← CNBC's "Fast Money"
CNBC's "Fast Money"
Mag7 Meltdown To Kick Off 2025… And Mortgage Demand Drops 1/2/25
00:43:46
The new year kicking off with a Magnificent 7 Meltdown, with Apple leading the losses. How the decline brought down the broader market on the first trading day of 2025, and what it could say about how stocks will fare the rest of the year. Plus Mortgage demand dropping to close out 2024. Why buyers are staying on the sidelines, and what it means for the homebuilder stocks. Fast Money Disclaimer
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- [00:01]
Courtney Garcia
What does it mean to be rich? Is it having more stories to share.
- [00:05]
Chris Harvey
Or time to give?
- [00:07]
Courtney Garcia
Is it being able to keep your loved ones close or travel somewhere far away? At Edward Jones we believe the key to being rich is knowing what counts. Your dedicated financial advisor will take a comprehensive approach to your financial strategy to help support what truly matters to you. Edwardjones.com findyourrich Edward Jones Member SIPC Global.
- [00:32]
Tyler Matheson
Markets up to the minute, Front page news. Wake up to Frank Holland and Worldwide exchange weekdays, 5am Eastern. CNBC Live. Ambitiously indeed it does. Live from the NASDAQ market site in the heart of New York City's Times Square. This is fast money. And here's what's on tap tonight. Holiday hangover. Stocks stumbling out of the gate to start the new year after limping to the finish line in 2024. Is this a bad setup for a bull run this year? We'll debate that. Plus st in reverse. Shares of Tesla taking it on the front bumper after reporting their first ever drop in annual deliveries. We will break down the stock's recent slide coming up. And later, the builders bruised and battered. Will the slide continue in 2025? Energy on the climb. Could this rebound be for real? And a call of the day on Uber. Why Goldman is so bullish. Welcome everybody. I'm Tyler Matheson in for Melissa Lee. Coming to you live from Studio B at the NASDAQ market site. On the desk tonight, Manawan Isaac, Karen Feinerman, Courtney Garcia and Guy Adami, folks. Welcome everybody. Happy New Year. Good to be with you.
- [01:41]
Karen Feinerman
Nice to be here to have you.
- [01:43]
Tyler Matheson
We start with a magnificent seven meltdown led by losses in Apple, the iPhone maker, dropping more than two and a half percent today, biggest loss by the way, since October and shedding $100 billion in market value in the process. A cool Hundred mil or 100, bill? 100 billion. 100 billion. The stock has now dropped more than 6% from the all time high it hit just a week ago back when we were counting the ticks to the $4 trillion market cap mark. It closed at less than 3.7 trillion. That's not so bad when you really think about it. Apple's weakness dragging down the broader market on this first trading day of 2025. Major indexes all down though off their worst levels of the day. Fractional declines really in percentage terms for the big 3s and P touching its lowest level but by the way, since election day. So does this sort of choppy start to 2025 portend an end of a two year mega rally. What do you say, Karen?
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Karen Feinerman
I hope not. First of all, it's so nice to have you in your retirement.
- [02:44]
Tyler Matheson
In my retirement.
- [02:45]
Karen Feinerman
That was such a beautiful.
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Tyler Matheson
They said we need an old guy. We need an old guy. And Neil Cavuto just wasn't available.
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Karen Feinerman
But I mean that send off a week or two ago whenever it was really not a dry eye and easy. Anyway, we're lucky to have you.
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Tyler Matheson
Thank you.
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Karen Feinerman
What were we talking about off the bench?
- [03:01]
Tyler Matheson
Y talk about Apple and the Magnificent seven.
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Karen Feinerman
What is this? I want to Magnificent seven.
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Tyler Matheson
What do we think about the market for this year?
- [03:09]
Karen Feinerman
I don't think. I don't want to extrapolate anything from what happened to today.
- [03:13]
Tyler Matheson
Today a risky thing to do.
- [03:14]
Karen Feinerman
Yes, it would. And make for not such a good show for the rest of the year, I think But I, you know, I like the ones that I own Apple. I think on this desk we haven't loved Apple primarily because of price. This sort of, you know, the disappointment about AI and whether the, you know, that I don't know when we're really going to see phone sales take off because people love the Apple AI experience.
- [03:38]
Tyler Matheson
I don't take a bite. Who wants to take a bite at Apple?
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Guy Adami
I'll take a bite. I might spit it out.
- [03:42]
Tyler Matheson
All right, you might. I will choke on it.
- [03:46]
Guy Adami
I'll see if I can chew this one down. So listen, I think Courtney and I were on the show and you know the other two panelists, I know we hate that word but we're a family here. But the other two members, I think collectively we've said, listen, there are times where Apple is a legitimate trading vehicle. It oscillates. There's times to get in and if you've been long that same volatility makes it very tough for you to time when you're going to get in and out. So if you're a believer in the long term secular story, it's one that you should own and hold onto. Now for those of us that have sat on the sidelines, I'll be the first to raise my hand. I just don't understand what the real drivers of the super cycle are. And if AI is the catalyst behind it, I can understand that they don't have the same spend as some of the other mag7. So there's a floor there. But in terms of what's going to take what is already a fully valued company to the next level and lead to either to for me P E expansion I don't think AI is a story yet or I don't see it. And for Apple you're saying for Apple.
- [04:48]
Tyler Matheson
Specifically and they're having competitive issues in China right where they've had to lower their prices to compete with Huawei and other by the way I was in Europe last summer and I saw some of the Huawei phones. They are cool looking.
