S&P, Nasdaq Notch 8-Day Win Streaks, And 20 Years Since Google’s IPO 8/19/24

0:02Thank you very much, John, live from the NASDAQ market site right here in the heart of New York City's Times Square. This is Fast Money. And here's what's on tap tonight. On a roll, the S &P and the Nasdaq now riding an eight-day winning streak in a tomorrow session as the recovery rally gets even stronger. So can the good times last or is it now time to fade this trade? Plus, an AI boost for Bitcoin? We'll break down a new report on how AI could give the beaten down Bitcoin miners a major shot in the arm and maybe the cryptocurrency overall, too. And then later on, Mickey D is getting its value meal moment.

0:36Happy anniversary, Google. And a good day for the L in Tim's Blysep acronym trade. We're going to explain that. I'm Dominic Chewin from Melissa Lee tonight, coming to you live from Studio B here at the NASDAQ. And on the desk tonight, Dan Nathan right next to me. And then there's Tim Seymour, Carterworth, and Julie Beal. But we start first with the S &P 500 and NASDAQ on eight-day winning streaks for the S &P 500. It's the first eight-day winning streak since last November. and the strongest eight-day stretch in more than 21 years. The index has finished up at least 19 % for the year. The last four times there was an eight-day winning streak in play during the year.

1:19Still, though, in the short term, there's plenty to contend with. A host of retail earnings this week, starting with lows tomorrow, along with Target, Macy's, and TJ Maxx as well. Then there's Jackson Hole, starting on Thursday with Powell taking center stage Friday, Friday, followed by a number of key events ahead of the big rate decision in September. So, Dan, we're going to start with you. Are you starting to feel good about buying this recovery rally? We've pretty much gotten back everything we've lost and maybe even a little bit more from that Monday drop that we saw a couple weeks ago. Yeah, I think it's tough to continue to buy here into Friday and the unknown here.

1:55But if I think about some of the other kind of inputs here to what's going on with the stock market, if you look at yield, if you look at the dollar, if you look at crude, If you look at VIX, they're all kind of round trip those moves that it's had over the last couple of weeks. So those ingredients are probably pretty powerful to get the S &P back through those prior all time highs. Let's be clear. I did not think that was something that was going to happen as we got into the end of July, early August. I think the lack of kind of fear that kind of gripped the market for months and months was kind of crescendoed lower into that event.

2:26But that clearly kind of felt like a bit of a near term bottom. him. I just didn't think we're going to be pressing up into here. And, you know, the last thing I'll just say is that if we continue to melt up into Friday's speech and to, you know, what Jay Powell has to say, it becomes a really difficult setup. If he's dovish, you know, does the stock market rally on that after it's just come back 10 percent and made new highs? I'm not so certain about it. So, again, I think Jay Powell, he probably doesn't know what he wants the market to react or how he wants the market to react to whatever he's got to say.

2:55What we do know, Tim, is that the markets kind of have priced in an outcome at this stage. And it'll be up to these central bankers and Jay Powell included to either validate that view or try to temper it. So what's it going to be, do you think? Do you think that the market's got it right with regard to the rate picture? Well, we know it's great to have you today, Dom. Thanks. And I think if you think about the market and the rate picture right now, I would argue that the pain trade is higher and that if you look at equal weight S &P actually breaking out to all-time highs, you're getting at least a combination of less reliance on some of the traditional leadership, but a dynamic where, again, you look semiconductors.

3:38I mean, they're kind of back to resistance, but on a relative basis to the S &P have outperformed, have picked up that pace. And then AMD and some of the laggards within that group have really turned it on over the last couple of days. So we're at a place where we want to hear from the Fed that the economy is in a pretty decent spot. You know, good news is good news. That's a dynamic that I think will continue to weigh and parse through every word. But right now, this is a market that's within 1 % of all-time highs. You do have places around the world that I think are either at resistance or struggling a little bit.

4:10It's also been fascinating that that yen carry trade, which was so much a part of the tumult of August 5th, it's been quietly strengthening. And, you know, that's something that actually is a market participant in a lower volatility environment. You kind of want to see. Now, Julie, this feels good for a lot of people. Does it feel good for you right now? Would you buy into this rally? Yeah, I think for the very long term, you know, we have a lot of optimistic factors that are supporting us in the near term. I still have some concerns about how narrow the market is and what the strength of earnings, particularly in small and mid cap land look like.

