← CNBC's "Fast Money"
CNBC's "Fast Money"
Momentum Magic Rolls On… And A New Year’s Correction? 12/16/24
00:43:37
Bitcoin hitting another record high, as MicroStrategy jumps on news it will be added to the Nasdaq 100. Why the CEO is calling the crypto a “cyber Manhattan”, and the price tag he’s putting on Bitcoin. Plus Markets hovering near record highs, and Wall Street expectations are for another solid year. But could the new year ring in a 10% sell off? How one market strategist is forecasting 2025. Fast Money Disclaimer
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- [00:03]
Melissa Lee
Live from the NASDAQ market site in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight. Major momentum. Two of the hottest trades since election Day have been highly tied to the crypto space. But can the rally keep rolling? And what's it mean for the names being left in the dust? And Softbank's big investment. CEO Massason meeting with President Elect Trump and Mar A Lago and pledging $100 billion in U.S. projects, what it could mean for the economy and for other investments. Plus, a recently not so magnificent stock in the Mag seven Capri reportedly looking to offload some of its luxury portfolio and Starbucks shares. They're getting decaffeinated. The stories behind all those moves. I'm Melissa Lee coming to you live from studio be at the nasdaq. On the desk tonight, Tim Seymour, Karen Feinerman, Dan Nathan, Laurie Calvert, head of U.S. equity strategy at RBC. Welcome, Laurie. And we start off with the latest signs of momentum shift in the market. The dow notching its eighth straight down day, shedding 110 points for its longest losing streak since 2018. Meantime, the tech heavy NASDAQ at all time high surging more than a percent to close at a record of 20,173. And two big momentum trades soaring again today. Bitcoin touching a fresh all time high, topping $107,000 for the first time. Crypto proxy Microstrategy happened up more than 7% after news late Friday that the stock will be added to the NASDAQ 100 next week. That gains fading in afternoon trade, but shares still up nearly 550% this year. MicroStrategy outperforming Bitcoin, Bitcoin by almost 30% just since Donald Trump was elected president. So what is the outperformance signaling to you? Because it could be a broader market, you know, signal, Tim, or it could be bitcoin specific.
- [01:44]
Tim Seymour
Well, it feels like allocation broader market. If you look at the Nasdaq, it's been outperforming not a little, but a lot by 5% since Thanksgiving. If you look at the equal weighted, it's underperformed by almost 5% since Thanksgiving. So and yet again the S and P is up seven and a half percent since the Fed. We've got a Fed meeting this week. In fact, we've got a bunch of other central banks this week. And I think the message is you've got central banks that are continuing to do their part. You've got seasonals which we spend a ton of time on. But I think the dynamic around both CPI and then also look at that services, flash PMI on US services, which is the highest in three years for the biggest part of the US economy. Now, you know, it could be a noisy, you know, lumpy data piece, but is ultimately the macro data has been supportive to a market where you've given equities every other ingredient. Labor markets are holding up, in fact are probably better than expected. I think we're rallying into year end. But it's notable that again, the part that leads markets higher are truly the ones that are moving the market higher. Not the breadth, but actually the same 10 stocks that are doing.
- [02:46]
Melissa Lee
Yeah, Laurie.
- [02:47]
Karen Feinerman
Yeah, it's been, it's been fascinating to see, right, because everyone's been on the broadening bandwagon and now all of a sudden we're seeing growth come roaring back. And I think when you look at Bitcoin, right, it's all tied up in the Trump trade and there are a lot of new things that are happen that it makes complete fundamental sense. But I would just add to what Tim said. I do think the economic fundamentals are solid, but there is also concerns about inflation creeping back in. Are we getting to the end of this Fed cutting cycle? And what I'm starting to hear from investors is the word stagflation again. And when you're in a stagflationary environment, the playbook has been to go back to these mega cap growth names. GDP is also sitting at around 2.1% for next year's forecast. That's typically also an environment when these kind of mega cap growth areas do well. So it's a good macro, but not quite good enough to support that broadening.
- [03:31]
Dan Nathan
Yeah, and broadening thing. Right. So let's just look at the equal weight S&P 500. You know, it had this nice rally off the election. It's given back maybe almost a half of that over the last week and a half or so. If they want to pull up the rsp, the BKX has come in a little bit. So to Lori's point, you've seen this massive move into the growth thing. I mean, I think about the Fed, we have it on Wednesday. We have a meeting in January. It's a week after inauguration. Maybe we continue to rally into that. We do have Q4 earnings coming in around that period. I think that's going to be a really dicey time because if we do have a hawkish cut this week and we start to kind of Price out a whole heck of a lot of cuts next year. I think the Fed funds futures, the CME is pricing in like a less than 20% chance of a 25 basis point cut in January. So if we have this situation where rates stay bid, we just saw like, well, rates not going lower, yields stay bid after the rally that we've had. And if we think that growth is going to start to slow, that's not going to be a great setup for equities. And just the last point about bitcoin and what we saw today, with broadcom up another 11% after it rallied 24% on Friday, it's gained about $300 billion in market cap in two trading days. Look at Tesla, it's gone from 250 the day of the election to about 450 now. There seems to be a bit of euphoria and how I pull that all together, it feels a lot like early 2000. I'm not trying to say that we're about on the precipice of a crash, but or late 2021 when we saw a lot of price action like this too. So the sentiment is unusually bullish right now and it's getting more and more crowded, especially as we see some of the broader trades kind of coming to an end a little bit in the near term.
