and fiscal q2 and before we get core pce prices which the fed likes to watch new gdp data, as well. so some macro stuff and durable goods in the works in just a little bit. >> new home sales is always an indicator for what's going on with the homebuilders, as well and we've seen the bifurcation which santoli has talked about. that will do it for us on "overtime". >> "fast money" starts right now. live from the nasdaq marketsite in the heart of times square, this is "fast money." under pressure w mortgage rates rises and reno costs through the roof, the housing market is getting drilled ask, is this se off limits? today is opening day for the new mcdonald's value meal. it's been a rough year for the stock. will this be the right recipe for mickey d's revival? a fast money show and tell is on tap and comments from the cfo,

novo nor disk fights obesity in a new market and ahoy matey for the cruising stocks and rivian climbing on vw, and i'm melissa lee coming to you live from the nasdaq, on the desk, tim seymour, dan nathan and guy adami. we'll get to the housing drop in just a moment and we'll start with the earnings alert with delivery giant soaring after a top and bottom line beat and the conference call just getting under way. frank holland joins us with the very latest. hey, frank. >> hey, melissa. shares are moving a lot higher partly on fedex saying they're conducting fedex freight and that's one of the reasons why fedex shares are popping and that's also a big reason for the stock's rise, fedex freight is a less than truckload business and the biggest in the nation that competes with xbo and old dominion and he sees both of

those higher on the news and in the release the company says it will look at the role of freight in the portfolio. we'll look for more color on the call, of course. overall, a pretty strong quarter on guidance, as you mentioned was strong in line with estimates and we got confirmation the company plans to save $2.2 billion through its drive cost-cutting initiative program, but there are still quite a few questions about the impact of losing the post office air delivery contract. they pegged the profit impact of losing that contract and this fiscal year expecting more color on the call and all around, a pretty strong report and the one issue it could be margins and both missing. margins are a proxy for the efficiency of the network and also something analysts are watching as the company combines its express and ground service when it comes to delivery. melissa, back over to you. >> is the assumption that fedex winds down that business as we're seeing the competitors move higher? >> i don't think wind down is possibly a spin-off or a sale

and this is a very valuable business and the biggest in the nation. they did announce that they're closing a few terminals and the pricing power that they saw was flat and it was down a few cents per shipment and nothing to be concerning, but they look like they're trying to optimize the business potentially for a sale or spin-off. we saw something similar with xpo and they make a pure play ltl trucking business for things like industrial purposes and manufacturing. it is a very good business overall when you talk about a company like old dominion is one of the blue chips in that space, but the question is does it fit into the portfolio of fedex? we saw ups do similar things just this week and they sold off the logistics business, as well, to focus more on their e-commerce and the parcel delivery business and they're seeing it move more into data similar to fedex. >> frank, thanks so much. frank holland. keep us posted on the conference call. that conference call is under

way right now. the value could be unlocked and we could see the value of the business. tim, you're a shareholder? >> i'm not a shareholder now and i've certainly been one and it's hard not to think of fedex as a blue chip category and we were waiting for the company to get their mojo back and i think they have and that's the reward and this is a glass half totally full response to what was glass half empty. the stock was down 15% going into this for the last three months and the dynamics around the express business, i think you have some yield issues, actually, and i think if you look overall at what's going on in shipping. shipping weakness is the story. the question is should they be rewarded for opportunity myself optimizing the portfolio. who cares? there are 325,000 people that work at fedex full time and another 200part-time. that's not a signal to the job market, but the cost-cutting

affects here and this is something we're hearing out of industrial companies and we're hearing it from everyone and the market seems to like it. >> i remember we had this on trade it or fade it earlier this week and i definitely faded this one and it's time to come to the table and pay my pound of flesh. listen, i think they would cut their weight of profitability and my concern is sequentially over the last two or three quarters you've seen those revenue numbers be flat to slightly down and they were up here and the guidance coming in to 2024 was less than stellar and you saw that be corrected on this call. i do still have concerns and and you saw ups get punished for doing the same thing on the logistics side. so i can understand the drive cost-cutting measures and saving $4 billion, but i would be cautious against cutting parts of the business that get a higher valuation. >> so 90% -- we talked about this, 90% of two things are

