Stocks Hit Record Highs To Kick Off March Trading… And The Bull Case For Eli Lilly 3/1/24

0:01The Nasdaq kicking off March with the new intraday high topping its previous best level set in November 2021 and we're coming to you live with the action from the Nasdaq. market site in the heart of New York City's Times Square. This is Fast Money. Here's what's on tap tonight. Bruised Apple, while markets seem to hit one record after another, the longtime biggest company in the world is not coming along for the ride. What's it mean for the tech giant and for the strength of this rally? Plus, old Dell, new tricks. The legacy tech company soaring to all-time highs after its latest earnings report showed surging demand for its AI servers.

0:33How the news could shake up the competition in the space. And later, vaulting Viking, shares of the biotech company more than doubling this week as its weight loss drug promises some serious competition for the big players. Could the positive results mean an acquisition is in its future? We'll dive into the options pits for some answers. I'm Melissa Lee. Come to you live from Studio B at the NASDAQ on the desk tonight. Tim Seymour, Steve Grasso, Courtney Garcia, and Guy Adami. We start off with that record-breaking start to March. The NASDAQ jumping more than a percent, notching its first record intraday high since before Thanksgiving 2021.

1:05The tech heavy index closing just below 16 ,300. The S &P also marking all-time highs, putting in its 15th record close since January 1st. But there has been one notable name sitting out of this market rally, Apple posting another loss today and is now down nearly 10 percent since hitting its record in mid-December. So whatever happened to that old idea that we like to say, bandy around here, that markets could not go higher without Apple? What does this mean for the rally. This is actually good news for this market, Guy. I'm one that adhered to that. And again, we play this game often. If you had told...

1:39Mel, Guy, if I told you Apple would be trading... Hold on, was that third-person reference? Was that a third-person reference? He said what I would say to him. Because I said what she would say. Okay, because it was uncomfortably close to a third-person reference. Well, we're very uncomfortable at times here. But you know what? We'll bring it back a little bit. Apple's below 180. Where's the S &P 500? I don't know, Mel. It's got to be down a few hundred points from the all-time high. It's not. And Apple has not been trading well since December or so. So what's happened here? Well, maybe it's become a source of funds.

2:07You know, maybe people see the growth isn't there. The valuation's extended and it's not justified where other companies at least have the growth that maybe you could wrap your head around. So I think that's what's going on. But to answer your original question, absolutely not that I think Apple would be under pressure and the broader market would be making all time highs. I mean, the context, too, is that the Mag 7 no longer trades as a monolith. We've seen Tesla drop out. We've seen Alphabet drop out, Apple dropping out. And maybe this is actually good that maybe some money is being transferred to other areas.

2:35I think that's what you want to see, right? We don't want just five companies leading this whole market rally higher. We want the entire broad markets rallying. And you're starting to see that. The market is broadening, I think, more than people realize, right? I mean, you have even things like health care and industrials are actually also hitting all-time highs in the last week. And even things like our financials are actually starting to get up to those levels, too. And I think that's what we need is a broad market rally. That's what we're seeing. that's much more indicative that this has more room to continue to run.

3:01These all-new highs, remember, are from two years ago. Markets have gone a whole lot of nowhere in the last two years. We still have ways to go here. I think Apple is the number two in the NASDAQ 100. Number one is Microsoft. They're both about 8 % or so. So Tim always points this out. Apple has been underperforming for quite some time in the overall market. So I don't think this is anything necessarily new. But how does the market perform when we all start to look at it? That makes sense. We haven't acknowledged the fact that it's been underperforming. So it has been underperforming, but because we haven't talked about it, it's like it's never not happening.

3:37If a tree falls in the forest, did it ever fall? So right now, it's been going on for quite some time, and the market has been performing just fine. Okay, so now that we know that it's happening. Steve is out at Apple here. Steve is out at Apple. People might start to use it as a source of funds now that people increasingly. So you think the selling pressure increases here? I think it could. And I also think that you could see cell pressure in Microsoft because of everything that's going on with Elon Musk and open AI. So if you start to see the top two holdings of Nasdaq under pressure at Microsoft means a lot more to the overall market than Apple does.

