Guy Adami (2:37)

Well, I will tell you, Tim Seymour has been talking about the semis, the importance of it. I'll say this. You know, today was a day where the market reversed. I don't know, noon ish or so S and P's were trading lower. It made a new all time high. You have this government shutdown. You have all these things in terms of valuations extended. Today was a day where the market could have really given it up and it didn't. And it went back to exactly what you're talking about, momentum. Now why is that? I wish I could answer. I think part of it is October. The chase is on. People behind the eight ball have to put money to work. And I think to a certain extent you're seeing that and valuations be damned. You know, I'm, I'm surprised at how strong the market was in terms of those stocks, but nothing should surprise me at this point.

Mike Khouw (3:18)

Yeah, as far as the momentum. Right. So we're seeing maybe some slight underperformance from that MAG7 in some of the groups that you guys are talking about are taking off. And then a Robinhood is kind of interesting because that's where all this stuff is kind of traded on. Right. I look at today and I say to myself, here's another situation where one of these Neo clouds gets more detail about a contract from a major hyperscaler as Microsoft and Nevius. Nevius rallies like crazy. We saw this with Core Weave earlier in the week when they got this contract from Metta. So you're seeing this sort of performance. But Metta and Microsoft did not go up on the days that they are announcing those sorts of contracts. So to me it feels like that sort of trade is getting a little bit long in the tooth as you see some of this money move, you know, towards these other groups. You saw crypto, obviously, you know, bitcoin's about to make a new high. But what also stuck out to me was recent IPOs. If you @ bullish, you look at circle, they're obviously crypto related. They had big days, so there's a lot of stuff going on. Everyone wants to keep making this comparison to the tech bubble that we saw in the Internet late 90s. I think it feels a lot like 2020 and 2021. There's a lot of comparisons right now.

Dan Nathan (4:20)

Well, it feels like FOMO and it feels like FOMO in anything digital and it feels that this is a Place where, you know, on a day or in the last 24 hours, we put a $500 billion market cap on OpenAI. It's the largest private company in the world. They raised 6.6 billion on an employee sale. And you have a couple other stories both in that market. There's even a, you know, there's a German I play Depot, which is talking about an IPO in the US and it's just interesting that the rest of the world is bringing some of this stuff. You have Samsung and Hynix also on a very big deal also in cooperation with the Open Air. And it does by the way, remind you that Samsung really is maybe in terms of memory chip in this space, the big player to watch. And I think a lot of U.S. investors, because that stock does not trade here, don't have a lot of exposure to Samsung, although you can get it. So that's what today feels like. And it's of course framed around this second day of a government shutdown that we spent a lot of time in the last week, but really in the last 48 hours understanding what this means and what it doesn't mean. What it doesn't mean is that, you know, the conflation between this and a debt ceiling dynamic, in other words, not, you know, that was, that was put aside when in the big beautiful bill, there is no debt ceiling issue. The treasury is not going to have any issues continuing to issue. And it's really just a question of how much transparency or lack of transparency is going to hold the Fed back from doing what they want to do. We're not going of a payroll number tomorrow. We're going by, you know, second derivative type gauges on a labor market that doesn't look so strong. So right now that's probably, I know it's crazy, but it's probably good for equities.

Mike Khouw (5:49)

Yeah. So we're only talking about public equities right now. You just mentioned Open air. Half a trillion dollar valuation. Here's one thing I think is really important here. So in the past cycles, you know, if you worked at a private company, a startup, you really didn't have the opportunity to sell secondary. Right. So think about, there are hundreds, if not thousands, thousands of these tech employees are able to sell when these valuations are getting so big and so Open Air, why did it trade at a half a trillion dollars, say because insiders and you know, employees and founders, they're all being able to sell $6.6 billion. Just think of that as being extracted from a company that is going to lose maybe $13 billion this year. They're going to make maybe four and a half, five. I don't know what the number in revenues, it's like between 5 and 10 or something like that. And these folks are just taking money out of the, you know what I mean? Where's that money come from? VC funds that raised it from pension funds that raised it from sovereign wealth funds that raised it from, you know, wealthy individuals. And you see this money that's being circulated around and it's kind of an interesting thing to think about here because in past cycles we really haven't had that. There's been these lockups. You've got to wait until the IPO and who knows what the heck is going to happen after that.

Melissa Lee (6:57)

Yeah. Julie Beal, what do you make of the markets movements today? And do you think that it's a statement on. On where valuations are in some of the most favored sectors out there like big cap tech?

Julie Beal (7:06)

Yeah, I think that people are continuing to try to find opportunities to make money. And if I think about most of the managers, the professional money managers that are out there, most of them are lagging their benchmarks. If they're in small cap, they're lagging them by a lot. And I think that what they've decided to do is capitulate to where the, towards the momentum, towards the high beta, towards the non earners. And I think that that really introduces a little bit of risk into the whole system because people are really chasing after a lot of companies that don't have the same quality as the mega Magnificent Seven. You can ignore everything in AI and the Magnificent Seven and Facebook is still an excellent business, a very high quality business. That's a little bit. My concern is that people are just assuming if it has the AI it's going to be quality. And I'm not sure that's going to be the case.

