← CNBC's "Fast Money"
CNBC's "Fast Money"
Stocks Drop After Strong Jobs Report… And Next Move In The Weight Loss Drug Space 1/10/25
00:43:50
Stocks selling off as investors digested this morning’s stronger than expected jobs report. And with nearly all of the post-election gains fading, with next week’s inflation data cause even more volatility? Plus Obesity drugs expected to be in focus at this year’s JPMorgan Health Care conference. How the industry’s biggest names are handling competition, and the next-generation of weight loss drugs. Fast Money Disclaimer
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- [00:01]
Melissa Lee
What does it mean to be rich? Maybe it's less about reaching a magic number and more about discovering the magic in life.
- [00:09]
Tim Seymour
At Edward Jones, our dedicated financial advisors.
- [00:12]
Melissa Lee
Are the people you can count on for financial strategies that help support a life you love. Because the key to being rich is knowing what counts. Learn more about our comprehensive approach to.
- [00:24]
Tim Seymour
Planning@Edwardjones.Com FindYourRich Edward Jones Member, SIPC.
- [00:32]
Melissa Lee
Is.
- [00:32]
Courtney Garcia
It time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals, like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at capella.edu.
- [01:05]
Melissa Lee
Live in the Nasdaq Marketsite in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight, a post job sell off, stock sinking, yields spiking and volatility hitting three week highs as concerns grow about where the Fed is heading. We break down all the moves and how next week's CPI print could factor in and the year of the obesity pill. Pharma companies seem to have a singular focus this year, where the top players stand in the race in the stocks that could see the biggest gains. Plus Delta shares take off as earnings season gets underway. Constellation Energy hits new highs on a blockbuster power deal and its deal with Tapestry may be done, but Capri may have another idea in mind. The luxury details coming up. I'm Melissa Lee, come to you live from Studio B at the Nasdaq. On the desk tonight, Tim Seymour, Courtney Garcia, Steve Grasso and Julie Beal. We start off with a major sell off on Wall street, all three indices tumbling more than one and a half percent after this morning's stronger than expected jobs report. Payrolls growing by more than 250,000 in December while the unemployment rate fell to 4.1%. Today's market drop nearly erasing the entire post election rally. Just one week to go until President Elect Donald Trump's inauguration. The Dow is now below where it was on Election Day, the S&P 500 basically flat since then, the Nasdaq still holding on to a less than 4% gain. And while equities sold off the dollar and treasuries, they ticked higher 10 year closing in on 4.8%, its highest level yield wise since November of 2030, you're hitting 5% at one point the dollar at its highest level in more than two years. All this action ahead of two key inflation reports coming next week, both producer and consumer prices expected to accelerate from November levels. So do all these moves set the stage for even more volatility to come? Tim?
- [02:48]
Steve Grasso
They do.
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Julie Beal
But volatility isn't necessarily have to be bad and doesn't necessarily have to derail what's been one of the greatest two year bull markets of all time. You know my view is that this week was all about central banks, was all about yields blowing out around the world. I mean look what happened in the gilt market. I know most people don't. So I'll just say if you look at Japanese yields, they've moved even faster than US yields and they are breaking to significantly higher levels, at least relative to themselves. What we learned this week in Fed minutes was that the Fed in their last meeting was very much on hold. What we heard from the St. Louis Fed is that effectively since September his view is the world has changed, this is a new voting member of the fomc and that it's very clear within the Fed that is so data dependent that look, if anything we're now out to march at best on a, on a cut. And yes, that's what the market is digesting. It's been like, it's been a lose lose market for equities and bonds over the last five weeks. We haven't done this since back to 2023. But it feels a lot like, it feels a lot like know the early stages of when the Fed was, was telegraphing that they were hiking. We're not getting anything close to that. Of course that was historic in terms of what they did in the end of 21 into 22 and 23. But you know, markets came into all of this with cash levels for professionals at lowest levels we've seen in a long time. Complacency, bitcoin going through the moon. I mean we came into this period of rising rates set up for volatility, volatility not comfortable, not always bad.
- [04:17]
Melissa Lee
So an excuse to lighten up positions or is the pace of this rise in rates, is that actually scary? Does that actually factor into revised outlook for stocks for you?
- [04:28]
Tim Seymour
Well, I think the bigger problem would be interest rates rising. Would you bring up and I think we're far away from that so I don't think that's anything to consider. But you're starting to see more inklings and kind of the rumors of like people starting to talk about that. So when you're looking at no rate cuts happening this year, that went from a 13% odds to 25% odds when we look at today. So I don't think rates staying this higher for longer is necessarily a bad thing for the markets. They need to digest that, which is what's happening today. But if they stay there, I think markets can likely continue, but we just want to see them going higher. I don't think we're there yet, so I wouldn't really price that in.
