Apple Nears $4T Market Cap… And Netflix’s NFL Double Feature Follow Through 12/26/24

0:01Live 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. Closing in, shares of Apple hitting a fresh all-time high and nearing the$4 trillion mark. How big is this milestone for the market? We will debate that. Plus, Gridiron Gameplan, what is next for Netflix? Fresh off its Christmas NFL doubleheader will break down the role live sports will have as the streamer looks to build its ad-supported service. And later, did Roaring Kitty just signal Game On for GameStop? The chart master's set to dive in on Dollar Tree and some happy returns for the retailers this holiday season.

0:34I'm Melissa Lee, coming to you live from Studio B at the NASDAQ on the desk tonight. Courtney Garcia, Bado and Eisen, Mike Coe, and Julie Beal. We start off with Apple's steady march toward a historic milestone. Shares of the iPhone maker adding another 0.3 % today, setting a new record, and closing with a market cap of more than$3.9 trillion. Shares need to rise another$6 or so to hit the never-before-seen$4 trillion mark. The stock has climbed more than 34 percent this year, adding over$900 billion to its market cap already, bigger than one whole Eli Lilly and nearly as big as Berkshire Hathaway.

1:11But even with those gains, some on Wall Street are still bullish on the stock. Wedbush's Dan Ives raising his price target to a new street high of$325 a share. That's another 25 percent upside from today's close. Here's what he had to say about why he is so bullish. Checks last 48 hours are showing, I think, strength from a holiday season perspective. It's our view. This is going to be a record year. 240 million iPhones, I believe, they ultimately sell. And with Wild, this is just the beginning of an AI-driven super cycle that's multi-year. And that's why, look, haters continue to hate on Apple, but I believe$4 trillion is just a start.

1:50So can this trade keep rocking higher in the new year? Courtney, are you going to be a hater or are you going to be a lover of the story in 25? You know, I kind of approach this with a little bit of caution. So Dan Ives increased his price target here. And he noted some things like this being the golden era of growth with artificial intelligence. And he pointed out some of the features they have, like AI emojis and chat GPT on Siri. And I just don't know if I can really buy into this yet, that that is going to be the super cycle upgrade of the iPhone that everybody is expecting. because this went from people assuming this cycle that was going to happen with this new iPhone to now, oh, this is going to be a multi-year problem.

2:26So, you know, I just don't know if this is a catalyst to get into the stock right now, especially after it's done so well. So it just had five weeks in a row where it's up 2 % or more. And after that happens, that tends to be a bad thing in the short term for Apple. And after such optimism, now that it's getting close to that$4 trillion, I think it's just having this really high bar. So I think long term, it's absolutely going to benefit from artificial intelligence. I think short term, a lot of that's probably priced in. And so I would stay on the sidelines here myself. Even if AI is a longer term story to play out, Bono, when you have the normal super cycle of people with really old phones needing to upgrade their phones, driving the immediate, you know, the near term at this point.

3:02So what do you think of the prospects and where it's valued in relationship to that? So that's the real question. I think it's fully valued. Or just the plain old upgrade cycle. Certainly. Right. And so and I think a kind of identifying that or calling that to issue doesn't necessarily make you a hater. I am behind the fact that you essentially have a two trillion dollar valuation based off of a services business that is recurring revenue, which is what you want to see. I'm with the fact that this company pretty much generates one time whatever its debt load per year. There are a lot of fundamental reasons to like this, to like it.

3:34But we're talking about a relatively short or medium trade. Do I want to put the incremental dollar towards Apple? To Courtney's point, I am a believer of the AI story in general, but I think that there are so many other alternatives in terms of ways to leverage AI that all these other companies have made available. and AI emojis or integrating ChatGPT, you can already get access to ChatGPT, Perplexity, and Google, and all these other AI features that I just don't know if having it at the proverbial fingertips is what's going to induce me to spend the additional money on another iPhone. Now, the install base having to upgrade, I understand, but I don't think that's an AI-specific phenomenon.

