Meme madness goes beyond the gamestops of the world. And the ceo of a Bio Tech Company disrupting the health care space. Im melissa lee, coming to you live from studio b at the nasdaq. On the desk tonight tim seymour, dan nathan, guy adami, and katie stockton. And we start off with a market that may have gotten a little too complacent in the face of rising uncertainty. The nasdaq closing at a record for the first time in over a month today. Volatility across a variety of Asset Classes somewhat surprisingly low. The vix Index Trading near its lows of the year. Bank of americas move index is down 8 this year. Even crude oil vol at depressed levels. All that, despite uncertainty over the consumer and rates, a potential trade war with china, and a war in the mideast. But two big data points could cause ripples. Cpi tomorrow,nvidia earnings next week. So, is this just the calm before the storm . Guy . I would have said that month ago, ill say yes again today. Listen, this is what i think is going on, but people have been conditioned to learn that markets, if they go down, they dont stay down, and 1 theres no point in being long volatility, because long val tr vol trades typically dont work. I think all those things together sort of whats going on here. Now, i also think thats sort of a recipe for destruction. Thats a trade that will work the majority of the time, when it doesnt work, you short of blow up. Ppi that comes in hot, yet the market doesnt react. When you see the geopolitical stuff, they get emboldened to do these things. And theyll be right until theyre not. Thats how these things typically work out. Guy, i know you like to do a lot of quantitative sure. This afternoon, you took a look on the fact set here, how many stocks above their 200day moving average. Its over 75 right now, and you are seeing the s p 500 outperform the nasdaq a little bit. Doesnt say that im getting bullish, but a lot of what guy just said is really true. The fact of the matter is, fed chair powell said, listen, its going to take us longer. Get comfortable with higher rates. And that doesnt even phase Market Participants . And i guess when youre thinking about it here, though, you know, we have an s p thats up 10 back at alltime highs. All the readings, you said, are very near lows. There is an alternative here, people. Threemonth treasuries are paying 5. 4 . So, if you think that, you know, were going to go sideways, theres other places to park your money right now. I get it. Earnings season, q1, better than expected. Q2 guidance, there were some situations here. It looks pretty decent, but at the end of the day, were likely to get the benefits of a lot of this excitement in and around generative a. I. With these top five names. They are probably in the stock, probably in the market, and thats what we saw last year when we got into july and was a pretty rocky period on their way to the lows back in late october 23. Are we in for a surprise, do you think . I think the market is positioned for a surprise to the bullish side, or a more benign inflation print. I think theres more focus on cpi than ever, not only because weve had three bad prints, but because if you look at some of the data weve got today, the components of the pce have been very mixed. Theres been actually enough to say, maybe you could, you know, read through this, the fed should be okay, but dans right. I mean, powell was out there today, hes saying, im not going to hike, but he said, im not going to cut. He really reiterated the higher for longer, and that restrictive policy needs to remain restrictive. But again, the flow to the market has been as long as the fed is not hiking, and i know its almost absurd to think thats, oh, its great, risk on you if the fed is not going to hike, but truly, the data has been to a point where people might have had to quickly reassess. So, i think, look. The move in the market, and the collapse in volatility is all postfed meeting. Were going to build up to this again. Its all about the fed. And were in an environment where we know eventually they will probably cut, we just dont know when. Maybe half the battle is just knowing where the fed stands and he addressed the possibility of a hike. He said, he really does not see that being the next move and by many measures, policy is still restrictive at this point. So, you know the fed is going to stay up here and maybe thats enough for the markets at this point. What do you see in terms of the possibility of a surprise in volatility . Well, we see the vix as a measure of market sentiment, and of course, with it so low, or relatively low, it would suggest that there is complacency in the market market. Its not always the case. But right now, with the meme stocks running up, it has that feel to it. What was interesting, yesterday, monday, the vix gapped up after having declined pretty notably for more than three weeks. And it came into some support on the chart. Now, longer term, the vix tends to move in these cycles, sort of low vol versus high vol. Weve been in low vol for more than a year which is above average. And the indicators are starting to shift momentumwise to suggest that well get into a higher vol type of environment, both near term and also potentially over the coming months. In terms of higher vol, you mentioned some of the structural reasons why volatility will not go back to the highs that weve seen in the past, you think that holds . I believe it listen, thats my thats my belief, im not suggesting im right, but if you think about sort of the arc of this entire thing, there used to be a time when people bought volatility to protect portfolios. When they realize zero int interrates did not allow the markets to go down, they didnt. And some genius said, wait a second, not only dont we need to do it, we is sell this vola volatility. And thats been the game for awhile. I theys why vol has been muted. However, you do get instances where that genie gets out of the bottle. We saw glimpses of it a month or so ago. It was short lived. I think were entering a period where people bhelter be prepared for it on the upside. And weve been talking about the giant jumps or declines in stocks on the back of earnings, so, individual stock volatility on an event basis, weve seen that, i mean, time between meta and starbucks, i mean, so many big cap names are seeing giant moves up or down. Theyve seem idiosyncratic. The other one is the