Nike Reports Results… And Commerce Chief Charges Tesla Up 3/20/25

0:00Live from the Nasdaq markets, I've been the heart of New York City's Times Square. This is Fast Money. Here's what's on tap tonight. An earnings bonanza today. Nike swooshing higher, but FedEx doesn't deliver the numbers and trades behind those stock moves and more. Plus, Tesla fallout from protests and vandalism at the showrooms to a big endorsement from the sitting commerce secretary, the EV maker front and center for the Trump administration. Will the stock continue to suffer with Elon not holding the wheel? and a Celtic slam dunk. Boston's basketball team making a deal for what would be a record valuation.

0:31The number, the buyer, and what it could mean for the storied franchise. I'm Melissa Lee. Coming to you live from Studio B at the NASDAQ on the desk tonight, Tim Seymour, Karen Feynman, Steve Grasso, and Guy Adami. And we start off with a big night, very big night of earnings. Nike, FedEx, Lenar, Micron all out with their latest numbers in the past hour. We've got full team coverage on those numbers. Frank Holland standing by on FedEx. Diana Olick is all over the home builder. Christina Parts Neville is watching the chip space. We start off with Sarah Eisen on Nike. Those shares are higher. The conference call kicking off moments ago.

1:02Sarah, what's the latest? Well, the important thing here to remember, Melissa, is that we are in the very early stages of Elliott Hill's new CEO tenure. This is his first full quarter, and Nike has a big turnaround job to do ahead. But what we learned today is that there are some early signs of progress, and these numbers were actually better than expected, what Hill is calling his win-now strategy. So here are the highlights. Revenue beat. North America looked better, only down 4 % on sales. But we're still looking at overall revenue declines of about 9%, 17 % in China, 15 % in digital. The earnings beat, it was a big EPS beat that was driven by cost because margins came in a little bit light.

1:40I did speak with Matt Friend, the CFO of Nike, and he pointed to a number of things when it comes to the progress. The Peg Premium, which is a new running shoe, the launch there was strong. He also pointed to some signs of cultural relevance in sports. For instance, the first Super Bowl ad that Nike did in decades catering to the women's market. They showed up big at the NBA All-Star Game. So they feel good about that. On China, which is a disappointment, down 17 percent, I am told that it's still a bullish story, but that the market needs a reset, cleaning up inventory, focusing on the stores and getting the right product into them.

2:14On tariffs, I do expect that you will hear them embedded in the Q4 guidance, which will come in the call this hour. But don't expect a full year outlook. Why? Because there's still a lot of work to do here and there's still hard to get some visibility into when we'll get a turnaround into margins and on sales. Look, Hill has to boost the culture. He has to accelerate and innovate new products. He has to rebuild the sales team. He has to work and improve the partner relationships with key stores. is get them excited about product again. Investors and analysts say that these problems have been diagnosed.

2:49He's done a number of meetings this past quarter with the analysts. But now it's a show me story. And investors are eager to hear just these little anecdotes about what's working on the product launches and on building Nike brand heat, which is very much lost because, Melissa, this is still a stock that's 30 percent off the highs and has basically been cut in half since the 2021 post-COVID highs. What are they seeing in China, Sarah, that makes them say it's a bullish story still? Well, in China, they see obviously tons of opportunity, but there was clearly a mismatch in terms of product that was resonating in the stores, which is much like we've seen with some of the Nike products around the world lately.

3:27They are still optimistic. They've been in the market for a really long time. Hill has traveled to China since he's been CEO, And he's been part of a Nike turnaround in China before in 2015 and 2016, where they basically just had to reset. They had to clear the inventory, focus on the stores. It's kind of a mono brand kind of market in China where there's a lot of focus on the Nike stores in particular and just get the right product for what consumers want. But they're optimistic about the demographics, about the brand perception, about what's happening with sport in the country. So I do expect to hear some of the bullish commentary on the call around that market in particular, which will come as a surprise, a negative surprise on the numbers.

