← CNBC's "Fast Money"
CNBC's "Fast Money"
A Decline in Chip Stocks Becomes Market Sell-off… Where Tech Sector is Heading 6/9/26
00:44:09
A strong start for chip companies suddenly took a turn for the worse in a market sell-off. The traders break down what the reversal means for chip price levels and the broader tech market going forward. Then, Kalshi Co-founder and CEO Tarek Mansour talks perpetual futures and the prediction market surge. Plus, why Apple’s price is tumbling after its disappointing Worldwide Developers Conference, why investors are piling into defensives, and earnings to look out for tomorrow. Fast Money Disclaimer
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- [00:00]
Dan Nathan
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- [00:31]
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- [00:58]
Melissa Lee
live from the NASDAQ marketsite in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight. Night, the reversal to the reversal. Stocks starting the day in the green before tumbling midday but closing well off session lows as investors seemingly bought the dip. What's behind today's wild gyrations? Where we headed next? We'll debate that. Plus, while volatility spikes, so does interest in perpetual futures. The CEO and co founder of Cal Sheep will be here. Predictions Markets are surging, but so is criticism of this investment vehicle many are calling straight up gambling. And later, apple sour streak, where the Chartmaster sees chips heading after the semi swing. And now options traders are prepping for tomorrow's big earnings report from Oracle. I'm Melissa Lee, coming to you live from Studio B at the nasdaq. On the desk tonight, Karen Feiderman, Dan Nathan, Guy Dami and Julie Beal. We start off with the day full of major reversals. The tech stocks surging at the open. But the comeback had a really brief shelf life. Both the NASDAQ and the SMH turning sharply lower by midday. But buyers came back late in the day, helping tech close well off session lows. Also a wild day for the other major averages. The Dow and S and P also failing to hold on to early gains. Dow actually closing in the green. The tumult today extending beyond stocks gold and silver with their lowest closes of the year. Gold now actually down for 2026. So what does this volatility tell us about where we go from here, Guy,
- [02:17]
Guy Adami
70200 was the level we mentioned last week. We set a close below 7,200 in the month of June. We have an outside reversal month for the first time. We've seen that in quite some time. It was protected today. It makes sense. We're still early in the month. We had a 400 point range in the S and P today, which if you just came in and said, oh, the S and p is down 19 handles, doesn't seem like a big deal. It's a big deal. What I think it portends to is increased volatility for the month of June. I'm surprised at the muted response to the vix. I do think it's going to get on its horse and I think we're going to challenge that 70200 level again.
- [02:51]
Dan Nathan
Guy, you deserve props. You're one of those. No, no, you're one of those selling. Go.
- [02:56]
Guy Adami
Never use that term.
- [02:57]
Stephen Whiting
Sure.
- [02:58]
Dan Nathan
I mean, I feel like it's something that you kind of subscribe to, you know, about the volatility, you know, on a day like when you see things just kind of fall out of bed and the things that have been the leadership, right. Is it, you know, semis and memory and storage and the like and you know, software, which has not been the leadership, but it's had a massive rally. I mean the two of them, the sectors were just getting destroyed. And it's one of those things where I think it wasn't particularly fundamental. We've had some reasons over the last week or so going back to, I guess Wednesday night with Broadcom's guidance. But I look around and I say myself, all right, I saw banks up, I saw, I saw, you know, homebuilders and there was staples were up when you might have expected staples as defensive. But there was a whole host of groups that were acting pretty well. And you know, we think about the ability for the largest mega cap tech stocks, you know, to really drive the train. That's what they've been doing to the upside. It is interesting to see that there is plenty of sectors that weren't driven down by that. And so, you know, at the end of the day, oil was down. And I think that's something that if you're consumer related, retailers were trading pretty well. They like that. But when that headline came out around 12:30 or so about, you know, geopolitics being infused back into the picture, oil didn't rally much. Right. And I thought that was kind of interesting. At the end of the day it seems like investors want to Continue to buy every dip that they can in the semis.
- [04:15]
Melissa Lee
Yeah, this is a clear rotation day, Karen, broadening out that we saw.
- [04:19]
Karen Feiderman
Yes. You know, so they've talked to it already. The volatility, I thought was the spread of the volatility. 17 and a half on the low side, 23 and a half on the high side, closing somewhere near ish the middle. That is way worse of a day than if nothing happened.
- [04:34]
Tarek Mansour
Right.
- [04:34]
Karen Feiderman
A lot of things went back and were kind of unchanged. And this is way worse than that because it just, you know, one should be nervous, right, Having, having just a peek at what a real, real sell off could be. And then we have, you know, this very big event on Thursday combined with the anthropic filing and the open air filing and that is a lot of money. Aside from, you know, we had Google before and maybe better, maybe not, who knows, but that's a lot of money. I feel like this is really setting up for Space X to be a very, very important event. Well beyond Space X. Just as market sentiment. Where are we in the evolution of this story? I feel like the underlying evolution of the story is still very much on tack. Insatiable demand for compute, but valuations don't, don't need to track that. Exactly. So I don't know. I think we're in for a good bit of volatility coming up. I don't think that the Vix does not live here at 1987 move somewhere.
