International Investing Vs. U.S… And NIH Funding Cuts Impact On Drug Development 3/17/25

0:02Live 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. The international divide. Emerging market stocks have been far outperforming the S &P this year. But can the group keep its leadership in a game of would you rather? We find out where the traders would put their money right now. Plus, we're counting down to NVIDIA's big AI conference. What to expect from the GTC keynote tomorrow. What it could mean for the stock. And later, a firm drops as a soon-to-be public competitor scoops up a big deal. Netflix streaming higher on one big bull call on Wall Street.

0:35and inside Intel's best three-day rally in over 37 years. I'm Melissa Lee, coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Feinerman, Dan Nathan, and Guy Adami. We start off with what has become a rare two-day win for stocks, with major markets following up Friday's rally with more gains to kick off the week. The Dow up 350 points, the S &P 500 gaining over 0.5%. The NASDAQ getting within 75 points of the 18 ,000 level. All had been down earlier in the session, But even with today's gains, U.S. markets are far underperforming the rest of the world. The EEM emerging markets ETF up more than 8 % in 2025, while the S &P is down 3.5%.

1:16China, Brazil, Europe, Mexico, and Japan all outperforming the U.S. so far this year. This divergence got us wondering, at these levels, would you rather put money to work at home or abroad? And I'll go to our emerging markets specialist, Timothy Seymour. Well, you know, there's no question for me. I'd rather be abroad, not only because I'm the ambassador, but I also run an international ETF, iDevo, which was the I in Blysep last year. I just think that there's a lot of different reasons why this trade isn't just a two-week trade. And I think that's the debate for people. It's been – it's actually not a two-week trade.

1:52It's probably – if you look at the outperformance, DAX outperformed the S &P by 25 percent since Thanksgiving. But I'm going to coin Dan Likes is – what is it? The fateful eight. Fateful eight. So I'm going with I'm going with MIGA, which is make international great again. And it's with some irony that the rest of the world has really been rallying since this administration took office. And I think it's a it's a combination of the dollar is going to get weaker. I think there might even be like a mini Plaza Accord. Take your your history book out for people if you don't know what that reference is.

2:23But the fiscal dynamic out of Europe is important. I think deep seek was a very important event for the world. I think it's certainly beneficial to China, but I think it's beneficial to Europe. I think if you get a Ukraine deal, leave the politics aside of that. I think energy costs in Europe go way down. I think the dynamics for deregulation in Europe are very important. But you started all this with a 15-year relative underperformance. That is something that doesn't change overnight. And you can make an argument that you're starting to see this trade work bits and parts of the last couple of years.

2:51So the valuations offer you a really attractive upside, even here as a discount to the U.S. You have better dividend yields, and I think you have fiscal policy as a tailwind. Is this trade, though, really working because U.S. tech has been under pressure? And in Europe, for instance, right, it's underweighted tech relative to the United States. It's really been benefiting from the presence of industrials and banks, the things that had been going in the rally, even here in the United States. So are you saying that the tech money leaving just one of the places going? If the tech trade is back on, maybe the money doesn't come back.

3:21I mean, I've had on various international for a while, and the only one of really any significant size is China. The rest is just little EWG and DXJ, which is actually yen adjusted. But so I'm feeling a little underweighted, rest of the world. But I feel like, oh, my God. Yes, right. That's how we got here. It's just what it is. All the money flowing into a market that doesn't have the market cap to absorb it. It's just going to go up. But I feel like, God, this has been such a big move. Maybe we do see a little pullback, and I'll have to jump in anyway. God, you're smart. No, I don't. Well, no, because he's going Plaza Court.

4:03That's where you're going. Yeah, come on. No, but I hearken back to Las Vegas like eight or nine, ten years ago. When we went to Las Vegas. We went out, and we were just sort of hanging out collectively, and somebody approached us and said, is there an emerging market specialist amongst us staring straight at Tim Seymour? It's one of the highlights of the. I didn't pay anybody for that. That was legit. I mean, you know, there are people that want to know. Of course they do. Especially now. Never know. Especially now. With all that said, yeah, I agree with Tim. I mean, I think you definitely want to stay there.

