← CNBC's "Fast Money"
CNBC's "Fast Money"
The Health Sector’s Fear Factor… And The Last Fed Decision of 2024 12/13/24
00:43:59
A rough prognosis for the health care sector, as new reports about RFK Jr’s allies point to a major overhang for vaccine makers. How names like Pfizer, Morderna, and Sanofi will fare under the new administration, as the entire health space comes into focus. Plus One more rate decision before the new year… and with expectations of another cut, could the Fed’s easing cycle be nearing an end? How next week’s rate decision will impact markets going into year end. Fast Money Disclaimer
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- [00:01]
PJM Representative
At pjum. Expertise across public and private markets today helps build resilient portfolios tomorrow. As a leading global asset Manager with over $1.2 trillion in AUM, PJM has navigated over 30 market cycles with active investing and disciplined risk management. Our combined global expertise and local insights give us these strategic perspectives we need to help you reach your long term goals. Pgum Our investments shape tomorrow today at Capella University. Learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at capella.edu.
- [00:50]
Melissa Lee
Live from the Nasdaq Market site in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight. Healthcare headache. It's the worst performing ESSENCE sector this year and with the Trump team focused on cutting drug prices, scrutinizing providers and talking about rolling back some vaccine mandates, is this part of the market dead money right now? We will debate that. Plus December doldrums the homebuilders struggling this month down more than 7% after riding high for much of the year. Is it time to nail down profits in this trade? And later, Broadcom booming on the back of its earnings. Can it keep climbing? Climbing, kissing the ring. The latest wave of execs set to visit the President Elect ahead of the inauguration and counting down the FedEx. Will they this holiday season? Feet. I'm Melissa Lee coming to you live from Studio B at the Nasdaq. On the desk tonight, Tim Seymour, Karen Feiderman, Bono and Eisen and Steve Grasso. We start off at the latest overhang for the beaten down healthcare sector. The New York Times reporting that a key ally of Robert F. Kennedy Jr. Is also behind a petition to revoke approval of the polio vaccine. Aaron Sery is a lawyer specializing in vaccine lawsuits, also helping Kennedy vet candidates for top jobs in the nation's health agencies. He petitioned the FDA in 2022 on the grounds that the polio vaccines safety hasn't been studied sufficiently. It's one of more than a dozen vaccines he has petitioned, filed petitions against this, just the latest sign of potential hostility toward vaccine makers in this next administration. Since President Elect Trump's victory, names like Pfizer, Moderna, Sanofi all seeing significant losses. It also comes amid a wave of backlash against health insurers following the murder of UnitedHealthcare's Brian Thompson and a Senate bill that could force insurers to break up their pharmacy benefit managers. Unhcvs, Cigna, all down double digits already this month. The broader health care industry down sharply to more than 10% below its 52 week high. It is the worst performing sector in the S and P this year. So how do we trade health care? Question is simple. Maybe the answer is not so simple, Tim.
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Tim Seymour
It's not simple because it's, it's complex. This is going to take years to play out in terms of policy. What we've I think argued on this desk is that the headlines are not necessarily the follow through. I look at say a Pfizer who's already been indicted in the stock market and I do mean in terms of the valuation over the last really year and a half in terms of their vaccine profile. And this is a company that spent a lot of money getting deeper into oncology, investing in their pipeline. And so, you know, I tend to look at this as an opportunity. I don't know that you have to go jumping in. I think we've often seen, at times, it's interesting, usually the buildup and the headwinds against health care come in the lead up to the election typically as opposed to the post op. And this is what it feels like when you get it, when policy is still uncertain. So I think we've had actually a nice recovery in some of the GLP names. When you look at the names that have been most under pressure and you talk about the health care business and what's been going on in that space, it's not surprising there's some reprisal in the market here and you need some catalysts to the upside. Right now we're waiting for earnings season. How about valuations that ultimately in many of these cases look pretty interesting?
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Melissa Lee
Yeah, sentiment is so, so, so terrible when it comes to the space. Once upon a time it was defensive and now it's got every single, you know, it's a bipartisan. All these issues are bipartisan issues. That's the issue. That's the problem.
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Karen Finerman
Right.
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Melissa Lee
With these policy efforts.
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Karen Finerman
Yes, yes, that's true and that is clearly weighing on the whole sector. But I think that just, I mean, I agree with everything that Tim said. I do. This is, you know, these headlines are kind of sensational and it's not surprising that the stocks would react. And one other that we didn't include in that is Merck with Gardasil. That's a really important product. So that's the HPV vaccine. And I think I long the space as we know it is the H In my, in my helm trade xle. But I think that, I think you brought up the other day this idea of why are we seeing MLR ratios so high. Right. And then some of the health care names not doing well. Where is that medical loss ratio spend going?
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Melissa Lee
Right.
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Karen Finerman
Somewhere. So there's a bit of a disconnect there to me. I'm staying long. It's been frustrating for sure. But we also haven't seen the pushback from the lobbyists yet, which we know will happen. It's happening under this. Under, you know, we don't.
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Tim Seymour
Historically, I mean, it's kind of. It feels like Big Pharma historically has controlled Washington. So you're right.
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Karen Finerman
Right. So we haven't seen that yet. We don't know if it's happening, you know, quietly, but it will happen at some point.
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Melissa Lee
Well, so.
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Bono
So fact, from what we think is going to happen, he's already said that he's not and he's not totally going to do away with vaccines. Actually. RFK said he's not going to do.
