Monster Move In Metals… and Big Tech’s AI Trade gets tested 1/26/26

22:10So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.

22:22I want to grow the game so every kid can fall in love with soccer like I did. So I asked myself, what would you like the power to do? My answers inspired me to invent a pop-up soccer goal that can turn any basketball court into a street soccer pitch. Bank of America champion street soccer advocate Kyle Martino and everyone who dares to ask, what would you like the power to do? Bank of America, proud to be the official bank of U.S. soccer and FIFA World Cup 2026. Bank of America, N.A., member FDSE. Welcome back to Fast Money. Health insurance stocks dropping after hours. The Wall Street Journal reporting the Trump administration is proposing a less than 0.1 % increase in the Medicare rate.

23:04The rate which would go into effect next year is far less than the 4 % to 6 % increase analysts were expecting. Rates rose more than 5 % this year. For more, let's bring in Lance Wilk, senior research analyst at Bernstein. He joins us on the Fast Line. Lance, great to have you with us. There's a couple of components in the Wall Street Journal report. First, is this basically leaving the rate virtually unchanged compared to that 5 percent increase, which we saw in 2025? Then there's also the aspect of the Medicare agency looking to eliminate a very lucrative billing practice, industry practice.

23:35How do you sort of view both of those components of this report? Yeah, you know, I would agree that this is a much lower rate than was expected. And when you look at the release from CMS, it looks like they've included that change to the risk adjustment profile or policy in this 0%. So it looks like the core rate would be more like 1.5%, and then they've got a 1.5 % decline as a result of excluding kind of chart reviews from risk adjustment. So it looks like they're pulling forward what might have been like the Cassidy bill or some policy later in the year into this. And so perhaps that's not quite as bad as had been expected, but overall a very disappointing rate.

24:23We're seeing the stocks sell off in the after-hour session, Lance, and I'm wondering if you think this is justified or if this is overblown at this point. You know, I think relative to expectations and perhaps some of the recent run-up in the stocks, this is very much a disappointment. Having said that, I think from an investor standpoint, the way to think about this is, you know, the rate was 5 % in 23 and margins declined 200 basis points because of unexpectedly bad utilization. And the same sort of thing happened in 24, too much competition. but a low rate. 25, which we had a very low rate, about a negative 2 % rate.

25:06Margins were flat, maybe even up a little bit for most people other than United. 26 is a good rate. We ought to have some margin expansion. The key thing here is going to be pricing discipline. And I think what you're going to see with this is companies taking an approach like United is taking this year, where they're going to be cutting back on benefits, narrowing their networks, and really working on trying to deliver a lower-cost solution to the government. And within that context, because competition is withdrawing, these companies can incrementally improve their margins. And, you know, you're going to probably get, I think, 100 basis points of improvement in 26, 27, a year like this.

25:44And if you had other years like this, I think you're talking more like 25 or 50 basis point moves, but moves up in margins. So I think you can continue to grind forward. I had only been expecting 50 basis point moves up in my United expectations. So I think actually from an investor standpoint, you can look at this and say that you can still make the numbers. But I think that from a sentiment, this is going to pull back. That's probably going to hit valuations a little bit. Lance, it's Karen. Thanks for being on. So there's something normally they tell the number and that's what it is. There's something about this that feels like maybe it's a little bit of a negotiation.

26:20Do you read it that way or that's it? The number is 0.09 and whatever the change in the product is. No, I would agree with you. I think that there's some things that are indicative of they're trying to make this a stabilized program going forward. There's some commentary down the footnotes about that, kind of an olive branch there. The other thing that they're doing is they're basically proposing that they're going to change risk adjustment by a percent and a half. And so they may refine that, and it might not be quite as large of a negative hit to this going forward. The other thing is typically visit the advance rate.

26:57We'll get a final rate in about two months. Normally that's about 100 basis points higher. So from a negotiation standpoint, I wouldn't be surprised if we end up with something more like a 1 to 1.5 percent rate on this basis. and then you'll have de-risked yourself from policy through, you know, 26, 27, when you probably had a good risk that Senator Cassidy's bill was going to come after risk adjustment. Lance, thanks for phoning in. Appreciate it. Lance Wilkes of Bernstein, UNH, one of the sharp performers lower in the after-hours session. UNH is also Lance's top pick for 2026. And I heard from Lance, and what it seems, based on the numbers, is that the street hadn't really priced in a whole lot for Medicare advance.

