The Most Important Charts In The Market… Plus Tracking Weight Loss Drug Supply 6/4/24

0:03Live from the Nasdaq Markets 8 in the heart of New York City's Times Square, this is Fast Money. Here's what's on tap tonight. Sideways, stocks, major markets, and a holding pattern over the last few weeks. But some charts may hold the true key to where we are heading next. The traders lay out their picks for what they're watching right now. And tracking supply, how one company is trying to help patients navigate shortages in the GLP-1 drug supply. And how the pharma giants are managing their own supply chains. Plus, dueling calls on Tesla. Will the bull or bear win this battle? Easy come, easy go for India's stock markets.

0:34and why Roaring Kitty's options bet on GameStop is more complicated than it may seem. I'm Melissa Lee, come to you live from CEO of B at the NASDAQ on the desk tonight. Tim Seymour, Karen Feinemann, Dan Nathan, and Guy Adami. The major markets managing to eke out gains at the end of the session with the Dow, NASDAQ, and S &P all now positive so far for the week, but it hasn't been a steady climb over the last few weeks with the S &P trading in a pretty tight range from the start of May. So with the big indices not giving us a clear sign of where they are heading next, We thought it'd be a good time to ask the traders to see what they are seeing as the most important chart in the market.

1:07The most important chart of the market. This is a tough game, by the way. It is. I mean, you know, what's the timeline? It's more like an assignment. There's so much to do here. But, Tim, what is yours? Well, I went with the XLY, which is the consumer discretionary ETF. And I went with it because I think we're starting to finally see the consumer collapse. And I think we're seeing it in a handful of names. And I think we even got some jolts data around what's going on with payroll. We'll get to that later in the show. If you look at where the XLY peaked, you can see that I think it was November of 21, really right about when the Fed started to get into their heavy duty assault on inflation and interest rates, whether it was too late or not.

1:48To that point, off the covid lows, it outperformed the S &P by 25 percent. What you can see in this second chart is this is the ratio chart. This is essentially XLY relative to SPY. And you can see we're making new lows. And you have to look under the hood in most ETFs. If you look under this hood, you can see the biggest is Amazon. The second biggest is Tesla. They kind of offset each other. You could make an argument if this was Tesla knocking it down, OK. But then you get into Home Depot. Then you get into Nike. Then you get into TJX. Then you get into Starbucks. We've heard from every one of these players.

2:18And I just think it's, you know, again, what's the most important chart for the market? it's certainly for a time and place. But as we think about what's been so strong, it's been the consumer. I'm worried about discretionary spend. And we've heard it from a lot of different types of discretionary spend, this earnings. And from a GDP perspective, the consumer is the most important part of that measure. I think that's a great chart. I mean, Amazon, 24%, Tesla, 13%. Throw McDonald's in there. Throw CMG in there, which is only probably 4%. But that's obviously done really well. And I'm with Tim on this one.

2:50It's telling a story without question. And you throw lows. I mean, there's a lot to be concerned about without question. And if obviously Amazon were to roll, that would roll in a significant way. For me, if you're asking me if we're still playing the game. You were asked. I was? Well, yes. You seem very excited to bring to the American public your chart. No, I'm not that excited. Well, I'm excited. You are, because I didn't even really prompt you. Every Wednesday is an exciting or hump day you get across the... Huh? The KRE, Melissa Lee. And if you look at the KRE... Listen, again, I'm not calling for banks to explode or...

3:21But KRE has not been trading particularly well now for quite some time. This is something that probably made its all-time high sometime in 2022. We know what happened in 23, and it bounced. However, we're nowhere close to its prior all-time high with an S &P that's obviously within earshot of is. There's a lot to be concerned about here. And if you think about it, if small and regional banks are sort of the lifeblood for small and medium-sized businesses, I think it's trying to tell a bit of a story here. So as the market continues to go higher, KRE sort of waning here is not particularly encouraging.

3:53One of the things that had been ailing KRE is the exposure to commercial real estate, the concerns there with rates coming down and potentially, you know, coming down even more with a Fed cut closer rather than farther away. Isn't that better? Yeah, you would have thought that. And I think that the price action of large money centers, of home builders, of regional banks, especially, you know, we just had, you know, 10-year come in 30 basis points in, what, three, four trading days. You would have thought those stocks or those sectors would have been trading a lot better. They haven't been. We've been talking about that a little bit.