- [04:57]
Steve Grasso
I think we pulled a lot forward. But the way you opened up the show with that litany of data points, the fact that we're so close to all time highs, isn't that something to take away? I think Tim touched on a lot of the good news in the marketplace. So if you went through that litany, the game that you always play, if you would have known the entry, where would the market be? And you could make the case that the market could be substantially lower than it is. The odds of Donald Trump becoming president again were probably pretty low. And as we got closer, it was still, you know, a flip of the coin when he was elected. Huge pro growth, huge capex. So there were a lot of things that were really in the bull's corner. So I think the market is just adjusting, if you will.
- [05:47]
Melissa Lee
Okay. There could also be a little bit of Julie Beal, you know, upon the election, there are all sorts of assumptions about all these pro growth sort of policies. And as we get closer to inauguration day, there is this reality setting in that, you know, what day one, there could be tariffs. We don't know the extent of the tariffs. There are all these potentially inflationary policies coming down the pike and we're at, you know, 4.74 and change.
- [06:11]
Peter Bocvar
Yeah, I think that's exactly it. I think there was a recognition in the markets that we could have a higher level of inflation. But I think what people weren't necessarily expecting was that, you know, other pockets of the economy would be as strong as they are. And I think this labor report really points to an underlying very healthy economy. And so I think taken together, it's getting very, very difficult for the Fed to be in any kind of position to be able to cut rates.
- [06:35]
Melissa Lee
For sure.
- [06:36]
Peter Bocvar
I think they're going to have stand still. I think the discussions that people that are starting to have about raising rates, I mean, I can't even imagine that discussion, you know, four weeks ago and suddenly I'm hearing it more and more. I think that's just a level of indication of how wide the cone of outcomes has become. And that happens anytime you start to really ramp up the level of uncertainty. And I think with this administration that's just a reflection of the fact that the cone of outcomes is wider. We're going to have more volatility because we can't really predict outcomes. And I think it's really the time for investors to focus more on fundamentals because come earnings, that's when things are going to get trued up in the right way.
- [07:15]
Melissa Lee
Bank of America previously expected to rate cuts this year, now expects none. The Economist they're saying the conversation should move to hikes if inflation drifts higher. So it's in print from a major bank, from major economists, and it's, it's.
- [07:31]
Julie Beal
Not all that provocative anymore as we've all just talked about. But I think if you go back to the number today and the unemployment rate of 4.1, I mean, and you look at where at least, you know, major focus on policy is around immigration and that's all types of immigration and whether that was legal, whether it was illegal, and there's a lot of strong opinions on it. There's no denying that the immigration into the country over the last three years was three times what it had been in the previous, on average per year over the previous 15 years. And that was significantly important to a labor market and significantly important to an economy that actually relished that. I mean, again, I will stay away from the immigration issues that are very topical everywhere else, but as related to the job market and where it made the Fed's job easier or where in fact at least it took some of the pressure off of a labor market that is largely normalized. I just bring that up because today was really as much about the unemployment rate, which we often say is more symbolic. It can move around. But I think the inflation dynamics that are at least out there today are certainly to be reckoned with. I think a stronger dollar is certainly a nice offset and we'll, we'll hear that though. But I mean, hey, we've got earnings season coming up. It's not that, you know, we started as we head into next week, we start to look straight into the barrel of earnings season. The banks are going to tell you first they're going to talk about a steeper yield curve. But a lot of these multinational industrials and 28% of the S and P revenues, people know these numbers are coming internationally. So some of that is good, some of that is bad.
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Melissa Lee
Companies don't I mean if you're a company and you're going to report earnings, there are many companies out there about to do exactly that. Would you go out on a limb and be bullish? Given the volatility to come? Is it in their interest to be bullish about their forecasts even for the next six months?
- [09:15]
Steve Grasso
It depends. I think judging on the election outcome, I think that you have a lot more horizon to see or distance that you could see that tax policy, taxes aren't going up, Capex is probably going up. So there's a lot of things that you can invest around with a clearer tax policy you can become bullish. But a CEO is never rewarded for being overly bullish. They're always rewarded for kitchen sinking and for lowering, lowering the bar and expectations. So and analysts by the way are rewarded for the same type of thing. But I think Tim talked about the dollar, you know you talked about a lot of these things. They seem very over overextended to me as we talk about on a regular basis. So I think inflation, CPI, 30% of CPI is housing. Could there be another outlier? Print? Yes, I think everything is overextended.
- [10:12]
Julie Beal
Well I think CEOs are going to comment industry specific and let's face it, I mean there are industries that are going to benefit from you know, a higher rate environment, a stronger labor market, etc. Etc. I think it's going to get back to fundamentals. I think, I think we have to look for the markets at 10 and a half percent EPS growth in 2025 at 22 times forward and say is this the market? Is this where we should be? And that's, that's really the question. The question is also going to come right back to those seven stocks who have priced a lot of great news and, but whose businesses? If you look at the Internet space and I was listening to Mark Mahaney today on a, on a webinar with Evercore. I mean he says they come into 25 in much better shape than they did into 24. So you know, in terms of the true demand of what's going on, the ad business, the ad, the ads component of it. But obviously everything from data center and certainly the consumer strength that's driving a lot of this. So it's going to get back to these big stocks again and I think these big stocks are going to be somewhat defensive in a higher rate environment.
