More Market Concerns… And Two Big Earnings Reports On Deck 8/5/25

0:02Live from the Nasdaq market site in the heart of New York Times Square this is fast money here's what's on tap tonight fresh signs of a slow down new data showing the services sector is flat line in the market of stagflation. What will it mean for stocks during a traditionally troublesome period? And a consumer check, Disney and McDonald's both reporting before the bell tomorrow. What will they say about demand and the strength of spending? And healthy gains for Pfizer after its results. A coin flip for shares of Coinbase, now down more than 30 % in about two weeks. And the CEO of space company Voyager Technologies joins after his first earnings report as a public company, what he has to say about the numbers and defense deals with the government.

0:46I'm Mike Santoli. And for Melissa Lee tonight, coming to you live from Studio B at the NASDAQ, on the desk tonight, Tim Seymour, Karen Feinerman, Dan Nathan, and Guy Adami. Great to have you, Mike. Michael, this is a rare treat. It's a rare treat. Rare treat. Says, pause for applause. No, we can do that. No, we can do that. We can absolutely do that. But we do want to start with a deeper look into the data that seemed to get under the market skin just a bit today. The ISM services index unexpectedly falling in July. But the price is paid component, a measure of inflation, rose to the highest level in more than two and a half years, while employment contracted for a second straight month.

1:25That, of course, after Friday's weak jobs report. Broader markets, they were all down today with the Nasdaq leading the losses. Utilities, tech and communication services, they were the biggest drags on the S &P. S &P 500. Modest moves, but are markets properly pricing in risks to the economy at this point? Guy, you know, look, the market showed a little sensitivity to this, right? You got a little bit of a whoosh down after the numbers. Banks actually took it on the chin. Mostly came back, though. So how do you put it in context? The stagflation part, I think, is really important. I think it was about 13 or so months ago, maybe 14, almost to the day when Jerome Powell, when asked about stagflation, he said, trying to be clever, I see neither the stag nor the flation.

2:08And quite frankly, we have both now. And the final component to that is the jobs market, which we saw last week is starting to deteriorate. So that's sort of the that's the chemistry. That's the mix for stagflation. The problem with that is, in my opinion, there's no real easy answer to get out of that. And I think the bond market is trying to figure out what's more dire right now. Is it inflation, which is clearly still a problem, or is it the slowdown? Today, in terms of yields, it's picking the slowdown. But what I would submit, neither one, I don't think, are bullish for the market. So what do you make of the market's ability to shrug it off today, then?

2:43I mean, that's why there are four of us here, because I say something, then you look over I understand that. I'd rather interrogate your point. I do think that two out of three last trading days, we've had data that is very concerning. I think Monday's rebound was a combination of, you know, we kind of we a little bit of razzle dazzle over here. We forgot, oh, let's fire the BLS head. Let's do this. And we kind of forget that payroll number. Unless we think those numbers are outright fugazi, we still have a labor market that suddenly went from being OK to thirty five thousand on an annualized, excuse me, on an average three months.

3:16That, along with the services part of the of the story, we know what the U.S. economy is. It's a services economy. We printed sub 50 on or almost sub 50 on that non-manufacturing PMI. And as we said, there's a sticky, stubborn part of the inflation side of this. So I just think we're at a place through earnings season. We've had pretty much everyone you needed to hear from, with the exception of NVIDIA, who's a couple of weeks away. We've had a chance to be bottom up. Bottom up's been very good. And I don't know that top down is terrible, but it comes after what has just been a heroic move in the equity market.

3:48So today's move is nothing. A 1 % move in the semiconductors who have outperformed the S &P by 25 % since that April low. You know, as Dan says, how about it? One thing is, I'll say, it's kind of grinding a little bit over the last week or so, right? We had that new high. We had a lot of new highs over the last couple months. They seem kind of incremental, like just kind of moving. And then if you take stock of what happened in earnings season, I mean, I'm really hard-pressed to see more than like a dozen stocks in the S &P 100 that really outperformed meaningfully to the upside. I don't mean the beats and the raises, that sort of thing.

