Markets Attempt Rebound And Opportunities in Emerging Markets, Health Care, and IPOs 1/28/25

22:07And as an investor, that's way more exciting. Right. Mike, great to see you. Thank you. You too. Mike Wilson of Morgan Stanley. more than just eight stocks in your view. Faithful eight, Mike. I'm not bringing the guests back here. But when Broadcam joined the party, I mean, and I think yesterday's really, I'm glad you teed me up there. I mean, those eight stocks, the fate of the market was really in them. So if you want to talk about it broadening out, I know we've done that a bunch over the last year or so. It was bullish that there was so much money that came out of those yesterday. The S &P outperformed in that way.

22:36Those eight stocks are like 25, 30 percent of the S &P 500. So I guess there is demand for some of these other stories. And so, again, valuations might be the silver lining. I've been trying to be. You know what? We started this year and I told you I was fairly neutral on the markets here. I am worried about the concentration. I am worried about the, you know, the kind of valuation turns that we've seen to the upside because of this euphoria in and around this theme. I think yesterday probably took a little air out of that. We're going to have Vinny and Porter on. And if you're called when they were in June on Fast money, they said make volatility great again.

23:09And they were spot, they're always spot on. But over the last couple of weeks, you've seen glimpses where volatility is going to be a story. And listen, it was a one-day event yesterday. I get it. My sense is you're going to see a lot more of that going forward. All right. Coming up, General Atlantic's Martin Escobarri joins us next where he sees the biggest opportunities in tech, emerging markets, and why he says the IPO market could be about to heat up. You're watching Fast Money in Miami, live from the iConnections Global Walls Conference. We're back in two.

24:00We've got a news alert out of the Trump administration. Eamon Javers has got the details. Eamon. Hey there, Melissa. The Trump administration is offering what amounts to a buyout to all federal workers in an email going out to the federal workforce this afternoon. The Trump administration is saying that if they offer their delayed resignation this week by February 6th, then they can continue to receive all of their pay and benefits until the end of September, even though they won't be required to do any work between now and then. So that's sort of the carrot in this carrot and stick effort. in order to make federal workers leave the workforce.

24:35They will be able to collect all of their pay, even though they're not working until September 30th, according to the email sent out today. A senior administration official saying that they expect 5 % to 10 % of the federal workforce to take this buyout offer. They say it could lead to$100 billion annually in savings for the federal government once they clear that group off the payroll of the federal workforce. So all of this part of the carrot, the stick, of course, is the return to office mandate that the Trump administration has put in place. So the federal workforce here getting a bit of a shock to the system, Melissa.

25:12They're not used to being dictated to this way. And this is something that we really haven't seen before. Interestingly, in the email, it says if you want to accept this offer, simply hit type the word reply in the email and hit send. Well, that's efficient. And Eamon, CNBC.com also is reporting some news out of the Navy. Yeah, that's right. It's related to Deep Seek. CNBC.com has gotten a hold of a memo to all sailors in the Navy that was sent out on Friday in which the Navy says that sailors are not allowed to use Deep Seek either for work or for personal purposes. They're obviously concerned about the Chinese ownership of Deep Seek.

25:53The Navy's warning saying, We would like to bring to your attention a critical update regarding a new AI model called DeepSeek. The memo says it's imperative that team members do not use DeepSeek AI for work-related tasks or for personal use. So that's an interesting response from the federal government as well, Melissa. And we may see that roll out through the entire military defense industrial complex. Eamon, thank you. Eamon Javers in Washington. The IPO market has been ice cold since our record-setting 2021. But our next guest says that is about to change. He's working with 30 companies he thinks are ready to go public right now.

26:29Martine Escobar is the co-president and head of global growth equity at General Atlantic. Martine, great to see you. Great to see you. Welcome to Fast Money. So what has changed in the environment? Is it the new administration? Is it just the cycle we are in the market? Yeah. We've been without an IPO market for three and a half years. This is the longest this century. The second longest was 18 months starting in March of 2000 after the dot com. There's about 3 ,000 companies waiting to go public. That drought has been great for growth equity because the pricing for private companies ready to go public who have not been able to access capital has meant opportunities for us.