4:17That is already built into, and the valuation reflects that that is just the way of the fundamental story behind Apple. Julie, where are you on Apple? Well, you know, as the official slow moving sloth of the fast money desk, for me, I've owned this name for 12 years. And for 12 years, I have had to tell myself not to sell this thing, right? There's been so many times where the valuation gets well out ahead of its, you know, fundamentals. And you see that in the periods over the long term. The problem with this is always the same, which is the idea that you're going to be able to get out and time it just right so that when you have one of these downdrafts, you're going to get back in.

4:57I think for long term, guys, it makes sense. The thing about AI with Apple that I really like when it comes to AI is I think of all the brands and technology, this one has the most trust. And I think when AI starts to get very useful is when we will actually need to have the most level of trust to feel confident that it's not going to mess with us, have incorrect data or be problematic for our privacy. And I think this is the best positioned consumer company to do that. The privacy issue is huge for consumers, as Julie points out, Mike. And then there's also just the issue of Apple. It may be late to the game, so to speak, maybe relative to some others and some other engines that exist out there.

5:37But usually it still becomes one of the best products out there on the market. And maybe we're discounting that aspect of it so far in the Apple story. They've always managed to, even if they seem like they're a step behind a competitor, to really nail in the end. Yeah, I mean, they do produce the best consumer electronics product on the market. I think everybody recognizes that. I think the difficulty, of course, is whether or not you want to rush out and buy the shares here, trading at 35 times forward earnings when growing at probably adjusted EPS at about 10 percent, when you could pick up NVIDIA at the exact same forward multiple, growing adjusted EPS at 50 percent.

6:15Or you could pick up Alphabet at 22 times forward and growing at 15%. Or you could pick up Meta at a discount to this price, also growing at a much faster pace. In fact, of the mega cap companies, this is the one that's actually growing the slowest on the adjusted EPS side. And the top line probably is going to grow along with the economy, maybe a little bit better than that. So if you're deploying new capital, look, I mean, I'm not going to say to Julie the good idea here to start pairing your position, because I think they're going to continue to grow faster than the economy. They're going to continue to grow faster than S &P earnings.

6:49But they're not going to grow faster than those other mega cap companies, which are trading cheaper. And that's where you want to put your money, I think. So you would rather, Mike, NVIDIA over Apple, even though the fears of a pull forward in terms of chips may exist out there? I mean, I'm just trying to understand. Valuation is one thing and projected growth is one thing. But if you believe that there's any sort of hiccup in the chip story of it, then maybe NVIDIA is not the choice over Apple. Well, I mean, the forecast for NVIDIA right now is already for much slower growth year on year when we take a look at full year 2025.

7:25So, you know, we're looking at probably 35 times the number on a 50 percent growth rate, which is less than half what they achieved over the trailing 12-month period that, you know, we just completed. So it's not growing as fast as it did. And I don't expect it to because things don't grow to the moon. But it is also fair to say that 35 times forward on it, 10 percent annual EPS growth is just pricey for Apple. It's pricey relative to Apple's own history and is pricey for any stock. And there are other companies that are growing faster that cost less. Yeah. And I think one thing we want to think about with Apple here, too, and I think the general consensus here is we like Apple.

7:59It's just not necessarily where you want to add your future money to right now. I think those are two separate conversations. But one other additional thing you want to consider is the fact that they have a lot of their supply chains in China and Taiwan, which in the current environment we're at, that does oppose additional risk. And on top of that, when you really look at them, they're antitrust regulations, right? I mean, they're going to be another one who the government has continued to look at to see, is this something they're going to come after them and is that going to affect their bottom line?

8:26So there's a lot of issues here where I think it's not a bad stock to own, but a lot of people are overexposed here because it is embedded in most ETFs that we see people own, most mutual funds, people own outright. Just something you want to say, maybe I take my extra dollars and add this somewhere else right now. Maybe that's what puts the floor in this stock. And the MAG-7 in general, Bono, and the idea that so much money is passive money going into ETFs. All these ETFs own the same stocks. S &P 500 ETF obviously mirrors the weight of the MAG-7 out there. I mean, does this sort of provide a support for this group of stocks going to 25, knowing that just incremental dollars passively invest in the market go to the MAG-7?

9:07I think it brings up two things. I think, yes, to your point, I think capital flows really dictate performance. Whether we want to—I'm sure not everybody agrees with that. You know, we have the active versus the passive argument all the time, And I think there are periods where, you know, you can find data that will support one versus the over. Over the longer term, I think there are a lot of people that would argue that passive gives you better performance on a net basis. And if that is the case and that's the underlying fundamentals that are going into your investing decisions, then really what you have to do is look at capital flows.

