In short
Fast Money episode centers on market signals from the Middle East, credit and rates, and “mysterious” trading ahead of Trump/administration announcements. Hosts debate the most important chart: Guy and Bono highlight high-yield credit (HYG) and widening/leveling of high-yield option-adjusted spreads; Bono also points to the two-year Treasury near ~4% as a refinancing/inflation/growth barometer that pressures equity multiples and credit spreads. Tim’s “leadership” chart is semiconductors outperforming the S&P, with rotation within semis (including Micron weakness after earnings).
Notable examples
Arm shares +16% on an AI inference chip forecast ($15B revenue by 2031); Merck +2.5% on a $6.7B acquisition of Tern for leukemia amid a Keytruda patent cliff. China tech rallies on regulators pushing to end food-delivery price wars (margin pressure).
Guest
John Flavin, CEO of Portal Innovations (early-stage biotech venture; focuses on clinic-stage assets and M&A driven by pharma patent cliffs).
Guest
Jacob Frankel, former SEC enforcement attorney; now chair at Dickinson Wright (government investigations; argues unusual oil/futures trading should be investigated by CFTC/SEC).
Key claims
credit “sniffs out” problems; treasuries haven’t acted as a classic flight-to-safety; suspicious oil/S&P futures activity warrants follow-the-trading investigations.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOAnalyzing Key Charts in the Market
1:46 to 4:00
Traders discuss the most significant charts affecting the market right now.
“We start off, though, with markets swinging on seemingly any headline related to the war in the Middle East.”
Government Debt and Pressure on Equities
4:00 to 6:04
Discussion on government debt refinancing and its implications for equities.
“I think credit always sniffs out problems.”
Impact of Inflation on Markets
6:04 to 11:19
Exploring inflation expectations and their effects on market dynamics.
“Isn't that a good, like, a little bit for me there to here?”
Semiconductors and Market Leadership
11:19 to 14:00
Analyzing the performance of semiconductors in the current market.
“You know, we've seen the 10 year at four and a half.”
Arm's AI Chip Announcement and Market Reactions
14:00 to 17:43
Discussion about Arm's new AI chip and its impact on the market and competition.
“And on a decent day today, another down day in Micron and Sandisk.”
Merck's Acquisition Strategy Amid Patent Cliffs
18:53 to 26:48
Insight into Merck's acquisition of Tern's Pharmaceuticals and the implications for the biotech industry.
“At Strayer University, we help students like you go from, is it possible?”
Merck's Acquisition Strategy Amid Patent Cliffs
27:00 to 27:31
Insight into Merck's acquisition of Tern's Pharmaceuticals and the implications for the biotech industry.
“The Jack Welch Management Institute at Strayer University helps you go from I know the way to I've arrived with our top 10 ranked online MBA.”
China Tech Regulatory Changes and Market Response
27:32 to 28:00
Analysis of recent regulatory changes in China tech and their effects on major companies.
“China Tech taking a big leg higher today with Meituan and JD.com.”
Concerns Over U.S.-China Relations
28:00 to 29:22
Discussion on the cautious outlook regarding U.S.-China relations and its impact on stocks.
“and Metawan, I do think needed something.”
Market Developments and Recent Data
29:22 to 29:50
Overview of recent market activity and major stock movements.
“trading activity that preceded them, the trading patterns that caught our traders' eyes and what regulators could do about it.”
Show all 19 chapters
Suspicious Trading Surrounding Announcements
29:50 to 31:32
Exploring the unusual trading activity linked to market-moving announcements.
“Climbing as investors digested the latest developments out of the Middle East.”
Investigating Unusual Trading Activity
31:32 to 36:32
Jacob Frankel discusses potential investigations into suspicious trading surrounding geopolitical events.
“Do you think this will get investigated?”
Implications of Suspicious Trades
36:32 to 37:53
Discussion on the national security implications of suspicious trading and market integrity.
“We're talking about the suspicious trades in the futures markets, but there are also suspicious trades in the predictions markets.”
Zeta's AI Agent and Market Potential
38:56 to 42:00
Discussion on Zeta Global's AI agent and its potential impact on marketing performance.
“AI marketing cloud company Zeta Global rolling out its super intelligent agent, Athena, to enterprise marketing teams this week.”
Zeta's Earnings and First Party Data
42:00 to 43:20
Discussion on Zeta's earnings and the significance of first party data in their business model.
“So, David, I think it's 18 quarters in a row, I think.”
AI's Impact on Advertising and Industry Players
43:20 to 44:10
Exploration of how AI is changing advertising dynamics and affecting major companies like Amazon and Meta.
“That's quite a return in terms of every for every dollar spent.”
Mortgage Market Update
44:10 to 44:30
An overview of the current state of the mortgage market and its implications for home builders.
“advertisers how their data could be used better.”
Challenges Faced by Homebuilders
44:30 to 45:57
Discussion on the challenges in the housing market, including declining mortgage applications and stock performance.
“Coming up, the latest blow to the builders is more mortgage data, waves in the sector.”
Final Trades and Personal Notes
45:57 to 47:03
A segment dedicated to final trades and a personal note celebrating a viewer's birthday.
“Finally starting to make a move, slowly but surely, slow and steady, wins the race.”
