The Two Big Events on Investors’ Radars Next Week: Nvidia and the Fed 3/15/24

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. NVIDIA in focus, the surging semi holding a must-see AI developers conference next week, featuring a two-hour keynote from CEO Jensen Huang. What you should be watching from this event and what it could mean for the red-hot chip stock. Plus, on the cutting edge, next week's Fed meeting could give some big clues as to when the central bank will finally start bringing down rates, what the traders are keyed in on and how it could impact the markets. And later, a new reality for realtors, a landmark ruling on broker commissions, sending shares of Zillow and other home buying sites plunging today.

0:36Is this an opportunity to get in on these names? And what could it mean for the housing market? I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Bono and Eisen, Steve Grasso, and Julie Beal. We start off with a countdown to two potentially market-moving events next week. NVIDIA's hotly anticipated GTC conference and a Fed meeting that could lay the groundwork for rate cuts this year. We begin, though, with NVIDIA, the Chip Standouts AI Developers event getting underway on Monday. Expectations on the street are high, with investors watching for new product launches, including a possible GPU for the Chinese market, and other updates that could sustain the stock's massive run.

1:12NVIDIA shares having a bumpy ride this week, posting a small loss today, but up slightly since Monday. For more on what to expect from the event, let's get to Christina Parts and Nevelis. Christina. They're calling it, what, the Woodstock of AI, the AI palooza, godfather of AI is going to take the stage. This is the first in-person GTC event in five years with over 16 ,000 attendees that are flying in for two days. Every hotel in the city is sold out for miles. Trust me, I can attest to that. But you talked about the shares. They've been up, what, 80 % in the last three months alone. The stock has moved over 2%, eight out of the 10 last trading sessions, even without any news as a catalyst.

1:48So one has to wonder how much is already priced into this stock and what more can the company and the CEO say over two hours to excite investors? Well, there's three themes that could do just that. The product roadmap for their new Blackwell AI chip, how good is the memory for that chip? Will it outperform AMD? When will it actually be launched? And is it really 30 % higher than previous chips like the H100? So could that mean a price target of$40 ,000 for these chips? Secondly, how AI adoption is growing at the enterprise level. It's been slow with most of the demand coming from hyperscalers.

2:22We talk about the CapEx spending from Meta, Google, Amazon, But NVIDIA's CEO said that enterprise demand is still at the very early innings. So expect Jensen Wong to hype up demand from other sectors, finance, health care. The list continues. And then lastly, you have inferencing, which helps spit out answers to questions on trained large language models. The question is, will that drive future demand since it already accounts for 40 % of data center revenue? Will there be an update to the total addressable market as well? Lastly, we're expecting some collaborations, partnerships with Micron, Broadcom, Oracle, TSMC.

2:56So expect the Midas touch of NVIDIA on Monday across the chip space. Christina, is the Blackwell the successor to the H100? So there's H100, H200. The Blackwell, yes, is the next step up in the architecture of the GPU, the graphic processing unit. So that's why there's so much focus on this chip, because it's expected to be much more powerful, have much stronger memory, and that's where that collaboration with Micron may come about. The problem is the price point is going to be a lot higher, and then the power usage will be higher as well. So we're going to be looking for those specs because that could dictate what happens to AMD stock as well.

3:32Right. Christina, thanks. Christina Parts Nevelis on NVIDIA. Lots riding on this one in many ways. Well, and for a stock when the rest of its peers and the semiconductors have started to pull back, I mean, NVIDIA is, you know, three and a half percent off its all time high, at least the closing high where the semis are off, you know, around eight. But, yeah, the question is, what's priced in here? I think it is an exciting moment. It's absolutely both the keynote and the dynamics around NVIDIA really showing off their full platform stack. And that whole dynamic of accelerated compute across a number of really different, you know, kind of key industries, whether it's Omniverse, you know, whether it's auto.

4:10I mean, all the obvious stuff. And then the AI Foundry data center and places where I think people believe this is where you're really going to hear them focus and possibly show how much farther ahead they are than some of the competition. That's what this comes down to at a time when we priced in a ton of good news. We know the addressable market or maybe we don't. But I think it almost does feel like the market needs to see something special. Yeah, it's a prove me story at this point with the valuation so high. I think there's argument around the valuation much higher. But there's pockets of the market that are still much higher.

