The S&P Notches a Historic Milestone and What’s Next for Japan? 2/9/24

0:01Live 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. A historic close. The S &P finishing the day above 5 ,000 for the first time ever. And not to be forgotten, the Nasdaq crossing the 16K mark for the first time since late 2021, closing just below that level. But what will the slew of big econ reports coming next week do to this rally? We'll debate that. Plus, the sun rising on Japan. The country's Nikkei index hitting a new 34-year high overnight. It is now up 11 % already this year. Can the run keep going. We are diving into the charts to find out.

0:34And later, chips rip even higher as NVIDIA hits yet another all-time high. Coinbase rallies ahead of its earnings report, but one big bear says shares are going lower. In the countdown to kickoff, Contessa Brewer is in Vegas for the big game. She's got the latest odds and the trades on the sports betting stocks. I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Steve Grasso, Guy Adami, and Julie Beal. We start off with Wall Street's record-breaking run, the S &P 500 closing above 5 ,000 for the first time ever, securing its fifth winning week in a row.

1:04In fact, it is up 14 of the last 15 weeks, dating all the way back to October. The Nasdaq also hitting a milestone today. The tech-heavy index trading above 16 ,000 for the first time since November 2021. Earlier today, it is now less than half a percent away from its own all-time high. The Dow virtually flat on the The strong week for stocks is coming ahead of another busy week of earnings. Coca-Cola, Cisco, Deere, Lyft all on the calendar, as well as CPI and PPI reports. Will these headlines keep this rally going? It certainly seems like we want to go higher, Tim. Wear the hats. Aren't we supposed to wear like 5 ,000 hats?

1:39Guy, where's your sweatshirt or something? S &P 5 ,000. Come on, man. All right. So enough of that. It's an extraordinary number, especially when I can almost feel like it was yesterday that I was, you know, when the S &P was at 666, I was under my desk on March 9th of 2009. Fetal position. I mean, you know, it really has been an extraordinary run. If you look at what the market's done, it's up 32 percent since the start of last year. You mentioned that reference point just even in October that started that 14 out of 15 weeks. And what's defined that? What's defined it is, I think, as much about that the Fed has peaked and inflation has peaked, but also the economy is showing strength.

2:17And I think this week is all about riding the coattails of good news is good news. Last week's payroll number was unambiguously bullish. Now, we could get some revisions down in the next couple of months. But the reality is you combine an economy that's where it is. You have certainly a financial kind of conditions dynamic with the wealth effect that has this consumer feeling pretty darn good. And then you also have companies beating. The fourth quarter earnings season has actually been better than expected. And we may not get what we want for 24, but 23 earnings look pretty good. And the narrative of inflation coming down, I mean, this morning we got the revised CPI number, and there was a little bit of worry that those revisions would actually show that inflation was hotter and not lower, but we were revised lower, and so that was a little bit of a sigh of relief this morning.

3:02Yeah, prior to two months, I think I revised higher. Yes, everything in time is spot on. And with that said, you would have thought yields which have been rallying would have gone lower today. Ten-year yields, the highest point we've seen, I think, since December, closed around 419. There's a lot to listen. The market is on autopilot right now. There's a lot to like. If you believe in fear, greed index, that's obviously at levels we shouldn't be if you want to continue to sort of ride this train. But you know what? We've been here for a while, and it hasn't mattered at all, Melms. Yeah. Broadening of the rally, that has happened.

3:30I mean, health care has really participated since that October reference point. Yeah, and there's a couple of things. So, Tim, I would sum it up as soft landing, right? So the economy is doing better. Earnings have bottomed. You're starting to see the economy really hitting on all cylinders. And you haven't seen it hit unemployment yet. That hasn't that hasn't it hasn't rose. So if you think about it, we're in an election year cycle. I always pull it back to that. I think that there's going to be a lot of halo put on the economy for the election year cycle. Energy prices are not going to soar.

4:04I think inflation has really it hasn't bottomed yet. I think we're over the hump there. But the main issue for this market is the Fed still. And the Fed is going to be cutting rates. So it depends on the timeline. But that sort of gives an all clear for the market. So why haven't we seen better participation, Julie, amongst the small caps, which really tried to make a run at it, but then sort of sputtered this year? Yeah, I think there's the realization that what worked last year was what everyone thinks is going to work this year. There's kind of a retrenchment. And it's because there still are underlying concerns out there.

