← CNBC's "Fast Money"
CNBC's "Fast Money"
Can Tech’s Growth Plans Keep Fueling The Rally? And Losses From California’s Wildfires 1/24/25
00:43:35
Stocks jumping in Trump’s 1st week of his 2nd term, and tech stocks are leading the charge. The big spending that’s fueling that trade, and if the mega cap tech names can keep leading the market higher. Plus Crews still battling the California wildfires, and the economic impact keeps rising. The losses tied to the blaze, and what it means for the state of housing in the state. Fast Money Disclaimer
Loading summary
Transcript137 lines
- [00:01]
Melissa Lee
What does it mean to be rich?
- [00:03]
Jared Holz
Is it having more stories to share.
- [00:05]
Melissa Lee
Or time to give? Is it being able to keep your loved ones close or travel somewhere far away? At Edward Jones we believe the key to being rich is knowing what counts. Your dedicated financial advisor will take a comprehensive approach to your financial strategy to help support what truly matters to you. Edwardjones.com findyourrich Edward Jones member SIPC learn how to use AI to be more successful with CNBC. Make it's new online course. We'll give you examples that can help you master AI tools. Go to CNBCmakeit.com AI and register now live in the NASDAQ markets in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight. Marvelous Meta shares of the tech giant at record highs as it plans to pour billions and billions of money into AI infrastructure. Is this the kind of spending that will keep the market rallying rolling? We'll debate that. Plus a shot in the arm for shares of Novo Nordisk, the pharma giant seeing its best day since March on positive weight loss drug trials. Is this the start of a turnaround for the company? Still 40% off all time highs and later crypto prices trading year records. We set the table for a very big week of big tech earnings and the long term impact of wildfires on the housing market in Southern California. I'm Melissa Lee. Come to you live from CDO B at the nasdaq. On the desk tonight, Tim Seymour, Bono and ice and Steve Grasso and former Bridgewater chief strategist Rebecca Patterson. Welcome, Rebecca. We start off with a presidential pop for the markets, the S&P 500 hitting another record early in today's session and notching its best first week of a new presidential term since Ronald Reagan in 1985. That's when the musical stylings of Wham were topping the charts. Marty McFly was going Back to the Future and the docs DeLorean. And speaking of the future, Mega Cap Tech is setting its sights on just that. The group feeling this week's rally as investors bet on continued AI spending this year. Meta hitting a new high today after announcing a plan to spend 60 billion doll dollars to grow that business. Let's get to Julia Borson with more on that company's Capex plans. Julia? Well, it's the Meta CEO Mark Zuckerberg pre announcing its AI roadmap and spending plan for the year saying Medit will invest between 60 and 65 billion dollars in capex this year to drive growth of their AI offerings. Now that 60 to 65 number is up from the 38 to 40 billion in capex last year and far ahead of the spending in the low $50 billion range that analysts expect expected. Zuckerberg saying he expects MED AI to serve more than 1 billion people this year, up from the half billion users that media I had at the end of the third quarter. Zuckerberg also announcing they're building a 2 gigawatt data center and developing an AI engineer tool. Now, one place they're going to be deploying some new AI tools is the addition of advertising in Threads. Head of Instagram Adam Moseri announcing that Meta will start testing ads in Threads giving brands AI powered controls as well as filters. Now with this news, Meta Saying Threads has 300 million monthly actives and three out of every four people on the platform follows at least one business that's seen as a good indication of potential for brands. Now, to put that 300 million number in context, startup Blue sky reportedly has 29 million users. So I'm sure we'll hear more from Mark Zuckerberg on AI how it's going to impact all the different parts of their business, as well as some more details on Threads monetization when Matter reports earnings. That's coming up Wednesday afternoon. Julia, thank you. Julia Boorsen so is tech spending like this enough to keep the market rally going? Because that has always been sort of the key test. Will these giants continue to spend on. I will continue to rally big cap tech? We're going to find out a lot next week. So is this a good indication that the tech spend is the race is still on?
- [03:59]
Tim Seymour
I think so. I mean I feel that this, this first month of the year has felt a lot like the first month of last year, except for you remove political overhang and you actually have the rest of the world trying to be more like America, at least. Beck, talk to us about Davos because it's fascinating, I think the impact that Trump's having on the rest of the world. But yeah, I think so. And if you think about Meta, they were the first one really a year ago to get out there and talk about. It was probably about. It was probably about 18 months ago but they started to talk about the Capex plans and they were in the year of efficiency. It was a question of will suddenly the stock that was rewarded for cutting back on Capex in the Metaverse to be rewarded and they absolutely have been. And in fact They've outperformed the MAG7 aggressively so far this year. So I like this story. I like the, the message this week from both the White House and policymakers is we're not even sure who's going to fund this. We've got a few people that have stepped forward to be, to be shepherds of this process. But it was a week where AI and the prospect of spending and again the broadening of that trade. So I think it's very good for infrastructure, I think it's very good for some of the, the chip players that build the infrastructure. And I think this is a very important announcement and I think kudos to Metta for getting out there first because other, I think other folks want to do it as well.
- [05:09]
Melissa Lee
It almost felt like, you know, Larry Ellison was up there with SoftBank and, you know, announcing Stargate and Mark Zuckerberg was like, you know what? I'm in it to $100 billion. You know, here I am. And so this comes, you know, there's a series of announcements here, a cadence at this point. So there are any doubts about the AI spend and whether or not that would power the rally, I don't know. Has that been put to bed in your view?