9:39And to your point, what is it, 20 or 25 percent of the weighting is a top seven or eight names within the S &P? That isn't going to change. That doesn't mean that there will not be muted. That does not mean that volatility necessarily gets muted as flows run in and out. But if you are allocating to equities, by definition, you are allocating to those names. And I do think it does provide a floor. I mean, David Einhorn sort of made that point, Mike, in saying the markets are broken in that way. I mean, the plight of the value investors, all this passive money not going to value strategies and going to these same groups of stocks.

10:13Yeah, I do think that that is a little bit of a problem. I mean, first of all, there is plenty of data that supports investors doing that. I mean, the SPIVA reports, which S &P puts out, I think 90 percent of active managers, once you start factoring in things like taxes, you start factoring in fees, are going to underperform something like SPY, for example, as an ETF, one of a few that actually track the S &P 500 or other passive strategies that you can get from other sources. So it makes sense when you look at it that way. It sort of takes a lot of stress off of investors, too. But I also think it presents a risk because, you know, you can get too much of a good thing.

10:54And there's a lot of reasons to follow a passive investment and systematic investment strategy. But it does have this effect where you are getting more and more money piling into fewer and fewer stocks. Many of them have done very well. But if something in that group turns, that could be very painful, I think. Yeah. And Julie, I guess you've owned Apple, you said, for 12 years at this point. So you are exposed to the Max 7. But your focus is small caps. And I don't think that that group has benefited at all from this sort of huge influx of retail money going into the largest stocks out there through the S &P 500 and various iterations of it.

11:31Yeah, I think that's right. I keep talking to financial advisors, and most of them do not have any exposure to small caps. And when they get these large rallies in small caps that they miss out on, they tend to do that by investing passively. And that's the place where I don't think that makes a lot of sense for passive inflows because 40, 45 percent of the index is non-profitable. So I think that's the one place where I would say active management can really make a lot of sense and have an impactful point on returns. It's a place where investment managers tend to do better than in large cap because I think there's less price discovery and those markets are generally a little less efficient.

12:07But I think Mike's point is really the one. You do get too much of a good thing if you're investing for diversification into some of these passive instruments, and you end up actually having a ton of exposure that's pretty concentrated unwittingly. Yep. All right. Meantime, the dollar also having a memorable year. The greenback trading near its highest level since November 2022, and it's up more than 7 percent just this quarter. Our next guest warns the dollar's strength may be on borrow time. David Wu held top foreign exchange roles at Bank of America and Barclays. He's now CEO of David Wu Unbound, a global forum devoted to promoting fact-based debates.

12:43David, great to have you with us. What's going to cause a dollar to come back down to earth at this point? You know what? I'm going to sound a bit cliche. I'm going to say world peace, you know, because let's remember, you know, U.S. foreign policy under Biden, has been pushing the world to the edge of World War III, parting U.S. allies and adversaries alike. I think this is one of the reasons why the dollar has been so strong in the last three years. U.S. stock market has outperformed. U.S. economy has outperformed because the U.S. is, relatively speaking, less exposed to slowing global trade and a dollar benefit from a safe haven status.

13:20So to the extent that Trump is coming in wanting to improve ties with China, that he wants to basically end the war in Ukraine. You know what? This is very good news for the rest of the world. And I think from that point of view, I'm not saying this is bad news for the dollar. I just think it's better for basically currencies of the other countries. Sure, those particular countries. And I like the theme of world peace, especially at this time of year, David. Don't get me wrong. But there are a lot of other factors that are sort of particular factors to various countries. Canada's political turmoil.

13:51France's political turmoil. The policy in Japan, we're not sure what the path of the yen is going to be at this point. We might see further weakening. And then also, of course, the weakness in China economically. I mean, these are things that world peace will not solve, I don't think, David. I think you're right. I mean, but that's why you have to look at these countries on a case-by-case basis. For example, I'm actually the only dollar position I've got on, short dollar position I've got on, is actually vis-a-vis the Mexican peso. I happen to like the Mexican peso, probably because I think Trump will have to be super nice to the Mexicans if he wants to deliver on his promise in terms of, you know, controlling illegal immigration.

