Is The Risk Trade Off?... And Another Rare Earth Rout 10/17/25

0:02Live from the Nasdaq market site in the heart of New York City's Times Square. This is Fast chair, one of U.S. producers, from a U.S. producer, about where things stand with China and how trade tensions are impacting his company. Plus, regional banks try to rebound after yesterday's plunge. Crude oil hits new five-month lows. And we're counting down to earnings from Netflix and Tesla next week. What to expect from the reports and how options traders are positioning right now. I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Feinerman, Bono and Eisen, and Carter Braxton Worth.

0:45We start off with a festive Friday on Wall Street. Stocks closing out the week near their highs of the session, locking in some solid gains since Monday. The Dow and S &P jumping more than 1.5 percent. The Nasdaq and Russell 2000 up more than 2 percent. The strength coming in as investors run into the safety trades. Gold down today, but up more than 6 percent this week. And bond prices rising, too. Yields on the 10-year yield. Bond yields on the 10-year, down 20 basis points since the start of the week. Meanwhile, investors continue to cash out of crypto. Bitcoin hitting its lowest level since June, with other tokens lower as well.

1:18So will today's risk-off action continue into next week? And what could it mean for the broader market? I don't know, Tim, how you decipher this. There's an appetite for risk on one hand, but there's not an appetite for risk when you take a look at the other trades. Well, it feels a little bit like the barbell trade that I think makes a lot of sense overall anyway. There's a place for some growth and maybe a decent part of aggressive growth, but then some value. And I look at health care and I look at a place where whatever health care proxy you're looking to invest, whether it's one of the ETFs or whether it's actually investing in a handful of the core names that have been really looking to base for a couple of years.

1:54I think there's an argument for both sides of the trade. Remember, where were we a week ago? What a difference a week makes. I mean, we went last Friday into a weekend where even as we got into late on Sunday at some point where futures were also indicating another week, we were going to be looking at a combined kind of two day down four or five percent move. And suddenly we've now had the best week since August after having the worst week since August. So I think the White House has helped calm fears about a fresh. It's not fresh, is it? I guess it's it's China. and where are we? And the rhetoric was very conciliatory or very comfortable that we're going to be in a place.

2:30The regional bank concerns, which I know were just discussed, I think are something that the market is focused on. But again, I think of this as a week when banks gave you full steam ahead in terms of a trade, where I actually think the regional banks are possibly more interesting than the money center banks at this point. So again, sprinkling a week that it's all relative to where we started. We're also getting data in terms of cash on the sidelines coming into this market. We talked about that. There's a lot of money on the sidelines. As rates come down, more cash comes into the market, or at least that was the trade this week.

3:05It's interesting to see where the gains were made in the markets this week. I mean, semiconductors were up almost 6 % on the week. At the same time, the equal weight S &P 500 notching almost similar gains, neck-to-neck gains with the S &P 500 market cap weight. So it's sort of a weird trade going on, I think. There's a whole lot of weird going on. I mean, I don't know what the differential was between very early this morning where the futures were and where we ended up. Lots happened. And yet I don't know that anything has really happened, but feels like it. I like going into earnings season where we have something very tangible to sort of, you know, shoot against.

3:40So I like that more than whatever the headlines may be. And they may change every day or within a day. So I do like the idea that maybe things are calmer on the U.S.-China trade front. But I agree with Tim on the banks. I thought banks were solid, which is great not just for the banks, but banks are really, you know, that's a good look at the economy. And so that seemed like the economy was in pretty good shape. So I like the banks and agree with the regional. I think that this is not the sort of systemic threat that the Silicon Valley bank situation was in any way. So I think that's sort of an interesting thing.

4:18We had a few banks today, regionals, that had good earnings, solid, truest financial, a bunch of others. Yeah, I agree in terms of what's been reported. It has been relatively strong, and I think that's reassured the market. I think we have to remind ourselves that there is a bit of a data blackout. So you should expect some additional volatility because people are essentially trying to attach some ability to garner information from every incremental piece of data. And that's going to be scrutinized a little bit more, being that we just don't have the same steady flow of information to kind of hang our hats on.

