Bitcoin & The Bro Trade… Plus More Room To Win In The Post-Election Rally? 11/11/24

0:02Live from the Nasdaq market side on the night that the S &P close above 6 ,000 for the first time. This is Fast Money. Here's what's on tap tonight. The Trump trade in rally mode from Bitcoin to meme stocks. Traders bidding up the names that could benefit in the next administration. But can the gains last? And health care headache shares of PharmaGiant AbbVie sinking after one of its key drugs disappoints in clinical trials. What it means for the company and for M &A in the space. Plus, chips get checked as Taiwan Semi drops. Delta helps the other airline stocks take off. And Home Depot sets a report earnings tomorrow.

0:32What to expect from the numbers and how shares could react. I'm Melissa Lee coming to you live from the studio B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Piderman, Dan Nathan, and Guy Dami. And we start off with the latest boost to crypto and its proxy trades. Bitcoin hitting an all-time high of more than 88 ,000 today as euphoria around what Trump's win could mean for the industry shows no signs of fading. The token has now doubled in value since the start of the year and is up nearly 30 % just since Election Day. The crypto contagion spreading to other coins as well. Ether, Solana, Doge all seeing outsized gains today and over the last week.

1:07Crypto proxies, Mara Holdings, MicroStrategy each soaring over 20 percent. Coinbase, Riot, Robinhood also catching a bid with investors. Even the meme stocks, they are seeing a comeback. GameStop and Chewy each gaining over 9 percent while AMC finishing the day up five. So what is all this action telling you about the markets at this point, Guy? What do you think? Well, enthusiasm clearly. And I think in some regard, and we'll just drill down on Bitcoin for a second, because in terms of Bitcoin, not that I know anything about it, but my view all along has been it's a play against fiat currencies.

1:38More importantly, it's a play against the Federal Reserve. And if you go back and look, I don't think it's coincidental that Bitcoin topped out way back in the fall of 2021 at 60 ,000, just when the Fed said we're going to start raising interest rates. Bitcoin took a nosedive and probably made sense. Since then, as the Fed has indicated, they were going to start to lower rates, that's when you saw it get on its horse. It sort of wavered as the number of rate cuts went from six down to four. But now that obviously there's a Trump administration coming in, people are excited. I'll say this quickly.

2:08Jerome Powell, I think, absolutely wants to prove his autonomy. You have CPI and PPI this week. Jerome Powell speaks on Thursday. I think there's a chance that the Fed sort of disappoints on the rate cut cycle. And with that said, you could put a little disappointment in the Bitcoin trade. I agree with you on the rate rate cut cycle. And in another environment, I think it would put a little, you know, that fiscal, that monetary discipline would be sort of tempering for Bitcoin. However, I do think that given the very dramatic change in what would be a regulatory environment for crypto and other currencies, that this sort of unallocated resources that are sitting on the sidelines that want to, need to get into Bitcoin.

2:50Now, it takes a while to get that much money in. And, I mean, clearly it started in a huge way. But if you think about when the ETFs and how much money came in, and it took, I don't know, a month at least. And then you look at even Dogecoin, which we know is nothing. What is Dogecoin? It's nothing. The meme coin. Yes. I'm sorry. I just want to. See, but you know it's coin. Yeah. All right. You know, that tripled maybe in the last week or so. So, I mean, the euphoria is there for sure. But I think that Bitcoin really is the one that's sort of a real asset allocation from institutional investors.

3:29And if you look at what's happened with gold versus Bitcoin in the last week, I think that tells you that's really happening. Yeah, I guess the gold thing probably has more to do with the dollar. If you look at the move in the dollar over the last few weeks, I mean, it's gone from$101.05 in the Dixie or above that. I mean, listen, you said something interesting, Karen. Like you said, for those who need. Thank you. Yeah, really. She knows that most everything that comes out. No one needs to get into Bitcoin. Right. So if you think about it in that way, you know, it's the one point seven, you know, trillion.