4:44And you know that I'm definitely a proponent of NVIDIA. I don't question the target addressable market. I don't question the full stack. What I do question is how much of the news has already been priced in. And I do think probably are a little bit asymmetrically, like, pivoted to the downside here if they don't deliver. But I do not put it past Jensen Wong to be able to get out here and sell the gospel of NVIDIA and talk about how much further ahead they are and what all the use cases are. So I just think it's going to be a prove-me story. And likely, if you are waiting to get in, and this falters a little bit, it probably will give you an opportunity to get in lower.

5:19John Fortin, The Overtime Show, was talking about how there could be an interesting cameo, which could also stir up the excitement around NVIDIA once again. What's the cameo? I'm sorry. Like a cameo appearance. It could be like some rock star CEO. Oh, wow. I thought you were leaving me hanging. I thought you were going to tell me who it was. No, I don't know. If I knew, I mean... Right, you would have told me. Then it wouldn't have been a cliffhanger. So, you know, there is a case to be made when you go to EV to sales that it's actually cheaper than it was before it had any sales. So I don't know if valuation is stretched now or if you think that maybe it could grow into it.

5:53Or it's already expanded to the point where there's a lot more room to the upside for NVIDIA. I saw that this thing, depending on how you look at it, the stock could double and still be cheap on price. because sales are increasing at the same, or I should say, at a dramatic, exponentially faster pace. So there's a way to move around if you believe it. But I think Christina touched on it, the collaboration, Hewlett-Packard, Oracle, Micron. I think those stocks probably will have the ability to move more so than NVIDIA next week. And that's what I'm interested in watching. A lot of the analysts that I've talked to leading up to this event, Julie have said that they will focus on also selling NVIDIA as a stock, not just a hardware company, but also one that provides services, that software that creates an ecosystem.

6:41So there's a recurring revenue component to this whole thing, not just, you know, the concern about double ordering because it's only a hardware company at this point. Yeah, I think it's really critical when you look at software businesses versus hardware businesses, you know, software businesses typically have recurring revenue and they don't have this high level of fixed costs. If you look at NVIDIA's margins, right? Their operating margin has doubled in the last five years. And so you have to think that there's enough capacity being built right now for them in order to continue to double their business.

7:12If that revenue materially decelerates, it has a profound impact on their profitability the way a software business just doesn't have that kind of volatility. And so I think that's the one kind of bear case is you have this high level of fixed costs absorption that you have to have in order to justify this valuation. And I think as long as demand holds in, it's no problem. My concern is the demand is still pretty consolidated among their customer base, right, who can afford this chip. The more that they can broaden out their base of customers, the better and safer their business is over the long term.

7:45So the partnerships are key. If it's sell the news, whatever the news may be, Tim, do we lose the market on Monday? Well, yeah, this could bring us into our market conversation because I think the market has some interesting cross currents that we got out of this week. Rates were higher. We had the worst week for bonds all year. We have a Fed. We have dynamics around inflation. It was much stickier this week. But back to Nvidia. You know, I think it's very important. Having said that, you can make an argument and look across the Nasdaq. Nasdaq has sputtered for a month. Nasdaq has really done almost nothing in a month, of which semis are a major part of that.

8:18You can see where the broadening of the market has happened at a time when, I don't know if semis have peaked for this short term. I continue to believe that until they stop making relative highs against the S &P and even of the NASDAQ, that I think the market is going to go higher. But they are not solely responsible for the breadth in the market here. So the question is, how many rabbits can NVIDIA continue to pull out of the hat? And if you think about what they've already given the market at different times, and this is not an earnings release. This is truly kind of a state of the union. We just had a state of the union.

8:51But their development cycle may be faster than people think. Think this is a company that's been so far ahead of everybody. If you think there might be nothing tomorrow, there might, on Monday, there might be something. And again, as Christina pointed out, there's some incremental progress on the 200 chip, some of the other dynamics. I think they're going to give the market something. It's just a question of what the market really wants to do with this. But I don't think we need NVIDIA right now the way we might have felt like we needed them a month ago. I think you need Microsoft. I think we've seen this week where Microsoft sort of staved off a lot of the sell pressure on the queues.

