In short
Fast Money episode focuses on Apple’s China AI rollout and broader market volatility. Topic: Apple shares jump ~4% after China regulatory approval to begin “Apple Intelligence” on iPhones, using localized AI models from Alibaba and Baidu (not the Google stack used in the U.S.). Guests discuss whether this narrows the feature gap vs Huawei, Apple’s “CapEx-light” on-device AI advantage (2.5B active devices), and valuation risk (Apple ~30–34x next earnings). They also cover China’s weak GDP (Q2 ~4.3% vs 5% Q1), winners in “new productive forces” (AI/semis/EVs) vs losers (property/households), and how PPI softness affects 2-year Treasury yields and Fed hike odds.
Notable examples
Huawei’s existing AI workflows; Alibaba’s potential “Ali Cloud” growth; RH’s 9% rally.
Guests
Mackenzie Sigalos (tech/markets journalist); Karen Feinerman, Tim Seymour, Dan Nathan, Guy Adami (CNBC Fast Money traders); Dwardrick McNeil (Longview Global); Matt Hulzire (Peak Six Investments co-founder).
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOApple's Regulatory Breakthrough in China
1:46 to 2:11
Discussion on Apple gaining permission for a significant rollout in China.
“The tech giant gaining 4 % today, adding$185 billion to its market cap.”
Impact of AI Partnerships
2:14 to 2:49
Exploring Apple's partnerships with Alibaba and Baidu for AI implementation.
“So Apple finally clearing a two-year regulatory roadblock in China, though this is not yet approval for the full Siri AI overhaul.”
Market Comparisons: Apple vs. Huawei
2:49 to 4:18
Analyzing how Apple competes with Huawei in the Chinese market and its implications.
“Apple also reportedly exploring M &A to bring more of its AI chip capabilities in-house, a move that could eventually reduce its reliance on Google Cloud and NVIDIA chips.”
Investor Sentiment on Apple's Valuation
4:21 to 7:20
Discussion on Apple's stock performance and investor concerns regarding valuation.
“Mackenzie Sigalos, what do you make of this move in Apple, Karen?”
Alibaba's Future Amidst Competition
7:21 to 10:52
Examining Alibaba's position in the market and potential growth opportunities.
“So I don't know how much of that you want to assign to that, but it definitely happened.”
China's Economic Growth and Challenges
10:53 to 14:00
Analyzing China's slow GDP growth and its implications for households and the economy.
“But I think the other issues are bigger.”
China's Economic Strategies and Global Impact
14:00 to 16:20
Discuss the implications of China's economic strategies, particularly regarding energy and trade.
“and other parts of Asia to be an exporter of high-end tech innovation?”
U.S. and Global Economic Forecasts
16:20 to 18:30
Analysis of U.S. economic indicators in relation to global markets and Chinese performance.
“Tim, where do you stand on the Chinese economy?”
Interest Rates and Inflation Insights
18:30 to 22:08
Examine the relationship between recent inflation data and interest rate expectations in the U.S.
“What we saw in today's session shed five basis points trading below yesterday's lows.”
United Airlines Earnings Discussion
23:19 to 26:23
Analysis of United Airlines' recent earnings report and market performance.
“We've got an earnings alert on United Airlines.”
Show all 23 chapters
Retail Sector Movements and Trends
26:23 to 28:00
Exploring recent trends in the retail sector, with a focus on RH and other retail stocks.
“State Farm can help because they know life's biggest moments often come with big responsibilities.”
Analyzing RH's Stock Performance
28:04 to 29:12
Discussion on RH's recent stock performance and market potential.
“Shares closed at their highest level since late February.”
Consumer Discretionary Resilience
29:12 to 30:06
Exploring the resilience of the higher-end consumer market.
“I just thought it was interesting, though, that the Franklin, the CEO, Friedman, sorry, Gary Friedman selling shares,$20 million of shares to do home renovations.”
Market Trends and Analyst Updates
30:06 to 30:56
Discussion on market trends and analysts' views on stocks.
“Look where we just traded down to in April of this year and bounce.”
Wrap-Up Before Guest Segment
30:56 to 31:19
Brief wrap-up before introducing a guest to discuss market volatility.
“Welcome back to Fast Money Stocks, ending the day in positive territory.”
Interview with Matt Hulzire on Market Volatility
31:19 to 33:30
Matt Hulzire discusses current market volatility and the impact of leverage.
“The Dow gaining 150 points now in the green for the week.”
AI and Market Dynamics Discussion
33:30 to 36:39
Exploring the implications of AI on the market and potential opportunities.
“So dispersion overall in the market's at record highs.”
Professional Traders vs. Retail Investors
36:39 to 37:58
Discussing how professional traders exploit retail investor behaviors.
“I mean, some of that implied volatility was just, I don't know, off the charts of anything we've seen.”
Key Takeaways from Interview
37:58 to 38:41
Summarizing key points from the interview with Matt Hulzire.
“When you say professional traders take advantage of the fact that retail investors are given so much leverage, what exactly do you mean?”
Discussion on IBM's Market Performance
38:41 to 40:02
Debating IBM's struggles and market expectations following recent drops.
“So when you talk about the last time you saw this sort of dispersion and then you're going to have high correlations at some point because the narratives are going to shift a little bit.”
Market Reactions and Stock Performance
42:01 to 44:28
Analyze the implications of recent stock downgrades and market reactions.
“But it can't be worse than they stated yesterday.”
Anticipating Netflix Earnings
44:28 to 45:50
Discussion on Netflix's upcoming earnings report and market expectations.
“Netflix on deck to report earnings after the bell tomorrow.”
Final Trades and Stock Picks
45:50 to 47:14
Panelists share their final trades and stock recommendations.
