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Live from the NASDAQ marketsite in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight. Shiny Apple shares of the iPhone maker closing out a new record after soaring scoring a win in China. All the details behind the move and how to trade the name right now and see sawing stocks. What to make of the wild swings we've seen in some tech heavyweights and what that move says about where the markets are heading next. Plus what 2 year yield signal about inflation, a retail rally in shares of RH and counting down to Netflix earnings. Can a struggling streamer turn things around in tomorrow's report? And how are option traders positioned for the results? I'm Melissa Lee can do live from Studio B at the nasdaq. On the desk tonight, Tim Seymour, Karen Feiderman, Dan Nathan and Guy Adami. We start off with that monster move in shares of Apple, the tech giant gaining 4% today, adding $185 billion to its market cap. It's now a stone's throw away from joining in video in the $5 trillion club. The latest move coming after the company got permission to launch Apple intelligence on phones in China. Alib Alibaba and Baidu which will partner with Apple on the rollout. Also rising today and leading the crane shares, China etf, Internet ETF higher as well. For more on all of this, let's bring in Mackenzie Segalis. Hey Mac.

Mackenzie Segalis

Hey Mel. So Apple finally clearing a two year regulatory roadblock in China. Though this is not yet approval for the full Siri overhaul, what it does do is pave the way for Apple to begin rolling out Apple intelligence in one of its most important markets now to get there, Apple had to localize the product using AI models from Alibaba and Baidu rather than the Google based stack that relies on here in the US that could be key to extending Apple's recent rebound in greater China with new AI capabilities potentially giving consumers another reason to upgrade ahead of the iPhone 18 and a possible foldable. Apple also reportedly exploring M and A to bring more of its AI chip capabilities in house, a move that could eventually reduce its reliance on on Google cloud and in video chips. But the bigger reason investors are warming to the stock may be what Apple is not spending. While the hyperscalers pour billions into data centers, Apple can distribute AI across its 2 and a half billion active devices without taking on the same infrastructure burden that is increasingly making Apple the anti cap exact trade Now Mac.

Melissa Lee

I'm curious how what Apple may now offer in China which is not the full revamped Siri, how that compares to what the local brands like a Huawei which has number one in market share right now in China, what they offer

Mackenzie Segalis

and actually calendar Q2 I got some data from IDC and it wasn't looking as good for Apple. Of course we're going to get those results at the end of the month but basically the market share widening between Huawei and Apple and to your point in terms of the features that we would get from Apple intelligence versus what Huawei and others for years have been offering, it's just, it's catch up work and even when I was at WWDC last month down in Cupertino you were looking at what Siri I was offering and that also looked like it was catch up work to the kinds of features that you get to this agentic on phone, you know, workflows that exist across different apps, being able to book rides, being able to do these different things that you've been able to do in the context of Androids and other smartphones for a while now. But it is a step in the right direction and so it is a promising sign.

Melissa Lee

All right Mac, thanks. Mackenzie Seagalos what do you make of this move in Apple Karen?

Karen Feiderman

Well I think it deserves it. Interesting. I mean to me this is like has the, this is cook, this is what he does absolutely best. Right, right. So we know the new CEO coming in, John Turner's a hardware guy but this, but you need Both. And you absolutely need a cook. I'm sure they have, you know, a deep team that does things like this. But that was the first thing I thought is this is his work, right?

Dan Nathan

It's not worth $1 trillion. Okay. So this stock has rallied, you know, $1 trillion in market cap over the last few weeks. You know, obviously it had that sell off when they talked about raising prices, you know, because of memory prices and the like here. When you think about China, you think about the data that we just saw. You think about where their economy is right now. This is not a country, this is not a consumer that's going to be able to pay for an upgrade of a hardware that has not changed. But because they're going to get Quinn, you can on your wall, I phone, download Quinn, have a ball, search as much as you want, do as much of a feature, you know, that sort of thing. And I just think that it's curious that we've had this move in the hyperscalers today. Then you see what we've got going on with Apple. Is it technical? Possibly, because I just think fundamentally it doesn't make a whole heck of a lot of sense. I think it's interesting that Mac just talked about the widening gap as far as market share. Apple is number two in China. But when you think about it from a price point, it's a very different sort of thing. And then you think about what they're actually going to be able to deliver. Why wouldn't they be able to deliver a much better product here in the US With a Siri revamp using Gemini from Google. Google, they have this deep relationship, right, for search with Safari. So to me, I just think it's one of those things where yes, you can kind of stick to that argument that they haven't spent hundreds of billions of dollars building out data center and that sort of thing. I just don't think it's going to be that important. When you think about what compute is going to end up being, you know, it's going to be somewhat commoditized and these guys should be able to benefit based on their hardware and their integration of AI, but it's just not there yet. And I just don't think. I think with China it's going to be much further behind what we have here that they're basically going to be able to introduce in the fall.