- [05:29]
Steve Grasso
I think it's been put to bed. You know, it's always short term. It's always looked through that lens of maybe a month out, maybe two months out. But the good news about CapEx is that it's deflationary. So you have more productivity, you have more efficiency. So it actually brings down inflation. So if we can get CAPEX going where we think it's going, inflation should come down as well.
- [05:55]
Rebecca Patterson
I hear what you're saying. I think there's a time element. I agree with you that if, if AI and everything related to it can increase productivity, I think that's where you're going. Efficiencies, right.
- [06:07]
Steve Grasso
It's so that, that inflationary.
- [06:09]
Rebecca Patterson
But in the short term, we're building infrastructure, we're building data centers, we don't have enough workers, we don't have enough materials. I see that as being inflationary. So reflationary. Right. Good for growth and pushing up inflation.
- [06:21]
Steve Grasso
So I'll put a button on this. So if you can increase growth, we're.
- [06:25]
Rebecca Patterson
Not going to just fight it out all night.
- [06:26]
Steve Grasso
No, no, no. Because we're both got my.
- [06:28]
Tim Seymour
I'm going to.
- [06:30]
Steve Grasso
Moving on. So if you can increase growth by 3 to 4%, you could actually bring inflation down ultimately by a percentage point as well. So if you could increase growth to where we need to be with all the Capex spending, you could get a percentage point out and actually reduce that percentage point in growth that you got to the upside in inflation, to the downside. So ultimately I think inflation, it will be deflationary. But I understand your re. Inflationary worries.
- [07:01]
Rebecca Patterson
Yeah, I think there's, it's just timing and if we're trying to get interest rates down because Trump declared that will happen and inflation down, he knows a.
- [07:09]
Melissa Lee
Lot about interest rates, apparently.
- [07:10]
Rebecca Patterson
I don't think that's going to, I don't think it's going to happen in.
- [07:13]
Bono
The term more than the guy in charge, I think is technically what he said. But yeah, yeah.
- [07:18]
Melissa Lee
Well, anyway, back to meta.
- [07:20]
Bono
Yeah, I'm with you, Rebecca. In terms of order of operations. And I do think that is important, Right. It's important in math, I think it's important in economics and for us to kind of keep in mind how this whole situation functions along that same line of thought. I do think that the, the, the posturing has kind of shifted to are these hyperscalers getting too far over their skis in terms of Capex spin to now I think there's FOMO in terms of are my competitors going to actually outpace me out, produce me, outscale me and reach those efficiencies as Steve was talking about before? I do, creating more of a moat for them at a competitive disadvantage.
- [07:58]
Melissa Lee
Point. Is that about a bad thing for the big cap tech trade? Not for a long, long time.
- [08:03]
Bono
I don't think so. And particularly not for the chip makers. I know you're going to ask me about Nvidia. I mean, I think, you know, the concerns that we've had, you know, the Stock popped about 7% and then it's been kind of trading off a little bit. But I think it kind of reinvigorates that trade that perhaps some of the concerns about sell growth going forward perhaps are a bit overdone in the short.
- [08:21]
Melissa Lee
Term, at least for a name like Metta. We will be able to see those efficiencies. Right. We see that they were the first one exactly to actually outline this is what we spend, this is what we get back for a lot of other companies we have yet to hear that. So, you know, in terms of your point about there is a time element to it, to the investment and then what follows, right. Are we going to hang on to this trade during that period?
- [08:43]
Rebecca Patterson
I mean, I guess the question is what else looks attractive and has a catalyst for growth. Right. So these companies are, I think most would argue richly priced, if not outright expensive and everyone owns them so that makes them risky to the downside but if you put your money somewhere else where else are you going? And we can talk about overseas and is this finally the moment or small cap but it feels like a lot of people want to keep a good leg on this stool. Yeah that makes sense because long term it still seems like the right play.
- [09:15]
Tim Seymour
Yeah I think Stargate might have bolstered this this the emphasis on what matter said today. I think if anyone's earned the right to get out there and say it's meta and if you think about the ability that they had first over anyone other than Nvidia to say hey we see a benefit here and again if anything the pushback on the capex spend has not necessarily been around the hyperscalers. It's been around what's the the competing factors with some of the biggest players the hyperscalers within video to develop their own chips. But again in the short term I don't even think that's an issue for Nvidia. I think, I think this is all great for Nvidia by the way was a week when semiconductors they had a tough day today. But if you look at the semiconductors trade semiconductors are doing what they did last year. They're up over 11% year to date. The dynamic around those that are really involved in the infrastructure build out and it's been Broadcom all over again. But I think this bodes very well for next week and remember Met is out on the 29th and they will tell you a lot more about this and the profitability.
- [10:08]
Melissa Lee
So then therefore this should bode well for the markets overall.
- [10:10]
Steve Grasso
Yeah, I think well the markets are reliant on mega cap tech and max 7 so whichever way they go the ultimately the market goes. But to your your question, Google has a path for the spend. Amazon has a path for the spend. Apple has a path for the spend. There's only those tertiary names that don't so you can make a case that they're just fostering if the market is reliant to the tune of 40% 30 to 40% resting on the back of the workhorses which are mega cap tech. This is good news for the market, this is good news for the tech sector.