consumer starting to weaken . And ill just say this, were going to get data about the consumer as we get deeper into retail earnings. What walmart has to say on thursday is going to be really important, if it corroborates some of the things we heard from the other consumer companies, then, you should start to get worried about the u. S. Consumer where a time powell just told us, u. S. Consumers are spending on credit, were receiving credit reset at much higher rates. So, these are all things i think we can focus on, but the flip side of that, if we do have a benign cpi number, if we have yields go lower, we have crude going lower, the dollar going lower, these are all supportive, i guess, of equities and equity valuations, and a consumer maybe giving them a little bit of, you know, a backdrop or Something Like that, a back stop. So, to me, i guess its a really difficult time right now. The last thing ill just say is, i just cant foresee a situation where we get a massive gap on a weak cpi to new highs where we are essentially right now. Why . Well, because i mean, to me, i think thats what happens tomorrow. You do . You think we get a 1 , 2 move on a weaker than expected i think you could see a huge relief. Weve had three bad ones in a row. People have priced in people have cpi shock, and if you got something that looked benign knee jerk higher. Were near those peaks, we have semis that should be under some pressure here that are within 3 of alltime highs and youve got the nasdaq, which, again, alltime high. Even though it is underperforming the s p, but i feel like this market tomorrow wants to go higher on a better cpi. You think thats the pain trade, too, right . Yeah. So, with what else is going on, i mean you i get it, you dont want to really step in front of that, but for instance, if the number is a little hotter and its the fourth one in a row, then i think the narrative starts to shift a little bit, and then really quickly, we get back to earnings with nvidia, and what does that mean for the entire megacap tech complex . Because if you lose that, which we lost last summer, then you lose the market. Well, i would say, you know, were prone here to a false breakout in the s p 500, very close to the highs. Minor resistance, around 5260. I could see a gap up, and a positive initial reaction from the market, but something thats not sustained. And for us, we always want to make sure these breakouts hold nearterm, and i dont think it will hold, so, we feel like we have one more down leg to this socalled corrective phase that began in april, and the vix and its posture would corroborate that. And the downward leg would bring it to what level . Well, i wish i knew, but the initial support is around 5055. I think that would be prone to a breakdown, just given the status of our indicators, a little bit too overbought for that to hold. So, you know, the secondary support, 4810 to 42820, that includes the former resistance level. That seems aggressive to me, so, perhaps somewhere in between. I think for the long only crew, you talk about those levels, you may absolutely be right. And i think theres been stocks that have maybe proven that, especially in the megacap, the m7, but say to 5050 on the s p, a lot of investors are like, ah, whatever. Thats not something that scares people from getting out of the market. If you think about not just passive flows, but people that are investing along second ewe lair trends, they understand volatility. Thats a lotof my clients. And if you told me that, you know, the corrective phase is down to 5050, im not going to be too cute around the edges, i think. Yeah, its managing risk and waiting for better entries. Well, is the hull. Back in volatility pushing investors into meme stocks . Mike khouw has the options read. Its been staggering the past couple of days. Yeah, theyre back, it would seem. The stocks themselves are not back to the prior highs in some cases that they had seen, but the options volumes have certainly recovered. We have a couple examples here. The buyers were most active in the may 10 strike calls which expire at the end of this week, 25,000 of those traded for 81 cents on average. Virgin galactic traded 7. 3 times the average call volume. About 18,000 traded for 16 cents. And lucid group traded 6. 2 times its average call volume, may 3 1 2 calls, most active, 36,000 or so traded for about 16 cents. And every one of these cases, the traders are betting on moves of 30 to 35 and risking 6 to 12 of the current stock price. They all have very high short interest. What kind of action have you seen in gamestop and amc . Very much the same thing, actually. Most of these, you know, really beaten down stocks, basically, its the whole theme. People are screaming for high short interest. I think those two actually, weve seen really big volumes both today and yesterday, and thats not surprising, you know, the Roaring Kitty return, i think, probably really got the gamestop thing in particular really fired off. But its all of these, you know, we also saw, you know, activity in things like plug, charge point, you know, a lot of these names that are actually single digits, you know, and probably on the cusp, you might say, but theyre not on the cusp as far as call buyers are concerned, who are trying to play for a squeeze. Is this the result, guy, of this low volatility world, people getting pushed out i mean, clearly devoid of fundamentals. We said it doesnt matter. We made the point. And listen, over the last two days, amc, for example, traded over a billion shares of volume. This is a stock that typically trades, i think, 18 to 20 million shares a day. Billion shares in two days a lot. Part of it is short covering, without question. Just part of it is the chase, as well. So, this can last. Tim talks about it all the time. Karen said it last night, silly can be silly a multiple of different times and were seeing it now. My concern is that people will get left holding the bag. And we said last night, one of these companies should do a secondary. Amc actually did today. Didnt matter. But thats if i were running these companies, especially gamestop. This is an amazing opportunity, especially at gme, i think approaching alltime highs to do something in that realm. Yeah, but again, you know, we talk about this, we dont like to use this term in a way that sounds s derogatory. We talked about yesterday where gamestop went out, it