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Manawan Isaac
Did you grab one?
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Tyler Matheson
I love them. I'm telling you I like that phone. But at any rate so they've got issues there and there are questions about how how well this latest phone is selling in the US and whether it's.
- [05:12]
Manawan Isaac
Going to like I mean headline risk without question. It is great to have you Tyler and your legend will only grow in retirement. But I'll say this. You know if you think about the things that I got wrong last year and clearly there were many but passive investing you don't realize the magnitude and so you start to see the numbers and $1 trillion made their way into ETFs and mutual funds last year which was a record Apple wins To this earned 487 ETFs 410 of which Apple is one of the top 1515 holdings. So as long as money flows in Apple will almost by definition go higher. But that doesn't mean valuation makes any sense. And you know Bono and just spoke to that I mean you talk about a company that was a growth company 9, 10 years ago it was trading at a ridiculously cheap valuation was trading in the low teens. Now that has become sort of a value stock. It's trading north of 30 times next year's numbers with EPS growth maybe at 12% 8% revenue growth doesn't make a lot of sense. So they win in this environment but be careful if it flips and that's my one of my biggest concerns of 25.
- [06:13]
Tyler Matheson
Let's broaden out here Courtney a little bit and pick up on one of the things bottom one said there about a last year I think it would be hard to argue that that one of the main drivers of the market was the lift absolutely in there. Are you expecting that kind of lift to reoccur this year and if it doesn't what kinds of stocks are going to move ahead? What will the drivers be?
- [06:38]
Courtney Garcia
And I think there's a lot of structural changes with artificial intelligence that are going to continue. So I think some of your easy money and has probably been made I don't know if you're going to see something like an Nvidia outperform to the same magnitude that has been a lot of that magnitude has already been priced in. But then look at energy, for example. Like there is not enough energy to go around for these data centers for electric vehicles. So I think there's a lot of these stories that are surrounding AI that aren't going away anytime here in the near future. So yeah, like with Apple, is like an AI emoji going to make me get the new iPhone? Probably not. But do we need that energy to create all of the new AI stories? Absolutely.
- [07:13]
Tyler Matheson
So is that kind of a two cheers for energy here? Is that, is that what I'm hearing? You say anybody else want to pick up on energy?
- [07:19]
Manawan Isaac
Well, it makes sense. I mean, we didn't talk about this stock for the first 16, 17 years of the show and it's VST Vistra Energy. And quite frankly, there's no reason to talk about if you look at a long term chart because it didn't do anything. Look at the performance it had last year on the back of exactly what Courtney is just talking about. I mean, this is a stock that's been reinvigorated by this whole phenomenon. And yeah, it's probably extended on valuation, but those are the names that are going to win in 2025. And I'll say this quickly, semis topped out in July. You say what you want, but look at an SMH chart. That's when it all topped out. And they've been sideways to lower ever since. Outside of maybe Broadcom and maybe of Marvell, AMD has been awful. You throw a micron in the mix, Qualcomm, even in video since the earnings release has not traded. Well, that's something to watch earlier this year as well.
- [08:03]
Tyler Matheson
Thoughts here, Karen?
- [08:05]
Karen Feinerman
So for AI, I mean, to me, when you look at Mag7 and how much is driven by AI, Metta has been the most compelling story because they've been the most able to translate that spend, which is enormous, into actually giving advertisers what they want. Right. They're able to target ads, the ads are more effective, the advertisers will pay more for them. And so to me, Zuckerberg deserves the benefit of the doubt here on this gigantic spend. We've seen a spend before and it didn't work out with the Metaverse, but I think it's, it had a great year, had a great two years, but it's still pretty compelling at a mid for mid 20ish multiple, not including, not excluding the cash. So it's a little more than a market multiple for I think a stock that is way better than an average market stock.
- [08:50]
Tyler Matheson
Man, when as you look at the landscape of 2025, is this a year where the market goes back sort of to what guy was saying semiconductors sort of topped out there in the middle of last year, including, including in video. Is this a year where the market broadens away from the Mag 7 and some sectors like energy, like financials and so forth?
- [09:15]
Guy Adami
I think there will be a significant pickup in volatility in 2025 and you know, I believe that most investors, particularly our audience, should have some passives. But I think 2025 will give you an opportunity to be a much more agile and an active trader. So I think for now you see, you've seen energy or pockets of it, you know, some of Vistra, Constellation Energy, some of those were leaders today for solar. I think you'll get opportunities where there will be ebbs and flows of money flows in and out of those subsectors. But I have a hard time thinking that we will get multiple expansion without that Mag 7 lift, especially with rates going higher.
- [09:59]
Manawan Isaac
And you know, I'm probably one of the few people that think, I still think 10 year yields are going to 5% throw up a TLT chart and I think it's going to trade down to the levels that we saw in October of last year, which is about 82 and a half or so, which sort of equates to about 4, 9 or so in the 10 year yield. I don't think the market's prepared for that at all and valuations certainly don't support that. So higher interest rates to me is one other thing you got to focus on, especially with all the issuances coming out over the first couple of months of this year.
- [10:25]
Tyler Matheson
I think that's a really good point. I think there are two things that make this year different this year that we're looking ahead toward. Number one is what happens with the magnificent seven and the air lift that may not be there to the same degree. And the other thing is rising interest rates this year and how the market and how you're going to have to discount against that. Let's move on. Our next guest expects stocks to rebound this year to new all time highs. Chris Harvey is the head of Equity strategy at Wells Fargo Securities. Chris, welcome. Good to have you here. You say this is going to be a good year but a bad vintage. What do you mean by that?
