CNBC's "Fast Money" Podcast Summary
Episode: Down Day For Drugmakers… And Intel Jumps On Deal Rumors
Release Date: January 17, 2025

Hosted by Melissa Lee, CNBC's "Fast Money" delivers an in-depth analysis of the latest market movements, key economic indicators, and strategic insights from top traders. This episode, aired from Studio B at the NASDAQ in Times Square, covers a range of pressing topics, including the downturn in the pharmaceutical sector, bullish movements in the cryptocurrency market, strong performances in the financial sector, a rally in Chinese stocks, rising homeowners insurance costs due to climate change, and the unveiling of traders' 2025 acronyms.

1. Down Day for Drugmakers

Novo Nordisk's Struggles
[00:49]

The episode opens with a focus on the significant decline in pharmaceutical stocks, particularly Novo Nordisk. The company's shares plummeted over 5%, reaching their lowest point in nearly six months, primarily due to the Centers for Medicare and Medicaid Services (CMS) adding Novo's GLP-1 drugs—Ozempic and Wegovy—to a list subject to price negotiations commencing in 2027. This development not only impacted Novo Nordisk but also affected its competitor, Eli Lilly, whose shares fell by more than 4%, bringing its week-to-date losses to 9%.

Insights from Courtney Garcia
[02:34]

Courtney Garcia highlights the broader implications for the obesity drug market:

"I really believe in this trade as and this drug, the promise of this drug... [Novo Nordisk's] 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."
[02:34]

Despite the price pressures, Garcia remains optimistic about the long-term potential of the obesity drug market, suggesting that increased demand and broader coverage could stabilize or even boost the sector.

2. Impact of Trump's Administration on Drug Pricing

Potential Price Negotiations
[03:33 - 05:09]

Steve Grasso and Karen Feiderman engage in a discussion about the incoming Trump administration's approach to drug price negotiations. Grasso anticipates that the administration may negotiate a 10% discount for Novo Nordisk, despite historical negotiations averaging a 22% reduction.

"If you do some analysis... it's probably a 10% discount in Novo, when you look at it. Down 26% for the year... that's probably your worst case scenario for me."
[03:53]

Feiderman adds that while price pressures are evident, the sustained demand for these drugs may mitigate some of the negative impacts:

"...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."
[05:09]

Dr. Kavita Patel's Medical Perspective
[07:39 - 13:03]

Dr. Kavita Patel delves into the complexities faced by Novo Nordisk, emphasizing the risks associated with Medicare's drug price negotiations and the competitive landscape, including Eli Lilly's promising red, a true tide trial results.

"I still think there's a market, but it just changes the dynamics of that market."
[09:25]

Patel underscores the importance of policy interpretations and the potential for deeper price cuts under the Trump administration, while also highlighting Eli Lilly's strategic positioning to capitalize on these changes.

3. Crypto Market and Trump's Policies

Bitcoin's Surge and Trump’s Crypto Agenda
[14:06 - 18:15]

With Bitcoin approaching record highs, the discussion shifts to President-elect Donald Trump's commitment to prioritizing cryptocurrency. MacKenzie Segalis reports on potential executive actions, including the formation of a crypto advisory council comprising industry executives and the possibility of freezing enforcement actions against crypto firms not involved in fraud.

"There are multiple reports that we're going to see an executive order that's crypto specific on day one in office."
[14:36]

Courtney Garcia and Steve Grasso express bullish sentiments on Bitcoin and Ethereum, anticipating further gains fueled by strategic moves under the Trump administration.

Lori Calvacino on Crypto as a Risk Barometer
[18:19]

Lori Calvacino observes the correlation between Bitcoin and the S&P 500, using cryptocurrency performance as an indicator of market risk appetite.

"These things are all starting to be interconnected and at the end of the day I tend to use it as a risk barometer."
[18:19]

4. Financial Sector's Earnings and Performance

Bank Stocks Hit Record Highs
[20:33 - 22:36]

The financial sector shines as major banks like JPMorgan, Goldman Sachs, and Morgan Stanley report strong earnings, driving stock prices to new heights. Panelists Courtney Garcia and Lori Calvacino discuss the favorable conditions, including net interest income growth, asset management success, and potential deregulation under the new administration.