4:11I use my decoder ring. Well, let me let me let me let me let me lend some sanity here. I think I think it's all I think it's all I think it's all about semiconductors, folks. We don't need Apple because we have semis. Semis have outperformed the S &P by 20 percent since January 4th. The entire S &P that everybody thinks is having a great year, and it is having a great year. Semiconductors, until they stop showing leadership, we are fine. And not only that, they've set the stage for the market for the last year and a half. So, again, if semis are outperforming NASDAQ or triple Q's, SMH over Q's equals S &P higher.

4:46And until that stops happening, we don't really care about Apple. And what happened today to semiconductors that the Sox, the Philly, whatever you want to look at, the SMH was up over 4 percent when, in fact, we've rallied. So it's a 20 percent move in the semiconductor index, its own index. In other words, it's moved 20 percent higher in a month. And this is coming. Yes, we got NVIDIA's earnings. We know what's happened. We're getting some real positives out of out of AMD and where they actually may be ready to compete. We heard from Dell. I mean, everybody that actually may have a real ability to throw their hand into the ring.

5:19So that's important. Courtney talked about market broadening. I think this week was all about that. I don't think as much as it was about semis and today's 4 % move is extraordinary. It really is a breakout in health care. It really is a breakout in retail. It really is a breakout. Energy catching fire here. All of these sectors. And this tells me that we're getting allocation. And it tells me that people are allocating. It's not it's not the other. You know, it's not the seven. It's not even what happened to the other 493. They're playing ball, and I think they're going to continue to play ball.

5:47It's a quick math you did. Did you see that? 7, 493. Yeah. The whole thing worked. The whole thing worked. It's clever that way. We like that. We like that. It's interesting. AMD, we were sitting. We were together. We were at the found blue hotel. As we typically are. Which sounds odd, but actually we were there for work. And we were sitting out by the pool doing our show. AMD reports earnings. It closed at 169. It was 164 in a heartbeat. The fourth quarter was okay. First quarter guide was not great, and the semi-stocks were going ballistic. Stocks added 25 % since then on maybe some news, but, you know, AMD's all of a sudden got in itself extraordinarily expensive, where this was an extraordinarily cheap stock two and a half, three quarters ago.

6:27So it's that fast you can go from valuation that's, you know what, you can get your head around to valuations that don't make any sense at all. We say we didn't need Apple because we had semis. Yeah. We really mean AI. I mean, is that really what you mean to say? Well, I think it is, because if Apple's growth was more about reaffirmation of a consumer and a services business and a multiple expansion, multiple expansion in AI is we'll ask questions later and we'll price NVIDIA on a 25 EPS multiple of north of$25, which makes it, by the way, not an expensive stock. So, yes, that's exactly what's going on.

7:03And whether that's right or wrong, and we're now questioning how big this pie really is for everything. I mean, I understand that NVIDIA is a winner, but I'm not sure if we have a bigger pie to draw from. And yet we're pricing everything higher. And without AI, you get commodity pricing. You get boom bust. Right now, that's extended the cycle for chips, where normally chips would run in these cycles with the economy. Now they're running into a different cycle where AI. Super cycle? I don't know if you could call it a super cycle because that makes me think you should short it. The secular growth story.

7:37I'm just trying to think of all these buzzwords that we apply to things. You can't go from Pixie. We'll think about Pixie. It doesn't actually pan out. Well, think about Pixie dust, right? We were all talking about Pixie dust. And NVIDIA proved that they could make billions off of something that was tangible. Now we're starting to see who could actually make revenue on Pixie dust that's no longer Pixie dust. We saw that Salesforce can't do it as of yet, right? So AMD can do it. Nvidia can do it. The chips can do it. The rest remains to be seen. Look at Broadcom is a name we actually have done a decent job with.

8:09I mean, it looks expensive because it's a$1 ,400 stock. But then you start doing the math and say, wait a second, this stock actually only trades at 25 times next year's numbers. I got to tell you something, that's more than reasonable in this environment. I think they report next Thursday. So, you know, there are stocks in a secular ship that makes sense. To me, there are other stocks that have just gotten way ahead of themselves. So here's a question at this point. If you had a dollar,$10,$100, whatever amount of new money right now that is uninvested on the sidelines, where would you put it to one of these sectors like a health care or retail that are showing signs of breaking out, catching up with the rest of the market?

