Trump’s Admin Taking Shape… And What To Expect Out Of Tomorrow’s CPI Report 11/12/24

0:01Live from the Nasdaq market site in the heart of New York City's Times Square this is fast money Here's what's on tap tonight. China concerns what a couple hawkish picks for the next administration could mean for relations with Beijing and for investments in the region. And countdown to CPI, what to expect from tomorrow's inflation print and how the markets could react. We'll get thoughts from KBW CEO Tom Michaud. Plus, Amgen shares slimmed down after analysts spot something strange in the data. How to play NVIDIA in your all-time highs. And a company that's betting AI can optimize your portfolio.

0:32I'm Melissa Lee. Coming to you live from Studio B at the NASDAQ on the desk tonight, Tim Seymour, Steve Grasso, Bono and Eisen, and Guy Adami. We start off with markets taking a bit of a breather today. The Dow dropping nearly 400 points. Two big Trump trade beneficiaries. Transports and small caps also down sharply. Meanwhile, Bitcoin briefly touching a new record high, 90K. Before pulling back a bit, we'll have more on that coming up. But first, a major appointment by the president-elect that could reshape the relationship between the U.S. and China. President Trump is said to have chosen Senator Marco Rubio as his appointee for Secretary of State.

1:04This follows the announcement that Florida Congressman Mike Waltz will take the role of National Security Advisor. The announcement showing that what Trump said he's going to do on the campaign trail is coming to fruition. We will get the reaction from Beijing in just a moment. We start off with Eamon Javers in West Palm Beach with the latest on the Trump transition. Eamon. Melissa, that's right. We still don't have an official announcement of Marco Rubio as Secretary of State yet, so we'll wait for that designation to come. But we expect at this point that he will be Trump's pick for Secretary of State.

1:36And Rubio is somebody who is as hawkish on China pretty much as you can get in Washington, D.C. these days. He is somebody that I know relatively well. We interviewed him for our documentary last year on Chinese corporate espionage against American companies, sat down with him and his Democratic counterpart on the Senate Intelligence Committee. Rubio is deeply skeptical of the Chinese government and all of its intentions regarding the U.S. economy. So watch for that to play out if he does end up as Secretary of State for Donald Trump. Also, Congressman Mike Walz, as you say, the designee as National Security Advisor.

2:12We now have an official statement from Walz that he put out just a few minutes ago. He says, together with President Trump and his team, we will confront the evolving challenges of today's world and hold firm against those who would harm our way of life. Our nation deserves nothing less than bold, unwavering leadership, and that's what he will deliver. No specific reference to China, though, in that walled statement, Melissa. And one other thing to think about with this Trump administration that's coming together in terms of its China policy is the unclear role of Elon Musk in all of this. We don't know exactly what Musk will do in terms of this overall government efficiency commission that he has talked about, how that will look, what kind of authority he might have or not have with it.

2:55But Musk is somebody who does a lot of business in China, has been reluctant to criticize Chinese leadership in the past. He attended the summit meeting in San Francisco with Xi Jinping that I was at last year. And he is somebody who is seen as someone who the Chinese government would be likely to lean on hard if they if they needed to to influence Washington. So how does all of that play out in the mix of an administration which is as hard line on China as we have seen to date? Melissa, that's an open question. I know it's impossible to guess, Eamon, but are you saying that maybe Elon Musk could sort of have a tempering effect to these hawks that he's appointed?

3:36I mean, it's possible. It's possible. We'll have to see what he does. His role is undefined right now. He's an unpredictable character in the world, so who knows? But he has a lot of business in China. He is dependent on the Chinese market in many ways. and he is somebody that the Chinese would presumably reach out to in order to express their view, certainly, of what Washington is doing and maybe see him as a conduit or somebody who they can at least get a hearing from. Given Elon's sweeping power now as this new administration is taking shape, that does raise some questions about what will his role be vis-a-vis China.

