The Old Tech Stocks Learning New Tricks, and the Stock That’s Been a “Terrible Embarrassment” For One Trader 9/1/23

0:01Right now on Fast, they say you can't teach an old dog new tricks, but no one seemed to tell that to Dell with shares rocketing to a record today with the resurgence in legacy tech names, says about the market. Plus, fueled up crude prices jumping to seven-month highs today as oil stocks are in rally mode again. The chart master says there's still more upside ahead for the sector. And later, a total embarrassment. That's what one of our traders call shares of Walgreens, why they're saying this could be the worst equity investment they've ever made. I'm Courtney Reagan. In this evening for Melissa Lee, this is Fast Money, live from the Nasdaq market site.

0:36On the desk tonight, we have Steve Grasso, Guy Adami, Tim Seymour, and Karen Fireman. And we start with what might be the surprising leadership of old school tech. Shares of Dell jumping 21 % just today, soaring past its previous records at way back in January of 2022. And it wasn't the only name seeing strength this week. Intel jumping 10 % since Monday, making it the best performer in the Dow. Cisco up up almost 4%, posting its highest close in 19 months. Even IBM was higher. It's now up more than 20 % from its lows of the year. So is there wisdom that we can gain from the performance of these elder statesmen of the market?

1:15Guy, I'm going to start with you. What do you make of some of these moves here today or in this week? You say elder statesman, and then you say, Guy, you're going to start with me. So I understand. I'm an old dude. I get it, Courtney. But that's okay. What do I make of it? Valuation matters. And a lot of these companies have figured it out. And look at Oracle, all-time high, I think, off to the races. And IBM, which is the I in the Swift trade, that's our executive producer, Sandy Kenold's acronym. That continues to work. And you look at their quarter, and you say, you know, they're starting to figure things out.

1:47The Red Hat acquisition is working. Last quarter, not so much for Red Hat, but they will figure that portion out. Software doing well. Valuation is reasonable. I think a lot of people are saying, listen, the road to the upside might be sort of limited for a lot of these high valuation names. But for a lot of these names under the radar screen, there's a lot of runway. And Steve, these names actually have a little bit of AI involvement, too. I mean, remember IBM? Watson. Watson. And you and I were both talking about this. If you have Watson, that was the original AI technology company. I'm sure IBM is screaming.

2:20How about it? 1997, chess champion Watson beat. In 2013, you remember them from Jeopardy. That's right. So these are names that still have the AI kicker. But to Guy's point, they have a much better valuation, much easier to digest. You're not buying NVIDIA. You're buying IBM or Dell, Cisco. All these different names have a much lower valuation. You still get the AI kicker. Yeah, it is really fascinating. Karen, what do you make of some of these names as well? I mean, you get a little bit more even with Dell. I mean, I understand their computing division wasn't all bad either. Right. I mean, I think we've seen we saw it with Best Buy that they maybe were talking about the bottoming out of the consumer electronics space.

3:04And this is sort of, you know, maybe the PC cycle has really bottomed. And so to Guy and Steve's point, you have a bottoming cycle and then you have a low P.E. in a market where, you know, rates are moving generally higher. maybe not today, but so that's a pretty good place to be. So I'm not there, unfortunately, but very impressive from Dell. And then you saw some others, you know, HP up and Best Buy as well. Tim, what do you think? Dude, do you need a Dell? Don't need a Dell, dude. And don't need a Watson. Cisco's the best of that bunch. Sorry. There's not even a question to me. Cisco, first of all, is not a company looking to reinvent themselves.

3:46They've already done it. This is this is a software and security story. It deserves a much higher multiple than it gets. It's the best value in mega cap tech. And this is a stock that's probably got the best chart out of all of them. I am long Cisco. So my view is we just got numbers. They've de-risked this story. They've become less cyclical. It's not about a hardware story. And this to me is a is a company that also has exposure, not only in the enterprise world where we haven't seen things fall apart. But again, parts of the business that I think are secular trends, including software and security.

4:18Guy, does any of this suggest to you that the market may be broadening out more generally beyond just today or maybe this week, that maybe we're going to get a little bit of momentum from some players beyond the Magnificent Seven? Yeah, I think the Bulls would definitely grab onto that and say, you're right, Courtney, that we're having a broadening out. It's great to see other technology names start to join the party. I get it. The fact that NVIDIA is down today makes sense. Again, that's not the cast aspersions. You know, it's had a decent run over the last week or so. But I think the broadening out is a good thing.

4:50But do I think it means there's all clear for the broader market? No, I don't think so yet. What remains to be seen. But these stocks, and Tim's right about Cisco, I think they can continue to do well for the foreseeable future, even on a benign tape. So let's talk about a little bit broadening up the conversation. It was Jobs Day today. Obviously, we are going into a long weekend. There's potentially seasonality that's on the table that I think is worth talking about. But, Steve, we got the jobs numbers today fairly Goldilocks. It seems like everyone was a little bit happy where bad news maybe is good news for the market because it means Fed policy potentially is working.

