SHOP-A-PALOOZA IS HERE! 11/27/23

0:01Live 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. Digital demand as the holiday shopping season kicks into high gear. The early winners are the e-commerce kings. Will this be the year that the onliners trounce the big box names? We'll debate. Plus, a heavyweight battle, a new study, revealing that Lily's Manjaro is a better drug for weight loss than Novo's Ozempic. The doctor behind those results will join us in just a few minutes from now. And later, a glittering milestone for gold. One foot out the door at Foot Locker, why one of our traders is selling, and the options action for Salesforce ahead of results later in the week.

0:40I'm Sarah Eisen. In tonight for Melissa Lee, coming to you live from Studio B at the NASDAQ. On the desk tonight with me is Tim Seymour, Karen Feinerman, Dan Nathan, and Guy Adami. And we're going to begin with a mixed bag of early holiday shopping results. Adobe Analytics finding spending on Black Friday was up almost 8 % versus last year. Cyber Monday expected to post solid gains this year, too. But heavy promotions and deep discounts have been the driving force to boost in-store traffic. The early winners so far include Shopify, Etsy, Amazon, as shoppers have been content to search for deals from their couch instead of braving the crowds.

1:15Other early winners here in the retail space who have embraced buy now, pay later. That was a big sub story today. Check out shares of Affirm as BNPL. It's the number one pure play stock there. The stock closing out the day up over 12 percent over the last 30 days. A firm is up nearly 75 percent. So what does this seemingly mixed start to the season tell us about the consumer, the economy and retail and what to do with these stocks? Karen, are you surprised? I am a little bit surprised because we've heard a lot about the consumer being weak in the last several weeks. And so this would sort of fly in the face of that.

1:49One of the names talked about Etsy, which is one that I own. So this is only an e-commerce site. I love the Etsy model, which is very asset light. All they do is just take a posting fee and they take a percentage of every transaction. And so I also think this is something a little more unique and shoppers can find something probably a little bit less expensive. So I love the way that's positioned. We did we did see Target last week, which was sort of a reprieve from what we thought would be terrible. So maybe this shouldn't have shouldn't have been a surprise. I am a bit surprised, though, with how how strong it seemed to be today.

2:22But there's still I don't know how many days left in the season. A lot can happen. And extra days to the margin. True. Extra days this year. So what do you think of this trend, Guy, that's shaping up where the online retailers are doing better than in-store, which which typically happens in this environment where we were expecting it to be weak because of all the guidance that we got from retail? Yeah. What's interesting is some of these stocks that is seemingly left for dead. Tim talked about this last week. I mean, Gap stores, for example, look at the move we've seen in Gap, the relief rally we've seen in Target.

2:55But does it suggest that they're operating better or is it just a relief rally off of oversold conditions? This is the way I look at the retailers, the consumers out there. The retailers across a swath of companies have talked about basically things slowing down in a pretty meaningful way in 2024. I agree with that. If California is any indicator, I think the unemployment rate in California now is up to 4.8 percent. That's typically a leading economic indicator for the rest of the country, maybe by six to nine months. So if that is, in fact, the case, I think you're going to start to see a pretty severe move higher in the unemployment rate, which I don't think is going to be particularly positive for retailers.

3:31I think the bounces you've seen, especially in like a target and a gap, are oversold condition bounces that need to be sold at these levels. There were some there were some signs of improvement in target, certainly in the profitability picture. Gap, too. Right. Yeah. Listen, again, improving, Target was a disaster. Target just seemingly got their inventories in order. But the problems they face, I think, are secular in nature. They're not going away anytime soon. I mean, Gap Store's problems have been in place for many years now. Target, for the last year and a half, two years, when you're in the middle in this environment, basically Target as opposed to a Walmart, you're in no man's land.

4:09And I think Target is still there. What do you think, Dan? You know, one of the more interesting things I read about the weekend and to your point about just this kind of shift more towards online, maybe that's a bit of the COVID behavior kind of just kind of working its way through. We heard a lot about the pull forward of this sort of e-commerce behavior. And it seems like Black Friday is dead. It's going to be cyber month, November from here on out. But the Journal and article about Amazon overtaking UPS, FedEx, not yet USPS on deliveries. And they're expected to do like six billion or something deliveries.