- [11:08]
Melissa Lee
A stronger economy in any environment. Still the mag seven, the magnificent seven, still magnificent.
- [11:16]
Julie Beal
I see what you did.
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Melissa Lee
No, you did it to yourself. I'm Just repeating your words back at you. Are they defensive?
- [11:22]
Tim Seymour
I mean they can be, right? But I think what we've talked about is they are still getting expensive. I still think we want to own those. I don't want to get out of them. I just still think there's a lot of other areas that you can add your money to right now. And I think when we're looking at what's going on right now with the jobs numbers, it's showing we have a strong economy. And I think this is where likely equity markets can get past this. If we have these higher for longer but the economy is still strong and consumers keep spending. I think the issue is does inflation get to a point that the consumer is weakened? And I think that's something that I always like to hear when the banks report earnings because they have a really good grasp on. Is the consumer still spending? I think that's what you want to listen to next week.
- [11:55]
Melissa Lee
All right, for more on the markets and the economy, let's bring in CNBC contributor Peter Bocvar. He's Obligely Financial Group chief investment officer. Peter, always great to have you. You think 10 year yields are going to hit 5%? What happens to stocks in that scenario?
- [12:12]
Contessa Brewer
Well, just to add some, what Tim was saying is it helps to self actualize. Do you want to be paying 22 times forward earnings in that rising rate environment? When rates are low, investors can be very valuation agnostic. When investors believe that the Fed is going to cut short term interest rates and save us, investors can be valuation agnostic. But when you hit the reality that interest rates have actually risen across the curve in the face of those rate cuts and now the Fed may not even cut again. Well, valuations may all of a sudden matter and instead of 22 or 23x, maybe 20x is more appropriate, maybe 17 or 18. Well if that's the case, then it's going to be tough for the market to drive much higher. Now the market can say okay, we're comfortable 22 and we can sort of not have much of a return this year if you've already priced in a lot of the gains. But this P multiple now all of a sudden becomes an attention focus if these rise in rates continues, which I think it will, and yes, 5% I do think will be touched again that we saw last summer.
- [13:13]
Melissa Lee
So markets go down in your view, Peter? I mean that's the bottom line. And is the bar for a Fed rate hike much lower in your view or is that still off the table?
- [13:25]
Contessa Brewer
I don't think that's not where the Fed's head is. And I look at the payroll number today and it just doesn't square with anything else I'm seeing. To me, job growth is probably more around the 150 level because while we celebrated the 256, which does include about 30,000 plus of government, ADP on Wednesday said private sector was just $122,000. I think the truth lies somewhere in the middle and it's probably about 150 and that's a slowing rate of job growth relative to 2023. So I don't think the Fed's head is there now. Of course the inflation data next week is going to be big. If there's one thing that can take the heat off interest rates, it could be a benign CPI number, which I think the services component can deliver that. But there's also more that's going on here. It's the global rise in interest rates. You essentially have the global bond police that's driving through all the different neighborhoods around the world and calling out governments that have excessive debts and deficits and wondering whether they're going to be able to sell that at the price these borrowers want to sell at. Whether it's Japan, whether it's the uk, France, and it's now becoming wider spread, it's falling into Germany, which is economies in a recession and with higher interest rates and Australia and Canada. And also one last thing with rates that's not really being discussed around markets is the bank of Japan is probably going to raise rates this year. I'm sorry, this month. And they continue to reduce the pace of their QE through the first quarter of 2026. They will have cut QE in half. That is a major liquidity spigot that's being turned off that I think is behind the scenes impacting global interest rates just as it did last summer when they eliminated yield curve control and the US 10 year yield within days started its ascent to 5%.
- [15:16]
Steve Grasso
Peter, when you look at the revisions that we've seen last year in the jobs numbers, we saw the biggest revision since 09. Do you think that could be a little wonky in the differential that you talked about? And secondly, when you take out MAG7, you're concerned with valuation. When you take out MAG7 and you look at forward versus forward without MAG7, it's a couple of percentage points different. When you look at current, it's about 10 handles different.
- [15:48]
Contessa Brewer
Agreed. You can drive a truck between the PE multiples of the growth stocks and the multiples of the value stocks. I think this is the ideal situation where value finally catches up to the growth trade and that the stocks most vulnerable are those growthy high PE multiples. Those that are less vulnerable are the cheap value stuff. Now, with respect to the revisions, when you think about here we are just a week after December ended and the government is supposed to come up with an accurate jobs number, it's just physically impossible. And that's why we get a revision next month, a revision the following month, a revision a year from now. And that final number is going to be very different than what we heard today. And it's also just because there are less businesses that are responding to these surveys and so on and so on. So that's why I think when you analyze the jobs data, you got to look at it altogether with a lot of different data points.
- [16:36]
Melissa Lee
Peter, always great to speak with you. Thank you.
- [16:40]
Contessa Brewer
Thanks. Have a good weekend.
- [16:41]
Melissa Lee
Peter bockvar Bleakley so it sounds like Peter says there are a lot of global factors that will sort of fuel the rate rise further. JULIE beal, in your world, your corner of the market has been absolutely crushed because of rising yields. And so, you know, for you who focus on you focus on quality names, those names get crushed too.
