In short
Summary of CNBC's "Fast Money" Episode: Stocks at Fresh 13-Month Highs as Investors Eye the Fed, and Biogen’s Latest Boardroom Drama (6/13/23)
Episode Overview In this episode of "Fast Money," hosted by Melissa Lee, the roundtable of traders discusses the surging stock market, Biogen's board drama, and implications of the Federal Reserve's upcoming decisions. The episode highlights significant market movements, inflation data, and corporate developments impacting investor sentiment.
Key Highlights
Stock Market Performance
- Indices Performance:
- S&P 500 and NASDAQ closed at their highest levels since the previous April.
- The Dow Jones reached its best closing since February 2023.
- Inflation Indicators:
- Consumer Price Index (CPI) recorded the smallest gain in over two years.
- Energy prices decreased, particularly a notable drop in egg prices (14% from April), marking the largest month-over-month decline in 72 years.
Federal Reserve Outlook
- Trader Sentiment:
- Discussion centered on whether the Fed will impact the current rally with its upcoming decision.
- Traders speculate that the Fed has the room to adopt a hawkish stance due to improving market health and CPI trends.
- Market Reactions:
- Concerns about inflation remain, especially with core CPI showing stubbornness.
- Potential for interest rate hikes persists as the Fed is seen as data-dependent.
Biogen's Boardroom Drama
- Board Changes:
- Controversy arose as Biogen's director, Alex Denner, announced he would step down while nominating his partner, raising conflict of interest concerns.
- Alzheimer's Treatment Scrutiny:
- European regulators are hesitant about Biogen's Alzheimer’s drug, questioning its effectiveness and associated health risks, impacting stock performance.
Company Updates
- Tesla: Noted for its consecutive days of gains, reflecting strong investor confidence in the electric vehicle market.
- Apple: UBS downgraded Apple from buy to neutral, citing potential softening in iPhone and services growth despite its all-time high stock performance.
Emerging Market Insights
- Japan’s Economic Recovery:
- Japan's Nikkei index reached 33,000 for the first time since 1990, attributed to stabilized currency, deflationary pressures alleviating, and international investments.
Key Takeaways
- Market Dynamics:
- Traders are cautiously optimistic as the market reaches new highs amidst mixed signals from inflation data and Fed commentary.
- Investment Strategies:
- The panel discussed varying investment approaches, emphasizing caution amidst potential market corrections.
- Sector Specifics:
- Biogen's ongoing issues with its Alzheimer’s drug and corporate governance are critical factors for investors in the biotech space.
Discussion Points
- Inflation and Federal Reserve:
- How should investors prepare for potential rate hikes and their implications on equity valuations?
- Investor Sentiment:
- With retail investors bullish, what strategies should they adopt to capitalize on the current market climate?
- Corporate Governance:
- The impact of Biogen's board changes on stock performance and investor trust.
Conclusion This episode of "Fast Money" provides a comprehensive analysis of the current economic landscape, focusing on stock market performance, Federal Reserve decisions, and corporate governance issues, particularly with Biogen. Investors are encouraged to stay informed and consider the implications of these dynamics on their strategies moving forward.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:00Right now on FAS, unbelievable. Stocks keep surging. The S &P &NASDac hitting fresh 52 week highs while the Dow is just 1 % away from doing the same. With inflation cooling and a Fed decision less than a day away, can the rally roll on? We'll debate that. Plus, Biogen Blue is a stock dropping as the details of its boardroom drama get released. It involves a polarizing director, his live-in partner, a baby in a bitter divorce battle. You heard that right. The details in the fallout straight ahead. And later, Tesla's lucky 13, the winning streak rolls on. A downgrade for Apple as it sits right around an all-time high and stocks in Japan do something they haven't done in 33 years.
0:35I'm Melissa Lee. This is Fast Money. We're live at the NASDAQ MarketSite on the desk tonight. Tim Seymour, Karen Feinerman, Dan Nathan, and Guy Adami. And we start off with fresh 52-week highs for the S &P and the NASDAQ, both indices putting in their best closes since last April. Again, the Dow, meantime, posting its highest close since just before Valentine's Day. The latest moves coming after new signs inflation is cooling. The Consumer Price Index posting its smallest gain in over two years in May as energy prices pulled back from last year's highs. And egg prices, yes, eggs, seeing their biggest month-over-month drop in 72 years.
1:10Go buy those eggs, falling nearly 14 percent from April. Meantime, Treasury yields rose ahead of tomorrow's Fed decision. The rates on five - and two-year notes all closing at three-month highs. So is all of this a recipe for this rally to keep going, or will the Fed tomorrow bring investors back down to earth? Guy, what's the risk here? First show we've ever led with eggs in the 16 and a half. You think so? You think we've never? No, I know so, without question. I mean, it's fair that we did it. Even during the bird flu? The Fed has complete air cover now to be as hawkish as they want to be. I mean, given where everything is, you know, given the health of the market, given the fact that the credit markets are intact without question, there's no reason for them not to be hawkish, in my opinion.
1:47And I tell you, they could take a page out of the Bank of Canada's book and maybe surprise some people tomorrow and get us a dose of reality. And, yes, inflation, the administration came out and said, our plan is working, inflation has been cut in half. I mean, there's something somewhat disingenuous about that because it's coming off 9%. And, you know, here we are still at a heightened level. But there's still work to do by the Fed. And tomorrow should, given the way the market is, tomorrow should give them a lot of air cover to do exactly that. But it sounds like the air cover that you're talking about is the rise that we've seen in equity prices.