9:26And NVIDIA is only about 6 percent of the queues. Not that Microsoft is that much more, but it's 9 percent of the queues. But it's a lot of how you think about the overall market. Microsoft seems like a steady Eddie. If the market lost Microsoft for any extent, a period of time, then I think the market's in trouble. I'd rather hold Microsoft and have NVIDIA be a little volatile than the other way around. All right. Well, let's get the technical take on where NVIDIA shares could go from here with the chart master. Carter Braxton-Worth of Worth Charting joins us. Carter, what do you see for NVIDIA?

9:57Sure. We'll get right to it. But before the charts and you're talking about how much NVIDIA will infect the market next week, it's important to point out that NVIDIA has been down five out of the past six sessions. S &P, identical. Five of the past six sessions and the same sessions, QQQ also, which is to say I think NVIDIA obviously has a lot to do with what the market's going to do on a day-to-day basis coming ahead. Anyway, let's go right to the charts. There are three long-term charts, and they're identical, and then one will wrap up with it short-term. So this is the period in which effectively the stock went from 10 to 1 ,000.

10:35And now let's put some lines in. We have a well-defined internal trend line. Literally, we have come up against this line for the fourth or fifth time. Just to sort of annotate that further, let's put some arrows in. And you'll see that we are touching this line. Last week, we touched it to the penny. And that's where we got that massive back off, that outside reversal day. And so the question is, is it a big move to a difficult level? I think that's the case. Let's zero in, final chart. And this would be sort of the here and now chart. It's that textbook breakout. The stock made no progress, essentially trading at 500 for six months.

11:13And then the beginning of the year, it broke out from a well-defined formation. And it doubled effectively, going to 1 ,000. And I think you have price discovery here, whatever might be coming in the conference next week or whatever it is. Can you have price discovery two years out or 10 years out? Of course not. No one can discount that. But has the doubling year to date discounted what lies ahead the next week or weeks ahead, month or two? I think yes. All right. Carter, thank you. Carter Braxton Worth. And we'll see you a bit later on in the hour. Meantime, what's your reaction? Do you think that we've seen the best of it for the next month or so?

11:50I think you'll probably reach a period where there is some consolidation here. I just don't see what not that there's anything questioning the story, but in the time frame that we're speaking of. Right. I don't expect that to continue for the next week or a couple of weeks. And we should mention that Jim Cramer is going to be sitting down for an exclusive interview with NVIDIA CEO Jensen Huang live from the GTC conference next week. You can catch the first part live at 1015 a.m. Eastern Time on Tuesday and with more on Mad Money at six o 'clock only right here on CNBC. Now let's get to next week's other big event, the Fed decision.

12:21Markets keen to see how the central bank will digest this week's hotter than expected inflation reports. The major indices all down today and for the week. The S &P and Nasdaq both notching two straight weeks of losses for the first time since late October, while the Dow was down three weeks in a row. Ten-year yield, meantime, hitting a more than two-week high today. So what should investors expect from the Fed? Julie, do you think that we are going to set up for a June cut, or do you think the Fed sort of moves that out? I think they're going to kind of continue to be posturing pretty vague because the data is a little bit mixed right now.

12:54obviously, the prints were a little bit hotter for PPI and CPI than we would like. And it feels like it's a little bit what they had warned about, which was we would make a lot of progress going from 9%, 10 % down to 3%, but kind of that last percent seems to be pretty stubborn. We're getting it on goods deflation, but it's really in the services sector that we continue to struggle to see any real progress. And so I think that they want the flexibility to be able to stand pat here and stand pat for the early part of the summer. You know, I think, you know, we look at June, June starts to look different.