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Melissa Lee
Away with whatever is on the market. Is on the market is basically what he said. Whatever's on the market, take away.
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Bono
And he also said, I want more transparency. I don't want. If vaccines work for you, have at it. Right. Sounds like Dan. No, but. So you're not going to get that taken away. Are there going to be new ones? So your point is the new ones that are coming to market, I think there's going to be a more of a transparent process because Big Pharma, to Tim's point, has run D.C. they've run over everyone. Everyone is in. Is in. It's sort of odd because you said it's bipartisan. Everyone's against Big Pharma, but Big Pharma pays every politician. So I think we're all getting a little presumptuous that he's going to do away with vaccines. That's not going to happen. MRNA, 95% of their revenue is from vaccines. So they have to figure out, let's get away from COVID and figure out what other things you want to get into. But the problem is no one wants a COVID vaccine. No one wants a flu vaccine. And they put them together now. So now you have two things that people don't want as a. As the main source of your revenue. So if you're a glp, you're okay.
- [06:39]
Melissa Lee
I think whether or not the vaccines are actually taken away, if that effort is actually successful, and maybe it won't be, maybe it will be it sort of just underscores just the question mark around science and the value of science in this administration and how science will be weighed at the FDA as well as the various agencies within hhs. Because if we have these vaccines like the polio vaccine or the MMR vaccine that has been in use for decades, you know, with very few side effects, if any, successfully stamping out basically an entire illness for generations questioned at this point, then you have to wonder what else is going to be questioned.
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Bono
But that's.
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Tim Seymour
I knew you're a bum.
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Bono
That's not rfk, though. That's his ally. Like this whole article was about his ally.
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Melissa Lee
This guy's next to rfk picking out who's going to head all these agencies.
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Bono
But remember, not to be political, but we were told follow the science. And the science had no clue what the hell they were doing during COVID Right. Six feet. It was arbitrary number. The COVID vaccine, it's going to safeguard you. No, it really doesn't safeguard you. So that's what put a bad taste in the population following the science. That really was no science back then. This is different polio, a different, A different. A different piece. And Trump, by the way, is on record.
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Melissa Lee
Emergency circumstances, by the way. We didn't have time to do years and years of research. I don't want to get political on this at all.
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Bono
I don't. And Trump said if someone tries to take away the polio vaccine, he's not.
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Melissa Lee
Put up a fight.
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Bono
He's going to put up a fight. So I think polio is safe.
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Melissa Lee
But how about the 12 others? That's my question.
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Bono
We'll get some more transparency.
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Steve Grasso
I do think there needs to be a delineation between longstanding polio, tuberculosis, smallpox vaccines that have. Whose efficacy really shouldn't be called into question. I can actually understand the argument around and again, staying on topic, how it affects stocks. Right. I can understand some of the concern around the COVID vaccine without having a political bent, just the speed of which it was. It was an emergency use case. I can understand there being pushback. There's been speculation around there being like heart conditions linked to it. So I think I'm definitely in support of there being transparency and ongoing studies because a lot of times you won't know 10 to 20 years from time of it coming to market what the real pushback or some of the side effects may have been. Now, getting into how to trade the stock market, I do think this calls into question how you look at trading the health care sector altogether, particularly large Pharma. I think it makes a lot of sense that this sector or subsector has lagged recently because you've had performance, you've had two years of 20 plus percent performance. Now going forward you really start to call into question because these are supposed to be low beta names that seemingly, whether it be headline risk or whether it be internal operations aren't giving you the downside protection and low beta portfolio hedging, which is really their use case. And if that continues to be the case, well then you're probably forced to look for growth and you're forced to be into the Eli Lilly's and the Novo Nordisk of the world and you're kind of eschewing it from a capital flow allocation standpoint. That to me is what brings concern about this.
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Tim Seymour
And I agree with that. And I think you've had a fresh opportunity to possibly re initiate some of those trades around GOP's. But I would get back to Bristol Myers. I mean there's been some big updates within the community especially around cell treatment and hematology and so around cancer. And these guys have drugs in phase coming to market. This has been a major underperformer. Bristol, you can make a valuation argument. Regeneron, same thing. I mean these are names that are very heavily in cell therapy and committed to car T& dynamics that I think are places you can invest around. I mean this doesn't get into the crosshairs of what's controversial. In fact, there's a lot of support for these therapies. So I think you just stay away from the headlines. But I think people that are willing to go after some of those headlines and take some chances are going to be rewarded by oversold conditions.
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Melissa Lee
I do want to bring to you a response from the RFK Junior team to NBC News in response to the New York Times article that we cited earlier regarding Aaron Siri, the lawyer looking to petition the FDA to revoke the approval of the polio vaccine rfk through a spokesperson saying the polio vaccine should be available to the public and thoroughly and properly studied. So thoroughly and properly studied, he wants further studies available first and studied later. Well, I mean it should be available to the public still. Okay. As well as thoroughly studied. This is all we have. This is what we have right now to NBC News through a statement. That doesn't stop Aaron Siri from petitioning the fda. That doesn't stop his, his lawyer from, you know, questioning the validity of the other vaccines there. For more on all this, let's bring in Dr. Peter Hotez, co director of Texas Children's Hospital's center for Vaccine Development and Deana Baylor's National School of tropical medicine. Dr. Hotez, great to have you with us.
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Dr. Peter Hotez
Thank you for having me.