- [05:07]
Laurie Calvacina
So I disagree with a lot of what Dan said, not all of it, but I think we will see growth. I think we will see the economy do better. I'm not afraid right now of growth slowing. I actually think it will accelerate. And I do believe that animal spirits have been, you know, released and that makes people willing to take more risk, willing to do things, to grow. And I think we will see that regulatory regime change. And I think those things all help businesses feel confident and grow. What I'm sort of like you. I do think that I'm surprised that inflation isn't reflected as the potential to be much higher. I think it will be like, you know, the 10 year bonds were flat today and I think we saw some decent pmi. We saw that was global. So I think that will weigh on the economy, but not as much as the positive of the sort of growth in the economy.
- [06:03]
Dan Nathan
Can I just read about one second? So I don't think that growth is going to come in that much worse. So we're talking about earnings growth and economic growth. Right. So we saw how GDP growth was trending this back half of the year. It was better than expected. Right. So my point is that if yields continue to go Higher we get four and a half percent or higher in the ten year. The dollar continues to rally. I think that is a headwind for earnings growth. I don't know how much of a headwind it is for economic growth, but when I think about earning growth and I think about consensus, we're looking at 12, 13% expected growth that has not come in or gone higher too much in the last year or so. So there's a lot of things that have to happen to justify the multiple expansion that we've seen over the course of this year.
- [06:43]
Melissa Lee
Yes.
- [06:44]
Karen Feinerman
I would just say three quick things. If you're thinking about the economic environment again, the number for next year right now is trending around 2 1. The average back to the 70s is more like 2.6. So 2.1 is great growth, but not quite great enough. Right. To kind of get people out of this old secular growth leadership. And that's what I'm starting to hear about a lot. And I would say, you know, to Dan's point, on the dollar, we do tend to see downward revision pressure when the dollar is strengthening for most sectors x things like REITs, utilities and financials. So I do think that's a potential hiccup. And then, you know, you mentioned, I think, what, 2021, 2000. The analogy that's been coming up in my meetings recently has actually been 2018. And if you look at, you know, sort of the beginning of that second year of Trump's first term, we had gone through this enormous euphoria in 2017, excitement over the tax cuts. We saw the CFTC data on S&P 500 futures positioning break out to a new high. And that is exactly what we're doing this time around. So, you know, I think that we've got a lot of, you know, fantastic momentum in the economy fundamentals. We need the GDP numbers to get a little bit higher. But at the same time, we do have some of these things that seem like they're going to trip us up. And going back to the original topic of conversation, bitcoin. You know, bitcoin, Trump, the S and P, they're all moving together so we can get clues from one for the other.
- [07:56]
Tim Seymour
I think this is a good time to take advantage of all this momentum to the upside. I mean, it's a great time to be selling upside calls, especially I think, in Mag 7 stocks. If you don't think we're going to get some kind of a correction as we get into March or April, as some of the policy starts to begin to have some teeth to it. I mean there's no way, I mean again, the moves that we've had, the fact that the triple Qs are up 13 and a half percent since the Fed meeting, so NASDAQ up 13 and a half percent since a Fed meeting, when you know, there was really no major surprise there. The talk about inflation is important because if anything, that is the outlier for 2025. If you get a Fed, that's if it's a hawkish cut, but more importantly, if the table truly. Forget the rhetoric this week on Wednesday, but if you get a table set for a Fed to begin to start to position to very neutral, but not necessarily an easing bias. Stocks haven't priced this in. So again, take the advantage of what you have in terms of momentum right now. I mean selling three to six month Google calls. I'm not saying it's a free lunch and you can always play ways where you can roll up and out on those. But I think the mega cap tech stocks which are leading the market higher are a place to capture where there's been a lot of fund flow. And that's what this is.
- [09:02]
Laurie Calvacina
I think. I don't know how you feel on options, but I think the three of us actually might agree on that. I do think the skew in the mag 7 names is so much higher to the upside that you can put on attractive collars and protect your downside. And I agree, I agree there's a lot of momentum and hype there. I mean we saw Google hit to 200 today.
- [09:21]
Melissa Lee
What a move.
- [09:22]
Laurie Calvacina
I know, just today, I mean, right?
- [09:25]
Tim Seymour
That's 35% in Google since September six when the UK said they were taking them down.
- [09:29]
Dan Nathan
There hasn't been a couple pieces of news in Google over the last week though. So quantum like and then some of the reviews of some of the Jenny products are launching again. This is mo. This had been a massive underperformer for all the reasons that we hadn't seen the invasion. I want to make one point though. If you're expecting like massive M and A from mega cap tech, I think it's important. Let's talk about Broadcom. Okay. Broadcom tried to buy an xpi. Okay. This goes all the way back right during the Trump administration. Then when that got knocked off, I think you could say, okay, we're going to have a better regulatory environment for M and A. Well, Asian countries, European countries can block these deals. Broadcom tried to buy Qualcomm, the Trump administration or the FTC or doj. They blocked that. Deal. So it's not going to be so easy I think to do deals.