Guy Adami

Lots on pack. Kudos to Tim and Karen who've been steadfast in this name. No, you have. I mean, for a long time. And you pointed out all the reasons you should be bullish. I've been sort of the people pointing out the reasons why maybe not so much. So let's play that game for a second. I think I get what's going on here. I also believe that the fact that Apple hasn't spent as robustly as a lot of these other companies I think actually now working in their favor, that's created a bit of a tailwind, number one. Number two, passive money. Apple wins to that without question. Here's the thing that's a little bit concerning though. At 30, almost 34 times next year's numbers, it's probably as expensive as it's been into earnings in quite some time. And this has been a six month basically uninterrupted lower left, upper right move from the lows that we saw in March which historically for Apple you don't really get. You get back and fills over these couple of months to three month period of time. We haven't seen it. So what does that mean to earnings on the 30th? It means they better perform otherwise I think valuation becomes a concern.

Karen Feiderman

Just one more thing. This was a giant Mag 7 day. This is a very Mag 7 stock. So. So I don't know how much of that you want to sign to that, but it definitely happened.

Melissa Lee

Yeah, but to the extent that that bears Apple bears might say, you know what they can't offer air in China, that gap with Huawei and others only going to widen, Tim. I mean maybe that at least weakens that argument.

Tim Seymour

Yeah, I think it does. And let's be clear, Apple's making concessions in China they're not going to make in other parts of the world. But, but as Karen pointed out, Tim Cook knows what he's doing in China and this isn't the mass market phone in China while we is it's not trying to be the mass market phone. And I think the fact that they're going to be working with Baba and Baidu, it just kind of goes back to actually why that DOJ flexibility with Google. Even though it certainly didn't take away the Google relationship, it gave Apple the flexibility to do what they want here. Apple can do what they want anywhere in the world and I think they're going to continue to choose their dance partners. They're going to do it in a capex light way based upon the world we live in and the chart. I think Katie Stockton on our show a couple of days ago, I mean she said maybe it was yesterday I remember but it was ultimately that 320 to 325 was really kind of your breakout level. So I think there's. I think there's more to do here. I don't think it's about valuation. I don't think the valuation has made sense for a long time, and Apple's been rallying in the face of it. I think having that kind of access to China right now and having that relationship in China is all about what this rally was.

Karen Feiderman

Yeah.

Melissa Lee

What if they took some of that capex money, which they did not spend on a giant data center, and spend it on an AI chip startup? Do you think that would be money well spent, Dan?

Dan Nathan

Well, they're designing their own chips, but they also are going back to the folks that they couldn't get rid of fast enough, which is Intel. Right. So, like, we have this back and forth here with who's trying to kind of use what sort of hardware within their devices. And at the end of the day, we also know that a lot of this hardware, other than what Nvidia has been able to produce over the last five years or so in the GPU market, has been very commoditized. Right. So intel getting back into the semiconductor manufacturing business, you know, to me, it just doesn't make a ton of sense. I know they talk about integration and they have been designing their own chips, that sort of thing, but they've never been one to go in and spend, you know, $20 billion to kind of crack the code on something. And especially when you think about some of the stuff that they've not done well with as far as integrating the software. I mean, we've been talking about Siri for more than 10 years and how bad that is. So at the end of the day, when we get to the fall and we see this new operating system, I think we're going to be somewhat unimpressed. So the idea that they would go in and spend a lot of money, you know, trying to kind of, you know, extend their manufacturing as it relates to components, I just don't think that makes a lot of sense because to Karen's point, Tim Cook has spent the last 25 years building out a supply chain in Asia. And that's. This is his last trick. I mean, it's a great mic drop for all intents and purposes, if it ends up working out, but I just don't think that they're going to have so much of an edge building out semiconductors to go into their phones.

Guy Adami

Tim's right. I mean, it's not about valuation. It never is. Until it becomes. And again, there's not a lot of valuation cushion here at the current level it's trading at. So we'll see what happens when the report. But Alibaba is the one that I think becomes all of a sudden interesting. Now with that said, I've thought that for a while, incorrectly. But the last couple of weeks suggest that maybe the bottom is in, in the short term. They don't report until I think middle of August. So you have that out there. But these headlines you're getting on the back of what we're about to talk about regarding China could make Alibaba set up pretty interesting.

Melissa Lee

Yeah. Does this unlock for Alibaba in terms of being put into the Apple phone?

Karen Feiderman

I hope so, but I think the other issues are bigger even I think, you know, if, if China is bottoming

Dan Nathan

and

Karen Feiderman

I mean Alibaba has been in this very, very competitive race with a number of companies there where they're all in that spending, that hyperspend that we're doing here. I hope that abates somewhat. But still the valuation I find compelling. I've liked it from, well, higher than here and lower than here. I still like it here. If I own none, I buy some right here. I do think there's upside there. We'll see. Hopefully earnings will be good. I expect to.

