In short
Fast Money covers a broad market selloff driven by a sharp Treasury yield spike (2-year near 4%, 30-year near 5%), flattening yield curve, and rising odds of a rate hike; oil drops on ceasefire hopes; Meta faces a New Mexico consumer-protection verdict; software and AI-agent concerns weigh on IGV; housing and GLP-1 drug stocks react to rates and competition; plus a Wall Street upgrade for Ralph Lauren.
Guests
Mike Schumacher, head of macro strategy at Wells Fargo Securities. Nikesh Arora, CEO of Palo Alto Networks. Evan David Siegerman, health care research head at BMO.
Key claims
Bond investors are “bunker” because Fed path is unclear and auctions show supply shock; stagflation isn’t fully here yet, but risk assets could worsen if growth falls below ~1%. Palo Alto argues AI can cut remediation time to ~1 minute and that AI cybersecurity is validated by ingesting massive security data; agentic AI tools raise trust/regulatory concerns. For GLP-1s, Lilly’s obesity pill launch timing looks positive; Novo’s next catalyst depends on additional assets beyond current products.
Notable examples
New Mexico jury ordered Meta to pay $375M (appeal planned). Anthropic’s Claude Code/Cowork can control a cursor. KB Home delivery down 14% YoY; homebuilders need faster rate declines. Citi upgraded Ralph Lauren to Buy ($360→$400).
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VORate Spike and Market Reactions
1:48 to 3:58
Discussion on rising treasury yields and implications for the economy.
“We start off with yields ripping higher after a rough two-year Treasury auction this afternoon.”
Inflation Concerns and Economic Impacts
4:00 to 7:58
Exploration of inflationary pressures and their effects on earnings and the market.
“That's when you really start to call into question, I think, valuation in the equity market.”
Investor Sentiments on Stagflation
8:01 to 13:20
Analyzing investor behavior in light of potential stagflation risks.
“The ECB vice chairman was talking today about how they have to be vigilant against inflation, and that implies hikes.”
Future Outlook on Growth and Inflation
13:26 to 14:01
Discussing the future of economic growth amidst rising inflation and market volatility.
“And Karen used the word before it's stagflationary.”
Understanding Stagflation's Impact on Markets
14:01 to 18:08
Explore what stagflation means for risk assets and the economy's growth potential.
“So I'm just curious where you think about, like, what does a stagflationary environment look like?”
Global Energy Prices and Their Impact
18:09 to 23:16
Discuss the effects of global energy prices on inflation and economic stability.
“I would imagine it probably starts to crop up in the next quarter or so.”
AI's Role in the Software Market
23:17 to 25:58
Analyze the impact of AI developments on software stocks and consumer trust.
“Claude Code and Claude Cowork can open up email PDFs, navigate Internet browsers, even export photos for you.”
Housing Market Challenges Ahead
26:41 to 28:00
Examine the current state of the housing market and its future challenges.
“With Share My Trip from Uber, you can send your live trip location to the ones who matter most.”
Impact of Rising Rates on Homebuilders
28:00 to 29:14
Exploring the challenges faced by homebuilders due to increasing rates and economic conditions.
“level homes, and that's where people are feeling the most pain.”
Interview with Palo Alto Networks CEO Nikesh Arora
29:24 to 35:23
Discussing the current cybersecurity landscape and the role of AI in addressing emerging threats.
“Stocks closing lower today, giving back some of yesterday's gains.”
Show all 17 chapters
Discussion on Cybersecurity Stocks and Valuations
35:23 to 37:36
Analyzing the performance of cybersecurity stocks and market reactions to recent events.
“Deirdre, thank you so much, Debo, on Palo Alto with CEO Nikesh Arora.”
Health Sector Updates and Market Outlook
37:36 to 42:02
Reviewing the health sector's performance and potential developments in the pharmaceutical industry.
“GLP-1 drug makers Eli Lilly and Novo Nordisk are on pace to close out the quarter firmly in the red, down 16 and 27 percent respectively as investors weigh rising competition and pricing pressures on the industry.”
Evaluating Novo's Pill Launch Success
42:02 to 42:44
Discussion on the potential success of Novo's Wagovi pill launch and patient retention.
“And, you know, it's really going to be what happens with these two pill launches before Big Pharma wants to jump in again.”
Consumer Products and Market Dynamics
42:45 to 43:18
Exploration of the consumer product market dynamics and pricing challenges for pills.
“You know, it's the positive side of being more of a consumer product is maybe the TAM is bigger, but it also indicates that they're not as committed necessarily to sticking to the pill, which is the issue here.”
Ralph Lauren's Stock Upgrade Analysis
43:19 to 44:12
Analyzing Citi's upgrade of Ralph Lauren stock and market conditions affecting it.
“But, you know, I mean, you're talking about the TAM.”
Retail Market Strategies and Challenges
44:13 to 45:40
Discussion on retail market strategies and challenges for premium brands like Ralph Lauren and Tapestry.
“Welcome back to Fast Money, a call of the day on Ralph Lauren.”
Final Trades and Market Predictions
45:41 to 46:46
Participants share their final trades and predictions on various stocks.
“And then when you look at Tapestry, that's been a storied stock over the years.”
Transcript
Automatic transcript. May contain errors.0:00At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are with personalized financial strategies that help protect what matters. So you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich together. Edward Jones, member SIPC. Are you as confident as you should be when it comes to growing your business? Is your strategy ready to execute today? If cash flows aren't where they need to be, growth could be at risk, especially in the eyes of your investors, board members, and the business press.
0:44But when your business is operating in top shape, you've earned the right to grow. EY Parthenon can help you reimagine your business and execute a game plan for long-term growth. EY Parthenon. Solutions that work in practice. not just on paper.
