← CNBC's "Fast Money"
CNBC's "Fast Money"
Stocks Wrap Up A Positive Week.. And How Pharma Will Fare Under Tariffs 4/25/25
00:42:44
Stocks closing out a positive week, as tech stocks lead the market bounce with a big move off its recent lows. How our traders are positioning ahead of another big week of earnings, headlined by Apple, Microsoft, and Meta. Plus A major pharma fee. The $51 billion Trump’s tariffs could add to U.S. drug costs, and where one industry expert is still seeing opportunity in the space. Fast Money Disclaimer
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- [00:00]
Melissa Lee
A rich life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities and even another passenger or three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. Edward Jones, Member, SIPC Are you still.
- [00:32]
Tim Seymour
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 creditcard based on the February 2024 Nelson Report.
- [00:59]
Karen Firestone
Live from the Nasdaq markets in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight, tech on the rebound. The Nasdaq popping over 6% this week. The S&P climbing more than 4. But with Apple, Amazon, Microsoft, Metta and more reporting next week and the good vibes last, we'll debate that. Plus self driving surge. Shares of Tesla popping as the Trump administration says it will loosen rules to help automakers take on China in the race for a driverless future. And later, is Apple's expansion to India going to happen? One Street Bear isn't buying yet. A big week for bitcoin. What's behind this comeback? And how are the president's tariffs impacting one of TV's biggest advertisers? We'll go inside the numbers. I'm Melissa Lee coming to you live from studio. Be at the nasdaq. On the desk tonight, Tim Seymour, Karen Fireman, Courtney Garcia and Steve Grasso. We're all tonight coordinated. Tonight coordinated. This wasn't done on purpose. Happenstance. We start off with a tech led rally on Wall Street. The NASDAQ jumping another percent today, bringing its gains for the week to nearly 7%. And get this, the index is now positive in April putting it on pace to break a two month losing streak. It has now rebounded more than 17% off its 52 week low hit three weeks ago. The S and P and Dow also finishing in the green, clawing their way back from early in the session losses as tariff negotiations seem to be quieting some investor concerns. But the next big test for markets is just around the Corner. Some, some $10 trillion worth of companies are reporting next week, headlined by Apple, Microsoft, Amazon and Metta. So. Well, next week's reports keep the momentum going. Are we in for a rude awakening? Well, if there are any concerns, Google certainly for at least now said everything's going to be all right, at least when it comes to the trade.
- [02:38]
Courtney Garcia
Yeah, I mean at the, I thought, I listened to the call this morning and I thought it was pretty good. I think Dieter talked last night about for the cloud part is being, you know, supply constrained, not demand constrained. So that was good. But we have this huge question mark about, you know, what's going to happen with the breakup or not or any of that. And then also this is the first quarter and so we don't have any sense of what this next quarter brings. So we'll have some information for sure. But it is possible that we have sort of, you know, conservative outlooks or no guidance or things like that or maybe the, you know, the dual guidance tariff this, if not that. So I mean it's, we're coming off a better place. But things have rallied so much that I'm a little bit concerned. The bar is high now, I think.
- [03:24]
Tim Seymour
In Metta and, and Amazon to some extent we have companies that, look, Amazon can tell you a lot about what they might be seeing in terms of the consumer and possibly some tariff dynamics. But I think Apple's really that tell and I think we're at least going to hear from Apple. But, but going into those numbers, this is the market that's now rallied 14 and a half percent off the intraday lows on April 7th. Although, you know, we're only about one and a quarter percent higher than where we closed on the day of, oh, we've got a 90 day reprieve on April 9th. So the market's done a lot in between. And if you think about it, I just, what's, I think very encouraging for the market is that over the last couple of days, that downtrend, that downtrend in the S and P and the Nasdaq and in the semiconductors has been broken today and even yesterday. And if you look at semis, I would argue that the NASDAQ Wednesday, Thursday, Friday is through that downtrend. So some of this price action, I'm sure chart folks out there will tell you you've actually started to create some real positive momentum to the upside back to the earnings. I do think Meta was the stock that couldn't do anything wrong until suddenly they got kind of caught up in the middle of this and really the questions about what Capex spent meant we can't wait to hear more about that. But everything we've heard so far, no delay in Capex demand is fine.
- [04:41]
Steve Grasso
If you look at all the charts, they all fell off a cliff right around Deep Sea. That was the initial sell off in the whole space. I think even though they bounced to everyone's point, they bounced off the recent lows, they're still off that high from when that deep seek headline really hit the tape so substantially that, that these, these stocks really have room to move forward. We, we've seen a, not a substantive bottom because we don't know yet. But you trade below 5,000. I don't think we're going to revisit that anytime soon. And the 10 year I think has more control over the overall markets than anything else. And we've seen the Trump administration be really sensitive when that yield spikes. I think they're going to come out of the woodwork. They're going to do anything that they can to make sure that yields stay low. They like low rates. It's no. So it's no secret and I think the pivotal point of this week was when Governor Waller came out and said on another news station came out and said that if the jobs market starts to fall off a cliff there'll be more cuts and they'll be quicker than people think there's going to be. So I think it put back on that Fed put where that Fed put was probably not in existence until this week again in earnest.