5:26What's your read? I think consensus is September is on hold. November is probably still in play. And everyone's worried about September to October performance. September did have a bad 2021, 2020, 2021 and 2022. We are definitely not in a 2022 environment. We're at the end of the rate hiking cycle, not in the middle of it. We don't have a lot of the headwinds with the dollar. There's a lot of issues that were going on then that aren't going on now. Into the back half of the year, I think we're going to rally. I also think that September could probably shock the market to the upside, because if you have Powell on the sidelines, You could get a 2%, 3%, 4 % rally just in September alone going into the back half of the year.

6:14Yeah, I think it's interesting, and the seasonality seems to be getting a lot of attention. Mike Santoli was talking about he feels like a little bit more than normal, Karen, but Bespoke basically said, look, when you look at the numbers, actually when you go into a year where you're up double digits through August, most of the time, I think 59 % or 60 % of the time, September actually ends on the upside. What do you make about what you heard today? If that changes anything you think the Fed is going to do, if it just gives them sort of more solid footing to hold where they are in September? What do you think?

6:47Yeah, I think so. I think I mean, they couldn't have asked for a better set of numbers today. I think right that unemployment ticking up and you had other things. Cool. I mean, it was really great. I think this definitely gives them cover to do nothing. Why not? And then look at the data. and they said they're data dependent. Look at the data, then they can decide again. But I don't know. They're not taking a victory lap, but quietly, probably to themselves, they maybe are a little bit. And it's deserved. I mean, this is that participation. I mean, I thought it was really great. Surprisingly good.

7:21Tim, what do you make of that? And I guess even particularly if you drill down into the numbers a little bit and look at the wage growth that was there, but less hot than expected. Perhaps that's also good as an inflation indicator for the direction at which the Fed is aiming to go. Yeah, look, you drill into the numbers. There's a couple of things to bite on. One is the size of the labor force went up over 750 ,000. And that's something that's a healthy sign. It also, though, means maybe we're normalizing some of these numbers. There's a lot of people that felt the unemployment dynamics have been skewed because of the size of the labor force and people staying out of the labor force.

8:00There's no question that the wages still are, they're better. There's enough in this economic report to show that the economy's not falling out of bed. And just dropping this into the context of the September that everyone thinks is going to be awful. I mean, that's the formula that we've seen for equities. People have predicted things, especially in how this market was going to sequence coming out of out of COVID. And the one thing that I will say that tells you that September should be something to be concerned at, you know, if you look at the divergence between equities and leading indicators, it's about as wide as we've seen in 40 years.

8:33And at some point, I think you pay the piper. I still think that the pain trade is higher. And I know the history around September, and I think we're going to see some of that. But right now, look, semiconductors finished today within 2 % of all time highs. They're holding serve against the S &P, And that leadership is something that's been really important for markets. Very interesting stuff. We've got to move on here. WTI wrapping up its best week since the end of March. A month ago, the chart master said it could be headed to the mid to high 80s. Well, it's at 85 bucks now. So what's next? Carter Worth of Worth Charting is back with an update.

9:08Hi, Carter. Hi. You know, I think you just stick with it. Energy, obviously, a very volatile area of the market. And of course, you know, as all commodities are, WTI is prone to headline news. But let's look at oil and then let's look at the OIH, the drillers. So one way to draw the lines again, lines are a judgment, right? Mine, of course, because I drew these and one can draw them any way one wants. But that's what my eye sees. Let's put in a downtrend line. And what we have here in this second iteration is the first chart combined with a clear move above that downtrend line. It's a reversal formation.

9:49We had energy accrued at 140 a barrel, Ukraine invasion. And of course, it drops to almost 65. Here we are at 85. And I think we're going towards 90. And I would just stick with it. But as it relates to the energy shares market, OIH really took it on the chin, dropping some 95 percent, if you can imagine such a thing, to the COVID low. But then look at that same chart with another way to draw the lines. These are weekly. We've moved above the downtrend line, in effect, from the peak to the trough. And so then final chart, same chart, but just another way to draw the lines. If you just examine the strength since the low, it's been very orderly, very sequential.

10:33And we have bounced to the penny off that minor uptrend line for the past year, year and a half. I think you just stick with it. OIH, dominated by Schlumberger, Halliburton and Baker Hughes. It's almost in the right order for OHIO game day tomorrow. Anyway, thank you, Carter. We'll see you in a few minutes on Options Action. We're going to trade this. Steve, I'm going to turn to you. What do you think when it comes to WTI or the energy equities themselves? I'm more bullish. So I agree with Carter. I'm more bullish on the actual commodity than I am on the underlying equities. I think the equities are more efficient.