1:02Tim Seymour:Live from the Nasdaq MarketSite in the heart of New York City's Times Square, this is Fast Money. Here's what's on top tonight. The great rate spike yields rising across the board. The two-year closing in on 4%. What is driving the moves? And what's it mean for the rest of the market? And crude realities. Oil prices taking a leg lower in just the last hour on reports of a ceasefire in the Middle East. Can a truce hold? And can prices go lower from here? Plus, Ralph Lauren gets an upgrade on Wall Street. The latest on the weight loss race from BMO's Metabolic Health Conference and a rough day for software names like Palo Alto.
1:33Tim Seymour:We'll hear from CEO Nikesh Arora on why the sell-off may be overdone and how the cyber industry can navigate the constantly changing landscape in the face of AI. I'm Melissa Lee. Come to you live from Studio B at the NASDAQ. On the desk tonight, Steve Grasso, Karen Feinerman, Dan Nathan, and Guy Adami. We start off with yields ripping higher after a rough two-year Treasury auction this afternoon. Rates on short-term treasuries getting close to 4 % on a very weak demand. The damage spilling into longer-term rates as well. The 30-year getting oh-so-close to 5%. Meanwhile, the yield curve flattening again and the latest sign that investors are growing more concerned about the state of the U.S.
2:08Tim Seymour:economy. Amid all of this, markets now pricing at a more than 6 % chance of a rate hike as soon as April. Rate hike, I said. How concerned should we be about these moves?
2:20Melissa Lee:Our market should be concerned without question. The auction was awful, one of the worst ones we've had in a very long time. In a long time, I mean decades, I think. And in terms of 10-year yields, I don't think it's coincidental. I mean, look at where 10-year yields got up to today, I think 443, 444. And that coincided with the announcement that there are Pete's talks coming later in the week. I think we've said this a number of times. The administration might be focused on the stock market. They're laser-focused on the bond market. And right now, it's going the wrong way.
2:47Tim Seymour:Well, that's the thing. They're telling two different stories. So which one do you believe?
2:51Melissa Lee:Well, here's the deal. I mean, the 10-year has not had that much of an impact on equities. If you think back, the last time was at 4.5. Let's just say we're right there. I mean, the S &P was much lower, right? So if you think about where we are right now, you know, we went from rate cut expectations and a bunch of them, I guess, over like an 18-month period. And now you have this chatter, like I just mentioned, about the potential for rate hikes. So the problem, to me, is more inflation. It's more a weakening labor market. It's more the strength of the dollar of late. And, you know, you think about S &P 500 earnings, you know, it's still very, very concentrated among those top 10 names that are concentrated from a market cap standpoint.
3:30Melissa Lee:If you start to see a deceleration in that earnings growth, then you probably have a problem for the rest of the 493. And you think about the performance then of those names. Investors are kind of telling you that they're expecting some form of deceleration. Now, on the flip side, the more cyclical parts of the market, we've already seen huge moves in industrials. We've seen huge moves in energy, that sort of thing. So I'm just bringing it back through the lens of the stock market. I mean, I think the market's OK with yields around here. But to Guy's point, you start getting to four and a half on its way to five.
4:01Melissa Lee:That's when you really start to call into question, I think, valuation in the equity market. So I agree with you. Everything? Wow. We almost had a moment. I know. So I do agree that four and a half on its own face is not necessarily a bad thing. It is earlier in the year, last year, a couple of months ago, it was four and a half on the way to a really robust GDP and things are going well. And the economy was really expecting sort of some extra juice from deregulation. One big, beautiful bill, all of that. Now it's four and a half because are we in a stagflationary environment? Right. We have some not great labor numbers, not terrible.
4:38But and then we have inflation, not great. And then you throw this grenade into it of what's happening in the Middle East. Then it gets sort of scary, I think. I mean, we saw, I don't know if we'll get to it later or not, KBH would just, this is really not good for the home builder situation. I know they really want to make homes more affordable. This is not good. So all in all, I don't think the market did terribly. I guess, do we have to wait till Friday to see what the present is, or do we know what the present is? I don't know. It's a very good present, apparently. It's a good present. I don't know if it's a Hormuz present.
5:11I don't know. A giant bow on the straight of four moves. Something gold. A gold bow. Yeah. I don't know. But, I mean, it's so many rumors flying around. The market could change on a dime. I'm hesitant to trade around it because I feel like I could just be, you know, struck on the other side. Well, that's what happens with the market, right? The market rips your face off when you think it's a sell and we're going to collapse. It rallies back the next day aggressively. The bond market can do what the bond market does. the Fed is no way, no how going to raise rates. So I feel like whenever I say stuff like that, you've got to save the clip because then it's going to be egg in my face.
5:51But I feel pretty confident, 99.9 % confident. Jerome Powell said as much the other day. They're not even thinking about raising rates. So that doesn't stop the two-year and the 10-year from rallying. Bond market's going to do that. I don't think the bond market is acting on the Federal Reserve inspired rate. It's acting on a supply shock. We are not, nor do central banks make a history and a correct history of raising rates into a supply shock driven inflation. So I don't think that's going to happen. Earnings estimates have been going up, not down. So I think the market can do something and the bond market can do something.
6:34Tim Seymour:Here's what I don't understand, though. We live in a global world still as much as we want to nationalize things and nationalize manufacturing. Other parts of the world are feeling the impact of inflation very severely right now. Eurozone PMI is 10 month low. We had UK factory prices indicating cost pressures they haven't seen since 1992. too. We companies here get earnings from overseas, right? Asia, India. I mean, all parts of Asia, Europe, all these places feeling severe inflationary impacts. So when are we going to see the impact on earnings? We say earnings are fine, but isn't this sort of a drag?
7:18Tim Seymour:I think it takes a little. Your premise makes 100 percent sense, but I think it's going to take Then you have to talk about, is it a four-week? We're on four weeks, right, of this? So is it a four-week disruption or is it a four-month disruption? So I think those two things are two totally different actions.
7:35Melissa Lee:So, you know, for the longest time, companies have been able to pass on their costs to the consumer. I don't think, and over the last few months, you've seen that they can't do it anymore, and stocks are acting in kind. So I get the energy prices, but the things that are happening now superseded what happened four weeks ago. Now, this sped it up without question, but we were headed this way anyway, I believe. And global yields going higher are a function of a lot of things. Part of it, yes, what's happening in the Middle East, but a lot of it not what's happening in the Middle East.