Melissa Lee (7:53)

Meantime, we are just ahead of earnings season which will start soon. Banks will kick it off and banks have been notable laggards for the week. And you're pointing this out on the call today.

Dan Nathan (8:03)

Yeah, it's just, it's interesting because we had this barbell kind of place where I mean if banks were value and they' not relative to themselves but there's certainly a place where you put your growth on then you put your other kind of more value play. Companies that were getting tailwinds from both policy getting tailwinds from their div plays. We've talked about banks quite a bit, so that story is interesting. To follow it. Are banks sniffing out some sense that the economy is weakening a little bit and that the payroll numbers are starting to possibly. The other just thing I think is critical about markets, not only the seasonal factor of where we are going to be in this quarter, it's rates. Unless something happens, this is when you not only catch up, but you try to throw a lot of extra chips on the table. There's $3.9 trillion of money market chips that I think are going to get maybe not all put on the table, but as rates have come down, equities are going to continue to be a more attractive allocation for people that frankly don't feel the same way about being so defensive as they did when they put a lot of that money in money markets. So I think a lot of that money will find its way into the equity market and I think it's sooner than later.

Melissa Lee (9:06)

Here's an interesting. Would you rather. I love this game, markets at record closes, record highs basically, or a CD that yields 4% here for the next six months? I don't like that.

Dan Nathan (9:19)

Patiently waiting to play.

Melissa Lee (9:20)

That's, that is the, that is the question. A lot of people are trying to.

Guy Adami (9:24)

Figure out the equity market from now, the end of the year or four or lock in at 4% or behind.

Dan Nathan (9:29)

What door number three. I don't want where they're.

Guy Adami (9:31)

Could be tuna fish.

Dan Nathan (9:32)

It could be like a mule or something.

Guy Adami (9:34)

I'll take the, I'll take the 4%, Melissa, and run like a thief because I do think it's something. Sometime in October you're going to see something interesting happen in the equity market.

Mike Khouw (9:43)

You tell me why the Fed's going to lower interest rates going forward. Is it because the labor market's weakening or is it because inflation's coming down and maybe the economy is doing just fine? If that's the case and yields are coming down, this trade that we're talking about, the gene trade, is going to continue to broaden out and it's going to go higher. So I think 4% seems like a sucker's trade.

Dan Nathan (10:01)

I think, I think I'm checking the equity market and feeling good that you guys are thieves and suckers. I mean, I, you know, I just feel as if weaker dollar, lower oil, lower inflation, money on the sidelines, a Fed that's accommodating policy, that's accommodating and trends around spend in technology and infrastructure that I don't see changing over the next few months. So for this quarter, I'm taking the money and running into the rounded out.

Melissa Lee (10:27)

What's your answer to the question?

Julie Beal (10:29)

I would probably take the 4%. I think that we have valuations at all time highs. We have something like 30% of CapEx being driven by four companies. That is a lot of concentration. That makes me nervous, not just in terms of the valuations in the market, but in terms of actually economic output that we see going forward.

Melissa Lee (10:50)

All right, for more on the markets, let's bring in Verdant's cio, Megan Hordeman. She joins us here. Megan, great to have you with us. I'm going to pose the same. Let's start off the conversation with the question I posed to the desk and that is markets at record highs here or a 4% CD for the next six months.

Tim Seymour (11:07)

4% CD all the way.

Melissa Lee (11:09)

Wow.

Tim Seymour (11:09)

I wouldn't be absolutely, you know, I've listened to the other guests. We've, we've talked about capitulation into year end, we've talked about momentum. I think we need to talk about complacency. And that's what we're seeing across a lot of different technical factors. You know, if there is chasing this market as quickly as the momentum can drive these markets up, as soon as that momentum loses steam, you're going to see those big names, the ones that there are actually profits on, they're the ones that are going to take a hit. And you're looking at Infotech and The S&P 500, these tech names, they're trading at 90% premium, their multiples versus the historical average. This just simply isn't sustainable.

Melissa Lee (11:49)

Let's say that one does believe that valuations are high and that it's not sustainable, but at the same time you believe that rates are coming down. I mean, is that sort of the one thing that will kill this rally if the Fed doesn't deliver what the markets are expecting? Because it does seem that if you think that inflation is sticky and the fit and the Fed is sort of pinned, they might not in fact deliver as many rate cuts as the market wants.

Tim Seymour (12:11)

Absolutely. And that's what keeps me up at night, is that this market is fully pricing in the fact that the Fed will just gradually cut rates at every meeting from here on out, that they'll save the labor market, that inflation is, we're completely behind us, that the Fed's going to just be satisfied with a 3%, you know, maybe even 3% plus inflation rate. That's just simply not the case. So this market where we are with valuations, where as extended as they are, it is there's so much more room for downside than there is for upside.

Guy Adami (12:41)

Understand that the bond market's a confidence game and I'm setting this up a little bit. Is a prolonged shutdown bond bullish or bond bearish in your opinion?

Tim Seymour (12:50)

I think it's bond bullish, but it's not bond bullish for the long run because what's going to end up happening to get the government reopened again, it's going to have to be some meeting in the middle. And meeting in the middle, what we've seen historically always means more spending. More spending means potentially inflation and that's bad in the long run for bonds.

