Can the Market Rally Continue and How Bots Are Winning the Prediction Markets 5/1/26

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20:26Tim Seymour:Welcome back to Fast Money. Berkshire Hathaway shares under pressure this year. Heading to tomorrow's annual meeting, CEO Greg Abel set to take shareholder questions without Warren Buffett for the very first time from Warren What to Expect, senior markets commentator and overtime co-anchor Mike Santoli, who is on the ground in Omaha. Mike, it's good to see you again. You've been to a lot of these things. What question do you want to ask Greg Abel in terms of how he will differ from Warren Buffett's tenure?

20:52Karen Finerman:I think it's largely about how he does view allocating capital. And I don't mean just the cash that's sitting around and what stocks might be bought and sold. but whether, in fact, he would like to kind of move in a particular direction already exposed in Berkshire Hathaway's portfolio, its portfolio of wholly owned businesses, or if there are new areas, how much opportunity he sees to sort of raise the metabolism of some of the operating businesses. And then beyond that, I was very interested to hear and see that Greg Abel had identified what the core positions are in that portfolio. Right. Apple, American Express, Coca-Cola, Moody's and the Japanese trading house investments as basically low cost basis, core holdings where they're an anchor investor.

21:38Karen Finerman:What do they think about the rest of them and why are those the core? And I also think he might have something very fascinating to say about Japan as an opportunity, even if he's not eager to make big pronouncements about macro in general or or things like policy.

21:53Tim Seymour:I'd love to get his thoughts on AI and where he's I mean, we've seen so much disruption this year in terms of, you know, just valuations being decimated by the concerns. I will replace certain areas if there is value there.

22:06Karen Finerman:For sure. And I think, for example, in the insurance business, it's interesting to think about how AI can be better deployed. And then if AI disrupts other industries or at least the market thinks they're going to be disrupted, does that create dislocations to invest? or maybe they want some kind of maybe more direct play on the capex side of it. I think it's fascinating that Berkshire Hathaway has underperformed, you know, from a very, very sort of stretched peak of valuation a year ago at a time when the world wants hard assets that can't be displaced. And that's what Berkshire Hathaway is full of.

22:41Karen Finerman:Right. The railroad, the electric utilities, all the rest of it. It really is these core businesses, housing related. A lot of that is not going to be threatened by AI. So maybe he can articulate some of that, as I also expect him to just confirm that the culture is not meant to change, that essentially he's going to be an instrument of continuity when it comes to how the company has investment discipline and runs its empire. And by the way, I was woefully unprepared with the tchotchkes last time, last hour. But I do have a few.

23:13Tim Seymour:How can you go there and not have any stuff to show for it? Because that is integral to the sort of the culture of this annual shareholder meeting, Mike. What do you have now?

23:24Karen Finerman:What we have is some of the Squishmallows, including the new one. This is Greg Abel right here. If you didn't know what Greg looks like, it's exactly like this is what he looks like. This is some kind of a little builder toy. Also fun, because Greg is a big hockey guy, plays hockey, There's, you know, new C's candy that's branded in that direction for a hockey player, as well as, oh, by the way, a spatula with his image on it from Pampered Chef. I like the spatula. So, you know, as I said, put your orders in.

23:54Tim Seymour:Yeah. I hope you brought an empty suitcase, Mike.

24:00Karen Finerman:Yeah, no, we can ship. We can carry whatever we need.

24:04Tim Seymour:Excellent. Mike, thank you. We'll catch you tomorrow at 9 o 'clock. You can catch the whole thing. CMDC.com. Mike and Becky will be there for every moment. But, I mean, it's such a fun event and such an important one tomorrow in particular because Greg Abel takes over.

24:19Karen Finerman:I'd kind of like to know a little bit more about what's going on with the spatula. Just anyway. But I think back to Greg Abel, who has already leaned into the insurance business, and I think that's going to be core. We've already gotten some sense that there's a lot of confidence in the changing of the guard at Coca-Cola and Apple. We've got a sense that outgoing players, we've kind of dumped their portfolios. So, you know, I think there is not going to be a massive change. I think Japan makes a ton of sense to me, improving governance, improving tailwinds in terms of truly transparency into companies that really had not had that.

24:54Karen Finerman:But 20 percent discount to the S &P. I like Japan.