- [05:57]
Karen Firestone
So a couple of things, a couple of puts are back in play. Then there's a Trump put which everybody thought was going to be low, low, low but then he comes out with very market friendly tones when it comes to describing talks with China specifically. And then there's a Fed put that's also back on the table this week. These are two monumental developments for investors. Yeah.
- [06:15]
Melissa Lee
And I think that's where you're starting to see the shock of the tariffs and people are really starting to move past that and they're really starting to see can the markets really get past the facts of the tariffs, the facts, the uncertainty and really look into what's moving forward. Because before the tariffs there was a lot of optimism with less regulation, tax friendliness, just in general pro business friendly environment. I think at some point you're going to start to get back there and that's where people are starting to look at the story and saying we can't forget about this. And there likely is going to be a place where this makes sense again. So I think the fact that the markets got so low, the volatility hitting those levels, the consumer selling the way that they were, I think we're starting to see past that and I think weeks like this are a very optimistic sign.
- [06:52]
Karen Firestone
I think you could probably make the case too that, that we have hit peak uncertainty when it comes to tariffs and that anything that develops now is only going to be a positive. It's got to be a positive.
- [07:02]
Courtney Garcia
I think that's a good way to. It's certainly the way they want to portray it and I believe that's the way it is. Right. They. They're desperate to and working, you know 247 probably to get some deals that would be good. I think that yeah the sort of abyss of the Liberation Day tariff regime, you know can schedule. I think that they've really pulled back very far from that needed to.
- [07:27]
Tim Seymour
But maybe, I mean I guess I can agree with the uncertainty maybe peak on tariffs because we've, we've looked into the abyss but we certainly have peak I think uncertainty in terms of market multiple. Where are we supposed to trade? Lack of visibility for companies into their core business. Scenario analysis upon earnings releases. This is not what you want as an investor. I don't need three scenarios for. For his CFO to tell me what their business could do. I want them to tell me what they think their business is going to do and make a call. I know Karen doesn't believe in guidance.
- [07:56]
Courtney Garcia
Anymore, but I never believed in guidance but I really don't believe in it now.
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Tim Seymour
Right. So. But I think the uncertainty for the markets is truly the uncertainty that's out there for the economy and where these stocks should trade. And if you think of a world post Covid, I won't go all the way back to the financial crisis where we had tons of accommodation but we threw 25% of GDP at the problem. It was a war economy. It was all kinds of things. It was fiscal nausea, it was central bank nause. You I think a lot of us would agree it's great that we're tightening the belt and have been but what does it mean for equities? I'm not sure. 21, 22, 23 times forward in the S and P is where we're supposed to be.
- [08:31]
Karen Firestone
By the way.
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Steve Grasso
I kind of like the two scenarios. I didn't at first and now I'm sort of leaning towards that. If a CEO gives you this is worst case scenario. This is best case scenario. This is. I mean look at analysts Right. You have your base case, you have your bull case, you have your bear case. So there is something to a CEO saying, here's my bear case, here's, here's my base case. This is what I'm looking at now. If nothing changes, and here's the worst case scenario to mess around.
- [09:00]
Karen Firestone
I always thought analysts who gave three scenarios is like CYA case. Yeah.
- [09:05]
Courtney Garcia
As well. You can understand that though. I mean, I agree. I mean, let's say, oh well, if my cost of goods is actually 40% higher than I thought, well then this, you know. But one of the things, the VIX though has come down a lot. It's not quite where it was just before Liberation day, but at 20, just under 25, it's starting to come down to like, all right, this crisis passed, but I think it's sort of getting time to look at protection that was way too expensive with the vix much.
- [09:34]
Tim Seymour
But as an investor, are you going to invest behind a CEO that gives you three scenarios or are you going to invest behind a CEO that gives you a scenario and says this is where my business is good or bad. So it just gets back to the markets and we can, we can assess really where the sellings come from. I said yesterday I think a lot of the selling really has been hedge funds. Then, you know, de risking followed by CTAs. I don't think retail's done a whole lot here and I don't think foreigners have done a whole lot here. But ultimately gets to a place where, where is new money going to be allocated? If you look at the biggest investors in the world, pension funds, endowments, I'm not sure they feel comfortable to be allocating new money here. And my guess is they can wait and they can wait another earnings season if they have to.
- [10:13]
Karen Firestone
Well, one of the biggies reporting next week is Apple and it is reportedly planning to move manufacturing of US sold iPhones to India as as next year to avoid tariffs on China. But the Street's biggest Apple bear suggests the goal is unrealistic. Moffat Nathanson writing in a note declines today that a global trade war is a two front battle impacting costs and sales. Moving assembly to India might, emphasis on might help the former. The latter may ultimately be the bigger issue. Craig Moffat has got a sell rating on Apple is behind the note. He is the firm's partner and senior managing director. Craig, always great to see you. You've had a great call on Apple. That sell rating was put on the stock back in January. You leaned in again and when you lowered the price target and lowered estimates as well. So at this point, what is the big, there's a myriad of issues. It could be tariff uncertainty, it could be brand or American brand damage, Apple brand damage. What is the biggest issue here for the stock?