“Tim Seymour, this is a stock that's been a dog, basically.”
Transcript
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1:02Tim Seymour:Live from the Nasdaq market site in the heart of New York City's Times Square, this is Fast Money. Here's what's on tap tonight. Shiny Apple shares of the iPhone maker closing out a new record after scoring a win in China. All the details behind the move and how to trade the name right now. And seesawing stocks, what to make of the wild swings we've seen in some tech heavyweights and what that move says about where the markets are heading next. Plus, what two-year yields signal about inflation? a retail rally in shares of RH, and counting down to Netflix earnings. Can the struggling streamer turn things around in tomorrow's report?
1:34Tim Seymour:And how are option traders positioned for the results? I'm Melissa Leak on DLIFM Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Feinerman, Dan Nathan, and Guy Adami. We start off with that monster move in shares of Apple. The tech giant gaining 4 % today, adding$185 billion to its market cap. It's now a stone's throw away from joining NVIDIA in the$5 trillion club. the latest move coming after the company got permission to launch Apple intelligence on phones in China. Alibaba and Baidu, which will partner with Apple on the rollout, also rising today and leading the crane shares China ETF, Internet ETF higher as well.
2:10Tim Seymour:For more on all of this, let's bring in Mackenzie Sagalus. Hey, Mac. Hey, Mel. So Apple finally clearing a two-year regulatory roadblock in China, though this is not yet approval for the full Siri AI overhaul. What it does do is pave the way for Apple to begin rolling out Apple intelligence in one of its most important markets. Now, to get there, Apple had to localize the product using AI models from Alibaba and Baidu rather than the Google-based stack that relies on here in the U.S. That could be key to extending Apple's recent rebound in greater China with new AI capabilities potentially giving consumers another reason to upgrade ahead of the iPhone 18 and a possible foldable.
2:49Apple also reportedly exploring M &A to bring more of its AI chip capabilities in-house, a move that could eventually reduce its reliance on Google Cloud and NVIDIA chips. But the bigger reason investors are warming to the stock may be what Apple is not spending. While the hyperscalers pour billions into data centers, Apple can distribute AI across its 2.5 billion active devices without taking on the same infrastructure burden that is increasingly making Apple the anti-CAPEX AI trade.
3:17Tim Seymour:Mel? Mac, I'm curious how what Apple may now offer in China, which is not the full revamped Siri, how that compares to what the local brands like Huawei, which has number one market share right now in China, what they offer. And actually, as calendar Q2, I got some data from IDC and it wasn't looking as good for Apple. Of course, we're going to get those results at the end of the month. But basically, the market share widening between Huawei and Apple. And to your point, in terms of the features that we would get from Apple intelligence versus what Huawei and others for years have been offering, it's just, it's catch-up work.
3:54And even when I was at WWDC last month down in Cupertino, you were looking at what Siri AI was offering, and that also looked like it was catch-up work to the kinds of features that you get. So this agentic on-phone, you know, workflows that exist across different apps, being able to book rides, being able to do these different things that you've been able to do in the context of Androids and other smartphones for a while now, but it is a step in the right direction. And so it is a promising sign.
4:21Tim Seymour:All right. Mac, thanks. Mackenzie Sigalos, what do you make of this move in Apple, Karen? Well, I think it deserves it. Interesting. I mean, to me, this is like has the this is Cook. This is what he does absolutely best. Right. Right. So we know the new CEO coming in. John Turner is a hardware guy. But this but you need both and you absolutely need a Cook. I'm sure they have, you know, a deep team that does things like this. But that was the first thing I thought is this is his work. Right.
4:50Melissa Lee:It's not worth a trillion dollars. OK, so this stock has rallied, you know, a trillion dollars in market cap over the last few weeks. You know, obviously it had that sell off when they talked about raising prices, you know, because of memory prices and the like here. When you think about China, you think about the data that we just saw, you think about where their economy is right now. Now, this is not a country. This is not a consumer that's going to be able to pay for an upgrade of a hardware that has not changed. But because they're going to get Quinn, you can on your Huawei phone download Quinn, have a ball, search as much as you want, do as much of AI feature, you know, that sort of thing.
5:24Melissa Lee:And I just think that it's curious that we've had this move in the hyperscalers today. Then you see what we've got going on with Apple. Is it technical? Possibly, because I just think fundamentally it doesn't make a whole heck of a lot of sense. I think it's interesting that Mac just talked about the widening gap as far as market share. Apple is number two in China. But when you think about it from a price point, it's a very different sort of thing. And then you think about what they're actually going to be able to deliver. Why wouldn't they be able to deliver a much better product here in the U.S.
5:52Melissa Lee:with a Siri revamp using Gemini from Google? Google, they have this deep relationship, right, for search with Safari. So to me, I just think it's one of those things where, yes, you can kind of stick to that argument that they haven't spent hundreds of billions of dollars building out data center and that sort of thing. I just don't think it's going to be that important. When you think about what compute is going to end up being, you know, it's going to be somewhat commoditized. And these guys should be able to benefit based on their hardware and their integration of A.I. But it's just not there yet.
6:17Melissa Lee:And I just don't think I think with China, it's going to be much further behind what we have here that they're basically going to be able to introduce in the fall. Lots to unpack. Kudos to Tim and Karen, who've been steadfast in this name. You have, I mean, for a long time. And you pointed out all the reasons you should be bullish. I've been sort of the people pointing out the reasons why maybe not so much. So let's play that game for a second. I think I get what's going on here. I also believe that the fact that Apple hasn't spent as robustly as a lot of these other companies, I think actually now working in their favor, that's created a bit of a tailwind, number one.
