← CNBC's "Fast Money"
CNBC's "Fast Money"
Stocks Drop and Climb Back On Tariffs… And The Impact On Pharma Description 02/03/25
00:43:42
Stocks climbing back from an early sell-off, as updates on Trump’s tariff plans filter in. The stocks seeing a comeback, and how the traders are navigating the volatility. And pharma in focus, as the space falls into the red. How fears of rising drug costs are impacting health care, and if the weight loss drug space could see a price surge. Fast Money Disclaimer
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- [00:00]
Melissa Lee
Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single making our communities healthier.
- [00:13]
Meghan Casella
That comes from making courageous decisions, partnering.
- [00:16]
Melissa Lee
With local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn more@mycare.org Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the February 2024 Nelson Report live from the NASDAQ markets.
- [01:01]
Karen Feiderman
I'm in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight held hostage to the headlines. The latest one just minutes ago, Canada will be spared from tariffs for the next 30 days. We'll get the very latest from the White House NASA desk, how you are supposed to trade in this kind of environment. Plus, bottom of the bottle boo. Stocks getting battered yet again. Tariffs, the latest hangover for a host of names that keep hitting new lows. And later, Palantir popping on the back of a big beep will go off the charts on the dollar's next move. And is a burrito blowout on the menu for Chipotle. That report out tomorrow. Our hot and spicy takes straight ahead. I'm Melissa Lee. Come to you live from Studio B at the nasdaq. On the desk tonight, Karen Feiderman, Dan, Nathan Gaidami and Julie Beal. We start off with the very latest headlines from the trade war. Canadian Prime Minister Justin Trudeau tweeting that there will be a 30 day pause on U.S. tariffs as Canada says it will spend more on its border and add more personnel. The this just the latest twist in a day of reversals. Dow round tripped briefly into positive territory after President Trump agreed to pause 25% tariffs on Mexico for at least 30 days. The pauses could be first steps toward avoiding what the Wall Street Journal is dubbing the dumbest trade war in history, even as tariffs look like they will remain in place for China. Our Megan Casella joins us now with more on where we go from here. What a day, Meghan.
- [02:22]
Meghan Casella
What a day, Melissa. That's absolutely right. At least two legs of this trade War are now on pause for at least a month. A message coming in from President Trump just seconds ago on Truth Social confirming that news that he has reached a deal with Canada to delay those tariffs. That comes after Canada promises to carry out this $1.3 billion border security plan. Trudeau also saying that he will appoint a fentanyl czar to take care of that at the border. Trump saying that it will be at least 30 days that those tariffs are on pause. That comes after he reached a similar deal earlier today with Mexico President Claudia Sheinbaum. She agreed to send 10,000 troops to the southern border to focus on Fentany specifically. She also said that the US Made some promises to not send so many weapons across the border into Mexico. Also at least 30 days on pause there. Negotiations ongoing. So we will play this game again a month from now. And the open question at this point, Melissa, is what's going to happen with China? 10% tariffs on all Chinese imports on top of any tariffs that are already in place are set to take effect at midnight tonight. It's been a little quieter out of China than usual because of the lunar new year. But they have expressed some discontent here. They have vowed to retaliate. We know that the two leaders have not been in contact, but Trump said earlier today that he does expect to speak with Chinese officials within the next 24 hours or so he mentioned. So more to watch there as of now. We do expect those tariffs to hit tonight.
- [03:42]
Karen Feiderman
Melissa, Meghan, thank you. Megan Casella from the White House. So in the face of this tariff turmoil, what do you do? Do you wait it out, trade around it? I mean, what we saw today was extreme whiplash when it came to the headlines. We thought there are tariffs and there's a 30 day reprieve with Mexico. Then again for Canada.
- [03:58]
Dan Nathan
Yeah, well, we had Vinnie and Porter and Danny Moses and did a panel with them and Vinnie talked about, you know, make, make volatility great again in June of last year on this show. And again, I think that's what you're going to see. And they're going to be in our business, we call them tape bombs and get ready because the next 75 to 100 days I think you're going to see more of them. And I don't know what you do other than embrace the fact that volume is probably going to be sort of on the other side of 18 and a half, 19 for the foreseeable future. So you're going to see whips like this. I'll say real quick again, though, I think today and all these down days, you see the vulnerability of a market that's trading at, I think, excessive valuations and how sort of tenuous things can be.
- [04:37]
Julie Beal
So just to piggyback on what you said about the Vix, so the Vix went from like 16 and change to 20, which if we were in an all out trade war, 20 would not be the number where we were. So I think there was a great deal of skepticism going into the day about, well, all right, this is where we're starting, but we'll see. There's, there's likely going to be some movement. I don't think that would have been a surprise to most people and I'm surprised it ended in one day. I don't know that it's fully over. There's not, that's not what they're saying. But I kind of don't quite understand the whole strategy. I think it's destabilizing to businesses to know there could be a trade war. There might not. Like if you're gm, what, what do you do? Hard to run a business.
