Rates Rise After hot CPI data… And The Latest On China’s Property Crisis 02/12/25

0:00Live from the Nasdaq market site in the heart of New York City's Times Square this is fast money Here's what's on tap tonight. All revved up, Ford CEO Jim Farley saying President Trump's early tariff moves are threatening to, quote, blow a hole in the auto industry and open the door for foreign cars to flood our shores. The details on this blunt assessment coming up. Plus, 18 and counting. Meta's magical run rolls on, now up 18 straight days and more than 18 percent during this winning streak. We'll ask the chartmaster where the stock is headed from here. And later, inside the numbers of Robinhood results, the details on Chevron's major job cut announcement, and CBS mounting a massive comeback.

0:37What is behind the rebound? I'm Melissa Lee, coming to you live from Studio B at the NASDAQ. On the desk tonight, Steve Grasso, Karen Feinerman, Carter Wirth, and Guy Adami. We start off with a great rate rise. Yields on 10-year treasuries spiking back above the 4.6 percent mark, seeing their biggest basis point jump in nearly two months. The move coming after a hotter-than-expected CPI print for January. Consumer prices rising more than expected, 3 percent from a year ago, excluding food and energy prices rose 3.3 percent. That news slash hopes for a Fed move anytime soon. Markets now pricing in the central bank will cut rates just one time this year.

1:14Stocks initially sank on the report, major indices all down over percent at the lows, but end of the day well off the worst levels. The Nasdaq even managed to eke out a small gain. So markets come to terms with the prospect that rates will be higher for longer, that maybe inflation could be stickier for longer. Guy. Today, yes, absolutely. I'm surprised. Again, if you had told me what would have happened, I would have been S &P's down 100 handles. Easy given to run. You know, Karen, I think it was last week, Thursday, maybe said she was short to TLT. She basically top ticked it. It's gone down ever since.

1:43And if you look at that trend line that we talked about in the TLT since September, that downtrend is intact, meaning, I think, yields continue to go higher. What does that mean? Well, I don't think it's particularly favorable for markets. Again, I'm surprised the market behaved as it did, but it's just a matter of time before rates become a huge headwind. So, well, I've been short the TLT for a while, covered some back and forth, but I generally think, and I am still very much positioned for the CPI continues to be hot. I do think to bring back a word that is, you know, a terrible word, potentially transitory items in there, when you take out some of the effects, we don't know exactly what they're going to be.

2:22California fires, for example. Maybe it'll be a little less hot going forward. But I do think that this administration has unleashed animal spirits and the combination of excitement about that and regulatory changes is sort of pro-growth, which is good, but also, I think, inflationary, even though they hope to not have it be inflationary, I think it will be. Yeah. There were a number of items that saw their biggest increases ever on a monthly basis, which were prescription drugs, medicinal drugs, parking, recreation, audio and video services. Then you had eggs. That was the biggest jump in a decade.

3:04I feel like I bought all of those things this month. Everybody has. Who hasn't? But you know, eggs are eggs. You had the bird flu, right? So you had the killing of 30 million birds. OK, so that's a one off. Then there's also seasonality because people tend to raise prices at the beginning of the year in January. So there might be some of that going on. But still, there's a bunch of stuff. But look at it this way. Worst case scenario, inflation spikes. We go into a recession. What happens? It cuts rates. So do you think we're going back to a Fed put back in play when you announced on the show? Is the market just letting it roll off its back?

3:42Could that be the reason why the market is letting it roll off its back? That eventually, if things are the worst case scenario, then he cuts rates. So you're saying win-win situation. I think it's a win. Inflation hot, Fed cuts, win. Deregulatory environment. Yep. Win. Yeah, so deregulation, lower taxes, pro-growth policies. I think Karen hit on a bunch of stuff. Could we overheat? I don't think we're going to overheat. I think we'll probably have a little bit of a spike and then maybe pull back. What do you see for rates? Yeah, I mean, as a pattern, right, it's what a pair of twos is. It's not.

4:21I knew you were going to say that. You knew I was going to say that because you know that's what it is. You have to tell. Yeah. What was that tell? But the point is that we're looking for inflection points. We all are, whether we're looking for inflection on the income statement as a fundamental analyst or on the balance sheet. Wow, the debt's being paid. Or in the price action, the chart. And it just doesn't feel as though this is a great inflection point. We're about to really go higher or go lower. It turns out that the cost of 10-year money has been at four and a half for one year and four and a half for two years.

