Tim Seymour (2:45)

Well, welcome Leslie. It's so great to have you here. Great to be here and it's an interesting conversation to have on what was an extraordinary week and Apple is just kind of like an afterthought and that's kind of the problem here. I think that's the issue I think, I think with part of Apple's move to all time highs and as someone that's long Apple and not necessarily because I think there's a lot going on but because I think there's not a lot that's been priced in. I love the Google Gemini partnership. It's not a huge surprise. We know some of the drivers certainly for Google but also for Apple was that DOJ settlement the dynamic here where I think, you know, ultimately I believe Apple is still how much of the world is going to really live their a better life and that has yet to happen. And so the problem with Apple here is there have been a lot of drivers as we just you know Brian handed off the show to us and talked about small caps. Look, this year has been characterized by things that were not necessarily a big part of last year's trade. Although you know, certain parts of the semis are Apple's a perfect example of. I just think there's been better things to trade. I don't, I'm not that alarmed when you look at that succession of weeks lower. Okay, the headlines don't sound great there but you know, stocks whatever down 6% in the last month. The problem is there's not a big catalyst here. The problem is it's 31 times forward. I can live with that in my portfolio.

Melissa Lee (4:02)

By the way, do you think that this is the year that it really joins the AI play in a big way?

Bono (4:08)

I'm not sure.

Melissa Lee (4:09)

Something that everyone's been waiting on.

Bono (4:10)

Well yeah, I mean all indications would actually suggest that they are in no rush to do that. And I think that's one which is part of the downside and why you can probably still own it. But I think it's also why it has not had the same type of returns as say in Nvidia or some of the more closely related cloud and AI names. With that said, I still think that services business is growing and that continues to defend margin. I don't think this is much of a trading vehicle And I think 2025 was very much about owning high Beta tradable names. Even into 2026, the story has been a rotation away from AI, Big Tech and adjacent names into more old industry, economically cyclical and, and sensitive type of names. And so like Tim said, there really is no catalyst there. I think, you know, the, you know, the forward multiple is somewhat concerning and until there is some catalyst, I don't see much upside. But you know, the rotation tends to mean revert at some point. And when you do see money flowing back into, into big tech because there is still a certain defensive nature because of Apple's balance sheet, I don't think you can, can help but actually have that boat be risen along with the other. So no direct catalyst in the short term that will likely be AI and you still have the China overhang, but you still have a service business and ultimately it's always going to be correlated with big tech and there will be money. If it's no, if it's for no other reason than passive investing that continues to flow into that space.

Melissa Lee (5:37)

Yeah, and maybe, Steve, there's a case to be made that kind of that tortoise mentality of Apple as it pertains to AI safety.

Steve Grasso (5:45)

Safe, rewarded for not chasing the dollars.

Melissa Lee (5:48)

That's what I was going to say. They still have a very huge cash board that they're able to deploy. They're not, you know, in this arms race necessarily doing partnerships as opposed to really spending.

Steve Grasso (5:59)

Yeah, I agree. And I think that's the strategy to take and I think they will ultimately be rewarded. Bono, I talked about the reversion trade. So there's been nine times since 2000 where Apple traded down for seven straight days. It always, obviously you look at the chart, it always rebounded aggressively. Now you look at the cash balance sheet. 60 billion, 40 billion, 50 billion. It depends on who's counting and when they're counting. Right. So the services is 22% of revenues. Bono and talked about that growing at 14%, higher margins, high 70% margins. So there's a number of things to be bullish about. If we're just looking at a trade, I think you'd be, you'd be a buyer of Apple right now. If you look at holding it long term, I think you're going to be a safe bet holding it long term, if you're looking at AI, I think the Gemini is very attractive partnership.

Melissa Lee (6:46)

Mike, from a technical standpoint, are there any catalysts that you see?

Mike Howell (6:52)

I mean, I kind of agree with what everybody has said here. I don't that AI is the reason to get into Apple, they're not the pioneers in the space by any means. Steve, you know, hit on probably the most important thing which is that the services revenue, which is about a quarter of their business growing at 14% versus the hardware side growing at about 4%. The company is going to do just shy of 4% free cash flow next year. So that makes it fairly safe. But at 31 times earnings and maybe six and a half, possibly 7% top line growth, it is probably fairly priced relative to the S and P more broadly. So, you know, don't love it, don't hate it. I've actually been pretty impressed by their services revenue growth. I think that that's demonstration that their installed base is really something they're going to be able to monetize. But you know, 7% growth, that's probably a little better than the market overall, but not a whole lot better.

Melissa Lee (7:42)

And obviously Tim, a key component of services and what, you know, a potential use case for AI for Apple would be Siri.