- [10:46]
Melissa Lee
So which of the big cap tech companies is your favorite at this point?
- [10:52]
Bono
I still think it's in video particularly after this news and I think they're squarely I mean I know they've been knocked down to what is a third now but I think that they still are the engine that is, that is leading to this growth. I will admit that yes, you worry about the hardware. I do think they've integrated themselves so that there's really, you know, a programmer programmatic build out around that. But at least for the time being, I do think Nvidia to me has like the most upside.
- [11:20]
Tim Seymour
When you think about what's going on in the ad world, in the ad revenue world, it just comes back to Google and Metta. And if you think about what matters going to report next week street somewhere around 40 to 42 billion, 43 billion on first quarter revenue. That's going to be up 15% on a huge number and again off a really difficult comps. If anything, these Q1 comps are part of what's going to hold these companies back because they're going to be really tough to beat. This is where I just think you have to get back to the names that it's very difficult to argue with the multiple that you're investing in these companies at, at this point when they are so well positioned to see their business broaden. And the thing with Google and we started to have this conversation on our call today. So a little insight into our production call is that, you know, there's, there is a report out there saying that maybe Google is, you know, the sum of the parts argument that we've all talked about. There's been corporate governance dynamics, there's certainly been regul governance dynamics around Google but, but ultimately there's so many levers that they can pull whether it's YouTube, whether it is core search, whether it is what they're doing in AI. So these are the two names going into next week. I mean these are the names that I think have the most opportunity for Runway in a world where others are a little bit challenged and are the.
- [12:21]
Melissa Lee
Lowest, ps lowest valuations.
- [12:23]
Steve Grasso
Metta has outperformed, I think Tim just said it matter has outperformed the rest of the group by and large, by, by a large extent. And Julia said that they were servicing 500 million users. Now they're preparing to service a billion. That's why the spend is double. WhatsApp, Facebook, Instagram. No one has the product lineup that Metta has and it's clear, it's concise and it's direct and I think that's your best bet still.
- [12:50]
Melissa Lee
All right, let's get more on the impact of Trump's policies. Rebecca, what are you. We were just discussing how this week feels like an exhausting week in those four days just because of the whirlwind of news that we're all digesting coming from the White House, right.
- [13:03]
Rebecca Patterson
Well, we knew that a Trump 2.0 would hit the ground running. They were much more prepared, they had lots of policies and people planned. So we knew it would be a tsunami and it has felt like a tsunami this week. I'd say my biggest takeaways from it, I'd say the biggest takeaway is that you need to focus on what you know for sure that's lasting. And all the headlines and the noise, you have to find a way to process it and then just put it in a box and just say, I'm going to come back to that and know the timeline. So what do we know for sure that's going to last? The consumer is still very strong, especially at the upper end. We've seen that in earnings this week. We see that in data. We know that business investment, especially in the big cap tech space, is incredibly strong. I mean, think the Chips and Science act was 60 billion, 50, 60 billion. This is multiples of that going into the economy. We know that the job market has moderated, but is strong. Inflation is sticky. We have a Fed on hold. So these are the components that I'm going to stay focused on. And all the Trump headlines. I'm going to know what he's saying, what could happen. But I'm not going to overreact to each headline because I know tomorrow it could go the other way.
- [14:12]
Melissa Lee
But how much of what the market has, has done is because of what is in that box as opposed to what we actually know? Because I feel like a lot of it is, is based on the hope. And a lot of the bank CEOs were talking about on their calls, the euphoria, you know, the distinct sort of improvement in confidence since the election specifically.
- [14:31]
Rebecca Patterson
Well, I mean, since we've had good Data in the 1950s, every single election cycle, as soon as you get through the election, whether you like the candidate or not, you have certainty of knowing who the person is, what the policy is, and then you can plan more or less. And so what we've seen historically, consistently, for example, IPOs go up roughly 15% in post election years versus pre election years on average. I think this year could be the same or even higher, depending on what happens with regulation. You see more M and A activity. So this is not surprising that people are more confident. I think that one of my boxes is tariffs. I think that's the biggest, most important box or downside risk. And we know nothing's happening. Until February 1st, maybe Canada, Mexico, maybe China. But the big one is April 1st because a lot of the investigations are going to be announced, the outcomes of those then. So if we're going to get tariffs, it's a little surprising we didn't get them day one because that's what he said he'd do. And that's some of the euphoria this week. But it doesn't mean it's not coming. It's coming. We just don't know exactly what it's going to look like. But I would feel confident it's coming well.
- [15:42]
Tim Seymour
And what's fascinating, Rebecca, is that this was a week also that the rest of the world actually outperformed the US and there's a lot of, there's a lot of rhetoric emanating out of Davos that that again, Trump's influencing the world. It's not just the story here, but it's a sense. And I don't think they would be admitting this in public and maybe this is, you know, what people over here want to believe, but the sense that the regulatory handcuffs that have been on a lot of the European companies and the European economy over the last decade or something that European leaders are looking forward to loosen up on. So there's some sense the outperformance is coming from also, frankly, a weaker currency is great for export markets. It's been a week when actually that's been highlighted. But the DAX has outperformed the S and P significant. So I'm just curious your view on the rest of the world.