4:48We're getting into almost three years. That's where it's Goldilocks. And so it doesn't go to five and six and seven. And it keeps not dropping down to three. Here we sit. No, it's fair. That should be good for equities. And it has been. I mean, the S &P is within, what, half a percent of an all-time high. So clearly the equity market cares about none of this. But, you know, it's interesting. Inflation is a problem. I mean, they were thrown around transitory three years ago. They were dead. They couldn't have been more wrong, and it's still sticking around. And it's only, I think, going to get it worse on the back of all the things that Karen's talking about, which means almost by definition rates have to go higher.

5:21Now, the Fed can do whatever they want at the short end of the curve, have at it, as Dan would say. They don't control anything else, and they're learning the hard way that they don't. And, you know, you may want tenure yields to go lower. You may want mortgage rates to go lower. They're not. And if they do, it's for the wrong reasons. And if they do, I think, to Guy's point, what does the 10-year rely on? Pro-growth policies and people thinking that they have a better chance of putting money in the market now and longer-term fiscal responsibility. What have we seen? First time anybody on either side of the aisle in my lifetime, with the exception of Clinton, that we've seen somebody worry about deficits at this point.

6:02So that has more control over the 10-year than this. So you mean all the cost-cutting that's happening? All the cost-cutting that potentially could happen and the fact that we have pro-growth policies could lower the yield on the 10-year, and that's why it's been so teamed. We haven't even started to see tariffs yet, right? We are one day into tariffs, right? Who knows? Could be reversed, maybe not, but I do think that's a wild card that we don't yet know how that's going to – you could see that being inflationary. We saw this game before, right? I mean, when their tariffs were on metals, it worked its way in to finished goods, machinery, etc.

6:38Ford, CEO, which we're going to talk about. And if everything's make it in America, you could see how that would be very inflationary as well. But let's remember, when Trump left office, the inflation rate was 1.9 percent. And we saw 1.0 on tariffs. Have we had a different backdrop to the environment? Of course we've had. We had the pandemic. You have a bunch of huge issues right now. But we've seen the 1.0 of tariffs, and it didn't result in much higher inflation. He left with a 1.9 CPI. But all of this, I mean, we talked to Paul McCauley about this yesterday. This is uncertainty. It's not risk.

7:12Risk, you know, the parameters of the game. Uncertainty is you don't know what the parameters are. And that's where we are for both businesses as well as consumers at this point who are feeling this inflation in their pocketbooks. 100 % they're feeling. I mean, that's why the—I mean, there are a lot of reasons the election went the way it did. That was one of the big reasons because people were feeling it in their pocketbook. And the Biden administration would trot these people out saying that they're winning the war on inflation. And most people with half a brain said, no, you're not. You're losing and we're losing on the back of it.

7:39And people are still feeling it. I mean, it's not going away anytime soon. And that seemingly is manifesting itself in these numbers. These numbers today surprise a lot of people. There's no way to sugarcoat it. The trajectory is basically reaccelerating to the upside. Our next guest says today's hot inflation report in Trump's anti-growth policies might create opportunities in the bond market. Dam Spring Advisors, CEO and chief investment officer Andy Constant joins us now. Andy, always great to see you. Hey, Melissa. How are you? Which bonds? Well, so I think what's happening is and I heard it in the in the discussion before me.

8:15There's great policy uncertainty. And not only is there great policy uncertainty, there's not necessarily consensus on what policies will actually do. So, for instance, I think it's without question that the deregulatory environment will be disinflationary and pro-growth. On the other hand, immigration reducing the supply of labor is anti-growth. Tariffs are anti-growth. and expenditure cuts are anti-growth. Literally, the government spends less. That means the economy contracts. And those are the policies that I call the Trump policies that are anti-growth. And so the question is, what drives equities?

9:04That's what a lot of your audience cares about. And what drives equities isn't inflation. It's valuation, which is driven by how easy monetary policy is, and growth. And so it's not surprising to me that when you get a hot inflation print, bonds sell off. But equities don't necessarily have to sell off until there's a negative growth impulse. And I think that's heading our way. For instance, last summer, we had extremely accommodative financial conditions. We had robust government spending, and the Fed was signaling a cutting cycle. It's not surprising that the data that typically lags what are very easy financial conditions is showing up now as very strong data.