Tim Seymour (7:50)

Yeah, it can only get. Siri can only get better. Sorry Sir. You can hear that. In fact, I'm sure they tried to turn off my phone. Siri will probably bring my phone back to life.

Melissa Lee (8:00)

Sorry, I was going to say what's the upside there? I mean, is that something that Apple could improve to the point where they charge a subscription for that service?

Tim Seymour (8:09)

It's possible. Apple has done a great job of figuring out ways to add to subscription services and we're all kind of seeing our Apple bill slowly creep higher. I just think that again, the partnership with Gemini is giving Apple the ability to build their own foundational models and inputs to ultimately, ultimately drive their own AI. And that's mostly AI apps. And we still haven't seen the app developer world really have the opportunity to use this platform in the way it will. I think it just gets back to not that it's the same, hey, we underestimated Google, so we probably are underestimating Apple. I mean, Gemini is the reason Google has come storming back along with Waymo and a few other things. But I think we've underestimated Apple. We priced in zero AI as we've all said. The capital intensity at Apple is something that's a positive, not a negative and something that I think is a reason that I'm comfortable owning it. It's funny, I'm just going through my portfolio over the last couple of days and looking at certain names that definitely feel like could drift lower. Could Apple drift lower? Yes, Trying to time it. I don't really Care. I actually think overall Apple is going to continue to participate at least with the market over time.

Melissa Lee (9:15)

What about bona? When all of this discussion surrounding a potential succession with Tim Cook and you know, is he getting tired? Is there someone else on deck? I mean, how do you feel about management at Apple and would that provide any kind of catalyst to one direction that you can think of?

Bono (9:34)

Listen, I think Tim Cook has done a wonderful job. I think transitions happen. What would concern me more is if they had made some massive push prior to transition. So you don't want to be in a situation where you're making some overarching, overarching change in and then asking the new entrant to manage that, that directional or strategic pivot. I think the fact that Apple is the, is the Apple that we've known for the last 10 years and essentially has someone that's come up through those ranks and can understand that and then put their own type of branding on top of an existing platform is actually a positive or at the very least like removes a lot of downside risk asking a new person to completely overhaul or create a new strategic, like come in the middle of a strategic shift.

Melissa Lee (10:17)

Right.

Steve Grasso (10:18)

I guess the biggest thing that you just touched on here is you just don't want a hardware person running. You want somebody if, if the money, if the revenue is coming from services. You want somebody from services who gets the cloud, who gets that type of aspect to the business.

Melissa Lee (10:31)

All right, meantime, shake up. Speaking of a shake up in the race for the next Fed chair, President Trump saying today he wants to keep Kevin Hassett wants a top contender for the job in his current position as an economic adviser to the White House. According to Kelsey Kevin Wash, his odds to be Trump's pick shot up to 59% driving a big wedge between him and Hasset whose odds plunged to 16% putting him in third place. For more, let's bring in Ben Emmons, founder and chief investment officer of Fed Watch Advisors. What was your read from the President's comments today? Clearly a surprise to Kalshee. Maybe a bit of reaction in the bond market as well.

Ben Emmons (11:11)

Yeah, I think with the latter was interesting because Kevin Hassett has been seen as more, I guess, not so market friendly. You know, he's come up with statements about we don't want to use the balance sheet and bit more conservative on interest rates as Hassett was much more aligned with the President about these rates, have to go down and speak his agenda. So it's an interesting change here because you know, this was really The I think the front runner has Kevin Hazard. So as this race sort of evolves, and I understand a Rick reader was interviewed yesterday, it's still to be decided. So Bassett said at the end of the day that the president will announce it right after the votes. So this will be, I think, a big deal next week as we see these rising interest rates, rising yields in the treasury market, reacting to, you know, Kevin Walsh going to be the frontrunner.

Melissa Lee (11:55)

Yeah. It's kind of surprising because all of the frontrunners seem somewhat dovish. But I guess the difference that the market's been dissecting has been the balance sheet impact between Hassett and Warsh and who in utilizing the balance sheet a bit more. And it sounds like Warsh would be a bit more hawkish on that front.

Ben Emmons (12:12)

Yeah, for sure. Because he's come out several times saying we've used his balance sheet the wrong way. We've actually given, you know, fiscal stimulus too much of a, of an impetus by using this balance sheet. Right. The Fed is essentially giving the government a free way to spend and he doesn't want to go on with that process. Whereas you take Rick Reeder, he had an interview with Scott Wapner, really talking about like, wow, we can really use this balance sheet and target a yield curve and do all kinds of things. He's a friendly market friendly person in that way. I think that's what the market was doing today. If Wash going to be the front runner now, it's a different game with the balance sheet.

