Eli Lilly’s Sales Slash… And How To Position Ahead Of Bank Results 1/14/25

Summary

CNBC's "Fast Money" Podcast Summary
Episode: Eli Lilly’s Sales Slash… And How To Position Ahead Of Bank Results
Release Date: January 14, 2025

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Introduction: Navigating Market Volatility

In this episode of CNBC’s “Fast Money,” host Melissa Lee, alongside a panel of top traders—Steve Rosso, Dan Nathan, Guy Adami, and Julie Beal—dives deep into the turbulent movements of key stocks and sectors. The episode centers on Eli Lilly’s significant sales decline, the impending bank earnings season, and the volatile landscape of quantum computing stocks. Additionally, the show addresses the potential TikTok shutdown in the U.S. and its ripple effects on social media stocks.

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Eli Lilly’s Stock Plunge and Market Implications

a. Disappointing Q4 Revenue Outlook

Eli Lilly experienced its worst stock performance since March 2021, dropping 6.5% and shedding approximately $50 billion in market capitalization. The decline follows a disappointing Q4 revenue forecast, with growth in blockbuster drugs Zepbound and Manjaro falling short of expectations. This downturn also negatively impacted rival Novo Nordisk, which fell 4%, and Viking Therapeutics, which plunged nearly 13%.

b. Insights from JPMorgan’s Angelica Peebles (00:39-03:20)

Angelica Peebles, reporting from the JPMorgan Health Care conference, highlighted concerns over slowing demand for obesity drugs. Despite CEO Dave Ricks asserting that supply chain issues were the primary problem, the broader market sentiment remains cautious.

“Lilly's fourth quarter coming up short of expectations and that is renewing fears that demand for obesity drugs might already be slowing.”
– Angelica Peebles [00:39]

c. Mizuho’s Jared Holz on Valuation and Demand (03:20-08:25)

Jared Holz from Mizuho expressed cautious optimism, acknowledging the complexity of supply and demand metrics in the pharma market. He emphasized the robust investment by both Lilly and Novo Nordisk in manufacturing, asserting that the demand for obesity drugs remains strong despite current setbacks.

“I think the demand is there. I think the one thing that gives me a little bit of pause is how long patients are going to be on the drug for.”
– Jared Holz [04:53]

d. Technical Analysis and Risk Assessment (08:39-10:32)

Guy Adami and Dan Nathan provided a technical outlook, noting support levels around $725 and discussing the stock’s risk-reward profile. They suggested that despite valuation concerns, the current dip presents a favorable buying opportunity for long-term investors.

“The average analyst price after today is still just north of $1,000. What's the case, though, Jared, if there is one with this thing can break down in a meaningful way.”
– Guy Adami [06:10]

e. Trader Perspectives on Future Prospects (10:32-16:07)

The panel debated Eli Lilly’s future, discussing potential diversification away from obesity drugs and the impact of upcoming oral pill readouts. Julie Beal cautioned about uncertainties in long-term drug efficacy and patient adherence, while Dan Nathan highlighted technical support levels as key indicators.

“If you have a very long term orientation, I think this could be a compelling opportunity. But you're going to have risks of further steps downs for sure.”
– Julie Beal [09:22]

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Social Media Sector Under Pressure Amid TikTok Uncertainty

a. Potential TikTok Ban and Its Fallout

The show addressed the looming threat of TikTok being banned in the U.S., a move requiring the platform to divest from its Chinese parent, ByteDance, by January 19. The uncertainty has led to declining shares for social media giants like Snap and Pinterest.

b. Insights from Julia Boorstin on Social Stocks (35:29-37:23)

Julia Boorstin discussed the negative impact on social media stocks, attributing declines to rumors of Elon Musk potentially acquiring TikTok’s U.S. operations. She noted that despite TikTok’s denial, market sentiment remains jittery, affecting competitors negatively.

“Snap shares were down nearly 7% and Pinterest shares were off about 2%. Now these stocks seem to be responding to rumors that Elon Musk could buy TikTok's U.S. operations.”
– Julia Boorstin [35:56]

c. Panel Discussion on User Migration and Market Dynamics

Julie Beal observed that TikTok users are increasingly migrating to alternative platforms like Xiao Hongshu (RedNote), rather than established competitors such as Meta’s Instagram Reels. The panel speculated on the long-term viability of these migrations and the challenges faced by competing platforms in retaining TikTok’s user base.

“People are calling themselves TikTok refugees and moving over to RedNote... I don't think they're going to get nearly as much benefit as they expect.”
– Julie Beal [35:56]

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Quantum Computing Stocks: A Volatile Rebound

a. Surge in Quantum Computing Stocks

Quantum computing stocks like Rigetti Computing and D-Wave saw substantial gains, rebounding after a previous sell-off. Rigetti’s shares surged nearly 50%, while D-Wave advanced by almost 24%.

b. Expert Opinions on Quantum Volatility (21:27-23:35)

The panel debated whether the resurgence in quantum computing stocks signifies a stable footing or is merely speculative. Julie Beal dismissed investments in quantum as too speculative, highlighting the dependency on Department of Defense (DoD) funding and the lack of earnings.

“Everything that's kind of in the quantum space is way too speculative for us. And it's not just that they don't have earnings... they are also especially Regretti is very dependent on DoD funding.”
– Julie Beal [23:14]

Dan Nathan compared the quantum sector to AI trades, suggesting that while there may be short-term trading opportunities, the long-term prospects remain uncertain.

“Quantum, you're going to have to wait a lot longer... it's really difficult to model any of this data.”
– Dan Nathan [22:52]

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Earnings Season and Big Banks Outlook

a. Anticipation Before Major Bank Reports

With JPMorgan, Goldman Sachs, Citi, and Wells Fargo set to report earnings, the panel discussed the potential impacts on the banking sector. Gerard Cassidy from RBC highlighted the steep yield curve as a positive driver, potentially expanding net interest margins.

“Net interest margins expanded... that is the story that is going to be the surprise to the upside in 2025 assuming the yield curve remains positively sloped.”
– Gerard Cassidy [27:02]

b. Regulatory Environment and Bank Valuations

Cassidy also touched upon regulatory changes, noting that the incoming administration’s approach could lead to a more supportive environment for banks, reducing capital requirements and enabling aggressive share repurchases.