8:44Or would you put it in the AI trade? I mean, I think you need both, right? I mean, I think with new money, I'm absolutely leaning towards health care. By the way, she didn't answer the question, but that's fine. Don't worry. It's in my head. It's in my notebook. Reminds me of bicep. Anyway, because really what you're seeing, I mean, there's officially like a feeding frenzy when it comes to AI. Companies are realizing if they're not getting into it, they're going to fall behind. And so you're getting everybody is mentioning they're trying to find some way to become profitable. And you know, there's a lot of case of not a business use for it, but it's creating this frenzy where they're buying.

9:13They're getting more chips and it's arguably making this double ordering issue where they're getting a lot more chips than they need. Down the line, you may actually see a glut because of that. And I think you're seeing that going into the share prices and it's becoming these high valuations. where everyone says, oh, it's going to keep going. Probably will for a little while as you're seeing people chase it. But longer term, I think I would look at something like a health care, which I think is going to continue to be profitable, and it's undervalued compared to those items. Same question to you, Grasso.

9:36I would go XBI. I would go biotech. Over AI. Over. Well, right now, so I agree. Shockingly answered the question, by the way. I always answer the question. And I always bring everything back to would you rather, but you don't like that either. So for me, I would go biotech, and I think you have to go with the smaller cap, the more equal weight, as Carter Worth would talk about, versus the IBB, you go XBI. And I think you have a lot more bang for your buck there. Tech is only up in XLK terms, about 9.5 % year to date. XBI is up about 13.5%. I know it runs counter to the growth dynamic, but I love utilities here and I love MLPs.

10:13Utilities have so underperformed. There was a question last year whether they really could exist, so to speak, with the higher energy costs, the higher yield costs. A lot of the infrastructure built out, but a lot of utilities were under a whole lot of pressure. MLPs, what we've proven is that a lot of these, call it mid-tier companies, are actually making money and they're much more CapEx defensive. And I just think there are places in this market that continue to look good. It's not necessarily that the equal weight S &P is outperforming. It's all the sectors that have underperformed that are real weightings in the S &P.

10:49I mean, utilities aren't a massive weighting, But they're 3%. Energy is 4.5%. Energy is starting to break out. I think these are places to play. Energy. And I like being the last because I can listen to all the other answers and then have time to think about it because it takes me time. And that's the best you came off with. Well, it is. But, again, just look at Crudel. Stealth rally nobody's talking about number one. You look at some of these names that we talk about all the time, all of them making all-time highs. Yes, Big Cap integrated, no bueno. But you know what? XLE is actually quietly getting itself off the mat, trading around 88 or so.

11:19So OAH north of 300 again. I mean, I think people are not paying enough attention to energy. All right. Well, with the Nasdaq setting a new record today, we thought it'd be a good time to take a look at the market technicals. The chart master, Carter Braxton Worth, joins us now to dive into the charts. Carter, what are you looking at? Sure. Let's go around the horn and look at some major averages or indices and where they are now in relation to their former highs of late 2021, early 2022. Let's put up the first table. So all three of these well-known, of course, S &P 500, the Dow, and the Nasdaq Composite are all above their former high.

11:54So two years later, S &P up 6.6, Industrials up 5.7. And as you just mentioned, the Nasdaq Composite making a slight new high. Now then, of course, we have those that haven't quite recouped all their losses. So the S &P 500 equal weight is not quite back to Unch. The Midcap Index, not quite back to Unch, but close. The Russell 2000, nowhere near being close to having recouped his loss. And then the oldest index of all, interesting, the Dow Jones Transportation Average, is still down 13-plus percent from its former all-time high. So let's look at a chart or two of some of these, and we can go from there.

12:32But the question is, do we chase the winners, right, or do we maybe play the laggard? So here's the S &P. Again, you're up 6%. But you'll note this. So the S &P consolidated for one full month, actually five weeks, before it broke out, right? It got to the former high, consolidated, and then exceeded the high. Now let's look at the next and the next, and you'll see that the equal weight has just now returned to that level. And the presumption is that it too, as the S &P did, will back and fill at a minimum, meaning before you exceed a high, typically you contend with it. Look at the NASDAQ composite as well, and you'll see the same circumstance.

