← CNBC's "Fast Money"
CNBC's "Fast Money"
Meta Scrapping Moderation.. And Charting Rotation Opportunities 1/7/25
00:43:52
Meta scrapping its third-party fact-checking program, as the social giant moves closer towards an ‘X’ style platform. Why CEO Mark Zuckerberg is calling the recent election a ‘tipping point’ for the move, and how users will respond to the changes. Plus From Leaders to laggards. Why Katie Stockton sees big opportunity in some beaten down spaces as a rotation gets underway. Fast Money Disclaimer
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- [00:01]
Katie Stockton
What does it mean to be rich? Maybe it's less about reaching a magic number and more about discovering the magic in life. At Edward Jones, our dedicated financial advisors are the people you can count on for financial strategies that help support a life you love. Because the key to being rich is knowing what counts. Learn more about our comprehensive approach to planning@edwardjones.com FindYourRich Edward Jones Member SIPC Weekdays.
- [00:32]
Frank Holland
At 5am Be first on world markets, first to the global business conversation.
- [00:37]
Melissa Lee
Get a jump on the investing day.
- [00:39]
Frank Holland
Every day with Frank Holland.
- [00:41]
Karen Finerman
Success starts early.
- [00:43]
Frank Holland
Worldwide exchange, 5am Eastern. CNBC.
- [00:48]
Melissa Lee
Live from the NASDAQ markets in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight, A late day sell off as yields hit 8 month highs and Nvidia sinks from records. What sparked the moves and how to trade the action coming up. Plus, that is moderation moves. Mark Zuckerberg making a big change to how it monitors content, the facts on getting rid of fact checkers and the impact on the stock. Then caveat emptor. That is the warning from one top analyst in the market's biggest stock while he is raising the red flag. And later, fighting words from the sea of US steel. McDonald's debuts its McValue menu. And we reveal the winner of our 2024 Acronym Challenge. I know you've been waiting for that one. I'm Melissa Lee coming to you live from Studio B at the nasdaq. On the desk tonight, Tim Seymour, Karen Feineman, Steve Rosso and Katie Stockton, founder and managing partner at Fairlead Strategies. And as we mentioned, markets selling off late in the day, closing near their lows of the session. The Nasdaq down nearly 2%. The Dow also going negative on the year. The pressure coming as yields spiked on new economic data. But it wasn't just rates on the move in video plunging after hitting a new record early in the session. CEO Jensen Huang just wrapping up an analyst Q and A in the past hour after unveiling his AI roadmap. Christina Parts Navalis joins us now with all the highlights. Christina, there are a lot of highlights.
- [02:02]
Christina Parts Navalas
Let's start with supply and demand because that was the first question that you got from Stacey Rasgran who's often on our network. And they confirmed that they're not changing their guidance. They are shipping both Hopper and Blackwell this current quarter, which fiscally ends in January, the end of January. They said that they probably will do a bit more, but they weren't going to Change the actual number for guidance. And they said, supply will always be a situation. There's nothing we can build that will be unlimited. And. But so that's for the Hopper stuff, because everybody really wanted to hear about the data center sales that we didn't really get. In the keynote yesterday for Future Growth, they spoke to two major drivers. The first one is general purpose computing is dead. Hand coding is dead. He's saying that all of these data centers, which we've heard before, need to be updated. And he was, dare I say, a little bit not aggressive, but maybe more affirmative in all his commentary, saying that if you're not putting accelerated computing and machine learning, you're doing something wrong. It makes no sense. He went on to say, if you don't have just AI within your system, all of his software engineers need to use AI chatbots. They mandate it. And that was a quote. So he went on to say that if you're not incorporating this into your business, into your cars, into your manufacturer, then you're behind and you are going to lose. That was the tone that I got from this entire Q and A.
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Melissa Lee
He talked yesterday in the keynote. And what's interesting is that he had this Q and A, and yesterday he had the keynote. Analysts were very bullish in reaction to the keynote. And one of the, you know, there are a couple of areas. Robot, which, who knows how commercial that can actually be. And then the GPUs for the laptop. And I was wondering for the laptop, that didn't seem necessarily like it should be a growth area. I mean, who wants to be in the PC market at this point, unless it's a corporate PC.
- [03:47]
Christina Parts Navalas
Well, I guess the argument he would make is that they're creating these personal supercomputers so that researchers, students, eventually can do everything, you know, in an office, in a research facility or university for the actual laptops. He did. And this was an interesting line. He said, I'm going to have to wait to tell you. When he was asked specifically on the Q and A part if he was going to be entering or expanding within the PC market. So that leads me to believe that maybe he is going to announce something at GTC in March or at Computex in Taiwan. But it is a market that won't move the needle for them that much. Considering Data Centers contributes 88% of total revenues. Gaming is about 10%. You know, PCs, we know the refresh cycle has been very slow. Look at amd, look at Intel. So it's a good point, Christine.
- [04:35]
Steve Grasso
Just the announcements were, I think as bullish and positive in tone as you could have expected. It seems like a lot of these dynamics and things were discussed are somewhat long tailed. So as we think about what's in it for the market right now for a stock that is, you know, is it priced to perfection? I don't know. I actually think that it's not priced perfection, but I know that that's an easy criticism that there's not a lot here that really is for here.
