Stocks Close Out Another Strong Week, And Why the Oracle of Omaha May Be Seeing a “Buy” Signal 5/2/25

0:02Live from the NASDAQ market side in the heart of New York City's Times Square. This is Fast Monday. Here's what's on tap tonight. A major tech divergence, the two biggest companies in the world heading in very different directions this week. What we learned from the earnings reports out of Microsoft and Apple and what it means for the AI trade. And reading the Buffett indicator as investors descend on Omaha in the Berkshire Hathaway annual meeting, one of the legendary value investors' favorite market metrics could be saying it is time to buy should you get on board. We'll debate that. Plus, crude clocks its lowest level in over four years.

0:32Netflix extremes to an 11-day winning streak, and Bitcoin closes back in on 100K. There's a new record just around the corner. I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Bono and Eisen, Julie Biel, and Steve Grasso. We start off with a solid end to the week for stocks. Major indices all rising more than a percent after a better-than-expected jobs report eased fears of a recession. The S &P now up nine days in a row, its longest winning streak in over 20 years. Today's gains had the benchmark index joining the Nasdaq in recouping all its losses since President Trump announced sweeping tariffs on April 2nd.

1:06The VIX notably also falling to its lowest level since that day. Speaking of tariffs, markets also getting a boost today on news that China is looking into ways to address the fentanyl crisis, which could pave the way to begin trade negotiations between the U.S. and Beijing. Megan Casella is in Washington with the very latest. Megan. Hey, Melissa, it's the first sign of possible momentum in these trade talks between the U.S. and China. The Wall Street Journal reporting around midday that a top Chinese security official has been looking into what exactly the Trump administration wants to see when it comes to his concerns over fentanyl.

1:40Remember, the 20 percent tariffs before the full 145 percent tariffs took effect were due to fentanyl in particular. So now China's saying they're considering sending the security official to Washington for meetings or having him meet with the Trump team in some third country. I should note here, Melissa, I reach out to the White House and have not heard from them as to whether they've heard from China on this, or if it would be enough to lead the president to cancel at least some of those tariffs against China, even temporarily. But this does come just after China's commerce ministry said yesterday that they are, that they are evaluating offers from the U.S.

2:15and that they want to see the U.S. show some sincerity by canceling some tariffs before they launch talks. And that's what makes this a key move potentially from China, because it's something that could really give both sides a win here, Melissa. It's the kind of thing that the Trump administration could say, we're getting something on fentanyl. Potentially, they could adjust the tariffs in that way. Then China could say, if tariffs are being adjusted, we're open to starting talks. So the kind of thing, Melissa, that could at least get the ball rolling. A positive step. Megan, thank you. Megan Casella from the White House.

2:46China has already begun carving out exemptions in terms of the list of products covered by tariffs, which is maybe an olive branch of some way. This was definitely taken as a positive. This would be a major win if even they started officially talking. Especially because this was really where we started out. Right. I mean, and so quietly exempting some of these tariffs is also another way the journal phrased it. And I think that's right. And I think if you think about combining that with what we had this morning, which was that the parge was just right in terms of today's jobs number on a week when we had a little bit of mixed economic data.

3:21But for the most part, the economy right now is doing its part, going into a Fed meeting next week. But all the superlatives about the stock market you can throw at it really are. And, you know, it's one of these, I hope you didn't sell because it really is. It seems as if some of this was an aberration. I don't think a lot of this is an aberration in terms of what we got in terms of the market's concern around the strength of the economy. But, you know, we're through an earnings season, you know, whatever, 60 percent through or so with obviously some some most of the big folks having reported correlations.

3:49Realized correlations between stocks are extremely high, which tells you that people are just buying the market in some level. And I do think, you know, as we've said a few times, a lot of the selling, if you believe it was just repositioning by long short hedge funds and global macro guys and CTAs, It means that there really wasn't a lot of real selling in there. And I think, fortunately for a lot of people, not over-trading this market is exactly how this was to be handled. I mean, the data that we got this week, Julie, really addressed some of the key concerns of the markets when it comes to the stagflation fear.