Tim Seymour (12:49)

But, but Ben, doesn't this really mean that the Fed independence question is, is now not really something we're focused on? And look earlier this week, and we see the moves in gold, we can see the moves in the dollar, we can see the moves and all the things that would be sensitive to it. Although gold didn't really budge that much today. And that's why I'm one of the reasons why I'm Bush Cole. But look, there's no question this was about could Hassett be confirmed? There's no question. To me, this was about credibility and a lot of people close to the president and a lot of reminders from within his administration and also from within the community that said, no way. And in fact, if anything, Kevin Hassett, it's, you know, less about, he's been doing such a great job with the White House is that he's not confirmable. And he's not confirmable at a time when a lot of other Trump policy is critical. And this is this week's Been all about headlines that are really more geared around midterm elections.

Ben Emmons (13:39)

I think you have a point because you know there were senators out there saying like that the nomination process could be the confirmation of it could be delayed because this case with Powell now and that if you have hacc being too close to the President that that's being seen as this issue about independence given the case of Powell. So a bit complicated but I guess the market is trading more about like this next Fed chair, whomever it will be, that's the guy we're going to listen to. And if it's Kevin was the front runner and he's more hawkish in his tone, that's what we listen to and I think that's what the yield curve did today. That's why the 10 year popped to almost like 4 2.23 but the 2 year was a little bit less. I thought that was interesting because it's about the economy. We got good data this week but it also about a hawkish Fed potentially or at least on the wars.

Steve Grasso (14:24)

Ben, when you look at this, I always look at the Fed chair being a political person because he's nominated by the President, has to be approved by the Senate, has to go up to Capitol Hill twice a year. So having said that, do you think this is all smoke and mirrors? Come May, the market's going to look at rates and rates are coming down regardless of what's going on with the balance sheet with mbs, these rates are coming down. So is the market just pricing in that May option basically from now till May to lower rates?

Ben Emmons (14:54)

That is actually that way because if you look at the odds still May, they're like 10%, 15%. So the market is priced for that in May or thereafter. This Fed will for sure resume with rate cuts. So that didn't change too much today actually in this move. But I think to your point, yes, any Fed chair is by nature political. It has to negotiate or communicate with it with the treasury, it has to go to Capitol Hill, win, you know, at least some sort of voice about we're going to raise rates or lower rates and you know how to affect the economy. But I think for the markets it's about if this is an administration that wants to really propel the economy to much higher growth level with all this investment, this Fed cannot stand in the way of that path from the administration's point of view. And if that's the case then you know you're going to get a reaction in markets, right? They're going to say like if you're going to lower rates for, to bring the economy up and bring investment up, long term rates actually going to go up. I think that's still the case that we were seeing the breakout down. The 10 year really got buff for 20. A lot of people in the market are looking at this saying like, yeah, this is the first step to, to a higher yield on the 10 year.

Melissa Lee (15:59)

Yeah. And the 10 year has been so rangebound. Ben, thank you for your time. Appreciate it, Mike. Of course, then you have the question of JP Morgan economists saying that the Fed's next move will be a hike from here, given sticky inflation. Do you think that's in the cards?

Mike Howell (16:16)

I'm not really anticipating a hike at the, at the short end. I will say that, you know, it's kind of an interesting pivot coming from the White House when you consider that one of the things that had been proposed was, you know, the purchase of mortgage backs, for example, because obviously the housing affordability issue is going to be propelled at the long end. And if you have a new Fed chair who is less inclined to use the Fed's balance sheet to manipulate the entire curve, then essentially the lid you would try to keep on the long end of the curve is lit, is lifted. So I'm with Ben here in the sense that I think you could have increased steepening, actually. So I'm really focusing more on that, I think, than what's going to happen at the short end and that that is unfortunately going to create continued pressure, I think, for the housing trade.

Melissa Lee (17:00)

Yeah. And then of course, geopolitic, the geopolitical risk is in focus as well. We heard from a variety of bank executives this week who insinuated that geopolitical risk among the top things that they were watching. It seemed even more just tonality wise to be front and center for them, given everything that we're seeing across the globe. How do you think about geopolitical risk, especially in the context of the moves that we've seen in the treasury complex today?

Bono (17:25)

Well, I'm going to try to bring that back to the, to the Fed discussion because I think it's actually pertinent. So I want to piggyback off of something that Tim said in terms of like, I think we're in a situation now where this is a confirmable pick. I think it serves another purpose.

Melissa Lee (17:38)

You think WARSH is a confirmable pick?