express and ground freight's very small. to be honest with you and frank alluded to it, and margins were disappointing in the context of what the street was looking for. with all that said, this comes down just a valuation story and the self-inflicted wounds that fedex had from may of '21 until the middle of 22 was just that. self-inflicted wounds. i've tried on the way down to be bullish on valuation and start to do the math and say at a 15 multiple and it's a $300 stock which is where it's trading now. if this were ever to get a market multiple which is not going to happen. we talked the stock should be significantly higher than this and it's deserved than a high teens multiple in my opinion so it should go higher. i've said that and you know how many times i've said that and watched the stock and just go right down, as well and the value trap that fedex has been over the years is significant, but maybe they've figured it out. >> the move is staggering. >> last quarter is the stopgap

made a new 52-week high and proceeded to fill in the whole gap and go lower and here we are the stock is at 245 in the after market and the quarter beat and that guide and i don't think on just those numbers you're looking at mid-teens and low single digits and sales growth and you throw that margin implication there and it doesn't make a lot of sense to me and again, maybe people were looking at ups trading at 52-week lows trading down so much over the last couple of years or so and they were kind of pressing this one, but i don't think it deserves to be at $295. >> there's been persistent weakness in shipping. i don't know why that changes and it gets back to what are you willing to pay for it? fedex is traded as low as low as 12 times and it could go cheaper. >> the home builder etf dropping today and the biggest decline since april and among the names of the biggest losses, williams-sonoma and home depot. bank of america warned the housing market will remain stuck for a number of years citing

reduced afford believity, a lock-in effect for homeowners and limited activity. they do not see relief until at least 2026. meantime the schiller home national home price index rose to a record high up 3.6% from a 30-year low and it remains over 7%. so can this trade get out of the rut especially if you don't see a lot of velocity on the market in terms of transactions. >> i understand the rut. two or three days ago or last week and this is making an all-time high and 111 and change and it's 8% or so, but i get where we're going with this and it speaks to the health of the consumer and what's really going on. i don't think the xhb is the best created etf of all time and that doesn't matter. it still obviously is forecasting something, but i do think it's problematic and if you look at the underlying stocks like a home depot and like a lowe's and these names and they're telling a much different story and they round out the consumer and say wait a second and maybe there's

something more here and this is something you have to watch carefully. >> the dollar stores, super marks and we'll talk about mcdonald's later and this is a broad swath of companies telling you something bad about the consumer. >> two words full court. >> there are two words you've heard in my -- >> i've never heard of pool corp, and i'm looking at my screens and xhb and home depot and then i see this company. >> they're not renovating. >> what do they do? >> they sell pool. they distribute pool supplies. >> should they change their name. >> someone else asked that question. >> i didn't know until 10:00 a.m. this morning, okay? >> pool corp. i've never heard of it and i'm just saying the ultimate description. this stock was trading like the home stocks like back in 2020 and into 2021 and it's been a devastation since then, but it's

taken a lot of the stuff down. >> by the way, i was the pool guy in college. >> sure, you were. >> you should have filmed some of this, you wouldn't be working some of that right now. >> that's a different kind of show. >> this is family. >> the fact that the xhb, we all kind of chimeded in today when we had the call earlier which was the different components of the xhb with lennar and pulte were all selling off as if there was something technical going on within the etf and i think the dynamic around the consumer is interesting and despite the fact that homebuilders have had such a great run as maybe yields and rates had peaked at least in terms of mortgage rates for the foreseeable. there's enormous interest rate sensitivity and at some point it comes back to the consumer and the lowe's and home depot performance, and i wouldn't conflate hhb, and i can understand that they've run up quite a bit and you see

consolidation and the lack of velocity that you've seen in existing home sales that they have in that space to me is to the benefit of those builders and we're still a million, a million and a half short of the long-term average and the ability to buy down rates and meet the consumer demand where they currently are, i think that's the pocket where you are still going to see that. a lot of these names, toll brothers and two names that i like, and kb homes have gotten expensesive on a price to book. it's your short-term winner. >> by extension, names like a masco or mohawk should be a better plight in addition to the homebuilders because they have to make homes and put stuff in them as opposed to a home depot or lowe's or, you know -- >> totally agree. >> think about the move we've been having in copper and the dynamic around dr. copper isn't just that it's a speculative