- [16:23]
Rebecca Patterson
I would say this week the rest of the world is outperforming in part because they didn't face tariffs immediately. China, Europe, Canada, Mexico, etc. Would have gotten hit so much harder if he had followed through on that day one pledge. Some of that bad news was baked in when it didn't happen. You got a bit of a relief rally. Now, I think there are some green shoots to watch in China. The housing market is still slowing, but it's starting to slow at a slower pace. Right. So second derivative is improving. And we've seen in some of the earnings this week, especially in some of the luxury makers, that the Chinese are starting to spend a little bit. I would call China a trade, not an investment because I think tariffs are still coming for China. It's just a question of when. But to the degree, you know, the ecb, the European Central bank will probably cut rates next week, week. So there are some reasons why some of the overseas stocks could have some legs for a few weeks again, I just, I wouldn't count on it to be the trade of 2025. I'd still be happier in the US.
- [17:20]
Melissa Lee
Coming up, Novo Nordisk shares surging on brand new weight loss drug trial data. The skinny on whether the biotech stock's latest effort could tip the scales in the obesity drug war Next. Plus the crypto craze scores one against the SEC inside a major rule change that could transform the industry right after this.
- [17:39]
Tim Seymour
This is Fast Money with Melissa Lee.
- [17:43]
Melissa Lee
Right here on cnbc. Every day thousands of Comcast engineers and technologists create connectivity solutions that change the way we work, live and play. Like Kunle, a Comcast engineer who is focused on revolutionizing the in home Wi Fi experience today and for the next.
- [18:07]
Bono
Generation, Kunle builds powerful Xfinity WI Fi.
- [18:10]
Melissa Lee
Devices that deliver a fast reliable connection with capacity to connect hundreds of high bandwidth devices at once. And next level latency for the applications of the future like augmented in virtual reality and cloud gaming. Learn more@comcastcorporation.com wi fi learn how to use AI to be more successful with CNBC make it's new online course. We'll give you examples that can help you master AI tools. Go to CNBCmakeit.com AI and register now. Welcome back to Fast Money. Novo Nordisk surging 8 1/2% for its best day since last March. The company out with positive trial results for its endocretin weight loss injection targeting the same gut hormone as Nova's existing obesity drug. Plus Amylon, a pancreas hormone affecting hunger patients on the highest dose losing an average 22% of their body weight after 36 weeks. For more Mizuho Healthcare strategist Jared Holz joins us here on set. Jared, great to have you with us. And for a long time, you know, we thought maybe Novo was out of the game, you know, but here it is. And at the same point in time, Tirzepatide had less efficacy than this new drug. So that's promising. At the same time, there are a lot of big questions about this early stage trial. So what are some of the doubts in your mind still?
- [19:35]
Jared Holz
Yeah, for sure. Thanks for having me. Yeah, there are a lot of doubts. There are a lot of opportunities when you kind of coalesce all of the data that we got today and it was unexpected. I think that's the first thing we really didn't know we were getting this this early. So I think there's some upside surprise. That's why you saw the stock do pretty well. And of Course, it faded throughout the day, but still a decent day. We just don't know what the end game is for this drug. Right. It's a, it's an additive to semaglutide. We know that. We know it gives you a couple percent better efficacy over less than a year. So it looks like this could be Novo's best injectable. But they didn't include a lot of data. We didn't see patients that may have dropped out. They were kind of not cagey necessarily, but they did not include every patient from the trial, only the ones that had stuck through the entire 36 week timeframe. So there are some, you know, reasons to be skeptical, but the drug looks good.
- [20:27]
Melissa Lee
So we don't know anything necessarily about tolerability at this point. And that seems to be the biggest question mark given that the company had released the initial oral data for the same drug and it was greeted with fanfare. And then months later they came out and released the tolerability profiles, which were horrible when it comes to nausea and vomiting.
- [20:45]
Jared Holz
Right.
- [20:46]
Melissa Lee
So is there any extrapolation that we can make or is this completely different and an injection makes them more tolerable, et cetera?
- [20:53]
Jared Holz
I think what we've seen out of the injectables is that they seem to be more tolerable than the orals. When you look at them head to head now, apples to apples trials we haven't really seen, but when you kind of take into effect what we've seen from Novo Nordics, what we've seen from some of these other companies, Pfizer is looking at dose discovery and just trying to figure out is there a dose that they can put forward that is tolerable? There have been a lot of abnormalities with what we've seen. The injectables do look better. And I think the company was fairly, you know, you got to take them at their word to some extent where they said that the tolerability profile of this drug is similar to what they've seen with Semi. So like that's kind of what we have to go on here.
- [21:31]
Tim Seymour
I don't, I don't. Based upon the reports I read today, it seemed like most people on the street said, I mean, the tolerability is similar in line with other GLP1. So therefore it brings it back to me, the great Paris trade. Which, which side do you want to be on at this point? Because ultimately, you know, Novo has been destroyed over the last six months and again, this, there's certainly enough evidence in today's release that this is a best in class drug and yet they've not been treated as if they're even close again yet. They were last year. So I'm just curious, you know, what you do now. You're not a trader, you're an analyst. But I think there's some sense of where there might be more of an opportunity in catalysts.
