Yields Surge After Hot Jobs Report… And Gamestop Sinks As Roaring Kitty Livestreams 6/7/24

0:02morgan thank you very much and welcome everybody live from the nasdaq market site in the heart of new GameStop shares sinking, even as its biggest champion meows that it's a buy. What we've learned from Keith Gill's live stream and what to make of the frenzy in that stock. And later, gold losing its luster, the stealth comeback in shares of Meta, and counting down to Apple's big AI reveal early next week. I'm Tyler Matheson, in for Melissa Lee tonight. Thanks for joining us, coming to you live from Studio B at NASDAQ. On the desk tonight, we've got Tim Seymour, Karen Feinerman, Bono and Eisen, and Steve Grasso.

0:54And we're going to start with that rate spike after this morning's hot jobs report. Yields surging across the board as investors digested the stronger-than-expected payrolls number. The 10-year jumping to more than 4.4 percent after slumping in recent weeks. The two-year nearing 4.9 percent. Now, that move coming after the latest employment report showed that the economy added 272 ,000 new jobs in May. That's more than 165 ,000 in April and well above what had been forecast. The unemployment rate, though, rose to 4 percent. Here's the ambiguity in these numbers. That's the first time it's hit that level since January of 22.

1:36But the strong payroll growth slashed expectations that the Fed would cut rates anytime soon. Chances of a move in September fell from around 70 percent yesterday to just about 50 percent today, 50, 50 or thereabouts. So with another Fed meeting coming up next week, as well as a new read on CPI, what can we expect after this morning's jobs data? Steve Grasso, let me start with you. It seems like the opportunity for a Fed cut waivers with every single number. Yeah. So the so at the end of May, I think it was the odds of a Fed cut went from basically 52 percent to 78 percent. And now they dropped from 70 percent or thereabouts to 50 from the from the last couple of weeks to 50 percent.

2:22So that just tells us every data point is going to be overanalyzed. But it's the unemployment data that's the most worrisome for the Fed and the establishment and the Biden administration. So it's great that the economy seems to be humming along quite nicely. But we're a long way from Kansas. I still think that they are going to cut. And I still think that there will be a few cuts. And they'll probably start September. So, Karen, to Steve's point, which is the more important number here? Is it the 4 % unemployment rate, which is sort of a sign of a slowing economy potentially? Or is it the 270 ,000-plus jobs that were added, which was more than expected?

3:04And you've also got wages, average hourly wages going up, which is exactly right. Strong. So just more murkiness in there. Right. So yes, murk. So I think that they're all I mean, as you said, all the pieces are moving a lot. And I mean, to me, the market's reaction was interesting in that bonds sort of, you know, buzzkill right away. And the market really looked like it was going to sell off. And it didn't. It actually ended up, you know, points of the day was higher. And it ended up not being so much of a, you know, sort of an unconsequential day in terms of that movement. But I sort of think that here's if Jay Powell were looking for any reason to be either dovish or bullish, he could pick one here.

3:47He could pick one. He could pick one. But I think he's going to err towards being not bullish, hawkish, I meant to say. I think he's going to err toward being hawkish and not raise until he gets one point one four handle is not enough to one for a four handle on unemployment. One of those. One of them. You've got to have more. Maybe it goes to four, two or whatever. And then maybe. Right. The cuts start coming. What what I've been thinking about, Tim, in recent days is this to the same thing I think about this stuff. I don't do it all the time. Believe me, it's good for my health. is this. The Fed has deployed its blunt instrument against high inflation, and that is by raising interest rates, which it has done over the past couple of years very significantly.

4:32Inflation has come down very significantly, but that last mile has turned out to be tricky. So the question is, what other tool does the Fed have to deploy to slow inflation or to get inflation down to that 2 % level, do we have to have a recession? Do we have to see unemployment go into the mid-fours? So welcome, Tyler. Great to have you here. Always great to have you here. And that other tool is time. If I think about it, in fact, if they don't do, you know, next week's a huge week, not only because Wednesday we have this CPI number, that's not only a number that I think kind of shapes the next couple months, which means if the Fed doesn't do anything in, you know, my guess is by July, I think they're not going to do anything until November.