"On every front you had net interest income, which is great... a great environment overall in the economy."
[20:54]

Steve Grasso's Take on Bank Valuations
[22:36]

Grasso cautions that while banks are benefiting from current tailwinds, their valuations might be becoming stretched:

"When you start talking about price to book these numbers are starting to get a little bloated for financials."
[22:36]

Despite this, the panel remains optimistic about the sector's continued performance, especially regional banks over investment banks.

5. China Stocks Rally

Positive GDP Data and TikTok Developments
[24:06 - 26:48]

Chinese stocks experience a significant rally, led by strong GDP growth of 5% in the last quarter, surpassing expectations. Companies like JD.com, Alibaba, and Baidu see substantial gains. The Supreme Court's ruling on TikTok, coupled with ongoing diplomatic engagements between the U.S. and China, contribute to investor optimism.

"There's a lot of upside here."
[25:06]

Karen Feiderman emphasizes the potential benefits of improved U.S.-China relations and continued economic stimulus in China, advocating for exposure to the second-largest global economy despite inherent volatility.

Lori Calvacino on Global Fund Flows
[26:17]

Calvacino notes a shift in global fund flows away from U.S. equities, signaling increased investor interest in international markets.

"We're starting to see these dynamics shift a little bit."
[26:48]

6. Homeowners Insurance and Climate Change

Rising Insurance Costs Amid Natural Disasters
[27:13 - 36:44]

Elise Greenspan from Wells Fargo Securities discusses the surge in homeowners insurance costs, driven by climate-related natural disasters such as wildfires and hurricanes. The Treasury Department reports a 9% rise in insurance costs, outpacing inflation between 2018 and 2022. Insured losses are projected to reach up to $40 billion, significantly impacting homeowners.

"This is a heavily regulated industry... the losses is what brings pricing power in the industry."
[33:25]

Courtney Garcia raises concerns about insurers exiting the market, while Greenspan explains that the industry can absorb these losses through higher premiums and strategic pricing adjustments.

7. Traders' 2025 Acronyms

Steve Grasso and Courtney Garcia Reveal Their Acronyms
[27:13 - 31:21]

In a creative segment, traders Steve Grasso and Courtney Garcia unveil their 2025 acronyms, reflecting their investment strategies and market predictions.

Steve Grasso's "BORE" Acronym
[27:39 - 29:08]

• Bitcoin: Advocacy for a strategic Bitcoin reserve under Trump's administration.
• Okta: Identity management company's recent profitability.
• Red Steel: Long position on Cleveland Cliffs amid merger rumors.
• Ethereum: Positive outlook on Ethereum's platform growth.
• Reddit: Confidence in Reddit's profitability and growth potential.

Courtney Garcia's "GLOBAL" Acronym
[29:32 - 31:21]

• Goldman Sachs: Anticipates increased M&A and investment banking activity.
• Lockheed Martin: Beneficiary of increased U.S. defense spending.
• Occidental: Focus on the energy sector's supply-demand dynamics.
• BABA (Alibaba): Exposure to bullish Chinese economic indicators.
• Abercrombie: Play on the retail sector's resilience with a focus on younger consumers.
• Louis Vuitton: Predicts a rebound in the luxury goods market.

8. Conclusion

Melissa Lee wraps up the episode by highlighting upcoming discussions, including a deep dive into Intel's potential acquisition rumors and further analysis on the insurance industry's challenges. The panelists provide final investment picks, reinforcing their bullish stances on financials and cryptocurrency.

"Have a great weekend. Meantime, just a few days to go before President elect Donald Trump is sworn into office..."
[19:33]

Key Takeaways:

• Pharmaceutical Sector: Significant price pressure on drugmakers like Novo Nordisk and Eli Lilly due to Medicare's price negotiations, though sustained demand may offer long-term opportunities.
• Cryptocurrency: Bitcoin and Ethereum are poised for growth under Trump's administration, with potential strategic moves like a national Bitcoin stockpile.
• Financial Sector: Strong earnings from major banks signal a robust financial sector, though valuations may be stretched.
• Chinese Market: Positive GDP data and improved U.S.-China relations contribute to a rally in Chinese stocks.
• Insurance Industry: Rising homeowners insurance costs linked to climate change pose challenges, but the industry is expected to manage through higher premiums and strategic pricing.
• Trader Strategies: Innovative investment acronyms reflect tailored strategies focusing on cryptocurrency, financials, global markets, and emerging sectors.

This comprehensive analysis provides investors with actionable insights and a clear understanding of the current market dynamics, positioning them to make informed investment decisions.