the year, lower volumes, some profit taking, preparations by funds, perhaps looking to 2025 but the s&p finishing down almost 30%, so we will continue to monitor this market. also what rates do on the back of this ecision as well.>> yeah for that continuing resolution lots to monitor. that's going to do it for us here at "overtime. >> "fast money" starts now live from the nasdaq market site in the heart of new yor city's times square, this is "fast money. here's what's on tap tonight stocks sell off. yields spike after the fed signals fewer cuts are coming. the dow down ten days in a row look at the moves in tesla, microstrategy, bitcoin is this the start of a turbulent end of the year? plus, merck makes a deal in the obesity pill space and financials hit two-month lows. i'm melissa lee, coming to you live from studio b at the nasdaq on the desk tonight -- karen finerman

dan nathan, courtney garcia, and michael contopolous. we start with the fed decision sending markets dropping today the s&p down nearly 3% the nasdaq dropping more than 3.5% the small cap russell 2,000 leading the losses in the worst day since june of 2022 this, after the central panning lowered its benchmark lending rate by 25 basis points and indicated there could be just two more rate cuts next year, down from the previous forecast of four. the ten-year yield topping 4.5% for the first time since the end of may meantime, the dollar index closing at its highest level in more than two years. gold prices pulling back a third of a percent and the volatility index crossing above 23, the highest reading since august and some wind coming out of the sails of top performers since the election bitcoin down 5%, while other momentum trades saw steep losses tesla, for instance, down more than 8%.

micro strategy, 9.5% for more on this, let's bring in steve liesman. hawkish pause, hawkish >> yeah, i talked about that yesterday and the day before, and nobody wanted to believe it. the federal reserve cutting rates as expected to a new range of 4.25% to 4.5%, but offered a hawkish outlook in rate cuts just how many rate cuts could be on the way in 2025 >> i think from this point forward, you know, it's appropriate to move cautiously, and look for progress on inflation. >> so, how did the fed freak out markets? only two cuts forecast next year one dissent, but three others in the dot plot without a vote wanted no rate cut four banks that could be the same, but probably not the same, did not ask for a discount rate cut, a sign of what their boards and presidents wanted, and

raised inflation outlook for '24, '25, and '26. policymakers appear to have begun incorporating potential fiscal policy changes into their forecasts for the incoming trump administration that could describe why average inflation went up for 2025, with specific concern about tariffs powell said those threats introduced uncertainty into the inflation outlook. well, what happened to the probabilities? january, that is out march, in taught may, getting more likely to get that next cut, june, more solidly. but look at that december second cut. the market has not really priced in a second rate cut for 2025. and you can see that more clearly, look at that doubt -- the december 2025 fed funds futures contract, trading around 4%, with a big rise today. it shows little conviction in that second cut that would send the funds rate below 4%. the situation could change if you get better inflation numbers or weaker unemployment data, that could make those cuts more likely.

and perhaps even, melissa, some clarity on what president-elect trump plans to do with tariffs i would also offer about half of -- more than half of the post-election trump bump in equities is now gone >> that's a good point there the situation could change, steve, if inflation numbers come in better. they could change if inflation numbers come in worse. and moving to two seems like it's allowing themselves sort of the leeway to re-evaluate. so, was there anything in the fed's language, because they said the economy is performing very, very well, using two veries in the press conference all these things add up to me like there's a door open to a prolonged pause, much longer, or maybe even a hike possibility down the road. >> i think that's right. i don't think -- well, look, it's important to point out that powell also said the fed is meaningfully restrictive still at this level. that tells you there is some tolerance for inflation

remaining where it is or going a little higher before the fed gets around to doing what you're talking about, melissa, and hiking rates there's some tolerance in there. nobody really knows how much, but if the committee becomes convinced that inflation is no longer headed, or no longer has confidence that inflation is headed under 2%, i believe they will hike rates, but the question becomes, how and when they incorporate the incoming fiscal policy from the administration >> steve, it's karen thanks for being on today. i was a little surprised the magnitude of the ten-year move in light of what i thought was somewhat, clearly hawkish, hawkish, hawkish from powell, that, you know, since the ten-year was sort of -- the ten-year was reflecting concern about, you know, would we just have wild growth and inflation, and that this, i would think, would maybe conversely have sort of this hawkishness, would have actually given a little more support to the ten-year than i thought, or is it just inflation

