← CNBC's "Fast Money"
CNBC's "Fast Money"
The Next Fed Chair In Focus… And Mike Wilson’s 2026 Market Playbook 12/4/25
00:43:20
Chatter over President Trump’s next Fed Chair pick is heating up. The latest being heard from D.C., and the front runners likely to take over for Jerome Powell. Plus, just a few weeks left of trading this year, and 2026 could see another double digit gain in the S&P 500. What Morgan Stanley’s Mike Wilson sees in store for stocks, and the sectors he says has the most opportunity. Fast Money Disclaimer
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- [00:01]
Melissa Lee
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Tim Seymour
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Melissa Lee
Try the all new Fidelity Trader Plus. Learn more about our most powerful trading.
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Tim Seymour
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- [00:25]
Melissa Lee
Fidelity Brokerage Services, LLC Member NYSE SIPC.
- [00:30]
Capella University Announcer
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@capella.edu.
- [00:49]
Dan Nathan
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. Metamoves the tech giant reportedly making some big cuts to a key part of its business. What the pivot means for the company and will it be enough to get the stock in long term rally mode? And next we're going to talk about the bids in for Warner Brothers discovery, the latest on where things stand and who's most likely to come out on top. Plus dollar store gains, what's driving today's jump in dollar general expedited approvals, how the FDIA is changing the line for drug development and a builder breakdown, the Wall street call that had shares of Lennar tumbling today. I'm Melissa Lee, come to you live from Studio B at the NASD US tonight, Tim Seymour, Dan Nathan Vano and Isen, and Mike Wilson, CIO and chief US Equity Strategist at Morgan Stanley. Always great to have you here, Mike. We're going to get to those cuts in just a minute at Meta, but we start with the latest developments on the search for a new Fed chair. While foreign NEC director Kevin Hassett has become a favorite, there are some rumblings that it's not a done deal yet. Let's bring in Eamon Jabbers and see what he's hearing from the White House. Eamon?
- [01:53]
Melissa Lee
Melissa, yeah, a lot of rumblings I think, is the way to put it. And a lot of that is just scuttlebutt, right?
- [01:58]
Eamon Javers
Part of the questioning that's going on.
- [02:00]
Melissa Lee
In Washington right now is, look, if the president has really picked it down.
- [02:04]
Eamon Javers
To one person, which the president says he has, why is he waiting until.
- [02:09]
Melissa Lee
Next year to make this selection? You know, maybe that implies that he doesn't actually have a favorite choice, or maybe that implies he's waiting for something else or some other piece of timing.
- [02:19]
Eamon Javers
So what A lot of folks here.
- [02:21]
Mike Wilson
Are speculating about is this idea that.
- [02:24]
Melissa Lee
Maybe the President is holding out for Bessen after all. Right. He said publicly time and time again that he wants Scott Bessen to be the Fed chair, but Bessen won't take it because Bessen is happy as Treasury Secretary. So there is this kind of line of thought that, well, maybe the President's holding out to see if he can kind of twist arms over the holidays or maybe make Scott Bessen to see it his way.
- [02:45]
Eamon Javers
We just don't know at this point. I should point out, Melissa, that the.
- [02:48]
Melissa Lee
White House thinks we're making way too much of this.
- [02:50]
Eamon Javers
They point to what the President said earlier this week, which is that he's.
- [02:55]
Melissa Lee
Going to nominate somebody in early 2026. And they say, you know, no sense speculating about that until the announcement comes.
- [03:02]
Dan Nathan
All right, Eamon, thank you. Eamon Javers. By the way, markets don't seem to have much faith that Kevin Hassett will be successful in carrying out Trump's rate cut agenda. In fact, since he emerged as a frontrunner to lead the central bank when the White House canceled interviews with potential candidates earlier this week, yields on 10 year treasuries have actually gone up. So what do we make of these moves? There's also an FT article saying that the White House had surveyed Wall Street. Wall street doesn't like haccp. You know, I mean, it's an interesting sort of dynamic here setting up.
- [03:31]
Melissa Lee
Well, I mean, if remember Scott Besson, who's been a remarkably successful hedge fund manager, who was probably as critical of the Fed in his time in the hedge fund manager seat as anybody, the fact that the 10 year yield has gone up a little bit as this dynamic has gone down tells me actually the market believes he will be the Fed chair and he will be very focused on making the White House happy. If you believe that a less independent Fed is bad for long term rates because that the market ultimately will decide that rates need to move higher. If the Fed is not independent, I'm not suggesting hack it's going to take that stance. I'm not suggesting the Fed is compromised. I'm saying that if you believe that the Fed will no longer be an institution that governs based upon pure macro and the fundamentals that drive the Fed today and the independence, then I think US Rates will go higher. I don't think there's any question they'll go higher. Especially if also the rest of the world believes that it's not about the Fed and the discipline that they've adhered to forever. Whether you believe in their policy or not, people have bleed in the institution.
- [04:27]
Dan Nathan
So based the bottom line here, Fed credibility is in question. So therefore the US has to pay more money to people in order to buy Treasuries because that credibility is.
- [04:37]
Melissa Lee
I'm not saying credibility is in question. I'm saying if Fed credibility is in question, rates will move higher.
- [04:42]
Tim Seymour
Okay, look, Kevin Hassett is a credible Fed chairman. I mean, he has the credentials is like guys out of left field. I think that this is the classic trial balloon. They led the market to believe it was going to be haccid. They allowed the poly market to go to 85% and now they're going to observe. This is one variable I'm sure they're watching. They're probably also watching bond volatility. They're watching funding markets, they're watching the stock market. And this is going to be the trial. And that's why I think the President probably pushed off the decision until the beginning of the year. He's going to have conversations over the holidays. He's going to see how the market digests this, and he reserves the right to change his mind.
