Berkshire’s Cash Bulk… And New Data In The Weight Loss Drug Race 11/4/24

0:01Live from the NASDAQ market side in the heart of New York City's Times Square. This is Fast Money, and here's what's on tap tonight. Bad Apple, the Oracle of Omaha slashing Berkshire Hathaway's stake in the iPhone maker. So if Warren Buffett is selling, should you be too? Nuclear troubles. The energy company's breaking down today after regulators nixing a big deal in the space. What is next for the names, and is there more trouble to come there? Plus, how markets are positioning ahead of the election. Viking Therapeutics on its way down on some bad obesity drug news. and the chart master goes panning for gold.

0:38Is he placing his bets on the precious metal or on the miners? Well, you're going to have to stick around to find out. That's why we call it a tease. Hi, everybody. I am Brian in for Melissa once again, coming to you live from Studio B, the NASDAQ, and on your desk tonight, Tim Seymour, Courtney Garcia, Carter Worth, and Steve Grasso all physically around the table. I love it because we are going to start with a potential warning sign for the Oracle of Omaha, Warren Buffett's Berkshire Hathaway, further cutting its position in Apple in the third quarter. It still holds a lot, but it's now under $70 billion.

1:15That's a lot of money, but it is less than half the stake that they held at the beginning of the year. Now, there's really two ways to look at this. Shares of Apple, they're up 15 % in 2024, underperforming a lot of the mega cap stocks and the S &P, but still a pretty good return In fact, if we look at it in the Mag 7, Apple ranks number five. NVIDIA, Meta, Alphabet, Amazon all posting better returns. So it kind of, Tim, begs the question, is he selling to just raise money for something else? Is he selling because he still owns a ton? And if he is selling, him or his team, we don't actually know if it's like Warren Buffett, like, filling out a form.

1:54Just call it Warren. Filling out a form. Good enough. Right? Probably sure he signs off on it. Is that a sign for the rest of our viewers and listeners? Well, what we always say on this show is that 13 Fs are backward looking. And so there's an element of this that really should not be how we're focused on anything. And what Warren was focused on in the third quarter, well, we're now in the fourth quarter. And it's a dynamic that I think is always fascinating. Warren is known as a value investor. So when you hear of an investor who thinks that the intrinsic value in stocks is essentially gone, you know, that that's something to listen to, because, again, this is where Warren has really made his money.

2:31And everybody knows the numbers on the outperformance to the S &P. The other dynamic that I think is what has investors most nervous is who was best positioned in the financial crisis to scoop up preferred chairs of Goldman Sachs, Mars, Bank of America. And again, you know, he he the form fours that he's filing because he owns more than 10 percent of Bank of America are part of what have people very concerned. I would make an argument it's a combination of truly being a value investor and seeing a lot less value in some of the names. The selling in Bank of America is more interesting to me on some level because this is a position that's almost down 25 percent from where it was even a couple of quarters ago.

3:08And it's a case where I think there's some concern that the rates, the rate cuts that the Fed will be bringing will be very poor for banks. So I'm not you know, I don't think any investor should be rushing to to the door based upon. I mean, the the Apple selling we've been hearing about for months. And this is critical, Steve, to remember about Warren Buffett. Warren Buffett is not considered the greatest investor ever because he buys high and sells low. He hoards cash. They have over 320. Warren Buffett has more money than most nation states right now. And what he does is he wants to raise money.

3:45So when he sees an extraordinary and rare opportunity, he buys in. So are we taking anything away from the sale of Apple? Maybe he just wants the money for something else. Well, he's in short-term treasuries right now. He's got$325 billion, but he's not buying back his own stock. Right. Right. So I think that's the biggest takeaway. So if Apple is not the bargain, his own stock's not the bargain right now. There's no bargains. So to your point, are there bargains in the market? No. Maybe some people, I look at you because I think that you probably don't think that there's a lot of bargains, so I apologize.

4:18There's always something to buy. But one of the great investors of all time is making a decision to not buy. Right. And he's had plenty of cash before the current trimming, right? So now it's getting to be in an unbelievably large pile of cash. And there's also cap gains tax. That could be changing, too. There's volatility around the market. And maybe he wants Greg Abel to make his own decisions on what he wants to do with the money. So that's where you start off. We don't know who's making the decision to sell it, but maybe they just want to be sitting on a ton until they find something that's worthwhile.