9:56However, financial conditions have aggressively tightened over the last since the September rate cut after the election and then subsequent with additional cuts. Bond yields have risen a lot and that has tightened financial conditions. And the Fed is on permanent odds. Not only is only one cut expected this year, but the yield curve is entirely flat for three or four years. And so that means no cuts are expected beyond next this year. And so with tightening financial conditions and anti-growth policies, albeit one policy is still a tailwind, which is deregulation, it is an environment where you might get a growth slowdown.

10:45So, Andy, it's Karen. Thanks for being on. We know the Treasury secretary really sort of has the tenure as the mark of success there. The president often seems to want the market, the things of the market. But how at odds are those two things to get the 10-year where they want it to be? Does that have to be a policy? I think the 10-year responds to disinflationary, solid growth. Steve mentioned fiscal responsibility, expenditure cutting. All of those things are what—if I were announcing the policies that are being announced on the Trump agenda, And what I would want to be measured against is falling 10-year yields.

11:29And I think that's what Secretary Besant pointed to. And I think he's attempting to point his only important constituent, the president, to something that would make sense, particularly when the policies themselves may not be that great for equities in the near term. All right. Andy, we've got to leave it there. Always great to see you and get your take. Thanks. The constant of damp springs. So what do you see for equities? What do the charts say? Well, I mean, what we know is that this has been a great run, and equities are popular. The word expensive should never be used because valuation is the worst timing tool of all, and no one knows.

12:10You can pick any stock in the S &P 500 covered by 20 analysts,$50 stock. Some believe it's going to$90. Some believe it's going to$10. Valuation's out the window. There's a relationship over 10 and 20 years between earnings and the share price. But here and now, is the market expensive? I just think it's full. I think there's a lot of complacency. I think a lot of money has been put into the market. And I think caution is the operative word of the day. You know, we're going to see, we've seen it the last couple of weeks, big companies are moving 5%, 10%, 15 % post earnings up and down. And there are a handful of them again tonight.

12:42The volatility is in the individual names. It hasn't gotten into the VIX yet. I'm not certain why, but I think it's just a matter of time before it does. All right. Meantime, Ford hitting its lowest levels in more than four years. The automaker CEO seeming to break ranks with much of corporate America right now, delivering some harsh words about President Trump's tariff plans. Our Phil LeBeau's got the very latest. Phil. And, Melissa, Jim Farley, CEO of Ford, said yesterday at an investor conference that he would be in Washington today to convey his thoughts to the Trump administration. We have reached out to find out if he's actually meeting with the president or simply the president's staff.

13:17But one way or the other, the message will be similar to what he said yesterday. And this is the quote that got a lot of attention in regards to a question about the impact or potential impact of tariffs if they were implemented. And he wrote, so far, what we're seeing is a lot of cost and a lot of chaos. The chaos is because Ford, like GM and Stellantis, have a lot of exposure in terms of manufacturing in Mexico. And even though the 25 % tariff that was initially announced with Mexico and Canada has been put on hold, Ford has got to make its contingency plans. Even though it has more of domestic manufacturing than its rivals, it still has to prepare for what might happen.

13:59As you take a look at shares of GM, Ford, and Stellantis since the president was inaugurated, the big question is how much will they potentially pay both in terms of future tariffs? What's the impact in terms of their components? And look at what's going on when you talk about steel and aluminum and 25 % tariffs. We reached out to Alex Partners, automotive consulting firm. We said, what's the potential impact of a 25 % tariff? And they've gamed it out at$400 to$500 cost increase per vehicle, because each vehicle has between 2 ,500 and 3 ,000 pounds of aluminum and steel in each vehicle. So that's why automakers like Ford.

14:39And I've talked to Jim Farley about this. As much as possible, they are trying to go with domestic sourcing. Quickly take a look at shares of AutoNation. One other note, they had their earnings yesterday and during the analyst call. They basically said, look, there is the potential here that you could see one to two years of tariff pain for consumers, depending on what happens with tariffs, if they're implemented, etc. And that's based on what they saw the first time around back in 2016 to 2020 in terms of potential impact there. So Jim Farley's message to Washington and potentially to President Trump is we need certainty.