- [05:15]
Dan Nathan
So how do you think the trial balloon is being received?
- [05:18]
Mike Wilson
Fine. I mean, the stock market's okay. I mean, the bond market, you know, seems to be doing just fine. We're talking about yields going higher. They're barely going higher. You know, I think that you've got to think about two sides of this coin, right? So President Trump back in his first administration, he nominated Fed Chair Powell. Fed Chair Powell has been there for all these years. I think his legacy is going to be that of independence despite pressure for the last, what, seven or eight years, Right. Not, not from the Biden administration. So at the end of the day, if he has someone in place that's going to do his bidding, I think you go across his cabinet and you look at every single one of these secretaries, none of them have pushed back about anything. So I think the idea, and this goes back to what Tim saying, you know, if business leaders or other countries that do business with us, you know, are supposed to have free market capitalism, and if they think that the Fed is under the control of the treasury and thus the executive branch, it does make for a lot of conflicts of interest. And we don't know how that's going to shake out, but it's something that we haven't had to deal with in 100 years. And then I know it's been floated, maybe it's just a rumor. That basic gets to be the head of the treasury and the head of the Federal Reserve. And at that point I just think that those two interests are not going to be aligned with the idea that this is a great place to do business with here in America.
- [06:32]
Dan Nathan
Well, then that goes back to bond yields go higher. It sounds like any scenario, bond yields go higher even though we all think rates are going to come down next year.
- [06:41]
Tim Seymour
Yeah, but I mean, like, let's take a step back on this Fed independence thing. Okay. They're not fully independent from the market. I mean, the treasury and the Fed have been working closer together since the gfc.
- [06:51]
Dan Nathan
Same person.
- [06:53]
Tim Seymour
That's different story. I'm, I'm not, I don't think that would be a good idea. Okay. But I think this idea that the Fed is, you know, fully independent today and no, they have an obligation to work with treasury on the funding needs and they've been doing that really since 2008. Closer and closer. Every time there's a bit of a crisis, whether that's Powell, whether that's HACC or somebody else, I don't think that is going to change, no matter who's in there.
- [07:14]
Melissa Lee
I think Dan reminded us. I think it's just, you know, it's fascinating that, that Powell was Trump's appointee and that through a lot of difficult times, he was the right appointee. This is a Fed that's had some unbelievable challenges ahead of it. The new Fed chair will inherit a wildly divided Fed and that's probably as interesting as anything. So I think what we're all saying here is, I want to be clear, I think the Fed is, is doing its job. I think the Fed under the next Fed chairman will do its job. I do think that when you introduce speculation about Fed independence at times when there are also concerns about the macro, you get the dynamics that we had back either in April where we are really testing the 10 year. And people, let's be clear as we announced policy that the rest of the world was somewhat shocked about, there was no question that there was a test in the long end of the US Bond market. I mean, I heard that from countless investors around the world, people I talk to all the time. I don't think outside of the sensational aspects of what was going on in April for everybody, we will see that kind of a challenge. Even though global central banks around the world, and there's a lot going on in Japan right now, who one of the biggest holders of Treasuries, their, their yields are moving higher, ultimately make it they had a great 30 year auction last night in JGB land, which the reason it's important to you folks at home is that Japanese investors are getting a lot more yield for their money and at some point may just start buying more Japanese JGBs than US Treasuries. But Fed independence is critical to the way our, I think our economy and our markets function. I don't think we're close to losing that.
- [08:46]
Dan Nathan
Bono and want to get your thoughts on this.
- [08:50]
Bronwyn Eisen
Yes, I mean I think the concerns that have been stated about Fed independence are, are credible. With that said, I think the other side of the coin is that this administration, while they do love loyalists, have also expressed that they are not willing to have elevated long term debt yields. I mean if you look at debt as a nominal number or if you look at debt as it pertains to gdp, we're not in a position where we can have funding costs blow out. So I do think that that is also a factor there. The other thing is whether it's Besset, whether it's haccp, either appointee is going to have to convince the rest of the members to vote one way or the other. So I don't think it's a one man show. I can understand that the predictive markets at 75 or 80% show that we are leaning one particular way. But again, I think that's perception. I think the reality of the fact is that this is going to still have to be one united front and the decisions are likely still going to be data dependent even if they are slightly affected with some political bent.
- [09:48]
Dan Nathan
All right, let's get more on what the bond markets are saying about the potential of a HACCP led Fed. Steve Lisbon's got more on this. Hey Steve.
- [09:56]
Steve Liesman
Hey Melissa. Yeah, there is concern about whether the prospective nominee, Kevin Hassett is an asset or a liability for the bond market. Financial Times of course reported some big players in the bond market have told the treasury of their concern with a candidate who seems very beholden to the President and his wishes for lower rates, perhaps at the expense of higher inflation. I've also heard some of this from some big bond players as well. The problem is that it's you got to squint to see this concern in the market. The bond market gets a vote here and we'll take a look at how it's voted since the unconfirmed speculation and I say unconfirmed about hazardous picked up steam. The spread between the two and the ten has grown somewhat wider a little bit. 5 6, 7 basis points. Traders bid the short end in anticipation perhaps of lower rates selling the long run because of inflation concerns. But as Seymour said, there's a lot of other stuff going on. The move, however, has been modest. That could reflect what Bronwyn was saying. The market's understanding rates determined by a committee. And by the way, that committee gets more hawkish next year. The US has 38 trillion in debt and an inflation above target. Hassett must understand the limits of policy flexibility here because the bond market gets a vote. So where are Fed fund futures? Take a look here. Price for a 25 basis point cut next week. But then take a look very gradual down a 340 by June, three or six a year from now, that is. The market may think the next Fed head is going to be beholden to President Trump, but it's not pricing in a Fed head who fulfills the President's every rate cutting wish and dream. And Melissa, I would say if you look at the final five, it is probably objectively true that Hassett would be the least independent of all of them. But I don't see the market trading with a lot of concern about that. And maybe that's because the market thinks rates ought to go down and that's the way they think Hassett will bring it. If it was the opposite, maybe you'd have a stronger reaction here.