- [10:13]
Laurie Calvacina
I agree with you on big tech. I think a handbag deal might go through, let's say hypothetically.
- [10:17]
Karen Feinerman
You mean between.
- [10:19]
Dan Nathan
Yeah, you might be buying, you know.
- [10:24]
Melissa Lee
But if you take a look, I mean to your point though, in terms of Google being an underperformer, are we seeing this sort of realignment of assets where you're going from what had been the performers like let's say a Microsoft which hasn't been performing very well, I mean the last I think was in August, sometime over the summer into a Google now. So at the end of the year, Even within the Mag 7, you're seeing this sort of recognition that there are the underperformers within mega cap tech that we want to be in.
- [10:48]
Karen Feinerman
No, I think that's fair. And look, I will say just mega cap tech broadly, right. They keep putting up the earnings and they're taking turns. Right. I mean there's, there's one that shines a little bit more brightly than the other at any given point in time. But the reality is the value trade is not working because it is not putting up the earnings growth. And so the relative valuations are staying elevated for the big cap tech companies because they simply deserve it from that earnings perspective and it's just not changing.
- [11:11]
Tim Seymour
And then the part of this market that's not performing that does kind of dance into the Max 7. Certainly Nvidia does, but semis are underperforming, so. So this is what's fascinating because Semis really led the market From October of 22, that CPI low through where we got through and really through the early part of this year. March is really when semis kind of tapped out. So interesting. Also you're seeing even relative value trades or maybe they're just relative both sentiment and catalyst trades. Taiwan Semi really outperforming Nvidia over the last three months and that's something that I think will probably continue.
- [11:40]
Dan Nathan
I think the Nvidia thing is really important, you could say or we might have said six months ago that if video starts selling off, so all our semi is going to start selling off. Maybe that leads some of these hyperscalers lower. It's just gone into Marvel, it's gone into Broadcom over the last two weeks. And let's be clear about this, with broadcom Getting over $1 trillion in market cap, the MAG7 is over. It's the fateful eight now. I mean that's it because I think the risks keep going higher. And higher as this trade. He doesn't avail the News Mag 7 plus the Broadcom. These are all the trillion dollar babies here and I think they become increasingly sort of crowded and just Microsoft could be a really interesting story. Faithful.
- [12:21]
Tim Seymour
You can't do that and run away from it.
- [12:23]
Dan Nathan
Listen, faithful.
- [12:25]
Laurie Calvacina
What do you mean by faithful?
- [12:26]
Dan Nathan
Hey Jim Kramer, give me a ring. I know you coined the fang. I did the maga. You remember the maga? Amazon.
- [12:33]
Melissa Lee
Yeah. Everybody else remembers it too.
- [12:35]
Dan Nathan
Picked it up.
- [12:35]
Melissa Lee
Not really, no. But in terms of fatefully you mean they. They determine the direction of the markets. Listen, I mean what's determined.
- [12:43]
Dan Nathan
Can I tell you? They determine the future of the secular technology trade towards generative AI. There's no doubt about it. So if all these companies start and Microsoft started to do this their guidance, their capex wasn't good enough. That's why this stock is lagging. Right. So if we get to a situation where there was over ordering and all these high end GPUs if there was too much capacity built out by the hyperscalers and we start to kind of see guidance go flat then the stocks are going to take.
- [13:07]
Tim Seymour
They're going to correct here isn't is so now the. The. The eighth member now so that who is help create the fateful eight Broadcom which is up as you. I mean it's up 40% in six days now. Why is it up 40%? I mean mostly an earnings number where you got some look into their AI business And actually the sense is that we have also three years out we've got 40 to 45% of high growth smart and AI business that to me this kind of fresh momentum it's not so much that people are now looking to sell invited by Broadcom. I think it just tells you a lot of people feel like there's a lot more to do in this trade. I almost feel like it's fresh legs to AI.
- [13:43]
Dan Nathan
That was the most. It was just BS. They say they see the TAM of 60 to 90 billion dollars by the end of 27 and the stock rallies $300 billion on that. That's like the dumbest thing I've ever heard in my life in the market. I mean that because you could drive a truck through that guidance and here's a company that's going to do $60 billion in sales and maybe 15 billion right now are generative and we're not even talking about the. The GPUs that that Nvidia is making. So a whole heck of a lot of things have to go right for them to take meaningful share in that maybe $90 billion number in three years. And you know what the price performance and the multiple has pulled that forward.
- [14:19]
Melissa Lee
Investors have made that leap, taking that leap. Where the hell to Nvidia and whereas Nvidia gone directionally Mel.
- [14:26]
Dan Nathan
But this has been going.
- [14:27]
Melissa Lee
I'm not defending it. I'm just saying what three psychology might.
- [14:31]
Dan Nathan
Be what I'm going to say. You know what I'm going to say.
- [14:32]
Melissa Lee
That's the dumbest thing ever. Have at it. All right, let's move on. Microstrategy co founder Michael Saylor joined CNBC earlier today saying his company will keep buying Bitcoin. Even at these levels.