27:03For the IPO market to open, historically, looking through the cycles, three things need to be true. You need to have at least 18 months of positive market performance, two years ripping. You need to have VIX low and relatively stable, check. Third, you need a handful of IPOs to pop. That hasn't happened. Our bet is it will happen and the IPO market will be back roaring in 2025. Now, I think the IPOs will be different. In my 25-year track record as an investor, experience as an investor, there's only been two periods where small companies can do successful IPOs, 2000 and 2021. So 2041, we'll see it again.

27:41I think the IPOs of 2025 will be larger, profitable, predictable, great companies. And we've got a handful that are eager to go and 20 plus that are ready to go. What do you think the investor appetite is for certain kinds of IPOs, certain kinds of industries? Has anything changed because of yesterday's rethink about AI and deep seek in terms of the portfolio companies that you have right now that focus on AI and technology? I'm excited about the news of yesterday. I mean, it's a talk of time. You guys are tired of talking about AI. No, not at all. Price of intelligence came down. That's good for the world.

28:14And what we're seeing is all our portfolio companies are using AI to cut costs, to drive productivity, and ROI is already there. The next generation of AI is the application layer. After five years of sort of venture bets in the application layer, we're finally seeing companies that are leading, that are creating new services using AI models, proprietary data, software that works better. We just did three major investments in AI. I think the next two, three years will be very exciting on the application layer. And I think investors will look for that. Martin, you just mentioned profitability. That's something that should be a key metric when you're going public.

28:54What are some of the other metrics you think investors should focus on or some of the things that you guys are focused on that kind of ticks a lot of boxes and signals that this company is ready to go public? Yeah, listen, when we look at investings, and I think public market investors are no different, the size of the market, the size of the price. We want companies that are going after vast companies. We are companies that are profitable. And then we want companies whose profitability has moat. Is it defensible? Do you have true competitive advantage or are you just experiencing profits, temporary profits, because you were first mover?

29:23But that's not defensible. So I think you want large markets and defensibility of profits in addition to profits. Let's switch gears to emerging markets because that's something you like. You know, Argentina, a lot of people are going to be talking about that for years to come. And there are many chapters left. But on the margins, incredible success story. The flip side of the coin is Brazil. You saw me looking at it. We're at a 10-year low in the EWZ, flirting with a 20-year low. Is there a potential turnaround in that part of South America? We've been investors in the emerging markets for 22 years.

29:52And for 22 years, we've made more ROI, more IRR in the emerging markets than developed markets. It is tricky. It is harder. If you go back 75 years, today we are at the highest discount for emerging markets that we've ever seen, 75%. We haven't seen it since World War II. You can buy the entire country of Brazil for seven times earnings. It's pretty exciting times. It is risky. But I think at seven times earnings, you get your money back in dividends in four or five years. I think you're doing okay. Martin, so great to speak with you. Thank you. Thank you. Great to see you. Martin Escobar of General Atlantic.

30:29Good guy trading the globe over there. I mean, Tim Seymour rubs off on all of them. I know. But, you know, one thing, and again, I'm not going to kind of jump the guys here from Seawolf, But, you know, you were on stage with them earlier today and they're starting to look, you know, far afield here. And I think that is going to become, as you're looking for value in the public markets, as the concentration in some of these names have seen crazy multiple expansion here, I think there's probably going to be some great opportunities outside the U.S. We've got an earnings alert here on Starbucks. Shares just turning lower in the after hours after the coffee chain's latest earnings report.

30:57It was Brian Nichols' first full quarter since becoming CEO in September. CNBC's Courtney Reagan's got all the numbers. Court. Hi, Mel. Good to see you. So the coffee giant did beat on earnings by two cents, slightly on revenue, too. Total same-store sales lower for the fourth straight quarter, but also coming in better than expected at down 4%. China comparable sales down 6%. Transactions overall down 6%. Average ticket up 3%. And then on the call, which is ongoing right now, Nickel discussed his back-to-Starbucks strategy. He's talking about investing in the staff, processing, and technology, all to get back to that four-minute delivery promise.