2:17The bond market is doing as opposed to the data. They're data dependent, not market dependent in theory. So don't we get a pass here? Don't we get a pause here? I think we're getting a pause. But the CPI data, if you look at the core, is basically where it was in the second half of last year when we were really worried about CPI. I mean, it's very stubborn. Services inflation, I realize, were 15-month lows. This is part of what the Fed's debating. We know about the labor data where there's essentially 1.79 positions that need to be filled for every person actually out there looking, which is more than two times the natural average.
2:52So the macro certainly says Fed needs to remain, and it will be a hawkish pause tomorrow. Look at Fed Fund futures. We are now actually between now and year end rates go higher, not lower. So, I mean, this is pretty dramatic what's happened over the last couple of days. Nobody's pricing in lower rates, which is interesting to see that equities aren't flinching. At one point, part of the equity rally was based upon rates will come down and all the math that you do when you're doing a discount, you know, doing an equity model or discount rate, etc. So interesting times. I think it's it's positioning for equities right now where people are cash levels sentiment.
3:30investment really dictates that actually all that easy pain trade stuff, I think, is getting a little bit long in the tooth. I agree with almost everything Tim said. I think, you know, to the extent that the Fed is data dependent, the data supports them continuing to raise, actually. I know this was a little bit cool, but still, if you look at the absolute number, it's way higher than it needs to be. So I think they can pause if they want. I'm not really sure what it gets them, actually. So if I were they, I would continue to raise. We talked about the other day, 25 basis points one way or another doesn't really matter.
4:02No, I think the rhetoric matters just as much. But if I were there, I would continue to raise. I think that the market can handle it. Labor can still handle it. They're not done. Inflation isn't where they want it to be. So if I were there, I'd keep going. The market's not positioned for a raise tomorrow, is it? Or do you think it is? Stocks, these guys all said it. I mean, the stock market seems really okay with rates where they are right now because they wouldn't be rallying like this. Go back to like 2021 when we saw a lot of unprofitable tech, recent IPO tech. We saw SPACs. We saw a whole host of things started selling off well before the Fed did their about face on inflation.
4:38I think a lot of the smart money was guessing that they were going to have to battle this. They're going to have to raise interest rates. They're going to have to get back to normalizing interest rates. And I guess what I think we all have to figure out is I think the Fed is not going to get inflation down to 2%. I think that that number is going to get ratcheted somewhere between two and four. We have a market now. It's probably three. So then where does Fed funds find itself in a normalized sort of world where we probably have 3 percent inflation? And I think some of the things that's going on, I know this word that Guy uses every so often or never.
5:08Which one? Goldilocks? I've never. No, no, no. Please don't. I was in such a good mood. OK, because maybe there's a scenario, though, where unemployment that we've all been talking about. How many strategists do we have on last year? How many times did us who are not economists say, where does unemployment have to go? It has to come off of 50-year lows and it has to go here to get the Fed okay because that one sticky component of inflation was wage growth, right? So maybe we do live in a world where unemployment stays at a really low level. Maybe interest rates have to stay higher. Maybe we have to become more comfortable with inflation readings that are not 2 percent, that are maybe 3 percent or between 3 and 4 percent.
5:45I don't know. And that's the stuff that I think I agree with you. They should do 25. The idea of a pause, if we do see inflation tick back up, the economy gets hotter, then they have to get back to do 50. That's what markets don't like. They do not like uncertainty. So stay the course right now and do the job that you said you were here to do. What was interesting that we learned from the latest FOMC Minutes is that there was a little bit of a sort of a debate on what wage inflation meant and whether prices drove wage inflation or wage inflation drove prices. and do we need to see wages actually come down in order for prices to come down?
6:19And so if you separate the two and if there is that argument and enough evidence to say, you know what, maybe wages are a function of prices in general going higher, then maybe the Fed can leave that job picture okay. Maybe we don't have to see 5 % unemployment. I think that's the bullish scenario is what you just outlined. That's the no landing, another one of those terms.
6:46I'm going home. I'll beat the traffic. But no landing. Now, of course, there's going to be a landing. I mean, Julian Emanuel was on last night saying, I mean, I'm paraphrasing and I apologize, but it's almost a foregone conclusion that something's going to happen. I'm surprised it hasn't happened yet. I don't know if that's a good thing or bad thing. I think with each passing day, it probably becomes worse because people start to feel as if Maybe we dodge this bullet. I don't think we've dodged it. I just think the bullet's come yet. Well, with each passing day, we're also getting just that broader market.
7:16I'm starting to see emerging markets break out. I'm starting to see industrials break out. We're going to talk about airlines. So in parts of the economy that we're waiting to kind of normalize, this is the part of where we are. Part of the data today, part of opening up with eggs, was pointing out that there's disinflation in food. So groceries and staples and a lot of these places that have been safety trades, big rotation trades. I think you're going to kind of continue to see that. If you look at the Bank of America fund manager survey, you're seeing that, look, tech, mega cap tech is still the most crowded trade.
7:45And so some of this has to be worked through. But this is a market that until semis stop making relative highs to Qs and Qs relative highs to the S &P, I think the market's going higher. And I think semis and the Qs are going to test those highs. All right. Well, Wells Fargo sees a key opportunity to fade the Treasury market in a short window leading up to tomorrow's Fed decision. and Chair Powell's news conference. Mike Schumacher is the firm's head of macro strategy. Michael, great to have you with us. I had to read this a couple times because this trade almost sounded too cute to be coming out from a respected strategist, blah, blah, blah, blah, on Wall Street.