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Christina Parts Navalas
Yeah, that was only two notes that I read today. Then one of them pointed that it was not going to have a near term impact on models because it's really contingent on datacenter revenues and all that. And to your point, maybe that's why the stock did sell off 6% but then the bulls were arguing no, think of it, the company just hit an all time high. Why are we so aggressive to find or you know, trying to pinpoint a reason as why it was down so much, why it was a laggard on the Dow, why it was a laggard on the nasdaq? I think though there is some truth to it. That's what was missing yesterday and it is the hype. But he in his commentary, this is the future. And if you're not getting on board right now, if every single EV is not going to be autonomous and that's literally what he said, it's not going to sell.
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Steve Grasso
American snakeskin jacket, by the way.
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Christina Parts Navalas
Oh yeah, Tom ford. Tom Ford, $8,990. It's currently on sale on the website for the Q and A. He did shift away from the patent. No, I don't know who you're hanging out with really.
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Steve Grasso
There's some tech rose that made a.
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Christina Parts Navalas
Lot of money in the stock, I think a lot of millionaires at Nvidia, I think according to a Forbes article. So very possible. But I think we can get the imitations maybe on Sheen or temu.
- [06:08]
Melissa Lee
But.
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Tim Seymour
So a couple of things stood out at me. Talking about the chat bot, the agents, all of that. But then the shift into the physical. How manufacturing writ large will be absolutely transformed and how much learning needs to go into that. Which seemed to be sort of setting another stage for maybe not to your point right now, but for in not so long and for a long time. That's going to need a tremendous amount of compute.
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Christina Parts Navalas
Yeah. That would utilize their Omniverse product that they're expanding and what that creates is to a virtual world, to your digital world. So if you're a manufacturer or if you're a car you can literally simulate the real world on your computer and not have to actually stick the car on the street. And you can figure out all of these possibilities. And so that's how you'll get all of the synthetic data. And so to your point, that hasn't really evolved yet. So that'll be a whole other level of extra data for large language models to train on. And that's the argument for those that say that scaling hasn't hit a peak and that scaling law is another debate. When you get a little technical, there's not enough data. Well, in this case, Omniverse is going to allow them to provide all of that with the digital twin. And you can do this in a manufacturing warehouse as well. A lot of companies will eventually have to deploy this. So you can see where your box is moving. You know how productive this section is compared to this section. The speed of which products are being executed out on a Runway. I don't know what the word is.
- [07:38]
Tim Seymour
Manufacturing line.
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Melissa Lee
Conveyor belt. Conveyor belts.
- [07:41]
Christina Parts Navalas
Thank you.
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Melissa Lee
All right, Christina. Thank you, Christina. Parts of Navalis. All right. Record high reverses closing. The lows of the day. 2 and a half times average daily volume.
- [07:49]
Katie Stockton
Katie, you know, you never want to see what we call an outside down day, which is what that was. It's an all encompassing price bar that takes out the previous day's low and then you see a weak close. So that is a short term setback for Nvidia in particular. We did also see it, you know, sort of widely among technology stocks today and we feel like the market with that in mind is somewhat feature fragile and we'd just be really mindful of short term support levels. So for Nvidia, we can see some support around 134 in our work. Resistance is pretty evident, around 150 on the chart. And the stock has been losing upside momentum since the summer months of last year. But thankfully it hasn't led to a breakdown yet. So we're watching that support close.
- [08:34]
Frank Holland
So the 100 day is 132, the 200 day is 119. We're a long way from 119. But what in video could happen overnight? We're used to this one way moves. But I think what you were talking about, it's almost like Back to the Future. They're talking about what got them here. So gaming. We're not talking about their major customers anymore. We were talking about Uber and Toyota. Not Microsoft, not Google, not Amazon, not all the, not all the things that got everyone excited in the last Year, sort of what's a smaller piece of the pie. So Christina said Data centers are 88%, gaming is at 10%. So if you look at that, why are we concentrating on Gaming and PCs that are a very small piece of the pie and not the growth areas?
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Melissa Lee
To be fair, this is a keynote at the consumer electronics.
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Nick Setyan
Yeah.
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Melissa Lee
So the keynote could have been tailored for that.
- [09:27]
Steve Grasso
Well, it was client side stuff. Right. So. And which is a much smaller part of their business, which I totally. I think that's exactly who the audience is. By the way, they probably love the jacket there because that's the kind of people that showed up there.
- [09:37]
Melissa Lee
Vegas.
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Steve Grasso
But. But I think, I think you get back to. It's great to point out the charts. I think in fact we all would think about 2025 trying to look at through the lens of what happened in 24 first three months of the year of 24, we're all about semis. I think it's going to be another great year for semiconductors. I think it's a year where we're going to start to see the broadening of that semiconductor trade and we started to see that even with Broadcom as we got into the last couple of weeks of the year. But the trading action here is something to be worried about, especially when you think about how little cash. I think if you look at fund manager surveys the market overall has and how much mega cap tech led that spurt into year end, which we know stalled a bit. So I wouldn't be jumping off the train here, but I think you could be short term cautious.
- [10:23]
Tim Seymour
You don't look like Guy, but you sounded exactly like Guy with the outside reversal, the volume, all of that. So I get that. I mean I'm still, you know, I still think there's a longer term story here. So I'm staying in it. Nvidia sold off. It was, it started to sell off and we got that data at 10 o'clock which I think was important for the market. Not in a good way. Right. We get higher rates and then obviously, you know, future cash flows get discounted and become smaller. So that to me was a bit of a bummer. I think that rates sort of came back into focus again. They've been shift, you know, higher, higher and now, oh, is it really going to be a problem? I hope we see rates level off.
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Melissa Lee
Right. Let's get to that big move in rates today because it was a big move on the 10 year yield. The yield there touching 4.7%, highest level since the end of April, the move coming after the latest ISM Services data came in hotter than expected. The spread between 10 and two years now, the highest since May of 2022. So fears about inflation remaining out there as something for the markets to grapple with.
