Nike, Fedex Report Results… And Insmed Drops On Disappointing Results 12/18/25

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24:32Welcome back to Fast Money. The Bank of Japan expected to hike rates Friday to their highest level since 1995. The country's benchmark 10-year JGB trading close to 20-year highs. This is U.S. investors continuing to watch the yields on the JGBs, by the way, continue to watch for signs of what the Fed will do next year. Today, softer than expected CPI print, raising probabilities for a March cut to 60 % For the potential market impact here at home, let's bring in market forecaster Jim Bianco, Bianco Research. Jim, great to have you with us. There's a lot to discuss, but in terms of the CPI print, this has not, in your mind, put to bed the concerns about inflation going higher?

25:07Yeah, this number was a statistical mess. They assumed that rents in the United States were effectively zero for the month of October. They surveyed the second half of the month because the government was shut down. So when you see things like apparel falling and airline tickets going down, that's because they picked up Black Friday sales. They didn't pick up any of the pricing before Black Friday. And so there's a lot of questions that have to be answered because of the unique circumstance of it being the first number after a shutdown. And so you saw this in the market, that the 10-year yield, which should have looked at this number as being very bullish, was down one basis point after this number was released.

25:47So you have this. So you have maybe the underlying belief that the Fed will have to keep rates higher than maybe what the markets are anticipating at this point, pricing in. And then you have the impact of the BOJ and their rates high. So basically lifting globally rates. I mean, how do you see this playing out into 2026? Well, two things. First of all, you're right. The Bank of Japan is giving a meeting for us in the United States overnight. There's a 95 percent chance they're going to raise rates to the highest level in 30 years. Their 10-year note is on the verge of going above 2 % for the highest for the first time in also 30 years, too.

26:24What's driving this? They've got the highest inflation. They have more inflation than the United States for the first time since the 1970s. And you're seeing this with all of the central banks in around the developed world. The only central banks that are expected to cut rates in 26 are the U.S. and the U.K. The ECB, the Bank of Japan, the Swiss National Bank, even the Bank of China are all expected to either hold or raise rates next year. Why? Because inflation is elevated everywhere in the developed world, except maybe a little bit in China. But then they've got some of their own special circumstances.

26:59But inflation is still a problem. So, Jim, it's Tim. I agree. And I know folks are actually happy to see some inflation in Japan for the first time in three decades. You know, be careful what you wish for. I'm just curious, really, your view on the technical side of this, because I do think also there are a lot of Japanese investors. It's not that they're going to stop buying U.S. treasuries. And it's not that there's obviously still not a differential that that would be favoring on U.S. 10 years. But there's no question that Japanese insurance funds have been major buyers of treasuries and their markets a lot more interesting right now.

27:32Does this impact the long end of our curve? It can. The Japanese are the largest foreign buyer in the world. China is number two. Actually, China is number three now. The UK is number two. And so you're talking about the largest buyer now looking at their home market and saying, you know what? We don't have zero rates anymore like they did for 20 years. We've got a competitive rate. You're right. The US still has 4 % 10-year notes. They have just under two. So we have a higher yield. But that spread is narrowing and will probably continue to narrow because the Bank of Japan, when they raise rates tonight are going to signal they're going to keep doing it in 2026 so that narrowing will continue to drive Japanese money back home.

28:16And that will be a loss of a big buyer over time gradually for the United States. Jim, we got to leave it there. It's great to see you. Thank you so much for your time. Jim Bianco, Bianco Research. So let's piece this all together then. Are the U.S. markets pricing too much Fed next year? Well, I would take it in another direction. If we see an unwind of the carry trade because of this differential they're raising, we're lowering, and you take that, you know, like the money that flew, you know, into tech, into Bitcoin. I mean, Bitcoin's telling you something and not that it's like, you know, as big as one of the MAG-7 or anything like that.