- [05:35]
Melissa Lee
Yeah, I mean it certainly felt like momentum has broken even if for now. Julie Beal I mean we did see, for instance, small cap 600 up a percent along with some of the other sectors that we had mentioned that had been out of favor and now gained a percent on the day. Materials, staples, discretionary. Well, discretionary was up a fraction of percent. Utilities, industrials.
- [05:57]
Julie Beal
Yeah, and health care. So I think you definitely saw this rotation that continued what we saw in Friday where quality suddenly was catching a bit. Names that have been pretty much left for dead. And I think part of it is this reflection that a lot of momentum is resting on just a few shoulders and that creates some concern. I think you're right though, Karen, that like the Space X IPO is really important because it tells us what is investor appetite for companies that don't have earnings. So much of the strength in this narrative is that the financing hasn't been that fragile. It's really been centered on free cash flow. And if we're suddenly turning our attention towards businesses that don't even have earnings, I think that it really remains to be seen if investor appetite for that is strong. I know that retail investor appetite is strong, but I think I'm hearing a lot from my peers that, you know, anyone who's getting allocations, plans to flip and I think that's a real concern for, you know, any IPOs that follow on.
- [06:56]
Melissa Lee
So how does this fit into what we've seen over the past few days in terms of the sell off, particularly in the high momentum areas, were they the ATMs with which will, you know, a Space X trade will be funded and once SpaceX goes public, how does that sort of then, you know, resume in the market?
- [07:15]
Guy Adami
That's an explanation. I don't know if it is the explanation, but clearly you can draw that or that you can draw that straight line, right? I don't know the answer, but there are only so many investment dollars to go around. But I do think, to Karen's point, I think it's an important one. I think a lot forget about just the, the, the, the duration of Space X as a publicly traded company. What it says about the broad market in this vacuum that we find ourselves in, I think it's going to be really important. And I said this on the call today and I'll share it now and I'm not suggesting I'm right, but at a certain point today, and I still think this is a potential, you know, if the market behaves like this, There's a probably 1 in 5 chance that for whatever reason, due to market conditions, this doesn't happen on Thursday and a Friday, which I think would be catastrophic for the market. So I think there's a lot riding on not the success of it happening, but how it trades in the aftermath.
- [08:05]
Dan Nathan
Yeah. You know, Karen, you just mentioned the insatiable demand for compute. You know, I think this is where at this stage of the game, this cold circular financing thing comes into play a little bit. And you know, if you think back to when Elon set out to build this colossus in Memphis, right, And the speed in which they were doing it and they bought a couple hundred thousand, you know, Nvidia GPUs, well, it ends up about a year and a half later they're not using it. Right. And so when you think about that, if the allocations were so tight for Nvidia GPUs a year and a half ago, we've heard this again and again. Well, if they're not using them and now they're ren them out to Google and Anthropic, you know, you start to wonder what the demand really looked like. You start to wonder who else is sitting on a bunch of these things and they're not renting them out or they're selling them out because they might need it in the future. And that setup is something that I don't think people are appreciating at this point. Especially when you think about what Broadcom said. I mean, they missed their numbers. Now you might say, well, they make TPU's for Google, and maybe TPU's don't do the thing to train the models, you know, that sort of thing. And maybe GPUs are better, and that's why Google remains a customer of Nvidia. But you see it all coming around a little bit, right? And I think there's a point in which you just had the CEO Crusoe on the last show. You know, they delayed a data center that's meant to go into Wyoming, Right. And it was like 1 GW or something like that. But right now, if you look out, you look at 27, you look at 28, what the expectations are for build out in gigawatt terms. Most of that has not been started yet. Most of the ground has not been dug yet. Right. And you start to think yourself, okay, well, maybe if the demand doesn't materialize in the near term and we'll have a slowdown, a delay in the construction of those things, and then you start to wonder, all of those companies that were securing GPUs to go into those data centers, well, we might end up in the not so distant future with like, excess capacity. Right. And so I'm just saying, like, that is a potential. Whether it happens in six months, a year, 18 months, who knows? But there are little crumbs, breadcrumbs that are being dropped right now about how that could end up. And when you look at a stock market, like in video sell off the way it did on a day like today. Yeah, they come back for it or whatever. You know, sooner or later there's going to be a scenario where there's going to be a couple pieces of news that really cause this thing to slow down in general. And then when you look at some of these other stocks that have been affected, you know, Palantir keeps coming up to this was the poster child how software was using this sort of technology to basically disintermediate a whole host of others. And that stock hasn't gone anywhere in a year. So I think when the fever breaks in some of these things, it breaks and it kind of stays broken for a while.
