valuation's not ridiculous. But this stock doesn't move 10 percent in a day historically. So let's see. All right. Let's head to break here. We are still watching Apple down now after giving some guidance here. The latest headline here on services revenue expected to grow at a similar double-digit rate in fiscal first quarter as in the fiscal fourth quarter. So similar double-digit rate. We'll continue to monitor these headlines and the stock reaction. Here's what's coming up next. Weight loss winners, obesity drug sales, fueling Eli Lilly and Novo Nordisk earnings in their latest quarters. We'll give you the skinny on the beats that were anything but slim.

24:32Plus, crunch time for the consumer trade. Could fintech be the X Factor this holiday season? The answer? Next. You're watching Fast Money, live from the NASDAQ market site in Times Square. We're back right after this.

24:57Welcome back to Fast Money. Apple shares just off of after-hours session lows, now down by 3.4 percent or so, 3.3 percent. CFO Lucomaestri is giving guidance, Q1 gross margins expected to be between 45 and 46 percent, which is close to where we are right now in the just-reported quarter. Fast Money friend Gene Munster has been listening in. They've also, Gene, been giving guidance on iPhone revenue services revenues, and we saw that stock drop in a straight line down 4%. What happened? Melissa, they guided revenue down by 5 % versus where the street was at for December. So, effectively, they're looking for revenue to be flat year over year.

25:34The reason is that they're attributing this to last year we had a 14-week December quarter, this year a 13-week. If this would have also been a 14-week quarter, Luca mentioned that you can imply that guidance would have been 2 % higher than the street. So this brings the question, what were analysts thinking and what percentage of the analysts actually factored in a 13 versus a 14-week? I was an analyst for a long time, Melissa, and I can tell you this is something that we would track closely. And I suspect that the majority of estimates did factor that in. So I think that this is a genuine soft guide.

26:12Luca did talk about part of the reason was the difficult comps. The iPad has difficult comps, the wearables with watch and new AirPods that came out last year. And essentially what they're setting up this to be is you've got also 1 percent headwind from FX is that there's a lot of noise related to the number of weeks and difficult, difficult comps. And I think it's setting up for the March quarter. If we start talking about that, probably to be back around 5 percent growth from flattish in December. It seems almost disappointing for Apple to sort of blame it on Wall Street analysts for not having counted the weeks on their calendar, which everybody has in advance.

26:50as you point out, Gene. I mean, people knew how many weeks were in this quarter versus, you know, I mean, that seems like a lame excuse. But in terms of your point that you're all, you know, excited about the active install base hitting a record, how does this sort of, you know, flush out with that data point versus the soft guide that they are giving right now? Because obviously that's not enough. Not enough. The way I think about it is imagine a line that slowly goes up and to the right. That's the active device base. Tim Cook mentioned that it grew nicely in the quarter. That was the word. So it's probably growing at a few percent year over year.

27:26And the way I think about it is the demand in any given quarter is going to have some fluctuations. Some of it's based on product timing. We're going to have a great quarter with the Mac, I suspect, in December. They talked about that. But then you get the softness because of some of this product timing. But ultimately, there's that rising number of active base, that line kind of slow up into the right. You're going to see revenue kind of some quarters. It's going to be a little bit above that line, some quarters a little bit below. And I think the December quarter is a little bit below. And there's I would say this, that investors are still going to sleep well, knowing that the franchise is intact.

28:01It's just a lot of noise, at least in how to think about the December quarter. All right, Gene, thanks for the update. Gene Munster, Apple down 3.7 percent right now. I don't know. What's your take on this guidance and how it was given? I mean, nearly 123 billion was the expectation, at least what I'm looking at here on FactSet for expectations. So they're guiding to 117. So that's about 5 percent. And when you think about it, I mean, the way we used to do math, you know, is like down 5 percent. The stock goes down 5 percent. Stock's down, you know, 4.5 percent or something like that. You know, again, this is a mid-single-digit grower for this current fiscal year.

28:35This is the Q1 that we're in right now, trading at, you know, 24, 25 times. I actually want to extrapolate this. You know, think about what expectations are for S &P earnings for 2024, up 12, 13 percent or so. And, you know, to me, I just think that sounds unusually too large right now. So to me, I think you can draw these things together. All right, let's move on here. Obesity drug heavyweights Novo Nordisk and Eli Lilly topping the tape after recording earnings before the bell. Results of both companies getting a boost from the popularity of GLP-1 drugs. but the pair noting the ongoing supply constraints as they each work to ramp up production.