13:09So were these two that are catching up to the S &P do what the S &P did, one can anticipate backing and filling or backing away before going higher. And then finally, relative performance is everything. So let's look at a ratio chart. This is the Nasdaq composite divided by the S &P, which gives you a relative strength line. And what we know is the Nasdaq composite's relative performance peaked in 2021 and still way, way behind the S &P. And then finally, of course, the Nasdaq composite overall, its relative performance, the Nasdaq 100, is making new 20 and 30 year lows as we speak. That's a very interesting chart, Carter.

13:53I want to pose a question to you that I posed to the folks here on the desk tonight. And that is, if you had to put fresh money to work today, where would it go? Would it go in the so-called winners, the MAG-5 or however many you want to call it or semis? Or would you go to the sectors that show signs of life now and are catching up, like a biotech, a health care, retail, et cetera? Sure. I mean, I think it really gets down to large versus small cap to some extent. And so I would answer it by saying I would rather have an overweight in a Russell 2000 IWM than an SPY. But I also like the energy theme that you all were batting around on the desk.

14:29I think that that's a good play here. All right. Carter, good to see you. Carter Braxton Wirth of Worth Charting. IWM closed above 205. We've been pointing out that that's resistance. That's a very good sign without question. So he's on to something there. I mean, that's like a two-year resistance level that we're through. So we'll see if that plays out. What's that holiday on the 4th of July? 5th of July? That's the one. That's so weird. No, odd, right? But you know, how long have we been doing the show? 17 years. How long have we been? Yeah, 17. I just learned before the show. It's always the same day of the week, right?

15:00Carter Braxton, the cat signed the Declaration of Independence. Well, not the one who was just on. No, no, no. Of course not. I wouldn't make him very old. But he's an ancestry. He's a relative, yes. It's incredible. I mean, I'd like him even more now. He's like American royalty. He's furious. Well, speaking of, you know, back then we obviously became our own. We pulled away from our friends in Britain. And if you look at Britain and if you look at Germany and if you look at Japan, the international markets are outperforming the S &P. Quite a segue. So, well, that's what I do here. And so it's a case where when the S &P is working, historically, we've seen international underperform and there's been reasons for it.

15:37Places where they don't have a whole lot of high tech and a whole lot of AI, I think, are responding. This is the whole thing about the real economy outperforming. And I think it's going to continue. And these are long cycles. This is 10 years of underperformance for the MSCI world or the Euro stocks 50. I think this is a trade you can also stay in. You like international, right? Absolutely. Yeah. And we've been we've really been talking about that because tech's been outperforming. There's a lot less tech, as you just alluded to, in your foreign markets than there is in the U.S. And the valuations are still so much lower.

16:04So, again, you want to own both of these, but absolutely with new money, yes, small caps, things like healthier, things like energy, and absolutely international. That's definitely where you want to start to allocate your assets to. If we look at international, you've got them making new highs. To Tim's point, you have Germany, France, Japan making new highs. And the domestic market here seems as though it's on fire, and I want to be cautious of it. we're due for some sort of a pullback. And I'm not calling for a bear market, but we do have to take a little bit of a speed bump. But other than that, I think the U.S.

16:36markets will continue to lead. All right. Coming up, it's a bird, it's a plane. No, it's Spirit Air Systems soaring. On news that Boeing is in talks to buy back the company, we will weigh the pros and cons of this potential mega merger next. Plus, a casino crap out, Malco hitting its lowest levels in over a year after a disappointing earnings report. One of our traders says now is the time to buy this Macau trade. More Fast Money right after this. This is Fast Money with Melissa Lee right here on CNBC.

17:12Welcome back to Fast Money. Boeing and Spirit Air Systems confirming after the bell that the two companies have held talks to recombine reports of the discussion sent shares of Spirit soaring during the regular session. Both companies saying, though, that there is no guarantee that a deal will happen. The news comes less than two months after the door of a Boeing 737 MAX 9 blew out mid-flight. And it's been a bumpy ride for the two stocks ever since. Spirit was spun off from Boeing back in 2005. The stock saw its best stay since October, up more than 5 % on this news. Meantime, Boeing down almost 2 % on this news.