4:49And we never I mean, not never, Courtney, but I know. Listen, there's there's an inherent bias that we have on CNBC. I fully admit that. Say, when do we buy something? When do we buy something? We very rarely ask the question. You guys do a great job of it here. But I mean, you know, I see what I did there, which is when do we sell something? And let's not forget, he still owns over$60 billion in Apple. So what do you take away from this? Yeah, and I think that's something, I don't think you want to take this as a negative on Apple. He's not exiting his position by any means. If it went to zero, we might have to have a different conversation.

5:21That would be a completely different conversation, but that's not where we're at. And he has been taking this off the table this year. And I think really Berkshire Hathaway had become mostly Apple and cash, which is kind of interesting because that's where the markets were, a lot of investors are either in the MAG-7 or in cash. but he really has always made sure he's a diversified portfolio. He's constantly pounding the table about that. And so I think seeing him take some profits here is more going to be for the future opportunities. What those are, I think, is the question. That's what we're all trying to figure out is what is he going to do with that cash?

5:49That we're going to need some answers on, but I don't think this is a bad thing on Apple. And the stock itself, of course, it dipped today quite substantially, but it's just in line with the insurance stock. If you look at his beta or his correlation to the S &P, it's actually higher to the transports and it's even higher to the S &P 500 insurance sub-industry group. So it really is treated as an insurer. And most of them have dipped of late. You look at MetLife. You look at Allstate. So I think you buy the dip. Yeah. And to your point, Steve Grasso, Warren Buffett has a whole team. You mentioned a few, Todd, and there's Gray and whatever.

6:25You just wonder, like, let the kids run. I mean, I say kids are probably in their mid 50s, but you get my point. Let them do what they want with the 325 plus this extra. It's all relative. Every year it gets a little more relative. You get my point. Let them run. Right. Warren Buffett's in his mid 90s. You're going to have to let your predecessors do their job. He defined his running of Berkshire the way he wanted to run it, the stocks that he wanted to buy, the sectors that he wanted to get involved with. And to your point, he's got to let the next generation figure out. So we don't. But again, Tim, do we take this away as everybody sell everything of Apple because Warren Buffett sold some shares?

7:03Well, no. I mean, again, far be it from me. I'm not being critical of what Berkshire's done. And it's been a it's been a phenomenal performer. But but actually for the last eight quarters, I think their net, you know, 166 billion in selling. This has been arguably one of the greatest eight quarter runs in the S &P history. So, you know, you don't he's not a market timer. He's he's happy to be very early. And if he sees things out there and I get back to intrinsic value in stocks, it truly is, you know, an oversimplified version of intrinsic value is truly there is more value in the whole than it's trading at.

7:38He doesn't see that. He's a valuation guy. It doesn't surprise me that we're in the place we're in. It's not the reason to go out and sell Apple today. If anything, those headlines came out six months ago and we knew about that selling. $325 billion in cash. I mean, someone was going to get a headline like Warren Buffett buys Germany. He bought German stocks? No, no, he bought the country. He just bought Germany. It's undervalued. All right. For more on the markets, the Fed, interest rates, and whatever else he wants to talk about, maybe Warren Buffett. Let's bring in Jim Bianco, Bianco Research.

8:06Jim, you can chime in on that if you want, but I want to start here. We have an election tomorrow. And without bringing politics into politics, let's bring politics into this because rates fell a few weeks ago. 10-year, 4.3 to 3.6, whatever it was, they've recently almost violently popped back up. And the stock market has moved with it. How much of that move in the bond and rate market is an expectation of a specific election outcome either way? I think only just the last couple of days to a week or so has really been about the election. And you see it in what's called the move index. It's kind of the VIX of the bond market.

8:47It's at a one-year high. Volatility in the bond market is through the roof. There's expectations that there's maybe fiscal stimulus coming or spending coming. But whatever the election means for the markets, it's being focused in on the bond market. And I think all the other markets are taking their reaction to it. And last thing is, look at Friday's move and look at today's move. These are extraordinarily large moves that we've seen in the bond market. But in this environment, they're just kind of average for what we're expecting through the rest of the week. Do you see another re-ignition of inflation either way?