- [11:07]
Craig Moffitt
Hi, Melissa. First, I don't think of myself as the biggest Apple bear. I actually, I think quite highly of Apple. My concern about Apple has been the valuation more than the company. But I would say to your question, the answer is sort of all of the above. Right? You have, you have a tremendous sort of menu of problems created by tariffs and moving to India doesn't solve all the problems. Now granted it helps to some degree. By the way, I would, I would sort of question how that's going to work. If the glass and the, the, the, the, the, all the material, the bill of materials for the entire phone is manufactured in China and yet it's assembled in India. It's not entirely clear how that, to the extent, the extent to which that will avoid Chinese tariffs. So there's still some questions about that. But, but even if you do that, what you were raising is a series of questions about the demand side. That, and in a trade war it's not just the cost of goods, it's also the demand that suffers.
- [12:25]
Karen Firestone
Right. Also, you know, the companies actually that would manufacture the phones in India, one of them is still Foxconn. So they could still have pressure from the Chinese government even if producing in China. I'm wondering though, you know, when it comes to this sort of demand issue, you know, in China, one could argue that Apple was already starting to lose that battle in terms of losing market share to local brands. And this sort of trade war could actually accelerate sort of the backlash against Apple. And then you add to that all of those people out there who in China who are upgrading to AI enabled phones there, who are out of the Apple ecosystem potentially permanently, how do you view that market share loss? Because it's not just the numbers here and now, but there seems that there would be a knock on effect going into the future of those lost customers.
- [13:14]
Craig Moffitt
You're right, it's a, it's very real problem. Right. During the first quarter we've seen declines, or we expect we'll see declines of something like 8% in, in China, but that's against a backdrop of some pretty significant handset subsidies. And the volumes are really going to the Huawei's and the Vivos and the local competitors in China rather than to Apple. Some of that is because of the price point that the subsidies were aimed at lower priced phones. But some of it is that kind of nationalism that is, is it's viewed as patriotic in China to buy a Chinese made phone and a Chinese branded phone. And that exactly as you say, means those people won't be inside the Apple ecosystem and won't be generating revenues two, three, four, five years from now.
- [14:07]
Tim Seymour
Hey Craig, it's Tim. I guess I'd like to talk a little bit also about, you know, post Deep Seek. This was seen as kind of a net positive for, you know, for Apple because maybe there's a lot, there certainly could be a movement to handsets a lot faster. There's I think universal conviction or view that the Apple intelligence has been a big nothing, but it wasn't priced into the stock. So I'm just trying to understand how you view. I still ultimately believe Apple's power is that installed base and that it will be the way AI is served up to many people and they will need to refresh at some point. Can you kind of lay this out?
- [14:41]
Craig Moffitt
Yeah, thanks Tim. You know, you could see it either way, right? I mean, on the one hand the idea when Deep Seat came along, it did endorse the model of, if you'll forgive the pun of of smaller models on handsets. On the other hand, remember that the enthusiasm for Apple is primarily based on the idea that an AI solution on the handset is going to require substantially more memory and a more powerful processor. Deep SEQ raised some questions about whether that's going to be the case. And remember we've said all along that if you're going to underwrite an upgrade cycle in your multiple for Apple, it can't be a one time upgrade cycle. It has to be a permanent acceleration in the rate at which people upgrade their phones. Deep Seek I think raises some real questions about how much that's going to be required and how much can be done with small language models instead of large language models.
- [15:44]
Courtney Garcia
It's Karen, thanks for being on Craig, let me just ask you, so you have this $141 price target. What are the pieces that got you to that 141 valuation?
- [15:54]
Craig Moffitt
Well, so it's a couple of things. First, I think you have to, we wrote about in our report, you first have to acknowledge that with interest rates higher and with a higher equity risk premium, a slightly lower multiple for the whole market, by the way, is warranted. I heard Tim talking about that before I came on. I think that's exactly right. You have to question the multiple. So we've trimmed our multiple A little bit. But we've also trimmed our, our estimates. So you know, if you have about a $300 billion product business at Apple, aside from services, let's say there's a $60 billion or so cost of goods sold there depending on what the tariff level of that, you have $20 billion. Now that, that might be an increase in cost that's absorbed to some extent by the suppliers, to some extent by Apple itself or to some extent by consumers. But you also have the demand destruction that's created by potentially higher prices. Remember you've had at&t Verizon and T Mobile all this week come out and say we're not going to underwrite the additional cost of tariff, tariff handsets. The consumer is going to have to pay for that. So, so you're going to have some demand destruction that's going to show up in even longer holding periods and slower upgrade rates. All of which probably trends estimates, you know, next year. Next year consensus for, for the full year is, is about $7 or about $8. I mean we cut that down in our model to about seven and with a small cut to the market to the multiple, you're talking about a warranted value that's probably in the 140 range. And again none of this is because Apple is a bad company. They still have a great balance consumer franchise. It's just the reality of there are no good answers when you are a product company and your products are going to be significantly tariff and you're heading into a market that is likely to have at least some deceleration in consumer demand because of the macro economy.
- [18:09]
Karen Firestone
Craig, great to speak with you. Thanks for joining us.
- [18:12]
Craig Moffitt
My pleasure. Good to see you.
- [18:13]
Karen Firestone
Craig Moffitt with accelerating on Apple. We've got a news alert. Former Fed Governor Kevin Warsh making comments about the relationship between the central bank and the Treasury. Eamonn Jabras has got the details on this one. Amen.