- [14:44]
Dan Nathan
I've said we'll just keep buying the top forever. Every day is a good day to buy Bitcoin. We look at it as cyber Manhattan. Every year for the past 300 years you pay a little bit more than the person that bought Manhattan before you. But it's always a good investment to invest in the economic capital, the free world.
- [15:05]
Melissa Lee
Does he own real estate here from Warren. What is next for the crypto proxy? Let's bring in Joseph Vaffi. He is the managing director of equity research at Canaccord Genuity. Joseph, great to have you with us. Thanks. You are an equity analyst. How do you value this company when actually you really have to have a directional call in Bitcoin to put a price target on Microstrategy?
- [15:28]
Joseph Vaffi
Yeah. Good afternoon. You know I think you have to have a positive medium to long term view in Bitcoin to be positive on Microstrategy. You know, kind of going back to Michael Saylor's analogy of Manhattan real estate. You know, there's not much more of it that's ever going to be created. And so there is a scarcity value proposition there. You know, in the case of Microstrategy, you know they're just going to continue on this path of buying more Bitcoin. And you know, importantly what you see in, in this strategy is MicroStrategy's ability to create accretion in Bitcoin held per share. It doesn't necessarily show up in their financial statements, in their earnings numbers or the like. But every day if you are an owner of a share of Microstrategy that share represents an increasing amount of Bitcoin on a, on a, on a, on a per Bitcoin basis. And so that, that's what I think that's what investors are really looking at and that's why they've rewarded the company so much in the last couple of years here.
- [16:37]
Melissa Lee
I'm just curious, Joseph, is there any other example of a company in history that has used their balance sheet in order to buy other assets? I mean, basically, it's. It's almost like a shell company because it's basically exercising the tools that a corporation can use to raise money in order to buy Bitcoin and make more money off of that. The yield is much higher on that. And so is there any equivalent and is there any at all regulatory risk that somebody steps in and says, this is not. This is not kosher, you know, I.
- [17:09]
Joseph Vaffi
Mean, it is a consideration. I suppose you have an operating. I mean, this is an operating company at its heart. You know, it's a software company. It's got an operating company set of financials. It's not an investment company. They are acquiring an asset. They're acquiring bitcoin. Just like maybe an exploration company, a drilling company or. Or an EMP company would acquire.
- [17:35]
Melissa Lee
Sell it. I mean, they sell. They produce. They produce or they drill for oil or gas to sell it. And this is expressly to hold it and. Or to trade it.
- [17:45]
Joseph Vaffi
Well, they're not trading bitcoin. They have really bought it. They've actually. I don't believe they've actually ever sold bitcoin. They just continue to accrue bitcoin as a scarce asset. And that's been the strategy today.
- [18:02]
Tim Seymour
So. So, Joseph, what do you think of the asset then? I mean, at the end of the day, you're. We all know what this is a call on, and I'm not questioning your ability to make a call on bitcoin. I'm just kind of curious what your call on bitcoin is, because ultimately that's really what this comes down to. And I would think this does feel different than a miner going out there and securing physical assets in the industry that they're involved in. But, you know, talk on bitcoin or who's the next bitcoin, or, you know, where do you go with this trade? Or are you just buying bitcoin forever?
- [18:33]
Joseph Vaffi
Well, you may be just buying bitcoin forever. You know, I mean, you know, taking a word out of Michael Saylor's pitch book, you know, bitcoin is the exit strategy. You know, if you look at bitcoin over the last few years, it's. It's come a long way. It's. It's seeing broader institutional adoption under a second Trump administration. We're expecting a much kinder regulatory backdrop. We've been dealing With a very, very menacing regulatory backdrop here over the last couple of years. You know, if we get a broad regulatory framework in place, digital assets just continue to make their way more into the mainstream. There will be more buyers of it. You could see other players do or mimic a microstrategy type of strategy or you could just see large tech companies, you know, The Magnus Magnificent Seven just allocating 1 or 2% of their balance sheet to bitcoin. So it does feel like, you know, you know, nothing's perfect and not every asset class is for everybody. But the backdrop around the fundamentals of bitcoin have really only been improving here over the last year, year and a half.
- [19:50]
Laurie Calvacina
Joseph, it's Karen, if you get, we get this regulatory environment very friendly to bitcoin, do you think that the premium would stay?
- [19:58]
Joseph Vaffi
You know, it's an interesting. I think you, I think you're talking about the premium at which MicroStrategy's equity trades at versus its holdings.
- [20:07]
Dan Nathan
Right.
- [20:08]
Joseph Vaffi
You know, right now MicroStrategy is the only one implementing this strategy, more or less. There are some smaller companies out there that are doing it. There's a small company called Semler Scientific that's mimic this strategy and it's actually worked quite well for Semler as well. You know, at this point there's not really any competition for MicroStrategy in this, in this arena. If we get a broader regulatory, regulatory framework, you know, there could be more buyers of bitcoin. I think it would be a high class problem for MicroStrategy because it would probably be upwardly biased, extra demand on the price of bitcoin. But maybe it wouldn't be as easy for them to implement this strategy at the scale that they're at.
- [20:51]
Melissa Lee
Joseph, great to see you. Thank you.
- [20:54]
Joseph Vaffi
Thank you.