31:31And Nichols noting quick changes that they've made, including 40 percent fewer discounted transactions in this most recent quarter, also eliminating the extra charge for those non-dairy milk customizations. But he notes plans to further simplify the menu. He wants to reduce beverage and food skews by 30 percent by the end of fiscal 2025. He also sees opportunity to potentially double stores in the United States. Coffee condiment bars, those are coming back, along with ceramic mugs and free coffee refills for customers dining in. Remember, Starbucks is sort of that third place location. Still no full guidance from the company.

32:05They suspended it when Nickel came in. But the CFO did note at least some puts and takes expected in the current quarter here and there. So maybe the analysts can work a little bit off that. Brian Nickel will be on Squawk on the Street tomorrow. He's going to discuss the quarter, of course, and a strategy for the turnaround. So make sure to tune into that. But Melissa, back down to you in Miami. All right, Cord, thank you. Courtney Reagan on Starbucks. And again, we're watching this very closely. I mean, making the experience much better, making the store more efficient. It can only be more efficient.

32:35Well, I'm not trying to be wise. You know that's true. Yeah. And you go to Starbucks almost every single day when you're on fast. To get other people. Yes, to get everybody else. It's not for myself. I know. However, I mean, if you look, comps were lousy, but they were better than feared. But margins were down about 20 basis points. That is going to be a problem. And if our crack staff in EC, and they are a crack staff, can look at a five-year chart, I mean, we've been in a pretty significant downtrend since the summer of 2021, which we have not broken. And I fear that this little pop we've seen is going to be sold off.

33:07So it's not a disastrous quarter. I don't think it's good enough, though. Yeah. And again, you're going to have to give them a little time. But the stock had that huge gap this summer, so it might have pulled forward a lot of that. So if you talk about doubling market costs and reducing discounts, that might be a bit of a disconnect here. It might kind of weigh on margins also. All right. Coming up, big short traders Porter Collins and Vincent Daniel will join us to lay out the under the radar market impact from the Trump administration. Fast Money Live from the iConnections Global Alts Conference in Miami continues.

33:51Welcome back to Fast Money Live from the iConnections Global Alts Conference in Miami Beach. Vincent Daniel and Porter Collins are known for shorting the housing market ahead of the financial crisis. Their story was documented in the best-selling book, The Big Short, which became a feature film. Their current firm, Seawolf Capital, is coming off a blockbuster year. Vinnie and Porter join us now. Guys, great to see you. Great to be back. And when I say blockbuster, we're talking 66 % returns last year. So what did you do last year to get those 60? I mean, what was it that got you there? And where are you now?

34:25So, you know, we had a good year coming into the election. And if you think about the way we invest, people always think we're bearish, which we can be. We can be. We can be bearish. Yeah. But, you know, you got to think in terms of probabilities. Right. And we thought that, you know, Trump had a good probability, not a political statement, had a good probability of winning. And, you know, and then you take that to, well, if he wins, what are the stocks that go up the most and possibly fall the least if he doesn't win? And so Vincent came on this show, pitched Fannie and Freddie Preferreds, which more than doubled.

35:00I pitched a stock that more than doubled. Not a lot of downside, a lot of upside. And so we sit here and we're scouring the globe and everyone's losing brain cells around AI, all that stuff. And how do we make easy money? And that's our focus right now. I mean, you actually said on stage during our big short panel today, AI, we don't want any part of that trade. Stay away. OK. You had Brad on before. The last thing I want to do is upstage him. I'd look like an idiot. That's the world's most proud of trade at this point. And that too. And you are contrarian investors. So where are you going now?

35:35Well, actually, we're a little bit AI in the fact that, OK, if you look at the cheapest stocks in the world, you do screens, they all show up emerging markets. And we pitched Brazil and Chinese stocks and came up and said, everyone hates these Chinese stocks. Alibaba, which is AI, came out and said that their model is better than DeepSeek. And I didn't know what DeepSeek was before Saturday and still don't. But a lot of ways to win with the stock trading at four and a half times earnings, that's cash. And the famous question we asked ourselves, what if it goes right? Can it trade to 15 times? That's 3x our money.