- [11:23]
Frank Holland
So we've all talked about this rates and if you're, if you have higher rates because of growth and you're looking at there's a reason why you have higher rates. There's a bullish reason, there's a bearish reason. But we often remember Kutty is still going on and Kutty is still supportive of rates. So you can't have cutting and cut on the other side. That's a push, pull or a tug of war. So I think the market is on pace to see Kutty end in March. That's where you could see rates sort of come back in again.
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Steve Grasso
I think that we should be talking about rates. I mean if you think about a 10 year auction where this auction by the way was pretty came out was fine. It was a non event in a world where it could have been eventful and yet we printed the highest yield since 2007. It's the first auction that's printed that high since 2007. We know back in April 470 was the close and that was the close to watch for today. And I think we're going to get there. I mean ISM Services, we know that's the biggest part of our economy was, was robust. The dynamics around the technical components though. And I think that's the part of this that, you know, I think Steve's also referring to. It's not just, it's not just about growth, it's not just about inflation. I mean there are technical components here and when we think about again the administration's what they've articulated in terms of policies, whether they're going to be and we've walked back tariffs and this and that. It is something that I think puts upward pressure on rates. Trump out there also saying rates are too high, far too high is what I heard, not too high so.
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Melissa Lee
Right. But we are in a different place in terms. I mean if we are worried about inflation remaining out there, the Fed is on a cutting path. They may be paused for a while but we know that the next move is most likely a cut by the Fed. So isn't that different? There's a different prism through which to look at this move in rates. Now, Karen, I mean are you concerned about this or. I am concerned.
- [13:09]
Tim Seymour
I don't. I think the Fed, what are we at now, two cuts is most likely one and a half in. And I was going to say they don't seem to be so committed to that. So. But gets back to your point, though, is it inflation for the good reasons or not? I think one of the things that we don't have a good handle on yet is productivity gains, if that can help. That could be the sort of. I don't want to say magic bullet, but that could help. Although I am concerned, we talk about all the time about this potential tail risk of a terrible auction and getting into a crisis.
- [13:39]
Frank Holland
Don't you have a power put again, if things get worse? Don't you have a. Don't you have the ability to cut rates in a more aggressive fashion?
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Tim Seymour
We saw in September, if we get higher, higher. Higher unemployment, higher inflation.
- [13:51]
Melissa Lee
They can't. But inflation.
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Frank Holland
Inflation comes from two things right now. It's energy and shelter costs. And the shelter cost seems like a cyclical battle because you need rates to come down for shelter costs to come down. But energy, I think will come down. So that'll be half.
- [14:08]
Steve Grasso
I think it's services. And again, the ism is what has people worried. I mean, if you think about some of the prints that we've been getting and when you look at some of the regional Fed surveys, when you listen to companies, it's really. It's not that there's a scarcity of jobs. It's that the wages and those dynamics. We have a big payroll number on Friday. I think wages are probably going to be kind of flat, coming in 0.3% or something, you know. But I do think that this is the part that we can't really handicap here. That's not coming down. They've been very sluggish. We'll see.
- [14:34]
Melissa Lee
All right. Meantime, Katie says it may be time to rotate out of last year's High Flyers and into the 2024 laggards for the technical take on this trade. Let's go off the charts, Katie. And certainly we saw some of that rotation that you're predicting today.
- [14:46]
Katie Stockton
Yeah, I would say that we're already starting to see this rotation. And first and foremost, it's come from software stocks. Those were among the biggest outperformers of late. And all of a sudden we've seen sort of a reversal, of course, in that relative performance. If you look at software versus semis, I agree with you, Tim, that semis may resurface as an outperformer. Now, in a more neutral tape, maybe that doesn't mean too much, but that relationship certainly seems to have shifted and that would be from one leading sector into a lagging sector like semis now. Also we're seeing it elsewhere and it's a bit more defensive in the rotation where health care, specifically pharma has caught a very short term bid and I think that's pretty interesting. Also in relative terms it seems to be occurring at the expense of the Mag 7 for one and also software and we're also seeing it in defense. So defense stocks which have really been under pressure both in absolute and relative terms have negative momentum and yet they're oversold and they've largely come into very strong support levels. So we're kind of interested. You see Merck, you know, inch above its 50 day moving average, you start to see some of these stocks find their footing and to us that seems to be a bit of a trade.
- [15:58]
Melissa Lee
And all this within the prism for you, that we are due for a correction in the first quarter?
- [16:02]
Katie Stockton
Yeah, you would expect to see those defensive sectors start to outperform at least in relative terms versus the S and P when you're getting into a more skittish environment like we believe we have right now. So we think that defensive positioning is correct on the sector front. But we've been recommending to our clients to be hedged. To be hedged from a top down perspective when you see the volatility pick up like it has done. And that doesn't mean you go by those pharma names necessarily, but you know, be more open to them as we see them find their footing.
- [16:32]
Melissa Lee
How are you hedging?
- [16:34]
Tim Seymour
Well, are you? Well, I mean I have some triple cues against what's pretty tech heavy portfolio. I have short bonds which I view as one of the big risks. But I was going to ask you a question about small caps. Do you see any hope for small caps?
- [16:51]
Katie Stockton
You know, the long term setup on the Russell 2000 index is pretty promising. We didn't see a decisive breakout to new highs. We did get those new highs briefly. But I think for now, while the relative performance may also improve there, we're starting to see a little bit of that. And it is timely seasonally to see that small cap effect or the January effect that tends to see small caps actually do better than large caps into February. And yet to me it's hard to make a strong case for them right now. In absolute terms the momentum has really faltered intermediate term behind the Russell 2000, but that's also shared by the S&P 500. So it's this broad based loss of momentum that we saw in December that I take issue with.
