Jobs Report, Tariff Threats Hit Stocks… And Tesla’s China Sales Drop 02/07/25

0:00Live from the Nasdaq market site in the heart of New York City's Times Square. This is Fast Money. Here is what is on tap tonight. A trio of troubles from looming tariffs to disappointing data and a big tech tumble. Some big clouds sending stocks lower today. So how should you play the pullback? We'll debate and all eyes on China. What a drop in one of Tesla's key market means for the auto stock in the state of trade between the U.S. and Beijing. And Uber revs up on a big activist stake. Nike shares hit nearly a five year low and the countdown to kickoff is on. A new survey shows just how big the appetite for sports betting could get.

0:36I'm Courtney Reagan in this evening for Melissa Lee, coming to you live from Studio B at the Nasdaq. On the desk tonight, we have Tim Seymour, Courtney Garcia, Steve Grasso, and Mike Coe. So let's start off with the threat of new tariffs, sending stocks sharply lower to end the week, the S &P dropping almost a percent, closing near its lows of the day, as President Trump said he'd announce reciprocal tariffs early next week. Those comments for the rattling investors already on edge after a disappointing jobs report in the morning. The U.S. economy adding 143 ,000 jobs in January versus estimates for 169 ,000.

1:10The unemployment rate also edged lower while wages rose more than expected. The Nasdaq was the biggest loser on the day, led down by Amazon, which dropped 4 % after its earnings report coming out after the bell on Thursday. Combined, the MAG 7 lost over$300 billion in market cap today. So what do all these moves say about the direction for the market. Tim, start us off. We're sort of ending the week with tariff worries. We started the week with some tariff rattling, worried first, then relief. What in the heck should we be watching here? First of all, welcome. It's always great to have you. And we're also ending the week with some disappointing earnings out of the MAG-7, where we kind of feel like we started the week and certainly where we had some of the week.

1:49So although the headlines at the end of the week about tariffs and reciprocal and a lot of the unknown in terms of the economic impact and truly what's going to happen on policy. I feel like the close of this week is as much about what really happened this week in terms of market leadership. Semis closed really at the 200. They've been fighting to kind of break back over that. They didn't fall apart. But lack of leadership from MAG7, for sure. Outside of Facebook, I guess we call it meta these days, and a little bit else, it's really been a story of that. The fact that this morning's payroll number was a number that didn't tell you that the labor market is bombastic.

2:25It didn't tell you that we have runaway inflation, but it definitely brought the unemployment rate down with the participation rate up, meaning this was a real number. This was really to the extent that you could see some tightening from labor forces just because there's more people looking for jobs. And overall, that the unemployment rate has come down a bit. Wages were stronger. There are some elements of this that say the Fed is absolutely on hold. You've got CPI next week, Humphrey Hawkins. And so I think as much as there's unknown around tariffs, you could make an argument this week was relatively positive in tariffs.

2:55I'd say the Trump administration is showing that they're kind of being very tactical and using certainly using tariffs as a stick from which to see what kind of follow through they can get. I think there's concern about market leadership. I think there's concern about the Fed. And that's what it felt like today. Yeah, there's so many different things going on. But I love a lot of the points that you make, obviously, with the tariffs potentially as a negotiating tool. I think retailers were really happy that it wasn't more than 10 percent on China, at least as of right now. Maybe some relief there.

3:22Courtney, but Tim didn't mention the University of Michigan. I hate even to say that. You hate Michigan? That's not nice. Consumer sentiment survey. I mean, my gosh, that was really disappointing this morning, much lower than expected. I mean, consumers are the backbone of the economy. Starting to see some worry there? Yeah, and I think that is something you have to watch, right? I mean, because we are very much a consumer-driven economy. So if the consumer continues to hold in there, that is a good thing. And you've seen these surveys come up and down. I think the bigger thing is what is happening with wages, what is happening with the labor market, and what you saw with the data that came out today.

