Transcript
0:00 let's get now instant reaction from our fast money friend gene munster of course he runs loop a venture capital firm gene we're going to have you on and still are by the way to talk about a lot of the stuff that was going on before this breaking news but you just heard it subpoenas should in america cares should investors care brian i don't think so i feel like i've heard this story before there's a healthy dose of deja vu and at the end
0:25 of the day i think most investors have become numb to what capitol hill is doing against some of these big tech companies this is just the the latest rev and when we think about the companies that are noted in particular a couple things stood out one is feel like i've heard this before and investors ultimately shrug these off second is notably absent from that list i don't think apple was on there maybe maybe i missed that but it felt like it
0:50 was more related to the social media media platforms and i think that's i think a testimony to how apple's navigated successfully around what's been going on capitol hill but when you focus on the social side these companies we think about facebook meta you think about what snapchat's doing ultimately i think it's a lot less about what's going on with subpoenas and capitol hill and what it's all what's what's going to be more important when they report their december quarter is
1:14 what engagement numbers are and just as a quick recap what the state of engagement was with these companies facebook was they grew their daily active users by six percent in the september quarter that compared to seven percent growth in the in the june quarter they've been growing at that six to ten percent range for the past four years and when you look at snapchat even though they had some negative commentary regarding idfa and some of the apple
1:39 changes they grew their monthly after the daily act to use it by 25 you put it together i think the dau numbers ultimately are what investors are going to care about with these companies over the next few weeks and less about what's going on capitol hill all right let's get back down to the reason you are here and that is some of the troubles in tech land and i want to make sure that our viewers know that we
1:59 have a sense of context okay gene because i get it stocks are down a couple of percent all right i'm old enough to remember when a 10 down move was not that big of a deal still we're dealing with a generation of new traders they really haven't had to deal with this of course outside of the pandemic led drop off in 2020 that was kind of its own exogenous event let's not forget from september to december of
2:23 2019 the nasdaq fell 22 and it ultimately was a buy what's your take on the macro move that we are starting to see in these markets buying opportunity or not yet not yet i i think i would generally echo some of the same commentary from the traders today i think that there's still some downside and of course especially to these hire multiple companies and the way i would assess it is kind of making a very a strong line between the near
2:52 term the next three months and the long term beyond three months and in the near term what i see going on is a game of fed roulette and this creates investor anxiety you're right i remember those days those ten percent down but down two and a half percent that is a two standard deviation move those are they are less they don't happen very often and of course fear creates more fear and then the question for me when
3:17 it comes down to answer your question when at what point do we get through this at what point do people start can they be more aggressive i think that there just needs to be a simple resetting of expectations from the fed as i mentioned this federal ed happens there's a direct correlation between somebody from the fed talks and the market goes down and what i'm hearing there is investors are saying i don't know what the fed is going to do and we
3:39 know inflation is bad we've established that and at some level the fed needs to take control here they need to give investors a clear direction of of what they're doing and i know they're not work they're not operating in a perfect environment but if they would just say we're going to raise it four times and guess what we're gonna we're gonna make that first raise 50 basis points the market would be down 5 on that but
4:02 then i think it would be done at least we would know and in this point the worst thing that the fed can do at the end of the month is to say omnicron and omnicron is bad don't get me wrong but if they just kind of play this off like we can't make any decisions now that would be a disaster i think to the market and ultimately i think the market needs its medicine and that's what i'm hoping will finally
4:24 get this cloud to clear so gene what what i hear you saying is this is a a rate environment that that that ultimately mega cap tech can tolerate i believe that again the kind of rate move i think we can get out of the fed in the near term or should expect so what do you do as an analyst we can judge what this means in terms of asset flows and passive markets and and we do that every day because of the
4:46 weighting of these stocks but how about a 20 to 50 basis point move to the valuations of these stocks tell the audience what that means to you as an analyst so every one percent change in the fed fund rates typically impacts the valuation by 10 to 20 percent for these companies and so you know there's a projected percent and a half two percent move it is a a measurable impact and so that is part of the reason why i said
5:11 we're not through this is we still need to digest those changes if we can get clarity about where the rates are going then the market can identify that and can move on but that's tim to answer questions that's that's the impact i would say that if there was somebody who was more optimistic at least over the next few weeks than i would they would argue that that's true that that dynamic is true about the one percent
5:33 impact but i they would argue that you know that you're going to see some this inflationary pressures are going to create upside to earnings that will offset that 10 to 20 percent headwind and so you do have an environment we think about how strong facebook and google's business was last year a lot of that was ad pricing that went up because of inflation they're going to benefit from these and so unfortunately from a fundamental perspective there's a lot of
5:59 of conflicting data gene repeat that i think is really important you just said every one percent move which would be four rate hikes assuming they're a quarter point each takes ten percent off of valuation ten to twenty now the we've seen some of this you know nasdaq's six percent off but if you assume we go to a one and a half percent fed funds rate that would assume there's another five to ten percent downside to the nasdaq
6:28 gene munster or loop really important stuff there gene we do appreciate that so i mean i'm not that good at math but thank you a guy i'm not that great at math but you think about it if gene's right in the history let's say you got a stock 30 times earnings okay we raise fed funds by a percent or the market thinks she will because they're going to act before the fed actually does it so that's ten to twenty
6:48 percent three to six so you take the stock down to say i don't know what 20 26 times earnings instead of 30 time journeys i wonder if it's that rational i think it is that rational now won't feel rational and we speak about this all the time you know pete talks about this too it never on the way down you know everybody's hoping for lower prices to buy things cheaper and they'll always say it i wish
7:13 i could buy x at this price but then when it happens it's never for the reasons that you thought that would get you there if that makes sense and you become petrified but if you have a plan in place this becomes very rational and to your point it is just a math problem i think everything gene just laid out we all should want because it's going to bring things back to a normalcy level where you can start to you know gauge
7:35 what is right and what's wrong in terms of stocks quickly you know in terms of microsoft you go back and look at the move and pete talked about this as did karen yeah that move from 349 or so to this level has been drastic but if you look at where we are we're at huge support levels we're at a prior all-time high from literally this fall so there are stocks that have given back enough where they might make sense right here
8:29 you