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Melissa Lee
You have actually spoken to RFK Jr yourself. Correct. About vaccines and the potential link to autism. And you speak not only as the vaccine expert, but also as a father of a daughter who has autism. So I'm wondering, what was his reception when you told him that you didn't think that vaccines caused autism?
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Dr. Peter Hotez
Yeah, and I'd even written a book with the straightforward title Vaccines Did Not Cause Rachel's Autism about my daughter. And it's based on a massive amount of scientific evidence. And let's go through it a little bit. I don't know how much time we have, but what RFK and other anti vaccine activists do is they keep switching the goalposts on what their actual beef is about vaccines. The original assertion was in 1998 with false claims that it was a measles mumps rubella vaccine, the MMR vaccine causing autism. That was debunked through extensive scientific studies. In fact, the paper was retracted. And they were expensive studies and long term studies that required hundreds and even thousands of children involved. And then RFK Jr wrote a paper in Rolling Stone magazine and Salon simultaneously said, okay, it's not the MMR vaccine, it's the thimerosal preservative that's in vaccine. Same thing again. That was debunked through large studies, even non human primate studies. Then they switched it up again. I call it vaccine whack a mole or moving the goalpost. Then they said, okay, then it must be that we're giving too many vaccines at once. In other words, they weren't taking no for an answer. They were going to look till they found something. Then that was debunked and then it was alimon vaccines. Then they switched it up to the HPV vaccine for cervical cancer and other cancers. They said that must be doing something they said was causing infertility or autoimmunity. That was also debunked. And now they're moving towards something that's so vague that no one can quite understand what they're talking about. Something called chronic illness. The point is, each time the scientific community responds. But there's another piece to this that's really important. It's not just the scientific evidence showing there's no link, there's no plausibility. It's because autism begins in early fetal development before the child is even born. We now have at least 100 autism genes, many of which are discovered at the Broad Institute at Harvard, mit. We did whole exome genomic sequencing. And Rachel and my wife Ann and I, we found Rachel's autism gene, which is similar, although somewhat different at the same time. And now at Stanford Medical School, at Sergio Pasco's lab, we even have studies with brain assembloids or organoids, mini brains in the test tube with neurons with autism genes showing aberrant migratory pattern. So it's a complete story. There's no there there.
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Melissa Lee
Right. So obviously there's the element which you outlined in terms of, you know, the tremendous amount of man hours and dollars and time being put into debunking these theories. Just a waste overall, you know, in the view of the scientific community. But what does this tell you about the role of science? I mean, what are your top concerns going forward? When you take a look at how this administration is shaping its hhs, shaping its FDA in terms of research and development, drug discovery, things like that.
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Dr. Peter Hotez
It's multifold. First of all, I'm worried about public health because we're already seeing now through this kind of rhetoric, a rise in anti vaccine activism in the United States. Now we have a five fold rise in pertussis cases, whooping cough cases from 2023 to 2024. We've gone from four measles outbreaks in 2023 to 15 measles outbreaks. So these are breakthrough infections that are occurring because parents are not vaccinating their kids. We've had polio in the wastewater in New York State in 2022. This is a fragile vaccine ecosystem and I'm worri horrific scourges. And both as a vaccine scientist and a pediatrician, I've taken care of children with Hib haemophilus meningitis or congenital rubella syndrome, or gasping for air from whooping cough or intubated because of measles pneumonia. These are horrible, horrible diseases. They're all coming back because of this kind of rhetoric. And that's my number one concern and also the chilling effect it'll have. As one of your guests or panel members mentioned, on bringing new vaccines to the attention of the fda, I'm worried this will have a chilling effect seeing.
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Melissa Lee
That, you know, we have Dr. Makary in line potentially to head the FDA. You're starting to see, and I'm not asking you to be the political analyst, but when you're seeing who's being put in key positions and what kinds of physicians they are and where they come from, a lot of them are respected physicians. Are you actually worried that science is going to take a back seat or do you think that, do you think that there are enough checks and balances within who is being appointed to offset sort of, you know, the conjecture science, if you will.
- [16:37]
Dr. Peter Hotez
In addition to RFK Jr. If we look at the appointments for the NIH director, the FDA director, they were during the pandemic, talking heads on Fox News that espoused some, some ideas that did not, were not part of the mainstream of science. There were claims that we would have herd immunity a few months after the pandemic started that never panned out. There was a fair bit of anti vaccine rhetoric. So I am concerned of what's going on not only with RFK Jr. But all of Health and Human Services. In fact, I don't want to make it about RFK Jr. What I want to focus on is all of the amazing science that's gone into these vaccines over the last few decades, since 1950, 1954, after the randomized placebo controlled trial of the polio vaccine was conducted across the Nation in 1954 and published in 1955. I don't want to see all of that erode.
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Melissa Lee
Dr. Hotez, great to get your thoughts. Thank you so much for joining us.
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Dr. Peter Hotez
Thanks for having me.
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Melissa Lee
All right, so we don't want to be political, but there are some questions within mainstream science about how science will be valued within this administration. And that throws into question some of the drugs that are being developed right now. Some of the drugs are on the market right now. And so therefore, if those questions remain and are out there, can you buy a Pfizer and you have it and you own it? Yeah, because this is just another thing on top of the pile for Pfizer in terms of its problems.