4:49As far as the banking crisis is concerned, I agree. There's nothing yet to suggest that there is a contagion. But I can understand that investors remember 2023 and are likely looking for some indication that perhaps this is not just a self-contained situation. We have kind of spoken ad nauseum about how the proliferation of private credit and buy now, pay later, all these other things that are a little bit more difficult to monitor. So while I don't disagree with everybody else in terms of what we have had so far leads us to believe that there is expansion. We've seen equal weighted kind of perform well.

5:22So you are seeing that broadening of the market. But given where we are and if you look at valuations and particularly if you look at the A.I. related valuations up in the 90th or 95th percentile, I think it is to be expected that people want to be the first out of the door. What is it? FIFO, if you will, as opposed to being kind of like held and forced to kind of hold that drawdown. And so while I do want to point to the market performance, I do think Bitcoin and gold. And then when you couple that in with the volatility that we that we have seen in the in the 10 year treasury, it does kind of lead people to be a little bit more on edge.

5:58And given where we are with performance, I can understand that. There's a lot to chart on this Friday, but before we get to Carter Braxton Worth, we want to get to some breaking news on Boeing, which is sending the shares higher by about 2%. Phil Abode's got all the details here. Phil. And Melissa, they're moving higher because the FAA has given Boeing its approval to increase 737 MAX monthly production from 38 per month, where they are right now, up to 42 per month. Now, we knew that Boeing was going to ask for this approval at some point from the FAA, but we've been told that this afternoon, Brian Bedford, the administrator for the FAA, has started notifying leaders on Capitol Hill that after reviewing the process, he has concluded that Boeing has the steps completed and has the processes in place to safely and effectively move up to 42 per month in a statement the FAA released just a few minutes ago to us.

6:50They said the FAA safety inspectors conducted extensive reviews of Boeing's production lines to ensure that this small production rate increase will be done safely. They go on to say that they will continue to monitor Boeing. And by the way, if Boeing wants to go up to 47 per month at some point, they're going to need FAA approval. In a statement, Boeing says what you would expect it to say, which is this is what we've been waiting for. The company says our team has followed a disciplined rate readiness process guided by our safety management system and tracked by key performance indicators that were agreed upon with the FAA.

7:26We remain committed to implementing our safety and quality plan and working with our suppliers to increase production in this increase in a disciplined manner. We appreciate the work by our team and our suppliers and the FAA to ensure we are prepared to increase production with safety quality at the forefront. So there you have it, Melissa. Not a surprise in terms of we knew it was going to happen at some point, but now it is official. Boeing can increase 737 MAX monthly production from 38 per month up to 42 per month. And you know how this goes, Melissa. Production drives deliveries, which drives free cash flow.

8:06And Kelly Ortberg, the CEO of Boeing, has already said he believes they will be positive free cash low this quarter. And this could be a key component to that. Phil, can you put this raise to 42 in perspective? What have Boeing's goals been by the end of the year in terms of production ramp? What had it been before? Well, they've always wanted to get up to 42 by the end of this year. And initially, some people thought they might get there maybe in the third quarter, but it's been pretty clear. And Boeing has been very adamant that they will not rush this. They wanted to make sure that the FAA completely signed off.

8:41And by the way, every day the FAA gets data from Boeing, from the manufacturing process in terms of what's working, what's not working, what needs improvement. And they've seen the data for some time. They had a meeting about three weeks ago where they finally went over the six key performance indicators. And at that meeting, the FAA said, OK, you've shown that you can do this consistently. So Boeing wanted to get to 42, thought they might get there in the third quarter. Realistically, everybody said fourth quarter. Now the question becomes, can they sustain this, not just in terms of quality, but in terms of their supply chain, and then potentially move up to 47 per year or per month, excuse me, sometime next year.

9:20Right. Phil, thanks. You bet. Phil LeBeau, who's here at the NASDAQ, but not here on the desk. Yeah, why is he here? I don't know. I feel like we're down the hall. You can climb the stairs. I'd love him here. We're so grateful for the report, Phil. Is this the final piece in the Boeing turnaround story? It sure helps. And again, we got Q3 deliveries, which are 160 aircraft versus 100. I think I wrote this down, 121 versus the previous year. So, I mean, we've already started to see a difference. And what that means in terms of Q3 revenues is almost a 30 percent increase. So, as Phil said, I don't think the street has priced in cash flow positive on this company for the fourth quarter.

