Retailers Weigh In On Weakening Consumer… And Opportunities In The Sell Off 3/13/25

0:02Live from the Nasdaq market site in the heart of New York City's Times Square this is fast money Here's what's on tap tonight. A consumer capitulation. Retail names among the hardest hit in today's broad market sell-off. Extending losses in an already painful week. What the moves say about the state of the shopper and where the stocks go from here. And banking blues. JPMorgan riding a six-day losing streak as the financials face a losing week of their own. What the pullback means for the banking trade and how much more pain is there to come. Plus, gold nears a milestone. What is next for the precious metal?

0:32Intel puts in its best two-day run in over 24 years. Is this the start of a turnaround for the embattled chipmaker? And buying opportunities, the traders make picks for stocks that might be bottoming out, and Chris Verone will grade the charts. I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Karen Feinerman, Dan Nathan, Guy Dami, and Chris Verone, partner and chief market strategist at Strategas, a Baird company. We start off with a crumbling consumer with the S &P 500 now more than 10 percent off its record high. The discretionary group under particular stress.

1:03The sector on pace for its worst week since September 2022, now trading at six month lows. Nearly three out of every four stocks in the space in bear market territory, more than 20 percent off their 52 week highs. And more and more companies sounding the alarm for what is to come. Delta Airlines, Costco, Kohl's, just a few of the names slashing guidance for the current quarter and beyond. They cite inflation, tariffs as clamping down on their customers across the income spectrum. Some of the stocks hardest hit this month, Best Buy, Expedia, Carnival, Ralph Lauren and Caesars, all down about 20 percent already in March.

1:38So with uncertainty mounting, what does the action in the space tell us about the broader markets and this narrative that there is a growth scare? Consumers are living that out in how they purchase, Guy. And we hear it from all over the place now. And Delta was the latest one. Dan talked about it the other night. By the way, that's silver linings, Dan, who I'm sure will have some encouraging things to say later on in the show. But it's clear that the consumer has been strapped. And, you know, they will spend, as we have said, under any circumstances unless they get scared. And what scares them?

2:08What we've been living through over the last couple weeks. And I think that's why things are changing so quickly. I do think that things change for Delta that quickly. So I'm going to give them not necessarily a pass, but I think the ground is moving under their feet. And I think you can see continued pain in the space here. To me, the most interesting one is Costco because they're such good operators, right? They seem to be able to be nimble and address any kind of environment. And so for them to express some concern is interesting. I mean, the stock is down, but it's still very expensive. Not that it's not worth it.

2:40I've just never owned it because it's always been too expensive. But they're really in touch with that consumer. And so that it is concerning. But I do think that as long as people are still employed and we'll see how long that lasts. There's an asterisk there that we've seen that we've seen the consumer ebb and flow. And I think we've also seen valuations really move a lot. And I think some of them are just really overdone for companies that have good balance sheets. They may have big buybacks in place. And you're starting to also see, though, conservative guidance no matter what. Right. So, which I understand.

3:16Which de-risks the stock in some way. Why not give conservative guts? Yeah, but, you know, you mentioned the valuation. No one cared on the way up. No one cared about Walmart trading at 30 times. No one cared about Costco. I just heard somebody say to me today, well, you know, Costco has been trading at this multiple. How could you buy that? Well, it's been trading at that multiple for five years. You know what I mean? But now, all of a sudden, it's down 20 % quick. And, you know, you think about Walmart, 20%. I mean, the last time this stock in two weeks has moved 20%. You've got to go all the way back to 2022.

3:42The stock was 50 bucks. It went straight to 40 bucks. And that was when they were dealing with the inventory problems post COVID, you know. But this one is really interesting to me. And I know guys like Dick's for a while. But this stock went from 52 week highs, all time highs to 52 week lows in three weeks. When you see that sort of price action, you know, that is wholesale selling. Now, what's interesting about this company? Yeah, it's discretionary. But I don't know, man, like things were so good three weeks ago and we've seen such a turn in consumer confidence. confidence. And this is not expensive stock.