- [05:18]
Guy Adami
You know, it's interesting about the strategy. I mean, if he had Trudeau come down to the White House, even Scheinbank come up to the White House and they had this meeting and it looked really nice and official and they walked out to the podium and they said, we've just reached a really great deal, you know, that sort of thing. I think those are the sorts of things that CEOs would have a lot of confidence in, especially when you think about with our allies. Now on the flip side with our adversaries like China, it's a totally different game, right? We've had tariffs on them, they are punitive. We know that they are our adversaries. We have an economic war with them as it relates to this kind of battle for AI supremacy and all that sort of stuff. And we should continue with those regulations, with those curbs, with a whole host of other things. And when you think about, you know, I know there's a lot of issues about them stealing our ip, that's been going on for decades and the like, and obviously some of this espionage. So China is actually 10%. If it stays there, that's fine. You know, I mean, when you think about it, because we will get concessions. It's the stuff with the adversaries. That's the sort of stuff if you are an auto CEO here, if you are an energy company CEO here, this is the sort of stuff that really hurts your planning.
- [06:23]
Karen Feiderman
Right? I mean, to that point to Dan's point, to all of you guys points. I mean, we're talking about our, our allies here. We're talking about in trade when it comes to Mexico and Canada. And that's what's so destabilizing. When it's China, you completely get it. You know that it's coming, you know it's going to happen. But with Mexico, with Mexico and Canada, it doesn't make any sense after so many decades of just sort of open borders and our ability to move things back and forth in manufacturing and goods. Julie, what do you do here? Because we've got 30 days theoretically now, and I don't know what the off ramp is because there hasn't been any, there haven't been any metrics. It's not like we want to reduce fentanyl shipments by X percent or X number of tons or whatever. Some people say that because there aren't any metrics. That is the off ramp, you can call it off at any time. Others are saying, you know, that there is no off ramp because there are no metrics.
- [07:15]
Jens Nordvig
Yeah, absolutely. I think it's hard to really keep track of everything. But this reminds me of the advice I've gotten from many pediatricians. You know, when your child curses, which mine does, is to underreact. Right. And I think that's really the benefit to investors right now is don't just do something, sit there. Because the fact is is there's just not enough visibility or clarity and things can reverse super quickly. So trying to position yourself perfectly for one specific outcome is not going to be the thing to do. Now if you're a long term investor, a lot of times we're going to probably get opportunities to buy good companies at better valuations. So I'm excited to have a little more volatility because I think most of our companies can manage through this over the long term.
- [08:01]
Karen Feiderman
Are there companies, are there sectors that you'd be looking for? We've seen some of the reaction. We've gotten a glimpse of what the impact could be in terms of the stocks. A glimpse? An idea. We saw it in the automakers, we saw in some of the homebuilders, I mean dollar stores, etc. I mean, are there any entry points in your view here if it goes low or if there's more volatility?
- [08:22]
Dan Nathan
This is interest you're trying to find? Yes. Sectors that might be impervious or some that have sold off enough where it could get interesting with some of these. Look, I mean aerospace, defense stocks for a Litany of different reasons have been under considerable pressure since the election. I think at some point, probably not now there's an area but names that seemingly are outside of the purview of this to me at least now software names I think are winning in this environment for a myriad of different reasons. Most of which what we heard last Monday from Deep Seek and some of these other things, I think the ultimate winner becomes software. I think they sort of fly under the radar.
- [08:53]
Karen Feiderman
Yeah, how are you here?
- [08:55]
Julie Beal
Nothing went down enough to really, you know, as you say, I mean levels are high already going into this. So yeah, nothing went down enough that I bought very little today.
- [09:06]
Karen Feiderman
Does this sort of underscore the notion that there should be a premium according to some sectors and maybe it's software, maybe it's a name like Matter which was up today that are not subject to the whims of this trade war.
- [09:17]
Guy Adami
I mean Meta is one of these ones that everyone loves. There's too many people who love it. It's just seems like a very concentrated trade. I know you love it and it's just gone up in a straight line, you know, 100 bucks, you know, and I just don't think that's particularly a natural reaction to the quarter and the guidance that they gave. And I get evaluation and I get what they've been doing in AI and how it works for their business and it's one of the first use cases that makes a lot of sen, but it does kind of speak to a fact that the AI bubble has not even kind of taken other than Nvidia and Microsoft of late. But Microsoft stuck in the range that it's been, you know, look at Amazon, you know, look at Google and obviously matter, they're trading at all time highs. So you know, you've seen a rotation out of some of these names where there's been some deceleration. The numbers have not continued to go up. But we're going to get a good. I don't know if we're doing that later in the show, I didn't read the rundown but like we're going to get a good look of the Amazon and the Google and what they have to say about Capex and you know, and there are some issues potentially there. You know, if you think about they both have cloud businesses they both been investing in around this, they've both been tripping over each other to invest in like anthropic, that sort of thing. So if you think about the reasons why Microsoft sold off because there's been a decel in the growth of their cloud business. I think those things are, you know, something you want to pay attention for this week.
- [10:32]
Karen Feiderman
Yeah, Julie.
- [10:33]
Jens Nordvig
I mean I think there are really are no sectors that are completely immune from a trade war. Right. Because if it leads to much more significant inflation, that's going to have a negative impact for everyone in terms of interest rates, valuations and mostly just consumer confidence and the ability to continue to go out there and spend. So I don't think any sector is going to be immune from any kind of a trade war. And I think that is reflected in the tenacity of fear that we see in this market around this trade war. I think that's why we have an editorial from the Wall Street Journal calling, you know, the president's first major action. You know, something that's dumb. Like it's, it's pretty clear.