could be high and that's what it's about >> i think that's part of it you know, i'm informed a little bit by scott's interview with jeff gunlack, who talked about the idea that you really can't make a strong belt t on rates gn down anymore i think from, let's call it the summer, maybe a little earlier, through the fall, you could say, all right, i'm going to take a position on rates coming down, and it was a pretty secure position i'm not sure you can take that anymore. where would you put rates? it may be that we're at the top end in terms of where the ten-year is. i agree with you, that given that hawkishness that the fed would be leaning further, more strongly on inflation in the coming year, but i also think, you know, melissa's question is not an idle one. if she's asking steve, are rates going to possibly go up next year, well, it must be a salient risk, i would say. >> i don't know. let's ask michael, who is on the desk tonight, fortunately. what do you think?

because, i mean, just yesterday, the day before, we were talking about t. rowe price, their head of fixed income saying 6% next year >> yeah, i don't know if we'll get to 6% next year. maybe over the course of the next economic cycle, i guess it's the start of the new economic cycle, certainly we would get there, but listen, in what world is the fed restrictive? i just don't see how that could even be uttered with a straight face i mean, they're looking at some hypothetical neutral right, they're looking at the real fed funds rate but remember the transmission mechanism of interest rates is to affect lending. lending standards are easing, you got speculation in markets and bitcoin. you know, banks are easing lending standards. there's plenty of liquidity out there. the affect of rates has not filtered through to the economy, obviously, so, i would argue that they're not restrictive i agree with the sentiment about the ten-year, you know, you would think that if you're going to tame long-term inflation and growth expectations, the ten-year should stabilize, not

go up, but i think this is more to do with a knee-jerk reaction than anything else and i wouldn't take too much out of today's price action i think we have to see how that plays out over the coming days before really understanding how the market takes us. >> steve, i'm cup use, when powell was talking about the 2% number, he said effectively that they're committed still to 2%, but it may take much longer than we were expecting. it may take another year or so does that jive with what he said in the past? is that inflation fight going to be more protracted than we think? >> i had the same thought when he said that is that showing us that he has more tolerance for inflation running above target than he previously did i think the thinking here is that it's not broke in the extent that you have unemployment relatively low, relatively contained, the job market is a little bit looser, and it's not, as he said several times, a threat to the inflation story here

and so, i think what he's saying is, at this point, given that growth has been pretty good, given that unemployment has been pretty well behaved, i'll take a little more time and not try to break it in terms of pressing further on the economy i think that's what he's saying right there, but i think what was said been the previous guest there was really fascinating this idea that the market doesn't necessarily believe that the fed is restrictive here, and therefore going to have a positive affect in terms of bringing down inflation. this is a big issue here, worth debating, if you think the fed is restrictive and going to win this inflation battle, you can bank on more rate cuts if you don't think that, as the previous guest does not, then you cannot take that -- that stand on more rate cuts coming next year. >> uh-huh. steve, thank you steve liesman from washington for us >> pleasure. >> so, where do you stand on that point, dan? >> well, listen, he's the smart bond guy i'll talk about the stock

market i'm kind of the dumb stock market guy, too. but go back to late '21. we can all agree there was clearly a stock market bubble and we had this crazy period of late 2020, 2021, everything that wasn't bolted down was going up. fed funds was on a zero interest rate bounce. the ten-year was about 2% or so. so, it was, you know, i was doing okay, right? so, relative to fed funds. what happened? when the fed signaled they're going to start raising interest rates to battle inflation, these tech stocks got killed, right? the nasdaq went down 38% over the next year. so, i think about what's going on right now, if you are kind of taking off the table further cuts, or, you know, three, four, like a lot of folks were kind of expects in 2025, then you have to start thinking about valuations you have to start thinking about this dollar that has gone from 100 to 108 that's the u.s. dollar index and you have to say to yourself, all the stocks that have pulled forward so much performance, they're anticipating double-digit earnings growth in 2025 now they have serious headwinds.

