DOW BREAKTHROUGH: LONGEST WIN STREAK IN SIX YEARS 7/21/23

0:01Indeed, it does. And right now on Fast, the Dow just barely keeps its winning streak alive. It is up to 10 days in a row right now. The focus now turns to a Fed decision next week, to housing data, consumer confidence as well. Plus, the biggest week of the earnings season on tap. Time to trade it or fade it. From big tech to burgers to big old airliners, we will look at where the desk stands. And that's just minutes away. And later, the chart of the summer. It has been, and here are some hints, on a swift rise since May and a yellow brick road of success for months. We'll dim the lights and raise the curtain coming up.

0:41Good evening, everybody. I'm Tyler Matheson in for Melissa Lee. This is Fast Money live from the NASDAQ market site. And on the desk tonight, Julie Beal, Guy Adami, Karen Feinerman. And here on set, the two lonely folks here, Courtney Garcia. Courtney, good to be with you. We've got to hold the fort down. We've got to hold the fort down. All right. We start with the Dow's best run in six years. It may have come down to the wire. The gain was small, but the blue chip index did eke out a small, and we do mean small, gain. The Dow now up 10 sessions in a row for its longest winning streak since August of 2017.

1:18For the other major averages, a bit of a mixed day. This on a day where there was a sizable volume of index and stock options expiry. Even with today's anemic performance, the Dow did jump more than 2 % this week, And the market now turns to the busiest week of earnings season and a key Fed decision on Wednesday. Guy Adami, how important is next week for this little bull run? Tyler, did you write that open? Did you write that open? Because that's why you're on the Mount Rushmore of CNBC. It's just genius. Right there. We nailed it. We're giving them the A game today. Of course you are. I think it's really important.

1:55I think the Fed's going to move 25. I think that's probably in the market. But it's the hawkish commentary that you're going to continue to hear. And I think they know. I think these Fed officials realize that I think inflation is going to reaccelerate in the back half of this year, September, October, November. All the indications point to that. The comps are going to be easier for inflation to start to rise. And if you look very quietly, gasoline is making a new 52-week high this week alone. So some of these inflation inputs are back on their horse. I think you're going to have a hawkish Fed.

2:25And I think it's going to throw some cold water on what's been an incredible rally. Karen, that has been the talk, what Guy just said, and that is that the Fed has basically said what they're going to do, and that is raise rates by a quarter point. But I find myself wondering, after that inflation print last week, do they really need to, or should they just stick with the pause? I'm with Guy. I think they sort of need to. I feel like, you know, one of the one of the things that they're trying to do is obviously have unemployment is as low as it's been. They're trying to sort of cool from the labor angle.

3:04They've no progress on that. So that sort of gives them a little bit of cushion to continue to raise. And, you know, great that the numbers are down. However, they're still higher than they need to be. So I think that I mean, maybe they pause after this one. I don't know. but I don't I actually don't think the job is done. I think they got a couple more raises left to go. Julie, as Guy points out, you've got some measures that are that are indicating sort of those inflation signals. This grain situation in Ukraine and the pressure that that may put on the price of what I would call strategic foodstuffs could also add to inflation.

3:41So are you also in the camp that says, hey, the Fed is going to raise rates by a quarter point next week. And what would that mean to the equity market? Well, you know, I definitely think that people are underestimating how much of a benefit it's been to the U.S. economy that oil prices have been as soft as they are. It's probably on the order of$200 billion in extra money in the consumer's pocket. And so I think that's why things have been as strong and as resilient as they have been. If that reverses, that really changes the math. And I think the Fed is wary of that. I think they recognize that a lot of the inputs in terms of commodities are out of their control.

4:19We don't know if the Chinese economy does get stronger. That does have pressure on pricing as well. So I think they're just really concerned to not repeat the mistakes of the 1970s. That really seems to be the playbook they care about. You can argue that this actually is much more reminiscent of the 1940s. And I think from here on out, the tone is what matters more so than 25 basis points here or there. So, Courtney, jump into the conversation here. Where are you on what the Fed is likely to do? And what might the messaging be beyond the fact of the decision, whatever it happens to be? Yeah, and I actually want to echo Julie's comments here, which I completely agree with.

5:01I think at this point, they've raised 500 basis points in a year. And actually, markets have really bounced off of their lows and actually not reacted very negatively to that news. So I don't think another 25 basis points is really going to move the needle here. And it's really going to be sentiment that matters. And I would be shocked if they did not come out hawkish. I don't necessarily that means they will continue to raise interest rates as we go forward, but they are not going to take their foot off the pedal or let people know that they're going to beforehand by any means. So I think you want to expect that you're going to get that language moving forward.

