A Housing Revival As Mortage Rates Drop… And Meta’s Nuclear Deal 1/9/26

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0:51The key to being rich is knowing what counts. Let's find your rich together. Edward Jones, member SIPC. 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. A housing revival. Homebuilders flying as a 30-year mortgage falls to its lowest level in nearly three years. What the drop will mean for buyers waiting on the sidelines and how the Trump administration is continuing its push for affordability. Plus, a data center surge. Meta signing a big nuclear deal to help fuel its AI ambitions. The name's powering the push and how the data center demand could grow in 2026.

1:29And later, an EB toll takeoff, why names like Joby and Archer are soaring this week, Novo's Prime Pill, how Amazon is bringing the weight loss pill to customers, and Google nearing a milestone, the big number, and where the traders see the stock heading from here. I'm Melissa Lee. Come to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Fireman, Steve Grasso, and Julie Beal. We start off with that big drop in mortgage rates, a 30-year falling 22 basis points to a slowest level in nearly three years. This is President Trump announces he is ordering Fannie and Freddie Mac to buy$200 billion in mortgage bonds.

2:02The drop in rates sending homebuilder stocks soaring. Toll Brothers, Lennar, Pulte and Deerhorn all rallying on the drop in mortgage rates. Let's get to Diana Ola, who's got all the details behind these moves. Diana. Well, Melissa, there were all these projections last night about what buying all that MBS would do to mortgage rates in the future, but we really didn't need to wait. Rates moved lower just on the news of it all. The average, as you said, on the 30-year fixed, dropping 22 basis points to 5.99%. It hasn't been that low since the start of February 2023. All that according to Mortgage News Daily.

2:35And it started last year just over 7%. So that's a big change. It did, however, I want to note, bounce back a little bit this afternoon, just over 6%. That lifted the residential housing sector, the home building ETF ITB up over 6 percent, of course, including names like Lenar Pulte and D.R. Horton, even home remodeling names like Sherwin-Williams, Home Depot and Lowe's. And take a look at Open, which will buy your home. It has been super volatile lately, but a big lift on this news today. Now, we're already seeing MBS pull back, as I said, a little bit from this morning, and we don't really have any idea when and how this bond buying will happen.

3:14But I also want to note something that kind of got lost in the shuffle of today's news, and that is that we finally did get some housing starts data, which we haven't seen since before the government shut down. So in October, single family starts were down nearly 8 percent year over year and building permits, which are an indicator of future construction. They were down over 9 percent, but apparently the stocks didn't care so much about that. Melissa. Diana, lower mortgage rate is fantastic, but typically home prices go higher when rates go lower. So how do you think this shakes out and impacts affordability?

3:46Yes, they do. Absolutely. I mean, just look back to the pandemic where we saw mortgage rates drop to record lows. And in the course of three years, we saw home prices jump over 50 percent and they're still up over 40 percent since they were before. So, I mean, yes, they always put a floor on prices and cause them to rise. Prices had been easing in the last six months, which was helpful to the market. This is probably going to help some of those first time buyers on the edge who might have been able to save 100 or 200 bucks on the monthly payment. But as I spoke to Ivy Zellman today, you know her noted analyst, and she was saying it's not so much that$100 on the mortgage payment.

4:20It's really qualifying for a mortgage. And she says a lot of folks now can't even qualify at 4.99 percent rather than 5.99. So you've got that problem as well. Karen has a question. Yeah, so$200 billion, and we were just trying to go through the math of, OK, what's the denominator? Is it close to$10 trillion of mortgage-backs out there? I don't know if you take away what's on the Fed balance sheet,$7.6 trillion. So it's not that giant of a buyback if we liken it to a stock. And how is it going to be done over time and over what part of the curve? How is it going to work? Well, so those details we don't have.

5:00As I just said, we don't know when they're going to start doing it. We don't know how long they're going to do it for and over what period of time. But you're right. $200 billion sounds like a lot. But by the way,$100 billion worth of MBS trades every day. That's not new money coming into the sector, but that is how it trades every single day. So it's not nearly as much as came into the market when the Fed started buying MBS at the start of the pandemic. That was many billion dollars more. They were buying$25 billion a month, and that went on for quite a while. So you're not going to see rates drop down to 3 % like we did then, but you are going to see them somewhere maybe in the high 5 % range.

5:36But again, these rates depend also on where the 10-year is going, where the rest of the economy is going. It does help when you buy MBS for sure to bring rates down, but that's not the entire equation. And just to dig into the move in the home building stocks, Diana, remind us what level home builders are buying mortgages down to, because this drop is just, you know, as much as you can close that gap, that's great for the home builders. Yeah, so that's interesting. They are already buying them down into the 5 % range, so it's not a lot of difference. It might, though, help the builders on their margins, because if they don't have to buy them into the 5 percent range, that gives them more money back.