6:47Number two, passive money. Apple wins to that without question. Here's the thing that's a little bit concerning, though. At 30, almost 34 times next year's numbers, it's probably as expensive as it's been into earnings in quite some time. And this has been a six-month, basically uninterrupted lower left, upper right move from the lows that we saw in March, which historically for Apple, you don't really get, you get back in fills over these couple months, two, three-month period of time. We haven't seen it. So what does that mean to earnings on the 30th? It means they better perform. Otherwise, I think valuation becomes a concern.
7:21Just one more thing. This was a giant MAG 7 day. This is a very MAG 7 stock. So I don't know how much of that you want to assign to that, but it definitely happened.
7:30Tim Seymour:Yeah. Yeah. But to the extent that that bears, Apple bears might say, you know what, they can't offer in China, that gap with Huawei and others only going to widen, Tim. I mean, maybe that at least weakens that argument.
7:44Karen Finerman:Yeah, I think it does. And let's be clear, Apple's making concessions in China. They're not going to make in other parts of the world. But but as Karen pointed out, Tim Cook knows what he's doing in China. And this isn't the mass market phone in China. Huawei is. It's not trying to be the mass market phone. And I think the fact that they're going to be working with Baba and Baidu, it just kind of goes back to actually why that DOJ flexibility with Google, even though it certainly didn't take away the Google relationship, it gave Apple the flexibility to do what they want here. Apple can do what they want anywhere in the world.
8:17Karen Finerman:And I think they're going to continue to choose their dance partners. They're going to do it in a CapEx light way. based upon the world we live in and the chart. I think Katie Stockton on our show a couple of days ago. And she said maybe it was yesterday. I remember. But it was ultimately that 320 to 325 was really kind of your breakout level. So I think there's I think there's more to do here. I don't think it's about valuation. I don't think the valuation has made sense for a long time. And Apple's been rallying in the face of it. I think having that kind of access to China right now and having that relationship in China is all about what this rally was.
8:53Yeah.
8:54Tim Seymour:What if they took some of that CapEx money, which they did not spend on a giant data center and spend it on an AI chip startup? Do you think that would be money well spent, Dan?
9:05Melissa Lee:Well, they're designing their own chips, but they also are going back to the folks that they couldn't get rid of fast enough, which is Intel. Right. So like we have this back and forth here with who's trying to kind of use what sort of hardware within their devices. And at the end of the day, we also know that a lot of this hardware, other than what NVIDIA has been able to produce over the last five years or so in the GPU market, has been very commoditized. Right. So Intel getting back into the semiconductor manufacturing business, you know, to me, it just doesn't make a ton of sense. I know they talk about integration and they have been designing their own chips, that sort of thing.
9:38Melissa Lee:But they've never been one to go in and spend, you know,$20 billion to kind of crack the code on something. And especially when you think about some of the stuff that they've not done well with as far as integrating the software. I mean, we've been talking about Siri for more than 10 years and how bad that is. So at the end of the day, when we get to the fall and we see this new operating system, I think we're going to be somewhat unimpressed. So the idea that they would go in and spend a lot of money, you know, trying to kind of, you know, extend their manufacturing as it relates to components, I just don't think that makes a lot of sense because, to Karen's point, Tim Cook has spent the last 25 years building out a supply chain in Asia.
10:12Melissa Lee:And this is his last trick. I mean, it's a great mic drop for all intents and purposes if it ends up working out. But I just don't think that they're going to have so much of an edge building out semiconductors to go into their phones. Tim's right. I mean, it's not about valuation. It never is until it becomes. And, again, there's not a lot of valuation cushion here at the current level it's trading at. So we'll see what happens when we report. But Alibaba is the one that I think becomes all of a sudden interesting. Now, with that said, I've thought that for a while incorrectly, but the last couple of weeks suggest that maybe the bottom is in in the short term.
10:42They don't report until, I think, middle of August. So you have that out there. But these headlines you're getting on the back of what we're about to talk about regarding China could make Alibaba set up pretty interesting.
10:51Tim Seymour:Yeah. Does this unlock for Alibaba in terms of being put into the Apple phone? I hope so. But I think the other issues are bigger. Even I think, you know, if if China is bottoming and I mean, Alibaba has been in this very, very competitive race with a number of companies there where they're all in that spending, that hyper spend that we're doing here. I hope that abates somewhat. But still, the valuation I find compelling. I've liked it from well higher than here and lower than here. I still like it here. If I own none, I buy some right here. I do think there's upside there. We'll see. Hopefully earnings will be good.
11:26Tim Seymour:I expect them to. All right. Meantime, China's economy grew at its slowest pace in more than three years. Q2 GDP rising 4.3 percent compared to 5 percent growth in Q1. CNBC contributor and Longview Global's Dwardrick McNeil joins us now. Dwardrick, always good to see you.
11:41Karen Finerman:Great to see you, Melissa.
11:42Tim Seymour:All right. So in order to get up to targets, Dwardrick, what will Beijing do? Because we know that they don't want to just have the sugar high of handing out money to consumers. So how do they chart that path to higher GDP?
11:55Karen Finerman:Yeah, this is a great question, great point, Melissa. I think we're all waiting on the sugar high in terms of consumption, but it's not going to come, Melissa. When we look at these numbers, sure, they are off target, but I think over the long term, China will hit its range, that 4.5 % to 5%. But Tim said something to me last year that stuck with me about GDP top line numbers. He said, I want to go beneath these numbers and I want to figure out what they're about, who's winning, who's losing. And to this point, Melissa, there's some real winners and some real losers in these numbers. Everything that's winning right now seems to be in this new productive forces area that she constantly talks about.