13:27I know people are talking about September rate cuts, but I think they're going to be limited how much they can really do politically as far as rate cuts right before an election cycle. What do you think, Tim? Are you looking still to June? Yeah, I think I am, although we've obviously given ground on that. And if you look at where, you know, we've seen a couple of Wall Street houses, even in the last couple of days, have to cut them into three cuts when they're at four or five. And so this is just a function of the calendar at this point. It's starting to compress. There's less time left in the year.

13:57PPI, as Julie pointed out, CPI, there's different parts of it, but owner's equivalent rent, services, dynamics. And then on the PPI side, energy's not making it easy. And some of the dynamics, I think, with, you know, if we're calling maybe some part of this, and retail sales was a little disappointing this week, there are people out there, Michael Hartnett of Bank of America, who I have a ton of respect for, starting to use that stagflation term. If we've got stagflation, even a little bit of it, you're going to continue to see the parts of the market that would respond to that. That would obviously be gold and Bitcoin, but I think it would also be energy and health care.

14:30And I think there are parts of the market that actually have started to break out, have started to outperform and are going to continue to perform. Despite what the Fed says, Julie's right, there's not a whole lot they can give us right now. And they're going to hang in longer than they can. It's not until we start to see restrictive policy. Again, that's when rates are higher than the rate of inflation. So by default, it is restrictive right now. And we won't know until we know. And that means it's already happened. So right now, I think the Fed this week coming is kind of a non-event. Futures markets have done a lot of the work for them.

15:03I think that's where Tim just left off. I think if you find that the data really starts to slip off the table, the Fed has waited too long. So they don't want to run into that. So I think what everyone is waiting for is to really see something and say they have to cut now. And you're not going to see that. He's going to cut, hopefully, before that time period happens. So if you look at next week, I think he's going to tweak QT. Then I think he's going to cut before June because of the same thing that Julie said. So it's going to be an intra-meeting cut? I think they're going to cut rates prior to June.

15:42I think now you're going to see them tweak. The next meeting, he's going to tweak QT. And then the next round of meetings, he's going to cut before June. That's what I believe. And for the reason why Julie said, you purposely want to stay away from the election. So I think he went out of his way to say that we don't really need to see things fall off a cliff. We just need to see things moving in the general same direction. And I don't think CPI or PPI, I don't think they really discontinued the same general movement. So you've become more dovish on the Fed. I mean, I don't mean relative to what position you had, but your point is that you're significantly more dovish than where the market is.

16:24I've always been significantly more dovish, and I haven't really seen anything to change my mind. As a matter of fact, I'm more convinced on Powell's own words the last time that he was at those meetings. I was at the Post Fed interview, because when you think about what he said, he just said, we don't need to see something drastically improve, just the same general direction. It seems like he's setting it up so that he has more latitude. I agree that he's setting it up so that he has more latitude. I tend to agree a bit more with Julie here. I hear both of you in terms of the political posturing and not wanting to seem like that is going to be a catalyst for a move one way or the other.

17:03But I think kind of accelerating the timeline still still gives you that same problem where you're just trying to get the rate cuts out in front of the election cycle. I think if anything, that would lead me to kind of lean towards you is the retail sales number, because if we don't see anything there, you know, but you but you haven't seen that follow through in wages and you haven't seen that follow through in terms of employment. So I still think that that PPI and CPI number gives you a little bit more latitude to say, let's wait and make sure that there is follow through before it's pivoting.

17:34We have given ground and perhaps now we're reaching more of a place of equilibrium because we've moved from literally March being all but a given out to now June being called into question. I don't know that June is again. And so June is not to be clear. I'm not saying before June. I'm saying, if anything, we could actually miss June. There's only a handful of inflation points, data points until we get to that June meeting based upon where the Fed's meetings are scheduled. So they're not going to rush in too soon. If anything, they're going to rush in too late. And that will always a problem. But that's what we're going to get this time.

18:11Not too soon, I think. Coming up, Japanese stocks on a tear, but a big shakeup could be brewing ahead of next week's pivotal central bank meeting. What it all means for the world's fourth largest economy. Plus, Bitcoin may be off its record highs, but the recent rally could be having some surprising effects on an unexpected sector. The impact the crypto is having on the nation's electricity grid. That's coming up. This is Fast Money with Melissa Lee right here on CNBC.

