Souring On Apple… And An Auto Affordability Push As Car Prices Speed Higher 1/16/26

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0:51The key to being rich is knowing what counts. Let's find your rich together. Edward Jones, member SIPC. Live from the Nasdaq Market Site here in the heart of New York City's Times Square, this is Fast Money. Here's what's on tap tonight. Bruised Apple, the tech giant, has now fallen every week since hitting a record in early December. What's behind the pullback? And can the iPhone maker get its mojo back ahead of earnings? We'll debate. And auto affordability, what the administration is doing to combat rapidly rising car prices and how it could impact the stocks in the space. Plus, the great utility divide as the president pushes big tech to pay for its own power.

1:32We start the countdown to Netflix earnings on Tuesday night and the final set of 2026 trader acronyms. What Bonoan is bullish on this year and how Mike hopes to earn some fast money. Don't we all? I'm Leslie Picker in for Melissa Lee coming to you live from Studio B at the Nasdaq. On the desk tonight, Tim Seymour, Bonoan Eisen, Steve Grosso, and Mike Kow. But we start with Apple closing out its seventh straight losing week. That's the stock's worst stretch going back three years. It's now down over 11 percent from the all-time highs it made in early December. At the time, it peaked at$4.2 trillion market cap, but it's shed about$472 billion in value and now lags behind both NVIDIA and Alphabet in size.

2:17The latest downdraft coming even with positive updates on the iPhone maker's AI strategy. Of course, earlier this week, Apple confirmed It's partnering with Google to power Siri using Gemini AI. So with today's move, Apple and Meta are now tied as the worst performers among the magnificent seven stocks this year, closely followed by Microsoft. So with earnings coming in less than two weeks, what will it take for Apple shares to stage a comeback? Tim, we'll start with you. Well, welcome, Leslie Picker.

2:46Karen Finerman:It's so great to have you here. Great to be here. It's an interesting conversation to have on what was an extraordinary week. And Apple's just kind of like an afterthought. And that's kind of the problem here. I think that's the issue. I think I think with part of Apple's move to all time highs and as someone that's long Apple and not necessarily because I think there's a lot going on, but because I think there's not a lot that's been priced in. I love the Google Gemini partnership. It's not a huge surprise. We know some of the drivers, certainly for Google, but also for Apple was that DOJ settlement, the dynamic here where I think, you know, ultimately, I believe Apple is still how much of the world is going to really live their AI better life.

3:24Karen Finerman:And that has yet to happen. And so the problem with Apple here is there have been a lot of drivers as we just, you know, Brian handed off the show to us and talked about small caps. Look, this year has been characterized by things that were not necessarily a big part of last year's trade, although, you know, certain parts of the semis are. Apple's a perfect example of I just think there's been better things to trade. I don't I'm not that alarmed when you look at that succession of weeks lower. OK, the headlines don't sound great there, but, you know, stocks, whatever, down six percent in the last month.

3:55Karen Finerman:The problem is there's not a big catalyst here. The problem is it's 31 times forward. I can live with that in my portfolio. Bonham, do you think that this is the year that it really joins the AI play in a big way? I'm not sure. It's something that everyone's been waiting on. Well, yeah. I mean, all indications would actually suggest that they are in no rush to do that. And I think that's one, which is part of the downside and why you can probably still own it. But I think it's also why it has not had the same type of returns as, say, in NVIDIA or some of the more closely related cloud and AI names.

4:28With that said, I still think that services business is growing and that continues to defend margin. I don't think this is much of a trading vehicle. And I think 2025 was very much about owning high beta tradable names. Even into 2026, the story has been a rotation away from AI, big tech and AI adjacent names into more old industry, economically cyclical and sensitive type of names. And so, like Tim said, there really is no catalyst there. I do think, you know, the forward multiple is somewhat concerning. And until there is some catalyst, I don't see much upside. But, you know, the rotation tends to mean revert at some point.

5:05And when you do see money flowing back into big tech, because there is still a certain defensive nature because of Apple's balance sheet, I don't think you can help but actually have that boat be risen along with the other. So no direct catalyst in the short term. That will likely be AI. and you still have the China overhang, but you still have a very strong service business. And ultimately, it's always going to be correlated with big tech. And there will be money, if it's for no other reason than passive investing, that continues to flow into that space. Yeah, and maybe, Steve, there's a case to be made that kind of that tortoise mentality of Apple as it pertains to AI.

5:43Safety. Safety. Rewarded for not chasing the AI dollars. That's what I was going to say. they still have a very huge cash board that they're able to deploy. They're not, you know, in this arms race necessarily doing partnerships as opposed to really spending. Yeah, I agree. And I think that's the strategy to take. And I think they will ultimately be rewarded. But I don't want to talk about the reversion trade. So there's been nine times since 2000 where Apple traded down for seven straight days. It always, obviously, you look at the chart, it always rebounded aggressively. Now you look at the cash balance sheet,$60 billion.

