Tech’s Divergence In The Second Half… And Retail’s Holiday Expectations 11/22/24

0:00Live from the market site at Nasdaq on a night with a down notched yet another record close this is fast money and here's what's on tap tonight a tale of two tech trades software software software software outperforming the one of the last night of the last night of the day of the day of the day of the day of the day of the day of the day of the day of the day of the day season. Plus, the dollar drives to two-year highs. Starbucks quietly closes in on its best levels of the year. And on this Friday, each of the traders is armed with their chart of the week. Oh my goodness. Good evening, everybody.

0:43I'm Tyler Matheson in tonight for Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Bono and Eisen, Guy Adami, and remotely, Julie Beal. Welcome one and all. Good to be with you. Welcome to you, Tyler. Thank Thank you. Good to be with each of you. It's always so much fun. All right, we start with a big divergence in two pillars of the tech trade, software and semi-stocks, heading in different directions in this second half of the year. The IGV ETF up. It sounds like I give up, right? That's what it looks like. You never give up. I give up. It's not what you do.

1:17Up 22 % since the start of July, while the SMH chip ETF has gotten crunched down more than 6%. Top software names making major moves higher in that time. Oracle, ServiceNow, Salesforce, Snowflake, all up double digits, while big chip stocks continue to trade lower. Lamb Research, AMET, Micron, Qualcomm, down 10 % or more. So will the second half separation in tech continue into the year end? Let's get to that. But why don't we begin with your reflections on the fact that here we go again, another Dow record high. the S &P, 59, 69, close to 6 ,000, then lead me to the tech. No stopping it. There's no stopping it.

2:00Now, if I had told you, if I had said, Tyler Matheson, there's going to be a headline this week that Russia fired ICBMs into the Ukraine. What's going to happen to the market? And you'd be, well, if you had said it to me, I'd be like, well, the S &P is easily down 100 handles. Yep. The VIX is north of 25, gold's up$100. Ten-year yields are probably significantly lower on a flight to quality. None of that happened. So I guess if nothing else, that just shows you the resilience of the broader market and passive investing being fourth, you know, first and foremost in everybody's mind. With all that said, I mean, you have to say at some point things can get a little dicey here, given all the geopolitical risks out there and all the other things we're going to talk about later in the show.

2:38Yeah, let's let's move on then to the question of the this outperformance. Yeah, the one guy didn't answer. You can say it, Tyler. No, no, wait a second. Listen to how we led the show before we get into it. What are your thoughts on the market? OK, he's a little defensive, Tyler. I'm not. And I'm happy to talk about this because I think we're going to maybe even talk about the underperformance of semis, although maybe this is that conversation right now. So it's partially because I think we priced in so much good news that you had a day after the day after on NVIDIA. In other words, stock finally did give up a little bit.

3:11NVIDIA was down today, right? Yeah, I didn't. Yeah, there it is. But as we argued even yesterday, and I think even the 3.4 percent move today is something that all things considered, the zoom into those numbers, the fact that I think they kind of downshifted successfully in terms of the guide. But software is moving because it is really seen as the next reverberation out. You throw a pebble in the water, Guy, what happens? Well, you get ripple effect. Okay, you get ripple effect. And that's really what I think has happened. But then the ripples go away. The ripples go away eventually. And I think at some point what we've seen other times is software has actually followed semis.

3:45And I think that's happened again. I think software, a ton of upgrades this week. But we heard it from everybody, from Snowflake, even Datadog, who I think 6 percent of the ARR is actually an AI customer base. Yet that base tripled in the last year. That's the kind of thing you do in software. And none of these valuations make sense. And we've talked about this with Palantir. I think it was 38 times forward sales, which is absurd. But the argument here is that if you're playing AI, you're playing it through the enablers, and software platforms have different ways to do it. And frankly, that's the way a lot of the consumers are reaching out.

4:18But more importantly, enterprise is happening right now. And I think it continues. Bono, thoughts on the broader market hitting new highs on the Dow, the S &P within a hair of 6 ,000, or pick up on Tim's thinking on the semis versus software. So I'm going to be defensive and offensive. So I'm going to avoid the question first and then answer it second. So in terms of the broader market, listen, I think we're in essentially an everything rally right now. Going into the NVIDIA print, I think a lot of us spoke about how we were a bit concerned about that. We'd like to see it perhaps trade a little flat or perhaps just be a bit more defensive in terms of posturing before going into that print.

