Banks Break Down… And Alibaba’s Big Run 2/20/25

0:01Live from the NASDAQ market site in the heart of New York City's Times Square. This is fast money. Here's what's ahead this hour. Financial flop. Bank stock investors taking it on the chin today. Some big names seeing their worst drop in months. Walmart getting wallop. It rolled back its stock price. But it's had an epic run. So what's the real story around Walmart? Plus, Baba's bounce gets bigger. Wow, alliteration. Meaty, beaty, big and bouncy. Palantir cashes out to its worst two-day run in over a year. And crew stocks, Tim? Yes. How about them? They got docked. They got docked. They got docked.

0:40I am Brian Sullivan in for Melissa Lee tonight. And as always, we are coming to you live from Studio B at the NASDAQ. And on your desk tonight, Mr. Tim Seymour, Karen Feinemann, Dan Nathan, and Guy Adami. Good to see you. I have not been here in the new segment. Can we clap? Let's clap. This is the first time since that new show. So, by the way, can we start by saying the show with you and Kelly is fantastic. It's one of the top 12 or 13 shows on the network. Without question, you compliment each other extraordinarily well, and I'm happy for both of you. I don't know where this is going. He's so nice.

1:15What? Handsome guy, Domi. Thank you. All right. Let's kick it. He's always like that. The live show is already sold out. Let's kick it all off with your money today. And let's be honest. It wasn't a great one. Walmart posted its worst day in more than a year. We're going to dig in more on Walmart in just a second. Because up first tonight, a big bank breakdown. Financials, the worst performing of the sector today. Goldman Sachs, Morgan Stanley, J.P. Morgan, Citigroup, all down. In fact, Goldman Sachs got your old company, single-handedly cutting 180 points off the Dow. JPM lopped off another 76.

1:53But the real interesting action, I mean, if you really want to get under that hood, Look at some of the more M &A-focused names. I'm talking, Tim, about the Mollison companies. I'm talking about the Evercores. I'm talking about the Lazard. President Trump signaling this week that he would keep strict Joe Biden-era merger guidelines in place. Karen, we'll kick it off with you because you actually pointed out this action earlier today. Yeah, so all the banks got hit, but they seem to be getting hit differently. And the ones that did seem to have big M &A businesses seem to be getting hurt more. I think it was on the heels of that.

2:29They've had a big run, though. Part of the story that's made the bank such a good place to be is not only, obviously, regulation and a pro-business environment, but the idea that M &A would be coming back with a vengeance, that it would be easier to get deals done. And who really benefits from that? The big ones that got hit the hardest. I still think the bank story is intact, although the first quarter looks like first quarter M &A will be disappointing and maybe it'll continue to be disappointing, but all of those other things are true. Asset wealth management is great. I think debt and equity markets will be great, and I think the economy's doing well.

3:04So I'm sticking with the banks. I definitely have less money today than I had yesterday, but that's okay. You're going to be just fine. Guy, here's the thing. We're in TV. We're very simple folk. We like to say big words like banks, but all banks are not created equal. I like how he's drawing you into this, by the way. No, I'm waiting for the hook here. He's very handsome and intelligent, by the way. Of course. Both are true. Both are true. But you know what else is true? Evercore, Mollis, and Lazard make their money in very different ways than Goldman Sachs, JPMorgan Chase, and others. And I think the market figured that out a little bit today.

3:39Although, first of all, I can't explain a lot of the things that are going on. I see what you did there. Meaty, beaty, big, and bouncy. First song on the album. But I'll say this. I thought MC should have been down more given the run that it's had And given the fact that we traded up the levels we last saw in 2021, if the crack staff wants to put up a chart, you'll see what I mean. In terms of Goldman Sachs, we're basically just wearing, this is something Karen will say a lot, we're just where we were a week or so ago in terms of the stock because it's had a monumental run. What I'll also say, though, is, you know, a lot of the enthusiasm around the banks is based on exactly what we led the show with.

