Stock Jump On Inflation Data & Fed Comments… And The 2024 Charts Of The Year 12/20/24

0:01Live from the Nasdaq market side in the heart of New York City's Times Square, this is Fast Money. Here's what's on tap tonight. A massive market turnaround after one Fed official signals there still may be more rate cuts in the new year. We'll dig in on the comments that seem to get markets back in rally mode and losing weight. Shares of Novo Nordic getting skinnier after its next-gen obesity drug draws disappointing results. Meanwhile, Eli Lilly is that found just getting approval to treat sleep apnea. So is Lilly now the unparalleled winner in the space? Plus, American Express charges higher.

0:31FedEx's post-earnings rally gets foiled and the traders lay out their charts of the year as we head into the last few trading days of 2024. I'm Melissa Lee. Coming to you live from the studio, be it the NASDAQ. On the desk tonight, Tim Seymour, Karen Freiderman, Steve Grasso and Mike Coe. We start off with the Fed comments that helped the markets turn around today. Stocks rebounding sharply after early losses after Chicago Fed President Austin Goolsbee told her Steve Leesman he was encouraged by this morning's inflation data. The Dow up nearly 500 points, while the S &P and Nasdaq were each up a percent.

1:02Stocks did end off their highs of the session, though, and all three major indices were still down for the week. For more on Goolsbee's comments, let's turn to Steve Leesman. Five days before Christmas, and the Fed delivered to markets two dovish Fed officials and a friendly PCE. Chicago Fed President Austin Goolsbee telling CNBC in an exclusive interview that the funds rate is still substantially higher than the neutral rate, so there's room for the Fed to cut. That's why I say over the next 12 to 18 months, if conditions keep on the way that they have over the last 18 months, I think rates come down a fair bit more.

1:38Goolsby will vote on policy next year. The Fed's preferred inflation indicator, the PCE, came out a tenth better than expectations. And New York Fed President John Williams, in another exclusive interview, liked what he saw. We've seen really sizable movement down in inflation in the last couple of years. We're still not to our 2 % goal. We're going to make sure we get there, but definitely seeing further progress towards that goal. Williams agreed with Goolsbee that the Fed is above neutral, so there is room to reduce rates. After the lump of coal delivered by the Fed on Wednesday to markets, the data and the Fed speak today were welcome gift to investors on the weekend just before Christmas.

2:17Back to you guys. All right, Steve Leisman, thank you. So did Goolsbee quell fears of a rate hike next year? because that was sort of entering the conversation. Torsten Slock over at Apollo mentioned that in a research report on Wednesday. But the data today, plus Goolsby's comments, does that sort of take that off the table in your view? For a little while, right, until we get data that, right, exactly. I mean, so when I looked early this morning, the handles were maybe down 50 or so. And then after that PCE number came in, cooler, that was down about 24. And I don't know what the rest of it was as the day went on.

2:54Maybe it was those interviews. That could definitely be it because those were very bullish. But I think also some progress on the debt ceiling that helped as well. And as well as the magnitude of yesterday, just kind of that sell off was getting a little bit sloppy. So I feel a little bit better. It's nice to see that CPE number come in or PCE number come in a little bit better. But I still think the trend is toward inflation and not a lot of a lot of cuts. Right. Yeah. Look, if you the numbers bear out what the market really how they reacted to the PCE, you went from you basically rallied almost 260 basis points from 950 a.m.

3:28until the markets then peaked up and then and then we can just small off to the end of the day. But that translated into a major reversal over where we saw futures. You know, you looked at your screens in the morning before the markets open and you said, wow, this is kind of sloppy. And we're probably going to go into the weekend and people are now reassessing their view of the Fed. But, Karen, I think you're right. I mean, sloppy in terms of how yesterday traded or how the couple of days have traded really since those Powell comments. I think that has as much to do with anything. I think markets are jittery.

3:57You look at the five day on the S &P, it's you know, we're down three percent. I mean, it's been even with this move today, it's been a rough period after such an extraordinary period for equities where the assumption was that inflation was your friend. And we had a number of other prints going into the Fed meeting that had you believe that while inflation isn't out of the picture and disinflation is certainly a thing of yesterday, that the Fed is not going to be hiking. Having said that, that is the biggest risk for 2025 at this point. And it's not that the Fed will hike. It's that the perception of the Fed will change.

