Market Impact From A Rate Cut, And Nasdaq CEO On Exchanges, IPOs, and More 8/13/25

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. Treasury Secretary Scott Besson calling for a big cut from the Fed. But what would dress but that would drastically lower rates. What would that mean for stocks, for yields and for the consumer? We'll lay out the possibilities. And the state of exchanges. Shares of Nasdaq have been rallying this year as markets themselves get new records. We'll find out what's behind the move and get a pulse check on the market for the IPOs from Nasdaq CEO Dina Friedman. Plus, we're dialed in on Cisco earnings and the big move in shares.

0:33Amazon upping the ante in the grocery game, what it means for both legacy companies and upstarts, and shares of biotech in Smed trading near 25-year highs after its latest FDA approval. What is next for the name and where this stock goes from here? I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Feynman, Dan Nathan, and Guy Adami. We start off with that big call from the Treasury Secretary. In an interview this morning, Scott Besson telling Bloomberg that the Fed should cut rates by 50 basis points next month and that ultimately rates should be 150 to 175 basis points lower than they are right now.

1:08That got us wondering, what would that mean for the markets, starting with stocks? The S &P and NASDAQ hitting records today, but it was a long, underperforming small cap Russell 2000 that saw the biggest gains. Do out of favor groups and sectors rebound if rates drop? I think we would all agree that equities would probably rally. Where would the rally be most pronounced? Well, you're seeing it in the small caps, no question about it. And I think Karen's spoken about this as well. I'll say this. We talked about it last night. It was this time last year that the market started pricing in six rate cuts for 2025.

1:39And the market, through the lens of the S &P, was significantly lower. So the market has rallied. Now we're starting to talk about more rate cuts. Personally, I think it's all priced in. But quickly, I find it fascinating. And listening to Treasury Secretary Besant talk about the reasons for these rate cuts are the softening job market, which, you know what? maybe it is a softening job market. With that said, what we heard from the administration last week was those revisions were rigged and it was a political hit job. So you can't, my point is you really can't have it both ways. Either the job market is softening and the revisions are legit, or the revisions weren't legit and the job market is robust.

2:21So pick a side, I guess, is my point. I agree with that. Yeah, so I agree with you, agree with me on the small cap, which that's not news, right? But to the extent that there is borrowing there that is fixed, that could be set lower. That's huge. I think anyone with a not great balance sheet. Also, if you look at who has really been hurt by higher rates, which is some of the commercial real estate. Right. We've got a lot of paper coming due to the extent that that could be cheaper. That would be a good place to rally. But also, you know, it's just math and that discounted cash flow. If you're using a lower rate, you know, you get a higher multiple higher stocks.

2:58Yeah, you know, the fact that the stock market in certain sectors has run ahead of that. And you guys just mentioned the Russell 2000 small caps. Look at home builders today. I mean, huge. Like just the fact that they are already kind of going in there and taking that performance, whether it happens or not, is a very odd thing to me. I get the reflex sort of reaction to some degree. I think a lot of investors are looking to play catch up in some areas that they think have been kind of suppressed because of the high rates. But then you think about it this way. OK, like last year at this time, the same debate was happening about the labor market.

3:30And, you know, I think the Fed at that point was probably a bit more confident that with 3.2 percent CPI, I think that was the July number or so at this point, that it was going down in the direction that they wanted it to go down. The market was not pricing in a trade war at that point. Right. And you had unemployment that was below 4 percent. And right now we're at 4.2 percent. Right. And then GDP growth. The first half of 2024 was basically one in a quarter. Well, that's where we were this year. So for all intents and purposes, the big change right here is that unemployment is going the wrong way.

4:03Part of this dual mandate and now inflation. Part of the dual mandate is probably not going much lower that quick. And so I just think about this from a growth perspective. The thing going forward, if we have 15 percent base rates on a lot of the imports that are coming in and then many from China at 30 percent, that has to weigh on growth. And, you know, I think I just said this or I heard him say it earlier today or something like that, is that we just really haven't seen, I guess, you know, I mean, the headwinds from higher prices just yet. We've seen plenty of scenarios, whether it was the autos, where the companies were willing to kind of eat that cost right now.