5:31Yes, Marcus might move a little bit on that, but I do still see there's definitely ways to look at this one way or another, but there are a lot of positives that I'm hoping inflation does continue to come down, especially wage inflation is trending downwards, which would be a good thing for the Fed moving forward. So I am hopeful that we'll continue to see it. Does the market sort of step past an interest rate hike this week if it comes to step over it? Quite like I don't think the rate hike itself is going to be the problem. It's going to be what how how hawkish the Fed's language is. That's really what I think the big caveat is going to be.

6:03Yeah. All right. Let's let's move on to New York Magazine out with a cover story this week on what they are calling the office space apocalypse in New York City. The piece hitting just as the REIT sector is starting to show signs of light. Our chart master just last month made a call that he was seeing opportunities in the office space and he's not ready to change his tune. Now let's bring in Carter Wirth of Wirth Charting. Carter, talk to us about it. Right. So magazine covers are a curious thing. There is a magazine cover indicator. But anyway, we'll leave that alone. The judgment from two Fridays ago was to start to embrace REITs.

6:45We'll look at some charts together. But it's important to note that the top four or five names, which make up about 50 % of the sector, not a one, of course, is in offices. It's storage REITs like Prologis, an American tower for cell phones and Equinix, right, for data centers or public storage and so forth. But let's look at the charts. We have three identical daily charts and then a longer term. So what you see here is the first chart has no drawings, no lines, but there is an arrow. And so why the arrow? Well, next chart. We have a well-defined downtrend. This is clear. And if you see it, the downtrend on the second chart, whether we use an automated trend line or an actual trend line.

7:28An automated trend line is what a moving average is. And that has started to turn. You can see the flattening of the line. Now look at the actual trend line. The next chart, it's the same thing, meaning we've moved above the downtrend. And then finally, a long-term chart, which really puts some of this in perspective. That well-defined uptrend line connects beautifully from the COVID low. And we've bounced off it to the penny repeatedly. And now we have converging trend lines and we're starting to move up and out from this formation. We like this area of the market, and we think IYR or XLRE, those are the vehicles to use.

8:07This wouldn't be the first time that a magazine jumps in at precisely the moment where the market turns in the opposite direction from what they're saying. In these ETFs, how do you know which ones have the kinds of concentrations in the kinds of properties that you might favor? In other words, some of the ETFs may have more commercial real estate, more malls and strip malls. Others may have more office buildings. Others may have apartment buildings. How can you do the second-level digging to lead you in the right direction, Carter? Sure. So you can go online and you can – the two big ones, it's the IYR, or again, the SPDR XLRE.

8:49They give you the weightings. And you'll note again that the biggest weighting in IYR and in the actual S &P fine-earned sector is Prologis, which is a storage warehouse, which has nothing to do it. But not storage like when you and I were to store an old bicycle. That's public storage, PSA for instance. And that's also in the top five. But American Tower, cell phones, or Equinix data centers, or Crown Castle, another tower. So the top five, there's not a single one that's like Boston property or something tied to New York real estate like S.L. Green. And so in that sense, I don't think it quite dovetails with the magazine cover.

9:28We know there's a glut of office spaces in downtown centers across the United States. Carter, we're going to see you shortly on Options Action, right? You bet. I'll be waiting. Karen, you're in this space. Your take on it? Yeah, you know, it's interesting. I look at things completely differently than Carter. He's all about the charts, much more about the fundamentals and what's happening. And so for me, Boston Properties, which he mentioned, is the way that I want to express this bet. I mean, sentiment could not be worse. It makes such a compelling short how terrible offices are, how interest rates have gone up, and there's no debt to be had.

10:05And yet it's so bad kind of that But I think it's good in that Boston Properties, which, as I said, is sort of the preeminent one, they did manage to get a debt deal done in May. They have continued to pay their dividend, while many others haven't. And so an SL Green has a lot more turbocharged. They did sell one property, which sort of ignited the market. And I just think capital will start to flow in. And so the risk-reward, I think, is compelling here. So I'm sticking with Boston Properties. All right, Guy, jump in here. What's your trade in this area? Well, before my trade, I'll tell you that Edvard Munch painting that Carter is sitting in front of is extravagant.

10:45You should look at that during Options Action. But my trade is Simon Properties, which is by—isn't that amazing? You know where I was three weeks ago? I have no idea. How would I know? How would I know? Where were you? I was at the Edvard Munch Museum in Oslo, and I saw a lot of monks. That looks like monk to me. I mean, I don't know about you, but— I don't know whether it is. We'll find out. Looks like a month to me. Anyhow, I digress. Go ahead. If we could put up an SPG chart over the last, like, eight or so years, you'll see it's a pretty well-defined downtrend from 2016. But you've had bounces along the way, and I think that's where we're in the midst of.

