CNBC's "Fast Money" Podcast Summary Episode: Retail Rises As Holiday Shopping Intensifies… And President-Elect Trump’s FDA Pick Impact
Release Date: November 25, 2024
Host: Melissa Lee
Location: NASDAQ Market Site, Times Square, New York City

1. Retail Sector and Holiday Shopping Surge

As the holiday shopping season kicks off, the retail sector is experiencing significant gains. The Retail ETF (XRT) surged over 3.5% today, tallying a 12% increase this month. Key drivers include robust earnings reports from companies like Bath & Body Works, which surpassed expectations and raised guidance, as well as strong performances from Dollar Tree, Target, Kohl's, Best Buy, Nordstrom, and Dixons.

Tim Seymour ([02:21]):
"The overall sentiment around discretionary spending has remarkably changed... Post-election, there will be both relief for consumers and the expectation of more tax cuts. The market is betting on that."

Karen Feinerman ([03:30]):
"Valuations are so low that as this market rallies, people are looking for where there is still any kind of value."

This optimistic outlook is bolstered by the anticipation of holiday sales, with XRT having risen nearly 10% over the last three sessions. The panelists discuss whether this momentum will sustain through the year-end period, emphasizing the cyclical nature of retail performance during this season.

2. Market Reaches Record Highs Amid Treasury Secretary Appointment

The broader market is celebrating record-breaking performances, with the Dow Jones Industrial Average closing 440 points higher, and both the S&P 500 and NASDAQ reaching new all-time highs. The Russell 2000 also hit an all-time high, up nearly 1.5%, marking its first record since 2021.

A significant catalyst for this surge is President-elect Trump's appointment of Scott Besant as the new Treasury Secretary. Besant, a hedge fund manager and founder of Key Square Group, is perceived as a moderating voice on fiscal policy, balancing potential tax cuts with deficit control.

Melissa Lee ([08:39]):
"The market seemingly rallying around President-elect Trump's decision for Treasury Secretary Scott Besant."

Tim Seymour ([09:25]):
"This headline is fantastic for markets at times when there's some fiscal calm. It suggests stability and potentially accommodative policies if the labor market weakens."

Stuart Kaiser ([12:47]):
"He's viewed as a market-friendly individual who understands macroeconomics and is likely less aggressive on tariffs."

The panelists agree that Besant's appointment is fostering a positive sentiment, potentially propelling the markets higher through the year's end.

3. Interest Yields and Monetary Policy Implications

Interest yields have seen sharp movements, with the 10-year Treasury yield dropping over 14 basis points to 4.26%, partially attributed to Besant's nomination. This decline has significant implications for various sectors, particularly housing and homebuilders, which have benefited from lower borrowing costs.

Dan Nathan ([10:06]):
"You have high valuations and a relatively high EPS target. Despite this, sentiment remains pretty positive, making it a tough flow to fight against."

Steve Grasso ([07:31]):
"Scott Besant doesn't change the dynamic in the short run, but his appointment adds policy certainty that markets appreciate."

The discussion highlights how lower yields can stimulate economic activity by reducing borrowing costs, thereby supporting sectors sensitive to interest rates.

4. Zoom’s Strong Performance and Potential Acquisition

Zoom Communications reported a robust Q3 Fiscal 2025 with earnings that beat both top and bottom line expectations. The company also raised its full-year guidance, citing strong enterprise customer revenue growth and increased operating margins. CEO Eric Wan emphasized Zoom's advancements in AI, positioning the platform as an "AI-first work platform."

Dan Nathan ([22:26]):
"With a quarter point of its market cap in cash and no debt, Zoom is an attractive takeover target. Its high gross margins combined with steady earnings growth make it a prime candidate for acquisition."

The panelists speculate that Zoom's strong financial position and strategic advancements could make it a target for larger tech acquisitions, drawing parallels to the Salesforce acquisition of Slack.

5. Nvidia Faces Competition from Amazon in AI Chip Market

Shares of Nvidia experienced a significant drop of over 4%, its largest decline in nearly a month, following reports that Amazon is intensifying its efforts to compete in the AI chip market. Amazon aims to release a new chip approximately every 8 to 18 months, challenging Nvidia's dominant position.

Melissa Lee ([23:58]):
"Shares of Nvidia dropping more than 4% today, while Amazon is bringing new chips like Trainium to market, signaling increased competition."

Steve Grasso ([25:42]):
"Amazon, Microsoft, and Google, who are also significant customers for Nvidia, are turning into competitors by developing their own chips, potentially eroding Nvidia's revenue base."

The panelists discuss the implications of major clients becoming competitors, questioning whether Nvidia can maintain its pricing power and market dominance in the face of such developments.