4:17The jobs report certainly eased sort of those concerns. And the earnings data that we got over the past few days eased the concerns about that AI slowdown sort of trade, too. So you knock those two things down, and then you factor in upside from tariff talks, potentially. It's kind of a good setup. Yeah, I think there was a lot to be excited about or enthusiastic about in the last week. Some of the data was for sure just a relief. And so it wasn't necessarily that it was great data, but it was just not as bad as people were worried about. And I think in looking at companies reporting earnings, that's actually been playing out with earnings, too, where as long as you're doing better than feared, you seem to be getting away with being OK, even if you don't issue guidance, which I think a lot of companies have just decided, you know what, actually, I can't issue the guidance.

5:03But for the stocks themselves, it's clear that there's so much enthusiasm to buy these dips, right? So many money managers and retail investors, frankly, sold stocks in March of 2020 and then missed out on buying them back. And I think that that always kind of provides this floor for people to kind of come back in because we all want to be heroes, right? We all want to buy at the bottom. Yeah, I think you make a good point, Julie, in terms of the forecast and guidance. You know, you look at Apple and it seems like they got a little bit of pressure there because they were unwilling to kind of try to look into the crystal ball and give you some concrete data to kind of wrap your mind around.

5:40So I do think just from a strategic standpoint, it makes sense to say, listen, we kind of have the cover to say, listen, there's there's uncertainty. We're not even going to make an attempt here. And so I think that is a prime example of what happens, you know, when you try to be perhaps, you know, extremely transparent and it kind of comes back to bite you. Speaking more macroeconomically, I also echo a lot of the sentiments that I think this was kind of the proverbial sigh of relief. I'm going to wax slightly pessimistic in terms of saying that I still think this is mainly April data. I think it's probably going to be two, three months of data that you're really going to need to see if there is a bit more deeper effects of the tariffs here.

6:17And then the last thing I'll point to is the volatility. We still need to understand that we're coming from a mid-teens regime to now we're saying that mid-low 20s is a bit of a relief. And all that says is that the downside is still going to be exacerbated. Tim spoke about the correlation. That VIX level is still telling you that on the downside, there is still heightened correlation there. And so that's something to kind of, you know, still suggest that you need to be picking upper crust names as opposed to looking at like extremely growth names that we that we saw in 2020, 2021 and 2022. And that's where the upside was offered there.

6:53I think we're in a slightly different regime. So if you have if we get the most negative, if we have if we have a jobs issue or if you say the market comes in, I think you get the Powell put back right now. You have the Trump put because he can change and be flexible on trade, which caused this rally right at any point. So you have the Trump put. Do you have the Powell put? If unemployment ticks up, Powell put. Inflation, you see energy prices coming in to a certain extent. We see inflation moderating to a certain extent. We see crude drastically collapsing. That's what Trump wanted. He wanted lower energy prices.

7:32So I think you get a Powell put at worst. At best, you get a Trump put and a Powell put if you see yields start to rise again. And Trump has no flexibility watching the yield rise above four and a half in a 10 year. The most important thing right now is China U.S. trade. Everything else is secondary by a distant second. If China trade gets handled. Three percent, five percent. What do you limit up in the S &P is five percent? So I think we could see a limit up day. You got a trade deal. But if we got if we got a trade deal, I'm not an economist. and I try not to play one on TV. I do think if you look at the effective real tariff rates that we still would have even in a, again, if the presumption is that they solve China tariffs, that they remove reciprocal tariffs of a flat 10%, and then all the other things that are out there, the world changes dramatically.

8:27And I think you have a backdrop that still is supportive to equities. I also, though, believe some of the headwinds we're seeing for the economy were tariff independent. I mean, I think there was certainly some dynamics of this going in pre-tariff that I think people were a bit concerned. I get back to just the market itself, and I'd say if you are someone that believes that we could go higher, but you also have this dynamic where people still will talk about the uncertainty around. I mean, implied vol to downside protection for this market has been removed. In other words, there's no extra premium, I guess I should say, to where we are now than there was to protecting the downside versus buying the upside.