- [11:55]
Dan Nathan
All right, Steve, thank you. Steve Liesman, you wanted to, well, I.
- [12:01]
Melissa Lee
Love when Liesman calls me Seymour.
- [12:03]
Dan Nathan
That's, that's we should, I think I'm going to start calling you that actually.
- [12:06]
Melissa Lee
By the way, Leastman can call me anything. And I think he hit on a really important point. The fact is most people in the market think that there's some rate cuts still to go and that's just the practical reality. Not if you look at markets at all time high, not if you look at the job market. We've got a payroll number. Tomorrow we had a midday call as we, as we often do. And the gentleman to my Left here, Wilson. Mr. Mr. Wilson. That's right now. But Mike, Mike, we started having a conversation about Fed liquidity and also the short term dynamics of monetary policy where they actually need to inject some liquidity to smooth out some shocks. So I just, you know, I think the market probably believes two more cuts at least and then possibly an extended pause. And if you start to send something very different and much more accommodative, that's the time to worry.
- [12:51]
Dan Nathan
So you're bullish next year.
- [12:53]
Tim Seymour
Yeah.
- [12:54]
Dan Nathan
How critical is what the market is pricing in terms of Fed rate cuts and who heads the Fed to your forecast?
- [13:00]
Tim Seymour
Yeah, I don't think it's so important who heads the Fed, but it is important that we get the Fed cuts and I think it's important how many more than what the market's pricing and faster. So as we were discussing this afternoon, I do think that the market has been correcting now for two months. I mean, yeah, the S and p is down 2%, but there are a lot of stocks that are down 20, 30, 40%. Crypto is another kind of reflection of that. So I believe that there's not quite enough liquidity in the system for the financial markets, but also an economy now that's demanding more capital. There's a lot of IG being raised in the credit markets and being spent. So that capital spending is another dynamic that needs more liquidity. And so we're looking, I'm following very closely things like bond volatility, the funding market spreads. That is as important to me as the back end of the treasury market. Okay, so, so it's important to me for next year to be bullish is the Fed has to probably surprise on the upside, both in terms of cuts and in terms of the liquidity injection.
- [13:50]
Mike Wilson
But it's funny Mike, you know, away from, let's just say large cap tech, that's been driving a lot of the gains in the S and P over the last couple of years. I'm looking at transports, I'm looking at industri, I'm looking at financials. They're all trade at all time highs. I mean, so like, you know, we have spreads that are really tight, like who needs what? You know, I'm saying, like, I don't know, I mean the labor market, that's fine, it gets a little weaker. You know, maybe we see a 4 1/2% unemployment rate. Let's say we have tame inflation. I mean why do we need 100 basis points of cuts?
- [14:20]
Tim Seymour
Well, we're very much on track. But in order to stay bullish for next year and get another 10 to 15% upside for our call, then we need more. Okay, so that's what I'm assuming does.
- [14:28]
Mike Wilson
If two cuts bring down the multiple in the s and P500 because if you get to 310, okay, expected 14% or so year over year earnings growth, you got an S and P that's trading at 24 times.
- [14:38]
Tim Seymour
Yeah, but that's, I mean we're not looking for 3, 10, we're looking for something higher than that. We're looking for 17, 18% earnings growth and we look for multiples actually come down. The multiple expansion happened this year in anticipation of what's going to be a much better earnings story next year. Not so much mag7, but the other stuff that hasn't been earning.
- [14:53]
Melissa Lee
Yeah, I think that's, that's right. And I listen to Mike and I listen to other strategists around the street and I do my own work to the point where EPS growth is the story for the market next year. That's the word. And the word is that if the Fed cuts two times and there's a long pause, we're probably in a, in a pretty good environment. And anywhere from 13, I'm here in 13 to 8, 18% EPS growth is fantastic. If you cut more than two times, I think there's a lot of ammunition for things to go even higher.
- [15:17]
Dan Nathan
Meantime, let's get to matter. Shares popping more than 3% today. Session reports that CEO Mark Zuckerberg is planning major cuts in the company's Metaverse unit that could amount to as much as 30%. In a statement to CNBC, just moments ago met a spokesperson saying within our overall Reality Labs portfolio, we are shifting some of our investment from Metaverse toward glasses and wearables. Given the momentum there, we aren't planning any broader changes other than that. Fast Money friend Jean Munser of Deepwater Asset Management joins us now to discuss. Jean, great to have you with us. As I understand it, according to a source within Metta, the overall number next year in terms of what they guided for in the conference call in the last earnings season for significantly more capex, that is not changing, it's just a shift within that larger number. How do you view this?