4:22So, again, you know, we were making arguments of why the banks are okay. They're benefiting when rates were going higher. And, you know, obviously we think that they're going to do better if they were lower, especially with those sorts of exposure, but it doesn't seem to be playing out. Do you want to talk about banks or do you want to talk about anything? Okay. So, actually, I did one trade today. I got out of Morgan Stanley and increased my Citibank bet. And so we're a little five weeks away, I guess, from earnings. And this one being the cheapest on the book metric makes it interesting to me.

4:55And I like weeks from earnings. Yeah. Yeah. I mean, I mean, I had to go through, right? I know. Just in the tail end for banks again, guy. Yeah. I mean, just like that. A lot of those will probably, they'll be reporting Friday, July 13th is probably, or the 12th, actually. Okay. July 12th is when we start again. Bankerings will start. It was April 12th when they all reported. Right. So, yeah. So, so, so, uh, diminishing your Morgan Stanley position. To zero. To zero. Yeah. Which is a, is a, is what? What does that say? It was, it had done nicely on that. Remember when they had that investigation and that, that seemed like a compliance nightmare.

5:32Marin. I thought it was going to weigh on them a lot. And yet they put out good numbers. Their asset management business is doing nicely. And I also think that there is a tailwind in the amount of capital markets business that there will be. And so that sounds like the bullish case. It was. And they got excited. The market took it up north of 100. Right. And that was surprising. So I sold it. I don't know. Ninety eight and change today. Citibank, I think, has a lot of those elements as well, but is cheaper. It doesn't have the asset. It is not seen as having the asset management that a Morgan Stanley does.

6:07I'll give you that. It does have banking business, does have other businesses, and the valuation, I thought, was really cheap. So that was what I did in the bank space. I don't think it's a bad time for banks. If your book is not where Bank of America is, I think a lot of good things can happen. And we haven't seen credit quality. It's ticked up a little bit, but it is nowhere remotely close to problematic right now. and the economy is doing okay. So I like the valuation, particularly when the market is more expensive. So Karen Self, would you rather effectively? I did. What she can do. She's allowed to do.

6:38If I even look at you wrong, I get in trouble. Well, within her own portfolio, sure, she can do whatever she wants. Excellent point by you. What would you do? I agree with her on the sitting. We've talked about this. You know, we've said that if it just gets to 75 % of book value with a$99.50, it's a$75 stock. And I'll stand by that. We've said it for a while. I think it closed, what, 61 and change. So I think there's room here. I think she's right to do that. Morgan Stanley has her own sort of, I don't know, idiosyncratic issues, I guess. But Citibank here, if you look very quietly at the chart, I mean, it's been sort of grinding higher for quite some time now.

7:10You're a holder, Citibank. Citibank is my largest bank position and has been also through appreciation. And I guess I think about the Morgan Stanley and the asset management business, which is obviously such a major part of the story now. We've come through such an extraordinary period. Any weakness in the markets and any weakness in terms of asset flows is something to worry about for some of these names. But right now, it's obviously been a tailwind. Karen, what is your most important chart? OK, see, here's the thing, though, about the assignment. What's wrong with you? She's already hedging.

7:40I am already hedging because, you know, it's funny. We have Carter and he looks at and learns everything from the chart. And I look at the chart and go, really, what can we get from this? And he looks at valuation fundamentals and go, really, that's going to tell you something? We just want to know what you think is the most sure. I picked NVIDIA because as the breadth is not going wider, it's actually narrowing, I think that so much of the sentiment in the market right now is just wrapped up in this name and everything that's seen as a peripheral to this name. So I think this is the most important show.

8:08I think that's a fine pick for me. Nothing wrong with that. Of course you do. You're almost apologetic. I think you nailed that one. Well, thank you. I think they didn't pick NVIDIA. I'm devastated. What do you think of NVIDIA? I mean, I think it's a good point. You're also concerned about the brain. Mine's a segue. I'll just get into mine. I mean, so mine is the SPY. No, no, but you guys can elaborate on both of them at once. I mean, mine is the market cap weighted SPX versus the RSP, which is obviously the equal weight. And it's for basically the same reason that you're talking about. It's Microsoft.