8:16But you're basically saying to fade the move that happens between 159 and 225. Whatever happens between those two markers of time in the Treasury market, you want to go opposite of that, right? Maybe even 226, 227. But yes, basically 2221. Whatever it takes. Yeah, tight market. Yeah, so the gist of it, Melissa, it's really interesting. So the market gets the statement. Statement speaks for itself. It reacts one way. Chair Powell takes the mic, and boom, things go the other way. It's been true in rates, true in equities, true in FX to a degree. And I think he tries to walk back some of the things in the statement or to talk about what ifs.
8:51It's not what markets want to hear. So it's really been striking. It's been time after time after time for the last year, really. So what do you think will be his message? What do you think happens, given the CPI data that we got this morning? What do you think his message will be ultimately? Yeah, so I'm in the hop camp. I don't like pause. That's probably not the right thing. But the Fed's still going to try to convey the message. And this is really Powell's job that, hey, we're not done. We've got more to do. Yeah, CPI came out pretty hot in line with consensus. But are we going to have a party because core is 0.4 percent?
9:22I don't think so. Nobody likes that. Too hot. And yet the Fed doesn't really want to go again right now. Should they? Maybe. But will they? I doubt it. So the challenge for Jay Powell is to say, we're not going to change the funds rate and then come out in the presser and say, oh, by the way, we still lean hawkish. Pretty tough job. I don't know if anybody can pull that off. So how does the Treasury market move in advance so we can figure out what to do? Because we need to do the opposite of what happens leading up to the press conference. Yeah, it's all pretty confusing, right? So you probably get a fairly modest rally, I think, from, let's say, 2 to 225-ish.
9:56And people say, oh, five minutes, better do our thing. Let's wait and hear from from the big dog here in a minute, and then things back up because he says, oh, we're not done. And it's possible. I'd expect you get this question. Last week, Bank of Canada surprised with a hike. Australia surprised with a hike. Could maybe, perhaps, the Fed surprised with a hike or two down the road people don't price? Sure it could. If inflation stays hot, probably has no choice. But I doubt that's really the main topic for tomorrow. So to try and get that message out there that, hey, they're not really done, just taking a bit of a hiatus, that's a tough one.
10:30What is the reinversion of the yield curve telling you from 110 basis points to 40 to 86, probably on its way back to a percent? What does that mean, if anything? Doesn't mean too much in terms of the economy. What it really tells me is you've got two really huge groups of investors. The group of long-end investors is very different than the group of short-end investors. Different motivations, different goals. Think about a life insurance company, yields hit a certain bogey, boom, they're in. Doesn't matter what Jay Powell says tomorrow. Doesn't matter what I say today. They say we're good. We fit our target.
11:00We're fine. So whether real Fed funds is 2%, one and a half, it's irrelevant. It's true of pensions as well. Whereas on the front end, you've got a very different set of folks. Also true on the issuer side. So very, very divergent set of views out there, a very bifurcated set of players in the capital markets. That's what I think you get out of it. Do you think one factor in the Fed's thinking is where markets are right now? Record highs, basically. I do. And it's called a tightening cycle for a reason. The Fed wants financial conditions to tighten. Yet equities have been ripping. Credit's doing amazingly well.
11:31A lot of people, including me, are puzzled by that. You look at it and say, we probably should have tighter credit. Banks keep saying, oh, lending conditions are getting tighter. Yet if you look at the capital markets, corporate credit's doing very well. Equity is doing great. Probably doesn't resonate very well with the Fed. Would Jay Powell be too upset if stocks traded down, I don't know, 5%, let's say, over the next few weeks? I doubt it. Would he be really upset if credit spreads widened by 10 or 15? Probably not. So trying to get conditions in general tighter, that's part of the job for the Fed.
12:01So yes, I do think they react to that. Former Treasury Secretary Larry Summers said this over the weekend, soft landings represent the triumph of hope over experience. Commercial real estate is one of those areas where there's likely to be distress. I thought that was a really interesting sort of comment. Talk to us a little bit about the idea of a soft landing being executed, but not having pockets of distress. You just said credit is one of those areas that continues to confound you a little bit. Really tough to pull off. When you think about the move in Fed funds and really across the whole central bank universe over the last 12, 15 months, the rate changes are huge.
12:34500 basis points in the U.S. When that happens, things break. I think that's the nature of the beast. And this time it seems like commercial real estate's taken ahead, but But perhaps you get some other pockets as well. So I agree with the secretary. It's pretty tough to imagine a case where everything comes in just perfectly. Think about how bumpy it's been over the last three years. Why would the exit be smooth? Probably won't be. So in the last, I don't know, month or so, the KRE has dramatically rebounded. And so I would think there would be a little bit of a sense of maybe they're doing more loans or maybe they feel a little better about their portfolio.
13:08But do you think there's still a huge, I don't know, lend or pretend kind of cycle that's coming that's really going to hit the banks again? Yeah, it's hard to tell just exactly how tough some of the balance sheets are. We'll get more information in about, what, a month, month and a half when you get the regionals reporting. So I think that's really the next big window. There was some news over the last week or so, which generally was kind of downbeat on the regionals. But I suspect it's going to be a question of visibility as much as anything else. You think about the macro landscape, how have things changed?
13:39Curves still inverted, that's bad. Rates have gone up a little bit, probably good overall. So I suspect when you think about some of the institutions that have really limited their balance sheet risk, quite a few have done it. But the basic problem, curves inverted, my net interest margin has taken a hit, I've got deposit betas that are higher than I thought. Those problems have all been bad, and they've not gotten any better really over the last couple months. So it's hard to say that problem is totally fixed. Since you're making trading calls to the minute, I'm going to ask you for certain things in the next six months.