Transcript
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1:28Tim Seymour:space. Plus, Arm Holdings jumps on its latest chip announcement. What is sending shares of Chinese Internet stocks higher today? And building blocks. New mortgage data and a warning from KB Home signals more struggles for the housing industry. When could there be relief in sight? I'm Melissa Lee. Come to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Bono and Eisen, Nathan and Guy Adami. We start off, though, with markets swinging on seemingly any headline related to the war in the Middle East. The S &P rising a percent and a half early in the day after news the White House had sent a 15-point plan to Iran to end the conflict and open the Strait of Hormuz, but falling midday on a report Tehran had rejected the proposal.
2:07Tim Seymour:The index ended the day half a percent higher. Crude, meantime, lower, although again, off its worst levels of the day. Yields also retreating after yesterday's spike. So in a time when investors are looking for any indication about the direction of the war, we wonder what what our traders think is the most important chart in the market right now. Guy, kick it off. Is that what we're doing? The most important chart, Guy. No pressure. No pressure. I'm kidding around. I know. It's an important chart. No pressure. For me, it's high-yield credit, HYG, high-yield corporate bonds. And this is not an ETF that trades all that actively or with all that much of a range.
2:48But if you look over the last sort of couple weeks, we're at the lowest levels we've seen since last June. And that was off the bounce from April. So we're looking at levels we really haven't seen in a while. I would submit that credit's going to lead this thing. And if credit is sniffing something out, I think the same way American Express is, Capital One is, to a certain extent, some of these banks, clearly private credit. It's going to find its way into HYG, which theoretically could find its way into the barter market. So for me, Mel, it's HYG.
3:14Tim Seymour:I mean, before this whole conflict started, that was one of the concerns, the centerpiece concerns in the market, private credit, and what was going on there and whether or not there would be more defaults. I mean, I think UBS had predicted 15 percent defaults. And then quickly, you know, with the war, we sort of, you know, it's sort of brewing still, but not front and center. Yeah, it seemed to be bubbling up. I mean, keeping in mind that if you look over like a five or 10 year period, HYG is still relatively close to the lows. But if you look at the percentage change off of where it was, I'm with Guy.
3:42You're seeing a material tick higher in the rate and lower in HYG. I'm not sure if that's my invitation to talk about my most important. Not yet.
3:51Tim Seymour:When I asked you, Bono in. I wasn't sure, so I asked. No, good that you asked.
3:58Karen Finerman:I like where guys go with this. I think credit always sniffs out problems. I think the credit markets are where equity should always be taking their lead. And therefore, when we were at all-time tights in credit, equity markets were at all-time highs. It should be noted that you are already starting to see some ground in the high yield option adjusted spread. You can look this up at home. It's easy. Just just look that up. You'll get a chart. We're at three thirty ish. We were at two sixty ish just, you know, just three months ago. And so some of this began even before the war. So there's no question.
4:31Karen Finerman:I think we're at a level that should be watched. I think this level is absolutely fine in terms of credit spreads. In fact, I think on a relative basis, it's still pretty tight. but has given ground.
4:42Tim Seymour:Are you going to go to the fintech name? So we've seen.
4:44Melissa Lee:No, I wanted to go to mine because mine is actually a good segue. It's a really good segue. Everybody just wants to talk about their own charm. Because mine is actually a nice addition to what you guys have all talked about.
4:56Karen Finerman:Wow, man. All right, go for it. You know what? I give up.
4:59Melissa Lee:By the way, this is not rehearsed.
5:01Tim Seymour:Everybody, just obviously it's not rehearsed. It's clearly not rehearsed. I mean, does this look rehearsed?
5:06Melissa Lee:So mine is not on my chart. This was from Torsten's Lock of Apollo yesterday on the Daily Spark. And he's talking about all the government debt that needs to be refinanced over the next year or so. And it's$10 trillion. And then where I was going to go is that there are now hundreds of billions of dollars of investment-grade debt that's coming from the hyperscaler build-out. And then there's high yield. There's all this other stuff. It needs to be refinanced. Rates have been going higher, right? So if you think about what's going on there, it's going to put pressure, at least this is what Torsten's saying, on the sort of demand that you might have for treasuries or that you might have for corporate debt.
5:42Melissa Lee:And you're basically going to have spreads doing something that won't be great, obviously, for what you would like to happen. And that's going to put pressure on equity valuations because the higher that you need to borrow, the rates, right, it's going to be that much more attractive and relative to equities. And if we have an equity slowdown as far as earnings growth, that sort of thing, you're going to see multiple compression, though. Isn't that a good, like, a little bit for me there to here? It's a little bit back.
6:07Karen Finerman:I mean, if you have to tout your own chart here.
6:09Melissa Lee:I'm not touting it. I'm justifying it. I'm justifying it.
6:12Tim Seymour:There's still quite demand, strong demand for investment-grade bonds, though. I mean, just a couple weeks ago, we had, like, the biggest day of issuance for investment-grade in many years. I mean, it's seemingly listen. I'm not suggesting anything is awry yet, but around the edges, things are starting to get a little interesting. And for me, that movement, American Express, a couple of weeks ago, opened my eyes to a lot of things. Capital One as well. We've obviously talked private credit names to death and now potentially seeing the HYG. So as Tim will say, it doesn't happen. Credit happens slowly than all at once.
6:44That was a great snap, by the way. Again, if he has to tout his own snap. I didn't. No, no, no. I didn't. That's applicable to anything.
6:52Karen Finerman:You have a nice snap. You snap and you keep moving. You know, it's a good point by you. I should have just not said a word. You rushed it.