11:06Tim's been good at pointing this out. The equities are the most efficient they've ever been. But at a certain point, you get to a declining sense of revenues that are coming off of those efficiencies. I do believe that the commodity will probably be range bound. I think the lid will be 100. oil this year. And if you look at you have to remember, the U.S. has to replenish their reserves. Sure. So they're going to be a buyer. The Saudis are going to cut back the OPEC. It doesn't matter whenever OPEC cuts production, you have to actually buy the sell the commodity because it's always inverse. So I'm not worried about that.

11:45I think the U.S. will probably just put a bid underneath this market for the commodity itself. Karen, when you look at the price of WTI and it was up, what, 2 % today, right around 85. Does that tell you anything bigger beyond what we're seeing with OPEC and the Saudis? Does that give you any economic clues? Well, it's interesting to me. I mean, that's a big move. And so, therefore, gasoline is up. And so we've been talking a lot about the consumer. I know we'll talk about that more. But that's something that I'm aware of. It's not a great thing. It's interesting to me how strong oil is worldwide when you consider what's happening in China.

12:18And if they were, you know, if their economy approves a lot. That would make me think, of course, there's more upside for oil. I've been playing it through the OIH. It's done OK, not as great as the underlying. But I think if oil is just range bound, the OIH should really do well. All right. Well, coming up, we've got a trade alert on one big media stock, the headline driving down shares of Disney today and why one of our traders is selling their stock. Plus, shares of Walgreens seeing red. And so are a couple of our traders. What's got them so frustrated? Coming up next, Fast Money back in two.

13:03Welcome back to Fast Money. Disney dropping more than 2 % today, now trading at lows, last seen in March 2020. Remember that? The media giant pulling its programming from charter communications cable platforms last night with the two companies struggling to agree on how much charter should pay to carry Disney's channels moving forward. And Karen, you're selling Disney stock. Is it on this news? Why? Yes. Well, it's, you know, I bought it. Remember that Iger interview with David Faber? And Iger sounded pretty sort of downbeat. And so they finally announced their earnings and the stock sort of did OK-ish.

13:37And I thought, all right, maybe it was a sell the rumor, buy the news, all the bad news is out. Well, no, that's not the case. So I dip my toe in it. I now don't have that toe anymore. It's gone. That was a quick nine bucks. And so I just, you know, I don't know how this is going to shake out this particular event. But I think, you know, the idea of, well, that's how it's always been done is no longer true. And so I'd rather watch from the sidelines and see how this plays out. Meanwhile, they've got the streaming business, which is losing a bunch of money. And the street loved it, you know, in 21 when money was free and growth was everything that mattered.

14:11And that was what generated great stock performance. Well, We're in a very different world now. So just chalk it up to a mistake and just, you know, take my punishment and go home. Hey, it happens sometimes. Guy, what do you make of Disney right here? So it's been a look, it's a disaster. I'm with Karen when they reported earnings a few weeks ago and they announced price price hikes and the stock was trading 91 in the after hours. I thought, you know what, that might have been it. I mean, the market is finally going to start to see the vision. Here's the turn. This thing should be not off to the races, but it should start to gain some momentum.

14:50That was wrong. And there'll be people out there, you know, the go woke, go broke crowd, which is imbecilic, will say it's a function of that. It's really not. It's just a function of a lot of poor decisions, quite frankly, and probably not a great backdrop. So I think at a certain point, I think Karen, Tim, and Steve would agree there's a valuation play here without question. The problem is they haven't given you any reason to sort of pursue that. Steve. Yeah, I threw in the towel a little bit ago as well, and I just got frustrated with seeing other stocks running up through the roof, AI related.

15:25But when you look at this, you started on your intro that it's trading around the pandemic low. So they're getting no credit for the parks, which is an absurd amount of money. But to Guy's point, you know, go war or go woke, go broke. Countries divided 50 50. So it doesn't hurt to the point of it's 100 percent of the worries. No, but it doesn't help either. So I think they have media issues. They have parks issues. They have pricing issues. And they also have the woke issues that are staring at them in the face, too. So I think it's a very difficult environment for Disney to actually conduct business in.

16:00Yeah, it makes a lot of sense. Well, moving on, we've got a buzzkill for you on Walgreens. Shares of the farmer retail are dropping 7 percent today, trading at levels not seen since 2009. The company unexpectedly announcing that CEO Roz Brewer is stepping down after about two and a half years. The stock has been cut, but by more than half since she took over. Tim, you're a shareholder of this. I guess I was a little surprised at the announcement today. I guess investors are not happy about it. But what do you make of it? Yeah, I was the one spewing all the vitriol and saying how embarrassed I am at holding this.

