Counting Down to SK Hynix Offering… And A Major Warning Sign in the Market 7/9/26

19:56Yeah, I mean, they added advertising, right? They added different tiers of their pricing. And, you know, they're trying to do some live stuff, which I think is, well, they're doing live unscripted stuff, right? It's much cheaper. And so now they want to move into sports and the like here. Which is expensive. It is. But, you know, at the end of the day, we heard the CEO, the company say, I want to say it was about a month ago or so, that they're going to actually do less quantity and more quality, right? And I think we can all agree that they're probably pretty good at identifying quality, and they're really good at serving it.

20:26And so I think some sort of menu that you were going to have, right now it's just their original programming, and it's the catalogs of other things, and it's a lot of documentaries. And so I just think more choice is going to keep people on the platform a lot longer. And I remember when Reed Hastings said, I want to say a few years ago or so, he's like, they're not competing with other streaming networks. There's competing with how much you want to sleep every night.

20:48Kathy Lien:Yeah, with everything else that you might spend your time on. Fill in the blanks. Coming up, Pepsi fizzling out. What the company said on today's earnings call that spooked investors. What it says about inflation and the consumer. Plus, laying the foundation for housing stocks inside the bounce in homebuilders today. And the latest read on the real estate market. Don't go anywhere. Fast Money is back in two.

21:11This is Fast Money with Melissa Lee right here on CNBC.

21:19Kathy Lien:Your data lives everywhere. On-prem, in the cloud, across apps. Bring it all together with EverPure. The platform that acts like a living system, delivering the latest in data performance, security, and innovation without ever slowing you down. Sophisticated enough to anticipate your ever-changing data needs, yet simple enough to feel like second nature. Tame your data chaos with EverPure and make storage and data management the simplest part of your business. Visit everpuredata.com to learn more. It's smart to always have a few financial goals. And a really smart one you can set? Earning cash back on what you buy every day.

21:55And with Discover, you can. Get this. Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show. See terms at discover.com slash credit card. Thursday, July 16th, CNBC Sport and Boardroom join Fanatics Fest for Game Plan, groundbreaking ideas shaping the future of sports and entertainment. Request your invite at CNBCEvents.com slash Game Plan.

22:28Kathy Lien:Welcome back to Fast Money. Pepsi shares down more than 3 % after warning about rising input costs in the second half of the year. The soda and snack maker also saying consumers were pressured by higher gas prices in the second quarter. The stock now down 4 % this year, while rival Coke is up more than 18%. We were making that point, you know, the snacks, having snacks is a big difference between the two in terms of performance. Yeah, and I think that's the question is, do you want to blame it on the consumer because the consumer is pressured, or are they just not wanting to buy these certain products?

22:57And I think that's the big question here, because I think when you look at the consumer, like, clearly compared to their competitors, they are going places. And generally speaking, they have been holding up well. Consumer spending has been holding up well. If you look at debt-to-income ratios, they're actually still relatively low. It's like 8 % of income, which means the consumer has generally been on good footing. They're just not wanting to put their money here. So even though they've been doing good abroad, it was the North American sector that hasn't been doing well. So I think it's more a question of the products than it is the consumer.

23:24Guy loves Fritos still, right? No, you know, first of all, I do love snacks. Fritos, no. I was never a Frito guy. The munchie nugget, once you get them on your hands, it's like you get all greasy and stuff. I like barbecue potato chips. I also like Pepsi last night. I said I could make a cogent argument for it. And here we are down four bucks. So I thought the valuation was sort of baked in in terms of the quarter. I think the quarter was bad. But when they talk about, again, input costs and slowing demand, it's problematic. And, you know, given the discounted trades to Coke, I thought it was worth a look.

23:55I still do. But I understand why people would say don't look here.

23:59Kathy Lien:How do you extrapolate the results on to other retailers or even a Walmart? I think about a Walmart first, and Walmart was down a little bit today in an OK tape. So you've got to think that's a pretty, that correlates highly, you would think, right? Walmart is obviously, they're so huge, they do have more power than most vendors do, but, or than, you know, most supermarkets or whomever do. But you still have to think, all right, the consumer is stretched here. But I do also think that tends to send people to Walmart. Right. Who might not go there otherwise. What would be your chip of, like, you don't have a desert island.