6:1840 billion, 50 billion. It depends on who's counting and when they're counting. Right. So the services is 22 percent of revenues. Bono and talked about that growing at 14 percent. Higher margins, high 70 percent margin. So there's a number of things to be bullish about. If we're just looking at a trade, I think you'd be you'd be a buyer of Apple right now. If you look at holding it long term, I think you're going to be a safe bet holding it long term. If you're looking at A.I., I think the Gemini is very attractive partnership. Mike, from a technical standpoint, are there any catalysts that you see?

6:52I mean, I kind of agree with what everybody has said here. I don't think that AI is the reason to get into Apple. They're not the pioneers in the space by any means. Steve, you know, hit on probably the most important thing, which is that the services revenue, which is about a quarter of their business growing at 14 percent versus the hardware side growing at about 4 percent. The company is going to do just shy of 4 % free cash flow next year, so that makes it fairly safe. But at 31 times earnings and maybe 6.5%, possibly 7 % top-line growth, it is probably fairly priced relative to the S &P more broadly.

7:26So, you know, don't love it. Don't hate it. I've actually been pretty impressed by their services revenue growth. I think that that's a demonstration that their installed base is really something they're going to be able to monetize. But, you know, 7 % growth, that's probably a little better than the market overall, but not a whole lot better. And obviously, Tim, a key component of services and what, you know, a potential use case for AI for Apple would be Siri. Yeah.

7:50Karen Finerman:It can only get, Siri can only get better. Sorry, Siri. You can hear that. In fact, I tried to turn off my phone. Siri will probably bring my phone back to life. Sorry. Go ahead. I was going to say, what's the upside there? I mean, is that something that Apple could improve to the point where they charge a subscription for that service? It's possible. Apple has done a great job of figuring out ways to add to subscription services. And we're all kind of seeing our Apple bill slowly creep higher. I just think that, again, the partnership with Gemini is giving Apple the ability to build their own foundational models and inputs to ultimately drive their own AI.

8:26Karen Finerman:and that's mostly AI apps. And we still haven't seen the app developer world really have the opportunity to use this platform in the way it will. I think it just gets back to not that it's the same, hey, we underestimated Google, so we probably are underestimating Apple. I mean, Gemini is the reason Google has come storming back along with Waymo and a few other things. But I think we've underestimated Apple. We've priced in zero AI. As we've all said, the capital intensity at Apple is something that's a positive, not a negative, and something that I think is a reason that I'm comfortable owning it.

8:59Karen Finerman:It's funny. I'm just going through my portfolio over the last couple of days and looking at certain names that definitely feel like could drift lower. Could Apple drift lower? Yes. Trying to time it, I don't really care. I actually think overall Apple is going to continue to participate, at least with the market over time. What about, Bono, in all of this discussion surrounding a potential succession with Tim Cook? And, you know, is he getting tired? Is there someone else on deck? I mean, how do you feel about management at Apple? And would that provide any kind of catalyst to One Direction that you can think of?

9:34Listen, I think Tim Cook has done a wonderful job. I think transitions happen. What would concern me more is if they had made some massive push prior to transition. So you don't want to be in a situation where you're making some overarching change and then asking the new entrant to manage that directional or strategic pivot. I think the fact that Apple is the is the Apple that we've known for the last 10 years and essentially has someone that's come up through those ranks and can understand that and then put their own type of branding on top of an existing platform is actually a positive or at the very least, like removes a lot of downside risk.

10:10Asking a new person to completely overhaul or create a new strategic, come in the middle of a strategic shift. Right. I guess the biggest thing that you just touched on here is you just don't want a hardware person running it. You want somebody, if the money, if the revenue is coming from services, you want somebody from services who gets the cloud, who gets that type of aspect to the business. All right. Meantime, a shakeup, speaking of a shakeup, in the race for the next Fed chair president, Trump's saying today he wants to keep Kevin Hassett, once a top contender for the job, in his current position as an economic advisor to the White House.

10:45According to Calci, Kevin Warsh's odds to beat Trump's pick shot up to 59 percent, driving a big wedge between him and Hassett, whose odds plunged to 16 percent, putting him in third place. For more, let's bring in Ben Emmons, founder and chief investment officer of FedWatch Advisors. What was your read from the president's comments today? Clearly a surprise to Calci, maybe a bit of reaction in the bond market as well. Yeah, I think with the latter, it was interesting because Kevin Hassett has been seen as more, I guess, not so market friendly. You know, he's come up with statements about we don't want to use the balance sheet and a bit more conservative on interest rates.