9:2450 basis point rate cut took some people by surprise. You had some politicians today, very high profile ones, calling for more rate cuts. Neither candidate seems particularly concerned about debts or the deficits. Do you see inflation rearing its ugly head again in some form, Jim? Yeah, I do in 25. I think the problem with the 50 basis point cut was that it was a signal that the Fed, to put it in Austin Goolsbee's terms, the Chicago Fed president, they've got hundreds of basis points to cut rates through 2020 through the end of 2025. and you've seen what interest rates have done. Look at what mortgage rates have done.

10:04They've gone straight up since the middle of September, right after the Fed cut. And this is the market, I think, just screaming at the Fed, whoa, too much. You're going to create an inflation problem. You're going to overstimulate an economy that doesn't need this much stimulation. And if you throw in that a Trump victory, we'll find out in 24, 48 hours, that we're going to be looking at tax cuts, deregulation and tariffs, we definitely don't need hundreds of basis points of rate cuts over the next year or so. And I think that the bond market's just screaming that this is just too much, which is why you've seen interest rates, long-ender yields, go straight up.

10:43So, Jim, we really value your view here. And you're talking about a couple of different things. I mean, the fundamental view that the economy is not as weak as people had thought, as the market had thought, but obviously the deficit dynamics that I think we certainly all focus on here. There's a credit dynamic. There's an issuance dynamic. So there's technical elements. But I also hear you saying bonds look interesting and that actually, you know, in a world where we've had 20 plus percent returns in the S &P, there's other things to do. Where would you be in the bond market here? Because it sounds to me like you think rates could back up a little bit.

11:12I think there's a lot of investors that watch this show that have become Treasury market investors in the last couple of years and they've enjoyed it. And there's some fear of moving too far out on the rates curve. So where would you be? Well, yeah. You know, to put this into perspective, I'll channel my inner Dr. Jeremy Siegel. In his book, Stocks for the Long Run, the edition of last year, what should stocks return you from this moment forward? I know they've had two 20 % years already, but rational expectations are about a 6 % to 8 % return is on average what you should get. Well, if this is 2019, and you look at the bond market yielding somewhere between zero and two, we were screaming, Tina, there is an alternative.

11:53But this is late 2024, where the Bloomberg Aggregate Index is nearly 5%. You can get most of the expected returns out of the stock market with a lot less risk, because in a bond market, a bad year is like down 1 % or down 0 % or maybe up 1%. It's not a 20 % correction like we saw in 2022. And so I think that's why you've seen investors get very interested in the bond market. Bond ETFs have already set a yearly record in terms of their inflows. And they still got two months to go to add to it. So I think that if you want to look at what should you expect, I know most people expect 20 % a month, but they're not going to get that.

12:33But if you are in that gap that a 6%, 7%, 8 % return is reasonable, all of a sudden, if you look at the bond market, you could get the majority of that with a lot less risk. And that's why bonds are significant competition for the stock market right now. Jim Bianco, Bianco Research. Always appreciate your views and your straight talk, Jim. Thank you very much. I think Jim was saying 20 % a year, but you get her broader point. Is there a trade here in bonds or anywhere? Sounds like Jim might have been advising Warren Buffett, right? So Warren wanted an easier path, and 6 % to 8 % probably makes sense.

13:08And maybe Warren Buffett and maybe Jim are calling a top to the market, but it seems like the Fed doesn't want recessions anymore. It seems like they're trying to be so proactive that they don't want a recession. So they want to be early. I think they were late to cut, but it seems like there's a new Fed and a new sheriff in town. Who's that? I guess Powell. Because it's the same. But he's been the sheriff. Yeah, but he's a different dynamic. Meet the new boss. I think he is the same, Tim. Different dynamic. I don't know if we're going to get fooled again by this one. I think no one's going to fight the Fed.