4:33We talked about EWZ at the end of January, and look at how well that's performed. That's the Brazil ETF, by the way. And a weaker dollar is going to win there. And quite frankly, that's about to break through about a 15-year downtrend that we've been in. And FXI, say what you want, but now you're talking three-year highs, and I think that's got a lot of room left as well. I'm going to trade the globe here a little bit. We're just getting it in here. You know, I think a good pairs trade at this moment on a short-term basis would be shorting international along the U.S. I mean, my base case is kind of that all of this chaos that we've absorbed over the last couple of months and is doing a number on the markets because the markets are anticipating the potential for a slowdown here if we were in a full-scale trade war.

5:12I suspect that doesn't happen. I suspect as we get into mid-April, we get back to that kind of base case scenario. And that certainly happens if the market continues to go down because it worries a bit more of a slowing economy based on the policy. So to me, I think the U.S. is probably more interesting at this point. And I think we'll probably test those recent lows, the 5500 level from Friday at some point. And you may have a really good opportunity to kind of average into this trade as it relates to the U.S. The one thing I'll say is in China, there are some opportunities. If you look at like a Baidu, OK, they get the predominant amount of their sales from search related advertising.

5:46But we know what this model looks like. It looks a lot like Google. They have a video site. They have a cloud business that's growing fast. And they have Ernie. Yeah, they do. The AI. Oh, yeah. The AI. Oh, yeah. And so I just, I think a name like this. Maybe they can pull up a five-year of this. It looks a lot like Alibaba before it just took off. So to me, I think, like, you're going to find interesting opportunities, especially with all that stimulus. But I wouldn't hold your breath for this stimulus to kind of give the Chinese economy a huge bump because it hasn't over the last few years. But this is the stock.

6:16I'm sorry. Famous Ernie's for 100. Well, Bernie, Bernie and Ernie show at University of Tennessee. That, of course, yeah. Ernie Grunfeld. Ernie Grunfeld. Ernie and Ernie. Ernie on three's company. I mean, I don't know. Well, that's 506 here. Hi. Hi. 506. We have a lot of wood to chop here. Let's chop in terms of what China announced, though, because we had been talking about this huge press conference. There was a huge run up on Friday in terms of the expectations for the stimulus. The mandate to raise incomes, especially for farmers, it seems like a much more a bigger effort to directly stimulate the consumer than efforts past, which is sort of it went through the financial system in order to trickle down to the consumer.

6:59But you have to you have to give them credit for trying something different. And there's no question that your traditional infrastructure build out is not going to work here. You know, what I would get back to where I do think that, I mean, Dan's referencing this with Baidu. If you look at their tech sector and you look at the transformation that you've had, I mean policy towards their own companies, towards their national champion companies. And then you listen to the companies themselves. I mean, when you listen to Baba, this is the B in tube, right? It is. Congrats. It's about time. It's also the A in carb.

7:29Look, and it was the B in zebra, correct? Yeah, but that's the last year. And the B in blicep was last year. So Dan and I were early in the trade, which means we were wrong. But when you listen to even what Baba tells you is they're going to spend 10 times more on CapEx towards AI and cloud in the next three years than they have over the last decade, decade and a half. So the spend is there, certainly in other parts of the economy. And it gets you back to where if you believe China is looking to be competitive on a global stage in technology, I think some of these companies are going to be allowed to do what they want to do.

7:59That's why. I mean, again, the movement of Alibaba, which is relentless. And again, I think this is something that also you can you can see where global players who don't have to be in China. And again, this is something where my ETF, we didn't have to own this for a while. And we've owned it now for two or three months. But I don't think it's time to sell, Baba. I think the valuation is an argument to stay there. I agree with that. And the crux of a lot of this emerging market, and Tim will speak to this, is a weaker U.S. dollar, which, by the way, I think will continue. You know, here the administration want for lower rates.

8:27Well, if they get lower rates, they're going to get a weaker dollar as well, which, by the way, is something quietly they all probably want. Because when you have a$37 trillion debt problem, you want that currency to be weaker. And I think that's what you're going to be seeing more of. I think that's why these emerging markets trades are going to work out as well as they have been and will continue to. All right. For more on what is next for international markets, let's bring in Rebecca Patterson, former chief strategist at Bridgewater. Rebecca, great to see you. Great to see all of you. Happy St.

