Guy Adami (2:37)

Guy It's a great question, Melissa Lee and I will attempt to answer it. I don't, I don't think it's, I think it actually is telling the real story. I think The S&P 500 is telling one story. But you look and I'll add a couple other things. At one point today, The Vix traded almost 19 on what was a pretty benign day. You mentioned bitcoin underperforming. Maybe part of that is Jerome Powell walking back a December cut. But this was in process long before he started talking. You mentioned the Staples as well. I mean there's something clearly going on and I think the volatility index is sniffing it out. I also think this weakness in the bond market, I want to be careful here, is something that's going to sort of permeate over the next couple of weeks. So despite the fact that those seven to ten names we talk about are doing very well, market breadth and other things suggest something otherwise.

Tim Seymour (3:22)

Yeah, market breadth has been, has been miserable. If you're a Mag7 ETF or a Mag7 player, life's good. And today was that kind of a day and has been pointed. I mean the equal weighted S and p is down six and a half percent since September 1st. Meanwhile, semiconductors have outperformed the S&P by 22% since September 1st. So it just tells you, I mean a micron which is, which is doubled. It just gives you some sense of what's going on here. Obviously we're going to talk about this other headline today, which is Amazon Open Air, yet another one. But I think the dollar creeping above 100 on the dollar index is another one of these things. It's not that the dollar, which often can be seen a dollar rally is a, is a risk off moment. It's just, it's a combination of a lot of things. I think the weak dollar trade is something that a lot of people were expecting. I think there's a dynamic that people believe is important for the stock market. And so, yeah, I mean there's, there's a lot of anecdotal evidence in a world where we apparently don't have real government data anymore that certain parts of the economy listen to the shippers listen to a lot of different parts of the economy rails over the Last couple of weeks have given us actually a lot of data points in terms of what is the most economically sensitive, arguably part of the economy, at least to impact stocks. So I would just jump in and say I think after a heroic run in equities, it's not surprised to run into some heaviness. I still think this is the best month of the year. I still think we're going to be higher than where we are today by Thanksgiving. Gobble gobble guy. And I think it's a case where you, you know, you can't overthink this. The Fed's out there. Different members of the Fed are saying we' now more focused on inflation than the jobs market. And so there's not this green light for straightforward Fed and everything else. Even though again, the most exciting trade in the world is game on.

Steve Grasso (5:00)

So I think if you wanted to buy the market off this dip, you would have to have a green light by the Fed. So I think that's the number one.

Melissa Lee (5:06)

Thing to cut again the cut again.

Steve Grasso (5:08)

Number two. Guy said it's been going on for quite some time. The week is a bitcoin meme. Stocks, Quantum stocks, those have been bought. Those are the risk ones. Those are the non profitable companies. And then Jerome Powell last week takes December off the table. That means rates are going higher or the market saying that rates are going higher. So what goes lower? Staples, it's competitive. Higher rates, they underperform. What does doesn't perform well with higher rates is bitcoin too. So there's a double reason why bitcoin doesn't perform well. There were choices a month ago with Quantum. Now they have higher rates to look forward to.

Dan Nathan (5:47)

Just say on the earnings front, you know, the dollar that Tim just mentioned, it's kind of doing this rounding bottom, it's back up to that $100 level. And then if you think about rates, if they're not like definitely priced to go much lower from, you know, US multinational standpoint, there's some pressure there as far as earnings have been a tailwind and on the, on the crypto thing, I mean, listen, you know, bitcoin was moving higher when rates were higher, you know, and I think this is one of those ones where you want to kind of say there's certain relationships that make some thing has defied a lot of relationships. And I think what's going on right now is that over the last couple of years we had this move, we had the ETFs that were being listed, then we had deregulation and then we had these treasury strategies. Well, it doesn't seem like there's too many other companies now signing up for these treasury strategies. And if you think about it, MicroStrategy was first to it. I think they owned 640, 640,000 bitcoins. I mean like 3% of all the available bitcoins. That might work out great for Michael Saylor and strategy. It might not work out that well for all these other companies. He is, he just owns bitcoin. The other ones are basically replacing stuff on their balance sheet with bitcoin. It might end up not doing the thing that they hoped it to do. And then if we ever have a reason for this to unwind a bit, it's going to be quite nasty. And then if you think about, you just mentioned all those companies that have gone public, who are these trading companies or brokerage firms or whatever? I mean, if you don't have stablecoins, if you don't have a healthy stablecoin market, then those companies, I don't know why they exist. Right. We already have places in which to trade them. If you look at Robinhood, how much that they trade these things, why do you need a company just designated to be there to trade crypto? Like that's my personal view. I mean, I have a Robinhood account or Fidelity account. I could trade it all right there.

Melissa Lee (7:23)

Right.

Dan Nathan (7:23)

And I got to have my 401k there. I don't think that's the thing that those other exchanges are there to do. They're there to kind of do stablecoins. And to me it seems like a solution in search of a problem.

