Stocks Bounce Back After Sell-Off… And Navigating Volatility Across The Market 8/6/24

0:01Live from the NASDAQ market site in the heart of Times Square, This is Fast Money, and here is what is on tap. Stocks bouncing back a bit. The average is all higher, and of course, still far from clawing back all the loss of the last few days, but up nonetheless. Stocks did sell off a bit into the close as well. So could this late-day fade mean more pain to come? And Disney Plus Plus is going to cost you more. Price hikes ahead, but it is helping the stock. And a smorgasbord of results for you coming on Fast and Furious on the tape tonight. Everything from semiconductors to Rivians to casino names and more.

0:37We've got all the names, all the trades, all the details, and everything that is on the move. What you don't have tonight is Melissa Lee. I am Brian Sullivan. Good to see you, everybody. We are live at the NASDAQ. I think people do. Studio B at the NASDAQ. It's my first time here on this show. Come on. Thank you. Clap for me. Clap for me. One guy tells you it's his first time here in a long time. You know who I am? He's looking for a clap. I'm the Tom Candelaria of TV news anchors. Interesting. If you were John Candelaria. I was going to say John Candelaria. John never made it. Tom never made it.

1:10Maybe that's the problem. You should have been John and not Tom. You don't know him. The candy man. The candy man. He was a Williamsport saw cutter, double A. All right. Anyway, on our desk tonight, Tim Seymour, Karen Feiderman, Kai Adami, and Dan Nathan. All right. Let's start here. After the last few days, you all may need some good news. And we have it. Sort of. All the markets up. The Dow closing up just under 300 points. The S &P 500 up about 1%. All 11 sectors in the green tech and small caps are also up. But we were up more than 800 points on the Dow. We ended up just under 300. The Nasdaq at one point soaring up two and a half percent.

1:50We ended up, but not that much. So today's gain is not nearly enough to get back anywhere close to what you may have lost yesterday and or Friday. The major index is still firmly in the red over a five-day period. Yields did go up a bit today. Still, though, near their lowest in a year, 10-year at 3.895. Also of note, the fear gauge, the VIX coming down a bit, it briefly fell below 25 after soaring the last couple of sessions. So, Guy, I'll talk to you. Are we out of the woods, or was today just kind of a calm before more of the storm sets in? You know, there's that former or the latter thing.

2:27So I don't believe we're out of the woods. That should come as no surprise to people that watch this. But I thought that for a while incorrectly. Today, if you look over the last couple weeks, it's just a blip on what's been a pretty significant sell-off. And Karen will say this. I'm still in love or thunder. But if you're bullish, which I'm not, it would have been a lot better to see this thing flush early and then rally late. That's not what we saw. We saw the big move early and then sort of give back some late. 5 ,000-ish is still the 200-day moving average. I think we need to get there, and I think we're going to violate it once we do.

2:58So with a VIX at 27, that still suggests there's some pain ahead, in my opinion. I think we were way oversold on treasuries, and the dynamic from one payroll number that we were suddenly rushing into recession, and again, not even like a shallow recession. We were going hard, hard landing is a dynamic that I think a little perspective on the day gives you. Does not mean that the dynamic that we do expect should be happening, which is the job market, which the Fed is clearly targeting, should be slowing. It doesn't mean that things are falling out of bed that quickly. And I just think the dynamics of the technical factors that happened late last week started going into a weekend.

3:34We don't have a lot of liquidity out there. And I think it's given people a chance. Having said that, we said this last night, there are any number of five things that could have been legitimate catalysts, at least part of a mosaic of things that had the market drive that VIX up to a six handle, a 60 handle. And I think some of those things are very much still in place. So it's great to see that the market has come back a little bit. I think the setup, Karen talked about this and Guy is mentioning it again, that Monday wash into a midday Tuesday after Europe goes home, we usually call that turnaround Tuesday.

4:06And it is something that actually, you know, it didn't really play out that way. But ultimately, it looked like it was going to. Nikkei was up. The circuit breakers were triggered on the way up. I guess, Karen, what I'm trying to understand is Friday was we forget that Friday was a terrible day, too. In fact, the three worst trading days of the year have all occurred in the last 10 trading days. So July 24th, Friday was terrible. And then yesterday, we know what happened. What changed from yesterday to today? I think that it was just overdone yesterday. But I still I didn't like seeing Japan up that much last night because I sense it.