4:54I think that kind of explains the move that we saw post-earnings because it was yet another blowout quarter. I think questions about blackwell supply and ability and back ordering and pull forward of ordering there. I think those concerns have been assuaged. And then in terms of the divergence between what we're seeing from SMH and I give up is, you know, a lot of those names. Let's take Salesforce, for example. The question was, and this is also with some of the hyperscalers, this AI related CapEx spin needs to be justified. That was the prevailing wisdom at the time. And these companies were coming under pressure because investors really didn't feel like they had an accurate answer to that question.

5:34You saw Salesforce trade off. I don't know what it was, 20, 25 percent post earnings. And so a lot of those names have gotten beaten up coming into the print. And so that explains a bit of it. It's essentially you have like a star player like Nvidia dragging up the rest of the balance. And so you've kind of been mired in that drag because, again, there's been a massive divergence between AI related CapEx spin and then CapEx spin going forward. Where do you put money now, Julie Beal, as between the semis and the software stocks? Where would you go? I think that software is a much better place to be.

6:08These are more profitable businesses. They have much better levels of their own revenue. You know, they're less capital intense there. They're less cyclical often. So I'm always going to prefer an alternate neutral. You know, I'm going to want to prefer a software name. But I think what's interesting to me is just this dynamic that we're seeing with India and then everyone else. is a little bit reminiscent of the telecom boom that we saw. I don't think that is necessarily sustainable over the much longer term. I think in the near term, they can continue to be dominant. But longer term, you should see a broadening within some.

6:41Is there something wrong with those other stocks that haven't participated among the chips? Or is it just that NVIDIA is doing everything right or has this immense tailwind moving it forward? I think that the average penny company does not have this moat of development that they do where the actual programming language is something that you learn and it's something that you build around. Very few semiconductor stocks, particularly if they're not analog stocks, have that. And that really is the core differentiation. It doesn't just solidify the current business. It really paves the road for the future.

7:18All right. We've got a news alert now on an AI company that is looking to go public. Julia Boorstin has the details. Hi, Julia. That's right, Tyler. CoreWeave, an AI cloud platform, is looking to go public next year, aiming for a valuation of more than$35 billion, is according to a Reuters report, and is likely to target raising more than$3 billion from its share sale. Tyler, this looks like a sign of life for the IPO market. There's been a lot of speculation that the IPO market will open up next year, and this would be a$30 billion valuation company and CoreWave. Looking out for that one. Back over to you.

7:56All right, Julia, thanks very much. Major averages trying to regain their post-election momentum this week, and they did, kind of. The Dow, the S &P, and Nasdaq all locking in weekly gains of more than 1.5 percent. The Dow also setting, as we've been talking, a fresh record close today. But where do they go as we enter these last few weeks of the year? Let's bring in Bleakley Financial CIO Peter Bookvar, also a CNBC contributor. Peter, welcome. You talk a good bit about this being a two-lane kind of economy. What does that mean and what does it mean for the equity markets? Well, we have a fast lane that includes upper income spending that's robust still, helped by not just income, but the wealth effect of higher home prices and stock prices.

8:43You have anything related to AI spending and you have anything related to government spending. In the slow lane, you have the lower to middle income consumer. You have manufacturing that's in a two plus year recession. You have the pace of housing transactions and everything related to it at the slowest pace in 30 years. And you have global trade that is rather muted. So while we see the GDP number in the aggregate running, call it two and a half percent-ish, I think it's much more mixed under the hood. When you've got interest rates, the market interest rates on the 10-year and others at the levels at which we find them today, is that going to make it harder, given where stocks are valued, for stocks to move higher?

9:29It's a great question because I do think that that is the biggest challenge. We have what I believe is a bond bear market that started a few years ago after a 40-year bull market. And I think we're just still adjusting to this rather sharp rise in interest rates in a very condensed period of time. And it's not just in the U.S. I see the Japanese 40-year bond yield closed at the highest level since 2008 this week. European yields are off their highs, but they have ticked higher. So I think there is this global rise in interest rates that will continue, notwithstanding central bank attempts to lower short-term interest rates.