14:11In the next six months, do you think markets will be higher? Yeah, if you look at the bond market, Melissa, I would say short-term yields probably come off a little bit. And that's interesting because we think the market's pricing too much easing out of the Fed for next year. It's a little bit hard to square those things. But if the market prices, let's say, a slower or less pronounced easing cycle next year, what's the follow through? You probably see intermediate yields go up in the U.S., three-year, five-year Treasury, that sort of thing, maybe the 10-year a little bit. Front end, we think, probably stabilizes fairly soon because maybe the Fed's not quite done.
14:46Maybe it's got one or two more hikes max. Probably not a lot beyond that. And over the next six months, the market's already priced for a lot of movement to happen. So I think nominal yields probably do come down over, let's say, through the end of this year is probably a good time frame. And do you think we see unemployment tick substantially higher? Almost certainly goes up. And it's been so resilient, it's hard to really peg it right now. People look at it and say, I'm amazed. And I can't imagine how many forecasters would have said sub 4 % right now. It's just mind-boggling. But does it get to 5 %?
15:16That's probably a challenge. But I'd say end of the year, something low mid-4 seems like it's in play. And in particular, if the Fed says, you know what, this problem is persistent, we have to go a couple more times. That could do it. Michael, good to see you. Thanks for coming in. Thank you. Pleasure. Michael Schumacher. Are you going to put this trade on? Are you going to watch what happens when you're 159 and 225, 226-ish? If Michael says it, and we're trading, this is fast money here. So this is what we seek to do. No, I call that the cha-cha-cha on the Fed release because you really get, you often get that kind of a move.
15:47But the conversations we're having here, I hear about banks. As far as I'm concerned with interest rates moving higher, Karen talked about the KRE. To me, banks are about to break higher. And it's not because I think all the credit dynamics we just talked about aren't very real concerns. I'm taking the market I have right now. I look at Fed fund futures that have risen and are getting healthier back to pre-SVB. That, to me, tells me J.P. Morgan, you know, say 145. That's a big level. Also, reflation trade. So it's very good for EM. It's very good for commodities. Commodity positioning is at three-year lows.
16:17People have ran from these things. And I think some of the things that OPEC have done, even though, you know, bears will tell you that's out of weakness, I think energy and oil stocks go higher. All right. Let's go to our call of the day now. UBS downgrading Apple to a neutral from a buy, setting softer iPhone and services growth. The change comes one day after the tech giant closed at an all-time high. The stock playing back just slightly today. UBS did increase its price target by$10 to$190. That's about 4 % upside from here. They make the point, and I thought this was interesting, that price appreciation plus dividend and their price, given their price target, is a 5 % return.
16:50And that's not good enough to be buy rated here. What do you think? That makes sense to me. Yeah, right. It's interesting. Sounds remarkably rational. It is. And I'm sure it's some$190s. And if it goes to 190, well, that'll actually work out a little bit better than that. It's hard to say, yeah, you've got to pound the table here. This multiple is rich. They deserve it. They're a premium company, but hard to pound the table here. I am long. Guy? Valuation's a concern. I mean, people look past it, and it's definitely been a flight to the perceived quality of Apple in the light of what's going on.
17:20But now, as other stocks seem to be getting on their horse, maybe there's a rotation out. I admire the call because instead of doing it at the lows, they're obviously doing it at the highs. So good for them. 190 price target, we're right there. Double top potentially here from the prior all-time high. Call makes a lot of sense to me. To the point of the broadening out of the market, I mean, just today we saw equal weight S &P 500 outperform S &P 500. In that scenario where it continues to broaden out, do we see money come out of Apple or is it other names that suffer? Well, you know, I was going to say this when Tim was talking about energy.
17:49You know, you better have banks and energy start to participate because they need to confirm what we think. If you're in the Goldilocks camp or the soft landing or no landing camp, then you need an economy that's about to inflect after a lot of headwinds, after 500 basis points of hikes in 14 or 15 months. And I look at the XLE, it's still down about 15 percent from its recent highs. I look at the XLF, which is down a bit more than that, and they better start to participate. And again, it gets harder every day that we open the show with new highs. And it seems very euphoric. And I'm seeing a lot of names that we were very easy to throw darts at in the back half of 21 and all of 2022 that are up 200 percent on the year.
18:28There are meme stocks again. There are SPACs that are starting working again. Crypto started working again. People don't. Guy, you just started talking about Apple. Valuation is going to. It's not going to matter. It doesn't matter. Look at the thing. The stock has gained$1.4 trillion since January in market cap. And they are not on the cusp of some AI revolution. They just told us about spatial computing. We are not going to work spatial computing into your Apple 2020. Although we did work eggs into the show. Yeah. But, you know, so what I'm saying is we're kind of in, you know, loony town here a little bit.
19:03Coming up, two semis diverging in today's session. And we're surrounding the chip trade with a dive into both. The reasons behind the moves next. Plus, what do GameStop and AutoNation have in common? So we've got the insider scoop on the stocks ahead. Don't go anywhere. Fast Money is back in two.
19:23Welcome back to Fast Money. AMD ending the day down almost 4 percent. The move lower coming as the company unveiled a new AI chip to investors and analysts. Its GPU is set to rival NVIDIA's products, which currently dominate the AI market. AMD CEO Lisa Su was on CNBC's closing Bell Overtime to talk about the AI market potential. AI has now kind of changed the way we perceive what we're doing in every industry, in every market, for all of our productivity and business applications. So yes, today we believe it's about a$30 billion-ish market, and we think it's going to grow over the next three or four years more than 50 % a year.
