← CNBC's "Fast Money"
CNBC's "Fast Money"
Banks Surge On Results… And CPI’s Impact On The Fed 1/15/25
00:43:49
Bank stocks surging as the group kicks off earnings season on a positive note. How their financials are faring, and the setup for the rest of earnings. And It wasn’t just the banks in the green. Stocks surging across the board as core inflation slows in December. What the data means for the central bank’s next move, as we count down to another Fed rate decision. Fast Money Disclaimer
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- [00:00]
Frank Holland
Weekdays at 5am Be first on world markets, first to the global business conversation. Get a jump on the investing day every day with Frank Holland. Success starts early. Worldwide exchange, 5am Eastern. CNBC.
- [00:17]
Melissa Lee
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, a big bank boom. The major financials getting earnings season off to a strong start. Is this just the start of an even bigger rally to come? We'll debate that. Plus a rate cut revival. Treasury yields sinking on the back of this morning's inflation report. Did the CPI print put a Fed move back on the table or is that the action premature? And later lackluster. Lilly, why the weight loss heavyweight failed to rebound from yesterday's losses. Private equity digging, diving in the college sports. Will it be a smart investment? And two more acronym reveals. One totally tubular and the other doesn't quite play by the rules. But we'll allow it this time. I'm Melissa Lee coming to you live from studio Be at the nasdaq. On the desk tonight, Tim Seymour, Karen Feiderman, Guy Adami and our very special guest trader tonight, Joe Moglia, the former chairman and CEO of TD Ameritrade, a friend to this show for all 18 years of our existence. Joe, welcome.
- [01:12]
Joe Moglia
Thank you.
- [01:13]
Tim Seymour
Clap a mess.
- [01:13]
Karen Finerman
Great to have you here.
- [01:15]
Joe Moglia
I'm honored to be on. Thank you.
- [01:17]
Melissa Lee
Thank you. We start off with today's massive rally on Wall Street. The Dow gaining more than 700 points for its highest close of the year. The Nasdaq up nearly 2 1/2% on a cool inflation print. The major indices all seeing their best day since the election. We'll get to the CPI in just a bit. But first a barrage of big bank beats. Wells Fargo, Goldman Sachs, Citi, JP Morgan, all surging today on the strength of this morning's earnings reports. And there is still more to come. Bank of America and Morgan Stanley both up to bat tomorrow morning. Will these reports confirm what we heard this morning? Karen? Very optimistic?
- [01:49]
Karen Finerman
Yeah, I think so. I mean this was really, really good on so many fronts. And for all the banks, I think a lot of things went right. Net interest income very good. Some of the capital markets business really good for some investment banking better than for others. But I think that the consumer is in good shape. And you know, I think the animal spirits idea, we'll see mergers, that's great for investment banking even if we didn't see it in this quarter. So there really was a lot to like for for both citigrape, Citi Grape, Citibank and JP Morgan. I of course listened to the JP Morgan call first but you know I like the idea of Jamie. It sounded to me like staying a few more years maybe. But I think things are going on just about all cylinders. It was really an excellent report across the board and I think the read through for the economy is really good as well. Not just the banks but more broadly.
- [02:42]
Melissa Lee
Yeah. The CFO of JP Morgan specifically used the phrase animal spirits. We are in animal spirits mode right now. The Goldman Sachs CEO said something to the effect of there's been a meaningful shift in CEO confidence since the election specifically. So we're setting up Tim, for what may be a very good age for the banks.
- [02:59]
Tim Seymour
It is. And while today I still think market action was really about a cpi, we're going to talk about that. I do think the bank messaging was fantastic. And I think when you think about JP Morgan and Citibank and you think about old versus new JP Morgan has really kind of kept pace with both innovation on the fintech side in terms of balance sheet efficiency. Citibank, the big issue all along was they were not. There was always so many inefficient investments. There were disparate places around the world where they were deciding to take take a shot. What we heard today is that actually the long term capital prognosis for this bank is fantastic. A $20 billion essentially repurchase and the dynamics around the cost efficiency that will get better in 26 from what we hear means. I think there's a lot more to go at Citibank and I know this means nothing. If you drew a chart back in Citibank obviously because of all the dilution there this is still a horrific story. You're back at like Jan 2008 levels or 2009 levels after still being down almost 80%. But that's it's tomorrow's money. And I really think Citibank is, is an incredible story that has an ability to outperform. But banks did send a great message.
- [04:06]
Melissa Lee
You sit in the CEO seat Joseph, how would you feel with this backdrop?
- [04:09]
Joe Moglia
Well I think one of the things that, that you need to pay a little bit of attention to I think we went is it 793 days or something like that with an inverted curve camera's already referenced that the significance grow significant growth that we've seen in the net interest margin with a positive yield curve that's only going to enhance the earnings as far as the banks go. So I mean I could not bullish in the financial sector at all.
- [04:34]
Melissa Lee
Yeah.
- [04:35]
Guy Adami
First of all, as you said at the top of the show, this is a man that's been a friend of this show since the inception was steadfast.
- [04:43]
Tim Seymour
This isn't easy to do, by the way.
- [04:44]
Melissa Lee
Not easy to do given who was on the show.
- [04:47]
Guy Adami
Fordham University, by the way. One of the great Jesuit institutions in the country. Home of Vince Lombardi, Alex Wojehowitz, one of the seven blocks of granite they named their football field. What?
- [04:58]
Melissa Lee
Mowgli.
- [04:59]
Guy Adami
Mowgli Afield. So a legend is amongst them midst of greatness. What was the question?
- [05:04]
Karen Finerman
I'm kidding.