10:04The most notable market thing that has happened over the last couple of months has been the sharp rise in interest rates in the face of the Fed, lowering short term interest rates by 75 basis points. Tim has a question. Yeah. Hey, Peter, how about notable in the dollars move? And what does that do for your view? You're someone that looks around the world, too. I mean, there are people have been talking about Spain is a great market, the best market, certainly the best economy across Europe. But dollars moved seven and a half percent really since the since yield started moving higher. And now there's probably a U.S.

10:34dollar EU differential that's economic based upon differentials on central banks. So I'm just curious what you think either the dollar means to multinationals here or where the opportunity from this dollar is for for multinationals that get better and more attractive here. Well, the dollar action is interesting because, yes, it's rallying against the euro, the pound, the yen and some others, but it's weakening against the price of gold. So is the dollar really strong or is it weak or is it just the better of other fiat currencies? With your point about Europe, well, we had pretty disappointing PMIs today, both on the manufacturing and services side.

11:13On top of expectations that then got built into the December ECB meeting, where we're now pricing in about a 50 percent chance that the ECB is going to cut 50 basis points. The ECB now, while their mandate is inflation, it's clearly shifted to the growth side, which is not their mandate. It's more of their unofficial one. But they're cutting the Fed, maybe not in December. It's 50-50 there. And that accounts for that weakness in addition to that economic weakness. The dollar, generally speaking, we know it's challenging the yen because the BOJ won't raise interest rates in the face of persistent 2 percent inflation.

11:50And to your question, what it means for earnings, it's going to be a headwind for multinational earnings if this dollar stays strong as the quarter progresses. But also, it's a liquidity suck if the dollar continues to rally, which the market obviously is ignored up to this point. But if it continues, I think it will get some attention. Guy, you want to jump in? I do. That's a financial term, by the way, liquidity suck. Liquidity suck. Tyler was right to mention, as was Tim, 10-year yields. But Peter, two-year yields have gone up lockstep almost. And if you had told me where 10-year yields would be and what's going on with the Fed, I would have said the yield curve is steepening in a major way.

12:27That's not happening at all. What are your thoughts on the yield curve? Well, the two-year, interestingly, going into the September meeting when they cut 50, the December 2025 Fed Funds futures contract was yielding about 285. Today, it's yielding close to 4%. So we've taken away, the market has taken away more than 100 basis points of rate cuts because we've seen the response in the long end of the curve. We've seen the economic data sort of hang in. We've seen the inflation data hang in. And I think people just got way too ahead of themselves. I do, though, expect a further bear steepening where the 10-year yield is most likely going back to 5%, while the Fed, while not cutting as much as we thought, is still looking to cut short-term interest rates.

13:15But most importantly, Jay Powell should not ignore the behavior of the bond market. When he spoke at the last FOMC meeting, he was rather dismissive of the rise in long-term rates. And I think that that's a mistake if he continues to be. I just want to, before we let you go, I want to get your thoughts on commodities. I know you are bullish there, long gold, silver. You like oil and gas. Why? Yeah, we were long. We remain bullish. I think the gold story still has more legs to it. I know it had to move after the election, but central banks are not going to stop buying gold just because Trump won, just as they were not going to stop buying if Harris won.

13:53That's not going to matter. To me,$70 oil is rather cheap. The energy stocks, we believe, are very attractive and continue to hold them. And I particularly like also the fertilizer stocks in the ag space, which have gotten very beaten up. Throw some fertilizer on it. That's what we do every night here at Tyler. We throw a little fertilizer on things. Yes, indeed we do. Peter, thank you very much. We appreciate it. Julie, is there a trade here that comes to mind based on what Peter said? Yeah, I think if I look at material stocks broadly, that's a place that really hasn't benefited from any of the improvement in economic conditions.

14:27If you look at earnings expectations from materials, it's a huge, huge, huge. But I think there are good opportunities with them. I think you just have to be a little bit selective on the ones that have real capacity protections around you. We talked a little bit there in that previous interview. And, Tim, you mentioned earlier the dollar eighth straight weekly gain jumping to its highest level in more than two years, closing in on parity now with the euro one to one. Tim, thoughts here? Yeah. Again, I think you have a dynamic which is now Peter highlighted. Those are terrible PMIs across Europe.