- [10:56]
Chris Harvey
So I think equities are going to go up this year, but people are going to put on too much risk. Right. So for the last couple of years people have been playing momentum. I Buy strength, I sell weakness. That's comparable to. I keep pushing my bets, I keep pushing my bets into the table. That's fine, but it builds up risk over time. The other thing is people are going to start to go out on the risk. Too far out on the risk curve and too far down the capital structure because the person to the right, person to the left is going to make more money and there's going to be a bit of fomo. So this is a year that I think equities do go higher, whether it's related to a good economy. The Fed still cutting rates, M and A activity, IPOs. But when we look back from the purchase 27, we're going to say 25 was the year where people put on too much portfolio.
- [11:35]
Tyler Matheson
Are you with Bonoin that this is going to be a year of heightened volatility or more volatility than we've had?
- [11:41]
Chris Harvey
I think that's an easy yet. Yes. We didn't have much volatility last year. We had a spike in the beginning of, what was it, August? And that just disappeared after that. Credit spreads are still incredibly tight. We should see some spikes in volatility or a lot more spikes in volatility. But what do I do? What do you do? What we do is we've been barbelling some of the things that we really like, right? We like the communication space, we like banks, but we want to barbell that versus versus Staples, right? Staples. Unloved, underappreciated. And that's going to give your portfolio some balance. And in times when the market really trades off, that's going to help out the portfolio. So you really want to barbell something defensive with something you like, garbage. Something a little bit more cyclical.
- [12:24]
Karen Feinerman
Karen, so when you're talking about investors being more levered, are you saying they themselves are more levered or they're looking at things that are more levered, which the Mag 7 is not.
- [12:34]
Chris Harvey
So what I think is they're going to put on more portfolio leverage. The other thing that we're going to see is more M and A activity, which will bring leverage into the system. Furthermore, when you look at credit spreads being this tight, you and I could go out and issue 200 million. I'm exaggerating, but you could issue a lot of paper, right? And so more leverage is going to come into the marketplace that way as well. So you're seeing on a portfolio level, you're seeing on a corporate level, and I think you're going to see a lot more risk seeking as the year.
- [13:02]
Tyler Matheson
Goes on, what do you see to Guy's point a moment ago? Interest rates moving up. He thinks they're going to, they're going to go up. What did you say to at least 5%. And what does that do to the overall. And your. And your price target is one of the highest on the street. Seven. Seven thousand seven. It's seven thousand seven.
- [13:20]
Chris Harvey
Seven thousand seven. A big James Bond fan.
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Tyler Matheson
Yeah. Dry, straight up shaken.
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Chris Harvey
So what that does is that that's not a positive, but we do think that rates do peak in the first quarter. Bonds are actually a pretty good risk reward at this point in time. The compensation you're getting on bonds above inflation expectations, it's about two and a quarter percent. You haven't seen that for a sustained period of time since 06. Excuse me, 06. Right when the Fed was still raising rates, not easing rates, rates. So yes, we can get rates go higher. I don't think you can sustain 5% for a long period of time. And I do think that rates will come down because the economy I think will slow down in the second half of the year.
- [14:02]
Tyler Matheson
Communication services is one of the, one of the elements of your barbell approach here. What are those companies? Which ones?
- [14:08]
Chris Harvey
That your Mettas, your Google's, your Netflix, some of your AT&T, Verizon and some of the cable companies.
- [14:15]
Tyler Matheson
Yeah. And so you think those are well positioned. And financials, Big Bang Financials is a big, big space. What do you, what do you, what are you emphasizing?
- [14:23]
Chris Harvey
So I think Karen hit on the head before it with communication. It's that quintessential GARP space. Yes, the stocks have done really well for the last two years, but valuation is still attractive, they're still able to commercialize and they're one of the first ones to really be able to commercialize AI and so the underlying fundamentals are still really strong. Technicals momentum look really good. With regard to banks. I just think you're going to have upward EPS revisions for banks and you're still going to have relative multiple expansion for the banking space because of the regulatory environment.
- [14:53]
Tyler Matheson
If the year ends where you think it is, 7707 is the first half going to be where the fun is or the second half?
- [15:01]
Chris Harvey
I think it's the first half. Right. I'm worried if we do get close to that number by September or something, we really want to start de risking the portfolio at that point in time. I do think we're going to start to see a lot more merger Mondays. I think you're going to see a lot more IPOs. Once you see that people will have more money to play with, their risk appetite will go stronger. And again, we're looking at a period where the economy is still strong, credit spreads are tight, the Fed is still easing, maybe not as much as we thought they would, and momentum is still very much in play. That's a pretty good recipe for upward stocks.
- [15:35]
Tyler Matheson
Chris, did you know that it's in my contract that if I host you have to be here. It's like every time I here something, you are here and we're glad you are. Thank you so much. Happy New Year, my friend.
- [15:44]
Chris Harvey
Happy New Year.
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Tyler Matheson
All right. This is the portion of the show where we get to agree with Chris or trash him. We'd like to start. Courtney.
- [15:50]
Courtney Garcia
No, I'm also very optimistic on where the markets are going next year. I think a lot of those like animal spirits that we saw coming out post election have been dampened when we saw this in December lately. Correct.
- [16:01]
Tyler Matheson
The last month.
- [16:01]
Courtney Garcia
Correct. Which I think actually probably puts you in a little bit of a better position in 2025 when some of that like has been let out of the sails, you know. And I think there's still a lot of that opportunity to come because we are still going into a new administration. There is likely going to be less regulation. There's also talks of tax cuts which we really haven't talked about yet. And I think a lot of those things are going to position the economy to continue to do well next year.
