Countdown To November Jobs Report… And Bitcoin Breaks Above $100,000 12/5/24

0:02Live in 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. Bitcoin, boom, the cryptocurrency crossing the milestone mark of 100K before pulling back. Banks, travel names and a couple of the MAG-7 surging to new highs. Can this record run continue? We'll debate that. Plus, self-driving heads south. Alphabet's Waymo is taking its talents to South Beach. We'll go inside the ride share rumble, shaking up the space. And later, a double dose of Obesity Week. Guest tonight, Eli Lilly's chief scientific officer breaks down the company's latest trial results.

0:34and the CEO of Structure Therapeutics on its oral option in the space. Both are here with us this hour. I'm Melissa Lee. Coming to you live from Studio B at the NASDAQ on the desk tonight, Tim Seymour, Carter Worth, Guy Adami, and Mike Coe. We start off with some pockets of strength on an otherwise tepid market day. Bank stocks outperforming with Citigroup posting its highest close in more than three years. Airline stocks also taking off after American gave a strong outlook for the fourth quarter. That stock hitting its highest level since July of last year. There was strength elsewhere in the travel trade, too.

1:03Hotel chains, Marriott, Hilton, as well as Expedia and booking holdings, all at record highs. The move's coming as investors turn their focus to tomorrow's jobs report. Expectations at hiring picked up substantially after a weak October. Will the data get the broad markets moving once again, moving higher, I should say? Guy, what do you think? Well, it's interesting, right? This jobs number, what are we rooting for? We have this conversation seemingly every month, but what are you rooting for at this point? Or does it matter? Or does it matter? I think that's the third, that's door number three, Monty.

1:32and maybe I'll take door number three. I'm not sure it does at this point. I mean, the market seems pretty convinced, you know, we're going to be on this lower left, upper right trajectory. Today was an interesting day. Technically, the Carter can opine on. It's not a big deal, but, you know, one day it's not a trend make. But the reversals today were interesting. But you mentioned Citi, and that's one that's been a dog for so long, but I think collectively a name we've tried to wrap our arms around, and it's finally showing signs of life and trading where it probably should go to. You know, if you want to be in the banks, although most of them had huge runs, Citi, to me, is still undervalued despite the move it's seen over the last couple months.

2:06Bank of America, also a nice day today. By the way, Guy, what's the over-under you think, and what's the number, that Mel actually knows the phrase, who she can reference, taking their talents to South Beach? Wow. I have no idea. Yes, you do, Melissa. You know I do not have any idea. LeBron James. Oh, there, come on. That's what you're holding back. I owe everybody money here. Okay? She's good like that. She knows everything. She knows everything. So in terms of knowing everything, if you knew coming into even the last three months that airlines were going to have the kind of period that they've had, it's a combination of the numbers are just better.

2:39They're becoming more efficient. They're becoming more profitable. And then you even have an upgrade of Delta's debt today to triple B minus, to low triple B, excuse me. But this is an important upgrade. Again, you think about airlines that have never had the balance sheets to take it higher. So I just say symbolically. And then over to Citibank, again, the worst of the money center banks, so to speak, in terms of their efficiencies. But this has been the year of efficiency for Citibank. So banks will continue to outperform. I think what you're seeing more broadly in the market is an acknowledgment that these companies and that earnings are going to be better in 2025.

3:13I think good news is good news tomorrow on the payrolls. And I think you're going to snap back after a couple of strikes, a couple of hurricanes. And these numbers are going to be real. I mean, the question for banks, of course, are we getting a redo of what happened in the election in 2016? And we know that financials and banks in particular surged post-election. And yet they peaked one month later, mid-December of 2016. And they, to this day, have never achieved a new relative high. I think we're setting up for the same kind of thing so that a lot of money has been pumped into this area. But it's not going to deliver alpha in 2025.

3:42As the consumer, of course, it's a very mixed bag. You've got homebuilders acting poorly, autos acting poorly, but then airlines and hotels and travel stocks. And so you've got to pick your pick your spots. Yeah. Where are your spots, Mike? And do you think tomorrow's number really matters to a market that wants to go higher, clearly? Well, I mean, I think that tomorrow's numbers, obviously, you know, I don't know that it's it's early yet after the election. You know, what we have seen is that cyclicals are doing very well. I think the general attitude is that, you know, the election results are good for cyclicals.

