Transcripts For CNBC Fast 20240706

Im melissa lee. Always good to have you, rebecca. And we start off with the sea of red on wall street major indices all down over a percent ahead of tomorrows fed decision investors seeing a more than 80 the central bank will raise rates another quarter percent. The big banks and regional efts hitting their lowest levels since late 2020. Pac west, western alinls, and comare ka down double digits the oih dropping 6 , lowest close since october, as crude tumbled back to the 70 mark investors blocking to the safety of gold. Both the Precious Metals and the miners offering some refuge amid the volatility the banking crisis not solved, the fed set to hike yet again, and a new xdate for the debt ceiling now just weeks away, not months so, theres a lot going on here, guy. Feels like people just want to be riskier not a trifecta you want to win. Bank of america, whisper of its 52week low. Not trading well and dan mentions it all the time the banks are so vitally important, its interesting, when people dismiss whats been going on over the last month or so, the same people that would tell you the importance of banks when things were going really well the banks are the life blood of this industry and regional and small banks are the life blood of small and midsized businesses, which again with the life blood of this economy so, things are not working out that well. The fact that gold is rallying here should disturb a lot of people and the fact that the bond market once again is showing the volatility that its had r recently is disturbing more to come in the banks . Absolutely because its not just banks now, its insurers, pension funds, mutual funds, theyre all on the table. Today is a disaster for whatever credibility you thought jpmorgan, the largest, best capitalized, best ceo, for what he said yesterday about this stage of the banking crisis, when you look at how it actually spread to money centers, at one point today, i looked down at my screens and i saw wells fargo, citibank and bank of america all down about 4 . Think about that on the back of whats going on in regionals so, if right now, if investors dont have confidence in what jamie dimon has to say and what jpmorgan are doing to stem this banking crisis, that sounds contained, this smacks of what we heard in the spring of 08. Im just telling you that. It doesnt have to be that these banks are in a difficult situation. These are the major money its the perception of what investors think about it and when you think about just the poor performance that weve seen in other parts of the kind of financially oriented, you know, parts of the market, its just not good. The areas that guy just said, and then we kind of extrapolate a little bit, weve been talking about blackstone, weve been talking about the gates that they have up, and the demands that they have for the capital back, this is six months in a row now that theyve actually been over, like right so, to me, i just dont know how any banker can go out and say that this is contained right now, because its clearly not. Down 4 , moves like that arent a big deal, but when you see a pac west and western alliance, trading down 20 , they are trading like theyre the next shoes to drop and that certainly doesnt feel like the banking crisis is over and whether or not its true, perception is everything in this kind of market, especially as the exit, you know, you have the debt ceiling stuff going on, you have the fed raising rates, rebecca. Right so much and the fed today probably had an early look at the latest survey, which is not a dr. Seuss term, a senior bank officer survey, to look at Credit Conditions and lending we got the European Central bank version of that out for the First Quarter today. Im guessing were getting the same message for both, lending slowing, so, the fact that were getting higher rates, another hike likely tomorrow, plus that pulling back the derisking within the banks, to your point, you know, this is trickling through the economy, and the small and mediumsized businesses are going to get hit harder and we havent really felt it yet. This is just through, what, the end of march, the data it doesnt take into account whats going on in april and for sure its going to be tighter. That is mostly true, although we have seen housing slow, thats been months in the making, right . As they the fed was hiking rates, we saw that mortgages became just too expensive for people to buy any homes. So, thats started but we havent seen yet the full effect, and, you know, you can argue, well, the fed should wait, because, lets see, whats the harm i dont think thats going to happen i think, you know, theyll probably hike and i dont know what the language will be, maybe it will be, were open to being ready to pause i dont know that it will be more than that, but i dont today seemed really interesting, they sort of rang the bell your point about perception, particularly for a bank, more than any other company, beth, bat bed, bath and beyond, they are going to go there and buy their