4:44Guidance has been pretty conservative. I don't feel like management teams are overly ebullient, which is a positive thing, right, actually, right? When you have overly excited management teams and, you know, lots of enthusiasm, that's typically when we set ourselves up for disappointment. That's not the case here. And so that's what gives me confidence longer term. But in the near term, I'm not so enthusiastic or sure that some of these valuations make a ton of sense. The valuations thing is also an interesting point, Carter, because one of the recovery trades since those market lows has been in computer chips, and many of them in particular have rallied relatively strongly from the sell-off.

5:22What does that tell you about the strength of the overall tech sector and maybe by the value of the market writ large at this point? Sure, that's where the beta is. That's where the excitement is. You had the greatest ascents prior to the sell-off. You Even in big names like Nvidia, of course, they have been some of the biggest ricochets. But what really is remarkable for the year, the two sectors, of course, that are outperforming the market are the two tech sectors. Tech itself and then communications, which, of course, dominated by Google and Meta at 40 percent is essentially a tech sector.

5:54It's not AT &T and Verizon. So holding aside the two big tech sectors, the biggest performer here today is utilities. And leading even that is gold miners. It's been a defensive year, even so. You know, it's interesting. And you talk about defensives. You know, when I think of the leadership, and Tim just mentioned kind of the lagging leadership, if I look at the MAG-7, I think we talked about this a little bit last week. You know, the NASDAQ is up 19%. If you think about Tesla is down on the year. If you look at Apple, Microsoft, Amazon, and Google, they're all like up in line or less than the NASDAQ.

6:26And the only two outliers are NVIDIA and Meta. And so to me, you know, maybe this is that broadening out. Maybe this is like the signaling of new leadership. But if you're holding on to utilities as the new leadership, I don't think that's a great sign of a healthy market. I know Carter's not suggesting that. He's just highlighting the fact that that is doing better than a lot of these other sectors that are expected to be, I don't know, a bit growthier in the like here. So I just think that relationship with the MAG-7, there's been so much emphasis about the concentration, the high valuations there, the large contribution to earnings for the S &P 500, which brings me back to what Julie just said.

7:00It's like, OK, well, we're still expected or facts that I think has consensus at 11 percent EPS growth in 2024 and 14 percent in 2025. And so I saw Goldman today suggesting that maybe revenue growth consensus for next year at about 6 percent for the S &P 500 is probably a bit high and you might see 4 percent. So that could signal to me that you hit peak margins. And when you hit peak margins for a market that's very growthy like this, that could suggest we pulled forward a lot of performance in the stock market. And that's one of the things I'd just be hesitant about buying in as we're about to make new highs.

7:34All right. So this is a good point because there's a reason why. I mean, it's not that everybody's bearish, but there are folks out there who believe the market feels a little toppy given expectations. And Carter, I'll go back to you on this because you now put out a note this morning about a pairs trade that you see involving not just the broader S &P 500, but also gold as well. Can you walk us through that? Sure. So this, rather than all of the attention on gold, which I think is merited, it's the miners. This is a sloppy area of the market, always has been. In fact, before we look at the charts, the Philadelphia Gold and Silver Mining Index, the same level it was in 1984.

8:12Now, this ETF, GDX, which you see here, the question is, is it bottoming? It's a ratio chart, and that is depicting its relative performance to the S &P. One thing divided by another gives you a relative strength. Let's annotate it. second of four iterations. And so what we see here is that we're just now moving above the downtrend line, in effect, essentially since the COVID low or high, however you want to determine it. Another way to draw the lines is as follows. And you'll see here, whether you want to call it a head and shoulders bottom, it doesn't matter. Let's put them all together and compile the charts.

8:49And what we have here is, I think, the makings of an important bottom. Again, this is relative performance of gold miners to the S &P. And interestingly, of course, the GDX is up 26, 27 percent year to date. That handily outperforms the S &P up 17. And I think there's more to come. OK, so there it is. Carter, that's the trade that you've laid out. Let's throw it around here, this trade about the S &P 500 using a funding source to go into gold miners. Tim, what do you think? I agree with Carter. I believe gold's going higher and I believe it can go significantly higher over the next couple of years.