- [22:08]
Jared Holz
Yeah, listen, I agree. I think the way the stock has traded over the past six months is I think just a pure reflection of negative headlines or certainly headlines that did not live up to expectations. So I think it's less about the numbers. Yes, you could argue that the quarters haven't been pristine. They have not. But to see 40% degradation in the value based on the oral GLPs not being what we thought they would be, I think that's a little bit severe. They're definitely in the game. I mean, I've said it multiple times over the past month. I think we sit here even in five years and this is a two player race in injectables. I just think it's too cumbersome, too expensive to get into this market. So they don't even have to be best, they just, they're there, they've got the patient population wrapped up. So I think this is a duopoly between them and Lilly and you're going to have to trade around them for the next couple of years.
- [22:57]
Melissa Lee
So I think at one point you had said something like do we need another injectable on the market, you know, is incremental weight loss. Here we are, we're cheering or investors have cheered Novo Nordisk for precisely that. So do you think that, I mean, has your view change? I mean there is still room. I mean feasibly this comes or will come just in time as semaglutide comes off patent? Yes, I think it comes off patent.
- [23:24]
Jared Holz
I think there's room if you are there and they are certainly there. So the fact that they are improving on their existing portfolio I think is important. If it were a newcomer and we saw 22% versus 20, but it was kind of, it needed to be supported by billions of investment that wasn't already, you know, lined up, lined up, I think it's very difficult. That's why I think if you're Amgen, if you're Merck and AstraZeneca, whomever, very difficult to say that you're going to be a real player, you could generate revenue, but you may not make any money. That's what I think.
- [23:59]
Melissa Lee
Is it more difficult today based on this data than yesterday?
- [24:03]
Jared Holz
Well, certainly, I mean this data looked like it could be close to best in class, but as every day goes forward here, I think it's more difficult if you're not an incumbent.
- [24:11]
Melissa Lee
All right, Jared, great to speak with you. Thank you.
- [24:13]
Jared Holz
You too. Thanks.
- [24:14]
Tim Seymour
Speaking of being a player, how about the specs on Jared?
- [24:16]
Melissa Lee
I know.
- [24:18]
Tim Seymour
That's fine. That's fine.
- [24:20]
Melissa Lee
Asking, I guess. Guess is goodbye.
- [24:21]
Steve Grasso
He's just stating, stating.
- [24:23]
Melissa Lee
He's always room for a compliment. Eli Lilly or Novo.
- [24:28]
Steve Grasso
So it's, I don't think it's a duopoly. I think it's a monopoly when you look at it. Lilly is up in a one year performance is up 24% and Novo is down 16%. So you can't have a duopoly when only one person or one thing benefits from it. I think the next stage in this is Lilly actually runs that entire sphere. Novo is just sort of living in their world. Novo actually has better gross margins and is right up there with revenue growth with Lilly. But I think the next stage in this is to buy the smaller players. I'm an alt immune which is sub 500 market cap. So be careful if you're playing that at home. But I think you're going to wind up seeing the smaller players who have great efficacy be gobbled up by these two larger players.
- [25:12]
Bono
Respectfully, I disagree. I think part of this is like talking to me. Yes.
- [25:15]
Steve Grasso
Because I left the stage.
- [25:17]
Tim Seymour
Do you guys want to take this outside?
- [25:19]
Bono
It's cold. But I do think you look at India for a trade here.
- [25:23]
Rebecca Patterson
Right.
- [25:23]
Bono
And kind of ride that momentum. I think that the Medicare negotiations, you've seen a lot of negative headlines and you look at the stock off 40%. I mean they are still a player here. Even if it is a duopoly. It doesn't take much market share for you to have accretive outcomes here.
- [25:38]
Melissa Lee
All right. There is a lot more fast money to come. Here's what's coming up next.
- [25:43]
Tim Seymour
Crypto cruising toward new highs as President.
- [25:46]
Melissa Lee
Trump signs a landmark executive order.
- [25:48]
Tim Seymour
And the SEC rolls back the red tape. How the latest moves could transform the industry from Wall street to Main street next.
- [25:56]
Melissa Lee
Plus, a deep dive on the state.
- [25:58]
Tim Seymour
Of the LA housing market as Southern.
- [26:00]
Melissa Lee
California continues to battle wildfires. How the region might come back from damages approaching $50 billion. You're watching fast Money live from the.
- [26:10]
Tim Seymour
NASDAQ market site in Times Square.
- [26:13]
Melissa Lee
We're back right after this.
- [26:17]
Tim Seymour
Learn how to use AI to be.
- [26:19]
Melissa Lee
More successful with cnbc. Make it's new online course we'll give you examples that can help you master AI tools. Go to CNBCmakeit.com AI and register now. Welcome back to Fast Money. Bitcoin higher today and trading near records. The crypto topped $107,000 around midday and is now up more than 50% since election day. President Trump signing an executive order yesterday which paves the way for a digital asset stockpile. So how much more juice is left in this trade? Three or four here on the desk in the trade here. What do you think, Bonoin?
- [26:56]
Bono
I think there's some pull forward. I mean you just look at the price action over the period of time. With that said, the nature of this beast is that it has pockets of extreme volatility. And I think that's one of the things that detractors will point to. I do think here if we're essentially, essentially talking about the US being a real data mining bitcoin mining center and using it for essentially a way to bring the world in, I can understand how that's just basic supply and demand. And then we've already had the, having the halving event. So listen, over the long term, I think there's legs. But in the short term, I think if you're kind of looking to trade this and make an incremental 20%, I think that's tough.
- [27:33]
Melissa Lee
20% ain't bad. But at the same time, Rebecca, you said, what did you say you can pay. I couldn't pay you to own Bitcoin.
