Fed Chair Powell Interest Rate Update… And Hims & Hers Thinning Out 11/14/24

0:00Live in the NASDAQ market site in the heart of New York City's Times Square. This is Fast from Timu and Sheehan, what it means for the competitors trying to get a foothold for themselves. Plus, Rivian loses its charge in the EV race, a big win for investor Tilman Fertitta, and where investors are putting their money after the election. I'm Melissa Lee, coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Courtney Garcia, Dan Nathan, and Guy Adami. We start off with breaking news in the latest cabinet pick out of the Trump administration, the president-elect tapping Robert F.

0:41Kennedy Jr. to lead the Department of Health and Human Services. Let's get to Eamon Javis for more on this. Eamon. Melissa, that's right. Robert F. Kennedy Jr. is a vaccine skeptic and a fluoride skeptic, among other things. He will now be, if he's confirmed and takes this office, he will be leading a department which is incredibly vast in Washington, D.C. It's got a budget of$1.6 trillion. It oversees the Food and Drug Administration, the National Institutes of Health, the Centers for Disease Control, and a slew of other agencies. It also controls spending for Medicare and Medicaid throughout the country.

1:16That is an enormous amount of money that goes through Robert F. Kennedy's future agency. Again, if he is confirmed and does take leadership of this office. The president-elect sending a post on social media just a short time ago confirming the news, saying for too long Americans have been crushed by the industrial food complex and drug companies who have engaged in deception, misinformation and disinformation when it comes to public health. The former president and future president sees Robert F. Kennedy as a solution to that problem and has said in the past at rallies on the campaign trail that he is going to let Robert F.

1:50Kennedy, quote, go wild on food and health and vaccines. Clearly, this appointment now is a little bit more of a formal role than a lot of people expected. Some people expected Kennedy Jr. to be getting some sort of outside advisory role on drugs and health. but instead the president-elect electing here to nominate him or to signal his nomination for secretary of HHS. That is a vast and sweeping role in Washington, D.C., Melissa. What are the odds of this being confirmed, Damon? Well, I mean, again, you look at all these picks, Melissa. You look at Gates over at the Department of Justice. You look at his pick for defense secretary.

2:36All these picks would be seen in a usual typical political environment as extreme long shots for confirmation. But Donald Trump won a sweeping and convincing victory on November 5th. And he controls this Republican Party in a way that very few presidents have ever done in terms of his personal sway over the senators. You know, there are some senators who are making skeptical noises about some of these picks. But by and large, you'd expect Donald Trump to get what he wants. and particularly if he uses a number of maneuvers that might be available to him for recess appointments to skip the Senate confirmation process altogether.

3:12Some of these selections just indicate to me, Melissa, that that's what Trump is thinking, that he doesn't need confirmation at all. He'll just recess appoint these people. They'll get two years in office. Trump gets what he wants and the senators don't have to vote on them. And he just bypasses that power structure altogether. That feels like where this is going, but that's speculation on my part. We'll see if the Senate demands confirmation votes and demands, you know, up or down advisor consent on all these folks. All right. Eamon, thank you. Eamon Javers. Let's get more now with NBC News medical contributor Dr.

3:44Kavita Patel. She's a practicing physician, also served as a policy director in the Obama administration. Dr. Patel, it's always great to get your take on everything, basically, medical and pharma. And I'm wondering what your first reaction is and how you think this could impact what the FDA does, what the CDC does, what the NIH does, what does CMS. I mean, the reach is vast here. It is, Melissa. And I would not be honest if I didn't tell you I was I'm stunned. I'm still a little stunned. I think there's a number of us who have been in Washington, D.C. around many administration transitions. This is the most unusual one I've seen to date.

4:20And I think to your point, you know, if you're Pfizer, BioNTech, Moderna, GlaxoSmithKline, where the bulk of your revenue come from vaccines, this is a big problem. Because as RFK Jr. has said, he's said time and time again, Melissa, he's not anti-vax. He's just against the vaccines that we have currently available. So in effect, any of the vaccines that we've talked about from COVID to the vaccines that we give routinely for children, he's been able to stoke fears and put out a lot of misinformation, frankly. And on top of that, even when he ran for president, he made a comment and it's been recorded that he said that he would stop drug development and research for eight years if he were elected president.