4:39in terms of credit card debt and rising delinquencies. So I don't think that investors have a ton of conviction in this rally. They're in it and they're excited. We're all enthusiastic about where the S &P is trading. But I think people are still worried that it's better to be in a growthier position with really strong fundamentals than anything that's a little bit more speculative or uncertain or slower growing. Right. And so we get to the advances, the continued advances in technology in today's session. Today was no exception. No, not whatsoever. I mean, Doug Cass put out a thing. Yes, I think we talked about it.

5:12The market cap in NVIDIA now is greater than the market cap of the entire XLE, which is staggering if you think about it, north of$1.7 trillion. Good for them, by the way. But, you know, the question you continue to ask, I mean, are these things just going to levitate seemingly on a daily basis? And then, quite frankly, seemingly on a reiteration of all the news we've heard over and over again. So there's this whole we're obsessed with AI. Maybe we should be. Maybe we're overly obsessed. But what many have talked about, especially many in the space and then sector specific analysts have come in and said, AI is helping the productivity in my sector.

5:45And we're talking about companies that are in shipping and transportation and retail, Walmart. I mean, Walmart's an AI play if you want it to be. They've made major investments in terms of that. But the market that is broadening a little bit is absolutely, and we talked about it last night, but reminding that it has been a week of oversized moves, double digit moves. Is that scary? Well, if you're a Disney shareholder, I am. If you're a GM shareholder, I am. You've watched these stocks do nothing for four years. And you have had reaffirmation that they're company specific through some things, but some dynamics around their business and the consumer.

6:18SARS, so auto sales are actually going to be improved upon last year. The dynamics around the consumer are much, much more resilient. So I'm going to you know, we're going to talk in a little bit on semiconductors. And I think they are their own little part of the market. But in terms of where you're getting leadership, the kind of leadership that we've had doesn't necessarily mean that we have to stay there. And we have had head fakes on broadening. But again, go back to a Union Pacific, go to a CSX, go to shippers. Look at some of these names that are having monster years. It's not just AI. It's not just technology.

6:50And I think that's interesting. And those big gap hires and the names that you had mentioned specifically, you know, like a GM, for instance, it's almost like a realization that there is value in the market and that when they put up the earnings, there's a realization that, yes, the story could actually be for real. And if all the things that you had pointed out in terms of the soft landing scenario plays out, you want to be in some of these better valuation names. And maybe you're willing to give up the growth or, you know, move some money into some of the undervalued. Well, I think you're going to get that's how you're going to beat the overall market, because everyone is so crowded into the tech names.

7:19But to Tim's point, you know, everyone's worried about tech being such an outsized percentage of the S &P. Every company in every other sector, you're either a tech company or you're using technology within your company. So tech is the overlay. So I wouldn't be concerned with that outsized percentage in the indices. But in order to beat the benchmarks, you have to be involved in something that is sort of under the radar because those are the ones that are going to double. And it's also interesting that markets are doing this with the interest rates, you know, essentially at two-month highs with the dollar having been strong.

7:55The dollar is 4 % off of the pullback that it had. We've moved probably 40 basis points, 35 for sure on the 10-year. And I think these trends are such that, you know, you had a decent auction this week. You've had dynamics, but I think rates are staying high. So there are some things that don't compute, right? You have this case where equity shouldn't be doing this in a 5 % Fed funds world. We've also seen that correct. So, you know, where we are back out to August, we're talking about, I don't know, about 65 basis points. That was over, you know, over one percent just about three weeks ago. So the higher interest rates with the stronger dollar with equities doing this, that means good news is good news.

8:30I mean, my view is this is people believing that the economy is in a better place and that this isn't necessarily bad for stocks. Or they see cuts coming. So it's maybe it's just a point of reference. Well, this morning I spoke to Shri Kumar this morning of Shri Kumar Global. By the way, you were great this morning on Squawk Box. Tremendous. I hope everybody can go back and watch. No, I'm being serious. You know, if you were bad, I would have said you were bad. You happen to be very good. You wouldn't have said anything. He could have said I was bad. Anyway, but he was saying that he expected a rate cut to come May 1st because of a commercial real estate tsunami.