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Tim Seymour
Well, if this was two years ago and let's just say it was even at the same price it's at today or the same valuation, whatever you think is the way to look at it here. I think you should be more concerned. I guess my sense is the market isn't really valuing the core vaccine business they have at this point and that that is something that it's been two years in the making.
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Karen Finerman
Just one thing, that Pfizer is not going down on bad news like this anymore. Right, Right. So I think a lot is really priced in meantime.
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Melissa Lee
Shares of Broadcom topping the tape after earnings last night. The chip maker posting better than expected profit and revenues that tripled from a year ago. Today's 24% drop was the stock's best day on record. Took its market cap over the $1 trillion mark for the very first time. Shares have now more than doubled this year. So is Broadcom the new winner in the air race?
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Tim Seymour
You said 24% drop. I think you meant.
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Melissa Lee
Oh, no, no, no, no. Opposite pop Bono. And what do you think?
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Steve Grasso
I do think it's a new winner and I do think looking out, you know, they spoke to 2027 numbers. We've all talked about pulling forward earnings. I do think that that is probably the one bone that I would pick.
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Melissa Lee
You don't like that?
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Steve Grasso
No, no, not at all. I think that just, that's a very slippery slope. But to answer your question more succinctly, I do think it's a new winner and I do think eventually their business is at the expense of Nvidia because with the custom silicon business, the core business that they have, they're really catering to hyperscalers that eventually are going to be the competitors and have their own capabilities, I think with inference. And as these, these large language models get more complex, you're going to need more customized solutions. So I do think that that raises to question how you want to trade your Nvidia position.
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Melissa Lee
So how do you trade your Nvidia position?
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Steve Grasso
I mean, I think you. Listen, I think ultimately I will wait until 2027 before starting to really, you know, take chips out of Nvidia and add them to Broadcom. But I do think in terms of needing to chase Nvidia higher, given the performance that it's already have, this may be, you know, a secondary.
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Bono
I think he brings up a great point. See, with, with Broadcom, the clients you have, Apple, Alphabet and Metta, they're more apt. Or those, those companies are more apt to go to a Broadcom than an Nvidia because they're going to be competitive. So I think ultimately the. Would you rather that you're going after. I would go with Broadcom.
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Melissa Lee
I wasn't. But sure. Versus what you.
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Bono
Looks like it's rolling over Broadcom. Yes.
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Steve Grasso
Spike.
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Bono
I wouldn't buy the spike. I would wait for it to settle in though.
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Melissa Lee
I will go to you with the. Would you rather. Okay, straight up.
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Bono
Pfizer or Broadcom?
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Tim Seymour
Yeah, right. So look what I, I'm going to eventually get there, Mel. But what I liked about Broadcom is that not only is there a three times multiple in their business year over year. We knew that and that's exciting. But, but I will say that the Wall street analyst community to what Bono is pushing back on in terms of going all the way out to 27. I mean, the street right now is saying we see 40 to 50% growth out of Broadcom for the next three or four years. So this is something that I think at least has provided some sense of where they do sit and where they can sit in between. So I'll go Broadcom.
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Melissa Lee
All right. Coming up, homebuilders on shaky foundations. The group deep in the red this week after a strong start to the year. Can they get their house in order or should you close the door on this trade? Don't go anywhere. Fast money's back in two. Waiting for Dinner Spice things up with Golden Nugget Online Casino. With hundreds of the hottest games, Golden Nugget lets you live it up in your downtime on classics like Cleopatra or exclusive games only found on Golden Nugget Online Casino. Forget about waiting. Golden Nugget keeps the action rolling while your dinner simmers. New players can get $50 instantly in casino cred. All you have to do is sign up with code FAST MONEY and deposit just $5 to get 50 in casino credits. Make any moment golden gambling problem. Call 1-800-GAMBLER or in West Virginia, visit www.1-800GAMBLER.net Please play responsibly. 21 physically present in Michigan, New Jersey, Pennsylvania and West Virginia. Only void in Ontario. 1 per new customer minimum $5 deposit max $50 issued in non withdrawable casino credits that expire in 168 hours. See terms@goldennuggetcasino.com welcome at PJM.
- [22:32]
PJM Representative
Our global perspective today unlocks investment opportunities tomorrow. Our 1400 investment professionals provide global expertise and local insights to help you navigate the complexities of a changing world. We offer a diverse range of active strategies across public and private markets to help you identify opportunities and achieve your long term goals. PGM Our investments shape tomorrow today at Capella University. Learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at capella. Edu.
- [23:19]
Melissa Lee
Welcome back to Fast Money. The S and P Homebuilders ETF in need of some major renovations. The group dropping almost 4% this week. Week ahead of next week's Fed meeting. Toll Brothers leading the losses since Monday down more than 13% its worst week since January 2022. KB Home Pulte Lennar also seeing outsized losses and the Chartmaster out with a note today this afternoon, in fact, saying things will only get worse from here. Take precautions, he said, where are you on homebuilders?
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Bono
So I agree, I agree with that. And I think you're going to see the bifurcation that we've seen. New homes versus existing homes. I think as rates, rates quote, unquote are coming down, you'll probably see existing home sales go up. But if you look at DHI in particular, they have the highest rate of mortgage buydowns amongst all homebuilders, which impede their margins. So I think it's gonna be tough for a homebuilder, but if you own a home, I think you have an easier job selling the home that you're actually in.
- [24:14]
Tim Seymour
Hi, Mel.
- [24:15]
Melissa Lee
Hi.