- [16:03]
Jean Munster
That'd be a massive shift, just to put some context on it is the expectations are they're going to spend about 19 billion, lose about 19 billion on reality Labs. That's kind of the center of the bullseye of this conversation. And next year, 22 billion. So if they're going to continue to lose that kind of money, what we're talking about here is a shift of $6 billion that goes away from like VR essentially towards more the wearables type. And so that's a pretty big move. I still think that that number does come down. I think that that's the market is hoping that comes down. My sense is it comes down, it's not going to come down by the full 30% because they're spending. If you look at Alan Dai, the hire from Apple he's probably. This is a Revenge of the Nerds comment coming up here, probably in the order of 500 million over five years with his whole package all in. So there's going to be some mix there. I want to kind of just quickly go beyond the headline. And the story behind the headline here, too is what. What Zuckerberg is telling us by the news about this reshift, this refocus and the hire of Alan Dai is a shift in terms of how they define the Metaverse. If we go back and look in 2021, he referred to it as immersive Internet, basically a VR first experience. And now, of course, it's more wearables. And so that's a big reset. And I think that they still got a long way to go. I mean, these glasses, we have them in the office. Nobody wants to use them for a reason because they don't really give you much today. And so I think when you put all this together, Zuck knows he's got to put some more juice behind these glasses and get them to work.
- [17:38]
Melissa Lee
And you look like Revenge of the Nerds.
- [17:40]
Jean Munster
Thank you.
- [17:41]
Dan Nathan
Well, yeah, sorry.
- [17:43]
Mike Wilson
Go ahead, Munster. Nathan here. All right, so let's talk about 2021. Let's talk about how famously wrong Zuckerberg was about the Metaverse. Now they kind of got a little bit lucky, kind of moving a lot of that spend out of Reality Labs and kind of getting focused on, you know, generative AI and what that might be for the company and, you know, how they serve ads and the like, and obviously that benefit. I know you've been very bullish, but what makes you think that this is a company without this big cloud service like an Amazon, like a Google and like a Microsoft, that all of this spend, regardless of this rounding error out of Reality Labs, is going to be useful for them, that's going to get them to the place that they want to be and compete with the large hyperscalers.
- [18:27]
Jean Munster
I don't know that, you know, the degree that all the spending is going to help advance wearables and make the utility kind of turn on. I think, I do believe that what they're doing in AI more broadly is having a profound impact. I mean, the growth rate of their daily active users is accelerating off of just a remarkable three and a half billion daily user number. And so they're getting value of it. And I would just say, kind of when I put all this mix together, we own the stock, we own it. I'm less optimistic today than maybe I was three, six months ago. And so I think that you're probably money's better spent other places. But the big picture is that Zuck is really married to this wearables. We've tested them just to give some quick context about the state of the union of meta display. 50 queries, 50 prompts. Compared it to ChatGPT running their vision product on an iPhone and it got half of them.
- [19:21]
Dan Nathan
Right.
- [19:21]
Jean Munster
I mean it was comically bad. And then when you Compare that to GPT's version, it got 98% of them, 49 out of 50.
- [19:28]
Melissa Lee
Right.
- [19:28]
Jean Munster
And so Dan, I think that there's something there. He's hitting the reset button. We put it all together. Meta's going to be in a good place, but there are probably other companies in the mag 7 that are going to be in a better place a year from now.
- [19:40]
Dan Nathan
Does this funk that's happened basically since Earnings Gene, does it. Does it get out of it? I mean, does this sort of when you say hit the reset button, does that reset the direction of the stock here or will it continue to face questions about how much it's spending, why it's spending as much as hyperscalers are spending and what it gets out of that spend versus a Google which is selling chips. It's got, you know, cloud services, it's got, you know, all these different layers of how it's using its AI spend to benefit itself.
- [20:09]
Jean Munster
Well, I just want to be clear. Meta is having a. Their business is having a profound positive impact from the. I think it's by one of the best at scale as far as getting out of the funk. The question of getting on the funk. It's in a funk because of that flip of the script from expense growth versus revenue growth and any commentary, what we're seeing today, around 30%. Still not clear what that means for expenses overall, but one thing that could re accelerate it. Fast forward to the end of January as they start talking about that relationship between revenue growth and expense growth or they start pulling back. That's a pretty big pie that they can dig into around Reality Labs. There's a lot of earnings growth that they can generate from that. So what I would look to, to flipping the script back to being more positive. I think in general the MAG7 earnings is going to be favorable for the trade, the December earnings and Metta will be one of those beneficiaries.
- [21:03]
Dan Nathan
Jean, always great to get your take. Thank you. Munster Deepwater Asset Management. How are you feeling about matter these days?
- [21:09]
Melissa Lee
First of all, I love the references to Revenge of the Nerds I mean, Anthony Edwards work as Gilbert.
- [21:14]
Dan Nathan
You love your own reference.
- [21:16]
Melissa Lee
Yes, exactly.
- [21:17]
Dan Nathan
What is going on here? You had to praise your own Joe more.
- [21:20]
Melissa Lee
Seymour wasn't my joke, it was his joke. He started out with Revenge of the Nerds and it kind of got me thinking about a great movie that Dan watched all the time. Anyway, I think Meta looks really interesting here. I think there's, you know, a chart person would say, hey, wow, look at it. You kind of come right back up to the 50 and the 200. You've got a bear cross coming right there. There's some, some things to maybe be watchful right now. The fact that Zuck has decided to focus back in on the year of efficiency in certain parts of the business and is interesting. And I think it's interesting because I think the entire hyperscaler but mag7world, those that have the exposure to Capex spend or ones that are at least thinking about market interpretations but aren't going to change a thing other than things in a dead business. I mean, why not? I mean, reality labs, like seriously, what are you wasting your time for when there's so much else to do in the rest of your business?
- [22:08]
Dan Nathan
Yeah, borrowing matter.
