Rate Peak or Pause?... Nike Reports Results 10/1/26

22:06There is a school of thought. It's not consensus that post-election things could actually escalate, not de-escalate, which I don't think is priced into where we are right now. But with all that said, these energy stocks are still in play, in my opinion. I don't think you run too far. Yeah, I agree on the energy stocks. And I don't know. That statement is sort of hard to really square that statement. If it is solved, then, you know, why do we need to do this? But I still want to stay long energy as well, for sure. One thing Eamon said that I think is important is, is this relieving other carriers?

22:42Is this not an escalation? This is just swapping out the team. Coming up, Muse inspiring some bullish calls on Wall Street, why analysts think there could be even more gains ahead, and how our traders are playing the name. Plus, it was not a September to remember for Airbnb shares dropping double digits what the CEO had to say about its role, or AI's role, I should say, in the industry and whether the stock can rebound from here. Don't go anywhere. Fast Money is back in two.

23:10Never bet against American grit or American energy. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States. but delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.

23:39When did work become so much work? The meeting about the meeting. The hundreds of files to find one insight. Setting aside the things you want to do for the things that pop up. Your workday's gone. But what if the insight surfaced itself? Or you could ship the deck without the distractions. Gemini Enterprise helps you get that done. It's AI that knows your business with agents that take stuff off your plate. Make work less work with Gemini Enterprise from Google Cloud. To realize the future America needs, we understand what's needed from us. To face each threat head on. We've earned our place in the fight for our nation's future.

24:21We are Marines. We were made for this.

24:30Welcome back to Fast Money. OnSemi and Synaptics, both rising after hours, the company revising their merger agreement first announced in June. OnSemi will pay$123 a share for a total value of$5.7 billion. That is down from$7 billion. Synaptics says its board still unanimously voted in support of this deal. Meanwhile, call of the day on Meta. Deutsche Bank adding the stock to its fresh money list, saying Muse launch represents the beginning of a rich product cycle and an attractive opportunity for long-term investors. They go on to say AI extends the durability of advertising growth. Shares of Meta up 30 % in just the last two months, so up 30%.

25:08You add more here. Is it fresh money to you? I think it's safer money. And I think we've seen also just cycles with the stock. I mean, I have to say it's it's some of it's just about stock market. Some of it's about the company. I mean, the fundamentals changed in what we talk about all the time for them. And there are some of their peers, but definitely for Meta, which is that the free cash flow story is not what it was. The valuation story is probably better, but it does it deserve a slightly lower multiple. I'm not sure. I do love the fact that Muse sets at least the ball moving forward towards monetization in real ways.

25:43I mean, you start lining up partners like Walmart to have your agents go out and cut. I mean, you know, it's real. And so I think what we've said about legacy players and whether it's Microsoft or Google or Apple, we're having this conversation over and over again that their core business might be only enhanced. Whether there's a bigger pie going forward is the big, I think, debate about AI, period. Yeah, I agree with that. The core business might be better. Maybe this is all great. This is a lot priced in, though. I mean, the move in the last six weeks is just extraordinary. So this piece is talking about getting a 25 multiple for next year, you know, so taking it into the 800s plus.

26:21Fresh money, I don't know. I think we're going to see some more agents out there that are going to be impressive in, I think, the near term. And so I would wait. I'm long, though. Stock was unchanged on the back of this, which I don't think is a great sign. It's come off, what, 8 percent-ish from the prior high. we just made, traded right up to the prior all-time high. As Karen just said, it's had a huge move. It has not been a straight line up or down in Facebook now for quite some time, so it's not going to be. I think you're going to get a better entry point, and I'll give you a number. I think 665, 670 is a 50 % retracement of this recent low and this high we saw a couple weeks ago.

26:58Courtney, you get in or you wait? We own it. I think you want to continue to own it. I'm not adding fresh money here. I agree with you. I think there's been so much positivity that's been priced in. And this agentic AI, it is going to be the next phase of artificial intelligence. I'm still questioning, are they actually the winner, right? They're getting the first mover advantage right now, but there's so many competitors who are coming out there. And they may be the winner of it, but I do think it's too early to claim victory. So I think for that reason, I'd own it. I'm not adding new money there.

