Countdown to Retail Earnings… And A Self-Driving Push 11/18/24

0:02Live from the Nasdaq market site in the heart of New York City's Times Square this is fast money Here's what's on tap tonight. Retail on deck. Walmart near all-time highs as it gets set to report earnings tomorrow, while Target continues to lag. How these two are poised heading into the holiday season and who comes out the winner, we'll debate that. Plus, a robo-taxi revolution. Tesla surging as the next administration looks to ease rules on self-driving cars. But is this really as bad for Uber and Lyft as today's action suggests? And Netflix hits new highs in the back of Friday night's Tyson Paul main event.

0:33The chartmaster says it is time to go short on Palantir. And we're wishing HBD to the GLD, the first ever gold ETF celebrating a milestone. But is there more time to shine? I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Carter Worth, Steve Grasso, and Mike Coe. We start off with a countdown to Christmas. Oh, I hear that. The bells are 36 days left in the holiday shopping season. And a big week of earnings set to give an early read on spending at the year end. Lows TJX gap among the names reporting. but investors are homing in on results from Bellwether's Target and Walmart for the latest clues in the state of the consumer.

1:09The target's been lagging by about 50 percent in 2024. The gap appears to be narrowing. The stock is up almost nine percent in the past three months, although its last reports show to return to sales growth. The retailer striking a more cautious tone on comps into year end. Walmart, meantime, gaining over 14 percent since mid-August. The company raising its guidance last quarter thanks to strength in the first half of the year, but was less certain on how the consumer would fare in the second half. So how do investors approach retail now? Tim, how are you feeling about Walmart? I feel pretty good about Walmart.

1:40I might feel better about Target, but it's hard not to feel good about what Walmart's doing on the playing field. I mean, they've done a number of things over the last six or seven quarters, including. So the e-commerce losses are reducing, the higher margin revenue business. So advertising and membership are great. We know what's been going on largely across the board in terms of their ability to dominate both not just food and grocery, but also maybe a different mix. I think less shrink. I think a dynamic where you have just, again, higher margin businesses paying means this is going to be a three and a half to four and a half percent comp year over year, which is going to be really strong.

2:18It's a question of what are you paying for? And that's why I kind of like I kind of like Target more here just because of the multiple. And again, it's two times the multiple, really, of Target. We got it there. There it is. And I think it's a combination where that reduced shrink and Target has a chance to play even better for their margin. I mean, Walmart, that's the key thing. What do you pay, right? So this stock is trading at 35 times. It's never at any point in the past 20 years traded more than one-time sales, trading more than one-time sales, 20 times cash flow. So the question is, is it full?

2:46Expensive is a bad word because things can always get more expensive and things that are in downtrends can get much cheaper. But I think full is the appropriate word. What do you pay? And my hunch is after three quarters in a row where it's beat expectations, I don't think it's going to be able to pull that off a fourth time. They are a check-the-box category. It's almost like the way Amazon was. They have 42 % of the market share in retail, brick and mortar. So it's hard to fight that. They're getting deeper in DTC. They're nowhere near Amazon. Amazon is like the reverse of them. So they're about 6 % online.

3:23but Tim didn't really would you rather because you asked him. I don't think I've ever done that in my life. Except for Friday. Yeah, Friday you did. And then Thursday. It's been a weekend. And then Tuesday also. Except those days. And then denied every time. Yeah, usually any day ending in why Tim does a self would you rather. But, you know, it's hard. But to both of their point, it's hard to bet on the winner constantly. I don't own Walmart. I have. But I think Target sets up for a bounce. The reduction in shrink is going to be a big driver for Target. But, Mike, in terms of the valuation of Walmart, can you say that historically it's never traded at these valuations?

4:01It didn't have that DTC business. I mean, it's sort of a different animal. It didn't have the subscription business of Walmart Plus. It has a different sort of business model than it had when it was only bricks and mortar, you know, 20 years ago. Yeah, and it didn't have grocery, which is obviously a much more stable business as well. So in terms of execution, the reason that their multiple has increased is because they're doing a lot of things right. And they went from their old business model to adopting several new ones. But to those on the desk that are sort of in favor of Target, Target is, albeit a little bit late to the game, but they're trying to do the same thing.

