Different Reads On The Consumer… And Pharma’s Obesity Drug Price Negotiations 11/5/25

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. A tale of two consumers. What results from McDonald's and a slew of other companies tell us about where people are spending and where they're not? And nearing a deal, the White House set to announce lower prices on the most popular weight loss drugs. What it'll mean for the makers as the divergence between Lilly and Novo grows wider and wider. Plus, from Qualcomm to Snap to Elf Beauty and more, we are dissecting another big night of earnings. Terrace takes center stage at the Supreme Court.

0:31And is it time to buy Roku? The chart masters here who lay out the case for the streamer. I'm Melissa Lee. Come to you live from Studio B at the NASDAQ. On the desk tonight, Steve Grasso, Carter Worth, Dan Nathan, and Diadami. We start off with the latest signs. A K-shaped consumer economy is forming. McDonald's rising despite missing Wall Street earnings estimates before the bell. The fast food giant did see an increase in same-store sales, but commentary on the call was very cautious. CO Chris Kamsinski saying low-end consumer traffic declined by double digits in the quarter, adding that he expects pressure to continue in the next year.

1:03That sentiment echoed by Chipotle in its report last week and Cava just yesterday, both saying their core consumer base, which skews younger and more cash strapped, just isn't showing up. Outside of restaurants, after hours moves in DoorDash and Elf Beauty suggest similar pressure on those companies' client base. But commentary from Uber and Shopify paints a very different picture. Shopify saying their consumer can't get enough, while Uber seems to see blue skies ahead for business firing on all cylinders. We'll get more reads on the consumer in coming weeks. Ralph Lauren, Tapestry, Target and Walmart all still to come this month.

1:35So what is the real read on the consumer? Guy, what's your take? Exactly that, that there's two different economies right now. The people that are doing well that are trading down but are still a bit have the ability to spend. And then on the lower end, people are strapped. And I think that's been going on for quite some time. And we see it in the performances of these stocks. I mean, Walmart, I think, tells the story. I think McDonald's, to a certain extent, tells the story. They'll need to get that one above$325. On the other end of the coin, if you're in the dollar stores, that's been a rough slog over the last couple of years.

2:06And if you're in the middle, you're absolutely nowhere. So this, to me, just reinforces everything I've thought for a while. 30 % of U.S. transactions at McDonald's were the extra value meals, which is interesting. And they're also saying that the uncertainty surrounding SNAP benefits are going to put further pressure on those consumers who are already struggling. Yeah, that's a difficult situation. So hopefully that resolves itself. New York Times, The Daily had a podcast yesterday going into a rural county in West Virginia, talking to folks and go check that out. It's really sad. Hopefully they get that sorted out.

2:39But, you know, one thing, again, to the K shape on the higher end, there's not it's not all roses. Look at Live Nation today, which obviously owns Ticketmaster's down 10 percent after their results. They missed on earnings. The revenues came in line. That stock is down 25 percent from an all time high just a few weeks ago. And, you know, so it really is, you know, some of the stuff experiences. That was the big story after we got done with all the goods during the pandemic. And it seems like some of that is coming unwound a little bit. So, again, you know, you tell me what inflation is going to do.

3:10You tell me what the course of the Fed is going to do. We've talked to plenty of folks over the last few weeks or so that they don't see 30 year mortgage rates going below 6 percent. So the housing market is still pretty well locked. And then you extend that a bit further. You saw this company, Trex, that makes decks, you know, and that thing was down, I don't know, 25 percent or something like that today. Home Depot was down in sympathy. So I think you've got to start broadening it out a little bit. You're going to continue to see heavy discounting into the holiday season. If you look at some of those, whether it's Guys Dicks or Best Buy or one of those sorts of names that are obviously right there for holiday season.

3:44But you're also going to see, I think, some pressure on margins because of that, you know, promotional environment. I like the existing home sales, one that Dan just touched on. He talked about mortgage rates. If you're trapped in your home, you can't get the money out of your home. That's a huge thing. And if mortgage rates do not come down, people wind up being house rich, cash poor. But to Guy's point, Delta is for the first time ever selling more first or should be on the precipice of selling more first class tickets than coach. First time ever. That was a staggering stat that jumped out at me.