Bono (17:40)

Yes. Or has it was not a confirmable pick with the war selection, if that is in fact the way that we go. I think it's a Situation where he has also come out and said that he does not want the same type of celebrity circus around the Fed. And so as you're trying to manage these geopolitical risk, as you're also trying to push through, whether it's the, the great Refi and bringing down affordability or whether it's changes to the energy complex, it's a situation where the light actually gets taken off of the Fed and they're essentially able to kind of work in the background and support, whether it be through monetary policy or balance sheet management. I think that also kind of allows the Trump administration to take ease that like the focus still remains on them and is not this push and pull, at least within the public domain between them and the central bank.

Melissa Lee (18:32)

I hear what you're saying because the President's comments was, were all about, you know, Hassett being good on TV and therefore he wants to keep him at the White House, insinuating that maybe being good on TV isn't necessary for the Fed. But the market relies on the Fed's messaging and has gotten used to this idea that the Fed will communicate frequently and communicate its moves very. Do you think that would be a pivot under war?

Bono (18:54)

I think it would be a pivot, but I also think that perhaps it ends up lowering volatility where you're not trading on the back of Fed headlines. And that messaging, it's not about how many times you send a message, it's about whether or not that messaging is consistent. And I think if you have, you know, a longer period in between times, you're coming out to the market and making announcements and you're allowed to actually be data dependent because you're taking a breath between iterations of you coming out and making policy announcements. I think you can kind of walk that fine line where you're not kind of forced to having these knee jerk reactions. I don't think the market needs out of added volatility right now.

Melissa Lee (19:33)

All right, coming up, paying for power. The latest push from the president for big tech to foot the energy bill. And the stocks moving on the news. Plus regionals on the rise. The KRE up nearly 20% over the past three months. The names hitting highs and where the financials head from here. Don't go anywhere. Fast money is back in.

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Melissa Lee (21:54)

Welcome back to Fast Money Energy Infrastructure in focus in D.C. as the Trump administration pushes the largest power grid in the US PJM Interconnection to make big tech companies pay for new plants. Pippa Stevens has the latest developments. Pippa hey Leslie. Well pjm, the regional grid operator just now weighing in in on the administration's call to hold an emergency auction so that tech companies can bid on long term power agreements with the grid operator saying large power users will have to bring their own generation or face early curtailment, among other initiatives. And this comes after the administration earlier outlined a goal to build more than 15 billion of new power generation with hyperscalers paying for that power whether or not they actually use it. Now we saw lots of big movers on the back of this Constellation. Vista and Talon are the losers. More available power on the grid could cut into their profits from providing guaranteed capacities to PJM with the proposed price cap also limiting those gains on the Flip side, power infrastructure stocks getting a lift. Ge, Vernova and Siemens Energy make gas turbines while Oklo and New Scale make small modular reactors. And don't lose sight of the picks and shovels trade. That's companies like Quanta, Eaton and Mastec that actually builds all this new grid infrastructure. Leslie Pippa, thank you Pippa Stevens for us there. Steve, this is something you see as a long term benefit for everybody, right?

Steve Grasso (23:19)

Yeah, I don't think the, the, the initial sell off today in Constellation or A Vista if you're, if you're substituting. So what they're not getting is those spikes in volatility on the spot auction prices anymore. But what they are going to get is a more consistent 15 year revenue base. So I think when you're taking out 11% out of Talon, I think that should be bought. I think all of the things that were sold off today should be bought and I think all the things that rallied will have the ones that can provide new builds, new builds quickly are going to benefit from it in real dollars real soon. So I think everything that was bought should be bought. Everything that was sold should actually be bought on more consistent earnings going forward.

Tim Seymour (24:01)

I think this was a knee jerk reaction. I do think that the IPs or the, you know, the independent power producers are ones that still have the best growth capabilities. I think they, they have the best ability to judge some of the new projects. I do, I'm long Constellation don't like to see the move today but doesn't change my thesis on where they are and again where they are especially at nuclear, where they are in that gas and I think their ability to actually grow and serve also really growing markets around them in some of their key states including Texas. That's part of the thesis here. I, you know again today was another one of those days when you saw nuclear stocks go to the moon and continue what has been a go to the moon. And now we're starting to see uranium prices. So the spot market is starting to soar and that's also something that you know ccj, which I've been long for a long time and probably set at 80 or 70 bucks. It was expensive. It's, it's that much more expensive today and it's going higher because uranium prices have to go higher given the amount of development that's going on right now. So I stay there.