6:11So that's another boon to the builders who had seen shrinking margins. And again, Ivy Zellman also noted that. She also told me, you know, for a lot of potential home buyers who don't know that the builders buy down mortgage rates, this could get them off the couch and out to a builder to talk to them in the first place. So that could help. All right. Diana, thank you. Diana Olick. As Diana mentioned, there's a lot we don't know. We don't know how it's going to happen, when it's going to happen, if it's going to happen. Is there a trade in your view here? I think the trade's in Home Depot. I don't think it's in the home builders.

6:42And I would be cautious here. I think these are headlines that are fantastic headlines. Affordability is what seemingly we all want for the housing market. And I do think it's going to be difficult structurally to change that. It's a combination of really an income gap, a supply-side dynamic that does not meet those folks. I get back to Home Depot, though, and this is a stock that around 350 seems to bounce, seems to have found a floor technically. But more importantly, I think the expectations in Home Depot are extremely low. They've guided for comps that are more or less flat, maybe down one, up one.

7:13Home improvement as a share of wallet. Apparently, we're at 30-year lows. So I think there's an opportunity and there's a belief that there could be another cycle of just kind of a remodeling. They're pro-business, we know. So I think there are different ways to play it. I also just want to folks at home, take a look at that XHB and look under the hood. The top 10 stocks, there's about three home builders in there. The rest are Trane, Masco, Johnson Controls, you know, Home Depot, Lowe's. So it's not necessarily buying the home builders when you buy that ETF. So I own Home Depot and Lowe's. I feel like this is a little lucky, more than fully deserved.

7:48But I think the other thing it does do if rates do move is we always talk about that embedded loan, right, That mortgage that people have, they're so cheap. Steve always talks about you don't own a home, you own a mortgage. If you narrow that gap somewhat, then maybe you start to get a little more supply, and that would help as well. I understand the Trump administration is trying to do anything to help affordability. Well, you have to look at it this way. Most people have a mortgage rate that's below, 50 % of the homeowners right now have a mortgage rate below 4%. So the only people that are going to be motivated to do this are 28 percent, basically, above 5 percent.

8:28So I think that there's a lot of percentages, a lot of wonky data here. But I don't think it's going to be a mad rush for homes if the rates come down like it was with the pandemic. You're probably only going to have a third of the people trying to buy a different house or a different mortgage. Still, even a little movement here for the sector, Julie, could mean a lot, because for a long time it was viewed that this was, you know, there was a lock here. We didn't know where the 10-year yield was going to go. We didn't know how that was going to impact mortgage rates. And here we have, you know, this impetus by the administration to directly hit on how you can massage mortgage rates to the best that they can here.

9:06And so you know that there is, I don't want to say a put, but, you know, there's a real force in this administration. They want to do this. Yeah, I mean, I think clearly it makes sense to be able to be motivated towards helping affordability. And I think structurally, the biggest issue is we just don't have the depth of mortgage buyers out there. And that makes it really difficult to really lower the rates in any kind of meaningful way. We're getting closer to the normal gap between what you see on treasuries and what you see on mortgages, but it's still pretty high. And that's just a function that the market is really structurally different than it was before the GFC.

9:40And, you know, I think this is a good first step, right? But I agree, if we think about this in buyback terms, it's pretty small relative to the overall pool of the market. What the problem is, is really just structurally, we just need way, way, way, way, way more homes, way more than we have. And I think any action towards that, towards improving the ability for people to actually build homes is going to be much more meaningful than doing a little buyback right here. There's a really interesting interview this morning on Money Movers with the co-president of Pretium. Basically, it's one of the largest firms that owns homes in order to rent them.

10:17And his point was that most of his renters, they would not qualify for a mortgage. So there's sort of a we want to make housing more affordable, Tim. But at the same time, people may not either have the ability to or want to buy a home here and that there's a real market for renters. There's a huge market for renters, and we can see that in single-family home and where rental rates are not coming down, they're going higher. And the question is, is that a function really of affordability? And I think it's a bit of both. I also think that the headlines here, leaving aside what would obviously be headlines that are supposed to be politically expedient.

10:52But the dynamic here is the first-time homebuyer is seemingly a younger homebuyer, someone that is really the one I think we're talking about on some level. And that's the case where I just think both demographically and socially and culturally, I'm not sure it's as much of the American dream as it used to be. I'm not sure because that's not me. But I do think in talking to a lot of young people, I don't think it's just about a lack of affordability. I think it's about a freedom. I think it's about an efficiency. And I'm not sure you're going to change that. But the lack of affordability, wouldn't that help keep home prices lower because the affordability is not there just yet?