20:00So we see like$150 billion by the time we get to 2027. So what do we think of this? You know, the AMD price action. Come here. I saw that. I saw that real quickly. I'm just gonna be really quick. Okay. So in the last three years, okay, AMD's revenues have gone from$7 billion to$23 billion last year. Okay. Intel's have gone from about 80 billion to about 50 billion this year. NVIDIA's have gone from about$10 billion, you know, five years ago, and they're going to maybe do$50 billion. They're just shifting around, right? These are chips. I'm just saying, okay, just think about this. This is market share sort of shift.
20:41So when she throws out, it's a$30 billion sort of market right now. I kind of believe that, okay? And then I'm not saying I don't believe anything she says. She's a genius, and she's a great CEO. But$150 billion market, this is not incremental to what we have right here. I'm just pointing out that you have these market share shifts, and there's winners and losers. And some have doubled their or tripled their revenue in three or four years. And then others have lost 35 percent like Intel. You know what I mean? So it's not a zero. And so, I mean, until today, you know, you start to hear about Intel, you know, and you think, you know, is this a place where Intel can finally start to catch up?
21:15Or the bottom line is Intel's multiple and its valuation really tell you where there's been underperformance. What what what's going on in the picks and shovels and kind of, you know, the pans part of the business around NVIDIA, though, is I think a market that we don't know the size of. And I think that's really what the difference is. And I think, you know, I'm not here to tell you NVIDIA is cheap, but I'm here to tell you that the growth rate that they're giving you and the multi-quarter guidance and visibility they now have into their data center is something that. And we've said this. Karen said this.
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21:46If they're giving you this number, you know, they're going for this number. And it's not even a question. So I don't want to say I'm not going to say any of this is cheap. Semis have had a big run. But when I look at some of these companies, I think it's not a zero sum game. I think the size of the picks and shovels market is still unknown. Agree. Yeah, I think it is a zero sum game. I think that's the difference. And the pie will be absolutely much bigger. I totally agree 100 percent on on market share. If anything, we've seen AMD show what you can do with, you know, from this much market share to completely making Intel almost an also-ran.
22:20So that's not to say it's not expensive. I just think the pie is bigger and will be growing bigger. I mean, the rate Oracle talked about it, the rate of growth accelerating. And this number that Lisa Sooth grew out from$30 billion to$150 billion, I don't know, three and a half years, that's 50 % CAGR. That's enormous. Not just for them, but I'm saying it's the whole industry, right? So my point about breaking those different names out is just they shift around, right? So if there's a KGAR that is much—she's not saying it's$150 billion incremental revenue. That's kind of my point here. And these are the sorts of conversations—like, I was going back and forth with a guy who was in the fiber business in the late 90s, and he was telling me—this was on email, a guy named Mike, a brilliant guy— and he was telling me the things that they used to hear from Lucent and Nortel about demands for fiber that they were laying all over the world.
23:07They laid more like that. You can get your margin back. OK. In 1998 and 99 and 2000. And all those stocks went down 90 percent. I'm not saying that's what's going to happen here. It's the same psychology when you think you were on the cusp of some sort of, you know, changing technology. There's double, triple ordering, all that sort of stuff. And the CEOs, it's their job to get everybody excited about their customers. Before those stocks fell, though, before they got just cut. Yeah. What happened to them? They went parabolic, just like these stocks are going. That's all I'm trying to tell you people here.
23:37How about it? Keep buying them. They will go down as quickly as they went off. Which stocks are we talking about? All of them. All of what? NVIDIA, AMD, Oracle, AWS, Microsoft. Sure, Oracle just started today. It may never trade higher than its opening print today. But are we talking about NVIDIA? Are we talking about AMD? I know you said all of them, but I mean, you know, the NVIDIA argument that, again, is at least out there since those numbers, is that this is a company that is growing 65 % year over year is what they did based upon the visibility. That changes it. So NVIDIA is one thing. And again, picks and shovels.
24:13We talk about the retail side and all the garbage around all these companies that mention AI. I don't agree that they deserve a multiple. But I think with AMD, who is significantly behind, you know, the fact that they got bit up may be what you're saying. So, Guy, do the bit where AMD reported about a month and a half ago the stock was trading at 80. AMD reported on May 3rd. The stock closed that day at 89. It was 10 % lower in the aftermarket, justifiably so. The stock had run in the previous month or so. Valuation was a bit of a concern. Next day, they announced a relationship with Microsoft.
24:45They were going to make AI chips to compete with NVIDIA. The stock has rallied 50 % since. It's a$200 billion company. Now, I'll say this. It's a great company, but this stock does not trade in a straight line. If we pull a chart up over the last couple of years, you see 25 to 40 percent moves both higher and lower in this name. And I just think it's gotten ahead of itself. It doesn't mean none of these doesn't mean they're not great companies. It means the stocks are a little ridiculous right now. There's a lot more fast money to come. Here's what's coming up next.
25:16It's what's on the inside that counts. And GameStop and AutoNation insiders sure are counting on gains. So what has them so bullish? And speaking of inside moves, a biotech board switch raising some eyebrows as one departing exec tries to keep it all in the family. All the headlines from the health care space ahead. You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this.
25:50Welcome back to Fast Money. confidence from the corner office, GameStop and AutoNation in rally mode as execs scoop up shares. According to SEC filings, GameStop executive chair Ryan Cohen bought$10 million worth of stock, bringing a stake in the company to more than 12 percent. And AutoNation CEO Mike Manley also hitting the buy button last week, even as that stock was trading near all-time highs. Dan, you mentioned the AutoNation purchase on the call today. Yeah, I mean, listen, it's a big, you know, open market purchase of a relatively new CEO spending a million dollars, like your point about trading very well near all-time highs.