- [18:25]
Eamon Jabbers
Hey there, Melissa. This coming from Reuters reporting of a Kevin Warsh speech at a conference here in D.C. earlier today. This is interesting because of the timing of all this in the context of President Trump's criticism of Jay Powell and these questions of will he or won't he in terms of attempting to fire Jay Powell? Kevin Warsh at this conference very critical of the Fed saying that he believes in the operational independence of the Fed. According to Reuters, Warsh told a conference today that the Fed has gone beyond its remit and undermined its own claims to independence. He urged the Fed to stop relying on data dependence to guide its decisions. And he blamed the central bank for aiding the expansion of the US national debt and for allowing inflation to surge after the pandemic. So this is similar in tone, Melissa, to some of the criticisms that Warsh has made before. But the whole context here is that Warsh is seen by a lot of folks as the potential Trump nominee for Fed chair at some point after Jay Powell, his term is over next year, or if something happens between now and then, more immediately than that. And so the question here is, is Kevin Warsh making these comments because these are his standard criticisms of the Fed, or is he making these comments now because he's sort of lobbying for the job? One big asterisk to all this. Although there has been a lot of discussion about whether Trump will or will not try to fire Jay Powell before his term is up next year. I asked the President in the Oval Office earlier this week if he believes he has the power to fire Jay Powell. And the President said, I don't want to even get into that because I have no intention of firing Jay Powell. So the current line from the White House is the president doesn't intend to fire Powell, but clearly Warsh is the man in the wings. And so a lot of attention being paid to what he has to say.
- [20:13]
Karen Firestone
I mean, it does sound like an audition for a job. Eamon, in terms of not relying on data dependence, has, has he said either in these comments or in past comments, what then the Fed should rely on? Because if it's not data, boy, I.
- [20:28]
Eamon Jabbers
Wish we had Steve Liesman here for.
- [20:29]
Karen Firestone
This because I understand that all the.
- [20:33]
Eamon Jabbers
Fed speakers, and we're a little bit out of my, out of my area of expertise. But yeah, I mean, he has been critical of the Fed before on these issues of, you know, U.S. debt and, you know, the policy post pandemic. And then the question is, you know, is he doing this just because, look, there's a lot of finance ministers in Washington this week. The IMF is here. You know, there are a lot of folks making speeches at a lot of conferences in financial Washington this week. Or is this timed to sort of dovetail with the President's criticisms of Jay Powell? And so that political timing, I think, is the thing that's going to raise a lot of eyebrows.
- [21:10]
Karen Firestone
I'm just too used to you having all the answers, Eamon. I didn't mean to put you on the spot, Eamon. Thank you, as always.
- [21:16]
Eamon Jabbers
Get Steve on that. Get Steve on the line. He's the expert.
- [21:19]
Karen Firestone
All right, Eamon Jabbers reporting From Washington. What would we make of a Fed chair? KEVIN wash. Yeah, I think he's for.
- [21:28]
Steve Grasso
Lower rates and I think what Warsh had said was not solely on, on data, not, not solely on the data points that the Fed is worried about market valuations, worried about asset prices, include those all in, not just data dependency. So I think, you know, to be, to be not fair to him, but I think that's what his view is. And obviously he would toe the line for the administration. And you said this sounds like an audition. We already know who's going to be the next, he'll be the next Fed chair when it happens.
- [22:03]
Courtney Garcia
So I mean, I think he would be, you know, he's a very good choice, I think, very smart guy. I think what happened, though, the last time that the Fed ignored data and thought things were transitory, Right. Instead of ignoring that data and saying, well, it's not going to be like that.
- [22:19]
Karen Firestone
Right.
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Courtney Garcia
That ended up being an enormous mistake. And so you can understand why they would be hesitant to do that again.
- [22:25]
Karen Firestone
Right? Yeah.
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Melissa Lee
And I think too, when it comes to the Fed, we saw this back in the fall where they started lowering rates, but the bond market just did the opposite. And I think to a certain extent we can see those policy changes, but the markets are also going to do something different. I think that is something we want to continue to watch is what are the bond markets telling us? Because that's been much more indicative, especially over the last six months, of where things are going. And so that's what I would continue to watch, especially with all this, all this arguing on Capitol Hill right now.
- [22:48]
Tim Seymour
But what was interesting about just what we went through here with Amen is that these headlines seem to be coming out in the context also of the Treasury. I didn't really understand what those headlines were saying because again, the independents, obviously the treasury and the Federal Reserve, very, very different functions, but obviously the treasury certainly has, there's, there's a lot of interplay, ultimately, what the treasury is doing based upon what the Fed does. The other confusion really could be with headlines to talk about data dependence. And all we've been doing is talking about an independent Fed and ultimately what is the Fed going to make their decisions based upon. And there's been some concern that some of the folks that are compiling a lot of the data and some of these independent sources that actually are, this is what they do are no longer doing what they do because they've actually been cut loose. So, I mean, there's different dynamics here. I agree with what everybody here is saying is Kevin Warsh I think brings a lot of continuity and I think most people are not concerned about that, but that these headlines are such that I do think it's easy to make some headlines here.