- [11:11]
Karen Feiderman
For more on what is next for the markets, let's bring in the chartmaster Carter Braxton Worth. Carter, you're looking at the S and P as well as the US dollar. So what are the charts telling you?
- [11:20]
Carter Braxton Worth
Well, sure, before we get to them we have an all data chart for the US dollar and all data chart for the S and P. So sometimes very short time frames are important and then we thought we'd look at very long time frames. But what we know is that today it's a fair thing to interpret it both as quite bearish and yet others. Well it shook it off, didn't it? And a lot of stocks did quite well. Important stocks like a Meta or a Google or an Amazon versus others. And so we'll see jump ball here. My own honcha bias is that we're churning and it's stalling and there's risk reward that's poor. But let's get to it. So here is an all data chart of the S&P 500 since inception in 1928. And you can see of course those dates. One could say, well isn't this, you know, just sort of fear mongering? I have no comment other than we sent it out to clients today and last night. And the idea is that we're at an interesting juncture and so the bull would say we're going to move up and out of this well defined internal trend line and it's the beginning of yet the new bull market. And others would say no, this is a very difficult level. But to equate it analogy is a weak form of argument. There are no analogs to 1929 or 2000 other than if you do Some valuation work. There are those that are making the case that we are as full or as expensive as we were at any time in history. My own hunch is to reduce exposure but to the dollar obviously that's. Yeah, go ahead please.
- [13:00]
Karen Feiderman
No, no, no. For the US dollar.
- [13:02]
Carter Braxton Worth
Yeah. So here's an all data chart of the US dollar and what we know is that obviously that peak is 1985. That's the Plaza Accord. Now if you looked at the trade weighted US dollar index it's making all time highs but there are three ways to annotate it. This is one of three. Let's look at another same chart, 50 year old data chart and then final iteration would be this way. Those all point to higher levels to my eye One might draw the lines differently but that's what I see.
- [13:35]
Karen Feiderman
Okay Carter, thank you. Carter Braxton Worth of worth charting. Interesting. The the chart work seems to coincide with what a lot of strategists are saying. David Costner over at Goldman Sachs saying 5% pullback on the S and P and the tariff impact just in terms of DOL$, not in terms of the impact on consumer confidence, not in terms of the impact on financial conditions. But just mathematically speaking those tariffs could mean a 2 to 3% reduction in S&P 500 earnings for this year.
- [14:01]
Dan Nathan
Yeah, that's the key, right. I mean it's all predicated on earnings and earnings growth. And I think, listen, coming into this year I think the market was expecting 14 and a half percent or so earnings growth. I never thought we'd get anywhere close. But to your point, if these were sort of being protracted, you know you're knocking that down. I think a couple handles a couple standard deviations lower on top of a market that's probably already expensive on back of that. So it is concerning without question and quickly the price action. Karen made a great point the other, she always makes great points. But on Thursday when Apple reported the stock was trading 234 she said wait for the conference call. That happened. She was right. The stock traded up to 247. But obviously the aftermath, the trading activity in terms of the way it's been trading has not been good. Microsoft throwing that mix, even if you want to throw Tesla in that mix and then go back to in video and we flagged that the day after earnings that engulfing pattern, these were all technical reasons. Now you're throwing some fundamentals on top might get this thing moving a little bit.
- [14:55]
Guy Adami
It's always interesting when you hear, you know, a pullback of 5% in S& P, that's been making new highs for like two years, you know, and it wouldn't be hard to get that. We had one just, you know, a month ago or so. But I think about again, the conversation we just had about uncertainty. I think about expectations. Expectations as far as earnings growth, normally you would see, you know, S and P earnings growth, expectations come down a little bit into the year, that sort of thing, and they haven't, they stayed pat. But if you look at Carter's work on the dollar, if you think about where yields are and they don't really move, they're stuck at four and a half percent or so. You look at CME Fed funds futures and you say to yourself, well, you know, we're going to be here for a while. And you say to yourself, with this tariff uncertainty, there's actually a lot of good reasons why earnings growth should be less, which could cause easily a 5% decline off a market that's trading at 22 times. So again, I don't think that's such a bold call. It makes sense, but it's kind of consensus.
- [15:46]
Julie Beal
I agree. I mean, it's hard for, for management to feel comfortable about what's going to happen next quarter. So a lot of times we care about what happened in the quarter and to the extent the dollar moved, maybe we'll dismiss it. Often it's somewhat dismissed. Constant currency, how did they do? But the idea of planning for the future, it gets much harder. So I think you have to be.
- [16:04]
Karen Feiderman
More conservative for more of the extreme moves in the currency markets because we did see a lot of that over the weekend. And today let's bring in Jens Nordvig, Exante Data's founder and CEO. He also is the co founder and CEO of market reader Wall street analysis platform Yan's always great to see you. It's been a rollercoaster in the currency markets. We've just seen such extreme swings. And so I'm wondering how you, how your clients are trading this and what you, what you're expecting for the US dollar.