8:05Tim Seymour:The ECB vice chairman was talking today about how they have to be vigilant against inflation, and that implies hikes. I mean, that's a lift to global yields right there. If they do, yeah, that'll be difficult. I mean, they're in a tough spot, though. I just want to add that the dollar rallying does work against what you're talking about with, you know, to the extent that we're importing. That sort of helps us a little bit. But I don't think things are titrated so close. Things are just kind of trading a little bit crazy because it's a really volatile world. Right.
8:38Melissa Lee:Yeah, I think it's important to note, though, prior to COVID. I mean, we're worried about deflation. Right. Like that was a big concern. Right. And so we think about it now. I mean, the tables have just turned dramatically. And so that 2 percent target, that's fine. We get the two, four, two, five. It's fine. But it's the cumulative nature of this inflation that we felt over the last five years or so. So, you know, you can talk about, you know, what the impact is to a consumer if they have to absorb higher input costs, even if it's for three months, six months, nine months. I mean, you know, we keep hearing about this, you know, return environment, the tax return environment.
9:09Melissa Lee:But no one talks about the higher cost of health care that a lot of folks are seeing. The higher cost, you know, gas at the pump, a gallon, is not going back to 290 and like anytime soon, even if we had some sort of, you know, agreed upon ceasefire. Because to your point, the question of whether or not it holds, the likelihood of it holding is probably not great. Right. So there's going to be a risk premium that's going to be built into, you know, crude oil. And then when you think about the disruption like you're talking about, it's not just around the world. Right. But we also have disruption about fertilizer and these other things.
9:41Melissa Lee:And the lead times for this stuff, it's long. So you disrupt supply chains like this. We felt this during COVID. You have the chip shut off. What does that mean for auto manufacturing? What does it mean for consumer electronics? I mean, and I'm not trying to sound so fearful. I mean, this is table stakes. This is what happens in a globalized economy. If you, did I cut you off? No, go for it, man. So I think you bring up a good point. Maybe the market's looking at it through that prism, saying in 2022, CPI was 9%. In 2022, gas was over$5 a gallon. So and it fell pretty, pretty quickly. And we've recovered.
10:15So maybe the market's looking through this now as a point of reference. Maybe. Right. It's a shorter term event and different table set than it was then.
10:25Tim Seymour:We do have some breaking news we want to get to. jurors in New Mexico just ruled that Meta violated state law and ordered the social media company to pay$375 million in damages, far below the$2 billion the state was asking for. The case was brought by New Mexico Attorney General Raul Torres and argued that Meta and CEO Mark Zuckerberg violated the state's consumer protection laws and misled the public about the risks for young users' mental health and the threat of sexual exploitation. Meta responding to the verdict, saying we respectfully disagree with the verdict and will appeal. We work hard to keep people safe on our platforms and are clear about the challenges of identifying and removing bad actors or harmful content.
11:05Tim Seymour:We will continue to defend ourselves vigorously and we remain confident in our record of protecting teens online. We've reached out to the plaintiff's attorney in the case. We'll update that to you when we have it. Right now, shares not really moving on the back of this. Obviously, there's still it's a fluid situation with the meta appealing, but this is just sort of one case. that shareholders are watching. Yeah, I actually see the shares higher now. A little bit, yeah. I think there's something to it. Just taking away any of the fundamental issues there. Just what does it do for the stock? A certainty of a worst-case scenario of a relatively small, a huge amount of money, small amount of money for Meta, and stocks a little bit higher.
11:44Tim Seymour:All right. Our next guest says the weak two-year note auction reflects a bunker mentality among investors. Mike Schumacher is head of macro strategy at Wells Fargo Securities. Mike, great to see you, as always. So why are bond investors in the bunker and stock investors are, like, out walking the streets, having fun? You know, I mean, like, there's such a contrast. Going out to the two. Right. Yeah, great question. I think on the bond side, people don't even know what the Fed's next move is going to be. It's not like we're debating 25 or 50 basis points of hikes or cuts. It's hike or cut. Can't tell.
12:15So it's really not a great environment to buy a really short-term treasury security. I think it's got people spooked, frankly.
12:21Tim Seymour:Why do stock investors, you think, not care that the next move is a coin toss almost? Yeah, it's interesting. When you think about the idea of the equity market maybe not getting support out of the Fed, perhaps people are saying, well, you've got a bit of inflation. That's pretty clear. It's going to be here for X number of months. It's not automatically bad for earnings. So earnings typically do well in an inflationary environment. So I think you've got some support there on that side built in. Bond people don't have that. So I can understand a bit of a disconnect.
12:50Melissa Lee:Does it even matter what the Fed does at this point? The market's been raising rates for them. We talked before the show that two year auction was a disaster in a word. The 30 year mortgage is what, 640, something like that now. So the market's been penalizing the economy quite a bit. The Fed always matters. But right now in particular, can the Fed really do anything? Would it want to? I doubt it. You've got a new chairman coming in, whether it's in a couple of months or maybe three or four months, who can say exactly. But it's really difficult to imagine the Fed doing anything different for a while.
13:19So I think it's on hold. It matters. But it's right now it's kind of stuck.
13:22Melissa Lee:Yeah. So, Mike, you just mentioned like corporate earnings in an inflationary environment usually do pretty well. But what do you think of the backdrop? And Karen used the word before it's stagflationary. You know, we have a weakening labor market. We have higher interest rates. You know, we have a scenario where, you know, inflation and the higher input costs for consumers that are two thirds of the GDP are really likely to have an impact. I mean, is it a scenario where when you do have weakening growth, maybe it's not great for equities in an environment where, you know, a lot of people think that this is just a hiccup on the way to getting back to a bull market?