- [17:02]
Peter Bocvar
I mean, we've demonstrated that they tend not to write a lot of the names that we own. We really try to focus on names that have cash positions rather than any kind of leverage. And so weirdly, a lot of the companies that I own have actually benefited from higher interest rates. And you know, that's not really a fundamental, fundamental issue here or there. But the most important thing is that these companies have they are really the masters of their own destiny. And I think that's actually what's critical when you have this level of uncertainty is that you have companies that have the financial flexibility to be able to respond to changes in markets. And that's something that typically small cap companies. And so I think if you can be really selective and choose those kinds of higher quality businesses that have a lot of earnings persistence, you end up doing well through a cycle like this.
- [17:47]
Melissa Lee
All right, let's get to what's happening out west. Southern California continuing to battle massive wildfires, the blazes killing at least 10 and forcing the evacuation of over 180,000 residents. Thousands of streets completely destroyed. AccuWeather estimates on economic losses and damages have tripled to $150 billion, with insured losses pegged at 20 billion by insurance analysts. CNBC's Contessa Burr joins us now to break down the current impact on insurance. And we were chatting in the green room. This, this is really a crisis in this industry.
- [18:20]
Eamon Jabers
It is, it is at an inflection point where several CEO, insurer, insurance executives have said to me today, look, this has the real potential of becoming an insurance desert. And it depends on how the insurance commissioner in California, how the state legislature responds to this crisis, whether they can come out of that. But $20 billion in insured losses would make this the costliest wildfire event for insurers in global history anywhere. And really, this is a homeowners event. It's far more exposed in homeowners than commercial property or, say, agriculture. The California insurance commissioner issued a moratorium on the cancellation or the nonrenewal of residential properties. My sources tell me commercial insurers are already putting a halt on new policies and instituting across the board nonrenewals for policies that come due while the wildfires are burning. That's how insurers reduce their exposure if they think the risks are too high for the prices they can get. And the Fair Plan, which is California's last resort insurer, has hundreds of millions in total billions, hundreds of billions in total exposure with only hundreds of millions in reserves, and we know $6 billion in exposure in the Pacific Palisades alone. There is no way, my sources say, that they're getting $6 billion in premiums, 85% growth in the number of policies there between 2023 and 2024. So that may not account for all the cancellations that we know State Farm handed out in that area. If the Fair Plan runs out of money to pay these claims, and by all accounts, it probably will, every insurer that has operated in this state for the last two years will have to pay in proportion to its market share. So that means State Farm, which has, you know, somewhere in the neighborhood of 19% market share in the state and which canceled about 1600 policies in the Pacific Palisades last year, will now have to pay out on claims for which it never collected premiums. Not only that, what's going to happen? I got a big warning on this today, Melissa. What people thought they were insuring. Say you had a $4 million house in the Palisades and you went to your insurer and you said, okay, I'm going to get this coverage. Your insurer may now say because of the inflation of materials, wait a minute, it's going to cost $5 million or $6 million to replace that house, and you only have a policy for 4 million. So there may be a lot of people who are way underinsured. And then that sparks the kind of lawsuits that have been a consistent headwind for this industry. The litigation that happens gets passed on to every policyholder everywhere, not just in California.
- [21:09]
Melissa Lee
So you live in New York, New Jersey. You're not anywhere close to the wildfires. But you will see your premiums go.
- [21:14]
Eamon Jabers
Higher, most likely, because the way insurance works is that it's a, it's a risk pool. If you have a lot of people paying into the same pool, then you don't have to take all of the risk when a tornado hits in the, in the Midwest. But, but yes, if it goes up, if we see California, if we see Florida, the other states that are heading toward this direction, New York, New Jersey, Illinois, if we see them follow this path. What this mean is everyone in the nation is going to see their home insurance premiums go up beyond what they've already seen.
- [21:46]
Julie Beal
I was going to say it's already been a rough couple years.
- [21:48]
Melissa Lee
Yes, that's right.
- [21:50]
Julie Beal
It's hard to believe that, but that's right. And how much of this is a function also of just how loosely regulated some of these other states are? There was an article in the Journal about that today. And that's part of where it can go.
- [21:59]
Eamon Jabers
I mean, the fingers have been pointed at this particular administration in California that the commissioner gets requests to hike the rates and sits on them and sits on them and sits on, doesn't say no, just lets it lapse. And then finally, when Allstate goes through and finally gets almost a 30% hike for property insurance and the homeowners are shocked by this, instead of seeing incremental, then what you say is, is that enough? No. No, that is not enough.
- [22:31]
Melissa Lee
Contessa. Thank you, Contessa Brewer. Coming up, Delta takes the flight. The numbers that have CEO Ed Bastian saying 2025 could be the airline's best year ever. Plus, the clock is ticking on Tick Tock. The Supreme Court could soon decide on whether to ban the popular social media app. Could that be a big win for names like Metta and Snap? We'll get some answers next.