- [24:15]
Tim Seymour
Yeah, you are. You are ordering people around.
- [24:18]
Melissa Lee
I saw on that screen we had dry instead of dh, which is a common.
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Bono
Yeah, yes.
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Melissa Lee
So it's a very big difference in very company. It is. Darden restaurants versus a homebuilder.
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Tim Seymour
It sure is.
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Melissa Lee
But anyway, so I was pointing, trying to point that out.
- [24:33]
Tim Seymour
Some. Sometimes people would prefer to go to Darden. The bottom line here is also this was the worst week in two months for rates. We closed at 440 on the 10 year. That sensitivity is there. You can't say it's not. There are secular themes at work. Wall street private equity have been heavily investing into rental properties. I mean, there is a dynamic that says at some point there are ways to meet demand in the rental market. That's not going to change the homebuilder story. I think it's a case of, look, they've been. And if you look at that chart, they've been struggling up at these levels. Rates aren't helping and I do think valuations for the main ones are full.
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Karen Finerman
So I like Home Depot and Lowe's, which. Anything that sort of hurts. The homebuilder story isn't normally really good for a Home Depot and Lowe's, but I do think that. But the economy is doing well and rates do come down even a little. Not enough to get all that existing inventory onto the market. Still, that can be a decent environment for Home Depot and Lowe's.
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Steve Grasso
I've owned dhi, not dri, not Darden and KB Homes. I have actually gotten out of that DHI position. I've lined up the KB Home position. I'm a bit reticent to just completely not allocate to that subsector because it still trades at a market discount. And frankly, I think that the supply demand dynamics are still supportive for this subsector. The last thing I'll say is listen to Tim's point. The 10 year rate shocks that we've gotten from roughly 3.6 to 4 and a quarter and back and we've kind of like round trip this thing twice. I think that's really what's leading. You know, we're essentially becoming uncorrelated from fed funds target. And until you get that rate volatility to calm down a bit, I do think it's a tough to own these in terms of having a core position, but I do think they will likely, given the volatility that we've had, present some trading opportunities in the short term.
- [26:16]
Melissa Lee
All right, there's a lot more fast money to come. Here's what's coming up next.
- [26:20]
PJM Representative
Payment pump shares of PayPal helping the bicep trade today. Why some on Wall street are getting more bullish on the name and what's in store for the fintech in the new year. Plus one more Fed rate decision before 2024 comes to a close. What invest and if the central bank's easing campaign is about to come to a close. You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this. At PJM, our global perspective today unlocks investment opportunities tomorrow our 1,400 investment professionals provide global expertise and local insights to help you navigate the complexities of a changing world. We offer a diverse range of active strategies across public and private markets to help you identify opportunities and achieve your long term goals. PJM Our investments shape tomorrow Today to build and scale cloud technology, organizations need top tier visibility and identity control. That's why Cyberark partnered with Wiz. Together we protect your multi cloud infrastructure, applications and identities. Wiz provides deep visibility into both human and machine identity risks, helping you stay proactive. Then with Cyberark you gain complete control by implementing zero standing privileges, securing every identity and reducing risk discovered with Wiz secured by Cyberark together building a safer scalable cloud.
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Melissa Lee
Welcome back to FAST Money. Let's get to our call of the day. Shares of PayPal higher after an upgrade from Wolf Research. The stock closing the day up nearly 2%. Analysts saying the payment platform has potential upside due to its strong monthly active user base. They also set a price target of $107 for the end of the year. PayPal is the P of course in blythe step.
- [28:18]
Tim Seymour
Tim yeah, by the way, can we give our viewers the date in January when we come back with fresh acronyms and you know they can have like I have a chance and Karen can play by the rules this year. Sorry I had that coming. I'm lashing out.
- [28:38]
Melissa Lee
Did you lose your mic? It's behind your tie. Oh my smartest you've ever sounded hard here tonight.
- [28:43]
Tim Seymour
You know, talk to the mic as.
- [28:45]
Melissa Lee
I.
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Karen Finerman
Pay for the P implicit, not the Allen bicep.
- [28:51]
Melissa Lee
Go ahead, go ahead.
- [28:53]
Tim Seymour
So, so the story here, Wolf's highlighting a couple of things. 200 million to 20 million in terms of user base makes them really the largest, largest in North America or the second largest depending on your how you're buying that, Alex. Don't call me Peter. Chris. Peter. Chris. Oh, it's wow. How exciting.
- [29:11]
Karen Finerman
New Year, New Year's.
- [29:15]
Tim Seymour
This is the Nasdaq by the way. It's an exciting place and there is always confetti coming down from the sky. The recent CEO team that's come in as has not only brought change but I think some urgency to really beginning to monetize new products, beginning to raise margins. I think this one has a ways to go. I think it's not just because this was a stock that traded three times the dollar amount. It's because the street right now is yet to really come around to some of these changes in monetization.
- [29:40]
Melissa Lee
Whatever happened to the competitive threat from Apple Pay still exists, right? I mean, should that be a concern?
- [29:46]
Steve Grasso
I mean it's a concern, but as Tim mentioned, 220 million active monthly users means that you're entrenched. Like by definition that is kind of your moat there. And the switching costs related to that are high. You know, another thing that he mentioned was some of the new, some of the new capabilities that they rolled out. I believe the single click pay that the conversion rates around that are around, you know, 45 or 50%, that's material. You're not giving the user an extra five minutes to think about while they're filling in their address, whether or not they want to go through with it with the purchase or not. The one caveat I would say is that you're still leveraging yourself to discretionary. Do you think that's run enough that maybe you hit the pause button just in the interim?