27:23Coming up, checking in to Airbnb. The launch of news rattling the stock in September, what CEO Brian Chesky had to say, new AI features, about new AI features and how they could revive shares. Plus, we're keeping an eye on Nike shares with a top retail analyst sees in store for the beaten down sneaker giant. You're watching Fast Money live from the NASDAQ MarketSite in Times Square. Back right after this.

27:53Who says Americans don't build big things anymore? Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.

28:21When did work become so much work? The meeting about the meeting, the hundreds of files to find one insight, setting aside the things you want to do for the things that pop up. Your workday's gone. But what if the insight surfaced itself? Or you could ship the deck without the distractions. Gemini Enterprise helps you get that done. It's AI that knows your business with agents that take stuff off your plate. Make work less work with Gemini Enterprise from Google Cloud. The wrongs we must right. The fights we must win. The future we must secure together for our nation. This is what's in front of us.

29:09This determines what's next for all of us. We are Marines. We were made for this.

29:24Welcome back to Fast Money. And the Airbnb CEO Brian Chesky joined Squawk Box this morning to talk about new features on the company's platform. A couple times a year, we try to make some big updates. Today, we're announcing a few, starting with really AI search. So we now have AI natural language search. You can type in complete sentences, and then those sentences can turn into filtered searches where it preloads all your different filters for Airbnb. We have an AI comparison feature. You can, you know, we have a number of other really cool features. We have social connections. So now you can connect with your friends.

30:01Fighting fire with fire. Shares have been hit over the last month on fears that AI agents like Muse could replace travel sites like Airbnb. Wasn't Airbnb in one of your... Many years ago. I forget. It was in your clam? No, it was not in my clam, Tim. It was in something. I don't remember. So Karen brought this up because I do remember things still. you would think that in some ways AI would be actually a benefit for a company like Airbnb. And I think that's sort of the point that he's making. And I don't think it has a AI problem. I think it has a valuation problem. And I think that's one of the reasons you're seeing this pretty significant sell off.

30:36But there's going to be a level where I think Airbnb gets interesting. I just don't think it's at$160. Yeah. Courtney, what do you think? Yeah, I have trouble with the argument that AI is just going to cannibalize all these industries. I think, like, ultimately they have the relationships with the homeowners, right, That even if your muse, your agentic AI agents are utilizing them, it's still that platform who has to actually be booking them. So I think ultimately it's going to be a good thing in the long run. I agree with this more of a valuation standpoint. But if that's the argument, that's not why you're selling this.

31:03I think long term, it's a good thing. Yeah, I don't think the social features of, hey, guy, I'm staying over at this cool pad down the road. Don't talk. I don't speak like that, Tim. Okay, well, maybe I do. He was doing it. I'm definitely not going to reach out to you now on my new social features. I don't think that's the reason for it. And there's been multiple analysts on the street that have done a nice job saying and outlining the fact that those same AI agents are going to go through the same, essentially, portals in the same vehicles, and they're going to go through Airbnb. So I think it's an opportunity.

31:34I'm not sure it has to be right now because I worry about the macro around travel and leisure, period. And I think that has something to do with the stocks move. Brian Chesky, the last quarter, they talked about how helpful it was for their business. And so I think we're going to see more of that to come. So I and I agree with you. That relationship is hard to replicate. Coming up, retail analyst Dana Telsey. Yeah, dig into Nike's numbers, what she expects from the stock in the broader retail sector with the holiday shopping season just around the corner. Fast Money's back in two. Missed a moment of fast?

32:09Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this.

32:20Welcome back to Fast Money Stocks. We're racing early losses to start October in the green. The S &P up 2.10%, snapping a three-day losing streak. The Dow and Nasdaq both with small gains. Shares of Micron climbing out of the red to end the day 3 % higher. The memory chipmaker beating earnings estimates last night and issuing strong guidance as data center revenue jumps. Meantime, consulting giant Accenture surging nearly 16 % for its best day ever after the company topped earnings and revenue estimates. It also posted record big-ticket client bookings and increased its quarterly dividend. GM climbing 3 percent, even as new vehicle sales fell 5.5 percent in the third quarter as sales of EVs slowed down.

32:58And a couple new additions to the S &P 500. Cloud company Twilio will replace Warner Brothers on Tuesday, while biotech company Vylor was added today after being spun off from Corteva. Let's get another quick check on shares of Nike. Nike, that stock, tumbled about 6 % and is basically back down there after reporting weakness in China. Overall sales, excuse me, that missed estimates. Retail analyst Dana Telsey, who runs Telsey Advisory Group, joins us here for more. Dana, great to have you with us. Thank you for having me. There are a lot of puts and takes here. North America was better. China was worse.

