US stocks fall, plus why cannabis regulation is a big deal for investors

Hello and welcome to Asking for a Trend. I'm Josh Lipton and in the next half hour we are breaking down the trends of today that will move stocks tomorrow. There's a lot to keep track of so we're focusing on what you need to know to get ahead of the curve here. Some of the trends we're going to be diving into. It was a slow start to earnings season. Investors unimpressed with results from J.P. Morgan and Delta pushing the S&P 500 and the Dow to close at session lows. We've got the top takeaways from the trading day. Plus Eli Lilly betting big on A.I. with a new partnership with NVIDIA. Hear what the drug maker has to say about that deal ahead. Pot stocks flew higher in 2025 but is there still room to run? The key question for many investors is whether there is a path toward decriminalization. Well cannabis stocks ended 2025 on a high note with the advisor shares pure U.S. cannabis ETF outpacing the S&P 500 last year. Things really picked up in December when President Trump signed an executive order urging the DOJ to speed up the process of rescheduling cannabis to schedule three. A category that includes substances eligible for FDA approval as medications. So what is next for this industry in 2026? Joining me now on this we've got Dan Ahrens advisor shares pure U.S. cannabis ETF portfolio manager. Dan it is good to see you. So big picture you call this Dan here. You say the most consequential federal cannabis policy shift in more than 50 years. Maybe start there Dan. Explain that for us. Why is this cannabis rescheduling Dan such a big deal for investors? Well we've been waiting on regulation for cannabis in the United States for some time now. And after it is a Schedule 1 drug on the DEA list listed along with drugs that have no medical use whatsoever and very dangerous narcotics. Cannabis shouldn't be a Schedule 1 drug. It never should have been there. And we already have a multi billion dollar industry in the United States. It's been allowed to grow on a state by state basis with the feds basically having a look the other way approach. But these U.S. cannabis stocks can't list on the exchanges. They can't bank. They pay very punitive taxes. And we're badly in need of the regulation after it was promised back when Biden was first running for president. And we've been in this quagmire for four or five years now. And now it seems with the executive order that President Trump is definitely asking for the process to be complete. To make it Schedule 3. Open up business and open up a great deal of medical research as well. Dan you talk about how rescheduling cannabis here you say enables 280e tax relief. Can you walk us through that in plain English? What does that mean? What would it potentially mean for a cannabis company's financials? Yeah many people don't understand this. And again we have Canadian cannabis companies that don't face taxes like this and can actually list on the NASDAQ and the New York Stock Exchange. But here we're talking about U.S. cannabis companies mostly traded OTC in the United States. They are saddled with this 280e tax which taxes them as narcotics traffickers. They cannot deduct any business expenses. Not a single business expense. Not even payroll. Certainly not rents and mortgages anything like that. It's a huge huge tax. So this rescheduling should pretty much automatically remove the 280e. If they're no longer a Schedule 1 narcotics trafficker they're not going to face 280e taxes. We don't know yet what it's going to look and smell like. If it's going to automatically remove past years of taxes that many of these companies haven't actually paid. They've been letting some bills build up. There's a lot of things to unpack. And some people worry that well Trump asked for it but it's not actually signed yet. Once it gets signed which we think is definitely coming. We don't know yet what kind of safe harbors there might be. Because removing the 280e tax is one thing. But people in our industry also want banking. We want listing on major exchanges. We want a lot of guidance from the DOJ for what adult use programs are going to look like around the country. So there's a lot to be learned still while we're waiting for this rescheduling to actually actually be enacted. What would you say Dan that the big regulatory risks still are though that we should be aware of. That we should have on our radar as investors. That could derail all the potential upside we're talking about here. Well mostly we have a lot of fear right now. Because cannabis investors have been burned so many times over and over again over the last four or five years. When we almost got to the finish line with safe banking. We almost got to the finish line with the Moore Act. A number of different proposals that have been written in Congress and failed. And again a lot of politicians very empty promises. Again starting back when Trump versus Biden was on the ballot five years ago. It's ridiculous. So what we have right now is a lot of investors on the sidelines waiting until it's real. Waiting until it's signed. And the risks as you ask for are that we don't know if it's going to have safe harbor for banking. And I think I'm of the opinion that this rescheduling makes safe banking a much easier much less controversial issue for Congress to pass. But hey we're dealing with politicians here. How fast are they going to move on that. Are they going to negotiate a lot. So the risks are we don't know the timing. We don't know how quickly these U.S. operating companies can get the ability to list on NASDAQ or the New York Stock Exchange. We don't know if it's going to include banking. I'm viewing a multi leg process. A big pop probably when we get the rescheduling. Then maybe some volatility maybe some pullback. And then multiple steps of figuring out banking up listing medical programs versus adult use recreational programs. So a lot of volatility ahead. And you know investors shouldn't invest in something they don't understand. And something that they can't handle the risks and volatility of. And cannabis has been the most volatile place to invest in