8:55Patrick's. Happy St. Patrick's. Nice screen there you got on. In terms of allocating, you know, the next dollar, would it be to U.S. or would it be abroad? If I'm looking at a one week or two week trade, probably abroad. But I I'm a little surprised you all haven't spent more of this first six minutes on the April 2nd tariffs that are coming that are going to be bigger than what we've seen to date and are going to be aimed at the rest of the world. That doesn't mean that we can't see a decoupling continue for some time, but it is going to be a pretty big headwind I take your point so earlier China's tilt in this latest stimulus towards the consumer is a pretty big deal It's not big in size, but it's big philosophically for president xi to actually say, okay, we're going to help the consumer The other thing they said they're going to help is technology and the stock market And we know historically China has used state-related bodies to intervene and support their own market.

9:52So even if they get hit with tariffs, do they do enough there to provide an offset? And maybe this is a low volatility but a stable-ish place to be while we go through this policy uncertainty. Maybe. I am nervous about the rest of the world being able to decouple on a sustained basis. I think what we've seen so far, primarily profit taking on the U.S., repatriation, foreigners taking their toys home. Their capital went home, and that's what weakened the dollar and lifted those markets. I think that's been the biggest factor driving this trade. That's finite. Once they rebalance, it's done unless we continue to get new positive catalysts.

10:30So in your view, it is uncertain as to whether or not Germany's stimulus plan will outweigh the negative impacts from tariffs, for instance, or China stimulus will outweigh the negative impacts? The German stimulus, I think, is actually a much bigger deal than what we're seeing in China, relatively speaking. What they're doing is a structural break from history by loosening the fiscal constraints, allowing the government to spend significantly more money, especially in defense and infrastructure. And what we know from history is when governments do this targeted fiscal stimulus, it doesn't get priced in all at once because the capital keeps rolling out over a period of years.

11:08So I do think there is a sustainable trade in European infrastructure and defense. It won't go in a straight line, but it probably has some legs to it. I mean, years, not quarters or weeks. China, I'm a little less certain about because they have so many structural headwinds, demographics just being one of them. And the tariffs are just going to make sustaining this latest bounce hard. We can spend a whole hour on the plaza accord and the possible new version of that. I don't know if the viewers today want to spend a whole hour with us on it, but that's a whole other can of worms. Rebecca, it's Karen.

11:44Let me go back to Germany, because this is such a massive shift, right? So you talk about for the next week or two, but I mean, it's a much, much bigger shift than that. Can you isolate where you would think about Germany versus some of the rest of the European markets? Yeah. So, you know, if come April 2nd And around that date, we get this new wave of tariffs. That's obviously going to include Europe. President Trump has made that very clear. And you get a pullback in some of these markets in Europe. That might be an opportunity to average into a long position. In terms of where I'd go in Europe, look, over the next 6, 12 months, personally, I'd rather be a little bit more on the defensive side.

12:25So looking across Europe, markets like Switzerland and the UK tend to have lower betas. They tend to be a little less volatile, a little more defensive. And they also offer the valuations and lack of ownership that the rest of Europe does. Germany itself, though, I would be looking for any dips in some of those big infrastructure companies, things like Arine Mattel, which I know has already rallied a lot. But just as an example, those sorts of companies that will benefit from this spending in the years to come, I think it will have legs. just like the Chips and Science Act, just like the Highway Act in the 1950s in the U.S.

13:02and defense in the 1980s. These things ran for years. We talked about a weaker dollar. What is your sort of take on the dollar going forward? Because the drop we've seen has been pretty precipitous in a very short period of time. Yes, precipitous. That's a good one. I'm happy that I was able to actually pronounce that right after you. So, you know, again, I think the dollar falling is less about what's happening in the U.S. and more about the capital flow leaving the U.S. for the rest of the world, including Europe and China. And if that rebalancing continues, the dollar weakness can continue.