4:40This is Amazon alone to packages here in the U.S. So I think that's really interesting. I think it just kind of cements the fact that bricks and mortar is going to have a tough time from here on out. But to me, you know, again, I think that, like, we're going to hear great things out of Amazon. I think to your point about some of these more niche stories and Etsy and the like here. And so, you know, I think that the department stores were very clear, like, it's kind of over here. And some of the big box stuff last week, at least what we heard, for the most part, was not particularly good. And if you do not have a good barbell strategy, you're dead in the water in retail.

5:09I feel like the promotions online also, like it used to be you had to go to the store to get the best deals. But there were some steep discounts online, just anecdotally. Well, indeed. And I think also the elongated, you know, Cyber Monday, Black Friday. I mean, this season's gone on forever. So the fact that those numbers pretty good over the weekend on a comp basis, those comps aren't the same. And actually, the comps would make it tougher for them to to hit those comps. Amazon, by the way, is as a stock, is a chart. That's a chart that's basically working off a multi-year base. I think it's breaking out to the upside, and I think there's reasons for it.

5:40But I look across the retail space, and there's very different stories based upon segment. The Target versus Walmart spread has been working because Target was so bad. It wasn't that their numbers were so good. And the trends that have been so good for Walmart are things, and as someone that's long Walmart and loves the company and loves the execution, there's disinflation for sure. There may, in fact, be some deflation, and it gets back also just to the consumer this holiday period. I think I think a lot of the retailers are very resilient here. And I think the consumer is cautious. As we've all said, Guy was pointing this out.

6:12You look at a basket of goods. Bloomberg got a couple of quotes out this morning in terms of a basket. One hundred and twenty bucks, one hundred nineteen and a half dollars buys you what one hundred bought you pre covid. The consumer feels this groceries are up twenty five percent. I know gas is cheaper. There's no question this is translating into where the consumer is this holiday season. And then there's segments. And I'll just tease the segment because Karen's got some interesting stuff to say later on in the show about a particular specialty retailer. I just think depending on the sector you're in and where you sit, I mean, there's certain parts of, for example, athleisure and whatnot.

6:42I think you've pulled forward a lot. Right. It does. It does feel like nobody's spending on home goods, but they're spending on Taylor Swift tickets, for instance. Guys, another potential way to play retail may be coming because CNBC now confirming that Shein, the major online retailer, has filed confidentially to go public. This was first reported by The Wall Street Journal. It could be one of the biggest IPOs in years. The last time Shein raised money in the private market got a valuation of$66 billion, and that was down by a third from its prior valuation. This is a company that they don't call themselves fast fashion.

7:16They like the on-demand fashion. They've totally changed the model and have captivated American consumers. Don't call them a Chinese company. They've been hard at work in Washington trying to convince everyone. The manufacturing is done in China. The headquarters is in Singapore, and so is the CEO. The retail market is all over the globe. They don't sell in China, and they have a huge growing market in the U.S. What do you think? Well, I think it has a lot to not like in that, okay, you can call it, you know, on demand, which is so different than fast fashion. I can't even begin to tell you how different it is.

7:50And you could say they're not a Chinese company, but OK, they seem to be. So those are two things right now that are fairly out of favor, right? So we've seen with the K-Web and we've seen Alibaba, for example, just valuations just get cut, cut, cut beyond what any reasonable model should show they should trade it. However, here we are. So this is one that I have to see the numbers, but I can't imagine I'll be gung-ho to jump into this one. I don't know. There's a lot to consider. There's a lot of competition as well, Timu. It is one of the most valuable startups, though. When you think about Baba, we know that model.

8:28Really, we got to know it as the Chinese Amazon, right, for all intents and purposes. But if you look on the flip side of that, look at Pindadao, the PDD, okay, so a very unique retail model out of China. That stock is raging. I think it's at 52-week high. It's got$150 billion market cap. They're expected to do$28 billion of sales. But then you look at JD and you look at Baba on the flip side of the models that we know. And I say that, you know, Shannon obviously is a very different model than those. And that's maybe why it will work. I don't know it well enough. I know you and Deirdre Bosa. You guys have been talking about it a lot for the last few months on CNBC.