Melissa Lee

All right. Meantime, China's economy grew at its slowest pace in more than three years. Q2 GDP rising 4.3% compared to 5% growth in Q1. CBC contributor and Longview Global's to Wardrick McNeil joins us now to work. Always good to see you.

Warwick McNeil

Great to see you, Melissa.

Melissa Lee

All right, so in order to get up to targets, to Wardrick, what will Beijing do? Because we know that they don't want to just have the sugar high of handing out money to consumers. So how do they chart that path to higher gdp?

Warwick McNeil

Yeah, this is a great question. Great point, Melissa. I think we're all waiting on the sugar high in terms of consumption, but it's not going to come, Melissa, when we look at these numbers, sure, they are off target, but I think over the long term China will hit its range that 4.5 to 5%. But Tim said something to me last year that stuck with me about GDP top line numbers. He said, I want to go beneath these numbers and I want to figure out what they're about, who's winning, who's losing. And to this point, Melissa, there's some real winners and some real losers in these numbers. Everything that's winning right now seems to be in this new productive forces area that she constantly talks about, semiconductors, AI, infrastructure, hardware, EVs, at least in third markets, green tech, robotics. The losers though, Melissa, is the old economy property, everything adjacent to property, traditional retail. And the biggest loser here, coming back to your point, Melissa, are households. Households are just not getting the help that they need from the central government, from the provincial government, and they are tightening their belts continually. So I do not see a rebalance towards consumption. And I think the Chinese government has decided we're going to keep a stiff upper lip, we're going to keep plowing forward because it's the 21st century economy, the high tech economy that we really want to build here and, and they're trying their best to manage a decline. It's messy. Melissa.

Tim Seymour

Hey Duodric, it's Tim. So speaking of new economy, speaking of an export economy and speaking of winners, you can make an argument that China is a winner in US tariff wars and relationships that have been struck with the European Union. Where is China on exports to Europe? Where is China as a winner at least, or as an alternative? We've, we've certainly seen it in the market. We're talking here and now about rotation in China tech. I think the rest of the world also though is a buyer at some point. Where has China progressed in the post tariff environment with the European Union and other parts of Asia to be an exporter of high end tech innovation?

Warwick McNeil

Yeah, this is another good question, Tim. Let me tell you what the EU would say about this framing. They would say that because of what's happened in the U.S. you know, the truce, the tariffs in 2025 and some of the U.S. restrictions, that the U.S. economy is somewhat gated from what we have been calling the China shock 2.0. That is not the case in Europe. So EVs and other high tech exports, the green economy, all of those things are finding their way in large numbers in the European Union, Southeast Asia and the Europeans are very concerned about this to the point where there's an ongoing discussion right now with a real crescendo moment in October and that the EU is looking for China to really talk about how they're going to stop using the EU as a dumping ground. So I think China is winning for sure. They're exporting a lot of this growth as we can see in some of those export numbers. But the EU in their mind is losing and are being really impacted by China Shock 2.0.

Guy Adami

Warwick. I think China has capacity to store 2 billion, 2 billion barrels of crude oil. I Think they currently have close to 1.4. So they've been stockpiling right before our very eyes. Why and how do they win because of that?

Warwick McNeil

Yeah. Well, I tell you, you know, we look at the pie numbers. There has been some inflationary pressure that carries through from the Iran war, but for the most part the Chinese are using that surplus to keep prices low for fuel. And you know, I think we're getting to a point, Guy, where I'm not sure they're going to be able to sustain this for much longer. But they had been planning for these types of external shocks for a long time. You see them rearranging their energy economy, their energy mix stockpiling the way they did all of 2025. It has been so far certainly valuable to China, but they can't continue this way forever. They're going to need an off ramp in the Gulf just like everyone else.

Melissa Lee

Duodric, always great to see you. Thank you.

Warwick McNeil

Thank you.

Melissa Lee

Melissa Dawdrick McNeil of Longview. Tim, where do you stand on the Chinese economy? Do you think they will ultimately hit the target?

Tim Seymour

I think today's numbers on GDP were well flagged. We knew they were going to come in weak. I still think there's a second half outperformance in the Chinese economy. I think more importantly just the fact that we're talking about the repositioning and the old economy is not where there's money being thrown blindly. I think the, the opportunity to invest in China is still very limited for US Investors or they're certainly not willing to go far and wide. I just continue to think that China Tech as a rotation play is, is not only a crazy valuation pickup, but it's a, it's a, it's time for rotation. And I think Alibaba is, is a place and what we're seeing even Deep Sea will IPO on mainland sometime soon. There's, there's a number of new companies coming forward, including the Memory so DRAM and NAND that we talked about also that are going to be global players and investors need to take notice.