15:18And all CEOs will tell you right now, Melissa, they want certainty. And you and I both know, everybody knows as you watch the president, this is as much about negotiation as anything else. And I'm not sure they're going to get the certainty they're looking for. What is the impact on some of the foreign manufacturers, particularly the ones that also manufacture here in the United States? Depends on what tariff is put in place. Let's talk about if there is a reciprocal tariff coming for vehicles being shipped over from Europe to here. It's about 5 percent of the U.S. auto sales, though we were told today, Eamon Javar said that the White House indicated there may be exceptions for the auto industry.

15:56What type of exceptions? Unclear at this point in terms of the reciprocal tariff. So that's the key, Melissa. You need to know exactly which ones are being put in place. The steel and aluminum, I mean, that's a hit to the automakers. Even if you're doing your domestic sourcing as much as possible, you're still going to pay. And I've talked with executives in the auto industry who said they're paying. They will pay in some fashion. Now, is it$400 to$500 for every vehicle? It's a little too soon to tell. All right. Phil, thank you. Phil LeBeau. So how do we digest? We saw the reactions initially, right?

16:30when it was revealed that there might be tariffs, and we saw all of them sell off very sharply. Yeah, and this goes to Ken Griffin's, exactly what Ken Griffin was saying, that this sort of chaotic situation isn't good for CEOs. It isn't for just this reason. I mean, the first thing I thought, though, I mean, that was a bold statement from Ford, and I thought, oh, this is good for Mary Barra. She doesn't need to be the one in the crosshairs. She's feeling the same, I'm sure. It's just as chaotic. But let somebody else. She said that she can mitigate up to 50 percent of the tariff headwinds. So I don't think she's in the same position.

17:06They've outperformed Ford. Maybe not. They've outperformed Ford. And I think I think that Farley, to a certain extent, is using this as a kitchen sink approach. He's underperformed GM for quite some time right now. His EV strategy was nonexistent. Mary Barra has knocked the cover off the ball at GM. Up 21 percent, one year performance, four down 29 percent. That's all you need to know about this conversation. That says a lot. I'm just looking here. So if you pulled up the MSCI World Auto Manufacturing Index, on a three-year basis, that index is unchanged. Imagine that, where the S &P is up, what, 37?

17:41The Qs are up. And this is every stock you can possibly think of, of course. So it's Volvo. It's General Motors. It's Tesla. It's Ferrari. They're all right here. Hyundai, BMW, Mercedes. So this aggregate worldwide, which is very important, speaks to global, is unchanged. Zero results. If you take out Tesla, is it down? If you take out Tesla, it's probably worse. Yeah, if you did an equal weight, sure. Tesla's a big weight. It speaks a lot to a lot of things. The tariffs make it worse. But the point is, this is an area to be having not been in for a long time. No, I think Steve makes a great point.

18:13I mean, the conversation is we will try our best to operate in the environment of uncertainty. But quite frankly, I mean, when is it ever certain about anything? And Ford today, I mean, you want to pull up a 40-year chart? Today's price is the same price it was in 1990. I mean, so you'll figure that one out. Coming up, the earnings keep rolling in. A number of names on the move after hours of details out of Cisco, Robinhood, and Reddit. Ahead plus Chevron slashing its global workforce. The oil giant planning to lay off up to 20 % of its headcount as it looks to cut billions in costs. What it all means for the company going forward.

18:44Do not go anywhere. Fast Money is back in two. Welcome back to Fast Money. Earnings alert on Cisco. Shares are surging on a top and bottom line beat. The company also hiking its dividend and announcing a$15 billion buyback. Christina Parts Nevelis joins us with the latest. Christina. Well, the tech giant Beat was powered by its Splunk acquisition, a software provider it acquired less than a year ago. Over half of Cisco's revenues right now stem from subscription-based models. But here's what's turning heads beyond the dividend hike you mentioned and the$15 billion buyback. Cisco's AI infrastructure sales like Silicon and Systems to tech titans like AWS actually hit$350 million this quarter alone.

19:21add that to last quarter's over$300 million, and they're really racing towards their billion-dollar AI target way ahead of year-end. On the earnings call, which is underway right now, the CEO said he believes customers are still in, quote, early days for building out their AI infrastructure and that enterprise customers are only just joining the mix now. The company is pretty confident, and that's showing in the numbers, lifting both revenue and profit forecasts for the full year, and telling analysts now, too, that those numbers do account for any proposed tariffs, and they're actually not seeing any signs of demand pull through despite those concerns.