4:13It was all when Walmart came out with earnings. By the way, gold crossed$3 ,000 for the first time. We'll have much more in gold later on, but that is a notable level that we wanted to bring to your attention. But the Walmart chart, market alert. Gold crossing$3 ,000 for the first time.

4:30They might do it again. Did it cross back or what happened? $3 ,001. Walmart, when they reported earnings and they had the commentary, that's when everything turned. That really was a marker in the markets. And let's remember, it's called a growth scare for a reason because it's scary. If markets bottomed on good news, this business would be easy. Markets bottom on bad news. It's a correction. And in corrections, there's a reason stocks go down. The news gets bad. And I think what we have to judge is how far are we along in that process. Remember, 2025 began with great expectations. And part of the year, we thought the first half of the year would be chipping away those expectations.

5:07So I think the question we have to ask, and Karen, you bring up some great points about where the valuation lows here are. Have you chipped away enough at sentiment over the last number of weeks? I think you're getting close, maybe 70 or 80 percent, as they say in our business. At the end, the piano players get taken out as well. And Costco was a piano player and Walmart was a piano player. They were viewed as largely defensive. So we're closer to the end. I think we're in that 70, 80 percent neighborhood. Costco and Walmart, defensives, or what are often perceived as defensives, getting hit here, I think is ultimately a sign that you are getting close.

5:41I mean, the bull case for Costco is that they can change their mix at any time. The amount of imported goods that are subject to tariffs that they handle, very low as a percentage basis. And they could just mix things up anyway. You know, instead of getting the dried mangoes that you want, they'll put something else out there. But what is concerning is their commentary about that consumer, which is like the gold standard of consumers. They're saying that consumers are being very choiceful, meaning price conscious. They are trading down in terms of lower cost proteins. They're buying ground beef and chicken instead of higher, you know, maybe steaks.

6:16So this is getting far more granular. But go back a couple of years ago when the dollar stores started talking about how people were trading down from them. So yes, the dollar general said that exactly consumables. So, I mean, so there's been there's been obviously a precedent for this. Now it's manifesting itself in retailers that I think a lot of people thought were impervious to anything. What is interesting, there are some retailers, and this is the name we mentioned, I mean, Kroger's, which is still a little bit expensive, but not ridiculous. I mean, pull up a Kroger chart. I think, I don't know if it made an all-time high today, but it's pretty close.

6:48So there's some operators that are still getting things done. Yeah, and there's other ways to think about what's going on here as it relates to the consumer or at least consumer-oriented names. Like, look at a Disney, I think Guy just mentioned. I mean, this stock's down 15 % since March 3rd. And when you think about the trade war and you think about antagonizing, let's say, some of our really good allies north of the border, I'm sure a lot of them go to the Disney World, you know, or Disneyland, whatever the one in Florida is, you know, or maybe or if you're from Vancouver, maybe you go to the land.

7:16That's in California. Right. So I'm just saying, you know, and and when you think about that, I mean, I don't know about you guys. I've been seeing lots of videos of people up there boycotting U.S. products, you know. So you think about the airlines, you think about the cruises, you think about the parks. I mean, I think there's a little bit of a mosaic here. You can understand why the consumer feels concerned, right? Particularly if it's a consumer that also has some money invested in the market and follows it. Right. Right. So there's that wealth effect feeling. But I think this sort of what seems to be chaotic rollout of tariffs is weighing.

7:51And I think even if it ends up back where it started, damage is still done. Right. It's for the same reason that CEOs are feeling less confident because it's so unpredictable. Consumers feel like they need to be prepared. By being prepared, it means not spending money. But let's also put this in context of the tactical consideration of this basket of consumer stocks. I think as we sit here right now, less than 10 percent of discretionary is above the 50-day moving average. So if you're looking for an area where you'd say, OK, there's actually some washout conditions here, you are largely in that ballpark.