we were talking about that yesterday, right we were talking about the dollar we were talking about where yields are and where they're likely to go yesterday, we were 4.4, today we're 4.5. if they go to 5%, if you don't think that the nasdaq and the s&p have a down 20% move from here at some point, i think you're not doing this correctly. so, to me, i think fact set has about 15% expected eps growth in 2025, if the dollar stays here, if yields stay here, that's not happening. >> i think the one thing we also have to think about is why rates might not be coming down it's interesting you're seeing this, michael, you brought up a good point, a knee-jerk reaction that's what you're seeing today. bond markets have been pricing this in. we knew the fed was going to have to start pausing or cutting less but if they're not cutting because the economy is strong and prices are still stable, that's very different than having to cut one or two more times next year because they need to save the economy and if you're in that position, where the economy can continue to grow, unemployment stays low at these higher rates, i don't think that's a problem for a lot of the equity markets in

general. you're seeing this knee-jerk reaction on some of your rate sensitive sectors. real estate, small caps. but inflation is going to be a concern next year, so, you want to have the inflation hedges in there, because that could be a problem, but you want to make sure you balance that out. >> so, courtney, does that mean that these dips in some of these high flying names -- do you go in and buy big cap technology? i think that's what -- i don't want to boil it down so simply, but i'm sure a lot of people at home are thinking, nasdaq down 3%, is this my chance to get into an nvidia, to get into bitcoin? >> what you have to look at, too, though this has had a dip, these are doing so well since the beginning of the year. most people are still way over exposed to these we've been trying to get people to take some profits off the table, even with this dip, that's still the case. is it a buying opportunity probably but most people are still overexposed. so, that's something you need to balance out. >> without being a little bit cliche and the tale of two markets next year, you could see a scenario where you go into next year, profit growth is reasonably strong, you know,

this rise in rates ends up in the selloff in stocks gets washed out because of the strong growth environment, all the promise of fiscal policy that might be coming under trump, et cetera, only to see earnings growth start to slow as you get later into the second quarter, into third uarter, and at the same time, restrictive policy, right, start to bite a little bit. and that way, to dan's point, it is very reminiscent of 2022, just rather than runaway inflation, you have higher than average inflation. instead of an earnings recession, you have slower earnings growth. instead of a fed that's hiking, you have a fed that's pausing, all coming off elevated equity levels and tight spread levels that does not bode well for back half of 2025, but near-term, i think the signaling is actually reasonably strong. >> i think the pull-back in banks is actually really interesting. i don't think that the environment for banks, the backdrop for banks, which i view as very positive, i think you've got -- you've got growth in

loans, i do think the animal spirits are still there. i think you've got great potential for m&a, good capital markets, and they're not crazy expensive. and so, this pull-back i think is attractive. i would be adding. >> i just have one other thing and i know we don't price in geopolitical risk, but i cannot remember the last time there's been so much uncertainty look at what's going on in canada, germany, france, russia and ukraine, look at what's going on in syria and the middle east, look at what's going on in china, and taiwan. and that's not just the only point i want to make here. china's economy is a disaster, okay when you think about this, we have disinflation here, and they're worried about a reinflation, right, of that, but look at what's going on there. they might be, like, they might export deflation to all the points, you know, around the world, that is not helpful to us one way or another and if you think about this dollar, it's going to continue to go higher under that scenario so, i just think this is a really messy year, and then you think about what we learned

about president-elect trump's first admin, there's just going to be so much rhetoric that moves around ceos don't like that sort of uncertain tip, especially when things are going great here, fine if we have to worry about tariffs and we have to worry about weakness all around the world and a strong dollar, that just doesn't set up for a great scenario that gets you to 15% year over year earnings growth in my opinion. >> all right for more, let's bring in loretta mester, cnbc contributor great to see you >> nice to see you >> what was your take of jay powell's press conference, his forward guidance, specifically >> yeah, i think it played out exactly as expected. i think coming into this, it was clear that the fed should be thinking about pausing, and i think he made it clear that that's what's on their mind. the dot plot showed half as much reductions next year as the former dot plot did, which is exactly right. i thought something significant he said was that they have

reduced the degree of restrictiveness quite a bit, and i think that's important because that's kind of where their mind-set is. you think about what they were doing since september's recalibration, now going forward, this is really about balancing those risks, making sure that they keep the funds rate at an appropriate place so that no matter how those uncertainties that you've just been talking about play out, they're in a good position to address them, either by holding at that current rate for much longer than anticipated, or if things on -- on the employment part of the mandate weaken more than they expect, then bringing the rate down faster so, i think they're still in a good position here, i think the markets are reacting in a way that's kind of interesting, because this was, i think, pretty well expected but maybe emphasizes that there is still uncertainty about the economy next year, including fiscal policy actions we're