33:28The guidance was sort of not good, considering a five-cent beat. What's your overall take on this and where Nike's turnaround is? A couple things. You have a new CFO, his first call, first time they ever said annual guidance. So he put a bar, could a kitchen sink it? Who knows? North America is still positive. But you have a brand that is continuing its reset. We know that the category has been weak. We know that there's been a shift to whether it's fashion or any type of occasion where that's there. There's nothing to expect right now from Nike. I think the thing is, while the guidance was worse, the whisper numbers that were out there, it wasn't that much worse than the whisper numbers.

34:04The gross margin was better and North America was better. There's not much to expect. My conference is next Thursday. Nike is going to be there. The fact that they're even showing up, I take as a good sign, because they want to unpack the pieces. And there's a lot of pieces. They have an investor day coming up in November. Why are they doing all these things if they want to show that there can be improvement? We're not there yet. Turnarounds take a lot of time. I have this theme of legacy modernizing. This needs to be a brand that modernizes. Fair enough. I mean, maybe their inventory is not a problem now, although still somewhat problematic.

34:38I'll ask you this. Is this a name,$50 billion market cap? Some activist says, you know what? Nike's out there. This could be an interesting thing to sort of insert ourselves in. I mean, that's not out of the realm of possibility. Not out of the realm of possibility. It's obviously a huge name. We've seen activists and other retail names. A lot of times it doesn't work out for them. So we think of this as a storied brand. but the competition now is very different than it has ever been. So the idea of getting back to ever those storied valuations seems not likely. Right. And you look at the market share.

35:13They've lost market share. The newer names like the Ons, the Hokas of the world, they've taken a lot of market share. At the same time, when you're looking at lifestyle versus performance, there's a real difference. Can you ever get back to that valuation? You have to set off where you are now. You can't go to the past. And you need to see accelerating growth rates. Accelerating growth rates will give you the multiple. You don't have that now. And you can't expect that to come in the near term. Daniel, let's kick off the holiday season. Guy loves it. I mean, tell Guy it's Christmas right now and he'll have a big smile on his face.

35:44But obviously. What song are you going to sing? Walmart versus Target versus Amazon. I mean, pick your horse here and drop it into the context of where we've been and on valuation because they're obviously clear winners and losers just for investors in terms of where you're getting into this trade. I think overall, when I think about the holiday season, look what we've heard over the past couple of weeks. C-levels were talking at all the conferences. And I went through every single commentary that they talked about. The word A, the letter A, acceleration. They talked about it. It was interesting.

36:14Acceleration, whether it's Victoria's Secret in sales, whether it's customer traffic gains in Five Below, whether it's new store openings in like a reformation, you name it, There's been improvement. So it feels like even though the headwinds of whether it's interest rates, inflation, gasoline prices, they are all out there. But what you talk about with Walmart and Target, there's newness at Target. Walmart has the benefit of value offering. And let's not forget the off-pricers. You've got to love the double-digit comps at Ross stores that they've been delivering. They've never delivered double-digit comps, and you've got them now.

36:48Why? A reset, legacy modernizing. Who would have seen the advertising that you're having now at Ross? And they're going to be opening a store in Manhattan. That's going to be interesting. Now, when you look at the consumer, I mean, the sentiment levels have been horrible, even though you're seeing the spending levels are not really indicative of that. But it's still getting out on spending. But there has been this bifurcation of the consumer, right? You're seeing the higher income consumer is actually holding up better. And then there's the lower income consumer. And when it comes to retail, people are questioning, should you be looking at your discount retailers or your luxury retailers?

37:16And I'm just questioning how you see that as we look into the end of the year here. Well, look at what we've seen from some of the European luxury retailers. is they haven't performed well. LVMH is down over 20 % year to date. In two weeks, we're going to get their sales results for the September quarter. What we hear about China, not so exciting. It's about North America's where there is the strength, while the European consumer is still slow. So when I think about overall, the upcoming holiday season, it's a discerning holiday season, but discerning if you've got newness. That's what's going to win.