13:52Melissa Lee:And it probably is because that's the way it goes. I think at the lows yesterday, the S &P was down 8 % from its all-time highs. And every year, on average, we have about a 10 % decline. We haven't had one since last April. So I'm just curious where you think about, like, what does a stagflationary environment look like? And I suspect you think it's not great for risk assets like stocks. Stakeflation would be terrible. There's just no getting around that. But the question is, are we there yet? I would say not. So we're going to see high inflation for a while. There's damage built into the system.
14:19You mentioned 2022. Yeah, we got through it. How did the S &P do that year? Down 20%. How did the bond market do? Maybe down 15%. Nothing won. So that was a very bad, pretty recent example. But a stayflationary environment is just all around terrible for risk assets and not very good for fixed income, but it's a timing thing. I guess it always is in markets, but still, how quickly do we go from, ah, this is kind of uncomfortable to, gee, it's a full-blown stagflation? I suspect it's another quarter or two, not yet. So just to get to the stagflation, beside the definition, what really is stagflation?
14:52What's enough growth to sort of stay out of the stag part, but still have the flation? Where could we sort of be okay? I think if you're sub-1 % growth, that's going to feel pretty bad. It doesn't have to be negative, sort of a tipping point. But anything below one in the U.S., that'll be pretty grim, I would say, for the outlook ahead. So when you when you look at the overall market and you look at the Fed's choices, and I think you touched on this in your opening remarks, there's really nothing they can do at this juncture right now. Right. There's no good choices that they have because they don't have anything in their toolbox to help what they perceive as the supply shock.
15:30And when you compare, when you said it's really not 2022, what is your best comparison to that? Where are you looking through the end of the tunnel? Yeah, right now, I'd say as far as the Fed goes, agreed, no good choice. So the best choice for the Fed, frankly, is sit and wait. Get more data, get more information. The Fed isn't really compelled to act right now. It doesn't have to. Why should it? What the Fed can do on the margin is keep liquidity in the system. So this is kind of our keen. The Fed's buying a bunch of T-bills. It props up liquidity. Why slow down? There's no reason to. So keep that going.
16:02Do things like that that are pretty simple, but don't change the policy rate until it gets more data. So as far as a comparator, there's not a great one. You can look at a number of historical examples, which are fairly dark, I'd say. And there's really not one that fits perfectly. So I think right now we can't even say exactly where this is going. Got to wait another month or two, probably.
16:23Tim Seymour:How do you look at the inflation impact that is happening right now and very sharply around the world because of higher oil prices and higher other input costs related to oil? And how long the U.S. can remain insulated from those drags around the world in different economies? That's a huge point, Melissa. When you think about the European data, already looking a bit worse, whether it's in the U.K., the Eurozone. Now, most people have talked about it probably many times on the show already. but you think about the U.S. energy status, it's basically flat as far as energy export import. Not true in Europe, so much more reliant on imported energy.
16:58That's the first key point. Second thing is when you think about how the policymakers actually are incented to operate, the European Central Bank is very different. It has only an inflation mandate. The Fed, as we all know, has two mandates, full employment, stable prices. So the Fed can say, well, might be a growth impact, might be a bit of inflation, we can wait. On the European side, they can't. They're not supposed to do that. Bank of England's a bit different. But the big difference really is you've got an energy, I wouldn't call it superpower, but at least pretty self-sufficient country here, and it's simply not the case in Europe.
17:30So they're really feeling the pain first and foremost. But we'll get that. It's a global market for energy and other products, so that'll find its way over here, but not as acutely.
17:38Melissa Lee:So to go to the basically unanswerable and unfixable stagflation, it's an employment thing that needs to kick in. What does the unemployment rate need to look like to sort of get your antenna up on the stagflation front? I'd say probably high force. So four, seven, four, eight, something like that. If you get something in that area, then people at the Fed and other central banks are going to say, boy, we really need to do something to step in and help that out.
18:03Tim Seymour:Going back to my question, though, not just the oil markets. When will we start feeling it in earnings where, you know, exporting goods or services and people are not buying or corporations are on hold because the inflation outlook there is much worse, whether it be in Europe or in parts of Asia? I would imagine it probably starts to crop up in the next quarter or so. I mean, some of these input costs have gone up hugely. Diesel's up, what, two-thirds, something like that since the attacks began. That's going to flow right through the system pretty fast. How are you feeling about the markets now?
18:35Tim Seymour:I mean, you've given us a lot of information, but what's your sort of feel? I mean, it was interesting to hear Mike Worth, the CEO of Chevron, yesterday saying that the market, the oil markets at least, are not looking at what we're looking at. We actually see a much tighter market than what the markets are seeing. I mean, how are you feeling about what the equity markets are pricing in when you take a look at the risks around the world? Yeah, I mean, I mentioned a couple minutes ago I can understand to some degree a disconnect between stocks and bonds, but not entirely. So the bond market's telling a story that we're all very nervous.
Read the full transcript
19:06The equity market, as you said, Melissa, seems to be partying in the streets. And that can go on for a while, but eventually the hangover kicks in and the party ends, right? So I'm not quite sure when that happens, but is it another 25 basis points in short-term rates? Is it 50? It's hard to tell what that tipping point is, but it can't be infinite. So get a couple more bad bond auctions or some bad inflation prints, and I suspect people in equity land finally do get nervous.
19:31Tim Seymour:Michael, great to see you. Thank you for coming by, Michael Schumacher. It's amazing to think that a month ago, the two-year auction was offered at 3.9-something percent. I mean, it's a hugely different story four weeks later.
19:44Melissa Lee:And I think the hope is if this war gets rectified or some sort of ceasefire that will abate, I'm not convinced that's the case. Again, I think things have definitely been sped up over the last few weeks, but I think this has been inevitable all along.
19:59Tim Seymour:Are you feeling like we should be in the bunker? No. You're still on the street. You got one foot in, one foot out. You know, I'm looking at the VIX again, just under 27. I don't think that's where it should be. And it'll either be higher or lower. I suspect higher first. But I'm not. I'm still. I'm long. I am always long. It's been a painful four weeks. But I'm not going in the bunker and selling it.