Melissa Lee (13:09)

So if you are negative, Megan, on the markets or you're concerned about the outlook, how are you positioning your portfolio? What allocations go up which go down?

Tim Seymour (13:18)

So first of all, make sure you're in balance. We did a big rebalancing in our portfolios not long ago with the run we've seen in the market. Make sure you're where you want to be long term. We still think, don't forget the value side of the market. It has been all growth and if this is we do get an inflation scare, that value side should outperform. Look at the areas that are pricing in the worst case scenario or at least pricing in some downside risk. So if you're a long term investor, even though I'm negative on the market here in the short term, I'm negative on the large cap growth side of the market over the long run. If you look at the small and mid cap side of the market, there still is room there and there are some opportunities and valuations are very cheap. If you can withstand the volatility in the near term, those are some of the areas you can invest in for a longer, longer term horizon.

Melissa Lee (14:05)

Megan, great to speak with you. Thank you.

Tim Seymour (14:07)

Thanks.

Melissa Lee (14:07)

Megan Hornman of Verdance. Julie Beal Small and mid cap music to your ears.

Julie Beal (14:12)

We'd love to hear it. We love to hear it. And I agree. I think not only are the valuations more attractive, but the growth prospects too are better. If you looking at analysts estimates, they're showing much better growth and part of the reason is they have very easy comparisons. But I do think that most small businesses have now figured out inflation. They've now sorted out a lot of the labor picture and a lot of them are really starting to get their interest costs under control and at a much more manageable level. So I think that's, that's positive.

Melissa Lee (14:40)

Large cap tech.

Dan Nathan (14:41)

Yeah.

Melissa Lee (14:42)

And value don't necessarily preclude one another. There are overlaps, aren't there? Well, or not anymore.

Dan Nathan (14:48)

When I hear get back to where you want to be long term. And I, you know, I hear that there's something wrong then with large cap, you know, growth tech. I mean, that's where you want to be long term. That's where you should have been for the last 10 years and it's where you probably should be for the next 10. I don't have a crystal ball, but again, I agree with Megan in that you want to think about where you want to be positioned, not for the next quarter, not for where the momentum is, but truly what the allocation looks like. And it's probably a barbell, but large cap tech is certainly, that's the part that, that I don't think you can be without yet.

Mike Khouw (15:23)

Large stock kept the tech is waiting for a moment. It's kind of like that deep seat moment and it's going to be different this time. You know, that was late January. We had just such panic in such a short period of time. Nvidia closed down that day, 17%. And I think that what our last guest just talked about, with the level of complacency, though, that's when you do have those sorts of shocks in a way. You know, when we're in January, we're making new highs every day. We were just coming off a 25% year in the markets, actually two consecutive ones, that sort of thing. And I just feel like there's just so much confidence in this trade. And Tim, you are right. 10 years from now, this is good. We're going have 10, $10 trillion market.

Dan Nathan (15:59)

Cap company for 10 years or they're positioning for 15 or 20. So I mean, and a lot of.

Mike Khouw (16:04)

Them are going to be these names or this theme. You know, there's no doubt about it. But I guess in the, in the near term, I just do think there's a lot of risk. I'm not sure it happens, you know, between now and the end of the year, but sometimes soon.

Melissa Lee (16:14)

All right, meantime, Tesla shares tumbling even after beating the street's Q3 delivery expectations. Our Filiboe has more of the numbers and the investor reaction.

Phil LeBeau (16:21)

Phil and I think generally speaking, Melissa, most people look at these numbers and they say, well, we knew they would be better than expected. I'm not sure we expect them to be this much better than expected. Almost 500,000 vehicles were delivered last quarter. Go back to the first quarter. Remember when it was 366,000, the hand wringing. Oh, my Goodness, what's going to happen this year with Tesla? Is this the end of them growing their deliveries around the world? Well, clearly they've rebounded though the consensus as you take a look at annual deliveries, there's nobody who is predicting them getting back to where they were last year. Just under 1.8 million vehicles. Right now the consensus is just over 1.6 million vehicles. And I'm not sure that's going to change. There you go. That's fine. Getting the shot. I'm not sure that's going to change by the time we get more analyst estimates because the pull forward in sales in the fourth quarter here in the United States. So what do the analysts say about all of this? Generally speaking, most were very positive. There was CFRA reiterating a sell. But Ben Callo at Baird, he came out with a note today saying we now expect shares to outperform as Tesla is increasingly viewed as the leader in physical AI. Adam Jonas and Morgan Stanley also out with a note today where he, he basically reiterated all the numbers that were there and said the softening performance by domestic Chinese OEMs were a contributing factor to Tesla's performance. And that's true. China is probably not getting as much attention as it deserves. When you look at the, at the quarter from Tesla, as you take a look at shares, keep in mind that one number that came out today that didn't get a whole lot of attention or hasn't historically Melissa but should energy deployments, it was a record at 12.5 gigawatt hours for the quarter. And one thing to keep in mind Melissa, year to date for the first three quarters, Tesla has deployed more energy storage than they did all of last year. Speaks to the growth of that business.