37:46Wherever there's newness, that's where it's going to be the most interest. And that lower income consumer, frankly, is so surprising people with the spend that they have on goods. It just is surprising. And there's more flooding into the value names there. Do you expect that sort of acceleration to continue? And how is your forecast if oil prices stay elevated, stay where they are, if interest rates and mortgage rates stay where they are? Does it fluctuate? Overall, when you think about holiday season sales, last year we had nearly a 6 percent increase. This year we'll be at a point or two lower.

38:18Maybe not because of the marketing that's been going on. I think it'll be maybe a little bit lower than last year, but not that much because I still have the strength of the high end and I have the middle income consumer spending. Okay. And last question, your top pick in the retail space. I think overall, when I think about what's working in the retail space, Ross Stores, it's working. I think there's more newness there and more to drive it. All right. Dana, great to see you. Thank you. Great to see you too. Thank you. Dana Telsey, Telsey Advisory Group. Mount Rushmore of analysts, not just retail, like the whole shebang.

38:50All analysts. I'll throw her up there. Look, Ross Stores has been a monster. I mean, throw a chart up and you'll see. I mean, the move has been parabolic in a word. If there's one concern that I would have, and I'm not Dana Telsey, valuation is a little expensive here despite the comps being so good. But you wrap your head around valuation, the stock looks pretty good. I actually think maybe the exporting goods. One of the things about Nike was that direct-to-consumer was weak. Wholesale was better. That bodes well for Dick's Sporting Goods. Gap is another place, and I know Dana likes the recovery at Old Navy.

39:23I'm shocked to hear that the lower-income consumer is as resilient as they are, and I just wonder where that's going to go. And let me get an early gobble-gobble for you. Here we go. It's starting already. It's October 1st. We're actually a little late to the game. Yeah, you know, it's fair, actually, in retrospect. I mean, it's around the corner. Coming up, home-buying hesitation. We'll dig into the recent surge in mortgage rates with a 30-year fix, topping 7.5 percent. The impact it is having on builders, lenders, the whole housing trade and Fast Money returns.

40:00Welcome back to Fast Money. New data from Mortgage News Daily showing mortgage rates dropping back a little after the 30-year hit 7.6 percent yesterday, its highest in nearly three years. Diana Olick's got the details here. Diana. Melissa, you know as well as I do, it has been a rough September for housing, no question. The average rate on the 30-year fixed, as you said, did come back a little bit to 7.54 % today, according to Morning News Daily. That's still a 117 basis point jump from a year ago and a 65 basis point jump just from the start of September. Now, I know we've already beat up the home builders to death here, and I know some of you like the home improvement retailers, some don't.

40:41But let's take a look at other sectors here that get hit. For one, real estate agents. Compass is off close to 12 percent in the past month and EXP down 9 percent. Rocket Mortgage and United Wholesale also down double digits for the month as mortgage demand just tanks on both refinancing and home buying. And don't forget Zillow down over 17 percent in a month. Now, housing is, of course, a massive ecosystem of real estate agents, mortgage brokers, home remodelers, builders, landscaping companies, pools. I could go on and on. But last night, our own Jim Cramer said housing was, quote, frozen because of higher interest rates.

41:17So while we may have a resilient economy, we do not have a resilient housing market. But one more thing I'll throw at you, Melissa. This morning, Morgan Stanley said Toll Brothers was a bargain, a great buy. it's cheap. Discuss. We shall, Diana. Thank you for the assignment, Diana Oleg. And Karen is not forgetting Zillow because it's in her portfolio. I'd like to. I mean, it is in my portfolio. I don't think it's been in an acronym, but who knows? Maybe next year. You know, the platform is, you know, a coil that if we start to see volume, just the margins of that is tremendous, but we are clearly not seeing it.

41:58Yeah. Diana mentioned the brokers also. I mean, there's also an AI disruption fear woven into that sort of stew of concerns over that sector. If you look at some of the mortgage servicers and some of the mortgage brokers, I mean, they look like they're going out of business. And I don't think they are. I mean, look at like a Walker and Dunlop. I mean, this is a chart that looks like it's headed lower. I think if you're finding great franchises, and I think there are places to invest in the home builders here, because at some point we are going to get some relief. Remember, the thing that solves higher interest rates are higher interest rates, right?

