Big Tech On Deck, A Transports Warning… And Foreign Money At Risk 4/28/25

0:01Live from the Nasdaq market site in the heart of New York City's Times Square. This is Fast America. New signs foreign investors are cutting their exposure to U.S. assets. Just how much money is at stake and what could it mean for the markets? Plus, one analyst trimming his expectations for Eli Lilly. UPS gets ready to report this week. Can it deliver? And Chinese discounters Timu and Xi in raising their prices. What this all says about the state of the consumer. I'm Melissa Lee coming to you live from Studio B at the NASDAQ on the desk tonight. Tim Seymour, Karen Fireman, Dan Nathan and Rebecca Patterson, former chief strategist at Bridgewater.

0:46And we start off with The countdown to mega cap tech earnings, Apple, Microsoft, Amazon and Meta headlining the action this week. But names like Qualcomm, Snap, Reddit and Block also on the calendar. The tech titans quiet to start the week, although Meta and Apple both pulled off a fifth straight day of gains. This is the Dow and S &P managed to claw their way into the green at the close. The Nasdaq was down slightly, but will this week's reports help jumpstart the major indices where they raise more questions about the state of the AI trade? Google certainly seemed to have maybe lifted the bar even for these results since the results were pretty solid.

1:20Yes, maybe a little bit. I mean, so I think the advertising part was a good read through to Meta. I think it's going to be easy for companies to not give a lot of clarity, guidance or this dual guidance that we've seen, because how can you possibly know? I actually think giving guidance, I don't understand giving guidance in this environment at all. So I don't know that we're going to have real clarity yet. But if it's bad, if the first quarter was bad, that's not going to be good. I think it's interesting to have these numbers dropped in the context of really where we've come from the market, because we've now I almost get the sense that the pain trade for markets is actually higher here, at least in the short run before I think massive pull forward, a lot of pressure on the business community.

2:03What multiple should pay for the S &P? The consumer headwinds. But but so I think people almost kind of want to believe. And as we're getting into the end of last week, what we're starting to see is the Nasdaq. First of all, yeah, the Nasdaq was outperforming the S &P and semis were outperforming the Nasdaq. Now, I'm not saying that this is where we're going to get back to the leadership that we had for two years, for five years. But I think based upon what we should be hearing so far, remember, we've heard in the last few weeks, not only do we get Google, but we heard Amazon. We heard Nvidia talk about AI demand, not seeing any let up that some of this was anecdotal, different CEO interviews.

2:36But I don't know where it suddenly changes here. Now, you know, Dan Niles is going to be a great conversation. Other people that are really kicking the tires, channel checks. What I'm hearing is it's not that simple, that actually there could be some slowdown. And I think the brave face in mega cap tech is interesting because, again, something that Karen says all the time. Why the need to go out there and say everything's great right now when, in fact, it couldn't be? Yeah, this is going to surprise you from the silver lining guy. I just didn't think that Google quarter was particularly that great.

3:04If you look at GCP and you look at the deceleration it's seen quarter over quarter, it came in at 28 percent growth, which sounds great, right? It's off a much lower base, let's say, than AWS and Azure. But, you know, last quarter, it was 30 percent. The quarter before that, it was 35 percent. Right. And I know what you just said about ad revenue. And that was good. And they saw better than expected margins. And they kept capex in the same spot. But the stock did not act particularly well, which is very different than three months ago where the stock was. Well, it's not that different, but the stock was at an all time high.

3:32It was down 30 some percent at its recent lows. Yeah, it bounced into it. But the stock reaction tells you that investors are not particularly that excited or, you know, I mean, I think while the bar is low, as we get into Meta, as we get into Amazon, as we get into Microsoft, if these stocks, again, see deceleration or the companies in their cloud businesses, but they leave CapEx in the same spot, I just don't think they're going to trade particularly well. Let me just push back a little bit on Google. I mean, you did touch on the run going into it. It was up$15 into it. But also on the cloud, they did say they were supply constrained.