6:58Tim Seymour:So it's almost like if there's where there's smoke, there's there's fire. I mean, all these things you think they don't have to be systemic risks, though. I mean, they could all be happening and there could be some issues, but it doesn't have to spill over to the broader markets.
7:11Karen Finerman:Well, it the question is, have we spilled over? By the way, you haven't asked me to get my chart yet. I'm not talking about myself. I think there are other places, though, we see where it has spilled. And so whether the correlation between the oil price, obviously, and the market, that's kind of obvious. Gold has been another one of these places where actually a rally in gold is market friendly. It is right now. And it's kind of interesting because historically you might have seen gold as more of that safe haven. So I do think that the concerns around credit, which existed, as we know, before Iran, is something that we have to be watching here.
7:48Karen Finerman:We were already starting to see the pullback in banks. We're going to hear from banks in three weeks. I think it's a fascinating time. But we should all always be watching credit in the equity markets. Look at the spreads on the corporates of the equities that you hold. You can see how healthy or not the market is treating those companies.
8:06Tim Seymour:Yeah. Bonham, why don't we go to your chart? Okay, boy. It's sort of semi-related to what we're talking about. Okay. Okay. That's my question. Bono in. What is your chart? There we go. Now I can go. So also very closely correlated to what Dan and Guy were talking about. I'm looking at the two-year Treasury specifically as opposed to the entire kind of term structure that Dan alluded to. And I think this really gives you a pulse on a lot. Right now we're trading on macro headlines as you kind of entered the shows talking about. I think if you look here, you're looking at, I mean, if you look at that chart, we've shot up to just shy of 4 % in a matter of like 30 days, 45 days.
8:40And this two-year rate, essentially, Dan talked about the refinancing risk. Okay, you're talking about bank deposits. We're talking about some of the banks that have struggled. I mean, they're competing against this risk-free rate for deposit base. I think that makes for a challenging case. You talk about refinance. There's that. Then there's the whole inflation situation. If we talked about the rotation that we saw at the end of last year into the early part of this year, out of growth beta into like IWM small caps, and all of this was because we thought we were going to be in a much more accommodative Fed policy type of glide path.
9:12That is not playing out right now. And you can tie that into Iran and oil shocks, gasoline, input costs, all of it. The last thing that I'll say is that if you also compare both this two-year chart and ACWI or IFA, and you juxtapose that with what we've seen in the U.S. market, you would expect that if this rotation away into cyclicals and away from technology, you would expect to see a lot more or some outperformance in those names. And you're not seeing that. So this two-year Treasury chart, to me, cues everything. It makes it where if you're not in an accommodating type of situation, it makes all of the equity markets much more challenged, all of the high-yield markets much more challenged because it's the proxy on which all of these spreads are priced off of.
9:55Karen Finerman:I'm here to comment on my fellow panelists' chart, not necessarily mine. What's fascinating, and we've now seen this a few times in the last year, that there's a flight out of safety from treasuries during an important point in the markets. In other words, a risk-off moment. Treasuries haven't been that flight to safety. And that's what's fascinating. In fact, today, markets are better, and you actually start to see treasury yields come in. And so we've had these days during the war, and we've had these days in the last year, when people have been concerned about some of the policy that at least Washington might be inflicting on the rest of the world, where you've had equities, debt and the U.S.
10:38Karen Finerman:currency all trade off in the same day. So I'm just pointing out that I agree with the two year note. You had almost a 65 BIP move higher on the back of Iran. But again, this has not been a flight to safety. This has been a flight out of safety. And I think that's notable. And I think it's going to continue.
10:53Tim Seymour:It's like a barometer of oil prices, of inflation. Right. I mean, yields go higher when oil prices are higher. That's that's the relationship. I think that's part of it. And I think that's exactly why the administration seemingly acquiesced the other day when 10 year yields got, I think, to 443, the highest we've seen in a while. So I think there's a huge correlation between risk on in the form of the market going higher and yields going lower, which is exactly what they want. We'll see how long that can last.
11:18Melissa Lee:Yeah. And about the yield thing. I mean, we've talked about this a bit. You know, we've seen the 10 year at four and a half. We've seen it at five in the last few years. I think what's really changed right now is the inflation expectations going forward, like we're just talking about here, but also growth. I mean, look at some of the misses that we've seen in GDP. And when you think about the sort of higher input costs, not just from tariffs and just the supply chain disruptions, but what's going on right now and the uncertainty about how long it's going to take to rectify itself. You know, this is the sort of environment where, you know, you use that, you know, expression stagflation.
11:48Melissa Lee:We don't have growth inflecting and we do have a lot of under certainty on the economic front. I mean, I guess the best point about that or the best example is labor market. You know, we're going to continue to get some data. I'd be really shocked to see it pick up pretty dramatically over the next couple of months.
12:05Tim Seymour:Timbo, what is your chart?
12:06Karen Finerman:Well, I mean, it's nice. And I assume there's a reason why we saved the most important of the most important charts for last. And I think it's a very much an equity market dynamic. I think it's the outperformance of the semiconductors to the overall S &P. So even during a difficult time in the markets, semis have continued to outperform the S &P. And in fact, I think they're about to make a new relative high. Whether they make an outright high is another thing, although I think that's probably eventual. But I think the most important thing for market right now is leadership. What's been interesting also is that within the semis, you've had significant rotation around different pieces of it.
12:45Karen Finerman:And so we're now out of memory. But we are certainly holding serve as it comes to semiconductors. Semiconductors, we're learning about other parts of maybe more the brick and mortar semiconductors, the more generics, those that are helping folks like Meta build their own in-house or partnering up. So I think as long as that continues, that's very positive for the equity market that is in a secular growth trend as it relates to semiconductors. And I don't think that stops.