4:08Yeah. Karen and I were discussing the quarter before we came to you. Karen, you had the question about China specifically. Yeah. And I was just wondering, sir, did they absolutely just blow out of the inventory sort of at any price? Because you had revenue that was OK and then you had obviously a margin hit overall. North America was great. So is that what it was? I think that's what it was, right? Promotions. That's how you clear things out in retail. And you just clear the shelves, you discount, you offer returns to some of the partners and promotions and clear the shelves for new and hopefully improved product is what they're thinking.

4:41And they need to do that overall globally. But clearly China is a bigger problem as well. I talked to a friend about this. I didn't hear anything specific to worry about in China, Karen. Like, for instance, we've seen in the past boycotts of American brand, that sort of thing. He didn't get into those those issues. And I and I do expect him to talk it up. and knowing what they have to do and getting it done on the call. All right, Sarah, keep us posted. Thank you. Thanks. Sarah Eisen on Nike. Tim, what do you make of the quarter? I like the quarter, but no one was looking at the quarter. No one was looking at the next quarter.

5:13We're probably looking at the second half of 26, and maybe this gets pushed out to 27. So what I like is what the ladies are talking about on inventory. Essentially, you've cleared out inventory, and I think inventories were down somewhere going into this number around 11%. They're probably going to show down even more so. So finished with seven and a half billion. Also, some some sense that the previous management team was was really giving ground on wholesale. And that, in fact, you'd seen full price selling something that was a problem and that this is really where the company is going back.

5:44This is where I think the market, the investor community is gets more excited about it. In terms of product and innovation and the things that I, you know, I don't really have a great call on this. I do think you have a case here where the stock as an investment is something that you can own now. I think you've de-risked it. I think you've taken a lot out. And you haven't necessarily bought into Elliott Hill as a white knight, much in the way some other companies that have changed CEOs. He had that first reaction. At 27, you could see an EPS inflection of this company north of 40 percent. I think you can own it here.

6:12Is the 800-pound gorilla in the room that Elliott Hill has been there for 40 years and he's the turnaround story? Where's the innovation going to come from? And I'm not being really aggressive towards him, or maybe I am, but where is that innovation going to come from if he's been there for 40 years? Did he have it already? So for you, it's really a wait, wait, wait and see. Well, they were very innovative for 36 of them. Right, exactly. It's only recent. Fair point. And he's not the only guy tasked with innovation. I mean, you know, he's the CEO, but he's not necessarily the guy that's probably on the front line of product innovation, if I had to guess at this point.

6:46I would say that when you look at a CEO, it's the guy that you're playing around a golf with. Right. That gives the 50 ,000 foot up story. This stock has been in a declining trend line since November of 2021. There's there's more than the problem is it's the private companies that are taking away from share. So what exactly are they focused on? Shoes, apparel, digital. If they're if they're trying to get away from Air Force One or Jordans, Jordans are 15 percent of revenue. Air Force One is 1 % of revenue. They're trying to build up women's apparel. So if women's apparel is 3 % of overall revenue, are you going to go and buy at Nike now?

7:30I always did. Would you increase? I mean, if they had the right product lineup. I don't think share is just taken away. I mean, I can't believe you said that yourself. That's a good share. It was a setup for a guy to say that Tim would buy women's apparel, but for you to say that you would. Eh, whatever. Oh, Tim, I don't know. Wrong person, wrong time. They need a new blood, and I agree with Tim. He's not the only one tasked with it. So no matter what, you're not buying it to Elliott Hill. No, I think you're going to get a pop, but I think tomorrow the stock is going to be down roughly 3 % to 5%.

8:00This is not even a dead cat bounce. Guy could talk about the technicals on it. It's below all its moving averages. This is a lackluster bounce of 2 % where you should have had a rebound. Yeah, I mean, Steve points out the level. Sarah said 50 percent. It's probably more like 65 percent from the all time high a few years ago. Obviously not good. And as much as people want to say, you know, it's a China story. China's the third region right now behind, obviously, North America and Europe and the Middle East. The problem is the deterioration in China is not turning around anytime soon. I think on the ground there, there's probably a big push to get away from Nike.