4:48Well, I really because if you think the yen carry trade unwind is over, which I don't really think that was it. It's over. But I think I'd much rather us have come into this down like Guy and Tim were saying down 500 and then end up 300. That's far more bullish. Not be up 800 and end up 300. That's a very different, you know, so I bought nothing today because I'd rather that setup be different than it was. I don't know. You know, this could all change two days from now. We're going to get some payroll data. Everything could change. Yeah, I remain focused on what I think is one of the huge drivers of the market's upside right up until about a month ago, and that's this whole generative AI trade.

5:33And if I think about what's going on, we know that NVIDIA is obviously the big leader. It's down about 25 % from those recent highs just about two months ago. But then I start looking at other pieces of this puzzle, right? So Dell makes the servers that go in the data center. Well, Dell's down about 40 % or so just in the last couple months. I think of Micron and the memory that it takes, right, to kind of do the training of these models. That was another story. So you need that additional to the GPUs, right? Well, that's down 40-some percent, right? I'm looking at Supermicro. Supermicro is down, I think, about 10 % in the aftermarket.

6:04That's been cut in half over the last few months. So AMD, we can keep going here. So NVIDIA is kind of the last man standing in this trade. And I just really think that that concentration under this story that also dragged Google and Microsoft and Amazon and Meta up, I think it's coming undone a little bit. I don't mean it's over, over, over. I'm just saying the monetization, this is what we learned during earnings season over the last two weeks, is just not there right now, possibly to justify the CapEx spend that we see. There was a line in a movie you guys helped me out. Deserve ain't got nothing to do with it.

6:35It's unforgiven. Unforgiven. Thank you very much. Yeah. Gene Hackman and Clint Eastwood. The end of the shootout was a little weird. They missed him at like two feet away. That happened. It's not Star Wars. Anyway, I go back to Deserve. He won the Academy Award in 1993. Little Bill. Does does NVIDIA deserve to be holding up if Dell, Supermicro, Micron, all the other ones that are halo trades are not? I mean, we're going to know on August 28th, right? And so this year, it's expected earnings and revenue growth of 100%. Next year, it's supposed to de-sell to 37%, both earnings. So again, let's see.

7:18They just had this push out of Blackwell. Karen and I were just talking about it. Maybe that's a little bit of a ruse because they're ready to guide down. They're seeing basically despite the capex increases that we saw from the hyperscalers, maybe it's just not materializing to the extent that, you know, it's justified here. So to me, that's the main event. If they guide down below where the street expects, I think the trade's over for months. Over for months. Maybe quarters. It's great having you here. You're asking the right questions. Well, you know, listen, every couple years, every couple, it is, by the way, shot it on our man.

7:52Well, he should have armed himself. Every couple of years, there's a stock that seems to define the market, define the trade, right? Whether it's a Tesla, whether it's an Apple, whether it's a, dare I say, Cisco Systems. Back in the day. Whether it's an Intel. We could talk about that a little bit later. Today, obviously, that's NVIDIA. And it's not only because it's NVIDIA, it's the biggest or one of the biggest stocks in hundreds of ETFs. So if we see a breakdown, to Dan's point, of an NVIDIA, is there any way that the macro market can hold up if NVIDIA does not? I think NVIDIA is one of the top 15 holdings in approximately 476 ETFs or so.

8:31NVIDIA, which probably was the big winner on this yen carry trade, should theoretically be the big loser as it unwinds. J.P. Morgan today said the unwind is about half over. So if you start to play it out, NVIDIA, which won to all of this, which wins to passive investing, all these different things theoretically should be on the other side of this trade. The one thing about this carry trade, and a lot of our viewers, you know, they've heard about the carry trade. They're not really sure who's doing it and how they're doing it or even why they're doing it. But the bottom line is you're borrowing essentially in a currency that's almost free at zero interest rates, and you are then investing it.