14:59Meanwhile, we had an ISM here that was actually pretty solid. We know manufacturing's in a recession in the United States, but we know that the service is part of the economy. It's not only the part that is the consumer, but the part where there is a bit of inflation. So I think in this case, the dollar strength is actually positive. Now, remember, we're trying to also impute upon a world where there are tariffs. There are there is at least a policy response. Some of it is fiscal policy. Some of it truly is the dynamic that could have higher tariffs being a barrier. dollar positive for now until ultimately you get a case where this is really a drag on the U.S.

15:32economy. So I think there's a limit to what the dollar can do. I think the break of this level here, I think it can rise up to 110. And I would get back to those asset clashes that have been phenomenally resilient in the face of a higher dollar, because historically, this kind of a move in the dollar would have destroyed gold. It would have destroyed the price of oil. And I understand there's a little bit of an oil disruption trade to the market this week. But But I love energy here. I look at the move in the XOP this week, and that was the kind of a move that tells me these are names to get back into.

16:00Bono, any reaction? Yeah, I think you brought up a good point about multinational. So Tim was talking about in the interim how dollar strength is a positive, and I tend to agree. But I think when you start layering on the tariffs and what the blowback might be, the response might be from China, from Europe, as everyone digests this, I think that's something to keep an eye on. The gold trade, I tend to agree. You know, I know Bitcoin is kind of getting all the headlines in terms of the move that it's had over the last couple of weeks. But I think gold still offers you upside in a much more steady, progressive, up to the right type of type of way.

16:31That was 17 minutes of pure content right there. I mean, golden content. I mean, how long does 17 minutes take on that? What's that show you do? Power lunch. That's it. Probably takes about 40. Yeah. Yeah. Yeah. Very nice. All right. Come on. Coming up, we got your Bitcoin battling to break the$100 ,000 barrier while the breakthrough could come and how high the cryptocurrency can run. We got that next. Plus, the retail giant Tanger outlet Jingle Bell rocking into the holiday season. The CEO, Stephen Yaloff, joins us for a closer look at how the consumer stacks up for the biggest shopping season of the year.

17:09Be right back. All right. Welcome back to Fast Money, everybody. More records for Bitcoin as the crypto inches ever closer to the$100 ,000 mark. The coin getting within$150 of that milestone today. The cryptocurrency now up more than 40 percent since the election day. How much gas is left in the tank, Bono? I think it's equally awe-inspiring and concerning. So, I mean, as I mentioned before, this run-up near$100 ,000, I think, kind of, you know, underscores the fact that there's broad institutional adoption. The retailers are still a massive supporter. And the administration has come out and essentially said that they're going to be pro-Bitcoin, along with Gensler stepping down.

17:48With that said, this has a long history of boom and bust type of trading cycle. And being that it's devoid of essentially an intrinsic value, you're kind of left at the mercy of the herd mentality in terms of needing to be the first one out and not the last one out of the door. So I think that and then you look at the micro strategy, you look at the fact that NFTs and artwork and everything is kind of getting that, you know, everything rally type of boost. I think it is a little bit speculative in nature at this point. You own a couple NFTs, right, Guy? Of course. Doesn't everybody? Tim's done an amazing job with Coinbase.

18:22Talk about Coinbase chart, though. This is one you talk about getting over your skis. This is it in spades. This is a company that's probably trading close to 90 times next year's numbers. It's now approaching the levels we saw in 2021. So I look at Bitcoin. I don't understand it, but I do understand valuation. And this thing, if you've enjoyed the run, I think you've got to take some money off the table in Coinbase. Bitcoin ETFs, there's some stats out here. I think they're now north of$100 billion. So there's a dynamic here. And Bono in reference, the Gary Gensler news, we all expected that.

18:51I mean, that was going to happen anyway. The reality is that more regulation in the form of the SEC being on board is really what Bitcoin wants. We talk about the Trump 2.0 as possibly being a world of less regulation. And there's certainly dynamics that's helping other sectors. So I think this is about institutional adoption. I think this is clearly an asset class where Bitcoin has an argument. I think there's a lot of less emphatic arguments out there for other parts of the digital space right now. But that's just, you know, I think it's a matter of time. That was part of my call on Coinbase.