- [16:22]
Tyler Matheson
So economy may do well, but that will maybe let's assume it does. What does that do to the Fed? That takes a little of the interest rate lowering pressure away.
- [16:33]
Manawan Isaac
They've made their path pretty clear. You know, I think the market wants something the Fed's not going to give them and I think the bond market is pretty much telling you that. But I'll say this as well. I think say was a glimpse of what you could see for the next few months without question. I mean the vixen one point say was above 19 and a half. I mean it closed lower than that. But you saw glimpses of volatility and what was yeah, a bit of a volatile day, but not that volatile. So buckle up and again, bonds will matter, the semi trade will matter. And I think Chris would be the first one to say it's not a straight line to 7000 and it might get there by year end. But it's going to be interesting to see where it heads first.
- [17:06]
Tyler Matheson
And let's talk about deal actually that's one of his hypotheses is that more deals this year. Agree.
- [17:11]
Guy Adami
I do. And I like the call on banks there, particularly the large integrated that also have an investment banking arm, because the volatility that I'm reporting we'll see will likely lead to increase in trading revenues as well. Bolstering.
- [17:25]
Tyler Matheson
Karen, wrap it up for us. What do you think?
- [17:26]
Karen Feinerman
Agree. I mean, I like that deal. And also when you see that's great for the banks and I have banks, but also other players in the sector where one got acquired, it's good for the rest of them. It sort of breeds excitement and I think it's going to happen.
- [17:38]
Tyler Matheson
All right, let's move on to where a lot of the action is going to be over the next couple of days, certainly, and weeks to Washington Republicans less than 24 hours from taking control of both the House and the Senate, but still a lot of uncertainty over who will be the House speaker. Our Emily Wilkins has the very latest as the deadline approaches. Emily?
- [17:57]
Emily Wilkins
Hey, Tyler. Well, yeah, Mike Johnson could face a battle for his speakership tomorrow if all lawmakers are present and they all vote for someone. It would only take two lawmakers to deny Johnson the gavel. Two Republicans voting against him. And we know at least one Republican, Congressman Thomas Massie, says he's not going to vote for Johnson. He criticized him in a lengthy X post for the way that Johnson handled the government shutdown battle last month, saying that Johnson, quote, already demonstrated that he won't tell the president what is achievable and what is not achievable in the House. And he lacks the situational awareness himself to know what can pass and what cannot. Now, about half a dozen other members are also undecided. Several of them actually met with Johnson this afternoon. And leaving that meeting, Johnson struck an optimistic tone.
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Tyler Matheson
People are talking through process changes they.
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Manawan Isaac
Want and those kinds of things, and.
- [18:48]
Tyler Matheson
I'm open to that.
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Emily Wilkins
And I think tomorrow's going to gonna go well. So one big difference, of course, between the last Congress and now is that any Republican who wants to block the speaker, they're just delaying progress on their own GOP agenda. That includes, of course, dealing with the debt limit, which as of yesterday is no longer suspended, giving lawmakers now a few months to figure out a solution. Tyler?
- [19:10]
Tyler Matheson
Emily, let me ask you a sort of technical question about the vote for the speakership. When someone like that representative says I'm not going to vote for Speaker Johnson, does that necessarily mean that he's going to vote against him? In other words, if he voted or others who do not support Johnson, vote present. Does that create more wiggle room for Speaker Johnson to continue in the seat?
- [19:35]
Emily Wilkins
I love this wonky question, Tyler. And the short answer is yes. The short answer is that I think you can have up to four members come in, vote present and Johnson will be just fine. Where it gets tricky is that if members actually start voting for someone else, be it Elon Musk, be it Donald Trump, be it you could do Mickey Mouse, I think. And that's where you're gonna see the kind of breakdown in the votes. Cuz remember, McCarthy won with 4 members not voting for him but voting for no one else in voting.
- [20:01]
Tyler Matheson
Yeah, I don't think it has ever happened. But you do not have to be a member of the House to be the speaker of the House, right, Emily?
- [20:08]
Emily Wilkins
You, you don't. But I will, I will bet anyone a beer that we are probably going to be seen, probably gonna be seeing Mike Johnson as Speaker. I think the how many times does it take him to get there and what sort of the things does he wind up promising or giving away or negotiating in that process? Because you have a lot of these members who are undecided. Their main concern is spending and they want to make sure that Johnson is going to be addressing it.
- [20:31]
Tyler Matheson
All right, Emily, thank you very much. Emily Wilkins in Washington for us. Let's take a quick break. Coming up, a rough start to the new year for a few high profile names like Tesla, Boeing, Nike, all in the red today. The reasons behind those moves are next. Plus, home builder stocks getting hit as new mortgage data filters in. But could there be an opportunity in this space? We're going to drill down on that trade when FAST MONEY returns. We're back in two. You're watching Fast Money here on CNBC. We'll be right back. Weekdays at 5:00am Be first on world markets. First to the global business conversation. Get a jump on the investing day every day with Frank Holland. Success starts early. Worldwide exchange, 5:00am Eastern. CNBC. Welcome back to Fast Money. Everybody got a news alert now on that U.S. treasury hack from earlier this week. Megan Casella has the details. Hi, Megan Tyler.