27:42And so that's why this is a little puzzling. It does seem that this is just another place where there's more pressure on the health insurers again. In other words, we've gone through this a couple of times. UNH has lost its multiple, and it's lost its multiple while it's lost some of its earnings power, but not as much relative to the multiple contraction. I think this is an opportunity after hours. I'm long. UNH was a godlike sock at one point.

28:07Peter Boockvar:Yeah, I mean, the best performing stock, right, on its time frame versus Apple, Microsoft. It's bombed out. A bearish to bullish reversal buy. I would concur with them. You know what I've noticed today? I agree, by the way. This is, yeah. Do you see that? Can we do it? The lack of shaving on this desk. What's going on here? I mean, I shave just because it snows Tim and Carter. Razors, apparently. They can't find a razor. Look, I can't help it that in a half a day, this is what happens to me. You know, I mean, it was stormy yesterday. What's a guy to do? I was out there shoveling. stuff? Sure. Yeah.

28:39Sure you were, Tim. There's a lot more fast money to come. Coming up next. Millions of Americans digging out from this weekend's massive winter storm. Thousands of flights canceled. When to expect relief from these freezing temperatures and the impact on airlines as carriers rush to get back on track. But first, another alarm bell in the

29:03Peter Boockvar:private credit space, what one firm is flagging, and how the traders view the long, struggling stocks. You're watching Fast Money, live from the NASDAQ market side in Times Square. We're back right after this.

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30:11So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.

30:24My community gives me the confidence to ask myself, what would you like the power to do? So every time I'm on the pitch, I play for more than myself. Oh, what a tackle from Naomi Gurma. Absolutely brilliant. Bank of America champions U.S. Women's National Team member Naomi Gurma and everyone who dares to ask, what would you like the power to do? Bank of America, proud to be the official bank of U.S. soccer. Bank of America and A member FDSE. Welcome back to Fast Money. And he shares a BlackRock's private credit fund, TCP Capital, shedding 13 percent today, its largest drop since March 2020. The move coming after the company cut the net value of its assets by 19 percent after a series of troubled loans weighed on its portfolio.

31:08The stock has lost nearly half its value in the last year. Private equity stocks such as KKR, TPG, Apollo and Aries all falling today. Guy, we're watching this very closely. And I'm not it's not like I'm splitting the atom here because, as Tim mentioned, CNBC.com did a piece on this on Friday. And a lot of people have been talking about Jamie Dimon has been talking about it. But it is worth noting that I'm looking at Apollo. I mean, this is a stock that made its all time high in December of 2024, as with KKR, a lot of these names. So the stocks are trading like there may actually be a problem.

31:39So we'll see a lot of bankruptcies late last year in companies that these direct lenders lended to. Again, as Jamie says, there's never just one cockroach. So we'll see. But in my opinion, especially if yields start going higher, it's something worth watching. For TCP specifically, it was six portfolio companies that accounted for 67 percent of the loss there. So that's interesting. It's sort of concentrated. They are most leveraged to software and internet software. Yeah, electronics and whatnot. Again, the idea is that private credit has been an extraordinary development, the accessibility of private credit, the ability of major lenders to step in and actually fill a void, especially in middle markets.

32:22Now, that whole concept is alive and well, especially with GDP doing well. Part of the concern around this is not that we've had a macro change, but that some of the underwriting standards have gotten lax. Some of the dynamics around risk have changed and you get small hits to certain sectors. And you can start to see this. So I don't you know right now, I don't think this is a run for the hills. I think this is a case where, first of all, I mean, BlackRock has noted that it's a markdown on NAV and they've actually made mark to markets on portfolios. I believe all other credit players would be doing the same thing.

32:58And you have to believe there's transparency there. So far, we haven't heard that from other people. Coming up, millions of Americans still digging out from a blanket of snow today as subzero temperatures persist across the country. What to expect the rest of the week and the impact on the travel space after thousands of flights get canceled. Fast Money is back in two.

