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Fast Money Podcast Episode Summary Podcast Title: CNBC's "Fast Money" Episode Title: Is the Sell-Off an Opportunity to Buy? And the Future of Cannabis Legalization (9/26/23)
Episode Overview In this episode of "Fast Money," host Melissa Lee and a panel of expert traders discuss the recent downturn in the stock market, particularly the Dow's drop to multi-month lows. They analyze whether this market sell-off presents a buying opportunity for investors. Additionally, the episode covers the upcoming Senate vote on the SAFE Banking Act and its implications for the cannabis industry.
Key Topics Discussed
Market Sell-Off Analysis
- Market Performance:
- The Dow dropped nearly 390 points, closing below its 200-day moving average for the first time since May.
- S&P and NASDAQ experienced significant losses, with mega-cap tech stocks like Amazon and Apple heavily impacted.
- Interest Rates and Economic Outlook:
- Treasury yields reached a 16-year high, contributing to market volatility.
- Jamie Dimon (CEO of JPMorgan) cautioned that the current economic situation feels like a “sugar high” due to prior stimulus and warned of a potential economic slowdown.
- The consensus among traders is cautious, with expectations of further adjustments in the market.
- Stock Watchlist:
- Tim Seymour mentioned stocks like McDonald's, Starbucks, Walmart, and Constellation Brands as potential buys due to their defensiveness.
- Karen Feinerman pointed out Citibank's attractive valuations despite its struggles.
Impact of Government Decisions
- SAFE Banking Act:
- The Senate is set to vote on the SAFE Banking Act, which aims to provide cannabis companies access to traditional banking services.
- Boris Jordan, executive chairman of Cureleaf, expressed optimism about the vote, noting bipartisan support.
Consumer Behavior and Economic Indicators
- Consumer Sentiment:
- Discussion on how inflation is affecting consumer purchasing power across various sectors, including cannabis, with predictions that discretionary spending will decline.
- The panel emphasized that while consumers are feeling the pinch, some sectors may still be resilient.
- Employment and Economic Growth:
- The traders noted that while corporate profits remain strong, the potential for rising unemployment could impact consumer spending.
- Anecdotal evidence suggests increased caution among workers regarding job security.
Future of Cannabis Industry
- Legislative Impacts:
- A positive vote on the SAFE Banking Act could lead to significant growth opportunities for the cannabis industry.
- Jordan highlighted that despite challenges, cannabis companies are becoming more efficient and are focusing on profitability.
Key Takeaways
- Market Volatility: Traders advised caution due to rising interest rates and potential economic slowdowns but acknowledged some stocks may be undervalued.
- Legislative Changes: The SAFE Banking Act could reshape the cannabis market by providing much-needed banking access, which may drive investment.
- Consumer Pressure: Overall economic sentiment is negative, but the resilience of consumers and specific sectors could offer investment opportunities.
Closing Remarks The episode concluded with predictions for market recovery and a reminder of the importance of monitoring legislative developments that could affect various industries, especially cannabis.
For more insights, tune in to future episodes of "Fast Money" airing weeknights on CNBC.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:01Live 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. Stocks sinking to multi-month lows, the Dow crashing through a key support level. But is this pullback a sign of more pain or an opportunity to buy in? We'll debate that and bring you the names of traders are eyeing for an entry point. Plus, higher for longer? No, this time we're not talking about interest rates. The Senate set to vote tomorrow on legislation that could keep marijuana stocks soaring. But one industry CEO has to say about what it means for the path to legalization.
0:30And later, Biden and the big three. Will the president's trip to Michigan help or hurt the automakers and their employees? A live report from the Motor City with the very latest. 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 tonight with the Dow's big breakdown. The index dropping nearly 390 points today, closing below its 200-day moving average. For the first time since late May, the S &P and NASDAQ seeing even bigger losses on a percentage basis. Mega cap tech among the biggest drags today.
1:01Amazon dropping more than 4 percent. Apple down over 2. That stock is at its lowest close in four months. The moves come lower as treasury yields continue to trek higher. The 10-year touching a fresh 16-year high, topping out at nearly 4.6 percent during the session. And then there's this warning from the nation's top banker. Right now, it feels good that fiscal stimulation was extraordinary. The monetary stimulus was extraordinary. That was a global phenomenon, more in the United States and elsewhere. But that's a little bit of a sugar high. And that's a little bit going to go away. And we're hoping we have a soft landing.
1:37But all these other things are there. I'm putting myself in a quite cautious category. Jamie Dimon also saying the Fed could still raise its target rate sharply from here. So as we look to close out the third quarter, are we in for more trouble ahead? Guy. Quite cautious category. Jamie Dimon, the most important banker on planet Earth, I would say. and we know our affinity for him different. With that said, I've been in the same camp for a while. Obviously, the market hasn't until today or at least the last couple weeks. And we've thought for a while at a certain point interest rates are going to matter.
2:10Well, it turns out they matter seemingly north of 4.3 percent in a 10-year. And rates continue to grind higher, and it's for all the wrong reasons. And I think there's this sort of recalibration going on in the market that, frankly, it's quite healthy, but it's going to be, I think, a little more painful than it's been. We were just chatting in the green room about the call from Andy Constant back in August, mid-August. That was around the time, that was the time of the Fitch downgrade, also when the BOJ started tweaking its policy. And in the meantime, we're facing now a government shutdown, slightly different, but sort of the same kind of thing.