4:22Coke, selling more premium. So it's fair life, smart orders. Apple, selling more phones. Walmart and Target, you have that trade down element. Costco, affluent are bundling up, buying a bulk. And others are just stretching it out, making their groceries last. So we're trading down, we're eating at home. No one's eating out. So it all makes total sense. It's a bifurcated market, and it probably continues until further notice. That's the word, right? So a K-shaped, I mean, that's kitsch. K-shaped, I mean, what does that mean? Somebody made that up because it felt good. They put it in a big research report, and everyone bid on it.

5:01Bifurcation is a word that's in the English language for a long time. We have a bifurcated market, as is the case. So it's not just the affluent. Think about a Capri. They have Versace. And Jimmy Choo and Michael Coors, that stock is at a 10-year low. Versus William Sonoma, very expensive. Bachelors, that's up at the high. Ralph Lauren, up at the high. But it's not Hermes and LVMH struggling. Estee Lauder's struggling. So it's not so much what type of consumer. It really is idiosyncratic. There are, generally speaking, problems with the consumer. We know that restaurants are almost universally under trouble.

5:31Housing stocks, not doing great. Autos, really mixed, and it goes on and on. Yeah. And the issue in terms of the higher-end consumer households above $100 ,000 is that we're now starting to hear about the layoffs that are existing in the corporate office. So not just the frontline workers, but those sitting in the offices, middle management, et cetera. And who are those people? Those people have been the ones who are spending. And now there's a threat of their jobs. So what does the economy look like then? Well, that's exactly right. And listen, Walmart was way ahead of this a couple of years ago when we started hearing 65 percent of their customer base earned more than$100 ,000.

6:06That number has gone up. Now, people will say, well, you know what, guy,$100 ,000 isn't what it was five, six years ago. I understand that. But the point is, there's been a trade down at the higher end without question. And that's going to continue. Who's set up best to take advantage of that? Steve just mentioned Costco. Absolutely. Walmart. Yes. Even McDonald's, to a certain extent, I believe, is set up to take advantage of that. Yeah. You know, and on the kitschy K-shape sort of thing, Torsten Slack from Apollo had a note out this morning. He was talking about actually it's a K-shape for corporations, too.

6:35He was looking at the S &P 500. We know the story. You You know, if you look at the MAG-7, earnings have been going up all year for them. For the 493, they've been going down, right? And it really speaks to all these names. We didn't even mention a MAG-7 name. We're talking about the others here. So if their consumers are having a hard time, you likely think that the companies are having a hard time because they're also trying to process all these tariffs. You know, go back six, seven months, whatever it was, it was a doomsday scenario because these tariffs are a tax on consumers or the companies have to eat it.

7:03Well, we've done okay in that regard, maybe until now. You know, maybe it is a cumulative sort of effect one way or another. So I just think it's interesting that we're also seeing a case shape for S &P earnings, too. Right. But in terms of the ones that you buy, though, I mean, if you take a look at Walmart, do you buy Walmart at a forward P.E. that is higher than Alphabet? I think so. You do? Well, yeah, and we've said that for, listen, I believe, I understand why people would say absolutely not. Valuation doesn't make sense. By the way, as Tim said last night about a stock, that's been true for quite some time.

7:33So I think you sort of throw valuation to the side, especially given the fact that I believe Walmart is winning in terms of utilizing AI and improving their margins. So Walmart specifically, yes, I think you can pay up for the stock. Yeah, and I think you go to Costco as well. So we would round tripping this one. Same type of it's underperformed Walmart by about 10 percentage points year to date. But the the the membership is sticky. So people continue. It's above 90 percent renewal rate and people buy in bulk. and you avoid that tariff by buying in bulk, and you avoid that inflation because you spread it out a little bit thicker.