3:52Wages have actually been rising faster than inflation. And you also have this wealth effect where people have actually been spending even higher than their wages, mainly to reflect the fact that assets have been growing. So that's really what's been keeping the consumer strong. The question is, is that going to crack at some point? And that's what people are worried about and they're waiting for, and that's where they're looking at data like you point out, like consumer sentiment. You're seeing some of that go down. I don't think I've seen it enough in the data of the actual aggregate of the consumer and the economy yet to justify that.

4:19But it's something to watch out for, absolutely. I think the inflation number and their expectations that inflation was going to rise to something like 4.3 percent, which is about a percent higher than previous. That sort of rattled me a little bit to see that. I mean, Steve, to make some points about the Magnificent Seven, kind of the Magnificent One maybe over the last two weeks or so with Meta being the one outperformer, NASDAQ down more than one and a third percent. Do you think that weakness continues as we move into next week? Yeah, I do. I wouldn't be buying, I said this last time, I wouldn't be buying Max 7 right now.

4:46And I think you're going to have this race. Even on the pullback, not an opportunity. You know, you're always going to get sort of that deep seek bounce back in a lot of those names. But if you think about it, deep seek is probably more than a one-day event in the thought process, in the psyche of the investor. If you think about that they can do it for$6 million or thereabouts when Meta is costing them$65 billion, Microsoft$85 billion, Amazon$104 billion, it becomes a – are they throwing the money away? Is all of this – Even though Amazon, they were trying so much to reassure, it's going to be worth it.

5:24It's the biggest opportunity. I think that feels like last year. So we were all on board last year where who was going to be the first to monetize. NVIDIA was going to be the first to monetize. NVIDIA was 85 % market share. But when you look at consumer sentiment that you brought up, seven-month low. Inflation spiked the most as far as expectations for a 14-year high. Right. So those things. But I'm on the other camp where I think tariffs, we're talking about this as inflationary. I think they could be deflationary. It also increases the dollar's value, which makes imports cheaper. It could slow down the economy a little bit.

6:07So that's deflationary. And also you get the substitution effect that where, okay, I bought this basket of goods, so I'll buy this basket of goods. So I don't want to say that I'm too rose-colored glasses on this, but I'm looking at it from a different angle. Tim, I want to go back because we started talking about the jobs report. obviously backward looking, most data is in this case. We've got a lot of stuff going on in the government and with government jobs. What's going to happen going forward? How does that impact the labor force and what we're going to hear from the numbers and how we should parse that all out, government spending?

6:40Well, yeah, I mean, it is typically people call it's a payroll number, but it's usually non-farm payrolls that people think about. But then there's a public and there's a private component to this, and I think it is material. I do think, though, what's going on within the government, What's going on in terms of cost efficiency or really just rooting out of agencies that maybe needed to be rooted? Who knows? I'll just say that I'm I think the labor market from where we were back in September and August and September, which was coincident with when the Fed kind of pretty much told you they were going to go.

7:13They're going to go no matter what. Now it really looks like 50 bps was too much. And it doesn't I guess on some level it doesn't even matter. It's what they did. But there's no question that 100 basis points that was rushed towards the end of the year, I think right now tells you why the Fed's on hold and why the markets are actually a little bit upset about that. I think it's not as if the Fed's going to quickly go about face. But the expectation that you could see rates come back in dramatically and give a boom to the stock market, that's why you're starting to see the broader part of the market actually really work.

7:41And back to allocation, there's no question equal weight it has outperformed. There's no question that parts of the industrial spaces look really quite good, even though there are still a lot of uncertainties about these companies that are importing many components of the core part of their jobs, their production scheme from China, Japan, really Mexico, Canada, China are the places we're focused on. So I'm less worried about payrolls here than I'm worried about market leadership. And when it comes down to it, what we heard out of the most important companies in the world over the last 10 days hasn't been emphatic.