2:40It emphasizes government, you know, dysfunction. Right, government dysfunction. And Moody's getting more cautious. And also it was the amount of treasuries to be issued was going to be enormous and that they would have to go further out the curve. And so you would start to see interest rates out the curve rise, which it has. That was an excellent call by Andy Constant. I think that all of those things still exist. Right. It's it's interesting because we have this idea. Oh, my God, rates are so high. They they're not even a historical. I mean, not even a historical average. So it's been certainly an adjustment.
3:13I think there's a little more adjustment to go. I am always long. So, you know, weeks like last week and this week is starting out really not delightful. But I think we're we're more than halfway through this. And I think the not all stocks will be hit equally. We talk about the high flyers, super high multiples. I think those have been getting hit as they should. I think those still have a little ways to go. And, you know, it's painful, but I'm sticking through it. Well, the warning signals for this market are that Apple and Microsoft are both through those those levels we were talking about, you know, three weeks ago and where they held and they were heroic and et cetera.
3:47And as you talked about, it's we don't spend as much time talking about the Dow. It's not that we're picking on the Dow. But I think there's reasons why the Dow is less significant than the S &P. The fact that the S &P has now decidedly traded through the 100 day for the first time, really, if you take out SVB, which I think at least for this, compare it, we're talking about the broader market, broader rates, dynamics that are not necessarily idiosyncratic around the banking sector for now. And it's a dramatic move. We haven't really seen this kind of move through the 100 day on the downside since going back to late last year.
4:19And if you think about where we have some of the big cap tech stocks actually setting up to go lower, I think, you know, I think 4170, 4150, which is a really interesting level on the S &P, is not going to be that difficult to get to. And I think ultimately it sets you up really nicely for two of the best seasonal months of the year. I think that the rates dynamic has to work itself through. There's a lot of anxiety. There's a lot of math involved here that doesn't make sense. But, you know, look at the VIX. I mean, the VIX for a long time was trading at pre-central or post-COVID lows for, you know, really through some of the first phases of this move higher in rates.
4:52And it's extraordinary. Small cap stocks are basically on a relative five-year low to the S &P. And they really are one of your big barometers of growth and whatnot. And that doesn't look so good. You know, it's funny. Jamie's cautious right now after everything that we've been through and some of the warnings that he's had. I mean, he was out, I think, four or five months ago saying, hey, be prepared for much higher interest rates. Right. So now that he's going to the top end of that band that he had guided to a couple quarters ago, when you think about it, 7 percent. I mean, you think about that on a historical basis, Karen, and you mentioned that we haven't seen rates as high.
5:22We still have inflation really high. Right. That's kind of the point. So if you look at what real rates are right now, it's not really that restrictive. And we have a time where, you know, the consumer is not doing well. We're talking about it last night. I mean, look at I guess if you would just want to look at it through the lens of small caps who are kind of most sensitive to this kind of rate. They closed, the IWM, the Russell 2000, closed flat on the year right now, right? If you look at the equal weight S &P, we look at that through the lens of the RSP. It closed flat on the year. And that thing, this is really important to Tim's point about some of these big mega cap leaders that were, you know, we've been talking about this all year.
5:55They've been concentrated. They've been driving a lot of the performance. Look at that RSP chart. If you look at it on a one-year basis, it made a double top just a month ago. It's down about 10 % now. We've got a news alert here on a short-term spending bill out of Washington. Emily Wilkins has got the details. Emily. Well, the Senate has come out with their bipartisan stopgap bill to avert a shutdown. What we know is that it would basically continue government funding until November 17th. It would also include$4.5 billion in aid for Ukraine. Now, that's less than the White House was asking for.
6:27But remember, this is, of course, a short-term bill. This is not what is expected to fund the government for the next fiscal year. Of course, the now difficulty is going to be getting it through the Senate, where any one member can hold up the process. That means that the bill might not be able to pass before the end of this week, in which time a government shutdown would start. If that happens, we would go into a shutdown, and lawmakers would still be working to pass this bipartisan bill. And of course, after it gets passed the Senate, it still has to go to the House. And that's a huge question mark for what happens there.
7:00Speaker Kevin McCarthy could easily put a bipartisan bill on the floor and get enough Democrats and Republicans to have it pass. and the shutdown. But if he does that, members from his own party have threatened to remove him from leadership. So a lot of steps left to go through before we actually find some sort of solution to funding the government. But certainly a major step forward now that the Senate has put out the details of their plan. All right, Emily, thank you for the latest. Emily Wilkins out of Washington for us. Major step forward. It seems like we're almost in the same spot, though, in terms of all the different hurdles we have still to go in order to pass it on time.
7:34Back to the markets, though. You're just saying about the consumer feeling really badly. They're still employed, though. And with corporate profits still relatively strong. I mean, something's got to give in terms of, you know, if the Fed wants to achieve what wants to achieve, the unemployment rate has to go higher. The consumer is only going to feel more pain. And I think the unemployment rate will go higher. I think they want it to go higher. They being the Federal Reserve, they wouldn't say that, but that's the reality of the situation. And I brought this up before, but it happens to be true.
8:00Unemployment rate in California now is north of four and a half percent. It moved eight, moved like 800 or so basis or whatever that is from three and a half to four and a half over the course of a couple of weeks. California typically leads the rest of the United States by a couple of months. We are trending that way. We will go there. The question is, will the Fed be able to control the unemployment rate the same way they thought to control inflation? The answer is no. So unemployment will continue to trend higher. It will get worse than people expect. And bad news, in fact, will be bad news.
