← CNBC's "Fast Money"
CNBC's "Fast Money"
Down Day For Drugmakers… And Intel Jumps On Deal Rumors 1/17/25
00:36:16
Drugmakers in the red, as CMS releases its drugs that are subject to medicare price negotiations. The names getting hit the hardest, and how its impacting the weight loss drug race. Plus Is Intel on the market? M&A rumors helping boost the stock, but who could be the buyer? What a deal could mean for the beaten down chipmaker, and the impact on the tech space. Fast Money Disclaimer
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- [00:01]
Karen Feiderman
What does it mean to be rich? Maybe it's less about reaching a magic number and more about discovering the magic in life. At Edward Jones, our dedicated financial advisors are the people you can count on for financial strategies that help support a life you love. Because the key to being rich is knowing what counts. Learn more about our comprehensive approach to planning@edwardjones.com FindYourRich Edward Jones Member SIPC Weekdays.
- [00:32]
Frank Holland
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.
- [00:49]
Melissa Lee
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. Shedding pounds and not in a good way. Shares of Novo Nordisk seeing their lowest levels in nearly months. The headlines that keep sending the weight loss heavyweight lower and lower. And a bitcoin breakout. Prices trading near all time highs as President elect Trump promises to make crypto a priority. What that means for regulation and the next steps for the space. Plus, could intel be a takeover target this year? Just how much climate change has affected homeowners insurance? And the last two traders revealed their 2025 acronyms. Why Steve is putting on his gloves and Courtney's going global. I'm Melissa Lee coming to you live from Studio B at the nasdaq. On the desk tonight, Steve Grasso, Karen Feiderman, Courtney Garcia and RBC's head of US equity strategy, Lori Calvacino. And we start off with the latest drag on drugmakers Novo Nordisk getting slammed after the Centers for Medicare and Medicaid published its list of 15 drugs subject to price negotiations for 2027, including Novo's GLP1 drugs, Ozempic and WeGovy. That stock fell over 5% today, now trading at lows last seen in the summer of 2023. Eli Lilly shares falling in sympathy concerns over pricing pressures in the GLP1 category. Shares were down more than 4%, bringing its losses since Monday to 9%. The company also trimmed 2025 guidance earlier in the week. And another wrinkle for Novo, the company out with top line results of a trial that studied a higher dose of Wegovy than is currently on the market. Patients losing an average 20.7% of their body weight after 72 weeks. That's still, though slightly less than what patients see on existing doses of Eli Lilly Zepbound. So what does this all mean for the direction of the obesity trade, which has really come Back down to earth for a bit, Karen?
- [02:34]
Courtney Garcia
Yeah, well, down, obviously. Right. And so for Novo, I mean, just looking at where Novo has been in the last, I don't know, five months or so, it's down almost half, which is, if it weren't so big, it would be a takeover target for somebody. But it is still like, I don't know, $350 billion or so. I mean, I. This is bad. I am long. Lilly. It clearly has, you know, you can't help but think, all right, well, if that's happening to Novo, you've got to think that Lilly's going to suffer some of that pressure as well. I'm still long. That hasn't been the right place to be in the last two months. But I really believe in this trade as. And this drug, the promise of this drug. And even if there is, I'm sort of hopeful that it will get covered much more broadly than we think.
- [03:19]
Melissa Lee
So they'll make it up on volume?
- [03:20]
Courtney Garcia
Effectively, yes, although I don't know that it works exactly that way. It's not like, oh, if you're going to go. If you're on the list, then, you know, then we'll cover it. But I do think that there's a chance that we see much broader coverage.
- [03:34]
Steve Grasso
Are we going to see a whole new negotiating team once Trump's team comes in, or is this.
- [03:38]
Melissa Lee
You think they're going to be easier on Novo Nordisk? You know, Novo Nordisk, we don't want to cut you that much. You know, we have lots of people on this drug who want to let them pay a little more. Does that sound like something they're going to do? I know that when I put it that way. No, I sense that you're being sarcastic.
- [03:53]
Steve Grasso
So I think that we're going to go with whatever the lobbyists in Big Pharma, kind of. That's unfortunately the way our government works. So, you know, and I think everyone likes to leave their own fingerprint. If he thinks that this is a better deal to do better. Historically, when they do these negotiations, the drug price comes in 22%. What does that do? So if you do some analysis and you go through, read the tea leaves, it's probably a 10% discount in Novo, when you look at it. Down 26% for the year. These are the names that we've talked about so much. They've been so prevalent and they've been these high flyers. It's down 26% for the year. Another 10% is probably not going to squeeze people out of it that's probably your worst case scenario for me.