industrial metal and the ev component of the grid and what not. truly industrial demand as it relates to housing and the real economy is interesting. >> you'll see a classic double top which technicians will say it's not particularly well and can you imagine, tim, can you move the umbrella for me, please, closer? >> wait, that kind of pool boy or the one that pulls the leaves out. >> let me clarify the terms. i wasn't a cabana boy. i was a pool guy. i would float into your backyard with my equipment. >> what does that mean, your equipment? >> the pole to clean the pool. >> the chemicals in the pool. >> listen, we want to clarify things, tim. >> it was a great summer job. >> certainly off the rails at 12 after. let's get more from ken seemer

from senior partners. is it pool corp, should we be worried that higher interest rates are impacting consumers and their ability to get -- and fund renovations, et cetera. >> we don't cover pool corp. used to cover it. i will say this, enjoying your conversation that homebuilders are an early cycle group. when the fed cuts they will outperform the market early which i saw in november and we were all in and then we downgraded the group. so we are more focused on quality because if you look at the last 18 fed cut cycles 12 of which were non-recession and they outperformed the market 30% and then the outperformance fades and that's the current view on the homebuilders and we like quality names where net income equals cash flow. >> if the mortgage rates remain at 7% because the fed wants to remain restrictive to make sure inflation is tamed and then will the homebuilders be subject to

just continued mortgage buydowns which will continue to weigh on margins? >> i wouldn't say they're already doing it and i wouldn't say it's an incremental negative and i would highlight and go back to 1962, the '70s did this and it's part of the cost structure right now and i certainly don't think there's margin upside as incentives and tied to mortgage buydowns will deteriorate if rates are going down at this point it's probable because of a weakening economy which is not good for the demand side. >> that's what i was going to ask you, ken, because as much as it would seem that weights were the entire story and it doesn't matter. i think it comes down to the unemployment rate and if i'm right, what is the level where things start to move in a very sort of accelerated fashion? >> i assume you're saying accelerated fashion on the down side? >> yes. >> we don't know, of the 18 fed

cut cycles included by 1994-95 when the homebuilders outperformed and then they lagged the market and i obviously cover stocks and i want to be an exist and the demand we're seeing at the job levels really can only go backwards and they obviously have affordability issues which is why they're doing incentives and the risking to return is pretty flat for the group right now and it's increasingly getting negative in our view if you have weakening job or jobless claims, et cetera. >> back to the stocks, right? so what you said is these homebuilders typically do better in the early cycle in terms of where you start to see the fed cutting. in your notes you point out after non-recessionary cuts is where they rally a lot. is that your way of saying this group is a sell? because again, i am someone who has been wrong as they hit fresh eyes and believing that also the lack of velocity in the space

that the consumer is ultimately giving ground and if the house costs 50% more of the mortgage at this point, it has to be worth less. >> you brought up a couple of points there. first, they have had their outperformance. they were up 40% call it january into march and they pulled back from that and in terms of the interest rates, the buydowns, and that's already in their cost structure, but if things get worse and the builders are building quite a bit of inventory, a. b, they are overlapping so the market tends to be concentrate in the top 50 markets and they're all in the same knife fight with each other and if demand fades we really want the lower cost, i.e., higher gross margin would builders that are able to turn their assets and generate their asset land into cash flow. >> is there -- you like the higher end sort of builders as opposed to the first-time buyer sort of homes? >> we look at it quaintitativel.

if you're in the high end, low end, how you do your job when you have your financing costs and they're a low-end builder. so some of the high-end builders have clearly benefited from existing sellers bringing their equity in. so, but, you know, like lennar and we have nvr and put and lennar has more in term of the monetization in terms of the other non-building assets and kkr are buying apartment buildings which we have to get the detail on and that's the kind of thing that would convert and that's not net income and into buybacks and it does have a good roe which we like. >> good to speak with you. thank you. >> ken zeener of sea port. how do we feel about this trade saying that diana olick was saying just today that 7%. even if we get below seven, even

a hair below seven it triggers more interest. >> as much as it's somewhat counterintuitive and it can do well with the stocks have done very well. if you think that the unemployment rate will tick up in a meaningful way, now is the time to get out of this. i don't think it has as much to do with rates as it does in the job market. >> i do think we have a dynamic where in much of the way different segments of the market have behaved differently in this fed cycle. it doesn't mean that homebuilders can't also have been one of these groups that should have traded off when they didn't -- when they traded higher each though i get the interest rate dynamic, but still relative to where rates were, should you be going to all-time highs and are you 30% from where rates are in 2022? i don't think that makes sense. >> there's more fast money.

