The Most Important Charts In The Market… And Viking’s Weight Loss Surge 10/24/24

0:00Live 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. An electric performance, Tesla jumping more than 20 percent following a better than expected earnings report and a bullish growth forecast by Elon Musk. Is the EV maker back on track after its best day in over a decade? We will debate that. Plus, delivering returns, UPS surging as package volumes rebound and cost controls take hold. The analysts who put a sell rating on the company just this week will be here. Will he defend his call or change his tune? And later, the quad combo pill giving Viking Therapeutics a shot in the arm, a disastrous day for mining giant Newmont, and still grounded at Boeing.

0:37What happens now that the union voted down the company's latest offer? I'm Melissa Lee. Come to you live from Studio B at the NASDAQ. On the desk tonight, Carter Worth, Karen Feinerman, Dan Nathan, and Guy Adami. We're going to get to the markets in just a moment, but we start with some breaking news that we've gotten in the retail space. Here's the Michael Kors parent Capri cut in half after hours after a U.S. judge blocked its merger with Tapestry, the owner of Coach. Let's get to CNBC.com's Gabrielle Fon Rouge for more on the story. Gabby. Yeah, thanks, Melissa. So huge news today. Clearly, the market hadn't baked this in.

1:08We've got Tapestry shares up about 15 percent. Capri shares down 15 percent. They've got a$240 million breakup fee. We did just get a statement from the FTC on this moments ago. Quote, today's decision is a victory not only for the FTC, but also for consumers across the country seeking access to quality handbags at affordable prices. These bags are a product which millions of people rely on throughout their daily lives. The decision will ensure that Tapestry and Capri continue to engage in head-to-head competition to the benefit of the American public. So, Melissa, you might remember that in September, Tapestry and Capri faced off with the FTC in a Manhattan federal courtroom.

1:47The FTC was arguing that Tapestry's coach and Michael Kors, owned by Capri, these two companies compete head-to-head. And if they merge, then it's going to mean higher prices for consumers, lower quality bags and worse benefits for employees. So it looks like the FTC has prevailed in that approach. Of course, Tapestry and Capri have the ability to appeal this, but we've gotten indications that they don't plan to do that. All right. So no appeal. Any sense on what is next for Capri? So, I mean, this is a rough day for Capri. I mean, already sales were falling tremendously at Michael Kors, its biggest brand.

2:21That's why it was willing to merge with Tapestry. is going to be able to come into a bigger umbrella, have the synergies. And, I mean, right now it's just having trouble competing. You know, Michael Kors used to be one of the most popular brands with American consumers, and now it's a mainstay at places like TJ Maxx. And you can't argue that they haven't seen that kind of brand dilution because of that. They're going to have to find the investments necessary, find the cash on the balance sheet to be able to invest into growth, figure out new strategies, and fix that brand. And that's not easy, and it's not cheap.

2:50Yep. Gabrielle, thank you. Gabrielle Fon Rouge of CNBC.com. Karen, you've been following this closely. What do you make of this? What happens next for Capri? What are its options in your view? So they're in a difficult spot. I think they only sold because they wanted to sell and felt like they needed to sell, that Coors, which is really the driver of their business, was having difficulty. I think they would look to sell again, which is not a great position to be in, certainly with your stock trading well lower than where it was before the merger started. I don't think the price that Capri is trading at right now is super shocking.

3:27What I think is far more surprising is the decision. Right. So stock was 41 on a$57 deal. It was telling you that there was downside if the deal didn't happen. But it seemed far more likely to me and I would bet to the ARB community at large, far more likely. Thank God they're saved from this competitive handbag situation. The consumers. This is just ridiculous. I mean, the American public deserves this kind of protection against over-priced handbags that are so important to daily life. Millions of Americans. Let's just put this in context. These two companies have combined sales of$12 billion.