was trading at 30, the aftermoney strat on the call and put premiums, it was like 65 of the price of the stock going out a few weeks. If you look right now, just playing from may 17th and gme, it closed at about 49. The 49 call, if you wanted to define your risk and make a bullish bet on this, between now and fridays close, it will cost you 12. A quarter of the value of the stock price. So, you know, you better be fast, you better kind of know what youre doing, you got to understand that this stuff can be binary. So, if you are good at trading this sort of stuff,have at it, but its not my game. There are definitely plenty of the traders that were talking about, its not derogatory at all, theyre traders. And so, yeah, i had a partner once that was one of the best traders i ever worked with. He said, dont tell me what to buy, tell me where to buy it. And that is ultimately what you have. You have voluatility on steroid here. If its mr. Kitty or not, i mean, its extraordinary, but katies right. This is a sign of risk aggression, and its something that weve seen in periods in this market, and look at credit spreads. People are pricing things like nobodys going out of business. Mike, thank you. Always nice to see you. Mike khouw. Coming up, the a. I. Race is heating up, as google announces its most powerful gemini model yet. How it positions alphabet in the next and neck battle. Plus, running ahead of the competition. On holding jumping after results. Nike gets left in the dust. Can the legacy name launch a comeback or is there a new g g. O. A. T. . Dont go anywhere. Fast money is back in two. This is fast money with melissa lee. Right here on cnbc. Earning a degree doesnt have to mean starting from scratch. At university of maryland global campus, it means building your next success on the foundation of life experience. Umgc values the successes youve already achieved. Thats why you can earn up to 90 credits from prior learning and life and job experience toward our bachelors degree programs. No application fee if you apply by may 31 at umgc. Edu. At corient, no Wealth Management you begins and ends with you. We believe the more personal the solution, the more powerful the result. We never lose focus on the life you want to build. Its time for Wealth Solutions as sophisticated as you are. Its time for corient. Welcome back to fast money. Goingss io 2024 conference kicked off with alphabets ceo unveiling a slate of new products. Deirdre bosa sat down after the keynote and here with all the highlights. Hey, melissa. This is really the biggest change to search that we have seen in decades. An a. I. Overview will be the default. It will roll out to all american users of google this week, and then to googles billionplus users over the next by the end of the year, rather. The technology will decide whether you get those ten blue l links or if you get more of a chat bot answer. I sat down with the ceo right after the keynote, and i asked him how this is going to change the business models. He said that both users and advertisers are going to weather this upheaval much like they weathered the shift from desktop to mobile and thinks it will be smooth. Also, this week, between openais demo and googles today, we got our first glimpse of a. I. Agents. Heres what he said about googles. I think you started seeing examples today across our keynote of what covers those capabilities. To be able to process the real world in front of you and constantly process it and answer it intelligently. We are building, you know, you can go to gemini and ask it to plan a trip. In search, we announce multistep reasoning. You can write very complex queries. Behind the scenes, we are braebbraeb i breaking it into multiple parts and composing the answer for you. These are all very early days. Were going to be able to do a lot more. I think thats what makes this moment one of the most exciting ive seen in my life. One of the criticisms of google particularly over the last 18 months is that it doesnt move fast enough to release these products. So, even though the demo, theyre calling it project astra, the a. I. Agent, it was really amazing, i asked him, when are we actually going to see it . And he told me he expects by this Time Next Year io 2025that its going to be ready for the mainstream and theyll have rolled it out. Melissa, back to you. So, d, having seen gpt 4. 0 and now agent, how do they stack up . They sound sort of similar in what they try to what theyre going to try to achieve. Yeah, i think the major difference, which they both share, is that this is no longer a chat bot that you type queries to. This is an agent that you interact with, that can reason, that has emotion, that remembers where you left your glasses because it has scanned the entire room that you are in. So, i think theyre pretty similar. And thats the key. I mean, we talk a lot in San Francisco about the commoditization of large language models, now, were going to start to see the a. I. Agents roll out. Do you need to be good enough for the consumer, good enough for the developers, thats where the next race is going to take place. Who gets it out, how capable it is, how it works with you, thats going to be really key for the next year. You asked the key question, though, in terms of how it changed the business model. Do you feel like you got a satisfactory answer, comparing it to the transition from desk top to mobile is fine, but when youre dealing with this chat bot and theyre talking to you where is advertisers . That fundamentally is going to change googles model. Its a great point. Now, youre relying on the technology to either show you a merchants link, or give you a generative a. I. Answer, and if it gives you that gen a. I. Answers, it pushes the links that have proved extremely profitable to google, push it below the fold. So, are advertisers going to be spending the same amount of money . Im not sure he answered it directly, but he said people are using search more than ever and they are finding these opportunities to provide them links, and that a chat bot isnt what users want in some of these cases, so, i this i thats still being negotiated, but he said that if, you know theyre going to be traveling, its a bit of a path up and down to see where they all level out, but he did not seem so concerned about it, and he also said that the cost for them are not going to go up materially, when you think about w