4:59That has sweeping impacts to institutions like the NIH, the CDC. And then let's not forget, the secretary does have quite a bit of authority over declaring public health emergencies. You could imagine declaring an emergency around vaccine safety, but not in the direction that we have. And I've been looking at the state of Florida just to see what's possible, where you had a surgeon general there that recommended that if you had measles, you could choose to send your children to school with active infections. That could be a little bit of a preview of what we see on a national level. Robert F. Kennedy Jr.

5:32has also said that he wants doctors who are not beholden to the industry. He views many doctors as having conflicts with either pharmaceutical industry or other parts of the of the industry, you know, food complex, food industrial complex. What implication do you think does that have on drug approval, particularly at the FDA? Yeah, it's it's very complicated because it could have far reaching implications just for the staff. Right. There already are conflict kind of regulations to make sure that people working on certain drugs or classes of drugs do not have any material conflicts. but you could imagine that they could extend what that interpretation is way beyond what's intended and say, a doctor like me who has actually prescribed medication could be deemed a conflict and I could never be on an advisory committee.

6:18I might not be allowed to actually be part of an agency to be a part of informing that process. So you end up unintentionally, Melissa, taking away the very experts who have expertise in a particular area. And let's talk about cell and gene therapy. We've talked about this. You've discussed this on this very show, how important this next decade is for cell and gene therapy. That's a very small pool of people who have that kind of expertise. Imagine saying that anyone who's even touched a trial funded by a drug company is not allowed to be part of a process where they give advice or even advise regulatory authorities.

6:50We're going to really undermine what I would say has been an incredible opportunity for research and development and getting cures to patients. I've never seen anything like what's possible now with sickle cell, cystic fibrosis, retinoblastoma. And Melissa, So you could be undermining decades of that progress. Dr. Pete, it's Tim. Great having you on this night, because when I hear about someone that controls Medicare and Medicaid, and I also think about what we talk about all the time in terms of the deficit and the budget and dynamics where, and we now have a new position that's there to cut down government fat.

7:23And while we've added, by the way, a new a new department and a new agency. But it seems to me that there's some obvious places to go after. And can you help us with a big picture look also on on what the ability could be in terms of attacking the budget and the spending that goes towards Medicare and Medicaid? Yeah, I think we can see a little bit of like a reprise of what we saw at the beginning of the first Trump administration, where you saw kind of a gutting of that role for navigators, people to help you navigate not only Medicare benefits, but also just the insurance. Remember, CMS Centers for Medicare and Medicaid Services also oversees the marketplaces.

8:01Those are exchanges. Those are companies like Oscar Health. Actually, every major insurance company offers plans on the individual market. That's for people who don't get their employee, don't get employer based insurance. Think Uber workers, think people who just don't have access to that. So these are millions of Americans. You could gut the ability to navigate those services and even staff those services. The enrollment come down in terms of Medicare and Medicaid. There's a lot of questions about who's going to be pushing for the subsidies that we use to keep funding some of the Medicaid programs around the country.

8:32Will there be a push from a Trump White House in the Trump HHS to get those subsidies when they are expired? It's going to be hard to imagine that this is an HHS or White House that will put focus on that. So the private sector really is affected by any of these changes. You'd like to think that the government is kind of on an island and that you can create efficiencies. It will affect every aspect, including my own health care, which I get through my employer, because those very employer based insurance plans are the same plans that are trying to offer subsidized insurance, insurance on the Medicaid market.

9:05Medicaid being one of the largest payers is no trivial thing. So the other piece that's concerning is that you just need to have we just talked about all the new innovations that are coming. Cell gene therapy. If you block or put a halt to that access, what happens when you're trying to think about paying for those therapies? And what do hospitals do? Hospitals have an obligation to treat patients. This then becomes debt that they cannot recoup simply because there's a lack of a payment model. So it's, as they say, it's complicated. And we're all going to be watching to see what kind of nominees come under an HHS secretary like RFK Jr.

9:41So, Dr. Patel, you're a doctor, but I know that you are, you have a little bit of traitor in your heart. And so as you look out, if you look at this disappointment and you start to think about the impacts this could have, where should we put the question marks in this sector? How do you think about it? The obvious ones are vaccines. The obvious one is, like I said, that's not a great place to be. But then I would put there is a huge like food market. I think that these issues around the food and the environment, if you're any one of the large kind of food manufacturers, ConAgra, anything that touches kind of the food supply chain and market, this could be a real dent, not to mention many common fast food restaurants.