- [16:33]
Carla Rizzuto
It's, it's really one of those situations, right, where we get a new headline literally every hour and we've had incredible moves Thursday, incredible moves Friday and extraordinary moves on Monday's trading. And now with the latest headlines, we've actually had the moves more than fully reversed for the Mexican peso, the Canadian dollar, right, because there's this delay in the tariffs that's been announced during the day and the market is now kind of jumping onto this idea that there's going to be a delay, that even the China tariffs that are supposed to come into effect at midnight, there's an expectation market that there will also be a delay for those, even though there has been no announcement specific to that. So it's extremely erratic market move, probably some of the most erratic trading I've seen in my care Korea. And it's, I think it's really important to not overtrade the headlines and think about what is the direction we're actually going. What is the administration really want to do? Is it a negotiating tactic or is it a policy they really want to implement? And I think there's a big difference between what they're trying to do in relation to Mexico and what they're trying to do in relation to China. Two totally different things.
- [17:50]
Karen Feiderman
Before we get to that, Jens, I'm just curious, in terms of the wild swings we've seen, how much of that is just positioning into the tariffs or what perceived tariffs and how much is that sort of increasing the volatility here?
- [18:04]
Carla Rizzuto
Yes. I've been working with institutional investors throughout the whole weekend, right. To, to plan for the trading session here on Monday and I think a lot of people were just embedding new kind of scenarios for, okay, where are different currencies going to go if these tariffs actually come into effect?
- [18:21]
David Rosenberg
Right.
- [18:21]
Carla Rizzuto
And we, we, we've never known with certainty and we still don't know. But that's the sort snapping out of the new equilibrium that all institutional investors are doing. And the big question is just, are these tariffs going to stick or is it just negotiating like a negotiating tactic?
- [18:39]
Dan Nathan
Yen. You know, the currencies to me drive everything. But the people watching this show are typically equity traders, investors. So in your opinion. And back on August 5th, it was the dollar yen move that got things moving. What should we be watching? Like what's the one thing that you wake up and say where is dollar Fill in the blank.
- [18:56]
Carla Rizzuto
Yeah, so, so, so right now I think we have some kind of proper information about what's going on with Canada and Mexico, but we have no information about whether the tariffs will happen or not happen with China. So I think literally where dollar China is trading at midnight tonight would be crucial.
- [19:16]
David Rosenberg
Right.
- [19:16]
Carla Rizzuto
Because that's when the tariff will start to officially be collected. And that's going to be the key stress point that we're going to have a reality check effectively whether we can relax as much as we've relaxed over.
- [19:28]
Karen Feiderman
The last few hours as opposed to looking at the crosses that directly pertain to the countries targeted by tariffs. Yen. Are there other currencies that we should be watching too for ancillary effects? For instance, you know, tariffs on China means, you know, U.S. brazil feels an impact, U.S. argentina, peso. I mean, what are some of the ancillary effects?
- [19:50]
Carla Rizzuto
Actually today we had, we had, we had some really unusual moves today. Right. That we had tariffs announced in relation to Canada, Mexico, China. And the euro was actually extremely weak today. Like there was more surprise that Trump started to talk about potential for EU related tariffs during the weekend and the euro got really scared about that. So you can see that big dip in the chart there. That was really a fear that EU tariffs could, could be coming soon. So that's probably the one to watch. Right. People are really on edge whether he could follow through on those specific threats. And he's been talking about repeatedly that he's not happy with what the Eurozone is doing and the EU is doing in relation to. To car trade, auto trade. So that's why there's a huge amount of focus on that.
- [20:41]
Karen Feiderman
Yeah, he just said, I think on Friday that he's looking to do something significant when it comes to the eu. So I guess that's why people are on tenterhooks on that trade. Yes. How would you, how are you recommending now traders position themselves. What cross is the most interesting to you in terms of the risk reward?
- [20:57]
Carla Rizzuto
Yes. So China is actually on holiday. Right. So when we look at how the Chinese currency is trading, we have to look at C and H as opposed to CNY to get a real time picture. And they'll only come back on Wednesday, but I think that's where the action will be. That's where the clue is going to be. And right now I would say the risk are underpriced because I don't think the situation is. Just because they have delayed things for Canada and Mexico doesn't mean that it's going to be late in the same way for China. So watch out there. I think that could be a big move that could also spill into all the, you know, ADRs and so forth of Chinese companies that are listed. So I think some equity action is pretty likely on that front too.
- [21:37]
Karen Feiderman
All right. Yes, we're going to leave it there. Thank you, Jens Nordvig of Exante. So I mean it's make volatility great again in the currency markets also.
- [21:47]
Dan Nathan
It's been great for a while and I think it's going to continue to be. And he's right. I mean, listen, the Yuan is absolutely something you got to watch. Dollar yen without question. But what happens, all loads, all roads are leading back to gold as well. Continues to make basically new time, all time highs every single day in environments where historically it shouldn't do well. That's what you should be watching.
- [22:07]
Guy Adami
You know, friend of the show, David Rosenberg, Rosenberg research had a note out this morning. Really interesting stuff. I mean, his point was he thinks that Trump has kind of overstepped his bounds with this negotiation. And what it does, it runs the risk of inflation going higher. And the very people who voted him into office are going to really feel the effect of higher inflation and they're going to forget that the Biden administration was the cause or the way they thought the cause for that inflation. And then what happens is you have some pressure on getting through some of these pro growth sort of fiscal policies because in his own party in the House, you're going to get these fiscal hawks acting up a little bit. So again, I think they have to walk a very fine line because that was one of the reasons for the changeover that we saw. People wanted less regulation, more pro growth policies, and this could be the sort of thing that actually causes it to kind of get stalled in that first year.