Dan Nathan

Yeah. So this is one of those situations where if you go back to April 2025.

Guy Adami

Right.

Dan Nathan

And we want to bookend from tariffs to this war right now, the longer the war goes on, you have to think that, you know, this is going to put pressure on the global economy more so outside of the United States. Right. So you hear a lot about our energy independence and you hear about how, you know, our monthly nationals have dealt with the tariffs. But if you think about the Tariffs and the way that China has diversified their exports away from the U.S. that's where I think a longer war, a higher oil price is really going to kind of depress the global economy and thus actually have a negative impact on Chinese exports. So, you know, to me a lot of this is tied to I don't know if she's still coming back. Is he supposed to come here in September and what sort of, you know, concessions that we might make here. But the second half could be maybe a bit nastier and maybe you do see another quarter or two that reflects this weakness that we've seen in this gdp number.

Guy Adami

The FXI went from 22 in February of 24 to about 42ish last fall. So this move down to 32 which we bounced off it, I can do the Math, that's a 50% retracement of that range. So I think you're going to get a re inflection higher in effect here.

Melissa Lee

All right, let's take a look at yields, shall we? Two year treasury yields in particular, what we saw in today's session 4 shed 5 basis points trading below yesterday's lows. The move coming after another soft inflation print this morning. Wholesale prices unexpectedly declined by a third of a percent in June. Traders reducing bets the Fed will have to hike rates for this year. So maybe we don't have to worry about some sort of hike at least immediately. Did this move makes. And we'd also had some very hawkish commentary from Lisa Cook who said if disinflation doesn't happen, I am ready to act, not, not say the whole committee is. But she was very forceful in those comments.

Karen Feiderman

Well, I think, I mean the data is definitely cooler, there's no question about it and I think it does give them some cover. It certainly gives, I think it makes Warsh's job easier, of course, because we know he doesn't want to hike rates, but I believe was fully prepared to do it if that's what the numbers were telling him to do. This I think gives him a little bit of breathing room, but we'll see. We've had such volatility from oil underneath, it's hard to pull that out and see what, what's, what's going on in the rest of the space.

Guy Adami

But two days are pretty, I mean, benign, if not very soft. And the bond market, although rates are lower, not meaningfully so. So I still think, listen, inflation is a problem. There are other factors at work here which I believe will make yields go higher over the next few months. So yeah, I get why they're low over the last couple of days. I think they're going higher in general.

Tim Seymour

Yeah Tim, I think the move and guys reference this that we've had over

Guy Adami

the last couple of days.

Tim Seymour

I think the piece CPI combo is as good as it gets in the face of hawkish war comments and waller comments and the sense we two days ago we were north of 50% for a July hike. We're now sub 10% and we're not going to get a July hike. But the message was laid I think the bond market has been trending higher at the short end going all the way back to really late last year but certainly since the spring. And Warsh if anything is is made it clear that inflation and setting variable inflation targets that the Fed has done at different times is absolutely unacceptable. It's a more hawkish tone. I think the two year, I think you're, you're probably selling yields here.

Dan Nathan

Yeah, I mean go back to 1-1-2025. We had a 10 year U.S. treasury yield at 2 5. Right. And we had the, you know, the S&P 500 trading at 6,000. So here we are at 7,500. We're right near the highs. I just don't think that you know, the stock market at this moment really cares about where the 10 year is. I think that guy's point makes a lot of sense. That maybe is a differential thing. Maybe it depends on what's going on with the yen. You have a situation where you have an unwind of the carry trade and that's something that will obviously weigh on large multinationals right now but that hasn't really mattered. I think you have to go back to like mid 2024 where we had that little bit of a scare at least in our markets.

Melissa Lee

Coming up, United Airlines losing altitude while shares are under pressure despite earnings beat. Whether you should board the airline trade now. Plus big movement in home improvement. What is feeling the breakout in RH shares and the other retail stocks leading the charge. Don't go anywhere. Fast money's back in two.

This is Fast Money with Melissa Lee right here on cnbc.

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Welcome back to FAST money. We've got an earnings alert on United Airlines shares getting grounded despite a top and a bottom line beat. The company warning it expects $6 billion in added fuel costs this year. While United said travelers continue to book flights despite higher fares, it gave Q3 earnings guidance below analysts estimates. And I guess this is a real letdown compared to what Delta told investors in the reaction in Delta stock. Tim?