10:21We've talked here about the McDonald's E. coli issue that's continuing to unfold, but this can extend to so many other kind of aspects of delivering food and providing food for people, even in places like school lunches. Those are publicly traded companies that could all be affected. I think the things that I'm going to keep watching for also are, could you see actually like a rally and acceleration for some of these wraparound services? Does this make kind of Amazon's pharmacy and some of the offerings that like hers and him, some of those publicly traded stocks really attractive because Melissa unleashes this era of the consumer where if you really need to get your care, you've got to go to these like kind of private sector outside solutions.

11:00That's entirely possible and also pretty likely. Dr. Patel, always great to see you. Thank you so much. Thank you. Kavita Patel. Guy, we led the show with this because it has such far-reaching implications, not just for our daily lives, but on so many subsectors within health care. Yeah. So let's try to just do it through the lens of the markets and stocks, because otherwise might get off the rails a little bit. But in terms of like the XLV, for example, which is the one that everybody looks at, Eli Lilly, the top holding. But Dr. Patel just said, I mean, these vaccine companies are in trouble.

11:33It's not coincidence that Moderna today made a 52-week low. I don't think it's coincidental that Merck is now trading below 100. Pfizer hasn't traded particularly well. Eli Lilly as well throwing the mix. You can throw GlaxoSmithKline. And the XLV is under significant pressure. Now, UNH is still at the top of the pile. But you know what? What happens with some of them? So and I'm not trying to be an alarmist here, but if you own XLV here, I think you got to reexamine what your thesis is because it might change dramatically. And I think this is where it's important to know as an investor, like not to fall into some like the short term headlines like the Trump trade, where the initial reaction was, okay, there's going to be less regulation, which is good for mergers and acquisitions, and that's good for the healthcare space and some of your pharmaceutical companies, because now it's the same headlines with the new administration.

12:17It's a negative for that space. So I think this is where you really should not be trading on the political headlines as much as the underlying value of these companies, essentially. Yeah, we've actually seen this sector under some pressure, both because there are some perceptions about what this trade was like a month ago. And then you have, frankly, you've got a couple of companies that have been at the top of the leaderboard that have been struggling because I think people just question the multiple. So you added to then those companies where there's really a prove it story. And Pfizer is certainly one of them.

12:45Moderna is like yesterday's news. I mean, in other words, Moderna has been struggling, has had a lot of cash in the balance sheet. And yet the stock continues to kind of make lower lows. So I agree the sector is one to tread carefully on. I think there are opportunities. These are these are headlines that are probably, to me, creating some buy opportunities in some of these names that were already selling off for weeks. Yeah, I guess the point is, though, the uncertainty in and around every one of these cabinet nominations is going to put different parts of our economy in different situations.

13:11I think the likelihood that he is confirmed by the Senate is not particularly good. The likelihood that some of these other nominations are confirmed, maybe a gate set or whatever, not particularly good. But what does that mean? It means that this process gets kind of stretched out a little bit and we have further uncertainty about all this stuff. So the idea of trying to trade any of these sorts of names off of this, I'm in Tim's camp. If you're looking at individual names and you like what they're doing and you like the valuations, you think they've been overly beat up. Well, that's when you start to buy them.

13:38It doesn't mean the market's going down significantly because of these sorts of nominations. And I just think that a lot of these folks are not going to get through anyway. Stocks are going to get lower into the close after the Fed chair Jerome Powell said the central bank is in no rush to cut interest rates if economic growth remains strong. Dow falling 200 points while the S &P and Nasdaq both saw their worst day of November so far. The 10-year yield, meantime, hitting its highest level in over four months. CNBC's Steve Leisman has more on the key headlines from the Fed chair. Steve. Yeah, Melissa, and a lot of action in the two as well.

14:11So Jay Powell in Dallas today affirming that the Fed tends to still reduce rates, but throwing doubt on the pace and how far the Fed may ultimately go. Here are some of the headlines. He said the Fed is indeed headed towards neutral, but in no hurry to get there. Nothing about the U.S. economy screams that the Fed ought to be in a hurry, he said. And there's uncertainty about where the neutral rate is and the fiscal policy. So all that calls for caution. He parried repeatedly a series of questions about how the Fed could react to potential policies from the Trump administration, such as tariffs and deportations that some economists think could be inflationary.