5:17And so I thought today's number. I know we overanalyze certain data points, but and we overuse the term Goldilocks. And it's a good thing Guy's not here because he hates that term. But but I'll just say right down the fairway, if you're the Fed. So we're talking about we're talking about maximum employment and easing inflation pressure and that four percent unemployment rate. Yeah. Highest in two years. Who cares? What you're seeing is a balancing out of the job openings to essentially unemployment rate. And that's what the Fed wants to see. I thought this number was as good as it got. I thought this number, though, also doesn't tell you that the Fed is in any rush to do anything.

5:53And I think, if anything, this probably tells you that the Fed, who may cut once and may cut twice, they're not going to cut more. And I don't think they're going to not cut. But it's all because they have to do something because at some point policy is restricted. There's nothing in the data that says the economy is falling apart. There's nothing in the data that says we're going to want to. So do you think if they don't cut by July, they won't cut until after the election? I think we're only getting one cut. I forget when the meeting is in November. I think we're only getting one cut. And I think next week packs a lot in for investors on Wednesday because you're going to have a CPI.

6:26But you're going to get out of that Fed meeting one or two. And I think, you know, I don't think it even really matters. What do you make of these numbers? Yeah, I tend to agree. You know, you look earlier in the week and it was a very manufacturing heavy and that told one story. And then towards the latter part of the week, you got a bit more services. You talked about wage growth. We look where the jobs actually come from. It's really in the service side of the economy. So you have that kind of push pull dynamic there. And really, if you just look at the volatility within the rate market and the Fed funds futures market, it tells you that there really is a lot of, as Karen said, murkiness and uncertainty.

6:58And the Fed has reiterated time and time again, we need to see a trend towards X, fill in the blank, whatever narrative that you want to say. My point is that you're getting anything but a trend. You're getting dot plots all over the place that are very inconsistent in terms of like where we are trending. And I think until we're able to make sense of what that trend is, expecting anything but status quo to me is speculative at best. Now, it's a market for a reason. You're trying to find some edge, something to trade, some data point that might give you some advantage. But as Steve said earlier, you've seen Fed fund futures reset and then retrench to where they were.

7:35It's a real long way to go nowhere. Yeah. You've been pretty consistent on your view of what the Fed is going to do. Sorry. I've been mocked. I thought it was five. I've been mocked. I've been mocked at three. Tim smirks whenever I say three. By the way, you're being very generous. By the way, Tim has come over to my side here because now I heard him say July. I've never heard him say anything about rate cuts. So I think, by the way, I think that you can. I'll leave you to sort this out. Steve was clearly wounded by your comment. It's fine. No, no, I want to jump into the rate cut thing. You can say July.

8:10BOC, ECB, BOE. You can say that the Fed is under this world domination where they want to have a succinct coordination with the rest of the world, the rest of the central banks. And I think that that's the case that you could make if they went in July. I think this number today probably pushes July, and then we don't get anything in August, and then we get September. But if they actually cut rates, I think inflation comes in. Rick Reader has been great on this. If you think about CPI. If they cut rates, inflation comes down. It comes down because think about what shelter costs are in CPI. It's over 30 percent.

8:52So you lock up the housing market when you keep the mortgage rates at 7 percent. So the only people that become wealthy and circulate more money are people that have money in treasuries, money in equities, money in real estate. So they keep pumping the system. Who are the people that are at the other end of that? People who don't have money in treasuries, money in real estate. Right. And in the market, eggs, cheese, milk, those are what's hurting the bottom income brackets. You keep this level of inflation here by keeping interest rates here. You cut and everything comes in. Reaction? I'm not sure.

9:27I'll take the other side of that. You will or you won't? I will in that cutting actually would tend to be more inflation. I understand exactly what you're saying about housing. I don't believe a 25 basis point cut is anywhere close to solving this housing situation. To unlock the housing market. Right, to unlock the housing market. I mean, the differential between those existing homeowners with the 3 % and 4 % and the new, whatever new mortgage would be right now, 7 % and change. Okay, let's say 7%. I just don't think 675. Directionally. And you wouldn't get the whole 25 % probably. But let's just say you did.