3:57I don't agree. OK, I think that there's a sort of portfolio out there that includes some allocation to Bitcoin that will become sort of the I don't know. OK, but I guess my point is, if it's only a store of value, you know, you have the gold and that's outperformed pretty dramatically. most every other asset class. I'm not making a case against it. I'm thinking back to the last time it was up a lot. Look at Ether. It's still down about 30 percent from its all-time highs. It really, the promise of that, of smart contracts and building decentralized apps on it, really never played out. And that's one of the reasons why it was kind of stuck in the mud.

4:30So if you're just buying this for a store of value, I get that. But I'm not sure what else it serves at this moment. If I could just, I think Solana is a little bit replacing Ether somewhat. So and I don't I can't remember the magnitude of the ether run and fall before that. But I don't know. I do think there's still more to go in this trade. Our digital girl. Well, I'll tell you what, you've got a combination of things. There's no question that Bitcoin is is on some level playing higher on a different kind of uncertainty. So gold obviously was playing higher and gold has pulled back and I have to call it what it is.

5:04I mean, I actually thought gold was going to do at least better at some point after elections. But I even thought I didn't think it was going to do this. I'm not too worried about the gold trade. I'm buying weakness here because, again, some of that Bitcoin buying weakness. I'm talking about a world where dollars at two year highs, almost two years highs. It could get to two year highs soon. The dynamic around tariffs is you could see a lot of other countries looking to devalue their currencies to make their goods more competitive here. So they net the whole thing out. It's going to be poor economics or at least inflation over here.

5:32But I mean, the Bitcoin story is one that again, someone somebody sent me a note this morning and they reminded me of the Ben Graham quote, which is that in the short term, the market's a voting machine and in the long term, it's a weighing machine. Well, the polls are still very much open. We started with that concept on the Trump trade here tonight. And I think that's part of what Bitcoin is doing. So the meme mania is back. And if you look at high multiple tech companies, some that actually do make money and some that do not are rallying aggressively. And I think you've got a dynamic here where people can still be voting on what's going to happen.

6:05But the vote is on less regulation, not just for Bitcoin, but for everything. I mean, look at banks. Look at how they continue to rally, even though banks rallied well before elections. So and then the Trump bets that are not just Tesla. I mean, look at Blackstone. Look at Stephen Schwartzman. Look at some of those trades where you actually feel like the CEOs, the principals themselves are getting rewarded for at least having some kind of position with this government. And I think it continues because right now it's still voting. These meme stocks, they're not known for their fundamentals. No.

6:35No. So in an environment where you think that there is less regulation, the economy is going to actually do better. That's the environment in which Meemsock could potentially move higher. I mean, I'm just trying to get at sort of this notion that Tim hit on. And that is what this means, how this is reflective of the appetite risk out there under this new administration. There is a belief here that for whatever reason, deregulation, you name it, things are going to be much better. And I guess our job is to figure out how much better is this reflective or is this pull forward? I mean, is it too much?

7:07I think that's fair. And I think that's what we're attempting to do without question. How much of now the animal spirits fully exhaust themselves? Or to Tim's point, how much more do we have in this sort of election cycle? And the short answer is Tim's probably right. There's more room to go in terms of the allocation of money. Karen said it as well. And you think about micro strategies, for example, like who has to buy it? Nobody necessarily. But now I'm looking. They're now holding 280 ,000 Bitcoin at an average price for about$42 ,700. So think about the investments they made and how it's paying off in this environment.

7:39So there are clearly people winning to that. But again, it comes back to what's the environment going in? And quickly, I think this is quasi-important, not to use a Josh Brown term, but China announced a$1 trillion trade surplus, which was a record. This incoming administration will look at this and say that's problematic. Whether it is or not, they'll be offended by it, which to me means the ability or the likelihood of higher tariffs is out there, which means inflation comes back, which means the gold trade that Tim talked about is alive and well. Now, a stronger dollar will offset some inflation.

8:14And again, I think what you're talking about with China, Bank of Japan is out there saying that they may not hike when they would have been expected to at their next meeting. It means the yen weakened that much more. I think it's a combination of this we're trading show. It's about positioning going into this. I don't think a lot of these trades really were trades other than we've talked about banks. We've talked about some industrials, airlines, which we're going to talk about. But but but the parts of this trade that are clearly election trades, I think there's still plenty to go in the election trade.