8:58And I've taken a look at it. Well, there's a reason. It has more than 330 million customers around the globe. I mean, it's really taken people by storm. and I think has revolutionized. They have this secret algorithm where someone orders. They have designers that work on the clothes, but the algorithm helps sort of determine what consumers want based on what they're ordering. How do you think our regulatory body is going to like secret Chinese algorithms? It's not a Chinese algorithm. I know, but it is. You know what I mean? I'm just saying, who knows? It's going to be messy. I think that consumers like$5 skirts, and that's really what I think has been revolutionary.

9:32And they don't have any inventory. Guy, why are you smiling? Why are you looking at me? I'm just smiling because I'm happy. Sarah's pointing out some important parts of the story here. It's a Monday night. Rangers play tonight. I'll say this quickly before. Look how breaking news is. We're jumping on it. Real quick, in terms of fundamentals, I think we've learned the hard way at times in Alibaba. Fundamentals don't matter. A lot of this is basically predicated on how these stocks trade. If the fundamentals mattered in a name like Alibaba, the stock would be, I think, almost twice where it's trading at now.

10:00So we can talk about fundamentals all you want, but in terms of these stocks, you have to actually understand how to trade them. And I'll say this quickly. Alibaba at 77, I think, is pretty interesting. Interesting. That's true. Yeah, 100%. Let's dig a little deeper now on the early returns from Black Friday weekend and Cyber Monday. Our Courtney Reagan has been live all day in Chino, California at a Walmart fulfillment center. Courtney, you've been listening to our conversation. What are your takeaways from these first few days of the holiday season? Yeah, you know, I think it is really interesting, the traction that we've seen online, especially what we heard out of a lot of the retailers for the third quarter, where many of them actually reported digital sales down year over year, in some cases more so than the sales in store.

10:43I do think it's very interesting, the data that we've gotten from Sensormatic and Retail Next, which tracks shopper traffic in store, and both said they were stronger than expected on Black Friday. So I think there's something to be said there. I was at a mall on Black Friday. I saw it sort of pick up all day long. I think it's just proven that the consumer is much stronger and still has dry powder than at least some executives were worried about for this first big weekend. But we do still have a very long season because of how early Thanksgiving fell. That being said, Walmart CFO John David Rainey kept talking about how he had gotten more cautious on the consumer because consumers were buying during these promotional events, but less so before and after, which makes a weekend like this really, really important.

11:28That being said, as you mentioned at the top of the show, Sarah, Adobe increasing their expectations for Cyber Monday today after what they heard over the weekend online. I talked to executives at third-party logistics companies, ShipBob and Radial, and they fulfill orders for a lot of these specialty retailers online, but also a lot of some of the big box retailers, And all of them said that they are really bullish on what's going on this season and so far today. Courtney, how indicative are Black Friday and Cyber Monday sales for the rest of the holiday season? Yeah, so it's a really important weekend.

12:04Adobe does think that this Thanksgiving to Cyber Monday period could make up about 17 percent of the total online sales for the whole season. But what honestly ends up happening, Sarah, is you see this big bump now, and you sort of see this lull for a couple weeks. Consumers wait until those expedited shipping cutoffs start to sort of fall for their favorite retailers online, and then you see spending pick up again, and then the last Saturday before Christmas is always really, really important. So I expect to sort of see this rollercoaster of action for traffic both online and in-store, which is why this week becomes so important for retailers to grab as much as they possibly can when it comes to sales and traffic because then we kind of die off a little bit when it comes to our interest in shopping and we take advantage of other things during the season like celebrations, travel.

12:53I know you talk about going to see concerts and just things like that to help celebrate the season in a more normal way which again a lot of retailers have sort of pointed out this seems like a much more normal season in the way that consumers want to celebrate it than they've seen in the last several years. Courtney, thank you. Just watching those packages zip by. In the background, Courtney, right again, maybe the soccer nets that I ordered for my kids from Walmart are back there. Well, now, you say that. If they're watching, now they know. They're not watching. How do you know this? Because they usually don't watch.