11:22So, you know, this bounce can probably last a lot longer than people think. It probably gets us up to the mid-140s or so, and then it probably starts its trajectory lower. But I think Karen's right in terms of the trade. I think Carter's probably right as well in terms of some momentum, but it's not like these things have been fixed. All right, let's move to a news alert on AMC. A judge blocking the company now from converting its eighth preferred units into common stocks. These have been common stocks. These have been controversial shares. Many retail investors opposed the conversion because it would have diluted their shares.

11:58AMC shares, as you see right there, are up$3, up 71 percent. Karen, you've been following. Well, let's go to Michael Santoli with the with the news here. Go ahead, Mike. Oh, I thought we had Mike Santoli on this. I beg your pardon. Karen, you have been following this one. I can try to be Mike Santoli. His big shoes to fill. But all right. So this one is it is not fundamentally great news for AMC, actually, because this is how they were going to raise cash to finance their rather hefty debt load. What it is is a short squeeze. A lot of ARBs had the position on long the APE and short the AMC, hoping that the court would allow APEs to turn into AMC and then the company could continue to sell them into the market to raise cash.

12:48So now this throws a big wrench into it. That's why APE is down. AMC is up. This is in no way a commentary on improving health at AMC. Barbie has got to just absolutely be, you know, gone with the wind of our era. I don't know how you get out of this mess of your AMC. They tried everything. Adam Aaron has tried everything. He has been a masterful marketer and capital structure, arbitrageur and magician. But this is sort of a big blow. If you can't get Adam Aaron and Barbie, and if they can't do it, I don't know who can. Julie, thoughts here? Yeah, no, I agree completely with Karen. This is one of those situations where the fundamentals are going to trump everything.

13:33capital markets exclusive. It's a function of this is a very difficult industry. It's really been disintermediated by a lot of what's happening in streaming. And we're just not willing to go into the theaters in the same way that we used to be. They don't have the leverage that they used to have in terms of being able to negotiate these windows. And I don't think that that really is going to change over time. So this is really, really a tough picture for them right now. It's really a fascinating industry. The theater industry is undergoing immense change. The studios, there's now strikes. The studios business is changing right underneath their feet.

14:11Not that they couldn't have seen it coming, but when you look at the Paramounts, the Warner Brothers, the Universals, the parent of CNBC and others, this whole business and the way filmed content is distributed is totally in flux right now, quite obviously. But at any rate, we're going to take a break here. And coming up, we're going to talk about the busiest week of earnings season. It is on deck. Fear not. We've got the trades for you next. And later, we will reveal our chart of the summer. So what does Taylor Swift, Ed Sheeran, Bruce Springsteen have to do with it all? We will explain the connection.

14:47More Fast Money in two minutes.

14:54All right, everybody. Welcome back to Fast Money. We've got the busiest week of earnings on deck. We're going to hear from Big Pharma. We've got oil, telecom, some consumer names, too. And we thought this would be the perfect time to play a little game of... Trade it or fade it. That's right. Trade it or fade it. Earnings edition. Let's get the party started with Boeing set to report results Wednesday before the bell. Guy, what do you say? Trade or fade? You know, Tim Seymour here, he would say it's a free cash flow story. He's right. It's coming around$70 million. And you've had some pretty bad headlines over the last couple weeks that the stock has not traded down on.

15:31So when stocks no longer go down on bad news, it means it's probably somewhat spring-loaded. So I will trade it, Tyler. All right, Julie, your thought. Trade or fade Boeing? Thing looks awfully expensive for something that's pretty cyclical and exposed to commodity prices. So I'm a little bit nervous that there's a lot of air that could come out of this tire pretty quickly. I agree on the cash flow, but I'm nervous about margins. You say fade it. Let's move on to an energy name. That would be Chevron reporting next Friday morning. Karen, what should we do here? Trade, fade? I think trade it. I think just, you know, the thing that I like most about it is how the whole space is just underperformed.

16:13And I think if we're seeing a rotation from some of the high-flying stocks into some of the things that haven't performed, this would be right in the sort of crosshairs of where to go. So trade it. All right, trade. Courtney, what do you say? I'm with Karen on this one. I think people have been overly pessimistic in the energy space. And really, when you look at them, they can really provide for their current capex and dividends with their cash flow. As long as oil stays above forty five dollars a barrel. And keep in mind, it's about seventy six now. So I think that the fundamentals here just look good and I think it's worth a trade.

16:42All righty. Tech and A.I. behemoth Microsoft out on Tuesday afternoon. Julie, what would you do there? Trade or fade? I think I'm trading it here. I think this actually is one of the few companies that can benefit from AI in the near term. I'm mostly going to be listening on this conference call because literally I haven't heard a CEO give me a real understanding of what generative AI is going to do. The writers on strike are doing a better job explaining what generative AI can do. So I'd like to hear more. All right. Karen, your thoughts here. It's a hard one. I actually, well, speaking from my book, sold half.

