Financials Hit Hard In Sell-Off… And Tesla’s Reputation At Risk 3/6/25

0:02Live from the Nasdaq market site and in the heart of New York City's Times Square. This is Fast money. Here's what's on tap tonight. Stocks in sell-off mode. The Nasdaq back in correction territory as more uncertainty over tariffs takes hold. How much pain is left to come, and how can you protect yourself from this pullback? And Tesla Trouble shares the EV maker down more than 10 % just this week. The CEO Elon Musk too wrapped up in Doge to give his company the attention it needs. We'll debate that. All that plus Broadcom on the move after earnings. A look at the state of the consumer ahead of the jobs report tomorrow.

0:33And Netflix gets chilled while the streamer finally got swept up in the market route. I'm Melissa Lee coming to you live from Studio B at the Nasdaq. On the desk tonight, Tim Seymour, Karen Feinerman, Dan Nathan, and Guy Adami. We start off with the washout on Wall Street. Stocks falling again today as trade war fears and more back and forth on tariffs hit investors hard. The Dow nearly erasing all of yesterday's rebound, down more than 400 points. The S &P 500 shedding almost 2%, now down a percent since the election. The Nasdaq dropped more than 3 % at its lows, closing at its worst level since early October.

1:08The tech-heavy index now in correction territory, down more than 10 % from its December highs. Consumer discretionary tech and communications services seeing the biggest sector losses today. And in terms of specific stocks, recent high flyers deep in the red today. Palantir, Vistra, and Constellation Energy are the biggest losers. Small caps also crushed. The Russell pacing for a sixth straight week of losses. its longest weekly losing streak since 2018. All this as investors grapple with the latest headlines on tariffs, and there were a lot of them today. Megan Cassell has got all the details on what we heard from the White House.

1:42Megan. Melissa, we got the official details on that tariff relief that we had been waiting for, but it was not nearly the extent of relief that markets had been hoping for or even expecting. President Trump signed that executive order officially amending the Canadian and Mexican tariffs, and what it said was that all goods that are USMCA compliant, or that abide by the rules of that North American trade pact are exempt. But a White House official told me that that's only about half of Mexican goods and only about one-third of Canadian goods that will see that tariff relief, that qualify for that tariff relief.

2:13Everything else will still continue to see those tariffs of 25 percent on most goods, 10 percent if it's a Canadian energy product. The president also made clear when talking with reporters that this will only last until April 2nd, until those reciprocal tariffs kick in, and that this was only a one-time short-term adjustment. Take a listen. It's just a modification, short-term, because I didn't want to hurt the American. It would have hurt the American car companies if I did that. Would you consider the same sort of exemption or pause for the auto tariffs you're talking about next month? We're not looking at that, no.

2:48No, we're not looking at that, no. He also made clear there that there would be no exemptions to those steel and aluminum tariffs that take effect next week, nor would there be any exemptions to the reciprocal tariffs once we see those starting April 2nd. So a lot more to come here. And, Melissa, just in the last few minutes, we're also starting to hear from the Canadians. They do say that they are keeping their retaliation in place that took effect this week on about$20 billion in goods. They are going to postpone the retaliation on about$100 billion worth of goods. That now won't take effect also until April 2nd.

3:20So a little bit of relief, both from the U.S. and the Canadian side, but overall still a lot of tariffs and a lot of wait and see. Melissa? Megan, thank you. Megan Casella at the White House today. You would have thought that that little bit of relief would have given the markets a little bit of relief. We didn't really see that today. Saw it yesterday. I mean, or you saw it two days ago in the form of General Motors, and you saw that bounce when they rolled it back to April, I guess. But, you know, diminishing marginal returns. And I do think they're trying to sort of walk this dance between making sure the market hangs in there and talking tough on tariffs.

3:53And that's a difficult dance or difficult tightrope to navigate. But that's the one they're trying to do. With that said, you know, the October low, October 31st, I think, was 5 ,700-ish. And we're right there. Critical support levels. A lot of technical damage being done in the meantime. And, again, a VIXIT basically 24 and change for a prolonged period of time is something we've been talking about. VIX is going to stay elevated. And I think that's why you're going to continue to see these wild swings. We were like 28 on the VIX December 18th. We were at 40-ish back over the summer. And we had that huge pullback.