9:04Tsunami. Tsunami. Not like a hurricane or a cat, too. It's like, you know, tsunami. Paul Tudor Jones made comments similar to that recently as well. There are a lot of people that believe that. There are clearly no—I want to be careful here. There are really no signs in terms of some of these markets that that's on the horizon. But with that said, these things seemingly come out of thin air. And that's the reason that you have to be concerned, because if they cut rates for those reasons, I don't think that's particularly market-friendly. All right. We've got a news alert here on former President Donald Trump's apparent about-face on Bud Light.

9:36Eamon Javers has the details. Eamon. Hey there, Melissa. CNBC has learned the backstory to a social media post from former President Trump, which has gotten a lot of attention this week. On February 6th, Trump took to his Truth Social platform to argue that his supporters should give Anheuser-Busch a second chance in the wake of last year's controversy over the company's support for a transgender influencer. The former president appeared to be well informed of detailed aspects of the beer company's operations. He noted that the company spends$700 million a year with Our Great Farmers, employs 65 ,000 Americans, and has provided scholarships to families of fallen members of the military.

10:16The former president wrote, Anheuser-Busch is a great American brand that perhaps deserves a second chance. Now, David Faber and I have been making calls on this, and we can report that the Trump post came after Dana White, president of the Ultimate Fighting Championship, reached out directly to Trump to encourage positive commentary about Anheuser-Busch. That's according to a source familiar with the situation. Remember, in October, UFC announced a partnership with Anheuser-Busch to make Bud Light the official beer partner of the Ultimate Fighting Company in a deal that was reported at the time to be worth$100 million.

10:52In a press release announcing the deal, White said, There are many reasons why I chose to go with Anheuser-Busch and Bud Light. Most importantly, because I feel we are very aligned when it comes to our core values and what the UFC brand stands for. A spokesman for UFC declined to comment on the white Trump conversation. In his post Tuesday, the former president threatened to release a list of companies other than Anheuser-Busch that he considers to be woke and building a list and might just release it for the world to see, Trump wrote. His followers, Trump suggested, should be going after those companies that are looking to destroy America.

11:30That came after a post on February 4th in which Trump was much more critical of Anheuser-Busch. on February 4th, Trump posted. The Bud Light ad will go down as the worst ad in history. In a matter of minutes,$30 billion worth of market cap simply disappeared from the face of the earth. Will they ever get it back? Who knows? But what a mess. So, Melissa, you can see the change in tone there between the February 4th post, very critical of Bud Light, and then that February 6th post urging that his followers should give Anheuser-Busch a second chance. Now we know the backstory to how that came to be.

12:03Melissa, back over to you. So let me get this straight, Eamon. So Dana White and UFC have a partnership with Bud Light. So Dana White calls the president and urges him to be more kind to Bud Light. What does Trump get out of this? Well, that's a good question, Melissa. And we don't know. I mean, Dana White and Donald Trump are, I'm told, very close. They speak regularly. White is in contact with the former president on a regular basis. And obviously, the timing of this is very important for Anheuser-Busch, right? This is just before the Super Bowl, obviously a big beer drinking event. Anheuser-Busch, the Wall Street Journal reported this week, they've got a big ad campaign for Bud Light coming up.

12:44They have been struggling in the wake of this sort of conservative criticism of the company for doing a deal with the transgender influencer back in April of last year. So for a year now, almost, the company has been really struggling to win back support from that constituency. You saw Kid Rock out there shooting cases of Bud Light. It's been very damaging for the company. So clearly, Dana White, who has just gotten$100 million support from Anheuser-Busch, has a dog in that fight. We are told Dana White called the former president and asked him to do this in so many words. All right. Eamon, thank you.

13:22Eamon Javers. And this is why we saw we've seen Modelo really gain share, at least here in the United States, Tim. And sort of those, you know, share shifts. There's a lot of history between those companies, by the way. And guess what? I don't think Bud's an American company anymore, folks. It's owned by Brazilians. It's owned by 3G Capital. So get your history right. And the dynamic with Modelo is when Bud did this big deal with Ambev and InBev, They had to divest significant assets of which they divested Modelo. And that's been a home run on its own. Bud shares, by the way, up 45 percent from the lows, have rallied about 26 percent.