4:13So maybe a little of the bloom is off the rose. But I think certain banks are intact. And I'll say the city, which hangs in there like a champ, think it's still a place you want to be, Brian. You know, look, the activity today was was disappointing for banks, but I would say the kids are all right. I mean, you've got a case here where deregulation was part of the theme. Banks are actually giving capital back. I mean, as much as you hear Biden era regulation, certainly around M &A. And yes, that could throw you back a notch. But what we've seen in terms of the rewriting the banks, It hasn't really necessarily been to me that their M &A business was going to go soaring.

4:47It's that the core business that they do have, which is a steeper yield curve, net interest income, more credit dynamics. The world seems to be awash in liquidity and regulation is is is their friend. In other words, lack of regulation is their friend. To me, if you think something changed through that rhetoric, then you've been investing in the wrong sector. That is it. But it's not nothing changed. Nothing, nothing changed. They had a good run. Camera's right. These are banks that have had a good run. If you wanted a reason to sell a headline, this was a good headline. It didn't change the investment profile of banks.

5:17Who's next? It seemed like something changed. Who's next? Yeah. You're in a different album. Yeah, but it's a good album, too. 71. So I'm going to look that up. I'd like to get behind your eyes and see what his opinion is. He doesn't have your eyes. The last time J.P. Morgan was down more than 4%, it was on September 10th. And I think this is really interesting because, again, I think they were speaking at a conference, the COO, and he guided net interest margins lower than expected. I remember us talking about that a lot, right? So think about this. The 10-year yield was like 3.65 back then. And we have now the 10-year yield at 4.5.

5:48Wouldn't you think that that is one of the reasons why this stock has appreciated so much over the last, call it, five months or so? And when I think about what Tim just said, it's like that was a headline that was more geared towards the investment banks. Make no mistake about it. I mean, J.P. Morgan is right up there with Morgan Stanley and Goldman Sachs, now tier one sort of investment bank. And you look at this as a money center bank also. You would think that they'd be benefiting from this, right? So it really says to me that the stock was 216 back then. It was 267 or something like that just yesterday.

6:16People were looking for an excuse to sell these things. I mean, that's as simple as it gets. And we're seeing that in other parts of the market. I guess, Dan, what's the relationship between investing in these companies and 10-year bond yields? Well, the net interest, you know, is really important. The steepness of the yield curve. The steepness of the yield, right. And how J.P. Morgan's positioned for it. Bank of America, that's a whole other story. It's a whole other story. Let's go into the M &A banks first. Yeah. Well, that's important. They would benefit from lower, lower, lower rates, I would think.

6:44Well. Private equity money sloshing around. You think so? But we haven't seen meaningful M &A so far. And maybe you could say, well, the inauguration was just, you know, a month ago, that sort of thing. And I don't know what the IPO pipeline looks like. We keep hearing about this huge backlog. We keep hearing about, you know, a lot of the, you know, intent for strategic M &A. We know that private equity wants to do stuff. So, again, I mean, we've got to see how things, you know, kind of start going. I just feel like if you're worried about banks, you would be worried about the labor market. You'd be worried about the consumer.

7:13You'd be worried about credit. You know, what we heard out of jobless claims, what we heard out of Walmart. I mean, I think you can see for miles that this is a case where the consumer is in a pretty good spot. And therefore, there's no reason to run out the door on banks. Hey, take some profits. But I think this is working tonight. We're going to run out of songs for the eight blocks over. Final word on the banks, Guy Adami. Well, I mean, you should, I think, be a little concerned about the consumer. We talked about it last night. that delinquencies are up in a pretty meaningful way that nobody seems to be talking about.

7:40Again, a lot of this is predicated on an employment picture that looks great. Below the surface are things to be concerned about. With all that said, I do think certain banks are really interesting. Goldman Sachs, you buy the sell-off, and Citibank, I think, gets to 90 before it gets to 75. It's the 90 before 75. All right, banks are down. Let's get back to Walmart. Walmart stock having a bad day, down about 7%. Walmart telling investors that profit growth likely to slow this year. In fact, Walmart was the worst performing stock in the Dow today, at least on a percentage basis. How justified was this pullback, Dan, on Walmart when, let's be clear, Walmart is pretty known for setting the bar low so they can beat the bar later.