12:41Karen Finerman:Semiconductors, AI infrastructure, hardware, EVs, at least in third markets, green tech, robotics. The losers, though, Melissa, is the old economy, property, everything adjacent to property, traditional retail. And the biggest loser here, coming back to your point, Melissa, are households. Households are just not getting the help that they need from the central government, from the provincial governments, and they are tightening their belts continually. So I do not see a rebalance towards consumption. And I think the Chinese government has decided we're going to keep a stiff upper lip. We're going to keep plowing forward because it's the 21st century economy, the high tech economy that we really want to build here.
13:25Karen Finerman:And they're trying their best to manage a decline. It's messy, Melissa. Hey, Dwardrick, it's Tim. So speaking of new economy, speaking of an export economy and speaking of winners, you can make an argument that China is a winner in U.S. tariff wars and relationships that have been struck with the European Union. Where is China on exports to Europe? Where is China as a winner, at least, or as an alternative? We've certainly seen it in the market we're talking here and now about rotation into China tech. I think the rest of the world also, though, is a buyer at some point. Where has China progressed in the post-tariff environment with the European Union and other parts of Asia to be an exporter of high-end tech innovation?
14:08Karen Finerman:Yeah, this is another good question, Tim. Let me tell you what the EU would say about this framing. They would say that because of what's happened in the U.S., the truce, the tariffs in 2025, and some of the U.S. restrictions, that the U.S. economy is somewhat gated from what we have been calling the China Shock 2.0. That is not the case in Europe. So EVs and other high-tech exports, the green economy, all of those things are finding their way in large numbers in the European Union, Southeast Asia. And Europeans are very concerned about this to the point where there's an ongoing discussion right now with a real crescendo moment in October that the EU is looking for China to really talk about how they're going to stop using the EU as a dumping ground.
15:00Karen Finerman:So I think China is winning for sure. They're exporting a lot of this growth, as we can see in some of those export numbers. But the EU, in their mind, is losing and are being really impacted by China Shock 2.0. Dward, Rick, I think China has capacity to store two billion barrels of crude oil. I think they currently have close to 1.4. So they've been stockpiling right before our very eyes. Why and how do they win because of that? Yeah, well, I'll tell you, we look at the PPI numbers. There has been some inflationary pressure that carries through from the Iran war. But for the most part, the Chinese are using that surplus to keep prices low for fuel.
15:46Karen Finerman:And I think we're getting to a point, Guy, where I'm not sure they're going to be able to sustain this for much longer. But they had been planning for these types of external shocks for a long time. You see them rearranging their energy economy, their energy mix, stockpiling the way they did all of 2025. It has been so far certainly valuable to China, but they can't continue this way forever. They're going to need an off-ramp in the Gulf just like everyone else.
16:18Tim Seymour:DeWordrick, always great to see you. Thank you.
16:20Karen Finerman:Thank you, Melissa.
16:22Tim Seymour:Dordrick McNeil of Longview. Tim, where do you stand on the Chinese economy? Do you think they will ultimately hit the target?
16:29Karen Finerman:I think today's numbers on GDP were well flagged. We knew they were going to come in weak. I still think there's a second half outperformance in the Chinese economy. I think more importantly, just the fact that we're talking about the repositioning and the old economy is not where there's money being thrown blindly. I think the opportunity to invest in China is still very limited for U.S. investors, or they're certainly not willing to go far and wide. I just continue to think that China tech as a rotation play is not only a crazy valuation pickup, but it's time for rotation. And I think Alibaba is a place, and what we're seeing, even DeepSeek will IPO on mainland sometime soon.
17:13Karen Finerman:There's a number of new companies coming forward, including the memory. So DRAM and NAN that we talked about also that are going to be global players and investors need to take notice. Yeah.
17:24Melissa Lee:So this is one of those situations where if you go back to April 2025, right, and we want to bookend from tariffs to this war right now, the longer the war goes on, you have to think that, you know, this is going to put pressure on the global economy, more so outside of the United States. Right. So you hear a lot about our energy independence and you hear about how, you know, our monthly nationals have dealt with the tariffs. But if you think about the tariffs and the way that China has diversified their exports away from the U.S., that's where I think a longer war, a higher oil price is really going to kind of depress the global economy and thus actually have a negative impact on Chinese exports.
Read the full transcript
17:56Melissa Lee:So, you know, to me, a lot of this is tied to I don't know if she's still coming back. Is he supposed to come here in September and what sort of, you know, concessions that we might make here? But the second half could be maybe a bit nastier. And maybe you do see another quarter or two that reflects this weakness that we've seen in this GDP number. The FXI went from 22 in February of 24 to about 42 ish last fall. So this moved down to 32, which we bounced off it. I can do the math. That's a 50 percent retracement of that range. So I think you're going to get a reinflection higher in FXI here.
18:30Tim Seymour:All right. Let's take a look at yields, shall we? Two-year Treasury yields in particular. What we saw in today's session shed five basis points trading below yesterday's lows. The move coming after another soft inflation print this morning. Wholesale prices, PPI, unexpectedly declined by a third of a percent in June. Traders reducing bets. The Fed will have to hike rates for this year. So maybe we don't have to worry about some sort of hike, at least immediately. Did this move make sense? And we'd also had a very hawkish commentary from Lisa Cook, who said, if disinflation doesn't happen, I am ready to act.
19:03Tim Seymour:Not to say the whole committee is, but she was very forceful in those comments. Well, I think I mean, the data is definitely cooler. There's no question about it. And I think it does give them some cover. It certainly gives I think it makes Warsh's job easier, of course, because we know he doesn't want to hike rates. But I believe was fully prepared to do it if that's what the numbers were telling him to do. This, I think, gives him a little bit of breathing room. But we'll see. We've had such volatility from oil underneath. It's hard to pull that out and see what's going on in the rest of the space.
