CNBC's "Fast Money" Podcast Summary Episode: Apple’s Rally Keeps Running… And Trump’s Crypto Plans
Release Date: December 12, 2024
Hosted by: Melissa Lee, Karen Feinerman, Dan Nathan, and Guy Adami

Introduction

In the December 12, 2024 episode of CNBC's Fast Money, host Melissa Lee and a panel of top traders delve into the relentless rally of Apple’s stock, despite disappointing iPhone sales and underwhelming AI offerings. The episode also explores President Elect Donald Trump's ambitious plans for the U.S. cryptocurrency landscape, insights from investment experts, and the latest movements in major companies like Costco and Broadcom. With a mix of market analysis, expert opinions, and timely discussions, this episode provides a comprehensive overview of critical financial trends and investment opportunities.

Apple’s Unstoppable Rally

Apple Inc. (AAPL) remains a focal point as its stock continues to surge, defying concerns over declining iPhone sales, lackluster AI product reviews, and ongoing geopolitical tensions with China.

• Stock Performance: Apple shares have climbed over 10% in the past month and an impressive 51% since April lows, nearing a market capitalization of $4 trillion (01:50). This staggering growth persists despite Apple Intelligence’s poor performance, including "awkward chat summaries, faulty image editing, and bizarre Gen Moji capabilities" (02:45).

• Market Dynamics: Dan Nathan observes, “It's just a money flow thing as well. So I get it. But with each passing day, it's getting more expensive, not cheaper” (03:29). He attributes Apple's rally to its significant presence in ETFs, making it a favored choice for investors seeking momentum rather than fundamental growth.

• Financial Health: Karen Feinerman critiques Apple’s financial strategies, noting that the company's cash position is a mere 4% of its market cap after debt, and its once impactful $110 billion buyback program now has negligible influence (03:29). She emphasizes that with 50% of sales still dependent on iPhones and limited growth in services and AI, Apple's high valuation remains questionable.

• Valuation Concerns: Guy Adami adds, “I don't really get this... But this valuation here, it's not super crazy but...” (05:23). He highlights the shift towards services, which are more profitable and recurring, yet remains skeptical about Apple’s ability to monetize AI innovations effectively in the near term.

• AI and Market Perception: Despite Apple’s struggles with AI functionality, the stock has rallied 30% since its June WWDC event. Karen Feinerman points out that while companies like Walmart and Facebook are leading in AI monetization, Apple is being rewarded for potential rather than actualized gains, which may not sustain over the next year or eighteen months (05:39, 06:08).

Treasury Yields and Economic Indicators

The episode shifts focus to broader economic indicators, particularly the rise in 10-year Treasury yields, which have hit their highest levels since before Thanksgiving. This surge is driven by a hot inflation report and increased jobless claims, raising concerns about economic growth ahead of the upcoming Federal Reserve meeting.

• Market Reactions: Melissa Lee reports, “Producer prices rising 4.10% in November, twice as much as expected...” (09:02). Karen Feinerman notes the discrepancy in market expectations versus actual data, highlighting potential headwinds for the economy (09:54).

• Expert Insights: Stephen Whiting, Citi Wealth’s Chief Investment Officer, suggests that despite the U.S. equities’ strong performance, investors should seek diversification. He advocates for investing in small and mid-cap American companies and non-U.S. assets, which are 40% cheaper in forward-looking valuations (11:09, 12:33).

• Interest Rates Outlook: Guy Adami posits that the Federal Reserve is unlikely to make significant rate cuts in 2025, anticipating continued economic growth despite inflation pressures (09:54, 10:15).

Service Titan IPO Analysis

Service Titan, a cloud software provider, made a significant debut on the Nasdaq, drawing attention from market analysts.

• IPO Performance: Leslie Picker explains that Service Titan’s IPO priced below its private valuation due to a “compounding ratchet” provision, which dilutes the company if the IPO falls below previous private funding rounds (27:46). Despite this, the stock closed at $101 per share, well above its IPO price of $71 (27:46).

• Market Sentiment: Guy Adami questions the sustainability of the stock’s performance, noting that while it closed near its offering price, the potential for insider selling exists once lockup periods expire (29:18, 29:32).

• Industry Impact: Karen Feinerman discusses the implications for future IPOs, emphasizing the need for compelling narratives to attract retail investors as traditional institutional buyers become less prevalent (30:08).

Trump’s Crypto Plans and Bitcoin’s Surge

President Elect Donald Trump has publicly declared intentions to position the U.S. as a leader in the digital currency space, aiming to make crypto regulation favorable and attract institutional investments.

• Trump’s Vision: Melissa Lee reports Trump’s ambition, stating, “We don’t want China or anybody else... to be the head” (31:55). His vision includes establishing a Bitcoin reserve for the country, leveraging cryptocurrency as a robust alternative to traditional reserves (35:02).