4:37But a lot of them, if you still see unemployment going higher and you see growth, they're not going to be able to do that. Can I? But I mean, nothing happens in a vacuum. Right. And so the impact of tariffs could still yet be felt, Tim. But at the same time, the offsets could be lower rates, lower borrowing costs, other savings from the one big beautiful bill in terms of, you know, expensing research and development, for instance. I mean, there are other offsets potentially that could help growth, even if tariffs weigh. Yeah, and I think that's the whole argument for rates. I think the administration is arguing that, too, that there is an unnecessary headwind, whether it's 150 basis points, I don't know.

5:16And my guess is that hedge fund manager Besant felt a lot different about the Fed's role in stimulating the economy than Treasury Secretary Besant feels. I also think the conversation we often have on the desk, we had a bit of it last night, which is that we don't know what the long end is going to do. We know that on the short end, that really does help those folks that are pinned to short term borrowing and those dynamics that really are moving. The yield curve has steepened. We also know, we had this conversation also last night, that liquidity is extremely high. So I think equities will continue to rally.

5:53And I think, you know, back to your original question is, what performs in that 150 basis point cut environment? I think you're barbelling this thing. I think you're grabbing high multiple tech where those discounted cash flows are farther out in the future. They make less, they don't make money, et cetera, or the ones that don't make a lot and have very expensive price to sales ratios. Those are going to rally. I think the mega caps will. And then I think the other side of your barbell is the value part. And look at where we're starting to get some breakout. We've had the breakout in financials.

6:23They will continue to do well. Look at health care. Today was a really interesting day in health care. There's a lot of headwinds from Washington there, but I think that's another place to play. Yeah. Nice gain today. More than a percent. Consumer discretionary also gaining. Right. So there's one thing I've sort of been thinking about is very much a positive, which is productivity gains, which I think will be very real. However, the other side of productivity gains is, I think, white-collar job loss that could be important. And, you know, white-collar jobs, those are high-paying jobs that, you know, flow through the economy in a lot of ways.

6:56I don't think we have a good sense of how that will all shake out. I think we'll see jolts higher because some jobs can't be filled because we just don't have enough people to fill them. Right. On the sort of lower end of the, right, more blue-collar jobs. But the white collar job thing and the productivity are, I think, two very interesting sides of the same issue. Yeah, I had a meeting today with a VC who only invests in AI companies that are going for job cuts. Like, that's it. Right. So like really pointed, you know, processes, that sort of thing. He also said to me that the coding space, these folks that are coming out of Stanford and MIT.

7:31And there was an article in The Wall Street Journal a couple of days ago. They're in big trouble. Yeah. And he's like right out of the gate because you don't need that entry level thing. Now, a lot of those folks are geniuses. They probably already built all these crazy models and companies like you're William, you know what I mean, that sort of thing. But a lot of these knowledge jobs seem okay for now, but a lot of those call center stuff, and that's not exactly white collar, but there's a lot of processes. He's going to take the under. I'm going to take the over when it's really disruptive, when it's really adding a lot of productivity gains, because if you think about trust is really important, right?

8:03And we were just talking about this using GPTs before. It's going to take a while before you're allowing an agent to do something. There's a whole host of things that I just think are going to take a bit longer. But the point is, that is going to be a massive headwind to job growth going forward. Make no mistake about it. So I just think that that's something that there are certain industries you don't want to be near. And one of them, we talked about it last night, enterprise software. It's just a really bad place to be in the markets. And the market where investors are already starting to discount that a bit.

8:30The offset to the offset, though, this is consumption services dominated economy. So theoretically, all those production gains are going to come at the cost probably of jobs and people start losing their jobs. This service consumption based economy doesn't do particularly well in the short term. So there are offsets to offsets here, I think. Offsets to offsets. So we're back where we started. Well, you asked the offset question. Well, I mean, isn't it worth wondering? That's the conversation. You know what else? Most people are wondering before we get into it. I'm sure they aren't, but go ahead and tell me.