- [22:58]
Karen Feiderman
I think your point about the election, electorate and people, consumers out there feeling the impact really is going sort of as confetti falls on me. You know, people are underestimating that impact, Julie, because you think, you know, up to the elections, people put on hold their purchases, they're hearing that things are going to cost more. I mean, that's sort of the untold effect. The last time we had tariffs, we weren't coming off of an inflationary scenario like we are this time. We are in shock still from inflation where people are still feeling it out there.
- [23:30]
Jens Nordvig
Yeah, I think that's something that's kind of understated, is that, you know, the last time we had tariffs, none of us really had experienced inflation in any kind of recent memory. And I think it's much more meaningful now to have price pressure happening. And I think having so little clarity on how it's going to impact consumers still is a big concern. You know, I think we continue to chart prices and see that there are pockets of goods that are really under quite a bit of pricing pressure, particularly in groceries. And that's a place that was pretty central to the debate for Trump versus Kamala Harris. So I think going forward, the real key is kind of continuing to follow how this impacts the consumer because I think so much of the US Economy is driven by what happens with the US consumer and the confidence around that and the willingness to spend is going to be critical.
- [24:21]
Karen Feiderman
Coming up, earnings season in full swing and shares of Palantir surging after reporting results, the details and the numbers moving the name next plus the bar lowered yet again.
- [24:30]
Carla Rizzuto
Boo.
- [24:30]
Karen Feiderman
Stocks pouring one out as tariff headlines hit the group by investors are getting on the wagon and off the trade. Don't go anywhere fast when he's back in two.
- [24:41]
Melissa Lee
Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide and every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the February 2024 Nelson report. Learn how to use AI to be more successful with CNBC Make it's new online course.
- [25:15]
Karen Feiderman
We'll give you examples that can help you master AI tools.
- [25:18]
Melissa Lee
Go to CNBC make it.com/AI and register now.
- [25:28]
Karen Feiderman
Welcome back to Fast Money. We've got an earnings alert on Palantir shares are trading near all time. Highs in the after hours on a top and bottom line beat. The Q4 conference call kicked off top of the hour. Sima Modi's got more on these results.
- [25:39]
Meghan Casella
Seema well Melissa Palantir painting a picture of optimism on the call with its guide for the full year. Much better than expected. Demand for artificial intelligence products that help businesses and governments continues to soar. Really ways for the company to help these clients assess bigger playbooks and synthesize complex data. CEO Alex Karp telling shareholders that the momentum the company is experiencing across its commercial and government segments is quote unlike anything that has come before. With the US army extending its partnership for up to four years on tariffs. Carp telling CNBC this is a revolutionary moment. There are going to be ups and downs. As long as it's good for the upward trajectory of America, we support it. We're looking at shares hitting a new all time high of about 22% in after hours. But only three buy ratings on Wall Street. Melissa While there are 14 holds and six sell ratings, analysts at Jefferies they hold an underperform rating and they're saying we're not debating the fundamentals, it's valuation that they think bank is unsustainable.
- [26:38]
Karen Feiderman
Back to you Seema. Thanks Sima Modi. It's also worth noting the average price target on the street is $51, about half of where it is trading right now in the after hour session. An extraordinary performance by this company last year. And look at it this year so far, without question.
- [26:54]
Dan Nathan
And if you. How many years ago was the hope trade?
- [26:57]
Karen Feiderman
Three years at least.
- [26:58]
Dan Nathan
I'm just ahead of my time. But in our world, early is wrong. But what they're doing now is the hope for Palantir was to a certain extent what we're seeing now the problem. And not that there's a problem at $102, but now it's a $220 billion market cap company. They're going to do three and a half to $4 billion in revenue, put on the $5 billion in cash they have and I'll round it up to 10. And you're talking about a company that's, you know, 20, 21 times sales, which is, you know, and this move, I don't think it's commensurate with the size of the beat. I get it, there's excitement, they have a lot of Runway. But this is a very expensive stock.
- [27:35]
Julie Beal
But the numbers were spectacular. I mean I wouldn't have bought this a third of the price ago, but I mean these, that the revenue growth numbers for the quarter are huge. Looking forward, they're huge. Interesting to me, commercial revenue growing much more quickly. I mean it's very good for the whole trade. Right. For the whole AI complex, I think, but really spectacular. The rule of 40, which we don't talk about that much. You know, you're looking for growth and margin 81. I mean it was just spectacular on so many fronts, but just way too rich for me. But I've said that, you know, for tens and 23, 50 points.
- [28:07]
Guy Adami
Well, this is one that is really in the hands of investors. Right. This company keeps executing, they keep beating and raising and that's getting investors really excited. They don't really care about valuation or any of the sorts of, you know, like the spread between what is logical and what they're willing to pay. And it just goes to show you that there are $200 billion meme stocks. And that's what it is. That doesn't.
- [28:29]
Karen Feiderman
That's what it is.