24:35Kathy Lien:Salt and vinegar potato chip, hands down. Easy. Okay. You know how to win her heart now. Well, wait, hold on. You're assuming I didn't prior to. We're not going to go around the horn on that one? We don't have a lot of time here. What do you like? I'm like a Cool Ranch Dorito guy. Oh, I can see that. That's also, what about Courtney? Ask Courtney now. Courtney, what are you into? Your favorite snack? Oh, I don't eat chips, guys. I'm a chocolate person myself. Oh, okay. Well, that's good to know. Well, Karen, come on. I don't need any. Help us out. I don't. Like an avocado. Chocolate-covered pretzel could be a thing with you.

25:05Kathy Lien:All right. News you can use here. Lots more fast money to come. Here's what's coming up next. Home builders raising the roof after a rough start to the month. What's fueling the turnaround? And is the latest rally built to last? Plus, Japan's currency crunch with the yen at four decade lows. What's keeping the pressure on? and why one expert says it could be flashing a major warning for the market. You're watching Fast Money, live from the NASDAQ MarketSite in Times Square. We're back right after this.

25:44It's smart to always have a few financial goals. And a really smart one you can set? Earning cash back on what you buy every day. And with Discover, you can. Get this. Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show. See terms at discover.com slash credit card. Thursday, July 16th, CNBC Sport and Boardroom join Fanatics Fest for Game Plan. Groundbreaking ideas shaping the future of sports and entertainment. Request your invite at cnbcevents.com slash game plan.

26:26Kathy Lien:Welcome back to Fast Money. Sales of existing homes unexpectedly fell in June, down almost 2.5 % from May. That's according to the latest data from the National Association of Realtors. The median cost of those homes, meanwhile, hit a record high of more than$440 ,000 still. Homebuilder stocks gaining ground, Toll Brothers rising almost 2%. Lenard, Deer Horton, KB Home, Pulte Group also higher today. Even the rates are pretty firm and not too far off from conflict-level highs. Yeah, and I don't think this is surprising because even though home prices are going up, it's the interest rate that's more important.

27:00Because if anybody's going to sell their existing home, where are you going to go if your rate is going to be higher? You're actually going to be paying more in that new house, so nobody's putting their homes on the market right now. And this is why the home builders are benefiting from that because that's really where you can find the inventory right now. But I think especially at Toll Brothers, one of your better performers, and because we talk a lot about the stretch consumer, it's particularly your lower income consumer who's hurting. Your higher income consumer is less hurting. Toll Brothers is that higher rate of new home purchase.

27:27So I think that's what you want to look at with your home builders is that that bifurcation probably will continue.

27:31Kathy Lien:And for consumers, I mean, that's where they're getting lower rates because their home builders continue to buy down those rates. And they're going to probably continue regardless of whether or not they want to. And Courtney brings up a great point, obviously, in Toll Brothers. They don't report until the end of August as well. But our crack staff in EC, by the way, we're going to single one out later in the show. That's a tease. Major double top in Toll Brothers. Let's go back to 2024 and you will see that 165 level traded off, traded back up to it. If you're of the belief, which I am, that rates are going higher and that the employment picture is not as rosy as the unemployment rate suggests, I don't think you can own homebuilders here.

28:05Also, it's not great for Home Depot and Lowe's, which I am both of. And if I look at the chart Lowe's, going back to the downside of COVID, when we started to come out of COVID, raise rates. I mean, it's, you know, five years, six years, it's really done nothing. Disappointing. But it's a holding in. Yeah, for no good reason, apparently. Yeah, I think.

28:25Kathy Lien:Still waiting. Yeah, revisit that. Coming up, how low can the yen go? The currency extending its slide as pressure builds on Japan's policymakers. When the BOJ might step in and what it means for markets right now. We're back in tune.