16:34There are a lot of stocks that I'd like to be a long term investor. And in a portfolio, there are stocks that are supposed to be portfolio stabilizers. And Walmart's been one of those names for me. Walgreens was supposed to be. And again, it's one thing for a company to get it wrong. But this company's gotten it so wrong. And I've been so wrong for staying in this name. And I'm long this name, you know, four years. And I bet I'm down 65%. And a lot of this is because I believe that the turnaround had to come, but that also the valuation started to make it so compelling. Talk about value trap. The 10-year average P.E.

17:08on this stock is 13.5. The five-year is 9.5. Now it's trading at 6.5, and it probably should. And again, I'm somebody that's invested in emerging markets. I'm used to owning companies that are higher risk. I've watched companies go to zero that are in speculative land resource companies, whatnot. This is Walgreens. This is a company that I've owned because I believed I understood their business. At this point, they don't understand their business. And today's CEO oust or resignation, whatever we're calling this, comes after the CFO left in July. They downgraded 2003 to the bottom end of the range.

17:45We have no idea what's going to happen in 24. And much of really the hope of the stock is coming from the U.S. health care business and growth in prescription volumes. And I have zero confidence in any of it. But again, I'm look, I'm mad at myself. This is an embarrassment. This is a stock that's not supposed to do this. and the multiple tells you all you need to know. It's OK. Mistakes happen sometimes, Tim. It's nice that you're owning up to them. But I mean, to be fair, it looks like Walgreens is trying to shift into more of a health care business, less of a retailer. And perhaps that's some of the confusion.

18:19I don't know. Karen, what do you make of what's going on here? Well, it's not good. I think what you touched on, that is part of the problem. This abrupt departure is obviously really bad, but pays a huge dividend, which is a terrible, terrible, terrible reason to buy it. They should cut the dividend. They get nothing from doing from having a 8 percent yield. It's only there because the stock is so low, but they should cut the dividend. You know, it's very interesting. Obviously, Rite Aid has sort of had rumored to be filing for bankruptcy. Yet there's all of this other interesting movement going on in the pharmacy business with some of these Ozempic and will go be drugs.

18:53But these businesses that are have a retail operation seem to really be struggling right now. Thank you very much all. Well, coming up, back to school and back to bills. Big changes for student loan borrowers starting today. So how will consumers respond to additional pressure on their wallets? We've got the winners and the losers ahead. And later on Options Action, we're going to spam you with a processed meat trade. But don't worry, we'll clean things up afterwards. To figure out what that means exactly, you're going to have to keep watching. We're back in two.

19:27Got a quick market flash for you on some additions to the S &P 500. Blackstone and Airbnb will be added to the index, replacing Newell and Lincoln National. Meantime, after more than three years, the pause in student loan repayment is coming to a close for more than 40 million borrowers in the U.S. Federal loans begin to accrue interest starting today, and borrowers must resume monthly payments on October 1st. And the impact on the consumer could be massive, with Deutsche Bank estimating the consumer spending could take a$14 billion hit each month. That has retailers like Macy's, Ulta, Dollar General, Best Buy and Moral bracing for borrowers to spend less in discretionary categories.

20:04So how should investors view consumer stocks heading into the student loan repayment? Karen, what do you think? I've got some thoughts, but I want to hear yours first. Well, I think we've seen some of the evidence, right? We've seen it in Target, which wasn't great. We saw it particularly yesterday, Dollar General and Five Below. So it's clearly hurting that, hurting that consumer. Plus, I talked about gas before. I don't know if this will be the kind of thing where the anticipation is worse than the actual event. But I am concerned about that low on consumer. And I have some exposure to that, which hasn't done well.

20:40Steve, you're nodding. Yeah, I'm always worried about correlation equals causation. So I believe that it will be a headwind. But I don't think it's going to be as bad as everyone thinks that that 14 billion dollar number people just throw stuff into thin air i don't think it's ever going to be as bad as that i think people will figure it out as long as the jobs market doesn't fall completely apart people have a job it's not going to kill the uh the economy i know some people i'm not being cavalier i know some people get affected by this but i don't think it's going to be quite as bad as we say okay well it's already time for the final trade so we're going to go around the horn and start with guys thanks courtney for joining us as always It's APA Corp.

21:19Stan and Energy. And Tim. Good luck to the Ohio State. Last call on Searsucker and Slumberjain, your four-and-a-half-year highs. Energy stocks are going higher. Karen. Court, thanks for filling in Friday afternoon. Great holiday weekend, everyone. My final trade covering some TLT shorts. And Steve. Rivian stopped exactly where it should have stopped. I think it's going to run through$30. All right. Well, that does it for Fast Money this week. But don't go anywhere because Options Action is next.

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