8:13Yeah, that is true. I mean, Mike, do you see any buying opportunities here maybe in some of these most important companies, the Mag7 or otherwise? Or you feel like you still want to be in a holding pattern because there's still a lot of uncertainty? Well, I think Tim just sort of hit it right on the head there. You know, equal weight is outperforming. If you take a look at last year, the consumer distribution sector was one of the best performing sectors for the whole year. And, of course, if consumer confidence is, you know, on the wane a little bit, then that's going to hit that sector. And it was the worst performing if you take a look at it today.

8:45You know, with respect to all of the big CapEx numbers, and I think that's what weighed on some of those companies that, you know, other than Meta, of course, that were just reporting. In Amazon's case, almost eye-watering numbers at$100 billion. But the fact is, that indicates that there is some support still on the hardware side for the AI trade. I don't buy the deep-seek$6 million thing at all, to tell you the truth. I mean, first of all, I think there's ample evidence that they probably had access to more chips than they suggest. And, of course, I don't think they're really counting everything either.

9:15Besides which, if you can do more with less, you can do much more with more. And that seems to be amongst those companies that have the financial wherewithal to make the investment the direction that they're going to take. And you don't get something for nothing. So, I mean, DeepSeek was quite an operation if you wanted to get access to folks in America because there was a record number of downloads. I don't recommend it because if you don't know what's being sold, you're the product. Yeah, maybe in this case it was a good thing that I was a late adopter because I was too late to the game. And then I heard maybe I shouldn't do it.

9:47So, huh, maybe it actually worked out in my favor this time. For more on today's market action, let's bring in CNBC contributor Peter Bufar. He is the Bleakley Financial Group chief investment officer. Peter, thanks for joining us. I mean, what do you make of today's action here? What was really the market's biggest worry, in your opinion? And why did we see that 10-year yield go above four and a half? Well, it was interesting because there were a lot of different factors. The payroll number, of course, as you guys have talked about, and the dip in the unemployment rate. even though it wasn't the cleanest number because we saw that the work week fall to the lowest level since 2010, not including COVID.

10:22Then, of course, the Michigan confidence number with the short rise in the inflation expectations because of worries about tariffs and the impact it's going to have on the prices that people pay. And then, of course, you throw in the threat of reciprocal tariffs, all combining for that lift back to about four and a half percent in the 10-year yield. The 10-year yield has been falling, interestingly enough, over the past couple of weeks. At the same time, inflation expectations in the tips market has actually been rising. If you look at the two-year, the five-year, and the 10-year inflation break-evens, we're at two-year highs, even as long rates have fallen.

10:59So I think that's an interesting thing. I think that's a tariff trade in the sense that it could be stagflationary in terms of its impact. That's interesting. So I was going to ask you what you think your overall impact is of U.S. tariffs. Steve says that he thinks it actually could be deflationary. Well, the initial reaction could be stagflationary, then a follow through where prices could fall. You know, the one experience we had, which is helpful, 2018. Well, U.S. manufacturing went into a recession in response to those tariffs that led to the Fed cutting interest rates in 2019. I think the only reason why we didn't see inflation then is because these manufacturers did not have the pricing power to pass it on.

11:39I think now we're sort of in this post-inflationary world where manufacturers may have more leeway and opportunities to pass it on, not just in a one-time fashion, which is the argument against it being inflationary, but something more persistent in the years to come, obviously depending on the complexion of these tariffs. Peter, it's Tim. Great to have you. Has the dollar peaked? And in the context of that, also, what do you think about international here, which has really outperformed the U.S.? Germany's going gangbusters, and yet everything we hear about what's going on in their economy, not so good.

12:12Well, on the dollar, we certainly have had a big adjustment higher in pricing in the tariffs. So if we do get the tariffs, that certainly helps to mitigate it. The question, though, is, is can the dollar stay strong? And if the dollar happens to weaken and we still get tariffs, then we lose that dollar mitigation with those tariffs. So I do think there's a possibility because other central banks that have been cutting interest rates, they seem to be coming to the end of their rate cuts as well. And the one currency to me that's most important is the yen here because JGB yields continue to rise.