8:28And the Fed can't control the price of oil. I'm sorry. And that is something that right now I think is out of control. And I think it's going to stay high. We'll talk about energy. We talk about energy. But if you think about the impact on the consumer where the marginal dollar will go, it will go towards gasoline. We're heading towards people are starting to. It feels like fall in the northeast here. People are starting to turn on the heat. People are going to start to have actually heating bills. And this is a dynamic, yet somehow the Fed strips it out of their inflation calculus. Core inflation does include food and energy.
8:55Those are the two places people are getting destroyed. Food prices haven't gotten better. And I just think that these are these are things that are weighing on top of everything. We had new housing data today. New home sales also, I think, are really starting to fall. And I just don't think a housing market, both with rates that are this high. And I understand what the home builders have been able to do. I understand that there are people that are still looking for a house. But between the lack of supply, but more that you're just not seeing any velocity in home sales. It's not good for housing prices.
9:22And I know this sounds all terribly bearish. Dan's got something to say. I can't believe it's going to be bullish. Well, it won't be. But, you know, on the employment thing, it's just this is purely anecdotal. You know, I remember we were all snickering at that whole idea of quiet quitting. And I know we're in the midst of this UAW strike right now. And a lot of questions about, you know, is the power back in the workers hands and this and that. And this is literally like it almost feels like the death rattle before we really contend with automation, before we really contend with A.I. and what it means for productivity in the workplace.
9:51But talk to people who are not, you know, pressing for a four day work week or not like there's a lot of a lot of people are worried that if they were to lose their job, they are not going to replace it. And that is some of the stuff I think that's starting to work into consumer sentiment right now, at least from the folks that I am talking to out there who run companies and they don't feel the need to give in to a lot of these worker demands right now. All that said, Karen, you still think we're through the worst of it? I do. I think that I guess it's not a monolith. We talk about that all the time, right?
10:25So there are various things that, you know, business is good. We'll start to get earnings. We'll start to see. We'll hear from Jamie Dimon in two or three weeks about what he's seeing in the economy, lending. I mean, there's a lot to hate, but that often, as Tim pointed out, volatility index, way higher. Highest since May. Still not high. But Karen, what do you think Jamie Dimon has good to say? If you think about just – Jamie Dimon never says things are fantastic, everything's great, risk on. Can I be really careful? He's been all over the place for the last two years. Economic storm was coming.
11:00Brian Moynihan clapped back. He said, we're in the eye of the storm down here. We don't see it. And he was right, Brian Moynihan from Bank of America. You remember that? I mean, I'm just saying, so Jamie's been like back and forth on a lot of this stuff. And I think it's interesting that he used the opportunity of being in India to give what I think is some pretty impactful market comments, economic comments, that sort of thing. Didn't do it here. It's two and a half weeks before they're going to report earnings. So I just look around and I look at, you know, like underwriting. I look at credit, you know, delinquencies and stuff that are ticking up.
11:29I look at, you know, trading. He's conservative. No, but nothing's good. What I'm saying is like he's been dauscious. I mean, I don't think he said the sky is falling. And I think he's at least been consistently cautious. In other words, I think you're right. During better times when other banks said, I don't see a lot of problems, Brian Moynihan was probably right about Main Street. Jamie's cautious comments are, I think, look, the same things that we talk about up here. You know, up here, I think he sees. And I think it's worth reminding people, if you're the largest money center bank in the world, of those things.
12:03That the worst case scenarios are not off the table because I think that's where consensus had gone to at some point recently. In terms of recession? In terms of recession, in terms of rates being higher. To pull back in the worst-case scenario of 7 % and a hard landing is still possible, I think. It's a conservative thing to do. Okay, anything's possible. But just let me point out, so Jamie Dimon, while we were seeing rates rise, he kept saying, rates are rising, rates are rising, positioned the bank to not only survive, to absolutely thrive, whereas Moynihan actually didn't do nearly as good a job, or Bank of America didn't, in having a health maturity that held up the way J.P.
12:40Morgan does. They are set up really nicely. So I don't think the stock's expensive. I'm hanging on to it. He was talking sort of, I don't know, tongue-in-cheek sort of about, wow, what regulars are trying to do to banks, this isn't great. I wouldn't, you know, I'd be, what was it, equal weight with his billion two of stock? You know, I just think at under 10 times earnings, I went out. He sounded much better than the headlines when we read them this morning or yesterday. No, I'm just saying, when I remember reading him, I was in bed, scrolling through the thing as usual. As you do. I was like, this doesn't sound good.
13:14You know what I mean? And the futures were down and all that sort of stuff. But when you listen to him there, he's just sounding like routinely costless. Right. Yeah, that's true. As a banker should be. Yeah. Where all you do is get your money back. That's the up kick. Bank of America is within a whisper of a three-year low. Citibank is disaster. So banks and KRE, which had a huge run since the spring, deservedly so, is now starting to roll again. So the banks are clearly starting, I think, to tell a story. And I don't think the story is particularly good. All right. Well, this market pullback got us thinking.
13:44Have some stocks sold off too much? So we asked the traders what is on their volatility watch list. Which stocks are starting to look like opportunities right now? Tim, you've got a couple of names here. Well, I think a watch list also has to be defined are companies that you feel a lot of you feel comfortable owning them in good times and bad times, but that there are both technical places on the chart, but there are also valuation ranges. And so the names that I framed here are McDonald's, Starbucks, Walmart and Constellation brands. On some level, I could argue that all those stocks are very defensive.