14:31I think Mexico's already going out of its way to meet Trump halfway. You know, as you probably know, they just cracked down one ton of fentanyl actually two weeks ago. It's a record seizure. Canada is actually very interesting. I actually think Trudeau, who's facing re-election, OK, you know, over the next 12 months, actually has no choice but to play ball with Trump. I think this is the reason why, you know, Freeman, his, you know, deputy prime minister resigned last week, because Trudeau actually decided to make peace. I think France is a lost cause. I think the bigger story, I think, is going to be what happens in Germany, whether the federal election to be held in February can produce actually a governor majority.

15:16I think it's still too close to call right now. But we shall see. Finally, with China, I think a lot is riding on whether Xi Jinping is going to accept Trump's invitation to basically attend his inauguration. I think if he doesn't come, I think the RMB will be in trouble because the implication with that, you know, there's no deal to be made. Trump is going to basically go hard on tariff. But I think if Xi Jinping were to agree to come, which will suggest a deal is in the making, I think that should be viewed, generally speaking, as very bullish for emerging market currencies. OK, so right now, sort of a question mark over the euro, question mark over China, depending on how Xi Jinping proceeds with the inauguration.

15:52Canadian dollar should strengthen and also the Mexican peso. So where else are the trades? Because it seems like investors are assuming that there is going to be at least a trade war within North America, that these border wars are going to flare up. I mean, there's just the article in the Journal this morning about, you know, the price of the affordable vehicle going up by about$3 ,000 because they're made in Mexico. I think we lost David's feed. We'll try and get him back. This is a very interesting topic, though, in terms of the dollar strength. I mean, we watch this very carefully, Mike, obviously because of the impact of a strong dollar on earnings.

16:29We've already heard some companies refer to the strong dollar as a headwind. Yeah, I mean, obviously, I wonder a lot about what's going to be going on with China. I mean, I think there has been some conversation sort of to David's point about the potential, you know, increase in trade, even though the NAFTA countries, so Canada and Mexico in particular, everybody was talking about the potential for, you know, tariffs and things going on there. The fact is that there is some migration into Mexico for trade, so much so that even China was sort of disguising some of their trade through Mexico to try to take advantage of that, that, you know, I think that that relationship is going to remain strong.

17:05Look, strategically for us, it's far better for us to improve our trading relationships with our immediate neighbors. And I think that one way or the other, we're going to find a way to do that. All right, David, I'm going to bring you back. So are investors offsides in terms of their assumption that there will be tariffs, that there will be some sort of a trade war amongst the NAFTA countries? I think definitely. I mean, I don't think NAFTA is less clear cut. I think with China right now, I think one of the reasons, for example, the dollar is so strong today is because everybody is actually banking on a tariff war, OK, on China already starting the day after the inauguration.

17:47This is why people are thinking, well, inauguration is only three weeks away. Let's basically build a long dollar and short treasury position. Now, I personally think, though, I actually personally think I would give it a 66 percent chance, a two third chance that actually Xi Jinping will come to the inauguration. I think Trump is going out of his way, to sound very sincere. I don't tell you, just last week, Trump, in his first press conference after the election, called Xi Jinping an amazing guy. And he said that China and the U.S. should work together and he'll be able to solve all the problems in the world.

18:19Xi Jinping has not heard those words from a U.S. president for four years. This is an opportunity of a lifetime. I think, you know, Xi Jinping is not a natural risk taker. But I think this is almost like if he's ever going to take risks is now. I actually think that this is an amazing opportunity for a reset. I think from that point of view, I'm willing to bet the next two, three weeks, the dollar is going to go up because people are going to be basically putting on the Trump terror trades. But I will be looking to basically sell it as we get closer to the inauguration. All right. Always interesting conversation, David.

18:56Thank you. David Wu, David Wu Unbound. What do you think of that, Julie Beal, in terms of, you know, seeing that dollar weakened from the levels it's at now, basically two-year highs, because a lot of people are just assuming that things are going to be so bad around the world still, tariff wars, Ukraine, et cetera. Yeah, it's not, you know, people who are making that bet are just benefiting from the previous data that has really shown that. If you had a major domestic focus in your portfolio, you've outperformed. It's been the better place to be since the pandemic. And I think that has surprised a lot of people, the strength and the resilience that is happening here, despite our government in absolute chaos.