- [27:40]
Rebecca Patterson
Yes, I said that.
- [27:41]
Melissa Lee
Why, even in bitcoin?
- [27:42]
Rebecca Patterson
Yeah. I don't like owning something that has no intrinsic value, that you can't quantify what fair value is, that doesn't have regulatory guardrails, that if I get hacked, there's no fdic, there's no nobody coming to the rescue. So for me, I appreciate I gave up a huge opportunity. Right. I missed the gains and I think about that. But at the same time, no, I would rather play in another space. Yeah, that's me. That's like that and market.
- [28:17]
Tim Seymour
I run the risk of going against Rebecca on this because I'm not a bitcoin. But wouldn't you argue that the market is determining a value and would you argue that part of the reason it's rallied is because we now have enough regulatory approval, both implicit and it's been, it's coming online and that's really where the last 25% has been about. It will be supported by the regulators.
- [28:37]
Rebecca Patterson
It's interesting to see what, what regulatory safeguard safety net is created once I see that. That could change my view, but it's not there yet. And then the whole stockpile. Look, the United States government already has something like 207,000 Bitcoin and they're not.
- [28:54]
Steve Grasso
Going to sell the seas coin and you're going to have balance sheets on corporations actually start to. You could. Right, that's the bullish case.
- [29:02]
Rebecca Patterson
That's the bullish case.
- [29:03]
Melissa Lee
Right.
- [29:03]
Steve Grasso
So you could have balance sheets going, you could have the SEAS coins not being sold off and you wind up getting that 21 million of the supply demand really getting goose here. And by the way, with the old administration, we had an enforcement outlook on bitcoin and crypto and now we have a regulatory which is constructive, bullish. There's plenty of time to get in. Bitcoin will probably double from here, I think short order.
- [29:29]
Rebecca Patterson
I think bitcoin's going up in the short term with so much support.
- [29:34]
Tim Seymour
We should rename the show Bitcoin Money. But I mean I feel that that's what's happening right now.
- [29:38]
Melissa Lee
But let's have the other side. I don't want.
- [29:41]
Rebecca Patterson
This thing has a volatility that's multiples of the stock market. It is not a hedge against inflation and it is not a hedge against the dollar. It does not have any of those correlations to date. So anyone who says that's the reason to have a stockpile has not actually done the math.
- [29:57]
Tim Seymour
Gold's at all time highs too. I mean as soon as. We're not going to commercial break. Any time we are.
- [30:01]
Melissa Lee
I'm trying. You guys aren't letting me. Coming up, estimates on the damage caused by the Southern California wildfires continue to rise. Our next guest lays out the path to building back the region after the devastation right after this. Welcome back to Fast Money. Property data and analytics company CoreLogic estimates LA fires have so far resulted in damages between 35 and 45 billion dollars. For more on what this can mean for the L A housing market, let's bring in CoreLogic chief economist Salma Hep. She's also a Los Angeles resident. Selma, great to have you with us.
- [30:44]
Salma Hep
Thanks for having me.
- [30:46]
Melissa Lee
Do you think there are going to be swaths of L A that just are not rebuilt?
- [30:52]
Salma Hep
Well, you got to put this into perspective. When you add all the 20,000 housing units that are structures that have been affected, that's only really about 0.5% of the total housing stock of LA County. So yes, it is really devastating for those neighborhoods or those communities. But LA county is the largest county in the US and so it's again only 0.5% of overall housing stock that's been impacted.
- [31:17]
Melissa Lee
So what are the effects so far that you've seen on the, on the housing market, the, you know, the surrounding areas?
- [31:24]
Salma Hep
Yeah, so the immediate impact obviously as people seek shelter is impact on rents. So we've seen rents being bid up significantly higher and not every everywhere again across the county because you have different communities that are looking for places to live of similar kind. So folks that lived in Pacific Palisades, for example, are going down further south in the Laguna beach for example, Whereas communities impacted by Eaton Fire, which is in Altadena, those are more middle income and lower income communities, they tend to stay in that area. So you can see rents of communities immediately surrounding the impacted area being affected and those that are very similar kind of communities.
- [32:10]
Tim Seymour
Summit Tim, thanks for joining us. I saw in your notes and you referenced Malibu where there's also been a series of natural disasters over the years. Help us understand what the pricing points have been there over the last 10 years relative to the area. In other words, have they been restrained? And is this part of the view you have at least on the areas that could be rebuilt?
- [32:28]
Salma Hep
Yeah, so what we saw, the last fire that was significant in Malibu was Woosley fire. And I was just looking at the data in terms of overall appreciation over the last since that fire, basically. And it has appreciated relatively more slow than other parts of LA county or just just overall home price appreciation nationally in Malibu, for example, HPI is up about 24 to 20 to 30% since that Woosley fire. And nationally or even L A Southern California, we are up 40 to 50% since the same period. So you do see a little bit of an impact, particularly in areas that see persistent devastating natural disasters where at some point people just decide not to go back. It all depends really on the size of the community. If people have elsewhere to go where it's close enough, the home, the home price impact is a little bit smaller than if you have a really small, tight community. People don't have a lot of places to go. The home price impact can be larger.
- [33:35]
Melissa Lee
Salma, great to speak with you. Thanks so much.
- [33:39]
Salma Hep
Yeah, thank you very much for having.