- [17:33]
Frank Holland
I always find that when you, when you hedge or when you go with the underperformers, you lose less money, you don't make any more money on a relative basis. The market comes in, everything gets dragged down with it. So I always think he said the best way to hedge is cash. And then you wind up seeing a rotation back into large cap tech again because energy 3% of market is not.
- [17:53]
Katie Stockton
Moving the market and tech has such a huge footprint. Right. It's become the most essential sector to the market and that's only grown as of last year. Last year was another year in which we saw those mega caps really take charge and outperform and that influenced the sector leadership big time. So we'll hopefully have a different year this year. I think with the breadth having shifted.
- [18:15]
Steve Grasso
Yeah, I think it's rotation for, not for rotation sake, but for fundamental sake. I look at the energy space and again, you know, oil prices have been largely very stable over the last 12 months. That's great for big integrated. And I think as you look to the higher quality names, there are places to play there. I think the, the farmer fallout both from the election dynamics and also just again you look at a Merck, it's had its test last year with Keytruda. You've got dynamics around valuation. But you know, J.J. to me is another name which had a lot of overhang from, from the, the cancer dynamics. But I look at names and I've certainly Tim Spizer is out there too. But Bristol Myers started to make a run towards the end of last year. These are names that I think are long term investors. They're paying really solid divs. It's not a reason to own a stock for me for some people it is, but that's what the rotation is about.
- [18:58]
Melissa Lee
There's a real story coming up. A rare sell call on Apple, why one firm is downgrading the tech giant and why they say no news might be bad news. That's next. Plus steel producers getting scrappy the lawsuit out of Nippon and US Steel after their blocked merger. And how fellow steel producer Cleveland Cliffs is getting roped in the details when Fast Money returns.
- [19:18]
Frank Holland
This is Fast Money with Melissa Lee right here on CNBC.
- [19:29]
Christina Parts Navalas
And now a next level moment from AT&T business.
- [19:32]
Steve Grasso
Say you've sent out a gigantic shipment.
- [19:33]
Christina Parts Navalas
Of pillows and they need to be there in time for international Sleep day. You've got AT and T5G so you're.
- [19:38]
Steve Grasso
Fully confident but the vendor isn't responding.
- [19:41]
Christina Parts Navalas
And International Sleep day is tomorrow.
- [19:43]
Steve Grasso
Luckily, AT&T 5G lets you deal with.
- [19:45]
Christina Parts Navalas
Any issues with ease. So the pillows will get delivered and everyone can sleep soundly, especially you.
- [19:50]
Steve Grasso
AT&T 5G requires a compatible plan and device.
- [19:53]
Christina Parts Navalas
5G is not available everywhere.
- [19:54]
Steve Grasso
See att.com 5g4u for details.
- [19:59]
Frank Holland
Global markets up to the minute. Front page news. Wake up to Frank Holland at Worldwide exchange weekdays 5am Eastern CNBC Live.
- [20:08]
Steve Grasso
Ambitiously Lee.
- [20:11]
Melissa Lee
Now to our call of the day. Moffatt Nathanson downgrading Apple to a sell Calling the iPhone maker decidedly unattractive. The firm cutting Apple's price target by 14 bucks to 188. That implies a 22% decline from today's close analysts citing rich valuations disappointing in the disappointments in the upgrade cycle. Among the downside risks they say that has the slowest growth but the highest PE amongst the MAG7 China problems, regulatory problems, the threat of losing the $25 billion a year that Google pays it for Search I mean it's a laundry list of reasons to be neutral to sell Apple here. Karen, what do you, what do you think?
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Tim Seymour
I agree. I mean I have a small position it should be either zero or much bigger but I agree those are all points we talk about all the time. You have valuation that's high and it's higher than it appears because we have this hardware software, you know services much higher multiple for the services that China is a problem. A big you know the new upgrade isn't really seem to be happening at all. There's not but it will only thing but I do think if they end up Google ends up not paying that somebody else will want to pay it. So I feel like that maybe that's much lower down the laundry list but kind of good for them. It's a, it's a bold call. I like it.
- [21:24]
Melissa Lee
Yeah, it really is.
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Steve Grasso
Well the title of the report is Caveat Emptor which is one of the great Brady Bunch episodes of all time folks. We just actually did it on the commercial because I was fascinated you did Greg, your dad was not, was, was not sympathetic at all and he shouldn't have been. I'm sympathetic to the Apple cause I think you know what would Moffat Nathan who we have we have a ton of respect for these guys. They're on our show a lot. I think Apple has not priced in a whole lot of anything. That's the flip side of this. I don't think Apple's priced in the the revolution. I think Apple will certainly be the platform in the way most People actually experience AI I think Apple's proven time and again that this really is that installed base that is the gift that keeps on giving. My goodness seems like someone me again it's quite the other side of this is. Can you not tell me that we haven't worried about Apple and China for a long time? Isn't that in the price. Don't we know what Apple's growth target is? Apple really has underperformed that group over the last couple.
- [22:22]
Frank Holland
You know what's not in the target? India, Vietnam, all things Thailand, Malaysia. All things that are the bullish call of them moving away from China or the dependency on China both for manufacturing and for consumption.
- [22:35]
Melissa Lee
Well the consumption doesn't. Doesn't offset the loss of consumption in China to Huawei and the other local brands.