- [22:11]
Bronwyn Eisen
Yeah. Listen, I think that it is somewhat of an implicit admission of guilt that they got the whole Metaverse thing wrong. But I am happy to see that he's willing to pivot here. The, the Capex spin. We all know that very well. We, I understand that it's somewhat of a concern, but at the same time I like to see them be aggressive. My thing is I think that they're making a play that the next thing, the next iPhone is going to be some wearable or non phone based, non computer based type of AI VR combination thereof. And he's taking a shot to do that. As, as we've all said, they don't have the cloud business, they don't have some of the other levers that the other hyperscalers have. But I would say that they still have WhatsApp that they can monetize. So I am a little bit glass half full in terms of seeing that they're willing to kind of take a shot at what the next AI thing is. If we remember six months ago, everyone thought that Google was essentially going to be left for dead and that AI essentially was cannibalizing their business and we didn't know where they were going to be. And lo and behold, over the next last two weeks, they're now the crown jewel with Gemini 3. So I think we're it we're still so early on to know really how this is going to play out. I like to see them be aggressive and take their shot and they have the balance sheet to do it.
- [23:20]
Mike Wilson
Yeah, well, Meta is not doing well no matter what you want to say about increased engagement on the platform. And Lama seems to be a dumpster fire. Like, let's just be clear. And so when you think about that being open source and you think about how many users they have around the world outside the US well, there's a lot of cheaper models being built and trained right now that are all also open source. So to me, I think there's a lot of headwinds. You say, well, who the heck is Nathan to kind of be critical of this? But you know, if you've used all.
- [23:46]
Melissa Lee
Of these, did you just third person reference? I kind of did.
- [23:48]
Eamon Javers
That was very.
- [23:51]
Mike Wilson
You know, you get my point. We're all, we're all using these, we're all testing these. At the end of the day, they're all going to be commoditized, but these guys don't seem to be making a whole heck of a lot of progress and they got to spend hundreds of millions of dollars to attract talent.
- [24:03]
Dan Nathan
Coming up, Media Moment of truth. The latest in the bidding war for Warner Brothers coming Discovery assets and who is pulling out ahead. But first, two different takes on the consumer. Why shoppers seem to be flocking to Dollar General but tightening their belts at Kroger. Don't go anywhere. Fast money's back into.
- [24:22]
Melissa Lee
And now a next level moment from AT&T business. Say you've sent out a gigantic shipment of pillows and they need to be there in time for International Sleep day. You've got AT and T5G so you're fully confident, but the vendor isn't responding. And International Sleep Day is tomorrow. Luckily, AT&T 5G lets you deal with any issues with ease. So the pillows will get delivered and everyone can sleep soundly, especially you. ATT 5G requires a compatible plan and device coverage not available everywhere. Learn more@att.com 5G Network.
- [24:52]
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Eamon Javers
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Melissa Lee
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- [25:38]
Dan Nathan
Welcome back to Fast Money. Shares of Dollar General topping the tape today. Jumping 14% their second best day on record. This discount chain topping earnings and revenue estimates and raising full year guidance as low prices pulled in consumers looking for bargains. Dollar General now up more than 65% this year. Bottom one I guess people who are strapped, they're looking for a place to go for value.
- [26:00]
Bronwyn Eisen
It's a similar story that we're kind of seeing with Walmart here where we have this middle and upper income consumer trading down. But I, I'm really curious about what the proper read is here. I don't know if Dollar General's win is really at the expense of the consumer. So I'm not sure that they're able to continue to take market share and frankly I don't know if the consumer dynamics that we're seeing is a red flag or a green flag for the, for the economy. I tend to think that it perhaps is showing strain within the consumer and there's only a limited ability for you to continue to trade down. So I think I still like Walmart over the name although I do think that they are executing getting shrink under control and doing better in terms of inventory management here.
- [26:42]
Dan Nathan
Well, shoppers may be flocking to the dollar stores but they seem to be making fewer trips to Kroger. Shares of the GROSS are falling nearly 5% if the company swung to a loss on increased expenses. Kroger also cutting guidance as consumers tighten their belt, specifically middle income. They said they're making fewer trips, they're making smaller trips, they're very choiceful. That's like the, the buzzword in retail.
- [27:03]
Melissa Lee
Earnings and then the other buzz kind of macroeconomic term or letter of the Alphabet because we've got one for every economic situation. It's a K shaped economy and this is what we're seeing and it's what makes it kind of noisy because you could still have 2 and a half to 3% GDP growth and you could have a lot of questions in certain parts of the consumer and I think there are, I'm not sure I'm chasing Dollar General or Dollar Tree. I will say they've been some of the best trading stocks and I'd like to use that term around airlines and other things but you've had significant moves in both of these names. I think you're back at the top of a range. Not trading it out tomorrow, but I'd be careful.
- [27:36]
Tim Seymour
Yeah. I mean Dollar General kind of fits our theme for 2026 is a, this is a laggard group. I mean these stores have really underperformed. The stocks have been terrible and it doesn't take a lot of to get them going. And we saw that today and I think it continues. I mean we actually like the lower quality parts of the consumer discretionary chain.
- [27:52]
Melissa Lee
Yeah.
- [27:52]
Mike Wilson
And it seems like Kroger's weakness is probably benefiting Wal Mart to some degree or maybe Wal Mart is affecting that weakness. That stock has gone parabolic. It's up in about 15% in the last month. I think more curious than everything that you guys wanted to focus on the rest of the panel here.
- [28:08]
Dan Nathan
You mean Seymour Wilson.
- [28:09]
Mike Wilson
And I said, yeah, I think Costco is weakness. I think Costco's miss those comps, you know, is really interesting and we've never really seen a bifurcation between Wal Mart and Costco. I just can't remember the last time we've seen.