4:20at least the stock market reaction to those. And, you know, David Rosenberg, a guy just calls him what? Rosie. Rosie. He had a stat this morning, and I thought it was really interesting. Insiders at only 151 S &P 500 companies in July bought back their own stock, lowest level since 2018. 2018 was kind of a tough year. It was we started a trade war, at least the administration did, right? And we had growth scares. And when we had all that combined, then we had a 20 % sell-off in the stock market in Q4. And so when you think about what's going on right now, the markets, you just asked this, Michael, they're not really appreciating a whole heck of a lot.

4:54But Rosie also added the one caveat that retail bought the dip and retail continues to buy the dip and retail bought the dip back in April and they didn't sell. There's a lot of data that suggests that. So it seems to be a bit of a bifurcation, at least what insiders at S &P 500 companies are thinking about their own stocks. And this goes back to when did Jamie Dimon say this? A few quarters ago, he was asked about whether they're buying back their stock or not or something to that extent. He's like, I'm not. I think it's expensive. Well, the stock here is only that much more expensive six months on.

5:23Yeah, I mean, J.P. Morgan's at like 2.4 times book value, like more expensive than it's been forever. But maybe not every company feels exactly that way. You know, Karen, you could almost watch the market do the kind of trade-off over the course of the day, which is, yep, we do have a little more pronounced slowdown evidence here based on the jobs number and maybe ISM today, and then we're raising the odds of a September rate cut. And maybe that's going to be in time to cushion the blow or kind of carry us through this period. I think it's exactly right. Why this is a pretty muted response, ultimately, at the end of the day, to what could, you know, is sort of double-barreled, not terrible, but not great data.

5:57And so I think the Fed put is very much in play now. I think the odds have gone up, what, to, I don't know, 70 % or so of not just a, that would be a September, but also the odds going up of two other potential raises. So that's what the market sort of wants to hear. I think that will drive the next leg up. We're getting some more clarity on tariffs. Earnings season is sort of over, except for retail. I am interested in how retailers and consumer, how the consumer is holding up. But I think it's that Fed put there. You know, we had this conversation yesterday, Mike, and part of this was what's more detrimental to the equity market?

6:33Is it inflation or is it a growth scare? And I think in the big picture, I don't think I don't want to put words in your mouth because I think you were talking a little bit. You're more concerned about the inflation keeping the Fed back. And so the Fed dynamic that Fed put is pretty exciting for markets here. But equity markets overall are not priced for for any type of slow growth environment. Let's be clear. I mean, and certainly not recession. So if we continue to see a run of data points and and again, we've said the hard data has been fine. The surveys and the sentiment data, the soft data has been terrible.

7:03Look what the market's done. Hard data hasn't turned. Well, we've gotten some hard data. And so I just think that after the kind of move we've had here, while retail has been off sides, the institutional community is probably breathing a sigh of relief because I think there's a lot of folks that really aren't at their benchmarks at this point. Yeah, they maybe wanted to come in a little more and retail kind of stepped in front. Yeah, but, you know, it's interesting what you said, what we're priced for. You know, FactSet is out today saying that they're expecting 10 percent earnings growth year over year over the next few quarters or something like that.

7:31That's a big bump, right? Well, 10 percent this quarter. That's where we're going to land. That's right. Right. OK. And it came down. Expectations came down from 9.4 percent at the end of Q1 to about 4.5. And now they're back up at 10 percent. So they're actually pushing that along for the next few quarters. So if you think about where the S &P is priced at 22 times, that's above, I think, 20 times as the five year average. 18 and a half is the 10 year average. I mean, we're not priced for hard data consistently coming in like this. And I'll tell you, like if you go back a year ago and we know that, you know, they were worried, the Fed, that is, they were worried about the labor market, right?

8:04And we just had the SOM rule kicked off, right? Remember that thing? And then the SOM came out and said it's not a rule. It's nothing, you know. But think about we went from 3.5 % unemployment to 4.2 % or something like that. We've basically been at 4.1 % for the last few months or so. We're not seeing the unemployment rate tick up that meaningfully. I guess if you start to see that with data like we just had last Friday, then you start worrying about a stagflationary environment because the unemployment picture is the last thing. I mean, the tricky part in terms of figuring out what the market is priced for for the macro is like 60 percent of the equity market cap of the S &P is like, tell me what AI trends are.