• Expert Opinion: Dan Morehead, founder of Pantera Capital, believes clearer regulations in 2025 will drive institutional investment into crypto, potentially propelling Bitcoin and stablecoins to new heights (32:25, 34:17).

• Market Impact: Bitcoin is hovering around $100,000, with Morehead optimistic about its future growth as institutional exposure increases (31:55, 36:28).

• Skepticism and Challenges: While the potential for massive growth exists, regulatory uncertainties and the lack of clarity on whether cryptocurrencies are classified as securities pose significant challenges for institutional adoption (34:17, 35:02).

Earnings Alerts: Broadcom and Costco

Broadcom Inc. (AVGO) and Costco Wholesale Corp. (COST) provided notable earnings reports.

• Broadcom: Despite missing revenue expectations, Broadcom's earnings per share beat estimates, driven by strong performance in AI-related segments. CEO Hock Tan highlighted ongoing momentum in XPU accelerators and networking, anticipating a recovery in broadband in the first quarter (16:52, 17:08). Broadcom also completed its $69 billion acquisition of VMware and raised its dividend by 11%, boosting investor confidence (17:59).

• Costco: Costco reported better-than-expected comparable sales and e-commerce growth, with membership fees slightly exceeding analyst predictions. However, the stock remained relatively flat in after-hours trading due to concerns over high valuations despite strong quarterly performance (20:18, 21:35).

• Market Reactions: Analysts discussed the thin operating margins, deferred impact of annual fee hikes, and the robust performance across various product categories, including gold, jewelry, and home furnishings (22:30, 23:00).

Tern Pharmaceuticals: Advancements in Weight Loss and Leukemia Treatment

Tern Pharmaceuticals is making strides in developing an oral GLP1 drug for weight loss and advancing a leukemia treatment.

• Obesity Drug: CEO Amy Burrows highlighted the effectiveness of Tern’s oral drug, which helped patients lose up to 5% of their body weight in 28 days. Unlike existing therapies, Tern’s drug promises better tolerability and scalability (37:43, 38:05).

• Leukemia Treatment: Tern is set to begin Phase II trials for its chronic myeloid leukemia drug in early 2025, with readouts expected by year-end (38:49, 39:06).

• Investment Perspective: Dan Nathan praised Tern’s financial runway, noting its $380 million cash reserves will sustain operations through 2028, enabling significant milestones and potential breakthroughs (40:54, 41:10).

Horse Racing's Potential Resurgence

The episode also touches on the resurgence of horse racing, driven by increased sports betting and the return of famed trainer Bob Baffert.

• Market Expansion: Bob Baffert’s return to Churchill Downs and his recent win with a $3.2 million yearling bucks enthusiasm for the sport (42:27, 42:50).

• Innovation and Engagement: Discussions highlight the importance of high-profile events and the integration of sports betting to rejuvenate interest and attract new fans (43:22, 44:07).

• Investment Opportunities: Churchill Downs’ stock remains undervalued despite positive developments, presenting potential investment opportunities for savvy traders (45:02).

Conclusion and Final Trades

As the episode wraps up, panelists reflect on the discussed topics, emphasizing cautious optimism in current investment landscapes.

• Final Thoughts: Dan Nathan encourages investors to remain patient with strong performers like Broadcom, while acknowledging valuation concerns with giants like Apple (24:04, 18:48).

• Final Trades: The hosts share personal trades and acknowledgments, underscoring the blend of market analysis with personal insights (46:04, 46:30).

Notable Quotes

• Melissa Lee: “Unstoppable Apple shares just keep going up despite lackluster iPhone sales...” (01:03)
• Dan Nathan: “It's just a money flow thing as well.” (03:29)
• Karen Feinerman: “50% of their sales now come from iPhones. They're not growing.” (03:29)
• Guy Adami: “If you, you know, we always talk about looking at the hardware and the software part...” (05:23)
• Stephen Whiting: “We have rapid growth in our tech companies... more opportunity and cheaper assets for the next 10 years.” (12:33)
• Dan Morehead: “Once they start engaging in this space, it should do well.” (34:17)
• Amy Burrows (Tern Pharmaceuticals): “We don’t think that there’s going to be one winner in the oral GLP1 race.” (38:39)

Conclusion

This episode of Fast Money provides investors with a deep dive into Apple’s enduring stock rally amid challenging business conditions, the promising yet uncertain future of cryptocurrency in the U.S., and key developments in major companies’ earnings. The insights from seasoned traders and industry experts offer valuable perspectives on navigating the volatile market landscape, highlighting both opportunities and risks for the forward-thinking investor.

For more information, visit Fast Money on CNBC.