towels if it exists, but it wont exist shortly. But a bank is a very different animal i think were going to see this bifur case of Money Center Banks and regionals just continue, and i think i still think that deal for jpmorgan was a fantastic deal, but didnt really seem like they just sort of rang the bell today but i dont understand why yields i dont understand is it a shlowdown that was weighing on yields i dont know im not really sure. Why yields were lower right is it the per fepgs that theyre going to turn and cut . I think its the debt ceiling. Avoiding that tbill issue. Right it might be partly that. I think, you know, the gold move higher today, even bitcoin, if one wants to consider that a safe haven of sorts for certain people, but the move into alternative assets and into safer places to be, defensives the same i saw staples do well today relatively speaking, so, there is a story there in terms of where the capital is going and longterm treasuries, i hear you on the feds not done raising rates, but if you get a decent yield, you get nervous about the exposure you have. Maybe you have some cash, getting 5 risk free, and you have some longer dated yeah, just say this, i had this great conversation with dan ne niles today, and he made a great point. This is not just about the cost of capital and access to credit. What have we seen . Weve seen lots of job cults Morgan Stanley with their second round. When you are done firing people, when youve cut to the bone, what do you do what did aws tell us on thursday from amazon about spending for Cloud Services this is probably when you start to see a pretty meaningful deceleration from one of the largest buyers of all sorts of tech services. And ill just, you know, make the other point, weve also seen a crowding in those names. Microsoft up 10 , 2. 5 trillion market cap so, the more crowding away from some of these perceived problem areas of the market into, lets say, some of these big what you think are safe sort of names, they become very dangerous. And were going to get a look on this as far as aple, they dont have the enterprise exposure, but were going to get nvidia. Thats why we try to put some of these things together a little bit, because i dont think microsofts guidance reflected that amazons guidance did reflect that and maybe they are just a month or two behind. Aple held up pretty well today. Thats been the flight to perceived safety why is that testif. Testify lon Balance Sheet people with wrap their head around the valuation though it happen to think ill effort to answer karens is pause for a second saw a huge move in bond volatility flight to quality, in the form of bonds the debt creeling, and this is not us fear mongering, if i may, Steve Liesman was on squawk box, white house Correspondents Dinner he said somebody approached him, a Senior Member of something, said, you are the network, are not making a big enough deal out of this debt ceiling. Should be a lot more the market should be more worried about it than it is. And i think steve actually agreed with that yeah. Our next guest is bracing for a messy time in this market. Michael shoochumacher, great to have you with us in your note, there was sort of a debt ceiling playbook, where you took a look at what happened, particularly with the bond market in past debt ceiling periods. And you did find that there was a bid for longer duration, correct . So, is that part of what were seeing today i think it is, melissa. And in our view, at least, Janet Yellens note yesterday that, hey, the debt ceiling could be a problem as soon as june 1st, it spooked a lot of people. So, what do they do . They look at what happened in 2011, the really bad case, and say, that was risk off in a big way. S p was down 15 in a couple weeks, treasury yields including the tenyear went way down lets revisit that, lets take risk off the table, lets buy some bonds i think thats whats been going on in the last 24 hours. Its karen, thank you for being on, michael. Do you think any of the economic data, which looked a little bit softer, do you think that we are getting some sense of a recession in the last couple of weeks . It seems like maybe a soft landing is a possibility what do you think is going to happen not there yet, karen. When you look at the data, its turned a little bit, but i suspect well get pretty strong data on friday with respect to the labor market yes, things have weakened, i get that, but in terms of the things that policy makers really focus on, and most reviewers look at, inflation, unemployment, theyre still pretty darn good no really visible sign of recession just yet one thing that ive been struggling with is trying to compare the debt ceiling now with what happened in 2011 2011, we were also in the middle of a european sovereign debt crisis, and so when i think about the move in bond yesterdays in 2011, how much of it was the problems we were facing here at home versus a flight to quality that maybe was global, europeans wanting to get into u. S. Treasuries have you been able toll parse which is