13:23Okay, you don't know is the answer. They're more squawking the street, folks. Disappointing. Yeah, no, they're more. They've been watching a lot of sports lately. They were on CNBC on Friday. Hold on. Before we have time, does that mortify you or does that make you happy? That they're watching sports? It does not mortify me. It makes me happy. No, it's good. I'm going to watch the Ranger game tonight, MSG Network. They watched the Michigan game on Saturday. Yeah, they did. They watched the Eagles. We stayed up late into overtime. F1 is why I got into it. Killer, killer doc that you did. Thank you very much.

13:54Thank you. Yeah, that was all inspired by them. So let's trade this, this retail story, which is important because we have to figure out what's going on with the consumer. It's not really clear. What do you think? I think the consumer is still there, though. I think we've had some headwinds, some tailwinds. So the headwinds are just talk of the consumer being under pressure. That's one. The tailwind's definitely still employed. Wage is still going up. Oil coming down. Those are all good things. And interest rates, of course. That's been a big thing. So maybe some of the retailers that have been really hurt, a Home Depot and a Lowe's, are starting to actually see a little bit of life as we see rates come down and the idea that, OK, maybe real estate will recover.

14:34Didn't get that in new home sales today. No, we didn't. But those stocks are doing better. Yes. And what was California unemployment rate? 4.8, I believe. It was 4.7 in September. I think it's 4.8 now. And listen, I think the Fed would never acknowledge this, but they want the unemployment rate across the country somewhere between 4.5 % and 5%. I think they're going to get what they wish for, and I don't think that's particularly bullish for the consumer stocks. Well, especially if the consumer has got a job and we have record unemployment. and this is what you get from the consumer. I mean, it's not a great stake or speak to.

15:05And just quickly, on a firm, because this whole thing that you've seen by now, I mean, such a seller of that one. Again, take this rally you've seen from 12 to 29. If you think credit's getting better for the consumer, if you think this company, their funding base and their profitability, don't even call it a credit story. Call it a company that survived and basically was built, I think, off of free money. That's a stock that's had a huge move, and I think you're fading that one. It has. Major Wall Street firm delivering its 2024 S &P 500 forecast today. Wells Fargo Securities going with 46.25.

15:36That's just 75 points from today's S &P 500 close. Chris Harvey is behind the forecast. Chris is the firm's head of equity strategy. So you think the market does nothing next year? A whole lot of nothing. Why? Why? Because if you look at things, it's really hard to get excited. If we have better growth, then the Fed doesn't do anything. If we have worse growth, then numbers are going to come down. The Fed will eventually cut. The second half will be better. But the first half is going to be really, really sloppy. So we just can't get excited about things. And the other issue is everyone's moved over to one side of the boat.

16:11Credit spreads are at all year-to-date tights. Equity market's up 20%. The VIX is at 13%. Every time we've gone into a new year with the VIX at 13%, we've seen spikes. We've seen the equity market pull back. And it's just not a great setup into 2024. for. I feel like the consensus is a little more positive than you are right now. This idea that we might go into another year with no recession. Everyone expected it this year. It didn't happen. If we don't have one again next year, that's a soft landing. And the Fed's done raising interest rates and might start to cut, which could be good news. So here's the problem with that.

16:44The cost of capital is a lot higher this year than it was last year. And if the cost of capital is higher, multiples can't go higher. The growth that we have is pretty, it's okay. It's not great. You You can only have a big recovery if you have a big recession, and that just hasn't occurred. So at the end of the day, you're stuck in this catch-22. If things are better, Fed's more hawkish. If things are worse, then numbers come down and things aren't great there either. But Chris, so we're in a sub-13 VIX environment, and I hear you that you don't see a lot of upside. The things you're worried about, I think I am too.

17:15But do we go to 46.50, just kind of dribble higher? In other words, think about the year we've had. Think about the volatility within the lines. Think about some of the dynamics. we're going to start the year with where you've had a Nasdaq rally 14 percent in 20 sessions. Just kind of curious how you see, because I think a lot of people, especially with the broader and a more constructive, potentially rates environment to invest in from an asset allocation perspective, that wouldn't be terrible if it was a nice, smooth, calm road. Right. So can we go higher from here? Sure, we can go a little bit higher.