8:23Yeah, and you know what? Bar rallied a lot. I mean, this stock doubled in the last year, right? And so it's trading at value. We talked about it last night before the print. is trading at valuations that a lot of retail investors, you know, had probably a difficult time, you know, digesting, but the stock kept on working and working. And it kept on working relative to a lot of its competition. And when you think about it, more than half their sales come from grocery. And there's some interesting dynamics as it relates to inflation and the sort of folks that were coming in there and why they kept on coming in there and what they were able to kind of upsell or whatever.

8:50I would also add that, you know, e-commerce growth disappointed a little bit on a, you know, on a quarter over quarter basis, right? It decelerated a little bit, and then it gave weaker than expected guidance. So the stock was up in a straight line over the last, you know, three weeks or something like that. I think it gained more than 10 percent. So it's given half of that back. I thought the quarter was great, actually. I think so. That wasn't the story. I own the stock. I own it going in. It was expensive. You know, it was very expensive. You sell it today? No, definitely not. I think that the quarter was really good.

9:20And what Dan talked about was the guidance. To me, the guidance seemed to be sandbagging somewhat. Why not say we don't know what's going to happen with tariffs because they don't. Right. Why not say let's be a little conservatives because we don't know how things are playing out. And that's what they did. And I think that as good as the quarter was and I thought it was very good. This just wasn't enough to keep the momentum. And then on a day like this, you know, at one point it was down maybe four, four and a half bucks. The call was really good, I thought. And then when the market sort of went to it went down another, I don't know, three bucks.

9:50So very bad day if you're on Walmart, which I am. But to me, the story didn't change. No, you've been on the magic bus, Brian, if you've been riding this stock. And I think it's a case where if you listen to what they told us, SG &A as a percentage of sales was higher. And so this has been a margin improvement story that's been part of that ride on that magic bus. In other words, this has been a margin improvement story for this isn't a growth company. It's not a tech company. It's been a margin story because they made major investments into technology, into infrastructure, into their digital.

10:21The good news is we heard stuff. Their higher income cohort is alive and well. People still like to go in there and find value and convenience in a group that's making more than$100 ,000 a year. That's fantastic for Walmart. And the other part of it is 30 % of their digital salespeople are actually taking on the higher delivery costs, the convenience factor. That's high margin. Again, this is not a bad number. No, it wasn't a bad number. Shouldn't have gone what shouldn't have done what it did. A huge number of people buying off their phones. You would say they're going mobile for more on Walmart's numbers.

10:54Let's bring in somebody who knows something about Walmart. That is Bill Simon. He is the former CEO of Walmart USA. He's now on Darden restaurants board and is the chairman of Haynes Brands. Bill, you just heard this conversation. What was your take on Walmart's quarter and more importantly, its guidance? Yeah, you know, I'm just a lowly retailer, right? What do I know? You know, I thought if you hit your numbers and did well and beat your earnings, things would usually go well for you in the market. But little do we know, you've got to have some magic dust. I mean, I don't know how you could have done much better for the quarter.

11:27I actually thought their guidance was pretty strong, given the fact that, as somebody just mentioned, really nobody knows what's going to happen with tariffs. And they were still that confident to continue to show a plus four, to call for a plus four next year and grow profit faster than sales to continue to develop leverage. So all in all, a good quarter, I think. What happened? The Mexico and China tariffs are delayed. What happens if, and it's a huge if, and I know that. I want to be very clear. I have no idea. Maybe one guy in the planet that knows exactly what might happen. If we get those tariffs, what happens to Walmart stock?

12:08Nothing, you know, because ultimately the consumer decides whether there's a tariff or not. Are they going to buy the product or are they not going to buy the product? Are you there's a tariff on avocados from Mexico? Do you have guacamole with your chips or do you have salsa and queso where there's no tariff? With a big company like Walmart, you know, the big guys, Walmart, Costco, Target, Amazon, Those guys have the supply chain and the sourcing capability to mitigate tariffs by redirecting the product, bringing it in from different places, developing their own private labels. Those guys will figure out tariffs.