12:45So I think that that's potentially a major factor. Now, in terms of international stocks, you know, Courtney said earlier, maybe we're down to the MAG1. And I do think that investors are all of a sudden realizing that there are a lot of other stocks other than the seven. There's 493 in the S &P. There's 2000 in the Russell. And you have a whole rest of the world that also trades stocks as well, where valuations have become extremely attractive. Peter, thank you so much. Really appreciate you joining us. We're going to have to leave it there for the time being, Peter Bukvar. We actually do have a bit of a news alert here.

13:17If we can move over to Megan Casella, I think she's got something for us.

13:24Hey, Courtney, that's right. On U.S. Steel, we are learning a lot today, a lot of moving headlines from President Trump. But the latest on this, first, Trump said earlier today that he continues to oppose a Nippon Steel takeover of U.S. Steel. Later, he said, though, that the company is now considering an investment in U.S. Steel rather than a purchase, and that that's an arrangement that he would support. Take a listen.

13:49We didn't want to see that leave. And it wouldn't actually leave, but the concept, psychologically not good. So they've agreed to invest heavily in U.S. steel as opposed to own it. And that sounds very exciting. And we're going to meet with Nissan next week, the head of Nissan, very great company, and they'll work out the details.

14:14Note that he did say Nissan there, but a source familiar clarified to me that he meant to say Nippon. Now, still a lot of outstanding questions on how exactly this would be structured and how significant of an investment this would be. Trump did say that he would also be a part of those meetings between company executives next week, that he'll be there to help mediate. But even while Trump says his concerns are addressed here, not everyone is on board. The United Steelworkers unions say their stance is still unchanged. They continue to believe Nippon is a serial trade cheater that has dumped its products in U.S.

14:49markets. So much more, Courtney, to watch next week on whether this arrangement might pass muster and make it through. Courtney. I'd like to be there when he mediates that. I can only imagine that that would be a spicy boardroom. Thank you very much, Megan. Steve, I know that you have a play here in the space. I'm a long steal from$30. I think it goes much higher. You're going to have a lot of volatility in that process and the sausage making of it. But I think he's he Donald Trump, President Trump is hard pressed to let steal the stock and the company fail. So he's either going to do it through tax incentives and perceptions reality.

15:26You're not going to let them buy it, but you could let them invest in it. I think there's room for there to be multiple winners. And I'm concerned with one winner, and that's letter X. And I think it goes higher. And we're talking about in the 50s with a Nippon deal. So we're trading at around 36, 37. I think it has the chance to get back up there. Interesting stuff, Tim. Well, I think U.S. Steel, even without the dynamic here around Nippon or Cliffs or anybody else, was that this company was cheap. The company was cheap, but there was obviously some cyclicality to steel prices, things we were worried about.

16:04There's clearly a need for reinvestment in a couple of the core smelters. And that's the story. We just got numbers out of U.S. Steel. The margins were better. The dynamic is interesting. What is the outlook for Steel? That's a big part of this. But I think you can stay long in the stock either way. I agree with Steve that really what the headlines are all about are things that seems like everybody kind of wants to make sure that U.S. Steel wins. Meanwhile, U.S. Steel on its own, I think, was undervalued going into this. So maybe it doesn't matter how it gets there if you think that it's going to win in the long run.

16:34Mike, what do you think? Well, I mean, if you take a look at what the options we're doing today, it seems like there's a lot of longer sort of midterm trading going on. And it trades 180 ,000 contracts, usually trades about 30 ,000, which is actually a pretty good number when you consider that every contract represents 100 shares. You're dealing with, you know, about 18 million shares worth of calls trading on that thing just today. So, you know, I think some people are, you know, cautiously optimistic, but it looks like they're playing it with the options to make their bullish bets here. All right.