8:41So that small caps trade. Yeah, it had its places. But again, back to back to Bitcoin, if you look at just even money flows. So the money flows that are signaled by the regulatory environment and what was already in place. You know, I don't know. When was it? A year ago we got all those Bitcoin ETFs. Well, the BlackRock ETF trust got in, I don't know, whatever number they got in last Thursday, put them larger than their gold trust. So that means you're starting to see this allocation happen. For more on Bitcoin's record rally, let's bring in Meltem Demors. She's a general partner at VC Crucible Capital.

9:13Meltem, great to see you. Good to be back. It's that time of year. It is. It is that time of year. Tim mentioned flows, and that's what you always talk about. Look at the flows. And you've been seeing the flows going gangbusters in this rally. The flow. Yeah, this is the story, right? Sentiment leads to flows and flows are really how we price Bitcoin. Bitcoin is a digital commodity. Supply and demand are what drive price. So flows right now are coming from, as you mentioned, the ETFs. Overall, I think it's just really important to state eighty four billion dollars of flows into the ETFs. Two-thirds of the way to the total AUM of gold ETFs.

9:53This is a blockbuster year for Bitcoin today. MicroStrategy bought$2 billion in Bitcoin. We saw last week$2 billion of flows into the Bitcoin ETF. The prior three weeks, we'd seen roughly the same amount. We're seeing all-time highs in terms of volumes traded. So the flows are coming. They're strong. And I think the story is Bitcoin was contrarian. It is now consensus. So I expect a lot more inflows. Do you think what are you do you think the chances are of the U.S. being a huge buyer in that it becomes a reserve currency or there is a special Bitcoin fund? Well, the strategic Bitcoin reserve was obviously part of Trump's crypto and Bitcoin platform.

10:33He announced that obviously at the conference, the Bitcoin conference in the summer. I will be so happy when that happens. And, Melissa, I will buy you all a drink. Meltemates, Karen, thanks for being on today. Do you think there is some amount of supply that comes out at, let's say,$100 ,000, which is a round number and a target for a lot of Bitcoin bulls? Do you think that we would see supply and that maybe put a top on it? Yeah, that's a great question. And that's a question we often ask ourselves. Last year, I think we were in a very different situation because there was still a lot of sellers of Bitcoin, Obviously, with the FTX bankruptcy and unwind, several other high-profile bankruptcies and unwinds, we had a lot of debtors holding Bitcoin.

11:19That supply overhang of Bitcoin is mostly gone. In May, we had a Bitcoin halving. There's now half the amount of Bitcoin that's mined in every block. So the inflationary pressure from Bitcoin mining is now cut in half. That supply overhang is getting cut back. I think the volume of buying is going to greatly exceed the volume of selling. The Bitcoin miners aren't accumulating as many coins, again, because that halving cycle has happened this year. So I think there's a lot less selling pressure. And the reality is, as much as people say they're going to sell at 100K or 125, if Bitcoin reaches parity with gold, that's$800 ,000 per Bitcoin.

11:56So I think that a lot of holders of Bitcoin are going to be long-term holders. And we see this in the charts, big whales holding more than 1 ,000 coins. They haven't moved a lot of their coins around to exchanges this year. When do you think that could be hit? 800 ,000. Oh, if I knew, Melissa, I would have been on this show. I mean, order of magnitude. I mean, is this like years? Is this decades? Is this what is it? I think it's years. I think the big question is, what are the big structural shifts? So I just want to talk really briefly about market microstructure because it's really important.

12:30Bitcoin ETFs, really easy way for people to access Bitcoin, but they're buying spot exposure, right, in a really easy wrapper. We have MicroStrategy. Why does MicroStrategy do crazy volume? Because you can buy options on MicroStrategy, right? It's a really clean way to trade long and short without needing the capital that you need to trade the CME futures product, which is cash settled and requires you to post collateral. The real question is, what is going to be the route where it's really easy for people to allocate to crypto and deploy a wide variety of strategies when it comes to Bitcoin. People have different preferences.