- [22:58]
Courtney Garcia
At Capella University. Learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Edu.
- [23:14]
Julie Beal
Global markets up to the minute, front page news. Wake up to Frank Holland and worldwide exchange. Weekdays 5am Eastern. CNBC Live ambitiously.
- [23:26]
Melissa Lee
Welcome back to Fast Money. Shares of Delta topping the tape today after beating earnings estimates and posting strong guidance. The company saying expects to generate more than $4 billion in free cash flow this year. That's 18% more than 2024 shares seeing their best day in more than three years. CEO Ed Bastian on Squawk Box this morning saying 2025 could be its best year ever.
- [23:49]
Eamon Jabers
We're looking in the first quarter close.
- [23:51]
Julie Beal
To double digits in terms of top line revenue growth. We're looking at doubling our EPS in the first quarter. We're looking at next year being the top financial performance in our history. You've got corporates up double digits, you've got the international up close to double digits, you've got our America loyalty, remuneration and spending at double digit levels. So every aspect that we're putting out, again many of these in premium categories are really, really healthy.
- [24:20]
Melissa Lee
All right, so can Delta keep going higher? We were just talking about CEO guidance and how it's not in their best interest to be really bullish unless they're really sure that it's going to pan out. Tim?
- [24:31]
Julie Beal
Well, what's, what's interesting is this is Delta's really provided a halo effect for the entire industry. It's not that they're not also doing a better job. I mean the whole industry is run differently. And the question for investors here when Delta is trading probably 30% north on multiple, on a forward multiple to its five year average and even more so on a 10 year and again it tells you those averages bake in how poorly run airlines were in the past and how we expected them. Any time there was an opportunity to actually take advantage of good news, they overbuilt out capacity. They became very inefficient. What they're doing now is totally different. And what they talked about today in those four Q numbers were that their revenue per available seat miles, otherwise known as RASM was, was up 160 basis points and that they expected to go even higher. So I think you stay in what used to be the greatest trading stocks in the world into now what are investable stocks. And I think it's been a huge run. You have to chase it today.
- [25:22]
Melissa Lee
There's a lot more fast money to come. Here's what's coming up next.
- [25:27]
Julie Beal
The clock is ticking on TikTok. Its fate hanging in the balance as the Supreme Court hears arguments over banning the social media giant, what it means for the industry and its top competitors. Next plus is 2025, the year of the obesity pill, the skinny on that, and the biggest topics from JP Morgan's healthcare conference, from Alzheimer's to AI and beyond. You're watching Fast Money live from the NASDAQ Market site in Times Square. We're back right after this. And now a next level moment from ATT Business. Say you've sent out a gigantic shipment of pillows and they need to be there in time for International sleep. You've got AT and T5G so you're fully confident, but the vendor isn't responding and International Sleep Day is tomorrow. Luckily, AT&T 5G lets you deal with any issues with ease, so the pillows will get delivered and everyone can sleep soundly, especially you. AT&T 5G requires a compatible plan and device. 5G is not available everywhere. See att.com 5g4u for details.
- [26:34]
Courtney Garcia
Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more@capella.edu.
- [27:06]
Melissa Lee
Welcome back to Fast Money. TikTok's days could be numbered the Supreme Court hearing oral arguments today on whether to ban the social media giant over its ties with China. CNBC's Eamon Jabers has got the latest Eamon hey there, Melissa.
- [27:19]
Julie Beal
No decision on the fate of TikTok today from the Supreme Court, just nine days before a legally mandated deadline for the Chinese company ByteDance to divest itself of the popular social media application. The justice has heard arguments today from attorneys for TikTok, a group of TikTok creators, and the Biden administration, which is seeking to uphold the law, which passed with a big bipartisan vote. Now, TikTok argued today that the Supreme Court should delay implementation of the law, which takes effect just one day before President Elect Trump takes the oath of office on January 20. Trump, who once supported a TikTok ban himself, now opposes it and has asked the court to delay the deadline so he can work out a political deal once he's sworn in on that date. The arguments today centered on who is protected by the Constitution's guarantee of freedom of speech, whether that's ByteDance, which is a Chinese company and it doesn't have freedom of speech rights. But maybe TikTok US, the American subsidiary, does have those rights. And TikTok argued that American content creators have a right to express themselves and that would be impacted by a TikTok shutdown. TikTok's attorneys said the app could be forced to go dark on January 20, January 19, if the law is upheld. But a Trump administration coming in the next day could usher in an entirely new world. Now, the court did not give a deadline for making its final ruling here, but a decision could certainly come next week. Melissa, back over to you.
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Melissa Lee
All right, Eamon, thank you. Amen, Javers. And of course, in the past we said this could benefit the likes of a metta, a snap, etc. Court, what do you think? Is there a trade still there?