- [04:43]
Melissa Lee
So down another 10% is your worst case scenario or in this stock, you think?
- [04:48]
Steve Grasso
I think the worst case in everything that we know right now. And I think you have the upshot shot of Trump's team being less onerous on these negotiations.
- [04:57]
Melissa Lee
What do you think?
- [04:58]
Karen Feiderman
Yeah, that is the big unknown is what is the new administration going to do with these price negotiations. But I think realistically, many analysts knew that they were going to be in this list of companies that were up.
- [05:08]
Melissa Lee
For these price drops.
- [05:10]
Karen Feiderman
Exactly. Which I think probably a lot of this more so is because of the trial that just came out. Probably more so than the price increases. But I think even if there is that price pressure, the question is, will there be increased volume for the demand in these drugs? And I think that's what we're continuing to see is the demand is there. They're really still not even able to supply it enough to get it out to people. And I would still say that outweighs these price pressures. That, yes, I would buy on these dips here. I would, you know, I don't know how much further would take to go, but I think I would look at this as a long term opportunity.
- [05:37]
Lori Calvacino
So I would just say zooming out. I was on the road pretty much the entire month of December and I got an ear. Well, no, but I got it. I got an earful from investors who were worried about the market, itching to go defensive. And they were talking about just about any other sector besides health care. And the reason why was the political uncertainty. And even looking at it, an area like pharma where, you know, we had been seeing some good earnings revisions, looked at the sector broadly, you'd seen some good valuation appeal. Maybe there was an idea there was a little bit less risk in that sector than other areas. I feel like this is a sector that just cannot catch a break. And going into a political environment where we don't know what we're going to get, I think it's tough to step in.
- [06:15]
Melissa Lee
I think it's interesting that you think the Trump administration is going to be a little bit easier on these. I mean, Trump, I know where you're going. Dealmaker, right? I mean, he's the dealmaker in chief. He wants, and it's a very populous thing to bring prices of drugs down, particularly very popular drugs.
- [06:29]
Steve Grasso
He also likes being contrarian. So if he sees where, where people are lining up, he more often than not will choose how to convince himself of the opposite opposing side. And the Only time we didn't see that with him was with US Steel. He stayed right in line with the Biden administration because of unions and because of Teamsters and because of whatever else, I would assume. I think you're going to see sort of a pivot here. And I get everything that you're saying makes total sense. And on paper it should be. He should be worse than the average of 22%, you know, fighting with the drug companies. But I think he's going to play it from a different angle, so he'll see it as a win.
- [07:13]
Melissa Lee
Do you think it's a value now? I mean, are you value?
- [07:16]
Courtney Garcia
Well, I mean, I guess, you know, it's lower, that's for sure. But I do think that, yes, I do think it's, I mean, for this kind of extraordinary product. How many of these have we seen? Maybe, I mean, I'm trying to think back since, I don't know, statins were gigantic, absolutely gigantic for a really long time. So this is bigger than that. So, yes.
- [07:40]
Melissa Lee
Let's get more on all this with Dr. Kavita Patel. She's an NBC News and MSNBC medical contributor. Dr. Patel, great to have you with us. You know what's interesting about Novo, it's got like a lot of things going on here as the Medicare, you know, the drug negotiation aspect, which could put pressure on pricing. But it also has the step trial results, which were, which seemed disappointing because it just, they weren't as. It wasn't as effective as, as its competitor Zeppelin. And it's coming off of the disappointment of Cargassema. So what do you think in this world of Novo Nordisk, is its, its biggest burden at this point?
- [08:16]
Dr. Kavita Patel
Yeah, I think the biggest burden is what. By the way, the interesting thing about that drug list is that it not just had, you know, Ozempicovian rabialsis, but it basically drugs that came out at different years, kind of lumped them in for class effect, which I know Novo has, you know, their suits pending, all sorts of things, but I think that's the biggest risk right there. When you look at the Medicare population and then the reach this could have, as well as the impact on the commercial market. For Novo, this is a big deal. Kind of watching how these drug price negotiations shake out and listening to how you all spoke before, you know, we're hearing Trump want to resurrect things like most favored nation. Melissa, that puts us into an even deeper conversation about deeper price discounts, not necessarily going easier on the industry. So I think that's the Largest risk combined with I feel like a broken record when I say I'm waiting for the red, a true tide, you know, kind of commercial launch. Because if you think there's Appetite and Zeppelin are better than Ozempic in the Step up true trial and WeGovy, you look at three mechanisms of action in red, a true tide and then you've got, you know, now we're talking about some incredible results that could put Novo in. I still think there's a market, but it just changes the dynamics of that market.