which and without europe going on, how big a move could we see in treasuries now do you have any thoughts on that yeah, when you think about 2011, yes, europe was blowing it, italy ten years traded at 7 for awhile but when you look at the historical periods, whether its now versus 2011 or some other time, there is always something different. We had Regional Banking problems today. Didnt really have that in 2011. Im not really sure if that will outweigh it. So, its tough to separate those effects. As far as how much yields could move, could it fall 25 to 50 basis points absolutely, we think it could. Is it super likely maybe not. But that could happen. So, i think its difficult to distill those effects, but thinking about that 80, 90basis point move in 2011, half of that, twothirds of that could that happen again . Yes, we think so when you think about what the fed might do and the path it might take, so, beyond tomorrows decision, does any of this factor in in your mind, michael, or is it just the data, and what you think the fed wants to do . Yeah, the feds in a tough spot, so, the fed now has the debt creeling, which cropped up, its a political event, not something the fed can really influence, yet it does impact fed policy, so, thats one thing. As far as banking troubles, to what degree is the fed maybe a little bit responsible, which is some of the tone that came out of the Silicon Valley assessment, and the huge increase in Interest Rates contributing to that, its tough to say so, the feds not completely a bystander in that case but the feds got a lot of crosswinds to try to assess. In a fullblown banking crisis with a fed hike, that doesnt make a lot of sense. But if the debt ceiling is becoming more intense or perhaps a lot more, would the fed go one more time . I think it probably would. And perhaps signal, hey, weve done a lot inflation is still out of control. Its coming down, but well above our bounds, we want to see it give a bit more time to the rate increases we already have in place. I think thats probably the messaging the fed would like to get across tomorrow. Going to be a tough job. We know the fed has said it doesnt care what the stock market does, and i get that point, but at the same time, when you see how some banks have traded today, i dont know if theres a fullblown banking crisis in reality, but the perception is that there could be one brewing right now which do you think the fed looks at, the perception, because perception, you know, a month ago, was everything when it came to that deposit flight right yeah, the perception can lead to reality, right so, i think the felt has to be aware of both and it can look at Regional Banks down a fair bit today and say, thats kind of worrying, should we be super concerned about that or is that normal volatilvolatility perhaps its a bit more than normal so, i think the fed takes into consideration, does it really count as an enormous crisis right now . Tough to say, probably not, with theless coupe l rescues that hae but i think the fed is weighing that carefully michael, thank you. I dont know, down 28 for a Regional Banking in one day . That seems way out of the bounds of normal volatilvolatility crisis for shareholders, but again, i dont think that should be in the purview of the federal reserve. If stocks go down, thats just what happens yeah, the fed is in a difficult position, that they put themselves in. Its unfortunate, but here they are. And the bank of canada tried to do what they called a hard pause, i dont know what that means, but didnt work out particularly well, so, what does that mean . Well, theyre going to try to navigate this. The gold market, though, if you Pay Attention and you sort of led with, is telling you, you know what . Things are going on. And people might be bullish of gold theyre not long of it yet. Look at the commitment of traders. When those machines get triggered, thats going to be the next move. Given everything we know, and look at its not just banks here, look at the proxies for growth in general, crude is 71 right now, look at the equities. I dont think the fed really cares about the stock market right here they care able out the effects f the economy here the s p is up 7 on the year theyd be happy to have it down a few percent. I totally agree with that the fed is trying to get financial conditions to tighten. Year to date, they havent done that so, while they might not like the speed of this move, the volatility of it and the cause of it, overall, are they going to be concerned the stock markets falling right now not at all it just seems like one of the last pockets of enthusiasm of this period that we had in the postpandemic period if you go out and you buy stocks because you think that it was a dovish hike tomorrow, you are just doing this wrong. And guy said this about 50 times over the last two months or so, the only reason the fed is going to lower Interest Rates right now or any time between now and the end of the year, if we really do have a crisis. And thats not when you want to be buying risk