29:09Eli Lilly CEO David Ricks joined CNBC earlier today. Here's what he said about expanding the obesity drug pipeline. I think a lot of the news is about the Incretins, Manjaro. And by the way, Joe, we have half a dozen other weight loss medicines in the pipeline with different profiles, including one in phase three that could have as much as 30 percent weight loss in obese individuals. So, you know, we're a serial innovator in obesity. So with both stocks far outperforming their health care peers this year, is it still Novo and Lilly's game to lose? Sort of feels that way, Tim. There's no question.

29:45I mean, these Manjaro numbers came in better than expected. The coverage and the ASP around the coverage is improving for the company. The capacity dynamics aren't great, but they're in line with what the company said. So this in Cretan, am I doing that right? It's essentially the portfolio of those drugs that basically regulate what's secreted into the blood. And this is where it starts to get way over my head. But the point is it's not just Manjaro. They have a full portfolio of stocks here that are serving nuanced, different needs within this space. So I look at the multiple and I say, no way.

30:18I will say that. I mean, I just at some point it gets to a place, but they've continued to be conservative. These numbers today were absolutely bullish. Agreed. The multiple is a tough pill to swallow. But if you look at the rest of the space, BMY, AbbVie, Merck, Janijon, Sanofi, all of those have struggled. Just absolutely brutal. And they're in a situation where they've got to struggle with repricing. They've got to kind of balance M &A with R &D. I just think the whole corporate structure set up for those is very challenging. And, yes, these other two stocks are up 50%, 60%, and you're reluctant to chase them.

30:52But I really they are the only real growth engine that doesn't have a structural challenge sitting in their face. Good news about Lilly. And we've pointed this out. You've had opportunities to buy these on significant pullbacks in the stock. I mean, we've seen 12, 15, 18 percent pullbacks in the name a number of times over the last couple of years. And we're probably going to get on the precipice of that happening again. Each time, by the way, the sell off, we've had a new all time high. Maybe we'll see that again. But I guess my point is I love the name. We've loved it for a while. I just don't think you have to go flying into it today if you're just initiating a position.

31:28Coming up, Roku rips higher. The stream are surging more than 30 percent thanks to an upbeat forecast. That action plus the rest of the day's big movers next. Missed a moment of fast? Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this.

31:52Welcome back to Fast Money. Stocks ripping higher today as Treasury yields retreated. The Dow, S &P 500 and Nasdaq all closing up nearly 2 percent. Roku ripping more than 30 percent on follow through from their upbeat earnings last night. It was only its best gain since July, though. Brought the stock back to where it was in mid-September. Some other after-hour earnings movers, Paramount and DraftKings, both higher on their latest reports. Coming up, FinTech front and center. Our next guy says consumers are being forced to take risks and the industry is balancing on a knife's edge. We'll dive into that right after this.

32:24That and much more ahead on Fast Money.

32:35Welcome back to Fast Money. Shares of blocks surging off its after-hours highs after posting third-quarter earnings and revenue beats EPS, coming in eight cents higher than its estimates. Blocks revenue also jumping. The after hours jump, adding to a 7 % gain during today's trading. All right, let's get to FinTech here. Affirm shares jumping more than 20 % today after expanding its partnership with Amazon. The company's buy now, pay later checkout option will become available to Amazon's small business merchants just in time for the holidays. And our next guest suggests it's a vital service for consumers right now.

33:06Stuart Sopp is CEO of Current, which is a digital bank. Stuart, great to have you with us. Thanks for having me, Melissa. You know, I read through the notes from the pre-interview that you gave, and what really stood out to me was what you're seeing in your own customer base in terms of people having two jobs. Yeah, that's right. So if you look at the Fed data, I think you guys were talking about it a little bit earlier, the wage inflation is moderating quite substantially. And America has a sort of tale of two cities right now, two groups, the wealthy and less affluent. And so if you look at the current data right now, if you're having a paycheck over this last year, 20 percent, 25 percent of paycheck depositors have at least one extra job.

33:45For the 20 percent incremental from there have two jobs. So that's nearly 40, 50 percent of payrollers on current looking for extra extra work. And they're trying to make that money go further because of inflation. How do you extrapolate that? How do you start thinking about buy now, pay later in terms of their exposure to a very weak consumer? It seems like that's the same cohort that would use buy now, pay later services. I think that's right. You have to be careful with charge offs and all the rest of it. But I think there's a very valid and valuable space for fintech right now that are offering extra liquidity at a very in need and demand time.