13:36Foreigners had put a lot of money into the U.S. over the last few years. So there is money to keep leaving. But if they think that the U.S. could still do OK and they still want that tech exposure, they might not want to take a lot more out. The other thing I'd worry about, and we have the FOMC meeting this week. Yes, this week already. Goodness. And if the Fed starts saying they're a little more nervous about inflation expectations rising and they decide that they don't want to have two rate cuts priced in for the rest of this year, that's a signal. And if inflation keeps Fed funds on pause longer than the market's expecting, that's going to provide a measure of support for the dollar.

14:14I think the dollar is more of a range bound situation in the next few months than straight down from here, frankly. We started the segment off, Rebecca, asking the ultimate question, the ultimate would you rather, and that is U.S. or Europe. It really sounds like if you had your druthers, you would say none of the above, because it sounds like you really want to be extremely defensive, at least in the near term, with fixed income and gold, correct? That's correct. I mean, look, later this year, we are going to get a tax package through in the U.S. It is going to be incrementally stimulative, although not to the same degree as what we saw in 2017, early 2018.

14:50We're going to have much bigger tariffs. That's going to be a drag. Immigration, I think, is going to be a drag on growth. So I think for the U.S. market, we're starting from a great point, right? We had strong growth at the end of last year, strong consumer balance sheets. But I think we're going to be seeing moderation in growth. And so equities might have a positive return this year, but it's going to be single digit, not double digit. You can have some exposure overseas. to be diversified. But then I also, even at these levels, I still would be looking to have a small position in gold, small position in fixed income, and probably looking to the degree it's appropriate at actively managed hedge funds to give you some more of that diversification.

15:27Because I think we're going to be in for a wild ride this year. There's a lot of big policy initiatives underway. And frankly, some of them, if they go through, are unprecedented. Rebecca, always great to see you. Thank you. Thanks. Rebecca Patterson. All right. So what do you take away from the conversation? By the way, we've been wordsmithing very well tonight, as we often do. So I just want to add one that I think tops them all. I mean, what's going on in Germany, it's more than extraordinary. It's epical. Okay. Epical? Is that a real word? It's not just epic? E-P-E-C-H-O. Yes. No, it's not epical.

15:59It's O-C-H. I was asking. Just asking. Epic. E-P-O-C-H. Oh, epical. Yeah, okay. Oh, she's just corrected me. Well, that's from your Catholic school teachings on Sundays. I don't know if that's the way you pronounce it. Anyway, proceed, please. So what's going on in Europe is really fiscal, and I think that's part of it. But then if you look at what's outperformed this year, even over here, you could look at an XLV. So in other words, health care. But look at a Novartis. Look at a Sanofi. And then as you get into the industrials, it's not just Siemens. I mean, you have Infion, and then you have some technology companies that are really exposed to this, like SAP.

16:33So, you know, I just think that there are companies on their own merit that valuation make a lot of sense here. It doesn't mean that, yeah, it's been a huge run, and I think we don't know what's going to happen April 2nd. Meantime, NVIDIA closing well off its lows of the session, but still ending the day in the red, the worst performer in the SMH semiconductor ETF today. The company holds its AI GTC conference this week with a keynote from CEO Jensen Huang tomorrow. Investors awaiting updates on its Blackwell GPU and its next-gen Rubin chip. Shares still down 22 % from record highs hit in January.

17:04Over the last week, three analysts have lowered their price targets on the stock. So are expectations prices to sell the news, Dan? If it is sell the news, then watch out for the entire general AI trade. Because, again, we all thought good quarters, good guidance. Just your acronym. Yeah, the Gen 8. Yeah, exactly. And I played that game right. You know, I mean, listen, it sold off after the results. The stock was already down, right? There was a lot of negative sentiment. A lot of their customers had already sold off over the prior couple weeks. So I just don't know if there's anything new for them to talk about as far as the product roadmap exists right now.

17:37So I'd be most worried if the stock, let's say, rallies because it's been down a lot and then fails because that is just meaning that there's no appetite for this story right now. Or what is the incremental buyer looking for? So we were talking about this the other day. I'm more interested in what are they seeing right now, not what is a little bit down the road. What are they seeing right now? Has the story changed? You know, we come back to this. Is there going to be a lot more compute needed for inference? And is DeepSeq actually potentially a plus? Right. CapEx story. What is it? You know, again, CapEx is not written in stone.