28:41Missed a moment of fast? Catch us anytime on the go. Follow the Fast Money Podcast. We're back right after this.

28:55Kathy Lien:Welcome back to Fast Money. Stocks gaining ground in today's session. The Dow adding 140 points, the S &P up nearly a percent, the Nasdaq leaving the charge up 1.3 percent. AstraZeneca, meanwhile, sinking almost 6 percent after its nerve disease drug, Weynia, failed in a pivotal late-stage heart disease trial. The drug jointly developed with Ionis Pharma, missing its primary endpoint of reducing cardiovascular death and recurrent heart events. And meta rising nearly 5 % today. According to reports, the company is planning to start production of a new AI chip in September as it looks to scale 14 gigawatts of compute next year.

29:29Kathy Lien:It will work with Broadcom on the design and Taiwan Semi on manufacturing. How did you take this news, Karen? Well, there's a few things going on. That's sort of interesting, for one. But also, just looking at meta, you know, So clearly Mark Zuckerberg seems to be he's messaging that, OK, things aren't going exactly as planned, but, you know, we're going to address this and we're going to think about revenue streams and how to do that. It does really make me confused about how much CapEx they will spend. On the one hand, he seems to be very aggressive. And on the other hand, I think he's getting the you know, here's the message that CapEx spend.

30:08And it's questionable what the ultimate return on it is going to be. And the stock has suffered for it. It's rallied some in the last couple of months. But that's going to be a really interesting tell. I looked at the straddle today for meta for earnings. It looks about 12%, which is a very big move. So, I mean, this one, I think, will be probably the most interesting of all the hyperscale. Yeah, I think Meta's story on AI is so confusing that it might end up being good. And I mean that, seriously. It's so confusing it's good. No, I just think investors are really having a hard time putting this all together.

30:44But again, you know, going back to NVIDIA, I mean, Meta's a huge customer of NVIDIA. We're wondering why is this thing not going anywhere? Because all of their huge customers are going other places or designing their own chips right now.

30:55Kathy Lien:Meantime, the Japanese yen trading around four decade lows against the dollar. Our next guest sees the move as a major warning sign for the market, which could push the Bank of Japan to intervene. Kathy Lean is managing director of FX Strategy at BK Asset Management. Kathy, great to have you with us. I feel like every morning you wake up and you're wondering, probably you, maybe not me, wondering if the Bank of Japan will actually intervene that day. Why do you think it hasn't so far? I think it's become clear that the Japanese tolerance for a weak yen, you know, in support of exporters as well as tourism has increased significantly.

31:29Kathy Lien:They also know that without the support of the U.S. coming in and coordinating intervention, their efforts will be futile. So that is why we haven't seen any evidence of intervention, because either trying to convince the U.S. or they're actually tolerating more yen weakness. It's probably a combination of both. All right, Kathy, it was July of around this time of year, actually, 2024 dollar yen, 161. CPI print came out on a Thursday. It was soft. Dollar yen in five minutes went to 157. By August 2nd of that year, a month later, the VIX was trading like 60. the U.S. equity market was under considerable pressure.

32:04The circumstances have changed considerably because their bond market has deteriorated exceedingly. I mean, just an extraordinary amount since that time. Debt to GDP, 250 percent. There are no levers they can pull. So what should we be worried about here?

32:18Kathy Lien:Well, from the perspective of Japan, there's probably a lot to be worried about. We're talking about Japan's markets. We don't necessarily have a crisis signal right now, but it's definitely a warning sign because, you know, the problem that we're having with the debt to GDP level, the problem they're having with the weak yen impacting, you know, the cost of living for consumers. Yes, it's helping exporters, but this is very bad for consumers. And all of that is going to translate into weakness for the Nikkei. We haven't seen it yet, but household spending in general has been very weak in Japan.