8:35So you got to feel that that's going to continue to deteriorate. The question is, can North America pick up the slack? Valuation has always been reasonable the last couple of years, but I don't know if it's about that right now. I think Steve is probably right in terms of innovation. Competition is there, and you have a series of lower lows and lower highs for a while. And I think this bounce is basically what we gave up during the day. I think it's short-lived. It's not cheap either. It's not cheap at all. It's expensive. Right. But as you and I were talking a little bit before the show, I always say, you know, when you're a new CEO, you kitchen sink the quarter.

9:07And this quarter actually really wasn't bad, particularly North America. But what if this is the kitchen sink, right? What if this was a very conservative quarter where they could have done a lot more with the quarter? And so I don't know. I'm long, but that's not been the right place to be. But I'm staying long. Yeah, we'll keep you posted on everything that comes out of that conference call, which is ongoing right now. Let's get to Lenar just reporting at the top of the hour as well. Shares of the home builder popping on a Q1 beat. CNBC's Diana Oleg joins us now with the details from that quarter.

9:34Diana. Well, that's right, Melissa. Lennar's Q1 beat on the top and bottom lines. EPS came in at$1.96 a share versus estimates of$1.73. Revenue of$7.63 billion versus estimates of$7.43 billion. New orders increased 1 % to$8 ,355, also above estimates. Deliveries up 6%, right around expectations. Gross margins of 18.7 % was just shy of guidance. Now, Linares executive chairman Stuart Miller noted in the release that the average sale price was down 1 % net incentives. He added, our first quarter was marked by a challenging macroeconomic environment for home building. While demand remains strong, persistently higher interest rates and inflation, combined with a downturn in consumer confidence and a limited supply of affordable homes, made it increasingly difficult for consumers to access home ownership.

10:24He added that they continue to use incentives, including interest rate buy downs, to help with affordability. And guidance, though, was right along a little shy of estimates on new deliveries coming in. But again, I spoke with Stuart Miller last week, Melissa, about tariffs specifically, and he said that was just going to hit affordability even harder. He said it's just hard to get those new buyers in the door, especially those first-time buyers. The stock just basically took a hit, Diana, just as you were coming to air. So obviously, you know, whatever happened on the conference call, we don't know about that yet.

10:56But it is down by three and a quarter percent right now. OK, conference calls in the morning, I believe. Tomorrow. OK, that's right. All right. So we'll try and look into this. It's the three percent decline here, Diana. Thank you. Diana Olick. Average closing prices continue to deteriorate, came in about 408 ,000. She was looking for 413 ish, and that continues to decline. Average price for the new order is lower than expected. The backlog is lower than expected. And margins are lower than expected. And that's with rates being favorable over the last couple weeks. I think it speaks to, in my opinion, an economy that's slowing down.

11:34And regardless of where rates go at this point, I don't think you want to be in the homebuilders. We've been saying that for a while. Yeah, I agree. And the valuations are not the problem. The problem is I think you have to look at the story a little bit differently, both because I think the margins this guy talked about are starting to break down. We know what they've been doing in terms of underwriting some of the mortgage costs. I do think that the consumer is weaker. I think the housing sector was also, if you're an investor, was getting, every time you got some relief on rates, especially back into the fall, it was pushing this up to all-time highs when I thought that that story was really something that should have been priced in the first time the Fed started cutting.

12:08Even though that was the first time they started cutting, we knew the Fed was going to cut. Markets anticipate that. So you don't need to run into this sector. I actually think home builders are going to be under some water for a couple of years at this point based upon where we see demand. I mean, if the sentiment number that we got last week from you, Mish, is not, in fact, an outlier and persists for a couple of months going forward. I mean, that is the pulse of the consumer. Are you going to buy one of the biggest purchases of your life when you are not feeling good? No. I mean, if you have to.

12:36But that doesn't change the market, that buyer who absolutely has to, no matter what. But we keep waiting for all that sort of tied-up inventory to come to market when rates are lower. But they're far away from that inventory coming on. Yeah, the whole complex, even Home Depot and Lowe's, all the charts look pretty similar. And they're all not buyable charts right now. When you have, what's the number, 70 % of people have a mortgage rate under 6 % or some silly number like that. So to Karen's point, you don't have to buy anything. You live in that mortgage. You can't even get out of it. So I would stay away until you see mortgage rates drop precipitously, probably below six.