- [30:24]
Melissa Lee
Coming up, just one more Fed decision left in 2024. Markets expecting another cut, but could the central bank's easing cycle be nearing an end? What to expect and the impact it could have on markets in the new year? Don't go anywhere. Fast money is back into.
- [30:40]
PJM Representative
Missed a moment of fast. Catch us anytime on the go. Follow the Fast Money podcast.
- [30:45]
Tim Seymour
We're back right after this.
- [30:56]
Melissa Lee
Welcome back to Fast Money. Stocks muted to end the week. The Dow losing 86 points, notching its seventh straight negative session, its longest losing streak since February of 2020. The S& P virtually flat today, but snapping a three week winning streak. The Nasdaq squeezing out a small gain and notching its fourth positive week. Another strong week for Tesla. Shares up 12%, hitting another all time high today, now up more than 73% since the election. Lamb Weston jumping nearly 7% today on reports that Post holdings is exploring a possible deal for the french fry maker. And Supermicro getting hit today on a report that the tech company is considering raising equity in debt as a beaten down server maker looks to shore up its finances. Meanwhile, next week marks the final fed meeting of 2024 and the last meeting before President elect Donald Trump returns to office. For more on what to expect from the Fed, let's bring in Fed Watch advisers Ben Emmons. Ben Greg, great to see you.
- [31:46]
Ben Emmons
Good to see you, Bill. Good to be back.
- [31:48]
Melissa Lee
Hawkish cut, what do you think? What are the odds?
- [31:51]
Ben Emmons
Yeah, it looks like that that's going to be the case. The market is very convinced that the Fed will cut rates. I think that was really to do with the data coming exactly in line. You know, when we talked about the last time on the show, I was sort of hinting like I think this Fed is closer to a point where they actually going to skip a meeting or maybe be on hold for a period of time because especially we do have an economy that stays really strong. And since the cut rates in September, old data has been basically lifted up. So inflation has risen, unemployment rate has not moved too much. So I think the Fed is at a point where it may cut again one time more rates, but then it could hold off. And it's an interesting dynamic going into January because the January meeting is right after the integration is where the debt ceiling takes place. So it may be really between these two meetings that the Fed decides to stay on hold for a period of time.
- [32:39]
Karen Finerman
Ben, it's Karen. Thanks for being on. I sort of think they should do a dovish pause rather than a hawkish cut. Is there any difference between those two beside just a little window dressing?
- [32:52]
Ben Emmons
Yeah, that's interesting to say it that way, caring because you know, if you think dovish pause and it would be market friendly when you say hawkish cut, it's like, you know, you cut but you actually are more hawkish than you perceive to be and that could be negative. So, so I think it's in the Middle of the two. It's a bit tough to say, I guess that the Fed is sort of saying we can cut rates, but we're still in the phase where the economy is strong enough, where we maybe be on hold for some time to assess the data and you come then sort of down in the middle. I think for the market it simply means that if they're going to cut rates, it probably will lift the market a bit into year end because I do think that small caps and industrials and financials will rally on that. On the other hand, if you're going to hold off from there, people going to struggle. Extrapolate that out into the first quarter of like rates are going to stay a little higher than anticipated. That will be probably the negative side to markets.
- [33:42]
Tim Seymour
Hey Ben. Tim, I know you flagged the dollar. I agree with that move. I also think the central bank differentials are starting to show up again. Not just BoJ, which can't be hawkish even if they want to, but also what's going on in Europe and some weakness that we're seeing across the eu. You, what's, what are the implications for the dollar, do you think next year on either, you know, where it is actually going to be supportive to the Fed or you know, talk about multinationals, talk about what that means for bond yields. What are your thoughts?
- [34:13]
Ben Emmons
Typically dollar, Tim, if it gets pretty strong, I mean it's an uplift to the, to the common terms of inflation because you get lower imported inflation on the strong dollar and it will be a headwind for, for multinationals in that sense. That's been the typical effect with bond yields. I think if you think of a strong dollar. Yes, if inflation gets more controlled by a strong dollar, it will probably be positive for bonds. I think going into next year the anticipation is that the US economy will continue to stay really strong, if not get stronger. As you mentioned, we have challenges in Europe and we got the bank of Japan sitting here. They may hike, but not so fast. The dollar has a lot of room to rise. I do think it will play out in the sense that maybe someone had went for the multinationals and ultimately keeping bond yields somewhat cap. But with a caveat there though, that if you're going to keep cutting rates, you are assimilating the economy that makes the dollar stronger but also lift rates higher. I think the dollar will strengthen and the yields are still poised to go higher.
- [35:17]
Steve Grasso
Ultimately, Ben, I've long argued that, you know, the tight credit spreads are really what are leading this rally in equities. Or supportive of this rally in equities. You mentioned the spread between the two year and corporate bond spreads. Would you mind elaborating on that a little bit and kind of speaking to some of the risks that might be that that might be elucidating?
- [35:38]
Dr. Peter Hotez
Yeah.