Bono (24:58)

Yeah, I'm somewhere in the middle. I think the IPs, I wouldn't catch the falling knife here. I think they've had a ton of momentum on the way up and if there's, there's a reversal of that and you get some air taken out of that, I think that could be somewhat of, I just think it's too early. It's not that I'm necessarily bearish them, but I don't feel they need to catch a falling knife here. I think in the short term the caps do serve to kind of undermine them because they were going to have a more constrained market where they're the incumbents and able to, you know, supply that power at peak pricing. And over the long term if we do get new kind of capabilities online, I do think it makes it where the, the new facilities will likely be able to out compete them on price. So I wouldn't listen this market right now you're going to have to trade these headline risks. So I'm not discouraging you from trading that, but I'm waiting for that headline to play out and I do see a scenario in which they are the net losers in this situation.

Melissa Lee (25:50)

Yeah. And then over the long term, if the tech companies are the one who are paying for this, do they have an added incentive to make all of this generation more efficient for their own models and so forth? There is a lot more fast to come. Here's what's coming up next.

Tim Seymour (26:05)

Banking on the regionals. The smaller banks started their reporting season this morning. Can they outshine the money centers?

Mike Howell (26:12)

And is there room to run in these names?

Tim Seymour (26:15)

Plus new wheels taking a hit on your wallet, how the administration is trying to control sticker shock as car prices.

Bono (26:22)

Speed higher and what it means for automakers and their stocks.

Tim Seymour (26:27)

You're watching Fast Money live from the NASDAQ market site in Times Square.

Bono (26:31)

We're back right after this.

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Melissa Lee (28:19)

Welcome back to Fast Money. The regional banks began reporting earnings this morning. PNC Financial posting better than expected earnings and revenue and giving upbeat guidance. Shares up nearly 4%, closing at their highest level in four years. The broader S&P Regional Banking ETF also climbing. It's up nearly 17% over the past three months. So what can we expect from the regionals ahead? Mike There has been this divergence over the past few few years questions ever really since the regional banking turmoil that we've seen about the big getting bigger and the benefits they get from that. Whether it's from a regulatory side or technology side or deposit taking side. What is the play with the regionals and do you see a dispersion as we kind of think about where in regionals are poised to prosper?

Mike Howell (29:05)

Well, yeah, I mean you just actually pointed out the dispersion that we saw today because if you take a look at kre, which is the regional banking etf, that actually did not do as well today. We saw significant options volume on the put side, so actually puts outpace calls by about 2 to 1 there. But then you look at names like PNC and it was quite the opposite. PNC traded 15 times its average daily call volume. Of the top 20 most active contracts, 18 of those were calls all short dated essentially traders playing for that to continue. Look, a big part of the weakness for some of the regionals was their exposure also to regional commercial real estate, which was something that was hard hit coming out of the pandemic and really struggled to recover. So really that's where I think the pressure is going to continue to exist. But as you point out on the deposit taking side, I think that there is some evidence that the economy in some of these areas is doing pretty well and some of those regionals are going to benefit as a result.

Melissa Lee (30:00)

Yeah, the credit quality has held up pretty well. I think it was MT that saw a little bit of a tick up in net charge offs as a percentage of total loans outstanding, but otherwise looking pretty good as you assess the regional landscape. Steve, how should we be thinking about regionals that are a potential takeover target versus regionals that are a standalone and just able to compete in this world?

Steve Grasso (30:21)

Well, I think in this, with this administration, anything could be a takeover target.

Tim Seymour (30:25)

Right.

Steve Grasso (30:26)

Because JP Morgan and the Money center banks could take take over whoever they would like to take over. Some limitations. But I think the two things that keep you going for regionals, Ben was on earlier, Tim mentioned this. If you look at the steepening of the yield curve and if that's going to continue, that has an outsized advantage to regionals simply because they borrow short, if they lend long, and they do it a lot more than the money center banks. What has been the headwind this week? It's been the 10% cap on interest on credit cards. That's only 4 or 5% of the portfolios for regional banks where it could be up to 20% on money center banks. So those are two reasons why you want to stick to with them.

Melissa Lee (31:03)

Yeah. And there's been such a run up in these names that I think when earnings came out earlier in the week, there was a little bit of a, you know, sell the news event perhaps with high expectations and a lot of expenses coming up in a market for a new car, you might want to buckle up how the Trump administration is trying to tackle car prices as they speed higher when Fast Money returns. Welcome back to Fast Money. Stocks relatively unchanged today and posting a weekly loss. The Dow down about a quarter of a percent. The s and p losing 4. 10 of a percent. And the Nasdaq leading the losses down more than half a percent. But the Russell bucking the trend, closing at a fresh record high today and climbing more than 2% this week. Shares up. Novo Nordisk jumping more than 9% today. Early data on prescriptions for the company's weight loss pill showing strong demand since launching this month. Novo now up nearly 23%. January. It's only January 16th. Meanwhile, automaker stocks stalling today as the Trump administration pushes to drive down car prices that have hit records. CNBC's Phil LeBeau has the details. Phil?