- [23:48]
Karen Firestone
Coming up, Tesla shares revving to their best week since November as federal regulators loosen self driving rules. The deregulation details next. Plus we're searching for gains in Google where the stock may find its next leg higher after last night's earnings. Right after this.
- [24:03]
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. That comes from making courageous decisions, partnering 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.
- [24:30]
Tim Seymour
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. Celebrate 20 years of mad Money. How Jim Cramer transformed investing in America. It's insane. The moments, the madness, the memories. Mad Money 20th anniversary Tuesday, 7 Eastern. CNBC.
- [25:18]
Karen Firestone
Welcome back to Fast Money. Tesla shares surging nearly 10% today, locking in their best week since the election. The latest popcoming on hopes of deregulation of full self driving technology that will prompt faster rollout of its robo taxis. Meantime, Alpha managing to close a percent and a half higher on the back of yesterday's results. Alphabet saying Waymo, its self driving taxi company may offer cars for personal ownership in the future. They also reported an astronomical rise in the number of rides that they are offering over a year ago. Which should, I mean we, you discussed this last night, Tim. Should impute some value to Google.
- [25:53]
Tim Seymour
I don't think, I mean again, I'm not a Google analyst and I don't have my sum of the parts in front of me. But, but I can tell you that it's not getting 30 to 50 billion in valuation or maybe, you know, maybe that's where it is. But again think about where Robotaxi is for Tesla. So I just, you know, I get back to those numbers on Google. I think it was an exhale. I think it was a relief and I think the more important parts of the business were fine and I'm not ready to say goodbye to their core search business.
- [26:16]
Melissa Lee
And I think when it comes to Tesla, they, they were down over 50% off of their highs before this week and now you're seeing that Elon is maybe stepping back into the Tesla role, which people are happy about. But this news with less regulation, that's the reason the stock popped so much post election. It's still down more than 40% from its highs. So I think it still has some ways to go there. But I think this is a bigger picture for the overall markets where if we are going to start to actually see this less regulation and get past these tariffs, you can see how much the markets want to see that they will put a price to that. So I think that's, that's an optimistic sign.
- [26:46]
Steve Grasso
Yeah, I think if, if this happens in June and they go to Robotaxi, you're going to see this pop today is probably nothing compared what you could see come June if it actually rolls out. Because we've seen this so many times.
- [27:01]
Karen Firestone
Just in the robo taxi makes money.
- [27:04]
Steve Grasso
I think the fact that it actually.
- [27:06]
Karen Firestone
Starts is you can start, you could.
- [27:08]
Steve Grasso
Start getting to efficiencies, I think, I think the stock could be up 30 to 50% higher than where it is now if it actually, you start to see that, that.
- [27:18]
Tim Seymour
But again that would, you may be right in that because that's how Tesla is treated. But that's again the same mentality where you're buying on the come which like ultimately you know, discounted cash flows like you can do anything you want with a DCF model. You could make Google $1,000 a share. And I think, you know, the futurists would like to do that. But I mean, I think you've got a case here where I can't just because they start with Robotaxi imputing that everybody that buys a Tesla is going to loan it out and it's going to be 100,000 pays back 75 or whatever.
- [27:44]
Steve Grasso
That math been so long in coming though that you actually get there.
- [27:48]
Courtney Garcia
But Tesla demand is down, right? I mean we talk about the dollar, right? But it would be interesting that could happen. Let's say they announce it and it wouldn't be surprised at all if the stock is up a lot. The irony I think would be I could see Google trading down maybe on that because like, all right, Waymo is not worth as much now even though they don't assign a big, big valuation to Waymo, which I think it should get way more than what I think is in there. That could happen as well.
- [28:16]
Karen Firestone
Coming up, $51 billion. That is how much tariffs could increase drug costs in the U.S. but our next guest says we are in a research renaissance that could keep the pharma industry humming right along the future of this space. Next. You're watching Fast Money live from the NASDAQ marketsite in Times Square back right after this.
- [28:33]
Tim Seymour
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 introducing CNBC plus the new streaming platform from the number.
- [29:06]
Craig Moffitt
One source in business news.
- [29:07]
Tim Seymour
Watch, live or on demand. Access any market, anytime, anywhere. Start Streaming.
- [29:13]
Craig Moffitt
Go to cnbc.com stream welcome back.
- [29:18]
Karen Firestone
We wanted to introduce CNBC's newest subscription streaming product, CNBC plus, where you can stream fast money in any of your other favorite CNBC shows anytime, anywhere on the go and also on demand. What you're seeing on your screen today is our CNBC data feed, which displays an enhanced data view and the latest headlines during our live business news lineup. So check it out. Meantime, tech leading the market as stocks wrap up a big week of gains. The NASDAQ jumping one and a quarter percent, up nearly 7% on the week Week moving into positive territory for the month. The S and P gaining three quarters of a percent, its fourth straight winning day. And the Dow up just slightly finishing the week up more than 2%. Meantime, T Mobile headed in the opposite direction, down more than 11% today, its worst day since 2011. The company posting disappointing wireless subscriber numbers in yesterday's earnings report. And Boston Beer getting a boost despite warning investors a tariffs could hurt full year results. The same Adams maker handily beating Wall street top and bottom line estimates for Q1. Finally, Bitcoin surging more than 12% this week, crossing above this $95,000 mark today for the first time since early March. What do you make of the bitcoin move?