8:09Well, they have been able to avoid tariffs because of their product mix. They can always change their product mix to sort of work around the tariff situation, which has been an advantage of Costco. In terms of the charts, Carter, do these charts look strong? Well, Walmart and Costco have also diverged, but a bifurcation there. Walmart's the better of the two. But just in terms of, let's just talk about the sector overall. Well, since Labor Day, the S &P 500 consumer discretionary sector is up some 7%. The equal-weighted sector is down 7%. And that is simply a function of two big stocks, Amazon and Tesla, representing 45 % of the weight of the sector.

8:44So the equal-weighted consumer discretionary sector itself is the true message of that area of the market. For more on the State of the Consumer, Tanger CEO and President Stephen Yaloff is with us here on set. Tanger reported earnings yesterday. Stephen, great to have you with us. Thanks for having me back. Um, record leasing volume. So you're seeing just brisk demand for retail space or sort of challenges, but we're talking about in terms of a bifurcated economy in some pockets of the consumer facing problems right now. Well, you know, it's interesting to sit and listen to what you were just talking about in the state of the consumer and where they're trading up and where they're sort of avoiding.

9:21And, you know, a lot of the brands that we're doing business with are many of the brands that you're talking about. What's interesting is they haven't taken their foot off the gas pedal with regard to growing their business and finding new locations. I think we're seeing some of the benefits of that. When a tenant finds space, what sort of time frame are they looking at in the future? I mean, they're saying the next year we're going to expect all the traffic to be here, or is it more like a five-year play? Yeah, no, I think the retailers are really about a year out. So right now we already have all of it.

9:50The rest of our 25s obviously are baked. 26s, we're probably about three-quarters of the way done. and now we're doing deals for late 26 and 27. Stephen, you're winning on the experiential side. You talked about that last time, but what you're also winning too is value has become more important than tariffs. And you guys, you and your occupants win to that in terms of the customer base that you serve. Well, I think particularly in the outlet channel, I think that value conversation is really important. And I heard a lot of you talk about that today, whether it's the restaurants that you choose to eat at or the stores that you choose to shop.

10:22And for us, you know, being on sale every day is a really powerful message to the consumer, especially now. Has your demographics changed at all in terms of who you're seeing show up? Well, yeah, you know, that younger consumer, you know, I listened to the Kava report and the Chipotle report. And one of the things that I thought was really interesting, particularly the CEO of Kava said this morning, is that the products are priced below inflation, which they think is doing a great job of getting them, a younger consumer, to come and convert with them when they choose to go to that store. You know, interesting in the outlet space, I think we find that our brands are almost deflationary in that the brand pricing is actually with the markdown.

11:02You also find it probably below that cost of inflation. How are you forecasting the retail, the holiday season for retailers? And what sorts of metrics are you looking at? What's on your dashboard in terms of indicating to you that the consumer will continue to spend through December? Well, the things that we're looking at from a retailer's perspective is stock and staff. You know, if you see the retailers are thinking that they're not going to have as much staff in the store, that's a problem. And the same thing with inventory. If there's no inventory in the store, that's a bigger problem because you can't sell what's not in the store.

11:32But we're seeing the stores are stocked. The stores are well staffed. We're really optimistic. In fact, you know, with government shutdown the month of October, we saw a traffic build in the month of October. So as counterintuitive as that might sound, I think people are looking to come to our centers. They're looking to shop value. They know they've got to buy holiday gift giving. I think the National Retail Federation is still saying that there's going to be an increase in spending this year versus last year. And we haven't seen any signs of slowdown yet. So, Stephen, you have a higher occupancy rate than your competition.

12:04Are you using analytics or using AI? Like, how are you deciding out who's going into those stores? How has it changed in the last five years? Yeah, you know, over the last five years, I think we're letting the customer, we're speaking to the customer a little bit more. We're listening to where the brands that they want to shop. Look, bringing brands into a shop is when you own a shopping center, you have to merchandise that center. You're like the general merchandise manager of an old department store that's looking for great brands that are going to bring the traffic in, but also bring the other brands in.