19:31But two days are pretty, I mean, benign, if not very soft. And the bond market, although rates are lower, not meaningfully so. So I still think, listen, inflation is a problem. There are other factors at work here which I believe will make yields go higher over the next few months. So, yeah, I get why they're low over the last couple of days. I think they're going higher in general.
19:51Tim Seymour:Yeah.
19:51Karen Finerman:Tim? I think the move, and guys referenced this, that we've had over the last couple of days, I think the PPI-CPI combo is as good as it gets in the face of hawkish, Warsh comments and Waller comments. And the sense, two days ago, we were north of 50 % for a July hike. We're now sub 10%, and we're not going to get a July hike. But the message was laid. I think the bond market has been trending higher at the short end, going all the way back to really late last year, but certainly since the spring. And Warsh, if anything, has made it clear that inflation and setting variable inflation targets that the Fed has done at different times is absolutely unacceptable.
20:33Karen Finerman:It's a more hawkish tone. I think the two-year, I think you're probably selling yields here.
20:40Melissa Lee:Yeah, I mean, go back to January 1st, 2025. We had a 10-year U.S. Treasury yield at 2.5, right? And we had the S &P 500 trading at 6 ,000. So here we are at 7 ,500. We're right near the highs. I just don't think that the stock market at this moment really cares about where the 10-year is. I think that guy's point makes a lot of sense. It maybe is a differential thing. Maybe it depends on what's going on with the yen. You have a situation where you have an unwind of the carry trade. And that's something that will obviously weigh on large multinationals right now. But that hasn't really mattered.
21:11Melissa Lee:I think you have to go back to like mid 2024, where we had that little bit of a scare, at least in our markets.
21:17Tim Seymour:Coming up, United Airlines losing altitude while shares are under pressure despite an earning speed and whether you should board the airline trade now. Plus, big movement in home improvement. What is fueling the breakout in RH shares and the other retail stocks leading the charge? Don't go anywhere. Fast Money is back in two. This is Fast Money with Melissa Lee, right here on CNBC.
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23:19Tim Seymour:Welcome back to Fast Money. We've got an earnings alert on United Airlines. shares getting grounded despite a top and a bottom line beat. The company warning it expects $6 billion in added fuel costs this year. While United said travelers continue to book flights despite higher fares, it gave Q3 earnings guidance below analysts' estimates. And I guess this is a real letdown compared to what Delta told investors in the reaction in Delta stock, Tim.
23:43Karen Finerman:Well, it's a combination of Delta has more fuel resilience. The story for United also, though, has been a significant rally into the spring up until the recent pullback led by the war starting again in the Middle East. But I think Delta, excuse me, United has come a long way. And if you look at these numbers, what they are telling you is that their revenue per available seat mile versus their cost per available seat mile has essentially doubled in the last year. They're becoming more efficient. The margin profile is changing. That's if you don't have a mark to market on jet fuel, which is a big deal.
24:18Karen Finerman:What we're also hearing is that they're passing along these higher costs and we may not want to accept it. But what we all know is that airline fares have not kept pace with inflation. So I don't think you're running far away from this one. I would prefer to be long Delta. I am long Delta, but I think United, you can own. Yeah.
24:36Tim Seymour:Sorry, Guy. No, you go ahead. It just seemed like all the segments had strength in terms of just average traveler, corporate, corporate was up 27 percent in the quarter. Yeah. And I think the third quarter guidance, you could drive, you could fly the plane through the guidance, which I get it. There's not a lot of clarity without question. But I'll play a little of the role of Carter Worth. You go back to January, February of this year, this stock stalled at 117 a handful of times, sold off and then obviously blew through it recently, made an all time high. That prior resistance is support right here.
25:09I'm with Tim. I thought the quarter was fine. I think the guidance is sandbagging. I think you buy United.
25:14Tim Seymour:Fuel costs are up 84%. I mean, that's a whopping number. And to Guy's point for Q3, even the upper end of the guidance was still below what analysts had expected. Well, it seems like they're able to pass that along somewhat, right? So some of that corporate traveler is going. It's amazing to me, sort of across the sort of high end, we talked about Richemont on the call today. I mean, the high And people are that K, whatever part of the K is really spending, making money. And I mean, we've seen it for all the any any airline that offers a premium product. By the way, you can catch United Airlines CEO Scott Kirby on Squawk Box tomorrow morning ahead of the conference call, 710 a.m.
25:56Tim Seymour:Eastern Time. There's a lot more fast money to come. Here's what's coming up next.
26:00Karen Finerman:A shopping spree and discretionary stocks. Why the sector is ringing up big gains today and the retail names our traders are checking out. Plus, don't sweat the vol stuff. What to make of big swings in some of the market's hottest AI names. And whether this rally is still on solid footing. You're watching Fast Money, live from the NASDAQ Market Side in Times Square. We're back right after this.
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27:58Tim Seymour:Wayfair, every style, every home. Welcome back to Fast Money. Shares of furniture retailer RH jumping 9 % today, now at more than 15 % since Monday. Shares closed at their highest level since late February. The broader retail space also catching a bit. American Eagle, CarMax, Kohl's among the big winners in the XRT. Tim, RH is your trade.
28:21Karen Finerman:Well, I think back to our last conversation about where luxury works, This is the ultimate luxury furniture play. And their estates line is a whole new rollout, something that offers a significant new addressable market. And the view that this will add 5 % to 8 % overall on revenue as we get into 27. I mean, that's significant. And the margin here is fantastic. They've also, for the rest of their broader skews, they think, bottom line is they have not seen significant discounting promotional activity. The stock's not expensive. We live in a world where I think there's some cyclicality here. I think you stay with this name.