9:06But a lot of times that leverage isn't going into high-growth stuff. It's actually going into stuff that's actually very conservative because you're just trying to pick up a couple basis points with that free money. And if it's levered up, you have major returns. It's a long way of saying that I actually think that a lot of this we still haven't even seen. I think that there are dynamics around the carry trade. I think the NVIDIA trade, Dan's right. You've had an opportunity to be critical. One has on NVIDIA for months. The reality is that you can make an argument that NVIDIA, which inspired this whole mega cap tech rally at a time when about five quarters ago we were questioning.

9:39And if you look at where the Nasdaq closed today, it's effectively unchanged to the S &P in terms of relative terms going back to June of 23. I bring that up because you're talking about leadership. You're trying to understand where are we going to get it from. And I think that's a real challenge for the market here, even though we love rotation. But that would seem to imply then, Karen, that this yen carry trade, which, by the way, is being blamed for everything but global warming at this point. I mean, let's be clear that people were borrowing in yen. They were buying super micro. Bitcoin, as I heard.

10:10And Bitcoin and shorting volatility. Whenever something is blamed for everything, pardon me for getting a little bit nervous. You do wonder if there's anything else at work here besides the yen carry trade. I agree. I mean, well, Tim points out it could be just something like buying little basis point differentials of treasuries versus yen. We're using, you know, using the dollars when you sell the yen to buy treasuries. I mean, I don't know. I feel like this MAG7 trade has been around actually for quite a while. And actually, I think it predates the NVIDIA. I think it goes back to during the pandemic.

10:50So it makes sense to me that it gets overdone and then people look to rotate onto something else. I had actually thought we would expand and be broader than we are. The IWM trade, I thought, would have worked more. It worked a little bit. But given the underperformance over so long, it really hasn't worked at all. So, you know, we forget now, though, we might be in a cutting phase by the Fed. We should be. Everyone expects in September. That seems the most likely path for sure. that used to be positive for stocks, I think it could be again. We'll continue this conversation because if you're trying to figure out where the macro economy is going or maybe what the Fed is going to do, you want to look at the banks because banks know a lot about things.

11:30Loan demand, credit availability, what people are doing with their money. And few companies know as much about banks as KBW. They are a 62-year-old investment bank focused on financials, part of Stiefel Financial. Tom Michaud is the CEO of KBW. Tom, great to have you on. Thank you. This is an important conversation. Yes. I think to Karen's point, here's the thing. Everybody's going to be waiting for this Fed easing cycle, but it looks like the bond market has kind of already done the job of the Fed for it. Yes. Well, the first thing is I would watch the yield curve and the shape of the yield curve.

12:02We're watching it very carefully for the banks. So this past week, we had the 210 stop being inverted for a short moment in time. This was the longest period of time in 47 years that that yield curve had been inverted. The one that matters most for the banks still is a little inverted. That's the three-month, five-year. That's the longest inversion in close to 70 years. Wow. I'm sorry. What does that mean, then, in plain English? Whenever I hear the first time in 70 years, it got my attention. Exactly. So here's what it is. The biggest component of bank earnings is net interest income, which they earn on the spread.

12:38When the yield curve is inverted, assume these banks are operating with a big headwind blowing at them. It's a hard market when that happens. When you get a flatter or a regular shape to the yield curve, that means banks can borrow short and lend a little longer and take advantage of that duration. So banks have been operating in a very hostile environment. environment if you were to say to me in general what's a tough environment for banks I'd say inverted yield curve after interest rates just went up a lot that's just what happened they're actually about to catch a break and we believe that the low quarter for net interest income the biggest component of bank revenue and earnings was in the second quarter that just passed now it's going to start getting better and it's going to get better slowly but it's going to get better well this asset class though has had an enormous run it's as if the market has anticipated this But there's a lot of different things that have been triggers for banks.

13:34I think a lot of it is less regulatory pressure. I think there's been dynamics around this. There's certainly, you know, we're well past the SVB headaches of, you know, about 15 months ago. Is it a credit story that, you know, I think people have a lot more confidence in banks? Because it seems that the one brain cell is commercial real estate gets a little bit more of a lifeline in a world where the Fed is easing back off. But either way, the presumption was there was a lot of credit risk out there for banks. And we're just not getting it. Well, first of all, the credit story has been far better than everybody expected.