18:47Welcome back to Fast Money. Japan's largest trade union saying workers in the country are set to receive their largest wage hike in 33 years. The union saying its 7 million members are expected to get an average increase of 5.28 percent, much higher than expected. The news comes ahead of a key Bank of Japan meeting next week where investors are watching whether the central bank will raise rates for the first time since 2007 and shift away from its negative interest rate policy, also giving up yield curve control. What do you think, Tim? This is sort of widely speculated around this wage hike. It is.

19:20I think, first of all, these wage numbers came in a lot hotter. And I think they might wait until the April meeting. This is interesting. We're having conversations like this in the U.S. They're having these conversations in Japan. The first move is to actually get rates back to even instead of negative. I think the second will be we're going to formally stop YCC or yield curve control. And then finally, I think they're going to have to communicate something in terms of what they're doing on buying of JGBs. This, to me, doesn't change the story of investing in Japan where, you know, I'm overweight.

19:50Idevo's overweight. There's different places where I think you can get your exposure. It's possible. And look, the yen will appreciate on the back of this. But think about these wage numbers. Think about consumption in Japan. Think about what a little inflation in Japan actually means at a time when there's also been significant corporate reform, pressure on the companies to pay out. I think the Japanese corporate sector, from a corporate governance perspective, really hasn't looked this good in decades. And I think you stay long. It's amazing. It's been eight years of negative interest rate policy in Japan.

20:17Crazy. So that's why it's kind of like our Fed. They're not going to rush right. I don't think they can rush right in. Yeah. Another part of this, though, is that you mentioned whether they buy JGBs and whether they continue also buying ETFs and other risky assets, Julian. I think that's sort of an interesting component of it as well. A lot of it, I think, really depends on their ability to drive better personal consumption internally. You're starting to see that, and the wage gains are really meaningful. You have these large multinational businesses in Japan that are benefiting from a very soft yen and able to do extremely well.

20:52And they're passing on wage increases, 14 percent, I heard 7 percent. That's very, very meaningful to the consumer confidence in that market and their ability to improve personal consumption. So it feels like it has the potential, at least, for a virtuous cycle. A lot of it depends, though, on what happens with the yen. Yeah, I mean, I think this definitely is positive for the catalyst or thesis around investing in Japan. As you know, DIGS, that's part of my acronym for this year. And I think this continues to kind of push that follow through there. Julia mentioned the consumption. I really think that the wage growth needs to translate there in order for us to really see that there is a justification for us leaving the stimulus and that there will be a natural background for that.

21:36Can we refresh DIGS? What do you mean refresh? You want Digi? Yes. You want Digi? You know. Digi Diggs. You're not digging my Digi? Do you mean refreshing? You want to know what it stands for? Yeah, a little bit of everything. Look, we've had a lot of fun with acronyms over the last couple days. And no, Digs is cool. Why should it be Digi, though? No, he's asking what it actually stood for. A little bit of a variety. I was truly looking for a refresh course on what Digs was all about. You know, we went through Guy's Clam last night. So we touch Clam all the time. Yeah, we sure do. We do. You don't want to pull that one back.

22:08What do you make of this trade now? So if you look at it, you know, Tim touched on what it does for the currency. And in large portion, their market has been helped by their currency not appreciating. So you would think just at face value, unless they do what you said, unless there's ETFs involved and there's a whole array of things that they'll do around this rate hike. But you're still talking about drastically low rates in Japan. It's been waited forever. So the people are angry that the wages were not increased. But I could see this as being a top point for the market near term, because obviously, if the yen appreciates, it's going to hurt exports, which will hurt eventually the market.

22:56How does that impact that? You know, it's funny. It's the biggest increase, wage hike increase in 33 years. The stock market is at a 33-year high as well. Yeah, no, Steve's right. I mean, to the extent a stronger yen, Japan is also it's a consumption economy. But at the heydays of Japan, they were an export economy. I mean, they were China before China was China. And so I do think a stronger yen and the yen's been artificially absurdly weak. I mean, we've seen, you know, in terms of quant terms, like three standard deviation move here in the end. It needs to come back in. The markets had such a great rally.