11:28So you don't have the wages are not improving to the same extent that home prices have accelerated in the last couple of years. So you're not going to get that feeding frenzy on buying homes. So you could actually have a drop in mortgage rates now and you're not going to see the appreciation in home prices. Really? Because everything you just guys just said. Right. It's a renters market. You could see rents. You could see renters pile in. But to be buying homes at this level, I think the affordability is still a question. It's the people may or may not. The people that have credit, if if if interest rates drop, housing prices are going higher.

12:08Yes. And what we're actually seeing is housing prices are starting to drop because the velocity of that market has dropped so much because of higher rates. I mean, New York City is an example of a market I know pretty well. And so it's a function of a lot of different things in New York City. But housing prices have really come down in the last six months, and it's not a function necessarily of what's going on politically here. It's a function of, at this point, rates being this high for this long, inventory has sat around. And I think this is happening every year. How much lower would rates have to go?

12:39My point is this. Yes, the adverse correlation exists. Well, my point is we're not going to get mortgage rates down to the 2.5 % or 3%. I don't think at some point people have to move. I mean, at some point, people will have to move. So it just has to come down enough for them to move. 28 % becomes unlocked around 5%. 28 % of homebuyers or existing homeowners becomes unlocked around 5%, 5%, 5.5%. Or in three or four more years when these 10-year IOs run out. I mean, I think from the old days. But even if it doesn't come all the way down and you still have a below market rate on your mortgage, it's not like the spread narrow.

13:17I'm saying, all right, I've got to give up my mortgage. I don't want to. But it's time to go. I have a giant house and it's only me. There's only so long you're going to live like that. Anyway, for more on the administration's affordability push in the markets, let's bring in Mike Schumacher, head of macro strategy at Wells Fargo Securities. Mike, great to see you here on set. This whole theme of affordability, it's sort of a through line right now in terms of the actions from the Trump administration in recent days. Do you think that impacts, does that impact your view of the markets about, you know, the robustness of consumer spending, of corporations confidence, anything like that?

13:51It helps a little bit on the margin, but it's not a massive impact as far as broad macro markets. But I do think it's a good point when you think about the mortgage market, the housing market, it's segmented. And it's all well and good to talk about people having mortgage rates at sub three. But think about people who took out those loans. They were probably, now they're probably 40 to 50. So think about the new buyers, new borrowers who are 30, 35. It helps them. So it helps them a bit, helps politically. Does it really drive treasury yields? Not too much. But still, I think on the margin, it helps a little bit.

14:21But on top of this, there's also stimulus. There could be stimulus checks coming to Americans, but certainly there's going to be tax refunds. And that should all help. Does that inform your view of the markets? It does. And that's actually, that was baked into the one big, beautiful bill. So that's actually coming online now with tax refunds or really lower tax payments. That's going to happen pretty clearly. What is interesting, though, in addition to that, so that's pretty well understood, I think. But you also have to factor in it's an election year now. It seems like it always is in the U.S., but now it's getting real.

14:51Is Congress really going to spend a lot more money? No. So you get this one big burst of stimulus coming up in the next three to four months. Then it's probably kind of a desert for the next year or so. So I think unless there's a massive downturn, Congress will not step in to help out. Mike, so the dynamic with the Fed, you think they're kind of on hold here and or articulate what you think the view is. And the Fed relative to other central banks around the world and what that means also just kind of dollar dynamics, rate dynamics here. Because I get the sense that the stock market is pretty jazzed up by the prospect of somewhat lower rates, somewhat weaker dollar.

15:27And that's a great environment for equities. Yeah, really, that's basically our core view right now, Tim, is the Fed would like to cut a couple more times, but it doesn't have to be now. Is it going to be this month? I'd be shocked. The market's pricing less than a 5 % chance of a rate cut now. It was probably 10 % to 15 % a couple days ago, so the market said, no, no, not going to happen now. Could they go in March? Could they go a bit later in the year? Yes, I think that's right. But they need to see some data that's actually clean. The data this morning was anything but. Total mess. CPI is going to be messy as well.

15:57What do you make out of that? What do you mean by messy? Well, you had jobs, actually, that were down relative to expectations. So not good. Unemployment relatively good. So whatever you wanted to think about that, you could take away from it. It didn't change anybody's view about anything. And CPI is probably the same deal. So I would say the Fed has to wait another month or two until it gets a pretty clean slate of data, and it can say, yeah, I can actually look at this. I can pop it into my spreadsheet. I can do a nice chart here on CNBC, and I can see how the economy is actually evolving. But until we get another month or two out, there's really not much the Fed can do.

16:28So I think the Fed would like to cut, but not just yet. So whether it's two more times, three more times, not really sure, I think that's still pretty likely. Not a given, but that's our base case. So if the Fed's sort of on hold, let's say, for the short term, is your view of the market positive because you think earnings will go up, multiples will go up, both? How do you think you get there? Yeah, as far as the equity market goes, I'll defer to my colleague Osung. He's bullish basically for an earnings call. That's really his main rationale. But if you think about the overall environments, the story really, Tim just painted, it sounds okay for risk.