4:39They are trying to bring in more grocery. I think that's a positive. We had seen some good improvements on the inventory side for them. There aren't a lot of places where you can buy stocks that are significantly cheaper than the multiple of the market at 25 times. We didn't mention it, but I think BJ's Wholesale, which is a much smaller business than any of these, but occupies sort of a similar space to the subset of Walmart that we call Sam's and Costco because they operate these sort of membership wholesale clubs. The big difference being that they take coupons where some of these others don't.

5:11That's another one that's trading cheap. That one's less than 22 times, whereas Costco's trading more than 50. So, you know, you put these two together and I'm kind of with the guys on the desk just saying, look, we've had a great run. Maybe it's time to look for some better values out there. And I think that BJ's is probably one. I think Target is probably one. So have you trimmed back your Walmart position? I have. I have. And I'd love to buy lower. In fact, I was selling some upside calls and those sometimes don't feel great when you get called away. And it just seems like this has been a case where Walmart's up 60 percent this year.

5:41You thought, you know, this year has been all about AI and semis. The SMH, the semiconductor ETFs up 37 percent, Walmart 60. So it just underscores where we are here. I do think there's maybe a refreshed view on the consumer going into this holiday season based upon everything, everything from the elections to the market, to the Fed. And even if the Fed is, you know, more cautious, let's just say, in terms of cutting, the consumer certainly got some sense that some of this is getting better for them. So as we go into this season, also lower gas prices at Walmart, I think, are a major, major tailwind, something that's probably underestimated.

6:16And I think even somewhat for Target. But I think it gets back to the margin. I think the shrink, which was 90 bps of margin improvement for Target in the second quarter, is expected to be another 50 bps of improvement here. All right. We've got a news alert here on Supermicro. Shares are surging after hours. Bertha Coombs got the details. Bertha. Yeah, Melissa, Supermicro indicating to the NASDAQ that it has engaged the BDO as its independent auditor effective immediately. And that will help it complete its filings for its 10K for the year end of June 30th, also for the quarter end of September 30th as well.

6:57They don't indicate exactly when they think they'll be able to do that, but certainly this is a big step forward after having lost their auditors and having been under the microscope at NASDAQ. Back over to you. All right, Bertha, thank you. SMCI up about 15 percent right now. Let's get back to retail here. Carter, you've been taking a look at the charts. What are they saying at this point? Yeah, let's run through a bunch of data tables, perhaps, and some charts. So one thing we can use to measure the whole space is the SPDR retail ETF. XRT. And you'll see here a number of constituents, 78. The whole thing adds up to about 4.1 trillion.

7:34And what's really stunning, of course, is the big difference between the average market cap and the median market cap. But if we look at the biggest holdings by market cap, it's the biggest names that everyone knows. You see Amazon here, Walmart, Costco. But interestingly, that's not the way the ETF is weighted. They weighted almost equal weight. And so here On the next table, you'll see the five biggest weights, and they are, of course, not particularly big companies. But the point is that no one stock gets more than about 2 percent. So you have a very effective way of saying, what does retail overall look like?

8:08And this next chart will depict that. If you look at the comparative chart of XRT to the market, they're dead even, essentially, over the past five years. But you see the beta associated with retail, right? It overshoots to the downside during COVID, overshoots to the upside. But on a five-year basis, this aggregation has matched the market. And then final chart, just look at the XRT itself. The issue here is that it's nowhere near its all-time high. Markets generally are at highs, and many stocks are. I have a sideways arrow drawn there. I think this is a pair of twos. OK, a pair of twos for overall XRT.

8:44And you said Walmart looks full, and Walmart looks full according to valuation and the charts. Yeah, we might have a chart of Walmart. And if we do, we can look at it. But Walmart, I don't see how you can pull this off. We're at the upper band of a well-defined channel. At least take some profits, sell some calls, that kind of thing. You don't sound terribly bullish on retail, period. Right. I mean, again, it's whether it's full or whether it's. Yeah, I think we have we have a lot of retailers, you know, that are in real trouble. Right. And we're kind of over retailed in this country. And so you're seeing.