8:44It's NVIDIA. It's Meta. It's Amazon. It's Google. It's Lilly. Okay? And it's also JP Morgan. when you think of like some of the top holdings. Now, obviously, Apple is not participating right now. It's basically flat on the year. Tesla's falling out. It's down 30 % or so. But when you think about the market cap weight and you think about the enthusiasm, there really are two megatrends that are kind of wrapped up in that, right? So it's obviously generative AI, but then Lilly has had massive appreciation. So at some point, if you were to look at a ratio chart, you'd see that, you know, the SPY or the SPX, however you're looking at it, is really pushing it here.

9:15You know what I mean? And so it wouldn't take much, to your point, about sentiment with one name like NVIDIA or the adjacent names like Microsoft, and then you start saying, oh, well, Amazon doesn't really have it great, and Google hasn't done a good job with their rollouts. You know what I mean? You would start second-guessing all of those the way that investors second-guess Dell, Supermicro, and Hewlett-Packard last week. So this is just a concern of yours. Should the gap close and you think the S &P 500 should fall? Correct. And the last point I'll just say is the S &P 500 is up 30 % off its October lows.

9:44The RSP is only up 22%. So that demonstrates that outperformance from the market cap weighted. It's so hard, though, to say, you know what, I'm not going to own NVIDIA anymore. If you're in it, it's difficult. Yeah, it's hard. I did sell some calls. Especially after the rock star speech yesterday at Precomputex. And you've got two new chips. You've got, I don't know, Vera. I don't know. Ruben. Ruben. But it's a road map. I understand. But the road map tells you about$50 trillion in industrial and hard assets. It's the next industrial revolution, AI style. So if you think about some of these industrial companies, and this is something that different people on our desk who have come on our desk.

10:23I know Savita's talked about this. Industrial companies that have actually become a lot more profitable because of the dynamic with AI and some of the things here. So until NVIDIA, and I realize it could be it could be at almost any day, except for the fact that the entire chip space is, you know, that is the new commodity space. And they continue to make new highs. So Karen's probably won the game today. Well, I think, though, I mean, the NVIDIA. Video calls are really pumped. A July, a regular expiration, July 19th, 1200 went out at 5866. So the stock's got to go to 1258 just to break even. That seems rich to me.

10:59We'll see what this stock split does. I have a sense this is sort of up on partially that. I don't know, Dan. Well, one thing I wanted to say about what Tim just said about the Computex and the roadmap, right? So we're still on H100. So anybody who's buying these GPUs are still talking about that. And then now we got a lot of excitement about Blackwell. And now there's additional excitement about Rubin in 2026. If you think that it's a straight line from here to 2026, you know what I mean? Like, I just don't see that, right? I agree that there's high potential for speed bumps ahead. But at the same time, when they guided higher on Q2, it was on the old chip.

11:35I mean, the difference in the increase in revenue is on the old chip, so people are still ordering. So the transition of this. And if Tim started out by saying the XOI and consumer spending, you said the consumer is about to crash. If the consumer is about to crash, that means. Stan's trying to paint me into a corner now. You did say it.

11:55It starts with the consumer. All right. Then corporations start cutting costs again. That means headcount reduction. That means all of these SaaS companies and all these things, they start losing licenses from heads. Right. They pull back on R &D and CapEx and all that sort of stuff. and then you have a downward cycle in enterprise spending. And so that's why it's not a straight line. And all these companies, like, you know, I listen to Justin Wang. I saw what he said. There was a lot of word salad in there. I'm telling you, and I'll get the quotes from it. He was talking about CEO math and all this sort of stuff and 98 % cost reductions and 97 % energy reductions.

12:29It sounds like nonsense. Here's my question. Can you have a world, though, where enterprise spend gets cut back or whatever, It's a period of austerity comes and companies still spend on a relative basis more on AI than other parts. So you'll just see continued pressure on the CRMs, which we've already heard about from earnings. Right. So they are defensive on a relative. But then there'll be pricing. There'll be pricing pressure like like like it just will be. And, you know, like so you're going to have all these other folks coming into the market. They're going to compete on price. And again, I mean, like if you guys think it's a straight line from here to there because this.

