← CNBC's "Fast Money"
CNBC's "Fast Money"
Red-Hot Reversals… And AI’s Impact On The Insurance Space 12/9/24
00:43:40
Some of this year’s hottest stocks staging a major reversal to start the week. The Tech, restaurants, and asset manager stocks in the red, and if there’s more pain to come. Plus Major developments in the UnitedHealthcare CEO’s murder investigation, and the slaying has the whole insurance space under a spotlight. How AI may be behind a slew of claim denials… and what it means for the future of the industry. Fast Money Disclaimer
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- [00:00]
Melissa Lee
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Guy Adami
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- [00:30]
Dan Nathan
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- [00:58]
Melissa Lee
Live in 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. What goes up. Some of the year's biggest high flyers making notable moves lower today with these reversals say about the market rally and where leadership could be in the new year. Plus, China rising new hopes for stimulus sending ETFs investing in the region soaring today. Is it just the start of an even bigger gain to come? And later, Oracle on the move after its latest earnings report. The chartmaster says it is time to buy Honeywell and how out algorithms could be impacting the insurance industry and how claims are approved or denied. I'm Melissa Lee, come to you live from Studio B at the nasdaq. On the desk tonight, Carter Worth, Courtney Garcia, Dan Nathan and Guy Adami. And on a day where major averages fell modestly, we start with the outsized losses in a number of this year's hottest stocks. Palantir sliding 5% even after hitting an all time high early in the session as a software giant expanded its AI partnership with the US Government. Palantir still the best performer in the S and P this year. Number two on the list, Vista Energy, with the beneficiary pulling back over 7% today. It's been rallying on surging power demand from data centers. Kava, meanwhile, dropping 12% after a major insider shares sale. And Sweetgreen down more than 10 for its worst day since May. Both those stocks have more than tripled this year. And that's not all. Applovin down nearly 15% for its worst day in over two years after being passed over for inclusion in the S&P 500, though still up a whopping 760% year to date. And even Apollo Global Management, which is slated to join the index later this month closed 3% lower after hitting a record early in the session. So what are these reversals signaling to you? Dan, I'll start off with you because you raised some of these issues during our call.
- [02:43]
Dan Nathan
I did. And I'll just say this as our chief salad correspondent here. I think it's the kava and the sweet gene. Yeah, I think it's the carbon, the sweet gene, which were really interesting to me today. They're both up more than 200% as you said. They reverse like 13% off of a high, closing down that much. You know, if you have big gainers like this and you're getting to this point of the year after the sort of gains that we had across the board and you're willing to actually take profits and pay taxes this year, it says something about some of the gains. It says something about where investors at least in the growth trade are starting to focus in next year. You know the one that really stuck out to me, forget the tech stuff, it was Apollo. You know, we started the day it was announced that they and Workday are going into the s and P500. You'll see this rush by indexers. They go and they buy these stocks. It gapped up, you know, and then the fact that it like reversed and closed down in the day from an all time high. This is stock that's up 85%. The idea that listen, this is a great company, you know what I mean? This is like the Goldman Sachs of private equity, that sort of thing. Everybody wants to be them. But the fact that it reversed, closed on the low like that, it is saying something to me about investor appetite.
- [03:50]
Carter Worth
Yeah, look at Palantir is the one and it's a time of season that that acronym. I did it right that yes, it.
- [03:56]
Melissa Lee
Will be doing in January.
- [03:57]
Carter Worth
If you recall a few years ago, mine was the hope trade and P was a Palantir in the hope trade and it didn't work out particularly well. But now it's starting to flex its muscles a little bit. But with today at one point at its all time high, this was a company that was trading about $175 billion of market cap on top of about three and a half billion dollars of revenue for next year. I can do the math. It's about 50 times revenue. It's obscene the valuations that it's trading at. But the reversal today on more than two times normal volume cannot be ignored. It's reminiscent of what we saw within video in March and again in June. And I think this potentially can sift its way into the broader market.
- [04:33]
Melissa Lee
Mounts back to Apollo that was also on heavy volume. And so technically is that, I mean that's.
- [04:40]
Guy Adami
And it's the precondition before an intraday reversal which is extreme strength that seems almost unreal, almost unbelievable. And then at some point it's. No one can know what day, what particular you get what is known as a reversal, which is an intraday event that actually not only undermines the previous strength but calls into question all of the preceding days and weeks that maybe is an over. So think about anything mid. Let's think about horse racing, right? If you go out too fast, the people who spend a lot of money gambling on horses, if the horse comes out too fast, it's too fast on the first or second turn like it's over because they've expended too much energy. That horse ends up fading and going to the back. These stocks are just also loved, right? They're all the most popular, the most inflows. And that's usually when it's right to start to question is there anything more and it's not random that they all did the same thing.
- [05:30]
Melissa Lee
Is there anything more in your view, Courtney? I mean seeing this group of stocks sort of staged, not key reversals, all of them, but some of them.
- [05:37]
Courtney Garcia
You know what I see when I look at this is investors clearly are actually those animal spirits we've talked about like coming after the election. I don't think they're fully unleashed because you are starting to see some profit taking right now. Now when you look at cash levels, people are continuing to dump money into cash right now. Those levers like $6.7 trillion is in money markets right now, which is showing that people still are just not ready to put everything to work. So I think some of this profit taking is perfectly normal. But I would say there's probably more room for the upside here because you're not seeing that euphoria and people just throwing their money at things. Yes, that risk appetizer is on that people aren't off to the races yet. I think that's probably going to continue to go here.