- [09:26]
Courtney Garcia
Dr. Patel, Karen, thanks for being on. If you're Lilly, how do you think about pricing now today versus yesterday?
- [09:34]
Dr. Kavita Patel
Yeah, it's a great question. So I all we have is to kind of look at what happened for drugs that were in the list that still has not taken effect. But that original list of 10 for the IRA drug price negotiations, remember, just to remind people, it goes into effect in January of 26, but there we saw kind of a spread, you know, 38 to 79% reductions. And I think that's where if you're Lilly, you're looking closely and just kind of trying to think through, well, if, if Trump comes in with kind of a most favored nation approach, then you're really hoping, and as the Lilly CEO has said, that that might result in other countries raising their prices so that overall US Prices are not much lower. But you're probably trying to do that calculus right now, depending on what you're hearing from Trump. And keep in mind, I think there's still so many uncertainties in how this administration, the incoming administration, would take action. But I was reminded again by staff who are career staff that they're the ones that are in the negotiation room. So there's a lot of political overlay and certainly the Trump administration can do things, but they're still going to have a lot more control at the career staff level. So Lilly should just look to kind of how the negotiations fared last year and trying to handicap well, where and how will we fare when we inevitably come into this market and position ourselves. I think they're doing that with these really interesting relationships. On the telehealth side, looking at their vials, I think they're trying to think about multiple prongs to get to so many people and to overcome that employer resistance to cover these drugs at the large group market.
- [11:08]
Melissa Lee
You mentioned that most favored nation status could mean even deeper cuts. By law, they could negotiate. The price cuts should be 25 to 60% off of the regular price. So you're talking about cuts that could potentially be deeper than that margin.
- [11:26]
Dr. Kavita Patel
It's. So this is where the question is kind of the interpretation of the statute, because if you read the statute closely, there's, there's wiggle room and how you can interpret kind of the mechanism of that negotiation and the prices to which it's indexed. So, yes, you're right. Statute tried to set up kind of a corridor of safety, just like it did with like, how long the drug has to be in the market and some of the other restrictions on it. But, Melissa, if you go a layer deeper, and the Trump administration has, keep in mind this isn't the first time they've talked about most favored nations. So I think there is, and there's really like some opportunity there. And I think that's going to be the active point of discussion once they come in. And I certainly do not expect for them to just kind of, they can't undo that list. That list is going to stay as it is. It's very difficult to do it without congressional action. And this is not the kind of thing you want to take congressional action on. I see them actually just digging in deeper and trying to think about what these prescription drug prices could look like. You know, Elon Musk's tweet several weeks ago, I believe with how he thought this could open up an incredible market if people had more access to it. That seems to be in line with kind of where people feel and the public feels that way, too.
- [12:34]
Melissa Lee
So for Novo Nordisk, it has this going on. Cagroset was a little bit of a disappointment. And it's also got the Semaglutide patent coming up for expiration in a few years time. With that backdrop, Eli Lilly is working on red, a true tide, which could be, as you mentioned, you know, a game changer in terms of efficacy. How much better do you think Eli Lilly is positioned now, seeing what the Novo portfolio is, the pipeline versus before?
- [13:03]
Dr. Kavita Patel
Yeah, I think Lilly and again, we've, we've kind of spoken, Melissa, about not just in this kind of space, but in some of their, just like that's in chronic disease in general. I think Lilly is positioned very nicely. Having said that, I think that there's so many aspects of, you know, there's so many in cretins, there's so many drugs kind of in pipeline that I think could offer even not just a good profile, but easier dosing. So we've always talked about orals. They're just not as good right now as the injectable. But with time, you would imagine that there's just going to be sophistication in the delivery mechanism. So I think Eli Lilly still has just an incredible kind of land grab for this space, and this space being chronic disease, effects of obesity and all the chronic conditions around it. We've already talked about watching closely some of the Lilly trials in other indications that keeps in, you know, that puts them in again, this great position for being part of, like eliminating chronic disease. Think about going from chronic to curative. And when you look at the Lilly pipeline, that's what it speaks to.