- [05:05]
Guy Adami
No, you know, I think you know, Tim, spot on about Citibank and we have actually, this is wrong, as I am all the time. Citi's one we've gotten right. And we have pointed out today, for example, they said tangible book is basically 97 bucks. And we have made the point that, listen, I get JP Morgan at two and a half times tangible book. Maybe it's deserved. But Citibank like 80% of it, it doesn't make a lot of sense. So I thought for a while Citi could trade up to 80. Here we are. But now that they've sort of raised the bar, I'm with Tim. I think you can go higher from here.
- [05:33]
Tim Seymour
I also just think the messaging from banks that we're all talking about is that NCO and expenses are going to stay the same. All profitability is going straight to the bottom line. This is a story where I think these banks have been underestimated by the analyst community. I think this is a case where you're going to see not only upgrades based upon eps, but on multiple or whatever multiple of tangible book you want to put on it. So I think we've been slowly going through this for about four years with banks. It was disrupted by SVB back in May of 23. But I think it's a case where people have a lot more confidence both in the capital base, the stewardship of these big institutions. And look, as Joe said, I mean, it's a time for. For businesses to be reinvesting. It's a time for businesses. JP Morgan, 90 billion alone in net interest income.
- [06:16]
Melissa Lee
So building on the sentiment, do you look at the banks and think, I want the bank with a little bit more of the turnaround sort of aspect to it. So for instance, Citi, the commentary today was this is a wayp 7% return on tangible common equity. This is a waypoint, not our destination. So we're going to improve, improve, improve. And then of course there's Wells Fargo which had, you know, had a nice little pop before.
- [06:38]
Karen Finerman
Yeah. I mean I love the quality of JP Morgan but you know, as guy references the price to price to book is the highest and as it should be. But so I do like a city that's well just by its own appreciation getting to be a bigger position. Wells as well, but also for all of them, the idea that their capital requirements could go down. Right. And so what that does for loan growth and that margin and just the higher NIM and the more loans under the nim, a lot of good things can happen.
- [07:08]
Joe Moglia
Yeah, no, I think in terms of, you know, you mentioned a big piece of this for me is leadership. And you know, to mention the Silicon Valley bank thing. Remember the chaos and the horrible disaster we had with that. Well, the job of every major brokerage firm and every bank is to protect their clients deposits and assets. Okay? Now the government was supposed to come in and make all these changes those four years ago. There's not been one change since then. So when you think about who you might want to bet on going forward, I would bet more on because everybody's going to do well in the financials going forward. I would do a better job. I would focus more on the companies that have been consistent and well run, have better management teams. I think over the longer haul you get paid, paid back pretty well for that.
- [07:50]
Guy Adami
We went seven minutes and we should bring up Goldman Sachs because I thought that was a pretty remarkable quarter. That's another name. I think we've done a decent job. It's had some ups and downs but here we are within sort of a whisper of its all time high. Deservedly so, I think. And you know we talk about Jamie Dimon all the time for a myriad of different reasons. Karen, I only talk about it for one reason. I know, but we don't, I don't think we bring up David Solomon enough and I'm not trying to curry favor here, I'm not looking for a job. But under his leadership, that company's. Listen, they've made some missteps. He's been outspoken about it, but they've made a lot of right choices as well.
- [08:21]
Melissa Lee
All right, let's turn now to the other report fueling today's gains. December's CPI rising 2.9% in line with estimates ex food and energy consumer prices rose 3.2% a tick better than estimates down from November. The market breathing a sigh of relief here. The 10 year treasury yield pulling back the dollar easing back from its red hot run. Bitcoin briefly topping 10000 mark again as investors get their risk on Mojo back on. Is this going to last, Tim? What does this, what does this tell you about what the Fed's next move is?
- [08:49]
Tim Seymour
Well, I think the Fed should still be on hold. That's a little bit of what I think and a little bit of what I think is going to happen. One CPI number doesn't do it. And 3.2 on the core is while it's the best downtick we've had in about six months, it's not where they want to be. I think if you look at the components of cpi, the breadth here of inflation is actually going higher. It's broadening and I think it's, it's, it's a, it's a big issue. This is one data point in a series of ones that haven't helped. The bottom line is the market was so scared for this report. I mean the positioning going into this. We were over inflated and we were, we were so worried about where things were going. This reaction doesn't surprise me. Doesn't mean that inflation outlook has to change that much.
- [09:27]
Karen Finerman
Yeah, I agree completely. I mean it's nice. That's, you know, 10th basis point is nice but still we're still higher than where we need to be. And I think that the animal spirits we just talked about does not to me read as lower inflation.
- [09:40]
Melissa Lee
Right.
- [09:41]
Karen Finerman
In fact it reads higher inflation. So nice to get that bounce back after that big Friday move. But I agree with you completely. There's, I really don't think the Fed should any.
- [09:49]
Joe Moglia
Do you guys think that there's actually going to be a shift in terms of, we've been talking about the Fed now for, on a, for nine, for the last couple of years and that we know that this year we might get one, we might get two, we might get zero. But we know that. But are we now at the point, I think where the investment community has got to start to look at the economy itself as opposed to just whether or not the Fed's going to ease or not ease or pause or increase rates. Focus on the economy, focus on the fundamentals behind the individual sectors and the individual companies. I think that's a shift that I'm starting to see with regard to the marketplace as far as valuation goes.
- [10:23]
Guy Adami
I think that's fair. And you know, you said it on the call earlier today and I've said it. I'm not a fan of the Federal Reserve. I'll be outspoken. But I think Jerome Powell on the margins has done a really good job sort of signaling what they're going to do. He's made some mistakes as well. But here we are at the market effectively at all time highs and they've been able to sort of navigate. But Joe is right in terms of is about the economy. But then you sort of look under the like Empire State manufacturing came out today. I think it was down like 12% or somewhere either side of 12% street was looking for basically flat to slightly higher. So there are some things under the surface that should be concerning. And I'll say again, you know people talk about the strength of the consumer. Yeah. They spend money consumer though if you look at it, I mean the balance sheets are on the wrong end of things, especially a higher interest rate environment.