9:56And I think that's something that's a driver. Remember, shares have been kind of caught in this sideways move for the stock that, by the way, is the B in band or bland, depending how you're playing this at home. I think this is a driver. I think analyst community can follow through now with upgrades. Carter, there's a lot to chart, but since we're in the Boeing silo here, what does the chart look like here for this one? Sure. I mean, obviously, Boeing is in the midst of as long as it's taken finally getting out of the mess that it's been in for, I mean, years, five, seven, eight years. And so my bias is up and leave it at that.

10:31But in terms of the, you know, the great conversation you're having about all the things that went on this week, I mean, I would say the key data point, it's twofold. The two most defensive things there are were up smartly. Yes. Bonds, U.S. Treasuries, both two year, 10 year and utilities. Right. We know that reads are defensive until they're not. Those office buildings could be a problem. And we know that health care is defensive until it's not. And staples. They're horrible consumer staple stocks that are in 10-year downtrends, as we know. The two most defensive things. And that's the story of the week with some of the most aggressive things really hitting the skids.

11:10And I would say, of course, that's crypto. Meantime, Americans' view on the economy turned negative, more negative in the third quarter, according to CNBC's All-America Economic Survey. For more, let's bring in CNBC's Steve Leisman. Steve. Well, let's say, yeah, we definitely had a turndown. It looks like there's a couple issues here. One is inflation. Another is jobs. And I think the shutdown also looks to be bothering average Americans. And it's kind of a reality check. Obviously, you cover the stock market every day. It's been going up, people getting wealthier. Not necessarily getting that loving feeling throughout America.

11:45We polled 1 ,000 people. Take a look, for example, at the jobs data. You can see, or there's the inflation data, 75%. Put those two blue bars together, think prices are rising, and 50 % say they're rising faster than usual. A key part of that graph, you can't see it there, but a very low number think their wages are going to be increasing. Now, look at the jobs outlook. You can see that a higher percentage than normal are more worried about being able to find a job or worried about losing their job, even though the number who think they can find a job is actually pretty healthy. So and all of that, by the way, you can look at the individual issues that we ask about President Trump.

12:23And you can see he does well on the southern border, but more negative on deporting illegal immigrants. And those two in the bottom, I think, are key. Got way more negative, that minus 15 percent on tariffs and more negative still on inflation and the cost of living. So those are the things bothering Americans. Stocks continue to go up. They're not that pessimistic on the stock market. But gold was the number one choice among when we asked people what the best investment was. Which seems telling in and of itself, Steve. Is there any breakdown in terms of demographics of your sample? Sure. A lot of demographic breakdowns.

13:04A lot of this is partisan. And you can look at things. And as soon as the party in power changes in the White House, Melissa, you get a flip in terms of how Republicans and Democrats feel about the economy. So we watch independents and what we find is that Democrats are minus 90, for example, on the president. Republicans are plus 90. But it's the independents that are sort of minus 30, minus 20, both on the president's handling of economic issues and indeed on the economy itself. So that's a place where you might get a little bit closer view of what people really think, aside from the partisanship, which is obviously runs throughout all of this survey.

13:43And was the survey in the field during the shutdown or at the beginning of the shutdown since we're 17 days in or so? Yes, it was. We were wondering if this was going to be a quick shutdown, if we should withdraw those questions. But it ended up being a good thing they were in there. And what we find is that 53 percent of the public says they would for the economic damage, they would blame Republicans and the president. Thirty seven percent say Democrats. That's the way they're thinking about it. So and we're going to talk Monday, Melissa, about Americans' views on health care, which is obviously a big part of the debate surrounding this shutdown.