4:25Yeah, and I think all of us agree. When you see that sort of spike in the VIX, it's probably getting near a time where the sell-off is getting a bit overdone. And we see bounces here. I think the volatility that we've seen in this range that Guy just talked about, between like 58, 50 and 5 ,700, it's a tough level here just technically. I'll just say this, though. as the silver lining guy on the desk here. Yeah, of course, everybody knows that. Just think of the hardest hit names in this sell-off. I mean, they're getting a little oversold. They're getting, today felt very panicky, let's be very clear.

4:53But the S &P is only down 2.5%. And so when you think about the internals of the broad market, that's probably a pretty good thing. You're going to take a lot of the froth out. You're going to get valuations back to levels where we think they're kind of appropriate. I know there was a lot of talk just two weeks ago, the S &P trading 24-time forward earnings. A lot of that is front end loaded to some of those biggest names. So, again, some of the damage that's being done in the growthiest sorts of names, I actually think it's pretty decent setup if you're thinking about the S &P that's now off six and a half percent from those recent highs.

5:23So I'm in the difficult position of agreeing with Dan, who's just the ray of sunshine here. I mean, you know, the VIX was up, well, we're going to close up almost three. So just under 25. It's not in the panic. I don't agree, super panicky, but it's definitely, you know, as I said, things trading down in integers at a time. I find that interesting. I did a little bit of buying today. I covered some KRE that I was short against the long money centers. But it didn't do a lot else. But I do think that, you know, the names that were super, super charged are just getting annihilated. But still, it doesn't take them to reasonable valuations, right?

6:00So I think there's probably some room there. But it's not a monolith. There are things that are, I think, attractive. I actually think, you know, we'll get to later, but discretionary. Some of the retailers, I think, have really gotten it. It's the velocity of the move, as we always point out, is really probably where we are. We haven't seen types of moves down. Really, these feel like, you know, March of 2020 moves or at least that era. And that that's part of this move. I mean, you've got a seven day move in the seven percent move lower in the S &P in 14 days. And we've been chronicling even the up days.

6:32I mean, these have been intraday reversals. The volatility that's attached to it, I think, is emblematic of two things. One is that we've had such such a voracious appetite for risk assets. And we've seen that. We've seen the pullback, especially look at look at levered three times levered ETFs and crazy call option activity. I mean, this stuff's I mean, they're literally vanishing three times long ETFs. They do vanish before your very eyes. And that's that's part of what we're seeing. I think that the Nasdaq correction, which is really now officially just about there, is part of it. But it's really it's that MAG-7 correction that's a little over 16 percent from the middle of December.

7:08And that's part of it. And as we've said for a long time, when you see the real leadership, which are semis, which are now down 24 percent from their highs and really haven't made those new highs since July of last summer. That's really what it comes down to. It's interesting to see some of the higher quality names that are not really MAG, but they're second tier. They're even beyond, Dan, straight eight. What is it? The fateful eight. The fateful eight. The fateful eight. But, I mean, NVIDIA, we're going to talk about later in the show. I mean, this was seemingly a bulletproof company that was so far ahead of its peers and was expensive to itself, but not really that expensive.

7:39So lots of uncertainty on policy. Reworking the global political order leaves people, I think, in a place where they can still, I think you can pause even more. You know, Tim has talked about the potential for a growth scare. Well, it's manifesting itself in the IWM. I mean, put up a chart. This was 240-something a few months ago, flirting with 200 now. And that's been breaking down in a pretty meaningful way over the last couple weeks. And one would think if rates were going lower, it would be supportive. But rates are going lower, I think, because there is this slowdown. So it's be careful what you wish for scenario.

8:11That's something you've got to watch as well. Yeah, so we've been talking about this. You just mentioned NVIDIA. When you think about what's the AI supply chain, NVIDIA obviously was at the core of this, the picks and shovels. But we also had memory as it relates to Micron. We had competitors like supposedly AMD. We have the server makers like Supermicro and Dell. So think about the data centers, the hyperscalers. We haven't seen an uptick in many of those sorts of names that I talked about before we get to the hyperscalers in a very, very long time. So once the hyperscalers joined the party to the downside, once we saw NVIDIA join the party, I think it's down like 30 percent or something like that.