- [11:05]
Tim Seymour
I just, I think the economy and the strength is really exciting. I think there are a lot of pieces of the economy though that got used to being funded at zero and I think this higher for longer dynamic. I don't think rates need to go down a lot. I don't think they're supposed to go down. In fact we're all saying they're kind of normalizing. So you get to a place where I think there, there will be credit issues out there but in the meantime I do think the message is that the economy is in better shape. I think speaking of that, you know the empire manufacturing, I think you know PMIs, but manufacturing ism and those dynamics, they've been in a bear market for two and a half years. I actually think we've started to see some bottoming in some of the manufacturing and I don't think it's critical either way but I do think actually you could see a surprise and I think some of the industrials which have been big underperformers look interesting.
- [11:50]
Melissa Lee
I think it's interesting the point about there will be credit issues. Yes. But to Joe's point, I mean it may not matter at this point how much the Fed does. We know it's going to be sort of just incremental to where we are right now. And what have rates done in you know, despite what the Fed has done since September, the Fed can only. Right.
- [12:08]
Karen Finerman
Can only have power over the short end. To your point, economy is growing. Right. Term premium. We talk Andy Constant talks about that all the time. That's, that's we're going to see the Fed has no control over what the 10 year is going to do.
- [12:19]
Joe Moglia
Yeah, I think one thing too with regard to Powell, you know Your point guy about he made mistakes. Of course you made mistakes. But he does say what he's thinking, even when he made mistakes. He said, you know, this is going to happen, it's transitioning, it's all those things. But at the end of the day, he's telling you what he's really thinking he's going to do. And then unless he gets a whole whole series of different data to change his perspective, that's what he's delivered on. And a lot of times the market's guessing what he's going to do, estimating what he's going to do. And the market's been wrong the last two, three years.
- [12:50]
Karen Finerman
Can I just add one little thing?
- [12:51]
Melissa Lee
Yeah.
- [12:52]
Karen Finerman
They were finishing hiking, but they didn't cut all last year. The market did fine.
- [12:57]
Melissa Lee
Right. That's a good point there.
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Joe Moglia
Yeah, but was that because they anticipated.
- [13:00]
Karen Finerman
The but cutting somewhat, but yet still a lot of businesses were doing fine.
- [13:05]
Joe Moglia
Yeah.
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Karen Finerman
Yeah.
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Melissa Lee
Well, Joe has been very bullish on the market since the election. Just days away, we are awaiting the inauguration of President Elect Trump. He will reenter the Oval Office. A lot of the bank CEOs were talking about this, about the change in sentiment, the change in confidence, the animal spirits because of this new administration. And you think that this will carry over across the markets, not just in the banking sector?
- [13:26]
Joe Moglia
I do. I think it's the entire market. So you've got a president now who, number one, he likes the market. You're going to try to take care of them. Number two, he's a business guy. Number three, everybody he's appointing with regard, almost everybody with regard to the decisions he's making. There are people that have business or investment backgrounds and frankly, they bring pragmatism to the table that a typical politician or somebody from academia doesn't bring. So he's not fooling around when he talks about deregulation. So deregulation, we kind of know what that means, but what it really means for individuals and different divisions within companies. You've got more people having more time to be able to spend, spend more energy on stuff that matters. And don't underestimate the massive, massive compliance budget because of all these regulations at every one of these firms that has a chance now to be reallocated into, into different areas where you may have greater growth. M and A is going to explode. I don't think there's any question about that. I think we all would agree with that. And at the end of the day, we're finally getting real clarity with regard to crypto he wants to be the crypto king, he wants to be the crypto president. He wants the United States to be the crypto country of the world. The people that he's hired to are appointing, most of them are invested in the crypto world now. Every, every one of, every one of the obstacles that have existed over the last decade, they're gone. They're gone. So when you think about that, in terms of going forward, we would all say you should never fight the Fed. I think we've got to say you should never fight Washington. You know, and as if I were still CEO, I would love this operating environment that we were heading into now. And as an investor, I don't think I've ever been more bullish. And I think you got on technology, I think you got to own crypto, and I think you got on financials.
- [15:04]
Guy Adami
It's hard to disagree with the things you said. I will say this is just me. I think Scott Bessant, out of all the nominations, he's to me, the most inspirational, inspired one. I think he's the right choice for that job. But my concern around this has been and would have been same if the other side had won this election. Policy is going to be inflationary, I think, almost by definition. And I don't think this economy is set up for higher interest rates on the back of that. So that's a concern. And we have a lot of treasury auctions coming this year. So today was a day where yields went lower. I get it. We're one bad auction away from being right back to 4.8.
- [15:36]
Melissa Lee
Yeah. Is that a concern? That all what you're talking about?
- [15:39]
Joe Moglia
I think, I think, I think there isn't any question that there's going to be volatility in terms of going forward and tariffs, you know, the tariffs could be used strategically. That could be a benefit for our economy, or they could be blustery and wind up turning out turning out to be a major problem for economy. But I think, I think with the people around him, as they start going down a bad path, I think they figure that out.
- [16:01]
Melissa Lee
All right, let's hope so for the sake of our country. Joe will be with us for the entire hour. Coming up, Lilly Lull, the farmer pharma giant unable to really bounce back after yesterday's big drop, why investors weren't buying this dip and if those losses will continue. But first, the latest out of California. As first responders continue to battle the wildfires and dangerous winds. An update on containment and the massive economic impact as insurers start to process claims.
- [16:30]
Frank Holland
This is Fast Money with Melissa Lee right here on CNBC. Weekdays at 5am Be first on world markets, first to the global business conversation. Get a jump on the investing day every day with Frank Holland. Success starts early. Worldwide exchange, 5:00am Eastern, CNBC.