13:42I think we're in a place here where I think the Fed's going 25 basis points. And I think the Fed's probably relieved that the economy, at least at this point, we know there are variable lags, et cetera, et cetera. But I do think that there is a fear that that inflation still could be out there. And we've just talked about all those risks. Good stuff. Let's move on to what's next. All right. From Wall Street to downtown D.C., security beefing up in the Capitol all ahead of Election Day tomorrow. Megan Gusella has more. Megan. Hey, Brian, that's right. We are here in downtown Washington right now, just a few blocks from the White House, where you can see businesses around me and apartment buildings behind me are gearing up for what they're worried could be a little bit of Election Day unrest here tomorrow.

14:23All weekend long, we've been seeing security going up, layers of security around the vice president's residence in northwest Washington, around the White House and the Treasury Department, and in the blocks surrounding the U.S. Capitol. And then over at Howard University, that's where Vice President Harris will be tomorrow night. There's also loads of security in place there. The city has asked all construction sites in that area to shut down and to remove anything from their sites that could be used as a projectile. So clearly lots of preparations being made here, Brian. But city officials are emphasizing that none of this is necessary, that there is no credible threat at this time of election violence, election day violence happening either here tomorrow or in the days later this week while we might still be waiting for a result.

15:03They've been trying to project really a sense of calm in the past few days and telling business leaders there is no need to board up like this, like you see around me. But in these blocks around the White House and downtown especially, business leaders aren't taking that advice. They're making the calculation that they would rather invest in these security measures than take the risk of damage to their storefronts. And, Brian, they lived through some unrest in the 2017 inauguration for Trump's first term, the 2020 summer protests, both of which did bring some damage to downtown Washington. And now these business leaders are saying they'd rather not make the risk again.

15:33Brian. Yes, I'll pray for peace, whatever the outcome. Megan Gosella, thank you very much. All right, we are going to take a very short break, but we've got more Fast Money coming up on deck. A trifecta of breaking news on semiconductors, slot machines, and some very private pills. Plus, what the government just did that melted down some of the red-hot nuclear names. That's all next.

16:02You're watching Fast Money here on CNBC. We'll be right back.

16:19We promised you earnings and we are delivering on our promises. We've got an earnings alert on NXP Semiconductor. that stock down a little bit, about 5.5 % on results. So let's find out why the stock is moving with Siva Modi. Hey, Brian, NXP Semiconductor shares declining after CEO Kurt Seaver said macro weakness in Europe and the Americas resulted in downbeat guidance for the fourth quarter. The health of its automotive business was in question following negative comments from Texas Instruments and On Semiconductor, but NXP managed to deliver revenues for autos that were in line with the street.

16:53The company does also have notable exposure to China about 35 percent of total revenue, according to Morgan Stanley. Regardless of who wins the election, Bank of America analysts expect restrictions on China to increase, which they say will challenge the entire semiconductor sector. A potential talking point on NXP's earnings call tomorrow. We'll also get an update from Supermicro after the bell, Brian. Waiting for Supermicro because that's not been a subject of trader discussion. Seema Modi, thank you very much. Let's talk about NXP semiconductor. Anybody here, I should know, But, you know, I don't I don't do this every day, Courtney.

17:27Anybody got a take on NXPI? The stock's kind of been dead money for about nine months in a market that's done pretty well. Yeah. And I think they're they're really going to be focused on the auto industry, which is really up for the debate with the election right now. Right. Because depending on where who's in office and what tariffs are going to be in place, that is going to affect the industry. Plus, we're seeing those longer term rates which are rising. And a lot of the auto industry, you're going to see more or less people will buy autos if those rates are going to be higher, if you're going to be paying more for your auto loan.

17:54So I think this is something that it's kind of one of those wait and see until after the election. Again, I don't always think that's what you should do. But in something that's so directly affected by that, I think you're going to see that. Well, you know, I would say I misspoke, but then I'd have to admit a mistake, which I'll never do. So if you expand the chart, it has been dead money for a couple of months, Carter. But if I expand that chart out, if we could throw a five-year chart of NXPI up, it's been dead money for three years. I mean, it's been a poor performer to its peer group, right, to semis.