14:05And everybody's been waiting for a shoe to drop. The shoe hasn't dropped. Not only is credit not getting away from the industry, credit is still better than average right now. We have not seen we haven't even gotten back to normal. We're still better than normal. And and last week we had 100 banks in New York for a conference. We followed all the bank earnings in the second quarter. They as a group said nothing that makes you think we're going to get a harder landing. As far as we see from our lens, soft landing still seems to be what's going to happen. What happened Friday and yesterday then?

14:37You know, I know some of your traders. What are they saying to you about what the heck? Well, I was listening to your conversation. There's a delinquage between these macro forces and it scares everybody. But the reality is it didn't affect the real economy yet in the United States. I mean, there is a story of a slowing economy. That's what the Fed's trying to do. And they'll eventually win because the Fed usually does. So the economy is slowing, but we're nowhere near crisis, in my opinion, which means I would buy these stocks on a dip, would be the high-quality ones. Tommy Cho is the CEO of KBW, formerly known as Keith Breit.

15:17We still go by that. If you got a little longer, we'll take the long name. Okay. Steeple Company. We are. 1962. Tom, great stuff. Thank you very much. Brian, great to be with you all. All right, take some comfort from that guy, Adami. Yes, you should, Tom. And if you look at their stock, it's done extraordinarily well recently under a lot of different leaderships, Tom being one of them. With that said, I mean, look at the recent move in Bank of America, for example. If it's just about interest rates, how do you explain the move from$44 down to$34 we've seen? Warren Buffett. Thank you. Why is Warren Buffett selling Bank of America now?

15:51You could say, you know, he's paring down his position without question. He owns a lot of it. But he obviously sees something as well. So I understand what Tom's saying. I understand what Warren Buffett sees as well. You know, I think these banks have been rewarded over the last couple months, probably in anticipation of what I don't think is about to come. All right. Good discussion there. And a little optimism, maybe, from Tom saying we don't see the hard landing at all. All right. On deck. Forget Taco Tuesday. We've got a buffet, not a Buffett, a buffet of earnings all rolling out. We're going to hit the names, the trades, the moves ahead.

16:23Plus, crypto creeping back up today as well. Dive into that. Got a lot more to do. You're watching Fast Money.

16:38All right. Welcome back to Fast Money. Airbnb getting slammed after its earnings report. That stock is down 13.39%. Travel company warning of a slowdown, at least as what they're seeing in demand in America. Deirdre Bosa is covering all the action at Airbnb. Maybe air D &D at this rate. Whatever it is, Brian, it is another data point in the travel and leisure slowdown. It is really that weak third quarter outlook that is hitting shares hard in the after hours. CEO Brian Chesky attributing it on the earnings call to shorter booking lead times globally and signs of slowing demand from U.S. guests, which he said has shown up more recently.

17:19And in July in particular, he says the growth of shorter lead times was, quote, very strong. Now, despite signs of macro weakness, Airbnb is in growth mode, he says, hiring and spending more in advertising, something that Chesky says will help them expand beyond its core. He got a lot of questions on how they're going to do so. He compared Airbnb to Apple and Amazon that began by selling only iMacs and books. He said that Airbnb is now ready to go beyond short-term rentals and into products and services starting next year. That growth push, though, I will note, is weighing on margins. And finally, Brian, it would not be an earnings call without mention of AI.

17:56And here Chesky was very measured, as he typically is. He said that an actual gen AI interface change is going to take time, a number of years, according to him and most of his tech friends, of which, Brian, he has many. Back to you. I just don't know what AI is going to do for a company whose problems, I think, Deirdre, are that people get annoyed by the fees. And this is another one of these going to be these these trades, Tim, where you're going to have the bears are going to look at Airbnb. See, the economy is slowing down. Airbnb sold said so. And then you're going to have others say, no, they're a unique company where people are going back to hotels because of just annoyance.

18:32But the whole travel space has run into a lot of headwinds. They've run into it from, I think, margin specific dynamics. And, you know, we talk about this in a lot of different places where there's discretionary spending. They just can't pass prices on the way they could as well. But the macro for Airbnb, I think, is the bigger story. We've heard this from Expedia, too. And VRBO has really been a major headwind. These are names that have actually been under pressure for much of this year. I think there's actually a trade. I think there's a trade in the airlines. I think after a 35 percent pullback, we saw Royal Caribbean today.