9:03Tim was scheduled to be on the desk this evening. The keen eye will notice that he's not with us. I just wanted to let people know that Tim is having pipe problems. He had to be home, yes. We'll leave it there. Personal stuff. Personal stuff, Guy. Thank you. Thank you. But just quickly, we talked to Subhadra Rajapa yesterday night about rates, and Tim, you alluded to it, but are we to believe that the 10-year in this environment where rates will come down 150, 175 basis points from where they are now that the 10-year stays firm in the range? I'm not sure. And the trends on the rest of the world, we could be having a conversation about higher rates, higher 10-year bond, higher 30-year bond for sure.

9:50JGB's higher 30-year in Japan. And rates are going higher in other parts of the world. We've actually had a pretty sideways run here. I think that's something to watch. We don't know. We know that the long end of the curve is responding to both inflation and technical factors, issuance, and the overall trust and the term premium, as we say, in the U.S. government. Those are all things that at least have had a fair amount of conjecture. And I think it's important. But I ultimately just get back to the trends we have for the market right now are very bullish for international. I think the dollar is going to continue to weaken up.

10:23I think some of the trends around mega cap tech stocks and look at look at where we've gone on terms of making new relative highs. So I think those are the things that the market can do. We've seen this before, too. And when we've been expecting Fed cuts, it's something to think about. The one thing I would worry about, and I don't know that we're close to it, is much in the same way that the equity market took off like a rocket when we had peak inflation. when we start to feel that inflation is done and that there's there's really nothing left to that concern. I actually think that equities might run into some trouble.

10:56I know that sounds counterintuitive. But again, you'd be selling that news. All right. Let's get more on where rates could be headed with CNBC's own Rick Santelli. Rick, it is great to see you. I want to start off with where Tim sort of left off in terms of we're not the only player in terms of dictating where rates go. There's a whole global rates market. The German 30-year, for instance, hit its highest since 2011 just yesterday. So there's a whole other dynamic going on. Where do you see rates headed if we are to be lower by 150 basis points? Well, I have some charts. But before I get to those, I largely agree with Tim.

11:31I don't pay as much attention to the 30-year, whether it's in Japan or whether it's in the U.S., but it is a long-dated security, so we want to pay attention. I'm paying mostly attention to tens, but Tim said kind of sideways to higher. I couldn't agree more. Whether you look at the UK, whether you look at the EU, whether you look at Japan, the US, the reason long rates are going to stay stubbornly high and what we all share in common is debt, debt and deficits. And that will mean issuance. And boon yields turned around the last couple of days for exactly that reason. Now, I have a couple of tricks on why I think rates are going higher.

12:08Let's go to the whiteboard. All right, here's 10-year yields, and here's one trick I always like, midpoints. Okay, so if you look at 470 in April of 24 against 362, key bottom. The average there, the midpoint there is 416. If I keep the 362 and look at 479, the midpoint there is 420. 416's the red line, 420's the blue line. It's been somewhat magical. I would think that we're going to hold above that and mostly sideways any close for a Friday for a week below 416, make it even 415. That would reverse my case study for higher rates. All right. Now let's go to one of the tricks that I like to do, and that's the 30 minus 10 spread, affectionately known as the knob.

12:56It is now the widest since SEP of 21. Let's call it four years. And when those spreads widen out, that usually tells me rates are going to be high on the long end. But it isn't only the 30s minus 10s. It's also 10s minus 5s, known as the fight spread. Same scenario. At 47 basis points, it's the widest it's been basically in four years. So we have wide spreads. We have key technical, simple ones, along with moving averages, that this sideways is a good congestion level to build on. I think in the end of the day, curve steepening is the way to go. I do think two-year yields are going to come down, but I don't see 10s, 20s, or 30s following the game.

13:41Melissa Lee, back to you. So you think that finally we're going to see the sideways to higher, but for so long we didn't trade on the fear about deficits, about all this issuance coming. So now it's going to hit and we're actually lowering rates? Why not? After we started this year, the lowest close we had is 4%, and it bounced off there big time. Big time. Show year-to-date chart. You'll see that 4 % spike. So to me, yes, what it says is that we're not necessarily going lower. How much we build is going to depend. And I do think that it isn't necessarily going to be inflation that's the biggest driver of the long end.