Steve Grasso (7:34)

And then when you see technicals on bitcoin, every time you trade down $5,000 worth, you see this DE levering come in or risk adjustment come in at the dance point. The higher bitcoin goes, the higher those Robinhood coin coin stocks will go. But if once you take the steam out of it, that unravels to a lot of tentacles in that whole space dramatically quickly.

Melissa Lee (7:58)

Yeah, I mean, I think that it's, it's a good point. That there's a lot more leverage in this trade than there had been before. And so this unraveling happens at a much faster pace. Let's put a pin in it for now. We've got some breaking news. Want to get to on Starbucks and it's China business. Kate Rogers got the details. Kate?

Kate Rogers (8:12)

Hi, Melissa.

Melissa Lee (8:13)

That's right.

Kate Rogers (8:13)

We've been anticipating this news. Starbucks announcing its found a partner in China entering into a joint venture agreement With VOYU Capital, it's a leading alt investment firm to operate Starbucks retail business in China. Now under this agreement, Voyu will hold up to a 60% interest in Starbucks retail operations in China. Starbucks will retain a 40% interest in the joint venture and it will continue to own and license the Starbucks brand and IP to the new entity. Boyu is going to acquire its interest based on a cash free debt free enterprise value of approximately $4 billion. And Starbucks expects the total value of its China retail business to exceed 13 billion. Two other details here. The joint vet venture. According to this press release, Starbucks expects this to be finalized in Q2 of its fiscal year 2026 after completing required regulatory approvals. And just a reminder, the China business, Melissa, has really been turning around. In the most recent earnings report last week, same store sales were up 2% boosted by a 9% climb in traffic. And a reminder for viewers, China is extremely important to the Starbucks business. They often refer to it as their second home market. You can see the stock is higher by 2% right now on this news.

Melissa Lee (9:25)

Back over to you, Kate. I'm not familiar with Buy you Capital. Where is it based?

Kate Rogers (9:30)

So I'm not sure where Boy you is based, but the operations are going to be headquartered in Shanghai. Melissa, I'm still going through the release and I'll bring any updates that are pertinent back over to viewers.

Melissa Lee (9:39)

Okay, thank you Kate. Kate Rogers and Starbucks. Starbucks shares are up about 2% on the announcement of this JV. Tim, as a shareholder, what do you make of this?

Tim Seymour (9:47)

Well, on some level it may be positive. You've been concerned about them not being able to do it in China without a partner. There's been a lot of local competition. This Boy deal, whatever we're calling this deal, where they've given up majority control is something that this isn't. I mean this is a headline that's been out there for the last week and some of this started to come out on their earnings call, which wasn't fantastic. In other words, we get back to the story which is it's going to be really hard to find what the next catalyst to take Starbucks higher. Even though I think you've priced in a lot of bad news, I don't think you have to run out and buy it. And I don't think this, this headline is something that should have people overly concerned about. China is no longer a growth spot.

Melissa Lee (10:24)

We are learning that Boy you Capital is a Hong Kong based firm and that may play into the strategy here. You want some Chinese partner right A Chinese partner to be in China, I'll.

Guy Adami (10:36)

Just say this October 8th, I think it traded down to 80 bucks. Starbucks go back to May, trade it down to 80 bucks. So if you want to trade against something, it's the $80 level. Obviously you're through earnings now, so you don't have that as a catalyst. So I actually think you might actually get some momentum to the upside here in Starbucks.

Dan Nathan (10:51)

You know it's interesting, another US brand is having a tough time over there is Tesla. And you see that some of the local operators are doing much better than Tesla. Tesla is expected possibly to have a 5% year over year decline in China when some of their competitors expend, they're growing at like mid teens or something like that. So to me it's kind of interesting. I don't know how a Tesla partners locally. I mean there is in a major price but it's interesting to think about. We're in the middle of this trade war and make no mistake about it, we're still in it. Some US brands are going to continue to have a hard time for nationalistic reasons, but also operational reasons.

Steve Grasso (11:24)

Brian Nicholas, an operator, and you can't count him out, but this is a very hard thing for him to turn around, right? The amount, the sheer amount of stores that you have, he's got a bunch of different levers that he's trying to pull. None of them have worked so far, but technically this is where the stock should bounce. This has been support going back to April. I would take a flyer out on it.

Melissa Lee (11:42)

All right, meantime, Evercore ISI finding unprecedented bullish harshness among clients in this latest weekly market sentiment survey. Let's bring in Julian Emanuel, the firm's senior managing director. Julian, great to have you with us.

Julian Emanuel (11:53)

Great to be here.

Melissa Lee (11:53)

So you were shocked by these results?

Julian Emanuel (11:56)

Shocked. So look, and again, part of it is a function of the fact that contrary to a lot of people's expectations, ours included September and October were as strong as they were. And frankly, we all know what the calendar looks like that November and December tend to be positive months anyway. But this level of bullishness in our mind is a bit of a contrary arbitrary indicator. Going back to 2018, the second highest reading we got when we asked what's the next 10% in the S&P 500 was 69% set up last week, it was 76%. You know, and frankly when you think about the setup and you think about last week, we got a lot of good earnings news, we got a lot of good Geopolitical news and the market just really sort of didn't go anywhere at the index level. And we've got a little bit of a information vacuum the next couple weeks and the government that's still shut down. So it's a near term cautious setup in our view.