- [28:29]
Guy Adami
Yeah. It doesn't mean denigrating the company, their products, their services and their execution. It's really, again it goes back to this is what investors are looking to play. And it also says that we've been talking about the narrowness of this trade and Guy just said it is like here's a company who's executing on that plan. They've articulated that plan. It fits right in the most exciting narrative in the markets and that's what's happening. But don't think for a second that when things slow down. This company is not slow down though.
- [28:56]
Karen Feiderman
Well, isn't demand, I mean, in, in some respects you can say that this is a defensive business that they are in. It is defense right through technology.
- [29:05]
Guy Adami
Look at the defense companies. I mean like this is, does this have a bigger market cap than your Lockheed, the L and your Clam? I mean like what's, what's.
- [29:12]
Dan Nathan
Well, it's the same market cap, for example. I mean, obviously extraordinary. Much like McDonald's for example. I think it's the same size of company as Palantir. I mean, so it's interesting how they've grown into this. I mean this is an excessive market cap, I think given their, given their revenue and given their projected growth. But people are excited about their story. And he, then he tells a great story. He's been telling it, by the way, for a long time. It's just over the last two and a half years people started to listen.
- [29:37]
Karen Feiderman
Julie Beal, where do you stand?
- [29:40]
Jens Nordvig
Yeah, I mean, I'm happy to see certain elements of this business kind of coming to fruition. Like now we're actually seeing GAAP earnings. And for me that's really much more meaningful than the level of adjusting that this company tends to like to do. And I agree, I think that the forward momentum is with this business, but that doesn't mean that it's completely infallible. Its customer base is good, but that doesn't mean that you can't see a spending slowdown. And the thing is, when you have valuation like this, execution has to be perfect. Every quarter you have to beat and raise and if you don't, you get punished pretty mercilessly.
- [30:14]
Karen Feiderman
There's a lot more fast money to come. Here's what's coming up next.
- [30:18]
Melissa Lee
Booze stocks going flat as Trump tariff headlines brew up a storm for the space. How investors are trading around those spirits ahead. Plus, drug costs coming into focus as tariffs threaten the pharma and biotech trade. What to expect out of the White House and the prognosis on the health care space. You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this. Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to disc. Learn more@discover.com credit card based on the February 2024 Nelson report. Learn how to use AI to be more successful with CNBC Make it's new online course.
- [31:23]
Karen Feiderman
We'll give you examples that can help you master AI tools.
- [31:26]
Melissa Lee
Go to CNBCmakeit.com AI and register now.
- [31:35]
Karen Feiderman
Welcome back to Fast Money. Stocks climbing back from steep early losses as President Trump pauses tariffs on Mexico and Canada. The dow down nearly 700 points at the lows closing 122 points lower. The S&P down three quarters of a percent and the Nasdaq down more than a percent but also well off lows. Gold and energy jumping on today's tariff headlines. Gold up nearly 1% crude and Brent higher Nat Gas surging Boo. Stocks heading in the opposite direction. The group getting hit as tariffs weigh in the space and some more after hours action. Shares of Clorox lower despite a top and a bottom line beat and XP semi higher after beating earnings and revenue expectations. Guy, what do you want to trade?
- [32:13]
Dan Nathan
Constellation, excuse me, Constellation Brands stz. If you look, I mean this was a great performer for about a year and a half, two years and obviously the last of pulpit chart. I mean the last couple of months have been catastrophic and that's not hyperbole. I mean just look at how poor the stock is traded. Valuation very compelling. People are selling first, asking questions later. I think you can get down about 160 which was the low we saw a couple of years ago. That was sort of the takeoff point. But there's still more pain ahead and they don't report until I think early April. So keep that in mind. More downside I think.
- [32:44]
Karen Feiderman
All right, coming up between tariffs and a hard place. Pharma and biotech getting hit as Trump tariff headlines stoke rising drug cost fears. How a health care venture capitalist is navigating the waters when Fast Money returns back into welcome back to FAST money. Biopharma stocks taking on the chin today and fears that President Trump's tariffs could raise drug costs and worsen shortages in the US the S&P pharma ETF dropping 3/4 of a percent while the biotech ETF dropped nearly 1 1/2 percent, though recouping some losses after hours. For more of the potential impact, let's bring in Versant Ventures managing Director Carla Rizzuto. The firm invests in early stage pharma companies. Carla, great to have you with us.
- [33:24]
David Rosenberg
Thanks for having me.
- [33:25]
Karen Feiderman
We initially asked you on because of your investments in the obesity drug space, which we will get to. But I'm just curious, you know, as more and more companies here in the US look to China specifically for deals for the next promising molecule, whether it be in obesity or cancer, how, how will tariffs impact. How will the worsening relationship, in theory, impact those sorts of relationships?
- [33:47]
David Rosenberg
I think there's two ways that the impacts could take place. The first is through, you know, accessing products that are innovated in China and then brought over to the US or to other markets. You know, we'll have to see how the tariffs are exactly structured to understand if it really will affect that sort of trade. But more tangibly, at least for most of our businesses, China is a huge center for contract research and for manufacturing. And anything that increases the cost of that is going to make it more challenging in our space. You know, we're already, you know, a space that's under pressure in terms of investor sentiment. And increasing costs is not going to help that.