- [30:23]
Courtney Garcia
Well, long bitcoin, I thought it was interesting. I mean there were some, you know, talk of Trump related products. There's that, but there was also sort of the for the same reason that gold has been very strong, bitcoin is as well. So. So I'm hanging on to it now. I sort of think it gets to the point of a gravitational pull towards 100.
- [30:42]
Steve Grasso
Yeah. And I think the interesting thing is that gold and bitcoin have been following that same path, but gold is starting to run out of steam. Maybe, maybe momentarily or short term, but bitcoin kept rising, so we got down to that mid-70s number. And then when you follow the retracement from 109 down to 70s, 75 or so, you capture the 50%, the 6, 1 8% at 92 to 97,000, that's where the sellers come in. So that's called the bounce level. So the 50 and the 618 on A, on a retracement to get a little inside the huddle. And that's where the sellers will come in. If it could bounce above 97,000, that's true momentum and that's where you actually buy. But right now, you want to see if it could bounce out of that zone.
- [31:27]
Tim Seymour
By the way, if you're in the huddle, our team colors are powder blue, so just everybody knows what we were wearing today on the uniform.
- [31:34]
Karen Firestone
Coming up, big pharma's big problem. The $51 billion tariff question that could force the major changes in the industry and why. Our next guest says there are still great deals to be had in the space. Welcome back to fast money. A 25% tariff on pharma could add $51 billion a year to US drug costs, according to an industry trade group report obtained by Reuters. That would translate to a near 13% hike in drug prices. But despite the potential sector overhang, our next guest says we're in a pharma stock pickers market. Let's bring in Len Yaffe, managing director at Kassaf Capital Management. Len, great to see you. You list some stocks that you say are compelling even despite the tariff overhang. Pfizer is one of them. And you could have made that case for a long time. So I'm just wondering how you view what value is right now.
- [32:21]
Len Yaffe
Sure. And there are two known unknowns, and those are the tariffs and whether or not we'll go to major pricing changes as it relates to favored nations. With the EU and I group the large cap pharmaceutical stocks into three areas. I look at the companies that are dividend plays which maybe don't have great pipelines or have patent expiry exposure. We're about to go through a very significant patent expiration cycle, $200 billion over the next five. Those three companies are Merck, Pfizer and Bristol. Pfizer is a dividend play. It's boring. I don't think the pipeline is that great, but it's a seven and a half percent yield. I then look at the companies trading between 13 and 15 times earnings. Those would be AbbVie, Roche, AstraZeneca, Novartis Novo, and several of those companies have good growth drivers as well as they have very impressive drugs in their pipeline. I think those stocks could be considered. And then lastly there's King Lilly, which I think is the best positioned pharmaceutical company that there is for many years. Trades at a multiple 34 times, but probably growing at 28%. And I think the estimates will have to be raised by Wall Street. So the two unknowns are difficult. They're partly factored into the stock prices. We don't know to what extent. Very confused by the commentary as it relates to tariffs in terms of what the end game actually is. But within that I see a very exciting, what I've called a research renaissance for the drug industry. We're in several therapeutic categories. We're making incredible advances that will cure or make chronic several cancers. Tremendous advances we talked about with GLP1s as well as advances in immunology and very overlooked area kidney disease. There are several very exciting drugs. So I think the overriding fundamentals are great. The two unknowns do make it much more difficult.
- [34:34]
Karen Firestone
The research renaissance that you're talking about, is this causing you to invest in smaller biotech companies as opposed to pharma? I mean, do you, do you see that as potentially the better play here? And you would have to assume that these smaller companies will either get taken out or they're well funded. Because in this environment they're not going to be raising money, I would imagine.
- [34:54]
Len Yaffe
No, that's the great question. And in 21 companies went public at ridiculous valuations just real quickly, $750 million market caps with preclinical data. And it was going to end badly. It did. Now many of those companies that made it through that cycle or have gone public more recently are trading near cash valuations. And yet in some cases, I think the compounds are very exciting. There's one small company, it's got a market cap of $200 million. They're going to come out with a drug that looks very promising for polycystic kidney disease. We'll have other drugs in kidney like IG nephropathy from companies like Vertex, a larger company. And because these companies raised money after they went public or when they went Public, they raised sufficient funds, to your point, they have enough money to get through 27 for the most part. Those are the ones I'm looking at, which will be much later than the major data readouts will get over the next 18 months.
- [35:59]
Karen Firestone
All right, Len, great to speak with you. Thanks for your time and analysis.
- [36:03]
Len Yaffe
May I give a quick shout out?
- [36:05]
Karen Firestone
Okay.
- [36:06]
Len Yaffe
I'd like to wish a very happy birthday to my wonderful wife Ruth. Thanks so much.
- [36:11]
Karen Firestone
Okay.
- [36:12]
Courtney Garcia
Nice.
- [36:12]
Karen Firestone
Good. All right, Len, thank you. And happy birthday, Ruth. Karen. Abby reported and it was better than expected. They also are viewed as sort of a little bit more insulated from tariffs.