- [28:22]
Tim Seymour
But Dan, I mean Costco has been underperforming for most of the year. I mean it's been, it's been a terrible stock. And I think this reflects what's been going on internally. Once again, like the market is actually taking down these high multiple stocks. I mean it's, it's correcting internally. I think it's doing it very efficiently and I think that's a positive development. I mean Costco was very expensive. It was overpriced and coming down now I think is a good thing.
- [28:44]
Dan Nathan
Coming up, stocks just a whisper away from records. And Morgan Stanley's Mike Wilson here is laying out his 2026 market playbook where he sees the biggest opportunities straight ahead. You're watching Fast Money live from the NASDAQ markets at in Times Square back right after this.
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Dan Nathan
Welcome back to Fast Money Stocks closing mix. Today the S and P and Nasdaq eking out gains while the dow shed about 30 points. Shares of intel down more than 7% after the company opted to keep its networking communications unit instead of selling it. Even with the drop. Shares have doubled since August when the US Government took a stake in the beaten down chipmaker. And some after hours action. Hewlett Packard Enterprise missing revenue expectations in Ulta topping earnings and revenue estimates. Meantime, Morgan Stanley recently raised its 12 month S&P target the 7,800. So as we mentioned before, Mike is feeling bullish. What is going to carry us to 7,800?
- [30:38]
Tim Seymour
It's really a continuation of this year's story. I mean you know, we, we had a view coming into the year that they were going to probably do the growth negative policy stuff first and it turned into sort of kitchen sinking it and that all happened faster and more dramatically than even we predicted. So that when they flipped the switch in April, I mean now we're looking at this just reversion of all of these revisions that got so negative. And now, I mean to be honest, I mean some of the stuff they've done is been even more constructive. I mean the big beautiful bill turned out to be much bigger than we thought today from a capex incentive standpoint, there's a real benefit to the consumer in the first half of next year in terms of tax cuts and tax benefits from the salt deductions increasing as well as the tax on tips, etc. Then you have the story with the Fed now kind of turbocharging this story. So you've already had the earnings revisions. The Fed's now is going to be a tailwind at your back. And this is the broadening out story that I've kind of referred to several times in the show already. So this is where I think investors have to make a choice. There's a fork in the road now as you can bear say take it. Okay, we're going to take the fork towards the broadening out and that would be areas like consumer discretionary. Some of the financials that haven't performed some of the financials have done really well, but there's parts of the financial sector that haven't done well. Transports, you mentioned that. That's an area that's really suffered. Some of the commodity patch hasn't done particularly well. Consumer goods over services. So there are plenty of things in the market that have not worked yet that don't have high multiples where the earnings are going to surprise. On the upside, you get multiple expansion and earnings growth.
- [32:00]
Mike Wilson
So you see the benefits of the tax bill, any of that offset by increased premiums for health care with the roll off of these subsidies? Because you know, that's a big number. But then you might say, hey, listen, that's a lower earning consumer, so maybe it's not that big of an impact on the broader economy.
- [32:16]
Tim Seymour
That's right. And the immigration restriction because that clearly was a funnel for consumer spending. But once again, lower end spending. So it's a good trade off. The biggest beneficiary of the bill is the middle income cohort and they have a high propensity to spend in areas that we're talking about.
- [32:30]
Dan Nathan
Coming up, the latest in the bidding war for Warner Brothers Discovery. The names that have submitted officer offers and what the frontrunners could do with the assets Fast Money's back into.
- [32:47]
Welcome back to Fast money. Comcast, Netflix and Paramount have submitted their bids for Warner Brothers Discovery. But what exactly are these companies interested in and who could end up the eventual winner? For the latest update, let's bring in CNBC's Alex Sherman. Sounded like Netflix is in the lead. Alex?
- [33:01]
Eamon Javers
Yeah, although there's a now we thought there were best and final bids already, but now, end of day today, there's going to be yet another round of bids for Comcast, Paramount and Netflix, the three companies that potentially made by Warner Brothers Discovery. Just briefly, Comcast and Netflix are looking to buy just the studio and streaming portion of Warner Brothers. Paramount is the only company that would buy the entirety of Warner. But what we know so far is that, look, paramount has bid 5 times now on this company. And what we found out today is that Paramount has sent a letter to Warner Brothers, in fact, two different letters, once arguing that Netflix is a major regulatory risk and you shouldn't sell in that direction. The second letter saying they feel like the sales process has been tilted toward Netflix and has been unfair. So how do you read the fact that you've got Paramount sending Warner Brothers letters mid process before they've even chosen a winner? Well, one way of reading it is that if this sales does not go in Paramount's direction, maybe they Go hostile. Maybe they take it straight to shareholders if they feel like this was not a fair sales process and it goes in the direction of, say, Netflix. Maybe Paramount has one last bid out there and they go directly to shareholders. We'll see.
- [34:16]
Dan Nathan
What about that argument that it wouldn't Netflix, Warner Brothers Discovery would not pass muster. I mean, as I understand it, HBO Max, those subscribers already subscribed to Netflix and that actually costs could come down if you bundled the two together. So doesn't that sort of address those antitrust concerns?