28:58Karen Finerman:This is not for the faint of heart. This is a stock that's been all over the map. It was five times higher than where it is today at one point a few years ago. But I do think this is a name that offers an attractive valuation and has momentum behind it. Yeah. Karen? I just thought it was interesting, though, that the Franklin, the CEO, Friedman, sorry, Gary Friedman selling shares,$20 million of shares to do home renovations. I mean, good for him. That's who, you know. It's an expensive shop. Yeah.
29:27Tim Seymour:Right. And he said, don't read too much. He's probably a member that gets a discount, though, on the goods.
29:32Melissa Lee:You know, we spent some time talking about American Express and the way it sold off in and around the war. And I think there was something to, you know, the travel and the business, you know, associated with that. But it's also that sort of upper K. And look at how hard that's come back. Right. And there was some resilience in the consumer discretionary as it relates to, you know, a higher end consumer. And then I guess that, you know, that business travel came back pretty hard. And I think it speaks to, I think, a lot of what you're kind of extrapolating from an RH2. When you get that sort of discretionary, it seems to be just fine right here.
30:01We traded to go back again, our crack staff and EC. Hopefully they're staying safe in this thunderstorm. But go back to April 2020. Look where we traded down to. Look where we just traded down to in April of this year and bounce. So technically it's done what it needed to do because it's been horrible for quite some time. And now you have momentum on your side. You also have analysts that are offside. I think there are 20 analysts that cover the stock. The average price target is$1.65. So they're going to start to chase. So I'm with Tim on this one. I think there's further room to the upside.
30:28Tim Seymour:It's interesting you mentioned AXP because it just got an upgrade from J.P. Morgan on the very premise that its cardholders are much more insulated from a lot of these things buffeting everybody else because they pay their balance and they're wealthier. Right. And, I mean, the market is up and they all have money in the market. Yeah. Yeah. I feel rich. Coming up, a rally reality check. Our next guest is riding out the volatility in AI stocks and why he says the path of least resistance for markets could still be higher. Fast Money is back right after this. Missed a moment of fast? Catch us anytime on the go.
31:03Follow the Fast Money podcast. We're back right after this.
31:18Tim Seymour:Welcome back to Fast Money Stocks, ending the day in positive territory. The Dow gaining 150 points now in the green for the week. The S &P rising by more than a third of a percent. The Nasdaq leading the way. PayPal soaring 17 percent for its best day on record. Reuters reporting that Stripe and private equity firm Advent International submitted a joint bid to acquire the company for nearly$61 a share, still a 10 percent premium to today's close. ASML meantime bucking the chip sell-off to close over 2 % higher. The semi-equipment maker raising guidance for the second time this year after reporting better-than-expected second-quarter results.
31:52Tim Seymour:Novo Nordisk rising 3 % after getting approval to sell its Wagovi pill in the European Union. It is the first oral GLP-1 to hit that market. And SpaceX fractionally lower for the fourth straight day. The stock dipping below its IPO price of$135 a share for the first time, though, closing just above that level. What's your take on PayPal? Curious.
32:13Melissa Lee:It's not trading at$60.50. I mean, this is like, think about it. If you're this management and, you know, obviously they've had like a turnover and there's going to be a whole host of kind of, you know, different composition when you think of like all the stuff that's going on in fintech, but they're not selling for$60. They've wallowed if you pull up a five-year chart at these levels. So, you know, how about it? I guess I would say if you're Stripe in private equity, give it a shot.
32:37Tim Seymour:It's a new CEO. And then there's also the competition potentially from X money by Elon Musk. And so I don't know what what that makes Venmo worth at that point. Well, it's well, it's because they mentioned that this morning. I don't know what the show is watching, but they said you do realize that they still own Venmo and like, yeah, but they really haven't monetized it in a way that they thought. So this to me is a take under at those prices. I think it's worth more than that. It's sort of a I don't know, not a bear hug, but kind of just test the waters. Yeah, yeah. Right? It's not, it's well short of a formal offer.
33:09So I get why it's trading here. It would be complicated probably to close. But as an arm, it doesn't interest me that much. All right.
33:15Tim Seymour:Meantime, memory stocks like Micron, Sandisk, and even SK Hynix, which joined the NASDAQ on Friday, have all seen big swings this week. Big one day, down big the next. What does this kind of volatility? Tell us. Let's bring in Matt Hulzire. Did I pronounce that correctly? Hulzire. Hulzire. Co-founder of Peak Six Investments. Matt, great to see you. Hi. So dispersion overall in the market's at record highs. And you're saying that leverage, particularly in this group, is a big factor behind the swings.
33:44Karen Finerman:I mean, I think we're seeing that retail investors are embracing the levered ETFs in a way that is driving the market behavior. So you have memory stocks up, Apple down, software stocks up, semiconductors down, et cetera. And so the index doesn't move all that much. It's just you're getting excessive moves in sectors based on these lever ETFs. And as a result, correlation is at all time lows.
34:11Tim Seymour:So how does that sort of typically resolve itself? When you see periods where dispersion is super high, correlations are very low, something has to give.
34:21Karen Finerman:Yeah, the last time we saw that was probably 1999 and 2000. So it usually doesn't end super well because there's a lot of leverage in the market. and when everybody runs for the door, they're going to run across the board. And so I think you'll see index vol ultimately will be higher.
34:39Melissa Lee:So Matt, has like some volatility been taken off exchange? We've spent a lot of time talking like event contracts and the like. And, you know, it just seems like very interesting because I know that you guys have exposure to some of these other products. They're new. There's probably a lot of opportunities. You guys have a big market making business. Are you seeing like really good opportunities as you get away from some of the traditional equities? And let's be honest, those levered ETFs, they're not great products. We've been talking about them for 15 years. Really hard for retail to get their arms around them.