- [06:11]
Dan Nathan
Well, I mean the way I see it, there is a problem though if those animal spirits don't actually kind of materialize the way that a lot of folks into the new year then all the crap that's been rallying over the last few weeks really because it's been a catch up trade. Right. So if you weren't participating and I'll just say this last week and I do not think this is bullish behavior. When you see snowflake up 35%, you see a marvel up 20%. You know, that to me is, you know, it's kind of startling that people are willing to buy those stocks up that much after, you know, they put together a good quarter that was unexpected or something like that. So I just think there's a lot of bizarre behavior. You throw crypto in there a little bit. There's just no fear. And some of these names, and especially some of them that aren't particularly high quality. I want to go back to Palantir. I'm not saying it's not high quality, but this was $175 billion market cap at the open today. This is a company that will do three and a half billion dollars in sales. You can do that math. And they're very concentrated as it relates to the Department of Defense and Intelligence and the like here. So to me, I don't know if that's Lumpy or not, but it just seems like that, that if you're dependent on the government and you're trading at that valuation, that doesn't make a whole heck of a lot of sense to Lumpy.
- [07:18]
Melissa Lee
Mm, Lumpy. You're gonna go for a nickname?
- [07:22]
Carter Worth
No, no, no. Lumpy was Leave it to Me. No, it's in Scrooge, remember, wasn't there, Bill Murray was called Lumpy.
- [07:28]
Dan Nathan
Oh, yeah.
- [07:28]
Melissa Lee
Leave it to Beaver.
- [07:29]
Carter Worth
Dan brings up good points about Palantir. It sounds like something I heard a few minutes prior, but with that.
- [07:34]
Dan Nathan
Did you just say that? All right, I wasn't listening. Sometimes we don't listen. I mean, I'm looking at each other.
- [07:41]
Melissa Lee
I hope you out there though, are listening to all they got.
- [07:43]
Carter Worth
If they, if they tuned in late, they caught him.
- [07:45]
Dan Nathan
Sorry.
- [07:46]
Carter Worth
The VIX was interesting today because it was not commensurate with the broader market move. I mean, understanding it's coming off a low base. But that move in the VIX today I think should be eye opening, closed over 14 on what was yet a down day in the market. But not entirely panic stricken. I mean, it was rather benign. So I think you got to watch that as well.
- [08:04]
Guy Adami
Another extended name. That's obviously a different category on all of these. Wal mart up some 80 plus percent, reversed. They down 2%. It wasn't just these high flying, hard to value dream stocks, if you will. I mean, I mean, it's amazing. Think about Kava. They have, they have hummus. It's incredible, right? They have pita, falafel, they have Falafel? I never heard of such thing. You must be genius. The point is Walmart's not that.
- [08:24]
Melissa Lee
Right?
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Guy Adami
Walmart is a serious business, not to say the cava, isn't it? Maybe it's really seriously good guacamole or whatever they've got in there. But the point is Walmart also reversed. So a lot of big extended names are vulnerable as well.
- [08:33]
Melissa Lee
So when you patch this together, what does this pastiche indicate to you?
- [08:39]
Guy Adami
The question is, I think it is consensus, and rightly so, that this is a good period seasonally to be just long. Most people don't want to book the gains, take the taxes and money flow is there. And so people typically run things to the end of the year. But that is not. That's not a strategy, that's not a thesis. That's just a. Okay, maybe, but maybe not, right? And I think consensus, it's just fine. We're going to run the year. It's going to be fun. Markets reverse for no reason. And perhaps today is an important day. It wasn't a big day for the market, but it was a big day for where the fever is really high and my fever broke.
- [09:14]
Melissa Lee
Are you looking to pare any gains at this point into the end of the year?
- [09:17]
Courtney Garcia
Yeah, and I think what's happening with a lot of clients right now is if you haven't made changes this year and a lot of people haven't, they're saying things are doing well. I don't need to take any profits right now, but especially if you're in like indexes or mutual funds, all of those tech companies are doing really well and you are overexposed to those. That is something we're starting to take a look at is saying, yeah, it probably is time to take some profits. But you have a lot of people out there, we're finding this with our clients, where you don't necessarily have to take the profits if you've got all this cash on the sidelines and you can use that to buy up new shares without taking profits on your high flyers. And I think that's part of what you're seeing in this dynamic. But cash levels keep going up, which is very confusing here. But I do think you're going to, at some point in time you're going to see that go back in.
- [09:53]
Dan Nathan
I'll just say this, we haven't mentioned semis yet, Right. So a lot of the performance that we saw in the S&P 525% of the gains as of a few weeks ago was in videos performance. Right. And if you look at the smh, the ETF that tracks it, right. You look time on time on semi and Nvidia make up like 35% of the weight there. And look at what the SMH has done since June or July. It's gone sideways. Carter makes this point all the time. This is trading where it was in May so it's made no progress versus the S and P. The S and P I think has had more than 55 new all time highs this year. I think that's near an all time high. So if you're thinking about what is the leadership into the new year, Is it going to be semis? I'm not sure. Is it going to be software that just rip the igv? Throw that up there. I'm not sure. That's played a little bit of catch up. We've seen massive multiple expansion in all of these groups without estimates going up commensurate with where strategists are putting their S and P targets. Right now we're looking to target I think of the guy from Oppenheimer put up 16 and a half percent or so. The S and P would be lucky to have that sort of earnings growth. So if it comes in at low teens then that's all multiple expansion. Right. And you better have a better macro view about how we justify those valuation.
- [11:01]
Guy Adami
And the multiple is not let's say cheap. Right. So you to get multiple. But the semi is easy in a way if you're just taking a pastiche. If the technology sector is the most important and semis have been the most dynamic within the most important and largest 32%, the faltering in semis and the great Nvidia that the equal weight Philadelphia Semiconductor index peaked in July. We're about to be January 1st. So the number one darling has been under pressure for quite some time.
- [11:27]
Melissa Lee
All right, speaking of semis, Nvidia falling more than two and a half percent today after a Chinese regulator opened an investigation into the chipmaker for potential violation of the country's anti monopoly law. This as China leaders promised more proactive fiscal measures next year to boost the economy. That's on shares of JD.com PD Baidu and Alibaba jumping 7% or more. For more on what the stimulus could mean let's bring in CNBC contributor to Wardrobe McNeil. He's the managing director at Longview Global toward. Great to see you. I first want to tackle this in video issue in the probe there let's be clear. Is this retaliation Melissa, it will certainly.