going to see >> loretta, it's karen thank you for being on given how hawkish he was and how he had statements like, more cautious in the future, and the reluctance to even make this cut, can you explain, how did it happen that it actually did cut? you know, the market seemed to be forcing them to not what goes on in the room that makes them come to this conclusion >> yeah, so, i -- you know, going into this meeting, i'm sure there are a lot of people who came in saying, you know, i could see it going either way. you come in sort of with your formulated view. they did nothing in the intermediate that would sway people and more importantly, why go forward with it? well, the narrative surrounding the economy hasn't changed if you look at the projections, and what chair powell said at the press conference, they still expect inflation to come down toward 2% over their forecast

horizon. it won't get all the way to 2%, but they expect it to be moving down, and they still expect, right, the labor market to remain healthy tick up in the unemployment rate over time, but still, a healthy labor market it's just going to take a different policy path to get those outcomes so, it will take probably more restrictive policy, certainly more restrictive than they thought in september, and that would be the reason to keep -- you could go forward with the rate cut of 25 basis points. as long as you coupled it with the information that they gave us and the communication, which was, look, from here on out, we're really going to be thinking about each meeting and looking at the -- the cumulative information. so, the way i think about it is, over this period, where they were recalibrating, coming into the meeting, it was -- is the evidence -- start with the base case, we're going to be cutting, and now, what's the evidence that would sort of say go against that from now on, i think coming into

neating is, we're not cutting at this meeting, what's the evidence that says, okay, we can resume those cuts? that's how i would be thinking about it now so, it's basically a subtle change of, you know, what's the base case going into a meeting and then, what is the accumulated evidence tell you? is it time to resume, we can bring it down another notch because inflation has resumed coming down and we think it's on that path towards 2, or, right, is it, no, we still haven't seen the progress on inflation, and so, we're going to hold pat for another meeting? and that's how i think about it. so, it's a subtle change in sort of what the base case is, going into a meeting the overall, you know, forecast remains the same, that eventually they'll be moving rates down, because the economy is going to get back to 2% inflation. >> loretta, i mentioned earlier that the transmission mechanism of, you know, higher federal funds rate is through credit channels, and what you ultimately want to do is either

slow or speed up, right, the availability of credit, and that's really sort of how interest rate policy works so, when you look at credit channels out there, i'd still argue they're incredibly easy and getting easier bank lending standards, credit spreads, et cetera so, you know, i know the real fed funds rate is elevated and i understand that we're above some theoretical neutral rate, but does anybody really sit in the room and talk about the impact of higher rates and how it's affecting credit available, ili? >> no, i mean, they talk about that until the room, and certainly we did when i was there. we looked at the overall set of financial conditions, and, of course, the fed produces its own indices of these things. but on the other side of that, if you think about how many people have and households have low rate, you know, fixed rate mortgages, right, that's -- that's something that works against the transmission of lower rates into the economy so, again, you know, depends on what second sector you're

looking at and i think the way the chair, you know, likes to put it as, he looks at sort of what's happening on both sides of the mandate, and if you look at the employment part of the mandate, you have seen some moderation on the employment side, so, that's -- and you have seen inflation come down on the inflation part of the mandate, so, that would be an indication that policy is restrictive from the point of view of what the fed controls, and therefore, you know, we're getting back to, you know, price stability and full employment but i think the real key thing is, there's risk around that, and one of the risks you're pointing out is that perhaps financial candidates aren't as tight, and that manifests itself today in looking at what the fed participants think the long run fed funds rate it's not exactly, you know, what a neutral rate would be at any point in time, but over the long run, the fed funds rate has moved up in those projections, and, in fact, one thing i

noticed today, which i found very interesting is that over the forecast horizon, even by 2027, the fed funds rate they're projecting is above still restrictive relative to the long run fed funds rate that wasn't true in the september s.e.p. so, again, they are projecting that they're going to have to remain more restrictive than they thought and over the full forecast horizon >> loretta, great to get your take especially on a day like today thank you. >> thanks, melissa happy holidays >> happy holidays to you so, karen, your view of the markets for 2025, yesterday versus today has it changed >> no, not really. no i mean, we're back, i don't know, ten days ago, some things are down more. no >> no. but -- this is -- this is sort of, like, higher for longer. >> i didn't think -- >> right >> i was not thinking there would be many multiple cuts. >> oh, okay. so, you weren't in that camp >> i'm short the ten-year,