20:22Melissa Lee:It's painful because there's stuff under the hood that we've been talking about. Like software today, the way that it got sold again for no real apparent reason. You know, we saw weakness out of these alternative managers. But I think with the S &P, you know, down 4 % of the year, down 5%, 6%. I think this is kind of like, okay, let's let it get down 10%. Let's let it get down 12%. Let's let some of these areas get totally washed out. It's not a horrible thing. Again, I think some of the biggest drawdowns we've seen since last year in the tariff, you know, thing was 5 % or something like that.
20:51Melissa Lee:So, to me, I think this sets up pretty good for a whole host of reasons. But, you know, you're going to have to pick stocks in this one. That's the one thing I'll tell you, because some of the sickle stuff or the energy stuff, it's not going to be that easy anymore. I think the one thing that we probably will save it for the next time is the Budget Act. I think that's a tailwind that we don't talk enough about recently. And maybe that's not totally eclipsing the headwinds that these corporations have or the consumer. But it's doing a lot to offset it.
21:21Tim Seymour:Coming up, we are watching shares of KB Home after its latest report. The numbers from the quarter, how our traders are positioned in the housing trade. Plus caution over clawed code, how the AI tools are reportedly taking more control of your computer and why he's taking another bite out of the software trade. Don't go anywhere fast when he's back in two.
21:43Modern enterprise is made up of a lot of moving parts and Comcast Business helps you orchestrate it all. With SD-WAN working at scale to keep 150 hospital locations connected and working as one. Plus, SASE and Zero Trust Security protecting financial data across a bank's 2 ,000 branches. And AI-powered networking that optimizes traffic across five continents. No one does business like Comcast Business. It's smart to always have a few financial goals. And a really smart one you can set? Earning cash back on what you buy every day. And with Discover, you can. Get this. Discover automatically matches all the cash back you've earned at the end of your first year.
22:24Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show. See terms at discover.com slash credit card. 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. This determines what's next for all of us. We are Marines. We were made for this.
23:05Tim Seymour:Welcome back to Fast Money. Software stocks sinking today with the IGV index down more than 4%, closing at its lowest level of the month. The latest move coming lower, the move lower coming on news that Anthropic's AI agent Claude can now complete your tasks for you using your computer. Claude Code and Claude Cowork can open up email PDFs, navigate Internet browsers, even export photos for you. Wow. Anthropic is currently testing out the feature for Pro and Mac subscribers. It actually takes control of your cursor. Mine finished my Christmas shopping yesterday. It's freaking amazing. Unbelievable.
23:41Tim Seymour:Are you serious? No. See, the fact that we could believe it. I don't know. I'm concerned. You know, I have Claude. Concerned about what? Concerned about loading the data.
23:52Melissa Lee:It's not just going to do it on its own. Yeah. You're going to be willing to take a few steps here. But let's say, let's say hypothetically I were to, okay, download a portfolio and I want to look at these and these correlations and whatnot. And not have it keep that information. I don't know. I can't feel certain that that's how it's going to be. I don't know. I believe that it could be. Listen, the fact that enterprise software sold off because of this today, this is really geared towards consumers, right? It's trying to get consumers kind of interested in agentic AI and getting them comfortable with these sorts of processes.
24:31Melissa Lee:And a lot of us are not there, won't be there. But the ones that are using it, and I'm messing around with this stuff for the last couple months, it's pretty remarkable. And the things that you can do, like that you thought you'd have to hire some nerd like Steve, coding all day long or something for three weeks. It's pretty, you know, I mean that. It's like amazing. So this is really geared toward consumers who are early adopters, who are willing to kind of look at this stuff. And ultimately, this is the sort of stuff that enterprises are working on.
24:55Tim Seymour:So there should be a sell-off in IGV.
24:57Melissa Lee:I don't think so. I mean, this is what we've been talking about for months now. Cowork came out in January.
25:01Tim Seymour:But it gets better and better and better. I know, but think about this in the enterprise.
25:05Melissa Lee:It really comes down to trust. Karen's just telling us that she doesn't trust it for her own data. If you are in a highly regulated sort of business, you cannot let these things go hog wild in your servers and in your cloud in this and that or whatever. It's just not going to happen.
25:16Tim Seymour:Well, then that would argue the case for Copilot. And Microsoft, which Ben writes as a Mellius yesterday, said was problematic. They have to save Copilot in order to survive. Well, they are.
25:25Melissa Lee:I mean, they did that deal with Anthropic. So now you can use OpenAI. You can use Anthropic. And Anthropic in Claude is going to save Copilot. That's the thing, ironically. You know, Microsoft owns 27 % OpenAI, and it seems like a dumpster fire over there. Like when you think about how quickly Claude just took the narrative and has been running with it, and it wasn't even from OpenAI. Gemini was the thing over the last six to nine months that really caught a lot of steam. So all of a sudden, you know, this company is raising money. This company being OpenAI at$730 billion,$840 or whatever the hell it is, after, you know, post-money.
25:58Melissa Lee:That seems absolutely crazy given what's going on right now. All right.
26:02Tim Seymour:Shares of KB Home on the move after reporting the latest details and numbers out of that quarter next. You're watching Fast Money Live from the NASDAQ MarketSite in Times Square, back right after this.
26:38After all, you listen to this show. See terms at discover.com slash credit card. With Share My Trip from Uber, you can send your live trip location to the ones who matter most. Like Dan and Hannah, who always wait up to make sure their daughter gets back to her college dorm room. Or Tiffany, who's running late as usual, and her friends are tracking her trip to make sure she's actually on her way.
26:58Tim Seymour:Look, she's right there. She's three minutes away. Or Sam, who never goes anywhere without her roommate knowing exactly where she is. Some journeys are meant to be shared. Share your ride in real time with Share My Trip on Uber. One more way Uber is putting safety at every turn. Learn more on the Uber app. 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. This determines what's next for all of us. We are Marines. We were made for this.
28:03Tim Seymour:level homes, and that's where people are feeling the most pain.