18:10If companies decide, you know what, the environment is not so we don't view it as favorable. There's too much ambiguity out there. They'll pull back on CapEx. NVIDIA loses to that, I think. That and the fact that they promised in the back half of this year to see a reacceleration of margins. Let's see if they address that as well. It is amazing that after hearing all of the major hyperscalers come out and raise their CapEx guidance, that there is still disbelief around those numbers, right? That there's still, in investors' minds, an asterisk next to any number given by a meta, a Google, whoever.

18:41And remember, those numbers and that guidance was well after DeepSeek. They had a chance to recant or try to hedge their words or something. So I think it's important. I think everyone's saying the same thing, though, that this is an important point for the market. It's a period where the breakdown in semis has been very clear, and it goes all the way back to last summer. Invitic traded the best of all of them, as it should. It's not expensive, but this is an important moment. So to the asterisk that you just mentioned, I mean, they just gave us the guidance. They're not going to change anything, right?

19:14So if anything, like if they were to come out and be a bit more bullish about that CapEx guidance or like upgrade their guidance for the quarter or something, no one would believe it because they had the opportunity on February 26th to do that, and nothing's really changed. The other thing I'd say about the asterisk is that, you know, these stocks that got killed in 2022, Meta was down 70 % at the lows in October 2022. That stock did not start rallying until they started cutting costs and still they started firing people. They have rationalized their costs as it relates to hiring. The only thing that they'd be able to cut if the stocks were down a lot over the next few months or a year or something would be their CapEx.

19:49And that's how these companies do that. I mean, we're not, we've talked about this for years and years, you know what I mean? Like when you're spending too much on CapEx, but your revenue's slow a little bit, then there's something that has to be reacclimated. And again, you know, like we saw why all these stocks sold off after their earnings, Microsoft, Meta, Amazon, and Google, because their revenue had decelerated and they hadn't laid off that CapEx guidance. If anything, they raised it. By the way, our own Jim Cramer is speaking with NVIDIA CEO Jensen Huang live from the GTC conference on Wednesday.

20:19That's at 1015 Eastern return time on Swap on the Street with even more on mad money. Coming up, a retail replacement, Walmart, shaking things up in the buy now, pay later space. News that had shares of Affirm sinking today and what it could mean for what will be the newest stock in the space. The details next. Plus, it's not just fintech. EV leaders facing increased competition as well. How one Chinese automaker is electrifying the space in just five minutes. We'll explain when Fast Money returns.

20:50This is Fast Money with Melissa Lee right here on CNBC.

21:03Welcome back to Fast Money. Buy now, pay later. Stock affirmed falling nearly 16 percent on its lows after CNBC reported rival Klarna would take over a key partnership with Walmart. The stock recovered some of the losses, but still ended the day down more than 4%. Klarna, which on Friday filed plans to go public, will provide loans to Walmart customers in stores and online through the retailers' one pay in the coming weeks. I know Karen had been interested in Affirm leading up to this. So it was down a lot on this. But as you know, you read the 8K, Affirm said, you know, it was 5 % of GMV. It was only 2%, right, of adjusted operating income.

21:39So that's not so big. And apparently we don't know this because Klarna doesn't need to update their S1 right now that there was a lot of equity incentive. So the Walmart would get equity in in Klarna and that would probably be, you know, valuable. So how much was it really worth to to a firm if they had to go along at price the way it was priced at Klarna? Not enough. I find this really interesting. It's come back a long, long way. It had that huge run, two huge quarters. I'm going to let the dust settle a little, but I like Affirm. Yeah, I just say this. You've got to figure out what else is going on here.

22:18So this is a huge boon for Klarna before they go public. We saw this with Reddit. Remember they did this deal with Google, and that really made sure that the numbers were going to work out of the gate. So, you know, were they competing on price? What did they have to give up? This is Klarna. At the end of the day, though, for Affirm, this is a big knock, you know. I mean, like we've seen this again with Amazon. It was like, you know, we thought that, well, why wouldn't they buy them? Well, why buy the cow when you get the milk for free? So, you know, this is a space that you think is perfect for a Walmart customer, right, especially on some of the bigger items.