13:03And so I think the real question is, when is market microstructure going to accommodate not just tens of billions of flows, but potentially hundreds of billions of dollars a day in trading volume from people who want to trade spot options and other sort of more sophisticated strategies? All right. Melton, we've got to leave it there. Thanks so much. It's always great to see you. Melton Demers. And obviously, you know, So we mentioned, but didn't talk about Coinbase and Robinhood being real beneficiaries of all of this, whether it be Bitcoin or the meme action. Yeah, I mean, to Karen's point, if you're an institutional investor and you need to buy Bitcoin for whatever reason, I mean, Coinbase is the place for custody and a whole host of other things.

13:42So that makes total sense to me. I know a lot of folks have been really focused on the retail. And again, there's lots of different places to do that now. And with the ETFs, I'll just make one point on the micro strategy. If you look at December expiration, the stock is trading at$340. The$340 straddle, you put the call premium and the put premium together, it's$100. And I just said it's a$340 strike call. OK, so just do the math there. I mean, there's some things that are getting very out of whack on a pricing standpoint. And the last few times, if you were to buy a Bitcoin on a parabolic move like this, and, you know, to this extent it's kind of moved, it's probably a tough time to do it unless you're willing to average down for a while and you have a long-term time horizon.

14:21I just wonder if the hood is sort of a virtuous circle cycle in that hood customers are probably also a lot of them hood owners of the stock. Right. As well as Bitcoin, cryptocurrency owners as well. All right. Things are going great. So that leaves a little bit more money for speculative. Right. GameStop, whatever it might be. Sort of, you know, it's a big party going on a hood right now. Speaking of Trump trades, Tesla shares rallying another 9 % just today, now up nearly 45 % since the election, adding more than$300 billion in market cap in that time. That is more than one Chevron. A number of Wall Street analysts raising their price targets on the EV maker, expecting a Trump White House to help with any regulation roadblocks facing the company.

15:06We've had this discussion before in terms of what is this pricing in. It's the most expensive of the Mag 7 on a forward PE basis, Guy. But there is a lot being priced in terms of the favor that Elon Musk will be able to curry from the Trump White House. I think it goes back to what Tim said earlier about, you know, the voting is still going in in terms of the market. And I think Tesla is obviously one of the biggest beneficiaries. Again, you know, after they reported earnings, I think collectively we thought it was going to test the stock, that 265 level, which was a prior high a number of times this year and last year.

15:35It did exactly that. Then you had a pretty significant pullback, almost down to 240. So that was intact. Obviously, the election changed the entire thing. Now, at this current price, by the way, we traded three times normal volume today, something to keep in mind. But we should be able to take out just on that momentum the prior all-time high, which was basically made, I think, three years ago this week. So that is the level I think you have to look for at this point. What we've learned over the years is that valuations at Tesla don't matter. And it just doesn't matter. And so you also notice how it's totally separated itself from the Mag6, who really underperformed today.

16:09It was not a great day for Mega Cap Tech. In fact, you know, I think that's a case where but but the dynamic around Tesla, if you want to get into again, for the people that don't want to call it a car company, it's there's only so much that I think even all of the support and tailwinds that could come from a Trump presidency in terms of border dynamics, in terms of at least being aggressive against the Chinese, possibly keeping Chinese EV imports out of this country, making it easy for Tesla to pick where they want to manufacture and probably not get hit with the same tariffs as everybody else.

16:39How much can you price into the stock? But again, this is a stock that before the election came up, this was a story about five quarters out. No one thought Tesla could give you anything. And they gave you profitability and gross margins in their last numbers on October 23rd that really surprised people. That's part of this. Yeah, we know from the last administration, Trump does not mind picking winners and losers, right? And so when you think about this one, I mean, he's also talking about getting rid of these EV tax credits here. They're definitely talking about tariffs, but he's also inviting BYD, which has overtaken Tesla in revenues and deliveries and the whole thing, to build cars here to avoid those tariffs.

17:15Well, that's going to decimate Detroit, if you think about that, right? It's going to be a greater competitor to Tesla. So the last thing I'll just say, I get it, right? So the stock is rallying because of the regulatory issue of full self-driving, if autonomy, if these are the big overhangs and that's what you're valuing the stock on. We had Kathy Wood on last week. That's what she's talking about. She's thrown like multiple trillion, I don't know,$10 trillion market cap. So, you know, at the end of the day, it gains$300 billion in a week. That doesn't seem particularly natural. It's pulling forward, I think, a lot of excitement about these other technologies.