- [22:42]
Frank Holland
Not yet but they have another. India is going to be India's number three right now or number four. Number three or four. It will be number two or three sooner rather than later. And then you have 2.3 billion of an install base. That's got to be worth something for Apple.
- [22:58]
Tim Seymour
I see. I'm not quite on board with and it's odd because we're fairly close together.
- [23:02]
Steve Grasso
Bring it about.
- [23:03]
Tim Seymour
Split them up three times earnings is not priced in for anything. If you think of the software portion which is only 30% the hardware is 70%. So the margins on. I mean the multiple on that. Let's say 20. That would be a really high multiple. Means the services multiple is trading much much higher. That seems like a lot is what.
- [23:23]
Steve Grasso
If I'm going to buy a software company and a services business with a high high multiple? I'm going to buy Apple's before I'm going to buy a lot. Look at the software companies and I won't refer to where the charts are but I think I'm paying more for Apple than anybody else. I'm not going to sit here and argue that Apple is cheap and relative to itself. It's kind of trading in line with where it's been for the last three years. I think about the drivers for the mega cap tech space around AI Apple's priced in zero of that.
- [23:50]
Melissa Lee
What do you see?
- [23:51]
Katie Stockton
Well I have to say it's nice to see a downgrade when a stock is near its highs right instead of after the fact after you've already seen that loss of momentum. So to me the stock is poised for a corrective phase but still within the scope of its secular uptrend and that should be welcomed by investors. It does look overstretched it does have some countertrend indications with validity for about eight weeks from here.
- [24:12]
Melissa Lee
Coming up, a steel skirmish. The lawsuits piling up after Biden blocked U.S. steel and Nippon's deal. What rival Cleveland Cliffs has to do with it next. Plus, major changes out of Meta, why the social giant is ditching fact checking and the new addition to the company's board that could really pack a punch. You're watching Fast MONEY live from the Nasdaq marketsite in Times Square. Back right after this.
- [24:38]
Frank Holland
Weekdays at 5am be first on world markets, first to the global business conversation.
- [24:43]
Melissa Lee
Get a jump on the investing day.
- [24:45]
Frank Holland
Every day with Frank Holland.
- [24:47]
Karen Finerman
Success starts early.
- [24:49]
Frank Holland
Worldwide exchange, 5:00am Eastern, CNBC.
- [24:55]
Melissa Lee
Welcome back to Fast Money. Another round in the steel skirmish. U.S. steel and Nippon suing the Biden administration after their merger was blocked. The company saying the review process was corrupted by politics and the deal was scuttled under false pretenses. US Steel CEO David Burritt had some choice words about the decision this morning on cnbc.
- [25:14]
Julia Boorstin
I mean, let's face it, God knows.
- [25:16]
Steve Grasso
That this process has been tainted from.
- [25:19]
Melissa Lee
The very beginning and we need to fix it. This should not have happened. But the lawsuits don't stop at the White House. The two companies also suing fellow steelmaker Cleveland Cliffs who had previously tried to buy U.S. steel in 2023, saying the company worked to block their merger. In a statement, Cleveland Cliffs CEO Lorenzo Goncalves saying the lawsuit is a shameless effort to scapegoat others for US Steels and Nippon Steel Steel self inflicted disaster. But really outspoken commentary. Yeah, he should be.
- [25:51]
Steve Grasso
And let's face it, it's not like there's a line around the corner for.
- [25:54]
Melissa Lee
Us, not at all.
- [25:55]
Steve Grasso
Okay. And it's also 1950 in this country where they made half the world steel. So I don't really understand this and I don't understand it from the geopolitical perspective in terms of Japan being an ally and a partner that I think we should show some faith in. But again, this was about making US Steel's aging plants and upgrading them and making them better. Cliffs doesn't even have the money to do that. So, you know, I don't know. I'd be frustrated too. And if I'm a shareholder, I think.
- [26:23]
Frank Holland
You'Ll see a bailout. And you'll see, you'll see Trump who came in and said, I'm going to.
- [26:27]
Melissa Lee
Be supportive bailout for this deal.
- [26:28]
Frank Holland
Well, he's going to figure out how to get him a billion dollars.
- [26:31]
Melissa Lee
It's got to be more than a Billion dollars. I mean, probably is going to put in six.
- [26:33]
Frank Holland
Yeah, that's what they were going to start to put in. So if, if you're going to see tax incentives, he'll do it through tariffs. He's going to do it through any way necessary. I do see why it's a critical industry. And yes, Japan is a major ally, but they weren't always a major ally.
- [26:50]
Melissa Lee
Japan with military technology, and we will not let them come in and invest in our steel mills on US Soil.
- [26:57]
Frank Holland
It's about unions, it's about a whole bunch of other things. But I do see the critical infrastructure. I do see the defense sector. And I'm a believer that both of them, both Biden and Trump got this one right. And I still believe I own steel and I believe that the industry will be however you manage it.
- [27:17]
Steve Grasso
The word bailed out, but Nippon Steel said they were going to make concessions on the employment side. They said they were going to not necessarily be laying people off. This isn't about union.
- [27:26]
Frank Holland
It's just about foreign. I think it's about foreign ownership, but.
- [27:29]
Melissa Lee
It'S about foreign ownership. It's about foreign ownership.
- [27:30]
Tim Seymour
I think. I mean, I think the reverberations could be much greater than just this one deal. I don't get that in the bigger.
- [27:37]
Melissa Lee
Scheme of allies can no longer come onto our shores and buy companies welcome.
- [27:41]
Tim Seymour
They're not welcome to help our. Right.
- [27:45]
Frank Holland
I also have a problem with China buying farmland next to military.