- [14:02]
Melissa Lee
Wow. Dr. Patel, always great to see you. Thank you.
- [14:05]
Elise Greenspan
Thank you.
- [14:06]
Melissa Lee
Have a great weekend. Meantime, just a few days to go before President elect Donald Trump is sworn into office for his new term. He has promised to make crypto a priority in his administration. Bitcoin trading securely over 100K, close to record highs. CNBC's MacKenzie Segalis joins us now for more on what we can expect under Trump 2.0. They're celebrating in Washington, Mackenzie. I mean, they're going to have a crypto ball for him, right? A party for Donald Trump. Bitcoin's already run so much. So what are we expecting the first, I don't know, hundred days from the Trump administration in terms of the bitcoin industry?
- [14:36]
MacKenzie Segalis
Yeah. The first ever crypto inaugural ball is tonight. It's closed to the press. But I will be there and I will report back on how that goes. There are multiple reports that we're going to see an executive order that's crypto specific on day one in office. I've been talking to a lot of industry specialists who've been putting together a plan over the last several months, channeling that to the Trump transition team. Some of the big pillars of this type of plan involve a crypto advisory council. So essentially a lot of the C suite executive members of different crypto firms who went to roundtables with President Trump in the run up to the election in Nashville and Mar a Lago, they were told that this would be the pool of candidates from which he would form this advisory council. And this would be separate to that AI and crypto task force that has been convened under David Sachs. Now, separately, there's also talk that they might look to There have been more than 100 enforcement actions brought against crypto firms over the last four years. And one of the potential proposals here that could be a part of an EO would be to freeze these enforcement actions if they don't involve allegations of fraud. So right now you've got coinbase, Ripple Robinhood received a Wells notice from the sec. And so if you see, you know, some of these enforcement actions frozen, that could be a game changer. Robinhood and Coinbase both ending up 5%. And then the big one, Melissa, is the fact that we might see a national bitcoin stockpile. This is something that Trump first introduced the idea of in July in Nashville. What's interesting is that over the last few months, we've seen a lot of executives from the crypto industry meet with Trump behind closed doors to advocate for other crypto currencies to be a part of this. You have Brad Garlinghouse, the CEO of Ripple, which is closely aligned with the XRP token, advocating for just that.
- [16:20]
Melissa Lee
So in terms of a crypto stockpile, presumably it would be under the purview of the Treasury Department. Has Besant said anything about it?
- [16:29]
MacKenzie Segalis
So, at this point, all that's been mentioned is that the $20 billion worth of Bitcoin that already sits on the government's balance sheet, under the purview of the marshals would potentially be migrated to this stockpile and be under the purview of the Treasury. We haven't heard whether or not that's going to happen. You've got names like Senator Lummis of Wyoming, who's been actively advocating for a more aggressive buying plan. One million bitcoin over the next five years. She's been meeting with members of the Trump transition team and some of his cabinet appointees, reportedly, to discuss that plan and making that a reality. But at this point, we're still waiting to see if this strategic bitcoin reserve would be a part of an executive order if it's brought next week.
- [17:07]
Melissa Lee
Mackenzie, thank you. Have fun at the ball. Should be interesting. Mackenzie Tagalos, an advisory council made up of industry executives. So that sounds like a great idea, Karen.
- [17:20]
Courtney Garcia
Yes. So I was just looking. At the end of 2024, the US had $489 billion worth of gold, and what was it, 20? $10 billion of Bitcoin. Did you say 20?
- [17:30]
Steve Grasso
Yeah.
- [17:32]
Courtney Garcia
So, I mean, that could. That there's a lot of room between the year and there. I. That will be fascinating, I think, if that's the case. I do think there's still more upside here. Clearly, bitcoin is excited about this and there's something built in here already.
- [17:46]
Melissa Lee
Right.
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Courtney Garcia
But if that is the case, I think there's more to go on.
- [17:49]
Steve Grasso
You know the saying, you can never be long enough bitcoin when it's going up. Right. And that's what People are to chase. So they're either going to try to capture 200,000 bitcoin per year or up to, as she just said, a million bitcoin per year. Either way, you're only going to have a maximum of 21 million bitcoin. It's the supply demand that keeps the bid within this. I have an outsized bet in bitcoin. I think it goes much higher.