34:21If you look at the CFPB that came out earlier this week with this big report saying one hundred and thirty billion dollars of interest and fee income in 2022. We have over a trillion dollars of credit card debt right now. It's going to be way bigger this year. And you have to assume, at least believe, that a decent proportion of that money is misallocated. These are products, unsecured credit cards are not suitable for everyone. And with inflation being where it is and the consumer, less affluent, everyday American being stretched and trying to fill that gap, they're being forced into risks like risky credit cards and these other things.

34:53And I think when you look at BNPL and you look at earn wage access or paycheck advance that we have at current, These are really good products, simple products to understand. Delinquencies are ticking up if you start to listen around the edges for all these American Express, Capital One. Are you seeing similar? We're not. So at Current, we focus, and many other neobanks, challenge banks, focus on primacy. So we try to get the paycheck as quickly as possible, and then we focus in deep on that relationship. When you look at Capital One and some of these other lenders, they have gone into banking to improve their funding costs over time.

35:26But what they have started with is unsecured, revolving credit cards for people that potentially this product doesn't suit in troubling and tough times. So we're not seeing the same kind of charge offs. And that's why. So do you mind speaking a bit about fee transparency and how that might serve the consumer that might be looking for your service or another, you know, a firm like service in terms of shoring of the finances, working capital, cash needs? Yeah, the White House has been all over the fees. And I think that's that's correct. Every fintech has gone, both public and private, has gone towards a path of profitability.

36:00And that's from growth at all costs. So there has been some fees that I think over time, at least in the last 14 to 18 months, have probably not been applied correctly in every single company. What I would say is that fintech has the customer's mindshare and good will at heart. And so despite all the regulatory oversight that we've seen over the last 14, 18 months, we are doing the right thing as an industry. We're providing valuable liquidity. And I think when you look at junk fees and all this other stuff that the White House is coming out at, this is traditional banking. These are old names that you're well aware of.

36:38Stuart, great to see you. Thank you. Thank you. Stuart Sop of Current. PayPal had a great day today. I mean, a lot of the financial names today had a good day. It's funny, really interesting. I was out at Money 2020. So there's this huge fintech event in Vegas last week. I was out there with Stuart, actually. And it was interesting. It kind of felt like there was a tide turning a little bit as far as sentiment. And if you think about what we've seen in the public markets, in the names that we're talking about, and you see the sort of bounces that they're having in relation to good news, it felt that way a little bit also in the private markets.

37:06There's a lot of private market companies out there, too. So to me, it's kind of interesting, you know, to see a stock like Square up as much as it is after a guide up. We haven't had good news in a name like this in a very long time. So, again, my final trade the other day was in PayPal. I just think it got really washed out. It's a very profitable company, and they're growing still. So, to me, I don't know. I think there's some interesting values in the space right now. Yeah, I'm on PayPal. And they got a bunch of downgrades, which were equal to upgrades. In other words, you had a street, and the target price for all the street who downgraded them after these numbers, these numbers were fine.

37:39It was a tough time for payments over the last couple of weeks. So, interesting. All right. Yeah. From fintech to traditional finance, a carry regional bank ETF surging more than 5 % today. That's its best day since June as Treasury yields pull back. It's now on pace for its best week since January of last year. You know, sometimes this group is referred to as a falling knife. I don't know if that fall is over guy, especially with the Fed sort of on the sidelines. I don't think so. I mean, obviously, this move in yields helped considerably to assuage some of the concerns. And again, in absence of bad news, this is a sector that goes higher.

38:13But I'll say this, you know, if you look at the Russell, the IWM had a decent day, but that's been rolling over. And a large component of that are small and regional banks. I don't think the worst is over. And I got to tell you, the volatility in the bond market probably means there's some other tape bomb to fall at some point. Yeah, there's probably some logic behind chasing the laggers. I can certainly understand that. It's a tough name. But as I said earlier, I just think it's tough when you're starting to see leadership from this specific subsector. I don't think anything fundamentally has changed about that space.

38:41I think it very much is a Fed story, and that remains to be seen, whether that persists or whether we see somewhat of a pivot tomorrow. All right. Coming up, are consumers missing the bullseye? Targets CEO voicing his concerns about the state of spending. We have the comments straight ahead.