4:29Yeah, I agree with that. I think the important thing is they're not going to be hiking. So whether they're cutting by twice or four times, not really the issue. The issue is, do they hike? But Powell, the day of the meeting, said that rates are meaningfully restrictive. Right. So he agrees with Goolsby. He agrees with Williams. And he also doesn't want unemployment to tick up. So you do have the Powell put. That's the way I saw it. I thought the markets totally overreacted to the commentary. I get it. He was a lot more hawkish than the market wanted him to be. I don't think the narrative has changed.

5:07Economy does worse. He's there. He'll cut more aggressively. And he's got plenty of tools or plenty of time and plenty of basis points to actually cut. I think the market got it wrong, but the market always overreacts. I mean, there is still the sort of the conundrum, the squaring the circle that needs to be done between raising your inflation forecast and taking down the number of rate cuts. And that's still, even with the Goolsby comments, Mike, that puzzle still remains. Yeah, I think that's definitely true. I think what Karen was probably also referring to is that, you know, a lot of the secular pressures that are inflationary, it's not like those things are just simply going to go away.

5:47We are at relatively full employment. So, of course, labor costs are something that we still obviously have to keep an eye on. I mean, to me, though, I think the important thing just in terms of what Tim was saying, which is that the market is clearly jittery, that bad news was really greeted with a very severe knee-jerk reaction. I mean, dropping 300 basis points in the S &P over the course of two hours sort of speaks to the fact that people might be a little concerned about the valuations. You know, one other point I would add, and I don't think that's as true this week, but going into next week, and that is that we are going to have a little bit less liquidity.

6:23I mean, there are going to be people who are not looking at their screens for all of next week. And, you know, that can also create a little bit more of that kind of jump risk that we saw in prices this week. Yeah, the liquidity get drained away. And also there's the seasonality. Seasonality typically happens in the second half of December. And here we are entering the Santa Claus rally period. Oh, ho, ho, ho. And I do think it's been quite joyous to this point. And if you look at where markets really haven't had a chance to test the 50, that's what the S &P did, hasn't tested the 50, really going all the way back to September.

6:57And remember, since that last September Fed meeting, where, yes, rates kind of then started rising, but markets also rose. And if you look at the NASDAQ, NASDAQ was up almost 14 percent from that Fed SEP 17 meeting into this last Fed meeting. So I think a lot of this is just a function of where we've come from. It's been it's been a really joyous holiday period. And again, since Thanksgiving and the economic data, let's not forget, has been forget inflation. The data around retail sales, the data around the labor market, even there are people we've had them come on our show talk about. They even think that the ISM manufacturing is doing a bottoming thing after a couple of years of what we know has been recessionary manufacturing activity.

7:35So the economy is in really solid shape right now. The market performed like that. So, yeah, I mean, it's kind of, to me, nice to see the reactions to the Fed almost like they used to be. In other words, where you didn't know what the Fed was thinking. Remember when the Fed was more opaque and less transparent? And it really felt like those were days where you truly got the cha-cha-cha. You had more clarity with no clarity. You mean like Greenspan? Look, I mean, I realize some of us were alive then. And it definitely seems like a long time ago and the days of irrational exuberance. But there was a time where the Fed wasn't supposed to telltale and essentially signal every move.

8:13Yes. The briefcase indicator. The briefcase indicator. Wow. Was it thick? Thin? What was the issue? Thick, thin? I forgot. Yeah, but that was, they're a lot more into transparency now. Well, nobody carries briefcases anymore. Well, that's true. Do you have a briefcase, Steve? Not with me today. So to Tim's point, the 50-day moving average is right where the S &P closed. But more importantly, we haven't even tested the 20-day moving average, which is a momentum indicator. No one looks at that. It's around 6 ,000. So we hadn't been below that for a lot of time. Everyone is now all of a sudden maybe, to Tim's point, getting jittery.

8:48But I think you would probably say the market should come in 3 % to 5%. It did come in that 3%. You could even make the case that the market should come in a little more from here, and you'd still feel good about it. Yeah. I mean, Julian Emanuel, I think, was saying the market should come in by 13 % or something in the first month or so of the year. How do you feel? I mean, you're going to be one of the people who are not going to – you're not going to be looking at your screen for the next few days at least. I will. She'll be looking at the movie. I'm not going to do much. Yeah. Yeah. I don't know.