13:11Tim Seymour:Could this be defense in this market, Tim?
13:15Karen Finerman:I think what we've seen is there's been defense within semis within that rotation. At times, you've found certain things. I think there's still all kinds of questions of where the wrecking ball is going within AI, but there's no question it's around demand for chips. It's fitting that on the opening night of the baseball season, Tim will be hitting cleanup for this squad. Yeah, it's nice. Well, it is, and I think in terms of cleanup hitters in New York, there's a real debate out there. There is a real debate, Mel.
13:43Tim Seymour:Which will happen on this show. Well, it could. But since we're on the topic, let's pull up a Micron chart, which we haven't talked about. Returning to stocks. Thank you. Well, since they reported earnings. And look at the move to the downside we've seen since they reported. It's$100 in the stock, which percentage-wise is probably about 17 or so percent off the top of my head. That's significant. And on a decent day today, another down day in Micron and Sandisk. So maybe the market is sniffing something out in terms of the other side of the mountain of the storage trade. Yeah. Let's get to Arm, the chip designer, surging 16 percent today after unveiling its first ever in-house chip designed specifically for AI data center inference.
14:25Tim Seymour:The company forecasting that its AGI CPU will generate 15 billion dollars in revenue by 2031. Shares are up more than 40 percent this year, close at their highest level since November. And that$15 billion, that's like five times more than the forecast had been before. So this is a staggering increase to that forecast.
Read the full transcript
14:44Melissa Lee:Yeah, I think this was a surprise to most people, right? So this is a company that designs chips for some of the biggest chip makers that we know. And so they're going to be squarely in competition. And we just heard from Jensen Wong last week that they are going to be making a CPO for inference, right? This is AMD. This is Intel, one of the reasons why both those stocks traded pretty well. I take this another direction here. You know, Arm, 86 % of that stock is owned by SoftBank. We were talking about last year, SoftBank sold NVIDIA so they could fund their investment in OpenAI. Now, there's been a lot of skepticism despite the fact that OpenAI just raised$110 billion.
15:20Melissa Lee:A lot of that is going to be pieced out over the next year or so. And SoftBank's a big part of that. So I actually think this is probably pretty good for OpenAI when you think about the ability for them to continue to get funded, if there was any trepidation about that before their IPO and whether they were going to be able to continue at the pace in which they were spending.
15:37Tim Seymour:What do you make of this news? Somewhat of a mixed bag. Clearly, if by 2031, I believe it is, maybe it's 2030,$15 billion. I mean, that's a legitimate ramp up in TAM. My question is, do you really want to pay for that now in 2026? And if there's any hiccup, I would suspect that this probably is slightly painful. With that said, I can understand how they're making somewhat of a pivot, really jumping into the competition for inference and broadening themselves away from just royalty streams. So if they're able to convert that and have a recurring revenue stream, I see it as a positive. In terms of trading the stock, again, am I willing to pay right now in a market that seems quite volatile for five-year-out revenue that may or may not actually be realized?
16:27That's the challenge for me.
16:29Tim Seymour:They have to walk the line, though, because they're going to be a supplier but also compete with their customer base. That's a strange position to be in. I find myself remembering a lot of things. And I remember I think it was the Arm IPO. In general? In general, right around it. That's good. Remember, Arm was a very mature company that went public a few years ago. Their revenue stream was about a$5 billion run rate over the course of three or four years prior. And right now, it's probably looking at a$6 billion run rate next year. So you've had no real meaningful revenue growth, yet people are rewarding it.
17:00This$150 billion market cap company. So price to sales never made any sense. So they absolutely need an announcement like this to at least justify the valuation. But they still have a long way to go, in my opinion.
17:12Karen Finerman:I think the analyst community was expecting this. I think they've been expecting something in terms of their approach to Silicon. And I think this was just that much better. And I think it was that much bigger, as we've all indicated. So I kind of like Arm here. I think it's a the softback part of it bothers me. I mean, it really does. And it's hard to feel like I want to follow them, but I might know they're going to be.
17:33Melissa Lee:I mean, the point I was making is they're going to be selling a lot of this. Right. So they sold in video, which is a much smaller position.
17:39Tim Seymour:Coming up, another multibillion dollar buy from Merck, the latest deal for the pharma giant and what it means for the drug pipeline. Plus, China Tech taking off regulators, stepping up efforts to end food delivery price wars, what it means for the stocks and how it will impact company profits. Don't go anywhere. Fast money's back in two.
18:22Melissa Lee:one does business like Comcast business. Hey, this is Jeff Lewis from Radio Andy. Live and uncensored, catch me talking with my friends about my latest obsessions, relationship issues, and bodily ailments. With that kind of drama that seems to follow me, you never know what's going to happen.
18:38Tim Seymour:You can listen to Jeff Lewis live at home or anywhere you are. Download the SiriusXM app for over 425 channels of ad-free music, sports, entertainment, and more. Subscribe now and get three months free. Offer details apply.
18:56Karen Finerman:At Strayer University, we help students like you go from, is it possible? To anything is possible by offering access to up to 10 no-cost Gen Ed courses. So you can reach your goals affordably and fast. Visit Strayer.edu to learn more. No-cost Gen Ed is provided by Strayer University affiliate Sophia. Eligibility rules apply. Connect with us for details. Strayer University is certified to operate in Virginia by Shev and as many campuses, including at 2121 15th Street North in Arlington, Virginia.