9:12And one can say, so what? That's the nature of life. They always sort out winners and losers. Losers lose, and people that are prevailing, whether it's a better athlete or a better politician or a better student, they prevail. But there are a lot of individual retail names that are in real trouble. All right. Let's get to the broader markets now. Our next guest says the rally can still hold into year-end. Let's bring in the Texas' Jack Janisiewicz. JJ, good to see you. Thanks for joining us. Thanks for having me back. Yes, pleasure to be back. There has been a real bullishness to the rally recently, and you say this can hold into year-end.

9:41And does that mean hold and make big advances or hold being, you know, we'll sort of chug along? Yeah, I think we continue to grind up into the end of the year and potentially go out of new highs. And, you know, I think the key to this is really what we're seeing out of the Treasury market. And one of the things we keep saying is I think the market may be getting a little bit ahead of itself in terms of pricing in some of that really overly hawkishness. And we expect maybe we get a little bit of some softer data over the next couple of prints. And that takes a little bit of the edge off the Treasury market.

10:09and that might take a little bit of the edge off the dollar strength. And that might be enough just to get a little bit of a catalyst into the end of the year. And that batched that up with the seasonals. And I think that's a pretty good backdrop here as we finish out 2024. Jack, when you look at the concerning the Fed, when you look at a term that you've used, the peak hawkishness, do you think that we're really there? And will that continue to be a tailwind for the markets? Or have the markets already priced in that and are repricing in something else? I think we've gotten to the point where we're starting to price in quite a bit in terms of hawkishness, right?

10:43If you go back to when we were really pricing in the majority of the rate cuts, you know, towards, let's call it the end of September, you're looking at 10 cuts. Now the market's closer to pricing in three cuts in here. And, you know, I think when you start to look at that backdrop, the market's probably looking a little bit farther into the Trump administration. You know, a lot of what we heard on the campaign trail not necessarily gets done in here. So maybe that takes a little bit of the edge off in there. And on top of that, you know, again, we go back to there's probably going to be a little bit of softening in the data.

11:13Are we going to fall off a cliff here and push into recession? Probably not. But I think that gives us a little bit of a range. The upside is probably capped because of that peacockishness. But at the same time, I think there's also a floor in terms of how much growth will slow. That probably puts the economy in pretty much a sweet spot here. It sounded, Jack, according to the notes, that you were a little bit skeptical in terms of what the bullishness around the Trump administration and what it could possibly do would actually do for the markets, mainly because of the backdrop. We're entering this year, his latest administration, with a very different backdrop than back in his first administration.

11:47You know, starting points matter, right? If you sort of look at the 2016 blueprint, and I think that's what the market has been following over the last couple of weeks in here, you know, that starting point was very different, right? You were looking at Fed funds coming off of zero interest rate, that lower bound. You're looking at 10-year yields at close to 2%. You're looking at debt to GDP of about 75%. You go through the list on and on and compare that to where we are today, very different backdrop, right? Fed funds at 4.5%, 4.75%. You're looking at the 10-year at 4.40%. Debt to GDP now at 120%.

12:21The deficit at$1.8 trillion. Those starting points matter. I think it puts a little bit of a lid in terms of how much of that upside to growth we can really price in because I think you're going to get a little bit of self-correcting mechanism, especially from the bond market, if things start to accelerate to the upside. All right, Jack, great to see you. Thank you. Great. Awesome. Thank you very much. Jack Janisiewicz of Natixis. Mike, he makes a great point. I mean, even Fed funds rates, the deficit, that was a staggering change between the first administration and this one. Oh, boy. Yeah. Wow.

12:56You know, I think some people are optimistic. I think part of the grind higher right now is that there is some sense of optimism that you could get some more material movement on some of the intractable budgetary problems that we have seen at a fiscal level. Whether or not that's true, remember, of course, Congress is the one that controls the purse strings. That's one of the things that's always attributed to the executive, but it's Congress that controls the purse strings. But, of course, if they can use the bully pulpit to identify a couple of meaningful places for change that don't pinch too much, then actually maybe we could see some movement in that area and we could get a combination of growth without quite the increase in the fiscal problems that we have seen getting extended out.