- [12:06]
Duarte McNeil
Be perceived that way by many here in Washington and elsewhere. You know, China has spent several years building out a large toolkit of statecraft tools like the anti monopoly law, the anti foreign sanctions law, the unreliable entities list. And we're seeing these actions of people being companies being added to these lists after the US has taken actions that China dislike. The perception will be Nvidia was added to, or at least the investigation was announced under the anti monopoly law after the US Last week tightened restrictions on semiconductors. We've seen this with skydio after the US Sold drones to Taiwan. And so there, I haven't seen the details. There certainly may be some legitimate monopoly issues here. This dates back to a 2020 purchase of Melanos technology. So people will wonder, well, what took four years to get us here? Lending more credibility to this being a retaliat regulatory action versus one that's really based on the economic fundamentals of antitrust.
- [13:13]
Carter Worth
Dwarven, it's great to have you here. So on top of this, the Chinese are allowing their currency to weaken in a way we haven't seen in quite some time. And J.P. morgan had a note out recently saying, you know what to combat tariffs, that's exactly what they're going to do. So you throw that on top of this mix and it feels like things will get a little dicey between the two countries.
- [13:33]
Duarte McNeil
Yeah, look, I think you're doing a great job here pointing out the depreciation of rmb. The question becomes how can you continue to do that and match, let's say this gets up to 20 or 30%. We don't have to get to the 60% that Trump is talking about. At some point you're going to create a situation where capital flight is going to become a real problem. You're going to hit the US with currency manipulation, which is another tool in the US Toolkit. So I'm not sure that depreciating the RMB is the answer here to address Trump tariffs, but certainly this is something that we have to keep an eye on.
- [14:15]
Melissa Lee
How do you, how do the fiscal measures that China says it's going to take next year factor into this whole, I mean, next year, President Trump takes office next year, all of a sudden they're going to have more moderate policy. That's no coincidence.
- [14:30]
Duarte McNeil
Well, listen, to be fair to the Chinese, they have been talking about the need to address domestic consumption. This is familiar to all of us here. Last Central Economic Work Conference last year. This time one of the top things on the, on the list was address domestic consumption. This hasn't happened. And so what I say to people is the rhetoric is great. The policy that they're announcing that they're going to put in place, we have to see what the details are. The diagnosis is right, the problem is correct. It's matching the policy solutions to the problems that you've suggested and implementing this in a way nationally that's effective and that I have not yet seen. So I would take a cautious approach and say let's wait on the details before we jump the gun here on them having finally decided to do something about domestic consumptions and the handle deflation. I don't know yet what the details will be. Melissa.
- [15:32]
Dan Nathan
So Duarte, you mentioned they're finally doing something. And I can go back two and a half months and I remember then they finally did something there. We had, you know, a handful of kind of stimulus measures here. So we think about the timing of this and I know the Chinese are meeting right now and the expectation was that they're going to come out with something. Do you think it has anything to do with President Elect Trump's tough talk versus China? The idea of kind of turning up the trade war a little bit and then like the whole idea that, you know, we hear this again and again, they're really, you know, to them face is really an important thing. Right. So the idea that the US Is going to start to kind of really accelerate growth, they're going to really take the upper hand as it relates to, you know, high end chip manufacturing and design and the like here. Does this have anything to do? We talk about the Trump trade all the time. Is the Chinese response maybe part of that?
- [16:19]
Duarte McNeil
Yeah, listen, I think it's fair to say that you can't ignore the Trump factor and some of the thinking around what we're likely to see in China from an economic policy standpoint next year, they're not going to be able to export their way out of this challenge, largely because the China shock is something that even the Biden administration has been on guard for and Trump will certainly be on guard for this. And so you're going to have to turn to your home market juice, domestic consumption in order to help deal with this. But I will say, Dan, that in addition to the Trump factor, there's just some legitimate issues that China have to deal with for its own economy's sake. Again, the issue of domestic consumption has been on the list for over a year. It was a part of the agenda last year for the Central Economic Work Conference long before we knew Trump would be president. So, yes, there's some Trump in this, but there's also a lot of reasons for China to do this, for China to Ward you.
- [17:17]
Melissa Lee
Great to speak with you. Thank you.
- [17:19]
Duarte McNeil
Thank you, Melissa.
- [17:20]
Melissa Lee
To Wardrick McNeil of Longview. Interestingly, in response to the possible fiscal stimulus next year, local indices didn't really move, but it was the K Web. It's, you know, sort of these other stocks international investors are in, which makes.
- [17:34]
Carter Worth
A lot of sense. Carter talked about this last week. I know Courtney's talked about it. I mean, the reversals we've seen in these names over the last couple of days are really interesting. And Alibaba, for example, filled that entire gap that was created on the way up in September. Now we filled them. You know, I think that Alibaba easily goes back to 100, which is a 50% retracement at 80 to 120. But I'm thinking we take out that 120 early next year.
- [17:57]
Melissa Lee
Yeah.
- [17:58]
Courtney Garcia
And this is going to continue to be something with the Trump administration. There is going to be issues with US China relations and that's where companies who have a lot of exposure in China are going to be exposed. You have something like an Nvidia. They already can't sell most of their advanced chips to China. I think it's like 12% of their revenues in China, which I don't think that's as much of a concern for them. I do still like emerging markets in the long run. I mean, I think the China aspect of it really takes over the whole, you know, people say, oh, I don't want emerging markets at all because it has China in it. But it's still over 50% of global GDP and only 10% of market cap. So I think there's still a lot of opportunity there. Yes, there's going to be short and short term political headlines, but I think as a law in the long run, you want to take advantage of these opportunities.