19:26Tim Seymour:Welcome back to Fast Money. Merck rising 2.5 % today after announcing plans to acquire a leukemia drug maker Tern's Pharmaceuticals. The deal, worth$6.7 billion, is expected to close in the second quarter. It's the latest move by Merck to offset a major patent cliff with Keytruda, responsible for about half the company's revenues coming off patent in 2028. For more on The Impact, John Flavin joins us now. He's the CEO of Portal Innovations, an early-stage biotech venture firm. John, great to have you with us. Hi, Melissa. From the Merck perspective, this seems like good news for investors. It bolsters a portfolio and also shows a certain discipline because Merck's CEO back at J.P.
20:03Tim Seymour:Morgan had said that no deal would be more than$15 billion. So they're certainly keeping within that. For you, is this sort of prime time for a lot of your portfolio companies to go out and look for partnerships or deals? all these major pharma companies facing big patent cliffs? Yes, definitely. And Merck's not alone. As we know, a handful of pharma companies face a roughly$300 billion patent cliff in 2030. And that has really driven a frenzy in M &A activity, certainly over the course of last year. And even in the first quarter of this year, we're seeing about$26 billion in deals announced so far this quarter versus$19 billion in the first quarter of last year.
20:47And the bite size of these acquisitions tend to range recently between $1 and$10 billion. And what that indicates is pharma is looking for assets that have shown initial human proof of concept. So they got to be in the clinic, but they're willing to take early risk, as is seen in the turn acquisition by Merck.
21:09Tim Seymour:And you saw that with one of your companies, which recently entered into a$2 billion partnership with Novo Nordisk. And I'm wondering, you know, you watch the space, one of your companies is involved with Novo now, and Novo basically closed today at levels pre-Ozempic for weight loss levels, as if Ozempic for weight loss had never happened. What do you make of what is going on here in this space? It's surprising. I mean, I think it's a value opportunity for those interested in playing that type of risk. I think they're dealing with an overhang that was really dealt by the prior management team.
21:49Some of the fumbles that happened over the course of last year. I mean, we know that they've come out with the first oral approach. They're ahead of the game in that regard. Yes, you know, Lilly, you know, the 800-pound gorilla in the space continues to dominate. But really, I think there's a value play opportunity with Novo. And we're certainly excited to see our portfolio company, Vivtex, enter into that transaction, which is allowing them, Novo, that is, to make more of these obesity drugs in an oral pill format, which, as we know, becomes really important from a convenience and compliance perspective for obesity patients and other patients that benefit from GLP-1s.
22:29Karen Finerman:Hey, John, Tim, great stuff. And so this move by Merck, as you said, you've got the patent cliff for they and many others. Surprising to me a little bit that Merck rallied on this news, although it's not a big transaction and it does bring a lot of promise. How do you really assess a deal of this size? And maybe not specific to this deal, but it does seem to me there's still a whole lot of unknown in terms of what this can translate into, especially as part of an overall approach. I mean, people did not reward Pfizer for dropping$35 billion on five or six companies after they had a windfall coming out of COVID.
23:04Karen Finerman:It seemed like the right thing to do. Stock's been dead in the water, although it has rallied. So I'm just kind of curious how you approach this. I think, again, it's good news for small biotech companies that are working in innovative, novel modalities going after important large disease areas, certainly cancer, and in this case, leukemia, large unmet need, new kinds of modalities like radiopharmaceuticals as breakthroughs, a lot of science that's driving better outcomes for patients, frankly. And as you look at the acquisition analysis, the business development and M &A teams at Big Pharma have quite a task ahead of them.
23:45So they have to take some risks, but they're pretty good at mitigating the risk by understanding, first and foremost, what market is this asset going to address? Second, is it a protectable moat from a pricing perspective that can help replace the currently marketed revenue-producing drugs in their pipeline? And then third, what is the likely the regulatory path that the company will need to follow. This is early data, for example, in turns, but there's a lot of early promise. I mean, 75 % response rate in this type of study does show that it could be a multi-billion dollar drug, and that's what gets companies like Merck and other pharma companies excited.
24:29And then they have to be moving in that direction. And again, that's good news for earlier stage companies that are in our portfolio that are in the clinic or entering the clinic.
24:38Tim Seymour:John, great to speak with you. Thank you. Good seeing you, Melissa. Thank you. John Flavin. Specific to terms, this was interesting in terms of the price,$53 a share. The average price on the street price target is$56. And there's some talk that they undersold their company, basically. Was it stolen? Did they not get enough money for it? Bit of a lottery ticket. So you can play both sides of that coin. I mean, Merck's making a bet here, and the data suggests that there's a good chance they're going to win. The flip side of that coin is, Tern just did a secondary, I think, in December, if I'm not mistaken, about$40 a share-ish.
25:16So they clearly were sort of in this road where they had a, this came, this opportunity came and they made the decision. Now, you could say it was too cheap. I'm not sure that's the case. I think it's a lottery ticket for Merck, and I think it's an exit strategy for Tern. All right.
25:30Tim Seymour:There's a lot more Fast Money to come. Here's what's coming up next. A rally in China tech. How a move by regulators is boosting shares of Alibaba and PDD. And whether it's enough to add them to your portfolio. Plus, a couple of interestingly timed trades raising eyebrows. The recent futures action that caught our traders' eyes. And what can be done about it. You're watching Fast Money, live from the NASDAQ market side in Times Square. We're back right after this.