9:29It's not going to be a straight line. But if you take that October CPI turning point of 2022, market rallied on the highest inflation print we had because effectively that did maybe sound the top. S &P is up 55 percent from that point. Guess what's up also 55 percent from that point? Gold. I think gold is especially with a lot less volatility, by the way. So it's been a significantly better investment than owning the S &P. And I think that the backdrop and the setup for gold is part of what I think continues, both from some of the macro, but also some of the geopolitical, some of the political here.

10:04I also think gold miners, which have been flat to gold, and we know they typically, at least historically, have a beta of two, two and a half to the underlying, have done nothing. And in fact, only in the last kind of three weeks to month, month and a half, have gold miners started to outperform gold. That will continue. We just got a lot of earnings out of the gold sector. That operational leverage, I think, is finally back and something I would stay in the miners. All right, Dan, are you excited about this gold trade, this gold miners trade, as much as Tim and Carter, perhaps? Yeah, no, listen, I love Carter's work.

10:38And I think looking at it relative to the S &P is a really great way to do it. I think the way that Tim just mentioned the beta historically of GDX, of the gold miners relative to gold is also a really important point of this whole trade. So if you're not trading it relative to the S &P, I think you can just look at it relative to gold. Tim and Guy have been pounding the table on every pullback in gold. And, you know, it's made a series of higher lows and a series of higher highs. Now it's trading at this level that I think a lot of folks thought we'd be in some sort of calamity economically or market-wise if it was making new highs right here.

11:10And I think the GDX has a really good opportunity to catch up to maybe those 2020 highs in and around 45 or so. So to me, if Tim thinks that you're going to see an outperformance, if Carter thinks you're going to start to see an outperformance in GDX, that would be my initial target, up about 10 percent or so. All right. Well, during our midday call today to discuss ideas, Dan also flagged the action in oil prices. They're not over 7 percent in just a week and almost 9 percent since mid-July. So let's take a deeper dive now into crude oil and the rest of the commodity complex outside of just gold.

11:43Francisco Blanche of Bank of America does a lot of work with those commodities. Francisco, thank you very much for being with us. Let's talk about the oil trade and what's got you a little bit peaked in terms of interest for what's happening with crude. Hey, thanks for having me. Look, I think the commodities complex is pretty straightforward. You have some min-reverting commodities like oil, gas, but also corn, wheat. And then you have trending commodities. You were talking about one, gold, but also copper and aluminum. So this is not the 1970s. It's the 2020s. And I think in gold, just like we're seeing the trend up in gold for a host of monetary fiscal and geopolitical reasons, we are seeing oil prices mean reverting on the back of, frankly, a lot more supply, but also softer demand.

12:35So oil is really trading on on supply demand fundamentals. And we have a bit of an air pocket right now with with China slowing down here. What happened to all the geopolitical risk, Francisco? And not only that, I'm a commuter. I can already see it in gasoline prices here in the U.S. as well, at least in the tri-state area around New York City. Yeah, I mean, I think, look, I mean, the geopolitical backdrop has yet to affect supplies in a meaningful way. We did see it back a few months ago when we started to see the rerouting of vessels outside the Bubble Mandate Strait in the Red Sea throughout the Cape of Good Hope into the southern part of Africa.

13:20But in reality, we haven't seen any meaningful supply disruptions arising from this geoportical tension, as we are seeing today, between Israel and Iran. And I do think that the oil market only really reacts when you actually do lose those physical barrels in a meaningful way. And again, that's not happening. So I do think there's a geoportical risk, no doubt, but it hasn't happened. I'm sorry. Hey, Francesco, it's Tim. Thanks for joining us. Talk about the solidarity within OPEC, OPEC Plus, because that to me has been one of the most important developments over the last decade in terms of oil, in terms of at least discipline, where, yes, we know Saudi's always had to pick up the slack around the edge.