Tim Seymour

Well, it's a combination of Delta have more fuel resilience. The story for United also though has been a significant rally into this print up until the recent pullback led by the, you know, the war starting again in the Middle East. But I think Delta, excuse me, United has come a long way and if you look at these numbers, what they are telling what I'm telling you is that their revenue per available seat mile versus their cost per available seat mile has essentially doubled in the last year. They're becoming more efficient. The margin profile is changing. That's if you don't have a mark to market on jet fuel, which is a big deal. What we're also hearing is that they're passing along these higher costs and we may not want to accept it, but what we all know is that airline fares have not kept pace with inflation. So I don't think you're running far away from this one. I would prefer to be Long Delta. I am Long Delta. But I think United you can sorry guys.

Guy Adami

No, you go ahead.

Melissa Lee

It just seemed like all, all the, all the segments had strength in terms of just average traveler. Corporate corporate was up 27% in the quarter.

Matt Holziser

Yeah.

Guy Adami

And I think the third quarter guidance you could drive, you could fly the plane through the guidance which I get it. There's not a lot of clarity without question. But I'll play a little the role of Carter Worth. You go back to January, February of this year. This Stock stalled at 117A handful of times sold off and then obviously blew through. It recently made an all time high that prior resistance is support right here. I'm with Tim thought the quarter was fine. I think the guidance is sandbagging.

Melissa Lee

I think you buy United, fuel costs are up 84%. I mean that's a, that's a whopping number. And to guys point for Q3, even the upper end of the guidance was still below what analysts had expected.

Karen Feiderman

Well, it seems like they're able to pass that along somewhat. Right. So some of that that corporate traveler is going to it's amazing to me, I sort of across the sort of high end we talked about respond on a call today, I mean high end people are that that K whatever part of the K is really spending, making money. And I mean we've seen it for all the any, any airline that offers a premium product.

Melissa Lee

By the way, you catch United Airlines CEO Scott Kirby on Swackbox tomorrow morning ahead of the conference call, 7:10am Eastern Time. There's a lot more fast funding to come. Here's what's coming up next, a shopping

spree in discretionary stocks, why the sector is ringing up big gains today and the retail names our traders are checking out. Plus, don't sweat the Vol stuff. What to make of big swings in some of the market's hottest AI names and whether this rally is still on solid footing. You're watching Fast MONEY live from the NASDAQ market site in Times Square. We're back right after this.

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See how your state measures up America's top states for business. See the full list now@topstates.cnbc.com welcome back to Fast Money.

Shares of furniture retailer RH jumping 9% today, now at more than 15% since Monday. Shares close at their highest level since late February. The broader retail space also catching a bit. American Eagle Carmax Kohl's among the big winners in the xrt. Tim, RH is your trade.

Tim Seymour

Well, I think back to our last conversation about where luxury works. This is the ultimate luxury furniture play and they're getting their estates line is a whole new rollout, something that offers significant new addressable market and the view that this will add 5 to 8% overall on revenue as we get into 27. I mean, that's significant. And the, the margin here is fantastic. They've also, for the rest of their, their broader SKUs, they think bottom line is they have not seen significant discounting promotional activity. The stock's not expensive. We live in a world where I think there's some cyclicality here. I think you stay with this name. This, this is not for the faint of heart. This is a stock that's been all over the map. It was, it was five times higher than where it is today at one point a few years ago. But I do think this is a name that's offers an attractive valuation and has momentum behind it.

Karen Feiderman

Yeah, Karen, I just thought it was interesting though, the, The Franklin, the CEO Friedman, sorry, Gary Friedman, selling shares, $20 million of shares to do home renovations. I mean, good for him.

Dan Nathan

That's who you know, expensive shop.

Melissa Lee

Yeah, right.

Karen Feiderman

And he said don't read too much.

Melissa Lee

He's probably a member that gets a discount though, on the goods.

Dan Nathan

You know, we spent some time talking about American Express and the way it sold off in and around the war. And I think there was something to, you know, the travel and the business, you know, associated with that. But it's also that sort of upper K and look at how hard that's come back, right? And there was some resilience in the consumer discretionary as it relates to, you know, a higher end consumer. And then I guess that, you know, that business travel came back pretty hard. And I think it speaks to, I think a lot of what you're kind of extrapolating from an RH2 when you get that sort of discretionary. It seems to be just fine right here.

Guy Adami

We traded to go back again. Our crack staff and ec, hopefully they're staying safe in this thunderstorm. But go back to April 2020. Look where we traded down to. Look where we just traded down to in April of this year and bounced. So technically it's done what it needed to do because it's been horrible for quite some time. And now you have momentum on your side. You also have analysts that are offside. I think there are 20 analysts that cover the stock. The average price target is a buck 65. So they're going to start to chase. So I'm with Tim on this one. I think there's further room to the upside.

Melissa Lee

It's interesting you mentioned AXP because they just got an upgrade from JP Morgan on the very premise that its customer, its cardholders are much more insulated from a lot of these things buffeting everybody else. Because they pay their balance and fall. They're, they're wealthier.

Karen Feiderman

Right. And I mean the market is up and they all have money in the market. Yeah, yeah.