39:02Again, we look at overall retail spending. Just look at the top line. You say, all right, a really healthy consumer, and they are spending. But even in food and beverage categories, over the last few quarters, the units, the number of items they're buying, has been declining. In discretionary goods, we've seen seven consecutive quarters of both dollars and units declining. So you're buying less apparel, less items for your home, fewer toys. That was Target's chairman and CEO Brian Cornell earlier on Squawk Box, voicing his concerns about consumer spending. Shares of the retailer were up today, but have had a rough year, as you know, down about 25 percent.

39:43And new forecasts showing consumers are likely to spend a record amount this holiday season, despite economic headwinds. The National Retail Federation projecting sales to rise by 3 to 4 percent in November and December to a total of just under a trillion dollars. So just how strong is the consumer here? Is it really a Target-specific story, perhaps? Maybe they're just simply losing share to other retailers. Yeah, we've said that for a while. They're in the middle, not where you want to be. By the way, that's floundering Target. Walmart made an all-time high today, and that continues. Listen, the pullbacks become more and more shallow.

40:15That stock continues to sort of grind higher. And you know what? Valuation, even though it's probably stretched, you could probably justify it. So I still like Walmart over Target. It's been interesting to look. You mentioned the beverage space. And if you look at some of the spirits companies and the beer companies, Molson Coors announced, there's some struggles in there. And there's certainly some sense that the consumer is trading down. We've also heard this in luxury, that consumer at least, and maybe some of that was an Asian consumer, maybe some of that was a Chinese consumer. But I think there's no question about it.

40:45The question back to Target, though, is haven't you priced this in? We've heard this, and we know about their sales mix. And I think that discount relative to Walmart and, again, that pair trade, we've done that here. I like Target. November 15th is when they report earnings, so we'll get the full view then. It's funny. It almost felt like what Tim just said about PayPal. Those downgrades were really upgrades, right? The fact that he's out there saying this a couple weeks before earnings, I think it is kind of priced in. And you do set up for a potential for a rally if it's better than expected.

41:10And, again, you know, I think you want to take CEOs at their face value. It does seem like you almost want to extrapolate it maybe as good as some of the – really a handful of retailers are doing particularly well. Maybe you probably want to take your foot off the pedal in Walmart here. Are we set up for a rally, you think, Bono, in terms of sentiment? I think we're set up for a rally, but they've got to deliver, and they have shown that they have struggled to do that in some of the previous quarters. All right. Meantime, some more after-hours movers we want to bring you. Expedia, Live Nation, Paramount, DraftKings, all higher after top and bottom line beats.

41:37Carvana is also higher. Coinbase, Cloudflare. Meantime, markedly lower. And let's get one more check here on shares of Apple. The CFO saying he expects fiscal Q1 revenue for iPad and wearables to decelerate significantly from September quarter. CEO Tim Cook saying China Q4 performance was pulled down by weak Mac and iPad sales. On Generative AI, Tim Cook saying you can bet we are investing. You'll see advancements over time. We're doing it responsibly. As far as the impact on Qs, not too much. Qs are down just about half a percent in the after-hour session. We do see Apple shares firmly down 3 % or more.

42:13We've talked a lot about Apple. I'll just quickly comment on DraftKings. I'm really impressed by the free cash flow generation that they've guided for. In an industry that's rationalized very quickly, They were spending everything they could on advertising and basically get market share. I don't know if you chase DraftKings on this, because I think this is the kind of stock that gets knocked the minute the market turns. But I do think it's impressive, the profitability. All right. Up next, final trade.

42:51That was for our podcast, by the way. You can listen to us. Yeah. You can listen to us if you miss the show. Time for the final trade. Tim. Energy transfer. E-T-B, EBITDA by 8%. Very clean beat. Firing on all cylinders, as World Research says on the title of their report. Longest one. Bono in. I don't like rate volatility. Gives me indigestion. GDX gives me calm. GDX. Dan. Yeah, if rates continue to come down, I think the XLP, Consumer Staples, could continue to work higher. Maybe back towards that breakdown level. Just above 70 bucks. About eight blocks from here, our beloved New York Rangers are coming home after a long road trip, Mel, as we talked about.

43:29Excuse me? He's unbuttoning his shirt. How's that? That's what I'm talking about. Can you get that? Hold on. Ranger Hockey. There we go. At MSG tonight, Mel. I know you'll be in attendance. PSX got an upgrade, but the aforementioned Wolf Research. I like the pretzel rods and the beer. They don't do it anymore. Thanks. Oh. Steins. Thanks for watching. Fast Money. Mad Money starts right now.

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