14:25I don't really buy the stagflation argument. I think we're going to have lots of whiffs of it. But in the end, I'm kind of with Rick Reeder here. I see good things bubbling up. I see the offsets that you've all been talking about. I do think the economy is going to be cooking in Greece much better than many think. And I think that's another reason the curve steepens and the long end goes higher. All right. Rick, good to see you. Thank you so much. Rick Santelli. Thank you. Well, that would be a disappointment to the administration if the 10-year yield does not come down. If we don't see mortgage rates, for instance, come down, if we don't see those borrowing costs come down.

15:00However, if the reason for those rates going higher is what Rick just said, because growth is going to be robust. I mean, I think that will be acceptable. It won't be they won't be thrilled by it. I think they'll learn to understand it. I think the flip side. This is just me. I mean, Treasury for a while. And this happened under Janet Yellen. They're trying to do the whole bills thing and try to push out what should be inevitable. And I think Treasury Secretary Besson thinks that as well. I think in his heart of heart, he believes that yields will come down at some point that will allow them to start issuing longer dated stuff.

15:30That's a high game stake of chicken right there, in my opinion. Yeah. What happened to the homebuilders? And we saw homebuilders having a nice day today on the premise that rates will come down in a meaningful way between here and the end of the year or so. And so if we are to believe that rates will not come down, they will remain stubbornly high. Is that little bounce that we saw? I mean, that that's all overdone. Yes, yes, I think that's right. I think rates, if they stay around here, then then I think that that the sector is is OK. But if they start to move up at all, I think, yeah, a lot of those gains will evaporate.

16:08Yeah, it was interesting how quickly like the money center banks sold off. You made a great point last week, you know, like last night, you know, about how that yield curve and going in the direction is really good for the banks. And it was just kind of interesting to see a knee jerk reversal of that today. And then obviously the opposite of what happened, I think, with home builders. All right. We've got an earnings alert here on Cisco. Shares are lower after hours. Despite a top and bottom line beat, Christina Parts and Lovelace has been listening in on the call. She joins us now with the details.

16:33Christina? I'd like to say that the shares have reversed a little bit. They're not as low as they were before. And the reason why we saw that initial reaction is that the midpoint of the guidance was just relatively cautious. And you have all of these companies spending so much money on AI infrastructure. Sure. Cisco is providing, you know, well, they say not just the back end, you know, everything, not just networking. But you would expect Cisco to be more of an AI winner. They did say that they booked eight hundred million dollars in AI orders up from six hundred million the previous quarter.

16:59But those are orders. It's not actual revenue dollars. And so that was a concern from a lot of people. When are they actually going to provide us with numbers? Well, just moments ago when I texted the PR, I was like, bam, there's your statement. They said they roughly got one billion dollars of revenue on AI back end orders in fiscal 2025. Chuck Robbins, the CEO who is going to be on CNBC tomorrow morning, did reiterate, too, that they don't guide specifically for AI revenues, but you can extrapolate from that$1 billion revenue number what that'll mean for fiscal 2026. And then they also said they haven't seen any indication.

17:34This is from the CFO of pull forwards, all the tariff stuff, and that the AI narrative still has seemed to go for them. And so really, I think it was just finally putting a number to justify even the Ford PE, which has climbed, you know, above the five-year average for Cisco. So some people are questioning whether this was really an AI winner. Christina, thank you. Christina Parts Nevelis. Tim, this is your Cisco. It is. I'll take it. And I'm long it. So it's mine. And I think the stock's going to be up tomorrow. I think it's outperformed the entire mega cap tech space other than NVIDIA. So if I throw in the top 20 market caps, it's up 60 % on a rolling 12-month basis.

18:13Most importantly, it's not expensive. And most importantly, we listened to the company. What they said was demand for AI infrastructure from web-scale customers came in two times their expectations. So they are seeing it. They're also talking about it. And in terms of what moves stocks, I think that discussion is part of what's going to take the stock higher. But it's been a great run for Cisco. It's not expensive. I think they have a much more predictable earning stream than they've had in a long time. And this is good cyclicality because historically it was bad cyclicality when things were concerning.