- [18:37]
Guy Adami
I mean, the move in F or K web, it's been almost hysterical, Right? It's been spasmodic. The biggest inflows on record in October, biggest outflows on record in November, People just moving, chasing and momentum is a great thing unless you get caught the wrong way. And then popping today, one of the.
- [18:54]
Dan Nathan
Most interesting things that I saw in reaction to the China News was EVs. If you looked at BYD, if you looked at Xpeng, you looked at Nio, they were raging today. And you know, Tesla opened up and it did close lower. So that to me is really interesting that those stocks were waiting for this sort of reaction, this sort of kind of. They haven't even done the lower interest rates thing and I think that probably.
- [19:13]
Melissa Lee
Really helps with coming up, a number of big after hours movers, Oracle toll and more reporting results, details and numbers out of the quarters next. Plus major developments the United Health Care CEOs murder investigation and the slang stirring up a lot of anger about insurance industry practices. Wire Next Guest says technology algos and AI may be supercharging claim denials. Don't go anywhere Fast Money's back into Waiting for Dinner Spice things up with Golden Nugget Online Casino with hundreds of the hottest games, Golden Nugget lets you live up in your downtime on classics like Cleopatra or exclusive games only found on Golden Nugget Online Casino. Forget about waiting. Golden Nugget keeps the action rolling while your dinner simmers. New players can get $50 instantly in casino credits. All you have to do is Sign up with code FAST MONEY and deposit just $5 to get 50 in casino credits. Make any moment golden gambling problem. Call 1-800-GAMBLER or in West Virginia visit www.1-800gambler.net Please play responsibly. 21/ph in Michigan, New Jersey, Pennsylvania and West Virginia. Only void in Ontario 1 per new customer minimum $5 deposit max $50 issued in non withdrawable casino credits that expire in 168 hours. See terms@goldennuggetcasino.com welcome at PJM, we actively manage risk today while targeting outperformance tomorrow. So no matter what investment risks concern you most, from geopolitics to inflation to liquidity, PJM brings disciplined risk management expertise that spans 30 market cycles. Our active approach finds opportunities and volatility, helping our clients to navigate risk and achieve their long term goals. PJM Our investments shape tomorrow today. Ryan Reynolds here from Mint Mobile. With the price of just about everything going up during inflation, we thought we'd bring our prices down. So to help us, we brought in a reverse auctioneer, which is apparently a.
- [21:15]
Dan Nathan
Thing Mint Mobile Unlimited Premium Wireless 3030 bid to get 30 get 202020 better get 2020 better get 151515 15.
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Seema Modi
Just 15 bucks a month.
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Guy Adami
Sold.
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Melissa Lee
Give it a try@mintmobile.com Switch $45 upfront.
- [21:28]
Courtney Garcia
Payment equivalent to $15 per month New customers on first three month plan only taxes and fees extra speed slower above.
- [21:33]
Melissa Lee
40 gigabytes in detail. Welcome back to Fast Money. Oracle shares plunging after hours of software company reporting earnings just short of wall street estimates a confere way. Let's get to see Modi with the latest Seema Hey Melissa Orgel CEO Safra Katz on the call blaming the stronger dollar for the negative impact on the company's third quarter guidance. So perhaps that's also weighing on the stock right now. However, on the topic of Oracle's growth in the AI segment, she says GPU consumption is up over 300% year over year and that she adds that Oracle is delivering the largest and fastest AI supercomputer scaling up to 65,000 GPUs, which is basically this powerful data center that Oracle is building to run complex AI models. Customers including OpenAI and Microsoft chairman Larry Ellison just right now chiming in saying that the use cases really span across health care and agriculture and it's all powered by Nvidia's AI chips, which Ellison is known for having a strong relationship with. Nvidia CEO Jensen Huang Katz also touting the success of Oracle's cloud business, which is, she says, faster and cheaper than its competitors. And that revenue growth is expected to accelerate further in the coming quarters, hinting at new contracts. Shares of Oracle DOE down about 7% in after hours after hitting an all time high in today's trade. It's up about 75, 70% so far this year. Melissa Seema thank you Seema Modi and this again fits into that category of reversals of darlings for the year. All time high today, heavy volume, didn't close at lows but here we are in the after recession.
- [23:09]
Guy Adami
Yeah, just for fun here I'll read you. This was at 233. What do you think of Oracle as incoming portfolio manager reports tonight, steady as she goes are getting toppy. Here's what I wrote back. Has gapped up four quarters in a row. Tough to pull that off a fifth time. I'm a seller.
- [23:23]
Melissa Lee
Double digit percent gains out on the back of all those quarters.
- [23:27]
Carter Worth
Quarter was fine. I mean but when you're trading at the valuation of the trading at, you're going to get whacked. And to Carter's point, there's some unfilled gaps. I mean they have something called RPOs, which is remaining performance obligations. They were up 29% over $80 billion. So it's all there. Their cloud business is growing year over year in a meaningful way. The valuation is a problem. So if you don't beat and raise, you're going to get whacked. Now there'll be a level to buy it, but I don't think it's 178.
- [23:50]
Courtney Garcia
Yeah, I think this is very simply a high bar that was set. I mean they are really well positioned here in the story. Their data centers, I think of 162 currently they need to get up upwards of a thousand data centers just to meet demand. I mean long term they really have a lot of opportunity there. When they were up almost 80% going into this reading here. I mean I think you're just kind of setting up for, for a high bar unfortunately.
- [24:11]
Dan Nathan
Yeah. So they're talking about GPU consumption and you know, I look at that and I look at kind of revenue growth in the cloud space and I said to myself it comes in line. So they're talking about a story here. They're the lowest price provider they miss on operating margins. I mean to me it just seems a little messy. And so you better hope that those contracts come in. You better hope that pricing stays the way it is or gets better. And that is a supply demand situation. So to me I, you know, again, I kind of put valuation there. I put price action in there. I'll probably reiterate what you just said because that's what I'm doing today, repeating everything, just repeating everything my smart co panelists have been saying. I don't know, it seems, it seems messy and to your point, to open at the all time high reverse close down, you know, 5, 5% or so and then have another 7%. There's no reason to step in and buy any of these stocks that have done this in the last couple of days.