14:16Starbucks is an example. After they gave their Q1 numbers, things were about as good as they were going to get, both in terms of margins, the backdrop for being able to have pricing power and whatnot. That stocks back about 20 percent from those two one release. China is a concern. I think there's a dynamic here where you look at where the bears will say that U.S. is slowing. And that's really a bigger problem for Starbucks. The reality is there's a range of 25 to 25 times forward to 15 times forward. Bold a bear. Frankly, I don't think we're going to get the either. In other words, I think it's somewhere in the middle.
14:46And I think Starbucks around 85 bucks, which ends up being about a 28 percent pullback, is a great place on the charts, a place where I feel like this company's priced in a lot of bad news. We can talk about a bunch of different names, but I mentioned the names, but that's my construct and how I do it. Guy? Well, I mean, I understand why gold's been weak. The physical metal, obviously, the dollar's been going higher. Interest rates are going higher. Neither one of those are constructive. I do think you're going to have this sort of, again, this point where nobody sees coming where dollar strength is actually going to start to lead to gold strength.
15:15And it's a come in the form, I think, of the yen continuing to break down in Bank of Japan. But I go to American Barrack, which I think is one of the better gold mining stocks. Stock's been under pressure for quite some time. But I think when the market finally realizes what's going on, gold will win. The miners will win on the back of it. Karen. Yeah, actually, Citibank to me is just so ridiculously cheap that I mean, if you remember, this was a 10 for one split in 2008. So it's four. And I mean, that's crazy to me. I think that, you know, it's a mid-single digits P.E. It's north of 5 % yield, although I never want to buy on yield, but just happened to point that out.
15:54And the price to book. Is it, you know, should it be on sale half of book? Doesn't that worry you, though? Yeah. Isn't some story so bad it's bad, not so bad it's good? Well, this one has been so bad it's been bad, but I haven't bought it yet. I'm just, it's on my list of, wow, this could get, could it get ridiculously cheaper? It could. Anything could. Also on my list, though, is a name like J &J, right? A different kind of name. That's one where you feel comfortable. It's not super levered where you're going to hit the ball out of the park, but that's when I would feel comfortable. And then, you know, some of the big cap ExxonMobil, names like that, really, you know, inexpensive on many metrics.
16:31Dan? I'd say that conversation we had on Apple last night, I don't know if we get to 150, it'd take a real messy market to do that, but 160 is probably a really good level. You've probably taken out some of that kind of valuation premium that's made some of us uncomfortable. Google at 110. I believe if you were to get back there, this is way too cheap relative to, I think, its prospects. I think whatever they're doing in generative AI and large language models, I think, is being underappreciated by the market. And the last one is Nike. And this has been so bad, it's bad. I'm not sure, and I know this is a Tim name, for great reasons here.
17:03I think I know. Well, you have been. But you've been along forever, and I know you've been riding it short for months and months now. I think you have this thing in the low 80s, and I think you probably just kind of hold your nose and buy it. Is that where you'd cover? Look, this week's interesting, right? Because we're going to either hear that it's going to take that next leg lower, or, you know, I think they priced in a lot of bad news. On the charts, 85, I agree with that. I'm still short. I think I can stay. I don't think it's going to get away from me in the upside. There's nothing they can say this week that's going to change that.
17:33Coming up, we're all over the after hours action in Costco. Shares on the move after reporting results, the latest from the retailer's quarter next. And does Amazon have a monopoly mess on its hands? The antitrust lawsuit from the FTC and what it could mean for the e-commerce giant. The details ahead don't go anywhere. Fast Money is back in two.
17:58Welcome back to Fast Money. An earnings alert on Costco. So shares lower after hours, despite the company beating in the top and the bottom lines. Conference calls underway this hour. CNBC's Courtney Reagan is here with the latest. Yeah, Melissa, this company is so interesting. They still report those comps monthly, but they still manage to beat on earnings and on revenue. And of course, you mentioned the stock is down a little bit. Conference calls ongoing. It does end this fiscal year. It's the weakest fiscal year for comparable sales for Costco since 2017, up just 1.1 percent for the quarter.
18:25E-commerce comes down about 0.8 percent. The company sang on the call. All those numbers weighed down by weaker sales of bigger ticket items. About half of its online sales are in that category. So that was the reason for the weakness there online. Membership fee renewal fees actually also higher than expected at just over 1.5 billion. Strong membership renewal rates for the United States of 92.7 percent. In Canada, that was up slightly over last year. Worldwide renewal at 90.4 percent, down slightly on the conference call that is still underway. CFO Richard Galanti called out food, fresh food, sundries for being among the stronger categories.
19:03Again, big ticket discretionary items still a little weaker. Traffic was up more than 5 percent. Average transaction or ticket, though, down 3.9 percent. Gross margin grew 42 basis points. Also, Galanti saying that inventory shrink is not an issue for Costco. He's been asked about it. Not an issue for them. And also, he noted, yes, Costco does sell one ounce gold bars on its website. They limit two per customer and usually sell out within a couple hours. Wow. So, hey, that's something new. Can't steal those. Well, the shrink thing is interesting because nobody's going to pick up a pallet of toilet paper and walk out the door.
19:36You can, but it'd be very difficult. They'd probably stop you on the way. But this really paints a picture of a consumer that is just focused on saving money. It really is. And, you know, Costco is one of these companies that is a staple, and it does tend to skew a little higher income, even though we talk about going there because of saving money. You know, it is a membership fee. You have to pay to go into the store, right? But it is a staple. It does seem to be where folks are going to be able to save money on those staples, which they are still buying in bulk and buying much more of than these other items.