13:39$3.2 trillion, I think, was the number that Penn had thrown out over the course of 10 years if the proposals that the incoming Trump administration actually were put into place, which was about$1.2 trillion more than Kamala had proposed. But I think there's some chance that that does come in a little bit. And growth, of course, can solve a lot of problems, too. All right, let's get to a buzzkill now. Checkout shares of Nike down another 2-plus percent today for the year. It's now down over 30 percent compared to a nearly 24 percent gain by the S &P. Even the announcement of a new CEO, Elliot Hill, has been greeted by investors with jeers.

14:14Tim, were you jeering? You weren't jeering. You're optimistic it sounded. Look, I believe this is by far the largest athletic brand in the world with the kind of brand that I think will be resilient. Even in the face also of I think they had probably their greatest moment coming out of COVID. If you think about where we all were on athleisure and what was even going on with the brand. But the Cowan note is talking about their concerns, first of all, when reaching out to both the street and the analyst community, but also just where the consensus is. It's still too high and that there might be just another reset on expectations.

14:48And wouldn't that make some sense if you're Elliott? You know, if you have this dynamic where you've got you come in, there's been this big boost to morale, but nothing really has changed. And the view has been that some of Nike's issues, I think, are at least medium term. So that's where we were with Nike, I think, even before the CEO change, is that you weren't going to see until mid-25 any real uplift in targets. And I think that's probably where we are. I mean, I would think it might even take long. I mean, if you're addressing issues like innovation and newness of product, how long is that pipeline?

15:18It's got to be a lot longer than six months for that problem. That seems to be one of the major ones there. And wasn't he's an insider, right? So the whole idea about switching it on its head to trying something new is hiring somebody that's not an insider, a fresh look, some fresh perspective. And you're not getting it. Look, Under Armour is up 22 % in the last three months. Nike's down 10%. Tim's probably wearing ons right now, right? Yes, I am. I put my feet on the table, but my mom told me not to do that. Really? Yeah. There's a lot of private. I fall back in the chair. There's a lot of companies that are taking share, and I get it.

15:53Nike is the biggest in the room, and everyone sort of revolves around Nike. It's the sun, but it's no longer the sun. In merchandise, people are buying other stuff. Adidas is struggling. A lot of the big super brand sneaker names have been under pressure. People want something new. Something new. People wear Pumas, Carter? I bet you did. Some Puma Clydes, maybe? No, never had a pair of Puma. Look at that. He laughed it off, too. They didn't nail memory. None of this existed. So they had Keds. Yeah, they had Keds. And they had Converse. That was kind of... My dad... You know, they started up. They were big at the club.

16:24We won't get into that. Tripped out of memory lane. Anyway, coming up, a boxy bump for Netflix. Livestream glitches not holding the stock back from hitting a fresh record high. How Saturday's slugfest could help pave the way for the streamers. Big push into live sports. And shares of Robin Hood well into the green after an upgrade. Details on the bullish call and how a coming SEC shakeup could fuel that trade. Don't go anywhere. Fast when he's back in two.

16:52This is Fast Money with Melissa Lee right here on CNBC.

17:05Welcome back to Fast Money. Netflix shares hitting a record high today after the streaming giant said a whopping 60 million households worldwide watched Friday night's boxing match between Mike Tyson and Jake Paul. But all that viewership wasn't without its problems. The streamer faced technical issues and customer complaints about stability and audio quality. Despite the issues, Oppenheimer reiterating its outperformed rating on Netflix this morning, saying viewership was likely double internal expectations and that any technical issues should be fixed by the time Netflix shows its first ever live NFL game on Christmas Day.