9:17I'm sort of looking forward to where we get to talk about earnings again, which really won't happen until January 15th. that's a little bit of a vacuum of not a lot of information. But I don't know. I feel like we got a lot of unknowns there. We're going to see, assuming they get a deal tonight, which I think they will. And even if it drags it tomorrow, I don't think that really makes a difference. We'll see what's at the top of the Trump agenda coming in. That'll be really important. I don't know if they'll start with, if I were here, I probably wouldn't start with the tariffs right away. Probably start with something else.

9:48But who knows? Who knows? Let me tell you one thing. We We didn't mention it, though. Bitcoin. Powell did not have to come out with that line that the Federal Reserve doesn't have the permission to buy Bitcoin. And they're not looking to change that. The market read that as extremely bearish over on Bitcoin because you have a Federal Reserve that their opinion shouldn't even matter. It's Treasury's opinion should matter. But that's where you start to see Bitcoin cascade lower as well. Yeah. Tim, what will you be doing next week besides, you know, decking the hall? Yeah, there's still some ornaments to go on the tree.

10:20and there will be some running around this weekend. But next weekend, I think there's an opportunity, first of all, even after the volatility of the last couple of days, I think there's still a lot of upside momentum in stocks that I think are the biggest companies in the world. I think there's an opportunity to sell volatility. I think actually three and six month vol and some of the biggest companies in the world that have run really hard into this, I think it's an opportunity because I think it also gives you an opportunity to trade around a little bit in that first quarter of the year where I think we will get some volatility.

10:47We have policy dynamics to take hold. There's a big options expiry. I think, you know, that Jan 17 options expiry, I think there's a lot of options that were tied to that as people look to, you know, even before elections, they set themselves up for where do I want to be positioned through, positioned through the change of power, et cetera. So I think those are the things to look at. But I think, if anything, it really is a time to start squaring away themes on, you know, both secular and structural and looking to 2025. Energy is really underperformed. Health care is really underperformed. I actually think they can be defensive, even with all the nastiness and the health care that seem to be the headlines.

11:20Those are the kinds of things I think you should be doing on a week like that. Mike Coe, Jan 17, is that on your calendar? And interestingly, that's before earnings season. That's also before the inauguration. Yeah, I mean, actually, January 31st is what's on my calendar as far as S &P volatility is concerned. I actually, just towards the end of the day today, picked up some SPX strangles, some 30 Delta puts and calls, which are actually up a little bit. You're just showing the VIX index there. It's not as cheap as I would like. But actually, to Tim's point, the relationship between volatility, the price of options going out three, six months on a lot of the big single stocks relative to index are indeed a little bit rich.

11:58And so I'm kind of with him there. I mean, it's kind of an inside baseball trade to start thinking about trading correlation. But I think that trade actually sets up pretty well. I would want to own the inauguration, though, because I think there's some geopolitical stuff that could come out right on the backside of that. We're not just talking about tariffs, but, you know, what is what's going to go on in Russia and Ukraine, things like that. You know, we could get some kind of late January surprises on the geopolitical front that I think you want to be prepared for. I agree with both of these gentlemen.

12:27Not that I disagree with you, but on the options, I have been doing some callers selling upside calls, taking that extra premium. You're able to buy a put that's closer to the money. Let's get to some breaking news in D.C. Lawmakers right now debating the latest stopgap funding bill that could prevent a government shutdown at midnight Eastern time. A vote expected to come later this hour. CNBC's Emily Wilkins got the latest from Capitol Hill. Emily. Hey, Melissa. Well, House lawmakers are now debating a bill that could keep the government funded until March 14th on the House floor. But the big question is we know that Republicans are behind this because they all met earlier and most of them basically agreed to go forward.

13:04However, the way that they're bringing this to the floor is going to require strong Democratic support. And at this point, we don't know where Democrats stand. House Democratic Leader Hakeem Jeffries is meeting with Democrats now just a couple floors below where I am. And we tried asking lawmakers as they were walking in. I saw whip Catherine Clark. She's the number two most powerful Democrat in the House. And she said that she's going to talk with the caucus. She's going to hear members out. She's not planning at this point to whip yes or whip no. Of course, that leaves a big question as to exactly how many lawmakers might wind up signing on to this.