- [18:16]
Melissa Lee
How many questions do you get, Laurie about bitcoin versus equities?
- [18:20]
Lori Calvacino
You know, it doesn't come up as much as you would think. We have another in house expert on it that ends up taking most of the questions. But we do have one chart in our weekly where we actually track bitcoin against the S and P. And most of the time that relationship has been pretty solid. It breaks down every now and then. We're right back into a pattern where they are marching right together. And the other thing we see is that if you look at Trump's net approval, it's also marching in line with the S and P. I haven't done the Trump vs Bitcoin chart yet, I guess I think I know what I'll find out there. But these things are all starting to be interconnected and at the end of the day I tend to use it as a risk barometer. We'll continue to use it that way.
- [18:58]
Melissa Lee
All right, but that's great news for the equity markets then court.
- [19:00]
Karen Feiderman
Yeah, and I would agree with that. I think this is a risk on bet and I think this is part of the Trump trade which has come back in focus again as we're getting closer to inauguration day because as we got into December inflation and the Fed kind of took control of the market macro conversation. And now we're looking at what's going to benefit under Trump presidency who has by far been the most favorable to cryptocurrency. So this isn't something we invest in but I can tell you it's probably the most common question we are getting from clients is like do we own this? Should we own this? How much should I own of this? Like it is like from a retail level like more and more people are getting interested in this which to see this point, the demand probably is there.
- [19:34]
Melissa Lee
Coming up a big week for the big banks. We'll dive into what strong earnings and a slew of fresh record highs means for this group next. Plus Chinese stocks soaring on the back of bullish GDP data is now the time to jump into this trade. We'll debate right after this.
- [19:49]
Frank Holland
This is fast money with Melissa Lee right here on cnbc.
- [20:00]
Melissa Lee
Every day thousands of Comcast engineers and.
- [20:03]
Elise Greenspan
Technologists create connectivity solutions that change the way we work, live and play. Like Kunle, a Comcast engineer who is.
- [20:11]
Melissa Lee
Focused on revolutionizing the in home WI.
- [20:13]
Elise Greenspan
FI experience today and for the next generation. Learn more@comcast corporation.com wi fi global markets.
- [20:23]
Frank Holland
Up to the minute front page news. Wake up to Frank Holland at Worldwide exchange weekdays 5am Eastern. CNBC Live ambitiously.
- [20:34]
Melissa Lee
Welcome back to Fast Money. JP Morgan, Goldman Sachs and Morgan Stanley among the names trading at Fresh Records today, the stocks just some of the marquee banks beating earnings estimates this week alongside Wells Fargo, Citi and Bank of America. Bny, Discover Financial and American Express also hitting new highs today. Everything about this environment is great for financials, Karen, it really is.
- [20:54]
Courtney Garcia
I mean on every front you had net interest income, which is great. You had other income, which is great. You had banking, you had asset wealth management, you even had growth in loans. I mean, and you're in that capital, potentially more capital. They might be able to release some capital and a great environment overall in the economy. So there's a lot to like there.
- [21:15]
Lori Calvacino
So we've liked the sector. I do think the investment banks are getting a little pricey, but we've still got really solid earnings revision trends and they probably got a bit more room to run. But look, I think a lot of the, you know, sort of less challenging stuff for markets, the good stuff, so to speak, from the Trump administration, easier regulation M and A, increased business optimism, all that stuff feels like maybe it's it hasn't quite happened in a big wave yet, but it's still kindling. And some of the more challenging things like tariffs just aren't that relevant here. So I think this is still a good sector to be in. I do like the regional banks better than the investment banks, but I think there's still more to be done here.
- [21:50]
Karen Feiderman
Yeah, Court, yeah, I think the banks look really attractive here. And I do think coming into a new administration, they're one of the direct beneficiaries of less regulation. You're really seeing a yield curve that's normalizing is really good for them. And I think what's also been really positive to see is their commentary on the consumer has been very positive where they're saying, well, we're really not seeing cracks in the consumer. Consumers are still spending. So it's good for the banks but also good for the economy and the markets on a whole. So I've been really happy to see the news that's coming out.
- [22:15]
Steve Grasso
This was the original Trump trade. This was the deregulation trade. So if Basel 3 is really gets rejiggered, this should be a tailwind to the banks. For everything that Karen mentioned, everything that the other panelists mention, everything that Laurie and Courtney said, I think it's, there's a tailwind. But are they sexy enough going forward?