17:46A lot of analysts say it would be good for Spirit in long term, possibly good for Boeing, too. We've talked about this actually for years. Obviously, it's coming to fruition now. And we talked about it when Spirit was trading a lot higher than it currently is now. I do think something's got to be done here. Get up back underneath Boeing's umbrella and figure things out. Spirit should go significantly higher from current prices. But once again, Boeing at this$200 level, not because it's a round number, because actually it is technical support. This is where it's held a couple of times. This is where it needs to hold now.

18:17Yeah. Yeah, they also say that Boeing could possibly pay all cash for this effectively and use their credit facility because they just paid down$4 billion worth of debt recently. So their balance sheet's really good for this. Yeah, there's a price for everything, and I think that's what this comes down to. And also at a time when there's so much pressure and focus on Boeing, who has outsourced so much to so many other companies, and this is obviously the biggest outsource, and that's really the problem here. And there's a lot of people that have to see some kind of major change at Boeing. The FAA is going to continue to at least go out of their way to be vociferous on certain things have to change.

18:50This is the kind of a thing about bringing a lot of this stuff back under their own roof again over the last 15, 20 years. Boeing has done a lot of outsourcing, and there's a high correlation to what's going wrong. If that's the case, then you would think that Boeing shares would be higher. If the vision is that they can claw back some of these operations, put it under one roof, have more control over it, and get those operations in order, maybe this could be a turning point. And I absolutely agree with that. But I wonder, to a certain extent, where you're getting, like, the boy who cried wolf, where Boeing, like, we keep thinking that they're going to be turning things around.

19:21We've been thinking this for several years now, but there keeps being issues. So I think the rumors of this happening are not going to be enough for investors to jump in here. But absolutely, I think this would be a good thing for Boeing. I think they need to get some of that quality control. They need to give the investors really the optimism that they have turned things around. So I don't think these rumors are enough of that, clearly. but you have to see them follow through. Boeing's a duopoly, right? So it's the reason why the stock hasn't came further. If this were any other stock, when Guy talked about the name, if you would have found out the headline before and see what the price action is, Boeing should be much lower than where it is now.

19:56Spirit needs Boeing. Boeing doesn't necessarily need Spirit, but the fact that they're hanging in around$200 is surprising for me. I think the stock should be much lower, but it can't go that much lower being a duopoly. To me, it just depends on what they pay for it, because Spirit will actually be accretive on a free cash flow basis. They have a higher free cash flow yield. One of the things I love about Boeing historically is this is a company that generates a lot of free cash flow. It's a company that I think will, again, it's a company that I think if you've got the right time horizon, whatever that is, I think you're going to be happy with a Boeing investment here.

20:27It's not going to turn overnight. There's a lot more Fast Monday to come. Here's what's coming up next. Is today's casino crap out your ticket to cash in? One of our traders is racing his bet, the Macau trade. We'll test the odds on rebound roulette next. Plus, more love for Eli Lilly as Bank of America boosts its outlook on the pharma darling. Is M &A the secret to even more gains for this stock? We'll take a deep dive into the options market to find out. You're watching Fast Money, live from the NASDAQ market side in Times Square. We're back right after this.

21:10Welcome back to Fast Money. We've got a news alert on the newest entrance to the S &P 500. Pippa Stevens has got the details. Pippa. Hey, Melissa. Well, Super Microcomputer and Decker's Outdoor are set to join the S &P 500. They are replacing Whirlpool and Bancorp. These changes will go into effect prior to the opening bell on Monday, March 18th, to coincide with the quarterly rebalance. Supermicro, Melissa, really feels like a sign of the times here. Back to you. Yep, it does. Thank you very much, Pippa Stevens. I mean, not too long ago, Supermicro wouldn't have been a candidate to be added to the S &P 500.

21:45Whirlpool going out. That's been one of yours in the past. Yeah, it has. It's not been for a while. I'd say I'm neutral on the stock. we have seen it getting kicked out of the Dow as being a bottom for a lot of stocks. I mean, look at what it did for Exxon, different circumstances. But for Whirlpool coming out of COVID where there was supply constrained at a time when they had demand, they ran into margin pressure on supply constraints. I think a lot of that has eased. I think there are challenges ahead on margins. But I think the stock's interesting. And I think you're actually at this point, it's gotten more expensive as the earnings have deteriorated a bit.