right? so, i -- because i think we'll see inflation. so, no, nothing's really changed. >> yeah. how about you? >> i'd agree with that i think if you've been watching what's happening, the expectation is that the fed was starting to get ahead of themselves, so, i don't think this should change your bigger picture. one thing that it changes, all the cash that's sitting there is probably going to sit there longer, people think, i'm still going to get 4% on my money markets, why do anything with it so, i think that part of the markets probably stay where it is, it doesn't funnel its way in i don't think that's a bad thing, but that's one less catalyst >> what changed for me is just, like, to see how quickly investor investors sold -- >> the biggest eight stocks. >> yeah, the -- you haven't heard that -- >> i haven't >> just coined it this show. >> bond guy here >> so, i think that's really what's important and you know i've been in this camp, that i think there's going to be this period next year where there's overcapacity and i think just the fact that

you're going to see a deceleration in the capex -- microsoft has been telling you that the numbers have been notching lower a little bit satya nadella and dan niles pointed this out he said he is not constrained on chips anymore. what does that mean? that means capex is going lower. so, he's constrained on power, but that's also been a bubble. so, what's clear to me is that the generative a.i. bubble, there's some air coming out of it, it just depends on how far you think you can go and the only thing i'll just finish on, like, we've seen a pull forward in a lot of the excitement about the activity that's -- that's been clear. i could have said that i did say that two months ago, three months ago, but it's more about the narrative. if you get the narrative right, you're not going to make a mistake an all-time highs like a lot of folks have, because that's the real danger here, if we were to have a sustained selloff. coming up, much more on today's monster selloff, with 96% of s&p stocks ending the day in the red is this an opportunity to buy or is there more pain to come and we're watching afterhours action. shares of micron and lennar on

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money. a developing story in washington, where president-elect trump along with jd vance and elon musk are taking shots at house speaker johnson's funding bill could this all lead to a shutdown emily wilkins is pacing the halls on capitol hill to find out the latest emily? >> hey, melissa. well, it's been a very interesting day up here on capitol hill we began with a 1,500-page bill, but not sure on the timing to vote on it, but now, that bill itself is in jeopardy. all day long, we've had elon musk and vivek ramaswamy urging no votes, and elon musk saying those lawmakers who voted for that bill would be primaried, and basically would be forced to give up their seats or lose them in an election that seems to have made a lot of lawmakers here pretty nervous, because we went from thinking that the stop gap would have a vote by the end of today, to no more votes by the end of today we've also seen reporting that says that leader -- speaker mike

johnson is actually looking at a slimmed down version, so, instead of a bill that had a lot of provisions in it, a lot of spending in it, just one that focuses on funding the government past that december 20th deadline. and then adding additional confusion and chaos to the mix, president-elect donald trump and incoming vice president jd vance both tweeted that while they want to see a stop gap bill, they want to see disaster aid, aid for farmers, so, they want some of the spending provisions. they've also called for that to include raising the debt limit if you remember, republicans had a big fight with this in 2023, they kicked the can down the road to january of 2025. and now, trump and vance are saying that republicans need to get it done. that is a very heavy lift. usually, negotiations over debt ceilings and debt limits can take weeks, months last time, it took half a year and so, to call for it with less

than 72 hours on the clock before a government shutdown is really raising a lot of eyebrows here on capitol hill and there's just a lot of uncertainty at this point about what, if anything, the house can going to be voting on, and whether it can get support needed to actually cross the finish line. so, we're monitoring the situation very closely, and we'll continue giving updates as we have them melissa? >> emily, thank you. honest question here -- do the markets care about this now or today is going to outweigh this. i think this is going to go unnoticed. friday this will be a bigger story. we have an earnings alert on lennar the home builder down about, a couple percent now issing on the top and bottom lines. 6%, ocean kus me >> it was a rough q-4 for lennar they blamed it on mortgage rates and they're not wrong. the average fixed rate was close to 6%, but shot up over 7%, and