here's what's coming up next. >> novo nordisk gets the green light in china and eli lilly in the pharma battle next. high rolling highfliers. delta air lines flashing the cash an a-list luxury lound in one of the busiest airports and will the glitz and glam be enough to keep frequent fliers happy? we'll pop this cork on the trade next. you're watching "fast money" from the nasdaq marketsite in times square. we're back right after this. ew . to help you see untapped possibilities and relentlessly work with you to make them real. [thunder rumbles] ♪ ♪ ♪ ♪ the biggest ideas inspire new ones. 30 years ago, state street

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welcome back to "fast money." novo nordisk gaining 3% after wegovy was approved in china for long-term weight management after it announced a $4.9 million investment in wegovy manufacturing capacity here in the united states. also in pharma, eli lilly saying it will work with open ai to develop novel treatments for drug resistant bacteria. both lilly and novo touching headlines and alnylam, a 6% gain after yesterday's 35% move higher at the biotech etf today.

what do we want to trade now? guy? >> tim alluded to it yesterday. just in the math of eli lilly and this has been true in for a while. it's done $52 million in revenue, by comparison merck will do $68 billion and one-third the size. there's something a skew here. i'm not saying sell eli lilly, and there will never be equals in this environment and merck given that math is still the stock you want to own. it's at an all-time high. >> the two have united into one story today. ai and weight loss. >> here's a question for you because i saw this great doc a few months ago on cnbc called big shy. >> you can watch it. >> when you see it, wegovy, it doesn't matter because it won't be there for years and they don't have the supplies. i'm curious, how do you think about that? if that's the thing driving price performance today, and it

gives you greater confidence in the future and i'm sure there are chinese manufacturers working on this. >> or an oral readout later. there will be other drugs in the pipeline and this shows the total addressable market is a actual number because it's approved. >> my point is we all know that. they've been skipping up the tam for this. it was 50 billion seven months ago and now it's a hundred and we all know that, but it's not too dissimilar with what's going on with ai and investors are pulling forward with whatever excitement will come in the offing and that's the only concern here. >> with lilly, it's a case where pharma stocks as a group and this is them's pfizer that has this to a tooth. you don't buy pharma stocks for a reason, they're cheap for a reason and they're particularly cheap and sometimes they're left for a while. now i think there are catalysts here and there and we talked about this even with gilead last

week. gilead who had this announcement with essentially an existing legacy drug that people are more or less pushing back on a company saying you have nothing other than hiv and hepatitis. the fact is you're getting the rest of the company for free. it's a long way of saying i think some of these companies you are buying them when they're expensive. i've been buying lilly in the last couple of nth mos and i didn't own it at 400 and i don't think the trends are going away. >> i think dan makes a good point with discounted cash flows are getting distance from the current stock price and i would be 100% in the boat with you, but i think ai and the sub sector has shown you around how sentiment stocks can continue to outperform and we'll see more of that. right now the fact that the stock has poppeded on this news of them increasing capacity speaks to the supply demand and how out of whack those are. yes, i do think you're pulling

forward a ton of cam, but you still see that as a sustained winner a market where you're seeing more concentration around names with a winning formula. >> you might be pulling forward with tam and they're not even realized now and applications and we haven't even mentioned nvidia because the comparison to ai here and the concerns, et cetera, nvidia bounced today. >> it did. tim talked about that last night and they'll bounce and it did and i'll say this, as well and the stock did bounce a number of times before having that move lower and i'm want going to back away from what he said last night and it suggests there's another downdraft and we'll see if i end up being right. >> big box blues. shares of walmart dropping and what the cfo that had investors rolling out of that trade. that's next. vw announcing a major investment in the ev maker. so is it time to charge in? we'll badete that. don't go anywhere. "fast money" is back in two.