17:37I was listening to Rich Greenfield this morning on Spockbox, and he was saying 60 million is far out exceeds whatever the NFL will pull in. I mean, realistically. Absolutely. And again, we still haven't gotten to that Christmas day with now Beyonce doing the halftime show. I mean, it's kind of like a Super Bowl. And the dynamic for Netflix right now with 70 million ad tier MAUs at this point, I mean, that gives you a chance to actually see where they can go in some of this stuff and where it can grow. So 25 revenue top line expected to grow anywhere between 11 and 13 percent. That's something that I think also could be upgraded.

18:12And if it does, this multiple for, again, a company that makes a lot of money. They'll make$29,$30 a share by the end of$25. I think you stay long. So I did watch the fight. I did have glitches. I don't know if anyone else watched the fight. I did have glitches. There were problems with it. Who were you pulling for? Tyson. Okay. Sure. Yeah. And I felt like he did hold back. But that's a totally different show. I think he could have won. I think he could have knocked him out. Neither here nor there. The problem is Netflix should have been focused on three times the viewership. There shouldn't have been any glitches.

18:46There shouldn't have been the ability to have any glitches on that. So I'm a little shocked. So is it just half that amount, as Rich Greenfield said? Is football going to be half that amount or a third of that amount? I don't know. But what's to stop that from having glitchiness, too? People aren't going to keep coming back if they have a choice. Right. Right. When it was, here's the question, when it was buffering and doing that, are you thinking it's my TV or my TV? I think it's your own internet connection, right? You're like, come on. Yeah. Yeah. Look, it's a you characterize it. It's just you stay with it.

19:18It's a stay long, be long, nice, steady uptrend. Nothing wrong. Yeah. Mike, you agree with that? Yeah, 100 percent. I mean, first of all, they're going to fix this problem. It is evidence that they have completely transformed where they occupy, you know, basically the media space. I mean, this is a remarkable turnout. I did watch it. You know, you're talking about 60, 65 million households, how many people within each. These are epic numbers. And the thing is that all of their margins are getting better. Their cash flow margins are getting better. Their net income margins are getting better. And the more of this content they bring in and the more dependent on them we become, the more flexible they can also get on pricing.

19:56I know a lot of people talk about people, you know, cutting them off if they raise their prices. But I actually disagree with that. I think this is kind of a staple. And I've described it before as an unregulated utility. Everyone's got to have it. Try cutting it off in your own household, but you don't have regulated pricing like you do for your PG &E bill. Think of how great this is for the betting sites. 60 million people are tuning into this. Imagine the percentage actually placing a bet. I mean, if you get viewership up, that's participation that's up potentially. Yeah. Again, it gets back also to another place where Netflix could pull some strings when it gets into gaming and dynamics there that they haven't even started.

20:33A lot more Fast Money to come. Here's what's coming up next. We go under the hood. Why analysts are getting bullish on one online trading platform and how the meme craze could drive shares. What's next for Robinhood is coming up. Plus, Tesla driving higher as its focus on robo-taxis could start paying off. The latest on regulation and what it could mean for the ride share stocks. You're watching Fast Money, live from the Nasdaq market side in Times Square. We're back right after this.

21:14We've got a news alert on Alphabet. Deirdre Bosa's got the details. Debo. Hey, Melissa. So Google shares, they dipped on this news. They've recovered a little bit. But Bloomberg is reporting that DOJ antitrust officials have decided to ask a judge to force Google to sell off its Chrome browser. Now, this is part of the lawsuit that went in the DOJ's favor. If you remember back in August, the judge ruled that Google has illegally monopolized the search market. There's been some remedies. So now apparently the DOJ antitrust officials are asking the judge to put a sell off of the Chrome browser on the table as part of those remedies.

21:52Melissa, as I mentioned, shares have almost recovered. They did dip on that. But of course, Google is expected to appeal. And we are likely not to get something on this for some months. But this is something that's now on the table that could make investors nervous. Back over to you. Deidre, thank you. Deidre Bosa. Micah, what do you make of this news? I mean, it does sound like it will be a protracted process if this actually comes to fruition. It's going to be a long time in coming. And by that time, you know, we might not even be looking at Chrome anymore. or we're just going to go straight to the AI chatbot?