12:44I'm not really worried about that impact. I would say with their guidance, they don't know, so it's hard for them to build it in. But the fact that they gave guidance of a sales increase of four and a profit increase growing faster than their rate of sales in that uncertain environment, to me, is a very, very positive indicator of the consumer. Yeah, Bill, I know you watch this show and you're on it often, so thank you. You also know, collectively, we've been extraordinarily bullish of Walmart for a while. What we were saying last night is, though, given the valuation, they really needed to knock the cover off the ball, which it was a great quarter.

13:23Not good enough. I guess the question to you is, you know, what is a reasonable valuation for Walmart, given they're operating better than anybody right now in the entire space? Well, if you like Walmart, if you like what they're doing, which is building a digital business and and sort of reshaping the company. They reported operating income for the year of around$29 billion. That's about what they earned 10 years ago in operating income. But they did it 10 years ago on$450 billion. And now they're doing it on$650 billion because they're building this digital business. If you liked that story yesterday before the earnings release, you should love it today because it's 6 % or 7 % cheaper than it was yesterday.

14:04If you don't like it, you probably still don't like it. Bill, it's Karen. Thanks for being on. So a lot of times when you're on, we talk about the Target-Walmart disparity. And so looking at those earnings today, we know obviously Target doesn't have the grocery ability that Walmart does, but some of the other categories were good. What's your read through to Target? Well, I actually think I'm hopeful that it's encouraging for Target as well. You know, they've obviously they've struggled because they don't have the food mix. But when you break down the category by category, the results over the last couple of years have been remarkably similar.

14:39They've been up where Walmart's up and down where Walmart's down, but their mix doesn't net it out the same way. And Walmart's report of general merchandise growth for the second consecutive quarter after a couple of really awful years is really encouraging from both a broad consumer perspective and for a general merchant like Target. So I'm optimistic for Target as well. I'm hopeful anyway. I do wonder if Walmart's still charging that quarter for coffee in their waiting room. If you go to see Walmart, it was famous, you'd go to Bentonville and they would charge you for the coffee. Oh, while you're pitching or something?

15:18Yeah, all the salespeople would go down there. And I know that because my wife's thinking some of her products. They were famous for being that concerned. Maybe that was a Bill Simon invention. Bill, we appreciate it. Thank you very much. So here's the thing, Karen, as an owner of Walmart, and you asked the right question, obviously, about Target. Do you worry about the valuation, though? Yes, I do. Because Walmart's not a cheap stock. No, it's not. It's not. And, you know, one point Walmart was so cheap relative to Amazon, that differential's gone. I don't know how much to value AWS for. It's not cheap, but I think I like what they're doing.

15:57I like the momentum, and I think they were lowballing their earnings. You know, Brian, for a long time, people have wanted to try to substitute Target for Walmart, and that's been the wrong trade. But as we've come to learn, it's not my generation's Walmart. So I think you're looking for a place to buy this stock, Tim, not sell it. And I got two in there as opposed to your double. It was a nice job by you, but I'll tell you what. But I think you're not going to get fooled again if you buy Target and put a pair straight on and sell Walmart here. The disparity, and we're talking about nine turns on a PE multiple, that's one you want to own.

16:29I'm long Walmart. I've been long Walmart for a long time. I'm also a long Target at these levels. And I want to be very clear, folks, to the audience that I'm not leading this charge. I'm just a seeker of truth. Although you did start this. Dan, final comment on Walmart and or all retailers? I think that, you know, if you're concerned about Walmart and expectations in the print, you've got to be concerned about Costco. It's got a similar sort of dynamic, a similar sort of setup here. There's probably some better valuations with similar sort of like setups, if you will. Maybe your TJX or something like that are trading at reasonable valuations that might do well in a more inflationary environment where we're seeing tariffs and the like.

17:07So I got nothing else for you there. That was great. And by the way, it has been amazing. Ralph Lauren, Tapestry, they basically doubled. in a year. Those stocks have been red, red hot, but big lots going bankrupt. It's like you've got to pick the management team. All right, coming up, gold shining bright, gold settling, closing in on the$3 ,000 mark on pace for its eighth straight week of gains. But there's a lot of talk about Fort Knox and potential audit. We're going to talk a lot more about all that. Plus, the S &P 500 pulling back today from its records. Is the market a little bit on the edge because of tariff uncertainty?