17:46All right. Well, shares of private prison stocks, GEO Group and Corrective, popping once again today. President-elect Trump tapping former acting ICE director Tom Homan. As his borders are, the stocks are each up more than 80 percent in the last week. Let's head to Mar-a-Lago, where CNBC's Eamon Jarvis is reporting the latest additions to the Trump administration. A lot has been done in a short amount of time so far, Eamon. Yeah, that's right, Melissa. They're moving quickly at the Trump transition. A real contrast between what's happening this year and what happened after Trump's first election back in 2016, in which there was sort of chaos on the transition.

18:20This time around, much more disciplined, much more organized. They've spent some time planning for this. We've got a couple of new names today, including Lee Zeldin, the congressman, former congressman, who's now going to be EPA director. Zeldin sending out a tweet saying, we will restore U.S. energy dominance, revitalize our auto industry to bring back American jobs and make the U.S. the global leader of AI. We will do so while protecting access to clean air and water. Trump also naming Elise Stefanik, the member of Congress, to be ambassador to the United Nations. And Stephen Miller is going to be Deputy White House Chief of Staff.

18:58He's going to be focused on domestic policy issues. He's a hardliner on immigration. One of the few names here that was involved in the first Trump administration. So much turnover in the Trump administration, even during the first administration, and since then, in terms of the personnel around Donald Trump. Stephen Miller, though, a longtime Trump aide, sort of the ultimate hardliner on immigration. And that clearly sends a signal of where this administration is going to go in terms of living up to the president-elect's promises on immigration. Guys, also a whole host of names that we're still waiting for, possible Treasury pick, possible USTR pick.

19:31There you see some of the names, Linda McMahon, possibly first secretary of commerce. There's a lot out there that we still don't know. But as I say, they are moving quickly here at Mar-a-Lago. Melissa, back over to you. All right. Eamon, thank you. Eamon Javers. You bet. I guess Treasury Secretary of Commerce, it looks like you have a comment already. No, no. My comment is I love Eamon Javers. We know that. I believe he knows that as well. Number two, I hope he does. He's smiling. It was that Mark Twain guy that said history doesn't repeat. But right. Rhymes. Yeah. Well, let's throw up a chart of geo.

20:03Go back about five years and look at where the stock was in 2016 before the election. It was a$15 stock. President, candidate Trump gets elected. It goes from 15 to about 31 by the spring of 17. Gave the entire move back. You're seeing history repeat itself right before our eyes. Now, if you want to play for another$3, as Dan would say, have at it. But this is happening exactly like it did eight or so years ago. All right. Coming up, two pharma names heading in very different directions. It's ad-beasing its worst day since the pandemic. And Bristol-Myers hitting 52-week highs. The new drug trial data that brought on this move next.

20:38And a semi-shipping halt. Taiwan Semi falling as regulators order the company to stop sending chips to China. What it could mean for the semi trade as well as U.S.-China trade relations when Fast Money returns.

20:52This is Fast Money with Melissa Lee right here on CNBC.

21:07Welcome back to Fast Money. AbbVie shares plunging today after the biopharmist proposed schizophrenia drug failed to show results in phase two trials or Angelica Peoples has the details. Angelica. Yeah, Melissa, disappointing day here for AbbVie. The company is saying that it's experimental schizophrenia drug failed to show a statistically significant difference compared to placebo in two phase two trials. Now, there's a couple of things going on here. First, the drug didn't perform as well as it was supposed to. And also people who were in the placebo group did better than we expected them to.

21:40Either way, this is a big disappointment for AbbVie, especially because the company went out and spent$9 billion to acquire this drug through its acquisition of Cereval Therapeutics. Now, on the other hand, this is a big boon for Bristol-Myers Squibb. They have a schizophrenia drug that just got approved in September. And the thinking was that they would have a little bit of a head start and that ultimately they would face competition from AbbVie. But now it looks like they will be there alone with this new type of schizophrenia drug. It's the first of its kind in decades, the first new innovation that we've seen in this space.