10:03I just don't think, directionally okay. But you would need multiple cuts for that to be, for that part of it. Meanwhile, on the other hand, if you had multiple cuts, you might spur other inflationary things. Tim? Again, I just think if the Fed doesn't signal that they need to do anything next week, they don't have to do anything. They're not going to do anything until at a minimum December. That's my point. And my point is that they're going one or two times. It's not a function of a weakening economy. We've just printed 249 on payrolls the last three months on average. We're not even close. Now, yeah, we could have a bad number next month.

10:42But I guess we all know that policy is restrictive. But the question is how restrictive? And I think the market is trying to figure that out. Ultimately, what was also interesting is on a day when you got to see that the economy was really, you know, if the labor market is the economy and it sort of is, it's sort of not. You know, stocks kind of be handled and like, you know, if anything, weak. You wonder if really weak number would have actually been really negative today. So it was a great week for the market. And at some point, we need to talk about that because it was a week where you had reaffirmation of at least leadership in terms of the biggest companies in the world.

11:17We're going to talk about Apple in a little bit. But I just think that ultimately we're going to talk about gold, too. But on a day when you pull back three and a half percent in gold doesn't mean that gold's a bad trade. It just means that what you saw today is there's no necessarily there's strength in the economy and that the Fed is not going to be, you know, their old dovish self. Eventually, they're going to have to cut. And eventually, all those trades that are that are predicated upon the Fed kind of an easier monetary policy and it will happen are going to be back on. All right. We're going to have inviting our first guest right now.

11:49And that is former White House chief economist who thinks that Fed policy is comfortably on hold. posts the jobs report. Joe Livornia is now the chief economist at SMBC NICO Securities. Joe, it's always good to see you. In reading my notes in prep for this conversation, I was curious about something that you point out, and that is not to wonk out on these employment numbers, but why not? There's a household survey and there's an establishment survey, and the establishment survey showed jobs growth. The household survey did not. Explain it and explain what it means. Sure. The establishment data, Taylor, good to see you, is basically it's a function of the companies, the BLS Bureau of Labor Statistics surveys, who is on their payroll, who gets paid at least for one hour worth of work during the employment survey period.

12:38The household survey is literally governments knocking on somebody's door, giving them a phone call and asking them if they're part of the labor market. And if they are, they go through a series of questions. So literally, it's the household. You go to somebody's household and you ask them about their employment status. The reason the household survey might be better is that at economic inflection points, because the sample changes every month, it might pick up trends in the data before the payroll survey does, because that survey is based earlier in the year on a set of economic conditions that may be perhaps changed.

13:09Because the establishment survey has a lot more data and it's perceived generally to be better in the sense that you're getting perhaps less bias in it from the people who are responding to the survey, that makes the Fed and others put more weight on the payroll data. Having said all of that, I do think the household data is interesting. Labor force participation is declining. Unemployment is rising. And if it continues to rise, that will be a more ominous sign for the economy next year. But at the moment, as Tim said, roughly$250 a month on jobs, the economy looks good. So household survey remains weak.

13:45Employment was down 424 ,000 in May and has declined in six of the last nine months. Is that kind of number sufficient to get the Fed to move to loosen up on rates? No, not yet, Tyler. The core PC, which is what the Fed focuses on, the three-month rate of change is running up around 3.5%. The year-to-date change is about 4%. I heard Steve's comment about what Rick Reeder was saying about lowering mortgage rates, which will help. The Fed is focused on other metrics as well, such as the super core, which is core services x housing. That's over 50 % of the core PCE. And that's been running around 4%.

14:26And there's no housing there. So it's going to be very difficult for the Fed to cut rates in this sort of environment. Question is, why is the economy healthy? And I think part of that isn't really health as much as debt-fueled spending. We have budget deficits that are 5 % to 6 % of GDP with unemployment at roughly 4%. That's never happened before. So let's talk a little bit about the inflation numbers and how you think they are trending. Are they trending lower? And what causes them to get to the Fed's target of 2 %? And back to the question I asked Tim. Do you have to have a recession to get there?

15:07Tyler, it's been very, we were saying that this was a supply driven inflation shock and then inflation would come down despite all this government spending. And that was the case for about 18 months. And then all of a sudden in January, the inflation trend turned for reasons that are not clear to me. And I think many others. And what that means is the Fed has to take a much more cautious approach. I agree with what Tim said. The Fed will have at most, I think, one rate cut, and that'll happen after the election. The Fed needs at least three, if not four, good months of inflation data to offset what we've seen.