19:00I think selectively you can't just sell out this whole sector, a sector which, frankly, I think most of the year has been under this macro pressure. You know, it's interesting. If you look at their earnings in 2023, and this is the post-COVID sort of thing, right? People couldn't get out there and do the thing. And it earned$8.36. That was up considerably from 2022. They're expected to drop earnings 40 % despite sales being up 13%. So you're talking about margins. You're talking about this spend. And that's not what investors want to see in this environment right now. They're shooting first, asking questions later.

19:33And if you guide down for the existing quarter or the current quarter, and then you guide the year down, which I think they're doing right now, There's just really no place to buy this thing at this moment, especially seasonally after you get by the summer season. All right, let's move on. Kind of in a related story, we've got another earnings alert. This is Wynn Resorts, obviously a massive casino and hotel company, higher despite also missing on the top and bottom lines. Steve Kovac has the numbers on Wynn. Steve? Yeah, Brian, this one's kind of a head scratcher here because, like you said, rent shares are up after hours, despite pretty significant misses on the top and bottom lines in the second quarter earnings report.

20:12Let me go over the results here first. EPS was$1.12 adjusted versus$1.14 estimated. And revenue, just a slight miss here,$1.73 billion versus $1.75 billion estimated. And on top of those disappointing results, the adjusted EBITDA missed expectations at$572 million compared to expectations of$576 million. Vegas revenue did beat expectations, though, at$629 million. But Macau disappointed at sales there when Palace in Macau booked$548 million and when Macau brought in$337 million. Now, shares were initially about 2 % lower or so when these earnings first crossed, but popped when the call started.

20:57It's up 3 % now. We'll keep monitoring, see what's really going on there. But we're not seeing any commentary in the call that really shows what's causing this surge here, Brian. All right, Steve, thank you very much. I mean, Karen, maybe it's the fact that this was a$222 stock 10 years ago. This was$118 stock a couple of years ago. It's a$78 stock. I mean, it just, the China story has never rematerialized. No, I mean, these China numbers, really, the Macau numbers are looking like a giant miss. So I'm kind of surprised. I don't know what they said on the call. So I always think it's really important to listen to the call.

21:32You get a lot of nuance and additional information that maybe isn't out in the earnings. I don't get why it's up, actually. Well, just the guidance, or at least the street, the EPS was somewhere between 55 cents and$1.46. You could drive a truck through that. So I think it comes down to what you just said. I mean, the stock has had a significant downdraft not only for the last couple of years, since April. I think it was$105 stock, number one. Number two, it wasn't a disaster. And you could look at this and say, wait a second, the valuation just is too cheap here. So it actually, in the context of all that, to me, it does make a little bit of sense here.

22:07I think you stay with it on the long side. Or do we worry about this is just another sign? No. No. No. Because this, again, sentiment here was so washed out. I mean, I don't think people are suddenly surprised by this. Actually, the burden has been on them to prove that actually there really is demand. China is such a big part of the story. GGR coming out of Macau has been disappointing as someone that look, I even own Melco. And, you know, I've been averaging down and, you know, it's been a bad trade. I think you're going to see a return here. China's reopening has been so disconnected and so uncyclically tied to the rest of the world.

22:40I still think that all the casinos and LVS I still own as well. It's moved around a lot. But the valuations, they're down two-thirds on a multiple from where they were. They're cheap. I know what GNR is. That's guns and GGR. Is that gross gaming revenue? Gross gaming revenue. Okay. Now, GNR, look. I mean, we could talk there, too. But besides Melco, you're the international guy. Welcome to the jungle, buddy. Well, this is definitely not Paradise City. Yeah, no. Okay. And it hasn't been for investors for a long time. Is anything or most things around China uninvestable without more clarity on the economy?

23:11Well, it was interesting to me to look yesterday at how some of China was trading in the middle of a bloodbath. And obviously, China's had its bloodbath. So the story around investing in Alibaba is not about a multiple and it's not about e-commerce revenue. So it's really about dynamics around China and corporate governance. And I think that's a case where I think in Wynn and LVS, where you have a lot of Asia exposure, I actually think you're pretty protected to the downside here. Before you throw the commercial, I know we've got to go. GNR, one of the most overrated bands in the history of mankind.