4:05Gap is$15. Kohl's is$15. Target's$100. This is what the tax dollars are going for? This is a joke. I mean, come on. Yeah, it is absolutely ridiculous. I mean, Tapestry is up on this. This wasn't a great deal for them at the price they paid. So surprising. It will not. This is the end of the deal. To get it finished by the time the merger agreement runs out, that's not going to happen. The deal's over, you know, for all intents and purposes. So Karen started her illustrious career in risk arbitrage. This is the risk. This is the risk. You know, like I'm lying. Long calls. I'm long some stock. I'm in.

4:41I'm long some tapestry as a hedge. But but it's actually I mean, David Einhorn initiated a position in Capri recently. So, I mean, you see what happens. But, you know, that's why hedges are in place. That's why Dan talks about options. So it all is playing out right before our very eyes. The question is, and I asked Karen this before the show, where does things stop? And obviously you get forced liquidation here, and we're probably below the levels we saw in that August 5th sell-off. But it feels like there's a little bit of downdraft still to come, even with it trading$21. Yeah, look, I mean, news-related resets like this should stay away.

5:13But imagine Movado and Swatch are going to merge. Millions will be. I mean, this is literally absurd. I mean, when Gabrielle read the FTC statement, it really underscored how sort of ridiculous this whole fight is to keep handbags well within the reach of the American public. You know, handbags that we all depend on in our daily lives. I like that line in particular. Anyway, we'll continue watching the story. Moving on. The Dow dropping for a fourth straight day, weighed down by lackluster results from IBM and Honeywell. But the S &P and Nasdaq both manage gains as those indices try to climb back into the green for the week.

5:47Yields on the 10-year Treasury holding steady near three-month highs. But with earnings season now in high gear, we wondered what charts the traders think tell the true tale of the market. Guy, what's your chart? So, you know, I did this because I wanted to tee up Dan Nathan, and mine is the IYT, the Dow Transports. Go ahead, Dan. Well, listen, early in your career, when you and Charles Dow came up with this theory, is it still applicable now? Well, that's why I bring it up, because I do think it is. because these transports are not your grandfather or my transports. So if you look at the three biggest holdings, Uber, which is obviously it's a relatively new company, right, in terms of its formation as a publicly traded company, Union Pacific and UPS.

6:31So the three use a wide swath of the economy. That's 42 percent of this ETF. Put up a chart and you'll see we're right up against prior highs from November of 2021. So one would think the most economically sensitive names, they're going to tell the tale here. Either we're going to go blowing through this prior high or we're going to stall here. And they all obviously impact different areas of the consumer and the economy. So for me, does the transports continue or does it stall? Do the charts prove that Dow theory is still relevant? You know, in many ways, one would be slow to contradict a lot of history, right?

7:05And so we have a lot of history with Dow theory. And the transportation average is literally frozen. And IYT made a slight new high because it's a price weight index. and Avis at one point was the biggest weighting at almost 30%. But the actual Dow Jones transportation average itself has not made a new high in about three years. It's got to give. You can't be in equilibrium forever. My own hunch is it's not going to break out in any meaningful way. You don't believe in it anymore. You think that's just... No, I think what Guy just said is really important. You know, if Uber is the largest holding, it's just not that relevant to some of the other names that I think a lot of folks would kind of rely on for the stuff.

7:41Uber is such a unique sort of situation within the transports. And, you know, the growth there does not look like the growth in many of the other sectors. So to me, I think it makes sense. But I think what Carter is saying is like with all that history, you probably want to lean in towards it a little bit. And just one thing on the weightings. I mean, the actual the IYT, while it attempts to mirror the transportation, the weightings are completely different. FedEx is the biggest weighting at 11 percent. And then I think it's Norfolk Southern. Uber is only three. So there is a bit of a difference between IYT and the actual Dow Jones Translator.

8:11Karen, what is your chart? So my chart is the 10-year. And so what I think is sort of interesting and relevant here is the 10-year and the bond market seem to front run the cut, right? And then once the cut happened, that was it for bond. I mean, yields started to rise. And I think I think we've reached a point of leveling off, which is good because as we saw what we thought was going to be, oh, great, new existing, you know, existing homes will come on the market and all of the all the things that go on with that would be better. But then that didn't happen as rates started to rise and mortgage rates went sort of right back up.