- [24:59]
Melissa Lee
Coming up, more after hours action to bring you Toll Brothers, Vail Resorts, C3AI and MongoDB all reporting results, the stock moves and what you need to know from those quarters. Next. Next. Plus, a spotlight on the insurance industry as the investigation to the murder of the United Healthcare CEO continues to unfold. The latest details and how the surge in AI is impacting the way insurance claims are approved or denied. You're watching Fast Money live from the NASDAQ market site in Times Square. Back right after this at PJM, our global perspective today unlocks investment opportunities tomorrow. Our 1,400 investment professionals provide global expertise and local insights to help you navigate the complexities of a changing world. We offer a diverse range of active strategies across public and private markets to help you identify opportunities and achieve your long term goals. PJM our investments shape tomorrow today. Ryan Reynolds here from Mint Mobile. With the price of just about everything going up during inflation, we thought we'd bring our prices down. So to help us, we brought in A reverse auctioneer, which is apparently a thing.
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Dan Nathan
Mint Mobile unlimited premium wireless 30, 30.
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Courtney Garcia
Bid to get 30.
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Carter Worth
Better get 20, 20, 20.
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Dan Nathan
Better get 20, 20, 15, 15, 15, 15.
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Seema Modi
Just 15 bucks a month.
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Melissa Lee
So give it a try@mintmobile.com switch.
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Courtney Garcia
$45 upfront payment equivalent to $15 per month. New customers on first three month plan only taxes and fees. Extra Speed slower above 40G detail.
- [26:32]
Melissa Lee
Welcome back to Fast Money. Toll Brothers shares on the move after the homebuilder reported earnings and revenue that beat street expectations for its latest quarter. Our Diana Ole got all the numbers. Hey, Diana. Hey, Melissa. Yeah, told beat on the top and bottom lines. Despite mortgage rates shooting higher during the couple's fourth quarter, home deliveries increased 25% year over year. CEO Doug Yearley wrote in the release, since the start of our fiscal 2025 six weeks ago, we have seen strong demand, which is encouraging as we approach the beginning of the spring selling season in January. He added that last year we increased community count by 10% and are targeting a similar increase in fiscal 2025. Toll is of course the luxury builder, so not as rate dependent as other builders. The average price of a toll home is just over $1 million. The big gain in the stock market may have had a bigger impact to the upside than mortgage rates did to the downside, Toll is also broadening its product lines, price points and geographies and it's increasing spec sales. So all of that likely played into the strong quarter and what ended up being a record year in revenue for Toll. Melissa. All right, Diana. Thank you. Diana Olek Toll's an interesting one. Also a strong stock for the year.
- [27:40]
Carter Worth
Yeah, it is. And this is me, the last one in the homebuilder space to feel it if things do sort of get softer in the economy given where their price points are, are. But they're not going to be based, they're not going to be insulated from it either. So you look at this, it was an EPS beat. I think people a little concerned about some of the metrics around it. I can understand why people start to take money off the table in these homebuilders, especially if you think for the lower end guys, interest rates will continue to go higher.
- [28:05]
Dan Nathan
Yeah, I just mentioned some of the folks that play into this trade. So if $1 million is kind of the average price for a toll, I don't know if you guys saw Guy mention it earlier. This is the RH, the Restoration Hardware making new 52 week highs today. Whirlpool. Huge, huge gains. Today was up 10%.
- [28:21]
Melissa Lee
So Wal Mart.
- [28:22]
Dan Nathan
Yeah, you're Wal Mart. But that reversed in Walmart.
- [28:24]
Melissa Lee
Reverse or. Yeah, that's a, that's a Carter mentioned earlier.
- [28:28]
Carter Worth
Are you here tonight?
- [28:30]
Dan Nathan
I didn't say Walmart wasn't. I know say RH or Whirlpool.
- [28:34]
Melissa Lee
No, no. You're doing a great job tonight, Dan. Don't worry about it. Don't let it get to you in terms of being worried about that higher end consumer.
- [28:43]
Courtney Garcia
Yeah, I think really with the homebuilders in general too. I mean I understand the idea that interest rates are not coming down, but there are just not enough homes to go around. I mean it is going to take years to build enough houses of the gap. That's happened because they basically just stopped building after a wait. Now there is too many people who are looking to buy homes. So Toll Brothers a little more insulated. They have higher income. Consumers have a lot more equity in their home. So think of all your baby boomers or empty nesters are buying those homes with their current equity and they're more likely to buy in cash. They actually don't have as much exposure to the new entry level homes because it's higher price. I do think that's where a lot of the demand is right now. You're getting those lower income and the younger consumers who are looking for those entry levels, they're just not in there. And I think that's something that's probably going to benefit here, you know, regardless. Fire rates.
- [29:23]
Guy Adami
Yeah. Also of course as you mentioned, a great area of the market in terms of strength. But relative performance has been stalling for weeks and weeks. I think the peak was back in August for the itb. And here we are again, mid December.
- [29:34]
Melissa Lee
Coming up, major developments in the United Healthcare CEO murder investigation. A person of interest now in police custody. The latest on that and how the murder has put a spotlight on the insurance industry's practices of approving or denying claims. More fast money in two. Missed a moment of fast.
- [29:50]
Dan Nathan
Catch us anytime on the Go follow the Fast Money podcast. We're back right after this.