20:06But they did say, I believe it was all appliances of about 30 percent over the last quarter or the last two quarters, which is sort of one outlier for that discretionary category that was still pretty strong. So I have a question. So down five bucks today during trading, down another eight. Is there anything that you see wrong beside the 38 multiple, which is 100 percent over the market multiple? Honestly, not really. Operationally, I think this is such a good retailer. They just started in on the questions with the analysts. But so far, really, all the financials look really strong. The analysts are curious.
20:36And the first question was about the membership fee. Can they go even longer without renewing that? Because they're pretty much at a little past sort of their average renewal rate. They didn't want to renew it when inflation was so high and pressuring everyone. And they said, you know, look, we don't have anything to announce today. But when we do, we will tell you it's a question of not if, but when. So sort of saying, yes, it will come, but we're not going to announce it today. I think Deutsche Bank pegs it as an increase coming in December. And Evercore ISI thinks in the next couple of months as well.
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21:06One thing, Courtney, I saw gas prices higher the gas price, the more that it probably helps Costco. Yeah. Which is great for Costco, but it's an indictment in terms of what's going on for the rest of these retailers. Yeah, absolutely. I mean, and that's a number that everybody knows. It seems like anyone that drives a car always sort of knows the price of gas. And we remember it relative to the recent past, not necessarily 10 years ago, right? And so if it feels higher right now, it may feel higher across the board. And Costco also, when you're looking at the numbers, will often give them on the conference call.
21:33The CFO always tells the analysts, draw two columns because he gives numbers with gas and without gas because it does have such a big impact even just on their numbers beyond the psychology impact, of course, for consumers that are dealing with those higher prices. Do we get guidance from them? No, we don't usually ever get guidance from them. Courtney, thank you. Thanks, Courtney Reagan. There's a lot more Fast Money to come. Here's what's coming up next. The FTC is taking on Amazon. How the nation's top M &A cop hopes to rein in the e-commerce giant and what it could mean for how the company does business.
22:05Plus, presidential picketing. Joe Biden joining auto workers on strike. How the pressure is ramping up on the big three. You're watching Fast Money, live from the NASDAQ market site in Times Square. We're back right after this.
22:28Welcome back to Fast Money. Amazon under fire. The Federal Trade Commission suing the company for illegally maintaining a monopoly power. Our senior Washington correspondent, Eamon Javers, joins us now with the details of this. Eamon. Hey there, Melissa. of the Federal Trade Commission filed an antitrust lawsuit against Amazon this morning. They're alleging that the tech company has used interlocking, quote, anti-competitive and unfair strategies to illegally maintain monopoly power. Now, the FTC was joined in the suit by 17 state attorneys general. They say Amazon's actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers and stifle innovation.
23:10The suit represents one of the Biden administration's most sweeping and aggressive moves to date to break up what it sees as consolidated power in the hands of the tech giants. The administration hopes this will both lower prices through new competition and spark new innovations that will help the economy. The FTC says Amazon's alleged schemes impact hundreds of billions of dollars in retail sales every year. In a statement, FTC chair Lena Kahn said Today's lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition. The suit alleges the anti-competitive conduct occurs in two markets, the online superstore market that serves shoppers and the market for online marketplace services that are purchased by sellers.
23:57The alleged tactics here include anti-discounting measures and conditioning sellers' ability to obtain prime eligibility on using Amazon's costly fulfillment service. The FTC says it's seeking a permanent injunction in federal court that would prohibit Amazon from engaging in this conduct. In a statement today, Amazon responded to the suit by saying the lawsuit filed by the FTC today is wrong on the facts and the law, and we look forward to making that case in court. Melissa, back over to you. All right. Thank you, Eamon. Eamon Jabbers. This is something to think about, though. I mean, for one thing, this is long anticipated.
24:34For another thing, five of the biggest deals, investments made by Amazon have happened under Lena Khan's tenure, which I think is also interesting. So I don't know if that makes it makes her more sort of vigilant in terms of going after them, gives her more fire in her belly, or if that just proves that the FTC can only go so far. Squawk box said an interesting piece this morning. and they were talking about all the cases she continues to lose. But each time she loses, I think Andrew made this point. Seemingly somewhere in there, they continue to sort of chop against this sort of be a myth in terms of knocking down some of the pillars that obstruct their ability to win these cases.
25:11With that said, Amazon traded up to 140 last August and failed. Look where it just traded up to now if we can bring a chart. 140 and seemingly failed. So the question is, when do you get back into stock? And I think it's probably, I don't know, one teens or so gets interesting again. Well, I don't know what the remedy is, right? We don't know what she's really hoping to happen. And if it is to sort of break up the company, although that doesn't just make that. And she said she didn't respond. OK, so we know that AWS is obviously much more profitable business in terms of operating margin. It's totally different business.
25:50We also haven't seen Amazon really pull back spending on the retail part and what that could actually earn. I don't know. This is going to play out really in slow motion. This is going to maybe sound crazy, but I'm kind of ignoring it for now. Yeah, you can ignore it for now, but I think it's there's something there and that they're there. It's what we said. I mean, this look, I'm not an antitrust lawyer. I'll let the FTC do their job and I'll let people respond. Small businesses kind of know where Amazon's been. But consumers, though. Well, consumers love it. And so that's part of the argument.
26:23Although I think there are a lot of people that probably prefer the mom and pop business that's been driven out of business. But more importantly, I think, is the sum of the parts with Amazon. And that's that's really where you're going with this. If you had to break this company up, is it worth more than it is here? Absolutely. And if you look at where it's trading at 14 times EBITDA relative to its history and even relative to a lot of the other players in mega cap tech, this is an attractive valuation, which you not used to be able to say about Amazon. It's funny. I always wanted to be an antitrust lawyer.