17:45But I just don't think you can go a ton higher. People have talked about 5 ,000. I don't see how you get to that level. And if you look at corporate bonds, if you look at the alternatives, there are things that are pretty attractive. And I hate to say that being the head of equity strategy, but you can park money at the front of the curve and make a pretty good rate of return and not put on a whole lot of risk. So, Chris, we always talk about the market is not a monolith. So do you think that there's pockets within, like, let's say the Russell 2000 or something like that, where you could see different growth and then maybe the Magnificent Seven take a breather for a while?

18:18So we want to be really constructive on small caps, but we just can't get there because there's too much operational leverage and there's too much balance sheet leverage. They're really oversold. But until we see the Fed cutting rates, we can't get there. As far as other sectors, I hate to say it, but the magnificent it's not so much the magnificent seven, but it's the Uber caps are still in a good place. They're not as effective as rates. They have better growth rates, better balance sheets. Valuation isn't horrific. This is not the 1990s. Right. And they can still work in that kind of environment.

18:47What we want to do is we want to go to the places that are oversold. We just upgraded utilities today. We upgraded health care. Those are areas that have good valuations, decent fundamentals. And most people really aren't there at this point in time. Chris, Guy and I had a conversation last week with the illustrious Lizanne Saunders from Schwab. And she made a really good point to us or some of these folks who are calling for a recession and maybe it gets pushed out another year, that sort of thing. And her call has been that there's just been rolling recessions in different parts of the economy.

19:18And it's been reflected in the stock market. You look at the sort of stuff that has underperformed this year in a year that the S &P is up more than 18 percent or so. How do you like is that making your job harder as a strategist? Karen just asked you about small caps. But there's a lot of things that have been going on under the surface. We pointed out on the show here, if you do think about things in monolithic terms and say, oh, how can the market go higher with the banks acting as bad as they are, that sort of thing. Like, does that give you some hope that maybe, you know, a lot of these folks that have, you know, 5 ,000 and up targets at the end of 2024 could be right?

19:48Listen, you can they can always be right. I can always be wrong. The issue I think you hit on something that that's perfect. So just talking about the economy, what we've been talking about is an economic malaise. Right. It takes a ton to bring bring the U.S. economy into recession. It takes a ton to bring it up to three percent. But you're right. We've had this kind of asynchronous growth. Some stocks, some sectors are going down. others are going back up, and that just makes this kind of lackluster type of growth. And we think we're going to see that going forward. And until we see a real washout, one of the things we were talking about is we go back to Silicon Valley.

20:22Silicon Valley was an event. It wasn't a clearing event. A lot of balance sheets, a lot of people still just have situations that they need to clear out. If you look at the banks, you look at the insurance companies, people have duration on, and they're underwater in a lot of these positions. It's hard to put on duration at this point in time. and that's keeping the cost of capital higher. As long as the cost of capital stays higher, it's really hard for me to get to a much higher price target. Chris, thank you for coming in. I love post-Thanksgiving when the New Year outlooks come out, even if they say nothing's happening.

20:53Chris Harbin and Post-Margo, let's trade it. Tim. Well, I like where Chris is going. I think there is a barbell approach. Right now, it's hard for me to believe that the leadership we've had is the leadership that we won't continue to have. They will or won't? They will continue? We will continue to have the same leadership. Maybe I said two double negatives. Maybe that's a double. I don't know. I think there is an opportunity to make money in utilities and staples and energy and health care. And I think they will be defensive sectors for next year for some of the obvious reasons, especially the underperformance.

21:23But if we peaked in rates, if we peaked in some of the dynamics that I think people also are really looking at a lot of these utility companies and saying they can't actually exist in the new rate environment. That's one of the reasons why I think the overshot to the downside. So, you know, my overall view is the leadership, though, is important that we've had. As much as we want market breadth, I think it's going to be tough. All right. What is it? 28 percent of the S &P is a magnificent seven. Yep. Coming up, don't call it a comeback. Crypto's revival helping boost Coinbase to 18-month highs.

21:50Some of our traders are loving the move. So can coin keep climbing? We're going to debate that next. Plus, a shining safe haven, gold, jumping to six-month highs as the dollar dips. The 24-carat trade when fast money returns. Back in two minutes.