jumped 21 basis s today lennar's new orders fell 3% year over year and far short of guidance gross margin of 22.1%. a little shy of estimates. now, lennar's chairman said in the release, in the course of our fourth quarter, the housing market that appeared to be improving as the fed cut short-term interest rates proved to be far more challenging, as mortgage rates rose almost 100 basis points through the quarter, even while demand remains strong and the chronic supply shortage continued to drive the market, our results were driven by affordability limitations from higher interest rates. he added that lennar adjusted sales price incentives and margins in order to reignite sales and manage inventories melissa? >> conference call tomorrow or tonight, diana >> tomorrow morning. >> so, there will be a lot of questions to be asked about mortgage rates >> yes >> okay, diana, thank you. diana olick. what do you think? i mean, obviously we could be in

for a prolonged period of higher rates here >> yeah. well, i mean, housing, remember, is a high multiplier industry. so, when you have higher rates, that starts to affect the housing sector that typically is not great for the rest of the economy. i think it's probably too soon to make that conclusion based on just today's price action, or even this month's price action, but yeah, i mean, listen, higher rate, higher for longer environment is certainly not good from that perspective >> how about for home depot or lowe's >> i was thinking about zillow they do have a rental business that's helped, but you know, this higher mortgage -- this high, this quick is not great. >> all right court? >> only interesting thing about higher rates in this industry means there's less existing homes that are going to be sold. the average mortgage are 4%. that puts your home builders in a little better position i don't know if it's as bad as it would have been in the past, without that -- without that situation. >> all right. coming up, more afterhours

action shares of micron on the move after reporting their latest results. the details from the quarter next you're watching "fast money, live from the nasdaq market site in times square. back right after this.

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welcome back to "fast money. micron shares tanking despite earnings that beat estimates the chip maker issuing weak q-2 guidance seema mody has the latest from the conference >> micron remains challenged by weak mobile and pc sales smartphone unit volumes in 2024 are expected to grow in the mid single digit percentage range, and in 2025, the ceo is expected low single digit percentage growth as consumers pull back. executives also add that autos remain soft, as they shift towards value vehicles, which has slowed memory and storage grab onto the bright spots, because data center sales rose 400% from a year ago micron more than doubled its high band width memory during the quarter. demand is so strong that hbms are sold out for 2025, which is part of the issues how can it increase supply at a faster rate?

micron revealing that its latest hbm will be designed into nvidia's blackwell gpus. chips not perform, well today, melissa. >> seema, thank you. seema mody it sounds like it's the old lines of business, dan, it's not a statement on a.i >> pcs, you know, and smartphones and -- the one takeaway, i would say -- and auto and industrial, okay, and they're also telling you okay, about capacity constraints for memory that goes into servers, well, let's see. let's see if jensen huang says if the blackwell demand is insane if it's not, micron is going to have problems. and again, apple is one of their largest customers. apple iphones did not grow this year there's an expectation they're going to grow mid to high single digits next year i don't think, with some of the news we heard, that they're working on a foldable iphone, a thin iphone, apple intelligence is a joke. i don't think it's going to be a big upgrade cycle until the

fall, until they have the new phones and then it goes back to the question, with apple's multiple that's expanded five points, well, why is that happening? so, at some point, there will be a reset if you don't get some indication bay some of their suppliers that things are going to be better than expected micron is not telling you that >> apple intelligence isn't drawing people and that the 16 is actually tracking worse than the 15, so, there's not traction gained off of this for an upgrade cycle. >> yeah, and i remember us talking about this back in the fall when the phone came out, it's this carrot they're dangling we're going to have a.i., and they came out with the phone, it's a.i. enabled, the a.i. is not only it until spring so, i think -- i agree with you. think is going to happen a lot later than we expected i don't know if it's this super cycle upgrade that people hoped for. we're not there yet. >> i agree with everything you've both side i won'ter what you think, dan, what is baked in i think when it was first released, i think the -- i think there was not a lot of optimism

that there would be a, you know, this wouldn't be huge. certainly until at least they enabled some of the a.i., siri is still the worst product manageable i think the expectations are kind of muted for the 16 still even, valuation is still rich, but i don't know, do you think there's very bullish expectations i think expectations got really high almost immediately. the stock rallied right after wwdc on june 10th. for the next two days, up 10%. it's a $3 trillion market cap company and it kept on going it sold off, it came back after that early august swoon. the thing that makes me nervous, over the last two weeks or so, look at the move that apple had. it went up 15% into today's all-time high, before it reversed it's just dangerous behavior when the fundamentals don't seem great, although it's a much-loved stock, and, you know, so, to me, i just think that, again, we're seeing pull forward, pull forward, pull forward.