9:03And I think that's something you should be thinking about in this environment. I think it's absolutely a time where you take advantage of this move. A lot of people wanted to be sellers if I could just get back to$5 ,600,$5 ,700 on the S &P. I think, if anything, you protect yourself. Remember those days. But, I mean, it's remarkable how it's been exactly a month, right? I mean, those tariffs were announced on April 2nd. Today is May 2nd. Who would have thought that we would have been back to where we started on the S &P? Market got all sides. But also the volatility index. So to Tim's point in terms of protection, protecting yourself, you think it's volatile straight ahead.

9:34Instead, now is the time. You're back to where we were. But it's also a key market decision point, too, because you're back to where you were. So do you remember those days when we were talking about S &P, you know, 48, 50, or, you know, worried about those days, and you sell? Or do you say, you know what, the worst is behind us. The worst of the tariff wars behind us. Peak pessimism, peak tariffs. Regulation is around the corner, and tax changes are around the corner, too. Yes. That's the next leg up, is taxes. So if you can get that tax bill and you can get the economic data going the right way or even the wrong way until we bottom out, you're going to have the tax policy is the next momentum kick up.

10:12Right now, people are still worried about stagflation. People got offsides. You don't have nine straight days of up days unless the bears got offside. That doesn't we have 20 year. We have a 20 year streak that we haven't seen since 2004. Yeah, fair enough. I do think you want to think a little bit about in terms of how we got here, right? It was a pretty precipitous fall, a self-inflicted gunshot wound, for lack of a better word. And so I can understand bears getting off sides because there was no clarity. And so in terms of what takes us higher, I really think you need to see some clarity in terms of seeing some trade deals actually get done.

10:47I think the, you know, like speaking about what may be what may be developing, I think we've probably kind of exhausted that. I think it's we've round tripped. I'm sorry to interrupt, but let me ask you this. Do you think that the tariff situation is going to get worse from this point or get better? I actually tend to think it's likely to get worse. Okay, so if you think it's going to get worse, then I could see your case for saying the markets are going to. But if you think that there's upside from here because the worst being the highest level of tariffs to be inflicted are on, then I feel like then there's upside.

11:21Let me clarify. Perception around, the market's perception around, are we in a better place or are we in a worse place? I think now there's optimism that's being priced in. At one point, we were extremely pessimistic. We got slapped with this 125, 145 % number. We had these reciprocal tariffs that we still can't do the math on. So this is pricing in wins. I think this is pricing in. We bounce back in and that there is a pending trade deal. Julie, do you think that we're pricing in this level, recoup that level? Is that pricing in wins, trade wins at this point? Yeah, I think it has to be pricing in a certain amount of enthusiasm that, you know, these deals are going to get done.

12:02Right. You can't have nine straight days without that's clearly a major change in sentiment. And, you know, the market, if it does one thing really well, it's overshoot. Right. And so if I think about how quickly we've moved back, it really gives me a certain amount of pause because the thing is, is that we don't have any actual deals announced. We are still talking about talking about deals. And to me, that's the problem, right? That's always the problem in the market is where our enthusiasm for what might be gets well out ahead of expectations of what actually could be. And the thing is, is that regardless of kind of where we end up, whether it's, you know, 10 percent, 15, whatever, it's still at a higher level and it's still creating friction and it's still going to create an upward lift on pricing.

12:50I think just real quick, the other thing that's helped equity markets here is we've stopped the free fall of the dollar and we've also stopped this uncertainty. There's been order restored. Rich Ross writes great stuff. I read his piece today. He said, you know, between 410 and 440 on that 10-year restored order. And that's a yield that's really indicative of not inflation or a slowdown. Let's roll down on the tech earnings. Microsoft, the standout in the week, rising another 2 % today to bring its gains to 11 % since Monday. The company top in cloud revenue estimates and issuing a stronger-than-expected full-year outlook when it reported Wednesday.

13:21But Apple sank more than 4%, almost 4%, I should say, following last night's results. Missing on services revenue, saying it's hard to forecast the impact of tariffs past June. So what does the Divergence say about the AI trade, about the Mag7? Let's bring in Gil Lauria, head of technology research at DA Davidson. Gil, great to have you with us. Thanks for having me. I mean, is Microsoft the winner at this point in this sort of environment? I mean, yes, advertising came in better than expected for Meta as well as Google, but that is obviously a cyclical business, which will be affected by the macro very closely.