“We're going to have an industry that is really heavily capitalized, which will enable them to be more aggressive in the share repurchase programs.”
– Gerard Cassidy [28:39]

The panel expressed optimism but also cautioned about high valuations, particularly for giants like JPMorgan, which trades at over 2.5 times its tangible book value.

“The real growth for the stock prices should come from the better than expected earnings growth potentially in 2025.”
– Gerard Cassidy [30:22]

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Trader Acronym Reveals: 'Plop' and 'Mocha'

a. Carter Braxton Wirth’s 'Plop' Acronym (38:05-42:44)

Carter Braxton Wirth introduced his acronym "Plop," representing stocks he anticipates will underperform in 2025:

• Palantir
• Linde
• Owens Corning
• Paccar

He emphasized technical bearish indicators and market conditions that could drive these stocks lower.

b. Julie Beal’s 'Mocha' Acronym (40:45-43:05)

Julie Beal unveiled her acronym "Mocha," highlighting stocks she believes will perform well in 2025:

• Mollus (boutique investment bank)
• Ollie's (discount retailer)
• Clearwater Analytics (portfolio accounting software)
• Hermes (luxury brand)
• Aon (liquid cooling for data centers)

Beal cited factors like value investment opportunities, consumer demand for discount retail, and growth potential in data center technologies.

“I think we continue to see good growth there [in discount retail].”
– Julie Beal [41:08]

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Conclusion: Strategic Positioning Amid Uncertainty

As the episode wrapped up, the panel underscored the importance of strategic positioning in volatile markets. With Eli Lilly’s sales challenges, potential regulatory shifts affecting banks, and speculative movements in quantum computing and social media stocks, investors are urged to remain vigilant and informed.

Melissa Lee concluded by reminding listeners to stay tuned for upcoming earnings analyses and further market insights, ensuring they are well-equipped to navigate the complexities of the investment landscape.

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Key Takeaways:

• Eli Lilly’s Sales Drop: Triggered by slower-than-expected growth in key drugs, leading to significant stock declines and affecting competitors.
• Banking Sector Optimism: Steep yield curves and potential regulatory easing bode well for major banks, despite high valuations.
• Quantum Computing Volatility: While some stocks show strong rebounds, the sector remains highly speculative with uncertain long-term prospects.
• Social Media Shifts: Potential TikTok ban is unsettling for competitors, with user migration to alternative platforms like RedNote posing challenges.
• Trader Insights: Acronym reveals by Carter and Julie provide actionable insights into stocks poised for underperformance and growth in 2025.

Stay informed and strategically positioned with CNBC’s “Fast Money” for the most actionable investment insights.

Transcript

[Melissa Lee]

Weekdays at 5am Be first on world markets, first to the global business conversation. Get a jump on the investing day every day with Frank Holland. Success starts early.

[Frank Holland]

Worldwide exchange, 5am Eastern.

[Melissa Lee]

CNBC. Live from the NASDAQ marketsite in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight. Losing weight, shares of the once red hot Eli Lilly seeing their worst day since 2021. If the air can even come out of this trade and mean for the other big winner of last year, I and a social reckoning. We may be on the verge of a TikTok shutdown in the US but that doesn't seem to be helping its competitors. We dive into the details coming up. Plus, big banks getting ready to report. With JP Morgan, Goldman Sachs and more on deck tomorrow, Quantum computing stocks leap higher after a recent sell off and the reveal of two more trader acronyms. One of our traders came out with not just their picks but a full definition. We'll let you guess who that was. I I'm Melissa Lee coming to you live from Studio B at the nasdaq. On the desk tonight, Steve Rosso, Dan Nathan, Gai Adami and Julie Beal. We start off with the big GLP1 drugmaker drop. Eli Lilly sinking six and a half percent for its worst day since March 2021, shedding about $50 billion in market cap. The move coming after the company gave a disappointing Q4 revenue outlook with sales of its blockbuster drugs Zepbound and Manjaro growing slower than expected. The news also taking a bite out of rival Novo Nordisk, down 4% today. That stock now trading at August20, it's lost nearly half of its value since late June. And Viking Therapeutics sank almost 13% today in sympathy with Lilly. That company's lead obesity drug is currently in mid stage trials. For more on all of this, Angelica Peebles joins us now from the J.P. morgan Health Care conference in San Francisco. Angelica? Hey, Mel. That's right. Lilly's fourth quarter coming up short of expectations and that is renewing fears that demand for obesity drugs might already be slowing. But Lilly CEO Dave Ricks telling Jim Cramer earlier today at the conference that it's not about demand.

[Guy Adami]

Because there's been supply tightness in the first half of the year. Inventory levels rose in the retail channel.

[Melissa Lee]

They rose in the wholesale channel because of uncertainty. As we become a much more predictable.

[Guy Adami]

Supplier, people are just pulling that down on demand.

[Melissa Lee]

They've been able to work down their working capital and patients can get the medicine when they want Lilly's new CEO or CFO, excuse me, also telling me that based on their 2024 guidance, what they did there was that they took with the trends that they were seeing earlier in the year when supply was tight and that once there was more supply available, people started pulling back. They weren't ordering as much as they needed or as they were before because there was more supply available. And they also assumed that there would be more seasonal stocking toward the end of the year. And that didn't happen. So they're taking that out of their assumption for this year. So saying that there was just a few things that were a little bit out of whack in their guidance and some of those assumptions that they were making. And Lilly's fireside chat is getting underway in just a few min here. So I'm going to go in there and see what else they have to say. Mel. All right. Keep us posted, Angelica, thank you. Angelica Peebles at JPMorgan Health Care. Our next guest sees Lilly's weakness as a buying opportunity. Mizuho health Care strategist Jared Holz joins us now. Jared, great to see you. Certainly has had an enormous pullback. Do you buy their explanation of the inventory, sort of fluctuations from quarter to quarter?