26:48But now, you know, I'm just saying, I mean, you know, I mean, you're just litigating. Yeah. But, you know, you know, it's interesting. When you think about this complaint, I haven't read it. I'm sure it's way too long for any of our attention spans, that sort of thing. But it really is about what's going on in retail. So the idea that they would break up this company, you know, break apart AWF, that's not what this is about. This is about the uncompetitive practices. And I think to Tim's point, what they have done, it's not just, yes, as consumers, we've become addicted to Prime. We've been addicted to, you know, getting things in one day.
27:15at what we think is a cheap price, but it really is about anti-competitiveness versus other retailers. And we know that bugaboo, that's the thing that existed with the other big box retailers until Amazon came along. When you look at their expected sales growth on their path to one trillion, they're going to get there before Walmart. At least that's what estimates do. So they're taking so much more of the incremental e-commerce dollar that exists. And so I'll just tell you this, I get it, we don't have to pay attention to it, and it's going to take years to play out probably, But at the end of the day, I think that we're probably all better off for having the government keep these guys, these huge platform companies in check every once in a while.
27:53Keep everybody thinking about it. You know what I mean? So to me, I'd be like, you know, have at it, because at the end of the day, you know, we can't just end up in 10 years from now with Apple, Amazon. You know what I mean? Google. But this is a number for why you want to buy Walmart. We're going to be in some sci-fi dystopia, though. All those things are about like these, you know, like quadrillion. This is why you want to buy Walmart? Yeah, yeah. I mean, look, their e-commerce business, they're eating into that. We all know where the market share in e-commerce is going. We know that, I mean, you can make it, I think this is also what you're saying, Dan, maybe I'm wrong.
28:23Like, I don't even know Amazon is dictating the price right now because they can actually drive price. But Walmart, more than anyone, has been the one that determines price out there. And I just think Walmart, now that they've made the investments into their e-commerce business and other parts of digital, they have the ability to get margins in a better place than they have. And again, they're competing with Amazon in a place where Amazon was never making any money, and they're actually making money in their brick and mortar. Do not miss, by the way, FTC Chair Lena Kahn on Squawk Box tomorrow morning, 8.30 a.m.
28:51Eastern Time, right here on CNBC. Coming up, autoworkers getting a hand as President Biden joins the picket line. The latest on the strike and the pressure facing the big three is up next. Plus, Micron's out to deliver results after the bell tomorrow. So how are options traders playing the stock? We've got the action when Fast Money returns.
29:14Welcome back to Fast Money Stocks. Selling off in today's session, the Dow posting its worst day since March. The S &P and Nasdaq each falling about 1.5%, both on pace for their worst month of the year. Shares of DraftKings, though, getting a boost today. Analysts at J.P. Morgan upgrading the name to overweight, upping the price target to$37, implying more than 30 % upside from here. The firm saying DraftKings has a strong product that should allow it to stand up to competition. And Rivian also jumping 5 percent after Baird named it a fresh pick. The firm expecting Rivian to be consensus on Q3 deliveries.
29:44That demand will remain strong. Meanwhile, President Biden shaking hands with striking UAW members on the picket line earlier today. The historic strike is now in its 12th day. Let's get to our Phil LeBeau, who is covering the story live from Michigan. Historic day, but I mean, also a historic move by President Biden. Phil. It was an interesting day, to say the least, Melissa. This is the first time We've ever seen a sitting U.S. president join a picket line. And though President Biden was only with the UAW strikers maybe 15, 20 minutes, didn't say a whole lot. Boy, what he did say is going to be impactful.
30:18At least that's what the UAW is hoping in terms of its negotiations with the big three. Among the things President Biden said, you saved the auto industry back in 2008. Then he went on to say, it's time for you to be paid back, essentially. Stick with it. You deserve a significant raise. Here's the president talking about what is at stake and what the union represents. Wall Street didn't build a country. The middle class built the country. And we built the middle class. That's a fact. So let's keep going. You deserve what you've earned, and you've earned a hell of a lot more than you're getting paid now.
30:59What's been the reaction from the big three? Well, we heard from Ford earlier today saying it continues to work, bargaining good faith with the UAW. General Motors says we have presented five record economic proposals that address the areas our team members have said matter most, including wage increases and job security. By the way, we also heard from Stellantis roughly the same thing that it said yesterday. Negotiations continue, but it has to have a competitive deal when it's all said and done. As you take a look at shares of GM Ford and Stellantis, keep in mind this strike is now in its 12th day.
31:31What's been the impact on inventories of new vehicles? We checked in with J.D. Power. No real change since the day the strike started. Melissa, back to you. Phil, thank you. Phil LeBeau in Wayne, Michigan for us tonight. And don't miss last call live from the front lines of the UAW strike. Brian Sullivan is outside Ford's assembly plant in Wayne. That is tonight, 7 p.m. Eastern time right here on CNBC. interesting move by President Biden. Well, an election year effectively. I mean, channeling sort of Harry Truman, FDR, pro-labor, pro-union makes sense, trying to garner some votes. And it makes a lot of sense that he did it.
32:08Is it going to help? Probably not. How do you trade the stocks on the back of it? I think we've been pretty clear. They're really very difficult to trade. I mean, Ford and GM both have not traded well now for a decade in which they should have done a lot better. I'll still go to Vician and say the auto part should win, and that's been the best in class for a while. I'm not, again, no one cares about our politics. I'm not analyzing necessarily where this goes in political calculus, but union membership is falling in this country, or it's 11 percent. If you think about what's going to decide the White House, it's probably a vote that's less than that.