- [34:34]
Eamon Javers
It might. I mean, we haven't really had a deal quite like this where it's a major streamer buying another major streamer. So to some degree, unchartered territory. I think Jonathan Kanter was on our air saying that today, saying he thought it would be, however, a big deal because Netflix is so powerful in the media scheme that depending on, you know, what metrics you look at, simply adding a whole bunch of millions of more streams subscribers. Even to your point where there's, I think it's, what is it, 75% overlap or so between HBO Max and Netflix. That's compared to something like 50% overlap for the other two companies, Paramount plus and Peacock, which would make, you know, make Netflix maybe not such a big antitrust concern. I'm sure that's going to be Netflix's argument. The other side of the argument is that Netflix is kind of putting to rest all of these traditional media companies and it's running away with this entire industry and therefore we should put checks and balances around its growth.
- [35:24]
Dan Nathan
Granted, the assets are different, but Versant, our parent company, or soon to be parent company, held its investor day today here at the NASDAQ Marketsite. You were in attendance. And I'm wondering, you know, there are a lot of assets out there to be acquired there. There are a lot of assets out there in the field. How do you see this? How do analysts see this shaping up?
- [35:43]
Eamon Javers
Well, the version story is an interesting one because listening to that presentation, I think 83% of Versant's revenue comes from traditional TV today. But the message was we want to be a media company that invests in non media businesses and we want to use these media funnels as in essence, marketing tools to grow other businesses. The example that Versant uses is this Golf now business, which is a tee time reservation business, but it's housed within Versant, housed within the Golf Channel or the Golf business. And it has been successful for Versa. And so they say, look, yeah, we own Golf Channel, but think of us as being in the golf business. And that is the case for the finance business, for cnbc, it is the case for the news business. Ms. Now so that's the message that they want. That's very different, I think, from what we're seeing with Netflix buying hbo, which is just, look, they're a media and entertainment company. That's fine. We want to be the dominant media and entertainment company. Similar message, I think, for NBC Universal and HBO coming together. Hbo, Max, Warner Brothers coming together, same deal with Paramount.
- [36:48]
Dan Nathan
Alex, great to see you. Thank you. Alex Sherman, where do you stand on, on a Netflix since you own Netflix? A Netflix?
- [36:54]
Melissa Lee
Well, actually, I don't own Netflix right now, but I do own Warner Brothers and I own Calls and Warner Brothers out to February just because I don't think they're building in the volatility that's on the upside here. What, what we're learning are that the sum of the parts, parts valuations of the pieces of Warner Brothers are worth a lot more than what the market priced them two months ago. You've got the biggest players in the world that are fighting over the assets. And I think it means, first of all, I think it's good news for a lot of legacy cable assets that we all know are. But what does Alex said they're funnels. They are absolutely. There's a, there's not a desire to spend more money on these places, but there is a desire to actually take those assets, those brands and put some of that stuff behind a firewall and start to get paid for it in a different way. So I think you can be long Netflix. I think the market does not want to see Netflix overpay on this. And I think that chart continues to weaken, even though it's an incredible story to buy. Weakness on.
- [37:42]
Dan Nathan
Coming up, a shake up for the pharma space, how the FDA could be changing the way new drugs are approved and what it could mean for the companies developing the drugs. More on that when Fast MONEY returns.
- [38:00]
Welcome back to FAST money. Biotech stocks getting a boost today after FDA Commissioner Marty Makary hinted major changes could be coming for drug development. The health regulator reportedly saying one clinical trial can be just as informative as two when they're designed correctly. Cutting the number of trials would vastly streamline the drug approval process. Obesity drug maker Viking Pharmaceuticals, one big beneficiary today, rising as much as 13% at its highs. For more on this impact, cnbc.com pharmaceutical reporter Anika Constantino joins us here on set. Anika, welcome to the show. Welcome to fast money. Yeah.
- [38:30]
Anika Constantino
Thank you guys so much for having me.
- [38:32]
Dan Nathan
So this is a very interesting notion. The FDA says that typically it's already one, and so they're just making this the default. How much will actually change here.
- [38:41]
Anika Constantino
Right. So here's why this really matters for you guys. So there was a Raymond James note that came out today that basically said, you know, the biggest impact is going to be on drugs that treat large patient populations. So when you hear that, you think hypertension, diabetes or obesity, which is what you really care about here and basically everywhere. And so when you think of names like Viking Therapeutics, it makes sense why we saw the stock rise so much. Because, you know, when you think about these companies, the amount of time and kind of effort they have to put into doing these massive multi trial, phase three programs, you know, it's going to save a lot of costs and a lot of time and a lot of risk if they only have to do one of these trials. And so Viking is such a great example.
- [39:19]
Dan Nathan
So for Vikings, specifically their obesity drug, the leading candidate is this drug that's in phase three right now. So under this new sort of regime, if this actually happens, they would be able to just get evaluated based on the data that's already in.
- [39:34]
Anika Constantino
Right. So it's unclear yet what exactly is going to happen, especially for drug makers that have phase three trials currently ongoing for their drugs. So it's unclear if the FDA is going to say, you don't need to finish that. You know, you've enrolled now, but you don't need to finish that or just finish it anyway because you've started it already. So we need to get more details once there's an official press release out from hhs. But what's interesting about Viking is that, you know, maybe one or two years ago, this was really seen as a hot takeover target when it comes to the M and A space. But we've seen pharma kind of move away from that and look for more differentiated and cheaper assets, like in China, for example. And so this is good news for Viking because it's going to be a company that might have to just really do this alone, like commercialize their drugs alone when it gets to that approval point. And so that's why it's good news for it.
- [40:19]
Dan Nathan
Anika, thank you. Nice to have you. Anika Constantino, you like health care here?