35:06Yeah, I think that, I mean, the opportunity, I'd say the opportunity is probably better than it should be for professional traders right now.
35:16Karen Finerman:Because you're just giving excess leverage to the retail traders. And we're seeing that. And the professionals are able to take advantage of that. And so whether that's the off floor type event contracts or the levered ETFs, it's just easier for a professional trader to engage on that. You're a hockey player and the best hockey players are the ones that sort of see plays that are happening 10, 15 seconds ahead of time. In AI world, what are you seeing that we're not talking about that we should be? Good question. Well, I think there's an awful lot of worry right now about AI. And hey, it's a bubble.
35:53Karen Finerman:but we also have a lot of worry about the fact that tokens are super expensive, that people are spending them, and that it's also displacing a lot of jobs. I think one or the other is going to be true. Both can't be true, that AI is a total waste, and B, it's going to displace a lot of jobs. So I do think it's probably some hybrid of those two. My guess is that AI is going to be a difference maker and that this is a seismic shift in the market. and you want to capitalize that and participate in it. I don't think it's going to play out for everybody. And so you would want to, the people who engage with AI are going to be the winners.
36:35So when you see the kind of moves that we've been seeing in the last today, even, but a few weeks ago, I mean, some of that implied volatility was just, I don't know, off the charts of anything we've seen. Do you, that's exciting to you, I'm sure. You want to take the other side or what, do you go home flat every day? How do you play in this market?
36:54Karen Finerman:We're more like a merchandiser. So peak six on the market-making side in particular, not the clearing of custody side, but on the market-making side, you give the customers what they want. If everybody wants to buy fruit, you go get fruit. And if people stop buying fruit one day, like it goes bad, you've got to get out of it. when people all come for software, hardware, banks, whatever it might be. You have to provide that and you have to replace that with other things, which is why bringing up the indexes, we carry a certain amount of volatility. We tend to be long and we tend to try to make sure that we have available inventory when people come for it.
37:38Karen Finerman:And so, look, I don't know how long this is going to last where you're getting this outsized volatility and particularly dispersion. But I would tell you a year from now, I think you will regret not having some sort of insurance in the indexes because it's low relative to the pieces.
37:58Tim Seymour:And last question, Matt. When you say professional traders take advantage of the fact that retail investors are given so much leverage, what exactly do you mean?
38:08Karen Finerman:I think the cost of transacting for the retail tends to be a little bit, it tends to be definitely higher than it is for the professional. And so buying a basket of stocks is just a lot easier for the pro than it is because we just get economies of scale. Walmart buys strawberries a lot cheaper than I do because they buy it at just such scale. The same thing happens in volatility. If you do things at scale, you get advantages.
38:35Tim Seymour:Matt, great to see you. Thanks for coming by Matt Halsizer. Thank you. Peak Six.
38:41Melissa Lee:I have two takeaways here. So when you talk about the last time you saw this sort of dispersion and then you're going to have high correlations at some point because the narratives are going to shift a little bit. And last time we saw that was 26, 27 years ago. Right. And then you think about like the idea. And we've been talking about this a bit. Like he says, well, you're going to want some protection at some point within the next year. We have a VIX that's banging around in the mid-15th. You know, we've seen demand, too much demand for out of the money calls. And we've been talking about this and not a lot of interest in downside puts.
39:09Melissa Lee:And that's something I think you have to go all the way back to other market tops. I'm not saying there's a top right here, but that's some of the sort of behavior. I like that skew, right? When you want to put a collar on and you can do it much, it doesn't need to be symmetric. You get a lot better protection. It's been really hard to be long volatility. But, you know, Matt speaks to it this time next year. I think it's going to be sooner than that. So, yeah, I'm with him on the vol trade for sure.
39:29Tim Seymour:Yeah. Tim, real quick, your reaction?
39:31Karen Finerman:Well, what we've always seen is that the indices tend to underreact until they overreact. So we used to always say in my long, short equity days that you shorted a sector ETF. It was kind of your sleep well. It didn't do anything for you until it really did. Single names, as he indicated, are the best place to get short exposure. Having said all that, I run a covered call ETF. Selling calls in this market has proven to be very lucrative, given the fact that vol is higher on single names.
40:01Tim Seymour:Coming up, a big blue bummer. IBM shares unable to recover from yesterday's plunge. We will dig into the software softness and what the company's vice chair had to say about the impact of memory mania when Fast Money returns.
40:19Tim Seymour:Welcome back to Fast Money. This is not my joke. These days, IBM could stand for it's been melting. Who did that? Not me. Definitely not me. Was that Anna? Who was it? I don't know. The stock unable to bounce back from yesterday's 25 percent drop down another 2.7 percent today. Vice Chairman Gary Cohn spoke to Squawk on the street this morning about memory prices. We see memory prices soaring. We see the demand well outstripped production. But memory historically has been a commodity-esque market. You know, when there's no demand, there's way oversupply and people sort of start curtailing demand.
40:58They start curtailing production to equal demand.
41:03Tim Seymour:IBM, whose profit warning sent shares to its worst day ever yesterday, will officially report Q2 earnings in one week. So Gary Cohn was a little bit limited in what he could actually say about that quarter and about Arvind Krishna's commentary. But he did answer some questions. What do you think of the non-bounce? As Gary does, I'm surprised by the lack of performance. And, you know, Karen was a tennis player. She probably still plays tennis. I don't because it's not a contact sport unless you hit somebody with a racket. But there's something called an unforced error. And I do believe a lot of what we've seen over the last 48 hours is that.