- [28:58]
Tim Seymour
Yeah, I would say if you're looking to trade this, I would actually argue that a Snap is probably a better beneficiary than a Metta. I think you're kind of seeing that the reels from Metta is going to benefit from that. But I think getting the younger cohort who's on Tik Tok, you already see even today like that had a bigger bump. I wouldn't trade it based on just that, however. I mean, I think this is a political football that's thrown around. You're seeing how they're talking about this. Trump is already coming in and saying, I oppose this, this happens the day after or the day before he comes in office. So yes, could it benefit Snap? Probably. I just don't know if it's that realistic. So I'd probably stay out of it for that reason.
- [29:30]
Steve Grasso
But you to see meta with that move towards Trump, Trump, that that will be the eclipse, that will be the real tailwind for that stock. So still bullish on Meadow with or without this ban on TikTok. I agree with Court. Snap has the most direct because the age group of people that are using Snap, and I also agree that if Trump is already talking about he wants to have a political decision on it, he's erred on the side of letting it exist. So whatever run up we see in Snap could really be wiped out immediately.
- [30:00]
Julie Beal
Immediately. Yeah, I just, you know, back to Snap. I also just think in terms of who has the chance to benefit more from a little bit upside. I mean, the news around Snap for the most part has been horrific for a year and a half now off those Q2 numbers which really sank it, it's a pretty decent six month chart. I'm actually long some Snap here, so I like this move.
- [30:18]
Melissa Lee
Coming up, a deep dive into the biggest topics of the JP Morgan Health Care Conference will GLP1 heavyweights finally tip the scales on obesity pills? The science skinny on that and much, much more. Load.
- [30:32]
Julie Beal
Missed a moment of fast. Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this.
- [30:49]
Melissa Lee
Welcome back to Fast Money. Stocks dropping sharply to end the week as investors react to a strong jobs report and the impact it may have on the Fed's next rate decision. The Dow S&P 500 having their worst day since mid December, and the Nasdaq closing out its worst week since November. Meanwhile, Hershey announcing CEO Michelle Buck plans to retire in June of next year. She'll continue to serve in her roles until a successor is named. Buck has been CEO since 2017. JP Morgan's annual health care conference kicks off on Monday in San Francisco, bringing together the industry's biggest names and emerging players. Obesity, of course, set to play a prominent role yet again. With investor focus now turning to the next generation category of weight loss drugs and the role of pills in the booming market, our Angelica Peebles joins us now with the details. Angelica of course, it's obesity that's going to hog the attention, of course, but this year it's all about the obesity pill. Now, the biggest event on the calendar is the readout of Lilly's Phase 3 trials of OR Forglo Prawn. Now we're expecting to get the first look in April with more data throughout the year. And before that we should get an update from Pfizer on its plans for its experimental pillars, Denuglipron, which is currently in dose optimization studies. Then in the second half of the year, we should get phase two data from both Viking and Structures pill candidates. And the question for everyone is really, where does a pill fit into the treatment of obesity? Goldman estimates that pills will make up about 30% of the market in 2030. And we also want to hear about what's important for an obesity pill. Nobody expects them to deliver more weight loss than the injectables, but side effects could be even more important for a pillar. Goldman's Chris Shibutani explaining that for pills to live up to this idea of democratizing use of GLP1s, they'll need to be prescribed by primary care doctors, and those doctors might not want to manage those side effects as closely as some of the specialists. On Monday, we'll be live from the conference talking to Pfizer CEO Albert Bourla and Structure CEO Ray Stevens, asking for the latest updates on the key trials to watch and much more. Melissa all right, Angelica, thank you. Angelica Peebles. For more on what investors can expect at jpm, let's bring in Portal Innovation CEO Jon Flavin. The VC investment early stage life sciences companies also providing lab space and industry partnerships to its portfolio companies. John, great to have you with us.
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John Flavin
Hi Melissa, great to see you again.
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Melissa Lee
You will there be there? Of course. How will the tone be different because of an incoming Trump administration in terms of dealmaking, etc.
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John Flavin
Yeah, I mean 2024 was a relatively rough year for biotech, biopharma and pharma stocks. You know, the dampers last year were primarily inflation and then the election uncertainties. You know, with the election behind us, there was an initial concern around who is coming in as head of hhs. That noise is starting to subside. But the stocks really took a hit, you know, toward the end of the year. As you enter into 2025, I think you there's reason for optimism, you know, with inflation generally in check, with tax cuts on the horizon which favor, you know, riskier bets and riskier stocks, as well as an administration that I think outside of the noise and hype will be quite friendly to biopharma and pharma as it relates to pricing and also the ftc. You know, JP Morgan is such an exciting event. I think it will be an event that will be looking toward a more optimistic, hopeful 2025. And I think that you're going to see a lot of venture activity leading in that respect the public biotech markets. I think you're going to see more IPOs come back and a lot of deal beginning to happen with a friendlier FTC and markets that are not as afraid of inflation overhang. You're going to see a lot more.
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Melissa Lee
Activity in the biotech sector in terms of VC money. John, you know, maybe a year or maybe two years ago it was, you know, anybody, anything that had to do with obesity would get money. How has that changed if it, if at all? I mean, given the performance of the publicly traded stocks, you know, weren't as strong in 2024.