32:38But it seems like it's a gambit on going for a pool of voters that he might already have and might be alienating people that sit more in the middle. I think the reality for this discussion with unions and management is that are these companies at record profits? On some level, they are. If you look at the free cash flow, it's why I can own GM even through some difficult times. And they've been really difficult times because I think the company's run about as well as it has. But they have to make major investments into EV and things that we know. Nobody's making money in EV other than Tesla at this point.
33:12And we know that Tesla almost didn't make it, if not for some extraordinary, you know what, I'll just say that I think this is a big challenge because these companies need to dig in here. Stray lies. No, no. It's interesting that Tesla is waiting for you to say. It's interesting that Tesla is down 10 percent since the strike started. I'm just saying like you would think that they would be the beneficiary of this. I think it's just coincidental with the market being. OK, well, I just said it's interesting whether you think it's coincidental or not. I mean, do you find it uninteresting? No, I find it interesting, but I don't think it's causal.
33:42So, I'm interesting. Remember how sad Elon was when he didn't get the invite to the Biden White House and Mary Barrow was there and Jim Farley was there and everything? He was sad. Took to X. Wind about it a little bit. Coming up, should you bet on AI? We'll bring the live report from one of the biggest tech conferences to help answer just that question next. Plus, shares of Cureleaf have been burning up this month in anticipation of a big vote tomorrow. What is at stake when the Senate convenes? means, what will it mean for the industry? We'll be joined by cannabis company's executive chairman ahead, the Cureleaf, by the way.
34:19We'll be back in two.
34:26Welcome back to Fast Money. Top tech executives are gathering at this year's Code Conference in Dana Point, California. AMB CEO Lisa Suh among a host of headlining executives. Our very own CNBC's Julia Borson is one of the hosts of the conference. She got an inside look at some of the hottest AI products on display. Julia, what'd you see? Well, Melissa, a key theme of this year's Code Conference is AI, and we've put together Code's first-ever AI studio, where a range of companies are showcasing their AI-driven technology. I got an early demo of Google's Project Starline, which uses AI to make you feel like you're talking to someone in the room, even if they're across the world.
35:05It was hard to capture on our cameras, but it was pretty incredible. Take a look. You look 3D. You look super 3D to me. Thank you. Thank you, Julie. I am 3D. I'm Project Starline. I should look to you like I'm perfectly in the room with you. So I feel like I'm probably sitting across the table. I can look you right in the eyes. And you and I are just together in the same space. We're making eye contact. Among the other demos here, Runway, which just launched a new feature called Director Mode to create videos from text prompts. I asked if this use of AI won't just threaten writers and actors, but also cinematographers and camera operators.
35:42Here's what the CEO said. We're allowing people to move faster through their creative process. And that's key about any creative tool. It's about allowing you to iterate faster in your ideas. And so when you think about storytelling, there's a lot of inefficiencies in how movies are made and how series are made. We're really trying to improve those processes and augment what filmmakers can do these days. I'll be talking about AI with all the people I'm interviewing here on stage, including Bumble CEO Whitney Wolf-Hurd, ex-CEO Linda Yaccarino. But first up is Ari Skirinch. He's CEO of EV Automaker Rivian.
36:20I'm going to be talking to him in just a couple of hours. And then tomorrow, I'm interviewing media mogul Byron Allen here on the Code stage and also here on CNBC on Power Lunch. Melissa? That should be interesting regarding ABC, Julia. But going back to the first example of you talking to somebody who's supposed to look like, it totally didn't translate on camera. Did it actually feel real? Because it looked like you were just having a Zoom. It did. It was nothing like a Zoom. I sat down at this table. The cameras turned on. The cameras facing me turned on. And then the screen turned on. But instead of looking like a flat screen, there was this thing in front of the screen that seemed to maybe project onto it.
36:59But anyways, it looked like there was someone in the room with me. I felt like I was talking to someone in the room. He reached out to give me a high five. I tried to give him a high five. He tried to hand me an Apple. It was just it was amazing. And I've demoed a lot of technology. And most of these things that are designed to make you feel like you're actually in the room with someone involves wearing a headset. Right. And we've done all done a demo, probably of the meta horizon world and see how they're trying to make you feel like you're with other people. But this is different in that you're not wearing anything on your head.
37:28Right. You're just looking at a screen. So it felt like sort of digital presence and definitely different than the other things I'd experienced before, Melissa. All right, Julia, thank you, Julia Borsten. So weird. I made it seem like somebody's phone actually went off here on set to when, in fact, it wasn't them. Yeah. There was no intelligence involved in that process there. So the people understand, because we have a minute. Every night before the show, what do we do? We say, Tim, turn off your phone. And he looks at me. He's mad at me. We're all accountable people, right? So let's look around the table.
38:03And of the last four phones that have gone off, how many times has it been mine? Four. No, one. I'm the last one. I think we've got one here. I think we've got one here. My phone is always on off. She's never on. Yours never has any. Well, I mean. Well, your battery's on 2%, so I feel like I'm a scapegoat here. I feel like this isn't fair. Sticking with the tech space, shares of Micron up nearly 36 % this year, but still slightly underperforming the broader chip space. But with results due out after the bell tomorrow, option traders are betting the semi-stock may be able to play catch-up. Mike Coe's got the action.