41:35So if there was just that business, I would say, you know what, you have to be concerned. But there's a lot of other good things going on at IBM that I think this 25 percent move is sort of masking. I think an unforced error would be if they if this earnings release is worse than they've already put out. That would be a gigantic one for Sarah. They didn't need to come out with it. I understand maybe why they felt like they should. But it can't be worse than they stated yesterday. Well, otherwise, we're right. You're coming out there for free. You've sort of said, all right, I'm doing this. You might as well make it under promise by a lot.
42:14Tim Seymour:Right. Oppenheimer downgraded it today to a perform price. Remove the price target. Just didn't lower it. Just took it away. And so that it's not going to be able to make up for that fall off in contracts in Q2 unless they acquire somebody or unless you wait until calendar year 27. Tim, that doesn't sound great for a stock that can't get off of its back right now.
42:39Karen Finerman:No, but I like the direction IBM has been moving for the last five years. And there are different parts of business, as we've talked about. I mean, Red Hat was up, I think, 11, 12 percent every year on that quarter. So some of those numbers were great. The infrastructure decline was kind of scary. And the software growth of 5 % isn't really that exciting, given that was some of the exciting higher margin part of the business. I guess I just think this is a bit of an overreaction. I do think this is a case where IBM had really rallied quite a bit over the last few months and now back to really just where it was.
43:17Karen Finerman:I think it's an opportunity. But but CapEx rationalization is alive and well everywhere. And it didn't work in their favor this quarter. But I think they've been overly honest.
43:30Melissa Lee:I think there's a lot of landmines out there. And I think this is a great example. Right. So this is a stock that was trading at all time high. This is back in early January. Then it sold off 23 percent and went to about 220. Then it rallied in a straight line in May, a straight line from 220 back up to those prior highs. And then you have one piece of news like this and it sends it right back there. And I just think that once we kind of the bloom is off the rose of some of these other business models that were basically in an AI wrapper. And this is a low growth company. They have not been able to execute around a lot of these big technological shifts over the last few years.
44:01Melissa Lee:I just think there's other ones lurking out there. You know, Josh, who we just mentioned, but we love Josh, just full disclosure. Of course. But he recently got promoted, justifiably so. But you write something like that.
44:13Tim Seymour:Maybe you take that. Are we sure it was Josh? I'm pretty sure it was Josh. All right. It's been melting. Coming up, the next episode for Netflix, what to expect from the streaming giant reports tomorrow, and the big bets options traders are placing into the print. More Fast Money in two.
44:34Tim Seymour:Welcome back to Fast Money. Netflix on deck to report earnings after the bell tomorrow. The streaming giant is hovering at a key support level, and options traders are betting tomorrow's results could make or break the stock. Oliver Rennick is at the SIBO in Chicago with the action. Hey, Oliver.
44:48Karen Finerman:Hey, Melissa. Options traders who were very bulled up on Netflix on Friday might be having some second thoughts as the stock continues to hug that$70 level. Bulls are hoping that will act as a springboard as it has in the past. But if shares slip below, the technical picture looks ugly. Expect a big move. Options currently imply an over 8 % swing for the shares, even bigger than the average 7.5 % move after earnings, four out of the last four of which were sell-offs, by the way. But one key sign of hope for the streamer, call-to-put volume ratios continue to lean towards calls by about 3 to 1.
45:26Karen Finerman:But we also did see a few bold bears on the tape. In fact, the two biggest single short term trades today were a put buyer of the 70 strikes expiring next Friday for just under$800 ,000 and a call seller of the 74 strikes in the same expiry who collected about 400 ,000, both bearish. Melissa.
45:47Tim Seymour:All right, Oliver, thanks. Oliver Rennick at SIBO. Tim Seymour, this is a stock that's been a dog, basically. I mean, down 40 percent over the past 12 months.
45:56Karen Finerman:Yeah, and I'm not sure that there's a lot of excitement to take it out of the doghouse. I do think that their ad business is something that is underappreciated. Remember, they were around 190 million subs back in November. They're north of 250 now. It's grown, whatever, almost 35 percent during that time. Those margins are accretive to the overall margin profile of the company. I think you're at a place where you should be nibbling this one. This is not about the Paramount unwind. This is about a company that's now gotten interesting.
46:29Tim Seymour:Up next, final trades.
46:40Tim Seymour:Final trade time, Timbo.
46:42Karen Finerman:Alibaba, Ali Cloud growth, 45 percent, decent margins. I think there's a rally that continues in an under-owned niche. Karen? Yes. So often I say I'm going home with the girl that brought me, which would be Netflix. I am long. It hasn't been a great place to be. But this time I'm thinking, you know what, maybe I go home with the call spread of the girl that brought me. So one day to do that. Dan.
47:05Melissa Lee:Yeah, Guy, you had a really good call in the software. This is going back a couple months. You had a good bounce here. I think if you're looking to play the counter trend here, you use IGV to the upside to find the risk. Well, congratulations to Argentina, who emerged victorious during this show. So the final's now been set, as you know, Melissa Lee.
47:22Tim Seymour:You can hear the crowds outside. You can hear the crowds outside. So exciting, I can't contain myself. Bristle Myers, BMY. Me too. Thanks for watching Fast Money. Money starts right now.
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From the publisher
Apple shares surging after striking a deal with Alibaba to use its Qwen AI model in Apple services in China. The traders break down where the tech giants are heading after the historic deal, and China’s broader outlook after its GDP slows. Then, semis taking big swings. Co-founder of PEAK6 Investments Matt Hulsizer gives his take on AI shortages, market volatility and Fed policies. Plus, United Airlines XXX after its second quarter earnings report after the bell, IBM falling further, what to expect from Netflix earnings.
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