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John Flavin
Yeah, I think you're going to continue to see investments go into the obesity space. But that won't be the only space where you're going to see the investments taking place. You know, certainly I think a key theme will be large market opportunities. So writ large, that's cardiometabolics within which you have the obesity opportunities. I think that the obesity opportunities that people are going to be looking at going forward will be to work and identify, you know, pill form looking at side effects with the GLP1 agonists especially long term looking at drugs that might be able to preserve or build up muscle mass, are going to be the next generation where you'll see a lot more investment activity. But I think you will also see continued investment in neuro. There's, there's going to be a lot more activity where you're starting to see the blending of devices like neuralink and bioelectronics that will impact diseases of the brain. But also some important drugs that I think will come forward to treat, you know, Parkinson's. You know, we saw the big deal with Karuna and BMS last year in the approval, you know, their schizophrenia drug. I think that's going to garner a lot of investment into that space as you look forward into the future in.
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Melissa Lee
Terms of the next generation of obesity. John, you'd mentioned all the things that are already in development that investors are expecting to have sort of, you know, readouts in the next year or so, whether it be oral medications or medications that also preserve muscle mass. Those are firmly in investor expectations, I think in terms of what is coming to market. What are the things that you're investing in that are years down the line that we're not even thinking about that will leapfrog that next next batch of obesity development?
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John Flavin
Yeah, well, Portal is very focused on early stage investing. So oftentimes, you know, we're investing first institutional money going into companies like Pelagos Pharmaceuticals. They're developing an exercise mimetic. We're particularly excited about this potential mechanism again, albeit very early in development. And exercise mimetic activates certain pathways that are beneficial for various diseases. And so if we can mimic what it's like to exercise, then we may have better effect on weight loss and preserving or building up muscle mass long term without the side effects. But also other related diseases that would benefit from exercise that we think about, you know, diabetes, Alzheimer's. So we're really excited about Pelagos. And then, you know, a company that spun out of mit, Bob Langer's lab and Geo Traversal, his lab, still early in development, but approaching human clinical trials, a company called Cintis, which just unveiled some recent data showing very promising results that would be an alternative mechanism to the drugs that are currently being developed in the marketplace that you hear about today.
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Melissa Lee
Right. Bob Langer being of course a founder of Moderna. John, fascinating discussion. Thanks so much for joining us.
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John Flavin
Great to see you, Melissa.
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Melissa Lee
John Flavin of Portal, Julie Beale. How do you think about the environment for biotechs next year? John had mentioned IPOs coming to market and just an overall better perform better year for them.
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Peter Bocvar
Yeah, I think the overall outlook looks, it's increasingly getting more sound. It's starting to become more investable. You're seeing higher quality coming to the market. And I think part of that is just a function of we had so many, we really kind of overdid it. And now the kind of quality as we've been through this difficult period has really yielded much higher quality businesses. And so I think if you are a biotech investor, which we aren't, but I think if you are, I think you're going to start seeing more compelling opportunities for sure.
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Melissa Lee
Coming up, a crude comeback. Texas tea hitting its highest level since October. The energy names are the biggest opportunities to capitalize on the rise. Next. Plus, another big shake up in the luxury space. How Capri is wheeling and dealing with one of the biggest names in fashion. That's next. Welcome back to fast money. WTI crude heating up to $76 a barrel, hitting its highest level since October 8th. This comes as new sanctions on Russia's oil industry raised risk of supply shortages. Energy prices is posting their biggest weekly gain since early October as well. Tim, what do you think?
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Julie Beal
I think it's more impressive when you consider the move in the dollar, too. I mean, what's going on here? You know, these sanctions against Russia Surrogate Nafti Gas and Gazprom Neft, two companies I used to follow very closely back in the day, are very close to the Russian government. And yes, there is the shadow fleet of, of tankers and fleet that are out there. But I don't think this is really what's driving oil prices higher. I think people are ultimately looking at, first of all, the global economy. Some of the demand dynamics, I think, are very much in place. And I think OPEC has done a pretty decent job of holding supply down.
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Steve Grasso
Yeah, we've seen China demand actually fall off a cliff. So around China, but in the United States, wti, that's what it's levered to. We've seen seven weeks of drawdown, seven consecutive weeks of drawdown. So you could see this bullish push into it. And then think about it. We've had on this air, we've, we've reported on the polar vortex. So you have some seasonality, you have colder weather, you have a lot of disruptions around the globe. But once again, if you have any profits, I would probably take them or keep them on a short leash because you're going to have President Trump coming in who's going to drill, baby, drill.
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Melissa Lee
All right. Meantime, a big deal in nuclear. The largest US Power plant operator, Constellation Energy, saying it will acquire natural gas and geothermal company Calpine for more than 6, $16 billion in cash and stock. The deal is one of the largest in the power sector. Constellation, which nearly doubled last year, hit another all time high today. It's already up more than 36% in the first few trading days of the year. And of course that says a lot about this deal and what it could mean for this combined company.