Melissa Lee (18:18)

Wow, Phil, thank you. Phil LeBeau. Thanks to the cameo appearance made by one of our tech crew at CNBC, down 5%. What was that all about when we were just talking about how the momentum trade was on fire today? Tesla has been a momentum Stock is up 33% or so in September. Is it just the natural pullback on.

Guy Adami (18:38)

So I find that you know when deliveries are bad and I'm not saying this is felt but people come on and say you're missing the, you're missing the big story. It's not about deliveries, it's not an auto companies about all the other things. When deliveries are good, look at how robust deliveries are. You really can't have it both ways. And again, I'm not suggesting Phil's doing that. What I do think happened though, this is a Classic sell the news and was three or so weeks ago, Dan said, you know, bullish to bearish reversal. It happened. It's upsetting that we didn't test the levels we saw in December, but given now that this catalyst is out of the way, I think it's reasonable to think that 360 level, which was resistance for the longest time, becomes support on.

Melissa Lee (19:15)

The downside, a couple of other catalysts though, earnings being in October, October 22, I think it is. And also the annual general meeting, which is in early November, which is also seen as a catalyst here.

Mike Khouw (19:23)

Yeah, I think the auto business is just a pull forward. I mean, we know exactly and it's going to come against fourth quarter. There's just not a lot of demand right now. And if these guys don't adjust their pricing lower, Q4 is going to be a disaster. And a lot of their competitors are already doing it. So the AGM you're talking about, it's going to be about his trillion dollar pay package is about robots and robo taxi.

Melissa Lee (19:41)

But that's what people want. That's what the market cap is based on.

Mike Khouw (19:45)

I just like, you know, and he's sitting there, you know, Space Karen over there is tweeting about, you know, canceling your Netflix. So if I'm a shareholder, I'm not enjoying much of that space.

Guy Adami (19:54)

What is space?

Dan Nathan (19:55)

I don't know what that means.

Melissa Lee (19:56)

Dan has his own.

Mike Khouw (19:57)

We know that express oddities when someone's a Karen, you know what I mean?

Guy Adami (20:00)

Space cowboy.

Dan Nathan (20:02)

Cowboy.

Mike Khouw (20:04)

He's like whining about you want to.

Melissa Lee (20:06)

Trade Tesla, you name it. Automakers.

Dan Nathan (20:09)

Well, I'm just going to chime in with Guy on this one. I just think it's interesting that we call it an auto company when we don't. There's no question that the valuation has to be in all the things that you just talked about. And maybe some space cowboys as well. I just think you're in a place with the stock that I think in terms of the EV cars out there in the competitive landscape, they're not winning.

Melissa Lee (20:31)

All right. Meantime, we do have news on a developing story out of the White House, a host, a publicly traded company set to lose federal funding on cuts to green energy initiatives. Emily Wilkins is in Washington with the very latest. Emily.

Emily Wilkins (20:44)

Hey, Melissa. Well, yeah, we're getting some more clarity on which companies are going to be impacted by the White House. House's 8 billion cut to green energy programs that was announced yesterday. Right now, more than a dozen public companies are set to lose funding. They were previously awarded. This includes General Electric, Cummins, Xcel Energy, John Deere and Caterpillar. And you know, when the cuts were announced yesterday, Trump's chief budget officer, Russ Vogt, said the cuts would hit states with Democratic senators. But we've got actually, it's a, it's a number of pages, a list of all the cuts here, and some of them are going to be occurring the districts of Republican lawmakers as well. Washington state Governor Bob Ferguson, one of the states that was targeted, said in a statement to CNBC that it is outrageous that the administration is using a government shutdown to punish blue states like Washington. We're working with the attorney general's office to fight this illegal action. Now, the removal of funding was meant to put pressure on Senate Democrats to have them vote with Republicans to keep the government funded until November 21st. However, it doesn't seem to have worked yet. We've only seen three Democrats vote with Republicans. The number you need is 8. Next chance they'll have to vote is going to be tomorrow afternoon. Although, guys, at this point it does sound like they're likely not going to have the votes then either, meaning the shutdown is going to go through the weekend and into Monday. Melissa?

Melissa Lee (22:10)

Emily, in terms of these cuts, are these cuts permanent cuts or is it funding that would be restored if the government opens up again?

Emily Wilkins (22:18)

That's a great question, Melissa. I've certainly heard from some folks who have been chatting with lawmakers trying to make the case that this funding that they need to restore it, I mean, certainly lawmakers could try to negotiate as part of getting the government back open in restoring some of this funding. But at this point, I think there are a lot of question marks as to what it's going to take to reopen the government. And there's just no clear answer at this time.

Melissa Lee (22:42)

Right. And it's not just the states that are being used as a pawn cut. Publicly traded companies at this point are pawns as well. Emily, thank you. Emily Wilkins in Washington. Coming up, a Baba breakout. The Chinese tech giant leading the country's biggest names higher this week, whether it can power the emerging markets trade to new heights right after this. Plus fair. Isaac faring very well today thanks to a big change in how it interacts with mortgage lenders, the implications for consumer credit and the housing market next.