4:13And I think we obviously have to wait a little bit to see whether the employment picture and the hiring sort of keeps up with that. But I think it's still going to be positive for that. The hesitation I have with the banks, I have to say, is that if things really pick up and we start to see the long end of the rate curve rise, obviously we usually think about a steeper yield curve as being good for banks, you know, borrow short, lend long. Of course, the issue is for some of them, like Bank of America, that still have a lot of duration on their book, that could be a little bit problematic. But it's going to be good for CNI lending, I would assume, if it's good for cyclicals.

4:47Is it a little bit different, dare I say, this time, if the economy is really going to heat up, if there's really a pipeline when it comes to M &A, whenever there's really a pipeline for IPOs, when the consumer is in still relatively good shape because the employment picture is decent, so things are largely OK, even if rates are rising. That's a Bank of America-specific issue, but in general. Regulatory environment is, I think, essential for this whole. It's part of the bank story without question. And I think in addition to that, the potential for M &A in this new administration is going to be significant as well, which is why I believe the KRE is having the move that it's had and might have some more legs to it.

5:25But the economy is an interesting thing. I mean, we talk about the consumer, the consumer is 70 percent of this economy, and they will spend under just about any circumstances. But if you start really breaking down and looking at delinquency rates and credit card debt and the average rate that people are paying out of credit card debt, it tells a story that I don't think the market is paying attention to. I mean, the question is rates, right? It just turns out, I mean, rates were where they, right now, where they were in Q4 of 2022. We're at 4.17%, not once, and it's important to state this, not once did the 10-year yield close on a weekly basis above 5%.

5:59Not once. So the higher for longer was never, it sounded nice. It's melodious in the ear. It's like, but it was never true. And it's not true. The cost of 10-year money is 4.17 % here at the end of 2024. How is that higher? Yeah, Carter, you've been saying this for a long time, so I applaud being right on that. And it certainly has been an environment that has allowed equities to move higher. The one thing that is also that dynamic we are contending with in this payroll number is the wages component. And we had ISM yesterday out, services, which was a little weaker. But more importantly, there were wage pressures that were discussed within there.

6:38What we've heard over the last couple of days is a series of corporates that have come out, including Chipotle out yesterday saying they're raising prices. Some of that is food input. A lot of it is wages. McDonald's tells us about wages. So I think, you know, the problem for equities will come is if the Fed really has to acknowledge that they're not comfortably getting into their 2 percent target. I think right now the jury is out on that. I think the wage component, services, inflation is something that we should be worried about as equity investors. As citizens, it's great news. The job market is very healthy.

7:09And I think ultimately some of those credit metrics that Guy also brings up that we should be concerned about right now, I think, are still rearview mirror at least as long as the job market holds up. You had an initial jobless claims outnumbered today that was kind of weak. And, you know, it's a noisy data series. But you have to watch this. Right. So, obviously, rents is being a big input. and wages, but the grains, I mean, the grains are at multi-year lows, right? Oil is not particularly, but there's a lot of mixed currents going on here to suggest that there is or there isn't inflation. At the same time, I mean, and this is an honest question, Mike, is it consensus that we do reach 2 % eventually, or is it consensus that the Fed will have to accept a higher than 2%, maybe softly, maybe a soft, you know, acceptance, but still?

7:56I think the consensus is that it's going to be very difficult to achieve that because a lot of the secular tailwinds basically for the inflation picture over the course of the last couple of decades, for example, you know, we had a lot of globalization. We had a lot of production moving to China. All of those those a lot of those forces have subsequently reversed. And I think that obviously it's great that oil prices remain low. That's not surprising. We're producing every bit of domestic demand at this point. Actually, the highest production that the United States has ever seen. We're the largest producer in the world by a long shot.

8:30So that's obviously a great tailwind for us in terms of inflation. But on the other side, obviously, we have wages and other things. And what we have seen in past inflationary periods is that there's a little bit of a cycle. And you get this dip. We have seen that. But there's a lot of patterns I've seen that suggest that we could see an uptick in inflation in probably the next 18 months or so. I think that's fair. And the fact that Tim mentioned CMG, by the way, very quietly, at stocks approaching levels we saw in June of this year, which was an all-time high, under the radar. So that burrito blowout is coming back in a major way.