>> this is why, you know, liquidity is so important. this has been a liquidity-driven market more than anything else, and that's why interest rates are really going to be a key driver next year. coming up, everything you need to know after today's massive selloff. the dow on its longest losing streak since gerald ford was in the white house. the impact on your money when "fast money" returns missed a moment of "fast?" catch us any time on the go. follow the "fast money" podcast. we're back right after this.

welcome back to "fast money. another check on today's market selloff, after the fed signaled fewer rate cuts next year. the dow plunging more than 1,100 points the s&p down 3%. the nasdaq falling more than 3.5% financials getting hit hard. the xlf down 3% with big banks all in the red charles schwab continuing its decline, down more than 10% since hitting a new 52-week high on thursday. and lennox international will join the index before start of trading monday, replacing bio

tech catalent. dan, you flagged schwab. >> oh, yeah. >> you remember that on the call today? >> oh, yeah, i'm just surprised, when you think about the retail interest in so many of these different names and the volume that we've seen and not just in equities, but in etfs and options. so, to me -- futures i wouldn't expect this thing to slow down, as far as volumes, just because the stork market is down, but again, i just think the price action of schwab was kind of curious. it had a massive run into this >> to karen's point, not much has changed because of this fed meeting. the fed underscored the point that the economy is very, very strong two veries in the description of the economy. and he said the unemployment rate is the same level as july things are steady as she goes here and we have deregulation coming so, that thesis, if you believe in it, still exists. >> and i think you hit the nail on the head when it comes to the deregulation that was the bump we got on

financials, was due to the fact they are the big ies of a deregulatory excite today, they are getting hit on higher rates, theoretically. they are back to the pre-election values at this point in time. that deregulation bump has been taken away, but that opportunity hasn't so, if anything, it's a buying opportunity. >> all right, let's get more on today's post-fed selloff with ben emons of fed watch advisers. great to have you with us. i quickly read through your note, you are quick on the draw in terms of getting the note out, but you think yields are headed higher. how high do you see it going in this environment, this new environment now? >> yeah, mel, as powell said, we've kind of shifted environments, he admitted that himself. and it's interesting to see the forecast come out, because by showing a high inflation forecast, it's showing, particularly in the back end, the members of the fmc see the inflation outlook. i think that's what triggered

the selloff today, it spilled over into the broader market, and, yes, you are breaking 4.5, so, 4.75 is the high of this year, so, that's an easy retracement, but it's 5.3 in april. that's upside there, and if i calculated that, that data really quickly on the forecast from the fed today, it's actually what the fed funds rate should be today, 5.3 we're about 80 base points easier so, there's a lot of opportunities for yields to go higher, given the fed's change in tone and change in reaction >> so, how do you piece that environment for equities together for next year, if we are to say that rates could glide higher to above, you know, just above 5% or so, what we're also looking for, you know, the conditions for stronger dollar, maybe slower earnings. how do you sort of put it together in terms of what the environment is for equities? >> i don't think it will necessarily be, because strong

dollar, better growth, higher yields, that still talks about a very, very good economy, as powell said. and i don't think under that condition, equities will actually sell off majorly. i think we have to just sort of digest ourselves to an environment where the fed may not just simply be easing any longer so, that's, i think, today's digestion, avoid an outlook that changes anything, other than you're getting inflation really coming back meaningfully so, the fed wants to get ahead of that inflation, by being more focused on inflation and forecast so, i think it's a good backdrop i think the point of deregulation is a key element next year, including to the tax cuts, that will continue to drive the sentiment. you just have to get used to it's going to be on hold and show a little bit more like inflation. that's the only thing that's going to hold equities back. >> it's karen, thanks for being on yesterday, there was that big piece, t. rowe price, 5%, 6%, even, ten-year, and one of the things they cited foreign governments not participating as

much do you see that happening and adding further pressure to the ten-year >> it's possible, karen, because, you know, and that's a good point by t. rowe. we talk oftentimes, like, the fed -- the u.s. doesn't have a deficit problem, it has actually a debt maturity problem. in other words, we're just financing too much with t-bills. that's still not really priced in i think that's what keeps these foreigners away from the auctions auction s. we have to see the high yields first before the foreigners come back so, i would agree with them. not sure if 6% would be the end destination. it's more like about 4%, 5%, but reflective of an economy that emerges next year stronger towards more 5% growth but yeah, bond yields will be higher >> ben, thank you for joining us appreciate it. >> thank you, mel. >> ben emons of fed watch. michael, you said you see 5%