assets. If you look at the s p, trading at 19 times earnings, in this environment, the fed funds at 5 , inflation where it is, if they are to lower Interest Rates, youve been saying this again, then the inflationary stuff that were trying to battle, like, this whole thing is about, like, taking out the regionals, unintended, okay, is just lost, its all for not. And then you have a confidence in institution that doesnt have a whole heck of a lot of credibility over the last few years. Im sorry say the last part again. Youre saying you have confidence and you dont have confidence in the fed . They cut interest if they cut. Understand. Right. Something bad will have happened for sure. I think they are going to be slow to cult whatever the bad thing happens, theyre not going to be out there cutting right away no, theyre trying to by fur kate the first order is going to be, what can we do with regulation, what can we do with special provisions, even temporary qe. Well, that makes sense. Westagflation, that would be a terrible situation for the fed. Hopefully we dont get there, if you talk about, you know, oil coming down, some of the other commodities are coming down, as well i think on our call, you talked about gasoline today coming down a lot. All those are good things. Its what they this was sort of the Collateral Damage they were willing to accept and needed to. They couldnt say, well, were fine with inflation, well just let it go. All right, up next, a huge slate of earnings action still to come. Star starbucks, amd, ceaesars and ford plus chegg gets sliced in hatch. Shares down nearly down 50 just today. How the a. I. 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Your client wont care how much you know until they know how much you care. vo Verizon Small Business days are back. April 27th through may 3rd. Until they know how much you care. Get a free tech check and special offers. Like a free 5g phone. Get started today with verizon business. Its your business. Its your verizon. Bridgett is here. She has no clue that im here. She has no clue whos in the helmet. Are you ready . Im ready alright. Xfinity rewards creates experiences big and small, and onceinalifetime. Money. Earnings alert on starbucks. Shares in the head despite a beat on the top and bottom lines. The Earnings Call just kicked off at the top of the hour kate rogers has been listening in starbucks beating on the top and bottom lines big samestore Sales Numbers growth up 11 overall, 12 in north america and china, in particular, as you mentioned, showing comp growth of 3 . Thats key, because its the first positive comp for china since q1 of 2021. China was a challenge last quarter due to ongoing covid lockdowns. Store traffic has surpassed p prepandemic levels in the companys busiest day parts in the united states, which is also key. This is the First Quarter were hearing from the new ceo, as howard shuchultz stepped down on the 20th he was still leading the business on this quarter he said there are more opportunities to do better with instore efficiencies on things like supply chain. He was positive on meeting customers where they are, whether its in stores, drivethrough and more. He said that the companys really only just scratched the surface, they are just getting startled star becomes cfo will be on squawk box tomorrow morning, so tune in for more there. Back to you. Thank you, kate what do you make of starbucks, karen . Those arent terrible numbe s at all very similar to mcdonalds excellent comp store sale numbers, but when you are priced as they are and as starbucks is, thats not its hard to believe, up 12, not good enough, right . Its so, at almost twice the market multiple, i think its too expensive. What were you saying a tall latte cost you today 5. 39 i did a little reconnaissance. I live on a block in new york city with six coffee places on a block. Starbucks has a little premium there were 15 people in the store this afternoon what it tells me, not on the, should i buy or sell this stock, but on the economy level, what the fed is dealing with, what were thinking about macro, is that consumers are still willing to have their little luxuries. The prices have gone up and theyre still buying the coffee. Thats what the sales are telling us and i think as long as thats the case, its hard for us to flip over into that recession dynamic. North america is, i think, twothirds of the revenue, so, operating margin, 19. 1 , its a staggering number. Overall, 14. 