Melissa Lee

They feel rich. Coming up, a rally. Reality check. Our next guest is riding out the volatility in stocks and why he says the path of least resistance for markets could still be higher. Fast Money's back right after this.

Missed a moment of fast. Catch us anytime on the go follow the Fast Money podcast. We're back right after this.

Welcome back to Fast Money. Stocks ending the day in positive territory. The Dow gaining 150 points now in the green for the week. The S and P rising by more than a third of a percent. The Nasdaq leading the way. PayPal soaring 17% for its best day on record. Reuters reporting that Stripe and private equity firm Advent International submitted a joint bid to acquire the company for nearly $61 a share. Still a 10% premium to today's close. ASML. Meantime, bucking the chip sell off to close over 2% higher. The semi equipment maker raising guidance for the second time this year after reporting better than expected. Expected second quarter results. Novo Nordisk rising 3% after getting approval to sell its WeGovy pill in the European Union. It is the first oral GLP1 to hit that market. And Space X fractionally lower for the fourth straight day. The stock dipping below its IPO price of $135 a share for the first time though closing just above that level. What's your take on PayPal? Curious.

Dan Nathan

It's not trading at 60 and a half dollars. I mean this is like think about it, if you're this management and you know, obviously they've had like a turnover and there's going to be a whole, whole host of kind of, you know, different composition when you think of like all the stuff that's going on in Fintech but they're not selling for 60 bucks. They've wallowed if to pull up a five year chart at these levels. So you know, how about it? I guess I would say if you're Stripe and in private equity, give it a shot.

Melissa Lee

It's a new CEO. And then there's also the competition potentially from X Money by Elon Musk. And so I don't know what, what that makes Venmo worth at that point.

Guy Adami

Well, it's, well it's because they mentioned that this morning. I don't know where the show is watching but they said you do realize that they still own Venmo and like. Yeah, but they really haven't monetized it in a way that they thought. So this to me is a take under. At those prices, I think it's worth more than that.

Karen Feiderman

It's sort of, I don't know, not a bear hug, but kind of just test the water. Yeah, right. It's not, it's well short of a, of a formal offer. So I get why it's trading here. It would be complicated probably to close, but as an arm, doesn't interest me that much.

Melissa Lee

All right, meantime, memory stocks like Micron, Sandisk and even SK Hynix, which joined the NASDAQ on Friday, have all seen big swings this week. Up what? Big one day, down big the next. What does this kind of volatility tell us? Let's bring in Matt Holzer. Did I pronounce that correctly? Sizer, Co founder of Peak six Investments Matt, great to see you. So dispersion overall in the markets at record highs. And you're saying that leverage, particularly in this group, is, is a big factor, but behind the swings, I mean, I

Matt Holziser

think we're seeing that retail investors are embracing the levered ETFs in a way that is driving the market behavior. So you have memory stocks up, Apple down, software stocks up, semiconductors down, etc. And so the index doesn't move all that much. It's just you're getting excessive moves in sectors based on these lever ETFs. And as a result, correlation is at all time lows.

Melissa Lee

So how does that sort of typically resolve itself when you see periods where dispersion is super high? Correlations are very low. Something has to give.

Matt Holziser

Yeah, the last time we saw that was probably 1999 and 2000. So usually doesn't end super well because there's a lot of leverage in the market. And when everybody runs for the door, they're going to run across the board. And so I think you'll see index volume ultimately will be higher.

Dan Nathan

So Matt, has like some volatility been taken off exchange? We spent a lot of time talking like event contracts and the like. And you know, it just seems like very interesting because I know that you guys have exposure to some of these other products. They're new. There's probably a lot of opportunities. You guys have a big market making business. Are you seeing like really good opportunities as you get away from some of the traditional equities? And let's be Honest, those lever ETFs, they're not great products. We've been talking about them for 15 years. Really hard for retail to get their Arms around them.

Matt Holziser

Yeah, I think that, I mean the opportunity, I'd say the opportunity is probably better than it should be for professional traders right now because you're just giving excess leverage to the retail traders and we're seeing that and the professionals are able to take advantage of that. And so whether that's the off floor type event contracts or the levered ETFs, it's just easier for a professional trader to engage on that.

Guy Adami

You're a hockey player and the best hockey players are the ones that sort of see plays that are happening 10, 15 seconds ahead of time. In a world. What are you seeing that we're not talking about? That we should be.

Matt Holziser

Good question. Well, I think there's an awful lot of worry right now, but I, and I, hey, it's a bubble. But we also have a lot of worry about the fact that tokens are super expensive, that people are spending them and that it's also displacing a lot of jobs. I think one or the other is going to be true. Both can't be true. That AI is a total waste and B, it's going to displace a lot of jobs. So I do think it's probably some hybrid of those two. My guess is that AI is going to be a difference maker and that this is a, you know, this is a seismic shift in the market and you want to capitalize that and participate in it. I don't think it's going to play out for everybody and so you would want to. The people who engage with AI are going to be the winners.