13:39Certainly, now that that two-year extension of the debt limit is out, one of the biggest concerns for a lot of Democrats is no longer a problem. Many of them support leaving the government open. They support that$100 billion in disaster relief. They support helping out farmers and agriculture workers. But it does remain to be seen. It has been quite a bumpy process up here in Capitol Hill. Nothing is sure until its final. But we are expecting to know, hopefully by the end of this hour, whether or not this bill is going to be able to pass the House. And then, of course, the action goes across the Capitol to the Senate, where lawmakers are eager to go home, but waiting to see what the House does first.

14:16All right, Emily, thank you. Emily Wilkins in Washington, something we will be watching very closely in the next seven hours or so as the shutdown looms. I'm going to ask this question I don't know the answer to necessarily. I can't believe that, by the way. I know I can't either. You usually know the answer to any question either way. Okay. Because what is surrounding all of this debt ceiling stuff with the Elon Musk tweet is government dysfunction, which is one of the reasons why the U.S. credit rating got downgraded earlier this year. And so here we are on the verge of a shutdown. And what happens if we actually get downgraded again?

14:50What do you think? To yields? What do you think? You can make the argument either way, higher or lower. Depends who's downgrading. And if it's S &P, I think it's a big deal. I think it's certainly nothing will feel like it felt in August of 2011 when we lost that triple A at plus. And it seemed like it was the world coming to an end. The reality is the U.S. is still the most credit worthy government and borrower in the world, in the deepest market, et cetera, et cetera. But what we've heard from credit rating agencies is that U.S. politics do matter and that they're starting to matter even more.

15:23And then you add that to fiscal dynamics. We recite these numbers often in terms of percentage GDP, debt servicing requirements and burdens and where we will be over the next couple of years. So I do think it's a big deal. I do think that the headlines coming out of the last 48 hours in D.C. are suspension of debt spending. Sorry, limits. In other words, for two years, possibly. And again, that's at least the headline. And that's part of the rhetoric around this deal. I don't think that's going to happen. Yeah, I don't think it happens either. I did happen to look at what companies are rated the same as U.S.

15:55debt today, which Moody's, I think S &P is double, A, small a. I know there's a different way to say it. And that would be Apple, for example, an excellent credit. And if we were to lose that, the next rung, there was Exxon, which would have been similar rated to if they were to lose that, another downgrade. So the market will tell us whether it matters or not. If they're able to fund their debt, it doesn't matter. And this must be an unwritten rule that corporations are not supposed to have better credit rating than the actual sovereign. They can't. Here's the sovereign ceiling. Exactly. Here's the sovereign ceiling is what we said back in the day.

16:33Yes. All right. Meantime, Novo Nordisk plunging nearly 18 percent for its worst day in over two decades after giving data on its next generation weight loss drug, Cagre Sema. The drug helping patients achieve weight loss of 22.7 percent on average, more than others currently on the market, but short of the 25 percent expected. And just in the last hour, the FDA approving Eli Lilly's ZEP bound to treat obstructive sleep apnea, the stock adding to its gains in the extended session. For more, let's bring in BMO senior research analyst Evan David Siegerman. He just cut his Novo Nordis price target to$105, a share from$156.

17:05Evan, great to have you with us. Thank you for having me. It wasn't just the headline number on weight loss, 22.7, but it was also the side effects. only 57 % proceeded to the highest dose, which would indicate that the side effects were severe. And so how much does that ding Cagrosemma as a viable product? It really challenges Cagrosemma. I think there had been hopes that you got something 25, 26, 27 % weight loss with a tolerability profile similar to ZepBound. So now ZepBound is the leading product. You're at the apex of tolerability and efficacy. I think it's important to note that with ZepBound, I think 36 % or so of patients had 25 % more weight loss.

17:46So it is highly efficacious. And this was Novo's answer to ZepBound. Now they feel like they're kind of lost. And they might be viewed as lost on the oral obesity as well. Novo's oral obesity is a large molecule pill, which is much harder to manufacture than Eli Lilly's smaller molecule pill. And so Are they losing on that race as well, or could it be that they acquire a small molecule drug from a smaller player? Well, as it stands, they don't have the small molecule, so they are losing. You have phase three data coming for Lilis or for Glypron, mid-25. Merck just inked a deal for an oral Glypron, so they're now in the race.