4:05not demand constraints. So I thought that growth number was fine, given that, you know, they're and that's why the CapEx was static. Right. They didn't change that whatsoever. But investors are thinking the opposite right now. Right. They didn't buy it up after like even being down as much as it is from the highs. And I know it had that rally. So I just think that as we get further into earnings season, let's just say the stock market stays like, you know, flat for the next few days until we get to that jobs report. It's going to take a meaningful increase as far as whatever the metrics that you're looking at at Meta, at Amazon, and at Microsoft, to get these stocks moving higher, in my opinion.

4:37And even now, they don't trade at multiples that I think make you even feel that good about it. And I'll tell you the other thing. NVIDIA acts like you know what. I mean, NVIDIA acts. Come on, you can say it. I mean, like if we were on the trading desk, maybe we're about to get away with it. But it does not act particularly well. And the headlines, you know, one is worse than the next. And you would have thought after that Google CapEx that it might have traded a little bit better. Wow, if you're Mr. Silver Linings guy, I want to see the other guy. We are in a curious spot, and we've said this before, where the data is not necessarily reflecting what we are seeing on the front lines of business.

5:10And so as long as that sort of weird disconnect exists, could we actually be okay and surprised to the upside for this earnings season? I feel like there's such, I don't know, pessimism going into the season because of what we believe will happen that hasn't yet happened, at least in the economic data. Shoot. All right. Can we untangle that, Gordian? Please, please. I mean, when I think put that into the context of the tech stocks, you know, if I'm looking at a position I want to hold for the next three years, tech is at least a market weight in my mind. Because I think there's a decent probability that over that period we'll have a slowdown.

5:44We'll come back through it. These companies will continue to be globally dominant. And America is probably going to win the race to get to AGI. And when we get that catalyst, we remember how fun Chad GPT was when that catalyst hit the mainstream. This one will be, too, I think. And so if we get another sell-off, if we get a further derating of these stocks and you have an opportunity to average into them at better levels for a longer-term investor, I don't even care about the non-guidance and what's happening in the short term. It's more of the strategic, thematic investment here. But I agree with you, Karen.

6:19I mean, in the very short term, I almost don't know if I care what they say over the next few days because do they even know what they're saying? How could anyone have confidence right now? It could change tomorrow. These digital companies should have more confidence than if you're like a cyclical, industrial, you know, financial, that sort of thing. And, you know, there was this Dallas Fed survey that came out, and this headline is not particularly great. I mean, that there's Texas manufacturing activity weakened significantly as executives used the words chaos and insanity to describe the turmoil spurred by the Trump tariff in the trade war.

6:51So you just said it's not showing up in the data. If anything, in a red state like that, which is very industrial and energy and that sort of thing, you'd think that maybe they wouldn't be using terms like chaos. And so I think when we get to some of those companies, you might see some guidance where they just lower the bar. I mean, I don't know how you can ignore that manufacturing. What is this? Texas is one of the top 10 largest companies by GDP or countries or states by GDP, whatever the hell. Don't mess with Texas. No, I think you're right. I think with Meta, I actually think they could be on the front line of some ad spend and advertiser concern.

7:26I mean, they were one of the first almost cyclical like around COVID and some of that that I thought, leaving aside just how COVID obviously clearly seized up the engine. But you were getting some sense that those that had exposure to the cyclicality of the consumer, but the ad spend world, they were there. What's fascinating to think about with Meta is how the company was rewarded when they pulled back on CapEx. Remember the year of efficiency and all these things? Would they be rewarded here by saying, hey, you know, our business is fine. We've made major investments. We're going to be cautious.

7:59We're going to be smart. We're going to allocate capital as we see to. I know. I know. I know. Well, I mean, I think the market's not going to like it. But I actually think it's OK. And there are some dynamics that are somewhat independent of the tariff world. And you could make an argument that there's pent up demand for AI that's going to go on for a long, long time. I believe that. The question is whether there are some, you know, call it supply chains, some dynamics in the pipeline, some things that are not allowing the follow through to happen as fast as it can. It's not the worst thing in the world for some of these from some of these companies.