17:00We were on a call yesterday talking about volatility, which I think is a pretty good indicator. And if you think about market after market, volatilities are really low. So just think about implied volatility as a price of insurance. The VIX is super low. Foreign exchange volatility is really low, down to less than 10th percentile in most currencies. Interest rate volatility was kind of a laggard. It's crashed down over the last few months. What that tells me is investors are saying we're pretty comfortable. Are they overconfident? Maybe, but probably not quite yet. But still, I think it's telling us that people are pretty sanguine about taking risk right now.

17:35They're taking more of it as far as I can tell, Karen. Michael, great to see you. Thank you. Michael Schumacher. Well, as far as it's interesting, this sort of dovetails with what Mandy Schu said from CBO yesterday, and that is overall volatility is going down on the index level, but individual stock volatility is going higher. Yeah, I mean, there's going to be a pick 'em market right now. And to Karen's point, if you wind up having earnings beat and we keep going forward with this with the big, beautiful bill, we have immediate expense. We have what what ran GDP was CapEx spend. So if you have immediate expense in CapEx spend is probably going to hang in there for the foreseeable future.

18:10If that hangs in there, then the economy hangs in there. And to your point, stimulus checks that are out there, people are going to be spending that money. The economy probably holds in unless we have a real, you know, debacle when it comes to earnings in the first two weeks. All right. Meantime, the market is unfortunately in dollar watch. Alphabet's market cap getting closer to that milestone. The tech giant hitting another all time high today. Karen, this must make you smile. How's it feel? It's good. I'm happy about that. No, I mean, the only thing I don't like, and I said about banks, I'll say about this, you know, we're going to have earnings in a few weeks.

18:46It's been an enormous run. I do think they're hitting on every cylinder, and I think we'll start to see a little bit more of that. But how much of that is priced in already? Some. It's not crazy expensive. I am sort of hoping that this year they break out Waymo in a way. So YouTube is its own line item. Waymo is not. I'd like to see that if we had some more clarity there. I think that would be good for the stock. I think if you look at what's going on for the market overall. So, you know, the mag seven performance called even just the triple Q's relative to other parts, whether you're following small caps, whether you're following equal weighted.

19:23So RSP versus I the Q's are up one percent on the year. Small caps are up for four and a half five. You have a dynamic here where I really do think this barbell is working. And I, you know, I'm sure I said this in the start of 25. I might have even have said it in the start of 24. The oxygen that was choked out by the top seven or eight stocks in the world, I really think you're now seeing the kind of broadening. And look to industrials, look to health care, look to different parts. We've had this move in banks. Retail is still trading kind of relative to lows all the way back to four years ago.

19:56I think the market is set up for a lot of moves in the stuff that wasn't. Google's numbers are going to be great. And I think Karen's right. I mean, the different pieces of that holding company that we call Google, it's starting to get rewarded, too. But the broader market is the story. I mean, to Tim's MAG-7 point, Julie, Google is the one. I mean, if you take a look at Microsoft's chart, Meta's chart, not good. And then you have Google being the real standout here. So it seems like within the MAG-7, there was somewhat of a rotation. Yeah, absolutely. You can see Amazon looks absolutely left behind by comparison.

20:29And if you kind of rewind the tape at the beginning of the year, we were all kind of looking at Google as dead because how are they going to get through this existential crisis of generative AI? And I think what they've demonstrated is they can use AI to grow their business. And they've demonstrated incredible competence at building their own chips, which means they're in charge of their own destiny and an ability to create models that are as good or better than what is the frontier. So I think that they've just demonstrated execution at a level that's pretty unique. And I think that's normal that you would expect that these things would start to decouple from each other because they do have different drivers.

21:05They are different businesses. They're benefiting, but they benefit in different ways, right? Meta uses AI in a way to make their own business better. Google is selling the AI. So it's just different for all of them. Coming up, oil CEOs head to the White House as tensions from Venezuela to Iran shake up the world's energy markets, what the Trump administration has planned for the industry next. Plus, mining for a merger, Rio Tinto and Glencore rekindling talks after a failed deal in 2024. Don't go anywhere. Fast Money's back in two. This is Fast Money with Melissa Lee, right here on CNBC.

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23:17Welcome back to Fast Money. President Trump saying oil companies will spend at least$100 billion in Venezuela with the U.S. protection as execs from some of the biggest companies meet at the White House today. Eamon Javers has got the details. Eamon. Hey there, Melissa. Kind of a lengthy session in the East Room today between President Trump and these oil CEOs as the president sort of laid out his vision for Venezuela and what he hopes to get from those CEOs. But, you know, maybe a little bit of ambivalence in the room among the CEOs. I want to play you a soundbite here from Darren Woods. He's the CEO of ExxonMobil.