28:52But I think that's the thing that we should be really cognizant of because that trade was fueling, you know, a lot of this MAG-7 gains. We've got some breaking news here on a potential TikTok sale. Julia Borson's got all the details here. Julia. Yes, Melissa, we've confirmed with sources close the situation that TikTok has signed the agreements with its investors regarding a new TikTok U.S. joint venture. We've obtained a memo sent from Sho Chu, the CEO of TikTok, to employees with an update in the U.S. business in which he confirms the closing date of January 22nd, 2026. This is the date from that Trump had set as the final deadline.

29:32He notes that they have signed the agreement and he notes that the U.S. joint venture will be half held, 50 percent held by a consortium of new investors, including Oracle, Silver Lake and MGX, with 15 percent each, 30.1 percent held by affiliates of certain existing investors of ByteDance and 19.9 percent retained by ByteDance. So in this, they go on to talk about how the U.S. joint venture will oversee data protection, algorithm them security, content moderation, and also software assurance. Again, these comments written by Cho Chu in a letter to his employees, which CNBC has obtained. We're going to send it back to you, Melissa.

30:11I'm sorry, Julia, if you had outlined this, but the 50 percent that is owned outside Oracle is the largest holder of that 50 percent. And who are the remaining parties? So, StarLake and MGX, along with Oracle, will hold 15 percent each. And then 30.1 percent will be held by certain existing investors. And then what's really essential here, Melissa, because this is what's been holding up this deal, is that 19.9 percent will be retained by ByteDance. And that's the essential piece here is pushing the U.S. ownership over 50 percent and ByteDance's ownership down to that under 20 percent level. OK, Julia, thank you very much.

30:51Julia Boorstin, I don't know how to interpret this. I mean, there's a lot of different ways, the impact on the media sector, but also maybe U.S.-China relations. Yeah, well, again, the presumption has to be that everybody knows that this deal and is comfortable with this deal on both sides and that this deal satisfies securities concerns. Again, we don't know the technical details yet. I mean, I can't entirely tell. It's also kind of interesting just to bring it back to Oracle in a world where they are connected to another big deal in the media space. I know TikTok's not really a media company, but aren't they?

31:26And where is it going? And again, what's going on with YouTube? And so it's fascinating times. You know, when you look at it, maybe it's a reason to distract yourself from Oracle's worries. Maybe you buy that stock. I don't think it really moves the needle much for them. But when you look at a stock that does move the needle for Snap usually trades down with positive news on TikTok. So does Meta. Snap is usually 2 % to 3 % on average historically. That stock cannot get off the mats, though, when you look at the long-term. Yeah, we are seeing a reaction to Oracle shares right now up 1.25%. I mean, to own a piece of one of the hottest media online properties out there, it's bad.

32:04Well, but Microsoft owns 27 % of OpenAI. It's not rallying right now as they literally double the value. I'm just saying, I don't think it really changes the media landscape. And I think really the most important point you just mentioned, What does it mean for U.S.-Chinese relations? This comes on a day where there's reports that we're selling$11 billion of arms to Taiwan. It comes a week after the Chinese are saying to their local buyers of GPUs, don't buy them. So I think that whatever detente we have with China on the trade front, it probably doesn't look or it is not as strong as, let's say, both parties will have you think.

32:37Coming up, we are watching shares of KB Home after the company's latest earnings. The details and the numbers from the quarter straight ahead. You're watching Fast Money Live from the NASDAQ MarketSite in Times Square. Back right after this.

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34:37Shares of Nike sinking to aftermarket lows, down 9.5%. We got some guidance from the conference call. The company expects Q3 revenues to be down low single digits, gross margins to be down approximately 175 to 225 basis points. If not for tariffs, they say that would be positive. They're also giving some guidance about other business lines, like Converse, expecting to be about the same, which was down considerably, down 30%. Small, but it's terribly bad. Yeah, what do I think? Yes. Thank God they didn't give annual guidance because at this rate, I mean, just one quarter is plenty here. That's bad.

35:13There's no question. That margin number. Isn't that margin number, though, less bad? Less bad than we thought? It's more bad than I thought. Less bad than it was, right? In other words, the rate of fall in the gross margin. In other words, what did you say, down 100? 175 to 225. Okay, 175 to 220, down from a gross margin falling 300, what we just heard. You know, in other words, the second derivative rate of change being less, I mean, you know, silver lining. I hope you're right. I hope you're right. But I mean, that's bad. We know the margins have been falling, and they're falling less significantly.