8:47So I think leveling off is really important, even if it stays there. Stop. Stop. The ascension of yields is important. I agree with that. I mean, Carter's going to have a different take, but I do think the rise in yields is something that the market is starting to take some. I think it's taking notice of without question now. As we had Katie on the show, I think it was on Tuesday, she thought the TLT was a buy. In other words, yields might have topped out in the short term. And that's proven to be correct. But I also think she thought it was a short term trading opportunity. I'm of the belief that rates are going to continue to go higher into the end of the year.

9:17And at a certain point, the market's really going to take notice. Yeah, what I find interesting, it's probably the most confusing trade in the market right now, if you think about yields. And it's obviously one that was very controversial heading into the Fed's meeting on September 18th. The fact that they cut 50 basis points, that was the dead low in the 10-year, like that day. And since then, it's gone from 3.6 percent to 4.2 percent. So I think it's got a lot of folks turn around when you see Paul Tudor Jones and Stan Druckenmiller talking about how they're positioning right here for higher rates.

9:46And for longer, it makes little pikers like me kind of say, you know, like pikers, just a little piker, just a little guy, you know what I mean? It's not like a bad word. Like we're not. If I called Carter a piker, it wouldn't be that nice of a thing to say. Okay. Right. I agree. Noted, but you're not. Carter, what's your chart? All right. Well, let's work from top down. If the most important sector is technology at 32 % and the most dynamic area within technology is semiconductors, we have a comparative chart here of the actual Philadelphia Stock Exchange semiconductor index versus the equal weight.

10:24And we know that the actual index is up 24 % year-to-date and the equal weight is up only 4%. And this is actually a three-year chart. Three years and the equal weight semi is at zero. So that this area of the market, which is so important, is actually underperforming the S &P. It's not as good as the headlines would believe. Or said differently, how long can a few players hold up and sustain the group, which is deteriorating? Right. This was effectively your chart as well, Dan. You wanted semiconductors. Yeah, the piker jumped right in front of me there. Mine is kind of similar in a lot of ways.

11:00And it's Microsoft. And again, this is one of a handful of$3 trillion market cap companies and obviously a huge beneficiary of this whole generative AI trade. They were one of the first ones to really get rewarded for some of their investments, obviously open AI, and then their access to that technology and how they're integrating it across their products and services. The thing is really stalled out. If you just look at it, it's about, I don't know, 10 or so percent off of its all-time highs made a couple months ago. It's only up 13.5 percent on the year. You have a NASDAQ and an S &P. They're up more than 20 percent.

11:32So at some point, it just appears that at least investors are thinking that you're going to see a downshift in growth. You're going to see some sort of metric degradation, or you're just not going to see the return on the sort of investment. And so you look at Microsoft, their Azure, their cloud business, you know, they've been building out a lot of capacity. Hopefully, a lot of their clients are going to access these models and the compute on there. And I don't know, you know, so like I think this is really interesting, the report next week. Let's see what that guidance is. And then for his semi-trade, if you see a downshift in CapEx from Microsoft, from Meta, from Amazon and Google, then that's going to be a real problem for NVIDIA.

12:07Noun. A stingy or cautious person, a gambler who makes only small bets. In New Zealand or Australia, if you're watching, a person who withdraws from a commitment. Piker. Oh, okay. So in the financial world, somebody makes small bets, so there's just a small player. Piker. Why are you? Odd Lotter. Odd Lotter. Oh.

12:31Karen, does it bother you that there's such dispersion in the semiconductor index? And no, not really. I mean, I do think, well, you know, while my chart was really much more macro, which was the 10 year, I do think very specific earnings will matter a lot. Now, sometimes they trade in front of them, either on good news or bad news. You trade, you know, trades on the same news multiple times. But I do think NVIDIA's very specific earnings will be important. Meantime, let's get to Tesla having its best say in more than a decade and its second best say ever. The EV stock surging almost 22 percent a day after reporting its first earnings beat in five quarters.