3 is still much better than, i think, the ten the street was looking for to your point, the margins are there. Problem is, the valuation is there, as well i think its close to 30 times next years numbers. This time last year, 70 stock, its rallied a lot not that that means anything, but we fail to take out the alltime high. So, one has to question if you can still own in this environment. This is one you probably wanted to pare down in earnings i went to a bar around the corner, Johnny Walker black, still 20 a pour and i did two no you didnt two doubles two doubles, yes. Okay, sorry. On the rocks, i hope. You dont do johnny black neat anyway, got another earnings alert. This was on amd, shares sinking in spite of revenues topping expectations data center revenue, which makes up more than the companys overall revenue coming in slightly below estimates christina has the numbers. Yeah, they did beat on the top and bottom line, but revenue overall fell 9 year over year, driven by weak client revenues, as well as some of that weakness in data centers. The chip makers expects that to persist next quarter client segments, that includes pc sales, that fell 65 , but lisa sue on the call reiterating q1 is the bottom for client revenue. Amds biggest competitor is intel, and they reported continued pc weakness. So, we know this is a narrative were seeing across the board. Analysts were paying close attention to data center revenue, which imbended revenue actually contributes more than 50 of total revenue suh su saying she remains server revenue to remained mixes, and they expect the Second Quarter revenue will be flattish, offset by moldest declines in our gaming and embedded segments so, overall q2 coming in light. That could be contributing to the selloff. Lisa su will be on cnbc in an exclusive interview tomorrow morning. Shares, though, down, last i checked dropping even more as the call is under way, almost down 5. 5 lower. Melissa . Kristina, thank you margin story. So, this time last year, 31 margins. This quarter, 21 . No bueno heres something perverse. I have no idea whats going on im willing to bet, though, intel is higher on the back of this, because intel can say, you know what, our data center wasnt just our data center problem, obviously a. Md is seeig the same thing i think thats probably going to happen in the meantime, amds probably expensive in this environment, if margins can trackwn the stock. Listen, some of the data we saw and some of the commentary around pcs, seems like thats bottom gaming, data centers, thats going to continue to be at the whims of Enterprise Spending they are just telling you right here, this Current Quarter is not particularly great, and it think this is a stock up 40 on the year, up 65 of the lows, expected earnings sales, declines, and margin declines, not great. Next year, we get into this year, closer to a bottom and it looks attractive again but again, if you could get this stock, you know, somewhat down 5. 5 now, lets let this stuff come to you. If you want to derisk your portfolio because of debt ceiling stuff, recession worries, do you want to be in a stock like and amd, karen . Just because the high multiple i mean also cyclical cyclical, but such a Quality Organization that, i mean, im willing to sort of withstand some of that gaming actually was pretty good, it sounded like those would be a little bit weaker this Current Quarter. I dont know if shes being a little bit more conservative she might be its cheaper than nvidia, though everything is cheaper than real tell us anything i hear you i think that the high multiple stuff will get hurt, but i dont have a big position here, but im just willing to make a bet on her i do think pcs have bottomed, so, i think client has bottomed. And i think theyll continue to get some premium valuation coming up, even more earnings on deck digging into caesars and ford, the headlines from the Conference Calls next. Plus, chegg taking it on the chin the details ahead. Youre watching fast money live from the Nasdaq Market site in times square. Back right after this. Why are there two extra seats . Are we getting a dog . 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Shares of cesars entertainment cutting their losses, briefly turning higher in the last few minutes despite a big miss on earnings per share Contessa Brewer is digging into the numbers for us i think they turned negative because of that big eps miss a big charge for paying off debt early. But the bigger story line here, mel melissa, caesars just continues to rule the vegas strip, with record First Quarter results Profit Margins here up 48 occupancies running about 97 . And on the call, tom pointed out that the percentage of business that is coming from groups, conferences, surpassed 20 before the pandemic, it was about 14 . Thats important, because the Conference Attendees generally spend more than leisure travelers. Cesars made so much money in the First Quarter it paid off a 400,000 loan from its landlord. Regionals are solid here, reno and lake tahoe dragged because they had so much snow in the First Quarter and really struggled with visitation there. And the ceo is doubling down on his prediction that Sports Betting will hit profitability this year. The Digital Business that includes sports and igaming lost only 4 million last year, youre talking about losses First Quarter, hatch a billion bucks. And on the call, reeg said this segment is turning a profit year to date. So, that really gives investors something to chomp on here one last note. We arent seeing any indication either in the report or on the call, of looming recession or consumer