- [27:48]
Melissa Lee
China buying farmland is far different from Nippon Steel investing.
- [27:52]
Frank Holland
I don't think it's that much different. I don't think it's that much.
- [27:54]
Melissa Lee
China is not an ally.
- [27:55]
Karen Finerman
Why would we want.
- [27:55]
Melissa Lee
Japan is an ally.
- [27:56]
Frank Holland
Why would we. We want to put another country, whether it's an ally, whether it's an ally or an enemy. Why would we want to put another country in charge of our steel industry? It just doesn't make sense.
- [28:07]
Tim Seymour
We can't make everything ourselves. Right.
- [28:08]
Frank Holland
We can make steel ourselves.
- [28:10]
Tim Seymour
There's one. But they can help us, right?
- [28:13]
Frank Holland
They can help. I just don't want them owning it.
- [28:15]
Steve Grasso
I think there's been a lot of places where politics in Washington have jumped in and I mean, there was the old scenic deal back in the day with China. That made more sense to me, was the Keystone pipeline made no sense to me with Canada. I mean, come on, again, this is Canada. They're basically our brothers. So, you know, I think there are places where there's an overstep here in the eyes of politics that are just so misplaced. You'd think that with an eye on politics as usual being such a negative Paul in this country that someone would get the light on this.
- [28:46]
Melissa Lee
Coming up, Matta's New Year's resolution. The major changes coming for the social giant and why the state, why the site, I should say could start to look a whole like lot like X. The details on Fast Money returns. Welcome back to Fast Money. Stocks declining throughout the day and closing near session lows. The Dow dropping 178 points, the S&P down more than a percent and the Nasdaq leading the losses down nearly 2%. Shares of Carvana getting a boost up 5%. Analysts at RBC upgrading the stock to outperform it, upping the price targets. $280 up from 270, saying they see the recent pullback as an opportunity. And shares of Instacart parent Maple bear jumping after hours. The company set to join the S and P Mid Cap. I do Maple there. It's joining the Mid Cap index before the market opens on January 14th. Let's get to Meta's moderation moratorium. The Mag7 social media giant kicking off 2025 with some major changes, scrapping its third party fact checking program in favor of a community note based model like what X employs. It's also bringing back political content and adding UFC president and longtime Trump ally Dana White to its board. Julia Borson joins us now with more on this big shake up. Julia?
- [30:04]
Julia Boorstin
Well, Melissa Mehta says it aims to restore free expression and says it's replacing its third party fact checking with what they call a community notes model, which is similar to X's approach. The company is also allowing more political content on its platforms. It's removing restrictions on subjects including gender and immigration, with policy enforcement now focused on what they call illegal and high severity violations. Metta is also moving its trust and safety and content moderation teams from historically Democratic California to historically Republican Texas CEO Mark Zuckerberg, saying these changes will correct the censorship it mistakenly allowed on the platform. This is Zuckerberg's latest signal that he is eager to work with the Trump administration. Last week, Metta announced Joel Kaplan, a former Republican staffer, would replace Nick Clegg, the former leader of Britain's centrist Liberal Democrats Party, as head of Meta's global policy. And yesterday the company announced that longtime Trump ally and supporter and UFC CEO Dana White is joining Met his board. Zuckerberg addressing criticism of censorship, Trump called him the enemy the people. Back in March, in an interview on CNBC, Meadows suspended his accounts for two years after the January 6th insurrection. But Melissa, it seems like they are on better terms now.
- [31:26]
Melissa Lee
Is this a huge cost savings to Metta, Julia, to not have people moderate content?
- [31:33]
Julia Boorstin
It won't be if it doesn't work for advertisers. I think there are a number of different factors here. Metta has so many different costs and now they're going to be having to make sure that the changes they make don't result in there being content on their platforms that advertisers think is not brand safe. So that's a key thing they're going to have to watch here. The other thing I want to point out is that they're rolling this out in the US over the next couple of months and then we'll see how they roll it out internationally. Here in the US media is protected by section 230 which keeps matter from being held liable for the content on its platform. But in the EU they have a much more stringent approach to content moderation and sort of punishment, if you will, if there is offensive or violent content on the platform. So this is going to to be a much more nuanced and longer term project to roll this out worldwide than it may seem initially. And the other thing here, Melissa, is AI. They're deploying AI to help identify offensive content in a way they maybe wouldn't have been able to even a year or two ago.
- [32:37]
Melissa Lee
Right, Julia, thank you. Julie Boorstin, our next guest says matters decision to dump fact checking is long overdue. Gene Munster's managing partner at Deepwater Asset Management. Jean, great to have you with us. It feels like the pendulum had swung really far to one side. Where is it now with this latest move?
- [32:54]
Karen Finerman
I mean, it's clearly on the right side of the equation, no pun intended. I think it ultimately is just a remarkable chain of events, turn of events for Zuckerberg and the culture of meta. It does lean left. And I think these recent moves, I think just speak to his willingness to work with more conservatives. And so I think that he's sending a message really to the world that he's more open to conservatives. Maybe you put those two together, then this nets out at kind of a net neutral type of platform at this point. I think that's where it nets out.
- [33:30]
Melissa Lee
I mean, Julia made the interesting point about advertisers and you know, if advertisers feel like their ads are going to appear in a safe sort of environment, then it's not an issue. But if that's different, if it changes with this latest move, then that is going to be a problem. What's your take on that? If everybody is doing this now, if this is sort of the change that everybody is going to make, then isn't that what advertisers have to live with?