13:58If you look at the beer space overall, we've actually seen a lot of consolidation within those shares and actually better trends on beer over the last three months. Meantime, let's get to the Nikkei. That index hitting a fresh 34-year high overnight. This latest move coming as the yen continues to fall and speculation rising that Japan's central bank will not aggressively tighten its monetary policy. Can this run keep going? Let's go off the charts with LPL chief technical strategist Adam Turnquest to find out. Adam, great to see you. What do you see in the charts here? Hey, thanks for having me on.

14:28And you don't really need to be a technician to look at the longer term chart of the Nikkei and see that we're in a pretty strong uptrend. And we might end a 34 year downtrend going back to 1989. That's the peak on the Nikkei. And we're trending toward that. And there's been a lot of changes in that 34 year period. Of course, one of the big changes is the government reform and the more shareholder friendly policies that they've instilled into their economy. You're seeing record buybacks. You're seeing record dividend payouts. Households are now investing in equities there. So there's a pretty strong macro theme that's driving this.

15:02Of course, when you dive a little bit into the shorter term technicals, it's really a story of breakout consolidation, breakout consolidation. We did break out early this year to new multi-year highs. We just had a shorter term breakout. We call it a bullish pennant formation. And if you measure that out and apply it, an upside price objective, that gets you to call it around 40 ,000. So, Tim, you might be amidst the S &P 5000 hat, but you could be wearing a Nikkei 40 ,000 by year end, we think, on the technicals here. We'll get working on embroidering that, Adam. Thanks for the tip. Part of this, obviously, is the weak yen.

15:39The yen right now is sitting at just about two-month lows against the dollar. What do you see there? I think right now, when you look at the yen, it's just more of a consolidation phase. We had a sharp pullback off that 152 level, came back. We're now back above the 200-day moving average. So when we look at it technically here, it's hard to argue against kind of a range-bound market, especially with what's going on with the Bank of Japan. Still ultra-accommodative policy there, expecting a change at some point, but we don't think it will be drastic. So maybe 152 on the upper end, 140-ish on the low end.

16:13I think the market would welcome that and more of a normalization there in terms of yen trading. Adam, great to see you. Thank you, Adam Turnquist. Thanks for having me. At the beginning of the Nikkei's run, part of it was the not-China trade. People didn't want to be in China anymore and just simply allocated to Japan. Is there more to it at this point? Yeah, well, Tim's been on this. Part of that was Warren Buffett talking about his ownership. I I think five different banks in Japan that started this as well. But, you know, the EWJ, which is rallied as well, but is not making new all time highs.

16:42That has room. And I think the largest holding there is Toyota Motors, which was a final trade of Tim's last, I think, earlier this week. That's number one. And I tell you what, that you might get value in in terms of the EWJ. Well, and EWJ was my final trade last night. And part of the reason that's been weak is because it's also imputed back to the weaker yen. So you actually have exposure to the currency. But I think Japan's gangbusters. And again, I work on an international ETF, I Devo the I in BICEP. Japan is a major part of this ETF. Mitsubishi UFG is near the top, Toyota Motors. And the dynamic is not just inflation again in Japan, but the TSX, the Toronto Stock Exchange, excuse me, the Tokyo Stock Exchange, let's try this again, has been putting a lot of pressure on companies to increase payouts and buybacks.

17:27The corporate governance dynamics are a lot better in Japan than they have been in a long time. And I think these companies look very interesting. And if you look at their market, we talk about our market being dependent on technology. Their market is roughly it's over 40 percent technology based or technology levered. And that seems to be what's really pushing the market along with the end, along with pricing. Valuations seem to be in line. Dividends buybacks are probably on the rise. And I think it's an awakening now when you had a deflationary market. Now you're starting to see some inflation and it's taking those risks as higher.

17:58Have you noticed that hardly a night goes by where Tim does not mention his bicep trade? Well, look, I mean, it's really getting a little shameless. Well, I mean, it's the. I love that. A lot of green left. You know what? You know what? There's nothing I can say when I'm called shameless by Melissa. So I'm just going to stop right now. You're not shameless. The mention of bicep every day. I know. You started this with the acronyms. I mean, it wasn't my game. At least Tim did it correctly. That's true. He did the acronym. Thank you. You're not going to mention names. Mr. Clown. The semi-search rocks on the details.