4:15We just don't have any information on what he might be saying behind closed doors on China, but the incentives are certainly worth taking a look at. Sure. Eamon, thank you. Eamon Javers in West Palm Beach for us. For more on how the appointments of Rubio and Waltz are being received in China, let's get to CNBC's Eunice Yun. Eunice. Melissa, the Chinese foreign ministry hasn't yet commented on Rubio or Waltz, but the two are seen as some of the most aggressive hawks on China. Senator Marco Rubio has been sanctioned twice by Beijing. He's been highly critical of China's handling of human rights in Hong Kong and the far west Muslim area of Xinjiang.

4:52The senator is also a vocal supporter of Taiwan, which the Chinese government claims as its own. It's unclear how the sanctions would impact Rubio's ability to engage with the Chinese since he's barred from this country. As for Waltz, today Chinese media focused on his push, along with Rubio, to expand America's maritime strategy to combat China's naval presence in the region. Despite the tough stance, there's a question of how hard-line the two will be. President-elect Trump has at times signaled a weaker commitment to Taiwan and his supporter Elon Musk has business interests and investments in China.

5:31That could lead to sparring matches over foreign policy within the Trump administration. Melissa? Eunice, thank you. Eunice Yun in Beijing for us. And I think the mention of Elon Musk is a very interesting one because he is the CEO of the only foreign automaker who has a fully owned factory in China. And there must be a reason for that. there must be some sort of goodwill towards Tesla. Whatever reason it is, he was able to clear that hurdle. So could he be a tempering effect to these hawks? I don't know the answer to that question. You know, you think about it. I mean, think about what President-elect Trump has said about Taiwan and reluctance.

6:09And I'm choosing that word. I don't know if it's the right word to potentially back them up. God forbid something would have happened. They're going to have to sort of pay their way. Marco Rubio has been on the other side of that coin. I mean, he's been a China hawk before COVID, I think. As Eunice just said, sanctioned twice, barred from the country. You know, you put those three people in a room, and I don't know what this sort of the game plan is in terms of China. I'll say this. I think if you think it through, tariffs are probably more robust than people think, which I think is inflationary, which I think is one of the reasons bond yields continue to go higher.

6:40I think the CPI number tomorrow, which is not going to be affected in any way by what's going on with China policy, though, is part of the story here because this is all inflationary. And, you know, there's a part of China that I think we all don't recognize how important they are to the global economy, at times at least. We just had a PPI number which contracted 2.9 percent out of China a few days back. That was disappointing. And ultimately, look at the performance of anything resource-related and commodity-related. And there's a lot of reasons why this trade has gone sour over the last, say, three to four weeks.

7:12Some of it's a stronger dollar, but some of it is China. So to the extent that when you look at the performance of Chinese equities, whether you're looking at the FXI or the K-Web or Alibaba, who reports this week, so does JW, JD.com. So the bottom line here is there's so many different time measures and cross currents. And, you know, whether we're actually trading China in the short term or long term is a big question here. And I'll just also say back to China, you know, how they are reacting to this. Historically, the cliche is that China plays the long game and that they're not going to react in the short term.

7:45But there's been a lot of provocation over the last medium term. And at some point, I think China is going to make a stronger move. So I do think the Musk conclusion does perhaps raise some doubt around alignment of interests. As you mentioned, you know, he has business interests there. and the other appointees essentially back up and echo what pretty much has been a very black and white hardline stance as it pertains to international relations. So here, you know, as Guy and Tim above pointed out, you're worried about some of the inflationary pressures that would be the result of tariffs here.

8:17And here you have Musk, on the other hand, that perhaps might be a sounding board of reason. And then that takes me into what are going to be the fiscal stimuli that have been highly criticized coming out of China and Beijing. So, you know, to me, it all makes a lot more sense in terms of how we have not seen the bazooka effect or robust type of, you know, infusion of capital or fiscal stimuli that we would have expected and that I think China bulls have been looking for. And I think perhaps I think it probably leads to some tit for tat. And it also raises questions for me, for U.S. retailers and for the supply chains that would, to me, be much more of an inflationary concern.