[Jared Holz]

Great to see you too. Yeah, I think I do. You know, this is obviously a moving target in such a fluid market. And there are so many things we still don't understand about all of the supply demand metrics in the market. Which drugs are going to be preferred by patients and doctors, how long patients are going to stay on the drug? Are they going to be on these chronically, intermittently? So, yeah, I think some of the supply commentary from the company makes a lot of sense. I just think there are so many variables that are just not yet understood.

[Melissa Lee]

Novo had a big pullback as well. Is there any concern in your mind that there is an issue with demand since, I mean, Novo just closed its deal with Catalan, so it's prepared to produce a lot more vials of the drug?

[Jared Holz]

I don't think so. I mean, it comes up in every conversation, both professionally and personally around this drug class and how pervasive it is and how many patients are going to either want it or need it or a combination of both. And Novo and Lilly have, I think, invested over $20 billion just this year in manufacturing. So I think we talk about this market as though it's much more mature than it is. But this is, you know, 2024 was really the first year where both Lilly and Novo had Approved drugs for obesity. Think we're just getting started. So I do think the demand is there. I think the one thing that gives me a little bit of pause is how long patients are going to be on the drug for.

[Frank Holland]

Hey, Jared, you know, as this gets approved for more and more things away from diabetes and obesity, do you expect, like, insurance numbers to go higher or the amount of coverage, whether it's employee, employers, that sort of thing? And I'm just curious, like, will that help demand? I would suspect it would.

[Jared Holz]

Hey, Dan. Yeah, I think so. I mean, sleep apnea, you know, various cardiac conditions and maybe even Alzheimer's disease. As we get data for that later this year, if the efficacy is decent and the safety, I think, will most likely be very good, at least versus, you know, the Biogen and Lilly drugs that are on the market. I would think that insurance is going to have to cover these for more medical conditions. So I think that's. That's a definite. The question is when. And I think as we move forward here, we'll get more evidence of that.

[Guy Adami]

There's a couple I think was last quarter, David Ricks didn't do a particularly good job explaining things during a conference call. I think he did a better job today. But when you're trading at the valuation it's trading at. You better have that story tight, otherwise this happens. So I know. I think the average analyst price after today is still just north of $1,000. What's the case, though, Jared, if there is one with this thing can break down in a meaningful way.

[Jared Holz]

Guy, what's going on? Yeah, I think the valuation is still the biggest constraint. When you talk to investors about their willingness to own it. I think it's trading around 32 times the new 2025 estimates that are going to come out, and north of 25 times 2026. You know, obviously that pales in comparison in comparison to where the stock traded last year at this time. But it's still much higher than most of the other pharma companies out there. Does it break down? I think you need to see a couple of quarters where the numbers do not inflect higher. I mean, this quarter. Zap down missed numbers, Manjaro. Missed numbers.

[Melissa Lee]

Again.

[Jared Holz]

We're talking about, you know, a very small variance. But in order for the stock to break down from here, to answer the question, I think you need to see a couple of quarters where you really are starting to see evidence that the revenue is not meeting consensus.

[Dan Nathan]

Jared, do you think that they diversify away from the fat loss drugs and they go with another area or do they gobble up the smaller players? I'm long a name Altimune, which Is dipped below $500 million market cap. This one seems to be under pressure, but the efficacy seems to be better than the larger players.

[Jared Holz]

Yeah, it's a really good question. I mean, you've seen them diversify away over the past couple of quarters. They've done a couple of deals. They just announced yesterday a deal for a private company in the oncology space for about two and a half billion. Call it whether or not they can add to obesity or these cardiometabolic drugs is really just a question of overlap. And you know, how the government would look at that. I think as it applies to either an altimmune, you know, or a bunch of these other much, much smaller publicly traded companies, it's going to depend on, you know, mechanism of action, things that are just much more detailed insofar as how the government would look at it. But I think we'll see what the oral shows. I mean, that data is coming out really soon. If there's any abnormality, malady or inconsistency with the oral drug or for Glipron, then maybe they kind of have to dip their toe into another asset there.

[Melissa Lee]

Jared, great to speak with you. Thank you.

[Jared Holz]

Thanks so much.

[Melissa Lee]

Jared Holes of Mizuho. We had mentioned before that Eli Lilly shares are at levels not seen since 2021. That was back before Manjaro was approved. That was before Zepbound was approved. So all that gain is gone.

[Guy Adami]

Yeah, if you throw up a chart, I mean, I think we got down to 725 in April of last year and then again in November. Ish. So there is a level of support that we're looking at right now. But with all that said, I mean, the risk reward for the first time in a while I think sets up. Okay, you know what your downside is a close below 725. Analysts are still very constructive and they believe that it's still early innings here, valuation be damned. So as a risk reward, it's probably the best it's been in quite some time.

[Melissa Lee]

As Jared had mentioned, there is the oral pill readout for Eli Lilly. Specifically, they have another drug which is supposedly showing even better efficacy than the TIRZ appetite that they already have approved on the market. Read a true tide. Julie, would you take a flyer and Eli Lilly on this pullback?

[Julie Beal]

I think for if you have a very long term orientation, I think this could be a compelling opportunity. But you're, you have to do that with the understanding that there are probably going to be more bumps in the road. Because I think any time you have something like this where expectations are extremely high, people really do move around. And this is such a unique and new class of drugs. I think we still have so many more questions in terms of are people going to be on this long term? What are the kinds of dosages that they're going to prefer? That sort of stuff still needs to be resolved and that makes it really difficult to be able to model any of this data. You know, it's not that anyone is bad at their job. It's just it's really difficult to do this correctly. And so you're going to have risks of further steps downs for sure.

[Dan Nathan]

You know, when I look at the technicals on this guy flagged a couple of them. So in February and April and November, this is where Lilly should, should pop in Novo. If you go back to August of 2023, that's where that one should pop. And we're looking at those similar levels. So if you're going to take a flyer out on one of these, these are the mainstay. These are the main anchor anchors in the, in the space. I think this is probably a good technical spot.

[Melissa Lee]

All right. How many times have we on the way up for both of these stocks likened these trades to AI, the trains that were very hot? Many, many, many times. What is happening right now? There are questions about demand for this drug. There are questions about the valuation of these stocks. Stan, this is a point that you were making earlier on our conference call.