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27:30Tim Seymour:Welcome back to Fast Money. China Tech taking a big leg higher today with Meituan and JD.com. Among the big winners, Beijing regulators stepping up efforts to end price wars in the food delivery space, a steep discounting ways on profits. Baba, Meituan and JD.com have rolled out offers to pull in users, putting pressure, of course, on margins. So the war is off, Tim.
27:52Karen Finerman:We'll see. You know, and I do think this is important, but I don't think this is a game changer for the industry. I think the industry and I mean China tech, whether you're looking at the K-Web, whether you're looking at Alibaba, whether you're looking at J.D. and Metawan, I do think needed something. And so, you know, I like this news flow, but it's not a reason. I think we're a lot more concerned about U.S.-China relations. I think you're going to continue to worry about innovation and where Alibaba. Certainly, Ali Cloud is a driver and where they are going to have to throw a lot of money at this as well.
28:27Tim Seymour:It sounds like you're cautious.
28:29Karen Finerman:I'm cautious because, well, I'm cautious because the stock's not cheap. These names aren't expensive as a group. The dynamic with China right now is, I would just say, been sideways. And I mean, it hasn't really been good or bad. And these stocks have fallen out of favor. And obviously, international has. Certainly a positive headline, but I'm with Tim in terms of being somewhat cautiously optimistic. I'm not even sure if I can call him optimistic, perhaps just cautious. Listen, this isn't the first time that we've seen Beijing come forward with an announcement and perhaps pivot or pull back. Bob has been in the crosshairs before.
29:08And so for me, until I see some follow through, it's really hard to establish a real core position in these names because, you know, We have been down this road before, and it hasn't always ended positively for the investor.
29:21Tim Seymour:After the break, recent market-moving announcements from the administration and the mysterious trading activity that preceded them, the trading patterns that caught our traders' eyes and what regulators could do about it. Fast Money is back in tune. Missed a moment of fast? Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this.
29:50Tim Seymour:Welcome back to Fast Money Stocks. Climbing as investors digested the latest developments out of the Middle East. The Dow up more than 300 points. The S &P up half a percent. The Nasdaq leading the gains climbing more than three quarters of a percent. All three indices on pace to snap a four-week losing streak. Oil meantime settling around$90 a barrel. Shares at Generac closing off its lows of the day as the company holds its investor day. The generator maker giving better than expected guidance for 2028 net sales, but did not announce any long-term hyperscaler agreements. Generac stock up more than 50 % so far this year.
30:21Tim Seymour:Shares of JetBlue jumping more than 13 % today on reports. The airline is bringing in advisors, I should say, for a potential sale. According to the report, JetBlue is considering how mergers with United, Alaska, or Southwest would sit with regulators. Swiss sneaker maker on-holding dropping more than 11 % as the company shakes up its leadership, appointing its co-founders as co-CEOs. The company forecast lower sales growth earlier this month. Shares of On down nearly 25 percent so far this year. And Chewy surging more than 13 percent today. The online pet food retailer forecasting another year of sales growth and margin expansion.
30:57Tim Seymour:Its earnings report this morning. Chewy, though, still down 20 percent this year. Well, a series of unusual oil trades tied to the Iran war raising red flags this week. Among them, a volume surge in WTI on Monday at 6.50 a.m. Eastern Time. 15 minutes later, after that time, President Trump posted on Truth Social that he was halting planned attacks on Iranian power plants and energy infrastructure. That's when oil plunged. Former SEC enforcement attorney Jacob Frankel thinks it's absolutely worth investigating. Jacob is now Dickinson Wright's chair of government investigations and securities enforcement.
31:31Tim Seymour:Jacob, great to see you. Good to see you, Melissa. Thank you. Do you think this will get investigated? I mean, so many people are pointing at this and saying this smells, this looks, I mean, it's just suspicious. I think it's in the administration's interest for it to be investigated. Yes, I think it will be investigated because of the unusual spike. I think we have to also be mindful as to who could be doing this investigation. But we also should not lose sight of where could, if there was material non-public information actually communicated, where was that communicated? The natural assumption is that occurred in the United States, but it could also have been within any of our foreign government partners who could have also communicated information.
32:16So we have to think about the whole world of information. And in terms of who will do the investigation, when we're talking about spikes in oil, that's the jurisdiction of the CFTC, the Commodities Futures Trading Commission. And when it comes to the equities, to the extent that there was unusual trading in any equity securities, that would be the SEC's division of enforcement. Well, Jacob, there's$1.5 billion of notional value S &P futures that were bought 14 minutes ahead of this. So and that in and of itself moved the market. Then subsequently, you saw what happened. So there's got to be some paper trail to this, I would imagine.
32:52And I think in your seat, you can understand why people watching to say the entire game is rigged against us. I mean, that's a that's a natural conclusion to reach. And that's exactly why I said what I said, which is I think it's in the administration's interest and the regulators interest to conduct an investigation. Because it's the opportunity to show, you know, through the investigative process that did not occur here. And you're mentioning the training in the S &P. That's clearly within the jurisdiction of the SEC. And I had great confidence in the experience and expertise of the SEC to conduct such an investigation.