13:08CEO Elon Musk also upping expectations for growth next year, saying vehicle growth will be 20 to 30 percent in 2025 compared to estimates of just 15 percent. Wow. Were the latest earnings just enough just to justify this move? We had it. What do you do here? We had an interesting conversation last night. And again, I want to say I was not bullish of Tesla going into this release. But with that said, what we talked about last night was the margins, the free cash flow, where the stock was suggested it could trade up to these recent highs. We actually said 263. And if you go to a chart, you'll see those highs a couple times now since December.

13:45And that's where trade, I think, was going to happen today. But here we are. The question is, having traded three times normal volume, does it explode from these levels or does it exhaust itself again? I think you have to do something here if you've enjoyed this write-up today. All right, this piker has to eat a little crow. I was very dismissive last night. You did say like 263, like where did it close, 260 or 261. You've got a good knack for this, Nostradami. I mean, listen, I just thought we hadn't seen the call yet. We hadn't heard what the sort of outlook was. I just didn't think based on that quarter, because I just don't believe that margin number.

14:21I think there was a lot of stuff that went in there cutting, you know, R &D and a whole host of other things. But when he throws out all of these sort of, you know, this timeline for robo taxi and a lower price thing or whatever, he's not going to hit any of them. You're not going to hit any of the price. You're not going to hit anything. So the lower cost car, I mean, that's a very short time frame. It's not like we're going to see this in two years. This is the first half next year. You think that's good for margins? I mean, like what they're going to do is he actually said they're not going to create a Model 2.

14:46Like I said, they're going to make the Model 3 cheaper. So the problem why margins have been coming down so dramatically, because the margin three has been getting cheaper over the last two years because they've been in a price war. So, you know, if you're buying this based on those sorts of outlooks, I think you're probably, you know, making a mistake. But the stock's been very range bound. I would be very surprised. I said that last night if it breaks out here. But, Guy, you had it right. What does one do? Yeah. So in principle, it's such unusual strength with such heavy volume that the stock has been rerated and belongs at this level.

15:18meaning the news justifies that kind of move. Apparently, I didn't look at the news at all. It's not what I do. But what we do know is at some point, you've discounted a great deal. You cannot discount out nine years. Some people on Wall Street think you can, or two, or even a year. But you can discount out two to three months, two to four months. And much, if not all, I would say of what's to come is discounted now by the magnitude of this move. So sell calls at a minimum. You know what's so interesting about this particular stock is that there's so many bears out there. and very emotional. I don't want to say emotional.

15:50Adamant bears. They feel very strongly about the bear case. And very rarely do I see a bear change his or her mind when it comes to the stock, no matter what the stock does. Well, Tony Sakanagi. And I sort of wonder why is that and at what point? He's been on the show and our show a number of times. I mean, I want to use the word legendary in the Wall Street community. I think he has a$110 price target on the stock, and he's had that for quite some time. On the flip side, Adam Jonas, I think, has a 310. So you could see the disparity. The reason to try to answer your question is because nothing really has effectively changed in terms of the negative.

16:26I mean, it's all still there in terms of, I think, the bear story. It's just the volatility of the stock makes it very difficult. So I think much earlier on in Tesla's history, there was a case for bears to change. And that was when the balance sheet, which had really been an issue, they finally banished that, right? It was no longer an issue. They had cash flow. They were able to raise money. They sold shares. They raised debt. That's one time to do it. I'm just looking. The short interest now is near less than 3%. So the bears have, you know, they're hibernating, I guess. For me, it's just a valuation.

16:58I just can't get. I would not be shorted, but I can't get it wrong. That's the key thing right there. There's almost no short interest. It's like two days to cover. So whether they're conceptually bearish, but there's not a big bearish short for the business-wise. Okay. Coming up, talk about delivering results. shares of UPS jumping as the company breaks the revenue rut. But will these earnings help the stock return to its former glory? We'll talk to an analyst who isn't so sure. Plus, Nuon Mining notching one of its worst days ever. The results have had investors throwing this name down the mine shaft.

17:28And what the technicals are telling us. Don't go anywhere more. Fast Money in 2. This is Fast Money with Melissa Lee, right here on CNBC.