- [22:36]
Melissa Lee
No one sexy enough meaning are they overpriced right now? What do you mean?
- [22:42]
Steve Grasso
I think they could, you know, when you start talking about, when you start talking about price to book these, these numbers are starting to get a little bloated for financials. So they could be overdone when you're looking for sexy. You think growth, you think technology, you think more efficiencies. I don't know if they have that just yet.
- [23:02]
Melissa Lee
Karen's heartbroken.
- [23:03]
Courtney Garcia
You know what I think? What I think he's like is not sexy. I think it is.
- [23:08]
Melissa Lee
There is a lot more fast money to come. Here's what's coming up next.
- [23:12]
Frank Holland
A major merger in the chip space. We're pulling back the curtain on the latest buzz, lighting up intel shares and diving into just how big this semi shakeup could be. But first, China stocks rallying today on economic numbers out of the country. But with the potential for tariffs and questions over the future of TikTok, is this market investable again? We've got answers next. 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, 5am Eastern, CNBC.
- [24:07]
Melissa Lee
Welcome back to Fast Money. The Supreme Court upholding a ruling that would force TikTok to shut down in the U.S. on Sunday. But the viral social media app might still live on. President Biden saying he will not enforce a ban before he leaves office. And President Elect Trump saying he will make a decision on the social media platform soon. Meanwhile, Chinese Internet stocks, stocks got a bump on the back of strong GDP data out of the country. JD.com up double digits. Alibaba, Baidu and others following suit. China's economy growing by 5% in the last quarter, better than estimates. Karen, you got in on the China trade.
- [24:40]
Courtney Garcia
I did. I did, Yeah. I did a bad job timing that. It is. It is one of the letters in my acronym. I'm not sure which letter, but Alibaba is one of them. And I just think there is a lot of bad News already priced in. If I don't know whether to believe this number or not, and I kind of dismiss it. But I think that to the extent that there is any improvement in the relationship not only with the US and China, but any improvement at all in their economy, I think there's a lot of upside here.
- [25:07]
Steve Grasso
I agree with that. It's sort of the same vein that we're talking about the weight loss drugs, where if you're going to have a representative, a high level representative from China at the inauguration, things can't seem as hot as we think they are.
- [25:21]
Melissa Lee
You mean the TikTok CEO?
- [25:23]
Steve Grasso
The TikTok CEO and the Vice president of China is going to be at the inauguration. So I think that between China and the US and we know that Donald Trump has, President Trump has already spoken to Xi Jinping about tick tock and about fentanyl and about a host of other things, I'm sure. So I think things could be simmering down and if they're simmering down at all, then this whole space should in theory run.
- [25:45]
Karen Feiderman
Yeah, and I would agree with this. This is something we have actively been looking at. I think you're getting a lot of overly over negativity that's been priced into China and if you have any sort of improvement with China, US relations or if we start to see a stimulus really come to fruition. I think there is a lot of questions of what those GDP number, GDP numbers and how accurate they are. But I think realistically they are willing to put the stimulus in to continue their economy growing. And I think it's absolutely a space you don't want to discount the second largest economy in the world. So you obviously want to look at your risk tolerance and how much you have there because as we know, economies can be very volatile. But I do think you want a piece of that for the long run. Absolutely.
- [26:18]
Lori Calvacino
So when we track flow data, we're not seeing a return to China yet, but what we are noticing is that you're seeing a break in the US dominance. And so we started to see US Equity funds flows really falter at the end of the year. And we've seen interest pick up in global funds, European funds, they're not seeing inflows yet on the European side. But we're just starting to see such a noticeable change in trend that things are getting so less negative. US Exceptionalism was one of the biggest consensus things we heard at the end of the year. So it's not surprising to me at all. We're starting to see these Dynamics shift a little bit.
- [26:49]
Melissa Lee
Coming up. Intel up big today as rumors swirl that the chip maker is on the auction block. What a deal could look like and what it would mean for this embattled name. Right after this.
- [27:00]
Frank Holland
Missed a moment of fast. Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this.
- [27:14]
Melissa Lee
Okay, welcome back to Fast Money. All week long our traders are revealing their 2025 acronyms and we are down to our final two. First up, Steve Grasslow's acronym wage turned into sage after Smurfit's deal for Westrock closed. It was a runner up, every component up about 40% only amgen down slightly giving the group a 28% gain overall. So Steve, what's your 2025 boxer?