8:57I think that Marco Rubio has been as big a hawk on Russia as he's been on China. And when you look at who's going to— He's also supposed to make people feel better about the relationship with China. Well, where I'm going from on here, I think when you say Elon Musk will settle down the voices or moderate the voices, Trump is actually a strategic hawk on China. He compliments Xi Jinping and then he hits Xi Jinping, but he always compliments him. So I don't think he's as hawkish as we think he really is. What he says he's going to do and what he's going to do, two different things. I think it's all posturing.

9:37I think it's fascinating that this goes down on a day when Intel's vice chair was meeting with the,

9:48you know, And also investment, we would be willing to take investment or support investment by Intel into our chip industry. I mean, this is all going on. These headlines are coming through at least early this morning from China, where we've got arguably one of our most important chip companies, whether they performed on the field that way or not. There's a lot of strategic interest that's being put towards Intel and around it. And here they are. And all the parties were saying the right things, including China, saying they want to have a healthy relationship and that they want to have a long-term and stable and sustainable relationship as it relates to tech.

10:23Whether that happens, probably not in the short run. By the way, just to make it a quick trade, I owned Alibaba. I think Tim still owns Alibaba. In my trade, I owned it around$100. I averaged today because I think a lot of this stuff is set up for a bounce right now. We're getting the worst news. Strategically, I think we're set up for a bounce. I mean, think about when David Tepper said you own everything, right? It's not nailed down or something. And I mean, he's probably going to wind up being right. But the timing of that announcement couldn't have been worse in terms of the arc of the trade.

10:57I mean, pull up an Alibaba trade over the last couple of months. And you'll see. I mean, it was right around 117 when those comments came out. And you see we've round tripped the entire thing. That trade was predicated on China stimulus, right? On big China stimulus. Does the arc of the trade change with a very hard stance on tariffs? I think that's a fair question. I think part of the sell-off has been predicated on that. But I think China Internet stocks, Alibaba specifically, are far more insulated in the tariff war. I think the bazooka of Chinese money flows is bigger than the tariff threat.

11:34For a closer look at how the new administration could impact U.S.-China relations, let's bring in Shahad. Shahzad, excuse me, Kazi. He's the managing director of China Beige Book International. Shahzad, great to have you with us. So what do you make of the appointment? Do you see the policy shaping, taking shape at this point? Well, look, if it is going to be Senator Rubio, I think that's a very, very strong signal to the Chinese, not only because he's been rhetorically very hawkish on China, but if you look at the legislation that's come out, which has been very, very tough, and I think actually very, very good in terms of results-oriented, if you think about it.

12:09That's been coming out of the Rubio office over the last many years now. So I think we're looking at very tough China policies, definitely from the State Department if it is Senator Rubio. And then, of course, we've got the trade team that's still being put together. Does this tell you anything about tariffs and how hard they could be or no? I think the tariff question is going to rest with, I think, the Bob Lighthizers of the world, his advice and the team that he's putting together. And those discussions probably go very, very aggressive and very, very live between Thanksgiving and Christmas.

12:39Shezad, I think a lot of our audience cares a whole lot about U.S. companies doing business in China. And so, and again, we've waited so long for some kind of reaction. I just mentioned before, you know, China plays the long game. But we've had enough now that it would be a medium game response to actually push back on U.S. companies. Do you think that could be coming or will it then be a result of some kind of policy act in this administration that's coming in? I think absolutely. Look, the Chinese toolkit is far more limited than the American toolkit. And American companies are absolutely one of the levers that they could push.

13:11So there's a big target on the back of American companies, no doubt. They're struggling as it is in China right now because of the economic slowdown. If Beijing decides that it wants to hurt Trump by going after American companies, they can most certainly do that. Do you think that China is weaker than we perceive it to be at this point? When we're looking for the bazooka, does the bazooka exist or are they so much more in decline than we think they are? Or is that am I just making that up to make myself fulfill a prophecy? My big problem in D.C. and on the street is that some of the bearish narrative on China sometimes gets overplayed.