26:23I mean, when you see something like that, you have to take note. You look at an auto nation, you see it trading seven times earnings or something like that. The company has executed very well in an environment that's worked very well to their strong suits, I guess, over the last few years or so. But that's the sort of thing you like to – we get asked all the time about what are the sorts of attributes of CEOs that you like to see. You like to have a lot of skin in the game, not executing options and then buying a – Even Ryan Cohen? No. He has a lot of skin. I mean, there's one example that's, you know, I'm not.
26:54He's playing lots of games, actually. I mean, and we learned that right from from the bed bath and all that sort of stuff. He plays lots of games. So I would look at what he does and take it with a grain of salt. What do you think, Karen? I mean,$10 million is a big purchase. It is a big purchase. I was kind of surprised, actually. I mean, I don't see what he sees. He sees something. I don't know if what he sees is here is a meme stock again that I can reflate as his in his CEO and his chairman role. he's a lot more constricted on what he can do, and he has over 9.9 percent, so he can't sell in the short term.
27:27He must really see something there. All right. Coming up, shares of Biogen taking a leg lower after a report that some regulators are not convinced by its Alzheimer's drug. The details dropping the stock next, plus 33 years to 33 ,000. That is how long it took Japan's benchmark index to get back to that level, how you should play the country when Fast Money returns.
27:55Welcome back to Fast Money Stocks. Higher after this morning, CPI data showed cooling inflation. The Dow climbing nearly 150 points. The S &P up more than half a percent. The Nasdaq rallying eight-tenths of a percent. Tesla's electric run continues. Shares notching a 13th straight day of gains. The stock now up more than 50 % over the last month. Over 100 % this year. And another name on a record run. Delta shares also flying higher for a 13th straight day. It's the longest winning streak. As the customers warm up to the summer travel season, that stock is up nearly 20 percent over that period.
28:28Tim. Well, you've got one-year highs in airlines, the greatest trading stocks in the market. We've talked about how the reopening dynamic has been delayed, delayed. The actual broadening of the market also indicates where there's some of this industrial cyclicality is part of what people are buying into. But again, if you think airlines are good, look at cruise lines. It's been out of hand. And I think airlines go a little bit higher. But again, you trade these things, you don't own them. All right. Meantime, shares of Biogen dropping nearly 3 % today as experts in Europe raise some red flags.
28:53On one of the drug makers' Alzheimer's treatments, they argue the drug may not slow cognitive decline enough to outweigh the associated health risks. Also adding to the pressure on the stock, a new report from Stat News revealing that longtime director Alex Denner will step down, but he is nominating his live-in partner and mother of his child, Susan Langer, to fill his place. The romantic relationship between the two had not been disclosed publicly, raising some new questions about conflicts of interest on Biogen's board. Here to weigh in on all this is Jared Holtz, Mizuho Securities Healthcare Sector Specialist.
29:24There's a lot here to unpack, but I want to get to the headline first, Jared, and that's what you told us in the break, and that is that Biogen is what, in your view? Would you buy it? It just seems like it's been an uninvestable stock for so many years, right? It loves this$300 level. We were talking about that briefly. Five-year chart. It just seems to want to come back to this price. This has been somewhat of a black box of a company for as long as I can remember. Every time you think you have it, it goes the other way. You know, now we have some issues in Europe with respect to an Alzheimer's approval.
29:55We got U.S. approval coming up. We don't know how this market's going to develop. Now with this entire board situation, there's just always something here. Can we break down the issues first with the Alzheimer's treatment? European regulators, they look at the data a little bit more closely. Is it possible for this drug to be approved in the U.S. and therefore get Medicare, be covered by Medicare, without European approval? And so, therefore, it can actually work out okay for Biogen, even though European regulators are scrutinizing it. Yeah, totally. This happens all the time. I think Europe in general scrutinizes drugs and drug data, especially pricing.
30:29I think this is what maybe they're trying to get after, getting Biogen and at some later date Eli Lilly to come in on pricing. Maybe that's the component here. We're not talking about enough, but we don't know. But yes, this happens all the time. U.S. approval. EU drags their feet eventually may approve or may not approve, but the companies tend to be OK anyway. So break down this boardroom drama, because when I you know, it's funny, I woke up this morning. I got a text from a friend who follows the space. She said this Biogen dinner story is nuts. I look up the press release. Looks like, OK, he's stepping down, whatever.
31:04But then she forwards a stat news report. I'm like, what is happening here? What's your take on this? Right. And, yeah, Statt was all over this right away, as were some other outlets. I mean, it's interesting to think that the company could have just swept this under the rug as though nothing were to happen. I mean, this is a serious issue, I think. I mean, we don't know whether she's going to be elected. She's been nominated. I mean, there are a lot of investors out there who think there's a lot of pressure now on shareholders, you know, to not make this happen. But we will see. But, yeah, I was stunned last night when I started to read everything about the situation and the relationship, et cetera.
31:39It's just it's bizarre. The whole thing. Dan was talking about sort of the zero sum in chips. But is there a zero sum here between Biogen and Eli Lilly? One wins, one loses. So is Biogen sort of woes Eli Lilly's potential gains? I don't know. I don't know. I think this Alzheimer's market is still really early. I think the thing that I'm kind of focused on, and it's probably way too far out, but the administration of these drugs being in an infusion center IV, I think for these Alzheimer's patients is going to be very cumbersome. So I'm looking for some new modalities, subcutaneous, where these can just be regular injections.