- [20:55]
Melissa Lee
Joseph Baffi. I mean Trump has said that the rules will be written by people who love your industry. That's exactly what he said at that crypto confab in the south over the summer.
- [21:06]
Dan Nathan
Doubt. I mean again, is this a pull forward? You know, when you think about the use cases of bitcoin right now, the only one is really, you know, nerd gold. It's a store of value. Right. So might there be other use cases? If there is some regulatory that kind of puts it in the hands of some of the businesses that want to use it. You asked a question though. This is really important. We're just talking about this. Have other companies done this sort of thing? Well, Apple is a great example. We were just talking about they bought back $800 billion of their own stock. They've retired more than a third of their shares. And you would tell me that was really accretive at the way in which they were buying back their stock relative to where they were borrowing money. And that is a good example of this. It never became levered it was actually trading like a value stock as they were doing it. Now it's become a growth stock when there is no growth. And I'm channeling my, my guy Adami right there. So it's interesting to me that that's a great example over the last 12 years.
- [21:56]
Melissa Lee
Coming up, luxury on sale. Why Capri could be looking to sell some high end businesses and the analysts getting bullish on Macy's heading into the winter season. All the retail moves straight ahead. But first, investing in America. President elect Donald Trump and the CEO of SoftBank announcing a major investment in the US just how much they are spending and how many jobs could come with it. Don't go anywhere. Fast Money is back into welcome back to fast money. SoftBank CEO Masayoshi Son appearing with President Elect Trump today at Mar a Lago to announce a $100 billion investment in the US over the next four years. They promise the projects will create 100,000 jobs in AI and infrastructure. CNBC's Eamon Jabbers has got the details. Hey Eamon.
- [22:43]
Eamon Jabbers
Hey there, Melissa. It was a scene right out of the Apprentice this morning as Donald Trump and Maciosi Son engaged in some lighthearted negotiations over that $100 billion investment in the U.S. trump tried to raise it to 200 billion, but Masayoshi would only commit to try to reach that higher figure. All of that in jest, of course. In the wide ranging press conference that followed the investment announcement, Trump touched on a range of business topics including the possibility of a resolution on TikTok. And we've learned late this afternoon that Trump has met with the CEO of TikTok. Trump didn't commit to any specific outcome in terms of the social media company, but he has said that he's got a warm spot in his heart for the Chinese owned company because it helped him win the election this year. He said he had a productive meeting with the pharmaceutical industry leaders who came to see him at Mar a Lago and placed blame for the high cost of drugs, not on them, but on unnamed middlemen that he said are driving up prices in that industry. And he discussed the high profile CEO visitors who've come to see him at Mar A Lago, including Tim Cook, Mark Zuckerberg and Jeff Bezos, who was expected later this week.
- [23:50]
Tim Seymour
The big differences between the first term, in the first term, everybody was fighting me. In this term, everybody wants to be my friend. I don't know, my personality changed or something.
- [24:00]
Melissa Lee
Yeah.
- [24:01]
Tim Seymour
The biggest difference is that people want to get along with me this time.
- [24:09]
Eamon Jabbers
Trump was also asked about the assassination of the CEO of UnitedHealth, which the President elect called a terrible thing. Trump said he can hardly understand how people online could be expressing support for the alleged shooter, calling that support a sickness in the country. Melissa, back over to you.
- [24:25]
Melissa Lee
All right, Eamon, thank you. Eamon Javers, Another note on UnitedHealthcare. In the wake of the murder of that CEO, there has been a lot of talk about the denial rates for claims. Late Friday night, UNH put out a release stating that the company approves and pays about 90% of the medical claims that are submitted. They also added that neither the alleged killer nor his parents were covered by unhappy insurance. Healthcare today hit again as Trump also railed against what he called, as Eamon mentioned, the middlemen in the sector, blaming them for keeping drug prices high. And it's just another overhang on this particular industry. Last week, remember, we had bipartisan legislation to force PBMS to separate off their pharmacy business for UNH specifically, there's some look into their antitrust practices supposedly for their hub practices. But Tim, I don't know, there's a lot to trade here.
- [25:12]
Tim Seymour
There's been, there's been a ton of headlines and there's, there's a lot of philosophical places, there's places to go attack US Health care in our industry, which is certainly the most expensive in the world. It also is the most sophisticated in the world. There are also companies that have spent tons and tons of time and R and D on, on both patents and drug pipeline. So I think, look, we all recognize this system is imperfect, but it's not broken. And I think there's opportunities to invest around this. I don't think you're running too far from the names that have worked yesterday.
- [25:44]
Karen Feinerman
Healthcare, Lori so I was overseas last week, actually last week and a half and talking about sectors with a lot of non US Based investors. And I will tell you in Europe, it's really interesting because they have a lot of nervousness heading into next year over various things and they're asking me about REITs and they're asking me about utilities and then we get to health care and things just get quiet. It is really just so much hitting this sector. And I've been doing this for over 20 years. Sometimes things get out of favor and this feels different somehow. And you know, you're still seeing a sector that has very good earnings revision trends, a lot of things going right. But this is just I think a unique moment and I think there's an appreciation of that with investors right now.
- [26:23]
Melissa Lee
There's a lot more fast Monday to come. Here's what's coming up next.