36:24And so that's the type of thing we're looking at and we get excited about and saying, wow, this market's really cheap. Everyone talks about how expensive things are, but go to Brazil. You talk about just the guests just had 10 % dividend yields in the index. And so where can we make money that's where everyone else is not looking? You know, Vinny, with Melissa, your panel's been the highlight the last couple of years at this conference. And when you were on the show in June, our show, you talked about, and I teased it, Make Vol Great Again. And, you know, we've seen at least five or six different times over the last eight or nine months where it has been great.

36:59They're one-day events. I think you're going to start to see more prolonged events. What are your thoughts? Absolutely. And I think I said on the panel today that the straw that stirs the drink is President Trump. Like, it's no longer the Fed. And look, we've seen it today. We've seen it for seven days so far. He comes out and moves markets. And it's our job to be extremely objective and to try to determine where the puck is going. In many respects, what he wants is pretty clear, like in terms of American exceptionalism, whether he's going to use tariffs or not in terms of agreements. Our view is that hopefully we can take advantage of where we think he wants to go and what is most probable of what he's going to get done.

37:40So talking about the emerging market trade, in order for this to work, and in order for American exceptionalism to work, the dollar has to weaken, in my opinion. And if the dollar starts to weaken, a lot of people are going to start looking at emerging market stocks relative to owning the top 15 names. And this is where we see value. And I know value is a four-letter word for a lot of people these days. But in general, that's the crux of our analysis and in our process. And then from there, we go from determining rates to change. And that's where we see the biggest opportunity. Porter, you just heard Martin, General Anik, one of the most successful VC firms, I think, of the last 30 years or so.

38:20They're excited about the IPO market reopening. How do you feel about M &A and the potential for deregulation in some sectors? Do you think that will be a big theme in 2025? I think it's the deregulation is probably bigger than people can wrap their heads around. And so, you know, Steve talked about the panel. There's gonna be a lot of bank M &A coming this year. Steve Eisman. Yep, Steve Eisman. Sorry, our old boss. And, you know, there's oil and gas. There's a lot of deregulation coming. There's already been a lot of mergers in this stuff. And so I think you're gonna see a lot of M &A happen.

38:54I mean, they last year they stopped the You know, the JetBlue merger with Spirit. Stuff like that's probably gonna go through. And so I think you're gonna see a lot more of this, a lot more business friendly. And that's why, you know, we're pretty bullish. And the stuff that we see, you know, we have more ideas than capital. And there's just a lot of stuff that we see outside the top 15 names. And it's pretty exciting for us. After a year like last year, though, I would imagine that people are knocking at your doors. You mentioned you have a lot of ideas and not enough capital. Capital's all around us here at this conference.

39:26I mean, we're the least professional guys here. The fact of the matter is we actually really enjoy running our own money. And look, if we were to open up, we would look for a partner that actually agrees with us. Our process does produce volatility in our return streams. And so you have to accept that. We've learned to accept it and deal with it. But, you know, it's funny walking around this conference. While all the people are looking for capital, we got about like five or six stock ideas from people who are coming up to us saying, hey, value idiots. Did you know these three, four names? Right.

39:58And we're like, no, I've never looked at this. And that starts our work that we need to do to see whether it will go in the portfolio. So you've got like a little notebook, right? Oh, yeah, absolutely. And all that. When we were walking through the halls, you're also telling me about F-Type, which is a stock that we talk about on the show. We talked about it when it was going straight up. And then we talked about it when it went straight down on the back of the Money Waters short report. Where are you now on that? Well, we sold the stock at 20-something dollars, and it went up 10x on us. We doubled our money.

40:27We were high-fiving each other, and then it went up 10x. And so we knew the name and, you know, the short report caused a lot of volatility. We like volatility. So the stock went from$200 to$75. And at$75, we knew the stock. We re-underrode it pretty quickly. And we said, you know, we think this is a little bit overblown. And we bought the stock. And so that's the opportunity of being small and nimble and, you know, constantly re-evaluating the process. Last question, because we're out of time, unfortunately. But your take on what the Fed could possibly do this year, I thought was really interesting, because I feel like that is something that investors are not at all baking in.