[Frank Holland]

Yeah. And we've been making this for months. And you could have been wrong for months. You could have just seen Lillian Novo sell off. And you know, this is a very narrow trade, not too different than general of AI. And I think the comparison is pretty good. And I'll tell you why. Like, if we see the unusual enthusiasm and sentiment as it relates to generative AI, we know it's become a very narrow trade. The faithful 8 is pretty much encompassed a lot of that enthusiasm. There are some that are downmarket or so. And it's not too different than we're talking about for last year about a lot of these other folks that are doing these trials in some of these drugs. So again, if you see a drop off in demand, if we see Capex start to slow, if you don't see the use cases arrive for the generative AI trade, it's going to take some digestion. Just go back, man. Like we talked about this from the highs in 21 to the lows in 22. You had Tesla, you had Metta, you had Netflix, you had in video they sold off 75% from their all time highs. Now no one thought that could have happened before and they don't think it could happen now. And I'm not saying that's going to happen again but in Nvidia could easily get in cut in half. We're just seeing that in some of these names. Lilly was a trillion dollar market cap, what just three months ago, six months.

[Melissa Lee]

Ago, the TAM was to the sky raised again and again with new applications, etc. Just like the AI, right? The applications for AI, the, the total CapEx spending expected, the applications for AI. All of these expectations get loftier and.

[Guy Adami]

Loftier and when and on the way up people will say that because you know what, you're not going to get any pushback. But it's the same thing. Valuations don't matter, it's different this time. Total addressable market. We have a moat around our business. I mean these are all things that again when things are going higher, people just not in agreement. When things start to go pear shape, it looks a little different. And in terms of the trade again twice last year you saw in video with the pattern that we talked about this engulfing pattern and both times the stock went down anywhere from 35 to 45%. You saw the same thing last Tuesday I believe when it made a new all time high, closed on the low twice, almost two times normal volume. It is setting up for a very similar move.

[Dan Nathan]

The obvious difference is lilly on a one year performance is up 15% when Nvidia is up 140. So a lot more can be taken out of an Nvidia. What I think you're going to see is people don't need those complicated chips the way they way they're looking for an Nvidia. You couldn't get another chip from a host of other semis. So I think what you might see is not the whole semi trade fail, just those larger cap tech names and then go into the smaller ones in.

[Melissa Lee]

The same space, reverse into the meme reversion trades.

[Dan Nathan]

Right.

[Melissa Lee]

So to speak. Julie. So let's connect that. I mean if we are concerned about these trades, we are concerned about the valuations, these two areas which were the hottest areas of the market. What happens to the markets overall as we sit at this crucial moment ahead of the inauguration of Donald Trump next week, as we are expecting CPI numbers tomorrow by the way.

[Julie Beal]

Yeah, I think Earning. I actually think that earnings season is going to be much more persuasive for investors than what's going on with these two. I think it's very possible that we continue to see better broadening, better improvement, better participation in other stocks. And you know, the things that I think the parallels that we see in AI and with these GLP1 drugs, there are kind of important differences that, that I would really point to one, you know, with Nvidia, the biggest challenge I see with that is just the level of customer concentration that they have. You know, half of their business is only in a handful of companies. That's not the case. Right. With all of these health care companies. And so there are fewer risks tangentially around a lot of these names. And that's where I would probably focus. But I think again like the most important thing really is going to be earnings. We already had a report today on small business confidence that showed great improvements and so the proof will be in the pudding if we see better Capex, broadly speaking, outside of the Magic 7.

[Frank Holland]

Yeah. On the earnings front though, we got used to a lot of different companies in a lot of different areas of the market. Talk about AI in their conference calls. I think we were kind of tracking it this quarter. Just wait. Constant currency. If you think about the last week of September where the U.S. dollar index, the Dixie was trading about 100, it just touched 110. When you think of that on a sequential basis but also year over year that's going to make a huge hit to some of the biggest earning contributors which are also some of the biggest companies in the market. And so to me I think that's something you got to keep a close eye on. But obviously any deceleration in some of the fundamentals of these big stories. But those are two things that I think are to be big headwinds for.

[Melissa Lee]

Earnings growth this year, dollar rates and policy uncertainty.

[Guy Adami]

All fair.

[Melissa Lee]

Yes. Top mentions on conference calls. No.

[Guy Adami]

And we're going to listen. PPE today I think initially gave people some, I don't know, a bit of relief maybe some oh my sigh of relief that maybe things were not as hot as the market suggested. But the bond market didn't back off. I mean 10 year yields are still 479. If that had been the case you would have seen a precipitous drop. Tomorrow's the number though and I think a lot of people think you can start to see a reacceleration. I am one of those people and I'll continue to say it. I mean 10 year yields I think.

[Melissa Lee]

Are going to 5% reacceleration and therefore what happens to the markets goes lower.

[Guy Adami]

I mean, almost by definition it has to start, you know, when valuations matter in a higher interest rate environment, the.

[Dan Nathan]

The only thing that the market has going for is that pie is seen to be a leading indicator where CPI is lagging and the Fed looks towards PC. So you have a host of things where it gives the Fed cover. Not that the Fed needs any cover, but let's wait for the PC to come out. They can. Those are a little bit more variable than the two numbers that are coming out this week.

[Melissa Lee]

Julie, where do you stand on what the Fed does next?

[Julie Beal]

I think they're probably going to pause. I think that they, you know, if you look at the body language, it's certainly tending towards pause and towards more conservative hawkish. But it's also if you think about the backgrounds of a lot of the members, particularly Jerome Powell, you know, if Paul Volcker is your hero, you're probably going to always lean a little bit hawkish when it's a little bit uncertain. And I think that the cost of waiting as opposed to the cost of cutting and then being wrong is probably a lot lower.

[Guy Adami]

You know, Julie, though, I think is everybody's hero today because she's doing the show out there in Southern California having to be evacuated from her home. Obviously we wish her and everybody else the best, but the fact that she's doing the show tonight is testament to her. So my hero for the next 43 minutes.

[Melissa Lee]

After that, who knows?

[Guy Adami]

After that, who knows?