17:06Well, stick with us. Coming up, Citi is benching Nike. Why one analyst says they're losing hope in the slumping sportswear stock that's up next. But first, one bill more than$2 billion in Uber. Pershing Square's Bill Ackman unveiling a massive stake in the ride-hailing stock. Why he thinks this name is trading at a big discount, that's right after this. Welcome back to Fast Money. Uber topping the tape today. Shares catching a ride on news that Pershing Square's Bill Ackman has been building a$2 billion stake in the stock since the beginning of January. The billionaire investor saying in a post on X that Uber is, quote, one of the best managed and highest quality businesses in the world and that it can be purchased at, quote, a massive discount to its intrinsic value.

17:49Tim, what do you make of this? I believe it. I agree with it. I was really surprised to see how the stock traded down on those numbers they announced. I realized that there was a little bit of disappointment in terms of the lower unit economics of what's just happening in kind of the core business. And there's some concern around the build out of the autonomous. But it does seem as if they are in a pole position in terms of autonomous if, in fact, that is not the death of these companies. In other words, there's been this question about are Uber and Lyft dead because of autonomous or are they really going to truly benefit?

18:16I think it's the latter. But I look at the company and I do think it's cheap. And I think also the pullback has been on a combination of factors that I think have largely worked through. I think the business has been normalized. They're given credit, as Bill Ackman's pointing out, in terms of having a well-run company across multiple verticals within essentially the super app of which is delivery. And I just think that the pullback is an opportunity. Stock's done nothing for two years. It's had a great couple of days, but I think you can still buy it. Mike, what do you see here in shares of Uber?

18:46Well, I see a 5 percent free cash flow yield based on full year numbers, which is obviously very cheap, I think, compared to a lot of businesses. Options traders love this one. It traded a million contracts today. That's a huge uptick in the volume. And that's probably not that surprising. You hear that there's a huge stake being taken by a famous investor. And you often will see a lot of retail pile into it thereafter. But, I mean, I'm with Tim here. I mean, the growth is outpacing the market considerably. And yet you're buying it as similar multiples. So, yeah, I think you can stay along this one.

19:16What's driving the stock here, Courtney, do you think? What part of the business is most important? I think the autonomous vehicles, that's clearly going to be its longest growth driver. I mean, I think the question is what that's going to be in the short term. But if that is something they can monetize and they can be at the forefront of, I think you're going to see that optimism here in the stock. And I think what you're seeing is we saw that from Bill Ackman. He was very positive on the stock and the purchases that they're doing. But also the day that we had the sell-off with Uber, they came out themselves and said, we're going to accelerated repurchase.

19:43I think they were repurchasing about$1.5 billion worth of shares over the next year. And I think you're seeing that optimism. Everybody said this is a great buying opportunity. I think you want to listen to some of those big names when you're hearing that. It's had a good two-year run, Steve. Yeah, I mean, this was the diversified play. They had a lot of buckets of revenue where Lyft basically had one. It's like free that eats and rocks. Exactly. And they can always partner up with another autonomous partner. or they can have bolt-on acquisitions, tuck-in acquisitions, where they can get the most bang for their buck and be in a better position than developing it on their own.

20:21They could probably be the deep seek of autonomous driving. Right? They take everyone else's technology and then they wind up just putting it all together. And I think the management team is bar none the best in the space. And when you look at the stock, every time it pulls back, it's always a buying opportunity. Good stuff. Well, there's a lot more fast to come. In fact, here's what's coming up next. Citi losing its faith in the Nike turnaround story. Inside a key meeting with CEO Elliot Hill that has one analyst benching this name. And whether or not you should just sell it next. Plus, Tesla's China problem.

20:58The EV maker seeing sales plunge in the region as competition heats up. Will a looming trade war just worsen the issue? And what's in store for the U.S. auto trade? You're watching Fast Money, live from the NASDAQ market side in Times Square. We're back right after this. Welcome back to Fast Money. Let's get to our call of the day. Shares of Nike dropping almost 4 % after a downgrade from Citigroup. Analysts also cutting their price target to$72, down from$102. The note citing sales pressure and competitive threats at Nike's running shoe business. analysts saying they are, quote, no longer, they no longer have the patience to wait another year for the company to make a comeback.