19:21I still think it is that on-ramp. There is no question. If you look at the rally we've had in equities, there's been a part of this. We talked about the parts that have been rallying. But the whole, call it meme world, the whole extreme speculation world that comes with digital assets and some of the stocks around it has been part of the last three weeks and really since election. And I think that's something that is something to be concerned about, as Bono had said. Having said that, I'm not going to fight this energy right now. Yep. All right. A lot more fast to come. All right, everybody. Welcome back to Fast Money, a four pack of fast movers catching our eye today.

19:55First up, you got Starbucks jumping to its highest levels in a year as the coffee chain continues its revamp under new CEO Brian Nickel. And a pair of Detroit automakers revving up. Ford, highest level since the summer. GM, nearly three-year highs. And finally, Supermicro jumping another 12 % today, bringing its gains since Monday to more than 78%. Now, that is its best week on record. The server maker hired a new auditor this week and said it has a plan to release its long-delayed annual report. Even with the gains, though, the stock is only where it was a month ago. Let's start with Starbucks.

20:31I struggle with Starbucks because Guy brings me one. He's a nice man. He's a nice man. He only gets you those. Yes. Tyler's our guest. You and I have been here. I'll get you talked if you want. I'll go to the break. He's a good host, man. He's good. Well, look, Starbucks, getting back to the dynamic here, you've got the CEO factor where I think Starbucks got the boost. It actually has followed through on a couple very important initiatives. I think the expectation is, first of all, while Starbucks is a brand where operationally people feel like there's much to be improved, there's nothing broken with that brand.

21:07OK, I mean, the bottom line is I think that's what Nichols really pointed out. This is this is a company that, if anything, and I know it seems perverse, given that they have shown more price inflation in some of their products than others. He's basically saying we're not giving the house away and we're actually not going to necessarily be promoting. So they've cut out a couple of these promotions. I think they have focused on the in-store dynamics. I think they have focused on where they have growth. And I just feel like it now feels like there's someone running the company. For a while there, we were having trouble getting economic forecasts and quarterly forecasts out of a management team that were anything close to the mark.

21:39I think that's as much of the improvement in the stock and in the multiple as the fact that Starbucks is a great global brand. You got real management in there now, Julie. I think Tim hit it there. The customer experience is everything. And I think Starbucks lost focus on the customer experience. It got expensive. They have so many drinks and things on the menus that they can't keep up. And they had drive-ins and phone-ins and walk-ins. And they're trying to serve them all. And they weren't serving any of them very well. Maybe a nickel is going to turn that around. What do you think? I think investors will always appreciate when a story gets a little bit cleaner and that there's a refocusing on what made a company great and what its competitive position is.

22:23I think it's really hard when they're trying to be all things to all people at all times of the day, when they clearly have a model that works best when they focus on what they're good at, which is more towards the early part of the day. I also think the opportunity that was talked about earlier in the week of divesting or JVing operations in China could be very interesting for them because I think that that really hasn't been the market that they had hoped it would be. I think there's just so much more competition than they expected. And so I think there's a lot fundamentally here that looks interesting.

22:52Guy, you want to talk Starbucks? You want to talk the cars? What do you want to talk? I'll talk Starbucks, man. I mean, they reported basically the day before Halloween, Tim, so I won't boo. But, I mean, the operating margins came in year over year. It was 14.4 percent last year, almost 19 percent. North American comps were miserable. I mean, it is not a failing business, but it's a struggling business. Yeah, maybe drawing on the cups and making things a little sleeker, but I think the fundamental problems that the stock was under pressure for for a year and a half have not gone away. As an analyst just came out and downgraded the stock's$75 price target, I don't know if it gets there, but this 102 level is probably the average price target of all analysts across the street.

23:29So I think it's probably fair right here. All right, we're going to take a quick break. Coming up, we're going to sit down with Tanger's CEO, Stephen Yaloff, for a look inside what could be a record holiday season for retailers, the numbers, and what's driving the rush right after this. Welcome back to Fast Money, everybody. Tis the season. We're counting down to Christmas. There's just a little more than a month left to get your shopping done or started. But how is the consumer stacking up for this holiday shopping season? We're joined by Tanger CEO Stephen Yaloff in the house for his take. Welcome, Stephen.