- [26:27]
Dan Nathan
Letting go of luxury, why Capri could be looking to sell some key brands and why Macy's could heat up this winter season. Plus, stocks hovering near record highs. And Wall street seems to think the good times will continue in 2025, but not before a January jolt. Why our next guest says a short term correction could be coming for the market soon. You're watching FAST MONEY live from the NASDAQ market site in Times Square. We're back right after this.
- [27:03]
Melissa Lee
Welcome back to FAST money. Some moves in the retail space today. Let's start off with Capri holdings shares getting a boost, up nearly 4% on reports the luxury retailer is looking at potential buyers for Versace and Jimmy Choo brands. This about a month after Capri and Tapestry called off their merger after the FTC successfully blocked the megadeal. Capri still down over 55% this year, tapestry up nearly 75%. Karen?
- [27:27]
Laurie Calvacina
Yes. So I don't know if it's true, but it certainly could be true because the great promise of cores was we are going to consolidate these luxury brands and Versace and Jimmy Choo were really the much more luxury ones of them other than the small part of Kors that is very high end. And when we do that, we're going to get a multiple that is much more of a luxury multiple. Not only did they not get that, they got a lower multiple than they ever had before and I think they overpaid. It's not surprising that they would want to dismantle this. The experiment hasn't worked and they have some debt. So and I think if they do sell them, that would be a positive for the stock.
- [28:04]
Melissa Lee
Meantime, Macy's rising as much as 4% after analysts at Gordon Haskett upgraded the stock to a buy from a hold. They also boosted the price target to 20 bucks from 16, saying the company's tone on current business trends was very upbeat and that the cold months bode well for seasonal sales. You do want to buy a scarf or 210 when it's colder outside.
- [28:23]
Tim Seymour
Oh, I look, I can't have too many scarves. Let's be clear. I think this is an interesting call because I think that those numbers weren't that bad. The volatility in the Macy's price has really been more around the dynamics of what's going on with the assets, whether they are really going to do a sale or not do a sale when we know there's outside interest, there's real estate value. I think it's interesting optionality to own for a business that's not expensive and is performing all right.
- [28:48]
Melissa Lee
Coming up, it's been a great year for the s and P 500 and Wall street estimates for 2025 are pointing to even more games to come. But could there be an opportunity to get in cheaper in the weeks ahead? Our next guest will lay out his take when Fast Money returns.
- [29:02]
Dan Nathan
Missed a moment of fast. Catch us anytime on the Go follow the Fast Money podcast. We're back right after this.
- [29:16]
Melissa Lee
Welcome back to fast money. The S& P rising ahead of the central bank's last meeting of 2024. The NASDAQ closing at a record high, but the Dow falling more than 100 points, now down eight straight days, its longest losing streak since 2018. Energy stocks underperforming the broader market today. The XLE down 2%, which includes ExxonMobil shares, now down seven days in a row, its longest losing streak since September of 2022. Well, Evercore ISI just put out its 2025 S&P target, saying it expects the index to finish the next year at 6,800. That implies a 12% gain from today's close, but there is near term warning baked into that forecast. Julian Emanuel made the call. He joins us here first on CNBC interview about this new price target. Julian Evercore is Evercore ISI Senior Managing Director Julian, great to have you with us.
- [30:00]
Julian Emanuel
Great to be here.
- [30:01]
Melissa Lee
So the warning is beware January because it's not going to be a straight line higher.
- [30:06]
Julian Emanuel
So I wouldn't call this irrational exuberance, but we've seen their pockets of exuberance. The Conference board survey actually showed the highest reading ever of people that think stock prices are going to be higher a year from now. That's the kind of cautionary and just for reference, the formerly highest reading was the beginning of 2018. And there's been a lot of discussion of 2018. And when you think about the policy backdrop of the incoming Trump administration, it's pretty easy to make the case that we're going to get a little bit of volatility to start the year.
- [30:42]
Melissa Lee
That is exactly what Lori was talking about, 2018 being the comparison year. What's your price target, Lori?
- [30:48]
Karen Feinerman
So we're at 6,600. We also have a bear case of 5,775. And it's, you know, it's interesting there's as much interest in my bear case as there is my target, just because I do think there is a lot of nervousness about sentiment, there's a lot of nervousness about valuation, but that runs counter, you know, to the strong animal spirits, economic upgrades that we're seeing.
- [31:08]
Julian Emanuel
So I would just say, and this is a positive, that clients are very, very focused and very concerned about valuation. And as all of us sit around here, we have, I dare say we have been nervous about valuation, all of us, probably for the last six months. Valuation alone doesn't end the bull market, but what it does is it makes it susceptible to any sort of less than perfect news, which, you know, the amount of geopolitics that we have going on and what happens if someone says, fed Chair Powell, do you think there's any scenario in which you might hike interest rates next year? How that question gets answered on Wednesday is going to be pretty informative.
- [31:55]
Melissa Lee
Dan?
- [31:55]
Dan Nathan
Yeah, so we have the fateful eight here. Now Broadcom, just add this thing, you know, it's trending. Does it worry you a little bit that those eight stocks are about 20% of the S&P 500? I know we've been talking about concentration, but if you're talking about valuation, they're also a really important component of the S&P 500 valuation. We've seen massive multiple extension. There are about 40% of the S&P 500. So 20 trillion eight stocks, 40% of the S&P500 that are making up a lot of the expected growth in the index next year.