[Melissa Lee]

And a quick program we note here. Be sure to tune in to Mad Money tonight for more exclusive interviews from the JP Morgan Health Care Conference. Jim is chatting with the CEOs of Merck, Cardinal Health, Abbott and Regeneron. Catch all the interviews top of the hour right here on cnbc. Coming up, Boeing deliveries losing altitude. The drop in those numbers in the widening gap with their biggest rival next. Plus, a quantum leap in the quantum computing. The group bouncing back after a major sell off to start the new year. Will the energy continue for these names or is the computing revolution still too far away? We'll debate that when Fast MONEY returns. This is FAST MONEY with Melissa Lee right here on CNBC. Weekdays at 5am Be first on world markets, first to the global business conversation. Get a jump on the investing day every day with Frank Holland. Success starts early.

[Frank Holland]

Worldwide Exchange, 5:00am Eastern, CNBC.

[Melissa Lee]

Welcome back to Fast Money. Shares of Boeing losing altitude on a disappointing delivery number. The manufacturer delivering 30 airplanes in December, rounding out a lackluster production year hampered by a slew of safety issues and a machinist strike. The December number bringing Boeing's total deliveries for the year to 348. That is less than half of the 766 planes delivered by rival Airbus. That was Airbus best delivery number since before the pandemic. So can Boeing bounce back this year? And we should note, of course, that Boeing is the B in Tim's band trade, which we unveiled the other day. But you've also been talking positively about Boeing.

[Guy Adami]

Yeah, and I felt like a genius in the late December was trading 180 and obviously here we are back at 167. But you know, I'll still say that secondary that was priced where 148 or so, maybe even lower than that. I think that's going to be for the foreseeable future. The low and this move that we've seen back to these levels is a bit of a retracement off that low in the recent high we saw in late December. So I'm a believer. I get delivery numbers are important, but this is bigger than that, I think just an increment lack of bad news. If they can just get out of their own way. I mean, this could be a $220. That's a big nothing changed. That's a big if.

[Dan Nathan]

If you look at backlog to you have with Airbus, the backlog is 8,600. With Boeing, the backlog is 5,500. So it's not just deliveries and to Guy's point, getting out of your own way, they can't, they don't seem to have the propensity to do that. And when you look at this stock, Guy talks about this a lot. The percent of revenue from the government is 54%.

[Melissa Lee]

Wow.

[Dan Nathan]

That's the only thing that keeps this stock afloat. Right.

[Melissa Lee]

I don't want to miss goes away or.

[Julie Beal]

No, I don't think.

[Dan Nathan]

I don't think it goes away. But I think that when you have a new administration coming in that wants to haggle and save multiple trillions of dollars, they're going to be renegotiating every government contract. The bigger, the more susceptible you are to getting it cut.

[Frank Holland]

All right, but you think that Elon Musk, who owns what does he own?

[Melissa Lee]

What?

[Dan Nathan]

SpaceX.

[Frank Holland]

SpaceX. Do you think he's going to be critical of Boeing in this Doge thing? I mean, like, it is a bit goofy, right? If they go in and they try to kind of, you know, the starship thing was a big disaster and Space X hasn't gotten up there and gotten these astronauts back. But we need a second source, right? You can't just rely on a private space company. But I just think it's interesting to your question about what the government might do. I think they kind of have to hold the line and they have to make sure Boeing does not fail.

[Melissa Lee]

All right. There is a lot more fast money to come. Here's what's coming up next. A rebound in the quantum space as the group bounces after a New Year's sell off. But can the comeback continue or will this quantum leap turn into a negative charge? Plus, banks kicking off earnings season tomorrow and a big shakeup at one major player. What it all means for the financial space and for succession planning. You're watching Fast MONEY live from the NASDAQ market site in Times Square.

[Frank Holland]

We're back right after this.

[Melissa Lee]

Global markets up to the minute, front page news. Wake up to Frank Holland and Worldwide exchange, weekdays, 5am Eastern. CNBC live. Ambitiously. Welcome back to Fast Money. Quantum stocks jumping after the recent sell off. Today's biggest winner, Rigetti Computing its shares up nearly 50% today. D wave surging almost 24%. Quantum computing and IonQ also significantly higher. Are these names back on solid footing or should we expect more volatility ahead? They seem like trading vehicles. I don't know. Grass, what do you think?

[Dan Nathan]

They're definitely going to be trading vehicles. And you had pointed it out when we were talking about Pixie Dusk. I had to take my time with that. I can't say that together. So that one. Yeah. So I think that you're going to see the same sort of of travel that we saw in AI. But I had a much closer horizon than Quantum. I will tell you though, number one, I loved him. Rigetti when he was with the Yankees. Right guy. He was.

[Guy Adami]

Well.

[Dan Nathan]

And I always also would like to change. I haven't revealed my acronym acronym, but I do have an R in it. And I would have liked to have replaced what my R is for, Rigetti.

[Melissa Lee]

After this 50% pop.

[Dan Nathan]

Now I would, I would take, I would say it's still down for the year, right? It's still down for the year. So it's not really as aggressive as we're talking about. But I think that Quantum, you're going to have to wait a lot longer. There's been everyone saying naysayers because we want to focus on their income strategy of AI first and then they'll focus on Quantum.

[Melissa Lee]

Talk about, I don't know, when Google or Alphabet, I should say, when we're talking about the Willow chip and the advancement there. I mean, even Google's roadmap for quantum computing, you know, signify that commercialization is still decades away, even with the advancement of Willow. Julie, I mean, it seems I'm going to go out on a limb here. This is not an area you're invested in.

[Julie Beal]

Yeah, no, I think everything that's kind of in the quantum space is way too speculative for us. And it's not just that, you know, they don't have earnings, which they deeply do not have earnings. But, you know, they are also especially Regretti is very dependent on DoD funding with DARPA and other programs. And that makes me extremely nervous going forward because I don't think it takes much for that to dry up.

[Melissa Lee]

All right, meantime, get them while you still can. There are a limited number of tickets left for a special event coming up at the end of February. Fast Money Live. It is your chance to see the show in real life at Times Square here at the NASDAQ market site. You'll also be part of a live Q and A session with me with the traders. What's more, you'll share cocktails with our gang. Visit the Fast Money set on your way out. We'll also give you a special commemorative memento only available to the people attending this event. And you'll get six months of CNBC Pro as well. So join the party. Folks are coming from all around the country with 25 different states.