17:46David Zervos coming up. We'll talk to him about that and what the Fed may really be thinking coming up. You're watching Fast Money here on CNBC. We'll be right back.

18:07All right. Welcome back to Fast Money. If you haven't noticed, gold continues to go higher, hitting yet another new high today. But the president raising concerns over the country's reserves of gold, saying that his administration is going to personally, I think physically, go check Fort Knox to make sure the stockpile is all there. Here's what former Treasury Secretary Steven Mnuchin had to say on CNBC earlier today about a potential audit. The gold was there when I visited it. I hope nobody's moved it. I'm sure they haven't. I was the first Treasury secretary to go there and I think over 50 years.

18:48There's very serious security protocols in place, obviously, to protect the gold that I can't talk about. But we went. We saw it. And if President Trump wants it to be audited, that's obviously something that can be easily done. All right. So, Tim, aside from some of the intranet stuff that's going around, which is why we actually are asking whether or not the gold is there, what do you make of gold and the trade? I don't need this Treasury dynamic to be giving gold this rally. In fact, I don't think that it is. Look at the correlation of where the dollar peaked in this last oomph and what's been a great three year trade in gold, even at times when we've had the dollar be pushing to all time highs, at least over the last couple of years.

19:29And we've had a challenge on rates. We've had a challenge on inflation. This is a story where, again, I think the trade is more in the gold miners. And I think it's a case where if you own the GDX or if you own the A in the clam, by the way, Agnico Eagle is it's one of the largest positions in Ideva, which is an ETF. And the reason is the operational leverage in gold miners at this point at three thousand dollars an ounce or almost with inflation under control. And they've kind of right sized a lot of their operations. Gold miners are wildly interesting here to me. And again, they don't always trade true to the underlying price of gold.

20:03But gold isn't necessarily rallying on this U.S. Treasury forecast. This is look at the dollar, two month lows today and a lot of other ingredients in the dollar trade. I think, by the way, global chaos. That's why you own gold. A hundred percent agree. And not all gold miners are created equal. We talk about it. I mean, you put up a new month chart that has been awful over the last five or six years. Agnico making all time highs. But the gold story is intact. Dollar goes lower. Gold goes up. Dollar goes higher. Gold goes up. Great same thing. I mean, gold has been impervious to things that historically it would be facing tremendous headwinds with.

20:33And there's a story behind it, the story being central banks continue to buy at a record pace. So, you know, you're not shorting gold here. You're staying long and looking for a continued move to the upside. This trade is still going, in my opinion. Still going. And Mnuchin went, apparently, to Fort Knox, said the gold is all there. All right. There's a lot more fast money to come. Here's what's coming up next. Stocks taking a leg lower as investors deal with earnings, potential tariffs, and economic uncertainty. How one top market strategist is positioning. Next. Plus, Alibaba's having a big year, and it's only February.

21:10What's behind the latest jump, and how much higher can shares go? That debate, next. You're watching Fast Money, live from the NASDAQ market side in Times Square. We're back right after this.

21:31All right, welcome back to Fast Money. Not a good day for your money. Stocks pulling back. The Dow falling 450 points. By the way, it's worst day since January 10th, so just over a month. The S &P 500 down a half a percent. The NASDAQ also down. But again, context is key. You can't go up every day. The NASDAQ coming in today with a five-day win streak. So it was down today. We'll see what happened. And there's a lot of stocks that are trading after hours right now. You know what? We should kill the term after hours. Why is that? Markets are 24-7 now. There's no before hours, during, right? Well, they're market hours.

22:02You know what? I just think, honestly, if you can buy and sell a stock, it's the market hours. But you can't sell it the same way in after hours as you can in the market. And I think the market hours are important. Okay. In after hours trading, Booking Holdings and Rivian are higher after both beating on earnings and revenue expectations. Nations block now trading under the ticker XYZ for some reason heading in the other way. It is down right now about 5%. They missed on the top and bottom line. Live Nations shares not really up a four tenths of one percent revenue coming in above that. So booking holdings Rivian and Live Nation up.