32:49Kathy Lien:And they're dealing with, you know, the possibility of food costs rising as well. And of course, you know, their strife with China is hurting a lot of, you know, export demand. So there's a lot of trouble spots that make me worried about the Nikkei level right now. I think that there was some guidance a few weeks back that there's open lines of communication between Japan and Treasury here. And I'm wondering if you think Treasury just doesn't want to take part in this or what the reasoning might be for not stepping in and helping Japan yet. I think the motivation to get involved in the intervention of the currency is still limited at this point.

33:28Kathy Lien:I think, you know, at the end of the day, you know, the U.S., they're focused on, you know, what's happening in, you know, within its own borders. I think they don't want to necessarily intervene in the markets. And they're trying to see if verbal intervention will be effective enough. At the end of the day, I think all of us realize that it's going to, it's not just going to be intervention that's going to be effective. It needs to come from substantial fall in U.S. yields, as well as, you know, some sort of risk aversion event. And so that comes from the U.S. side, the U.S. interest rate story, the U.S.

33:57Kathy Lien:data story. Intervention in the past, you know, probably in the future, is rarely lasting. So do we break 40-year lows on the yen? Where do we go? I think we get to, you know, right under 165. You know, 164.75, we even hit 165. That's my next target because the reason here is that the Fed story is very strong. And I think, you know, there are many reasons to believe that rates will continue to rise this year. And as long as rates continue to rise, especially in relation to some of the other rates abroad in Japan and the eurozone, demand will continue to flow into the greenback. And as long as the greenback remains in demand, that's going to keep the yen under pressure.

34:36Kathy Lien:It's going to be a very difficult scenario to change at this point. Do politics come into play at all? I mean, the Bank of Japan, of course, central bank. But at the same time, you mentioned cost of living, and that is a real problem, especially as oil prices are so high, particularly for the Japanese. This becomes a real problem for the political party, the prime minister. At what point do you think that factors in, if at all? I think that's becoming a very pressing issue right now. And that's probably part of the motivation for the latest interest rate hike, because maybe they want to stem the slide in the yen and they realize that that alone isn't effective.

35:09Kathy Lien:So I think it's going to be a lot of political strike that starts becoming out of this because 40-year lows for a prolonged period of time is going to be very damaging, especially when you're hurting already from the tourism factor. So I think it's going to have reverberations all around the economy, politically, economically, socially as well. Kathy, great to see you. Thank you. Always a pleasure. Kathy Lee in BK Asset Management. What do you think happens? They're the largest foreign holder of U.S. Treasuries in the world,$1.2 trillion. What do I think happens? They're going to have to do something there.

35:41And I think it requires them to sell treasuries, try to defend the currency, which is a mook's game historically. It doesn't work. So when they have to turn to their bond market? I mean, there are problems there without questions. There are no levers that are going to pull that are going to fix this. And at some point it makes its way here. I just don't know what the breaking point is. But I will tell you, each day their bond market sells off, each day their currency sells off, as Liz Thomas of SoFi says, that's a relationship problem that needs to be reconciled somehow.

36:07Kathy Lien:At the same time, good for the stock market, which Kathy had suggested. And so, therefore, I mean, would you think, oh, the Nikkei has more room to run? I mean, if Cathy says that it's going to get weaker, why wouldn't the stock market go higher? Well, I have the DXJ, which is the yen adjusted. Right. So you're not taking the currency risk. And I want to continue to hold that. But I mean, you're right. You know, I came into the business when the pound was being defended. And we all know that that didn't really work out. So since then, I can't remember a currency really being defended that really worked out that way.

36:38It doesn't work. So that seems like a waste of money. There's a saying in gambling, not that I gamble, but you don't want to chase bad money with good money. And I think that's what this is.

36:50Kathy Lien:Coming up, Ohio taking the top spot in this year's top states for business. But the biggest surprise might not be who ended at number one. The states that have made the biggest leaps in the rankings. That's next. Fast Money is back right after this.

37:07Kathy Lien:Welcome back to Fast Money. The World Cup quarterfinals kicking off today with France currently leading Morocco 2-0 in Boston. The economic impacts of the tournament are already being seen. Bank of America finding all 11 U.S. FIFA World Cup host cities have seen an increase in credit and debit point-of-sale spending. Kansas City, Los Angeles and Miami seen the biggest increases, spending between June 10th and July 5th up more than 6 percent year over year. although it seemed like Nike didn't have any boosts from the World Cup. Or maybe they did. Oh, interesting. Yes. That could be worse. Yes. Oh.