Melissa Lee (12:55)

But longer term, you are bullish.

Julian Emanuel (12:57)

Absolutely. Absolutely. The, you know, as, as uncomfortable as owning stocks at this valuation has been, and frankly, we want to see it become uncomfortable once again. You know, you look at the AI story, it continues to get better and the earnings are just incredible.

Tim Seymour (13:20)

So what you're saying is basically disregard some sentiment and stay in for the long haul if you're that type of an investor. But to the extent that we just got done talking about market breadth, which is narrowed almost to, you know, a short little kind of triangle here. What, what does this mean? Is this part of your euphoria dynamic or would you be concerned more broadly about market breadth? We all know there's a headline tomorrow, there's another one next week, and there's another one next week that's about retrofitting AI capacity and all these big boys that are already there. We know those headlines are coming. The rest of the market's not doing much.

Julian Emanuel (13:55)

Right. Well, so. And if you look at this last couple of years of bull market, unlike the late 1990s, which we are all fond of comparing it to, you've had market breadth expand the entire time, whereas in the late 90s it was declining for those last couple of years. And so to sort of lose that prop the last few weeks is certain, certainly a worry. And to your point earlier, Tim, is nobody is positioned for a stronger dollar. And when that's the case, you tend to have other pain trades. Bitcoin is certainly likely to be one of those. And the entire recipe tends to be something that will likely spread the caution. Again, we're not going to have any more information until the last of the Mag 7 reports two weeks from now.

Guy Adami (14:43)

How problem, by the way? I don't think this is going to happen. I think they cut in Dec for the market would be. If they didn't cut in December, it.

Julian Emanuel (14:51)

Would be pretty problematic. In, in, in our view, they are going to cut. We still basically, if you look at the market implied probability, it's around 65% today. We think actually counterintuitively, we'd rather see that move down to 50% because that's when you put a little starch into the vix and you put a little fear in people's eyes cut and you get Your buying opportunity.

Steve Grasso (15:17)

Julian, how concerned are you over the SCOTUS decision on tariffs right now? And if they rule against tariffs, does that just make you more bullish? Because the cuts would probably be coming.

Julian Emanuel (15:27)

Well, here's the problem, Steve. Do we as investors actually like tariffs now or do we not like them? That the market likes, the market does like them. And our concern is probably less than an adverse ruling because our policy people think the Trump administration will be able to find a workaround to call it 80 to 90% of the tariffs that are on the books right now and more, whether the payback is mandated, the $250 to $300 billion that's been collected, that's the kind of jolt that the interest rate market is not prepared for. Interest rate volatility is actually lower than equity volatility right now.

Melissa Lee (16:11)

Going back though, to the contrarian indicator of your survey in the short term, do you think that indicates the bullishness, the extreme bullishness, that you've seen a short term pullback and if so, what, what magnitude of a pullback?

Julian Emanuel (16:26)

We don't think again, given the seasonality of November and December, it's going to be all that incredible. You know, the, the 50 day moving average, which is about 3% below where we are right now, has held most of the pullbacks the last several months. But frankly, when the market is priced at 26 times and there is an element of complacency against all assets, it's probably enough again to create a more robust buying opportunity.

Melissa Lee (16:56)

Julian, great to see you. Thank you. Julian Emanuel. I love the expression put starch in the volatility.

Dan Nathan (17:02)

Yeah.

Melissa Lee (17:02)

I mean, it's very.

Tim Seymour (17:04)

Get a visual on that.

Melissa Lee (17:05)

Right, right. You can just feel it stiffening up and.

Tim Seymour (17:08)

Absolutely.

Melissa Lee (17:09)

But would you agree about the assessment in terms of where we are right now, Dan?

Guy Adami (17:13)

Yeah.

Dan Nathan (17:14)

I mean, there seems to be a bubble in calling a bubble in AI, and that's something. No, I mean, and I get it. I look at the market and I see these two things. Right. Tim just kind of described what's going on under the hood. And the rsp, the equal weight versus the mega cap weight. And I hear a lot of folks talking about how the financials have participated, industrials have joined the party, that sort of thing. And I say to myself, there's no way this market is going to come down meaningful if it's not done by this sort of trade, like that's it. And look what's going on in the aftermarket right now. I mean, Palantir, I know we're going.

Steve Grasso (17:44)

To talk about it just.

Dan Nathan (17:45)

But this is important to this market conversation. I mean stocks unchanged and the guidance that they gave us, fine. You know this is a company that trades 100 times sales and normally you would say well it's not good enough. You know what I mean? People would take in profits and they're not the other thing as far as the options market concerned, look at any of these sorts of names there. The calls are more expensive than the puts. People are more interested in getting upside exposure than they are downside exposure. And that's telling me a lot about something about the psychology with the market right here.