11:22Whereas Hassett was much more aligned with the president about these rates have to go down and speak his agenda. So it's an interesting change here because, you know, this was, I think, the front runner, Kevin Hassett. So as this race sort of evolves, and I understand that Rick Reader was interviewed yesterday, it's still to be decided. So Besson said at the end of the day that the president will announce it right after the votes. So this will be, I think, a big deal next week as we see these rising interest rates, rising yields in the Treasury market reacting to, you know, Kevin Worsh currently be the frontrunner.

11:55Yeah, it's kind of surprising because all of the frontrunners seem somewhat dovish. But I guess the difference that the market's been dissecting has been the balance sheet impact between Hassett and Warsh and who believes in utilizing the balance sheet a bit more. And it sounds like Warsh would be a bit more hawkish on that front. Yeah, for sure, because he's come out several times saying, we've used this balance sheet the wrong way. We've actually given fiscal stimulus too much of an impetus by using this balance sheet. The Fed is essentially giving the government a free way to spend, and he doesn't want to go on with that process.

12:30Whereas you take Rick Reader, he had an interview with Scott Wapner, really talking about like, wow, we can really use this balance sheet to target the U-curve and do all kinds of things. He's a market-friendly person in that way. I think that's what the market was doing today. If Walsh is going to be the frontrunner now, it's a different game with the balance sheet.

12:48Karen Finerman:But, Ben, doesn't this really mean that the Fed independence question is now not really something we're focused on? And look, earlier this week, and we see the moves in gold, We can see the moves in the dollar. We can see the moves in all the things that would be sensitive to it, although gold didn't really budge that much today. And that's why I'm one of the reasons why I'm bullish. But look, there's there's no question this was about could Hassett be confirmed? There's no question to me this was about credibility and a lot of people close to the president and a lot of reminders from within his administration and also from within the community that said no way.

13:22Karen Finerman:And in fact, if anything, Kevin Hassett, it's less about he's been doing such a great job with the White House is that he's not confirmable. And he's not confirmable at a time when a lot of other Trump policy is critical. And this week's been all about headlines that are really more geared around midterm elections. I think you have a point, Tim, because, you know, there were senators out there saying, like, that the nomination process could be, the confirmation of it could be delayed. I think it's the case with Powell now. And that if you have Hassett being too close to the president, that that's being seen as this issue about independence, given the case of Powell.

13:56So a bit complicated. But I guess the market is trading more about like this next Fed chair, whomever it will be, that's the guy we're going to listen to. And if it's Kevin Walsh, the front runner, and he's more hawkish in his tone, that's what we'll listen to. And I think that's what the yield curve did today. That's why the 10-year popped to almost like 4.23, whereas the two-year was a little bit less. I thought that was interesting because it's about the economy. We've got good data this week, but it's also about a hawkish Fed potentially, or at least on the Walsh. Ben, when you look at this, I always look at the Fed chair being a political person because he's nominated by the president, has to be approved by the Senate, has to go up to Capitol Hill twice a year.

14:34So having said that, do you think this is all smoke and mirrors? Come May, the market's going to look at rates and rates are coming down, regardless of what's going on with the balance sheet, with MBS. These rates are coming down. So is the market just pricing in that May option basically from now till May to lower rates? That is actually that way, because if you look at the odds till May, they're like 10 percent, 15 percent. So the market is priced for that in May or thereafter. This Fed will for sure resume with rate cuts. So that didn't change too much today, actually, in this move. But I think to your point, yes, any Fed chair is by nature political.

15:14It has to negotiate or communicate with the Treasury. It has to go to Capitol Hill, win, you know, at least some sort of voice about we're going to raise rates or lower rates. and how it affect the economy. But I think for the markets, it's about if this is an administration that wants to really propel the economy to a much higher growth level with all this investment, this Fed cannot stand in the way of that path from the administration's point of view. And if that's the case, then you're going to get a reaction in markets. They're going to say, like, if you're going to lower rates to bring the economy up and bring investment up, long-term rates are actually going to go up.

15:48I think that's still the case, though. We're seeing the breakout now in the 10-year. really got above 420. A lot of people in the market are looking at this saying, like, yeah, this is the first step to a higher yield on the 10-year. Yeah, and the 10-year has been so range-bound. Ben, thank you for your time. Appreciate it. Mike, of course, then you have the question of J.P. Morgan economists saying that the Fed's next move will be a hike from here, given sticky inflation. Do you think that's in the cards? I'm not really anticipating a hike at the short end. I will say that, you know, it's kind of an interesting pivot coming from the White House when you consider that one of the things that had been proposed was, you know, the purchase of mortgage backs, for example, because obviously the housing affordability issue is going to be propelled at the long end.