Karen Feiderman

So when you see the kind of moves that we've been seeing in the lab today even but a few weeks ago, I mean, some of that implied volatility was just, I don't know, off the charts of anything we've seen. Do you? That's exciting to you, I'm sure You want to take the other side or what, do you go home flat every day? How do you play in this market?

Matt Holziser

We're more like a Merchandiser. So Peak 6 on the market making side in particular, not the clearing of custody side, but on the market making side, you give the customers what they want. If everybody wants to buy fruit, you go get fruit. And if people stop buying fruit one day, like it goes bad, you got to get out of it. When people all come for software, hardware, banks, whatever it might be, you have to provide that and you have to replace that with other things, which is why bringing up the indexes, we carry a certain amount of volatility we tend to be long and we tend to try to make sure that we have available inventory when people come for it. Look, I don't know how long this is going to last where you're getting this outsized volatility and particularly dispersion but I would tell you a year from now I think you will regret not having some sort of insurance in the indexes because it's low relative to the pieces.

Melissa Lee

And last question, Matt, when you say professional traders take advantage of the fact that retail investors are given so much leverage, what exactly do you mean?

Matt Holziser

I think the cost of transacting for the retail tends to be a little bit. It tends to be definitely higher than it is for the professional and so buying a basket of stocks is just a lot easier for the pro than it is because we just get economies of scale. Right. Walmart buys strawberries a lot cheaper than I do because they buy it at just such scale. The same thing happens in volatility. If you do things at scale, you get advantages.

Melissa Lee

Matt, great to see you, thanks for coming by. Matt Holziser.

Matt Holziser

Thank you.

Dan Nathan

I have two takeaways here. So when you talk about the last time you saw this sort of dispersion and then you're going to have high correlations at some point because the narratives are going to shift a little bit in. Last time we saw that was 26, seven years ago. Right. And then you think about like the idea and we've been talking about this a bit like he says, well you're going to want some production at some point within the next generation year. We have a Vix, it's banging around in mid 15. You know we've seen demand, too much demand for out of the money calls and we've been talking about this and not a lot of interest in downside puts and that's something I think you have to go all the way back to other market tops. I'm not saying there's a top right here but that's some of this sort of behavior.

Karen Feiderman

I like that skew.

Tim Seymour

Right.

Karen Feiderman

You want to put a collar on and you can do it much. It doesn't need to be symmetric. You get a lot better protection.

Guy Adami

It's been really hard to be long volatility but you know, Matt speaks to this time next year I think it's going to be sooner than that so I'm with them on the volatrade for sure.

Melissa Lee

Yeah. Tim, real quick your reaction.

Tim Seymour

Well, what we've always seen is that the indices tend to underreact until they overreact. So we used to always say in my long short equity days that the, if you shorted a sector etf, it was kind of your sleep. Well it didn't do anything for you until it really did. Single names as he indicated are the best place to get short exposure. Having said all that, it's, you know, I run a covered call etf. Selling calls in this market has proven to be very lucrative given the fact that volume is higher on single names.

Melissa Lee

Coming up, a big blue bummer. IBM shares unable to recover from yesterday's plunge. We will dig into the software softness and what the company's vice chair had to say about the impact of memory mania and fast money returns. Welcome back to Fast Money. This is not my joke. These days IBM could stand for. It's been melting.

Guy Adami

Who did that? Who?

Melissa Lee

Not me. Definitely not me.

Guy Adami

Was that Anna who was, I don't know.

Melissa Lee

The stock unable to bounce back from yesterday's 25% drop, down another 2.7% today. Vice chairman Gary Cohen spoke to squawk on the street this morning about memory prices.

Guy Adami

We see memory prices soaring. We see the demand, well, well outstrip production. But memory historically has been a commodity esque market. You know when there's no demand, there's way oversupply and people sort of start curtailing demand. They say they start curtailing production to equal demand.

Melissa Lee

IBM, whose profit warning sends shares to its worst day every yesterday will officially report Q2 earnings in one week. So Gary Cohn was a little bit limited what he could actually say about that quarter and about Arvind Krishna's commentary but he did answer some questions.

Guy Adami

What do you think does. I'm surprised by the lack of performance and you know Karen was a tennis player. She probably still plays tennis. I don't because it's not a contact sport unless you hit somebody with a racket. But there's something called an unforced error and I do believe a lot of what we've seen over the last 48 hours is that. So if there was just that business I would say, you know what, you have to be concerned. But there's a lot of other good things going on in IBM that I think this 25% move is sort of masking.