8:32And of all of them that we rewarded for actually having a business that benefits immediately from AI, I think is the one that they tap the brakes. It could be OK. If they if we don't believe the guidance that they give us in terms of financial results for the current quarter, for the year, whatever it may be, then why should we believe them in terms of their CapEx guidance for the year that they gave weeks ago? Well, I think it's an arms race. And right. We saw AWS affirming theirs. Right. So if they were all to go in on it together and say, hey, let's everybody reduce 10 percent or whatever it is, maybe they could do that.

9:05But now with AWS having done it and, you know, Google also. So you would think that the other two, Microsoft and Meta, are going to stick by. Actually, remember, the stock went up on their last time they talked about this big CapEx number. Not down. It was down. Once they pulled the Metaverse spend, it was up. But once they said they were going to do the CapEx. So this time, if they could say we can do the same with less, that would be great. But we've heard stories in the last three weeks or so where Microsoft's canceling leases on data center. Amazon is doing the same thing. There was a story, I think the information was reporting like a week and a half ago, that Meta was asking Amazon and one other, I can't remember, to kind of help them on their spend with Llama, which is an open source model.

9:49And you could talk about they're serving better ads and the like, and that's clearly been reflective, I think, in the stock over the last year and a half. But if Meta is getting to a point where they're not getting to serve better ads, they've been spending too much money. People are not using meta AI the way that they might have hoped because that's the next leg of this sort of thing. I don't know. I just think that we kind of crossed the Rubicon a little bit about that spend, about that arms race. And all these companies were saying, you know what, we're going to ask for forgiveness rather than permission.

10:15Well, that's been flipped on its head right now. So we're going to see as we get through these earnings over the next week or so whether investors are really going to continue to reward this kind of static level as it relates to CapEx. I mean, I wonder if we'll actually see if these reports are actually true, because for every report we've heard, the likes of Microsoft come out and say, that's not the full story here. Or we're constantly reevaluating our data centers and our needs. Yeah, but when Microsoft announced$80 billion in CapEx, I want to say like three and a half months ago, 40, 50 percent of that was meant to be overseas.

10:44And now all of a sudden you put together this kind of trade war. We don't have trade deals with the EU. We don't have trade wars or trade deals with Canada and the like here. So they were probably going to pull back a little bit on that spend externally. And again, I don't know if they're going to be rewarded for it in the stock market in the near term. But, you know, it might speak to the fact that they are their guidance, you know what I mean, about demand and stuff is not going to be particularly clear. And I don't really care when someone says we're no longer, you know, supply constrained.

11:12You know, we're I don't know. Like, we'll see. You know, I mean, these things can turn on a dime. It's going to come back to me also what what you're willing to spend on these stocks. Remember, Meta's always been cheap. But at this point, really, for the last six months, maybe for the last 12 months, it's gone from being a multiple. Karen, help me out here. I mean, you know, 18, 19 and on a forward basis. And to high 20s, like 22 with, you know, I don't know, maybe one turn of cash. So 21. So it's a little over market multiple. And that's totally, you know, based upon the growth and where they sit.

11:48And again, in terms of ad spend and ROI for advertisers and the world of AI that Facebook lives in, life is very good. It's just a question of the cyclicality and the multiple. So we're saying that about the entire market. I don't know what multiple we're supposed to have on the market here, but I think it's less than yesterday. We don't know what the guidance is. We don't know what earnings are. It's impossible to come up with a multiple. How do you invest in that environment then? I'm not doing a lot. I mean, frankly, I bought some more gold in January. I'm very happy about that. and I'm holding on to it.

12:20I like money markets. I know that's incredibly sexy and exciting. And in equities, I stay invested and I get a little more defensive at the margin. So I add more consumer staples. I look overseas. The crazy thing now is some of my typical overseas safe havens like Switzerland and pharma, I know we're going to talk about later. Is it? You know, if we have tariffs on pharma, like, so it's harder to find those safe places if you want to diversify outside of the U.S. I think the U.K. is sort of interesting. It looks like the prime minister there has a good relationship with Trump. It might get an early deal.