12:31So we're making merchandising decisions. Let's take Lululemon or Sephora, really important brands from a consumer traffic generation point of view, but equally important when we're talking to other brands and saying this is a property that you want to be in. They're going to ask who the other retailers. And when you mention some of those higher end names and brands that are really hot right now, that's who the consumer is looking for. That's who the other retailer is looking for. Question on Nike. Obviously, that's a very big tenant, if not one of your biggest. Any thoughts? Because the whole shoe space is struggling.

13:03Do you see any change in trend there from some of the smaller operators? But also you see the struggle in Adidas. But Nike in particular is the big one. Yeah. You know, I think full price Nike because they're so distributed. I think we're going to see a lot of problems, you know, in some in some sectors, but not necessarily in other sectors. And all sales might be off in, you know, in our portfolio. We're still finding that that consumer is looking for, again, brands that they want. You know, our consumer is not coming in looking for commodity. They're not looking for a pair of sneakers at the best possible price.

13:36They want Nikes, and they want Nikes at the best price. And as we talk about trading down or the top of the K, you know, we see an aspirational customer that wants to buy into brand. We're also seeing a higher end customer who's like, why pay the most for a pair of sneakers? If I want Nikes, I'm going to go shop them in the most value offer that I can find. Unrivaled sports partnership deal that you, I think it was just announced. Speak to that because it's fascinating. Yeah, you know, so as an owner and operator of outlet shopping centers, I think what's really important and what folks might not know is it's really incumbent on us as the operator to drive traffic into our shopping centers.

14:13A lot of the brands in an outlet center are not using their marketing capital to say, hey, go shop my off price channel. They're using their money to say, hey, go shop my full price channel. So it's really as it becomes more important for us to drive traffic, we're looking for new and organic ways to bring people into our centers. Unrivaled Sports is the biggest name in youth athletics and experiences. And essentially what it is, I'm sure all you guys have attended one of these venues where your kids have a game or a tournament on the travel team that they're in. Well, they host these travel team events.

14:49and because they're so proximate to our shopping centers, our partnership with them allows us to share their experiences and also be on the itinerary of every youth athlete and their families that comes to one of those venues. That's a lot of people. Steven, great to see you. Thanks for stopping by. I appreciate it. Thanks for having me back. Steven Yellof, Tanger. Do you see this as an outlier in terms of record-facing volume and the traffic that that's not the real tell on the overall economy? This guy's as good as the cats, by the way. And that's not a dispute. But it's an interesting read, right?

15:23We can sit here and go back and forth for every one of this. There's another one of that. Like we were talking about Instacart. That's your maple bear. You know, that thing has traded so poorly for the last couple months. And now all of a sudden DoorDash is catching up to it. DoorDash is down 30%, right? So that's the hard part. That's why we kind of diagnose these names and look at these situations every day. But it's really hard to look at it as a mosaic right now and say, like, this is what the consumer is doing because that's pretty strong. T.J. Maxx, we always say, pretty strong, you know, that sort of thing.

15:53And, you know, we're even starting to see some of these, you know, you mentioned Macy's early today. That thing is starting to pick its head up a little bit. So I don't know. It's about as clear as mud, Mel. Yeah. I mean, Carter mentioned Tapestry versus Williams-Sonoma. Very different stories. Sort of the same kind of demographic. 100%. But to go back, I mean, they're just a great operator. If you look at the quarter, I mean, they're really operating at a high level. And they're trying to figure out how do you drive traffic. Stephen just spoke to that. So stocks had a decent little run since April.

16:20Like many stocks have, I still think there's room to the upside. You have back to school. You have Halloween. Then you have pre-holiday sales. They're always discounted sales when you look at a tanger, sometimes as much as 50 % or 60 % off. It's experiential when you go to these outlet centers. I like them into the holiday season. You know, speaking of a great operator, in the financial crisis, the REIT space, the sector went down about 78 percent. Tanger went down only 40. And they have always exhibited a relative period of strength when things are really bad. An earnings alert here on SnapShare, the social media company jumping after topping revenue estimates.