- [17:00]
Melissa Lee
Welcome back to Fast Money. President elect Donald Trump is considering an executive order that would halt the nationwide ban of TikTok set to take effect next week. This according to a Washington Post report. In just the last hour, social media stock Snap and Metta each falling in the extended session. We were just talking about this and how the beneficiaries of a ban may not in fact be any of these social media publicly traded companies here.
- [17:22]
Tim Seymour
Yeah, I mean it was just, you know, last week or even we were talking about the benefit. Careful, there's some confetti. Don't, don't get hurt. And you know, you had this dynamic that actually, if anything, you know, Snap is benefiting disproportionately. Snaps issues are snaps alone. By the way, you shouldn't be buying this on a TikTok ban or not. You should be buying it on where they sit in the, in the ad funnel and where they get at least most of their revenue. But I actually, and I actually think Snap's kind of interesting. There's a couple of upgrades this week. These headlines are going to move stuff around as they have. It's not a reason to do anything.
- [17:51]
Melissa Lee
Yeah, it's certainly not a reason to buy or sell here.
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Karen Finerman
No, I mean Matt is down 10 bucket, you know, 1/2% in the aftermarket. I don't know if therelet's say you had a 1/3 shot. So a 10 point move on a 1/3. Okay, that really happens then that would be down another 20 bucks if it does. Still, I agree. I'm not trading around the TikTok fan.
- [18:11]
Melissa Lee
All right. Insurance companies starting to process claims from losses tied to the California wildfires. This is dangerous winds continue to hamper firefighting efforts in the LA area. CNBC's Contessa brewers got the very latest.
- [18:22]
Contessa Brewer
Contessa and we've been seeing them carry that fire retardant still up over the mountains. Melissa. In the meantime, State Farm has just erected this customer care center staffed by specially trained catastrophe representatives from all over the country. The insurance giant says this is in fact the largest fire, the costliest in terms of claims that it has ever responded to in California. At last report, the company has received more than 7,400 home and car claims. Now insurers can use aerial Imagery and other technology to process the claims even before the adjusters are permitted back into neighborhoods. And State Farm says it has already begun cutting these initial checks. But in California, State Farm has the largest share of homeowners insurance policies. 8 million across the state, 250,000 property policies in LA county, and 880,000 auto policies. Last year, though, it joined its publicly traded competitors in significantly lowering its exposure to the riskiest regions in the state, not renewing policies or not accepting new policies, it says that the state just wasn't allowing rates that reflected the true cost of the risk. Today, they say, though, their focus is completely on the clients they have. The company spokesperson told me they're on a mission to reassure these customers they will get paid what they're owed. And we just learned that State Farm yanked its super bowl ad for February. It says it needs to focus on its customers. So those are the updates here from the state's largest insurer.
- [19:57]
Melissa Lee
Melissa Contessa. Thank you. Contessa Brewer. There's going to be a need. In the last hour, Contessa was talking about. There's not going to be a big developer like a Toll Brothers to go in and rebuild. These are all individuals rebuilding their homes, hiring contractors. And you know what, if there are tariffs imposed on Canada and Mexico, materials are going to be much more expensive to rebuild.
- [20:20]
Joe Moglia
Sky high.
- [20:21]
Melissa Lee
Yeah, sky high. I mean, that will affect everything in terms of the ability to rebuild.
- [20:25]
Joe Moglia
You know, we know there are people out there in Hollywood, Louisiana, et cetera, that have plenty enough money. They can do that. But the typical person in our population doesn't have enough money to be able to do that. So for them to be able to replace their home in the area they want to be able to live, they may have to relocate and wind up going someplace else altogether. I mean, you know what I find really, really sad? We used to prepare for the Hundred Year flood, Right. That we'd get every decade. Now every year there are four or five major, major natural crises. And it happens again and again and again and again. And what's the reason for that? Global warming? I don't know. But these things are very, very take a very serious toll on, you know, the individual families.
- [21:04]
Guy Adami
Yeah, there might be people watching in North Carolina right now that had a similar disaster that seemingly everybody's forgotten about and they're still struggling. So to Joe's point, and it's going to really pain me to say this, but, you know, we're tasked with trying to figure out what goes up and what goes down all the insurers topped out like late October, early November, for example, Pulpit Chubb Chart. And you'll see exactly what I'm talking about. I mean you look at these names and you know you're not buying them for these reasons but just on a valuation alone and their ability to continue to earn. I mean these become very interesting after these sell offs.
- [21:34]
Karen Finerman
Yeah. I mean to guys point for us to try to translate bad news, good news, whatever it is into what does that mean for the market. If you look at names like Home Depot and Lowe's, you know, you could see a big bump there. Restoration Hardware for you. I mean it's going to take a while.
- [21:48]
Melissa Lee
Yeah.
- [21:49]
Karen Finerman
But I mean there's going to be a lot of rebuilding.
- [21:52]
Melissa Lee
There's a lot more fast Monday to come. Here's what's coming up next.
- [21:57]
Frank Holland
No rebound love for Lilly. Investors pass on scooping up the beaten down pharma giant after yesterday's route, the guidance that's keeping them on the sidelines and whether that stock can see a pharma flip. Plus more on today's major market moves, how the inflation data will impact the Fed and what their next move on rates will be. You're watching Fast MONEY live from the NASDAQ market site in Times Square. We're back right after this. Weekdays at 5:00am Be first on world markets, first to the global business conversation. Get a jump on the investing day every day with Frank Holland. Success starts early. Worldwide exchange, 5:00am Eastern, CNBC.
- [22:47]
Melissa Lee
Welcome back to Fast Money. Eli Lilly marginally higher today but unable to recover from yesterday's losses, now down nearly 7% on the week. The company's updated financial outlook disappointing investors with projected sales of its GLP1 drugs, Manjaro and Zap down falling short of expectations. The stock now more than 20% off the all time highs hit just in August. I thought it was really telling that there was very little bounce for this stock. We had Jared Holds on a Mizuho yesterday. He said he thought it was a buy here if you're a long term investor but nobody's a taker yet.