- [21:37]
Emily Wilkins
We're learning just a little bit more about what exactly was accessed in that hack. Bloomberg News is now reporting that Chinese hackers were able to hack into the computers of senior U.S. treasury Department leaders. They say roughly 100 government computers were compromised, that they were accessing unclassified material. That's what the Treasury Department had already said, that this was all unclassified material, but that it was specifically some senior leaders computers. They're not saying who exactly, but they're saying that hackers were able to access drafts and notes for policy decisions, itineraries and travel planning documents, as well as some internal communications that they're still trying to decide, trying to figure out exactly what was taken, but that once again, it was all unclassified information. So this does go a little bit further than what we already knew about this hack. It follows the Washington Post reporting that it was the sanctions office specifically, as well as the Secretary's office that had been targeted and breached in this hack. So more still to come out on this just today, Congressional Republicans have been asking for a briefing and the Treasury Department says that they will be briefing Hill Republicans or Hill leaders on this, I should say. So that's something to watch next week. More details will be coming out then, Tyler.
- [22:46]
Tyler Matheson
All right, Megan, thank you very much. Megan Casella in Washington. Meanwhile, Tesla shares plunging 6% to kick off 2025 after the EV maker reported its first ever drop in annual deliveries year over year. Worst performing stock in the S&P 500 today. Deliveries last year coming in about below 2023 levels at 1.79 million versus 1.81. Our Phil Labeau has the details. Was this expected, Phil?
- [23:15]
Phil LeBeau
Wasn't a surprise, Tyler. If they were going to hit the consensus, they were still going to see a year over year decline in deliveries. Here's the numbers for the fourth quarter. I mentioned that they did not hit the consensus. The consensus was for 504,000 and 7,700 vehicles to be delivered. They delivered just over 495,000, as is usually the case, 95% of them, Model 3 and Model Y. So as you take a look at annual deliveries, as you guys pointed out, 1.81 million was what they delivered in 2023. They fall about 20,000 vehicles shy of that for 2024. So really close, almost flat. But it's still a decline. The first one really, since Tesla. You'd have to go back to their days of making the Roadster, when they were only delivering a few thousand vehicles. And even then it's hard to determine exactly whether or not they ever had a decline in vehicle deliveries. So this is the first one as they've ramped up production and really hit the commercial markets around the world. If there is a silver lining in the report today, it's with energy storage deployments. They report that every quarter along with their annual deliveries. And it was a nice number that they reported in terms of the fourth quarter. Deployment 11 gigawatt hours, most they have ever done in a quarter. The consensus was for 9.6 gigawatt hours. The 2024 deployments of energy storage up 113% compared to 23. And remember, they've got a megawatt plant that's going to be coming online in China in early 2025. So we expect that probably will see even greater energy deployments. As you take a look at shares of Tesla, keep in mind that they will be reporting their Q4 results January 29th after the bell, and the focus is really going to be less about deliveries, although that will get a lot of questions. The focus is going to be about what Elon Musk says about robo taxi development. And also take a look at shares of BYD. BYD said that for the year of 24, Tyler, 1.76 million vehicles delivered. So Tesla keeps the crown, at least for another year as the overall leader in EV sales worldwide.
- [25:26]
Tyler Matheson
Tyler, I wanted to ask you if you have any granularity on where were the sales more slow than in other. Was China a notable weak spot? Do you know that? Did they break it out that way or was it a slowdown?
- [25:39]
Phil LeBeau
They don't break it out by regions, but we. They don't break it up by regions, but you can put the numbers together and you look at things like vehicle registrations. They actually, in the fourth quarter, in this third and fourth quarter were increasing deliveries in China, but they're not growing sales as quickly as China's EV market is growing. So that's one area where they're feeling pressure. And then here in the United States, you know, they're also going to be facing the questions about what happens with the EV tax credit on a federal level.
- [26:07]
Tyler Matheson
All right, Phil LaBeau, thank you very much. Let's kick it around a little bit. Thoughts on Tesla.
- [26:11]
Guy Adami
I think there's general concern around just the demand for EVs at least in the interim, which is why we've seen a lot of the heritage US Automakers kind of pull back or either do completely away with or push back what their target dates have been. But I really don't want to conflate the two between BYD and Tesla. They're playing two completely different games. Although Tesla has shown some willingness to entertain compressing margins in order to drive up sales and push out competitors. We're not talking about a state backed agency, a state backed enterprise, although that may be.
- [26:48]
Tyler Matheson
There's a joke in there right now.
- [26:51]
Guy Adami
But my point is I don't think the Comparison should necessarily be between the two and then that inform an investor whether or not Tesla is a worthwhile investment. They've just pulled back from that unprecedented presidential electional like what was it, a 60% run or 40% run since November? 70% run. I mean. Exactly. So they've given up about 20, 25% of that. I think you've got to put that in context before saying that. Okay, well now Tesla is no longer investable because they missed deliveries by a percent year.
- [27:21]
Manawan Isaac
Year was interesting the question asked Phil. I mean clear the market wasn't prepared for it on the back of the sell off. Right. So maybe people were expecting it. But in terms of market positioning, it wasn't. Given the move we saw today and given the amount of shares that traded. With that said, you know, I'm surprised it's still trading on delivery numbers because now it's about full self driving and robo taxis and all those other things that they've been promising for quite some time. If you're looking for a level, this is it. I mean this was the prior all time high back in November of 2021. So we basically traded all the way back down to a prior high which should be support. So if you want to play from the long side, here you go.