8:41We've been talking about that. I mean, the fact that people thought that these stocks couldn't get cut in half, and I don't mean Microsoft or Google or anything like that, but in NVIDIA. And then look at how it broadened out a little bit. AppLovin told a great generative AI story. Palantir was telling a great – they became meme stocks. These became$100,$200 billion meme stocks. AppLovin's been cut in half in just a few weeks. Think about that, okay? Palantir's down 35-something. It could easily be down 50 % or something like that. So if you don't think that Microsoft, Google, some of these other names in the fateful eight, Tim, could catch up and be down 30%, then you're not paying attention because that happened in 2022.

9:17Mr. Silver Lining, though. I was just going to say. Yeah, I mean, not so long. But the silver lining may be that maybe they're more fairly valued now, and maybe it is worth buying an Apple oven cut in half. Well, let's be honest. I mean, NVIDIA, if that thing got cut in half, I think it would be the steal of the century because then it's really up to them to just start to – the expectations would be down so much, right? And then the beats that they need is not going to take much to get that stock going again. I'd rather – way rather have a Google or a Meta over an Apple oven down half, for sure.

9:46Not even close. Financials. We spoke about this before, getting hit especially hard this week. The sector down another 2 % today, on pace for its worst week in two years. The KBE Bank ETF heading for its worst week since August. And take a look at one of the biggest laggards, Bank of America, down more than 10 % since Monday, now at its lowest level since October. So it doesn't have a single penny of post-election optimism baked into it, whether it's from deregulation or handcuffs being off, whatever you want to call it. Yeah, well, they have their own issues. They obviously were in the crosshairs of this new administration for a period of time.

10:21They probably still are. I think they have, you know, two maturity holdings in terms of their risk they have with rates going higher. When interest rates 10-year yields were 5%, I think they had$117 billion unrealized loss. So they have their own issues without question. I think there are a lot better banks than Bank of America. But when you see a move of that magnitude, you have to take notice. So I don't still love Bank of America yet, but it is sort of getting interesting. They do have that big problem that Guy talked about being way too invested in low-yielding assets that are maturing 10 years from now.

10:53So that's bad. I also think they do have a very big credit card portfolio. That may be weighing on some of it. They do have an outstanding deposit franchise, though. And I think that's worth something. And their banking business is actually, I know we're a little disappointed with the slowdown banking, but they've actually sort of worked their way up the ranks. So, yeah, I've got to look at it again. Is the credit card portfolio any worse, though, than the credit card portfolio at Citi or J.P. Morgan in terms of quality? I think their charge-off rates, I think, were pretty similar. Yeah. Yeah.

11:24Yeah, but I do think that in Bank of America you are sniffing out a little bit of the consumer. I think you're – and you're also sniffing out – let's be clear. I mean, there is a hierarchy in terms of quality in the money center banks, and Bank of America hasn't been it. No one has been at J.P. Morgan's level. Then it's really been Citi and Bank of America fighting out Citi, I think, for the last year and a half. is vying for at least the more improving governance story. And actually, Wells Fargo's probably stole both of their thunders in terms of at least getting back a little bit under the graces, getting some, you know, set out, let out of the penalty box in terms of some of their asset management stuff.

11:58Yeah, away from the money centers, I think Goldman and Morgan are pretty interesting. You know, they've had now a bunch of IPOs, at least S1s, that are being filed or thought to be in the very near future. Do you think they're in this market environment? Well, I don't think. I mean, so you get pushed out because of marketing conditions, as they say. I think this CoreWeave one is really interesting. I don't know if we talked about it here. 77 % of their revenue, it's a data center company, comes from two companies. Microsoft is 62%, and there's an article in the FT today that they're canceling some of these data center leases.