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Melissa Lee (24:51)

What made you confident that you could do something that hadn't been done before?

Halima Croft (24:55)

I have no fear of failure.

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Trailblazing women, changing the game One of.

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My favorite pieces of advice. Think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself.

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Melissa Lee (25:23)

Welcome back to Fast Money. Chinese equities seeing more strength. Signs of stabilization in the housing market helping boost sentiment. September home sales growing.04% year on year versus a more than 17% decline just last year. Last month, Alibaba helping lead the charge. Their shares up over 3% today, up 10% since Monday. This is a new high. Keeps powering higher. It's amazing. JP Morgan had a very bullish note raising the price target. Alibaba tonight today I should say overnight. And they cited of course AI and cloud growth there.

Dan Nathan (25:54)

Yeah, their AIM app cloud hit a record 360 million users. There is some concern that the valuation is is coming in. I I Bob it's the largest position in Naidevo. It's my largest personal position and I'm not selling. In fact I was selling some upside volume today. But I look at the valuation, I look at where they're now beginning to actually get some credit in terms of market cap for, for Ali Cloud and some of the other businesses. It's, it's nice that the Chinese economy may be doing what it's doing. The more important part about what the stock is doing is that Chinese stocks have been so under owned for so long and that this is a time when you're starting to see the, the global tech play again. We talked about Samsung, we talked about Hynix, we talked about other places to get the same exposure for these mega caps. And I think people are looking for that and they know that Alibaba is that region's at least representation of cloud.

Guy Adami (26:41)

K. Webb is a definite bearish to bullish reversal. We had talked about this for a while. It's happening in real time. I'm with Tim on Alibaba Can a pullback. You've seen pullbacks before but it's still relatively cheap. Obviously it's gotten a lot more expensive but, but something happened recently. I haven't seen this. Maybe Tim has, I'm not sure. But they repurchased 17 million shares. I haven't seen that in a while. Their share repurchase good for them.

Dan Nathan (27:05)

So at one point they had 30% of their market cap in cash on the balance sheet and before it went on this run. So there's a lot of cash. They were growing their payout levels, they're growing their dividend. It's not a dead play but yes, that's right.

Mike Khouw (27:15)

Is this just a catch up trade, A beta trade? You know these are US investors that are listed here and just looking for. We were talking about it. 30% of their market cap was in cash and there was nothing good to say about the economy, about our positioning with them, that sort of thing. How they were positioned against the US guys. But I guess these consumer oriented ones away from the cloud. Has anything really improved in the economy? Yeah, or PDD or you know that sort of stuff. I mean Ambassador.

Dan Nathan (27:39)

But in a world where you have less inflation. So if you're in emerging markets more broadly, first of all you have to get China. Right. But if you look at the EEF them it's double the performance of the S and P this year. And some of this is that you've got above trend growth, you've got lower, you've got lower inflation. We're about to talk about oil but lower energy input places, prices in certain places around the world and I think just underinvestment. So I think you stay in this trade, watch that weaker dollar. But if growth falls apart, you want to get out of the way here, let's be clear. I mean these, these parts of the world will underperform if the US Truly is going into a recession, inflation and it will go harder. So be careful.

Melissa Lee (28:16)

Julie, where do you stand on this trade? And you know, I'm curious, you know, you take a look at an Alibaba and take a look at an Amazon. Alibaba is trading something like nine turns lower than Amazon. So which would you choose?

Julie Beal (28:28)

I, you know, I would have agreed with him if we were talking about nine months ago in terms of if the growth starts to soften. But the thing is, is that as a result of all the Trump tariff actions, China has done a fantastic job reallocating a lot of its supply chain, reallocating a lot of its exports. And I think that they can continue to forge strong relationships with other countries and figure it out. So I think there actually is more potential for it to hold out. And again, we continue to wait and see if the consumer can really start to take hold. The biggest overhang with China is still to me, everything that's happening in real estate. But I don't think a 9 turn valuation differential between Alibaba and Amazon makes sense. So I would be a holder here.

Melissa Lee (29:11)

There's a lot more fast money to come. Here's what's coming up next.

Dan Nathan (29:14)

We're bringing energy to the energy trade. With crude oil falling to four month.

Mike Khouw (29:19)

Lows to kick off the fourth quarter.

Dan Nathan (29:21)

RBC's Halima Croft has the read on how this beaten down space could fare into year end. But first, fair Isaac bidding farewell to credit bureaus inside the major changes it's making to cut the middleman out of mortgage lending now. Next, you're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this.

Melissa Lee (29:50)

What made you confident that you could do something that hadn't been done before?

Halima Croft (29:55)

I have no fear of failure.

Tim Seymour (29:57)

Trailblazing women, changing the game.

Melissa Lee (29:59)

One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself.

Tim Seymour (30:09)

Life is short and you just got.

Julie Beal (30:10)

To think big to accomplish big things.

Tim Seymour (30:13)

Julia Boorstin hosts CNBC Changemakers and power players. New episodes every Tuesday, wherever you get your podcasts.

Melissa Lee (30:22)

Welcome back to fast money. Fair Isaac surging nearly 18%. Today, the company unveiling a new pricing model that allows mortgage lenders direct access to FICO scores by bypassing credit bureau shares of experian, Equifax and TransUnion falling on the news. Julie, you've owned FICO. You've called it your final trade a couple times here. So what do you do now?