32:15I think that'll happen down the road maybe four or five years from now. That'll really get the market going. I think they can both be winners over the near term. I just don't think either of them are going to be massive drugs this year, next year, maybe even 2025. What about reimbursement for them? How do you think that plays out? Well, I think Biogen is going to get reimbursed, fully approved in the second half of the year, like two months from now. You know, paid for$25 ,000 or so. That seems fine. I don't think there's that much controversy around it. I mean, they royally messed up Atahelm about a year and a half ago.
32:48That launch went belly up and they had to pull the drug from the market. So there's a lot of, you know, PTSD around this company, around the stock as a result of that. But I think reimbursement and pricing is OK. Nothing horrible. Overall for pharma, what's your outlook? I mean, say for Lilly, what's going on with this group? I don't know. I don't love it. I like biotech a lot more. You don't love your own sector? No, we've talked about it before. I'd much rather own biotech than pharma. I think they're much better positioned near medium term. I think all we're going to talk about as an investment group is what is pharma going to buy if M &A is the biggest thesis out there.
33:25But if that's sort of, if there's like cold water on that because the FTC is scrutinizing all these deals, then we still love biotech? We just saw another deal. Novartis announced a$3 billion deal yesterday. They're coming. They may not be the massive price tags that we want in terms of dollars, but they're definitely coming. All right. Good to see you, Jared. Thank you. Thank you. Jared Holtz. What's your take on the space? Well, you know, the other part of the kind of the A.I. excitement is around the weight loss also. And, you know, you talk about, again, Lilly versus some of the other players out there.
33:55And this is where I actually think, you know, Lilly's going to continue at least to trade well above the multiple. It's a case also where we don't know what the addressable market here is. I mean, if you think about that one, a lot of people who are taking some of these weight loss drugs are not people that really are even that overweight. They're people that actually, you know, and I know people like that. But I think the addressable market on this is something that's pretty extraordinary. And I think that's why these things trade at the multiple they do. And I think they're going to continue to.
34:23I mean, it's anybody who has diabetes who's obese or thinks they're obese in theory. That's the addressable market. I've been doing it, okay? And I was prescribed for a pre-diabetic. Doing what? Taking it with Govi. I'm doing it through Roe, their Roe Body Program. It's been life-changing for me. I've lost 30 pounds in four months. My blood pressure is down. My cholesterol is down. My sleep apnea is better. I'm sleeping better. I have more energy. All my stats are better. You know what I mean? So, like, to me, it is an addressable market. It's going to be massive. And I think it's going to be preemptive for a lot of other health issues to me.
34:53So, again, you know, this is what I can firsthand speak about. Coming up, the last time Japan's Nikkei Index traded at these levels, you could still watch Cheers. Guy's favorite, the Golden Girls and Twin Peaks on TV. We'll go inside the rally and ask the ambassador how to play the EM move straight ahead. Fast Money is back in two.
35:17welcome back to fast money we're turning back the clock to july 19th 1990 on that date she ain't worth it by glenn madeiros and bobby brown was topping the billboard charts diehard 2 was number one at the box office and the world wide web as we know it didn't even exist it's also the last time japan's nikai index was at 33 000 the same level it finally climbed back to today tim and And the number one song anybody got? We've talked about this woman band, Karen. 1990. No, no. Cranberries? No. Rock set, It Must Have Been Love. And it's a tough song, and it's now in your head, folks. I'm sorry about that.
35:55Japan. So why is Japan rallying? I think there's a handful of things. First of all, deflation or, you know, the dynamic that the Bank of Japan, do you think we had it here? Deflation is over in Japan. There are some listing requirements in the Tokyo Stock Exchange that are also forcing payout levels. You have a dynamic where the yen, which was the weakest major currency for years, and you don't need to see the dollar plummet. You just need to see the yen stabilize. And I think that's absolutely what's going on. So it's a combination of international investing, under positioning. And I think if you look at international markets, they inflected against the S &P last year.
36:29So, you know, again, it's a case where I think international investing, I advise Ideva, which is an international ETF. I think it's an interesting time to be doing this because you have currency, you have valuation support, and you have an argument that there's really actually inflation around the world. How about China? They cut rates. And so some people are saying that Beijing is turning a little bit more concerned about the economy. About the current war. Yeah. Yeah, look, I think the second half of 23, which we're effectively in, is a place where China's going to surprise. They're actually concerned about their currency.
37:00Yuan right now, the differentials on interest rates means they're a little bit worried about capital flight. But, again, I think Alibaba on a trade, EM is also breaking out. If international works, EM will work. Coming up. I was going to say, no, before we're coming up, because we've done a bunch of things tonight. Eggs. So many things. Eggs. Yeah. But Rock said. No, look, we had to go there. No, we didn't. No, we didn't. Must have been love. But it's over now. You know, Guy, it's over now. Listen to your heart, Tim. Oh, no. Oh, nice. Coming up. Confidence is key, and it looks like retail traders are packed with it.
37:33The results from Investopedia's latest investor survey is next. Fast Money is back in two.
37:41Welcome back to Fast Money. Individual investors are back to being bullish on stocks this month, now more confident than they've been all year that markets will continue to rise. That is according to Investopedia's latest investor sentiment survey. For more, let's welcome Fast Money friend and Investopedia editor-in-chief, Caleb Silver. Caleb, great to see you. Great to be here. This seems like quite a turn from the last time we had you on, which is just, what, a month ago or so? Absolutely. And investors were really cautious. Yeah, six weeks ago, big sentiment shift here. And a little rodeo going on here.