15:41I do expect inflation to moderate because I do think the economy will weaken. I do see some cracks. But right now, the inflation, if it comes down, will be much more gradual than what I had expected and certainly not enough to get the Fed to ease anytime soon. It comes back to the point you made, Tim, which is time may be the weapon here. Go ahead. You want a quick question. Joe, how about the mosaic this week of global central banks? What does that mean to you in terms of it doesn't necessarily have to mean anything. And I know you're an economist. You're not necessarily a trader. But but, you know, you do have a dynamic where you've got central banks around the world, you know, pushing on the ease, albeit, you know, talking out of the other side of their mouth.

16:15Any thoughts? It's an interesting week when you get this payroll number. It's an interesting week, Tim. I mean, some of the European and European inflation data and the U.K. economy and certainly energy has been a big factor. And inflation there has come down a bit faster than where it has here. And I think that policymakers sort of taking their cue from the Fed late last year, wanted to get at least one rate cut in. I don't think they're going to be able to cut much more. It's unlikely that these other central banks can continue to ease rates with the Fed on hold. And I think actually they'll at this point probably focus on more what the Fed does from here than the other way around.

16:51All right, Joe, thank you so much for spending time with us on a Friday evening. We appreciate it. Thanks, everybody. Great to be with you. Thank you. Good to see you, Joe LaVornia. All right, let's trade it. Who's got an idea here to put money to work in light of what we've just been talking about? I think you lean into dollar strength here. I mean, listen, we're looking at the ECB. I think there's a key difference there. There is a collaborative effort of I'm not exactly sure how many countries, but it's not just one United States situation that you're dealing with. So you have a situation in Germany or Italy or the U.K., and you've kind of you've kind of have to, you know, move policy around to be accommodative to all of the constituents of the ECB.

17:28I don't think that's the case here. In fact, I mean, it's not. It's the U.S. economy. So I think, you know, you kind of lean into dollar strength for the time being. I think you'll probably get a chance to redeploy into gold if it comes back significantly because there is still very much uncertainty on the horizon. But I think those two things kind of set you up to what pockets of the market that you really want to be involved in. Karen, thoughts? Status quo, really. I didn't think anything would need to change. You know, it's not a big enough rate, something that would be supportive of rates where you'd say, oh, valuations will be cheaper because rates are going lower.

18:01That didn't happen. And yet it wasn't super hot. You have that 4%, as you said. So, you know, murky, which means status quo. Status quo. Keep it where you are. Well, there's things that I think you don't want to do. And one is assume that rates are going down significantly lower. And it was that week where until, I mean, a 17 basis point move on the two year today, 17 basis point move. I mean, it tells you how advanced or over their skis the market got in terms of some of these treasury trades. I think if you think about trades that also have continued to not work, how is it that on a day when we showed economic strength, small caps significantly underperformed the market as they have all year?

18:38So to me, reaffirmation that the places you're going to be safest also in a world where maybe there is, maybe there is not slower growth in the next couple of months are the places we've had it, the places that there is growth and the places that are interest rate sensitive. Quick final thought or trade from you. So I think there's still a demand of about 5.5 billion notionally coming from corporate buybacks. And that fades out in the middle of June. I would say stand, Pat. But if you are looking for a sell off, maybe you get something mid June to first week or so of July. Interesting. All right.

19:11We're going to take a quick break coming up. Apple closing in on all time highs as we count down to the Worldwide Developers Conference. That is next week. What do we expect to hear about the company's AI efforts? That's the big question, and we're going to give you the answer next. Plus, Roaring Kitty doing his very best to evangelize his GameStop thesis in his first live stream in nearly four years, even as the meme stock tumbles. We'll dive deeper into the madness right after this. You're watching Fast Money here on CNBC. We'll be right back.