pullback in any segment, melissa contessa, usually for conferences, they book, you know, a year out, im wondering if theres any indication, at what point do we understand, will we understand if this is repeat business or if this is part of a boomerang that we saw when individuals were traveling its not. Its not, okay. Yeah, its not its not repeat business. Theyve said that this is a far more packed calendar than theyve had before, in part because they opened new conference facilities call ed te forum, right before the pandemic, so they have new facilities they never had before to host higher end, its a smaller, more intimate space for conferences, and those tend to spend more so, they said this is its not really comparing apples to apples for what caesars did before the pandemic. Im dying to jump in on this, because this is a coyote going towards an edge of a cliff, in my opinion not the company, i dont want to talk about the fundamentals of the company, but whats driving this is discretionary business spending it is consumers in households that still feel good tapping those credit cards and with what were seeing by the fed and the banks pulling off and layoffs starting to broaden, its just a matter of time youre not going to keep going with business conferences when you have to lay off workers. Thats why i was asking about, at what point do we see more bookings for next year, because i would imagine then next year, people might not be wanting to book conferences out at this point, if theres going to be layoffs. This year, it was the first one in person they did, so lets go for it one and done. Right, right and the optics around conferences in the midst of layoffs, with unemployment going to be rising, not particularly good caesars is a fine quarter, but look at the stock over the last year this time last year was a 45 stock. Magically, its still a 45 stock. In the midst of a win going from 70 to 115 and Las Vegas Sands having a similar type of move. So, i guess my point is, there are better places to be, but its just a matter of time before wile e. Coyote goes off that cliff with the acme dynamite strapped on his back. Coming up, two stocks bucking the market downtrend in a big way today. What has investors flocking to uber and molson coors . 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Melissa, in this call, which is about halfway through, the q a has just begun, and jim farley is pretty emphatic, very emphatic, i should say, that the company is in a form essentially remaking itself, and it is not only going to hit these projections, but it is going to remake the business well talk about that in a bit you mentioned they beat the stree street, earning 63 cent as share. The street was at 41 cents a share. And theres the performance of each of their divisions. 26. 6 billion from ford blue the commercial vehicles in ford pro earning 1. 36 million. And the model e losing 722 million. Heres farley on the Conference Call talking about his plan for that division to break even. Were on track this year towards a contribution margin approaching break even in model e. And for our first Generation Products to be ebit margin positive next year you mentioned the guidance, yes, they reaffirmed 2023 guidance, with Free Cash Flow coming in about 6 billion and the ev decision, they believe it will lose about 3 billion, thats what they told us about a month and a half ago, reaffirming that guidance today. This all comes on a day when they are lowering the prices, theyve announced lowering the prices on the mach e, as they deal with the price war that is being felt by everybody who is competing with tesla as it lowers its ev prices but jim farley is saying, we have seen the future in terms of what is going to drive the bottom line, and its Software Software for the vehicle, software so you can bring the customer in. Now, weve heard that from other automakers, hes explaining how they will get to that point. Its not just about building cars and trucks and if you can do that profitably its about the recurring revenue that is going to be tied into that vehicle on the Software Side of things melissa, back to you. Phil, let me understand, so, they beat on adjust ed ebit, the are standing by the previous they are. Which raises the question, melissa, what are we going to see later this year . And everybody said, look, were going to see prices come down. Going to be tougher in the second half for everybody. Phil, thank you keep us posted guy . The margins for ford model e were negative 102 , so, they have a long hill to climb, and in terms of, you know, its interesting to hear software so give the cars away. Its that whole model. Razor blade exactly right why not . Maybe im onto something because clearly, nothing else seems to be working. In terms of the stock, series of lower highs, lower lows since this time last year. That sort of 10. 