the past year. Even as you showed when you're introducing me that our fund outperformed the S&P 500 in the last calendar year. It did so with a great deal more much more volatility. And just in there on your on your ETF there ticker MSOS. It is up about 40 percent here over the past year. I'm just curious what makes your ETF sort of distinct and different than other vehicles track in the space. No thanks for asking that. Our fund MSOS is by far by far the largest cannabis fund in existence. And investors like the liquidity that it offers. Therefore the options that are listed on it. It's an actively managed fund. And some people question what is actively managed mean. We're not tactical. We're not trading it every day or every week. Actively managed simply means it's not an index. And when you have a unique industry unique sector like cannabis. I will very readily say you don't want to be in a market cap weighted index. The largest isn't always the best. Our fund is very top heavy. Very heavily weighted in the largest most liquid most successful cannabis companies the United States. And then has some much more immaterial exposure to some of the smaller companies. That frankly might have more upside in in this federal reform marketplace that we're looking at. So it's a it's a spread out fund. And we're very low turnover but actively managed in the fact that we're not following an index. Dan great to have you on the show as always. Thank you. Well it was a tough day on Wall Street. A closer look at the day's action. That's coming up next. The S&P 500 retreating from record highs as investors digest earnings and new inflation data. Yahoo Finance's Jared Blickery joins me here with the training takeaways. Jared. That's right Josh. The CPI could not do it for stocks. Banks kind of wait on the entire market just a little bit. JP Morgan starting off earnings season this brand new 2026. And it was a little bit of a disappointment. So JP Morgan down about four tenths of one percent. Just going to pull up a quick one year chart. This is a stock that is coming off of pretty recent recent highs here. So you can see up about 27 percent over the preceding 12 months. Tomorrow morning we got Wells Fargo. We got Citi. We got back. And I'm going to be talking with Julie about those at 9 a.m. So stay tuned for that. But in the meantime that was a day in banking. That was banks. What was working. What was looking bullish. We got to talk about Intel. And I remember those old commercials Intel inside. Well Intel has broken outside of its trading range. Hence the outside there. And I'm going to pull up a chart here. I'm going to do a 10 year on the stock because it is broken out of an important trading range. That's 10 years. Everything looking good. I'm going to draw you the 45 dollar line in the sand. Now this was prior support going back to the first half of this decade period. And you're going to see we broke above to 50 dollars in late 2023. Could not hold. So we broke into this range again above 45 dollars. We're going to have to see if we can hold this time. And the real test is when we get to about 65 70 dollars for 65 70 dollars. And I was talking to Dan Newman. He is the CEO of Futurum Group on stocks and translation. Episode was just dropped today. So look for it. I asked him the catalyst that it's going to take for Intel to get to this level. And here's what he said. The catalyst is actually already happened. It was the backing by the United States government and the backing that came from NVIDIA because Intel needs to be the U.S. chip champion and foundry. I am a massive bull for TSMC. Best best at what the company does. But the U.S. needs to have a least some level of independence from Taiwan to be able to manufacture leading edge chips. And it needs to be done here in the United States. The fact that the government backed it was basically what I would call in the mafia would call being made. All right. Intel has been made. I like that. But the runway could be long and not saying that it's imminent that it's going to get to record highs. But we'll see how this plays out this year. Quick check on Bitcoin. Yeah, let's do that. Because Bitcoin has been bouncing. In fact, best day for Bitcoin in several weeks. And you're going to take a look at this heat map we have for crypto. And there's a lot of dark green on here. That's good. Number one, that means breadth. But let's take a look at what Bitcoin is doing in particular. That's what happened today. I want to go to a two year chart because this isn't that dissimilar from Intel because we're talking about support and resistance. We got prior highs here that became. So this was a ceiling. This became a floor. And my thesis has been, and by the way, that's a seventy five thousand dollar price level, is that we need to tag that or maybe even break it slightly before the bulls, the weak logs can get flushed there. So you got to flush out the weak players sometime before it can take off. Now, it could just take off from here. And that has happened in the past. But Bitcoin famous for its breakdown, false breakdowns and false breakouts. I think it needs to punch through seventy five first. We'll see. Nevertheless, like I said, I like the breadth in this heat map. How about the greenback? Let's do a little Dixie here because the Dixie, the U.S. dollar index, has just punched above its 200 day moving average. And it has done this before. So I wanted to show you a couple of different possibilities of what's happening here, because let me see. This is I need to dial this down to a two year and I'm going to put on the 200 day moving average. So you can see we are just climbing above the 200 day moving average. That could be bullish. But let me show you the three year, because sometimes when a stock or an instrument that's trading goes sideways, it just bounces above and below and you don't see much there. So could be a repeat of that. But this could be the beginning of a rise for the U.S. dollar index. That would not be necessarily good for stocks and that would catch Wall Street off guard. So that's a yellow warning flag right there. All right. Thank you. Thank you. Appreciate