Karen Feiderman

I think an unforced error would be if they, if this earnings release is worse than they. Oh yeah, that would be a gigantic one for unforced error. They didn't need to come out with it. I understand maybe why they felt like they should but it can't be worse than they stated yesterday. Well Otherwise we write you're coming out there for free. You've, you've sort of said all right, I'm doing this, you might as well make it under promise by a lot.

Melissa Lee

Right. Oppenheimer downgraded it today to a perform price, removed the price target, just didn't lower it, just took it away and said that it's not going to be able to make up for that fall off in contracts in Q2 unless they acquire somebody or unless you wait until calendar year 27. Tim, that doesn't sound great for a stock that can't get off of its back right now.

Tim Seymour

No, but I like the direction IBM has been moving for the last five years. And there are different parts of business as we've talked about. Red Hat was up I think 11, 12% year over year on that quarter. So some of those numbers were great. The, the infrastructure decline was, was, was kind of scary and the Software growth of 5% isn't really that exciting given that was the, some of the exciting higher margin part of the business. I guess I just think this is, you know, this is a bit of an overreaction. I do think this is a case where IBM had really rallied quite a bit over the last few months and now back to really just where it was. I think it's an opportunity. But, but Capex rationalization is alive and well everywhere and it didn't work in their favor this quarter. But I think they've been overly honest.

Dan Nathan

I think there's a lot of landmines out there. I think this is a great example. Right. So this is a stock that was trading at all time high. This is back in early January. Then it sold off 23% and went to about 220. Then it rallied in a straight line in May, a straight line from 220 back up to those prior highs. And then you have one piece of news like this and it sends it right back there. And I just think that once we kind of the bloom is off the rose of some of these other business models that were basically in an AI wrapper and this is a low growth company. They have not been able to execute around a lot of these big technological shifts over the last few years. I just think there's other ones lurking out there.

Guy Adami

You know Josh, who we just mentioned, but we love Josh, just full disclosure of course, but he recently got promoted justifiably so. But you write something like that, maybe

Melissa Lee

you take that job.

Guy Adami

I'm pretty sure it was Josh.

Melissa Lee

All right. It's been melting. Coming up the next Episode for Netflix. What to expect from the streaming giant report exports tomorrow and the big bets options traders are placing into the print. More fast money into. Welcome back to FAST money. Netflix on deck to report earnings after the bell tomorrow. The streaming giant is hovering at a key support level and options traders are betting tomorrow's results could make or break the stock. Oliver Renick is at the CBO in Chicago with the action. Hey, Oliver.

Oliver Renick

Hey, Melissa. Options traders who were very bulled up on Netflix on Friday might be having some second thoughts as the stock continues to hug that $70 level. Bulls are hoping that will act as a springboard as it has in the past. But if shares slip below the technical picture looks ugly, expect a big move. Options currently imply an over 8% swing for the shares, even bigger than the average 7.5% move after earnings, four out of the last four of which were sell offs, by the way. But one key sign of hope for the streamer call to put volume ratios continue to lean towards calls by about 3 to 1. But we also did see a few bull bears on the tape. In fact, the two biggest single short term trades today were a put buyer of the 70 strikes expiring next Friday for just under $800,000 and a call seller of the 74 strikes in the same expiry who collected about 400,000. Both bearish. Melissa.

Melissa Lee

All right, Oliver, thanks. Oliver Renick at CBO. Tim Seymour, this is a stock that's been a dog basically. I mean down 40% over the past 12 months.

Tim Seymour

Yeah. And I'm not sure that there's a lot of excitement to take it out of the doghouse. I do think that their ad business is something that is underappreciated. Remember they were, they were around 190 million subs back in November. They're north of 250 now. It's, you know, it's grown whatever, almost 35% during that time. Those margins are accretive to the overall margin profile of the company. I think you're at a place where you should be nibbling this one. This is not about the Paramount unwind. This is about a company that's now gotten interesting.

Melissa Lee

Up next, final trades, Final trade time.

Tim Seymour

Timbo Alibaba ali cloud growth, 45%, decent margins. I think there's a rally that continues in an under owned name.

Melissa Lee

Eric yes.

Karen Feiderman

So often I say I'm going home with the girl that brought me, which would be Netflix. I am long hasn't been a great place to be. But this time I'm thinking you know what, maybe I go home with the call spread of the girl their problem so one day to do that.

Dan Nathan

Dan yeah you had a really good call in the software. This is going back a couple months. You had a good bounce here. I think if you're looking to play the counter trend here you use IGV to the upside to find your risk.

Guy Adami

Well congratulations to Argentina who emerged victorious during this show. So the finals now been set.

Melissa Lee

As you know Melissa, you can hear the crowds outside.

Guy Adami

You can hear the crowds outside. So exciting. I can't control Bristol Myers. Bmy you too.

Melissa Lee

Thanks for watching. Fast Money starts right now.

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