- [23:17]
Tim Seymour
Well, it's not just about valuation. I mean what we're learning through bits and pieces is that the competitive landscape is changing and whether it's an oral or whether it's the dynamics that that there are even players that are not in the top two, for example. But even leaving look at just the volatility even in novo when in fact again a phase two trial for them wasn't exactly the numbers were great but it wasn't exact. I think the bar is not only so high but. But I think investors recognize that this isn't a two horse race.
- [23:43]
Melissa Lee
Yeah. In the fireside chat because Dave, Rex, the CEO was going to give a fireside chat yesterday just when we were on the air and I looked the transcript he actually talked about. It was an interesting way he talked about. He said, we don't want to do a lot of discounting. We don't want to do a lot of coupons and things like that. We want to make sure that we have the drug for our customers. This is a long term relationship that we are building. We want to develop customer loyalty, sort of an acknowledgement that there's the ability to switch amongst players if there is another product out there that is delivering the results and is accessible.
- [24:13]
Guy Adami
Yeah, I think that was, in my opinion that was in response to what I think was a disastrous call a quarter or so ago. So good for him. But to your earlier point, I mean, the fact that on today's tape the stock was up a dollar given the sell off we've seen is disappointing. I'll say again what we said last night. The 735 level has been support for a long time. It's got to hold right here if you want to trade against it.
- [24:35]
Karen Finerman
I sort of really like it when a CEO says, you know what, we could have done a better job. I mean, to me that adds credibility. It doesn't take anything away. So I'm long here. I'm long from much lower, Long from much higher. I'm staying long.
- [24:48]
Melissa Lee
Are you in pharma, Joe? It's kind of a tough space lately.
- [24:51]
Joe Moglia
I was in pharma and I own Lilly. We sold it about a year ago. I think we're looking for a spot to get back in. But you mentioned Rich the other day. Kramer interviewed him.
- [24:59]
Melissa Lee
Yeah.
- [24:59]
Joe Moglia
And he did a nice job talking about, I think being very, very simple, very, very direct. Talked about the compounding impact 60% plus he's going to be able to have over the next few years and other things that are in the pipeline. And I think, you know, I think it's something you got to look at. I feel that way about a CEO too. You can't just come up and say, you know, here are some of our problems. You have to have solutions to those problems when you present them.
- [25:20]
Melissa Lee
You're looking to get in at this point more attractive.
- [25:23]
Joe Moglia
I don't know. But starting to look at it now. Starting to look at it now.
- [25:25]
Melissa Lee
Okay. All right. By the way, we do Want to give you an update on the big Fast Money live event coming February 27th. Well, thanks to overwhelming response from our loyal fans, we sold out. All the tickets are gone in less than 48 hours. But if you missed out, don't worry, you can join the waiting list. You never know.
- [25:43]
Tim Seymour
Purpers going with the secondary market.
- [25:44]
Guy Adami
You know what, we're not involved in the secondary market.
- [25:48]
Joe Moglia
12,500.
- [25:50]
Tim Seymour
That's it.
- [25:50]
Joe Moglia
Joe Ticket right now.
- [25:53]
Karen Finerman
Thanks for bidding, Joe. Appreciate that.
- [25:55]
Melissa Lee
Do not worry, we might have future events as well. So head on over CMC events.com fastmoney Join the wait list and we'll see where this thing goes. But it's going to be a fun, going to be fun.
- [26:06]
Guy Adami
And I'm encouraging everybody that comes that night and there'll be a lot of people encouraging them.
- [26:11]
Melissa Lee
Yeah.
- [26:11]
Tim Seymour
Who do what?
- [26:12]
Guy Adami
Well, Mel is shy. You know this.
- [26:14]
Tim Seymour
Yeah.
- [26:15]
Guy Adami
But she really, she likes, it's a good hug.
- [26:17]
Tim Seymour
People come up and hug her and.
- [26:18]
Guy Adami
Just, you know, so don't be scared of her shyness.
- [26:22]
Tim Seymour
Yeah.
- [26:23]
Guy Adami
Embrace it.
- [26:24]
Melissa Lee
I know all of you out there know me well enough to know that that is just patently false.
- [26:30]
Tim Seymour
Not shy or not liking her.
- [26:32]
Melissa Lee
I'm going with a bottle of Purell. But I will be happy to share the Purell. Yeah. All right. So again, QR code. Join the waitlist. Coming up, the latest CPI report giving markets a major boost. The stocks surge across the board. So what does the data mean for the Fed's next rate move? Societe General's Badger a job that joins us next to lay out what she is expecting. How today's inflation print plays into the central bank's policy this year. Don't go anywhere. Fast money's back into.
- [27:01]
Frank Holland
Missed a moment of fast. Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this.
- [27:17]
Melissa Lee
Welcome back to FAST money. Stocks surging for their best day in more than two months as investors digested the latest read on inflation. The Dow rallying more than 700 points. The S&P up 1.8% and the NASDAQ leading the gains up nearly two and a half percent. Crude settling with a more than 3% gain today. WTI at its highest level since mid August. Bitcoin also surging today. The crypto briefly trading above $100,000. Altcoins like Etherium Solana also jumping. And shares of FTI Aviation dropping nearly 25% after Muddy Waters announced a short position on the name. The firm accusing the aerospace supplier of misleading investors, saying the company exaggerated the size of its aftermarket aerospace business and engaged in channel stuffing. Wow. A massive turnaround in the treasury market after that CPI report the 10 year yield plunging by about 13 basis points. But Societe General won't rule out another near term run toward 5%. Subhaja Japa is the firm's head of U.S. rates strategies. About your Great to have you with us. There are a lot of things in the pipe that could actually be inflationary and it's not just policies, it's what's happening in California too. Right?