18:25I think they do need to get into this space. That's how you broaden the market. There are other small players we've talked about structure on this program, and that could be a viable option for Nova Nordisk. But the FTC would have to clear something like this, which could happen under the new administration. So what happened? So is it just Eli Lilly's in the poll position at this point? It's Eli Lilly's race to lose. It is, I would say. I think over the summer I called Eli Lilly the goat of obesity. And that's definitely playing out. You have a superior product. You got the OSA approval. That's six million more patients in Medicare.

19:00You know, potentially more patients on therapy next year. I think the one issue that we're looking at with Lilly is they need to hit 4Q numbers and have a good 2025 guide. Same issue with Novo, but that's what's really riding on sentiment for the stock. I know the stock's up, you know, 30 some odd percent year to date. Novo's now down almost 15 percent. So to keep that momentum, they have to have a good 4Q. Evan, when you look at this class of drugs, we're talking about weight loss. So whether it's 20 percent or 25 percent, seems like that's in the right area where you should be losing weight.

19:32Is the next metric going to be muscle mass? And will other candidates really start entering into the fray? Well, that's a very good point. So we have talked a lot about muscle mass and quality of weight loss. Right now, there's actually no way to get that approved by the FDA. So we'd have to have some regulatory updates. So what I think is most important is maintaining the weight, good tolerability, right? This derailed the NOVO program and potentially more extended dosing frequencies, right? Dosing once a month, once every other month. That's why people were interested in Amgen's Maritide. Evan, I'm curious, does this stumble by Novo Nordisk prove that the smaller players actually have a shot in this game, either by commercializing a product or being bought?

20:15Because it was thought maybe even a week ago that these two big players are so deep pocketed, they've got such a deep pipeline, that the smaller players, they may not necessarily have a place in the race. I mean, this was thought on, I think, Wednesday when Merck bought the pre-clinical asset. So you saw Viking and Structure both down. So I think, yes, there is a room for the smaller players, probably not a standalone. They do need to either partner or take it out completely. And I think that's how, you know, a large pharma player that's not in the space like, you know, Novartis, Sanofi, you name it, could get in or Novo Nordis could catch up.

20:52Who in 2025 will be bought, do you think? Oh, that's a tough one. That's a tough one. I think Structure actually establishes a partnership with the Pharma Partner, and that's what they've been saying. I don't cover Viking, but I know a lot of folks hope that Viking gets taken out. All right. Evan, thanks for joining us. Appreciate it. Thank you so much. Happy holidays, everyone. You too, Evan Siegerman of BMO. The Structure CEO actually talked about that partnership right here on Fast Money during Obesity Week. In terms of Eli Lilly and the stakes, remember in October the horrible sloppy quarter because they couldn't explain what was going on with demand.

21:26And so that's what he was referring to in terms of the bar is high for earnings. They need to actually have a good earnings print without any questions. Yeah. I mean, right. That demand question was really an issue because we always say we don't have problems if they're unable to fulfill demand. Is it a sale denied or sale delayed? Hopefully they will clarify that. I mean, I don't know if they clarify. Does it get back to where it was, that 900 plus? I don't know. But I am long. Mike? Yeah, I mean, I think that the difficulty here, of course, now we just had that shortage issue. And it's kind of funny, actually, because you think about it.

22:04Had we actually seen the FDA keep it on the shortage list, that sort of would have spoken to that demand issue. You obviously would have been fighting with the compounders a little bit, but that still would have indicated that you still had that sufficient demand. I actually, as far as health care is concerned, I mean, I'm actually going to step away from names like Lilly. I think there's obviously a lot priced in for the next 10 years while these patents hold up on the GLP ones that they have. And they're obviously the front runner. But take a look at health care in general. And you're seeing something that's basically traded sideways.

22:33It's trading at less than 20 times forward as a group that includes the hospitals. You're talking about, you know, the medical device makers and everybody else in the space. And health care is going to grow faster than the economy overall. I mean, most forecasts have it around 13 percent faster growth over the next 10 years than the economy is going to grow. And it's kind of hard to see how that, as a group, doesn't start to play some catch-up after underperforming for a while. All right. Coming up, return to Sender. FedEx giving back all of last night's gains during today's session. Why investors aren't sure this transport name can deliver the goods.