24:58Tim Seymour:We've got a newsletter here we want to bring you. GameStop is reportedly preparing an offer to acquire eBay. That is according to the Wall Street Journal. It is reportedly part of Ryan Cohen's plan to turn GME into a$100 billion plus company. This is an interesting one. You see their shares of eBay up by about 9 percent. This really wasn't on my bingo card for this hour. I don't know what your initial thoughts are, Karen, in terms of I haven't looked at the market caps either. I got to look at where they incorporated. How much do they own? Do they own any? Is this a 13D? It looks like it looks like I don't know.

25:31Karen Finerman:Well, eBay on its own was not heading towards 100 billion in market cap. So it does give some sense that there's there's a platform dynamic and leveraging that is is something there's some intrinsic value. And as well, I don't know that it's trading up is is a sign of anything because everything's been trading up. But this this is fascinating, though. Yeah. And is that part of the GameStop plan for I mean, if you're a GameStop shareholder, What is the holder base of GameStop now?

26:02Tim Seymour:I'm not sure if it's still a meme sort of stock or what the base is. Mike, I don't know if you've seen any action worth noting in shares of GME. Once upon a time, it was one of those stocks and options that were very active. So what's interesting to me, and this kind of caught me off a little bit, because both GameStop and eBay saw extraordinarily above average volumes. So I'm looking at my screen right now. eBay traded seven times its average daily call volume today, and that was a little inexplicable. And GameStop, 570 ,000 call contracts, 180 is what we would normally see. So I'm not trying to stir up the hornet's nest here, but it's awfully interesting that both of these names would have seen such extraordinary options volume.

26:54And then we get this news after the close like this.

26:58Tim Seymour:Yeah, I love it when you stir up the nest. Yeah. So GameStop, I'd see, is$5 billion, I think, of net cash. However, the enterprise value of eBay at the close, it's up a little higher now, is$49 billion. I don't know how excited I would be as an eBay holder if I were one to get some sort of GameStop currency, GameStop stock, as part of the consideration. Maybe they lever up. I don't know. I find this kind of amusing as well, just the idea of we were on death's door. Right. We survived. We did a great job. And now we're going to buy eBay. We did a great job. They raised capital into that. Good for them.

27:39And now they're going to buy eBay.

27:41Tim Seymour:Yep. We'll continue to follow the story if we have more developments. Again, the Wall Street Journal is reporting that GameStop is preparing a bid to buy all of eBay. GameStop shares are up 6 percent. eBay up about 7 right now. A lot more fast money to come. Here's what's coming up next. Beauty, bailouts, and Bitcoin. The fast movers catching a bid today as markets wrap a wild week. What's driving the action and how to play the pops? Plus, shop till you drop? The shift that's bringing younger generations back to shopping centers and what it's signaling about the health of the consumer. You're watching Fast Money, live from the NASDAQ market side in Times Square.

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29:53Tim Seymour:My community gives me the confidence to ask myself, what would you like the power to do? So every time I'm on the pitch, I play for more than myself. Oh, what a tackle from Naomi Gurma. Absolutely brilliant. Bank of America champions U.S. Women's National Team member Naomi Gurma and everyone who dares to ask, what would you like the power to do? Bank of America, proud to be the official bank of U.S. soccer. Bank of America and a member FDSE. We've got a news alert out of D.C. The White House planning to withdraw troops from Germany. Let's get to Eamon Javers with the latest. Eamon. Yeah, Melissa, this report coming to us first from CBS News, now matched by other outlets.

30:36And what the report is that about 5 ,000 troops in Germany will be brought back to the United States, according to Pentagon plans that are underway right now. Now, as a percentage, that's not enormous. The Pentagon has about 36000 troops in Germany right now. But as a political statement, it certainly will not go unnoticed in Germany. The president has expressed frustration time and again with the German government for not joining his war in Iran and has expressed enormous frustration with NATO itself as a whole for not participating in that war as well, saying that he doesn't believe that NATO would be there to support the United States, although NATO did invoke its collective defense agreement back after September 11th, 2001.

31:22So this news just crossing, Melissa, and now it looks like a couple of news agencies have matched it. Back over to you.

31:27Tim Seymour:All right. Eamon, thanks. Eamon Javers. Stocks mostly higher to kick off the month of May, the Nasdaq leading the way up almost a percent, while the S &P added three-tenths of a percent, both closing at records, the Dow shedding about 150 points, Bitcoin higher by more than 2 percent and in positive territory for the week. The crypto now trading around the 78K mark. Estee Lauder up after the beauty brand beat earnings estimates and raised its full year forecast. The company also said it plans to cut more jobs as part of its turnaround efforts. And JetBlue taking off amid reports that Spirit Airlines is close to shutting down.