13:51But here's the deal. You know what you just said. The bazooka is there. But if they fire the so-called bazooka next year, the year after because they want to compete with tariffs, that's not really stimulus. You're just using money to run in the same, you know, run in place. Or maybe you're running a little bit slower. It's preventing you from running too much slower. So I think that is a very hard cap over there. Let's go to Taiwan for a second. Are they going to be forced in this whole game of chess to buy bombers from the United States and, you know, arsenals like missiles and those types of things to show Trump they're serious about defending themselves?

14:24I mean, is that what this game is about to a certain extent? That's a big chunk of what we're trying to get done. And if you talk to policymakers in D.C. who are concerned about the Taiwan invasion in 2027, as we've said before, the big concern in D.C. is not just that does China invade, but do the Taiwanese want to fight? And the appetite for that right now is very low. And many people in D.C. are very concerned about that. What is the incentive for China not to punish U.S. companies? Just to try and understand the other side of it. I mean, is it is it, you know, economic not destruction, but hurt on their part?

14:58Will they feel, I mean, I would assume foreign direct investment would really grind to a halt, but it's already pretty slow as it is. Yeah, it's slowing down. Look, you could treat them as an ally. And, of course, corporate America is China's biggest ally right now. So you could put that on the back burner and say, we don't go after you, but go back to D.C. and tell Trump to back off. I see. OK. Shahzad, great to have you with us. Thank you. Shahzad Kazi. So does the China trade change in your view, or do you think that is it, are the tariffs a big question mark in the China trade? I mean, I think the question is about the extent of the tariffs.

15:32I think, you know, I'd be a bit, you know, foolish or sleep at the will to assume that there are hope for the best case scenario where they don't happen. I concern my concern is around more IFA, some of the international markets and what that blowback may be. And my concern is also about U.S. supply chains. We are not a manufacturing company and we rely on that infrastructure. So for me, you know, this these responses don't exist in a vacuum. And I think the response might, if you hearken back to the supply chain shocks of 2020, a repeat of that is not what the U.S. consumer needs now. Alibaba reports on the 15th, what's the 12th?

16:07So I guess next week early. You know, I think you own Alibaba here. I mean, it filled that gap that we created on the move higher. It basically round-tripped the entire trade. I don't think the Alibaba trade is over by any stretch. By itself, the stock is too cheap. B and Blysep? B and Blysep. Long-term holder, long-term investor, bit of a trader. I do think the story around China is one where right now sentiment remains about as low as it can get after the trade. Everyone who said it was a trade nailed it, by the way. Let's be clear. It is totally round-trip, so it was a trade. And Alibaba, I will continue to say, with 40 % of their market cap in cash, is not a China macro call.

16:46I'll also just quickly say, hopefully, the$17 trillion economy that is China, I think we're underestimating the impact of what tariffs to the world can do to the overall economy. Coming up, we're watching some after hours action in today's session. Instacart, Spotify, Occidental, Kava all in the move after reporting. The details from the quarters ahead and a biotech beatdown. Shares of Amgen dropping as one Wall Street firm spots some interesting data in their latest trial report. We'll talk to the analysts who made that call next. Don't go anywhere. Fast Money is back in two. This is Fast Money with Melissa Lee.

17:20Right here on CNBC.

17:28Welcome back to Fast Money. Shares of Amgen seeing its worst day in over three years after a report on the potential side effects of its weight loss drug, Meritide. Cantor uncovering data apparently hidden in the appendix of Meritide's phase one trial results. According to analysts, the data show a 4 % decrease in bone mineral density over 12 weeks for trial patients on the largest dose. For more, let's bring in the analyst who wrote that note, Olivia Brayer. Olivia, great to have you with us. Yeah, thanks for having me. I'm curious how this happens. You get a spreadsheet and you hit a tab and you find it.