12:53It's a defensive market. It's a low beta market. It's fairly cheap. And then look for relative winners of the trade war. You know, places like Brazil. Brazil is going to eat market share from China, and it's going to eat market share from the U.S. To me, it's not that surprising that the stock market there is up nicely year to date. Just one more thing on Meta. I do think they're taking share, So even if there is somewhat of a slowdown. In what business? Advertising. Okay. I do. Definitely. They're absolutely taking share in a growing digital ad space. I mean, in other words, they're the person to be investing in a secular trend that's only getting better for them.

13:29It's just a question of are we going to hear from them their cyclicality even in that core business, which how can they not be based upon what everybody's calling out three to six months? Let's bring in an authority on big tech and AI. Hedge fund manager Dan Niles is the founder of Niles Investment Management. Dan, of course, was a semiconductor and computer hardware analyst during the dot-com bubble, a famed one, in fact. Dan, always great to see you. Thank you for joining us. I know at the beginning of the year you took a very defensive stand relative to some of, you know, other market participants.

13:57Cash was your best position. You weren't in any of the MAG7 names, and that seems like an amazing call at this point. Are you closer to reallocating to MAG7 at this point, or no? There's still a lot more that you need to see. So I think you need to look at it from a very big picture standpoint, which is if you think about what drives the S &P 500, there's really only two things, right? It's multiples and it's earnings. Right now, S &P earnings are forecasted. Official forecast is up over 10 % year over year. I sincerely doubt that's going to occur. That number is probably close to low single digits and maybe flattish.

14:33So you know that's coming lower. Second piece is obviously the multiple. and you've got the trailing PE for the S &P at 23 times. Coming into the year, we said, you know, with inflation between two and a half to 3%, the average is normally 19 times. I don't think we're going to get a recession, but if you do, that multiple is closer to the mid-teens. So, you know, the multiple's got to go down. So then you move to the MAG-7, which is a question you asked me, Melissa. And if you look at it dispassionately, the numbers for four out of the seven MAG-7 have been coming down since the middle of last year.

15:07And that is Microsoft, Amazon, and Apple. And then Tesla's numbers have been coming down since the year before, but that's obviously a different beast. So estimates have been coming down. And if you look at the MAG-7, when they reported their calendar Q4s, six of the seven companies had their forward revenue estimates go down. That's before all of this tariff stuff started to kick in. So things had already started to weaken on a fundamental basis. Now, the good news, as you said, is if you look at NVIDIA, the stock went down 49 % from its peak to its trough. Tesla was worse. And so a lot of these things have corrected.

15:49And by the way, the four companies that are going to report, I think all of them are going to beat revenues, beat EPS, beat margins. And probably that should be good enough. But then you look at Google and you go stocks up less than 1 % after having done all of those things. And so you wonder, are investors really thinking forward to the next leg of this, which is, yeah, that's because demand has been pulled in and we're going to have to pay that back sometime later this year. And so I'm going to actually start to think a little bit further ahead. Hey, Dan, help us think about this, because I remember speaking to you when Q2 results were being reported last week.

16:26You just said that a bunch of the MAG-7 names had, you know, they had estimates coming down, right, the last July and August. And I think that was the relative top in the MAG-7. You also came into this year, as Melissa just said, you had none of the MAG-7 in your portfolio. There were none of your top picks. At what point, again, if we had that pull forward like you just mentioned, at what point do you think you get more constructive on these names in the back half of the year? What would some of the things that you'd be looking for? For me, quite honestly, you've got to get through a negative GDP print, probably in Q3, because you've had so much demand pulled forward in the fourth quarter and in the first quarter.

17:05And I think what you're going to see is numbers get cut really dramatically in the back half of the year. So the time to get bullish was a few weeks ago. I had an interview on CNBC on April 7th. And I said, look, I'm bullish short term. Long term, I'm still bearish. And then you have Trump walk the tariff back 90 days and everything rallies. Today, I started to peel off some things that I bought for a short term rally because I'm looking at Google and I'm going, well, people want to like it, right? It's 18 times. And obviously, there's things you can look at that I have issues with longer term.

17:43But I'm kind of surprised that the stock didn't rally more off those numbers. And so then I go, well, maybe people are thinking about the fact that the clicks for search was only up 2%. And a year ago, it was up 5%. And a year before that, it was up 8%. So market share is being taken. Do people start to think about Apple's market share loss? What about NVIDIA? This Ascend processor that's coming out, that's probably going to take 20 % of the market away from NVIDIA in China, right? And then the DeepSeek stuff cuts the inference costs. So There's a lot of things you still have to go through. Market tops are a process.