38:35Hey, Mike. Hi there. Yeah, so it traded one and a half times its average daily call volume. The options market implying a move of about 6 % by the end of the week. That's in line with the historical average. The busiest contact for the October 71 and 75 strike calls. Those were the result of purchases of the 71-75 call spread. That trader obviously making a bet that it could go to the upside, probably closing that upper 75 strike and rolling down. All right. Thank you, Mike. Mike Coe, coming up, will Cura Leaves High Times continue? Find out next as we will be joined by the cannabis company's executive chairman.
39:06Much more Fast Money into it.
39:14Welcome back to Fast Money. The Senate Banking Committee is set to vote tomorrow on the newest version of the Secure and Fair Enforcement Regulation Banking Act. This would give cannabis companies access to business banking services. Hot Sox hire ahead of this vote. They've been hired for weeks. From what this could mean for the industry, let's bring in Cure Lee founder and executive chairman, Boris Jordan. Boris, great to see you. Great to be back, Boris. What are you expecting tomorrow? You know, I think tomorrow, I think it was a year ago that I was on with you the last time and we talked safe banking.
39:43So it feels like Groundhog Day. But I think this time we're going to get a positive vote. And I think what's really important is that this is the Senate. So the House, as we know, voted on this seven times, passed it, handed over to the Senate, and the seven never took it up. So this is the first time the Senate has actually taken this law up through the whole process, so through committee onto the floor. And I think that both Republicans and Democrats have had significant time to opine on this law. I think it's in pretty good shape. I do think we're going to get a positive bipartisan vote of probably 14 members tomorrow on the banking committee.
40:17And then it will go to the Senate floor. And I think they are frank. We do have the votes to get it best. Hey, Boris, it's Tim. And you've said many times and you're right. And I would confirm it as well as someone that's involved in the industry. You're not playing for this vote tomorrow. You're running a business that you've picked the places where you want to put down assets and you're running as efficiently as possible. But so whether we get this follow through, I think getting through the house is going to be very tough. Let's talk more about just the capital markets and the prevailing market conditions.
40:44Cannabis stocks have had a major rally. You guys were one of the first guys to come to market in the fall of 2020 when the conditions got very good. And people were critical at first. I think it was a very smart move because it gave you more of a buttress of capital at a time when, in hindsight, everybody needed as much capital as possible. So how do you evaluate the environment today? Is it a good time to come to market for companies that have seen a major run up in their stocks and just where balance sheets are overall? I think that right now is not a great time. At least I don't think the biggest companies are going to come to market with any significant raises at this point in time.
41:19Some of the smaller operators that are in more need of capital are coming to the market right now. We saw a couple of small deals happen last last week and the week before. I don't think you're going to see any of the names you have up on the screen. Curaleaf truly for Green Thumb come to the market anytime soon. I think we're all reasonably well capitalized. We have strong cash flows. And I don't think we need to come at this level of valuation. I think people are going to wait to see a re-evaluation of the assets. These assets have corrected almost 90 percent from their highs. And I don't think at this point in time, people are in the condition to have to raise capital.
41:52Most companies have cut costs, have rationalized their businesses, closed markets that they didn't want to be in, and feel much better today than they did, you know, even a year and a half ago. So I think in many ways, you know, this, you know, lack of legislation, lack of regulatory change has forced the industry to really start to clean its act up and get to profitability. So you're not going to be raising capital, Boris, but can you talk to me about what you see on the other side of this? Let's say it passes. What sort of environment are we in right now? I mean, I would think that for many people, cannabis is a very discretionary item.
42:26For others, it's not. It's a medical need. But for some, it's definitely discretionary. How does this hold up in an era where consumers are strapped and they're looking to cut costs, you know, all over the place in their households? Well, there's no question that I think the whole industry and cannabis is no exception. All consumer products industries right now are feeling particularly discretionaries are feeling the pressure of the consumer. And we're feeling purely, you know, with a global platform, we also have a large operation in four major countries in Europe. in addition to the U.S. I would say in Europe, we're feeling it even more than the United States right now with a higher inflationary environment there than we're seeing in the United States.
43:03The U.S. consumer seems to be a little bit more resilient than the European. But I do think that with time as rates come down, I think we'll start to see a recovery of that. All right, Boris, great to see you. Thank you. Boris Jordan of Cureleaf. Up next, Final Trades.
43:28Time for the final trade. Tim Seymour, whose phone is definitely off right now. My phone? What are we talking about here? This sounds like AI someplace else. McDonald's, that's part of the basket. Again,$245 to$250, where are you buying it? Karen. Yes. You know, when you have some shorts on and they're really working, you feel like, oh, thank God I have them. Time to cover some, actually, I think. Bought a little TLT back. Dan. Epic trade in the TLT. Yeah. Just pressing those. Nike, after its earnings. If you see it, low 80s, that's pretty good. If any of the players of the New York Liberty are watching, they're all fans of the show.
44:02They're all fans of the show. We're fans of the Liberty, by the way. We are huge fans of the Liberty. Well, listen, their season hangs in the balance. So don't make a regular season disappear. Play the game tonight. Bring it. Bring it to the Lumber. It gets you done. Thank you for watching Fast Money. We'll see you back here tomorrow at 5 for more Fast. Meantime, don't go anywhere. Mad Money with Jim Kramer starts right now.
44:28All 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.
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Stocks sold off to multi-month lows, with the Dow breaching a key level of support. But some stocks may have been unfairly punished in the volatility. The traders are putting together their list of names that might be getting attractive right now. Plus the Senate set to vote on the SAFE Banking Act tomorrow. What it could mean for the marijuana industry.
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