- [32:25]
Julian Emanuel
It's definitely a concern. And we all know there is one stock in particular that's had an incredible run up since the election is now trading over 200 times earnings. And I dare say that that's a consideration and a worry no matter what. But again, it's one of these things where, if you think about it, I think we were all amazed when say the top five stocks in the weighting the S&P 500 rose beyond the Y2K peak and think about how long ago and how many index points ago. So that was again, it's a question of you need other things and a it's in our mind it's going to be, you know, potentially irrational exuberance. We think the capital markets will show the way towards that if we get there or A recession, which we just don't see in 2025.
- [33:15]
Tim Seymour
So US exceptionalism has been the story for four years now. Dollar at some point is a problem. Rates at some point could be a problem, but haven't really been so far. What do you think about the rest of the world? We know their politics in Europe are kind of scary right now, but it's been a lot of underperformance.
- [33:33]
Julian Emanuel
Well, we are getting a ton of questions about the rest of the world. It started about really right at the election because the assumption is in an America first president, you'd see more of this kind of performance, which you have seen from our point of view. Again here, valuation relative or absolute, it's very difficult to just make the case that it's going to work on the basis of that. We would want to see in Europe a reasonably defined dollar top, which is something to certainly look out for. That may be driven by Trump's displeasure. You remember he got uncomfortable about the strong dollar during the first administration. In China, we'd really want to see bond yields stop declining. It looks very much like what you saw in Japan in the 1990s in terms of yields going lower than you could ever imagine. And then as far as Japan, what we want to see is sort of a separation between the way the Nikkei trades and the way the yen trades. And we think that's possible. It worked throughout the 1980s. But again, all of these are catalysts that we're waiting for the macro backdrop to change. And we do anticipate getting more positive on the rest of the world at some point.
- [34:50]
Melissa Lee
Super quick. Julian, you like small caps. Is do you expect small caps to outperform S and P broadly next year?
- [34:56]
Dan Nathan
We do.
- [34:57]
Melissa Lee
Okay.
- [34:57]
Julian Emanuel
We do. It's really, if you look at the year after every election since 2012, you had this spike in small business uncertainty. It comes off. And small caps have worked throughout those cycles.
- [35:11]
Melissa Lee
Julian, great to see you. Thanks for coming by. Julian Emanuel. We had a wealth of strategists on set tonight. Do you like small caps, Laurie?
- [35:19]
Karen Feinerman
I hate to be the party pooper on this one, and I'm an old small cap strategist, but I expect more of a trading environment between the two. And I think right now, you know, we're just full in terms of positioning. The CFTC data is actually above the highs that were hit in 2016 through 2018 when we saw three distinct Trump trades in small cap. That fizzled out pretty quickly. And also, you know, if we think about valuation, we're also sitting, you know, we're not quite at the ceiling, but the ceiling is in sight if we look at the historical data. And then if you also think about the Fed backdrop, the Fed is really what's gotten us here, the dovishness. And we're starting to see that dovishness get dialed down again. And you know, I appreciate the idea of the animal spirits, but I think that's only going to be able to take this space so long. And you really need a stronger economic tailwind to see small caps outperform and we're just not there yet.
- [36:07]
Melissa Lee
Coming up, hims and hers rebounding ahead of a major decision from the FDA and compounded GLP1 drugs. The skinny on how the options market is betting next. Plus, a buzzkill for Starbucks as the coffeemaker faces a new challenge in brewing up business abroad. The details and more fast Money into Welcome back to FAST money. Let's take a look at the options action on two key events this week. First, the FDA expected to rule by Thursday on whether Eli Lilly's Tirzepatide should be on the drug shortage list. That's a key compound in diabetes and weight loss drugs Mounjaro and Zepbound. Removing Tirzepatide would have a big impact on other companies ability to manufacture and sell compounded versions of the drug. For a look at how the options market is betting on this outcome, let's bring in Mike Koh. Mike, what are you looking at?
- [36:55]
Mike Koh
Yeah, so Himes, this is a pretty volatile one. Right now the implied volatility is about 120%, which puts it sort of in line with names like MicroStrategy. Right now the calls and puts are about evenly matched, I would say. But actually most of the stuff that's just looking to the end of this week looks like tactical downside bets. Some of the biggest trades we were seeing were in the options that expire at the end of this week, the 26, 22 one by two put spread. What those traders were doing is they were buying those downside 26 puts and then selling the 22s twice as many of them against it to offset some of the premium. That's a tactical downside trade if you think about it, because they're targeting a range basically between about 18 and a half and you know, 25 and a half is sort of what they're looking at for the end of the week risking about 22 cents or about 1% of the current stock price. A little bit less than that.
- [37:44]
Melissa Lee
That's interesting. Just last week we had Zach Raitano on the CEO of ro and they had announced a deal, a partnership with Eli Lilly to sell this single dose vial which would be a lot cheaper. And some are saying that that partnership signals that Tirzepatide is not in shortage. Why would they launch this new product line that so many people would want if this compound, this drug was in shortage?