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snapping the five-day run of games and shares of carnival surging 9% after reporting a beat on the top and bottom line this morning and the cruise operator giving strong eps guidance and that stock still down 4% this year pf shares of walmart lower after hitting a record high yesterday. q2 is the most challenging quarter this year. walmart finishing down more than 2%. specifically, that cfo who was speaking at a bank of america conference in london said that the comp situation will be very difficult and that's why q2 will be so challenging. >> makes sense, over promising and will underdeliver. let's get into it really quick. they're not trading particularly well at all and they haven't been trading well. that to me is an interesting tell on the consumer and layer upon that, difficult comps, i get it, but when you hear commentary out of the cfo of walmart, you have to take pause and target hasn't traded well and the consumer is manifesting itself vis-a-vis the stocks and at some point the broader market

wakes up. >> we should have been paying attention to the real message as opposed to the message was they were doing massive promotions and we thought it must mean they're increasing traffic. no, they were really increasing promotions. walmart, after moving like a tech stock over the last six months and it has, i think it's amazing that in this environment the stock's down 2.5% after that kind of a move. we're talking about walmart. as much as i love the company it's not like there's a lot of wiggle room in the margin and when you hear the challenging quarter from the biggest retailer in the world it's a big deal and it's a big deal for the macro discussion that we've had tonight and for a stock that's had the move. >> talk about costco, and i would have to assume that there are some of the same issues going on over there and they just reported a couple of weeks ago maybe or something like that? again, the stock keeps powering through and it trades wi more, pensive to the names in the

space. >> rivian revs up and we'll get you the details and what it means for dan's zebra trade. plus fast food's $5 fight. mcdonald's launching its brand-new value menu, but how does it stand up against the competition. all of that and a side of fries, next. missed a moment of "fast" in catch us any time on the go. follow the fast money podcast. we're back right after this. they respond to emails with phone-calls... and they don't "circle back" they're already there. they wear business sneakers and pad their keyboards with something that makes their clickety- clacking... clickety-clackier. but no one loves logistics as much as they do. you need tamra, izzy and emma. they need a retirement plan. work with principal so we can help you with a retirement and benefits plan that's right for your team. let our expertise round out yours.

welcome back to "fast money." shares of rivian soaring nearly 50% on news that volkswagen is investing a billion dollars in the electric automaker. if the gains hold it will be the stock's biggest gain since going public two and a half years ago. phil lebeau has the details. hey, phil. >> melissa, this is a big investment that volkswagen is making in rivian. here are the details, in total it comes to $5 billion. the remainder then will happen over a couple of tranches in '25 and '26 depending on some of the conditions of where rivian's stock is and where the investments are made and you do the math and you have vw taking a 10% to 15% stake in rivian

again, depending on shares of rivian and where they're trading it and surging after hours and on this news and the news that rivian and volkswagen are forming a joint venture. it will be focused on software. software for electric vehicles. software for the next generation of vehicles. here's rivian ceo r.j. scaringe talking about the deal. >> there's mutual benefit to both sides. so the scale that volkswagen brings to the portfolio of outstanding brands that they bring the opportunity to apply that scale to achieve meaningful cost savings across materials and across our business, coupled with the ability to drive and the acceleration of this technology into more products and on the volkswagen side, it really is highly complimentary. >> take a look at where rivian is in u.s. ev sales.

it is now among the top five. obviously, this is still tesla's market that it dominates and this year sales will be limited in part because production is limited at 57,000 vehicles as they adjust their production facilities in central illinois as you take a look at shares of rivian and volkswagen. the other thing to keep in mind for these two companies that it's liquidity at the end of the first quarter and $9 billion. remember, melissa, they lost 1.45 million in the first quarter and we'll get more details and perhaps more color about what the second is looking like and they're not each close to break even and they put it as a target for the end of this year and they've got to show that they can get there, but this is a huge deal that they've announced with volkswagen. >> who is left on the major shareholder list, and ford held its stake and amazon is still in and amazon will beat up more of the major stakeholders? >> yes.

correct. amazon is a huge stake holder and rivian is building electric delivery plans for amazon and they really ramped up that product substantially over the last year. >> you are at the brand-new delta one lounge not too far from here from the nasdaq and this is meant for the beautiful people as you said this morning on "squawk box." the really special, profitable travelers. >> those who fancy themselves that way. this delta one lounge is the only one in the world and you have to be a delta 360 frequent flier. that's the top of the top. i mean, that's by invitation. you just don't get there by flying a lot or you're buying a delta one first-class ticket obviously from jfk, a lot of those are going to europe those first-class tickets and sky clubs, while they are nice and delta plans to add more in the future, the delta one lounge is

for those most lucrative customers and so they can say to those customers, you are important and we want to show you how important you are, and here is a lounge that's not as crowded. >> and it even has a restaurant. what is it like? ? it's very good. fortunately, there are no pictures of me eating in a sitdown restaurant. that's the difference, melissa, it's not like most lounges where it's a buffet and you go through there. the whole premise of this is more space, more refinement. >> yeah. phil, thank you. phil lebeau. the r is the r in zebra. >> just black to flat on rivian. >> the z is for zoom. [ laughter ] >> so, interestingly enough about rivian.