18:19Remember, the market peaked in February. We're like two months into that. Usual drops when you're potentially staring into a recessionary environment. You look at the tech bubble or the global financial crisis. That took a year and a half to two and a half years to sort this out. Numbers haven't really started to come down in a meaningful way when S &P forecasts are for growth still above 10%. So I'm a fundamentals investor, unfortunately, or fortunately. And I go, we've had an 11 % rally in the S &P from the bottom. The normal bear market rallies are about 10 % to 14 % in size, and they occur within two to four months on your way to losing 50 % of your money if things get bad.

19:03This one's up 11 % right in that range. And I think you've got to start wondering a little bit more about the downside risk potentially, you know, after you get these good prints from the four companies coming up this week. Dan, always great to get your analysis. Thanks so much for joining us. Thanks, Melissa. Dan Niles, Niles Investment Management. Rebecca, do you agree with Dan? This is just a bear market rally. We're headed for more downside. I mean, I don't know if today is the top of it, but I 100 % agree that these things happen in waves. They don't happen in a straight line. So is it very possible that we could have a truth social post or an announcement or one of the various factions from the White House creating more uncertainty in the days ahead?

19:49Yeah, for sure. We've got a news alert out of Washington. Speak of the news. Several CEOs set to visit the White House on Wednesday. Megan Cassell has got the details. Megan. Hey Melissa, that's right, we're just learning from White House officials that the president is set to hold an event here on Wednesday called Investing in America. It will feature company leaders from a number of sectors. I'm told defense, tech, healthcare and consumer products will all be represented. Companies are sending either leaders or top CEOs. And just some of the CEOs that will be here are the leaders of NVIDIA, GE Aerospace, Johnson & Johnson, Eli Lilly and SoftBank.

20:25I'm told by White House officials that this is an event designed to highlight the amount of investment that has been announced so far this term. All of these CEOs and company leaders are representing companies that have agreed to invest in the country since the president has been in office. They'll be displaying their products, talking about their investments, and the White House hopes they'll be encouraging further investment to come. It comes, of course, Melissa, as the White House is using this week to mark the president's first 100 days in the White House. There are a number of events throughout the week, and this one on Wednesday will be to mark the actual 100th day.

20:57Melissa? Megan, thank you. Megan Casella. Look, I think more investment in the economy is great news. It's going to support GDP, but it is interesting that we're seeing companies in the U.S. announcing investments rather than trade deals. And the 90-day clock is clicking, and so far we haven't seen any. Every CEO is there, has already announced an investment. investment or they're looking for a carve out. I mean, like, come on. And so these sorts of announcement are going to lose their teeth. I think the market probably won't move off of these sorts of things. And so, you know, again, I think it's kind of like infrastructure week.

21:33Remember for four years about infrastructure week is going to happen. It never happened. And now you're getting these kind of announcements on buying, you know, investing infrastructure. But if the companies don't have any clarity, we've just been talking about this. The CapEx is going to go down. Well, you just said the Dallas Fed survey, right? We are a couple standard deviations below the average. And that's true across every regional Fed survey that came out this month. But the market is focused on a few different things. And we are now seemingly near the end, not the end, but the detox phase, we got hard.

22:05Now we're moving on to new phases. I mean, that's that's the strategy from this administration right now. So whether it means any real changes are actually going to be happening or things that are benefits or deals that are cut on the trade side, I don't know. But I think about the phases of this administration, I think they've, you know, we got a little sniff of the Trump put last week. We talked about that. So I think the worst of detox in terms of the market has been out there. I'll take the other side of that. All right. We shall see, as they say on TV. Coming up, not feeling the pharma space, the bearish call from one analyst as we await results from the health care space.

22:37What are traders see from that sector next? And price hikes in the discount aisle, how China's retailers are responding to Trump's tariff plans, and what consumers will be the ones feeling the pain. Don't go anywhere. Fast Money is back in tune.