- [33:40]
Melissa Lee
Me, salma, have of CoreLogic. The other aspect to it is a lot of people have their wealth tied up in their home. Their home is now gone. And so in terms of the, you know, the economic impact, how do you sort of work that through, Rebecca?
- [33:54]
Rebecca Patterson
I mean one thing that we've seen trending over the last couple of decades is just this consistent rise in very expensive, we'll call it weather events, whether it's fire, flood, hurricane, drought. And this year or this past year, 2024, we had 27 weather events that cost over a billion dollars. The average from 1980 to 2024 was eight or nine a year and it's been a steady climb. Now you can say it's related to climate change or not, but the point is we're having more of them and the more we have, the more you can't just look through it and say it's a one off. They rebuild, we move forward. It becomes more of a macro event that's going to have a more lasting impact on inflation and possibly on growth. Certainly California, I have to assume they're going to get a bailout or need a bailout. This is going to be a huge hit given the importance of property taxes for the state's revenue.
- [34:44]
Bono
Yeah, I think you look at the builders here. I think you also look at the insurance companies. I really think it's really tough right now at this stage in the game to understand, but I do think there will be a trading opportunity, particularly around K.B. pulte and Lennar. Those are some of the largest presences and from the builder stand that standpoint. And then Allstate and Travelers State Farm are also have a large presence from the insurance standpoint. So I do think you will probably see some persistent inflation until we understand the insurance and reinsurance risk. But once that's behind us, you will probably get an opportunity to trade around those names.
- [35:17]
Melissa Lee
Coming up, all systems Stargate. But where is the funding for this landmark AI project coming from? We'll dig into the major players, the drivers and more. And Fast Money is heading to Miami next week for the iConnections Global Alts Conference. Tune in Tuesday for guests like Morgan Stanley's Mike Wilson, Altimeter Capital, Brad Gerstner, Porter Collins and Vinny Daniels and Seawolf Capital and General Atlantic's Martin Escobarri. That starts 5pm Eastern Time on Tuesday only on CNBC. Welcome back to Fast Money. All hands on deck for President Trump's 500 billion dollar AI project. SoftBank's Masayoshi San OpenAI, Sam Altman and Oracle's Larry Ellison may have headlined the announcement this week, but they're not the only ones involved. CNBC's Kate Rooney has been digging into the money.
- [36:07]
H
Kate hey, well, yeah, so there is one Stargate investor you might not have recognized on the list when it came out, mgx. That is because a year ago it didn't exist. This is an Abu Dhabi based investment firm launched back in March as a joint venture between sovereign wealth funds out of the United Arab Emirates. The fund was carved out to focus on AI and it has been in some of the hottest deals we've seen in Silicon Valley in the past year. OpenAI, Databricks, XAI and then $100 billion partnership back in September with BlackRock and GIP on infrastructure. The Emirates region has been on an investing tear lately, especially in a Ivy. Emirati sovereign funds including MGX spent almost $30 billion across 52 deals in the past year. That was the highest across the region according to W F a research firm. It does highlight foreign demand overall to get into some of these deals, but especially in infrastructure. So these Middle Eastern countries, they're looking to diversify these oil rich economies. And I've been talking to sources who work closely with mgx. They say the team is highly technical and those who know the playbook and are familiar with it, they say the goal is for this fund to really learn about how to build these types of mega data centers in their own backyard.
- [37:22]
Melissa Lee
Now Kate, is there any sense amongst the people that you talk to that there is a concern that there's a lot of foreign money being used to build the United States major data centers infrastructure for AI?
- [37:35]
H
It came up a lot, Mel, the national security question, I think the Emirates have warmed relations with the US they are seen really as among the sovereign funds quite friendly to the US And Jared Cohen at Goldman Sachs, I'm going to steal this term from him, he's called it geopolitical swing states. So especially those sovereign wealth funds in the Middle east, they have a binary choice when it comes to they are either going to invest in the US or in China. I'm told the bet here by the US by the Trump administration is that they would rather have that money here in the US knowing that otherwise it might go to China. I'm also told in these infrastructure deals they're not getting any sort of ip. It's not like they can can go in and sort of take a picture of the data centers they're getting, the relationships, they're getting the sort of big picture know how, but there are still strict IP restrictions.
- [38:21]
Melissa Lee
All right Kate, thank you. Kate Rooney, a fascinating glimpse. We just heard headlines say that SoftBank is going to folks like Brookfield for money. So they're actively sort of trying to raise their funds.
- [38:33]
Tim Seymour
It's fascinating. And part of the comment that MGS has been making is that people don't even appreciate the disruption. And CNBC had a great note on that about four days ago on dot com. But the message also is investing around energy transmission, infrastructure, energy itself. I mean these are the places that are probably the most interesting to me because these are places, it really is terra firma and we can already see that. And you know, Constellations deal last week puts an exclamation point on that.
- [38:58]
Steve Grasso
If you see the uae, they've diversified away from oil, petroleum. You wouldn't think they've gained that much, much of a diversification so far. But they're well on their way. They're way over 50% on cutting back on the Reliant on Petro and they're looking at AI and they're looking at renewables and they want the tech.