13:01I don't know who said straight line. I didn't hear straight line anywhere. I talked about what I heard yesterday was recognizing a new addressable market for where this could go for industrial, for physical assets, for industries where physics are actually a big part of kind of where the revolution will come. So the issue with NVIDIA is that it's doubled every, you know, it doubles every six months. That's the problem. Their earnings are keeping pace with it for now. We all know it can't grow at this pace. To say that it's the most important stock in the market, we do that all the time. We know what it is.

13:32But semis right now as a group have not shown that they're ready to break down. The old saying, you know, your margins are our opportunity type. And that's going to at some point that now I understand they have a huge head start in video. But my sense is companies will start to close the gap, I think, faster than the market anticipates. And those 77 percent margins or so, you know, enjoy it while it lasts, because I don't think it's going to remain stay here for very much longer. All right. Meantime, Treasury yields continuing to slide today with the 10-year hitting its lowest level since early April.

14:03The latest move coming as investors await Friday's jobs report. But where are rates going from here? For some answers, we bring in the man with lots of charts, the chart master, Carter Braxton Wirth. Hey, Carter. Hi. Yeah, I mean, look, I'm in the lower rates camp. And yet maybe there's no camp to be in before we look at the charts. The truth is higher hasn't happened. Lower hasn't happened. We're just stuck here in the mid-fours. This chart that you see on the screen, we're right now exactly where we were in October of 2022. That's 20 months ago. At that point, we had just spiked from two and a half to four, three in three months, and higher for longer became a mantra.

14:45But it's not been higher for longer. It's been no change. And so the question is, ultimately, I think we're in the peaking process. These lines would suggest, to my eye anyway, that we're going to break trend. Let's look at a few more iterations. It's all the same chart, one after another. But if you look at the next one, you'll see here that 20 months, despite that slight blip above 5%, interest rates are not higher, not on the 10-year, and there's just no way around that. And it's a good lesson for all of us when something becomes a mantra to typically consider suspect. Let's keep going. Next chart.

15:18And they're all the same. It's the same time frame, but just drawn a different way. The down arrow was a judgment. That's mine. Other people are thinking, and I have a lot of clients that push back on the note again today saying, you know, when the buyers step away, the Chinese and the Japanese and the federal government, we're going to have a big problem. The bond vigilantes are coming. I can't speak to that, but my hunch is lower. Let's keep going. I think I've got one or two more ways to draw the lines here. It's all the same chart. We broke that minor trend that you see today. Again, 4.32, lower than where we were in October of 2022.

15:53It's June of 2024. I think we might have one more. It's all the same chart. It's just different ways to depict the situation. Falling back below that horizontal line is not good if one is bullish of yields or thinking yields are going higher. Maybe one more, I guess, there is, and then that's it. And so I think we break this formation. I'm a buyer of long-dated treasuries. Hey, Carter. It's Karen. So if we break that line, where do you think the next stop is? Well, see, that might be the seduction, right? Maybe it isn't meaningful. One could say, well, my goodness, you're thinking 2%, 3.25%. It's very possible that the whole rate conversation, right, isn't productive in the sense that maybe this is the proper level for 10-year treasuries and that the work of Cap-M, right, and dividend discount models and discounting cash flow should disregard this and that the securities analysts, the portfolio managers, should go back to the job of trying to figure out two to three-year future cash flow and discounting and putting a price target and not extrapolating 7 % on the 10-year, 3 % on the 10-year, because it turns out the 10-year is the same level it was two years ago.

17:08But as to how much lower, I think we're going into the high threes. Carter, it's Tim. It's hard for me to argue that, especially if we get some of the economic turnaround, that rates aren't going to come lower. And at least that's not the first move. And I do think there's this whole setup of less central bank buying. I do think there's a deficit to finance that's a very different story. How can you argue that rates haven't gone higher since July of 2020? And I realize you can pick spots since, you know, you can find spots in October were of 22 or back in 22. And I'm picking a spot, too. Like, I'm picking a low spot.