- [33:55]
Karen Finerman
Exactly. I mean, you're hitting, right, the pressure point, that's what advertisers have to live with is this new dynamic essentially of the Wild west on these platforms. But at the end of the day, advertisers care about return on investment. And I think that that has been a powerful. They've had this powerful return and that's what is causing their advertising business to go up close to 20% for the last six quarters. And so I don't think that's going away. I think that they will maybe have language around wanting to change, but ultimately, advertisers aren't going anywhere. 3.2 billion daily active reach, that is unprecedented. And so I think there is, when I mentioned the pressure point, there's another piece to the engagement. Assuming that advertisers stick around, which I believe there's a nice cost savings here, and Julia pointed out just in the US today. But if you look at the 90 different third parties that Meta works with, they spend somewhere between two to four billion dollars a year on content moderation, mediation. And if you run that through to the bottom line, that adds somewhere between 2 and 5% to Meta's bottom line if they go globally on this. And so this is yet another lever for Zuckerberg to play. It's kind of fallen below the main conversation today, but I think this earnings impact is something investors should welcome.
- [35:09]
Tim Seymour
Thanks for being on, Jean. It's Karen. So you talk about the earnings impact. Do you see any other side to it? Can you quantify what you think might be advertisers pulling away?
- [35:22]
Karen Finerman
Yeah, I think advertisers talk a big talk when it comes to wanting to do the right thing, but at the end of the day, they have to grow their businesses. And again, I think that the return on investment with Meta is impressive. And I think that again, speaks to what their advertising revisit. So I don't see advertisers drifting away here. I don't see the platform going into total disarray. And there's another piece to this too, that advertisers are going to like, which is when you take some of these rails off and allow more of this crowd kind of oversight of the content, it ends up stirring the pot more. And ultimately, when people get stirred up, X has done a great job of this getting stirred up, get emotional, that increases engagement. And so this is something that's going to be a slow, positive build. But I think that it can improve the engagement.
- [36:11]
Melissa Lee
Gene, thank you. Always great to get your.
- [36:13]
Karen Finerman
Thank you.
- [36:13]
Melissa Lee
Gene Munster. Zuckerberg in his video statement made the point that, you know, this, this now lines up with what we see. You can say anything you want on the floor of Congress, you can say anything you want on other TV networks, but not on Meta. That doesn't make any sense with what's going on in the world right now. So here we are. There are advertisers on some of the other networks that lean one way or the other. Breaking news.
- [36:34]
Steve Grasso
Yeah, it's fascinating because you could have made an argument, you know, back when the rails were on, when the fact check thing was they were doing that to actually reduce legal risk. Gene's arguing that they're reducing legal risk by taking them off. And so I think it's just, I think it's another broligarch move. I think this is just, you know.
- [36:53]
Christina Parts Navalas
Yeah.
- [36:53]
Steve Grasso
You know what I mean? This is oligarchy. This is people kissing the ring and they're doing it because it makes sense to business, their business.
- [37:02]
Melissa Lee
All right, coming up, the big reveal of our 2024 Acronym Challenge winner. We're just minutes away. Find out which of our traders courageous and valiant efforts stick them to the top. And yes, that was a clue. But first, McDonald's is doubling down on value. How the fast food giant's new McValue platform could help drive growth in the year ahead. Top analysts will weigh in next. More fast money right after this. Welcome back to fast money. McDonald's rolling out its latest attempt at getting value conscious customers back into its restaurants. The newly launched MC Value platform, featuring a buy one, add one for a dollar option as well as app specific deals. The $5 meal deal also set the to stay on the menu through the next summer, the company said. For more, let's bring in Wedbush managing director Nick Setian. He's got an outperform rating, a $330 price target on the stock. Nick, great to have you with us.
- [37:59]
Nick Setyan
Thanks for having me.
- [38:00]
Melissa Lee
Obviously what we saw some results because of the meal deal being put back on the menu in terms of traffic going up, but then it had the E. Coli setback. Is this specifically to get people back that they lost from that incident?
- [38:15]
Nick Setyan
I think it's, it's more than that. I think it's really a fight against grocery and you know, just the fact that the KSR category category. McDonald's is no exception, took too much pricing. You know, over the past few years post Covid and grocery has taken share, right? That meal that the direct meal replacement customer, which is almost 30% of, of transactions in QSR, including McDonald's, really shifted to grocery. Grocery transactions are up 13% versus, you know, 2019, the restaurant industry seeing transactions decline about the same amount. So it's really a fight against grocery and I think it's going to work in 2025.
- [38:55]
Melissa Lee
How do you view these deals? I mean, is it a short term hit to earnings, a short term hit to margins, but a longer term gain of, of market share or, or. I mean, how are you sort of assessing the impact to the bottom line?
- [39:11]
Nick Setyan
I don't think it's going to be a negative for margins. I mean, I think they've structured these offerings in such a way where it's pretty neutral to food costs. I mean, ultimately, you know, you can't lower the menu prices where you can drive negative mix. And I think, you know, they're shooting for an average check in 25 in the mid 1% range versus, you know, a grocery of maybe 1% inflation. You know, last year that gap was over 3%. And so, you know, historically median's only been about 1.6. So you know, they're going to drive that gap below the median. I think that's going to result in some, some, you know, gains in transactions that they lost to grocery over the last couple of years.
- [39:53]
Steve Grasso
Hey, Nick, it's Tim. It's a fascinating discussion because there's no question how we all feel in the grocery store. But when they, when they initiate or they brought back out the value meal a few months ago, it was really seen to be an attack within the industry in QSR on some competitors who at least have watched McDonald's come in this. And the value meal usually stays longer than it had planned and it usually works for McDonald's. Anyone that suffers from this and is, you know, is there a relative value call here on McDonald's versus somebody else in the sector?