Melissa Lee (18:12)

Well, speaking of the trade, let's get to Amazon here. Surging 4% today, closing at another all time high. The latest jump coming after Amazon Web Services and OpenAI announced a $38 billion multi year cloud deal. Today's move combined with Friday's post earnings reaction marks itself best two day gain for Amazon stock in nearly three years. I read an interesting comment from RBC about this saying that Amazon is the only one with no agreement with OpenAI and so that was negative investor sentiment surrounding the stock and now it has an agreement. So it's joined the club. It's okay to get in on this trade guy.

Guy Adami (18:47)

It also did something so it traded two times normal volume today. It opened basically where it closed. And they have two gaps lower in the chart you're setting up for, dare I say a bit of an island reversal if we open lower tomorrow. I didn't think the news today was that earth shattering. I will say collectively we had been bullish on Amazon into earnings. I think this move today extends it. I think it trades lower from here.

Tim Seymour (19:08)

I think it validates though investments NWC has made and they're going to, they're going to retrofect retrofit again, AI and Datacenter. The capacity on this deal that essentially goes to work right away runs out at the end of 26. So. So this isn't one of those ones where we're talking about 28 to 32. This is one that actually really is, is, is in play now for a company that has been making the investment. So for, for a company that I know this is hard to ever say about Amazon but that has a relative valuation argument in favor of it over at least some of the players and certainly relative to itself. I'm not surprised to see the traction guys right on the fascinating on the charts and to the extent that people were waiting for this kind of an announcement, let's see how much you follow through. But those numbers that they had late last week were great.

Steve Grasso (19:52)

This just keeps the momentum going out of earnings. When you see us recapture some momentum up 20% year over year, this is, this is what they had to do because now they have a seat at the table too. I'd be a buyer right here of it. It's a catch up trade.

Tim Seymour (20:05)

Yeah.

Dan Nathan (20:05)

And you know, Open Air is interesting. They seem to be and maybe this is a great strategy for them. More interested in running this sort of compute than actually building it out. I know Stargate exists and this is something that's going to come in the future. And you know, we got the Oracle deal, we got all this sort of stuff, but they're spraying this all around and you know, you use the word tentacles. I mean at point, if there is.

Tim Seymour (20:24)

Just the metaphors are flying.

Dan Nathan (20:27)

What my only point is to go with this. I mean things better go right with Open Air because if it's not, the tech sector as we know it is just going to be decimated.

Melissa Lee (20:36)

Coming up, we're just going to move on. Earnings season rages on. Shares of Palantir on the move after reporting in the last hour the numbers and details from the latest quarter. Next plus a media meltdown. Why Wall street is changing the channel on shares of Comcast and whether there's any chance of a rebound for the stock. Don't go anywh. Fast money's back in two.

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Melissa Lee (22:33)

We've got an earnings alert on Palantir. Shares volatile even after the company raised its fourth quarter revenue guidance above Wall street expectations. It also beat top and bottom line estimates. The stock close a regular session at a record. The conference call kicked off at the top of the hour. CNBC's Morgan Brennan has got more in the quarter. Hey Morgan.

Kate Rogers (22:48)

Hey, Melissa. Well, the big earnings takeaway here for Palantir and this is from the call is AI is driving the growth. U.S. is driving the AI adoption. Palantir's U.S. revenue grew 77% last quarter. U.S. commercial up 121%. Q4 U.S. commercial forecast it's implied to be similarly strong here. Rule of 40 score. This is an eye popping 114%. This is an enterprise software metric. Higher's better. I spoke with CEO Alex Karp and I asked whether he thinks an AI bubble is inflating and or a shakeout coming across the tech space more broadly given all the deals being struck, all the capital pouring in. He told me, quote, here's this large set of the AI market that works either in consumer or enterprise. The things that are valuable will remain valuable. The things that are not valuable are going to get flushed out. The strong companies are going to get much stronger and the people pretending they're doing stuff are going to disappear quickly. Now I think looking at Palantir's numbers, he would be suggesting that Palantir is one of those valuable companies that gets more valuable. The conference call still ongoing. The last thing I would say, Melissa, on this and this was a big part of my call with Carp, conversation with Karp and it's a big part of this conference call right now is what this new AI era and implementation of it is going to do to the economy and to the workforce. Karp talking about a worker available GDP and that that's the focus of Palantir, but basically saying that what's going to be valued within the workforce and what that's going to mean in terms of demographic breakdown and how that's going to reverse and change is underway here and it's going to that is basically going to change what we consider the most important when it comes to workers of the future.

Melissa Lee (24:26)

Morgan, thank you. Fascinating stuff. Morgan Brennan on Palantir. We should know in terms of the reaction the stock sort of in the after hour session at this point it had beat 19 out of the past 20 quarters at about half the time, traded up half the time, trade lower. So it's, you never know. It's a coin toss when it comes to the reaction to the actual earnings.

Guy Adami (24:44)

Dr. Karp said it was the best quarter. Software companies ever. I'm not going to argue with them. Okay, that's fine. And it's probably true. The margins were spectacular. Numbers are great. Here's the problem. Dan points this out. I will point it out as well. It trades north of 90 times revenue, which historically we have never seen before. Now if you say, you know what, she swizzed, they're going to grow into that. That's fine. They got to grow really quickly in order to get to that valuation. And I don't think we're anywhere close. I mean, they'll do maybe $6 billion of revenue sitting on top of a half a trillion dollar company.