14:49We're still months away from a new administration, let alone knowing the real details of what's going to happen and then being able to project what will be the net effects on the economy. Powell acknowledged with inflation higher than in 2018 when the last set of tariffs were enacted, the effects this time could be actually different or worse. In fact, together with a firmer wholesale inflation report we got in the morning, markets took Powell's comments as hawkish and reduced the probabilities of upcoming rate hikes. So a 75 % probability of a December hike fell to 59%. A pause remains priced in for January, but a 59 % chance of a rate hike in March is now just 46%.

15:29So after a December cut, the next fully priced in rate cut now is not until May. A year from now, there's just a total of 70 bps of cuts built in. That makes the market, in fact, more hawkish than the Fed's September outlook as it settles in for uncertainty over inflation, guys, and policy from the administration. Melissa? All right, Steve, thank you. Steve Leisman. And we sort of had a similar discussion yesterday about the impacts and how inflationary they might be and how right now it is consensus that these policies will be inflationary. And so what does that you're typically a, you know, anti consensus other side of the boat kind of guy.

16:07When everybody says that these policies are going to be inflationary, what does that make you want to do? No, it means I think they're going to wind up sometimes the consensus is right. OK, all right. And I think this might be one of those times. And I don't think it was Jerome Powell's best day ever. He said something, inflation is a social phenomenon. I'm not sure what that means, but that has to absolutely infuriate people. But to get back to the specific question, yeah, I think regardless who had won, it was going to be inflationary. And I think the market is telling that tale right now. I thought he was very clear on a couple of things.

16:38First of all, he's keeping all his options open. He focused on the he's he talked about the strength of the labor market. I think he said it looks pretty solid. And for a guy that in September pivoted to say we're focused on the labor market, that's the other side of our mandate. I thought that was significant. Sounds like it's OK. By the way, jobless claims today and PPI, both sides of that trade didn't work for you. If you're if you're looking for a more dovish Fed, you also had Fed governors out there. Governor Kugler. Is that how I pronounce his name, by the way? Kugler. You just did. Well, I mean, you know, I've been bad with pronunciations this week.

17:09But I think, you know, you're listening to more Fed officials try to assert the independence of the central bank for obvious reasons. I think that shift in Powell's tone about the jobs market is kind of interesting after that October jobs number. That was a big disappointment, some of the revisions. But all that being said, I think, you know, we just were talking about a nomination and what that could mean for a specific industry. I think one of the biggest issues that's being underappreciated is the fact that Trump might come in and he might just fire Powell, like just fire him. Think about it.

17:37No, Powell said not possible. So wait, Powell, the lawyer, you're telling me that it is not possible that if someone tells Donald Trump he can't do something, that he won't do it. You can fire a Fed chair for cause, but then it'll be tied up in courts. And by that time, Powell's term will probably. And you think I'm just saying like that could happen. But that would place a level of uncertainty about monetary policy and the fact that it won't be, you know, like divorced of politics. And I think either way, though, the bond market has been telling us this for weeks. Right. I mean, ever since the Fed started lowering rates, you're seeing yields are rising because the bond market is saying, we don't believe that the Fed has inflation under control.

18:10And again, yeah, regardless of who came in office, we have a really high deficit. I mean, inflationary policies are likely going to be in place either way. So I think now you're just kind of seeing them catch up to the bond market. So I was here, don't fight the Fed. You probably don't want to fight the bond market. And I think that's what you should be listening to and continue to watch as we go forward. Coming up, shares of hims and hers thinning out, notching their worst day ever as Amazon makes a push into the hair loss drug market. We'll comb through the details. Oh, boy. Ahead. Ahead, yeah.

18:38Well, some after hours action and applied material shares on the move after reporting results and numbers from that quarter when Fast Money returns. Amazon shares touching all-time highs today before pulling back. The tech giant launching a low-cost telehealth service for conditions including hair loss and motion sickness. The news sent shares of health and wellness platform Hims & Hers down 25 percent, their worst day on record. Earlier this week, Amazon also launched a new mobile discount store, Hall, which could compete with China's Timu and Xi 'an. It's in beta test on the mobile app right now.