- [27:39]
Steve Grasso
And and we're going to start with B for Bitcoin and for obvious reasons, right, we have the strategic Bitcoin reserve, the most pro president because bitcoin wasn't around for most of the presidents. So there's, there's, you know, this whole he ties himself, President Trump ties himself with the market and with bitcoin. He's not going to let either one fail. And then we move to the O which is okta recently profitable. This is an identity management company. It's already up 11% year to date. Letter X Steel. This is one that also President Trump is not going to let fail. So whether he uses terrorists to save it, whether he uses tax policy, we've already seen Cleveland Cliffs rumored to be back in a deal in partnership with Nucor to try to take them out. So is are they going to get taken out for the same price that Nippon put on the deal? No, but there's still light at the end of the tunnel. I'm long it I'm up 70% on this trade. I'm going to stay long it etherium rising tide lifts all boats. Crypto. If crypto rises, Etherium rises in Ethereum platform is what a lot of the other crypto names are actually built on. And the last one is Reddit it So Reddit is the forum of forums. Another one that's recently profitable and I think this one has. This one had a huge year or huge three months and I think it has the ability to have another huge year in front of it.
- [29:09]
Melissa Lee
All right, our final trader acronym, Courtney, your 2024 Pick V scheme didn't follow the rules.
- [29:17]
Courtney Garcia
I thought it did, but clearly you did.
- [29:20]
Melissa Lee
But still ended up 8% last year consisted of sectors, values, small caps which are your top performers, health care, emerging markets and Energy. This year Courtney followed the rules. So what is your acronym?
- [29:33]
Karen Feiderman
I follow the rules that I felt like were directed at me so I made sure to follow them. But this year my acronym is Global and we are looking for a global recovery here in 2025. So we'll start with G which is Goldman Sachs. We've talked actually a lot about the banks tonight which we really continue continue to like. And I think Goldman Sachs specifically is really well positioned to see more M and A more investment banking activity. The L, I guess the first L in mind is Lockheed Martin which is just going to be a beneficiary of increased defense spending here in the US Our O of Global is Occidental. Talked a lot about energy and just really this supply demand constraint that is not going away anytime in the near future. This is one of the world's largest oil and gas producers. My B is Baba. So Karen, I think we actually share one of our letters this year and this is just really looking abroad. We're looking at emerging markets. If you see any of this improvement in US and China, this is absolutely a beneficiary that you want to make sure you have as a piece of that. My A here is Abercrombie. This is actually the only one that has not done so hot since the beginning of this year. This had quite a sell off. But this really is a play in a tough retail space. They have really resonated with the younger consumer and I do think that younger consumer is going to continue to be strong and this is a brand that you'll likely see that resonate with. And lastly here we have Louis Vuitton, which I think you're going to see the luxury buying really rebound. You've already started to see that with Cartier's parent company. I think that's going to be a trend this year. So Global is my acronym now that I'm following the rules.
- [30:58]
Melissa Lee
Yay.
- [30:59]
Courtney Garcia
Courtney, nicely done.
- [31:00]
Melissa Lee
I think though in your acronym is Alibaba A. Yeah. So I'm just pointing that out. But it's interesting. Guy, you and, and Karen.
- [31:12]
Courtney Garcia
Yes. Did Tim have.
- [31:13]
Melissa Lee
No, no, not this.
- [31:14]
Courtney Garcia
Okay.
- [31:15]
Melissa Lee
This year I think it's early.
- [31:17]
Steve Grasso
Got to be a winner. Going to add a company in April. April ish.
- [31:22]
Melissa Lee
Sure. Yeah. Coming up. As recovery efforts continue in the wake of the wildfires blazing across Southern California, our next guest says insurance losses could hit $40 billion. What is next for the industry and homeowners? Right after this. More fast Money in two. Welcome back to Fast Money. Even as firefighters work to control the Southern California wildfires. A new threat is emerging. Landslides. At least one Pacific Palisades home split in two after being spared by fires. All this as the rise in homeowners insurance cost draws attention. The Treasury Department are releasing a report, report just yesterday that found costs rose by almost 9%. That's more than inflation between 2018 and 2022. The reason the report says climate related natural disasters. Elise Greenspan follows the insurance industry for Wells Fargo Securities. Elise, welcome to the show. Welcome to Fast Money. You think it could go up to 40? Right now you're at 30 for insured losses and it could go up to 40.