28:07Melissa Lee:I think we've done a good job. Delivery is down 14 percent year over year, and it's manifesting itself. Listen, they're all different, but they're all going to be very similar very quickly. And if you look at the stocks, they have not performed now since basically the fall. And now the added kicker here with rates going up, I mean, that potential tailwind that everybody has been talking about, that's become a headwind. And if the unemployment rate continues to trend higher, you can't, in my opinion, I'll say it again, I don't think you can go anywhere near these homebuilders yet. And the homebuilders have done the fullest of their capability of lowering or buying back mortgages or lowering them.
28:39So I think we're at the end of that story. They really and truly need rates to come down and come down hard and quick. And we haven't seen that yet. So also guidance was a factor here. We talked about this yesterday. If you're a homebuilder or any company, really, maybe the exception of energy companies, why not give less than stellar guidance? You don't need to go out on a limb or even no guidance. I think we might see some with no guidance.
29:06Tim Seymour:Coming up, AI and cybersecurity, how Palo Alto Networks is handling the rise in artificial intelligence and the latest threats they are defending against. The CEO will join us next when Fast Money returns.
29:23Tim Seymour:Welcome back to Fast Money. Stocks closing lower today, giving back some of yesterday's gains. The Dow falling 84 points. The S &P down four-tenths of a percent. The Nasdaq down eight-tenths of a percent. WTI crude settling above$92 a barrel, but falling from those levels in the past hour. Shares of Micron down another 2 % today, now down nearly 15 % since reporting better than expected results last Wednesday. Today's move coming as South Korea's SK Hynix says it plans to spend$8 billion on equipment from rival ASML. Crypto stocks syncing with Circle Internet, seeing its worst day since going public.
29:55Tim Seymour:Draft texts for the Regulatory Clarity Act suggesting stablecoin rewards could be restricted. Coinbase, which is the main distribution platform for Circle's stablecoin, was down nearly 10 percent. Gets about 20 percent of revenues from USDC. And we've gotten a response from New Mexico's attorney general on the Meta ruling telling CNBC, The jury's verdict is a historic victory for every child and family who has paid the price for Meta's choice to put profits over kids' safety. Meta executives knew their products harmed children, disregarded warnings from their own employees, and lied to the public about what they knew.
30:29Tim Seymour:Today, the jury joined families, educators, and child safety experts in saying enough is enough. The substantial damages the jury ordered Meta to pay should send a clear message to big tech executives that no company is beyond the reach of the law. policymakers and law enforcement officials across the country can help make this verdict a turning point in the fight for children's safety. This is a watershed moment for every parent concerned about what could happen to their kids when they go online. Of course, as we mentioned in the, when we brought you the news, Meta is appealing this verdict. Meantime, cybersecurity stock Palo Alto Network is looking to expand its AI offerings, including introducing, I should say, a secure browser for AI agents.
31:08Tim Seymour:CNBC's Deidre Bosa was at the RSA conference in San Francisco earlier today, is now joined by Palo Alto Network CEO Nikesh Arora. Deidre. Mel, thank you very much. Nikesh, thanks for being with us. Thank you for having me. Let's start with what you're seeing right now amid the Iran war and retaliatory attacks. Are companies prepared or are they still playing catch up? Well, in the last few years, whenever we had a geopolitical situation, cyber has now become part of the arsenal. You have seen cyber attacks being used offensively to go sort of nullify situations so the armies could get in to do their stuff.
31:43And you're seeing retaliation from nation states as it relates to retaliating to efforts that the U.S. has sort of undertaken on behalf of some of the part of the world. And we are seeing attacks from Iran. You're seeing them. But they're more opportunistic there in terms of they're trying to send a message that we can attack certain entities. So they're not programmatic yet. You are seeing examples where they're getting in and disrupting certain businesses. And I think there is a possibility we'll see more of that if this drive continues. Right. That was something similar to what I heard from the Databricks CEO today, who was also at RSA.
32:15They launched Lakewatch. Ali Gadsi, the CEO, said that basically the defenders can't keep up. Customers are asking him for a product. And he's saying that his tools can do what you can at 80 % less, lower cost. How do you respond to that? Well, first of all, you know, I'm really excited that more people are trying to solve the cybersecurity problem. So I do think there's a bit of hubris around AI, that people believe that AI is the panacea, will solve everything that we haven't been able to solve in the past. All players in cybersecurity, if you see at RSA, the entire rage is AI. Everybody's putting agents into AI.
32:54Everybody's trying to put generative AI into work so we can solve the problems in training our models. So I think what he's telling you is that the customers are demanding more AI be used to solve this problem because we need to shorten the time to remediate these attacks because the old methods are not going to work. This is something we've been talking about for the last two years. We built a platform two years ago to do exactly what he said needs to be done. We have 11 ,000 machine learning models which are analyzing data on the fly as it gets into SIMs and SOCs. and we've reduced the mean time to remediate down to one minute.
33:23The fastest attack is 28 minutes. So I feel very comfortable that our strategy is validated with what he's saying, and I welcome him to the field. He would probably say that there's a key distinction. In fact, he did say that. He said that the legacy tools are putting AI on top of their cybersecurity tools. He's using a database to build cybersecurity. They are essentially already in the building. They have their customers, your customers' data. Isn't that a harder competitor to fight than another cybersecurity firm? I mean, I haven't paid attention to exactly what he's talking about in terms of what he's actually built.
33:55But remember, since we launched our same product, we are now ingesting 17 petabytes a day of very specific security data and applying AI from the ground up to solve the problem. So I think we are doing exactly what he's aspiring to do. We have deployed north of 300 customers. We have 300 more to go. By the time we're done, we'll be in the 20, 25 petabyte range. So we still retain the largest amount of security data in the world from a database perspective. So I think it's just validating what we're trying to do. Nikesh, you're listed as a partner on their press release. So why did you sign up if you're already doing what they're trying to do?