- [39:20]
Rebecca Patterson
Yeah, yeah. I would just remind people 10 years ago, maybe even less than that, China was one of the big source of funds for US Fundraising. Right? They were their sovereign wealth fund. They were coming and putting money in the United States States. The PE firms wanted their money and they can't touch it anymore. So they have to look for other sources of wealth. And the Middle east is probably the biggest, deepest pockets out there. So if you can find a swing state, you take it. And I think the point of US versus China is another reason why the US government is going to be friendly about that.
- [39:51]
Bono
I mean another incentive might, at least from, from our side might be to have our energy relations, our oil relations. You're sitting here saying we want to lower the prices at the pump, we want to lower the price of crude. There needs to be some incentive with that cohort in terms of there being a, you know, a symbiotic relationship in terms of being inclusive and allowing them to get access to things that perhaps on the fringes we may not be fully comfortable with. And then you know, that needs to serve as an incentive for them to come to the negotiating table and essentially lower the price at the pump when that they really have no, you know, internal reason to do so.
- [40:24]
Melissa Lee
Coming up, Microsoft, Tesla, Matt and Apple headlining a jam packed week of earnings ahead. How the options market is prepping for the blockbuster reports next, more fast money into. Welcome back to Fast Money. A huge week of earnings ahead. The options market expecting a major moves in the big tech names. When those results cross the water, Mike Co's got all the action. Hey Mike. Hi there.
- [40:54]
Bono
So yeah, Tesla is implying a move of over 8%. Microsoft implying a move of about 3.6% met another big one at 7.4%. And Apple's implying a move of about 4%. Now, Tesla, of these four, not only has the highest implied move, but it also traded far and away the highest number of contracts, almost 2.3 million contracts, or about 4% of all U.S. listed stock ETF and index options today calls outpacing puts. And excluding those contracts which did expire today, the busiest call contract where the January 31 weekly for 20 calls, nearly 16,000 of those traded for about $16 and a quarter per contract. Buyers of those calls are obviously expecting some good news after they report.
- [41:37]
Melissa Lee
Yeah. Which of the earnings, Mike, are you watching more closely most?
- [41:42]
Bono
Well, for me, it's going to be. It is Tesla, not only because it's the most actively traded, but also, you know, of these four, it's the one whose valuation is, shall we say, the hardest to get your arms around. And so obviously it's more of a sentiment trade. And of course, he's got Trump's ear. But the interesting thing about this is that Trump isn't really supporting the EV trade so much. In fact, he's kind of been pushing back on that a little bit. So I think that's going to be the interesting one to follow.
- [42:07]
Melissa Lee
All right, thanks, Mike. Mike, co. Steve, how about you?
- [42:11]
Steve Grasso
Yeah, I mean, it would have to be Tesla and have to be meta because everything that we discussed that they kick off of the show. But I think Tesla's at a really cool technical spot right now because you have that late November low and then it took off to mid December and we're right at that 50% retracement right around 406. So I'd be betting on the guy that has an office in the White House to probably pull another rabbit out of the hat someplace.
- [42:36]
Melissa Lee
All right. Oftentimes in TV we like hyperbole a little bit.
- [42:41]
Tim Seymour
Never occasionally.
- [42:43]
Melissa Lee
One might say that next week is a make or break week because of the earnings flow. Do you think that it is a make or break week in terms of the earnings? So we got a lot of big ones.
- [42:51]
Tim Seymour
I feel like it's been more make or break at other times, so less hyperbole. So second derivative of hyperbole means it actually may be a good week to not perform. But I don't know, I think you have a lot of tailwinds to the market here that include at least, first of all, let's not forget there's a Fed. Now, we may not hear a whole lot out of this Fed, but there's dynamics here, I think, for the market overall, all I think there's allocation going on. I think there is a bit of, you know, this animal spirits trade that we see going on. I think there are parts within that tech group and again, I would just say Apple, you didn't ask me, but I think they're the most interesting because they're the one that has the least confidence around them and this is one of the most iconic companies in the world.
- [43:29]
Bono
Yeah, yeah, Tim, my thoughts exactly. It seems like we had just forgotten about Apple. I know it was a hot topic last week, but you know the sentiment. I think short interest is around 1%, which doesn't seem large, but it's pretty relatively large for Apple. And if you think about the, the, just the, the amount of that Apple is traded, 1% is pretty significant here. So, yeah, I'm looking for a counter trade.
- [43:49]
Melissa Lee
All right, up next, final trades. Time for the final trade. Rebecca Patterson.
- [44:10]
Rebecca Patterson
You know, I may not love bitcoin, but I do love diversification. I'm going to go with Gold.
- [44:14]
Melissa Lee
Gold. Tim.
- [44:16]
Tim Seymour
Well, we love having Rebecca Patterson on our show. So great to have you. I go to Nextera Energy and who also has made some implications about what's going on with their nuclear business. I think there's a lot to do here.
- [44:26]
Bono
Bono in seems like there's a recommitment to infrastructure spend. I'm going to go with Oracle.
- [44:32]
Melissa Lee
Steven Grasso.
- [44:33]
Steve Grasso
We've heard about AI, we've heard about bitcoin from this administration. We haven't heard a lot about critical minerals. I'm playing MP up in the trade and I'm sticking with it.
- [44:43]
Melissa Lee
All right, great to have you on the desk, Rebecca. Thanks for watching. Fast Mad Money starts right 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 Learn how to use AI to be more successful with CNBC Make it's new online course. We'll give you examples that can help you master AI tools. Go to CNBCmakeit.com AI and register now.