17:18So that would be a fate. It just has had a huge run up. Obviously, the AI pixie dust is there, but we don't know exactly how it's going to work. We do know that compute power is good for their cloud business. But this run, this multiple for Microsoft is pretty high. All right. Last but not least, we've got Procter & Gamble reporting Friday morning. Courtney, the biggest sort of consumer products company of them all, I guess. Yep. And I actually would trade this one. I think some of the headwinds that have been a problem for it are higher commodity prices and a strong dollar. and you're starting to see those things come down, which really should benefit them.

17:53So I really think this is worth a trade here and taking a look at. All right, Guy, what do you think of Procter & Gamble and all of its manly products? Love their products. I'm not sure about the stock. Valuation is rich. I think margins are going to start to contract. I'm not sure they can pass on their cost to the consumer anymore. I think it fails at the prior all-time high from, if memory serves, Tyler, December of 2021. All right. My memory never serves these days. But coming up, the temperature is rising, but so is one company stock price. Who's going to be crowned the chart of the summer?

18:28That name and trade is next when we return here on Fast.

18:38All right. Welcome back to Fast Money, everybody. Time for a chart that looks so good. It's not just our chart of the week, but our chart of the summer. Shares of Live Nation off to a sizzling start, surging more than 40 % over the past three months. No secret why. The stock getting a boost from the success of high-grossing summer concerts. You've got Taylor Swift's Eras Tour, Bruce Springsteen's 2023 run, and Elton John's Farewell Yellow Brick Road World Tour. So how should investors trade this summer surge? We'll begin with you, Court. Yeah, I think it's a couple things here, but this is very interesting to look at what it means for the consumer.

19:16Clearly, this idea where people are going more towards services and they want live events rather than goods, that trend is definitely continuing, and you're seeing that with Live Nation. I was at the Ed Sheeran concert here. I have never seen a more packed concert. I mean, this is happening right here. MetLife on a Sunday night. It was completely packed. Yeah, everybody's in their seats on time. It was amazing. Yeah. I think my only concern with this stock is how expensive it is. It trades at 145 times next year's earnings. But interestingly enough, the last five years trade over 200 times next year's earnings.

19:46So I think when you look at it that way, it is very expensive, but not necessarily compared to itself. So maybe it still has some room to run here. Karen, what do you think? This is one you own. Yes, it is. It's one I've owned for a long time. It always has been expensive. They sort of pay up to build their book of future concerts. I mean, they just have an ecosystem that is absolutely unmatched. So between the concert venues that they control and the talent that they work with and then the sponsorship and the ticketing, they do own Ticketmaster. It's just it is a business that you really can't recreate.

20:18So it's expensive, but I do own it. So, Guy, how many farewell tours can you have? This is a farewell tour, and I really mean it this time. The Eagles are going to do one, Elton John. And so what do you think of Live Nation, man? I mean, you have as many as you want. I mean, Tyler, think about it. I mean, if you really think about it, every night is sort of a farewell tour. You never know what's going to happen the next day. I think Live Nation, to Karen's point, to Courtney's point, has always been expensive. But if you go look at a chart, it was this time last year. It was actually early August that the stock sort of topped out around 98.

20:52So this is actually a logical place, I think, to take some profits and look for a pullback to buy it at better prices. All right. Let's do our final trades. It's gone by so fast. I can't believe it. And I'm doing this not in any order other than the one that they wrote for me. So I'm not picking on anybody. But Julie, you go first. I think TransUnion is worth a look here. You know, mortgage originations were surprisingly good at J.P. Morgan and Wells Fargo. And that's good for the credit bureaus. Guy, you're final. Do you speak Portuguese? No. Well, you should because Brazil ETF is breaking out of like a 17-year downtrend.

21:30EWZ. EWZ is OK. Karen, you're up. Yes. Well, first, I want to thank you, Tyler, for being here on a Friday night in the summer. Thank you guys for having me. I love being with you. I may regret this because the guy's on the other side of it, but I'm going with the girl that brought me to the last segment. Live Nation, staying long. Live Nation. All right. And, Court, you have one that you mentioned earlier as well. Chevron, yeah. We talked about this earlier, but I'm definitely optimistic on energy and ahead of earnings. Worth a look. All right. Got to go. That does it for Fast Money, but don't go anywhere.

22:06Options Action is up next. Great to be with you all. Thank you.

22:13All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBC Universal, their 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.

22:47To view the full Fast Money disclaimer, please visit CNBC.com forward slash Fast Money disclaimer.