34:32And how many partners have said publicly they want to replace your tools? I looked at the press releases. You showed it to me. It's great. It says they ingest data from every security company. And that's true. They should have to. So you didn't know that you were going to be included on it? I'm sure my team talked to them, but we talked to anyone who wants to ingest cybersecurity data. Our cybersecurity data for cybersecurity companies is ingested across the board in the industry. So Microsoft ingests our data. We ingest their data. CrowdStrike does so. We do the same. This is an industry where you have to collaborate and make sure because the customer wants the data to be commingled and be able to analyze attacks against that.
35:07So I'm sure we're doing that. I will note CrowdStrike was not part of it, but this is obviously a larger conversation. I know they were talking about it on the show earlier. the threat of AI to sort of any software tools. But Nikesh, thanks for being with us today. Thank you for having me.
35:20Tim Seymour:Let's all throw it back over to you in the studio. All right. Deirdre, thank you so much, Debo, on Palo Alto with CEO Nikesh Arora. Okay, so, I don't know, even here, cyber can be displaced, but you need cyber. So how do you think about it?
35:35Melissa Lee:You need cyber without question, and Palo Alto is, we've said it 100 times, I think it's the gold standard in the space. Here's the problem. Nobody cared about valuation. Now people look at valuations. It trades about 40 times next year's number one. Number two, it's the fifth largest holding in the IGV. So it's getting dragged down by the rest of the components in that. That's working against it. And this whole software thing, I mean, they're getting sort of conflated, I guess is a word, along with that space. So they're going to be guilty until proven innocent. $145-ish on the downside is a pretty significant level.
36:07Tim Seymour:By the way, there are already threats embedded in AI. I mean, Kaspersky Threat Research has found malware in downloads. Basically, if you want to download Claude and OpenClaw for some of these downloads, if you search it, it'll come up. There's a sponsored ad. It looks almost identical to the actual place where you would actually download the real Claude and the real OpenClaw, and it embeds malware in your computer. And then it just lies out there, and then it hits when it wants to. This should be the right environment for all of these stocks. But to Guy's point, when you look at a crowd strike, that's down 15 percent year to date.
36:44Snowflake's down 25 percent. They've all been hit by this wall in October. And I think it has a lot to do with what Guy's talking about. More software and not real fundamentals, although growth has been decelerating for them. Just to your point, that did happen to me. I was doing with William, my tech savvy son, and his mom. No, not that one.
37:07Tim Seymour:He knew that it was a fake one. Yes.
37:09Melissa Lee:By the way, that could happen with anything. The fact that it's like AI, it could have been Google or Amazon or something like that.
37:15Tim Seymour:Well, yeah.
37:15Melissa Lee:I'm just saying. All right.
37:18Tim Seymour:Tell me how strong. Have a ball, Dan. Download whatever you want. Have at it. Health struggles. There's pharma, biotech, and the broad health care space all in the red this year. But can things turn around as we get ready to kick off Q2? We'll get all the headlines from BMO's health conference and the names that could shake up the space. Fast Money is back in two.
37:42Tim Seymour:Welcome back to Fast Money. GLP-1 drug makers Eli Lilly and Novo Nordisk are on pace to close out the quarter firmly in the red, down 16 and 27 percent respectively as investors weigh rising competition and pricing pressures on the industry. All eyes now on the launch of Lilly's much-anticipated obesity pill and the ripples it could have across the weight loss space. That next chapter taking center stage at today's BMO Metabolic Health Summit. The firm's head of health care research, Evan David Siegerman, joins us here on set for more. Evan, welcome. Thank you for having me. What did you learn from Lily in terms of the timing?
38:14So we didn't learn anything new in terms of timing, but body language is positive. We had the chief medical officer, David Hyman, with us. And, you know, their conversations with the FDA are going well. Obviously, they're not going to tell us anything that they can't. They don't want to compromise that. But it's clearly a high-profile launch, and they are very focused on it. They emphasize how they have, I think, a billion and a half inventory ready to go. So when it's approved, they will be launching.
38:37Tim Seymour:Did you hear anything from Novo that indicates any urgency around the portfolio, anything? So I think a few things with Novo. One, the Wagovi pill launch is gangbusters. It's going really well. It doesn't matter. I know, I know. They need a bit of a strategy, kind of 180, and we'll get that at their capital markets day in September. But that's going well. I think folks are kind of in this holding pattern until Orphac Lipron's approved to see what both of those products do. They just got Hidos or Hidos Sema approved. They really need another asset. I think Cagri is just disappointed time and time again.
39:14And absent something beyond Sema, it's really hard for investors to really feel comfortable with what Mike's doing now that he's been in the seat for almost six months. So on Novo. Sure. It doesn't seem like expectations are very high. and you say it's going well, is there a number that would actually move the stock higher? Well, a few things to think about. One, I think their estimates for the Wagovi pill in their guidance are pretty low. I think it's six, 700 million, under a billion for sure. I'm into the billions. So we could see an upward guidance revision either in 1Q or 2Q. They do like to do that a lot.
39:52That could help the stock. But I really think they need something beyond SEMA and they need a strategy kind of 180. A lot of folks are also nervous about generic SEMA coming on in Canada and in Asian countries.
40:04Melissa Lee:Bloom is off the rose a little on structure, GPCR, but I don't understand why necessarily. And I think they made comments, and correct me if I'm wrong, but they might be sort of in the game to be acquired. So what's the problem here? I think they're definitely in the game to be acquired. Ray Stevens, the CEO, has talked a lot about partnerships. I think he wants value for their Amlin asset, which we'll get data for later this year. With structure, you know, a lot of slicing and dicing of the data. Some folks think that there's some tolerability issues. I don't see that. But 16 % weight loss is very strong and could be a core portfolio product for any big pharma company that's not in weight loss.
40:39Tim Seymour:On the topic of M &A, you also had an emerging companies panel. Yes. And there's some notes that caught my eye, orthogonal weight loss methods from Corvius. Can you describe what that is and how far out is this? Great question. So they're actually looking at, I think, a CB1 inverse agonist. Novo has one. And we know that these drugs work, but there's potential for some neuropsych kind of side effects. We'll get more data from their product later this year. Like what? I think it kind of makes you go crazy, I want to say. Oh, really? Which would look great. I mean, yeah. Serious side effects. Serious side effects.