Steve Grasso (25:14)

It trades above to guys point above 100 times EV to sales. 55% of it is from the US government. 66% of revenues are from our domestic revenues. But when you think about it, they're in the crosshairs. The Trump administration is friendly with them. Did they take a stake in them yet? They didn't. Right.

Tim Seymour (25:34)

They're talking about the CIA has a stake and they, they're one of the original backers.

Steve Grasso (25:39)

So, so, but, but the Trump administration akin to Intel. Do they take a 10% stake? I don't think they did as of yet.

Melissa Lee (25:46)

Why would you say it should be a strategic.

Steve Grasso (25:48)

It's because it's a, they've been talking about. It's a strategic asset. It's a defense. It's, it's, it's, you look at anything in.

Tim Seymour (25:54)

So buy high, sell higher.

Melissa Lee (25:56)

Despite I think it's coming in. There could be a government.

Steve Grasso (26:00)

So that's the only reason I could have bet against this company a while ago. I didn't think that 50. I didn't want to buy a company that was 55% dependent on the US government. But you do have a friendly government for the next couple of years. So you might not be wrong in buying it now.

Tim Seymour (26:17)

I just feel, I mean, the government story is well known in the stock. I almost feel like the stock trades as if it has a strategic partner in the government and effectively they do. And we know that government, the government component of the growth, I mean, is 52% of revenues and it continues to kind of be sizable. I mean, that's good and bad. And I understand with this administration, it's been Fantastic. You know, I wouldn't bet a bet against this company in the current environment we have. I think everyone's right to point out that the valuation makes zero sense. The valuation has not made sense for three years in Palantir. And it goes higher.

Will Lewis (26:50)

Yeah.

Dan Nathan (26:50)

Except that a year ago is trading at 40. Right now is trading at 208.

Tim Seymour (26:53)

Right.

Dan Nathan (26:53)

And that obviously, you know, that's that difference between 50 billion and 450 billion or whatever it is. But like two guys, we've just never seen a stock like this, not at this scale. And you know, it's a software company.

Tim Seymour (27:04)

Okay.

Dan Nathan (27:05)

And it takes sales and it takes people to implement it. It takes people to kind of update stuff. And you know, all of this revenue that they're speaking of, $4.4 billion this year, it's not all AI related too. So I just think that no one's really drilling in and doing a whole.

Will Lewis (27:19)

Heck of a lot of work.

Dan Nathan (27:20)

There's momentum, stocks. It's a great story. It continues to work. At some point it's not going to be able to grow into this valuation.

Melissa Lee (27:26)

All right, Palantir shares flat right now in the aftermarket coming up. Palantir may be surging this year, but there is a lesser known biotech keeping pace. What is driving inside stock and what the CEO sees in store for the company. You're watching Fast Money live for the NASDAQ markets site in Times Square. Back right after this.

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Melissa Lee (28:40)

Welcome back to Fast Money. Comcast shares down 3% today, closing at levels not seen in more than nine years. The latest move coming as a slew of analysts cut the price targets on the stock stock Citi, Goldman Sachs, Deutsche Bank, Barclays, all lowering estimates after Comcast last week reported a fourth consecutive quarter of broadband subscriber declines. Comcast owns NBC Universal, which is currently the parent company of cnbc. So logically we do watch Comcast shares very closely and it's been a really rough ride for this one. What do you think of the nine.

Guy Adami (29:13)

Year low you just said? I think was January 16th. This is a huge support level because you get through here and there is open water probably down to a teenager. When I say teenager, 18 and a half, 19. Now people are going to point to valuation and say it's cheap. Problem of course is that's been as expensive as Palantir has been on the way up. That's how, that's how cheap Comcast has been on the way down. You don't buy this for valuation.

Dan Nathan (29:35)

Yeah, one of the unfortunate things like so I know we've been talking a little bit about this YouTube, YouTube TV and this Disney thing, right? So I have YouTube TV and I don't get to watch ESPN. You know what I do? I canceled that. I got who Hulu. Like the idea that you would ever go back to a proper cable situation. It just doesn't exist anymore. So again, it's sadly a melting ice cube that business. And we'll see because it really is YouTube TVs and the streamers game to win here.

Melissa Lee (30:00)

Right?

Tim Seymour (30:00)

At 10 straight quarters of contraction and you lost another 100 and something thousand in broadband subscribers, which is the largest part of the business. And again when that starts to shrink, it's really a concern concern I think more indicative of just what's going on overall and what we're seeing in telco, what we're seeing in cellular.

Melissa Lee (30:19)

It's been a rough month coming up, a biotech boom. Shares of Insmet have more than doubled since the summer. What is pushing the stock higher and what the CEO says will drive results going forward? He'll join us next when FAST MONEY returns. Welcome back to FAST money. Stocks mixed to kick off November. The Dow falling more than 200 points. The S&P up about 2.10of a percent and the NASDAQ climbing about a half a percent. Kimberly Clark announcing a deal worth nearly $49 billion to acquire Tylenol maker. Can view the move coming just weeks after the Trump administration made unfounded claims linking Tylenol use during pregnancy with autism. Can view shares up 12% today while Kimberly Clark dropping nearly 15%. On the news.