[Guy Adami]

I was talking to Mary Duffy, who is. I mean, she knows more about. She's forgotten more than any of us will ever know. But over 25 states now, including Oregon, Missouri, Arkansas, Louisiana, D.C. also Canada. We have dairy farmers, we have traders, we have lawyers.

[Melissa Lee]

Staten Island.

[Dan Nathan]

Don't forget Staten Island.

[Guy Adami]

Nobody from Staten Island. Oddly enough, I don't think they have trouble with the Verrazano Bridge, but there's time.

[Melissa Lee]

So.

[Guy Adami]

No, this is going to be. Honest to God, as I said earlier, you know, people say to us, we feel like we know you. Here's our opportunity to get to know you in return. So, absolutely. Join us.

[Melissa Lee]

Yeah. And you get a chance to hug Dan.

[Dan Nathan]

He loves hugs.

[Frank Holland]

You know what?

[Dan Nathan]

He is a hugger.

[Frank Holland]

Is there any trader who's in more need of a hug? No.

[Melissa Lee]

That's true. You'll find out if Dan is actually this bearish.

[Frank Holland]

This what?

[Melissa Lee]

This grumpy.

[Frank Holland]

This grumpy, yeah.

[Melissa Lee]

So lovable, though. No, but seriously, this is the first time that we're ever doing this, opening our doors of our house to you guys out there.

[Dan Nathan]

So we occasionally have some people, very small group here, but this is going to be a very exciting time as Guy said, to see people that watch the show. I've been in the industry as the rest of us have for a lifetime and it's nice to hear the feedback and see what the viewer actually thinks and have that sort of connection.

[Melissa Lee]

Absolutely. There are still tickets available, so scan the QR code on your screen or go to CNBC events.com fastmoney to get your tickets. Coming up, earnings season kicks off tomorrow and big banks are getting the ball rolling. RBC's Gerard Cassidy will join us next to lay out where he is seeing the best opportunity in the space. And while he says it's all about the yield curve, don't go anywhere Fast money's back into Missed a moment of fast. Catch us anytime on the go follow the Fast Money podcast. We're back right after this. Welcome back to Fast MONEY Stocks. We between positive and negative territory throughout the day. The Dow ending higher jumping more than 200 points. The S and P squeezing out a small gain, but the NASDAQ posting another loss now in a five day losing streak. Shares of Signet Jewelers plummeting more than 21%, its worst day in nearly five years. The company lowering sales and adjusted earnings guidance as holiday sales fell short of expectations. The big banks kicking off earnings season tomorrow on tap. Goldman Sachs, JP Morgan, Citi and Wells Fargo, their stocks all rising today. And RBC's top bank analyst sees big banks trading even higher on strong results with the treasury market trend playing a big role. Gerard Cassidy is the firm's co head of global financials Research. He's a multi year top ranked analyst by Institutional Investor and is always welcome on fast. Gerard, great to see you.

[Gerard Cassidy]

Thank you Melissa for having me.

[Melissa Lee]

So the steep yield curve, that's going to be a big boon for the banks?

[Gerard Cassidy]

I think so Melissa, because when you take a look back in time, you know, first we haven't seen a positively sloped curve since 2022. Then if you go back in time, whether it was back in 2001 or no. 8, 09 or 2018, 19 as the yield curve steeped, net interest margins expanded. And I think that's the story that is going to be the surprise to the upside in 2025 assuming the yield curve remains positively slow. So if the bottom of the front end of the curve stays anchored between four and four and a quarter long end of the curve is around 475, maybe the 490. That is a nice slope to the curve. And the banks don't even need to aggressively lend in that environment. It's as the earning assets roll over, think about the yields that Bank America and other banks have in their bond portfolio from purchases made in 2020 and 2021, when the 10 year was below 1%. Those are going to roll over into higher yielding securities, which is going to help the net interest margins not only for bank of America, for all the banks. So we think this is the underlying surprise potential for 2025.

[Dan Nathan]

So Gerard, when you look at it, so that's your number one bullish tailwind. When you look at regulatory environment, you look at taxes, how would you gauge those? What would be the regulation that with Basel iii, is that a tremendous tailwind? Is that equivalent to the steepening of the yield curve? How do you feel? What type of business is that going to bring in and where, where should we look at the banks through that prism of regulation being lowered?

[Gerard Cassidy]

I think you put your thumb right on it. It's tremendous. Particularly the Basel 3 endgame. Last Monday, Vice Chairman Barr for the Federal Reserve of Vice Chair of Safety and Soundness announced his resignation. Now this incoming Trump administration is going to appoint a new controller of the currency, a new head of the fdic, a new head of the Consumer Financial Protection Bureau, and then they'll appoint another board member, maybe Michelle Bauman, to replace Vice Chair Barr. And in a speech last Thursday, the vice chair of the FDIC pointed out that Basel 3 endgame should be capital neutral. And if that proves to be the case, think back to July of 23, when it first came out. They were talking about capital levels having to increase 16%. JP Morgan, Goldman, we're talking 20 to 30% now, it's likely to be zero. We are going to have an industry that is really heavily capitalized, which will enable them to be more aggressive in the share repurchase programs. So we're going to go, I think, from a confrontational regulatory environment that we've had for the last three to four years to one that is more soft to touch and more supportive of our banking industry, so that the banking industry can get more involved lending into the economy to help stimulate growth in this administration.

[Guy Adami]

Gerard, you're in the hall of fame. I would never bet against you. I'll say this. So at some point, valuations matter. And JP Morgan report tomorrow, tangible book will be $98. It's trading $248. That's north of two and a half times, which is levels we haven't seen probably since pre financial crisis. I mean, can this just continue to grow or are we running into some valuation problems?