Julie Beal (30:42)

Well, it's a little bit of a challenging situation, but basically what happened is we saw Bill Pulte come out in June criticizing FICO for raising prices on their scores. And their response today has been, this is what we're going to do. We're going to cut out the credit bureaus, go directly to trimerge, and as a result, the FICO score will be cheaper. You won't have the markup from the credit bureaus. And while I think this makes sense and is very clever, the thing is, is that they have to recreate the Rails for trimurge in order to get that data for a discount of $5. The thing is, this isn't really going to have a very large impact on the cost of a mortgage. Right. It's less than a percent of the cost of a mortgage. And the thing that's really important to recognize is that it's not the bank that pays that cost, it's the lender. And most le are not themselves asking for a discount on this FICO score. This is not the place to lower the cost of a mortgage. Right. And I think that's the real challenge is Bill Pulte is looking at the profitability of FICO's business and saying this is an unreasonable level of profitability. But the thing is, it's a very valuable asset. The FICO score is simplifies things and makes mortgage underwriting really quality. The protesters that are standing outside of Trump Tower right now are not protesting the high rents that they charge because everyone can recognize being on Fifth Avenue makes sense and is a valuable commodity. It's the same with fico criticizing the company over here as a result and trying to use that as leverage to lower the cost of homeownership. It isn't here. The place you could actually focus on is getting the fiscal budget under control so that interest costs could be lower and all of interest could be lower for everyone, including home buyers.

Melissa Lee (32:22)

Amen, Julie. But it's a good thing for your stock that you own. So where do you stand on this?

Julie Beal (32:29)

Well, I think that the challenge now is what is going to be the competitive response from the credit bureaus. I personally don't think this is going to change very much because I don't actually think that the trimer is going to spend the money to get this direct pipe into FICO to get the data. I think you will probably see some pressure on pricing in terms of the markup that Equifax and the others and their other credit bureaus charge. But I don't, I actually don't think it's going to create a whole hell of a lot of change. I think this is really about optics. Optics and how problematic is that that we're spending so much time and effort on optics for something that's really not very meaningful.

Guy Adami (33:07)

Getting a relief rally here off the back of a huge sell off over the last few months. It's a big valuation at these prices. It's I think 50 times next year's numbers. You know, maybe they have 25% EPS growth. You got to struggle with the valuation. I think Julie was fired up.

Dan Nathan (33:21)

I surrounded. I'll tell you why that was excellent up.

Melissa Lee (33:26)

Coming up, supply growth and demand worries teaming up to push crude oil to four month lows. So what does it mean for energy for the rest of the year? We'll talk to RBC Halima Croft to find out. More FAST Money into welcome back to Fast Money. WTI and Brent oil pumping lower today, both on pace for their worst week since late June as expectations of open OPEC plus boosting output and supply fears to the market. For more on the path ahead, let's bring in RBC Capital Markets global head of commodity strategy and CNBC contributor Halima Croft. Halima, great to have you with us.

Halima Croft (34:03)

Thank you for having me.

Julie Beal (34:05)

Melissa.

Halima Croft (34:05)

The same scenario as we had last month. We had a rally one week before the OPEC meeting. If we had talked this time last week we just been talking about brent prices approaching 70. Now we have another sell off going into an OPEC meeting over the weekend and I think market participants are very focused on a potential oversupply story. We continue to have strong US Production growth, non OPEC growth and the question is will OPEC add more barrels come.

Melissa Lee (34:32)

Sunday, what do you think happens?

Halima Croft (34:35)

I mean I suspect they're going to add a smaller amount than some of the stories that are out there. Reuters, without saying that they're considering a 500,000 barrel a day increase, we think they'll probably do an increase similar to last month, about 137,000 barrels barrels. And even within that number, I think you should really focus on the Saudi barrels. Most OPEC producers are already at maximum capacity. It's really only Saudi Arabia that has spare capacity. So the headline number will be bigger than basically what they actually bring on the market. But at this stage, a lot of people are saying that's already too much oil.

Dan Nathan (35:12)

Part of your magic is your politics of oil. And so, you know, OPEC obviously is the politics. But let's go straight to US Saudi, where are we? What's the quid pro quo? Who's got the, I think we know, I would guess the US Always as the leverage. And, but, but what is it that Saudi now wants from the U.S. what is it U.S. wants from Saudi? Oil prices are in a pretty good spot for Trump.

Halima Croft (35:35)

I mean, so you're asking is there a pump for Trump trade going on. The Saudis basically say they are not pumping to please President Trump. They say that they are essentially believing the market can take these barrels health, that they want to no longer be the guarantor for other producers to just produce it well on their back. But certainly if you're President Trump, things have worked out pretty well for you in terms of the OPEC increases. And the Saudis have done very well, I think in the negotiations with President Trump. They've gotten many of the key items that they were looking for as part of the U.S. saudi grand bargain. They've gotten support for civilian nuclear program. They're getting the Nvidia chips for their all important AI build out. They are getting defense equipment. I mean, again, they would say they're not pumping to please President Trump, but the relationship between the US And Saudi Arabia seems to be on strong footing with the Saudi crown prince set to head to Washington in November. Now this is of course problematic for the US Producers. And the Dallas Fed survey was out last week and a lot of US EMP executives expressed real angst about the current price environment, about US Policy when it comes to price and tariffs cracks.