- [35:38]
Ben Emmons
By the way, I think these corporate bond spreads are not as tight as we've been since the financial crisis. And if you look at this graph like it seems to be that the history, you know, it may not repeat but it does rhyme in the idea because in ultimately spreads do widen significantly when the Fed has to cut rates really sharply because we're in a downturn. So we don't seem to be at that point just yet. But one point is to make here is that if the Fed were to keep cutting rates and say they do continue because they want to keep the unemployment rate at this level where we are now not letting the situation worsen, a worsening labor markets ultimately going to erode the economy and therefore widen spread. So I do think we're at this point where spreads will probably stay tight. It's a leading indicator to the broader equity market. But there's some scope here for ultimate widening if you, if you are going to cut faster. So as we were talking earlier it seems the Fed wants to get potential hold for a period of time to see how things play out. But spreads are indeed really, really tight. So it does mean that the economy ultimately is going to drive spreads wider and that's the big question for next year. It doesn't seem clear right now but it does seem that spreads are really at the low end of the range.
- [36:47]
Melissa Lee
Ben, great to see you. Thanks.
- [36:50]
Ben Emmons
Thank you.
- [36:51]
Melissa Lee
Ben Ammons, bad watch. What do you think happens next week?
- [36:54]
Bono
Well I think that they're probably going to cut and one of Karen's scenarios there is probably going to take place. But if you think about it, Ben said the economy is strong, getting stronger and it's always a point of relativity. Are you going to buy us? Are you going to buy Europe up US is still the place to buy and it sounds like we're back to a Fed put if unemployment increases they cut more aggressively.
- [37:17]
Tim Seymour
Well the iron bless up is IDEVO which is an international ETF that I'm actually a PM on. I actually think international some the Sanope, the Novartis, the Siemens, the SAP is I think multinationals do very well in the environment where the dollar is that strong. So I think there's an opportunity, I think you have to pick your spots internationally because I do think you know, Germany's running under a lot of pressure, pressure. And I think the EU will continue to cut rates.
- [37:39]
Melissa Lee
And you stand by a pause?
- [37:41]
Karen Finerman
I think they should do a pause. I don't think that's what will happen, but I think that's what they should do. The economy is going fine. I think I hear your point about, okay if unemployment ticks up, but what if inflation kind of ticks up. Right. So that could, would that be shocking?
- [37:57]
Bono
Well, the only thing that's good about inflation is that 65% of it is housing costs. And that's what we actually saw, some relief in that sector. So if, if we really look at it as a holistic approach, you should probably see that coming in. It all relies on rates, but you're not going to have gas, you're not going to have food, you're not going to have oil. All of that seems to be coming in just, just a bit. But it's any anybody's guess at this point. They went 50 in September, so there was some urgency that they went 50. They saw something approach. So maybe they, they stem the tide of whatever inflation that they saw that was really coming down the pike.
- [38:35]
Melissa Lee
Coming up, big tech, big donations, how CEOs from some of the largest tech companies are cozying up to President elect Trump and what they're looking to get out of the next administration that is next. Plus, just when you thought we were done. There's more earnings to come next week. The key names to report and how to trade the biggest stocks when fast money returns. Welcome back to Fast Money. Bank of America, the latest company planning to donate to President elect Donald Trump's inauguration fund. As much of big tech looks to cozy up the incoming administration. Case in point, that the New York Times just minutes ago reporting Tim Cook will be having dinner with Trump tonight. Deirdre Bosa's got all the details, Dee.
- [39:19]
PJM Representative
He's not the first and he won't be the last. Big tech CEO going down to Mar a Lago and really the inaugural fund donating to it, it's a gesture of support and a strategic investment in a new power dynamic. We compared donations so far with public data from the last two inauguration funds, Biden's in 2021 and Trump's in 2027. Keep in mind that the 2025 fund is still open, so there's still time for others to make donations. But so far it has seen million dollar contributions from Meta, Amazon and OpenAI's Sam Altman, three of the players that may have the most to lose in Trump's next term. Now, according to government records, Meta and Altman didn't donate anything in 2017, but they contributed a million each for 2025. Amazon, meanwhile, upped its amount ahead of another CEO Jeff Bezos meeting, I should say chairman meeting next week that Trump alluded to at the New York Stock Exchange yesterday. Now, this is also a significant step up in support from those three versus the Biden 2021 fund. In Altman's case, it's a small way to counter Elon Musk's influence as their rivalry heats up for met on Amazon. Zuckerberg and Bezos, they have been favorite punching bags of Trump and his regulators in the past. This won't guarantee them protection in the next administration, but $1 million is small stakes for them. And it could make a difference between having a say in the conversation versus watching from the sidelines or getting caught in the crosshairs through a tweet. This is really a strategy that Tim Cook himself reportedly perfected in his dealings with Trump's in previous years. There was a great journal article from a few weeks ago that detailed how Cook developed a personal relationship with the President elect by appealing directly to him through phone calls and meals versus sending government relations executives or lobbyists. So, Melissa, that news from the New York Times that he's heading down there for dinner tonight, that makes a lot of sense.
- [41:10]
Melissa Lee
It does. I mean, remember Tim Apple. So it's not the first time that he's done anything with Trump Apple. Yeah, exactly. It's come a long way. It's interesting that you compared the donations and buy it. I mean, if you think about how much the companies have grown in the time period too, I mean, $1 million is a lot more versus the dollar amount. But compared to the market cap growth in their company and the power that they have within the market markets, that has. So that has grown exponentially.
- [41:39]
PJM Representative
It's maybe more relevant for a Sam Altman.
- [41:42]
Melissa Lee
Right.