it. Coming up, much more as for a trend still to come. Eli Lilly teaming up with Nvidia to launch a one billion dollar A.I. drug discovery lab. Eli Lilly's CFO joined Market Catalyst this morning to discuss the partnership, the company's weight loss pill and more. First of all, this is a real investment that we are doing here in San Francisco. We are going to bring both scientists from the company and also researchers and engineers from Nvidia. The best talents that we have on both companies together here in San Francisco. You mentioned the total investment up to one billion dollars. And we are going to put that not only the investment is on the people's side is infrastructure, but also computing to basically work on the hardest problems that we have in drug discovery to start with. And that's across the entire core therapeutic areas and portfolio that we have. So very exciting. This is building upon the additional investment that we are doing as well. We are building a supercomputer back. This is in Indianapolis. We are building that supercomputer at corporate center. That computer will be up and running as early as next month. So exciting time to continue to build upon our journey in AI. And so, Lucas, so when you say it's you're trying to solve some of the toughest problems in medicine, what are the toughest problems? What are you guys going to be focusing your energies on? Yeah, the energy will be focusing, as I said, across all the therapeutic areas there. Again, challenges on a small molecule, gene therapies. And it's all driven by how fast, how much you can basically put in a scope to test, discover in different targets. So this will help us. AI will help us to augment that significantly and go faster, but also look at different combinations in a way much faster way than what it used to be in the past. It's still scientists and our brilliant minds will be very much needed. But again, this will help us to augment that over time. Lucas, I'm also curious about how it affects the sort of cost equation over time. Right. You guys are making this investment in it now on the technology. But if it's going to be faster or if you're going to have potentially more drugs out there to treat more different things, eventually, are you going to see costs overall come down as a result of AI and this method of drug discovery? I think over time what you will see, Julie, on this is two fronts. The first one is the one that you alluded, which is basically that we are going to go faster to bring molecules to the market. That's very important when you think about bringing, again, those solutions to the patients globally. That's the main focus of our attention, how we bring more innovation. But also at the same time, you mentioned the cost component. Of course, over time, you may think that, again, these will drive efficiencies as well and how we drive, again, our development focus as well. But the main focus is how we do this faster and bring more molecules to the market. I want to ask about what's coming down the pike in terms of your weight loss pill, because I know this is a big focus for you guys. It's a big focus for the market. And you have said you expect potentially second quarter approval. Now, this is after your competitor, Nordisk, got approval for its pill form of its weight loss medication. How do you sort of catch up? When do you expect it to come to market? And how do you bring it to market in a way that's going to compete with the entrant that's already out there? Yeah, very exciting time. As you know, again, when you think about the obesity space, you're talking about one billion patients. And we are just scratching the surface nowadays with injectables. So bringing the odors will give us the scale in my eyes and also convenience of use as well for millions of patients actually to get treatment as well. You mentioned, again, the competition. I think when you talk about a couple of months, there is not a big difference. In fact, as you know, we are the market leader, both in type two diabetes and obesity. And we came after the competitor as well. So I don't think that is the one that is going to be driving this. But it's more about how we can address more patients globally and have more options between the injectables and the odors. So how many patients are on the existing drugs, the injectables that you all have on the market, Menjaro and ZepBound? And then with an introduction of a pill, how much more market penetration do you expect to get as a result of that? Yeah. Thinking about the U.S. market, you are talking about basically 120, 130 million patients that you can treat. We are actually penetrating the market in the high single digit here in the U.S. But all U.S., you're talking about more than 900 million patients that we can serve. And the level of penetration that we have nowadays, remember early days, is low single digit. So when you think about scaling in particular in a small molecule, this will bring a solution for patients, for example, in China, India, Brazil, large patient populations that could be served by this oral pill as well. Yeah, there are many actually benchmarks that you can use in different fronts. I think when you think about this space, you are thinking about potentially reaching in the 20% or so penetration globally. But it will all depend on how much you can continue to drive this growth over time. You're thinking about the small molecules, but we have a pipeline as well. This is the time for the oral pills or foliopron. But we have a pipeline and a breadth of portfolio that will bring also different options. We are actually starting to read out our triple actin, retratutide, that will actually the first study read out back in December. And the weight loss that achieved was 29% and also a big reduction in basically ulcerative colitis pain as well. So there is again a big combination in my eyes of bringing more solutions, bringing more options to the patients to go back to your question about treating more patients globally. That's a wrap on today's Ask for a Trend. Be sure to come back tomorrow at 4.30 p.m. Eastern for all of the latest market-moving stories affecting your well.