Guy Adami (36:46)

It's not the golden age of refiners, but it's pretty close and without getting too in the weeds, crack spread since January, lower left, upper right, at levels we haven't seen in quite some time. The refiners are enjoying this. I guess my question is, can that continue?

Halima Croft (37:01)

I mean, sure, the refiners are enjoying it. I mean, again, I think the bigger question for the Trump administration is, is that they are putting a lot of exuberance behind the build out, having power for AI, having drill baby, drill. And the question is, is this the type of backdrop that the Trump administration really is setting them up for next year when it comes to US Production growth? I mean, this is a, a core policy of President Trump. I was with a number of Trump administration officials have been with executives and they all talk about the need for abundant US Energy to win this air race. And again, when I read that Dallas Fed survey and I read what US Oil executives are saying, they're expressing real concern about the business model for Shell going into next year.

Melissa Lee (37:49)

Halima, always great to see you. Thank you.

Halima Croft (37:52)

Thank you.

Melissa Lee (37:53)

Halima Croft, RBC is the Ian tube. Is that an energy Q2?

Guy Adami (37:58)

Yes. I mean, that's actually done. You know, it's been okay. You know, it's fun. Do we have time?

Melissa Lee (38:04)

Yes.

Guy Adami (38:05)

Ryan Sullivan had a great interview with the CEO of a night that you were not here. Believe Joe Kernan was here. The stock was trading 61. They wax poetic on how well the stock can do and how great things were over the next month and a half, the Stock went from 61 to 49 in a straight line. What's the point? No real point. I just thought I'd bring it up. I still like equity here, by the way, because it's Ian tube. It's the Ian tube.

Melissa Lee (38:30)

Like Julie, where are you on oil or energy?

Julie Beal (38:33)

You know, we continue to not be big fans of energy just because it's really hard to create a lot of differentiation. But I agree, you're really kind of in the crosshairs of the energy argument. It's problematic to know exactly how we're going to power all of these data centers. And it's just something that even though we talk about it all the time, I still don't think we talk about it enough.

Mike Khouw (38:51)

This is more question. So we have this strategic petroleum reserve. Remember the Biden administration tapped that. It's got capacity, about 700 million barrels. We're only at about 400 million barrels. Wouldn't this be like a good time to start filling that thing up? When you think about oil, you think about energy in general as a really important, important, I guess you'd say, pillar of the AI trade going forward.

Melissa Lee (39:12)

Coming up, Lithium Americas might not be the last name the US Government takes. Equities. Taken the comments from the White House, that could mean the wheeling and dealing is far from over. That's next.

Dan Nathan (39:26)

This December. Join the celebration in Times Square. CNBC opens its doors for an exclusive in person experience at the iconic NASDAQ market site in New York City. Fast Money Live trading the holidays. Join Melissa Lee and the team of traders live and on air for an all access celebration. Unwrapping trades, trends and tips to ring in the new year. Fast Money LIVE trading the holidays December 11th. Get your tickets now at CNBC events.com fastmoney.

Melissa Lee (39:58)

Welcome back to Fast Money. The Trump administration looking to strike deals in up to 30 industries before the midterms, according to a new report. CNBC's Eamon Jabers has more. I guess this is the tip of the iceberg. Intel, Lithium Americas, etc.

Eamon Jabers (40:14)

Yeah, that's what I'm hearing, talking to White House officials that there's more of this coming where the White House is going to force companies to turn over an equity stake in the company or a revenue stream from the company or a percentage of that revenue from the company. The president likes this way of being and we're told that there's more coming. Don't know exactly which companies are in the mixer here, but I had the opportunity yesterday to talk to Caroline Levitt at the White House press briefing and just sort of of ask her what's the overall principle here? What is the administration trying to do? Here's that exchange. Yesterday your administration took a 5% stake in lithium Americas and a stake in the mine that they're working on. And you've taken stakes in other companies and revenue streams from other companies. Can you articulate the broader principle here? When does the administration see it as appropriate to demand equity stakes or revenue streams from American companies and one other company are you going to be demanding those from?

Tim Seymour (41:07)

The president is focused on how can the United States government make more money? How can we make our country wealthy and rich again?

Melissa Lee (41:13)

And cutting some of these unique, creative.

Tim Seymour (41:16)

Deals with companies around the world and here at home is just one way the president is seeking to do that. And I know the Department of Energy.

Melissa Lee (41:23)

Just announced this new deal. It's another great deal for the American.

Julie Beal (41:25)

People and our government.

Eamon Jabers (41:28)

So, Melissa, the administration is looking at this in just in deal making terms, right? The opportunity to make more money. And so I think what that leads to, if you're looking for, you know, which companies are next, you know, it's companies where the administration has leverage. Does the company need a license? Does it need natural resources from the government? Does it need permission from the government in terms of import, export, that sort of thing? That's where the administration is going to have leverage. And what the White House is saying is they're going to continue to force companies to turn over a percentage of their equity, a percentage of their revenue, revenue on a deal by deal basis because they're concerned about the deficit and they're concerned that the United States doesn't have enough money coming in. And so they're going to continue to do it.