41:05I mean, I asked Mike Wilson and Morgan Stanley, do you think there's a chance that the Fed raises rates? And you said on stage that you thought that there was a chance. It depends. Right. So if Trump's policies creates a very pro-growth agenda, and we do see economic growth, I think six months from now, there's a higher probability than what the market's expecting that we will be talking about, thinking about raising rates. It's possible, but that's six months from now. I don't think that's a today event. There's a lot of road to go down. Yes. It's not as simple as it was in, you know, 22, where we knew they were going to hike rates.

41:39Right. Right? That was easy. This is a little bit harder right now. Always great to get your guys' perspectives. Thank you so much. Awesome. Thanks for having us on. Danny and Porter. They are fun. People, I mean, when they see these guys with Steve and Danny. They run after them in the hallways. It's like share, four of them. Share? It's like four shares. Like four shares. That's the worst analogy. I did not think that's where you were going with that one. But, you know, it works. Quite talented, though. It's funny, you know, these guys come on. We've known them for a while. They have that great track record.

42:11They seem pretty objective all the time. They're really fun, actually, outside of the markets and stuff like that. So very excitable, too. Try to be. Yeah. Thanks, guys. Thank you. Appreciate it. Coming up, a few fast movers catching our attention in today's session. How the traders are handling the moves in GM, Lockheed Martin, and Royal Caribbean. More fast money live from the iConnections Global Alts Conference in Miami continues right after this.

42:49Welcome back to Fast Money. A couple of stocks moving that caught our attention today. We'll start with General Motors. Shares of the legacy automaker tanking despite posting better than expected results for the quarter. Concerns over potential tariff impacts and changes to EV pricing driving the stock to its biggest drop since early 2020. Dan. You know, it's interesting. Again, tariffs has become a thing now. And I think the guys were just talking about the potential for volatility around uncertain policy. That's not something we're really focused on, I guess, for the last few years. But you see a company like this, the way they performed over the last year, at least the stock, you say to yourself, OK, they've got to kind of knock the cover off the ball.

43:24I think the guidance was a little lacking. There's uncertainty around policy. I see why the stock was down 10 % on those numbers. It's interesting because obviously tomorrow's Tesla's earnings. So this will be compared, you know, in terms of what they say about ETS. A hundred percent. And the commentary around that and to, you know, Danny Moses' point on stage with you today, it's going to be interesting if interest rates come up with Elon Musk. So that's something to watch for. Because he has talked about high interest rates hurting his business before. So could it happen again? Take a look at shares of Lockheed Martin.

43:51That stock plunging after missing on revenue, issuing disappointing guidance. Defense name seeing its worst day since October 2021, hitting its lowest level since last July. We actually had Raytheon, I think, too, out disappointing. Well, you know, these stocks all got the benefit of the doubt spring of last year into the fall. And then when it became clear that candidate Trump looked like he was going to win from the election on, disastrous for a myriad of different reasons. What it means is they're no longer getting the benefit of the doubt, and the market is now focused on that guidance. Valuation is fine, but I guess some of the feelings around this whole space is sort of squishy right now.

44:27And Cruise Line Royal Caribbean trading at all-time highs in the back of an earnings beat. The company issuing strong guidance saying it expects increased demand in the coming year. Carnival Norwegian Cruise Line is catching the wave, both up about 8%. This really shows, Dan, that the consumer is out there, he or she is spending. Yeah, we've seen it in the airlines too, right? Some of those names have gone parabolic. I think the most interesting takeaway there, and I know, Guy, you're going to be excited about this, is that Royal Caribbean, they're entering the river cruise market. The guys are waiting for a river cruise.

44:54Which is something that I think you're probably looking forward to. Yeah, yeah. Yeah. Up next, Final Trades.

45:10We'll be in Miami tomorrow at 5 p.m. with another huge lineup covering everything from the Fed to big tech's earnings kickoff. So stay tuned for that. Time for the final trade. Around the horn, Dan. Yeah, Baidu out of China. A lot of cash. Welcome to this. It's a big day. Guy. Derek Mullen. Yes. From Dublin, Ireland, is flying to New York for the live show. So, Derek. That's amazing. You're the man. Look at Alibaba, Melissa Lee. I will. And hi, Derek. Thanks for flying in. Thank you for watching Fast Money. Live from Miami, Mad Money with Jim Kramer starts right now.

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