CNBC's "Fast Money" Episode Summary: “Trump Rally Overdone?... And Netflix’s Subscriber Surge” (Release Date: January 22, 2025)

Hosted by Melissa Lee, CNBC's "Fast Money" brings together a panel of top traders—Tim Seymour, Karen Feinerman, Dan Nathan, and Guy Adami—to dissect the latest market movements, earnings reports, and broader economic trends. In the January 22, 2025 episode titled “Trump Rally Overdone?... And Netflix’s Subscriber Surge,” the discussion navigates through soaring stock markets, cautious voices from industry leaders, and significant performances in the streaming and insurance sectors.

Market Overview: Record Highs Amid Mixed Sentiments

(00:17 - 02:18)

Melissa Lee opens the episode by highlighting a record-breaking day for the markets. The S&P 500 reached an intraday high, buoyed by strong earnings and optimism about President Trump's potential impact on stocks. The Mag 7—Nvidia, Microsoft, Oracle, and others—are leading the NASDAQ, spurred by the announcement of a $500 billion Stargate infrastructure project.

Dan Nathan emphasizes the market's precarious position:

“These indicators suggest the market has less and less room for error on the upside.” (02:18)

However, voices of caution emerge. Elon Musk and Jamie Dimon have voiced concerns over market valuations. Musk questioned the financial backing of the Stargate project, stating:

“They don’t actually have the money to make it happen.” (01:51)

Tim Seymour adds a nuanced perspective:

“The pendulum has swung. We don’t know how far it is in its path to go.” (03:05)

Inflated Asset Prices and Market Sustainability

(02:00 - 06:24)

The panel discusses whether the market rally, potentially driven by Trump's pro-growth policies, is sustainable. Karen Feinerman points out that asset prices appear "inflated by any measure," suggesting that solid outcomes are necessary to justify current valuations.

Dan Nathan concurs, noting:

“The market has less and less room for error on the upside.” (02:18)

Guy Adami questions the reliance on the Mag 7:

“If fund managers don’t believe in the Mag 7 trade, aren’t we off to the races?” (06:24)

International Markets: Germany’s DAX Outperforms Amid Global Uncertainties

(07:10 - 12:04)

Shifting focus to international markets, the DAX in Germany hits all-time highs, outperforming the S&P by nearly 600 basis points. Carter Braxton Worth highlights the strong performance despite concerns over potential trade tensions with China:

“The rally that we’ve seen globally… Tariffs were not the number one criteria.” (10:17)

Karen Feinerman adds:

“China's priced so poorly,” but recognizes the necessity of China in the global economy. The panel debates whether geopolitical tensions, particularly with China, could introduce headwinds, but the immediate market response remains positive.

Apple’s Stock Pullback: Technical Concerns vs. Fundamental Strength

(13:17 - 19:30)

A significant portion of the discussion centers on Apple's stock performance. Despite beating earnings, Apple’s shares are down nearly 11% in January, trading near six-month lows. Carter Braxton Worth describes the technical pattern as a "head and shoulders," indicating a potential rollover:

“It has all the look and feel of something that is rolling over.” (16:50)

Karen Feinerman counters with a focus on Apple's fundamentals:

“iPhone sales, services, business, and margin... these give investors a lot of confidence.” (17:20)

Tim Seymour notes optimism driven by Apple's second and third pitches—services and margins—but acknowledges concerns over their competitive edge:

“They need to roll out AI features that make people want to buy phones.” (18:20)

Streaming Sector: Netflix’s Subscriber Surge and Competitive Pressures

(29:24 - 36:05)

Netflix shines as a standout performer, achieving all-time highs with a significant surge in subscribers. Tom Rogers, executive chairman of Orbit Media and Entertainment, commends Netflix's growth but outlines several caveats:

1. Aggregate Viewership: While Netflix boasts strong engagement, when combined with other streaming and linear services, its total viewership trails behind competitors.
2. Advertising Revenue:

   “Amazon, Peacock, Hulu all have higher streaming advertising revenue than Netflix.” (30:43)
   Netflix aims to double its ad revenue, which remains a critical battleground.

3. Algorithmic Technology: Enhancing advertising targeting to compete with tech giants.
4. Gaming Integration:

   “Until they get those games up on the television set instead of on the phone… they’re not going to get there.” (Tom Rogers, 30:43)

Carter Braxton Worth suggests potential strategic acquisitions to bolster Netflix’s position, such as acquiring Snap to enhance advertising capabilities:

“There’s a lot of ways to grow that advertising.” (36:18)

Insurance Sector: Travelers’ Strong Earnings Amid California Wildfires

(37:45 - 41:45)

Turning to the insurance industry, Travelers reported a record year for profits, surpassing street expectations thanks to robust investment income driven by higher interest rates. However, the impact of California’s wildfires poses significant challenges.

Contessa Brewer, CNBC contributor, explains:

“Travelers was careful to couch its profitability and its potential with sympathy for the fire victims in California.” (37:45)

Travelers is navigating the delicate balance between maintaining investor returns and managing public relations issues amid policy cancellations and rate hikes. The company’s strategy includes limiting exposure to wildfire risks, but the first-quarter impacts remain unclear.

Divergence in Healthcare Stocks: Moderna vs. Johnson & Johnson

(41:45 - 43:33)

The healthcare sector showcases a stark contrast between Moderna and Johnson & Johnson (JJ). While Moderna sees its shares rising, propelled by a $590 million HHS grant for bird flu vaccine development, Johnson & Johnson's stock declines despite an earnings beat. J&J's cancer drug sales boosted profits by 19%, but its psoriasis treatment Stellara faced a 15% revenue drop due to international competition.

Dan Nathan cautions:

“The problems that were around Moderna for this entire move lower... have not gone away.” (42:57)

Earnings and Sector Highlights: Airlines and Technology

(25:27 - 27:22)

The episode also covers earnings from airlines, with Alaska Airlines outperforming expectations by reporting earnings of 97 cents per share versus the expected 44 cents. Ben Minicucci, CEO of Alaska Airlines, is scheduled to discuss the company's strong performance and strategic moves.

Dan Nathan highlights:

“American Airlines is completely underperforming and may start to outperform after tomorrow’s report.” (27:55)

Conclusion: Balancing Optimism with Caution

(43:44 - 44:57)

As the episode wraps up, the panel reflects on the delicate balance between market optimism and underlying risks. While sectors like streaming and insurance show strong performances, concerns about market valuations, geopolitical tensions, and sector-specific challenges persist.

Melissa Lee signs off with a reminder to visit CNBC’s resources for further insights and to register for their AI success course, underscoring the show's commitment to providing actionable news for investors.

Notable Quotes:

• Dan Nathan on market indicators:

  “These indicators suggest the market has less and less room for error on the upside.” (02:18)

• Tim Seymour on market pendulum:

  “The pendulum has swung. We don’t know how far it is in its path to go.” (03:05)

• Carter Braxton Worth on Apple’s technical pattern:

  “It has all the look and feel of something that is rolling over.” (16:50)

• Tom Rogers on Netflix's challenges:

  “They’ve got to demonstrate that they can lead the pack.” (30:43)

• Contessa Brewer on Travelers' strategy:

  “Travelers was careful to couch its profitability and its potential with sympathy for the fire victims in California.” (37:45)

This comprehensive summary encapsulates the critical discussions from the episode, offering insights into market dynamics, sector-specific performances, and the interplay between optimism and caution among investors.