14:17Steve, it's Karen. Thanks for being on. Let me just do a survey of one, which is you. What's your take on the economy right now? Well, I think the idea of it being a bifurcated economy certainly is not my own original thought, but I think that's the case. I mean, you look at some of the returns that are out there in the stock market and really the world that we live in, the milieu that we live in, and it's one where there's a lot of wealth around. I'm not sure that's so true. I think the tariffs have potentially been pretty disruptive on a small business or a small manufacturing level in ways that don't necessarily show up in the data.

14:53And of course, we don't have any data. So I am concerned about a kind of hollowing out in the middle and the lower end until these tariffs become something that people understand how to deal with, if they can deal with themselves. But you can imagine places that we're getting, you know, small businesses that were getting imports from overseas that now pay more. Maybe their business plan doesn't work. I also think there's a lot of uncertainty out there. And that's something we've picked up in business surveys as well as small business surveys. And also, I think it's a big deal in the responses that we've been getting.

15:26Steve, always great to see you. Thank you. Pleasure. Steve Leisman. Interesting to see this degree of caution when it comes to the economy, how they feel, how they feel about inflation. And yet, all the indications from the bank CEOs indicate that consumers are spending, that there is no letup in consumer spending. So the consumer appears to be strong when you look at that data point. When you actually survey these consumers, there is some indication that they don't feel as good. Yeah, I think some of the survey data does have to be taken with a grain of salt or at least put in context. Two things.

15:56I think a lot of times there's a lot of championing about U.S. ownership of the stock market. But I think that has to be a little bit more nuanced. You need to look at how much of their actual employment wages are replaced by the amount of investment that they have. Because then that gives you a relative amount of, like, replacement and wealth effect and things of that nature. aside from that like the consumer is almost in a position where they're where they're forced to spin i think that's the the other kind of caveat here where we have had inflation and it's pulled back but price prices remain elevated and the consumer spinning data to me needs to be drilled down in terms of how much of that is actually uh discretionary spinning and how much of that is just necessary day-to-day transactions yeah carter i want to go to you on some of these traits that We saw, you know, that were notable, as you pointed out, the move in gold, the move in rates.

16:45What are you anticipating at this point looking at the charts? Yeah, well, again, it all feels a little soft, right, for lack of any more perfect word. Oil is troublesome. Regional banks and others a bit troublesome. And big banks, despite the big news, not following through. Again, yields making a storytelling. And then gold, of course, which has been spectacular, reversing today. It's important to note also, here we are exactly one month later, the S &P is unchanged. Literally, he closed at 6664. And if you look at where we were on, I guess it was October 19th or Friday, four weeks ago, it's 6664.

17:28Not that that's a magic number, but the market is unchanged. Now, after a big run-up and a consolidation like that, of course, the case can be made that that's the pause that refreshes, that you consolidate only to reassert yourself and go higher. Or, of course, it's the opposite, which is it's a stall and it's a churn. Based on some of the action in the constituents, again, whether it's certain energy stocks, the way utilities are acting, the way regional banks, and so forth, my hunch is that this is not the pause that refreshes, but something less sanguine. All right, let's talk regionals now.

18:03Shares of Zions Bancorp trying to rebound from yesterday's route. The stock up nearly 6 % today, but still down 5 % this week. Analysts at Baird upgrading the battered regional from neutral to outperform, saying yesterday's billion-dollar market cap loss in reaction to a$50 million charge-off was, quote, excessive. The firm has a$65 price target on the stock. Some of the arguments are they're much more disciplined when it comes to extending credit in this cycle. And so, therefore, you know, the quality should be better here. I guess I'm maybe I'm being naive, but I have not heard outside of these.

18:37You know, we've we've heard a handful of call them isolated, idiosyncratic, you know, whatever you want to do. In fact, you know, when we had Tom Mishaw from KPW on earlier in the week, I mean, the argument was that the regionals are in a really interesting place because not only do you have some tailwinds that are going on for core businesses, but lower interest rates, but also a regulatory environment that might actually start to see some more consolidation in the space. So I look at regionals and I look at them certainly relative to the S &P. They've really underperformed. But relative to the money center banks, it's been a terrible trade.