41:14But theirs is not brain penetrant, so you shouldn't have that. But we'll get data on that later this year. Wait, is that a quarterly? No, no, no. Amgen's is quarterly. We had Amgen there, too. Everyone was here. Amgen, obviously, with Meritide, a lot of focus there. You know, they are really gearing up to be a player in this space, kind of coupling it with their strength and path on.
41:36Tim Seymour:Based on what you learned today and all the players that are out there and the possible targets that are out there, et cetera, in one year, what tie-up do you see happening? Or maybe none. Maybe the answer is zero. I think once you get the structured AMLIN data, I think there'll be a partnership with them. You know, when it comes to Lilly and Novo, I don't, you know, they'll probably do smaller deals. I think Novo is probably primed to do something larger, not necessarily an obesity, maybe an adjacency. And, you know, it's really going to be what happens with these two pill launches before Big Pharma wants to jump in again.
42:12Tim Seymour:But seeing that Novo had a great launch for the Wagovi pill, does it matter if Eli Lilly has a great launch for it or for? I mean, so what's interesting, so we're only 60 days into the Wagovi pill launch. What we need to see is do patients actually come back for the second, third, and fourth dose? We had Z from Roe talking about that launch right there, one of the telehealth providers of, you know, for the Wagovi pill. really seen a lot of enthusiasm, but the question is, do folks come back six months, a year in? Evan, great to have you with us. Thank you for having me. Share our findings at the conference.
42:47Tim Seymour:Looks great today.
42:47Melissa Lee:I mean, handsome. Look at that light-colored suit. Well, he had a conference.
42:50Tim Seymour:Very important day for Evan. Important guy. Does a great job. But it's interesting. You know, it's the positive side of being more of a consumer product is maybe the TAM is bigger, but it also indicates that they're not as committed necessarily to sticking to the pill, which is the issue here.
43:07Melissa Lee:You know, again, I think some of the behavior doesn't, like, kind of really bear that out, right? And the pricing is coming down and the ease of use is piping down. And then just think about this, all the things that's going to be prescribed for. You know, I saw this huge, this great doc that was on CNBC last year. It was called Big Shot. And it really went through. Melissa Lee. The illustrious Melissa Lee. But, you know, I mean, you're talking about the TAM. When you did that doc, you couldn't get that full pay for under$1 ,000. So think about it right now. So I just think the more you start seeing it prescribed for other things, the ease of use, the ease of access, that sort of thing, the pill works.
43:43Melissa Lee:But it's just whether that's a good margin for these companies.
43:46Tim Seymour:And then junk.
43:49Melissa Lee:The whole junk has been junk. Let's be clear. You're junk. Thank you for that. By the way, you said it. The picture's not bad. It's not bad. It's going to have its own way. I tell you, Karen's got structure in her thing. She's going to be a winner on that.
44:04Tim Seymour:Coming up, a fashionable call on Wall Street. Why analysts are bowled up on Ralph Lauren and where they see the retailer heading after a big run over the past year. More Fasten 2.
44:19Tim Seymour:Welcome back to Fast Money, a call of the day on Ralph Lauren. Citi upgrading the retail name from neutral to a buy, raising its price target from$360 to$400. The firm saying they have increased confidence that the momentum in the brand can continue and that market uncertainty presents an attractive buying opportunity. Stock is up more than 45 percent in the last 12 months. Interesting timing given what's going on. Yes. It's not a bad call. I mean, I understand why they like it. Right. You know, compound annual growth rate margins are improving. They've done a spectacular job at 21 ish times. it's not crazy expensive, but also for me, if I was going to be putting more in the retail space, it would probably be with TJX, even though it is expensive.
45:05Right. More expensive. Yeah. Significantly more.
45:07Tim Seymour:Didn't last quarter they had strength in Asia, Ralph Lauren, the brands found renaissance in Asia, which I, so I think like the Asia could be an interesting. Although this is not a great environment for Asia. Exactly. Right. So that's why I think the timing in particular for this upgrade is,
45:21Melissa Lee:is curious.
45:23Tim Seymour:You're half a step ahead of me.
45:23Melissa Lee:A little late, but I have it less than that. I have it like 20-ish times. I think they're going to earn$18 or so next year. Whatever. We're splitting hairs. It's less than a market multiple. And it seems like they have some tailwinds. So it's a late call, but I still think you can own the stock. And there's a lack of premium brands. And this one seems to be gaining traction. Took a hit in the market. And then when you look at Tapestry, that's been a storied stock over the years. That's another premium brand. Chart looks okay there. But I wouldn't disagree that I think with margins. Margins are strong, and I think it has some serious tailwinds going into the back half of the year.
45:56Tim Seymour:Up next, final trades.
46:10Tim Seymour:Time for the final trade. Stephen? I'm looking for a quick rebound in Robinhood. Please use a sell stop just in case you get back in. Karen? Yes, so Dell has had an extraordinary run, but I think you've got to take a little money off the table with some upside calls, Dell. Dan.
46:25Melissa Lee:Yeah, gold via the GLD looks interesting to me for a bounce. Looks a bit oversold.
46:30Tim Seymour:GLD, not GDX, right? Okay.
46:33Melissa Lee:You know, Miles was great yesterday on his birthday, but he went right back being loud. No, I'm kidding. It's a joke. Win resorts now.
46:41Tim Seymour:All right, thanks for watching Fast. See you back tomorrow on Overtime. Mad Money starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but 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.
47:13To 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.
From the publisher
Yields spiking after today’s treasury auction showed weak demand, as stocks failed to build on yesterday’s momentum. Why a top market strategist says bond market investors are in “bunker mentality” right now, and why he’s alarmed at today’s showing. Plus KB Home reports results, how an updated Claude Code could reportedly be gaining more control over your computer, and Palo Alto Networks CEO on the rise in AI threats and the step up in security holding them back.
Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.