16:33And if you have a new Fed chair who is less inclined to use the Fed's balance sheet to manipulate the entire curve, then essentially the lid you would try to keep on the long end of the curve is lifted. So I'm with Ben here in the sense that I think you could have increased steepening, actually. So I'm really focusing more on that, I think, than what's going to happen at the short end. And that is unfortunately going to create continued pressure, I think, for the housing trade. Yeah. And then, of course, the geopolitical risk is in focus as well. We heard from a variety of bank executives this week who insinuated that geopolitical risk was among the top things that they were watching.

17:12It seemed even more just tonality-wise to be front and center for them, given everything that we're seeing across the globe. How do you think about geopolitical risk, especially in the context of the moves that we've seen in the Treasury complex today? Well, I'm going to try to bring that back to the Fed discussion, because I think it's actually pertinent. So I want to piggyback off something that Tim said in terms of, like, I think we're in a situation now where this is a confirmable pick. I think it serves another purpose. You think Warsh is a confirmable pick? Yes, or Hassem was not a confirmable pick.

17:44With the war selection, if that is, in fact, the way that we go, I think it's a situation where he has also come out and said that he does not want the same type of celebrity circus around the Fed. And so as you're trying to manage these geopolitical risks, as you're also trying to push through, whether it's the great refi and bringing down affordability or whether it's changes to the energy complex, It's a situation where the light actually gets taken off of the Fed, and they're essentially able to kind of work in the background and support, whether it be through monetary policy or balance sheet management.

18:18I think that also kind of allows the Trump administration to take ease that, like, the focus still remains on them and is not this push and pull, at least within the public domain, between them and the central bank. I hear what you're saying because the president's comments were all about, you know, HACCP being good on TV and therefore he wants to keep him at the White House, insinuating that maybe being good on TV isn't necessary for the Fed. But the market relies on the Fed's messaging and has gotten used to this idea that the Fed will communicate frequently and communicate its moves very. Do you think that would be a pivot under Warsh?

18:53I think it would be a pivot, but I also think that perhaps it ends up lowering volatility where you're not trading on the back of Fed headlines and that messaging. It's not about how many times you send a message. It's about whether or not that messaging is consistent. And I think if you have a longer period in between times you're coming out to the market and making announcements, and you're allowed to actually be data-dependent because you're taking a breath between iterations of you coming out and making policy announcements, I think you can kind of walk that fine line where you're not kind of forced to having these knee-jerk reactions.

19:29I don't think the market needs added volatility right now. All right. Coming up, paying for power, the latest push from the president for big tech to foot the AI energy bill. And the stocks moving on the news. Plus, regionals on the rise. The KRE up nearly 20 percent over the past three months. The name's hitting highs and where the financials head from here. Don't go anywhere. Fast Money is back in tune.

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20:50Karen Finerman:Game day at my place is kind of a big deal. If I'm grilling, chilling, and watching hoops, my outdoor patio setup better be ready to play. That's where Wayfair wins. From patio seating and umbrellas to grills and grilling accessories, Wayfair's got it all, and it shows up fast. I'm talking championship-level fast and easy delivery. So level up your grill game and your outdoor chill game and head to Wayfair.com now to get your outdoor space ready for the season. Welcome back to Fast Money Energy Infrastructure and Focus in D.C. as the Trump administration pushes the largest power grid in the U.S., PJM, interconnection to make big tech companies pay for new plans.

21:33Pippa Stevens has the latest developments. Pippa. Hey, Leslie. Well, PJM, the regional grid operator, just now weighing in on the administration's call to hold an emergency auction so that tech companies can bid on long-term power agreements. With the grid operator saying large power users will have to bring their own generation or face early curtailment, among other initiatives. And this comes after the administration earlier outlined a goal to build more than 15 billion of new power generation, with hyperscalers paying for that power, whether or not they actually use it. Now, we saw lots of big movers on the back of this.

22:06Constellation, Vista and Talon are the losers. More available power on the grid could cut into their profits from providing guaranteed capacities to PJM, with the proposed price cap also limiting those gains. On the flip side, power infrastructure stocks getting a lift. G. Vernova and Siemens Energy make gas turbines, while Oklo and Newscale make small modular reactors. And don't lose sight of the picks and shovels trade. That's companies like Quanta, Eaton and Maztech that actually build all this new grid infrastructure. Leslie? Pippa, thank you. So Pippa Stevens for us there. Steve, this is something you see as a long-term benefit for kind of everybody, right?

22:45Yeah, I don't think the initial sell-off today in Constellation or Avistra, if you're substituting. So what they're not getting is those spikes in volatility on the spot auction prices anymore. But what they are going to get is a more consistent 15-year revenue base. So I think when you're taking out 11 % out of talent, I think that should be bought. I think all of the things that were sold off today should be bought. And I think all the things that rallied will have the ones that can provide new builds, new builds quickly are going to benefit from it in real dollars real soon. So I think everything that was bought should be bought.