amazon is the largest shareholder at 16% of the holdings there and this is a commitment out of volkswagen and this is a joint venture that they'll be fairly committed to. you think about also and phil mentioned this and i think the order was for 100,000 ev vans from amazon and there's a lot of possibility here and the burn rate is a lot, and this was something we're concerned with about tesla, and ten, 12 years ago or something like this. i think there's room for multiple players in the space. >> by the way, you're up a few percent according to sandy who tabulated those. >> thank you, sandy. >> rivian or delta which would you rather trade? >> i would rather trade delta. >> i didn't mean that as a game. >> me and steve ready to play games. assume it's the game, incorrectly. i really think this is more of a turning around the free cash flow and delevering story.

you look at 2020. i think peak debt was around 35 billion and net debt 31 billion and they've slowly, but surely rolled that off and that story continues. >> coming up a $5 deal dogfight. fast food chains vying for business as consumers cut back. so we're putting the value meals to the test. atou are getting for your money. that is next. "fast money" is back in two. ♪♪ chewy, a citi client, uses citi's financial expertise to help drive its growth and keep its supply chain moving, so more pet parents can get everything they need... right when they need it. keeping more pets, and families, happy. ♪♪ for the love of moving our clients forward. for the love of progress.

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welcome back to "fast money." mcdonald's rolling out a new $5 meal to lure customers back. >> the revealing the $5 meal. it will include a choice between a mcchicken or mcdouble, a four-piece chicken nugget, fries and a drink impeach the offer is slated to last for about a month and it remains to be seen if mcdonald's extends the offer beyond that. coca-cola is making this more appealing to get it going and a franchisee advocacy group has urged mcdonald's to offer it to keep it on the menu for more than a limited time.

jay told the anchors that some franchisees may keep it around locally for more than a month. the competition is%. burger king launched a similar meal before mcdonald's this summer and plans to keep it on the menu longer and that's according to a memo at franchisees and wendy's and starbucks has stepped up with values meaning consumers feeling cruncheded for cash will have plenty of options and i'm curious to see which you like best. >> we do have a lot of options on the desk. thank you, kate rogers. we don't tackle a story without getting first-hand experience. >> we surround the trade. so we have got the value meals from mcdonald's, burger king and wendy's. we have them all here on set. can you imagine? this is $15 worth of food. >> if there's one guy who is up for it it's guy adami. >> this is not a joey chestnut situation. we're not consuming all of this. >> i quit myself. >> you can take one for myself. >> you see my crown, tim?

>> the crown is heavy. uneasy lies the head that wears the crown, right? >> right. you remember that, shakespeare. >> not so heavy when it's only $5 for a meal though. >> i'll say this, i'm going to get into one of these burgers. >> are you? >> the reason i'm not getting into the wendy's burger is i didn't order it. tomatoes gross me out. i know that mcdonald's does not put mcdonald's on their burger. >> pickles -- >> excuse me? only a little pickle, tim. something you're familiar with. i'm very fond of the mcdonald's and if i'm playing the game correctly i'm going to go with mcdonald's although, the stock is extraordinarily challenged. so while you assess the stock i'll bite into this tasty cheeseburger. >> enjoy the cheeseburger that was procured by. >> our crack staff. by elizabe. >> no big deal.

99 degrees outside -- 3:00, so not as poisonous. >> anyway, so what really shocked us all is how much food you can now get for $5. the question is will this work? >> well, and how long will this promotion go on? because mcdonald's has been known to overstay their welcome on this promotion and there's no question the competition is intense and guy should be grabbing on to the biggie bag from wendy's because might be helpful and i think you have a dynamic where the consumer weakness that we see in fast food is not something that's getting better. it's why i love mcdonald's and i think they have the ability to squeeze margin out better than their peers and now is the time yet. even though they have warned again, $5 meals are a sign that the competition is very, very intense and i think it gets worse. >> what do you think? >> compare and contrast this to the upper echelon of fast capital. cmg, and i just think you see a

completely different method of attacking how to best serve customers. whether it's innovation on one side or it's a price war. listen, i loved mcdonald's for a long time and i'm hoping that this is a signal of the bottom and perhaps that the trade down is in fact coming and they have to entrench themselves here as a tradedown option because innovation and the grimace shake versus carney asada is really not a comparison. >> what was that? >> i'm going to wash down that burger with this tasty drink. >> which has no more ice because it's all melted. >> pulp fiction for you, mel. >> a big mac. >> what did they call it? >> le mac. >> royale with cheese. >> thank you, mel. >> enjoy. >> coming up, small, but mighty the russell 2000 midcap flat for the year and the bull case on the group next.