18:46I like Cisco. Yeah, I think the valuation is absolutely reasonable, especially in this environment. It might be rich historically, but the world's changed without question. They did$800 million in AI revenue, I think, last year. They said they were going to do a billion this year. Tim just said it, and Christina said it. They doubled it. It's two. So I think valuation, you could ratchet it up a couple notches on the Cisco front for sure. Coming up, Prime Delivery setting its sights on a bigger market, how Amazon's expanding its grocery plants, and the impact it is having on delivery competition.

19:14That is next. Plus, more fast movers from today's session, the massive surge in Paramount Skydance, a crypto exchange soaring in its market debut, and a China tech check as the group rallies to five-month highs. Do not go anywhere. Fast Money is back in two.

19:34Welcome back to Fast Money. Amazon expanding its same-day delivery service of fresh foods, including meat, eggs, and produce. The service will be launched in 1 ,000 more cities and towns by the end of the year, bringing the total number of delivery zones to 2 ,300 in the U.S. Delivery stocks and traditional grocers all sinking on the news. Instacart seeing its second-worst day on record, DoorDash dropping about 4%. Wedbush had an interesting note out on Amazon specifically saying that basically this is an area where they have yet to oust the incumbent, the assumption that Amazon's going to make some headway here.

20:08Are you concerned about a Walmart, let's say? Well, I'm long Amazon, too. So I think Walmart's, they're both expensive, actually. I'm not concerned yet for Walmart. But I think, I mean, Amazon, you can't argue with the power of Amazon. But Walmart has also shown their ability to innovate, to get things faster. So it could be game on for both. You know, it's interesting. So this is obviously groceries, which is kind of apples and oranges when you think about Uber Eats in general. But they have those sorts of partnership. Uber Eats is, you know, 25 percent of the market. You look at a company like that, it really didn't budge today, right, relative to what you saw at DoorDash, which has, you know, I think 65 percent of that market.

20:47I would say that Uber has an opportunity in this space also. So if you think about just kind of the network that they build out and, you know, the union economics were like a real issue for these companies a few years ago. They saw that huge surge during covid. Well, they've obviously got a lot better here. So you see Amazon. I think these guys knew Amazon was coming into space. I don't think this is a huge surprise. It might be to investors. We're selling the stocks off. But again, I would expect those stocks to kind of get back some of those losses in the not so distant future. I agree with both Karen and Dan.

21:16And, you know, Uber, when they saw the news, it traded from 92 and changed down to 90. Walmart down to 100. But I think they're set up. They're probably those two companies, Walmart more so, set up to take this on. And I think Walmart reports on the 21st of August. That stock has been resilient in the face of valuation, in the face of a lot of different things. I think you've got to stay with Walmart here. I mean, for Amazon, there is a point made that three quarters of the people who actually ordered perishables this year, Tim, they were new to this. That was the first time they had done that this year.

21:45So the penetration that could happen with this is tremendous when you think that it's free for Prime members. So it's just that a few extra people, you know, trying this out can mean a lot. But hasn't Walmart been given credit for taking some of that same, also same day service, or at least the delivery and the Walmart Plus customers from Amazon? I don't know. Walmart is set up like Amazon with the walk-in places. I mean, every one of these warehouses is a fulfillment center. And this is why I think a lot of the investment they've made in technology is something. I think they can counter this, whether they want to or not.

22:22They probably will, whether they have to or not. Grocery has been the dynamic that have gotten more people, more of a demo into their stores. I don't see why that changes now. And Walmart Plus allows for a lot of the same options. There's a lot more fast money to come. Here's what's coming up next. A monster move in media, a crypto exchange surging in its debut, and a check on Chinatac, the trades on all of today's big market action. Plus, key moves in the biotech space, the details behind one company's latest FDA drug approval, and what the CEO sees in store for the industry. You're watching Fast Money, live from the NASDAQ market side in Times Square.