33:22Welcome back to Fast Money Stocks. Starting the week in the green as investors brace for a slew of corporate earnings. The Dow jumping more than 300 points. The S &P up half a percent. The Nasdaq also climbing more than four-tenths of a percent. The S &P and Nasdaq both now on a four-day winning streak. Shares of consulting firm Booz Allen Hamilton dropping more than 8 percent today. Treasury Secretary Scott Besson saying the Treasury has canceled contracts with the company after an employee leaked President Donald Trump's tax records, as well as those of Jeff Bezos and Elon Musk, to media outlets.

33:50And shares of GameStop jumping more than 4 percent. Big short investor Michael Burry says he's been buying the stock that he believes in CEO Ryan Cohen and that GameStop is a long-term value play rather than a bet on renewed meme stock speculation. He called it a crappy company and that Ryan Cohn can milk whatever he can out of it. Right. I mean, for him to be long, the stock was up, I guess, intraday. I don't know. Let's say 4 percent. Had Roaring Kitty bought GameStop back in the early days? It would be. I don't know. Is GameStop a gold company now? A gold miner? Can you imagine? You're thinking of AMC, but they sold high crop mining last year.

34:30We've done all kinds of, you know, AI and crypto things. Yes. Sorry, but, you know, they're probably going to be a gold company soon. Karen's point is well taken, though. If it had been roaring, that would have been a 25%, 30 % move, without question. But it's interesting that a guy like Michael Burry is finding his way to GameStop. I mean, I can't speak intelligently about a lot of things, least of which the fundamentals of GameStop, if there are any. At least 19 states seen more than a foot of snowfall during this weekend's storm, according to the National Weather Service. But as the snow tapers off, millions across the U.S.

35:04now face dangerously cold temperatures. AccuWeather's Jeff Cornish joins us with more. Hey, Jeff. This is a mess out there, Melissa. Even though the freezing rain has stopped falling, the sleet is over, the snow is winding down into England, a lot of people are without power. If you're in one of these maroon counties, you're either at a hotel or you're probably not tuned in because you don't have electricity right now. 80-plus percent of those maroon counties in parts of Mississippi especially, a lot of people also into the Nashville metro, in the dark right now after that freezing rain event, that massive ice storm.

35:35So we have still many, many without power, huge numbers of people in the dark at this point, and we have extreme cold that's setting in. So anybody who doesn't have the ability to keep themselves warm or the pipes warm, we're going to have a lot of frozen pipes out there as this Arctic air presses south, 15 to 30 degrees below the historical averages, If you're that cold, that much colder than the norm in April, it's chilly. If you're that much colder than average in January, it's a big problem. We're looking at a record-breaking low tonight in D.C. of 5. Record is 6 from 1935. Dallas gets down to 9, and the record low there to beat is 12.

36:10During the day, we're going to see a little bit of a thaw, but it's not much. Ineffective sunshine, so just a little bit of melting from that ice into trees. We're right back down below freezing again over the next several nights. And if you're in the dark blue, you're going to stay below freezing consistently into February. Melissa. All right, Jeff. Thanks, Jeff Cornish. The waitout also leading to historic numbers of flight cancellations in the U.S., with Sunday marking the most in one day since the pandemic. For more of the impact to airlines, let's bring in Phil LeBeau. Hey, Phil. Hey, Melissa.

36:39It is improving. If you are headed somewhere, your flight is more likely to be making to its destination over the next couple of days. That said, we saw a slew of cancellations today after the worst day since the pandemic yesterday. That made the weekend cancellations. Yesterday was over 11 ,000. Total of 15 ,715 for the weekend. You see today, it's better, but still not good. 5 ,210 flights canceled. Tomorrow, only 274. That number is going to increase. But as I checked in with the airlines and I've asked people within the industry, what are you expecting? They are expecting it to be improving.

37:14The airline stocks under a little bit of pressure. We're showing you Delta, Alaska, and United. They all reported their earnings last week. They, like all of the other airlines, are slowly planning to ramp up their schedules over the next couple of days. Meanwhile, American and JetBlue, they report their results tomorrow. We'll see what they have to say about a possible impact here. And then you have Southwest reporting on Thursday. Remember, it also begins its assigned seating tomorrow. And one last note for you, Melissa. So don't forget that on Squawk on the Street tomorrow, shortly after they release their Q4 results, we'll be talking with the CEO of Boeing, Kelly Warburg.