- [28:23]
Subhadra Japa
Yeah. Because you look at the core pce, a lot of that has to do with insurance costs, car insurance, home insurance. So when insurance costs, when you have a catastrophe of this magnitude, you're going to see insurance costs not just in California but all over the country go higher. So that's something that I'll be watching in the prints, both CPI as well as core PCE in the coming months. But you know, this is a disaster of a very large magnitude. But the US economy is still relatively large. You're looking at, you know, the impact in aggregate to the US economy might actually be somewhat muted over the longer run. We might see a run up in the unemployment rate for the next couple of months. Perhaps we could see some, you know, some very specific sectors of the inflation basket go up. I mean maybe lumber, construction costs, things like that might feed through to cpi. But for the most part I think it's going to be something that's more temporary.
- [29:22]
Guy Adami
What a 5%, 10 year. And thanks for joining us by the way, what a 5% 10 year yields mean to the equity market, if anything, because this whole run up, it's to a large extent has been impervious.
- [29:32]
Subhadra Japa
Yeah, I think that a gradual increase in interest rates towards 5% is going to be okay. But if you start getting towards that 5% level, equity risk premiums start to get unattractive. So investors are going to start looking at moving away from equities or risky assets, whether it be corporate bonds, and then starting to move their money towards more safer assets where you're getting a pretty good return of 5%. The question is that you're not looking for perhaps 10 year yields to go from 5% to 4% and getting that capital gain. But you could be there because the coupon or the returns look attractive. The rally in the bond market might ultimately turn out to be somewhat limited.
- [30:15]
Tim Seymour
So. But how about though the, the implications of higher rates here around the world. And look in the past, while our Fed may not be hawkish here, higher US rates have Been a disaster for certainly emerging economies. But we look at what's going on in Japan, their bond market isn't necessarily getting, you know, and we'll see how Japan trades tonight. But I mean ultimately the JGB yields are something that I think are pulling up US rates. Any thoughts on that?
- [30:39]
Subhadra Japa
Yeah, I think that they're going to be hiking rates. The bank of Japan kind of skipped the December meeting, but they're poised to, to hike again perhaps more than once this year. And the demand for, from Japanese accounts for Treasuries or foreign accounts in general for Treasuries has been quite low because domestic yields in Japan are quite attractive. So foreign demand has been going down. Custody holdings of, of Treasuries from foreign central banks has been going down and that has led to less demand for Treasuries. So we've seen this build up in term premia coming from less demand as well. So that's something that we're watching as well. You have more supply and less demand. So that's a recipe for a push towards 5%.
- [31:22]
Joe Moglia
As you look at survivor rates going up and down here, going up and down across the entire world, that's got to have a pretty significant impact on the dollar as it has an impact on the dollar. What kind of impact then is that going to have on our economy and therefore the markets?
- [31:37]
Subhadra Japa
Yeah, the dollar has been strengthening quite dramatically. If you actually chart the 10 year yield and the dollar, you see that strong correlation as the dollar has strengthened after the elections, you're seeing that that's been something that has been correlated with the rise in 10 year yields. The impact of the stronger dollar is going to be something that's felt not just in the US but also in emerging countries. Latin America is going to feel the pressure of higher, the strengthening of the dollar and then we'll have to see what the impact of tariffs is going to be if that's going to continue to strengthen the dollar. The last go around the U.S. consumers really didn't feel tariffs feeding through because you had that offset from the stronger $. So that could very well again play out. But then the dollar is already very strong. Then you have to ask us how much more, how much more could it strengthen from here on?
- [32:27]
Melissa Lee
Yeah, Subhadra, great to have you with us. Thanks for stopping by.
- [32:30]
Subhadra Japa
Thank you.
- [32:31]
Melissa Lee
Subhadra Japa of Socjin, how do you think about the dollar at least in terms of earnings? It's oftentimes a look through but at this point they may not be investors may not be able to look through an impact that's true.
- [32:44]
Karen Finerman
I mean, we'll see. I don't know if it's front run, all the tariffs and then if we get something a little more moderate that maybe actually it might backtrack. I don't know.
- [32:52]
Melissa Lee
Tim.
- [32:53]
Tim Seymour
Well, I, I think the dollar at times when we have these extreme moves can be seen as a source of 28% of the S and P is, is, is global. I do think the dollar is also part of the conversation as a major mitigating factor on inflation. I mean, US Dollar's buying power is, is about as good as it's been in a long time and anyone running around Europe certainly sees that. So, so I think the dollar is, tends to be at extreme levels, part of a story that's either about some kind of a flight to quality, a mismatch between central bank policy and I think that's probably what's going on right now.
- [33:27]
Joe Moglia
I think the impact we talk about with regard to tariffs is really, really a big deal. And Trump is pretty good with hyperbole and he could very well be using the tariffs as a negotiating tool a little bit later on, which is going to be a problem. However, if he's just really thoughtful and we use these tariffs strategically, I think that that could be a boom to what we've got going on. With regards to a little bit more consistency across the board right now, that's still a bit of a question mark.
- [33:53]
Guy Adami
Real quick, what's been interesting. Gold's worked. With the dollar going higher, with rates going higher, with the dollar going lower. It's worked under just about every environment, quite frankly. Historically it has not. So I think you continue to watch gold. I think the next move is significantly higher.
- [34:08]
Melissa Lee
Coming up, acronym reveal week continues. We've got two more 2025 trades. Desk thinks could take off. That's right after this break. And later, the college football championship game is just around the corner. We've got the trader. One trader tonight who's very familiar with the ncaa. Joe Mowgli will weigh in on the changing landscape of college. Welcome back to Fast Money all week Long, where traders are revealing their 2025 acronyms and their top trades to watch. First up, Guy Adami, your calm acronym. I mean, it turned into clam.
- [34:45]
Guy Adami
Of course it did.