- [38:06]
Dan Nathan
And you know that the pens were in shortage to a great deal causing a lot of those problems. And you think about that price point at $400 for a vial that is competing directly with these compounds. And I don't know why you take a compound if you get that straight.
- [38:18]
Melissa Lee
From Lilly for the same. Yeah. All right. Meantime, Nike's on deck to report earnings after the bell on Thursday. Also, options traders betting the sportswear giant could be due for its first positive results in more than a year. Mike, what are you seeing on this one?
- [38:30]
Mike Koh
Yeah, so right now the options market's implying a one day move of about 7% slightly more than that by the end of the week. That's less than the long term average move of about 6%. But over the last eight quarters, as you pointed out, it's moved around quite a lot closer to 9%. We saw calls significantly outpacing puts and it was the December 80s, those are the ones that expired this Friday that were most active. We saw about 4,000 of those trading for about $2.34 a contract. That was earlier today, more than that traded by the close. And those guys are taking a risk. Limited bet that this could be the first positive earnings release in more than five quarters.
- [39:04]
Tim Seymour
Yeah, Tim, I think it is unlikely that it is though. So I see how the options market is lining up here. I think the expectations for what are true catalysts to change Nike's business in the short term, I'm thinking probably the next two to three quarters. I don't think you have to wait for those catalysts. I think there was a lot of euphoria priced into the CEO change. A man from within with the Nike culture. That's great stuff. And I think this is one of the great global. This is the great global athleisure brand. You don't have to buy it here.
- [39:32]
Melissa Lee
All right, thank you, Mike. Coming up, a bitter day for Starbucks as a company. As a coffee chains business in India hits a roadblock. What is leaving investors jittery today? Straight ahead, more fast Money into. Welcome back to Fast Money Buzzkill on Starbucks, the coffee chain dripping four and a half percent today. Yes, go ahead and groan. And the CEO of Its venture partner Tata Consumer Products said it would open fewer stores in India due to weaker demand. It was Starbucks worst day since May. Dan, you actually flagged Starbucks for us today.
- [40:12]
Dan Nathan
Well, I wasn't even thinking about India. I must admit that headline. I know in China you saw the consumer data. They announced their first ever growth officer in China today. So maybe they're starting to see some stuff that's not so great. And again, a large part of that move was a CEO change. So you know, to me it feels a bit precarious at these levels.
- [40:29]
Tim Seymour
Yeah, I think Starbucks is one I can own here because I think that the brand which is again I think preeminent and ultimately this is an operational dynamic. I do think they have I concerned about pressing power. Brian Nichols basically going the other direction. He's basically saying we're not dropping prices and we're going to hold on to the gross margin. Maybe that's what the stock needs.
- [40:48]
Laurie Calvacina
Yeah, the worst thing that happened to Brian Nickelodeon was that first day move. Right. Anything you could have done for the next two or three years was already priced in. And anything that doesn't happen perfectly is just detracts from that. I don't know if they feel like it's expensive here, but not crazy.
- [41:02]
Tim Seymour
I've been nibbling this at Starbucks over the last two months just a little bit. I mean, you know, it's hardly time to say it's game on. And I do think China and certainly other growth markets are not why you're buying.
- [41:14]
Karen Feinerman
Look, I would just say broadly consumer discretionary stocks, you know, we're neutral on them but we do need more sectors that look good in this market. Right now I can only ride my financials overweight for so long. People hate my energy overweight. And I can.
- [41:26]
Tim Seymour
I like it for what it's worth.
- [41:27]
Karen Feinerman
Well, thanks. There's one person out there but you know, and I've overweighted communication services because it does have a discretionary angle. You know, the valuations aren't great. Interest rates, you know, we've lost that tailwind. I'm really curious and rooting for this sector in the new year.
- [41:45]
Melissa Lee
Up next, final trades. Time for the final trade. If only you knew what we were talking about. Laurie Calvacina.
- [42:03]
Karen Feinerman
I'm buying communication services cheap. Good earnings, not a lot of politics.
- [42:08]
Melissa Lee
Tim Seymour.
- [42:09]
Tim Seymour
You can buy what the CEO wasn't wearing at Macy's. I do think you have a dynamic to a stock price has the ability to move higher with some optionality letter up.
- [42:18]
Melissa Lee
Karen Feiner.
- [42:19]
Laurie Calvacina
Yes, I am optimistic for the holiday season here. Retail name that I like is Gap Stores. They come into this quarter with pretty good inventory situation.
- [42:28]
Melissa Lee
You think Banana does better has been improving.
- [42:32]
Dan Nathan
Yeah Dan yeah, Kramer had fang.
- [42:36]
Melissa Lee
You have. What is it called again?
- [42:38]
Dan Nathan
You know what it is. Just say it Mel. We're going to hear it from somebody who's reputable.
- [42:41]
Melissa Lee
Faithful 8 okay. Yeah. Grateful dad, very memorable.
- [42:44]
Dan Nathan
Faithful 8th. You know, I also like Lori's energy call into the I actually too.
- [42:53]
Melissa Lee
Thanks for walking Fast Mad Money starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company, or affiliates, and may have been previously disseminated by them on television, radio, Internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer.