Trump Rally Overdone?... And Netflix’s Subscriber Surge 1/22/25

0:02Live in the Nasdaq market site in the heart of New York City's Times Square. This is Fast Money. And here's what's on tap tonight. All-time highs. The S &P hitting a record for the first time this year. And most of the MAG-7 seeing big gains. But will words of caution from the likes of Jamie Dimon and even Elon Musk put a damper on the euphoria? We'll debate it. Plus, streaming gains. Netflix at all-time highs of its own after earnings. But will this rising tide lift all other media boats? We'll talk to longtime industry exec Tom Rogers to get some answers. And later, the chartmaster's warning after Apple's pullback.

0:34insurance giant Travelers gets a boost after earnings, and two healthcare names moving in starkly different directions. We've got the trades on J &J and Moderna. I'm Melissa Lee, coming to you live from Studio B at the NASDAQ. I'm the desk tonight, Tim Seymour, Karen Feinerman, Dan Nathan, and Guy Adami. We start off with a record day for the markets, the S &P 500 hitting a fresh intraday high as investors digest strong earnings and seem to look favorably on what President Trump will mean for stocks. MAG7 stocks leading the NASDAQ on the back of yesterday's announcement of a$500 billion Stargate AI infrastructure project.

1:07NVIDIA and Microsoft leading the pack, and Oracle putting together its best two-day gain in over three years. But one close advisor to the president appeared to pour cold water on the red-hot trade, Elon Musk claiming the Stargate backers, OpenAI, Oracle, SoftBank, they don't actually have the money to make it happen. And those weren't the only words of caution today. J.P. Morgan CEO Jamie Dimon telling Squawk Box this morning from Davos that he thinks the entire market is overvalued. I think asset prices are kind of inflated and, you know, by any measure. And you need fairly good outcomes to justify those prices.

1:43And we're all hoping for that. And I think, you know, having pro-growth strategies helps make that happen. But there are negatives out there and they can tend to surprise you. So is this apparent belief that all of Trump's promises will come to fruition and in the best of ways? Is that justified and already baked into this market, Guy? Well, this has nothing to do with President Trump now, but he's walking into a market and there was something going around the Internet today. Nine of the metrics that we talk about seemingly almost every day, but from time to time, are in the 98th to 100th percentile of where they've been historically on the overbought side of things.

2:21That sort of flies in the face of what we saw in January of 2009 when all those metrics were at sort of 1 % or 2 % in terms of being on the oversold. So when Jamie Dimon says that, there's reason to say it, and that's CAPE ratios, Buffett indicator, price to earnings. There's a myriad of different things. But with that said, you know, these indicators are not a timing mechanism. We say it all the time. But what I've tried to say is what these suggest is the market has less and less room for error on the upside. So, you know, I always like to hear what Jamie Dimon has to say, of course. But I feel like, you know, animal spirits don't trade to fair value and stop, right?

2:58So the pendulum has swung. We don't know how far it is in its path to go. I agree with you. You know, you can't really trade around and try to say, oh, I'm going to sell things at fair value. And then I will absolutely have the chance to buy them back later. It doesn't work like that. So for me, I'm always staying long, though I do look at the volatility index. I think it will be higher in the not too distant future. So I'd be inclined to buy some protection there. Yeah. Last night you were casting some doubt over these commitments as well in terms of the AI infrastructure project. I mean, listen, all these companies have already committed to spending tens of billions, if not hundreds of billions of dollars over the next few years to build out their infrastructure.

3:35I would say, you know, it's not all going to be in the U.S. And maybe that's the thing that's changed. But whether it happens and this is new capital looking to kind of make these sorts of investments, I think Elon is right. Where does the money come from? You know, these companies, again, have to be very careful about CapEx. I know that they're not willing to ask for permission and they would rather ask for, you know, obviously forgiveness, you know, if the thing doesn't pan out. But I think we're going into a digestion phase. The last thing I'll just say is that, well, I'm sure I'll say a few other things, but the last thing I'll say in this bit is that, you know, the Trump administration is coming into a pretty decent economy.

4:11If you think about it, you know, you have unemployment at 4 percent. You have, you know, PCE and CPI, you know, on their way down 3 percent, however you measure it, on their way maybe to 2 percent. And then you have GDP. It was 3 percent, you know, last year, expected to be 2.5 percent. These pro-growth sort of policies, if they work, should have GDP trending higher. So, I mean, to me, at the end of the day, we're all, no matter what side you're on, we want the economy to do well and we want the markets to do well. And maybe they're set up well to do that. But to Guy's point, there are some potential headwinds.

4:41So, first of all, Elon Musk's comments are interesting to me because I can also interpret them as maybe they're starting to be a little bit of thrift. Yeah, some sharp elbows, a little bit infighting. You know, some people are certainly fighting over who's going to get the allocations to some of these mandates or actually some of that capital. I do think whether funded now, the message from the markets is it doesn't really matter. The message is there will be funding for AI. And I look at, you know, the Bank of America Fund Manager Survey, where there's a lot of interesting data in there. So the numbers that came out just yesterday, first of all, AI bubble was really a distant, distant risk in terms of tail risk for the market.

5:17So, you know, if that's where the institutional community is, I think that's fair. In fact, the Fed, who's meeting Monday, I mean, you know, suddenly, you know, the Fed could be a bigger risk for markets in the short term, I think, than a lot of this. I get back, though, to we have had some really solid earnings already. You know, look what the banks gave you. We had Netflix. We've had some, again, not the core is going to report next week and really over the next couple of weeks we're going to get into it. But the argument here is that margins are decent, that some of the most important companies in the world are as profitable as they've ever been.

5:51They came into this year as properly as they've ever been. And then I would just get to the markets themselves. Are we starting to see that relative outperformance of semiconductors in the triple Qs again? And if we are, the markets are going higher. And it's great leadership. Whether you want it or not, it's the kind of leadership that says, get out of the way and don't fight it. That was the question mark, right? Whether or not the MAG-7 trade could continue this year. We got a great hand from the banks in terms of what we were dealt at the beginning of earnings season. Fantastic. But you needed the MAG-7 to work.

6:20So if fund managers don't believe, if AI bubble is not a top worry among fund managers at this point, and we're getting all this juice from all these promises, Guy, aren't we off to the races? There's a great line about juice in a movie. I don't know about this juice, but you better have a lot of it. And that's really what the market. It's actually called The Gambler, if you really want to go. James Caan. I believe it was 1975-ish. Well, if you're going to reference a movie, you've got to let us know. Well, I just told you the movie. But it shouldn't take five minutes. But there's a lot of people that know that movie.

6:53I forgot what I was going to say. You need the juice. Yeah, and it needs to continue, which is fine. But when you're trading at the valuations that we just were talking about before, it's important that it continues and it carries over. So my concern is obviously there's enthusiasm. NVIDIA has gotten itself off the mat now within$4 or$5 of the prior all-time high. But that's been offset by what we've seen in Apple. So there's definitely a push-me-pull-you going on. Yeah, so there's been so many comparisons, obviously, to the late 90s into the dot-com sort of bubble. And I think that if you were – fast money existed, and I was on it back then, I might have been a little skeptical about how it's going to change industries in the near term.

7:29I think long term, a lot of us feel like this is kind of a game changer, and we get it. You know, when I think about the late 90s, when was it, like, 95, when Greenspan said the markets are showing a bit of irrational exuberance? And then the S &P proceeded to go up 25 % a year for the next five years, right? And so we've had two 25 percent plus years. The last year was clearly, clearly drawn or driven by the fateful eight. Right. And I know CNBC has this thing about the Mag seven, which is funny. You know, they should throw the Broadcom in there, make it the fateful eight. So maybe these companies, if the CapEx comes in better than expected, that's what I'm really waiting for next month or next week, excuse me, to see what they have to say on that front.

8:09Agreed. Agreed. I mean, the CapEx numbers from all of the other that's going to be important. But at least now there's potential money coming from the government to replace that CapEx if it is dialed back. But that's the point. It's not coming from the government. That was the Chips Act last year. That was coming from the government. A government sponsor funnel from the private sector into some of these companies. Yeah, maybe. Let me just go to Fateful Eight, MagSat, or whatever you want to call them. We're good. There's a couple of them that even with this run, the valuation is, you know, not too demanding, as Guy would say.

8:40If you look at a meta, you know, mid-20 to 26, seven multiple, not even taking account the cash, same for Alphabet. To me, those are still closer to value than they are to really stretched. Is this the part of the show where we talk international markets, too, or is that in a block that I'm not supposed to not get there? Let's trade the globe. Let's trade the globe. Let's trade the globe. Well, so if you look at international markets, the places around the world that were supposed to be so weak, they've really outperformed. They haven't just outperformed year to date, but they've outperformed over the last three months.

9:10The DAX in Germany is at all time highs. It's outperformed the S &P by almost 600 basis points. It's a case where, you know, if you look at international markets and we heard this from J &J, who reported today, they talked about a one point eight billion FX headwind. Now, J &J's numbers were really more about what they're not doing and the growth that's there. And it's a name I'm long and I think it's an undervalued stock. But they were talking about FX. So I get back to companies like, first of all, the European banks that have announced over the last couple of weeks, Barclays, Santander. And if you look at some of the rallies across those banks and you look at the German industrials, I think there's a trade here.

9:46Look, I run an international ETF. It's definitely a case. That was the I, by the way, in Blysep, IDIVO. And I've been watching these companies closely over the last nine months. And these are companies that are actually starting to really inflect into some of this U.S. strength. They are some of the names that I actually think are going to be outperforming. What about China? Yeah. What about it? Well, I'm just saying it seems an outlier to the theme that you just mentioned. And again, if China is going to be at the heart of any trade war here with bigger tariffs than some people expect, I mean, at some point they have massive deflation.

10:14Right. If they were to export that a little bit around the world, that makes those headwinds for those economies that much worse. Right. Relative to ours. Some more than others. So Germany's definitely one of the major export economies of the world into China. I mean, what's been interesting over the last couple of days is the rally that we've seen globally is kind of like, ah, this, you know, day one, day two, tariffs were not the number one criteria, the number one initiative out there. So I don't really know what the timing means. And I do know that the headlines are certainly going to continue to be nasty.

10:42And I do think the world needs China here. But I think China's priced so poorly. Melissa, may I direct a question to Tim? Oh, hi. Am I allowed? Yes. Thank you, Melissa. Nice that you asked that. Hi, Tim. There's a Bank of Japan meeting now. Okay. They're talking about rates. So there's a lot of interesting things going, which you know, and I'm kidding around. But, you know, till recently, the yen had almost weakened the levels we saw over the summer. It stopped. But their interest rates have been going higher with the weakening currency. So there's a lot of things going on in Japan now that I don't think the market's paying enough attention.

11:11No, and again, you talk about some of those systemic risks. I mean, I think the bigger risks are that not only Japan is a problem, but also that the Fed is going to have to be more hawkish than they want to be. So I think the rest of the world is worth focusing on, even though, again, And the start of this conversation was about AI and what's really been driving our markets the last couple of days. Just one last thing on the international in Europe. I think the chance of a Ukraine, Russia, something positive. Ceasefire something. Yes. It has gone up a fair amount. And I think that's somewhat reflective.

11:42But I do think if they actually reach that, some sort of agreement, that there'll be more to come for certainly Germany, but all over Europe. So all that said, U.S. banks or European banks? European banks are cheaper and they have higher distribution payout levels. And I think as much as there are systemic credit problems across Europe more than there are in the U.S., I like those names. But I'm very long Citibank, Bank of America and J.P. Morgan. So I'm still staying there. No, go ahead. I was going to say real quick, Citi is the one that I think in terms of valuation, I think that one, even with the move we've seen from$60 or so to this 82 level, that's the one that's still really interesting.

12:20But going back to the point that Karen made earlier in terms of the overall market and whether or not we are in a euphoric state, how the pendulum usually doesn't stop right at the middle. It always goes beyond. It feels like we can. I mean, can we go higher from here? It feels like the markets want to believe all the promises, all of the potential, all of the hopes. Let me throw something else down. Back in 2017, when those tax cuts came, it was about a trillion and a half dollars. You know what the corporates did with those tax cuts over the next two years? they bought a trillion and a half dollars back of stock.

12:51So if you think about that, I mean, that could obviously be a huge, huge tailwind. I want to ask you, are we doing Oracle here or no? Are we doing Oracle later? Are we moving past Stargate or no? Everybody's being very funneling. I know. What is this going on? I'm sorry. I just feel like that was in the rundown. We were going to do some Stargate, but then we got into like European banks or something like that. They have better payout ratios. Take it by 10. It's next. Grab a spot. All right. Real quickly on the Oracle thing. I find it really curious that the stock had this huge rally. It came in a little bit from it.

13:20We were talking about it last night. You know, when the stock sold off in December 10th when they reported their Q2 earnings, you know, yeah, people were excited a little bit about 50 percent cloud growth for them. It's off a really small base. It was two and a half billion dollars in the quarter, about 17 percent of their revenue in the quarter. But people were concerned about the guidance that they gave on a sequential basis. It was supposed to decelerate meaningfully below 30 percent. So when you think about this for a company like Oracle, you better have some new funding. You better have expanded deals with some of the other folks and be able to compete, you know, with Microsoft Azure, Google Cloud and AWS.

13:54But I don't think they have the models on their cloud that's going to make them that interesting for other companies to kind of rent that compute. So decelerating growth, this deal, you know, maybe it sticks, maybe it doesn't. But to me, I think you want to be skeptical of some of these companies that rallied off this. Real quick, Oracle traded 44 million shares today, typically trades eight. And that had a it's had a ridiculous run that this recent run has actually got the stock from relatively inexpensive in this environment to a little bit expensive. So I'm sort of with Dan on this one. May I move on now?

14:25Should we take a vote? Appreciate you asking. I'm not asking. Apple shares are up half a percent today, but down almost 11 percent so far in January. The stock now trading on more than six month lows. Nvidia reclaiming the position as the world's most valuable company yesterday, bumping Apple to the number two spot, and now Microsoft getting close to pushing it down to number three. The chart master is doubling down on the call he made back in November. Keep on selling. Carter Worth joins us now. Carter, why? What do the charts show you? Yeah, yeah, I mean, what is it? I mean, I guess there's that old-fashioned technical expression.

15:01The stock doesn't act well, and people don't like it. They're like, what are you, personifying the stock? but they understand that when a pitcher doesn't act well, they say, get them out. If a player or a student, you know, let's change horses, so to speak. So what we know is just year to date, I mean, Apple's down almost 11 % in a market that's up three to 4%, whether you look at the market overall or the tech sector. But we do have one chart. Let's talk about it. It's a relative performance chart. And what it depicts, of course, as a ratio, it depicts Apple's relative performance to the tech sector.

15:34And what you're looking at here is the peak, which was in Q3 2022. Now, one could say, hold on. I went and checked since the end of Q3 2022, Apple's up almost 50%. This is true. But the tech sector is up 100. And so what that means is that's the definition of a bad pick. One could say, I don't care, I made 50%. But if the alternatives are better, it's the definition of no alpha. And so that is a problem. being down 10 % in the strong goings for the year so far is a problem. And then there is this pattern, which is, I think, problematic. You can call it a head and shoulders if you want. That's how I've annotated it.

16:12But it has all the look and feel of something that is rolling over. All right, Carter, thank you. Carter Braxton Worth of Worth Charting. And then on the fundamental side, you have a lot of Wall Street analysts coming in, getting much more skeptical of Apple. just yesterday. There were two downgrades a week before Moffitt Nathanson went to a celebrating. J.P. Morgan yesterday cut the price target on Apple. It's piling up. It is piling up here. You don't see that. So head and shoulders, yes. But the question I guess you have to ask, and Carter's left, I'm not bringing back the guests, but sometimes you have to let your ace pitch through some of the troubles in baseball he is having.

16:49And I think that's the situation right here. A piece of confetti flying by Karen's ear. $2.20 was a huge level. That's where we traded down to in November and bounced. That's seemingly where we held recently. But a close below$2.20 sets up a potential move, round-trip that June move back to$1.93. But if a pitcher has great stuff and he has four or five pitches you can go to, if the fastball is not working, which is iPhone sales and units, but it's actually services business and margin, I mean, these are things that I think should give investors a lot of confidence. This quarter and what we're going to get out of Apple is not going to be about the quarter itself.

17:21It's going to be about the outlook. And when I think about places where Apple can continue to keep investors happy and, again, be that ace of the staff that isn't necessarily pitching their best game right now, that's what they're going to do here. They have a second and a third pitch that can get people out. And in the case of Apple, they are buying back shares. The valuation is going higher. They have an incredible free cash flow generation. They have an installed base that hasn't priced in AI, maybe because it doesn't deserve to. That's fine. But it's not in the price. What is the second or third?

17:50I mean, granted, I really cannot continue this metaphor, but I will do my best. You're doing a great job. What is the second or third pitch, though? Because they need to roll out AI features that make people want to buy phones, and we have not seen that yet. So what is that next thing? I think their fastball is the iPhone and the ability to refresh that over and over. But the second and the third pitch are services and margins. The margins are better, okay? The margins are getting better, and they will continue to get better, I think, at least in the short run. Services business isn't growing at the delta it was five years ago, but it's still such a meaningful part of the business.

18:26So that's where I am. I mean, every team needs an ace of the staff, and, you know, Yankees probably have too many. You're 100 % right on the margin thing. It's been, you know, it was 43 % a few years ago, now 46%, almost 47%. That does come from services. I'll tell you this. Kids are not going to upgrade their iPhones if TikTok is not downloadable in the iPhone store. I'm going to tell you that right now. So this is a massive headwind, you know, for the kids upgrading. I'm just like matter of fact. OK. And then the other thing is China is really weak. There's new form factors coming out in the fall.

19:00Let's see if that's that third pitch or whatever it is. Knuckleball. Listen to you. Typically a knuckler doesn't have all the five pitches. That's their only pitch. What do you got? At what point is Tommy John surgery? Well, that's fair. So is there a UCL tear that's slowly happening in Apple's game? I love the sports metaphors. We could do it all night. It's going to be shown to itself, but it's not. Coming up, it's not in the game. Shares of Electronic Arts dropping after a big warning out of the video game maker. The news sending that stock lower next. And speaking of earnings, Travelers hire on its report how the California wildfires are impacting the company and what the results mean for the entire insurance space.

19:41Don't go anywhere. Fast Money is back in two.

19:53Welcome back to Fast Money. Shares of EA dropping after hours, a video game company slashing its full year guidance and revising its forecast for the holiday quarter lower. Steve Kovac is here with more. Steve. Yeah, and this just keeps dropping. When I first reported this a little bit after markets closed, it was only down about 5 percent, now down nearly 11 percent, it looks like. And this is because in the December quarter, Electronic Arts says it's global football business, not American football. We're going to keep the sports metaphors going, guys. This is soccer. Soccer, their Football Club 24 game, did not perform as well in the December quarter as they had anticipated.

20:27They saw some early momentum early in the quarter, hence the guidance. But now they're knocking off about half a billion dollars for their full fiscal year guidance for the quarter ending in March. And that's just basically lackluster gameplay on this. There's one other game that also underperformed, a game called Dragon Age Inquisition. I know you guys are huge Dragon Age Inquisition fans, so Guy Adami has been playing it all the time. Oh, he does. Yeah, level 7 mage over here. Oh, I'm level 8. And that game also underperformed, so that's what we're seeing. But this is coming ahead. We've got a really exciting year of video games coming up.

21:02We've got the Nintendo Switch 2. We're going to get more details on that console launching, one of the biggest console launches ever. And then later in the year, Grand Theft Auto. That is going to just print money. We've got to talk about that. That's coming from Take-Two Interactive. So some lackluster gaming performance at the end of last year. This year, it's going to be different. Okay. So the console upgrade, how is that? Do we know any details about the console, like pricing? We'll get more on April 2nd. They just showed it off briefly last week. But that's going to be the next big video game story coming here.

21:34Electronic Arts, by the way, will have titles on there. We'll be able to take advantage of that. And also, by the thought is later in this year that Grand Theft Auto will help kind of rising tide lift all boats in the gaming sector here. But disappointing holiday quarter, it sounds like, for Electronic Arts. February 4th, they'll have their real earnings. We'll get all the details and explanation maybe why this happened and where that energy went. One game that they do have that has been performing well, they brought college football back after the NIL issue was resolved from the Supreme Court.