- [27:56]
Tyler Matheson
All righty. Let's take a quick break. A lot more fast to come. Here is what is coming up next. New year, new opportunities. Could the recent dip in the home building space help you nail down some gains? What you need to know out of the housing sector ahead. But first, Boeing and Nike, both starting 2025 in the red. And with 30% loss from both stocks in 2024, are those names in for another year of pain? You're watching Fast MONEY live from the NASDAQ market site in Times Square. We're back right after this. Weekdays at 5am be first on world markets. First to the global business conversation. Get a jump on the investing day every day with Frank Holland. Success starts early. Worldwide exchange, 5:00am Eastern, CNBC. All right. Welcome back to Fast Money. A pair of big buzz kills to kick off 2025. Nike tumbling 2.6%. But we start with another blow for Boeing, the aerospace company, one of several US Companies on China's latest export control list. The sanctions would ban imports to and exports from China or making new investments in the country. It's now down almost 5% just this week. So Courtney, your thoughts on Boeing?
- [29:23]
Courtney Garcia
Boeing's been tough, I mean really for the last several years. Like you want to find an entry point into Boeing It's a duopoly. And really whether it's them or Airbus, like they need to keep making airlines. When you look at the airlines, I mean, there's just really not enough planes to go around right now. They need the more efficient planes and that demand is still there, but they just keep having issues is one thing after another.
- [29:42]
Tyler Matheson
Why has it been such a mess for so long?
- [29:45]
Courtney Garcia
I mean, your guess is as good as mine. I'm not in management there, unfortunately. But it's just, you think you're over one thing and it's just something completely unexpected, right? I mean, this recent news of a crash, I think we all thought we were past that. And now it's another thing, I think that's become really frustrating for investors and it's hard to jump into something that just seems like such a, I mean a mess, for a lack of a better word from a, from a management standpoint.
- [30:04]
Tyler Matheson
Thoughts on Boeing?
- [30:05]
Karen Feinerman
Yeah, I bought some Boeing a little bit after they did that very big capital raise of $24 billion. I mean, to me that was really important, important event. We all know they've had tremendous issues. That used to be really a great cash flow story and now it is a negative cash flow story. So that's a big change. But I think that when you're as down and out as Boeing, every little thing becomes a big thing. That crash the other day, that was terrible. I think this tension with China will continue. But I'm kind of intrigued by Boeing. I think that it didn't stop going down today, but it has generally stopped going down on bad news even, which, you know, as Tim always says, you make the most money when things go from terrible to just bad. So I'm long Boeing in the hope that it gets out of that it.
- [30:49]
Tyler Matheson
Gets less bad category.
- [30:50]
Karen Feinerman
Right.
- [30:51]
Tyler Matheson
All right, let's move over to Nike now. It was down 2.6% in the first trading day of the year. Sales estimates for 2025 continue to fall. Analysts predicting a 10% annual drop for this fiscal year according to Factset. So is it time, guy, to just sell it?
- [31:07]
Manawan Isaac
Well, we've been saying this for a while. I mean, pull up a longer term chart of Nike and you'll see this is more than cut in half since its all time high, I think in the summer of 2021 or thereabouts, and deservedly so. I mean, competition seemingly came out of nowhere and they weren't prepared for it. And quite frankly it's still sort of expensive on valuation. It's flirting with the levels that we saw this summer, 70 bucks or so. You know, to me it feels like it's going to take it out and try to test a whole new sort of level. On the downside, I don't think, in my opinion there's not a compelling reason to own this. Not on valuation yet and it's not on a turnaround yet. And the fact that the competition is only getting worse doesn't help them either. So I'm an avoider of Nike.
- [31:46]
Guy Adami
Still, I have a very small position. I wouldn't sell it yet only because I do believe in the long term story and ultimately it's small enough and we've right sized it so that we can kind of play for any type of leg up. But I'm with Guy. It's hard for me to really find some compelling catalysts. The issue is we need some exposure to retail within the portfolio. It's not as if we can invest completely in AI or completely in renewable energy. So from a portfolio standpoint, I can understand that you feel like you're picking amongst the upper echelon of retail, but they certainly need to get their act together and we'll probably hold off on investing.
- [32:29]
Tyler Matheson
Guys point, the competition has only become stiffer and stiffer for Nike. Let's take a quick break. Coming up, a big drop in mortgage demand as the housing market enters its annual winter's freeze. Is it just a seasonal slump or is there even more weakness to come? The outlook for homebuilders when Fast Money returns. 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 everybody. Stocks starting the new year off in the red despite all three indexes initially starting the day higher. The Dow dropped more than 150. The S&P and NASDAQ both down about 2.10of a percent. Both indexes riding five day losing streaks. A rough end of the year, the longest since April by the way. Crypto starting the new year off however with a bang. Bitcoin up 3% trading around $97,000. Ethereum and Solana also higher today. And shares of the biotech stock Nomura Therapeutics plummeting more than 80% today. Its worst day ever. That would be my worst day ever. 80% down after the company's experimental depression drug failed to reduce symptoms in late stage trials. The stock now worth worth about $300 million. That would take you into small cap territory. Meanwhile, the homebuilder stocks in need of repair. Dr. Horton Pulte Group, KB Home Lennar falling double digits over the past month as mortgage demand slid to end. The year often does that seasonally. Diana Olek has the details. Hi, Diana. It does, usually. That's right, Tyler. But it did a lot this year.
- [34:12]
Karen Feinerman
Total application volume for the two weeks ending December 27 dropped nearly 22% compared.
- [34:18]
Tyler Matheson
With the week before, according to the Mortgage Bankers association, which did seasonal and.
- [34:24]
Karen Feinerman
Holiday adjustments during that time, the average.