31:57Tim Seymour:Just in the last hour, the Wall Street Journal reported that Spirit is expected to cease operations at 3 a.m. Eastern time on Saturday. Bono, in which you want to trade?

32:10I want to trade Bitcoin, and I want to trade Bitcoin-adjacent names. I think it still is very much a reminder that there is still a pocket of the market that is looking for risk and is willing to push further out on the beta curve. And I think that is a type of activity that I think you might want to caution against heading into the macroeconomic environment that we're into. All right.

32:31Tim Seymour:Coming up, the retail detail, the CEO of Tanger will join us next to dig into the company's latest earnings and the trends he's seeing among consumers. More Fast Money after this.

32:44Tim Seymour:Welcome back to Fast Money. Outlet mall operator Tanger reported record leasing volume last night and increased its guidance for the year. This even as the consumer comes under pressure from rising gas prices and economic uncertainty. Tanger stock was down 2 % today, but is still up nearly 9 % this year. CEO Steven Yaloff joins us on set here for more on the quarter and the state of the consumer. Stephen, great to have you with us. Thanks for having me back. We were just chatting during the break. It's surprising to you. Is it surprising to you that the consumer is still doing well in spite of all of this?

33:13Well, yeah, you know, what we're seeing is a much younger consumer show up in our shopping centers. That's part of the surprise. But, you know, with rising gas prices, the old narrative, particularly in outlet centers, was people have to pile into the car and drive 20, 30, 40 miles to get to the center. But I'm finding that a lot of people are moving closer and closer into the geographies where we have shopping centers. So a lot of the localization work that we've done, restaurants, entertainment, things like that, I think are really resonating across our portfolio. And we're seeing the customer come and shop.

33:44Tim Seymour:AAA reported that the average price of gasoline is now at 430, which is up from, I think, 403 or something like that last week. So the spike is real in terms of how quickly it's gone up. At what point do you start getting concerned, oh, this level, I would expect to see some traffic slowdown? Yeah, you know, I think in our outlet portfolio, and, you know, we have some full price shopping centers, too, and they serve a very localized customer base. So I don't think there'll be as much impact across that portfolio. But in the outlet portfolio, you know, when you're selling value every day, and when you've got the opportunity for customers to come in and buy their favorite brands, you know, Gap, Gap's back, unbelievable business.

34:27Nike, Coach, Michael Kors, at the best possible price. I think that the customer is like, you know, the gas price is less of an issue when they know they're going to get great savings when they come and they shop.

34:37Karen Finerman:Stephen, sharp-dressed man, always love having you. Great numbers last night. Part of that beat was lease income, and, you know, give us some sense of also just a step removed from the consumer, but leasing demand and what you're seeing, because on some level, those are the folks, as we just said, I mean, gap, great turnaround. Not everyone's going through that. So what do you see? You know, first of all, from a tenant point of view, the first thing we say is it's really not about categories. It's about brands themselves, the brands that are really resonating. So, you know, you'll have the accessory category as an example.

35:09Well, Coach is just such an outlier doing unbelievable business. The family apparel category is doing extraordinarily well right now. Gap is an outlier. And, you know, the athleisure business, and we know what's happening with some of the athleisure brands that had, you know, great success in the last few years. But now all of a sudden the brands like Aerie. And if you take a look at the three, those three brands that I'm calling out, it's that young consumers really feeding into a lot of that. As far as leasing volume is concerned, you know, there's not a lot of new supply being added to the marketplace from a development point of view.

35:39So the M &A business, there's a lot of acquisitions going on, a lot of properties are changing hands, but they typically come well leased. So there's not a lot of space. And I find that brands are really competing for space and trading up a lot of these shopping centers. The successful centers are just getting even more successful. And the middle of the pack centers are starting to see interest from brands that they hadn't seen before. And we're really benefiting from a lot of that. You know, last time I was on, we talked about Sephora just as an example. Well, Sephora is not an outlet player, but coming into the outlet business because they see a customer shopping with us and they want to put their product in front of that customer.

36:16So when you say you're seeing strength in a younger consumer in their 20s, and yet we hear stories about, you know, fears of A.I. disrupting the job market for someone in their early 20s. You're not seeing that at all, it sounds like. Well, it hasn't. They're working and have money to spend. Yeah, you know, it hasn't really resonated yet. And we're seeing that Gen Z consumer, that's really a big cohort of ours now. That's who we're marketing to. We have a loyalty program. That's who the key players are as we keep on building that loyalty group up. We're seeing a lot more of that Gen Z age bracket coming into our centers and, you know, sort of looking for deals, looking for great brands, looking for the experience, looking for amenities and spending more time.