35:52I don't know actually why they still have it. Why not just sell it? I don't know, half a million dollars, not a huge, I don't know. I don't know. All right. Well, we'll continue to monitor this. Again, Nike shares down almost 10 percent right now. Coming up, a black eye in biotech shares of InSmed taking a big hit today. The trial data weighing on that name and what Wall Street sees in store for the stock when Fast Money returns.

36:19Welcome back to Fast Money. InSmed dropping 16 percent for its worst day since May of 2021. The company discontinuing development of its drug to treat a type of chronic sinusitis after it failed to meet primary and secondary endpoints in trial. That drug had been cleared by the FDA to treat a serious chronic lung disease in August of this year. Even with today's move, InSmet shares are up 141 % year-to-date. It's still among the most valuable biotech stocks with a market cap of more than$35 billion. For more, Mizuho health care strategist Jared Holes joins us here on set. Jared, great to have you with us.

36:50Thank you. I'm assuming that models until today had the drug Brenso in for this sinusitis. When you take that out, how much is that out of the model for peak sales? Yeah, I think roughly$3 to$5 billion was where the street was. I think Mizuho's research team had five. They were probably towards the high end. They just did a call with a doctor recently that was more positive, so I think that gave them a little bit more optimism. Obviously, it didn't come to fruition, but$5 billion for a sinusitis drug seems very big. I think we can all kind of move on here and assess the company for what it is.

37:30And if Brenzo is still a$10 billion drug, like everyone thinks, maybe the stock isn't that overvalued here. $40 billion, four-time sales, not crazy. So what is in this model in terms of peak sales for Brenzo? It is for the current indication, which it is approved for. But there are also other indications that they are studying the pipeline. Does that include any of that as well? How much is that? And where is the bar? Is the bar higher or lower now after this disappointment? It's lower. The next indication is this sort of rare skin disease called HS. UCB, a European pharma company, has dominated.

38:04They have a blockbuster drug that's been incredibly successful. Moon Lake Therapeutics failed in this indication earlier this year, or at least wasn't as good. The probability of success is fairly low, I think below 30 percent. So maybe about a billion in models right now, which is not a huge amount. Again, the company has been very adamant that even without these indications, Brenza will do close to 10 billion. And I think that's where the street is. So, you know, maybe the data, if it's a slight disappointment, the stock goes down a little bit, but not nearly what it did today. How about this acquisition of the antibody?

38:38Is that a surprise? Is that, I mean, bolstering the pipeline, I would think, is always a good thing. But how is it viewed in terms of the success? To announce it the day that they're discontinuing a trial, I don't know, puts a question on it. Yeah, I don't think anyone's really done any work around it. I mean, it was not part of the narrative at all until yesterday. I don't think there's a consensus around it. No one's built a model around it. It's new. I think any time you see that, they're clearly trying to take a little bit of the pressure away from the data and have you focus on a new toy that they've acquired.

39:17But I don't think the street's done enough work on it. Okay. So all this said, is this an opportunity to get into a hot stock, what has been a hot stock? I think so. I mean, the numbers actually now, now that it's pulled back to 165, they're not egregious. You can make the model work. They do have other assets in the pipeline. And there's a possibility. I think the street has really walked away from M &A from this stock because it's gotten so big. But it is possible that you could see a$50 billion deal at some point. I mean, pharma, obviously, we've all talked about how they need assets. So I think it's probably a trade.

39:50I'm not sure. It's clearly not going to have a year like it had this year, next year, 140 percent. I think you're playing for maybe 20 to 30 percent at this point. So maybe a trade. But I'm not sure it's going to have a monster year. We're so out of time, but I have to ask you about Lilly and Orfor. So going to 2026, is it hands down? I mean, it sounds like it could come to market next year. Oh, it's certainly going to come early. I think in the first quarter it'll hit. Yeah. Obviously very bullish. I mean, first-line therapy, maintenance, like we've talked about. I think it's going to be an incredible maintenance drug.