Tim Seymour (31:06)

News.

Melissa Lee (31:06)

Jim Cramer, by the way will be speaking exclusively with Kimberly Clark's chairman and CEO on Mad Money tonight. That's 6pm Eastern Time. Shares of Eli Lilly getting a boost up nearly 4%. The pharma giant planning to build a $3 billion plant in the Netherlands to expand production capacity for its weight loss pill. Lilly in September announced a six and a half billion dollar plant in Houston, Texas. And Serapha Therapeutics plunging after hours. The company saying it's Duchenne muscular dystrophy treatment did not show significant improvement versus the placebo in the latest study. It also posted a drop in revenues for the latest quarter and swung to a net loss. Those shares down just about 36% even with a slight pullback today. Inside up over 11% since reporting earnings just last Thursday. The rare disease drug maker posting strong sales of its lung disease treatments including Brin Super, a first in class drug that launched during the quarter. So far this year, insmed shares have kept pace with one of the market's high flyers as Palantir, prior to the software's company's earnings. Tonight, both stocks are up roughly 170% year to date. Joining us on set for more insight, CEO Will Lewis. Well, great to have you with us. Guy was remarking that the first time you were on the show the stock was what, $30. So this is quite a journey that you've been on during this past quarter. We had the launch of Brun Supri, which had been better than what analysts had been expected. Q4 though should be the test. So can you sort of walk us through the push and pull going into Q4? There was some indication on the calls, I understand it, that there could be a more normalized run rate in Q4, but there are a lot of other positive catalysts that could also come about in Q4 like improvement in back office, improvement in payers, etc.

Will Lewis (32:40)

So there's a whole lot of reasons for us to be excited at the moment at the company. The first is that the Brin super launch in its early days and it's only six weeks of data looks very, very strong. We had good breadth of prescribing. We had as many as 2500 patients on drug which is, which is fantastic out of the gate. Q4 is the first full quarter and so we really need to see that to know what the shape of the launch curve is going to be. But we're certainly optimistic about that. And behind that we have a whole host of other clinical and commercial catalysts that we think are going to continue to drive value at the stock.

Melissa Lee (33:11)

If you were to make the case that there could be some upside thing, you know, catalysts that happened in the quarter that would lead to continued uptake of Brin Suppree, what would those be? You know, there could be inclusion, for instance, in the US Recommendation in terms of how this disease is treated, and that could help Brin Supri uptake. What else is there that investors should consider?

Will Lewis (33:33)

So chest guidelines just came out and we were, they're draft guidelines, but we were included and recommended for use under those guidelines. And that's not surprising. This is the first and only approved therapy for the treatment of bronchiectasis. This is a disease that's been around since 1819. So for 200 years, no one has been able to develop a drug that could have an impact until we came along. So we're very excited about that, take that responsibility very seriously. We have a lot of disease education going on as far as catalysts that will drive it from here. It's really the breadth and depth of prescribing. We need the Centers of Excellence to continue to write scripts for patients that will benefit from the therapy, as well as expanding to the almost 30,000 pulmonologists across the United States that are in a position to write this drug.

Melissa Lee (34:14)

There's a lot of penetration to come in terms of prescriptions. When it comes to your pipeline, though, a lot of analysts are looking forward to Jan 2026, when there's going to be the Birch data phase two readout. Can you walk us through what that could mean for expanded use of this compound?

Will Lewis (34:29)

Well, if you take a step back and think about where insmed is, we are currently serving between the addressable markets for our first drug, Ericase, and our second drug, brin supri, roughly 250,000, 280,000 addressable patients at the moment. Between now and the end of this decade, that could increase to over two and a half million. If these various drugs and pipeline prove to be successful. The first check of that will be in January at the JP Morgan Healthcare Conference, where we'll have data on CRS without nasal polyps. As you mentioned, there are more than 30 million people in the US alone that have this condition. There's only one generic generic steroid approved to treat it. So if we were able to make a dent there on the most severe end of the patient spectrum, that would be a significant advance for the company.

Guy Adami (35:13)

Well, congratulations. And people will say, can they go it alone? So I'll ask 1.7 billion cash, cash equivalents marketable securities. How long a Runway does that give you?

Will Lewis (35:23)

Well, we have a lot going on at the company. I like to say that next year, if things fall into place, we could be kicking off almost as many as a dozen phase three trials for multiple indications. So this as much as we've had a lot change in the last 18 months, the next 18 months are going to be even more eventful. We have a very strong cash position, as you say, and I think that's going to serve us well as revenue grows from the launch of Bryn Supri and Eric Case continues to perform. We certainly expect that the clinical spend will pick up as we go after these different indications, but we have a lot of resource behind that, so we should be in good shape.

Melissa Lee (35:58)

So of all those phase three, so that indicates that those experimental drugs are closer to market in theory. So what is the next drug that you would expect to be approved?