13:13You probably get people starting to make a move. All right. Meantime, markets failing to hold on to yesterday's post-Fed momentum with major indices all closing just in the red. The central bank kept rates steady and forecast two rate cuts this year, even as inflation expectations rose. President Trump voiced his disapproval of the move on Truth Social, saying the Fed would be much better off cutting rates as tariffs transition into the economy. He also called April 2nd when the next round go into effect, quote, Liberation Day in America. But Double Line Capital CEO Jeffrey Gunlock expressing a little bit more doubt about the economic outlook.

13:50I do think the chance of recession is higher than most people believe. I actually think it's higher than 50 percent coming in the next few quarters. I think 50 to 60 is where I am. For more, Damp Spring Advisor CEO Andy Constant joins us now. Andy, great to have you with us. The last time you were on, you made a fantastic call. I mean, you called for the slowdown. And I guess, you know, our question now after you make such a great call is what is your next call? Because it sounds like, you know, you called for the scare and now you think the scare is going to become a reality. Right. And I think that's right.

14:29Last time it was about the Fed on pause. They're still on pause. Financial conditions tightening. They've eased a little bit, but they're much tighter than they were last fall. And then it's all about the Trump agenda. And the Trump agenda is, except for deregulation, is anti-growth. And so that hasn't actually started hitting the economy yet. So we definitely had a growth scare. Bonds rallied a lot. Stocks fell. And that's probably over. And what's going to happen and what I think will drive a second leg down is the growth is actual growth will slow more than expected. Hey, Andy, it's Karen. First of all, excellent call.

15:15So what do you think? I know you said some of the policies are inflationary. So are we looking at a stagflation? I know Trump trying to talk interest rates down, but that's not going to really affect the 10-year. Only the front of the curve. Right. I think what is true is that the policies are anti-growth. In terms of inflation, tariffs are, as I think now the Fed is telling us, at a primary level, looking through the initial price change, level change, and not assuming that it's going to be inflationary. but you will have a short-term inflation rise that they're going to look through. Immigration is inflationary because you reduce the labor supply.

16:05The budget cuts, the expenditure cuts, are anti-growth but also disinflationary. So I think inflation is less a big deal right now. Of course, if the tariffs do have secondary impact and start causing a more persistent inflation, then the Fed's going to not be able to cut as promised. But for now, I think it's all about growth and the anti-growth policies. Andy, Tim, how about credit? Because there have been times, at least for the last month and a half, when equities have been extremely volatile. People have said, look at credit markets. They haven't budged. If you look at the high yield option adjusted spread, I mean, it's actually moved 35 basis points in the last month.

16:45And so I'm just curious your take on this, because typically we are always following our clues on the equity market if we're smart by following what credit's doing. Right. Sure. So credit is generally moves less than equities until it moves quite a bit more. And I think we're in that phase of it moving less than equities, outperforming equities, but starting to get the sense that there's this sort of convex move wider in credit spreads. But I think that's going to take another leg down and actual weakness in the economy to happen. And as it relates to Treasury bonds, the Fed's on pause. So the front end of the yield curve is not likely to change rally much.

17:32But if we continue to start seeing more slowdown, you might see a flattening where the long end continues to rally a bit. So, Andy, how are you positioned for this anticipated second leg lower? Right. So I think bond markets are very boring right now because of what I just said. They're very fully priced for a slowdown. Credit, as you said, could, as we were talking about, could be an interesting place to be long protection. But I don't have much exposure at all in fixed income. I am short equities and planning on, for now, because this second leg may take through, say, for instance, the earnings season upcoming, to become an actual slowdown.

18:19I am beginning to short equities again. I'm short them, and I'm going to add shorts on any rally. All right. Andy, great to speak with you. Thanks so much. Annie Constant of Damped Spring. Guy, what do you think? Second leg lower on equities? Makes sense. We'll talk about FedEx in a minute, which will, I think, sort of galvanize my thoughts. But, yeah, I do think so. We just traded up basically back up to the 200-day moving average. The S &P, we failed. I mean, we've seen it before what happened yesterday. You have a rally on the back of the Fed. It's typically the next day it reverses. That happened again today.