19:09And I'm not sure that that's a trade people have on. I think regionals actually from here over money center banks is where you want to be. Well, I'm positioned in money center banks, but I do have some regional exposure. And I think that there was I agree with everything Tim said. I really don't think this is, as I said earlier, the start of any kind of systemic SVB like anything. I think that some of the trends are by the way. SVB was proven to be not. Well, there was a couple. I mean, yeah, First Republic did go under. And yeah. But what? Oh, those guys. Yeah. Right. I love those guys. Yeah.

19:50That was a great thing. Anyway, but now they're part of J.P. Morgan, so I'm sure they're very happy. But the other thing about the regionals is that we are seeing regulation, which, you know, decrease regulation, but also the idea of mergers being able to happen. We're starting to see a little bit of that. I think that will continue to accelerate. Rates coming down better for them. I like that space. I think it's interesting. I get all of what you say in terms of the potential. They act terribly. I mean, the chart is just it doesn't act like the money center bank. It doesn't act like it has the wind at its back.

20:27It's a different animal than the money center banks. They don't have they don't have the money center banks have this giant capital markets investment banking thing that's really been great. The regionals actually are seeing a little bit more pressure on deposit prices or deposit costs so that their NIM is, you know, getting hurt a little bit. Their efficiency is decent, though, and I think rates coming down is better for them. I also think some of the real estate pockets that were so problematic, that's sort of abating a little bit. And when you put on top of that regulation and mergers, I think it's an interesting place to be.

21:05Carter, what's your verdict on the chart for regionals? Well, I mean, maybe just look at the statistics. And you used a great old-time technical expression. They act poorly. So forget the KRE, which doesn't have a lot of history and only has maybe 40, 50 constituents. The Nasdaq Bank Index has some 300. It goes back to 1970. Right now, that index is making all-time lows to the S &P. I mean, the history of bank operators in the United States, it's a highly risky business. And if you get it wrong, you go out of business. And these are trading assets. They're not investment assets. Coming up, Apple making waves in China with its new iPhone Air.

21:45We'll take a closer look at the latest data and what this means for the tech giant next. Plus, high interest in low energy to close out the week. Oil under serious pressure as economic uncertainty builds. What's next for black gold right after this?

22:04Welcome back to Fast Money. Apple shares popping 2 % to close out the week on some positive reports of strong demand in the key China market. For more, let's bring in CBC's Steve Kovac. Hey, Steve. Hey, Mel. Yeah, we're seeing a lot of evidence now that the iPhone is seeing somewhat of a resurgence here. We saw it last quarter in earnings. We saw the early data of the iPhone 17 and then now the iPhone Air, which was a little delayed over there in China due to some regulatory issues. They got it off the ground today and we're already getting signs that it's a real hot seller and demand is pretty high for it.

22:35But look, Tim Cooks has spent the last past week over there in China doing a bit of a tour. He met with customers. He met with some regulators and things like that, made a promise, at least according to state media, to continue increasing investment in the country, though no specifics on that. He also had a custom made labubu made of himself. That's all part of the show going out there. But look, this is all happening at the same time. As important as China is to Apple, it's the second biggest market outside the United States. We're still seeing Apple and Tim Cook increasingly take its dependence away from China and onto other places.

23:12We talk about India a lot as a place for U.S.-bound iPhones are being made, and plus Vietnam for all those other accessories. And look, we're going to get earnings here, Mel, in 13 days from today, and we're going to get our first official indication of how big this cycle is for the iPhone 17. It's really interesting to watch. AI doesn't even play a part in here, but we're already seeing some positive momentum compared to last year, Mel. You mentioned Tim Cook's China tour and also part of the China tour. I thought that was interesting, Steve, is his willingness to sort of I don't want to say kowtow, but, you know, placate some of the Chinese regulators.

23:51I mean, he's part of a board of Tsinghua University. He's made a donation to Tsinghua. And then he also met with Ho Li Feng, which is the trade negotiator for China. Presumably, you know, he's playing the Chinese side as well as the U.S. side. You know, of course, he gave Trump a hunk of gold, basically. Yeah, the golden trophy. No golden trophies, as far as I can tell on this one. But look, Tim Cook is really experienced doing this kind of stuff in China. We're just not used to seeing him do it in the United States with the United States president. So he's been playing sort of politician in China for many years now.