18:19But I think the condition here is not one that's idiosyncratic. It's the whole space. We know that the semiconductor index relative performance peaked in March to the tech sector. So the most important part of the sector, semis, the most dynamic, its performance to its peer group, that would be Apple and Microsoft, peaked in March. And it's getting worse. The equal weight semiconductor has not made a new high since July. The semis have not made new highs since July. The market has made new highs. This whole area is all the elements of distribution. And in the auto industry, they rely as a percent of revenues.

18:52It's 55 percent, to Courtney's point. So autos are the chunk that have to do well, and they haven't done well enough for NXPI to thrive. You know, it's interesting. Just a quick side note. Did this election road trip two weeks ago. We drove across 900 miles. I talked to numerous business owners. They all said. I had no idea you were running. Did you know he was running? Not yet. He should run. You'll see. But a couple business owners told us that their business had kind of frozen up ahead of the election. that they almost felt like their customer base was just frightened in action. And I do wonder if after I bring this up because you wonder if somebody got to buy a car a couple of weeks before this election, when everyone's kind of on edge, could we see this business boom once it's once we have a clear winner, we move on.

19:36Could we have a business boom post-election, Steve? I wonder. It's always a possibility and you never know how the offsets shake out. You don't know who's coming in and what incentives are, but you need lower rates for the housing industry and you need lower rates for second mortgages and you need lower rates for auto loans. Yeah, I just it could be a good I'm trying to be optimistic on the election where once it's over, whether that's in a day or a week or a month, whatever it might be, that people are unfrozen from whatever concern they may have. And they go out and buy more cars. Maybe that benefits an NXPI.

20:09They do whatever it might take. And I just to put a bow on this whole underperformance of even three years, if you think about the industrial space, I mean, the industrial space was under a lot of pressure, supply chain dynamics during covid. That that meant there was not delivery of, you know, I mean, the chip dynamic for some of the autos was a big deal during late 21 and 22. And when demand has started to recover, it's why also I just think industrials as a group. And this may speak to kind of the dynamic you're talking about what we've seen with a handful. and I do mean GM, and I do mean even the airlines, we're seeing this part of the industrial sector start to break out after a long period of consolidation hire.

20:45Well said. All right, NXPI, a name that has not done a whole lot. All right, coming up here on Fast Money, more after-hours action on Palantir and Wynn results. Contessa Brewer is going to bring us the latest on Wynn and why investors do not like what they see. Plus, Amazon's nuclear no-go. So you got the federal government saying, uh-uh, Amazon and some big nuclear stocks took a hit because of it. That's all I have.

21:26All right, welcome back. Are the chips down at Wynn Resorts? Some investors apparently folding on the back of results. But there's always more to that. story, and I'll stop with the puns. The conference call just wrapping up. Contessa Brewer has the very latest. I knew you'd like it. I did it for you, Contessa. But what seems to have investors a little concerned? Well, you're watching the stock dropped about 4 % during the earnings call, despite CEO Craig Billings saying, look, everything's fine. Earnings missed. Revenue came in just shy. Adjusted property EBITDA, that's a crucial earnings metric, a little light.

22:00CEO Craig Billings said Golden Week in Macau, though, was great, encouraging that Wynn's market share in Macau is stable. Gross gaming revenue was down across the whole destination. You can't help that. And the other thing is we know that there was some ADR, the average daily room rates that had dropped somewhat in Macau, but they were running at almost 100 percent occupancy. On China stimulus, Billings says it's just a little bit too early to say whether that's driving visitation and spending. in Las Vegas. We saw the casino numbers softer than they were last year. It seems like Wynn was hit by a string of bad luck that we heard much of the, like other casinos on the strip, we've heard in their quarterly earnings reports as well.

22:44Billings described demand as healthy. He said that business from high-end customers is stable, but the year-on-year comparisons are tough. In fact, he says, look, in retail, we saw revenue up 3.5 % year-on-year. That's just an indication that customers are still spending on luxury. The other thing that they wanted to focus on was this board buyback. The board authorized about$750 billion of new buybacks. That brings the total to about a billion dollars. They said, all systems are go. I quote here, Brian, he said at the beginning of the call, look, trees don't grow to the sky, meaning there's a cap now and then to how much you grow.