18:51So the level we traded up to makes sense. I'm with Annie on this one. Next leg lower. I think you really have to look at the 200-day moving average. And I think the balance could last a little bit longer. So if you look at the 200-day moving average, it's somewhere around 57.45 or so. We've already spent a week below that or nine days. I think we rally a little bit further. All right. Coming up, more earnings action shares of FedEx and Micron on the move after reporting. The details from the quarter's next and a controversial stock pick out of D.C. Why the Commerce Secretary is endorsing Tesla and the impact politics are having on the EV maker's business.

19:23Don't go anywhere. Fast Money's back in two. Welcome back to Fast Money Earnings Alert on FedEx. Shares are lower if the delivery giant fell short of expectations on the quarter. The analysts call just minutes away. Let's bring in Frank Holland for all the details. Hey, Frank. Hey there, Melissa. FedEx shares are pretty moving lower, not only on that EPS miss, but also just broader concerns of the impact of tariffs and economic uncertainty on the business. So FedEx seemingly trying to get ahead of that, saying the release about the cut to its revenue and EPS guidance, saying that that forecast assumes, and this is a quote, no additional adverse economic, geopolitical, or international trade-related developments.

19:59But of course, we have the April 2nd tariffs. Those are coming up where the Treasury Secretary has said the numbers are basically still being calculated based on what the administration feels the real tariffs are based on duties and other measures that other countries have in place. So I just spoke to FedEx. They clarified. They said the forecast only includes currently implemented tariffs, not the April 2nd tariffs that are coming up. CO Ross Rumanian referred to a challenging operating environment. However, the CFO gave a lot more specific color, appearing to speak to the impact that tariffs and trade negotiations are having on U.S.

20:30businesses, saying in part, our revised earnings outlook reflects continued weakness and uncertainty in the U.S. industrial economy, which is constraining demand for our business-to-business services. And you really saw the impact of that in the freight segment. Take a look at this. Over the quarter, and remember, this included the holiday quarter, the average pounds per day that FedEx freight was moving here in the U.S., it fell by more than 60 percent year over year. However, the holiday peak e-commerce business did post strong results in U.S. package volume. That increased 5 percent year over year.

20:59FedEx shares lower. UUPS also trading a bit lower in sympathy. Melissa, back over to you. Frank, thank you. Frank Holland. So it sounds like based on the forecast, based on the April 2nd tariffs not being incorporated into guidance, that there is downside risk to the guidance they have issued, which is lower. I think so. And again, citing the outlook for the U.S. industrial economy is very unclear and uncertain. and what we're hearing from CEOs, and they're seeing it. This was a story that I think coming into these numbers, we were starting to see, I think, at least the guide that was getting better.

21:32You're going to start to see sequential growth. I think this is pushed out. It's rare that this company is expensive even to itself. It's not expensive. But what you do see with FedEx is I think it can overshoot to the downside. I mean, this stock can get cheap. And if I wanted to own one of the two, it's not a would-of-you-rather. It's just pointing out that UPS has really underperformed FedEx substantially. And therefore, I think being cheap isn't good enough right now for FedEx. All right. If that's not a would you rather. I mean, anyway, that's a side point. A would you rather not called a would you rather is not a would you rather.

22:06I mean, it's OK. It walks like a duck. Anyway, Karen, your thoughts on FedEx. I agree with everything Tim said, even though. Yeah. And if I didn't would you rather, I own neither. I own neither right now. It's not surprising that the guidance was low. However, the bar was low. The expectations were low and the P multiples low. DHL is actually that would you rather? Well, she did. Would you rather? Join in. Everybody in. Look at all of these. If you look at all of these and compare them all, DHL is actually the only one who's come up with a digital strategy. The chart looks great. It looks great.

22:41If you look at their performance, it's all about the market share for international. They beat UPS. They beat FedEx. They own more market share on that side. They've figured it out. But I would have thought that you would see the pull forward for FedEx and UPS be a little a little bit bigger, more obvious with tariffs coming down the pike. We didn't see that. So Guy had touched on a little bit earlier. This could be a sign a canary in the coal mine or a further sign that the consumer is weak. It's probably probably that's the way it lines up. But if you had to DHL is where you want to be here.

23:13You know, Gilead looks really interesting here.