- [30:04]
Melissa Lee
Welcome back to FAST money. Stocks pulling back from records. A kickoff the week the Dow falling 240 points. The S&P and Nasdaq both down about 610 of a percent. Two New York City ad agency titans announcing a merger deal, Omnicom and Interpublic behind some iconic campaigns like got milk and MasterCard's priceless. The deal is expected to close in the second half of next year. The combined company will be worth more than $30 billion shares check out shares of Apple hitting another record high. Shares are now up more than 28% this year. And some after hours action. Vail resorts on the move after reporting EPs and revenues that beat estimates. C3AI and MongoDB both jumping after beating expectations. MongoDB announcing their CEO and CFO Michael Gordon will step down at the end of the fiscal year. And Eli Lilly announcing a new $15 billion share repurchase program as well as a 15% increase in quarterly dividend. Well, a person of interest in the murder of a United Health Care CEO now in custody. Police arresting 26 year old Luigi Mangione. The New York Police Department says he is being held near Altoona, Pennsylvania after being spotted by a local McDonald's employee. The insurance executive Brian Thompson was shot and killed in Manhattan last Wednesday. Authorities have not given a motive yet, but the murder comes as insurance companies rely more and more on technology, specifically artificial intelligence, to process claims. Brown University School of Public Health Dean warns the technology is causing a surge in denials. Dr. Ashish Jha joins us now. Dr. Jag, thank you for being with us. We do appreciate it. You know, we talk about typically on this show air as being great for corporate America. It saves a lot of money, it cuts down on costs, etc. For the insurance industry. What have we seen so far? Because it is still early days in terms of the IMPACT Act.
- [31:45]
Guy Adami
Yes.
- [31:45]
Seema Modi
So first of all, thanks for having me here. It is early days and insurance companies have jumped right into this and they're using this technology to do a lot more denials, a lot of inappropriate denials. Was there some data that suggests that 25 to 30% of claims may be getting denied using AI technology? So it's a real challenge.
- [32:04]
Melissa Lee
How do we actually know that it's causing an increase in denials? Because those numbers aren't readily available. And as I understand it, part of the Affordable Care act act allows federal regulators to collect that information. But in large part that information hasn't been collected. So how do we know that this is actually causing a spike in denials?
- [32:21]
Seema Modi
Yes, it's a great question. I mean, certainly anecdotally we hear this from doctors who describe this and from patients as well. And it's really caused a lot more frustration. We heard from health systems. I think it's important that companies actually report this data. What proportion of claims are they denying? What claims are they denying? Transparency is going to be very, very important here.
- [32:40]
Melissa Lee
The important thing to understand also about the use of AI, and we know this from the use in other industries is that it's only as good as the data you put in. And so for the insurance industry, what sort of data is being put in there? Because you think about AI models, and the potential is that in the past they've denied certain amounts of claim, and so this sort of perpetuates those denials as well as perhaps even biases when it comes to race and gender.
- [33:04]
Seema Modi
Yeah, exactly. And so look, in the past, when you denied claims based on, let's say, a really expensive drug for which there was a cheaper alternative or expensive treatment, that made sense, or at least it was reasonable to do. The way these models are getting built and the way they're being deployed, we just actually know very little about it. What we're seeing is a lot more denials, including denials of things that are obviously necessary services. And so that is, I think, what is causing so much friction in the system and so much frustration for doctors and patients.
- [33:32]
Melissa Lee
Do you think AI is. Is. And I hate to ask this question because it is so early in sort of the impact on any industry at this point, but I use this historical data, and do you think that it's agile enough, so to speak, in the medical industry to actually say, you know what, we can approve this medicine because it is actually better in its new.
- [33:53]
Seema Modi
Yeah, it's a great question. My view is, over time, these models will get better as long as we're focused on trying to make them better. Look, AI definitely can be used to make sure that care is more appropriate, that unnecessary stuff isn't being. It's just not how insurance companies are using it right now. Right now they're using it to try to deny a lot more things with the hope that they're going to be able to spend less money on health care. It's causing a lot of side effects, as it were. Over time, I hope these models get better.
- [34:18]
Melissa Lee
Do you think that this is going to be the moment that we look back on, you know, this moment in time here with the tragic killing of the CEO, when we actually took this moment to try and address some of the issues in the health care industry?
- [34:32]
Seema Modi
Yeah, well, first and foremost, I mean, this murder was completely horrible, unjustified, and I hope that we see this nothing but an as an unadulterated evil. Now, that said, it has sparked a national conversation. I think we insurance companies have to do a better job of focusing on these issues. And to the extent that it might lead to some policy action, that would be a good thing. Again, the murder itself is terrible, but I am hoping that maybe we can see some more reforms in this industry.
- [34:59]
Guy Adami
Industry.
- [35:00]
Melissa Lee
You have worked in the government during the COVID pandemic. And so I'm wondering, you know, if you were to advise lawmakers, advise whatever agencies, hhs, so what to look into in the insurance industry from your perch at the school of Public health, what would that be, first and foremost, from the consumer standpoint?
- [35:18]
Seema Modi
Yeah, I mean, first and foremost, I think we need a lot more transparency. You know, the fact that we don't know what proportion of claims are being denied is a huge problem. I think companies should be very transparent about what are they denying, why are they denying it? If you're using AI, what models are you using? I think all of that would be extremely helpful. It would create incentives to build better models, and it would create incentives for people to be much more appropriate in how they do denials. That's all stuff that government regulators and government agencies can demand. And I think that would make an important difference.
- [35:47]
Melissa Lee
Dr. Jha, thank you so much for your time. We do appreciate it.
- [35:50]
Seema Modi
Thank you.
- [35:51]
Melissa Lee
Dr. Ashish Jha of Brown. We ask all these questions because we wonder what is going to be the lasting impact on the insurance industry. And so if we have stirred up this public debate, this public conversation about what needs needs to be done, all these things that need to be done that are cited, potential additional regulatory overhang on this industry.
- [36:12]
Carter Worth
Absolutely. An overhang, without question, potentially a headwind. But there's a reason why Warren Buffett bought Geico when he did, and he owns, I think, almost 7% of Chubb right now. And if you pull up a CB chart, for example, there's a reason why this is lower left, upper right, for the basically entirety of its publicly traded life. So. So it's an incredible business that potentially could have the existential risk of what we're talking about, but I don't think it's imminent.