- [34:27]
Tyler Matheson
Rate on the 30 year fixed increased.
- [34:29]
Karen Feinerman
To 6.97% from 6.89%.
- [34:32]
Tyler Matheson
For loans with 20% down, rates were 21 basis points higher than they were the year before. And that's a change as they had.
- [34:39]
Karen Feinerman
Been lower on an annual comparison for much of 2024.
- [34:43]
Tyler Matheson
Applications for a mortgage to buy a.
- [34:44]
Karen Feinerman
Home fell 13% during the two weeks.
- [34:47]
Tyler Matheson
And were 17% lower than the same period one year ago. Now, December is typically the slowest month of the year for home sales, but.
- [34:54]
Karen Feinerman
The annual comparison still shows considerable weakness. And that's why the homebuilders also had.
- [35:00]
Tyler Matheson
A rough end to the year. The ITB, which is the Homebuilding ETF.
- [35:03]
Karen Feinerman
Was down nearly 18% in the last month.
- [35:06]
Tyler Matheson
Names like Lennar Pulte and Dr. Horton, all way down in December after they.
- [35:11]
Karen Feinerman
Had shut, shot much higher from July.
- [35:13]
Tyler Matheson
To November in anticipation of many more.
- [35:16]
Karen Feinerman
Fed rates, rate cuts, which of course.
- [35:18]
Tyler Matheson
We know are not going to be as many as we thought. Tyler. All right, Diana, thank you very much. Guy, what do you think of the homebuilders?
- [35:24]
Manawan Isaac
Well, if you believe the rates going higher, which I do, and if you think the unemployment rate's going higher, which I also do, it's really hard to make a compelling case here. People look at valuation, it's not about valuation, and you see how quickly these stocks can go lower. I mean, pull up any one of the four you want, and the move over the last couple of months has been staggering. And now all of a sudden, middle of December, you started to see downgrades. Barclays downgraded three names, J.P. morgan. I think you're going to see more and more people downgrade. So people want to play, you know, pick a bottom here. I think it's way too early to play that game right now in the homebuilders. I think there's more pain on the downside.
- [35:56]
Guy Adami
I'm with Guy in terms of trying to catch a falling knife, but I do think the relative performance versus IYR is starting to get interesting. IYR being the real estate etf, which, which has a lot of REIT exposure. So I would be looking at A pairs trade where I'm using IYR as a source of funds and I'm deploying capital into itb. And that way you're still net neutral, the overall real estate subsector, but you, you know, have long pockets of outperformance of ITB versus iyr.
- [36:30]
Tyler Matheson
Courtney, do you like rates? Do you like home builders? Do you like any of it?
- [36:33]
Courtney Garcia
Yeah, you don't have builders. I think Guy, you bring up a lot of really good points, but I'm actually going to take the other side of this because I do think longer term there is a really big structural demand problem. There are not enough houses to go around. I think there's like 5 million more houses, households created over the last two decades and homes that have been built. And I think you're going to likely start to see some of this fatigue where freights aren't coming down, those buyers are going to start to come in. And when the current homeowners mortgages are under 4%, they're not selling, which is where the home builders, they're the ones who can come in and they can actually buy down rates or things like that to actually bring in the buyers. So I don't think this is a story that's going to end anytime in the near. In the near term I do think yes, short term there could be some pressure on it, but longer term I don't think there's a story that's ending. If anything, you probably want to start to buy in some of this week.
- [37:16]
Tyler Matheson
So Courtney says long term the homebuilders might be a place for some money. Do you agree?
- [37:20]
Karen Feinerman
I think so. I mean she talks about this really interesting dynamic of all of this. Stranded existing homes that aren't on the market because people have too cheap a mortgage. At some point this might be a sweet spot for homebuilders in that that that inventory isn't coming on yet and yet there is this pent up demand that is enormous and I think we'll see easier regulations to build homes. So I'm kind of inclined to take a shot on the home builders. And they've come down a lot.
- [37:47]
Tyler Matheson
You want to know it's all good.
- [37:49]
Manawan Isaac
That's what makes markets, makes markets.
- [37:51]
Tyler Matheson
Two sides of the story here I just want to see. All right, coming up, high energy in 2025. Oil stocks leading the charge in the new year's first day of trading. So which names can keep powering higher? We will debate that when Fast Money returns. Welcome back to Fast Money everybody. Energy stocks powering higher today. The S and P Energy ETF up 1%. It was the best performing sector today. Oil and gas producers seeing some of the biggest gains with the XOP ETF locking in an eighth straight session in the green, longest streak in roughly a year. Those moves coming as Brent and West Texas crude prices each rose to their highest level since mid October amid a more optimistic outlook for demand in China and maybe a chilly, chillier weather season. Guy thoughts on energy Karen's been talking.
- [38:47]
Manawan Isaac
About Cheniere LNG for years and it's had a little bit of a pullback off an all time high the last couple of weeks, but it's back on its horse today and NAT Gas is one of those stories that nobody's talking about. But it's more than doubled now since the spring, deservedly so. So the NAT Gas is in play without question. Those names work so deviant in the mix as well. But I think you're right to point it out. I mean crude oil is surprising people, I think to the upside. It's been steady over the last couple of weeks and I think there's just a matter of time before these energy stocks start to play catch up into the valuations. Exxon actually traded lower today, probably on the back of the broader market. But I still like energy here.