18:32on NVIDIA's huge investment helping drive chip stocks through the roof and a biotech buzzkill. Bad news from Moderna's entry into the RSV vaccine race. The news hitting the stock hard, the details and the diagnosis for the space when Fast Money returns. This is Fast Money with Melissa Lee right here on CNBC.

18:58Welcome back to Fast Money. Semiconductor soaring in today's session. The SMH ETF jumping 2 % as the White House announces plans to invest$5 billion in new semiconductor research and development. NVIDIA also among the biggest winners in reports that it is forming a new unit focused on designing custom chips, including advanced AI processors for cloud computing firms. That stock closing at a fresh all-time high and gaining 3.5%. It's just unstoppable, it seems, at least, Tim. Well, you know, it's up, you know, 40 % year to date. This announcement today is another niche they're carving out while other folks are just scrambling to get close to what they're doing.

19:37If you look at semis, you know, they're up 142 % from October of 22. Apparently, semis double every year. This is what it seems like. And if you think about the leadership, again, we talked about the market, but until semis stop leading and again, leading the Nasdaq, which is leading the S &P, this market's going higher. And there's all kinds of metaphors and analogies to where they are in the they're the new commodity. They are you know, we talk about that. But that used to mean cyclicality. Now it means high growth. And until that stops leading, folks, it's going to lead. There's an argument for both.

20:10I mean, it can really get the bill for a couple of arguments. I mean, Julie, if you're a believer in being invested in the growth stocks because of uncertainty or whatever it is, they fit the bill. If you're a believer that there's a soft landing here and you want to be in cyclicals, semis fit the bill. I mean, it's like for everybody, for every argument you have. Yeah, you can make any argument around them. And I think that's what you're seeing in the valuations for them. There's just so much support, broadly speaking. I still am a little concerned that the cyclicality is underestimated and that some of the growth that we're seeing right now is not sustainable.

20:42So I think it really benefits to be very choosy and being really selective in the types that you're using. Because at the end of the day, these are still very capital-intensive businesses that have a hard time forecasting growth. So I think for me, you've got to be really careful. I think Sam Altman today announced he was trying to raise$7 trillion. The U.S. is going to spend$5 billion on these research and development centers. And$7 trillion is going to be in the trillions. In the Middle East. In the Middle East. That's going to go over well. I mean, good for him. I think global GDP is like$100 trillion.

21:16I mean, when you start hearing things like this, you're pushing towards the outskirts of absurdity. $7 trillion fund. Is this like the top? Good luck. I mean, he probably pulls it off, but that's something. But Julie is right to talk about the cyclicality you brought up, as I brought up too. But here's the point. We actually saw Taiwan Semi this year give guidance in their numbers. They're going to grow 9.5 % this January over last January. A lot of these chip companies in the last 12 years have had to hit the headwinds of inventory and corrections. And we've had part of the dynamic being part of this move.

21:50And it's been extraordinary by any measure has been we've gotten kind of an all clear on destocking and growth again. And that cycle. And it's it's telling us it's alive and well. So, yeah, you definitely had a supply chain opening up. But if you look at NVIDIA, it was about pixie dust. And then you look at they are the only ones that are monetizing right now. And they own an 85 % market share in AI. So when you look at NVIDIA, everyone compares AMD as a second choice. But the third choice, which should be your second, Broadcom. Broadcom actually outperformed AMD. And unless you actually look at the numbers, you wouldn't have realized that.

22:29So the dark horse in this is AVGO. But NVIDIA still owns the crown in all of AI. It's their game to lose. It's a terrible setup. NVIDIA is ahead of its earnings, which are like a couple weeks from now. As it has been for the last two earnings quarters. That's true. And still. I don't know. Steve's right about AVGO also. I mean, we were playing that game about, you know, again, we love to play games here. And apparently the acronym game is getting old, guy. Apparently I've heard tonight it's getting a little bit old. But we played a game where who would you put in the new MAG-7? AVGO is probably that name.