- [34:46]
Melissa Lee
It finished fifth last year. ConocoPhillips, Lockheed Martin, Agneco Eagle, your best performer up to 6% and Martin Marietta. So I loved your clam.
- [34:57]
Guy Adami
I really enjoyed your clam for the entire year.
- [35:00]
Melissa Lee
Beloved clam.
- [35:01]
Guy Adami
Well, late in the Year the clam sort of. It soured.
- [35:04]
Tim Seymour
Yeah.
- [35:05]
Guy Adami
Lockheed Martin was sort of the culprit there. I mean, I didn't see that one coming because that sucker went from like 610 down to 480. That. That really?
- [35:13]
Melissa Lee
Yeah.
- [35:14]
Guy Adami
But I have a new one for this year.
- [35:15]
Melissa Lee
You do?
- [35:15]
Guy Adami
So I'm going from last year's clam. Melissa Tube Tim.
- [35:22]
Tim Seymour
Yeah.
- [35:24]
Melissa Lee
Surprised this guy. And why?
- [35:25]
Guy Adami
Well, you know what? I've always wanted to sort of get Toyota in here, but historically every time this game begins, it's at an all time high. Not this year, sister.
- [35:34]
Melissa Lee
It's going to slam it.
- [35:35]
Guy Adami
Stock has had a bit of a sell off, so I think you're catching it at the right time. Uber is another one where stock went from 8590 down to 60. You've seen a couple of analysts now make it their best selection for 2025. I think you're catching Uber at the right time. I'm stealing one from the Tim Seymour playbook in the form of Alibaba here at 82 bucks or whatever it is. This stock to me is 40% too cheap. I'm not saying it goes there this year, but they're going to be some significant bounces in Baba. And the last one, equity.
- [36:05]
Melissa Lee
Interesting.
- [36:06]
Guy Adami
A little energy your way. I mean there's. That's the end. My.
- [36:09]
Tim Seymour
Just to get some money on the end of your tube.
- [36:11]
Guy Adami
Well, you need it.
- [36:12]
Melissa Lee
Otherwise it might be tubs.
- [36:14]
Guy Adami
No, but that wouldn't be any fun. So equity, which is off to a rip roaring start already this year.
- [36:20]
Melissa Lee
Why is tube so fun? Guy versus another letter.
- [36:23]
Guy Adami
Athena, I think. Well, I mean, I think you want it. For me, it's always a four letter acronym. I think anything more than that is just superfluous and it's excessive. And I just think, you know, you want the tube to do well in any Circumstance, especially in 2025.
- [36:37]
Tim Seymour
Look at your tube sizes up.
- [36:39]
Melissa Lee
Yeah. Yeah.
- [36:40]
Guy Adami
By the way, there's a great song by ZZ Top.
- [36:42]
Melissa Lee
Yeah.
- [36:42]
Tim Seymour
Yeah.
- [36:43]
Guy Adami
Maybe we should play that.
- [36:44]
Tim Seymour
It's a boogie of sorts. I think.
- [36:45]
Guy Adami
I think it's a tube steak.
- [36:46]
Tim Seymour
Interesting. Yeah. It's a love ZZ Top. And you know about ZZ Top now. Yeah.
- [36:51]
Melissa Lee
They all had beards except for one.
- [36:53]
Guy Adami
Yes.
- [36:53]
Karen Finerman
Yeah.
- [36:53]
Tim Seymour
Whose name was Beard. Yep.
- [36:55]
Guy Adami
Unbelievable.
- [36:56]
Tim Seymour
How good is that? Melissa Lee, ZZ Top trivia on fast money. It doesn't get better than that.
- [37:01]
Melissa Lee
I hope it does. Karen is Next up. The Helm acronym ended last year in fourth place. Health care, energy, LVMH and Meta, the social stock was your big star. It soared 6, 66%. Which stocks are you loading up on now? What is the acronym instance? You don't play by the rules. What does this understand for. Because we know they're not going to stand for tickers.
- [37:23]
Karen Finerman
That is. That is.
- [37:24]
Tim Seymour
Or a couple of them will just to throw you off. Really bizarre and selective.
- [37:29]
Karen Finerman
So this year mine is carved carb. Could have been braced, but whatever.
- [37:34]
Melissa Lee
We decided on card anyway.
- [37:35]
Karen Finerman
So to move quickly. Citibank, we already covered that today. But I still think there's more upside to come trade the discount to book. We're in a nice situation for banks. Alibaba, like you, like Tim. I think that there is a lot.
- [37:47]
Tim Seymour
She's using the A there instead of the B.
- [37:49]
Karen Finerman
Yes, I am.
- [37:50]
Tim Seymour
That is.
- [37:51]
Karen Finerman
I don't think that's. To me, that's not even.
- [37:53]
Tim Seymour
That is.
- [37:53]
Karen Finerman
That hasn't even. That's totally.
- [37:55]
Tim Seymour
That's ever been done.
- [37:56]
Karen Finerman
You get to the fourth one, the third one, the R obviously is for United Rentals. Okay.
- [38:03]
Guy Adami
Come on.
- [38:04]
Karen Finerman
It is. Come on, you can get plane all you want. Blah, blah. That's what it's for.
- [38:09]
Tim Seymour
United Rentals, basically.
- [38:12]
Joe Moglia
Charlie Brown.
- [38:13]
Karen Finerman
Love the secular. The secular move out of companies owning their own fleet and renting. And they've done a great job on shoring. We see them do just yesterday a great acquisition. This is what they do. They build cash flow and value for shareholders. B is Boeing. I like when something's really down and out. This is really down and out. And I think that the second, by.
- [38:35]
Tim Seymour
The way, update, two of her letters are actually playing by the rules. Two or not. Okay, keep going, keep going.