- [39:23]
Karen Feinerman
Energy, I do like energy but oh my God has it been frustrating for a couple of years and there's so many reasons to think think it would be good with, you know, Ukraine, Russia, still unresolved tensions in the Middle east, you know, GDP being good here, but it hasn't seemed to matter. At some point I thought value will out. I thought that would happen last year it didn't. Maybe this is the year guy.
- [39:46]
Manawan Isaac
Maybe, maybe it's in your acronym.
- [39:49]
Guy Adami
I feel like the moves that we've seen today are indicative of flight to perceived safety and I think valuation and free cash flow generation are those perceptions of safety. We saw a similar situation with consumer staples where they weren't really offering much return but they were, they were a perceived store of value and I think that could be a lift for the energy sector. I mean clearly it's under owned, it's underperformed, but I think that's what I think that's what we saw today, right?
- [40:17]
Tyler Matheson
All right, thanks man one Coming up, two fast movers heading in different directions today. The calls on Uber and so far that powered the pop and drop more fast Money into Welcome back everybody to Fast Money. We've got a call of the day on Uber. Shares are up nearly 5%. Goldman Sachs added The ride share stock to its conviction list. Analysts saying the company is still on track to meet its growth targets even amid autonomous vehicle hype. Lyft also rising today, nearly 6%. New story from the information this afternoon suggesting that Amazon could acquire the company this year with the tech giant looking to scale its own robotaxi business. Courtney, thoughts on this space, particularly Uber or either one of them?
- [41:14]
Courtney Garcia
Yeah, actually I like this call on Uber and I think this is something that has gotten lost in the conversation of autonomous vehicles and people are saying, oh, that's going to be the end of Uber. But I think actually in the short term that's not going to be an issue for them. And I think longer term they're likely going to be able to integrate it into their platform and could be a benefit for them. And I think they've been really strong showing how profitable they have been, especially in an economy where the consumer is tight and they are starting to pull back on things. They have continued to show that they are a company of strength here. So I think looking at this as an opportunity could absolutely.
- [41:42]
Tyler Matheson
If my son's bills are any indication, Uber is going to do just fine. He's standing over there now. Mac is here.
- [41:51]
Manawan Isaac
Mac, what are you doing?
- [41:52]
Tyler Matheson
Mac, you use Uber?
- [41:54]
Manawan Isaac
Chat about that.
- [41:54]
Tyler Matheson
He uses Uber.
- [41:55]
Manawan Isaac
Craziest thing.
- [41:56]
Tyler Matheson
He uses Uber a lot. Maybe wandered off. He's probably in an Uber or something.
- [41:59]
Manawan Isaac
It's on your credit card.
- [42:00]
Tyler Matheson
You bet it's on my credit card.
- [42:02]
Manawan Isaac
I mean you can see where he's going at least.
- [42:03]
Tyler Matheson
Well, I know what he. I know when he's going. I don't see really where.
- [42:07]
Manawan Isaac
Real quick, I'm with Courtney on this one. The move from 87 to 60 pretty much in a straight line was way overdone. And if you look at where it held Uber, the August 5th low, so good for Goldman Sachs on this call. And I actually think Uber's one is going to surprise early this year as well.
- [42:21]
Tyler Matheson
All righty, let's move on to another big analyst call so far sinking 8% after KBW downgraded the stock to underperform. Analysts saying the Fintech firm's valuation looks overstretched. Also raising some concerns around whether the company can meet its long term growth targets. Bono, and what do you think here on SoFi?
- [42:38]
Guy Adami
Well, this is a name that I like. I like the fact, much like American Express, they seem like they're catering to a younger cohort. And I think that's important that you get the pulse of what that consumer is doing. But the valuation I think it's 70 something odd on a forward basis, like 127 on a trailing basis. It's hard to argue it based on.
- [43:00]
Tyler Matheson
Valuation with the overvaluation. You go argument there. All right. All right. We're going to take a quick break, come back, do some final trades in just a minute or so. We'll see you after the break. All right, time, folks, for our final trade. Let's go around the horn. We start with you, Bonoin.
- [43:26]
Guy Adami
Cybersecurity. The need for it is not going away anytime soon. I think it's approaching a level of support. Palo Alto Network.
- [43:33]
Tyler Matheson
Alto Networks. Karen, your thoughts?
- [43:35]
Guy Adami
Yes.
- [43:35]
Karen Feinerman
First of all, thanks for being here.
- [43:37]
Tyler Matheson
Thank you for having me.
- [43:37]
Karen Feinerman
Nice to have you. You know, hope springs eternal. It was one of the X's in my helm trade, Energy xle.
- [43:45]
Tyler Matheson
I still like it.
- [43:46]
Courtney Garcia
All right, Court the home builder. As we talked about earlier, I think there's some pros and cons here as I would take a look at this. XHB is the ETF you can use here.
- [43:53]
Tyler Matheson
All right, that's the home builder.
- [43:55]
Manawan Isaac
We have the Matheson family watching their husband slash dad iron. It's in real life. In real life and it's great starting the year with you.
- [44:05]
Tyler Matheson
Good to be with you. Great to be with you guys.
- [44:08]
Manawan Isaac
Bristol Myers, your biggest.
- [44:10]
Tyler Matheson
Thanks for watching. Fast Money, everybody. Guy, thanks for the coffee. Appreciate it. Mad money starts right about now.
- [44:18]
Courtney Garcia
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 forward/fastmoneydisclaimer.
- [44:58]
Tyler Matheson
Global markets up to the minute. Front page news. Wake up to Frank Holland at Worldwide exchange, weekdays, 5am Eastern. CNBC Live. Ambitiously.