did that number rachet higher based on today or no >> no, not really. this was pretty much our base case we didn't think the fed should have been cutting, really, at all, so far this fall, so -- we sort of anticipated that they're probably going to have to slow down the pace of cuts. and therefore hasn't really affected our outlook too much, but yeah, so, i think nothing's really changed today >> michael, can fed funds, like, can the yield on the ten-year go to 6% and fed funds not go higher can that happen in your mind because, again, you made the point, you know, there was, i don't know, t. rowe, somebody said they're going to 6% rick santelli was on our desk, he was talking about -- >> 7%. >> 7%, 10%, we were hearing that jamie dimon said prepare for six, seven so, that's one of the biggest shifts we've seen year over year but can we see yields on the ten-year go much higher without the fed starting to raise rates? >> um -- you know, when you

think about what the backdrop would be to get to a 6% ten-year, it's probably one of pretty aggressive growth and inflation m and in that world, the fed would try to slow it they would probably get behind the your can curve it would start slow, they wouldn't believe it, like 2021 >> but the stock market would hate that. >> well, it depends on -- i think it depends on how quickly you get there. if you got to 6% and it happened very fast, the stock market would hate it, because the volatility component if you did it over the course of two, three years, and it was gradual growth, then i think it's a very different answer for the stock market, and so, i think how you get to that 6% level would really matter. i do think we will see a 6% handle, i just don't think it's going to be likely this cycle. >> 2025. >> right. coming up, merck's obesity bet. why they're going all-in on a pill out of china, and if the move could help shares stage a turnaround that's next.

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from china importantly, the oral drug hasn't been put to the test in human trials yet smaller bio techs developing their own pills dropping sharply today. we talked to all of them during our obesity week, they are all down double digits in terms of losses today and, you know, the thinking is that merck was probably one of the most likely big pharmas to acquire one of them. merck licensed this deal with the chinese pharma company, so, maybe it is out of the running of doing an acquisition of these smaller plays. how do we feel about pharma in this environment with health care sentiment so bad in general? >> i feel like we've seen health care sentiment be so bad over -- >> it's good >> yes over election cycles, where all the rhetoric and, you know, bipartisan and everybody hates it and all of that, and yet, they still seem to rise. i mean, that's interesting about merck, they can afford to sort of make some bets out there. >> yeah.

>> i'd like to see the gardasil situation improve -- that weighs on the stock heavily >> yeah. this really does show you, merck is down 1.7%, which is, you know -- >> better than overall markets in today's session >> this is really the holy grail, for those with pipeline challenges, this would be a tremendous opportunity >> absolutely. yeah, and i think this is a much bigger deal for the smaller firms, like for example, like viking, down 18% today, versus almost 2% that merck was down, so, it's a bigger deal for some of these companies where this is something post-election, people said, we're going to see m&a, now maybe that's not going to happen in the obesity space. i don't know if that is the end of this, or if, you know, they could do both. and i think that's a question. you're seeing a little bit of a knee-jerk reaction here. i agree with karen, i think it's so -- people are so negative on it, and, you know, kind of -- for reasons we don't have any

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find all the senior care you need at care.com do not miss the reveal of cnbc sport 75 most valuable college athletic programs. that's tomorrow on cnbc.com, starting at 6:00 a.m. eastern time time for the final trade michael? >> given the big selloff today, great relative earnings growth, i'm going with small and mid caps over the next quarter or so >> great to have you on the desk today. karen? >> feel like we went over this a couple of times on the show. i do like banks still, financials i like wells fargo >> only been about ten minutes since you liked them before.

>> utilities, xlu, i would not be buying this here. a couple of things that are wrapped up, higher for longer and this kind of generative a.i. trade. i would avoid. >> courtney? >> yeah, i agree with karen here, i would look at the banks. they were really hit on the fed, like a hawkish cut we saw today. i think my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market summer and i promise to help you find it. mad money starts, now. hey i'm jim cramer. i'm trying to save you money. my job is not only to entertain but this is a contest because they're hard to understand. so call me, tweet me @ jimcramer.