40:24Get off the injection, start taking the pill if you're suitable for it. Yeah, we're going to start talking about this really early next year. Okay. Jared, great to see you. Thank you, Jared Holtz. Thanks. All right. So how are you feeling about Novo versus Lilly, Karen, given the data today? Not great. I mean, I still think Novo is, you know, really cheap. Yeah. Clearly, they're at a structural disadvantage. Can I bring back? I can't bring him back. No, sorry. He's not here. Even though he is. Happy holidays, Jared. Even though he is. All right. About structure therapeutics, something like that.

40:57Yeah. I mean, Novo's got a problem. They may or may not have a solution. All right. Coming up, the president officially rescheduling marijuana as a less dangerous drug. We'll get more on the impact for the cannabis industry. Truly, CEO Kim Rivers will join us when Fast Money returns.

41:17Welcome back to Fast Money. President Trump signing an executive order today to reclassify marijuana as a Schedule III drug under the Controlled Substances Act. The change lowers restrictions in conducting medical research in the U.S. and removes a tax burden on cannabis operators. For more on the impact, let's bring in Kim Rivers, CEO of Trulieve. She was at the signing this afternoon. Kim, great to have you with us. Thanks so much for having me. How much does this actually help your company and how much of it is symbolic? Well, I mean, first of all, the fact that President Trump had the first meaningful cannabis policy reform action since cannabis was scheduled back in the 70s, I would say it's a pretty monumental day.

41:54Like you said in the intro, it does two things. First of all, it does not legalize cannabis, but it does open the doors for medical research. And it also brings to a halt the punitive tax burden that my company and other companies in the industry have been under. What else needs to happen? Because there's a whole other piece in terms of access to capital, in terms of listing, in terms of institutional investors. How far do you feel you are now today to that versus prior to this executive order? Well, everything starts with a single step. And today was that very important first step. We know that Congress and feedback from members of Congress have signaled that they really were looking forward to the president signaling that policy change is here so that they can move forward on safer banking.

42:42I think that's the next incremental step here, which would, again, bring down banking barriers and potentially lead to NASDAQ and NYSE getting comfortable with listing cannabis on U.S. exchanges. Hey, Kim, Tim, congrats. It's been a lot of hard work, and I know the industry's worked together on this. I guess my question is, we're the traders, so it doesn't, you know, markets sold off 20 % today after 150 % move in five days. That's stuff for us to do, something I do by day. But my question to you is, I think there is some reaction from a market that saw a lot of headlines around CBD and a lot of, you know, potential conflict for an industry where you've built a very asset-heavy business.

43:21Clearly, there has been some struggle between call it the cannabis world and the hemp, essentially the derived, the intoxicating hemp, whatever market we're calling this. Can you just weigh in on this? Because I'm just curious your view on it's incredible news on Schedule 3. Are you concerned about the CBD side of this? Yeah, thanks, Tim. No, I'm not. I believe that, again, if you read the EO, there were some specific language in there about calling out the fact that there needs to be a regulated marketplace. And I think that's consistent throughout this EO, and that's consistent language from the White House.

43:58They want to see safe, regulated, tested products. Millions of Americans are using medical cannabis. Forty states have very intricate, very specific programs that we operate under. And the president is very clear that he wants folks to be able to have access to safe, regulated, researched products in controlled environments. And I think the language in the EO is very consistent on all of those points. And I think we're going to continue to see moves towards, again, a very strictly regulated but also available marketplace in the medical marijuana space. Kim, great to speak with you. Thanks. Thanks.

44:34Kim Rivers of Trulieve. As someone mentioned, the stocks, I don't want to say collapsed. They took a dive today. I mean, we saw that run up steadily on first the sniff of it and then the day before. So now what? Well, just to be clear, as great as this news is, and I think this brings in more institutional capital, and I don't think you need legislative action, and I don't think you need another administrative action to necessarily get followed through on exchanges. But leaving that aside, this doesn't bring in institutional investors today. It doesn't bring them in necessarily tomorrow, but I bet it does bring them in, starts to bring them in the next day.