Phil LeBeau (32:11)

You know, Leslie, it's a little unclear what the Trump administration wants to do next in terms of policies that it believes will make new vehicles more affordable. And we're strictly talking about the purchase of them. We haven't even gotten into the question of ownership costs, things like insurance, etc. But new vehicle transaction Prices are now at a record high, according to Cox Automotive, more than $50,000. We saw the big run up during the pandemic, and for gm, Ford and Stellantis, the average price for a new vehicle loan, and this isn't just for these guys, it's for the entire industry. It's now at $781 per month. That's the average monthly auto loan payment. That is close to a record high. And there are more than a few people who are saying, well, we can't afford this. And that's why AutoNation Group 1 Automotive, Penske Automotive, those guys have kind of traded sideways. Look at the number or the percentage of $1,000 or more a month in auto payments. It's now one out of every five auto loans. And this is why a lot of people are screaming about affordability. But if you're an investor, where's the play here? Where do you go? Take a look at the auto suppliers. No surprise that Borg, Warner, Magna Lear, they've all steadily moved higher. Why? Because we don't have enough capacity in terms of production in this country. Leslie, right now you have more used vehicles out there. The supply of new vehicles is not keeping up with what has been out there. That's partially coming out of the chip crisis a couple of years ago. And so for the suppliers, even though tariffs are an important component of what's happened over the last year, you look at these guys and you sit there and say, they probably are in the best position here.

Melissa Lee (33:52)

I was going to ask you about used vehicles as well as we think about affordability, because obviously that was a huge topic of discussion during the pandemic. Not as affected, of course, by the more recent tariff policies. But I was looking the other day, we need to get a bigger car. And I was like, well, maybe, you know, because new cars are so expensive, maybe look at used cars, they didn't look any better. I mean, the prices were just kind of way up there. Even for things that were seven, eight.

Phil LeBeau (34:19)

Years old, they've gone up as well. They're close to a record high. I think the average monthly payment for a new vehicle, what, at 781? I think on the used side, it's close to 565, 80. Might even be 590 somewhere in that range, which is close to a record high for used vehicles as well.

Melissa Lee (34:35)

Yeah, it's tough out there if you need a new car. Phil, thank you for breaking it down for us. You bet, Tim.

Tim Seymour (34:41)

Well, I don't know why you'd go any further away from the oem. So GM and Fordham, when we're having this conversation, I just, you know, I'm, I'm, I'm reminded that it's taken a long time for these companies to become as efficient and have the gross margins. And I'm really speaking to gm. I know we just had some restructuring that was announced on their EV business. I know there's some cash charges, but then there's ultimately some savings. And I think the strategy on EV has been realigned enough that I think there's a lot more profitability here. I understand. Where once again, it's the week of affordability out of the White House. I mean, you know, you pick the sector, there's going to be a headline. What's ultimately going to happen? I mean, at the end of the day, we want the big two to become even bigger and more profitable. And I think the White House does. And the move in GM still doesn't make it an expensive company and it's never been run better. These kind of headlines, I think are actually in support of GM's core business. I mean, they are becoming more profitable.

Melissa Lee (35:36)

Profitable, Right. Bona wins. What's your take?

Bono (35:38)

So, I mean, well, bulls make money and bears make money. So Tim kind of laid out the bull case and how you look to invest there on, on the bearish side. I think this is definitely a negative for the pure play EVs. And I think if you are going to be in the EV space, it's even more of a supportive type of situation for a Tesla, which we've all argued isn't really valued based on, you know, its EV production or auto sales or any of that. FSD Robotics. I mean, if you're going to be in the EV space, that clearly is probably where you to want to be.

Melissa Lee (36:05)

Yeah, that's the next frontier for sure. Coming up, Netflix under pressure to kick off 2026. But options traders are betting next week's earnings could roll out the red carpet for big gains. All the action ahead of the streaming giants report next.

Mike Howell (36:21)

As America celebrates its 250th anniversary, CNBC spotlights the business leaders who forged American.

Tim Seymour (36:29)

Industry and an extraordinary legacy of philanthropy.

AT&T Business Wireless Announcer (36:35)

John D. Rockefeller Sr. Was a titan. He built America during the Industrial Revolution and helped together with others, create the modern country we have. In doing so, he of course went from being someone who came from modest resources to the world's wealthiest individual and decided he would use that wealth to give back to society and help shape a future that was hopeful and optimistic, not just for the winners of that age, but for everybody. The Rockefeller foundation was established more than 100 years ago. We were founded to do scientific philanthropy because John D. Rockefeller believed that science applied to health, agriculture, energy, and even social sciences applied to governance could really help transform society and make it an environment where everyone flourishes, not just the select few. The very first big project the foundation took on was eradicating hookworm in the American South. They in fact successfully eradicated hookworm, went on to tackle malaria, and that process created both huge successes in modern public health, but also seeded the American public health system in county by county across this country and presented the antecedents of the Centers for Disease Control based in Atlanta. We focus today on bringing science, innovation and partnership to lift up vulnerable populations across the planet. To me, what really propelled America's rise over the last 250 years has been innovation and inclusion, because a long time ago we created a nation based on the basic idea that everyone matters years.