8:21Let's also not forget we're only three or four weeks removed from the discretionary versus Staples pair actually making a new cycle high. That's something that often deteriorates months and months or even quarters before the big R word starts to creep into people's forecast. So I think it's early to suggest that this is more than a correction. It's certainly not pleasant. S &P is down 10. Could it go down 15? Of course it could. But what we have to do is we have to identify stocks in good long-term uptrends that are now flushed. There are some in the consumer that check that box. It's interesting, you know, we'll play Dan Nathan for a second with the silver linings.

8:57You're just jumping the thing. I had a silver lining take here, but now I can't do it. Well, you don't know if it's the same take. You can both be silver linings. I'm just curious what you think. There's a chance tomorrow you see some short-term capitulation in the form of this consumer confidence, which is going to be a disaster. So I'll play the role of Karen Feynman for a second and say you could get a day where you open on the low, spend the rest of the day rallying into a weekend where anything could happen. So tomorrow's the day if you want to play a little stock market where things should get interesting to the upside.

9:24Right, and I played a little stock market on the close, bought a little QQQ. I don't know, it just felt like, to Chris's point, if that consumer confidence number is really bad, you know what I mean, then maybe that's the sort of thing where you get a bit of a gap down. Maybe it's a half percent, maybe it's a percent, and they rally. But as the silver lining guy on the desk, I think, like, Amazon is a really interesting one here because they have exposure. You have to call yourself that means that you're not. Anyway, sorry, go ahead on Amazon. Well, I called it, you know. I just think that one is interesting because of the retail and the consumer exposure.

9:52And let's assume that they operate maybe a little bit better than the Walmart and the Costco right now. And maybe there's some other aspects about their ability to kind of, you know, get the pricing that they want. But then you also have the exposure as far as their cloud business and the investments that they've made in Anthropic. I'm not saying you buy the stock right here at$194, but there is a level where the valuation in a name that we have not been able to say a whole heck of a lot looks pretty interesting. I agree there for sure. And I would buy it. I'm long. But I think that they're such an amazing operator.

10:25If we look at something, I mean, Target is really a sort of, they're in the crosshairs of Amazon. They're just taking their lunch. I think Costco, BGs, those are all good operators as well. But Amazon, also, they could just turn the lever when they want and become a lot more profitable. You know, let's put this discussion for a moment in the context of the macro as well, because we just talked about markets and discretionary and tariffs and D.C., but we haven't talked about the Fed. And this is not the first growth scare of this bull market the last two and a half years, but it is the first growth scare where we don't really have an eager Fed to get back to accommodative.

10:59And I wonder if ultimately that's the chip that has to fall here. Watch the two-year yield. I think if you start to lose the two-year yield back under 4 % again under 390, that's the market's way of saying, hey, Powell, you better wake up here because something's not so right. Meantime, President Trump doubling down on his tariff plan, saying he is not going to bend at all, and that won't change his mind on the reciprocal tariffs set to take effect on April 2nd. Eamon Javers is at the White House with the very latest. Eamon. Melissa, you summed it up pretty well there. President Trump doubling down on tariffs in the Oval Office this afternoon, saying he's going to go ahead with those reciprocal duties on April 2nd.

11:37Here's what he told reporters. We've been ripped off for years, that we're not going to be ripped off anymore. No, I'm not going to bend at all. Aluminum or steel or cars. We're not going to bend. Meanwhile, no comment from Commerce Secretary Howard Lutnick here ahead of his meeting this afternoon with a Canadian delegation that includes Ontario Premier Doug Ford at the Commerce Department. We believe that meeting is ongoing now. We're learning about a couple of high profile CEOs in the meantime who've been here as well. Although they're not on the official White House schedule, both GM CEO Mary Barra and Meta CEO Mark Zuckerberg met with President Trump here at the White House yesterday.

12:18The White House is not releasing any details of those closed door conversations. So we don't know exactly what they discussed, but we can imagine. Melissa, back over to you. Eamon, thank you. Eamon Javers. Interesting that Mark Zuckerberg went to the White House. What do you think? Again, yes. And Mary Barra. Yes. I mean, well, they have sort of he doesn't does not have the supply chain issues that he does. And the tariff situation could not be more complex, I think. But I mean, they both want to need to curry favor with the president. For more on tariffs and the impact on retail stocks, let's bring in Laura Champagne, senior consumer analyst at Loop Capital Markets.