9:03In a good way. It's not always good. I guess it's the implication. There's some question out there sometimes. I don't know. I would say the lion's share, it's a good thing. Of a blowout. Yes, I agree. Once in a while. That stock is, by the way, about 20 % higher than it was at the peak before Mr. Nickel left and walked out the door. In other words, it's not only dealt with that, but it's well above that. But quickly, I mean, the inflation story, I don't think it's over. And I think you're hearing more and more people come to the realization, hey, wait a second, maybe that genie is not back in the bottle.

9:33And the rate story, Carter's been spot on 100%. Tim outlined that as well. But I think the rate story is going to surprise people early in 25. Well, especially with the tariffs coming. I mean, how many companies have said we will pass that on to the consumer? I mean, that is going to, I mean, if there are tariffs, the consumer will ultimately pay. That's just the fact of the matter. I mean, I'm a big Barbie fan. And Mattel said that also yesterday. They went out there and they pretty much they felt the need to go out there and also say we only source 40 percent of our materials from China. But they said we will price that in.

10:03And I think there are a lot of companies that are waiting. So we just don't know. And I think there's a lot of speculation about what tariff policy is going to be. I think there will be some headlines that will be exciting for the new administration to get behind. And there's a reality to what they can do. Let's just wait. But the pressure on inflation, I think, is to the upside right now. It's not to the downside. All right. Let's move on to Eli Lilly announcing a$3 billion investment to expand GLP-1 manufacturing capacity at its Wisconsin facility today. This coming just a day after the company published results of a head-to-head trial comparing its weight loss drug ZepBound to Novo Nordisk's Wegovi.

10:37Patients losing 47 percent more weight on Lilly's drug after 72 weeks. Joining us on the Fast Line for more is Dan Skowronski, Eli Lilly's chief scientific officer and president of Lilly Research Labs. Dan, great to have you with us. Good to talk to you again. Yeah, pleasure to be on. Thank you. There's a lot of excitement surrounding this head-to-head trial, but there's one big question mark, and that is the tolerability profile. Will we get those data anytime soon? And can we extrapolate it all from historic trials where historical trials where we saw the, you know, the nausea and vomiting percentages?

11:13Can we extrapolate that maybe Lilly's profile looks better than Novo seeing that, you know, at 72 weeks versus 68 weeks on Novo's drug, that the percentage of patients suffering nausea and vomiting was lower? Yeah, it's a good question. Thank you. And thanks for highlighting this trial, we showed the patients on ZepBound lost about 50 pounds compared to the competitor with Govi. Patients lost 33 pounds. In the press release, we noted that the tolerability of the drug, the adverse effects, were similar to what we've seen in previous trials for each of the two drugs. In previous trials, we've seen that ZepBound is generally well-tolerated.

11:53The most common side effects are, as you point out, the nausea and vomiting and diarrhea, which still happens in a fraction of patients, most of those patients actually stay on the drug and get the benefit. The study wasn't designed to compare the safety of the two drugs, but of course we'll be presenting that data at a scientific meeting. And we're excited about what we saw, not just in the efficacy, but also excited about the tolerability profile of ZepBound in this trial as it's demonstrated in previous trials. So, I mean, this has great implications in terms of the ability to market, saying, you know, your drug Zetbound is more effective than the Novo Nordis.

12:30But, you know, there are a lot of drugs coming down the pipeline. And I'm wondering, you know, it's sort of like an arms race. All these drug candidates from you, from Novo, from other smaller players, where they want to benchmark higher and higher weight loss advantages. How do you look at that in terms of the importance of gaining that sort of benchmark weight loss percentage in terms of the success of a drug? Yeah, thank you. Weight loss is one of the important aspects that patients are looking for, for sure. That's why we did this trial. It's actually the most common question we get from people who are interested in these drugs is, you know, there are two great drugs out there.