19:55So shares still up 6%. Back with you. Christina, thank you. Christina Partzinevelis. Guy, what do you make it? It's not expensive. You know, the margins are improving. The guide was very good. I mean, now you have a stock that all of a sudden it's like what IBM is doing, the stealth rally in these old technology and Oracle. Throw that in the mix as well that nobody's paying any attention to. I think, and I don't know if our crack staff at EC can do this, But you go back to 99 and we're probably approaching levels that we last saw 25 or so years ago. So good for Cisco. Yeah, I think, you know, that that point that we've been making around the table, that people are moving away from mag seven names because they're just too volatile off of every headline.

20:35So what's the second derivative play? It's a company like a Cisco who now is actually making some revenue on AI infrastructure. So they're a habitual beater of EPS. Do you know they've beat for the last 10 years on EPS? These are the fun facts that you always find out after, because I would have bet on that then. There's got to be MGM odds on something like that. Old tech is now new tech, safer tech. That dividend and the buyback gets people in that name versus the volatile tech sector. All right, let's get more earnings here. Robinhood popping on strong results thanks to growth in crypto and equity trading.

21:11that conference call kicked off at the top of the hour. Kate Rooney's got more on this. Kate. Hey, Mel. Yeah. So booming crypto and equity volume drove this blowout quarter for Robinhood. Company beat expectations across the board with strong deposit growth as well. Revenue for the quarter more than doubled at a record 1.01, roughly, billion, that is. Net deposits were up by roughly 16 billion. Assets under custody jumped 88 percent. And then average revenue per user roughly doubled to$164. Total funded customers now topping 25 million accounts and then transaction-based revenue. This is pretty much a reflection of trading volume.

21:48It was up 200%. Crypto was the standout, growing 700 % in the quarter. Options and equities up 83 % and 144 % respectively. Interest income also up roughly 25%. We did also get some January metrics just now on the analyst call. In the month, deposits, they said, were the second highest month ever. Equities, options, and crypto volumes, they say, were also all up double to triple digits when you look at the growth rate from a year ago. And then options volumes, they say, are now at an all-time high, at least in January. CEO Vlad Tenev also said they are going to be launching a, quote, comprehensive platform for event contracts, calling it an innovative new asset class that's despite the Super Bowl contracts being called off at the last minute.

22:32It does say they're excited to do more on that. It says they're going to be expanding the availability of crypto tokens as well, thanks to the regulatory environment and new administration. We are going to be sitting down with CEO Vlad Tenev. He's walking the street here in San Francisco tomorrow, guys. Back over to you. Kate, in terms of the assets that were collected, it was above what analysts had been expecting. They also have been doing a lot of promotional activity to get those assets, to get people to transfer their accounts to Robinhood. Is there any, you know, color on what those assets cost ultimately.

23:05So that's been interesting, the promotions, as you mentioned, to get people off of the other brokerage platforms. They've been slowly rolling that back in previous quarters, likely to get more of that on the analyst call and sort of the plans. They've sort of narrowed it down a little bit more and focused on specific promotions. Compared to probably six months ago, there are fewer promotions, but we also got some color from the CFO, Jason Warnick, about the type of customers. He said they're coming in at a higher base with higher net worth versus what you would traditionally think of as kind of the first-time Robinhood traders.

23:37The demographic is slightly different. They're going after a more active trader. But again, we'll hopefully get a little bit more on the promotions. Also, the cost of that. They did say marketing costs are going to go up significantly this year. So that could play into some of the costs for this company going forward. All right. Kate, thanks. Keep us posted. Kate Rooney in San Francisco. though. It's interesting transformation of this company in terms of his, Kate had mentioned higher net worth individuals, having accounts on Robinhood, not the traditional Robinhood customer. Right. I mean, we think of them, you know, GameStop was a pivotal moment there, but I mean, good for them.

24:12They're in the right place. They put themselves in the right place at this time. It's not by chance. I mean, that quarter was very impressive. I think that, you know, it's just too expensive for me, but they seem to be doing all the right things. And remember, this is a stock that has a beta of almost two. So as you know, they grow assets. But if the market's good, the assets grow as well. And the trade, the option trading looked enormous. So good for them, but too expensive for me. We've got a news alert on President Trump's lawsuit versus Elon Musk's X platform. Steve Kovacs got the details on that.