37:51That is an exclusive you do not want to miss. We'll see what they have to say about how they finished up 25 and the outlook for 26. Yep, that's going to be a good one. Thank you, Phil. Phil LeBeau. For the airline specifically, do we just look through this? Is it just, you know, it happened and that happens? Yeah, I think you do. I think American JetBlue spirit were particularly badly hit. And then there were some regional airlines that were in parts of the world, parts of the country that weren't so bad. But I don't think you get into a dynamic here again. I think the things that are driving airlines right now are probably jet fuel prices.

38:25And I think we're starting to see an uptick there. I think the average price target, according to street accounts for Delta, is 84. I think there are about 30 analysts that cover it. And you see where we're trading now. And this can just sort of, no pun intended, levitate just on a valuation re-rating into earnings in April. So, yeah, I like that. What's the cruising altitude of the stock for you? 33 ,000. Oh, oh. I mean, that would be a stock target. Cruising altitude 85. That's where it needs to get to. Cruising altitude. So we're at like 67 right now. Okay. So we still have some. I don't know what you're talking about.

38:56No, cruising altitude. I get it. I get it. This is not funny. It's what she was saying. No, no, no, no. Don't do that, Tim. Don't. Just because it's not funny, don't say that I just want to bring it up. If it's not funny, it was because of you, not because of me. Lighten up, guy. Both of you are not funny. Coming up, banking on the charts. Financials underperforming the broader market so far this year, where the Chartmaster sees the group heading next when Fast Money returns.

39:24Peter Boockvar:As our country celebrates its 250th anniversary, CNBC spotlights the leaders driving business and the nation forward. I grew up in a small town in western Tennessee. When I say small, I mean about 10 ,000 people, and I'm the middle child of seven. I tell people I won the lottery with two winning tickets. I was born in America, and I was born with two great parents. My parents taught us a couple of fundamental things, and that is you couldn't allow your surroundings to limit your vision of your future. Because I could stand in my front yard, and I could look to the north, south, east, and west, and nothing looked like success.

40:00My parents encouraged us about the power of education, the power of believing that you could be anything you wanted to be. And so I look back at that and I'm incredibly fortunate. My dad is my ultimate role model. It's great that in one generation, he can go from Jim Crow segregation to seeing his son be the chairman CEO of two Fortune 500 companies. And that can only happen in America.

40:30Welcome back to Fast Money. The financials have been struggling since kicking off earnings season. The group currently the worst performing sector this year. And the chart master, Carter Worth, says it is time to sell the financial ETF XLF. Carter, what do the charts say?

40:44Peter Boockvar:Well, before we get to the charts, we know that this is the second biggest sector in the market, right, at around 13 percent weight. And we know the top five stocks represent 40 percent of the sector, of course, led with Berkshire and then J.P. Morgan, Visa, MasterCard and Bank America. But let's look at two charts. They're identical, and they're both two-panel charts. The top panel is the past three years. It is the XLF, the ETF that tracks the S &P 500 financial sector. And the bottom panel is relative performance. This is what alpha is all about. That's relative to the S &P 500. And we are hovering at three-year lows.

41:18Peter Boockvar:So even as the sector has been advancing, it is, as a choice, been a bad one, right? Now, the question is, is it going to get worse still? I think so. second of the two identical charts, just another way to draw the lines. And so you have characteristics that are undesirable, which is poor relative strength, poor action in response to earnings, and you have bifurcation. You have big insurers having rolled over, stalling, Visa, MassCard, and then you have extended spiking-type action, Goldman Sachs and Morgan Stanley. So there's real winners and losers, but the extended ones are vulnerable to profit-taking and or shorting, And the ones that have rolled over, look what just we heard after the close, there's pressure on insurance stocks.