6. Housing Sector Boosted by Lower Yields and Treasury Pick

The housing sector is enjoying a day of strong gains as yields on the 10-year Treasury note fall, influenced by the appointment of Scott Besant. Homebuilders such as KB Home, Toll Brothers, D.R. Horton, and Lennar saw significant surges, along with home adjacent companies like Sherwin Williams, RH, Whirlpool, Williams-Sonoma, and Wayfair.

Steve Grasso ([28:44]):
"Toll Brothers has the best chart in the home builder space because their clients can pay cash, making them less sensitive to interest rate fluctuations."

Karen Feinerman ([29:18]):
"It's amazing how much this sector moves on a 20 basis point move in the 10-year Treasury yield, demonstrating the sensitivity of housing stocks to interest rates."

The discussion highlights the direct relationship between interest rates and housing demand, with lower yields making mortgages more affordable and stimulating home sales and construction.

7. Health Care Sector and Trump's FDA Commissioner Pick

President-elect Trump's selection of Dr. Marty Makary as the new FDA Commissioner has provided a boost to the health care sector, particularly telehealth companies like hims and hers, which surged over 20% following the announcement.

Angelica Peebles ([31:35]):
"Makary is seen as a pro-science individual who supports innovation, which is positive for companies in the telehealth space."

Jared Holz ([32:55]):
"The selloff in health care was overdone. While there's uncertainty regarding compounded GLP1 products, overall sentiment should improve as Makary supports scientific advancement."

Panels discuss the implications of this appointment on biotech firms, compounded medication providers, and the broader health care landscape, suggesting potential policy shifts that could favor innovation and regulatory support.

8. Airline Sector Thrives on Increased Europe Travel

The airline industry is experiencing heightened activity, especially with increased transatlantic travel. United Airlines is hitting fresh all-time highs, driven by expanded capacity to European destinations such as Palermo, Venice, and Nice. Industry demand is expected to reach unprecedented levels during the holiday season.

Phil LeBeau ([38:52]):
"Transatlantic seat numbers are surpassing those of 2018, and United is capitalizing on underserved markets to meet growing demand."

Tim Seymour ([41:19]):
"The consumer demand for overseas travel, along with competitive pricing, is benefiting airlines like Delta and United, which are offering more revenue per available seat mile than ever before."

The panel highlights how increased travel demand, particularly to Europe, is driving stock performance in major airlines, with Delta Air Lines and American Airlines also positioned to benefit despite some capacity reductions.

9. Tesla’s Stock Under Scrutiny Following UBS Report

Tesla is under pressure as UBS reiterates its sell call, citing a substantial 40% rally since the election and concerns over the removal of federal EV tax credits. Despite this, UBS has raised Tesla's price target from $197 to $226, suggesting mixed sentiments.

Karen Feinerman ([43:31]):
"It's surprising that UBS continues to hold a bearish stance on Tesla despite the stock's performance."

Steve Grasso ([44:37]):
"UBS has never been positive on Tesla since 2014. Personally, I'd rather buy Tesla on dips than follow their sell recommendation."

Dan Nathan ([25:45]):
"Tesla's path to full self-driving remains technically challenging, and regulatory influences remain uncertain despite Elon Musk's ongoing innovations."

The discussion reflects skepticism towards UBS's bearish outlook, with panelists debating Tesla's valuation, growth prospects, and regulatory environment, ultimately suggesting a cautious but opportunistic approach to the stock.

10. Final Trades and Market Sentiments

In the concluding segment, panelists share their individual trades and market outlooks:

• Tim Seymour ([45:56]): Endorses the Russell 2000 (IWM), highlighting its all-time high and favorable positioning.

• Dan Nathan ([46:12]): Advocates for Amazon, noting its recent pullback as a buying opportunity before potential price increases.

• Steve Grasso ([46:18]): Remains bullish on Applied Digital despite Nvidia's challenges, citing strong fundamentals.

Overall, the panel maintains an optimistic view of market momentum, driven by strong retail performance, beneficial policy appointments, and sector-specific gains, while acknowledging potential headwinds from increasing competition and regulatory uncertainties.

Conclusion

The episode of CNBC's "Fast Money" provides a comprehensive analysis of current market dynamics, highlighting the resilience and growth opportunities within the retail, housing, health care, and airline sectors amidst favorable policy developments and strong consumer sentiment. However, it also underscores challenges such as intensified competition in the AI chip market and regulatory uncertainties in the health care and automotive industries. Viewers are advised to consider these multifaceted factors when making investment decisions as the markets approach year-end highs.

Notable Quotes:

• Tim Seymour ([02:21]): "The market is betting on that [consumer relief and tax cuts]."

• Dan Nathan ([22:26]): "Zoom is an attractive takeover target...making it a prime candidate for acquisition."

• Karen Feinerman ([43:31]): "UBS has never been positive on Tesla since 2014."

For more insights and detailed analysis, visit CNBC's Fast Money at fastmoney.cnbc.com.