- [36:25]
Courtney Garcia
Yeah, I mean, there was a general bounce today. Right. I think, you know, maybe just value masters coming, the market just seeming a little calmer, the whole tariff thing seeming a little calmer still. My biggest bet here is Lilly, and.
- [36:38]
Melissa Lee
This is an interesting segment here because typically there's something that's viewed as defensive and something that would benefit in the case of going into recession. But this is a case where it's the tariffs that are causing the potential increase of recession, in which case they are at face of. So I think you're really seeing that get priced in here. But I do think it's absolutely worth looking at some of these as an opportunity. Even some of these that are less exciting names than your Lillys, they are trading at really low valuation valuations. They pay a good dividend. Even Lilly, which is pretty expensive after their trials recently, I think has a lot of optimism here. So I would actually take a look at this sector.
- [37:10]
Karen Firestone
Your Pfizer, you know, dividend, 7% is down 13% though, for the seven and a half. Seven and a half, even more.
- [37:15]
Courtney Garcia
Because every day. Yes.
- [37:18]
Tim Seymour
You're talking about, when you're talking about a really chunky div. That's Tim Spizer we're talking.
- [37:24]
Karen Firestone
To.
- [37:25]
Tim Seymour
Yes. Bristol Myers is also interesting here, too. And again, they just recently had Q1 numbers. They weren't bad. There was a couple, you know, they're more or less fee. Yes, exactly.
- [37:33]
Karen Firestone
Schizophrenia.
- [37:34]
Tim Seymour
So that that's, I think, one that we had seen really picking up and closing the gap after a significant underperformance in 2324, but has now fallen almost, you know, almost 22% in the last month. A month and a half.
- [37:47]
Karen Firestone
And I think it's interesting coming up, automakers hitting the gas on ad spending, how the industry is shifting gears in an attempt to get ahead of tariffs. More fast Money into. Welcome back to Fast Money. Automakers are some of the biggest ad spenders out there and recent tariff pressures are forcing them to tweak their messaging and strategy. Julia Borson's got the details on how the industry is shifting gears. Julia? Well, Melissa, companies and sectors ranging from travel and beauty to mattresses and autos are marketing to consumers to buy now before tariffs drive up prices. Automakers have been tweaking their messaging and.
- [38:23]
Melissa Lee
It is very visible because their spending.
- [38:25]
Karen Firestone
Accounts for 7.6 of all US ad dollars and nearly 15% of all digital ad growth. Ford and Hyundai are promoting that. They've temporarily locked in prices to reassure customers. And Nissan is promoting discounted prices. While Ford and Stellantis ads tout their American Heritage Global automotive lead at agency MRM Michael Jobst tells us in the short term they're using these tariffs as a buy now messaging opportunity to drive sales by heightening urgency. The goal is to pull forward as many sales as possible and sell through the existing inventory. He and other industry insiders tell us some ad spending from the second half of the year is likely getting pulled into this quarter. And another impact of this uncertainty, we can expect negotiations over upfront ad sales commitments to drag on for longer than usual as brands wait for clarity and potentially we could see fewer ad dollars committed up front as brands look for flexibility. Melissa? Julia, thank you. Julia Borstin. And of course this is really going to come into issue next week. We're getting reports from from Matter. We heard what the that ad demand was very strong from Google Financial Services.
- [39:34]
Courtney Garcia
Was one they pointed out a lot. And also the timuchi on being down.
- [39:37]
Karen Firestone
Right, right.
- [39:38]
Courtney Garcia
Which we'll hear. But I mean this is interesting. If it is pulled forward then you don't want to put a multiple on that. Right, right. But I don't know. I'm optimistic for men. I thought Google was very good.
- [39:50]
Steve Grasso
Can I go to Ford and GM offer that?
- [39:52]
Karen Firestone
Sure.
- [39:52]
Steve Grasso
So for big Adventure, you want to.
- [39:54]
Tim Seymour
Do a shout out to Ruth.
- [39:56]
Steve Grasso
Happy birthday. So so Ford and GM on April, on April 9th had an outside, outside day they call an outside reversal day. So a higher high, a lower low than the previous day. Both of them have broken out. And I think you could probably take a look at the two of these. They've gotten such a headwind from tariffs and such a negative momentum and I think that momentum is unwant.
- [40:18]
Tim Seymour
Well Ford definitely to say to Ruth, yeah, well look, I just hope Ruth has a great, great birthday. You know, her man was wearing blue. He was wearing the team colors too, which is also great. Ford has been wearing the team colors. That's what they're telling you in these, in these commercials, they're telling you made in America. Made in America. And Ford is certainly going to benefit more than GM. I mean, we're talking about 2500 bucks a vehicle roughly in terms of add on cost versus 75 to 8,000 on a GM. I still think GM is the far superior play with a lot of profitability to offset some of that.
- [40:48]
Melissa Lee
And not even in just an advertising. I mean, just even from our own client base. The amount of people who have been looking at cars and that is the sales pitch with car dealerships right now, buy now before the tariffs. I think you're going to see a lot of that pull forward. But I do think moving forward, the bigger thing is going to be where interest rates going because if higher rates are going to mean it's higher to get these auto loans. And are consumers worried about the future because you just got those consumer sentiment numbers out and people are more and more worried about what their future is going to look like and are going to put off those bigger purchases like autos. So I think that's going to be the bigger question when it comes to the auto industry.