Melissa Lee (38:24)

Welcome back to Fast. Money has been a rough run for Netflix so far this year. The streaming giant down 6% in 2026 and 15% since striking that deal to buy Warner Brothers Discovery assets last month. The company reports earnings on Tuesday. Our Julia Boorstin has more on what to expect from what will inevitably a very closely watched report and conference call. Julia that's right, Leslie. Investors will be examining earnings to see what the quarterly numbers say about Netflix's reason to do the deal now. Because Netflix no longer reports subscriber numbers as it diversifies into advertising, the key number in focus is revenue growth. It's projected to be up 16.8% from the year ago quarter. That's slightly slower than the third quarter, 17.2% growth. Growth. So the question is whether the company can beat those expectations and accelerate growth from Q3 to Q4. Earnings per share are projected to increase by 29%. If you look at Netflix shares since its last earnings, they are down 29% as recent results have sparked concerns about weakening engagement amid an increasingly competitive market. Acquiring Warner Brothers Discoveries studio and streaming division would supercharge Netflix's content. So we'll have to see if the company announces that it's maybe amending its offer to an all cash offer to speed up the close, which is something that's been reported. Leslie yeah, absolutely. And of course, they're in a quiet period probably leading up to that report. Julia, thank you. Looking forward to Tuesday. And the options market is looking forward to Tuesday as well. It's optimistic that that report could help Netflix turn shares around Mike Koh has the action. Mike?

Mike Howell (40:05)

Yeah, we saw above average call volume, which is interesting ahead of a three day weekend. Usually you would see volumes depressed a little bit. Calls outpace puts by about 2 to 1. Right now the options market is implying a move of about 7% after the report on Tuesday and just under 8% by the end of the week. If we compare that to the last eight quarters, that's actually slightly less than the company has actually moved. But where we saw a lot of that activity was in call options that expire at the end of next week. The busiest of those contracts were the 90 strike calls. We saw over 7200 of those trading for just under $2.60 a contract. Look, if they hit those numbers that Julie was just talking about, it's trading only about 27 times forward earnings and I would actually say that it's very reasonably valued and that this pullback, assuming that they hit those numbers, might be an opportunity on the long side.

Melissa Lee (40:52)

Yeah, not to mention you've also got a bunch of merger arm traders in there as well, kind of also having a role. Steve, what's your take?

Steve Grasso (41:02)

I think plenty of people were waiting for the stock to sell off since June. Now split adjusted, the Stock's off about 30, 35%. When you look at it on a chart, there's people that have been waiting.

AT&T Business Wireless Announcer (41:11)

To get into it.

Steve Grasso (41:12)

But this is definitely marking a pivot from creating everything in house to buying. So it could be dilutive to their business strategy. You know, they are the best at what they do. They are, it's, it's Netflix and it's everybody else. But I think this is a definite pivot in what investors appreciate from Netflix.

Tim Seymour (41:31)

Well, I mean I just. Their licensing fees and what they pay every year to people like Warner Brothers. I mean this is, this is part of the story. I mean ultimately I think this is a, it's an acquisition that's not that hard to understand. There's no question that Netflix has done this in an asset light way. But I would just get back to what Mike's pointing to on valuation. I think it is time to buy Netflix. I do think the expectations in here year, let's not confuse the concern about a stock that's run out of momentum that was really kind of relatively expensive and some questions about a deal. Their core business is alive and well and it's crushing it. And I think they're going to continue to show those fourth quarter numbers also have a price increase. So there are no real comps on that. Those numbers are going to be great. I don't think there's any question. And I think the paid at the paid additions is, you know, north of 14 million in terms of subscribers. Even if they're not breaking it out, that's what the Street's looking for and I think that's, that's what they need to deliver.

Ben Emmons (42:27)

Yeah.