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Tim Seymour
Yeah, and I think that's been the question with companies like these is they've done so well over the last year is all, is all that optimism already priced in. And clearly it's not. And I think when you just look at how much energy we need for the grid, for artificial intelligence, for electric vehicles, there's just not enough to go around. And that's where something like your nuclear energy is going to be one of those big sources. And now with this deal, they're your largest clean energy provider between that and natural gas. So absolutely that's going to be a beneficiary for them. I don't think that supply demand story is ending any time in the near term. So yeah, I think this is something you want to be a part of.
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Melissa Lee
Constellation alone is the big, has the biggest nuclear energy fleet out there. Calpine has the biggest NAC asset. What Courtney was saying, what you were saying was it's the largest clean energy provider. And that is actually what, that's what the data centers want, Julie. That's what, you know, us and Microsoft and Oracle, they all want this.
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Peter Bocvar
Well, they want, they want to have their cake and eat it too. Right. So they want to be able to say that it's clean energy. But the thing is, is that they need baseload power that's always there, always on. And that's not really the traditional renewables that we think of in terms of solar and wind. Nuclear is a much better option for them in terms of baseload. And I think a lot of people are trying to kind of couch natural gas as being clean. And it's, I don't think I would necessarily call it clean, but I would call it cleaner for sure than coal. And I think that that's a real opportunity for them. And you know, the thing that's important for them for all of these utility players is that the demand is what's going to enable them to be able to expand their capacity and charge higher rates with their regulators. Because remember this is still a very highly regulated area. And so that's really kind of critical to the growth story around this.
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Julie Beal
Only for public IPs to play, you know, power growth, essentially. And so there's a scarcity value there. Also this, this deal is all about Texas where demand is really growing. And this is Calpine's positioning. And I think this is a lot of reason for doing the deal.
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Melissa Lee
Coming up, Capri catching an upgrade from Citi. But that's not the only news driving this luxury name higher inside a deal that could shift shake up the fashion industry. Next, more fast Money into. Welcome back to Fast Money. Capri back on the M and A Runway. Prada is reportedly evaluating a bid for Capri's Versace business. The news helping the stock to its best day since August of 2023. Capri also getting a boost from Citi, which upgraded the name to a buy from a neutral, raised its price target to 29 bucks a share. Shares have been under pressure since its deal with Coach parent Tapestry was called off back in October. Steve, you in this still?
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Steve Grasso
No, I had been in Capri. I sold it off that pop on Tapestry. I thought I was going to get more of a run because Tapestry, the bid was for $57. I wound up selling it in the low 50s. Then Tapestry didn't give me the love that I wanted either. I made a little bit of money there, but I thought, I thought Karen made a good point that Tapestry could be brought up on. I don't want to parsing this on nefarious activity or comments about why the deal should have gone through or not gone through. So I thought at a 12 year high, maybe it's time to lighten up on that. And maybe by Capri, 23% of revenues is Versace. The bulk of it is Michael Kors. But there's a lack of premium names out there.
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Melissa Lee
Right.
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Julie Beal
Got a lot of time for Versace products. I don't have a lot of time. I don't.
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Melissa Lee
Yeah, show.
- [44:07]
Julie Beal
There's a. There's a time and a place. Mel.
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Melissa Lee
Yeah.
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Steve Grasso
That's a pajamas.
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Julie Beal
I'm not pajamas. Versace ties that I think you gave me some heat about actually.
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Melissa Lee
Probably.
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Julie Beal
Yeah, you probably did. But this is a sum of the part story, one that I think, you know, has its moment for me. It's not now.
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Melissa Lee
Yeah. Luxury goods, Courtney, in this environment. Do you like them?
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Tim Seymour
Yeah, I think, I think actually there could be some optimism for luxury goods if the consumer continues to remain strong here. I do think the sum of the parts which I'M said is probably the story here. So the fact that Tapestry was interested in means there is some value there and the fact that they are willing to sell means they are going to be open to it. So I think seeing some sort of activity, especially when we get into this new administration, they are more open to M and A. Think something will probably happen here. So if you want to trade on it, it might be worth it. I'm not a part of that, but I think that's my two cents.
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Julie Beal
I'm wearing Versace next week by the way.
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Melissa Lee
You do that. Look forward to it. Up next, Final trades Time for the final trade.
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Peter Bocvar
Julie Beal Sir Cara should be a beneficiary of a better biotech environment.
- [45:11]
Julie Beal
Tim Mellie, you're pulling for the SEC over the Big ten tonight. I know obviously I'm pulling for XLE Energy.
- [45:18]
Tim Seymour
Courtney Delta, we touched on this earlier. It's one of the big winners. I think it's something you want here in 2025.
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Melissa Lee
Steve Grasso Octa it's the O in.
- [45:26]
Steve Grasso
My acronym that we haven't unveiled yet.
- [45:28]
Melissa Lee
But you just unveiled one letter.
- [45:29]
Steve Grasso
I didn't say what it was. It's one letter.
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Melissa Lee
Oh, the suspense.
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Steve Grasso
Can I get a Val?
- [45:34]
Melissa Lee
Thanks for watching Fast. Have a great weekend. Madden Money with Jim Cramer starts right now.
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Courtney Garcia
All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning, and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.