75, 11 level held so, if you are looking to trade the stock, probably about as good as level as you are going to get but man its been a hard slog for ford shareholders. And we were talking about the upgrade of gm the other day. Its interesting that both gm and ford, they dont get any they dont get any real valuation for their ev business not enough, but not enough valuation for their i. C. E. Business. Internal Combustion Engine one day, i think that will normalize. Coming up, shares of chegg getting schooled wha edschooled. What caused the sendrecogat egs drop in history. We have details straight ahead and this here is winnie, who zhuzhed up their cup. This is victoria, helping women stay healthy. These are your kids, snacking snacks made with veggies. And matty can help you find your new favorite color. And kyle helps find meds for under 10 dollars. Whoever you are, wherever, whenever, at cvs, healthier happens together. 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Chegg plugging nearly 50 for the stocks second worst day on record the company issuing weak revenue guidance, saying a. I. Tools are hurting subscriber growth. The ceo said this on cnbc just in the last hour chatgpt is often wrong, and its not going to be right any time soon. The reality is, were not seeing any impact on our renewals, any impact on cancels. This is people that historically probably wouldnt have wanted to pay, but would have, and we just saw it and we said, lets just do it quarter by quarter, so, this is significantly overblown in our opinion shares of chegg now trading at lows not seen in six years. He met with the open a. I. Ceo. They are going to have their own sort of chegg mate a. I. , yet still the stock reaction maybe this is a little baby with the bath water here, i mean, dans been around tech for a long time. Hes not likely to miss, i think, a big move like this, but theres a lot of near term hype, and its interesting what he say renewal rates versus somebody that might do a search for somebody and they have this free sort of tool its a tough play, because is there valuation support . Yes. I mean, possibly, if numbers dont get incrementally too much worse. In 2020 and 2021, when Interest Rates were, like, really low, all of these lending platforms, we were talking about upstart and the fintech companies, they were benefits from the use of a. I. Tools in their lending practices and then they all crash and they were down 90 so, this one is also down 90 and feeling the opposite effect of it. So, to me, this is probably a bit overdone and i think that hell probably find a way to turn this around a little bit. What does that chart look like to you . Besides grim death grim death. This was ten times the stock, i think, in february of 21. It makes sense what happened in terms of trading volume, it traded 50 million shares today, typically trades three its probably up in the aftermarkets is my sense, just on some sort of relief rally this is one of the things you can trade around the future does not look particularly bright, but if they can integrate all this a. I. Into their platform, maybe this is a buy at these levels. Coming up, all eyes maybe on the fed decision form, but theres another data point that could tell the true tale of where the bond market is heading. Well tell you what it is after this cecily youre looking pleased with yourself. seth not to brag, but i just switched to verizon. cecily so you got an awesome network. seth and when i switched, i got to choose the phone i wanted. For free. Not bragging. cecily youre bragging. neighbor oh, hes bragging. seth who, me . Never. Oh, excuse me. Hello, your royal highness, sir. cecily okay, thats a brag. seth hey, mom. 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The future starts now. Bridgett is here. She has no clue that im here. She has no clue whos in the helmet. Are you ready . Im ready alright. Xfinity rewards creates experiences big and small, and onceinalifetime. Welcome back to fast money. Markets have been hyper focused on tomorrows fed rate decision, but theres another data point you should watch before the bell tomorrow the treasury will announce the types of bonds it plans to sell to fill the massive deficit. Our next guest says the bond market will be paying close attention. Lets bring in Andy Constand andy, great to have you with us. Melissa, thank you for having me what does the status tell you exactly, and what do you do with it so, tomorrow, were going to get the composition of what the treasury is going to issue, but stepping back briefly, the at 3 00 yesterday, we got the quantity, and that quantity was extremely large. And signaled that the deficit is rapidly increasing, and which has implications of the debt ceiling, and also, that theres just approximately 1. 2 trillion of bonds that are going to be sold between now and the end of september. So sorry, when you get this data, what are you looking for exactly right and how does that inform your sort of trading strategy sure, so, tomorrow, well find out what the composition of that 1. 