- [36:35]
Dan Nathan
Yeah. I'll just say this. If you're unfortunate enough to have somebody who has a chronic illness in your life, you will recognize that this is exactly the sort of experience that you have. You're denied coverage, you're denied medicine, you're denied treatments, that sort of thing. And it's very frustrating when you think about the idea of adding AI into this. This is a very personal thing for the folks that are suffering from this sort of stuff and need this sort of treatment, and that it's being done in a very impersonal way. So let's hope there is some change. Change and something good comes out of what a horrible incident is. And you know, maybe it is policy. I would be surprised under this new administration that comes. But maybe some of these companies recognize the fact that they could do better.
- [37:10]
Melissa Lee
And impersonal, literally, it is being done by a machine that has been programmed and doesn't necessarily have the oversight of a human being. Or that human being is a doctor who isn't necessarily as familiar with that particular patient's experience and needs. Needs. Yeah.
- [37:26]
Courtney Garcia
And I think this is where we talk a lot about AI and there's a lot of pros about it, but obviously there are going to be cons. We're just now getting this figured out. And I don't know if the implication here is do the insurance companies know that more claims are getting denied or are they just, you know, really relying on AI more than they should? I don't know. I don't know if anybody has the answer to that. But those questions have to be asked. And you know, will it affect bottom lines? It is quite possible. So something to keep our eye on.
- [37:49]
Melissa Lee
Coming up, Warner Brothers Discovery shares they are jumping after inking a monster cable distribution deal that could pave the way to major growth for the beaten down streaming stock. Got the details Next plus, is this long term laggard ready to break out what the Chartmaster is seeing in Honeywell's technicals right after this. More fast Money into Welcome back to Fast Money. Some media moves in today's session. Comcast and Warner Brothers Discovery inking a new global cable distribution deal and settling a dispute over. Harry Potter writes this as shares of our parent company fell sharply on new worries about cord cutting. Julia Borson's got the details. Hi Julia. Hey Melissa. Well, Comcast and Warner Brothers Discovery announcing a renewed and expanded global distribution deal. Comcast will be able to bundle ad supported versions of Max and Discovery plus in its streaming Bundles plus for Sky. The deal now includes an ad supported Max app when the service launches in the UK and Ireland in early 2026. Warner Brothers discovery shares were higher, but then ended the day down fractionally. Comcast shares, though, plummeted down nine and a half percent after Comcast Cable CEO Dave Watson said at the UPS Global Media and Communications Conference that the broadband business would face similar challenges in the fourth quarter as it did in the first half of this year, saying that in the fourth quarter they could see just over 100,000 broadband subscriber losses in part due to an impact from the hurricanes. Watson noting broadband competition remains intense and that improvement seen in the third quarter would not be continuing this quarter, shares of rival charter also fell 9%. On those comments, Watson did note that Comcast is the nation's largest Internet service provider with 32 million subscribers and their growing average revenue per user. He also said they're one of the fastest growing wireless companies. Melissa. Julia, thank you. Julia Boorstin, what do you make of this?
- [39:47]
Carter Worth
Well, I got to tell you something. The reversal on WBD today traded North north almost 11 and a half dollars at one point. Today closed unchanged, slightly lower. This, if I recall correctly, this was a bearish to bullish reversal a while ago for Carter. But when you see a move like this, it leads you to believe that maybe that portion of the trade is over. So take this one, I think, and tread lightly.
- [40:11]
Guy Adami
Yeah, a big movement up 70% off its low and far above the hundred face. It's made the turn now a little rich trim take profits.
- [40:18]
Melissa Lee
Yeah. How about you? Yeah.
- [40:19]
Courtney Garcia
I mean, it's a tough business. Cord cutting is clearly going to continue to be a problem with a lot of these firms. And I think what you need to see is, is that streaming platform and having the content to continue to have the subscribers there. And I think it's going to be one of those things where it does cannibalize some of their customers in the short term. Long term, there's a lot of opportunity here, but I think there's still a lot of headwinds that I, you know, I would tread lightly.
- [40:37]
Dan Nathan
This is such a confusing scenario here because no one knows where any of these services are. They're going to need to get rebundled. And so, you know, when you see these sorts of deals and these stocks both trade down off it, I know there's some other stuff going on at Comcast, but I think the next piece of news that people feel good about some of these streaming services is somebody like Apple just rolling them all up and giving you like, you know, like the cable companies did before without the cable boxes.
- [41:01]
Melissa Lee
Who wants to have five different streaming services, which I'm sure some people, I mean, I know guy you don't stream.
- [41:05]
Carter Worth
Anyway, we're running low. I wanted to watch the Ranger game Friday night because I'm a fan. And there, you know, Jacob Truba got traded as you predicted. I knew that and I couldn't, I won't use the vernacular, but I had to find like the Hulu thing and espn. It was a nightmare for somebody like me. So it's infuriating. I finally found it for a long time. I got there like early second period. You don't care.
- [41:28]
Melissa Lee
No, I do care.
- [41:29]
Carter Worth
No, you don't care.
- [41:29]
Melissa Lee
I do care. I do care.
- [41:30]
Carter Worth
But it's, it's, it's mad.
- [41:32]
Dan Nathan
You know what? You have to download an app from MSG plus it's 29.99amonth. To watch the Knicks. Yep, to watch Knicks. And the radio.
- [41:41]
Melissa Lee
How does Comcast chart look, Carter asking for a friend?
- [41:45]
Guy Adami
Yeah, a little less. A little less well, today. But I mean, here's something that's just been a long standing kind of. So what? It's not really working. I would. Whatever. Yeah. Just would keep it for one.
- [42:00]
Melissa Lee
I want to know.
- [42:01]
Guy Adami
I mean, I guess it. Does it look as though it's imminently at risk of really getting weaker? No, but there's just no life to it. It's life.