- [38:40]
Karen Finerman
Just wait, there's more. Boeing. I do think, you know, as Tim likes to say, you make the most money when things go from terrible to just bad. I think we are in the just bad part. You don't need it to go all the way back to where it was by any stretch to make a lot of money here. The E obviously stands for oih, which is an energy play. That's because you gave me so much crap last year for using the X and actually as energy in helm wanting.
- [39:06]
Tim Seymour
Her distending the show.
- [39:07]
Karen Finerman
Just, you know, we got Scott Bessant, who I think I agree would be a good, good choice and like very likely be nominated his 333 rule. Three of those. One of those threes is 3 million barrels a day. What will that do for the oilfield services? Nice there. And D is for Dell. Cheaper way to play the AI. It's been a little spot Yes. D for Dell.
- [39:26]
Melissa Lee
That makes.
- [39:26]
Karen Finerman
I was going to do R for Del, but R was taken by United Rentals.
- [39:30]
Tim Seymour
So three out of six are actually.
- [39:33]
Guy Adami
Yes, but dispensation. I mean, if Tim had tried to pull that off, he'd be.
- [39:37]
Melissa Lee
Thank you, thank you, thank you. Medium. Next year, if Karen's acronym actually wins, there might be an appeal.
- [39:44]
Guy Adami
I won't.
- [39:44]
Tim Seymour
I'm filing it now. No, I'm filing it now. I mean, after we get off the show, I'm going to Sandy. I mean, you know, and because I also feel like the E in carved, which is the oh, could turn into some other energy name because it's E.
- [39:59]
Karen Finerman
You know, I mean, change wants my extra energy and extra health. I didn't add ycep. I didn't add Lyft.
- [40:07]
Tim Seymour
Now, maybe if I. I'm very sorry.
- [40:09]
Guy Adami
I added United Rentals, though. I mean, that's just like, how can I get United Rentals in?
- [40:13]
Joe Moglia
I don't know.
- [40:14]
Guy Adami
Just make it an R rental.
- [40:16]
Karen Finerman
R for Rentals.
- [40:17]
Tim Seymour
By the way, your B in CARB is my B in vat.
- [40:21]
Karen Finerman
Yeah.
- [40:21]
Tim Seymour
So we're. I'm pulling for you, actually.
- [40:24]
Melissa Lee
Coming up, we are counting down to kick off for the big college football championship game on Monday. Notre Dame taking on the Buckeyes. And it's not just super fans tuning in. We'll dig into why private equity is getting skin in the game. That is next. More Fast Money in two. Welcome back to Fast Money. The College Football Playoff national championship game between Notre Dame and Ohio State is coming this Monday. And as billions upon billions get poured into college sports and new players joining the game, Private Equity Avenue Capital's Mark Lasri is one of the biggest investors putting money into sports. Here's what he had to say in Squawk Box this week.
- [41:07]
Karen Finerman
The universities need the capital because through.
- [41:10]
Guy Adami
The capital, more people are going to.
- [41:12]
Karen Finerman
Come to the games.
- [41:13]
Guy Adami
And as more people come to the games, more people go to the university. So they understand that.
- [41:18]
Karen Finerman
And it's either alumni are going to.
- [41:20]
Guy Adami
Give you that money or it's going to be people like us.
- [41:24]
Melissa Lee
Our guest, Trader Joe Moglia, is still heavily involved in college athletics as the chair of athletics at Coastal Carolina. So do you think these PE investors, they're going to be a driving force here? They're here to stay.
- [41:36]
Joe Moglia
They're here to stay. I think it's going to be more and more critical as time goes on. The issue with the NCAA is that Power four football and power four basketball have to break away from the ncaa, become the pcaa Professional Collegiate Athletic Association. If the NFL ran themselves the way college athletics run themselves today, the NFL would literally go out of business. So to be able to break away and get executive management that understands business, you have real contracts, you have real transparency, you have collective bargaining, you have salary caps. You have all the things that you need to run an effective business. Now, having said that, then you could do a better job valuating what's going on. But are we going to have private equity or individual investors own the football program at Ohio State? Those things are all very, very real possibilities, because right now, what we have is total chaos.
- [42:23]
Tim Seymour
Does that explain a little bit, though? If you look at Belichick in North Carolina, you know, part of him coming in there is he's. He's bringing in that infrastructure that, that gm, so to speak, that college needs. Could this be happening inside of each program as opposed to breaking away as its own league?
- [42:37]
Joe Moglia
The typical head coach and athletic director, most of them, they don't have the skill sets to run it like a business. So when Belichick first took that job, there were a lot of people saying, oh, he's not going to be able to double, college guy. It's over. It's over. So it's a professional operation. The first hire he hired was Lombardi, who came in as his general manager. So college football does not need to adjust to Belichick. I'm sorry, Belichick doesn't need to adjust to college football. College football's got to adjust to Belichick. What he's doing and the way he's doing it is very much the way of the future.
- [43:11]
Melissa Lee
For more on this story and the big business of sports, be sure to head on over to cnbc.com sport. You'll find the latest news and exclusive interviews with some of the biggest names in the business. Up next, final trade. Final trade time. Joe Moglia.
- [43:30]
Joe Moglia
I want Notre Dame with the point plus eight over Ohio State for the national championship.
- [43:35]
Tim Seymour
Fire. Fire. With you, Tim Buyer of Joe Moglia. Thanks for joining us, Joe. Great time today.
- [43:41]
Joe Moglia
Alibaba.
- [43:42]
Tim Seymour
It's in the carved. It's in the. It's in the tube everywhere.
- [43:45]
Karen Finerman
All right, short tlt of not buying this cpi. Down forever.
- [43:49]
Melissa Lee
No P A S. Thanks for watching. Fast Mad money starts now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer Global markets up.
- [44:36]
Frank Holland
To the Minute, Front Page News, Wake up to Frank Holland and Worldwide exchange, weekdays 5am Eastern, CNBC live Ambitiously.