18:02I mean, nobody else is looking at this? You know, it's funny. This data has been out there since February, and the data has been combed over so many times. But, you know, we have a really great team, and we look at things really closely. And it was a little bit of a fluke, frankly. I mean, to basically right click on an Excel spreadsheet and you hit unhide and a few more sheets pop up. And it's something that nobody had been talking about. I don't think anyone had seen it. Frankly, I think Amgen's probably surprised that someone found it and uncovered it. I don't know if they knew it was there.

18:34But funny enough, it's all in the public domain. And so anyone, you don't even need to log into this is the phase one nature article. I mean, you can look at it, you can unclick it, and it all pops up. So it was a bit of a fluke that we found it, but definitely some important data. Obviously, it's getting a lot of attention. How does this impact your forecast for Maritide? Yeah, I mean, look, the thing is, we don't know how big of a risk this is. They are having face—this was from a phase one data set, very small patient numbers. And they do have phase two data that are coming by the end of the year.

19:10It's in a lot more patients. it's a lot longer follow-up. So it's a 52-week study, whereas the phase one was only a 12-week study. So there are still a lot of unknowns. But this does add a risk. I mean, I will say this was a known theoretical risk around bone marrow density before today. But now we actually have some data on it. Like I said, it's small patient numbers, so it's hard to know really how much weight to put on these data. We don't know if it'll plateau. We don't know if it'll keep decreasing over time in a long study. You know, Amgen's also working on different titration schedules for their dosing.

19:41So they may change their dosing. They may get it right. And we may see less tolerability, less bone mineral density issues. But right now, I think the read here is that it was a theoretical risk. And now that there is some data behind it, it just adds a little bit more validity to the risk. Is it possible that the bone mineral density loss was just coincidence? Or does it actually, you mentioned it's in the highest dosages. Is there less of a degree in the lower dosages, which makes you believe that it is causal? Yeah, there is. There is. And it seems to be dose-dependent. And a lot of that, again, has to do with the fact that in the higher dose, you are seeing a much steeper decline and a bigger magnitude of decline, too.

20:26So that, to us, signals that it probably is dose-dependent, that it probably is mechanistically related. But again, I mean, unfortunately, there are a lot of unknowns. I think we'll get a better picture of this drug in totality once we have the phase two data in hand. that, again, that'll be by the end of the year. I'm sure Amgen hopefully will address some of these comments around bone mineral density. But there are still just a lot of unknowns at this point. The 7 % decline in shares, what's your take on that? Yeah, I mean, look, I understand it. You know, our kind of base case valuation, if you strip out obesity, is you get to somewhere around 250 on the stock.

21:05Obviously, it's trading closer to 300. So there is still a decent amount of obesity value in the stock, as there should be. I mean, we've been very positive on Amgen. We've been very positive on the probability of success for their phase two data. So I would say today's data doesn't change our view, but it does add more risk. And I think at this point, you do have to have a very competitive profile, and you do have to be able to overcome some of these hurdles if you are going to be a later entrant in this obesity space. Because again, there are other players in obesity. So the bar has been set.

21:38Right. Olivia, thanks so much for joining us. Appreciate it. Olivia Brer of Cantor. Right click on all your tabs. You never know what you're going to find. But she said if you strip out obesity, it's still 250 and it's trading at 300. Well, you admire the rigor of the work they did, number one. I mean, they said they've combed through a lot of different things. That's great. I mean, 250, it's interesting. You know, they just reported what I thought was a decent quarter on October 30th. The market didn't like it all that much. Valuation isn't completely stretched, but, you know, maybe a lot of the premium in the stock based on the run that it's had has been on this obesity thing.

22:11$250 gets to the April low. That's actually a pretty good place to get in, I think. You know, and I think when she was pressed on that$250, I think it's probably you could probably find someone who says$200, right? So$200 or$250 is probably flexible on that on the level to the downside. So you probably want to proceed with caution. They also have a patent cliff that's 70 percent of their portfolio by 2030. That's probably 20 percent more than the rest of the space has. So I did speak. I did a little bit of the cliff notes. I spoke to Jared from Mizuho and that's where he is at. He's at 200 to 250 as far as the downside.