Melissa Lee (42:27)

And there's just so much competition out there. They want to be offensive and making sure that no one else acquires something that can make them bigger and compete with Netflix as well. Coming up, the final day of our Fast Money Trader acronym reveal. Will von and wins picks charge higher or will Mike's find the speed they need to reclaim the top spot they'll see spell out? Yeah, I know. Next, and don't miss the premiere of the new closing bell Overtime on Tuesday. Mike Santoli and Melissa Lee will anchor right here from the Nasdaq and it will be a big first day with Netflix earnings headlining the overtime action. That's Tuesday at 4pm Eastern Time. More fast money into. Welcome back to Fast Money. We're revealing our last two Trader acronyms tonight. Bonawin and Mike are rounding out the group. Let's start with Bonawin, who ended last year with a nearly 16% gain. Boom. Didn't strictly follow the rules as it stood for B for Broadcom and not the ticker Avgo.

Tim Seymour (43:35)

Oh, man.

Bono (43:37)

Come on, Bonwin, way to call me out.

Tim Seymour (43:40)

I'd kind of forgotten you broke the rules. Actually. Now I'm ready to, to really focus on.

Bono (43:44)

Let me down there.

Melissa Lee (43:45)

Or is it that, you know, Broadcom should just change its ticker.

Tim Seymour (43:48)

Thank you.

Melissa Lee (43:48)

They're Broadcom.

Tim Seymour (43:49)

Nice. There's a lot of sensitivity on this issue on this desk, Leslie and I, you know, I for one will not stand by subtleman. Tell us you did it right.

Bono (43:58)

Well, the rules change this year too. So listen, if you ain't cheating, you ain't trying. So this year is bull. And what I went for is like counter trend and headline risk. And I really think the market is telling you that's the way you really need to trade, at least if you're trying to outperform. So we have bitcoin. I mean, there's not really a lot to go into here. We've seen a precipitous fall here. But I also think that with some of the geopolitical risk and the debasement talk, there is a path to go higher on you. We've got ura. We had the announcements day with regard to power and electricity. I don't know what the winners and losers are going to be on a net basis. But I do think all hands are on deck in terms of electric supply. We have Eli Lilly. I think it's a two horse race and I think it's Novo and Lilly. But you again have the headline risk. It can go either way in terms of drug price negotiation. And then lastly you have lmt, again, geopolitical risk. And you've seen this stock whip both ways in terms of Trump coming out and saying that they don't want them to be able to buy back shares or issue dividends. But you also have the geopolitical risk that could actually push our defense spending higher. So bull.

Melissa Lee (45:02)

And Finally, Mike, the 2024 winner ended last year rising above just about half the back. It consisted of the S and p equal weight ETF, the ibid, bitcoin fund, REITs, India, the N A, N C, which tracks stocks traded by Democratic members of Congress and Alphabet. All in all rising about 16%. Mike, what's your 2026 acronym?

Mike Howell (45:28)

Faster. So I'm looking actually for a rotation away from the AI trade and I'm looking for companies whose year on year sales growth, growth is expected to be greater than that of the economy overall and hopefully greater than that of the S and P more broadly and also are hopefully trading cheaper than the S and P. The F in Faster is for Fluorocorp, that's an engineering, procurement and construction company. They actually have a lot of play in the utility space building plants and that they own a big portion of NuScale. A is for Alcoa Corp. Obviously, I think that's kind of self explanatory as is S for slb Schlumberger, the oil services company. T is for Trade Desk. E is for Exelon, the utility. We were talking about those earlier today. And then R is for Ralph Lauren. As far as consumer discretionary is concerned, I think that on top of very good performance that they've been exhibiting recently, they also are sort of skewing towards the higher end consumer. And that's essentially where all the growth we're seeing in consumer discretionary is coming from.

Melissa Lee (46:26)

All right, Faster. Up next, final trade trades. Welcome back. It's final trade time. Let's start with Mike.

Mike Howell (46:40)

Yeah. One part of auto affordability of course is gasoline. They've dropped 40%. Gas prices are down 40% since their highs in 22. I like general Motors light truck sales.

Tim Seymour (46:51)

Tim Leslie, so great to have you.

Melissa Lee (46:53)

Lovely to be here.

Mike Howell (46:54)

Here.

Tim Seymour (46:55)

Regional banks, I think. So great to see rerating there after the money center banks Kre von win.

Bono (47:00)

I think they're on a tremendous run. I think they're likely headed higher. Today's news only gives me more confirmation bias.

Steve Grasso (47:06)

There you are a Steve, are you here on Monday?

Melissa Lee (47:09)

I'm not here Monday. Nobody.

Steve Grasso (47:11)

No one's here.

Melissa Lee (47:12)

No.

Tim Seymour (47:12)

We got question.

Steve Grasso (47:14)

This is going to be the year of Quantum. I have a bunch of names I love. Ionq is the one I'm using for a final try.

Melissa Lee (47:20)

I will say next week. A lot going on Davos. More earnings on deck. Thank you for watching Fast Money Mad Money starts right now.

Edward Jones Narrator (47:28)

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