2 trillion of bonds is and that could be all bills, which would have very limited implication on markets, or it could be weighed heavily to treasury bonds, which would have quite a bit of implication to bond yields, as you tried to attract you need to attract new bond holders with higher yields so, andy, its karen, thank you for being on positioning yourself in front of this, because that numbers so big, is there anywhere on the curve that you want to be over a different part of the curve or do you want to be out of bonds until we see this come to market right, its a contract with the potential debt ceiling and the implication going long bonds. And this very heavy supply so, ill be looking at the number i expect a number that over the next two quarters theyre going to be at least 350 billion of bonds, as compared to past quarters, where theres only been 250 billion, but that number given the size of the total needs of 1. 2 trillion could be as high as 500 billion, and that would effect the long end of the curve fairly significantly. Andy, one of the things that is also coming up around the debt ceiling is the potential for another credit downgrade for the united states. We had s p downgrade the u. S. In 2011, weve seen some comments from senior officials at fitch they are considering a downgrade, so, how would they play into your view on bonds if we have more supply, all else pushing yields up, flight to quality with the debt ceiling and recession fears pushing yields down, what would another downgrade, two out of three, buy for buyers and sellers, or does it matter . I was actually sitting at bridgewater looking at that in 2011 when the downgrade happened, and it had significant implications to the short end, in particular. With bills that were after the debt ceiling was going to occur. Trading at a significant premium. Any sort of downgrade, to me, seems premature and the rating agencies will probably, in my view, will wait until the actual drama of a Government Shutdown occurs, given the mistakes they made in 2011 andy, thank you so much for joining us pleasure, melissa andy constan. If chinas reopening fades and europes growth slows, it wouldnt shock me to see more foreign demand for u. S. Treasuries coming back, and that demand helping to offset some of the supply andy was talking about potentially. At the same time, we are seeing, well, Central Banks in general are continuing to buy u. S. Treasuries certain Central Banks of countries that the u. S. Isnt as friendly with do appear to be pulling back, so, even if we dont have a default, if we get too close to that cliff, we have another wile e. Coyote moment if we have a technical default, for a day or two, that might be enough to spook some of the Central Banks. Obviously its a pr tool think of the policy makers that could use that and say, this is why we dont have a capitalist system, this is why we dont have a political system like this because it doesnt work so, theres going to be a lot of policy and political ramifications from this, as well as market, but the big deal to me is that bond vol and stock vol are highly connected if we see bond volatility going higher with all of these cross currents, ill think youre going to see more pressure upward. One last check on the Regional Bank route today, led lower by pac west. Investors continue to worry about the groups solvency these are some of the most active stocks among options traders. Who made some big bearish bets mike khouws got the action. Mike yeah, kre traded over three times its average daily volume, and the russell 1,000 regional b banks, theres 26 of those, traded six times their average daily put volume the busiest of them was pac west, which kraeded more than 11 times its average daily put volume the most active contract was the weekly five strike put us. 14,000 of them paying 53 cents they expire this coming friday buyers of those puts obviously think that the worst may not yet be over. Mike, thank you mike khouw for more options action, the full show, friday, 5 30 p. M. Eastern time. Up next, final trades. The biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . upbeat music constant contacts advanced automation lets you send the right message at the right time, every time. constant contact. Helping the small stand tall. Your record label is taking off. But so is your sound engineer. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire time for the final trade Rebecca Patterson . We have one week before the debt ceiling xdate potentially, for all congress and biden be doing. Its going to get ugly i like buying gold karen yes sort of along those lines, i like buying the s p putputs today was down a little, but i think theres still more to come dan yeah, kind of along those lines, i like buying the tlt difficult night for me last night, the rangers went down in game seven i know you were devastated congratulations to the devils and their fan base im with newmon mining thank you for watching fast money. See you back here tomorrow mad money with jim cramer starts right now. Hello and welcome to matt money. Im just trying to save you some money. My job is not just to entertain but to put all the stuff in context. Call or tweet me. Sometimes the hurdles justine too high