Will Lewis (36:08)

So the next one, that's. Of the first three, we have Ericase, which is looking to expand. We have Brin Supri, which is currently approved for bronchiectasis. And we're awaiting data for CRS without nasal polyps and hs, Hydradenitis Suprativa, which will come in the first part of next year. And then we have tpip, which is the drug that we put phase two data out in pulmonary hypertension earlier this year. That's going to be addressing as many as four different indications. Pah, phild, IPF and ppf. And all four of those programs will kick off next year.

Melissa Lee (36:37)

Wow. So in terms of all those different indications, the drug has to be approved for each. So are the trials designed individually for each of those indications, or is it simultaneous?

Will Lewis (36:50)

Well, they'll all be running in parallel, but each one is designed for each specific indication. And obviously there's some read through from one to the other. That's helpful directionally, but we're in a very good position behind all of that. We have another close to 30 preclinical programs that are going to be entering the market over the next several years. We're targeting one to two inds a year for the next several years. So this is really just the beginning.

Melissa Lee (37:11)

Is all of this, I mean, is all in house? I mean, are you acquiring molecules like some other companies are doing from overseas or elsewhere?

Will Lewis (37:18)

All of what I've just described is already in house. We still have a business development effort that's underway, and we're going to continue that in the current environment. There are a number of great technologies and molecules out there. We'd love to add them to our collection. We want to make sure that each drug we bring in though is first or best in class. And if we have that, then we know the impact on the patient will be there. And as we like to say, everything else will take care of itself.

Melissa Lee (37:40)

Will, great to see you. Thank you so much. Keep us posted on the progress Vault.

Will Lewis (37:43)

These It's a pleasure.

Guy Adami (37:44)

Will Lewis, There's a company we used to talk about years ago, Celgene, I think it was bought in 2019 by Bristol for about $74 billion. That's six years ago. So to me, and we'll still here listening to this, but this is this generation Celgene in a lot of different ways. So despite the fact that the stock has been on a rocket ship, I think it's got a lot more to go.

Melissa Lee (38:04)

Coming up, putting the air in appraisal. The CEO of better.com joins us next to lay out how the company bringing artificial intelligence to the housing space and why the latest Fed rate cut could unlock thousands of dollars of savings for millions of Americans. And do not miss Treasury Secretary Scott Bessant on Squawk Box tomorrow. That's 8:00am Eastern time right here on CNBC. More fast money into welcome back to fast money. Mortgage rates are down substantially from where they started in 2025 with a 30 year fix now around six and a half percent. Our next gu that could translate into big savings for millions of homeowners who locked into 7 or 8% mortgages. Michelle Garg is the founder and CEO of Better.com, the first AI powered mortgage lender. Shares of the company are up more than 700% this year. He joins us now on set. We've got a high bar in terms of letting CEOs on the show tonight, stock performance. Michelle, great to have you with us.

Michelle Garg (39:02)

Thank you so much.

Melissa Lee (39:02)

So I have to ask you because I'm sure that intro everybody saying, well, what can I do? I want to say so what is it in terms of your 7 or 8% mortgage right now? What can you do to unlock savings?

Michelle Garg (39:13)

If you've got a seven and a half percent mortgage, then that's 20 million Americans have over a 7% mortgage that they've gotten over the past three years. The best thing you can do is look for a refinance. You the average mortgage rates around six and a half percent. We're at 6.2 on better.com and that 80 basis points, $400,000 loan balance. You know, you can save 30, 200 bucks a year in interest. And that's pretty decent money in inflationary times and where, you know, know, times are tough and we're going into a recession.

Melissa Lee (39:43)

Yeah. In terms of how your business works, I mean, I'm assuming that some of these, you know, a 6.2% rate versus a 6.25%. Excuse me, refinance rate. That difference is partly because of the money that you are able to save because you're using AI.

Michelle Garg (39:57)

That's right. The average mortgage company, it costs them about $12,000 to make a mortgage. It costs better.com $3,000 to make a mortgage. Our loan officer, Betsy, is able to automate so many of the tasks, you can call it.

Melissa Lee (40:09)

Betsy's not a person, by the way. Okay. Just. I'm just making the audience. It sounds like he's talking about somebody.

Tim Seymour (40:15)

You know, not to be shocked as far as he's concerned.

Melissa Lee (40:18)

But anyway, sorry.

Michelle Garg (40:20)

I would tell you that Betsy's better than 80% of the loan officers that you've seen out there. She's trained on 12 million phone calls. She knows all the underwriting criteria across all the investors. She can calculate savings for you. She can, like, figure out, like, what's a better option for you. She can ask you all these questions that people otherwise don't have time for for. And she's open for business. 24, 7, 365.

Guy Adami (40:37)

Vishal, congratulations, number one. Number two, people want to say, what's a comp figure IPO? Talk about how you stack up against them.