33:31I also, you know, this to me is also a flashback. It's a flashback to 9-11 when there was a lot of trade, when there was put option trading, there was short selling in advance of the Twin Tower attacks and the 9-11 terrorist attack on the United States. That investigation was principally centered overseas involving trading by Middle Eastern interest. That investigation ultimately did not result in any enforcement actions. Why? I think that's still a big mystery. But at the end of the day, this is the kind of trading activity that absolutely should be investigated. and to restore confidence in the integrity of the markets, it's necessary for the regulators to do so and to report their findings, particularly if ultimately there is no enforcement action, which we really can't prejudge at this point.
34:25Tim Seymour:There are also suspicious trades surrounding Liberation Day, Jacob. So this is not the first instance where there are suspicious trades surrounding an event that insiders, whether they be in the United States or out, might have known the outcome. If you were still at the SEC, how would you start investigating? Where would you look first? How do you go about this? The way you go about it is the first thing you do is you pull the records on the trades. Who was trading? And then you try to find out what are their connections to potential sources of information. It's always about connecting the dots.
35:01And the place to start is, you know, is always the case in what I'll call financial crimes, capital markets investigations. It's follow the trading, follow the money. And that's really where the investigation will start and will lead. And one of the things that we've seen historically when the SEC in particular, but also the CFTC, believes that there was a need to take emergency action through the courts, they can freeze assets. But let's also not lose sight of the fact that we now have the former chairman of the SEC as the United States attorney in the Southern District of New York, who has gone on record as saying that he's going to be conducting investigations and is conducting investigations involving the prediction markets.
35:53we've already seen a criminal case brought in Arizona. So I think there are a lot of jurisdictions that would show interest. And I think going back to a point that I made early on, the same type of information that the SEC or CFTC or U.S. Attorney's Office would look at, so too would the foreign regulators to the extent that the activity is taking place outside the United States, because ultimately jurisdiction matters. But historically and typically, in these types of investigations, There's a lot of deference to the U.S. regulators, U.S. enforcers to take the lead.
36:27Tim Seymour:Jacob, it's always great to speak with you. Thank you for your time. Thank you, Melissa. Jacob Frankel. We're talking about the suspicious trades in the futures markets, but there are also suspicious trades in the predictions markets. On Pali markets, there was a mystery trader that had a 93 percent win rate. They made dozens of five-figure bets on predicting unannounced U.S. and Israeli strikes, unannounced, and somehow they got it right. I mean, all of this just, I don't know, it's suspicious. Let's put it that way.
36:59Karen Finerman:Well, prediction markets, again, this is a whole new frontier that needs regulation. And it needs regulation and ultimately will lead to more value in the space. I mean, what we've seen throughout time is that institutions need to have structure around this. it's great to hear that regulators here are very focused on these events. And it's great to hear that the credibility of the markets are always critical. This is what we all want. It's what everybody wants. So go get them.
37:26Melissa Lee:Yeah. Big difference between insider trading in and around a corporate action, right, whether it's earnings or an M &A situation or whatever. I think the companies and I think investors and I think regulators all have the same interest that this doesn't happen. I think this is a very unique situation where to have this sort of information, to be able to bet the sort of money that has been bet. This is national security. I mean, this has so many other implications here and the likelihood, unfortunately, no one's going to get to the bottom of this. I don't think any of the regulators are going to have this sort of leeway to go after and get the sort of information that would find who did this and how they did it.
38:00Melissa Lee:And so, again, I think it's really a knock against some of the things that I think a lot of people feel that is so important about our markets here in the U.S., the transparency, the regulation, all that sort of stuff. So this is just another one. This is not going anywhere, people. This is where we are right now with this sort of information.
38:17Tim Seymour:The national security, I mean, there are leaks, that means, right? Somebody knows this stuff.
38:21Melissa Lee:Listen, here's the thing. Let's be honest. Everybody knows the president's phone number. Talk to any journalist right now. They all have his phone number. So there's things that are being hacked. There's no doubt about it. So maybe there was nobody who did anything wrong, you know what the government, but there's plenty of bad actors who can figure this stuff out. I don't have his number. I feel left out.
38:41Tim Seymour:Aw, poor guy. Coming up, I know he watches the show, though. AI coming for the ad space. The CEO of Zeta joins us next to lay out the company's new AI agent and how they're looking to usher in an era of super intelligent marketing. They're going anywhere. Fast Money's back in two.
39:05Tim Seymour:Welcome back to Fast Money. AI marketing cloud company Zeta Global rolling out its super intelligent agent, Athena, to enterprise marketing teams this week. Athena uses enterprise data to help teams make decisions and execute campaigns through a conversational interface powered by OpenAI. For more, we're joined by Zeta Global CEO David Steinberg. David, great to see you. Great to see you, Melissa. Thank you for having me. If you take a look at data stock, it looks like it suffered a lot of the same sort of pain that a lot of the software sector suffered, David. And so how does this agent answer investors' concerns about businesses like yours being supplanted or threatened by AI?
39:45Well, let me start by saying, you know, that narrative is I've heard it before. I heard it when the Internet came out. I'm that old. And the Internet was going to destroy JPMorgan Chase and Morgan Stanley and Walmart. And what we saw in 100 % of the cases is enterprises that adopted and embraced these technologies skyrocketed. Enterprises that turned their back on everything from the Internet to mobile to cloud computing, they went away. And it's going to be the same thing with large language models. We're going to adopt them, but there's no scenario they're going to disintermediate Zeta.