- [40:25]
Nick Setyan
I think this is going to act as a halo for the entire QSR category. I think the insert entire category as we've seen in 2H24, by the way, right? So we've seen that aggressive value messaging throughout 24 and the entire category has benefited. And so I think this is really a concert fight against, you know, getting some of that, some of the transactions back that the entire restaurant industry lost to grocery. And it's not just QSR as Well, right, we've seen this in casual dining with Applebee, that 999 chili, that 1099. So fight across the industry to gain some of those transactions back. That left restaurants. Back to restaurants.
- [41:07]
Melissa Lee
Nick, thank you for joining us. Appreciate it. Nick. Satyan.
- [41:10]
Nick Setyan
Thanks.
- [41:11]
Melissa Lee
Katie, how does the chart look?
- [41:13]
Katie Stockton
You know, the whole space has been correcting, so laggards, and they're not the laggards that are benefiting from that rotation. So I would say McDonald's in particular, long term trading range with downside momentum. Not that interesting yet.
- [41:26]
Melissa Lee
All right, coming up, it is the moment you have all been waiting for. We've tallied the results over the past 12 months and we have a new champion. We are crowning the winner of 2024's Acronym Challenge. Look at this trophy. You won't want to miss it. More fast money. And welcome back to Fast Money. We have been tracking the traders acronyms all year and it is finally time to reveal the winner of 2024. But before we tell you who's on top, we got to run through who's on the bottom. Who just walked away with the win. In fourth place, it is Karen's helm. She picked Health Care, Energy, LVMH and Meda, which was her big winner this year. Overall, she was up 14%. In third place, the Chartmaster Carter's plug peloton really pedaled higher in the second half, helping propel into a 23% gain on the year. Our runner up, Steve Grasse with Sage. Most of his picks, Smurfet, Westrock, Google, Ethereum Trust, outperformed the broader market. Overall, he was up 28%. But our winner. Drum roll please. Mike Coe with Brave B for Bitcoin gave him the lead, soaring 122% last year. Combined with his other picks, Real Estate, Anglo Gold, Ashanti Value, and Emerging Markets, he was up 34%. Mike Co, congratulations. You are the winner of the 2024 Acronym Challenge and the recipient. Hold on. Of this illustrious trophy. That's pretty.
- [43:05]
Steve Grasso
All right, Mike.
- [43:06]
Frank Holland
He's got a spot picked out for it.
- [43:07]
Melissa Lee
You feel good about this, this win, Mike? Huh? I do.
- [43:11]
Frank Holland
I actually have to tell you, I felt better about how the acronym was doing through the end of the third quarter. And it is only since that time that, you know, bitcoin really took off. But a lot of those other areas haven't been doing quite so well. And what we've really been seeing is that divergence in US Chinese rates.
- [43:26]
Melissa Lee
I think that kind of tells the whole story.
- [43:28]
Frank Holland
The emerging markets picture certainly got ugly on the back of that. The value group of stocks has underperformed on a risk adjusted basis relative to the S and P since then. So all of that's a pretty funky backdrop.
- [43:40]
Melissa Lee
But obviously bitcoin helped help carry me.
- [43:43]
Frank Holland
Through the finish line even as some.
- [43:45]
Melissa Lee
Of those other categories didn't perform so.
- [43:47]
Frank Holland
Well in the fourth quarter.
- [43:48]
Melissa Lee
Well, again, congratulations, Maiko. And by the way, we will unveil the 2025 fast money trader acronym starting on Monday and the 2025 winner will don't Careful.
- [44:00]
Steve Grasso
Mike's trophy.
- [44:01]
Melissa Lee
We can.
- [44:02]
Tim Seymour
It's like the banana and the tape. We can just tape a four on there.
- [44:06]
Steve Grasso
Sorry, my final trade. Good job.
- [44:16]
Melissa Lee
Final trade time.
- [44:17]
Steve Grasso
Tim Seymour yeah, I defer to Katie's view on the chart, But I think McDonald's in terms of what they're doing against their peer group, it's long term been a holding and will remain so.
- [44:26]
Tim Seymour
Karen after coming in fourth place, I can't believe that wasn't enough. I have to come up with something else. I'm going to cover a little TLT had a big movement.
- [44:34]
Melissa Lee
Yes. Katie Stockton Affair Lead I think everyone.
- [44:37]
Katie Stockton
Should have a look at It's a pharmaceutical sector etf.
- [44:41]
Frank Holland
Steve Texas Hedged Bitcoin microstrategies bought it today.
- [44:45]
Melissa Lee
All right, thanks for watching. Fast Money Mad Money with Jim Cramer starts right now.
- [44:54]
Julia Boorstin
All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal.
- [45:01]
Melissa Lee
Their parent company or affiliates, and may.
- [45:03]
Julia Boorstin
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- [45:08]
Melissa Lee
You should not treat any opinion expressed.
- [45:10]
Julia Boorstin
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.
- [45:17]
Melissa Lee
Such opinions are based upon information the.
- [45:19]
Julia Boorstin
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- [45:22]
Melissa Lee
CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it.
- [45:27]
Julia Boorstin
Should not be relied upon as such. To view the full Fast Money disclaimer.
- [45:30]
Melissa Lee
Please visit cnbc.com fastmoneydisclaimer Global markets up.
- [45:35]
Frank Holland
To the Minute Front Page News Wake up to Frank Holland at Worldwide exchange, weekdays 5am Eastern, CNBC live Ambitiously.