8:40Yeah. Yeah. And so what does it matter? I think it does matter. I mean, it's an eight, nine, 10 stocks are probably now 45, 50 percent of the 10 stocks are 40 percent of the. Yeah. I mean, that's that is historic in terms of just the magnitude. I'll say this and you talk about it on the different shows you're on all the time. Some of the technical moves we saw last night, I think, last week were concerning. Obviously, yesterday sort of, I think, maybe covered over a little bit, but it didn't change what we saw last week. And again, there's zero valuation cushion in terms of the market right now.

9:15People have been rewarded on sell-offs, and this complacency has made itself into the market. But, you know, very quietly, the VIX is hanging around 18 again. And in my opinion, you know, you're setting up for another reacceleration to the upside in that. I hear it. I also kind of get the sense that almost everybody is at least telling themselves they're prepared for that. Right. They're telling themselves August and September are weak. You've got to expect us to come in. We went straight up from April to, you know, July 31st. And so I just wonder how that plays into it. Right. If everybody wants and expects the five percent, you get more, you don't get it.

9:49Go ahead. Well, I was going to say, I'm not going to trade around in front of that. I think, all right, I know historically bad month and next month as well. I'm not going to do that because it's so difficult to get back in. It's also really inefficient tax-wise. So, you know, when the VIX was down at 15, that seemed like a decent time to buy some protection. Here, it's sort of no man's land. We're talking about the market not as if it's a monolith. We know there's these few huge companies. That growth there was tremendous, well over the 10%, right? I mean, you look at Meta, revenue up 20. Palantir today, that was insane.

10:22But I think there's a whole bunch of stocks and probably all the IWM, not sure the IWM, that is actually reasonably priced. Yeah. Well, I'll just say that if it was all about AI and I agree with that. And if you want to see the market go higher, that's what you need. And I didn't hear anything during this earnings season that told me that those trends are not very much intact. And, you know, back to Palantir, we had this chat. I mean, sovereign AI is a big deal. There's infrastructure spent around the world and governments are much further behind the private sector. Why won't that continue to support some parts of that trade?

10:59And I'll just I mean, you can't tell me, banks, we just talked about JP Morgan's valuation. Banks have participated. Industrials have outperformed the S &P all year. So you can't tell me this has been five stocks. And we know there's a couple of members of the Mag 7 that aren't doing so well. But I think, yes, September and August could be weak. They're expected to be weak. That might even be that wall of worry. I just want to point out for Palantir, of course, stock up almost 8 % today. Over$22 billion worth of stock traded in Palantir today. Basically the same as NVIDIA. It's one-tenth the market cap.

11:32It's three times the dollar value. One-tenth the market cap at$400 billion is 100 times. No, I know I'm making a difference. It's 100 times sales. Of course. Think about that. Okay, so people are like eye-popping year-over-year growth. I mean, the company is clearly inflecting, but it's coming off a very low base. and all of that growth this year expected to be 52 % year-over-year revenue growth, it decelerates pretty meaningfully. And we're talking about a company that's supposed to go from$4 billion in revenue this year, they've just passed$1 billion for a quarter in sales for the first time ever, to$5 billion next year.

12:03Okay,$10 billion expected in sales. I want to go out three years or something like that. So for this stock to grow into that valuation, you take every sovereign on the planet, okay? And they're not like, you know what I mean? Like, that's my only point. This is like the youngest stock I've ever seen in the entire stock market. My point is more the look at the fever in terms of how active this stock is. It trades three times more dollar volume today than Microsoft, and Microsoft's ten times the market cap. That's my point. Well, it's right up there, though, with these cartoonish moves we've had in IPOs.

12:33And it speaks to the froth and the liquidity. And, by the way, Palantir, my guess is if you divided this along demographic lines or certainly along age lines, chronological lines, if you're 35 and under, you own the stock. If you're 35 and over, you might not. So I guess everyone on this desk is. It's owned by people who were told all along that crypto is worthless, and they are sitting there watching crypto get to trillions of dollars, in my view. Meanwhile, Bank of America CEO Brian Moynihan says he does not expect a recession, despite today's disappointing ISM data. Take a listen to what he said.

13:08Our economists believe there will be no recession. They believe the economy in the U.S. will go about 1, 1.5 percent this year. They believe that the Fed will not cut rates because inflation will take longer to get down. That the Fed will not cut rates? During 25. They'll cut them at 26. And they've been on that for a long time. And they believe that, and even when the tariffs came in, they said all that would cause less economic growth this year than the other would schedule, but still no recession. Our next guest disagrees, saying two rate cuts are still coming this year. Let's bring in one-point BFG Wealth Partners chief investment officer, Peter Bookfar.