38:08Cue Garth Brooks because individual investors are back. About a quarter think the market's going to be up 5 % or more by the end of the year. Back when I was here in early May, that was only about 12%, 13%. We have only about 18 % expecting the market to trade lower by the end of the year. So a lot of bullishness here and the lowest level of pessimism we've seen all year. Very fascinating. getting. My favorite question always from the survey is what would you do with$10 ,000? Last time it was CDs, I think. And this time it's stocks. And by the way, after he answers, I want to hear how you'd answer that question.
38:41$10 ,000? I'm risk averse. But anyway. Yeah. We love asking that question because our readers love asking us that question. We even put out a magazine to reflect that. It's in on newsstands now because it's one of the most popular questions we get on Investopedia. So what are they saying? Individual stocks. And that's where they usually are. These are individual investors who love putting money to work. They love setting up their portfolios. They haven't been able to do that, they felt, in a long time. So stocks on top. CD's still in the top three, but the fact that they're back to stocks is a bullish sign.
39:11ETFs are on that list as well. Traditionally, the people who respond to your survey, they like the bread and butter sort of stocks, like the big cap techs. Does that still hold or have things changed? Absolutely. They love the home cooking. They love mega caps, even though they feel they're a little bit bubbly right now. But if you look at the top 10, looks an awful lot like the S &P 500. You got your Apples, of course. You got your Microsofts. We do have NVIDIA back in that list this round, of course. But they like big home cooking. We're doing a lot of going down memory lane. So where's the beef?
39:41Was the commercial back in? Where's the bubble? Because I know you asked that question as well. Yeah, we asked that question, and they think it's in AI-related stocks. Who was talking about that earlier? I think it was you earlier on in the show. So AI stocks, related stocks, 55 percent chose that as the most bubblicious of the assets right now, followed by mega cap tech. About half the people saying that housing stocks, as we know, housing stocks have been on a tear, even though the housing market has been asleep for a while. They think that's a little bit bubbly. And then Internet and comms, your metas and your alphabets, of course.
40:11It's interesting because there's a little overlap there between a related stocks and big cap tech, right? There is now. Let's really think that there's a bubble going on there in terms of their concerns. It seems like there's a big cluster. There are a lot of worries still, though, out there amongst retail investors. Yeah, but the level of worry has really come down a lot in the last six weeks. Usually when we survey this, over the last six months, the concerns have been 80 % inflation. Now it's just 61 % choosing inflation, recession, U.S.-China relations. That's moved up from about six to the number three concern right now.
40:40Of course, the bank issues are behind us. That may have a lot to do with it. Inflation is subsiding a little bit. High interest rates definitely on their mind, but not a huge concern. And then Russia, Ukraine. But a lot of the things that were there are no longer there. Yeah. Caleb, it's always great to see you. Thank you. Thank you. Caleb Silver, editor-in-chief of Investopedia. $10 ,000. I'm going to ask that question since you wanted. I'm going to ask you that. Well, I was not talking about in the market. I was talking about outside of the market. How would you spend that money? Outside of the market.
41:06That's probably too personal. Does real estate count as a market? I'm sorry. Yeah. Well, I think so. We're talking about financial assets. Anyway,$10 ,000. Because we were just having this conference. When was it yesterday? We were saying CDs at like 4.5%, 5 % or stocks. Because if you like if we go back to the UBS downgrade of Apple, their point was that a 190 price target. That's a 5 percent return when you include price appreciation and dividends. It's the same. Look, this is an allocation discussion. And at this stage of the market, I think you can I think you look up at these levels. I'd like to have a lot of cash.
41:35I'd like to be in high grade corporates. I'd like to be slowly moving at the curve. But, you know, I'm investing for the next 10 years. Equities go higher. So I want equities in there. You know, I don't want to say I just put 10 grand in Nvidia puts.
41:50I lost the other 10 grand last week. Sorry about that. That's a true story. Meantime, broad sentiment among options traders. There's a little mix ahead of tomorrow's Fed decision. Mike has got the action. Hey, Mike. Yeah, actually, and the mixture of that sentiment is kind of in alignment with what we were just hearing. So the two most active ETF options, actually the two most active options contracts in general, are SPY and QQQ, not surprisingly. And if we take a look at SPY, what we are seeing is that we're marginally seeing bullish activity outpacing bearish activity. And the busiest contract there today was the 437 calls.
42:28We saw about 660 ,000 of those trading for about 45 cents. Now, if you take a look on the tech side, by contrast, there, the sentiment was just narrowly bearish. And the busiest contracts were the 360 strike puts that expire at the end of this week. And those were trading for a little bit more. Now, I want to make one quick point here, too. It was more retail-y on the spot. Those were very small trades. Nine contracts average bets of about$300, less than the$10 ,000 that you're suggesting. And RSP, which is the equal weight, that was the one that saw the most bullish activity looking out through the end of the year.
43:03All right. Mike, thanks. Mike Cove for more options action. Tune into the full show Friday, 5.30 p.m. Eastern Time. Up next, final trades.
43:15Time for the final trade, Tim. Let's mention Roxette again. EEM on a breakout here, just because I can't. Aaron. Okay. I'm going with Mexico again. EWW. Dan. IGV. iShares. Expanded software. ETF. They're throwing the first pitch out to Shea Roxette. Citi Field. Slumber Shea. SLB, Mills. Thanks for watching Fast Money. See you back here tomorrow. Five Mad Money with Jim Cramer starts right now.
43:48All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBC Universal, their 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.
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From the publisher
Markets added to the week’s gains, with the S&P and Nasdaq both closing at their highest levels since last April. The Dow at its best since February 13. But will tomorrow’s Fed decision take the air out of the rally? Plus a shake up on Biogen’s board raising eyebrows as the company’s Alzheimer’s treatment draws questions. What it all means for the stock.
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