[Gerard Cassidy]

Guy, I think you're right. There are some of the banks and you put your finger on the one that is the most valuable of them all amongst the biggest banks, which is JPMorgan Chase. Obviously they've deserved the valuation from the numbers that they have delivered over a number of years. And so for them to really deliver this year in terms of stock performance, it's really going to have to come more from earnings growth rather than valuation expansion. But there are a number of other names, whether it's Bank America in the money center space or even on the regional space, a name like US Bancorp, these companies multiples can expand because when you go back in time, and I'm not talking about the pre financial crisis period because that's not really fair to use those comparison periods since the banking industry has changed considerably since the financial crisis. But if you go back to that January of 2018 that was the cyclical high and the group then traded a 1.6 times book, 2.2 times tangible and about 12 to 13 times forward earnings. Today we're at about 1.3 to 1.4 times book, 1.7 times tangible and about 11 to 12 times earnings. So you're right, we've had a nice move in valuations for the group. They're higher, there's a little room to go higher. But it's really, I think the real growth for the stock prices should come from the better than expected earnings growth potentially in 2025.

[Melissa Lee]

Gerard, great to see you. Thank you.

[Gerard Cassidy]

Thank you, Melissa. Thank you everyone.

[Melissa Lee]

Gerard Cassidy of rbc. Julie Beal, where are you on the financials? Which is your top pick?

[Julie Beal]

It's still probably J.P. morgan. I mean if you look at the bank index the last 20 years, it's only been four years that it out it underperformed the bank index. And I think that's just a function of it's just a better managed bank. And you know, I think that generally speaking, lighter regulation is probably actually more beneficial for smaller banks because it just makes their lives easier. JP Morgan knows how to work in any kind of environment. But broadly speaking, I still think having the flexibility in this balance sheet that they have is where you really want to be.

[Frank Holland]

Yeah, regional banks act horrible though. That's one of the things. And so if you were like getting excited about the potential for M and A, it just doesn't the market's not telling you that's it. You know, it filled in that entire gap from the post election as far as the big money centers. Again, you know, I say to myself, all right, it's kind of laughable at this maybe we're late cycle in the economy. You want to roll back, you know, regulation, go back to 2018. A bunch of the regulation that was rolled back were the very things that felled a lot of these regional banks in 2023. So so to me, I think the market where the way BKX acts or the carry is telling you that don't expect a lot of deregulation anytime soon.

[Melissa Lee]

By the way, we'll have more on the results of the banks, JP Morgan and others tomorrow. We'll break it all down with our guest trader Joe Moglian, former CEO and chairman of TD Ameritrade. That is tomorrow, 5pm Eastern on fast Money. Coach Joe Coming up, social unfollowed, Meta and Snap under pressure today, even as it seems more and more likely that TikTok is going to be banned in the US why the downward moves? Well, we'll dig in and it's acronym reveal week or traders are spelling out more trades to watch in 2025. One will give you a caffeine pick. We'll tell you what it is when we come right back. Welcome back to fast money. The clock is ticking for TikTok as it could be banned in the US this weekend. Congress has said the social media giant must divest from its Chinese parent ByteDance, by January 19 if it wants to keep operating. But while American TikTokers may be jumping ship ahead of the deadline, they aren't just turning to Meta's real Snapchat or YouTube. They seem to be flooding to Xiao Hongshu, aka RedNote, another Chinese social media alternative. And rumors of what might happen to TikTok are impacting social stocks. For more on the state of social media, let's bring in Julia Boorstin. Julia? Well, Melissa, today met A shares lost 2.3% despite some bullish analyst commentary. Snap shares were down nearly 7% and Pinterest shares were off about 2%. Now these stocks seem to be responding to rumors that Elon Musk could buy TikTok's U.S. operations despite TikTok telling CNBC, quote, we can't can't be expected to comment on pure fiction shooting those rumors down. TD Cowan saying reports even of a prospect of TikTok remaining a platform in the US Is seen as negative for its rivals. And that's why Those stocks are lower. Now the other big news today, Metta announcing it's looking to cut 5% of its employees its lowest performers with the goal of backfilling those roles later this year. CEO Mark Zuckerberg saying in a memo, I've decided to raise the bar on performance management and move out low performers faster. The company says it expects to reach 10%, what they call non regrettable attrition by the end of the current performance cycle and they say they'll provide generous severance. Now Medicares were down before that news was out. That news not impacting the stock very much. Melissa all right, Julia, thank you. Julia Boorstin, Ever since a potential ban on TikTok was a possibility, there was an assumption that all those tick tockers would have to go somewhere else. Julie but it seems that they are looking to sort of give the US Government. See what I can do. I'm going to say that nicely because the other way is not sanctioned by the ftc. Going to this Chinese owned app which is not owned by ByteDance, it is owned by another Shanghai based company.

[Julie Beal]

Yeah, I think it's a really fascinating dynamic where the assumption was okay, if there is no TikTok, everyone will move over to reels. And that's just really not been the case, at least in my experience. People are calling themselves TikTok refugees and moving over to RedNote and there's this great interaction that's happening. But I mean I've seen people on TikTok say they would rather write their Social Security number on a post it note and put it right on Xi Jinping's head than move over to Instagram reels. And so I think that there is some work PR wise that needs to be done in order to get young people to move over. I don't, I don't think they're going to get nearly as much benefit as they expect.

[Melissa Lee]

There's some talk too that some of these people who moved over to RedNote will also do weekly bans. You know, not going like sort of protests of Meta's various properties, Instagram Reels, WhatsApp, etc. So they could be facing those pressures.

[Frank Holland]

There is a certain sense of irony that Mark Zuckerberg is cozied up to the president and likely or the incoming president because he wants to put the pressure on TikTok. And the flip side of that, the story we hear is that the Chinese might be considering selling TikTok to Musk. You know, so there's a lot of goofiness going on here. But at the end of the day, I'm not sure the app is banned. I think you can't download it. You know, there's a whole host of other things, but ISPs would have to block it. I just don't think it's that easy.

[Melissa Lee]

It would just degrade. Like, there would not be updates. So eventually it will just cease to work.

[Frank Holland]

Yeah, the kids will use it, though. They're obsessed.

[Melissa Lee]

Like Guy.

[Guy Adami]

Well, I was. You know, you say that. And Jess, meanwhile, who was the earliest adapter of Pinterest?

[Melissa Lee]

Okay.

[Guy Adami]

I don't know. The TikTok.