12:56Laura, great to see you. Thanks for having me. I'm wondering, you know, you've probably heard a lot of our conversation. Where do you think the consumer is right now in terms of digesting the uncertainty in the macro? Early. So I think that they're as confused as those of us who watch markets, if not more so. And we know that inflation, the numbers were a little bit better this week, but could get a lot worse. I would expect kind of an ugly consumer confidence number. The movements in the markets do make some sense for some companies. But I would be looking for opportunities in consumer discretionary stocks.

13:32because we do think that at some point we get clarity on tariff policies and American companies can adjust. So you like a name like a Costco and a BJ's and they have a very strong consumer. They have the ability to weather the storm in terms of changing their product mix up. They've got more limited exposure probably than a lot of other retailers to imported products that are actually subject to tariffs. You said the consumers early in terms of digesting uncertainty. Where are the stocks? Right. So many of these stocks have pulled back a lot, some of them 15 percent in a couple of days over the past week or so.

14:08Costco and BJ's make most of their income from the membership fees. So risks around earnings are really low compared to other retailers, which is part of why Costco has healthy multiples. You get a pullback in Costco, makes sense to step in. And that's just been a great stock over the years. And a nervous consumer spends more at those warehouse clubs, more in like off-price TJX, Burlington Ross. And some of the troubles that mainline full-price retailers have, these off-pricers won't really have. So, Lawrence, Karen, thanks for being on. Just reading some of your notes, you upgraded Royal Caribbean.

14:46So we've been seeing, you know, travel just really getting hit hard. Tell us about that. You know, that's a little bit of an edgy call, and it's a potential to take advantage of a dip in the stock. Because the cruise lines are pre-booked into 2026, we had another one of our bi-rated cruise line companies, Viking, reported earlier this week. They're 88 % booked for the whole year, and they've seen very good pricing trends. Royal Caribbean has a nice set of new ships launching, big ships. The cruise lines are at a significant, similar to Costco and TJ Maxx, they have a pricing umbrella by land vacations where they're 25 to 50 percent cheaper than taking your kids to Disney World, for example.

15:32So we think they're going to win share of wallet, too. And we would see that as kind of a maybe not as visible, but still a value play for consumer dollars. Lauren, February of 21, Whirlpool made an all time high north of 240s. We're sitting here today. It's probably 65 percent off that. But I think you find it interesting here. Can you speak to that? You're absolutely right. If you want to play a U.S. manufacturer with 30 percent market share and look, they make their components in the U.S. They are very well positioned. We had lows at our conference earlier this week and appliances are still on a downswing.

16:08They're in their worst decline in 40 years, which is good timing historically to buy the stock of a company like Whirlpool that tariffs may actually help. In addition to, I would expect, as their plants are reaching higher levels of productivity and utilization, earnings are a spring that we think is ready to show massive growth once demand comes back, as it will if the Fed stays in an accommodative stance. How do you look across the landscape, Laura, and think about the consumer that's best able to weather the storm? If you do look at it that way, I mean, you think the Costco consumer is best able to weather the storm, and yet they're indicating that consumers are being very mindful about what they buy, and they're making some trade-down choices.

16:54So what are you looking for? So they're indicating that, but they're still showing a comp in the U.S. that's 8 % to 10%, a little bit higher in international markets. They're taking share. One thing that Royal Caribbean and Costco have in common is a household income between$120 ,000 and$130 ,000. So as much as people with six-figure incomes may complain about things like egg prices, coffee prices, and so forth, most people in that income bracket can afford to keep spending. They'll look for value options, though, which we think positions both of those companies really well. Laura, it's Karen again.