- [32:26]
Elise Greenspan
Yeah. And we've kind of, you know, set expectations right now at around 30 billion of insured losses with the expectation that things could rise to 40 billion. And to your earlier point, right, this is a loss that's really going to fall on the personal property side, so really hit, you know, homeowners, insurers, we expect around 85% of that, you know, 30 to perhaps $40 billion loss will, will fall on the homeowner side of things, which with a much smaller percentage of commercial property.
- [32:55]
Melissa Lee
Mm. We had a stat in our intro about insurance costs rising. It's actually they rose 9% more than the pace of inflation. So that's extremely steep and it sounds like they're only going to go higher. Is there a point at which you're afraid that the industry is going to fall under scrutiny? It's like, because that is one of the big drivers of inflation in terms of all these inflation reports, insurance costs, that's not going down. Any pressure, external pressure on the insurance companies. I mean, there's really no way around it in some, in some aspects of it.
- [33:25]
Elise Greenspan
Well, exactly. I mean, this is a heavily regulated industry, right, at the state level. Right. Companies are filing, you know, for, in the standard market for rates that they would like to charge. And, and to the point, the reason that homeowners rates have gone up so much is that there's been a host of, you know, different losses. When we look back, you know, over this time period, right, we're talking about fires. There's been a series of hurricanes. There's been some states that have impacted by, you know, winter freeze. There's been other fires that have impacted California. So it's just been a period of just elevated catastrophe losses for the industry that has really led to this increase in prices.
- [34:00]
Steve Grasso
So, Lisa, they could either, to Melissa's point, be held under more scrutiny or when you look back on these charts, and I don't Want to belittle any of the tragedy that's happened. This has been immense, it's been horrific. But when you look at the charts on these names, we seem to get past it. And is it just a matter of the fact that they outpace inflation, the normal set inflation levels, or people just have a short term memory and they do what they have to do as an insurance company to survive? Will they get past it at this point?
- [34:31]
Elise Greenspan
Well, look, I mean, you know, our view, right, is even at this 30, $40 billion loss, right, for the insurance industry, this is an earnings event, not a capital event. Right. So the industry has the capital to absorb the loss. And then, you know, when we're talking about prices going up, right. On the flip side, there will be price increases, right. Where, you know, the losses is what brings pricing power in the industry. So there'll be greater price, you know, that these companies can kind of, you know, move past the event and potentially. Right. You know, write more business in the state of California at higher prices.
- [35:06]
Courtney Garcia
So it used to be when there was a disaster, whatever the hit was, it was just an income hit and then they were able to price higher. But now you have a different dynamic of people or insurers just wanting to leave the industry. We saw that already. How do you think the industry will rebuild or not as people rebuild their homes?
- [35:26]
Elise Greenspan
Well, this, you know, when we talk about, right, non renewals and you know, leaving the industry, you know, that's, that's, you know, been a situation that's been, you know, much really pronounced in California than other states in the industry. And the way that, you know, homeowners, insurers have been able to, you know, price in California has been different in other states. Right. For example, primary insurers up until very recently cannot pass through higher reinsurance costs. So if insurance carriers didn't think that they were, you know, enabled to earn, you know, return and charge appropriately for the risk, they were going to pull back from the state. State. But that being said, right, you know, we're talking about standard market insurers and there is a host of, you know, California business that goes to the excess and surplus lines market where companies have been able to charge a much higher price.
- [36:16]
Melissa Lee
Elise, thanks so much for coming by and explaining all this to us. Elise Greenspan and Wells Fargo and certainly we're going to continue talking about this at this point. Time for the final trades. Final trade time. Lori.
- [36:36]
Lori Calvacino
I'm still buying financials, room enough on valuations, lots of political tailwinds, not too many headwinds Karen Growth Animal Spirits.
- [36:44]
Courtney Garcia
To me that's inflation short to tlt.
- [36:47]
Melissa Lee
Courtney actually Lori, I was going to.
- [36:49]
Karen Feiderman
Use your same one so I picked JP Morgan because I do like the banks here, especially going into inauguration day.
- [36:54]
Steve Grasso
Steve Love bitcoin and I love something that outperforms Bitcoin three and a half to one. That's MicroStrategy.
- [37:00]
Melissa Lee
All right. Thank you for watching Fast Money. Have a wonderful holiday weekend. Mad Money with Jim Cramer starts right now.
- [37:10]
J
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 weekdays at 5:00am.
- [37:51]
Frank Holland
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.