45:05I think the research process here on the plant is extraordinary. I do think today's reaction is very technical. It's overly technical in a market where there's not a lot of institutional capital, and this market had rallied 150 percent into it. I do think the CBD headlines, there's some concern that there is a battle seemingly between the dedicated cannabis world and broad spectrum CBD and where intoxicating CBD has taken market share. Today's headlines had more attention on CBD than pure cannabis investors expected. I think, and it's what Kim said, I think regulation around the plant in CBD land and in cannabis is great for the industry.

45:42And I think there's room for everything. Kim also said this is this was a tax relief, not a safe bank relief. So you need both of those things. But the thing that you need the most of is enforcement. Right. So you have states all over the country that are not enforcing. So the illicit market is still stealing 60 to 80 percent of the revenues that should go to the legal public players. The prediction market is booming and gaming companies and exchanges all vying for a slice of potential trillion dollars in annual trading volume coming for the space. Contessa Brewer is here with all the details.

46:12Contessa. It's an eye popping prediction here. A trillion dollars in annual trading volume before the end of the decade. That comes from Eilers and Kryjik, which is a gaming research firm. And they say EBITDA margins could be between 25 percent and 45 percent. Look, that's notably higher than sportsbooks, in part because the sportsbooks pay high state taxes on gambling revenue. Guess who doesn't? Prediction markets. Sports is, though, fueling the growth of those markets and forecast to remain the anchor category, making up 44 percent of volume when they hit that trillion dollar point. But sports is also the most at risk for regulatory or legal crackdowns.

46:51So you've got DraftKings, FanDuel and Fanatics all launching predictions of their own. And then you have ICE, CBOE, Coinbase, CME diving in. Citizens this week estimated that prediction markets or revenue is now at$2 billion and expects it to be five times that by 2030. Remember, CNBC and Calci now have a business relationship. I think really what this illustrates is there's a convergence between trading, hashtag investing, and trading, hashtag gambling, and the way that these are crossing over. It'll be interesting to see the way these platforms try to cross sell their customers into their core business.

47:30Yes. How do you view it? Is it additive? Does it cannibalize the other parts of the business? I don't think so. So I think there's a huge opportunity here. And I do think prediction markets have become part of the investing world. And it's another tool that traders have or investors have. Yeah, I just think it's like to your point, it's like this massive new market that didn't exist. You think about the numbers and you think about a company like CME Group that has this highly regulated exchange. And they're able to kind of jump into this product. We saw this with a lot of crypto stuff when it got listed.

48:04So, again, I think it's kind of exciting. I like your hashtags, though, because I think they make sense. I don't know. I'm a little uncomfortable, to be honest, to have these investing platforms, supposedly. But also now you can have prediction, betting, basically. So you can see how some of the funds that would be in investing and longer term planning and whatnot will end up there. It's so easy to do, right? It will be seamless. Right. Do you have endless amounts of money to invest slash predict? I don't know. The same guardrails in place that ping like the sports books if someone is overdoing it.

48:39One other interesting play here. Remember, I cover insurance, too. Imagine with premiums soaring. You have people in Florida who say, I'm not going to pay for the premiums anymore. Instead, I'm going to put in the predictions markets a Category 5 to hit my home. And that is how you hedge your bet for your home. We'll see. Contessa, thank you, Contessa Brewer. Final trades up next.

49:04Check on Nike, down 10 % on disappointing guidance for the current quarter, 10 % after our recession lows, levels not lasting since May. Time for the final trade. Tim. Happy birthday, Guy Adami. Go listen to Mandy by Barry Manilow. UPS. Karen. Yes, still my Dell puts that expire tomorrow. I have to say happy birthday to Bill Plott, not tonight, but tomorrow. Happy birthday to you, Bill. And happy birthday to Guy again. Dan. I'm going with Bill Plott, happy birthday. Buying weaknesses snap. C. All stocks do not have to be sexy. Boeing and happy birthday to the sexy Guy Dami. The OG, a very good friend, the anchor of this show.

49:40Thank you, Guy Dami. Happy birthday. Thanks for watching Fast Mad Money starts right now.

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