13:13How do I know which one to try? and now we have data comparing them directly. But also over the last year, we've generated a lot of data on ZEP bound, but also some of the other benefits of the drug to sleep apnea. And most recently we showed a trial where we tested it in people who had pre-diabetes, meaning they were at risk to go on to get diabetes, and we reduced the risk of diabetes in those patients by 94%. So we're accumulating a lot of data about the benefits of weight loss. But you're absolutely right. We're in a race. Maybe it's a good race for the benefit of society where we and Novo probably as the main two competitors keep trying to out-innovate each other with better, better medicines.

13:59Novo had semaglutide. And then we came with ZepBound, which is the dual-acting molecule we're talking about today. And now they are working on their own dual-acting. We're working on a triple-acting molecule that actually targets three, incretins, retitrutide. We're working on an oral molecule. Both of those are in phase three. I think we're going to get to a point with molecules like retitrutide that are in phase three where for most people, I hope they'll be able to achieve a normal body weight, even starting with very high levels of obesity on this medicine. And so then it becomes important to think through those other benefits and how can we make sure that we're improving the health of the whole patient in addition to losing weight.

14:40And we look forward to more and more of those data coming up. You're also working on an oral, and that seems to be something that a lot of people would like to not inject themselves either as a primary way to lose weight or as a maintenance program. We're going to be speaking to the CEO of Structure Therapeutics later this hour. They've got an oral candidate. You've got an oral candidate in Orpher Glypron. And it's supposedly almost just as effective. So far, that's what the data shows for structured therapeutics, Dan. And so I'm curious how you think about, you know, the competition coming and when you have these sort of benchmark trials and investors are all taking a look at, you know, the results for weight loss.

15:19What's your outlook for Orforglipron in terms of how it fits into your portfolio of obesity drugs? Yeah, thank you. We're pretty excited about Orforglipron. This is an oral pill. It's a small molecule, easy to take without food or water restrictions, we hope. And we hope in phase three, we'll find out that it can deliver the same benefits as the best injectable GLP-1s. We don't know that yet, but this is already at the end of the last stage of development of phase three trials. So we're going to get the data next year. And if that's successful, we hope to be able to launch that quite soon. Now, I know there's many companies, and you mentioned one of them, that want to follow in our footsteps here.

16:01I know we're quite a bit ahead here and a several year head start. But of course, there'll be competition in this area. It's a huge market opportunity. We estimate by 2030 that there'll be a billion people around the world living with obesity. That's a lot of patients that need to be treated. And I think easy to use orals are probably the way to go here. All right. Dan, great to speak with you. Thank you. Yeah, thank you. Dr. Daniel Skavronsky of Eli Lilly. Not too long ago, we were saying, oh, this key level on Lilly, but it's sort of bounced here. Let's take a look at it real good. We'll throw up a chart that made its all-time high, traded down to 775 or 770 in August, bounced and made a new all-time high, traded down and held it again, had a subsequent bounce.

16:53This recent low took us down to the April low, which we held and now are bouncing. So the theory behind the trade here should be we're set up to take out those prior all-time highs, and they continue to sort of get the tailwinds of these good news. And, you know, when valuation matters, it does. When good news matters, it overrides it. And I think that's where we are right now. It seems that the Lilly trade is sometimes, at least in this phase, called the last two months, has been a function of the competitive landscape as opposed to just early innings, really, in this GLP trade, because we are.

17:24And so what do you want to pay for a company who is arguably the leader? And there is this whole dynamic with, is it Kagris Semi? How am I saying that? Kagris Semi. Okay, so Kagris Semi, there's a debate that if this comes out with even greater than 25 % weight loss dynamics, it could be a bear pivot for Lilly. I don't think so. I think it's a case where you just have to look at the compounded annual growth rate you couldn't be expecting from Lilly, which I think is going to be 25 to 30 percent over the next three years. And I think you're buying that weakness. I mean, I guess the question is, this has obviously been an uninterrupted and very orderly uptrend.

17:58Right. And now for the first time in almost three years, there is some question to whether that uptrend is intact. Right. So the characteristics are bearish price volume correlation and poor relative strength to its sector and to the market. My hunch is that one is right to reduce exposure. Coming up, we are watching Lululemon after our shares on the move after reporting results and details and numbers from their quarter next. and self-driving coming for the Sunshine State. Alphabet's Waymo looking to hit the roads in Miami. More on their expansion plans and the ride share stocks taking a hit on the news.