36:58You know, the largest dwell time across our portfolio is coming from that cohort of consumer. Has the AI fear resonated? It's probably more fear than reality right now. So, you know, we'll make hay while the sun is shining, particularly as it relates to that consumer.

37:13Tim Seymour:Stephen, great to see you. Thanks for coming by. Thanks for having me back. Stephen Yaloff of Tanger. Mike Co., what do you make of SKT? Yeah, I mean, I'm not really that interested, to be honest. I mean, look, it's, you know, I always use the Holley Index as my barometer for consumer strength, and I'm not really big on the shopping side. I will tell you that if I'm looking at the consumer, one of the names that has long been on my list is Ralph Lauren, frankly. I think that's been certainly an impressive place. And another thing on the consumer side that I think is kind of interesting, and you mentioned Estee Lauder earlier, that stock did very well today.

37:50The name, though, that I'm kind of interested in on a relative basis is actually Elf. And I probably should defer to people who know more about the makeup business than I do, but that's a faster-growing business at a better turn. So when I look at the consumer, that's sort of the area that I'm looking at. Long Elf, short Estee, long Elf, Ren.

38:07Tim Seymour:All right. Coming up, prediction markets soaring in popularity, but it's bots, not traders, for reaping most of the profits. A look at what the betting data is signaling next for Fast Money in two.

38:23Tim Seymour:Welcome back to Fast Money, a report this week may be giving prediction market bettors pause before making their next wager. The study found retail traders are actually losing money while algorithmic strategies are netting a profit. For more of the battle between bots and traders, let's bring in the professor behind the study, Josh Della Vidova of the University of San Diego. Josh, great to have you with us. My pleasure. Thank you for having me. I feel like this is what most people believe, but you've actually found the data behind it at this point. And it's not that the retail trader is guessing wrong on the outcome.

38:55Tim Seymour:It's that they're slower. Can you explain? Exactly right. So in my research, I found that retail traders are actually correct 51 % of the time, but lost$80 million over the last four years. In contrast, bots, these algorithms that are trading thousands of times per day over thousands of markets, they're not correct. They're correct at a rate of about 50%, a coin flip, and they made$130 million. In prediction markets, it's not just about being right. It's about being early. And that's how you make money. OK, and so what is the discrepancy? What is the difference between how much retail makers make and how much the bots make?

39:37Exactly. So the thing about retail traders, they're coming in quite late, just three days before these markets resolve, and they're betting about 85 cents to win a dollar, win 15 more cents, while bots are getting in weeks before building up these markets, trading much more volume, betting 50 cents to win 50 cents. It's not just about the direction, it's about execution quality, similar with high-frequency trading in equities, for example. Professor, thanks for coming on. So are some of the retailers smaller bets or bigger bets than the bots? Who's betting more money, and does that matter in the calculation here?

40:18Yeah, this is interesting because bots only comprise of 4 % of the traders, but they make up 90 % of the volume, while everyone else just constitutes 10%. They're actually churning over the market, making spreads, getting in early, and that seems to be the most profitable strategy. By the time retail investors come in like you and I trading at 90 cents, there's nothing more to be gained. We're betting too much to win too little.

40:48Karen Finerman:Josh, it's Tim. Thanks for joining us. Fascinating professor. And so when I think about this, it seems like we could get second and third derivative bots, moving bots in one direction to go the other direction. And how much of this and I don't necessarily market manipulation, but obviously the markets themselves, as you said, are inefficient. and larger players are pushing markets around. So it seems to me that the bots would be competing in a way that we would be almost three steps down the checkerboard. Yeah, that's an interesting comment because bots are actually moving prices more towards fair value.

41:24So there's actually a competition among bots in which the top 10 % of bots are making 70 % of the profit. These are sophisticated market makers coming in from other markets and they're providing liquidity for retail or other investors to embed the information. So when it says Rory McIlroy has an 85 percent chance of winning the Masters, he actually has an 85 percent chance. It's not so much they're manipulating the market, but they're being compensated for building the market.

41:53Tim Seymour:So unlike the markets, the bots are not going against the retail traders. They're both betting against the house, so to speak. And so I'm wondering, in your view, how does a retail trader lose out? It's just that they're able to only win less money because of the presence of the bots and heavy volume? So bots are providing liquidity, as I mentioned. But in this market, there isn't a house. It's a peer-to-peer network in which investor A is making a trade against investor B. The best way that they're losing out on money is they're betting too much to win too little. If you're betting 90 cents to win a dollar, you have to be right 90 percent of the time to be profitable.