17:39I recognize I'm buying in the low spot. But I can draw a trend line all the way there that has not been violated from July of 2020. So I don't want to get here and try to get out there and die on the hill if I think rates have to go over 5 % tomorrow. But I think rates have consistently crept higher with periods of a lot of volatility. Well, they have. I mean, we know that from the low of COVID, when the cost of 10-year money was almost zero, we're up meaningfully. We're up 5x from those levels. But the point of this exercise, at least as I think, that spike high in October of 2022, we'd essentially gone from 2.5 % to 4.5%.

18:15That was the low for the market. The S &P at that point in October of 2022 was down 27%. We were in a bear market. The Nasdaq 100 was down 37%. But the extrapolators at the time, that's when higher for longer became, well, my God, if we've just gone from 2.5 % to 4.5%. What about 6.5 %? And it turned out that was completely not right. And it's not about being wrong and right. It's just that rates really are not meaningfully higher. Yes, over the past three, five years, they are. But is, and there's no way around this, is 10-year money at 4.5%, is that a bad thing? Is that a bad thing for valuation?

18:49Of course it's not. In any other era, that would be considered nirvana. All right. Carter, thanks. Carter Braxton Worth, the Chartmaster. Meantime, we've got an earnings alert here we want to get to on HP Enterprise, shares of the Enterprise software company ripping higher on a top and bottom line B powered by demand for AI servers. Also, the company's personal systems business seeing growth for the first time in eight quarters. The after hours gains bring the stock to their highest level since March. We are up by 13 and a half percent. A little bit different from what we saw from Dell. Yes, a little bit different.

19:21Also, more enterprise as well. So, I mean, this one, not yet, Dan. But no, better than Dell. Dell, I mean, I really went through it and looked at it again, looked at it more on Dell. And I do think they're going to work their way through it. But definitely more compression on margin than I would like. Yeah, go back and look at Hewlett last week. It had a huge gap after a big run. It gave most of it back over the next couple of days or so. So, again, I think these are kind of hard things to buy on the breakouts here. because I think there's not a heck of a lot of confidence, maybe for the current quarter, given the guidance that some of these companies are giving, but beyond that.

19:57Reasonable on valuation. I think the full-year guide might disappoint people a little if you look at the magnitude of the beat and then the subsequent guide. With that said, go back to, if we can do a longer-term chart, 2018 we were at basically$20. We're right up against a prior high. It's going to be interesting to see tomorrow if we do break out or if it fails at this prior level. All right, we've got another news alert here on New York Community Bank, some changes to the board. Contessa Brewers got the details. Contessa. Melissa, another twist in the drama that is New York Community Bank this year.

20:28The parent company of Flagstar Bank announced a change in the executive chairman of the board. Alessandro D 'Anello is out. Joseph Odding, who currently serves as the president and CEO, will take on the chair role. Additionally, D 'Anello was stay on, we're told, as director and advisor to Odding, according to the company news release. He briefly served as CEO from February 23rd through April 1st after Moody's downgraded NYCB to junk territory. Last year, it had acquired Signature Bank. It got hit in the commercial real estate book, and the company hit with a slew of analyst downgrades. Shares are off 69 % year to date, and now we'll have the CEO coming on to take over the chairman role, Melissa.

21:13All right, Contessa, thank you. Contessa Brewer. Karen, are you still in this? I am. I am. I just view this as not so much. I mean, this was the, I believe this was the CEO over which that other guy from the board resigned and said, well, you know, actually, I'm not certain that was him. I don't think this is a big deal. I think this is who Mnuchin wants to be in the chairman role. And so that's who it's going to be. So maybe my KRE thing wasn't that far off base there. You want to reassess your Karen Wins thing or no? You mean in terms of the best chart? This is all. This is KREs and New York Community Bank.

21:49I mean, all this regional bank stuff still seem to be cropping inside up, but no. Karen Wins. This is a minor. It's not a big deal, but I think the whole NYCB thing is it is now an option with life. And when you have life and you have volatility on a relatively big book, good things can happen or you can lose all your money. Coming up, Lulu Lowdown. Shares still, excuse me, in downward dog as investors braced for earnings tomorrow. What to expect and how the rest of retail is faring ahead. Plus, markets in India reversing after yesterday's big win. What the election results in that country could mean for stocks.

22:23Don't go anywhere. Fast Money's back into.