- [34:26]
Karen Feiderman
I don't think people realize how much is actually done in China when it comes to developing pipelines and developing next drugs. As you mentioned, research, contracting the research. And we're not just talking about the Bio Secure act, we're talking in those firms, obviously. But there are other firms that companies use, big companies like Merck or whatever to develop drugs over there precisely because of the cost. I mean, can you give us an idea, just, you know, for the American public, that a lot of drugs are actually being worked on there on our behalf?
- [34:56]
David Rosenberg
I mean, if I look at our portfolio, you know, we probably manage about 80 companies actively. Virtually all of them are using a Chinese CRO or manufacturing partner in some way in the R and D and development process. Right. So it's a very significant part of how biotech and pharma companies operate. And it goes from the smallest company up to the very largest ones, the mercs, you know, etc. So it's a very significant part of how the sector operates.
- [35:25]
Karen Feiderman
Can you give us an idea of how much, you know, in your portfolio companies, let's say, how much more it would cost if you had to bring that research or how disruptive it would be if one had to bring that research and reshore it to the United States?
- [35:37]
David Rosenberg
Well, the. I mean, to put it in perspective, if. Let's just say that we wanted to reshore all of the Externalized R and D and manufacturing today we couldn't do it. There's not enough capacity in the us so it's very difficult to imagine how that would happen. But just in terms of pure costs, I mean, I think you're just looking at linearly with respect to the amount of tariff that's applied.
- [36:01]
Karen Feiderman
I do want to talk about your weight loss portfolio because you have investments in a number of companies. How should we think about the space? Are we still thinking about GIPS and GLP1s? Are you sort of going next, next step beyond that?
- [36:14]
David Rosenberg
Yeah. Versant. We see the obesity space and cardio metabolism more broadly as the single largest value creation opportunity in the history of the industry. And so we're building a broader to contribute from multiple angles. We've started working on what we would call adjacencies to the incretins, so the GLP1s and the GIPS. But also thinking about even further afield approaches that are sort of the next horizon. So thinking about ways to address comorbidities that obesity patients suffer. But in the very long run, ways to reset what we call the metabolic set point. So these are. This is a mechanism that your body uses when it's being starved to slow metabolism and therefore conserve calories. It's a great thing if you're a hunter gatherer in a cave and have a lean winter. Not such a good thing in our food abundant world.
- [37:08]
Julie Beal
So we've heard about the loss of muscle mass and that's a really important thing to try to solve. And then also the delivery mechanism could be or are those sort of the very next thing or how far away are those and what's after that?
- [37:23]
David Rosenberg
Well, the near term needs, and this is where healercore comes in, are improving tolerability. Nausea and vomiting. Patient discontinuations are a big deal on current GLP1 based medicines addressing fat mass versus lean mass. So preserving muscle while still losing fat is a significant area for innovation. And that's where Helicorp comes in. We got excited about Helicore because it offers a first in class approach that should be more tolerable, that precisely targets fat while sparing lean muscle mass. And we know that muscle mass is critical for overall health. So that's. That was the reason the Versant partnership got excited about Helicore. But in addition to that, there are significant unmet needs in maintaining weight loss. Once a patient has reduced their weight, you know, by the 20 to 25% that can be achieved with current therapies. And we want to avoid the rebound effect, which is that when the patient comes off the therapy, they very rapidly regain the weight that was lost. And most of that regain is coming from fat and not being rebuilt as muscle. So that's quite problematic from an overall body composition and long term health perspective.
- [38:28]
Karen Feiderman
Carla, we'd love to have you back talk more about the weight loss space. Carla Rose, My pleasure. Aversant A lot of things that we touched on in terms of the tariff impact on the space, but also the next sort of frontier when it comes to weight loss.
- [38:41]
Dan Nathan
No doubt. And I think if we have a further conversation, we'll talk about the potential for M and A in the space. I mean names like Bristol and Pfizer and even Merck to a certain extent have not performed. And I think they're going to have to do something in 2025 and that's something that's grow by acquisition. So I think it's going to be a really interesting time if you can identify some of these smaller biotech companies.
- [38:59]
Karen Feiderman
And by the way, Merck does have a partnership with the Chinese company for an oral obesity city candidate, the right to develop manufacture. So, you know, and they just ink that I think at the end of 2024. So this is really a very common thing for the pharma industry here in the US to reach out to China to look for the next potential blockbuster.
- [39:19]
Julie Beal
I mean it's sort of playing the next next game which is interesting. Like I feel like VC in anything but VC on the cutting edge of pharma is sort of you got to have a lot of tough stomach. I can. Courage, Courage. There we go. That's the word.
- [39:33]
Dan Nathan
That's a married.
- [39:34]
Julie Beal
Yeah.
- [39:35]
Karen Feiderman
Coming up, closing the retail loophole. How Trump's latest tariff moves are impacting the likes of PDD and other Chinese commerce names and what it can mean for advertisers as well. That is next back into. Welcome back to Fast money. Temu parent PDD holdings dropping nearly 6% today after President Trump's new China tariff tariffs closed a trade loophole used by the company. The de minimis exception exemption, excuse me, allows packages worth less than $800 to be shipped into the US duty free. On top of that, a report out of bank of America Global Research adds that if fewer packages end up in the United States because of the exemption going away, growth could be hurt and that could lead to marketing budgets being slashed. That could hurt names like Meta and Alphabet. Julie, is this a reason to be concerned? They also say that a name like Etsy could actually benefit from this.