[Frank Holland]

No.

[Guy Adami]

People send me those things. Like, you should watch this. And then I try to open them and then you can't do it because I'd be on the TikTok. Why would I do that?

[Dan Nathan]

Is it Red Note just going to be banned as well? We're going to. We're going to start this and we're going to wind up banning them all. The only one that needs it, snap needs it for. For their stock performance. Meta would like to have a ban, but doesn't really need it. They're going to survive either way. Snap only had one profitable quarter Q4 of 2021. It's been unprofitable. So if anyone needs a ban on.

[Melissa Lee]

TikTok, it's now coming up more 2025 acronym reveals. The traders are laying out their picks and the words they hope will carry them to the top. Carter Julie's acronyms are next. Fast Money's back into. Welcome back to Fast Money. All week long, our traders are revealing their 2025 acronyms in the trades to watch today, we bring in a special guest, Carter Braxton Wirth. His 2024 acronym plug was comprised of Peloton, Lincoln Financial, UnitedHealth and Gold. A second half surge by Peloton peddled him to third place with a 23% gain last year. Now the. This year, he not only sent us an acronym, but its definition and pronunciation. Of course it is a noun. A short sound as a. As of a small solid object dropping into water without a splash. Verb is to fall or cause to fall with a plop. Carter, you're actually betting on a plop for these stocks? Yeah, that should be flopped. Could have changed that, but let's just do it. So I thought I'd do the other side of plug. Four stocks I might have been plugging here. Four stocks I think perhaps will be.

[Julie Beal]

Unhappy performers in 2025.

[Melissa Lee]

So the first is Palantir, and obviously this is a beloved stock that is Drawn in much capital and much anticipation for more to come. And perhaps it'll quintuple from here. But I think the path lower or.

[Julie Beal]

Higher starts with lower.

[Melissa Lee]

First, it's just full by my work.

[Julie Beal]

The second is the biggest company in.

[Melissa Lee]

The S&P 500 materials sector at 21%. That's Linde. It's a big chemicals company that's down some 15 18% from its peak of December and has all the elements of a bullish to bearish reversal. Then I've got a buildings material stock that's Owens Corning. And it too, on its lows of just four or five days ago, is down some 20% from its December high. And then bringing up the rear, no pun intended, is a truck manufacturer, Paccar, its peak was back in 2021, has still never recovered its losses of the past two years. And I think all of these, the burden of proof is on the bull. The bear just points to the circumstance in each one. And presumably, Carter, all of the components of your acronym have come up as you sorted and sifted through hundreds of of stock charts and you see that the technicals bear bear this out. Well, I mean, as you said, I could have done flop or MOP or.

[Julie Beal]

Some other thing, but you know, it worked.

[Melissa Lee]

The possibilities are endless. Thank you, Carter. Carter Braxton. Our second acronym today comes from Julie Beal. Her 2024 word track had TransUnion, Aspen Technology, Sertara, Cooper Companies. It was up about 2% last year as a big win for TransUnion was canceled out by big losses in Satera. So what are you picking this year, Julie?

[Julie Beal]

My acronym is Mocha. It's not just a great paint color, but has some ideas in here. Mollus is one. You know, this is a boutique investment bank and I think that the M and A environment, particularly for sponsors and private equity, that's really a key competency of theirs, is going to be much more positive. O is Ollie's. This is a bargain discount retailer. They are closeout merchandise only. And I think all I keep coming back to is that customers are desperate for value. They're not seeing it anywhere else other than these kinds of places. And I think we continue to see good growth there. My third is Clearwater Analytics. This is a company they announced today, actually an acquisition with Enfusion. This is nice sleepy software that works in portfolio accounting. I think it's really well positioned to kind of continue to expand its platform there. And my H is Hermes. In tandem with this, Ollie's IT bid. Hermes really is a representation of value but in a very different way. I remember they were in my office, the management team, and they kept using this word value. And really, if you think about it, where other luxury have brought up their prices 70%, 80%, 90%, and this has really only brought it up 10% because it's kind of always been consistently expensive. And so I think they're actually one of the few places that really delivers luxury value. And a is Aon. This is a liquid cooling company. They have really nice exposure to data centers. They have something like $200 million in orders for data centers. And I think they're also really well positioned this year.

[Melissa Lee]

All right, so the next two in the books now. Julie's MOCA and Carter's Plop. Up next, final trades. Time for the final trade. Julie Beal.

[Julie Beal]

I talked about it before. Clearwater Analytics. I think really nice positioning.

[Melissa Lee]

Steve.

[Dan Nathan]

Micro. Micro. I didn't even hear Julie. Microstrategies. Time to buy. I think Bitcoin pops my Micro Dan.

[Frank Holland]

XL F puts look attractive for a hedge in the bank.

[Guy Adami]

You know, before the show, I said to you, and I'm going to close the show. Your hair looks fantastic.

[Melissa Lee]

Thank you. Oh, you mean thank you. Yours is okay. All right, thanks.

[Guy Adami]

No, I can say that Pinterest. It might be. Maybe it's on my Pinterest page later.

[Julie Beal]

Who knows?

[Melissa Lee]

All right, don't forget, tickets are still available. Go buy them. Mad money starts right now.

[Julie Beal]

All opinions expressed by the Fast Money.

[Melissa Lee]

Participants are solely their opinions and do.

[Julie Beal]

Not reflect the opinions of CNBC, NBCUniversal.

[Melissa Lee]

Their parent company or affiliates, and may have been previously disseminated by them on.

[Julie Beal]

Television, radio, Internet or another medium.

[Melissa Lee]

You should not treat any opinion expressed.

[Julie Beal]

On this podcast as a specific inducement to make a particular investment or follow.

[Melissa Lee]

A particular strategy, but only as an expression of an opinion.

[Julie Beal]

Such opinions are based upon information the Fast Money participants consider reliable.

[Melissa Lee]

But neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such.

[Julie Beal]

To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer weekdays at 5am.

[Frank Holland]

Be first on world markets.

[Melissa Lee]

First to the global business conversation. Get a jump on the investing day every day with Frank Holland. Success starts early.

[Frank Holland]

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[Melissa Lee]

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