13:55and Apple is most closely tied and Amazon to tariffs. Microsoft seems to be sort of the one with the least amount of problems. That's exactly right. Here's a framework I've used to understand the earnings we just saw and what's ahead for the year. The consumer is slowing down. Once that happens long enough, advertisers, companies are going to advertise less. And if it lasts even longer than that, maybe they'll scale back their enterprise technology spending. What that means is we already saw the most consumer exposed companies. Apple and Amazon show some weakness yesterday. The advertising companies, Google and Meta, were okay.

14:35And Microsoft's the one that's doing the best and looks to be resilient for the balance of the year. Because things have to get really bad for companies to pull back on their software spending and on that shift to the cloud. On top of that, Microsoft is executing phenomenally well. The fact they were able to get Azure up to 35 percent growth, this is a$70 billion business. When AWS is only growing 17, even Google Cloud's only growing 28, that tells you that not only are they more resilient, it's the least consumer exposed, but they're also executing phenomenally well. Gil, when you look at the DeepSeek headlines late January and you look at Mag7, it was the most negative for NVIDIA.

15:17It was the most positive for the rest of the group because the rest of the group can make cheaper AI chips. So it was a tailwind for the rest. They're all trading as a monolith right now. But once we start to get to a different time period, could what is negative for NVIDIA be positive for the rest of the space? It is positive because the cost of compute is a cost for these companies. They're generating revenue based on that. So the lower the cost of compute, the more efficiently we can do compute, the less expensive the costs are for Microsoft, Google, Amazon and Meta. For NVIDIA, it's a different story.

15:57This week, there's some relief in NVIDIA because Microsoft, Apple and Google maintained their CapEx plans. Meta increased its CapEx plans. NVIDIA is fine on that side of the ledger. It's the other half of the business that's more a concern right now. 20 to 40 percent of the revenue comes from either China or Chinese companies. That is very much at risk as we speak until we know within the next couple of weeks how much chips are we allowed to sell in China, if at all. We're not going to know about that. And let's not forget that when CoreWeave IPO'd, we learned that there's a whole segment of NVIDIA's sales that's below subprime.

16:37Companies that have to borrow at 14 percent interest to buy GPUs. GPUs. That's very much at risk and a slowing economy. So that's the half of the business for NVIDIA we've worried about, a lot less those big customers. Gil, real quick then, how about your investors? How about your clients? What I want to hear about is Microsoft, yeah, nice outperformance. Microsoft had underperformed most of the Mag 7s, not just a little bit. I mean, underperformed Tesla by 48%, underperformed Apple by 20%, underperformed Meta by almost 30%. So it's been a year, it's been a year and a half of waiting for Microsoft next move.

17:12I'm just kind of curious where people are positioned and where sentiment is going in these names going forward. Well, things for Microsoft flipped in March, right? The underperformance came between the middle of last year until March because AWS and Google Cloud had caught up to Microsoft and it looked like it was going to be a more even race. Things flipped in March when that narrative flipped. When we started worrying more about consumer, Microsoft became the best, most defensive play because of their least amount of consumer exposure. And if you look since March and certainly since tariff day, Microsoft has been the best performing mega cap.

17:53And that's what we expect to continue for the balance of the year. Gil, great to see you. Thank you. Thank you. Gil Loria, DA Davidson. Bonoan, did Microsoft come out on top in your view of the earning season? I think it came out in terms of the safest amidst concerns. I think Tim makes a good point in terms of it's kind of been flat money for, I'm not going to call it a dog, but it's been flat money. I mean, you think about the year we had, think about the rolling one year that you had. Even NVIDIA, which looks like it's peaked, NVIDIA outperformed Microsoft by almost 28 % on a rolling one year basis.

18:29So I think there's fleas on that dog. OK. Here's a question, Julie. If a trade, all the trade deals get resolved tomorrow, the market rallies. Do you want to be in the MAG-7 or do you want to be the S &P 500X MAG-7? Where's the biggest, where's the bigger upside in your view? I think there's more opportunity across outside the MAG-7. For sure, there's enthusiasm to be had in the MAG-7 with the AI opportunity. But I think actually a lot of that is priced in. The valuation is still not attractive to me versus the rest of the S &P. First of all, there's two reasons. One, it's not only just that they're better priced, but they did a better job protecting on the downside.