Michelle Garg (40:44)

Well, I think figure is a great company. They're focused on the home equity space. And the average American family can save a lot of money by taking all the debts that they have and refinancing them using a home equity line of credit. Americans are sitting on 32 trillion of tappable home equity. They've got 18 trillion of debt debts, half of which they put on since the pandemic. And so we're seeing an average family save 1100 bucks a month by refinancing through home equity. Figure was the leader in the space. They started in 2018. We launched our home equity product in 2023. We're only about 18 months in, but our direct to consumer home equity product is already 2/3 the size of figure. And we're now catching up fast. They're about five and a half times bigger than we are customer, but, you know, they trade at like something like eight, $9 billion valuation. And so, you know, our valuation is just around a billion. So if you think about it from that Perspective we're growing faster than they are. They've done a great job of establishing that there's a there there in the market and reintroducing the home equity product. But we're growing much, much faster than they.

Tim Seymour (41:46)

So Vishal then how about the competitive landscape and you say you're AI driven but it just seems to me that the adoption rate in AI as such and I would think there are a lot of industries where absolutely I will be change the playing field in terms of the efficiencies of the business. Why aren't other people popping up in your space doing the same thing? Well they are but how are you leading them?

Michelle Garg (42:07)

That's a really great question. The average mortgage company works off of eight different systems. They have a CRM system, a point of sale system, a system for the loan officers, a system for the processor system for the underwriter years. We built a system called Tin man from the ground up. It's the first new end to end system in the mortgage industry in 25 years. The incumbent solution that's got 90% market share. You can't even have more than one person working in the file at any time. You probably remember from your Windows 95 SharePoint days where you had to call somebody up and say hey can you get out of the file so I can get back in there. That's how the bulk of the mortgage industry works today. And so when you take a look at that, that we've got the only end to end system which we then have been able to train the AI on being able to do any task inside the system for other mortgage companies. They've got to get rid of the entire core system, retain their entire workforces to be able to implement AI. So what are they doing? They're like making an AI appointment scheduler. They're making an AI like document retriever but that's not real AI. Real AI is when you can take take massive amounts of costs out of the system and deliver that back in savings to the consumer.

Melissa Lee (43:17)

Vishal, great to have you, hope you'll come back.

Michelle Garg (43:19)

Thank you so much.

Melissa Lee (43:20)

Michelle Garg. Coming up, communication breakdown. Why telecom stocks are feeling the pressure and how competition is weighing on this group. More fast money into. Welcome back to Fast Money. Telecom stocks losing signal today. T Mobile, AT&T Verizon all well in the red. T Mobile which hit a record high in March is down more than 25% from those levels. Dan pointed out the weakness earlier today on the call.

Dan Nathan (43:53)

Yeah, I mean this goes with the staples to staples are making 52 week lows and we started the show with this bookend the show like yeah Staples, you know you'd think that okay stock markets at all time highs these stocks stocks trade the other way but you know we have a Vix that was 18 this morning. You think these things are catching a bid and it's just I think it's saying something about there's no cares for like the sort of yields that these guys have, the slow growth, that sort of thing. So to me it's like you want to avoid these deemed defensive stocks right here.

Tim Seymour (44:19)

Yeah and the defensive stocks that were also including tobacco stocks and I mean at one point this year we were looking. They were outperforming the S and P. They were outperforming, they were holding serve in fact they were outperforming delivering the triple cues of the Nasdaq. So I think there's a rotation dynamic I think there's a place like I'm long Altria they had some tough numbers there was. We don't need to get into that. The fundamentals aren't as good as I thought that they were going into those numbers but what's happening for telco tobacco others core staple high div payers that were defensive and part of a barbell strategy not working and I don't think they're going to work.

Steve Grasso (44:53)

Yeah freights are going higher. No one's buying a dividend payer but there's really no high growth name. It used to be T Mobile. You don't have a T Mobile in the telecom space anymore. Seems pretty saturated right now. I have a legacy position in telephone. I think it's just one of those things. I have a certificate hanging on my wall. That's it. That's the only reason I use it.

Guy Adami (45:12)

Yeah framed.

Melissa Lee (45:13)

No just like a.

Steve Grasso (45:15)

You want to come over?

Guy Adami (45:16)

I mean it should be framed quickly Guy because we don't have a lot of time. T Mobile the 200 hour levels where we traded down to in January this is a big support level. So you want to get long, you get long against 200 bucks.

Melissa Lee (45:28)

Up next, final trades. Time for the final trade. Let's go around the horn.

Tim Seymour (45:47)

Tim Yankees Mets argument. That break with Guy almost had me forget that I chose GM as my.

Steve Grasso (45:52)

Final trade go GM Steve Amazon a.

Michelle Garg (45:54)

Seat at the table Dan.

Dan Nathan (45:56)

Nice lemonade.

Melissa Lee (45:59)

Did you forget to powered insurance company.

Dan Nathan (46:03)

We talked a little bit about that. They report on the wait for that.

Melissa Lee (46:06)

But that's a good name Guy, do you remember your final trip?

Guy Adami (46:08)

Yes it would be PSX it used to be Philips 66. It's now PSX Corp. Melissa, back to you.

Melissa Lee (46:14)

All right, well, thank you. Thank you for watching Fast Money. Have a wonderful evening. See you back here tomorrow. Mad Money June Kramer 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 in other media. 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 Are you feeling.

Michelle Garg (47:09)

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