37:44Kathy Lien:Oh, yeah. Yeah. I hadn't thought about that until you just said it. All right. We'll see. All right. Meantime, Ohio may be number one on CNBC's annual top states for business this year, but which one saw the biggest moves in 2026? Scott Cohn is in Columbus with more. Scott. Hi, Melissa. It's been a kind of slow climb for Ohio. They were 30th the first year that we did this in 2007. Other states are moving up the ranks even a little bit faster than that. Let's check out this year's most improved state. Arkansas, the natural state, jumps 13 places to 28th place this year. Janine and Kevin Segan moved to the Bentonville area from Utah in March.

38:27It's peace.

38:29Kathy Lien:We wake up to the birds and the deer and we go to bed and sleep to the birds and the deer. But if we need to get someplace, it's a matter of 20 minutes. Remote workers for Utah-based Intermountain Health, they could have moved anywhere. And they looked, but they landed here. They like the schools here for their teenage daughter and the welcoming atmosphere. It's kind of all encapsulated in quality of life. Their realtor, Anthony Mosley, says there's more where they came from. I have people that have come from all over the United States, Canada, Mexico. I have people come from Europe. Helping Arkansas rise 23 spots in our workforce category and 10 spots in economy, a top state for job growth.

39:10But Arkansas still has problems, finishing 41st for quality of life, near the bottom for health care. Their health care system needs to change.

39:20Kathy Lien:On top of that, even if we did get into a specialty doctor, they're booked out clear until almost next year. Yeah. Biggest move over 20 years has been Michigan, which started at number 41. This year it's number six. Second biggest move is here in Ohio. There is a great group of people, lots of them, that work on Top States for Business every year. I wish I could thank all of them. But a special shout out to our Top States producers this year, Leanne Miller and Mallory Leonard, their first Top States for Business. They put up with me and they nailed it. Go to topstates.cnbc.com. See where your state ranks.

39:58Melissa?

39:59Kathy Lien:Just been tremendous. And Leanne, by the way, is a Fast Money alum. She was on this team. So shout out to her, too. Scott, thank you. I feel like I only see you once a year, basically. So see you next year. Scott Cohn. Maybe. Sometimes I come back, but yeah. I hope so. Thank you. Hope to see you before then. All right. Before 2027. Yeah. But Ohio, of course, is the top state for business this year. Mike Santoli, I have to give him some credit. My closing bell overtime co-host. He guessed it. He nailed it. He's a clever man. Nailed it. Yes. And of course, Joe Kernan, the great Joe Kernan, who you co-hosted with this morning.

40:36Kathy Lien:He wanted to have confetti on Squawk Box this morning. He got one of these party popper things. No, he didn't. He couldn't pop it. it didn't pop. Because he was unable to? He twisted it. He couldn't twist it. Yeah, that speaks volumes as to Joe Kernan. And also, of course, Sarah Eisen from the great state of Ohio. Of course, yes. But Scott Cohn does, it's amazing. It's fun work, and it's great. And you're right, he should be on this show more often. He should. We miss Scott. But this is amazing. All right, coming up, changes at brewing, changes brewing, I should say, at Starbucks. The coffee chain upping its reliance on AI to cut costs inside the company's latest efforts and the impact on the struggling software sector straight ahead.

41:14Kathy Lien:More Fast Money in two.

41:25Kathy Lien:Welcome back to Fast Money. Starbucks jumping two and a half percent today on reports the company is tapping into AI to develop in-house software. The move could curb its reliance on third-party vendors like IBM and Microsoft and is part of the coffee chain's$2 billion cost-cutting push. This is interesting. This shows you how companies can actually use AI and save money and have a return on that investment court. Yeah, and I think that's what people have been waiting to happen. When are you going to see all of these small companies all across the country who are using this to lower their costs and streamline their businesses?