- [41:18]
Karen Firestone
Coming up, you ask. We answer Fast Money fans from across the country sending in their market questions, where our traders stand on volatility, managing money through stormy waters and more. Those answers next. More Fast Money into welcome back to Fast money. Even with the recent rebound, lots of Fast Money viewers are still nervous about how to navigate the market swings. So let's get to a few questions sent in by fans who attended our last Fast Money live event.
- [41:43]
Craig Moffitt
Hey, Fast Money team, this is Bennett, the dairy farmer from Bakersfield, California. I had such a good time at the live event a while ago. Thanks so much for doing that. The cows are doing well, but my portfolio, not so much. So if I could traders, please give me some advice. Should I raise some cash and try to get in at lower levels or should I just ride out the storm? Thanks so much.
- [42:11]
Karen Firestone
It's nice to hear from Bennett. It's nice to hear the cows are doing well. What would you recommend, Karen, in terms of cash and in and out and all that?
- [42:17]
Courtney Garcia
Yes, obviously I would recommend absolutely staying the course. It is nearly impossible to market time. I just, you know, you want to know you have companies with good balance sheets that they can ride out the storm. And then I would just do that, ride out the storm.
- [42:30]
Karen Firestone
Wait, let's get to one more.
- [42:34]
Melissa Lee
Hi, Fast Money hosts.
- [42:35]
Courtney Garcia
My name is Carol and I bet.
- [42:37]
Melissa Lee
Some of you know exactly where I.
- [42:39]
Courtney Garcia
AM In Washington D.C. i have three.
- [42:42]
Melissa Lee
Children age 19 through 26. When I was their age, I invested in technology mutual funds which I still own.
- [42:50]
Courtney Garcia
Where do do you suggest the young.
- [42:52]
Melissa Lee
Adults today in this volatile market sock their extra cash?
- [42:58]
Karen Firestone
Well, Tim knew exactly where Carol was.
- [43:00]
Tim Seymour
I was like holy cow, that's Georgetown. She's standing right in the circle. Good for you Carol and good for you for getting the young investors out there. And that's in fact that's really what we did at Best Money Live. We talked about market volatility, we talked about long term plans, we didn't talk about trading in and out of the market. And I think we're probably going to have have jittery markets for a while. But ultimately how should you be investing for young people? Part of it should be you need to be diversified but you need to be reaching for growth. I mean ultimately these are people that are going to be in the market through multiple cycles and frankly shouldn't really care over the short run. But you know, buying, you know, just a high tech stock today, that happens to be a fad. I would be careful about that. I would look more towards an etf.
- [43:40]
Melissa Lee
Yeah. And especially for your young investors, you want to be diversified and even think about longer term like your small cap companies actually tend to outperform your larger companies. Especially as younger investors thinking of something like your tax efficient strategies might actually work to think of like Roths and things like that might actually be really beneficial for your younger clients to look at.
- [43:57]
Karen Firestone
Well if you want your questions answered by the fast money traders, join us live for the next Fast Money Live event here at the NASDAQ. That's June 5th. Folks are coming from all over the country and even from down under Australia to join the party. So scan the QR code to your screen on your screen or head on over to CNBC events.com fastmondy to grab your tickets. Markets we're still counting down the days until June 5th because it's going to be a lot of fun. Up next, final trades. Time for the final trade. Tim Seymour.
- [44:23]
Tim Seymour
Okay, first of all, next Friday I want everybody showing up in like pistachio green or like mint julep or something. Meanwhile, I'm going to show up with Tim Spizer.
- [44:32]
Karen Firestone
Karen Right.
- [44:33]
Courtney Garcia
I like Amazon. I think I liked what we heard out of Google last night for cloud. I think that'll be good for aws. I think they'll manage the tariffs well in their retailing business.
- [44:42]
Melissa Lee
Courtney Apple I want to hold this year. I would not be buying into this yet. It still has a higher valuation. I think next week when we get earnings, they're still going to have a lot of headwinds, so I'd hang tight on this one.
- [44:50]
Steve Grasso
Stephen, after that outside reversal day on April 9th, you could either buy Ford or GM. I'm going to pick GM.
- [44:58]
Karen Firestone
All right. Thank you for watching Fast Money. Have a wonderful weekend. All opinions expressed by the Fast Money participants are solely their opinions and do.
- [45:05]
Melissa Lee
Not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may.
- [45:10]
Karen Firestone
Have been previously disseminated by them on.
- [45:12]
Melissa Lee
Television, radio, Internet or another medium.
- [45:15]
Karen Firestone
You should not treat any opinion expressed on this podcast as a specific inducement.
- [45:19]
Melissa Lee
To make a particular investment or follow a particular strategy, but only as an expression of an opinion.
- [45:24]
Karen Firestone
Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries.
- [45:31]
Melissa Lee
Warrant its completeness or accuracy, and it.
- [45:34]
Karen Firestone
Should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer Celebrate 20 years.
- [45:42]
Tim Seymour
Of mad Money How Jim Cramer Transformed Investing in America it's insane.
- [45:48]
Craig Moffitt
The moments, the madness, the memories.
- [45:51]
Tim Seymour
Mad Money 20th anniversary Tuesday, 7 Eastern CNBC.