13:40Peter, pick your spot in terms of where you would take issue with that view. It's interesting, both Bank of America and Morgan Stanley saying no cuts this year. And, you know, I guess because they figured growth is going to hang in there and the Fed's going to want to wait to see inflation come down. How do you see it? Well, I agree with Brian that economic growth this year is only going to be one, one and a half percent, if that. That's what we saw in the first half of 2025. The second half of the year, I think, is now in question. And if July's jobs data is any precursor to further weakening, then there's more risk to the downside to one to one and a half percent than upside.

14:16The Fed, to me, they are locked in for the cut in September after they saw the jobs report. And if they don't like looking at the BLS report anymore, all they have to do is look at the ADP report or the employment component to the ISM manufacturing and non-manufacturing reports. And they all still confirm each other. They have every reason, I believe, to cut. But I think what I want to emphasize, though, is a cut in September, maybe one in December. This is still more rate tweaking. The days of going back to zero are over. So yeah, maybe we'll get a few more cuts. But is that going to be the saving grace to an economy that's still dealing with other challenges like tariffs, for example, but maybe offset by some tax incentives on the capital spending side?

15:02But I think net-net, the Fed is locked in for cuts. It's only going to be a few. But we have to understand why they're doing it. They're doing it because there's been a deterioration in the labor market. And I think you hit it earlier, Mike, when you talked about the stock market sort of weighing the benefits to the markets with those cuts. But on the other hand, trying to figure out, OK, well, they're cutting for economic reasons. And what does that mean for corporate profits in the back half of the year? I wonder about the ISM services number today and also just the takeaway from it, because, you know, not to undermine its message, but we went through a couple of years when ISM manufacturing was telling you, based on historical patterns, we should be going into a recession.

15:45It didn't happen, even though the Fed was tightening. It didn't happen for whatever other reasons, whether it was pandemic stimulus still flowing through. So I'm wondering what your read through on the ISM services number was today. Obviously, a little pressure higher on prices and a little bit lower on new orders in employment. Well, the way that I break down the U.S. economy, because I think it's important to do so in order to understand the true drivers. I mean, AI spend and anything related to it is a major driver of economic growth. If you're not part of that ecosystem, you are seeing more challenging economic conditions.

16:19Government spending, a very powerful driver of growth. upper income spending is as well, particularly in travel and leisure. But manufacturing has been in a recession for more than two years now. The housing market's essentially in a recession. The lower to middle income consumer are basically in their own personal recessions. Global trade is rather muted. And capital spending, X that AI spend, has actually been flatlining. So it is a very mixed and uneven economy in this debate. Recession, no recession. Well, parts of the economy are in a recession. Parts of the economy are growing. And in the aggregate, we're basically seeing just one to one and a half percent type GDP growth, which back in the day was knocking on the door of a recession.

17:02One percent growth should not feel good. Maybe some want to call it resilient. Maybe some want to say, well, it's not a recession, but it's pretty punk growth in totality. Peter, services are basically the consumer. And, you know, Brian Moynihan and Jamie Dimon lists them in different planets because they have a much different view on where things are, maybe because of the way the banks are structured. But with that said, delinquency rates now, I think 90 days plus or 13 percent of all credit cards, which is the highest we've seen in the last 14 years. And there's a laundry list of delinquency rates that are going higher.

17:36That, to me, does not speak to a strong consumer. Thoughts on that? I agree. When I hear a company like Conagra, which full disclosure, we own not happily, but we do when they talk about their snacks business being hurt by consumers pulling back on discretionary spending where a two dollar, three dollar bag of pretzels is this is it considered a discretionary item or a Slim Jim that they sell to me? that tells me that there is a portion of the population that is very stretched. And I think it's being reflected in those delinquency numbers. Luckily, the economy has that upper income spender where the top 10 percent earners are spending half the money.

18:18But below that lens, we are much more challenged, which also ties in the stock market itself being as elevated as it is, is also helping that upper income spender. Peter, I appreciate you weighing in. And see how it goes from here. Karen, are you hearing that sort of a line from your companies in terms of real stress on the consumer? Or is there a way that we're kind of going to be able to muddle through? Depends on the ones like United Rentals. No. Yeah. But I'm interested. That's why the retailers we haven't heard from yet. We'll see how the Walmart consumer is doing. I kind of think, OK. Yeah.