19:09It's got a lot of cheap stuff on there that really does compete price-wise. Some old-school stuff by Amazon. Your margin is my opportunity. You think about that. I mean, that's why a platform like HIMSS was able to kind of get to where they were. And Amazon can just flip a switch, and they can be in there. So, again, it's going to be interesting to see how far across health care products and services this goes. But right now, I think HIMSS is telling you the whole story. It's also interesting because if we're willing to give Amazon credit as an investment, In other words, the callus and the drivers that Amazon can pull, these levers, they can suddenly decide we want to be profitable here when historically we haven't applied and ascribed any value to their e-commerce business or essentially to that business, that distribution, that infrastructure, that ERP, that logistics that they spent so much money on.

19:50They can they can roll this out in many different directions. And I think I think it's going higher. Yeah. And I think what's interesting is Amazon is, as far as I've seen, is not coming out with a compounded GLP ones, which that's like a big part of him's story going forward. which, you know, could be turned off at any point if the FDA comes out and decides that these are no longer in a shortage. I mean, that can get pulled really quickly. So they kind of have this coming from both sides. They now have Amazon as a competition and what happens with the GLP-1 compounded. So they definitely have pressure coming on both sides right now, which is kind of interesting.

20:18I mean, the moves on the stock on any given day based on any given headline, either from the FDA or from an Amazon, is nuts. I mean, what a roller coaster if you're in this. Yeah, but finally, Amazon at least got through that 180 level that was resistance a couple of years ago. We traded up to and seemingly failed again. And the fact that we got through it are now breaking out. We're seemingly in a new trading range. So past resistance becomes support. And I think Amazon actually might be in this new level, this new range where 180 is the floor for a period of time. Yeah, when you think of these GLP-1s and basically potential shortages or that we know that if you look at Lilly down 20 percent from its recent highs, if you look at Novo Nordisk, his roundtripped its entire year's performance, it's kind of telling you that the shortages are going to be gone in the not so distant future, which probably means that the compounds are going to be done, which means the pricing on those from Lilly and Nova are going to come down.

21:06We know there's more competition. So, again, that's probably something that is a huge headwind to Hems anyway. Coming up, the EV tax credit may be in jeopardy and it's having a big impact on electric automakers. But could this be exactly what Tesla wants? We'll dig into the charge of trade next. The first supply of materials on the move after reporting the details and the numbers from that quarter next. You're watching Fast Money Live from the NASDAQ Market Site in Times Square. Back right after this. Welcome back to Fast Money. Semi-equipment maker, applied materials dropping despite a top and bottom line beat for Q4 thanks to light revenue guidance.

21:39The conference call is underway. Steve Kovac joins us with the very latest. Steve. Hey there, Melissa. Yeah, applied materials shares are down after hours, like you said, despite those beats. Let me give you the results here. EPS was a beat at$2.32 adjusted versus $2.19 expected. Revenue is also just a slight beat here. $7.05 billion. Street wanted$6.95 billion. But shares are falling on that revenue guidance for December quarter, which only slightly missed estimates. Now, the earnings call is underway, but some comments from the CFO here. He said China has been a sore spot for the company, saying DRAM sales were down 10 percent year on year in the country.

22:15CFO also saying gross margins are still increasing despite those headwinds in China. He credited inventory management, among other things, for that one. Also said to expect gross margins of about 48 percent for the long term. We see shares down still about 5 percent, Mel. Steve, thanks. Steve Kovach. Dan? Yeah, I mean, listen, this is something we've been focused on since ASML gave that bookings guidance about a month ago. And again, a lot of folks were kind of keeping an eye on what CapEx looks like from the folks that buy these sorts of equipment. And so it's just not good enough. This stock hasn't traded particularly well over the last couple months.

22:49But that comment about DRAM, I mean, we've watched Micron. We've seen how that's been trading. Samsung is also going lower. Maybe they can pull up a Samsung chart. This is one of the worst charts in the whole world. I'm just saying like pull it up. I mean, literally, it's been global stocks. Well, there you go. We're trading the globe here, Tim. Yeah. Nice. Well, I think you're right. And I think, again, there was that confusion around because, again, Taiwan Semi, we heard about this increase in advanced foundry. They were very positive. But then the DRAM decline in China is all right back at AMAT.