17:48Welcome back to Fast Money. Shares of UPS topping the tape today after the company beat on the top and bottom lines this morning. Delivery volumes increasing for the first time in seven quarters. Earlier this week, Barclays downgraded the name to an underweight, saying long-term pressures from competitors could cause margin challenges. Joining us now is the man behind that call, Brandon Oglensky, senior equity research analyst at Barclays. Brandon, great to have you with us. We gave you props. That call, it's rare for Wall Street to go to effectively a sell rating and it had an earning. So that took a lot of courage.

18:18Where are you now? Because some would say that UPS just proved that the challenging times are behind it, that there's some sort of floor when it comes to the stock at this point. Yeah, thank you, Melissa. And thanks, everyone, for having me on. And for sure, it's not easy to downgrade a big company to a sell, especially during earnings. But this wasn't really a call about their third quarter because they'd set up a pretty low bar and admittedly stepped over it. But the question is about profitability going forward. And here's the challenge. And, you know, we like Carol Tomei at UPS. She's, you know, an outsider that's running the company, like the first CEO in their history.

18:51But the challenge here is that she's dealing with a unionized workforce, and Amazon is her largest customer. And so the challenge of that is they've had their cost base marked up with a new contract in the past year that's really pressured profitability. So her path forward is to say, let's take a lot of price. But the problem with that is when you take a lot of price, especially on an Amazon that has their own delivery network now that rivals the size of UPS, you just further incentivize them to insource even more of that traffic. So it becomes this negative spiral and feedback loop that I just suspect it's going to be hard for them to get back to long-term profitability targets.

19:26I know you don't cover Amazon, but in respect to its delivery network, is it the writing on the wall that Amazon will eventually take all of that delivery volume back and put it into its own network, which it will grow? Well, you know, I'm not certain that Amazon can take it all back. There's certain things that Amazon can't do today. Like, they don't go both ways. They only deliver. So returns, when we return things, that usually goes through the UPS network. So that's still value add that UPS is likely going to offer for a long time. But the challenge here is, you know, again, as they push more price, Amazon has a lot of ability to insource more of that.

19:59And it's really telling because Carol had an investor day in March and said, look, the glide down, as they call it, the Amazon business had halted in March. She expected it to be roughly flat. But then this quarter, we learned, no, actually, Amazon insourced more of these next day air volumes. They're downgrading to ground. So that's still ongoing, even though we thought maybe it had reached a bottom. So let me just switch gears a little bit. Operationally, they improved. That was good. But they talked about a little bit of softness or a little bit of moderating expectations for the fourth quarter.

20:28That's more broad. Does that weigh into your calculus at all or not really? Well, for sure. I mean, that's more a near-term issue, and we saw it with FedEx last month. I mean, they had a pretty terrible quarter as well. Some of that is just macro because we're not seeing the industrial side of the U.S. economy really come through. that pushes a lot of urgency through the supply chain B2B volume. So I think that's where we're not seeing the pickup yet. And definitely, you know, UPS called out that some of their biggest retail customers said, hey, pull back in our peak expectations for the holiday period just a little bit.

20:59I mean, a challenging stock without question. And I admire the call as well. And I think you're right that it's probably it wasn't about this quarter. I mean, this stock, if you pull up a chart, it's been in a downtrend for three years, lower lows, lower highs the entire time. Nothing has changed. But I guess my question to you is at a certain point, we're going to wake up and say this is now a value stock. What is that point, in your opinion, price wise? Oh, that's a great question. I think in the low 100s, this becomes a very attractive dividend yield. And we're not saying that the dividend is not safe because they're covering the dividend.

21:30The challenge I have, you know, at 130 or 140, which is where it's trading roughly today, you're not going to get a lot of dividend growth from here. because what they did is they took the dividend up quite a bit during the pandemic when we had peak earnings, peak volumes, and now they're well above their payout ratio. And I know a lot of institutional investors own this in dividend funds that want to see dividend growth. So that's my fear, that at these levels, you're just not going to see the type of performance that you want. And I might even go just a step further, too, because FedEx is merging their package operations here in the U.S.