- [40:31]
Jens Nordvig
Yeah, no, I think this loophole has been pretty well exploited by Temu and Shine. They've done a great job of being able to find ways to avoid these kinds of duties and I think closing this loophole makes actually a lot of sense. What's going to be interesting is understanding the follow on effects. The thing is is that most of the Temu and Shine things are so cheap that quite honestly I don't think it's going to make a huge difference in the consumption patterns around it. People are going to want their cheap wares no matter what. So I'm not as worried about it for Metta. I do always think that there are opportunities for people to kind of recognize what's out there on Etsy. I'm always surprised the innovation that's actually happening just locally.
- [41:10]
Karen Feiderman
Yeah. What's your take on you. You raised this a long time ago because Tim and she and obviously spent a lot in terms of advertising on Facebook as well as Instagram. Yeah, exactly. It's like the team who billionaires.
- [41:22]
Guy Adami
I think that's moderated a bit and I guess I'd be more focused. I had the stat here. More than 70% of the products sold on Amazon are manufactured in China and disproportionate on the GMV are sellers from China. So you get this both ways. You know, I don't know how this is something that is, you know, this de minimis rule goes away. It's got to affect Amazon and then the other folks over there. So to me I just think that it seems a little precarious because those tariffs are staying on for a while.
- [41:49]
Karen Feiderman
Coming up, another busy week of earnings including reports from Alphabet, Pfizer and Chipotle all out tomorrow. How are the traders are setting up for those names? Next, more fast Money into. Welcome back to Fast Money. Earnings season rolls on and three big names are set to report tomorrow. Alphabet, the big headliner after the bell, Chipotle also set to report Q4 results in Pfizer kicking things off tomorrow morning. So we kick it off with Alphabet. Karen, what do you think?
- [42:19]
Julie Beal
Yes. So we're talking about on our midday call. I think two things. Cloud after Microsoft. That'll be interesting. And after Metta, search and advertising. So I'm long. I think that what happened at Palantir tonight is probably supportive for that trade in general. Just cloud.
- [42:36]
Guy Adami
Yeah. I mean I think the bigger issue is obviously they're two very different businesses, two very different applications. Search is Google's bread and butter. But to your point, any deceleration in that Google cloud business is going to be extrapolated. I think more importantly is like how much is this new overlay when you do a search on Google, how much is it cannibalizing? Let's just say the blue link business and you know, at the end of the day, Gemini is not nearly as good of a product as Chat cbt. And so if you have this behavior, if you see some of the numbers, the way that they're growing users and then paid users, it's got to come out of Google. And I like the name and I get why you like the name. The stock had that big gap after that quantum computing thing was a little quizzical. But the fact that this stock has been immune to any downside selling pressure in the in the wake of what happened with DC Deep Sea Glass is very curious to me. It's going to take a big beaten arrays to get the stock higher, in my opinion.
- [43:26]
Karen Feiderman
All right, let's talk Chipotle. That's because we do like to talk about a good burrito blowout. Four times a year. Guy.
- [43:34]
Dan Nathan
It's more than that, sister. That's pretty funny. People just reiterated a buy with a seventy dollar price target and they've been on top of this thing for a while now. Obviously this is sort of the epicenter of any tariffs with Mexico for a myriad of different reasons that have somewhat been, I guess assuage of what we heard over the last couple of hours. Valuation is concern, always been a concern. It's come down to comps which I think is expected 5.7 and margins. I think they're going to actually surprise people to the upside. So I think you continue to stay long. CMG Sister.
- [44:07]
Karen Feiderman
Avocados, Avocados, avocados. JULIE BEAL they will be subject, you know, if these tariffs get back in place and that will bite into margins.
- [44:16]
Jens Nordvig
Yeah, I agree. I think the commentary around margins is probably the thing that I'm most interested in because the valuation for me of a restaurant, no matter what how quality it is, it's just prohibitive. But all of the commentary around costs, and not just that, but labor cost too I think is really kind of an important place to pay attention.
- [44:34]
Karen Feiderman
Up next, final trades. Time for the final trade.
- [44:45]
Jens Nordvig
Julie Beal look, anytime that you have volatility in markets with logistics, dicart tends to benefit.
- [44:53]
Karen Feiderman
Karen yes.
- [44:54]
Julie Beal
You know how I always say if you went home long at the close, it's the same as buying it right here? Well, I went home with the girl, brought me goo. See you tomorrow.
- [45:02]
Guy Adami
Dan I never had a girl bring me anywhere really tough.
- [45:05]
Julie Beal
I believe you.
- [45:06]
Guy Adami
That tractor got an upgrade here today. That looks a little overdone guy.
- [45:14]
Dan Nathan
EQT that would be the E in my tube for you playing our home game.
- [45:19]
Karen Feiderman
Thank you for watching Fast Money. I'll see you back here tomorrow at 5. Bad money with Jim Cramer starts right now.
- [45:27]
Melissa Lee
All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or in other 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 Learn how to use AI to be more successful with CNBC Make it's new online course.
- [46:13]
Karen Feiderman
We'll give you examples that can help you master AI tools.
- [46:17]
Melissa Lee
Go to CNBCmakeit.com AI and register now.