42:31You get to a place, and this is the kind of a thing where at some point this will lead to lower rates. I like the way Diana ingratiated, further ingratiated herself to her. She's already in. She's always been in, but she didn't realize it. So Morgan Stanley initiated Overweight Toll Brothers. At the top of the show, we had a conversation about a tactical move in yields lower. Obviously, homebuilders will like that. So if you want to play a little stock market, TOL is the place to be. One of the reasons why they like this one is because their buyers are less mortgage sensitive because they're wealthier.

43:00But this goes to your whole thing. Buy into that rotation early before we actually see for sure what the peak is. Right. You stole the words right out of my mouth. Yeah. So you're talking about earlier, if you're going to assume that we're getting closer to a peak in rates here, anything that's been hit so hard from this increase in rates, that's probably a better opportunity right now. And you're seeing the reference of Toll Brothers here. You also have been seeing Berkshire Hathaway. They've been buying Lenar. Like, I do think at a certain point here, especially with rates so high, there is nowhere to go for new buyers other than these home builders because nobody is selling their house when you have a rate that's under 4 % or 5%.

43:32Where are you going to go? And it's just going to keep that rate frozen in the meantime. Coming up, Courtney's fixed income playbook. What she says, why she says there's a lot of the rate moves that may already be behind us and how she's putting money to work in the bond market. More Fast Money in 2.

43:51Welcome back to Fast Money. The recent rise in interest rates got us wondering, what are investors' biggest concerns about the current market environment? So, Courtney, what are some of the questions that your clients are asking you? Yeah, well, I mean, bonds has been the big move here, right, because that's getting hit way more with rates going up right now. But it's also leading to a really good opportunity. So we talk a lot about what's happening with treasuries right now. If you look at the municipal bond market, that has actually gotten hit much harder than treasuries right now, which is also leading to a really good opportunity.

44:17Like you can actually lock into some much better income here. You're looking at 7.5 % tax equivalent yield, depending on the state you live in, which is real income right now. And I think what's kind of interesting is a big reason that this is selling off more than treasuries is because there's this tax loss harvesting that's happening right now. People are selling their munis to lock into the tax harvesting, and now they're reinvesting into higher rates. That probably continues throughout the year as you get later in the year, though. So I don't know if this is like your peak opportunity, but I do think you want to keep starting to buy back into munis here as we get into the end of the year, because this is great income.

44:49With this kind of sell-off, you absolutely want to take advantage of that, especially if this is getting towards the end of rates. You want to get in here before the rates peak, not after. Seven and a half percent. That's a pretty juicy guy. The thesis is interesting without question. And you look at that and say, okay, what's going on in the muni side of things? And then you put up, for example, an HYG, sort of the credit side of this component, which is not true. I'm not advocating to trade this, but look at a recent chart of the HYG, which really doesn't trade all that actively. over the last month and a half, two months, that has sort of fallen off a cliff.

45:19So if you think there's going to be stabilization in some of these things, yeah, municipal bonds could be very interesting here. I would just say as a guy that allocates assets for people, he said, this is the first year where you've actually had the stock, the equity fixed income kind of inverse reaction. In other words, the first year where bonds have gone down when stocks have gone up or vice versa, and in this case we know it's bonds haven't gone down. I think this just reinforces why you want to have a mix, whether it's that traditional 60-40 mix or not. I think owning the two-year here is great.

45:48I also would just say we are seeing at the long end rising real rates, and that's interesting. We haven't seen that in a while. Up next, final trades.

46:01Let's take a check on Nike here. We're down about 6.5%, close to after-hours session lows. These are levels last seen in 2013, so it would be a fresh all-time low if it opens here. Time for the final trade. Let's go around the horn. Timbo. Yeah, congrats to Courtney's pods. Yeah. Tough times in Boston, I guess, huh? Anyway, SMH, semis outperforming. Karen? Yeah, so 10 to 12 days from now, we'll start seeing bank earnings. I like Citibank. I would buy some out-of-the-money call spreads. Courtney? The equal way here, if the rates are closer to the top here, you want to make sure you're broadening.

46:34Say hi to Melissa at Madison Square Garden tonight for the home opener of the Rangers, by the way. She'll be there sporting. But you won't be able to spot her. Is that what you're hiding? AEM, Melms.

47:12but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money Disclaimer, please visit cnbc.com forward slash Fast Money Disclaimer. To realize the future America needs, we understand what's needed from us. To face each threat head on. We've earned our place in the fight for our nation's future. We are Marines. We were made for this.