14:04But to some extent, it's been part of the stability in oil prices. And even near the bottom end of the range, I would argue oil prices have been remarkably stable in a volatile world. You're absolutely right. We've seen the lowest volatility in oil prices this year in more than 10 years. The oil VIX has been trading at around 20, with volatility implied in oil options at really very, very low levels. And OPEC has a lot to do with that. To be honest, the Strategic Petroleum Reserve has also been used to the effect of stabilizing prices by the White House repeatedly over the course of the last 18 months.

14:42first releasing barrels, but then refilling and sending signals to the market. So we've seen stability coming from both ends, OPEC plus and the SPR. So I do think that's been a factor. And then demand has been holding steady while supply came back. But we are now getting towards the end of that. And we need some China stimulus and we need interest rate cuts. And we need them soon because the economy is a little bit on the edge right now. All right. Francisco Blanche at Bank of America with the oil trade. Thank you very much. We'll see you soon. Thank you. All right, let's trade it. Julie, we're going to go to you first on this one.

15:15The energy trade is one that's been lagging. Do you like it now on the back of oil prices? You know, at Cain, we're long term investors. And so we're kind of 10 throws down in terms of investing in the energy sector. It's really hard to understand the politics and be able to predict them. I can't even really follow the politics of my first graders group chat for the parents, right? It's just not for me. But it's really important to pay attention to it if you care at all about the consumer, because it just has such an outsized impact. And it's politically very relevant as well. So the movements that we've seen this summer have been a little bit unexpected.

15:49We haven't seen the cohesion that I think we might have thought. And I think going forward, we should probably be looking for more volatility from here. And Carter, let's go to you. Just a quick comment on the charts. Does it set up one way or the other for that crude price? Yeah, I mean, a couple of things to keep in mind. Remember, adjusted for inflation, crude right now is at$23,$24 a barrel, the same it was in 1985 in the summer. So it's a smaller and smaller input in the economy in terms of cost to the home, to the consumer. And yet it is a big issue. As to the market, it doesn't matter at all, right?

16:25The whole sector is 3.5%. Many clients just say, look, I'm going to hold Exxon and leave it at that. I'm not going to worry about trying to figure out Halliburton versus Lumberjay, this one versus that one. I actually think it's a contrarian trade here. One should be long, and I would do it through XLE. All right, there you go, the sector side of things. All right, guys, thank you very much for that. Coming up on the show, we're watching Palo Alto Networks in the after-hours trade. Shares are on the move after reporting results. We've got details from the quarterly report coming up next. And then we're flexing into Tim's Blysep trade.

16:55Some of those names in the green today in the session. So how he's handling the moves when Fast Money returns. We're back in two minutes. You're watching Fast Money here on CNBC. We'll be right back.

17:20Welcome back to Fast Money. Turning now to an earnings alert. Palo Alto Networks just reported beats on the top and bottom line. Its stock is up 2.5%, almost 3 % in after-hours trading. Our Kate Rogers is covering the conference call taking place right now and is here with the latest results. And it's up, again, another 2.5%, almost 3%, on 2.3 million shares of volume. What gives? Hey, Don, while you mentioned here beats on the top and bottom lines for Palo Alto Networks Q4, the company also giving some upbeat guidance for Q1 and full year, as it says demand is likely to be strong for its services in this environment, Its full year annual revenue and EPS guidance had high end ranges that were better than anticipated.

17:57Another highlight likely moving the stock, the board directors authorizing an additional 500 million dollars for share repurchases. Now, on the conference call, its CEO, Nikesh Arora, mentioned some of the factors, he says, are driving an uptick in bookings, including AI, saying, quote, AI adoption is proceeding at a rapid, rapid rather pace. Innovation is driving the speed of adoption, while security might be an afterthought. At the same time, adversaries are leveraging AI capabilities to broaden attacks, better target organizations, and scale their malicious activity beyond the capabilities of defenses that rely solely on humans.

18:30Much more to come on the company on Mad Money tonight with a CNBC exclusive with Palo Alto's CEO. Tom, back over to you. All right, Kate Rogers with the latest on Palo Alto. Thank you very much for that. Julie, let's go to you with the trade here on Palo Alto. Is this a name that you would want to own? Yeah, I think this is really a compelling name. It really has a lot of market leadership in terms of both its reputation and its ability to execute, which is so important in security. And what I like about security is that most companies, they don't switch out their security vendors. They just add them on top.