41:56And I think it also is going to come into question again, the CapEx of your hyperscalers. If that's going to take away from anybody's business because you can do this stuff in-house, is that still justified? So I think we want to see that. So I think you're probably going to start to see more of these stories. I think it's fascinating. Yeah.

42:09Kathy Lien:And this whole, you know, AI eat software. I mean, that narrative, I would find I would think fuel, you know, this is fueled by it. Yeah. I think that this comes back to return on investment. Let's see how some of this stuff works. And we've been talking about this for a couple of years. I think it's much more likely to happen in small, medium sized businesses. And, you know, I obviously larger companies have a bigger budget for this and the ability to actually squeeze more out of it. But, you know, I just think it's going to continue to take time. We're going to have some one-off situations that kind of justify it.

42:39And there's going to be plenty where people are like, you know what, I'm just not there yet. I don't know. What do you think of them as a medium-sized company, a big company? I don't know. They're massive. Yeah. Okay,$40 billion, it looks like. Well, just because they're doing it doesn't mean it's going to succeed. No, it doesn't. But, I mean, they have the wherewithal to do it. If you are a sales force, you have to be concerned about this. How can you not? And even if it doesn't happen now, if the cost isn't justified right now, It's not such a leap to think maybe in short order.

43:06Kathy Lien:Right. It will be much more efficient to do that. I mean, specifically for this, they're saying it's a Microsoft inventory tracker and, you know, like things like that. It's like they're not massive. It's not like they're replacing 365 by any stretch. But still, like at the margins, this adds up. First, probably not the last, right? I think you're right to bring it up. But where would Carter Worth sit in your words? It's like the Parthenon, right? Yes. And he would look at the Starbucks. I can't speak for him, obviously, because he's not here. But he would look at the Starbucks chart and say, you know what?

43:35I am looking at it. Yes, I am. But if you do it longer term, you'll see a classic bearish to bullish reversal. And very quietly, Starbucks has gotten itself off the mat. Big valuation. But you know what? The chart actually looks pretty good here.

43:48Kathy Lien:Yeah. Unless you're worried about the consumer. I mean, I don't know. It seems like the one thing we're here. Yes. He would definitely be complaining about the price of coffee for sure. But no, I mean, he's done a good job. Not an easy turnaround. So good for him. But I've missed it. Court. Yeah, I think the question of the consumer, what are they spending money on? And I think Starbucks, I mean, when you look at their loyalty program, like they have pretty, you know, loyal customers there. So I think that's the question. I think this is much more of a story of them being more efficient with AI than it is the consumer.

44:18But I do think that's going to be continue to be a question.

44:20Kathy Lien:Guy's a loyal consumer. Not for myself, though. Right. On behalf of others. On behalf of others. I'm a giver. Starbucks giver. And I saw some nice policemen in there today, and they typically said, no, no, no, no, and I shoved the guy out of the way. I said, you know, I'm not interested in what you know. Did you spin the wheel for them, or did you actually take their order? No, I asked them what they wanted. Okay, all right. I was wondering. Up next, Final Trades.

44:56Kathy Lien:The Fast Money family welcomed a new member this week, our coordinating producer, Michael, and his wife, Louise. Welcome to Healthy Baby Girl on Tuesday, Rose Afinie. That's beautiful. Beautiful. Happy family. And they met on CNBC. Stop it. Watching the show. Time out for the final trade, Courtney. I told you were talking about home building. I think this is one of the names I'll look at. Karen. Yeah, congratulations to them. It's wonderful, wonderful. I like Ulta Beauty. Dan. Beautiful baby. Ultra beautiful. DRAM. Let's see how this SK Hynix trades tomorrow. I think it'll sell this DRAM. Let's see.

45:33We lost a family member last week. We gained one in the midst of that. So that is beautiful. Oracle.

45:39Kathy Lien:Thanks for watching. Fast 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.

46:09To view the full Fast Money Disclaimer, please visit CNBC.com forward slash Fast Money Disclaimer.

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