16:56Julia Borson's got all the details. Hey, Julia. Hey, Melissa. SnapShare is soaring now about 26 percent on a revenue beat, stronger daily active user growth, unexpected plus guidance to fourth quarter earnings well ahead of estimates. The company announced a$500 million stock repurchase program and a partnership with Perplexity to bring its AI chatbot into Snapchat. Perplexity is paying$400 million over the course of a year. Snap saying, quote, our investments in AI and machine learning are delivering measurable gains for advertisers. Going on to say purchase-related ad revenue grew over 30 percent year over year, reflecting higher attribution accuracy and better campaign performance.

17:37The company did warn that engagement could decline as they roll out new products and daily active users may decline in the fourth quarter as new age verification and age limit laws go into effect. But they say they're working to improve average revenue per user as well as to improve financial efficiency. Melissa? Julia, thanks. Julia Worsten. I want to go to Dan. I feel like you've traded this in the past pretty well. This is one I kind of thought about, man, it's just so washed out and there's just nothing really going on. I know Evan Spiegel's been telling a story about, you know, AR, VR. They have some new devices they're about to launch here.

18:12But the stock honestly has not been able to get out of its own way while the stock market's been soaring. This is the sort of deal, though, for a company like this that will give you a bit of hope. It looks like, you know, Google paying Apple sort of thing. It's also a scenario where, you know, they have not been spending whatever the number is. This is a$6.5 billion revenue company, so$400 million in a year. That's not insignificant by any means, but they haven't spent billions of dollars building out their own LLM, that sort of thing. And I think that's going to be a story going forward. I think you're going to see this stuff a bit commoditized, and these companies with the models are going to start paying people to use their service.

18:48$500 million stock buyback is not insignificant in a company this size, and their free cash flow almost doubled what the street was looking for. It's hard to chase this stock up or down, but this is actually one of the better quarters we've seen in a while. This is obviously a massive gap higher, Carter. So, yeah, I mean, you know, you referred to how bad this has been. It was IPOs back in 17. I think it's below its IPO price. I mean, OK, maybe for a trade, but I'm with this. No chasing. You know, when you look at price targets, it's right at price targets right now. So I would not chase it. Give it a three day.

19:19We'll see where it's settling. Coming up more after hours action to bring you with Qualcomm, Lyft, Robinhood and more. We're all reporting results in just the last hour. The details and the numbers in the quarters next. Plus shares of Novo Nordisk lower on its own results. What spooking investors and where Novo and Eli Lilly stand on drug price negotiations. Do not go anywhere. Fast Money is back in two.

19:41This is Fast Money with Melissa Lee. Right here on CNBC.

19:54Welcome back to Fast Money. The Supreme Court today hearing oral arguments on the legality of some of President Trump's tariffs. At issue, the president's use of an emergency law to justify the levies. Eamon Javers has got the details on this. Eamon. Yeah, Melissa, this was an interesting one today. High stakes, obviously,$90 billion in already collected tariff revenue is on the line. What the administration was arguing through the person of John Sauer, he's the Solicitor General, was that this law from 1977, IEPA, does give the president the authority to impose tariffs, even though the law itself doesn't say the word tariffs anywhere in it.

20:31Here's what he said. Congress is a practical matter. Can't get this power back once it's handed it over to the president. It's a one-way ratchet toward the gradual but continual accretion of power in the executive branch and away from the people's elected representatives. Sorry, that was actually Neil Gorsuch, the Supreme Court justice. And what you heard from him just there, Melissa, is important, because that's what raised everybody's eyebrows today, was that you had some of the justices who would be expected to maybe politically, ideologically, and for all the other reasons, side with the Trump administration.

21:09But even those justices were expressing some real skepticism here about the Trump administration's case. Because that law does not mention tariffs, because the tariff power and taxation power is inherent to Congress in the Constitution, and because they're worried about this idea of Congress just ceding huge amounts of authority to the executive branch, all of that sort of ends up with this package where you get some conservatives who are very skeptical. So what's going to happen now? The justices are going to take all this back into their chambers. They're going to give it a think. And then at some point, and we don't know when, we are going to get a ruling from the Supreme Court.