19:55All right. Welcome back to Fast Money, everybody. Apple shares closing back in on all-time highs as the company gears up for the kickoff of its worldwide developers conference on Monday. Investors anticipating major announcements with respect to Apple's AI plans. Rumors include a partnership with OpenAI, a deal with Alphabet's Gemini software. and according to Bloomberg, more advanced voice control of its products. The AI additions would be an attempt to catch up with other big tech names making moves in the space and could serve to boost Apple's main businesses. But will the company be able to deliver the stock, Bonoan, is close to all-time highs.

20:36A lot of anticipation built in here. What do you expect? What do you expect the stock to do? You know, I said at 160, that was really your chance to kind of get back into a long position. And I said it then and I'm going to repeat it. And maybe I'm wrong. I was wrong then and perhaps I'm wrong now. But my point is, barring some real AI product and service, I'm not talking about just having a third party AI platform on the phone. I don't know what takes them to the next level because this very much is an AI fueled market. Now, with that said, and to Tim and Karen's point earlier, there is a defensive nature to this stock where I can see people getting involved.

21:16But to expect an incremental 30 or 40 or 300 percent like we're seeing from some of the other AI names, it really boils down to how defensive do you want to be? Do you want a company that is a bellwether and that you know has cash on hand and that's got this massive subscriber base? It's got the services. It's got, you know, whatever super cycle that's going on. or do you want more pure AI plays? And if I'm going to take a tertiary bet on AA, I'd rather just be involved in the AI champions right now. So you see this then as a more of an incremental part of the Apple story? Sure. As Carter says, I see it as a pair of twos, but I'm fine.

21:53So in July and in December, it hit around these levels. And we all know the seasonality of this going into WWDC, the stock rallies. This is a pretty aggressive rally that we've seen recently for Apple. So unless they do have... Maybe Apple got mad when NVIDIA passed it there briefly. Well, you bring up another point. In the ETFs, as of June 14th, if NVIDIA has a higher market cap than Apple, then they're going to flip spots in the XLK, and that's not the least of which. So now you have that replicating buying every time the ETF is bought. But to Bono's point, if AI is not substantive, I think the stock sells off.

22:34And I think either way, the stock is probably going to be. So the bar is high here for Apple. Well, the bar, it was lower several weeks, you know, back when you were talking about. So this has been a lot of front running in what they hope will be something really fascinating. I mean, they're sort of building it up to be so. And I don't know if it's I think it's got to be something revenue generating, subscription kind of generating AI sort of product, not just fixing Siri, which I really honestly believe they have made Siri worse purposely before this, so that whatever they replace it with, we'll see that much better.

23:10I really believe it. It's so bad, it's unbelievable. It's almost an embarrassment. It is beyond an embarrassment. I wouldn't even say anything if I were she. I wouldn't say another word. She's listening. I know. She's listening right here. I really believe there. And you have two of them, don't you? One's a charging thing. One's a charging whole fear. Yeah. So I just think the stock is already pricing in something really great. I have a tiny position, which really means I'm closer to short than long. Yeah. Yeah. That's a hot take, though. They're making it bad. I think she's talking to us. She's talking.

23:48She's talking. Yes, she is. She listens. She hears everything. Certainly. Now she's really going to be not good. We're going to take a quick break. Yeah. All right. We're going to behave ourselves now. There's a lot more fast money to come. Here's what's coming up. GameStop stock down big today, but its biggest evangelist is still preaching buy, buy, buy on his first live stream in years. What's really going on with the meme stock? Next. Plus, a metal meltdown. Strong jobs data dealing a major blow to gold and the miners. Is this glowing trade finally starting to lose its luster? What to make of the commodity conundrum?

24:27Right after this, you're watching Fast Money, live from the NASDAQ market site in Times Square. We're back right after this.

24:42Welcome back to Fast Money, everybody. We've got a news alert now on some new additions to the S &P 500, and Seema Modi has the names. Hi, Seema. Tyler, three new companies joining the S &P 500. KKR, the private equity firm, CrowdStrike, and GoDaddy set to join the benchmark, replacing Robert Half, Comerica, and Illumina. Those names are out. The changes are effective Monday, June 24th, and it coincides with the quarterly balance. And you can see shares are moving here in After Hours, Tyler. KKR, CrowdStrike, and GoDaddy. Seema, thanks very much. Appreciate it. Our meantime was a painful day for GameStop shares.