19:00It's incremental spend almost always because they're all so concerned about any kind of data breaches that have such strong consequences. So I think for this one, it's really a category leader. The profitability is very strong. And the guidance was pretty good. Okay. All right. So let's talk a little bit about now, Tim, what we think about this Palo Alto trade. Is this something where you feel as though this is one that's worth doing now that we've seen what the aftermarket action has been like? Well, look, this is these are great numbers. This guide was slightly better than expected in a difficult backdrop and therefore continues kind of a return back to performance for the stock after a horrible Q4.

19:41And that announcement that came out earlier in the year and a gap down. But, you know, the question is always going to be, what are we going to pay for this stock? At, you know, 31, 32 times EBITDA on next year, it's not terribly expensive relative to itself, but it's not terribly cheap. I think consolidation in the space more than offsets some of the weakness that they've seen in the Prisma platform. And I think it's a stock that I would stay long, but I think it's going to have some volatility in any tape that's starting to challenge growth. All right, let's turn to another part of the tech trade.

20:12That's AMD. Those shares jumping in the regular session after announcing plans to buy server builders, ZT Systems, for nearly$5 billion in stock and cash. AMD CEO Lisa Su joined John Fort just this past hour on the Overtime Show to talk about the deal and how it furses the company's AI goals. We've been investing for the long run and investing in that strategy. So it's about our silicon solutions, which are really capable, our software solutions, which are really capable. And now we add sort of the third leg of that stool, which is the system solutions that really wraps it all together. All right.

20:49AMD has been lagging a number of its peers and chips lately. Dan, what do we think about this stock? Yeah, we spent a lot of time over the last couple of weeks talking about Dell's margins in the server business. And then Super Micro, I think it was last week or two weeks ago, they had 17 percent gross margins a year ago. They just reported 11 percent, which is half of that at Dell's. You look at an AMD with 53 percent gross margins, you say to yourself, this might be difficult for them to integrate this, you know, sort of acquisition. This is one of the largest acquisitions they've ever made.

21:17I think Xilinx was bigger than that. And so to me, just a low margin business, I'm not sure the verticalization of this is that integral to them building out this platform and having competitive chips that go into these servers that go into these data centers. So to me, the market's saying yes right now, which I think is interesting, but it's not something that I think is like that importantly incremental. Carter, looking at the chart there, even with a four and a half percent gain today, that's pretty much all of it. All of its gains this year have happened today for the most part. Carter, what do we think about this chart?

21:47Yeah, I mean, you know, this is beta. This is aggressive, speculating, to say the least. I mean, to think that at its low just a couple of weeks ago, it lost 46 percent of its value. It lost half the value ever created since it opened shop. And so now, yes, a bit of a recovery, but this is high risk, high reward, high beta. It's a very cyclical business. We know this. And at this point, I guess if I were long, I'd sell calls. Okay. There's the trade. Thank you guys very much for that. There's still a lot to come here on Fast Money. So here's what's coming up next on the show. Gains for the Blicep trade, how lifts drive higher, and Estee Lauder's reversal are fueling Tim's acronym.

22:29A check on Netflix next. Plus, Google's IPO turns 20, and it's been a wild ride for the sultan of search ever since. So what's next for the tech giant as regulators amp up the pressure? You're watching Fast Money, live from the NASDAQ market side in Times Square. We're back right after this.

22:57Welcome back to Fast Money, a big day for two stocks in Tim's Blysep trade. Estee Lauder is shaking off some pre-market losses of more than 8 % to close out just 2 % lower on the day. The company gave weaker guidance in its latest earnings report and announced its longtime CEO would depart at the end of fiscal 2025. Lyft, meantime, continuing to grind higher, up 3.5 % for its fifth straight day worth of gains. It's up nearly 20 % in just the past week. So, Tim, are you flexing on these moves? It's hard to flex. In fact, I probably need to hit the gym a little bit. I mean, if you look at the performance of Estee Lauder over the last couple of years, all it does is continue to tell you how weak China has been.