18:54Because also we have that Walmart trade down effect from the wealthier consumer there. Yeah. Well, and Walmart trades like it. In other words, and we had this chat yesterday. I mean, it's back to it's back to near all time highs. And Walmart is as well prepared for this back to school to take market share to be essentially inflicting price upon everybody else. I just quickly also, you know, it's interesting. We had some trade data today, whether it's a small thing. It's certainly a headline maker. But the dollar is a very interesting, you know, call it an asset class at this point. It's certainly very important to how a number of other asset classes will trade.

19:25Dollar seems to be finding a little bit of support here. And I think it's also been a very crowded trade to be short the dollar. That may be something that's changing. Well, if I had a little bit of support, but then backed off on the jobs number. And, you know, it's hard to know. I mean, if it's if it's. But if the Fed is really now, you know, again, if the Fed's now going to cut three times this year and central bank differentials are going to favor very much the Fed being the weakest one in the room. Dollar will go lower. But I don't know if that's the case. Yeah. None of us does. at this point.

19:56All right. We have an earnings alert on AMD. Shares of the chipmaker dropping after hours. The company beating revenue estimates, but falling just short on EPS. Our Christina Parts Nevelis joins us here now with more on the quarter. Christina. So you saw that share price actually climbed a little bit higher just when the earnings came out. And that's because their guidance hit$8.7 billion, higher than the Whisper. Gross margins were relatively in line at 54 percent for Q3. But what's standing out on the earnings call is really Lisa Su, the CEO, trying to position the company as a transformation towards an AI infrastructure firm.

20:27And I say that because there's three main quotes right now that just stood out to me. And she's only been speaking for the past 20 minutes. The first one is she calls out NVIDIA point blank, saying the MI355 matches or exceeds Blackwell, so the B200 chip. So these are just AI GPUs in critical training and inference workloads and delivers comparable performance at a significantly lower cost. So she's calling out NVIDIA specifically. She's also speaking to the MI400 series, which is the next generation, saying that it is launching in 2026 and there's significant interest from larger multiple profile customers.

21:04And then lastly, on China, she did say that she believes the chips for China should resume, and this we know, as long as these licenses are granted. So it's a wait and see kind of approach for NVIDIA as well as AMD. The problem is the stock is, I guess the expectations were very high going into the print, stock up 45 % year to date, outperforming all of the chip sector as a whole. So that could be, you know, just not enough for a lot of these investors. It has had an amazing run, but it is interesting that, you know, the reason to believe, I think, from people who, you know, have been owning AMD is if it just, if the dial just turns a little bit, A little bit of the revenue that's basically been earmarked for NVIDIA next year, you know, spills toward AMD.

21:47The size differentials mean that it's a great win for AMD, right? It's like one-seventh the revenue, AMD next year versus NVIDIA. So the idea is the pie is that big, they only need a little taste. Right. So it's great for them. And yet, why is that reaction happening in the markets right now, especially if the CEO is speaking to the progress made with their next generation core GPUs, I should say. And their CPU is doing quite well as well. I guess I feel like this was a fantastic response for a stock that's up 110 percent off the April low. So as you point or whatever it is year to date, 45 percent.

22:18And I think that guide was fantastic. And I am excited by MI355 and 400 and the ability to take just a little bit of market share. I thought the market is responding to the uncertainty around China. I mean, that to me weighed through all of the comments. Didn't we know that already? We did. But in the last month, we've had a rally back on the sense that China was back open for business. I mean, the White House and the opening up and we, you know, NVIDIA claws back the six and a half billion dollar write down because suddenly, you know, the chips in China are at least in a place where we feel we understand the strategic dynamics of what's going to be allowed and not allowed.

22:52I just feel like AMD had a big rally on that alone. NVIDIA certainly did. So in terms of the comments after market, yeah, I agree. I mean, China's who knows. But that's not a reason to be selling the stock. And after the move, as someone that's along the stock, maybe that's what it sounds like. I thought it was a great outcome today. Yes. I was just looking. I mean, the 800 million dollar charge. So basically in inventory charge. So if you back that back in, that's how you get to the 54 percent gross margins, because on the surface, it looked like a huge miss. Operating margins weren't great, but the data center was good.