42:00Peter Boockvar:It's not a good setup. Yeah. Are you worried about the extended ones in your portfolio? The extended XLF ones? JP Morgan, I mean, it's JP Morgan, so I do feel like it deserves a premium multiple. It has a premium multiple for sure. But I think right now Citibank, which has also been under pressure, I like Citibank. If I own none, I would absolutely buy Citibank right here. The XLF, though, it does have Berkshire and the two, Visa and MasterCard. If you take those out, because I don't want to own those, I'm feeling OK with my bank exposure. That was my point, is that MasterCard, Visa and Amex are probably, I can tell you, they're about 16 percent of that ETF, not even including then Berkshire.

42:43So that may have something to do with the tone here. But there's no arguing that financials roared into, speaking of roaring kitty, roaring financials into earnings. But you're saying that the extended ones are due for a pullback specifically.

42:57Peter Boockvar:Well, again, if you think of bifurcations typically resolve poorly. So we have it in semis, semis that are steep and uncorrected, but Avago and NVIDIA stalled. It usually means that weakness that's foreshadowing the end of a run and things that are overdone and that often bifurcation is resolved by the weak ones that are stalling getting worse and the extended ones succumbing. Bank of America has found its way to two times tangible book. It's also found its way to the high that we saw in the summer of 2006. So potentially a 20-year double top. I think BAC goes lower. All right. Coming up, CoreWeave getting a big vote of confidence from an AI hyperscaler, what the NVIDIA investment says about the state of spending and what it could mean for the space.

43:39More Fast Money in, too.

43:48Welcome back to Fast Money. shares of CoreWeave jumping nearly 17 % at their highs. NVIDIA announced it was investing$2 billion in the AI infrastructure company. The deal will allow the company to expand the capacity of its AI factories to 5 gigawatts by 2030. CoreWeave CEO Michael Entrader joined CNBC earlier today with NVIDIA's Jensen Huang to talk about what the deal means for the company. It allows us to deliver our software solution to those consumers. And that is a market that we haven't really been able to open up. You know, ordinarily we build within our own data center. Now we're going to be able to build within our own data center.

44:24And we're also adding the ability to deliver software so other people can use our solution for their builds. And that's a huge market for us. All right. So does this alleviate the concerns that have been plaguing the stock around financing about using high interest debt in order to buy things like chips and fund its expansions? Does it alleviate it? It helps for today. It may help for longer than today. I think they also did a good job when their stock was up of doing some converts, what are now ridiculous prices. So good for them. The bonds, you know, the 2030s, which are, I think, the most liquid are 2030 ones.

45:01Those were up two and a half or three points each. So that's nice. I don't know that this changes the macro fear of how is this all going to get done. Right. And the circular financing that NVIDIA and Corweave are. I was going to say, I mean, you know, CoreWeave is an AI infrastructure company. NVIDIA is an AI infrastructure company. And that's the story that has held, seemingly held the stock back for, you know, the last six months. I think it's interesting. I think we don't really know how to value a lot of these investments for NVIDIA. And I think we're worried about some of the spending being circular.

45:36I'm going to put my Carter hat on real quick and go back to you. Carter's right here. Sorry, I put it on. Anyway, go ahead. Put your own on. Hat on. Yeah, don't steal his hat. Or my own. I like my hat. Sorry, Mel. There's a downtrend from June of last year when it made an all-time high of 183. The third point comes in around 110 or so, which we basically sort of got to today. So I think buyer beware here on a technical basis. How does it fit, Carter? Your hat on him. What does your hat say?

46:01Peter Boockvar:It's over my eyes. I can't see. No, I think it'll higher. I'd say a little higher. Okay. All right. Up next, final trades.

46:16Final trade time, Tim. Healthcare, we are seeing this Novo rally relative to Lily in the oil field. This is also the N in Guy's junk, apparently. Karen. Yes, and it's in, I'll be dang. It's the Z. No, it's the N. But anyway, Amazon, we don't see earnings until the 5th, February, but I think that AWS is going to crush it. Carter.

46:40Peter Boockvar:An important day for silver, and I'm a seller. Guy. I just want to say that Miles Ross, we're all very familiar with. He's done an amazing job. Great job. We're all right. Gilead. All right. Thanks for watching Fast. See you tomorrow on Overtime. Mad Money starts right now.

47:14Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money Disclaimer, please visit cnbc.com forward slash Fast Money Disclaimer.

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