Melissa Lee (42:08)

Eamon, you use the term turnover equity. Turnover revenue stream. Turnover revenue. I get turnover equity is something completely different. So we're not just talking about. It doesn't sound like we're talking about wheeling and dealing in the sense of, you know, from an investing standpoint you're going to put money in or are we in?

Julie Beal (42:25)

We.

Melissa Lee (42:25)

Where is this money coming from?

Eamon Jabers (42:28)

Yeah, well in the case of Lithium Americas it is money, right? I mean what Lithium Americas is looking for there is a loan guarantee, a loan from the federal government. Right. And so the federal government is saying we're going to loan you this money to develop this non economic resource. Right now because of Chinese dumping, we feel that lithium is not priced right in the United States right now. So even though you couldn't really afford to do this on your own economically get the financing for it, we're going to finance that. But in Exchange we want 10%, right. I mean or 5% in this case is what it ended up being. I think that's the deal that a lot of companies are going to be looking at.

Melissa Lee (43:04)

Yep. Amen. Thank you. Amen. Jabbers so it's not necessarily strategic reasons apparently according to this report, you know, up to 30 industries that covers a lot of ground there. And in terms of the administration having leverage over companies, they have leverage over every single company here.

Dan Nathan (43:20)

That's, that was, that was one of the first things, you know when I hear that is the government has leverage over you in every single way. And we've seen it now in the tariff dynamic and that leverage has shown companies not giving up an equity stake but certainly playing ball in a number of different ways. I've got at least a surprising for me that I'm thinking this way about. Look, I don't like these headlines. As someone that's invested around the world, when a company gets nationalized their valuation gets chopped up into very small pieces. But I will say that this is different than the government having a big, big, big stake in Petrobras because that was often, you know, where were they going to spend the next awful dollar of capex in the case if you're talking about companies that at least the ones we've talked about and Intel's been like this too. I actually think you're talking about real world companies that actually will benefit from this, this backing even though it's unorthodox.

Melissa Lee (44:08)

Coming up, Boeing on the move in the after hours on a report at 777X jet will not fly until 2027. Inside the the latest setback that could cost the aerospace giant billions. That's next. More fast money into. Welcome back to fast money. Boeing up as much as 1% after hours. The planemakers Triple 7X now reportedly slated to fly in early 2027 instead of next year, which could cost the company billions in accounting charges, which today's slight lift off the stock is up over 22% this year. Julie, what do you make of this report?

Julie Beal (44:44)

Yeah, I think what's really interesting is we have President Trump out there selling these jets, doing amazing, very impressed with that. But the thing is, is that the company needs to be able to execute on this. And you know, this jet is already five, six years delayed. It has a lot of demand for it, but their ability to be able to execute and really deliver on all of these promises, it really calls into question both their reputation and the ability really to deliver. So I worry a lot that this company really is writing a lot of checks it can't cash.

Guy Adami (45:15)

I think 265, December 2023. That's been the level that I think it's got a bullseye on. I think it's going to trade there by the end of the year.

Melissa Lee (45:22)

Up next, final trades, final trade. Julie Beal.

Julie Beal (45:33)

I think all of this noise with FICO and TransUnion is overblown. So I'd be interested in TransUnion today.

Dan Nathan (45:38)

Staying with the digital FOMO Coinbase.

Melissa Lee (45:41)

Dan?

Dan Nathan (45:41)

Yeah.

Mike Khouw (45:41)

Your maple bear has a little more.

Dan Nathan (45:43)

Room to run here.

Guy Adami (45:44)

You might notice tonight I was a little bit sad. I think we all are. And that's because Alexa Lamonaco, who's been with us now for the last few months, our final page here at CNBC's Fast Money. And you know what? We went out on a huge high note.

Melissa Lee (45:57)

Yes.

Guy Adami (45:58)

Love her, Love her family. It's been a pleasure working with her. Come on, Alexa.

Dan Nathan (46:03)

Thank you, thank you, thank you.

Melissa Lee (46:06)

Do you have a trade?

Guy Adami (46:07)

Oh, I'm a little welling up here.

Melissa Lee (46:09)

I know.

Guy Adami (46:11)

Lululemon. I love their underwear.

Melissa Lee (46:13)

All right, good luck, Alexa. Have fun on the Today show. Thanks for watching. Fast Mad Money with Jim Cramer starts right now.

Tim Seymour (46:21)

All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of cnbc, NBC universities, their parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer Taylor Swift just.

Melissa Lee (47:02)

Came off her record breaking eras tour.

Mike Khouw (47:05)

What can she do to top it?

Phil LeBeau (47:06)

The pop superstar announcing a brand new album.

Julie Beal (47:09)

Literally everything she touches.

Dan Nathan (47:10)

People won't know about the Swift effect.

Mike Khouw (47:13)

Cnbc premieres Saturday, October 4, 10 Eastern.