- [41:42]
PJM Representative
In a very different position in 2017 and even 2021. But you're right, Melissa. I mean it's kind of change for these companies and these people. It's not a lot to sort of as a gesture of goodwill. And it's interesting because they could always afford this. Right. But this year they've really sort of ramped it up even compared to the previous one ones.
- [42:01]
Melissa Lee
Right? Debo, thanks. Deirdre Bosa for us on this. You know, Tim Cook meets with Xi Jinping too. So why not the President Elect of the United States of America?
- [42:09]
Tim Seymour
But is he giving him $1 million.
- [42:11]
Melissa Lee
Xi Jinping. Well, he doesn't have duration funds.
- [42:14]
Bono
I mean, I mean this, this is the, what's good about the second term is that large cap tech are actually having conversations and they didn't have those conversations prior to it. So I think it's a softer Trump administration. I think it's a more open Trump administration, or maybe it's the same Trump administration and people are taking him up on dinner. I think it's a win win for the economy, a win win for the United States.
- [42:39]
Melissa Lee
Either way, win win for these tech executives. Right. You want these companies, if they're in your portfolio, you want them to have a seat at the table. Yeah.
- [42:47]
Karen Finerman
You want them to have a good relationship with the administration? For sure.
- [42:49]
Melissa Lee
Yeah.
- [42:50]
Karen Finerman
That $1 million is like me spending 10 cents on the.
- [42:53]
Tim Seymour
And, but, but I have to laugh at this as a guy that spent a lot of time investing in emerging markets. I mean, this feels like every oligarch, oligarch walking up to the Kremlin and making sure Putin's happy. I mean, so, so there's, there's not even an attempt to mask what this is, which is just what it is.
- [43:10]
Steve Grasso
Well, these are the rules of engagement for me. It's like they're protecting their downside if you don't donate. Like the opportunity cost of not donating clearly is not.
- [43:19]
Bono
But they've done this for both sides. This is, I'm not saying that. You didn't say it's a rules of quantifying something that's been done on both sides.
- [43:26]
Karen Finerman
Well, I don't know. If you look at the chart though.
- [43:28]
Melissa Lee
We had a few.00, right?
- [43:31]
Bono
Yeah. I mean, the first one to do it was Obama with, with ambassadors. That's usually an ambassadorship that people wind up donating and you get the ambassador to Italy or whatever you want to know.
- [43:41]
Melissa Lee
Coming up, another big week of earnings. Is Micron, Nike and FedEx. Among the names reporting what to expect out of this reports next, more fast Money into. Welcome back to Fast money. A host of companies reporting earnings next week, headlined by Nike and FedEx. Those stocks have had vastly different years so far, with FedEx up double digits and Nike down nearly 30%. This will be the athletic company's first report since Elliot Hill took over as CEO. What should we expect from these names? Karen, you're looking at FedEx.
- [44:16]
Karen Finerman
Yes. Well, so FedEx I think will be really interesting. I don't know that the quarter itself will matter. I think the commentary will really matter.
- [44:23]
Melissa Lee
Right.
- [44:23]
Karen Finerman
When I think about Retail and how it might do for the fourth quarter. We this quarter, which ends in September. We don't. We had all the uncertainty about the election. Right. And retail. And I think that I really want to hear the commentary what's happened since then and I expect it will be pretty strong which would bode well for the coming quarter, which I think will be more important.
- [44:43]
Bono
Whenever you look at FedEx, you always compare UPS and FedEx and UPS has had headwinds from labor and unions and FedEx. You don't get that the chart is very volatile, but it's up 12% for the year. I always look at it as a verdict on the economy, how the economy is doing, what they're doing, what they're seeing. So I use that as sort of a 50,000 foot up as to how to put the pieces together with every sector that I'm trading underneath it.
- [45:10]
Melissa Lee
Nike.
- [45:10]
Tim Seymour
Tim the trends, just because there's a new CEO haven't gotten less challenging and therefore I think there's going to be, you know, a very rosy or a constructive outlook for, you know, a business that's not broken. I want to make this clear about Nike. I think this is, you know, by far the world's largest athleisure brand and they can dominate and they will dominate again. But I think the next couple of quarters are rough. I don't think you have to chase this one here. And I think there's little on the horizon to change the competitive landscape in their favor.
- [45:42]
Melissa Lee
Up next, final trades. Time for the final trade.
- [45:57]
Tim Seymour
Tim the last time I was talking about PayPal earlier in the show, confetti was falling from the sky and I think that's what you can expect with this name over the next three to six months.
- [46:06]
Karen Finerman
Karen I don't feel a confetti is falling over my xlv. It's more like, I don't know, dunked with hot water. But I actually think it is stopped going down and I think that being the pendulum could swing.
- [46:17]
Melissa Lee
All right, I'll get so big final and Iceland.
- [46:20]
Steve Grasso
I think, you know, oftentimes we're concerned around breath and is it the max 7 that can continue to lead us higher? I think Alphabet still offers you that upside because of the negative headline list.
- [46:32]
Melissa Lee
Nice week for Google.
- [46:34]
Bono
Steve Steel Letter X.
- [46:36]
Melissa Lee
Thanks for watching Fast Money. Have a terrific weekend. Don't go anywhere. Mad Money with Jim Cramer starts right now.
- [46:46]
PJM Representative
All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of cnbc, NBC Universal, their parent company or affiliates. And may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.