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let's bring in nancy preole. thank you for being with us. >> thank you for having me. it will be a small caps' day in the sun and contribute to market breadth. what is the catalyst? >> so we think the catalyst and i feel a little bit like the tree in the forest that's fallen and nobody hears but the catalyst has to be earnings growth so we are expecting to see a relative improvement in small kaup stocks compared to what we've seen in large cap stocks. there are many small-cap companies that are both doing well and that are seeing that earnings growth that's driving their appreciation. so that's what we want to focus on is companies with good balance sheets and good cash flow and improving fundamentals. >> there are themes to the stock picks that you're bringing to us. one of them being government spending or regulation and things that will drive investment in certain sectors. so tell us how that frames your picks. >> absolutely. so again, we want our small cap

stocks and take advantage of the valuation discrepancies that we're seeing in small versus large and even in the small end of small versus the large end of small and we want to do it with companies that are already seeing and proving fundamentals and strong earnings growth. so we want the tailwinds secular growth, government spending trends that can support both the growth rates and the valuations and we see a lot of that particularly in the infrastructure area, companies that are benefiting from the bipartisan infrastructure act from the ira and very importantly from the buildout that's happening in ai. >> thank you very much for joining us. i totally am with you in terms of the stepdown in valuation. would you mind speaking a bit in terms of rate relief and how that might allow smaller caps to recap and move forward with operations? >> right. so if you had asked me this six months ago i would say absolutely rate relief will be one of the drivers. we have seen some rate relieves

certainly in the ten-year and it has not yet begun to work. so we think that it's the combination of rate relief, continued confidence that the economy is going to be okay. it doesn't need to be robust, but not into a recession and again, very importantly, a relative turn in earnings growth. one misunderstood factor about small-cap stocks is that their balance sheets have actually been improving through this higher rate environment and so they are not as susceptible to high rates as people thought, but maybe that's dampening some of the recovery we've seen with rates coming down a bit. >> nancy, a big part of the small caps are small and regional banks which do not trade well and if the consumer is rolling over which we've had that conversation for the last 45 minutes or so i'm hard pressed to understand how small caps do well under that environment. >> i don't disagree with you on the iwm. i think some of the russell benchmarks have issues structurally with the way they're constructed.

we look at the s&p 600 small cap and maybe the wilshire 5,000 and the example of small caps that don't have those big exposures and particularly in the banks. we conot like regional banks here and having said that, this is a market that can pick stocks and find ones that do well. >> nancy prial of essex investments and how do you feel, anyway? >> it is a concern. viewers are calling in and emailing and everybody's worried. >> if we had done this at the top of the show. >> we would not have allowed that to happen. >> i would not be sitting here right now. >> because my constitution -- we produce in great detail. if we ever did a cheerios taste test on the show it would be disaster. >> i wonder how much a chick-fil-a value meal is? $13.

$12.75. >> your point being? youwanted to change the subject? >> how is that piggyback? >> pretty fascinating. >> up next, final trades.

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>> time for the final trade. let's go around the horn. tim? >> i have not been invited to the 360 lounge the yet, but you never know, but i like delta. i like the stock after a 75% move and it's running into resistance. it's trending higher. >> cmg is on the opposite spectrum of the $5 value meal, but i would be starting to take some profits around the stock split. >> danny? >> mcdonald's trades below a market multiple and growth accelerating again next year. i think it will drive traffic. >> he likes it.

mikey likes it. >> shout out to quentin tarantino and all of the pools and people that owned the houses that tim cleaned. >> i'm sure he performed a very good service. >> and he cleaned the pool, too. >> letter "m," melissa. >> thank you for wchating "fast hey there, i am cramer. welcome to mad money. call me, one 807 43 cnbc. do you know why this market won't broaden out beyond a few gigantic objectives? i will tell