18:27Don't go anywhere. Fast Money's back in two.

18:39Welcome back to Fast Money. We've got an earnings alert on Lululemon. Shares higher by about 10 % after the company beat on the top and the bottom lines. The conference call wrapping up. Courtney Reagan joins us now for all the details. Courtney. Yeah, a lot of positive surprises in this one. 18 cent beat on the bottom line. Slight revenue and comparable sales beat. But I think the pattern is what's important because comparable sales did reaccelerate from last quarter. So 4 % total. Americas are still down, but slightly better than last quarter. And international comparable sales, also much stronger than what we saw last quarter.

19:07Now, the holiday quarter outlook, it brackets estimates. And then on the call just now, CFO Megan Frank describes the forecast as prudent. And she called out the shorter shopping season and uncertain macro conditions for part of that. Now, Lululemon also, we should note, increasing stock repurchase program by a billion dollars. On the call, CEO Calvin McDonald did say he was pleased with the business and traffic in-store and online over this extended Thanksgiving weekend, with Black Friday actually setting records for most visits ever to Lululemon's app and website. Now, remember, Lululemon doesn't run these blanket promotional events.

19:38They're not storewide. They're not sitewide. McDonald's said actually they use that elevated traffic to clear through product that it's not going to take forward, but also to feature full price style. So I think the street like to hear that, that such strong traffic without those big sales events. Now, shares are higher, but they've got a lot of ground to make up. I mean, year to date, we're down about 33 percent for Lululemon. XRT in that same period up 14 percent. The XLY up 28 percent over that same period of time. There's some short interest, but not that high. But I think the street's probably pleased.

20:07A lot of questions on the call, trying to dig it, whether or not the executives think that the America's situation has bottomed. Not quite going there, but analysts are trying to figure it out. Exactly. I think maybe that's about as far as they'll go. They said that it's to their plan, to their plan. It's a 6 % short interest shares outstanding. So it's not, yeah, to your point, it's not that much in terms of this surge after hours. China mainland was really surprising. Is it a tiny base? It's up 27%. Yeah, I thought that that was really interesting. So obviously stronger than when you're looking at the bigger results there.

20:39I mean, look, I think there's a lot of questions, too, about competitors, Aloe, Viore. Now, they're private, so we don't exactly know market share gains there. But I think whether that is taking share internationally here in the United States, a lot of questions. But I think so far a positive surprise, I have to say, just anecdotally. I was at the Garden State Plaza Mall for Black Friday, and I was there before doors opened. The longest line, actually, was at Lululemon, and that's without, you know, these big storewide sales. So I thought that was interesting. Yeah, I think for the story here, you have to wonder whether, one, you're worried about the U.S.

21:10comp staying negative or whether you're really more concerned about where the margin profile for the company is going to be. Because, you know, going into this tailspin, the company was at peak margin. The move, which has now been almost 70, I'm sure Carter's got to be on the chart because it has been a heroic run off those off those lows. I just think that the dynamic around the competitive landscape is one that's going to continue to be something to worry about. Valuation could actually have some upside. It really depends what the multiple you want to put on it. Yeah, so we will. It's indicated to open up at 380 tomorrow.

21:37It's trading at 344. Interestingly, Wall Street, and there's about 40 analysts that cover it, have a 12 month price target of 323. So a group of individuals, not just one or two, but a broad group, 40, believe it's worth 323 in the next 12 months. But it's trading at 344 and tomorrow be at 380. So what will happen is they will all change their price targets. That's the way it goes. And the question is, do you fade this pop or do you embrace it? I think you fade it. Mike, is Lulu still in the Holley indicator? Did it come off the Holley indicator when the stock was down? Did it come back on as the U.S.

22:08looks to be stabilizing? And can we explain the Holley indicator? Yeah, so the Holley indicator is sort of a Peter Lynch approach to investing. You take a look at your credit card bills and you see where your family is spending your money. And Lululemon, Tesla, Apple, Costco, these have always ranked fairly highly. Fiore did start to rank more highly. But on the CNBC website, I actually put out an article on October 24th saying to get long the name simply because I think it did get extremely cheap relative to the S &P and relative to the Consumer Discretionary Index and actually relative to other athletic apparel companies like Nike.