40:24Melissa Lee:Hey, David, it's Dan. Thanks for being here. You know, you have this product launch here today, and it seems like something that you guys have really leaned on, leaned into, and then obviously this relationship with OpenAI. You know, how do you measure the performance of something like this? Does it take a little time? Are your clients, you know, are they open to this? Is it something that is going to be disruptive to the way they operate their businesses, and how quickly might they see a return? Yeah, thank you, Dan. So if you look at the Zeta marketing platform today, we returned 600 % on every dollar spent through the platform.
40:57And initial clients, which included some Fortune 500 companies, came back to us and said not only are they seeing a substantially higher return on ad spend when they use Athena, but they're seeing an incredibly simplistic workflow as it relates to using the platform. So, I mean, just very simply, Athena is a conversational super agent that allows you to navigate the entire platform. And if you think of today, most organizations and individuals use a very small percentage of the software they buy. You might have a Bloomberg terminal. You might use 5 % or 10 % of it. Our platform is the same. We've built this fighter jet, and our average client knows how to fly a turboprop.
41:42And they're getting a 600 % return on ad spend with it. But by using the voice-enabled interface, we think we're going to be able to get our clients above 1 ,000 % return on ad spend. And once again, back to the disintermediation question. I think companies that are creating intelligence, own large pools of proprietary data, and are creating meaningful return on investment are going to be very successful in the future. And that's exactly what Zeta does. So, David, I think it's 18 quarters in a row, I think. And you can correct me if you've had earnings beats, right, which is astounding. People will say there hasn't really been a moat.
42:21This is the moat, I think. And if people figure that out, then all of a sudden these earnings beats look a lot more interesting, I would imagine. 100 percent, Guy. This is a massive moat in our business. It has been 18 quarters in a row. We've been public for 18 quarters. We beat guidance and raised guidance. And, you know, if you look at Athena and you look at our first party data, one of the things a lot of people do not understand is our enterprise clients, 51 percent of the Fortune 100, 24 percent of the Fortune 500 in our 603 enterprise clients. They're giving us their first party data, too.
43:00We merge our first party data with their first party data. And that's where the algorithms train. And that's how we create this massive return on investment. Could you imagine a world where a Fortune 500 company is going to hand their first party data over to a large language model?
43:20Tim Seymour:David, it's great to talk to you. Thank you for your time. Thank you, Melissa. Really appreciate you guys. That's quite a return in terms of every for every dollar spent. You get 600 times back. I mean, for a company, that's exactly what you want AI to do for you. Absolutely. I mean, as you kind of alluded to, I think you're seeing the transition from dashboards and looking back in hindsight and being able to manipulate data that already exists to more predictive tools. So in that light, I mean, listen, I think it's incredible. A guy mentioned 18 quarters in a row. I'd be curious to see what the conversations are with CMOs on real AI spin.
43:54Are these displacing dashboards or is this leading to net new spin?
43:59Karen Finerman:I think the conversation around advertising is also just fascinating. And also what even in the last few days, I mean, you know, some of the announcements by Amazon and I mean, you know, Amazon and Meta are eating the lunch of everybody that sat in a space that generated revenue by informing advertisers how their data could be used better. I don't know what Trade Desk is going to do, but it doesn't seem like they can counter this wave.
44:30Tim Seymour:Coming up, the latest blow to the builders is more mortgage data, waves in the sector. As the spring selling season gets underway, the latest in the health of the housing market. That's next. More Fast Money in 2.
44:50Tim Seymour:Welcome back to Fast Money. Mortgage applications dropping more than 10 percent from a week ago as the average 30-year mortgage rates rose to the highest level since last fall. That's according to the Mortgage Bankers Association. It's just the latest sign of weakness in the housing market. Home builders, D.R. Horton, Pulte Group, Toll Brothers, Home Improvement Stocks, Home Depot and Lowe's all down double digits since the start of this month. Guy. Homebuilder stocks, the ones you mentioned for ex-Home Depot, all right at the lows we saw in November of last year. Critical support, but I'll say again, I don't think you can own the homebuilders here, Mel.
45:22Karen Finerman:UBS had a really interesting report about the wealth effect and the effect it has on consumer spending. I think it has a big effect on the housing market also. I think stocks have meandered, if not gone down, over the last six months. I think there's something to watch there. But more broadly, I do think that's a fascinating stat. And I think that's something goes back to why the White House is always, by the way, for every administration, is always targeting the stock market.
45:48Tim Seymour:Up next, final trades.
45:57Tim Seymour:Final trade time. Timbo.
45:58Karen Finerman:We talked about pharma. We talked about Pfizer. And how about Tim's Pfizer? Finally starting to make a move, slowly but surely, slow and steady, wins the race. Pfizer.
46:08Tim Seymour:Bonoan. If you're willing to look through some of the volatility that we've experienced recently in regionals, I think PNC is worth a look. Dan.
46:15Melissa Lee:Yeah, it's great to hear a CEO talk about how an application or enterprise software company is making a move with AI for their clients as they decision. Big Fast Money family out there. They watch religiously. It's Kim LaMonaco's birthday. I know she's watching. Yeah, Kim. The whole family's watching. Happy birthday. Structured Therapeutics, that's the G in Karen's whatever.
46:37Tim Seymour:Thanks for watching Fast Mad Money starts right now.
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Stocks take a leg higher after the U.S. reportedly sends a peace plan to Iran. But with markets seeming to swing on any headline out of the middle east, our traders lay out the charts they’re watching for clues on the markets next move. Plus, Trading Trump announcements. Why a spike in oil futures ahead of Trump’s latest Iran announcement is turning some heads, and the suspicious trading pattern raising some red flags.
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