17:28And one last question is what is the most important metric that you look at to gauge how likely the consumer is to spend? Is it employment or is it something else? Employment, consumer discretionary income is a really key one. If we're looking really short term, consumer confidence is a directional help. And that will not play, we don't think, in our favor tomorrow. And we think that's a buying opportunity because most of us are trying to discount what's happened six months out from now. And we would expect certainly more stability than we've got today then. For the housing-related names, home prices have historically been a great indicator.

18:05We need more supply to start pushing that. We're watching home turnover closer than ever. Home turnover, we've been getting some mixed signals. But they're at such lows that we think as we see home turnover improve, companies that make appliances like Whirlpool flooring, like Mohawk, even mattresses like used to be Tempur-Sealy, now Somni Group, Let's look at some domestic manufacturers. We think there's a real opportunity to get those at cheap multiples right now. Laura, great to see you. Thanks for joining us tonight. Laura Champagne of Loop. Chris, Laura mentioned some stocks we didn't talk about yet.

18:40What do the charts look like for BJ's or Mohawk or Whirlpool? Yeah, well, actually, I think the most compelling names from a technical standpoint that she mentions are these cruises. I mean, Carnival and Royal are both great long-term uptrends that have been thrown out here with everything. as oil prices have come down. So, you know, you have Carnival basically back to where it broke out from, which was$20 maybe two or three months ago. I think very, very timely there. And on the housing side, pay attention to D.R. Horton here. It was kind of first into this correction. It peaked last summer. It's down 40%.

19:10That's generally been kind of what the corrections in the homebuilders have been. So it's the housing and the cruises that I think are probably most timely. Royal Caribbean, I mean, put up a chart. It has moved lower, but in the context of things, It's barely budged off an all-time high, off a parabolic move that if you didn't know what this was, you would swear it's a biotech stock or an AI stock, and it's not. So, you know, maybe it's interesting, but at a certain point, you start to see the consumer roll. These will roll as well. Coming up, we'll have much more on today's market sell-off, including some beaten-down names that could be buying opportunities and a technical take to boot.

19:43The pharma stock is bucking today's drop and the next move for gold as its record rally keeps shining. But first, J.P. Morgan's not-so-hot streak. Shares are lower for six straight days. What is behind the bank's decline, and how are traders handling the move? Plus, Intel is still riding its new CEO high as investors hope for a major turnaround in the name. What the new chief can bring to the table, and whether the company can return to its former glory in the semi-space. Don't go anywhere. Fast Money is back in two.

20:12This is Fast Money with Melissa Lee, right here on CNBC.

20:30Welcome back to Fast Money. J.P. Morgan falling more than a percent for the stock's sixth straight down day, now trading at levels last seen since November. The big bank underperforming its money center pier so far this week, shedding 7 percent. The Morgan Stanley, Goldman and Bank of America, Wells Fargo, too, all on pace to finish the week in negative territory. What's up with JPM, Karen? You know, just in the sea of red of financial companies. But I like JPMorgan. Yesterday I bought some call spreads in May, so we'll see next quarter's earnings in front of that. Today would have been a better day to buy them.

21:07But, you know, I think it's just getting too beaten up. We know what the bear case is that, all right, what if the economy slows? What if credit turns? I don't see credit turning dramatically, yet the stock has moved dramatically. And I think that we know that M &A will be lower than we had thought. However, we do also think regulations will be lower. So they're extremely well capitalized. So there could be growth there. And I think there's a lot of other parts of the business that are good and that we'll still continue to see growth. So I'm comfortable being long here. Could it go lower? Of course.

21:40But I wanted to add. I'm right there on the charts too, Karen. And, you know, we like to play blackjack by the books, as they say. And part of that is buying oversold conditions and uptrends. And J.P. Morgan is certainly kind of in that category in the 220, 225 range. Wells Fargo actually not making a new low today, I thought was interesting. We own that in our ETF, SAMM. I want to be adding to these as they get oversold in these uptrends. Goldman Sachs and Morgan Stanley check that box as well. Remember, financials entered this correction as a leader. It doesn't make them immune to weakness. but I'd rather kind of anticipate what the leadership on the other side by telling me what was strongest going in.