19:08So you're assuming if we get all our trade deals done, that that's the end of that. But I think that that's the concern is that even if we announced a whole bunch of trade deals, what could happen later? You know, what other changes could happen? And the level of uncertainty is so wide that I would rather have more diversification and spread. All right. Coming up, crude oil closing out its worst week since March. And CEOs are sounding off on earnings. The state of the space next and Bitcoin roaring back toward the$100 ,000 mark. Can the crypto retake the key level or is the momentum about to hit a wall?

19:41More Fast Money in two. This is Fast Money with Melissa Lee right here on CNBC.

19:58Welcome back to Fast Money. Crude oil turning in its worst week since March as trade war fears and OPEC Plus combined to make traders cautious. Weaker prices hitting big oil earnings in the latest quarter. Exxon profit shrunk 6 percent, while Chevron's net income dropped more than 30 percent from last year. Here's what Exxon CEO Darren Woods had to say about demand. The questions around how the tariffs are going to impact economic growth around the world is leading to a lot of speculation and uncertainty around where demand goes. That then puts concerns and pressure on the demand side of the equation.

20:33What happens with the oil from here, Grasso, in your view? Yeah, this is a tough one because it's already dropped 18 percent. So you have a huge drop. And And from my point of view, it's based on OPEC +, which is increasing production by 411 ,000 barrels per day to we don't know how long. So they're going to keep voting on that. They want to keep market share away from U.S. producers. So for me, when I look at Chevron versus Exxon, Exxon has the Permian and Exxon has Guyana. And Chevron got hit with, as you said, the 36 percent drop in revenues. When you look at the overall base of down 18 percent a little, I think there's probably has to be some stability, maybe a little bit of a sideways movement.

21:17I don't think we can go much lower in a straight shot in oil right now. Exxon's also going forward with production growth. Exxon's going forward with its buybacks, which is a different story from Chevron, which also, by the way, has a possibility of its Venezuela license being revoked. That's been looming over the stock since Trump took office here. Which one would you prefer? Yeah, it's amazing. Because for a couple of years until about a year and a half ago, Chevron was doing everything right. And before that, I really think it was Conoco. Again, companies that were looking to be efficient, selling assets where they could, not over investing in areas, drilling dry holes, et cetera.

21:52It's been Exxon's been the winner. And truly, that project that's been now a, you know, where Chevron has now bid aggressively to own a piece that was owned by Hess. I mean, that's great. What Exxon told us today, ultimately, is that a$5 billion quarterly buyback is still intact. The div's probably going to be growing. Free cash flow is excellent. They can dial it back. Steve's right. I mean, the biggest issue for oil prices has been, I think, for the recent history, OPEC Plus had made us feel that oil price was under control and that they would control supply even if we couldn't control demand.

22:24That seems to be more in question now. Yeah, I tend to agree. I think given the tariff uncertainty, I think given the market uncertainty, you probably want to stick with Exxon between the two of them. With that said, I do think a 5 % div yield is relatively attractive. And given what we've seen with yields recently and also given what we've seen with volatility on the market, generally speaking, I think if we continue to see a pullback in Chevron, you actually might want to look at that name as well. You in oil, Julie? No, you know, I mean, we continue to find it to be a difficult place to invest because it's just so hard to create any kind of competitive advantage in an actual commodity.

22:56And I think the thing that really strikes me is when I looked at Chevron's earnings, this shortfall in free cash flow, it's cut in half year over year. That's just really difficult to get excited about. Right. And the capital intensity of it overall is just it really doesn't make it super attractive for us. There's a lot more Fast Monday to come. Here's what's coming up next. The crypto craze carrying Bitcoin back within inches of the one hundred thousand dollar mark. Does digital gold have enough momentum to hit a fresh record high, or is this rocket about to run out of fuel? Plus, the Oracle of Omaha taking center stage at Berkshire Hathaway's annual meeting this weekend.

23:34And one of Warren Buffett's favorite market metrics is flashing a big buy signal. We'll tell you what it is. You're watching Fast Money, live from the NASDAQ market side in Times Square. We're back right after this.