12:25That's Microsoft. That thing's not coming out, not in this environment with generative AI and the broad market. So to me, I think that the IPO calendar not getting going, and maybe M &A that hasn't existed is going to weigh on Morgan and Goldman in the near term. All right, we've got a news alert here on Walgreens finally reaching a deal to be taken private. Let's get to Seema Modi for the details. Hey, Seema. Melissa, the Wall Street Journal reporting that Walgreens has sealed a$10 billion take private deal with Sycamore Partners. That's the private equity firm, which, if approved, would be one of the biggest leverage buyouts in the past decade.

12:57This is Walgreens, the pharmacy chain that has been challenged in recent years. Chief Executive Tim Wentworth is quoted by the Wall Street Journal saying, going private is going to let us be more focused, more nimble, more long-term in our decision-making in the context of the challenges that we continue to face, stock up here and after hours. Melissa? All right, Seema, thank you. Seema Modi. Well, beyond the struggling markets, we are also seeing real increases in auto and mortgage delinquencies. Are these fresh worrying signs that the consumer slowdown is picking up steam? Let's welcome to the set Michelle Meyer, MasterCard Economic Institute's chief economist.

13:32Michelle, welcome. Great to see you in person here. Great to be here. Thanks for having me. So we're hearing so much. I mean, the sentiment data softening and we're hearing, you know, grousing from the C-suite about tariffs and the impact on consumers, et cetera. Are you seeing that in the data? So you're not yet. And I think that makes sense because the first to react to headlines are going to be the soft data. It's the surveys, which is showing up. The University of Michigan Consumer Sentiment Survey showed an increase in inflation expectations, even longer run inflation expectations, which is meaningful.

14:01So consumers are thinking about what tariffs might mean for the future and how persistent it might be for how they absorb prices. But they're not spending very differently yet, at least not in a discernible way. And I think a lot of that is because the fundamentals of the economy are still sound at the moment. When you think about the labor market, when you think about wage creation, when you think about the fact that it's been a very positive wealth effect over the last few years, and a lot of that has buoyed the consumer. How do you think about how the consumer will spend once the tariffs go into effect in terms of a shift maybe towards grocery and away from discretionary?

14:35I don't know if you use 2018 as a guide here at all. Yeah, well, I think what we've learned about the consumer in the last few years is that the consumer's been very nimble. Right. This is a consumer who is very aware of where they can find value and how they want to deploy their purchasing power so they get the best out of their dollars. So you could imagine an environment where the categories that have seen the biggest price increases because of that pass through of tariffs. Maybe they shy away from purchasing those and move towards those that have more value, lower prices. You don't see the tariff impacts.

15:13You could see a little bit of a goods experience story play out where the services economy, that doesn't have the direct hit from tariffs, experiences like travel, restaurants, leisure, maybe there's some acceleration in spending there where some of the durable goods, where the tariff impact could be more meaningful and quick, consumers shy away. We'll see. We'll see how the consumer responds. So as a sort of segue from consumer spending to worrying if the consumer is really starting to get hurt, what's the most important piece of data that you look at, whether it's 30-day delinquencies or something totally different, that is a good sort of indicator of, wow, the consumer is really feeling pinched and we've got maybe a credit issue here.

15:53So there's the balance sheet issue, which you're speaking of, but then there's also the drivers of spending, which is the labor market. And to me, both of those matter, but I like to really focus on the labor market as an indicator of what's to come for the consumer. And I think that was really important in the last several years when people have been looking for this big turn in the consumer. It's coming. It's coming. How can the consumer continue to spend? Well, they can spend because the labor market is supportive. So tomorrow's jobs report will be very important. It's still early in the process, right, in the sense that we're probably not going to see if these headlines are mattering just yet.

16:28But monitoring all the different labor market measures, initial jobless claims, the JOLT survey, the Challenger survey, and, of course, that monthly jobs report. Is there an unemployment rate where things start to flash? Listen, it's historic in terms of how well the job market's been, but you know quickly how things can change. So speak to the level that gets concerning. So I think it's less about the level and it's, as you said, the change. It's the rate of change. Once you see the unemployment rate trend higher and it's consistent and it's indicative of people losing their job and staying out of work.

17:04So looking at things like how long are the duration of unemployment, the micro data within the jobs report, then you start to worry because then you realize that there's not that degree of healthy churn in the workforce that would be supportive of the consumer going forward. But we're not seeing that, right? You have a 4 percent employment rate. That is a low unemployment rate. But how about in the discretionary part then of the spend and really in consumer discretionary? I mean, there are parts of discretionary that I frankly thought were going to fall out of bed in the middle part of last year.