19:39So I think going forward, it's still the case that probably economically, this is the better positioned and more dynamic economy that can withstand any kind of changes globally. However, it is the most expensive one too. And so I think there's opportunities for investors to be able to diversify into less expensive markets that are growing probably just as well and maybe a little bit more uncovered to find. All right. And we do have some sad news to report. Richard Parsons, a titan of the business community, has died at the age of 76 years old. He held leadership positions at Citigroup, Time Warner, CBS and a host of other companies.

20:18His passing was confirmed by Lazard, where he was a longtime board member. He spent much of his career stepping in during corporate emergencies, including at Citigroup during the financial crisis, cleaning up the AOL Time Warner merger, and most recently at CBS after the departure of Les Moonves. Mr. Parsons was also a major advocate for the arts, serving as chairman of the Apollo Theater, the Jazz Foundation of America, and on the board of the National Museum of African American History and Culture.

20:50Welcome back to Fast Money. The holiday shopping season may finally be over, but was it nice or naughty for retailers? MasterCard saying in its latest Spending Pulse survey that holiday spending was up 3.8 % this year, but that shoppers were searching for value. Online shopping, holiday promotions and experiences like restaurants driving the jump in sales. Retail names across the space getting a nice pop post-holiday. Macy's, Foot Locker, Five Below, Dick's and Ulta all seeing gains. And take a look at Chairs of Target, the beaten down big box store up 3 % today, posting its highest close since its Q3 earnings report last month.

21:23So what is a retail trade looking like for 2025? And looking through that spending pulse survey, what was interesting was this uptick in spending on stuff, so apparel, electronics. I mean, the stuff that we used to put under the tree is now back under the tree or was back under the tree, Bonoan. Yes, listen, I think given that there has been concern around the consumer, this retail sector does have the propensity to outperform. just because it's a bit of a counter trade. I would say in addition to that MasterCard data, there was also data showing that the additional credit card debt load was about$1 ,200 of unexpected additional debt load.

22:04And you add that on to the$1.1 trillion and$1.2 trillion that we already have, I don't think that we can persist to have increasing debt, higher interest rate, higher debt service costs, and still have healthy consumption. So I think one of those levers has to pull. And ultimately, I think that in the short term, perhaps retail has a has a chance to continue to run. But that is also the very first place I would be looking at in terms of cracks, possible cracks and the proverbial canary in the coal mine. I get that as a commentary on the sector. But that additional twelve hundred dollars in debt, depending on who has it, may not really make a difference in terms of the household income of that particular person who has that extra debt.

22:46Courtney, and that's a story that's played out all year in terms of the bifurcated retail sector, the haves and the have nots. Exactly. Yeah. And I think that's what you're saying is the higher income consumer has been much more resilient, obviously, which makes more sense. But when you're looking at the overall debt compared to income, it's still really not a concerning levels. I mean, especially when you look at pre-COVID, it's not higher than it was back then. So I think that's a thing is Kansas consumers, generally speaking, sustain the debt to your point. And currently they can. And especially you're seeing a tight labor market.

23:17And we just got labor data that came out again, which is showing you do have a cooling but very consistent labor. And that is going to continue to keep the consumer strong. So I would not write off the consumer here. I think people keep trying to find reasons to do it. But we do have a resilient economy. And especially when we look at things happening with immigration. But also when you look at the amount of baby boomers who are retiring every single week and every single year, it's taking more and more people out of the labor market, which I think we're probably going to continue to have a tight labor market, which continues to keep your younger consumers in a better standpoint.

23:47All right. So, Mike Coe, I want some retail stock picks if you have any, if you can stomach retail. What was under the Coe tree? Do you think that's an indicator of any sorts? I do. You know, I have that Holly index that I'm always watching. And, you know, I have two teenage sons also, so I get a pretty good sense of where it is on athletic apparel in particular. And the winner this year was Owen Holdings, actually. There was more than one item from Owen Holdings for everybody this year. And also, I think Lululemon, you know, this was obviously has not had a good year. But, you know, I think this is actually a bargain relative to names like Nike.