- [40:24]
Tim Seymour
We do. We upgraded it back in September and it was kind of around the RFK rollout of what he was going to talk about. We thought it was a lot of Negativity turned out it wasn't as bad. MFN pricing, not that big a deal. The deregulation on drug approval approval looks great, but the most important reason we like it is earnings now are actually accelerating for the first time in two or three years. The last thing I'd point out is that health care, we looked at this over 30 or 40 years, has its best year in the second year of a presidential cycle. Don't ask me why, but probably because when a new administration comes in, everybody gets nervous. That second year, though, is a sweet spot. So this is a nice defensive part of your book. If you. If you want to have some defensiveness.
- [41:00]
Dan Nathan
In it and if all of a sudden you don't have to go through as many phases or as many trials, that brings down the cost of R and D, which is a great thing for a lot of these companies.
- [41:09]
Melissa Lee
Yeah, I'm long Viking. I'm also long a lot of the other stocks, I bet some of the ones Mike likes. And it's a combination of just tailwinds overall for the sector, positioning by investors over negativity. Valuations are interesting. And back to Viking. I don't know that they're going to go it alone, but this, this news is that they could possibly get there on their own. And that would like. I think they're two more steps down the chessboard. They're going to be consumed by somebody else.
- [41:31]
Dan Nathan
It does, theoretically. I mean, if they don't have to go through phase three in its entirety. Let's say they've got a drug potentially that is approved. And so, you know, a suitor can come along and it's like you've got an approved drug, not an experimental drug. It's a different kind of.
- [41:43]
Melissa Lee
And the market beat this company up. I don't know. It was probably nine months ago or so when we had some trial news that the headline was kind of what the street expected, but it wasn't perfect and the stock was cut in half. And. And again, I think the story has been relatively consistent here, but this is good news for them.
- [41:59]
Dan Nathan
Yeah, Bonwin, where are you on biotech?
- [42:03]
Bronwyn Eisen
Yeah, I think you probably own it here. I mean, this news definitely on its face is certainly positive. You're driving down R and D, you're shortening the Runway, and you're making it where you have a proven drug and likely the multiple paid for that is much higher than in a much earlier speculative place. So I think it's a net. Net positive.
- [42:21]
Dan Nathan
Coming up, a housing call from Wall street where analysts Toll Brothers and Lennar heading into the new year. That is next, more fast money into.
- [42:40]
Welcome back to Fast Money. A double call of the day in the home building space. JP Morgan upgrading Toll Brothers to overweight, downgrading Lennar to underweight. Both had been rated neutral. The firm reiterating its cautious stance on the sector for 2026. Seeing unfavorable supply demand dynamics and expense evaluations. Analysts still think Toll Brothers valuation is attractive. Both shares though ended the day in the red. What do you think homebuilders here?
- [43:02]
Melissa Lee
Well, first of all I respect the, the attempt to do some stock picking here in a sector that actually trades often with zero. Excuse me with, with correlation of one for the homebuilders. I don't love the stocks here. I think there's still a lot of pressure both in terms of the costs, their margins, where they've been subsidizing a lot of these mortgages. And I think they're no longer interest rate sensitive. If rates come down.
- [43:26]
Tim Seymour
Yeah, I mean I would agree with Tim. I think they have a cost structure problem. They also have an affordability issue. So where the buyers and we like the home improvement space though we do think next year rates come down that there's activity. I'm not sure it's great for the builders.
- [43:37]
Dan Nathan
Yeah, bottom.
- [43:41]
Bronwyn Eisen
Yeah, I mean I like it as a Paris trade. I think one he's essentially saying that some of the lower end the Lennars of the world are a bit overvalued vis a visa Atoll Brothers which catering to a much more well heeled cohort. So I think if you want to put it on as a Paris trade, which is the way that I interpret it, that you can do it there as long as you're willing to do it cost neutral and then you kind of just remove a little bit. You're able to kind of move down on your multiple and you're removing some of the the perceived catalysts that are related to rate cuts. If we don't get them in terms.
- [44:11]
Dan Nathan
Of the tailwinds for the consumers in the beginning of the year. Mike, doesn't that help that potential buyer out there?
- [44:17]
Tim Seymour
It does, but it's going to take some time. I mean we could come back to this. We could revisit it. I just think it's had so many false starts already on the hope of rate cuts. You kind of price in a bunch and there's just better things to do.
- [44:26]
Dan Nathan
All right, up next, final trades.
- [44:42]
It is time for the final trade. Let's go around the horn Bonwin Eisen.
- [44:47]
Bronwyn Eisen
I think Patton Cliffs and possible FDA revamps or tailwinds. I like XPI here.
- [44:52]
Dan Nathan
Mike Wilson of Morgan Stanley.
- [44:53]
Tim Seymour
I'm going to go with Meta. I think down 27% from the high. You know it's been a pear trade against Google and I think it just got thrown out in the garbage can. I think this is when you pick up before you're in.
- [45:02]
Dan Nathan
Great to have you here on the desk, Mike. Thank you Tim. Seymour awesome.
- [45:06]
Melissa Lee
We've learned a lot. Or Seymour Seymour thinks utilities are a trade for this year and next year, much in the way that some of the trades that Mike referenced that this year still I think demand and capex for utilities continues to be very strong. You stay with the xlu.
- [45:20]
Dan Nathan
I like Seymour.
- [45:21]
Melissa Lee
I think that's fine. Stick absolutely fine.
- [45:24]
Mike Wilson
So yeah, I think Netflix is going to lose this bid for Warner's. I think Netflix should buy Spotify. They could really do exactly what you're talking about is lower that cost for a consumer, raise the margins.
- [45:38]
Dan Nathan
Thanks for watching. Fast Mad Money starts now.
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Dan Nathan
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Dan Nathan
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.
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Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning, and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more@capella.edu.