42:35They're only correct 51 percent of the time. That's not a profitable strategy in the long run.

42:41Tim Seymour:All right. Professor Josh, thanks for coming on. I'm sure a lot of people out there will be shocked by this data. Thank you. Thank you so much. I misspoke. They are going against there's no house. But it is interesting that the odds are stacked against you, basically.

42:56Karen Finerman:Well, it's much like a Well, I think it's how you bet. And you could sit at a poker table one hand too long if you haven't been betting the right amount.

43:05Tim Seymour:Coming up, the traders will lay out their top charts as we wrap up a week full of big market swings. All the picks straight ahead.

43:18Tim Seymour:Welcome back to Fast Money. It's been a big week for markets with big tech earnings, a Fed decision, new market records and a slew of massive single stock moves. So we thought we'd ask for traders which charts caught their eyes this week. So, Mike, why don't you kick it off? Chart of the week time. Well, you know, we'll start at the top alphabet. That's the chart that definitely caught my eye. And you know what's interesting? We can show the price chart. We can't show the forward earnings chart. I wish we could because if you did that, this is one of those names that we've just been talking about has actually become cheaper over the course of the last seven days.

43:53Tim Seymour:Hmm. Yeah. So your chart of the week is really forward earnings chart. Exactly. That's clever. Not catchy, but Karen, what's caught your eye? Well, Google, but I answered too late. So when they asked, again, what was your chart? This one, Qantas Services, and it was really just an absolutely extraordinary earnings. They beat on earnings by 30%, which is really crazy. Now, what they do is they do a lot of stuff related to the electrification and maintenance and new electrification. And obviously, data centers and AI, as well as on-shoring and general construction, all of that have just led to blowout earnings.

44:37If I owned none, would I buy it right here, if I were honest? Good question. No. You would not. It's no. It's just, I mean, it's great. It's extraordinary. But the valuation is also quite high.

44:48Tim Seymour:All right. Bono, what's your chart? uh it's eaten and you know this week the hyperscalers are already had everyone's attention so this one popped up because i was focused there and noticed this i think caterpillar gets a lot of the attention we've seen them run up in that name eaten is also about 55 percent uh on a one-year basis but if you believe the ai super cycle story and the backlog that they've expressed i think this thing has upside with that said it is fully valued here so you have to be buying into that story. And Tim, what is your pick for the week?

45:20Karen Finerman:My chart of the week is a tip of the hat to Karen and Carter, who have talked about this name. I'm talking about Zoom. And it's a company that is breaking out now. And it's finally breaking out. Carter's talked about that long base. And we know the farther the space.

45:33Tim Seymour:Is that the longer the base?

45:36Karen Finerman:It's also a company that their AI companion is three times engagement of what it had a year ago. They had almost two billion of free cash flow in the first quarter. They'll probably improve upon that. In fact, They're talking about buybacks and possibly cash givebacks. It's a story of a software company that's outperforming during a software winter. And it's been very impressive. So it's not expensive. Zoom.

46:01Tim Seymour:They also have a little bit of a stake in a little bit of a ton, more than$5 billion. Up next, final trades.

46:13Tim Seymour:Tim, did you just put that pin on? What a lovely pin.

46:16Karen Finerman:This is a sunflower. And if you're a trader, everybody knows that the sunflower is a flower, has the Fibonacci sequence. It's also the flower for the Wealth for Women event on May 28th, which Karen and a lot of hot shot women are going to there and teach other women. It's going to be a great day. In fact, get a ticket for mom for Mother's Day.

46:34Tim Seymour:That's right. Time to get your ticket. Wealth for Women, May 28th. Scan the QR code on your screen. Go to CNBC events slash Wealth for Women. Final trade time. Mike Coe. Yeah, more than 10 years after AlphaGo, AlphaBet continues to demonstrate their leadership in AI. Google. Bono in. Power and grid infrastructure play, Eaton. Karen. Yeah, quick shout out to my sister producer, Wendy Feiner, in her movie, Devil Wears Prada 2, Open State. Nice. And Meta. Tim.

47:02Karen Finerman:Got to go see that. Estee Lauder, maybe I'll put on something nice from Estee.

47:07Tim Seymour:Mad Money starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such.

47:37To view the full Fast Money Disclaimer, please visit cnbc.com forward slash Fast Money Disclaimer.

48:07Two with Tom Hanks. New episode Monday at 8. Part of History Honors 250. Only on the History Channel.