- [42:08]
Melissa Lee
All right. Coming up, a sweet buy call from the chartmaster. Why? He says you can catch more flies with these technicals. That name ahead. More fast money into. Welcome back to Fast Money. Honeywell lagging the broader industrial sector this year. But the Chartmaster out with a note this morning saying it, it is prime for a pop. So let's turn to him now for the details. Carter.
- [42:36]
Guy Adami
All right, so this is not exciting, right? Honeywell, an old line, sort of industrial, about a third aerospace, then other divisions, they're into building and so forth. But a laggard is either a problem or it's an opportunity. And if you have the setup of long and pronounced underperformance, then nascent outperformance and that's what you have here. You have the prospects of something good. So you see those comparative lines, it's pretty straightforward. You got S and P and you've got the industrial sector. And then of course they're bringing up the rear. Is Honeywell basically unchanged over the course four years? Let's look at it a different way. Two charts coming up and they're identical. These are two panel. You're looking at Honeywell on the top. You see it's been going up since the COVID low, but its relative performance to the market of course been going straight down into its sector. Let's iterate this a different way. And what I think is coming here is that we're going to break out on an absolute basis and you would get a concomitant move up and out of that downtrend line on the relative performance. Finally, just the last plain simple chart playing for a breakout. Now, do all stocks that are toying with past highs break out? Of course not. But we play the cards as they're dealt. You play breakouts and after that you take your chances.
- [43:50]
Melissa Lee
Concomitant, I think, is a word that is underutilized.
- [43:53]
Dan Nathan
I won't repeat that word because I have no idea what means guy, what kind of with.
- [43:59]
Carter Worth
So from 2020 to pull Carter's chart, I mean, it's an uptrend and over the last year and a half, two years, a series of higher highs and higher lows. If Louisiana Motto was here, she's not.
- [44:11]
Melissa Lee
Carter because we have Carter as we have Carter here.
- [44:13]
Carter Worth
She would say bigger space, the higher the base.
- [44:16]
Melissa Lee
Higher space.
- [44:17]
Carter Worth
Well, we've been building this base now. So 232 carters at the prior high from the fall of 2021. It's going to take it out. I'm with Carter on this one.
- [44:24]
Melissa Lee
Where are you on industrials?
- [44:26]
Courtney Garcia
You know, I agree. I think there's a lot of optimism here when you look at this stock. But I think this is also something where there's a lot of talk of M and A activity with this new administration. I think this is something that if it doesn't hit those new highs and every hoping they hit, this could be one of those companies where the sum of the parts is higher than the company as a whole. So I think there's a lot of opportunities there that it could go higher for several reasons.
- [44:46]
Melissa Lee
Industrials overall. Is that a terrible chart or is this just relative strength versus the sector?
- [44:51]
Guy Adami
No. Well, Honeywell has been terrible.
- [44:53]
Melissa Lee
Right.
- [44:53]
Guy Adami
And that's the industrials relative to the S and P. They're running at a very high correlation. It's just the same chart. They've been up and to the right and obviously a few big names have dominated it.
- [45:02]
Carter Worth
Boeing gets dragged into the mix. Right. I mean, I think that's probably part of this whole thing. But you know, very quietly, Boeing has seemingly stopped going lower on news and the news really hasn't. The news cycle hasn't been there for them. So at one time the time has come. I think so. I mean, what did he do? That's the thing. Dan likes Dogs of the Dow.
- [45:20]
Dan Nathan
I love it.
- [45:21]
Carter Worth
That could.
- [45:22]
Dan Nathan
I don't know.
- [45:22]
Carter Worth
What are you talking about?
- [45:23]
Dan Nathan
By the way, when Courtney just mentioned Honeywell in like some sort of M and A. She was like in grade school when GE tried to buy Honeywell. Do you remember that one about 25 years ago? It was a disaster. Never happened. Just saying.
- [45:36]
Melissa Lee
All right, she is a younger panelist.
- [45:39]
Dan Nathan
That's what I meant. She should be fired by that. She is.
- [45:42]
Melissa Lee
She should be.
- [45:44]
Dan Nathan
Not you. You're fine.
- [45:45]
Melissa Lee
We're all up next. Final trades. Time for the final trade. Let's go around the horn. Carter, Braxton, Worth, Honeywell.
- [46:05]
Guy Adami
Buy it for a breakout.
- [46:06]
Courtney Garcia
Courtney, the home builders. I think I'd continue to take a look even with higher rates here. XHB is a way to play it, Dan.
- [46:13]
Dan Nathan
We're going to do this. Build your dreams. Byd.
- [46:18]
Melissa Lee
Is that what it stands for?
- [46:19]
Dan Nathan
Yeah. Largest EV market share in China. They're killing it right there. I think they lower rates. I think this goes higher. Lower rates. Byd. Higher.
- [46:27]
Melissa Lee
I did not know that, that it actually stood for anything.
- [46:29]
Dan Nathan
The perplexity just told me that.
- [46:33]
Melissa Lee
Guy.
- [46:34]
Carter Worth
I mean, it's crazy, right? It's a fun show, though, for a Monday night.
- [46:37]
Melissa Lee
All right.
- [46:38]
Carter Worth
It was raining out. Gold. It's Barrick Gold.
- [46:42]
Melissa Lee
Melissa Lee all right, thank you for watching Fast Money on this Monday. Mad Money with Jim Cramer starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do.
- [46:56]
Courtney Garcia
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 media.
- [47:06]
Melissa Lee
You should not treat any opinion expressed on this podcast as a specific inducement.
- [47:10]
Courtney Garcia
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 first and foremost.
- [47:34]
Melissa Lee
The thing that powers your business is power.
- [47:37]
Dan Nathan
And when it comes to power, Ford Pro has options. Now, scratch that.
- [47:42]
Guy Adami
We've got every option.
- [47:44]
Dan Nathan
Diesel, gas, hybrid, and all electric. Plus, they're all connected, so you're always in the driver's seat. The power is yours. Visit fordpro.com today to learn more.