17:32And I looked at also some of those places I thought there was too much pull forward and post-COVID pent up, you know, voracious buying. Actually, I've used voracious twice now. I'm sorry about that. It's a great word. Well, it's not three times in five minutes. It's done. But ultimately, where are we in your concerns around that type of spend? And it seems like we punished a lot of those names. We talked about Lulu. We talked about Nike. Some of those might be competitive. Are you worried about that spot of spending? Well, look, if the consumer to fall into stress, typically what you see is a shift into essentials.

18:04They have to eat. They have to pay their bills. They have to get gas to drive. So you do tend to see a shift away from discretionary into necessities and to essentials. So that would be indicative of, again, a sign of consumer stress. I think what's happened over the last few years, when you think about the shifting consumer basket, it's been about choice, not necessarily about economics. for most consumers out there in the sense of what is it where they find the most value? What are they prioritizing? And initially after the pandemic, of course, it was appliances, it was goods, it was all things tangible.

18:40Once the economy reopened and then continued, you saw this big move to experience economy that continued to have legs. The strength in the dollar was part of it, right, in the sense that you can travel abroad and your dollar goes further. But to me, it's been a it's been a consumer that has made these very discrete choices where they see value and where they want to use their purchasing power, not necessarily based off of the economics. Michelle, great to see you. Hope you'll come back soon. Of course. Thank you. MasterCard. What do you think of the consumer here? Well, let's just be clear. Over the last four months, we've seen an about face in a lot of policies as relates to the consumers.

19:15And if you think about the austerity that we're kind of in right now, every day we're waking up to a headline where government workers are being fired. And we're also worried about the prices of things going higher. Right. And so when you think about that setup and then you think about some of this data that has been getting softer, that's why tomorrow's number is so important. You look at that GDP now that the speed in which that thing turned. And I know we're not going to come in with a negative two percent print, but the speed in which you did, it's not too different than what you're talking about, the velocity in which the unemployment rate could go up.

19:45And so we're going to get a better sense for that. If you start seeing headlines like that, you reserve or reverse some of this wealth effect that we've seen in the stock market. That will weigh on consumer sentiment. But the federal layoffs will start hitting the numbers in the next few weeks. And that's when we're going to see some headlines there, I'm sure. I think tomorrow's number is going to be fine. I think the number to watch is certainly going to be that March number. And back to what Michelle said, even though she's not here anymore, there are the things around travel. I mean, look at the pullback in some of the hotel stocks.

20:10Look at the pullback in some of the airlines. I do think some of that is both the cyclicality of that business and also just people are doing that less. Yeah. I thought it was interesting that the whole like shift willing to spend on services still because it won't be impacted by tariffs. But paring back purchases in categories that will feel tariffs. Right. Well, I would have thought they could have maybe hoarded a little bit. I don't know. Right. That's for the for the for the Walmarts of the world to do. But I think she's, I mean, this is what, I just am amazed probably at the trove of, you know, treasure of data that she can look at that jobs is really the underpinning.

20:46If you're employed, you feel like you can spend. Coming up, some key names on the move after hours, Broadcom, Costco, and Gapall reporting results, details, and the numbers from those quarters next. Plus, Netflix dropping nearly 9 % in today's sellout. How are traders are handling the drop in the streaming giant when Fast Money returns back in two?

21:12Welcome back to Fast Money and Earnings Alert on Broadcom, the chipmaker stock jumping after hours. On bottom and top line beats, Broadcom also giving better than expected guidance. A conference call underway. CNBC's Christina Parsinevelis is here on set with all the latest. Christina. Much of the beat or the January quarter was due to software. Revenues were up 15 percent sequentially. That was according to the CEO on the call. the acquisition of VMware software infrastructure from really helping drive that category. As for hardware, though, Broadcom's CEO highlighting on the call just now, still ongoing, that hyperscaler spending continues to drive AI growth, specifically in semiconductor revenue, and that he anticipates momentum to actually continue into the second quarter.