- [10:34]
Karen Feiderman
So just to what you're saying about SpaceX and Xi Grok, let's say that's probably losing the calculus of. Do I take these huge monthly payments, right, from Anthropic and from Google, right? Huge 1.25, 2.2 together, 2.2 together monthly. Do we take that? Is that a better return on capital for our GPUs than using it for Grok? I would suggest yes, it is. So to me that doesn't seems like
- [11:06]
Melissa Lee
a smart thing to.
- [11:07]
Dan Nathan
We can all agree on that. But my point is they bought them a year ago, right? And they took them from somebody else who want them, right? And now they're sitting on Iraq and now they're being used. And I'm just saying, like at some point there is a pocket, an air pocket of this stuff that, you know, if you don't need it the way XI didn't need it, like the fact that GROK didn't work, that should be a huge surprise. I mean, like Elon, this is something that was so important to him, you know what I mean? So I don't know. I mean, if it's, if Elon is failing at it, you have to assume some others are failing at it.
- [11:37]
Melissa Lee
So you're saying basically the tech sell off that we have seen over the past few days is fundamental, driven. It's not just a break of momentum, it's not a correction, a reversion to the meat. It is fundamentally driven because of slowing
- [11:48]
Dan Nathan
demand for computer is supposed to have 90% earnings growth like this year. That's astounding, right? Look at the, look at what palantir put up.75% earnings growth, you know what I mean? And they're still out there, that's the consensus. And some of these stocks are kind of stuck in the mud, Palantir in particular. But you know, listen, this is how it comes unwound, you know, at some point. I'm not saying it's happening right now, but like, pay attention here, people like some of the headlines. They're out there.
- [12:15]
Guy Adami
I like the Progresso Italian seasoned breadcrumbs number. Dan just mentioned breadcrumbs. My grandmother, panko plain panko. My grandmother used to make her own breadcrumbs. She's not alive anymore.
- [12:29]
Melissa Lee
I make my own sometimes too. Anyway, new developments out of the Middle East. As President Trump says the US must respond after Iran shoots down a helicopter over the Strait of Hormuz. Megan Casella has the details. Megan?
- [12:42]
Megan Casella
Melissa. President Trump vowing retaliation against Iran for that incident, which he described as an Apache helicopter being shot down by the Iranians. Now, Iran has not directly claimed responsibility for that attack. And Iranian state media, citing a military source, reported just in the last half hour or so that no offensive air military operations have been conducted in the Strait of Hormuz in the past 24 hours. Now, that same military source says that in the event of renewed hostility by the enemy, under the pretext, they say, of the crash of the US Apache helicopter, then they say there will be a decisive response. All of this now threatening escalation in the U.S. s war with Iran coming, of course, after days of tit for tat strikes in the region. And it raises the question of what this means for ongoing peace talks. But one potentially critical point here is that it remains unclear as of now whether the helicopter was shot down on purpose or whether, as some reports this afternoon have suggested, it may have been an inadvertent collision with an Iranian drone. Now, I've asked CENTCOM for comment on those reports. They referred me to the White House. The White House has not responded. Melissa?
- [13:46]
Melissa Lee
All right, Megan, thank you. Megan Casella, Even with the recent volatility in stocks, our next guest says market fundamentals are intact. Stephen Whiting is the CIO and chief investment strategist at the CIO Group. Stephen, great to have you with you. This is just a break in momentum. Should that make us feel better about the damage that we've seen?
- [14:04]
Stephen Whiting
Well, we can debate fundamentals. There are things that will be uncovered, as you just said, that we will have to see. When you have some companies, you can pick the name like micron, up nearly 200% year to date, any kind of loss of momentum, a drop like 20% isn't really that material. We've had this incredible outperformance in everything AI we're going on our third year, compounding at a 65% growth rate of this piece of the economy. And so we all know that it's on an unsustainable path at some point. I don't think that it challenges the view that the spending numbers that we're seeing out of hyperscalers, that there's going to be a doubling in EPS for semiconductors this year. But about a week and a half ago, we were on and we said we had to take some profits. Some of these companies, especially outside of sort of the most advanced, the most those that are really providing the most to I have had all the returns of Nvidia, for example, just the last three years. They've had it in just one year. So this is time. If you have a break in momentum, you could see it in gold and silver. It wasn't that they did anything wrong, but you could see a significant retrenchment if you're on fast money, if that leaves.
- [15:13]
Guy Adami
I agree with you. Stephen and Melissa stand that question and I'm with you. It's more technically driven but technicals can be pretty powerful. Talked about some of these things that we're seeing. How powerful you just, you know, you just sort of alluded to a sell off. Like can you quantify it?
- [15:28]
Stephen Whiting
Well, I would feel much worse if earnings were actually under threat. And if you take a look at what happened the ISM report four year high. Every employment measure we've had has improved every one of them. If you take a look at pmi, ISE around the world, we've had a much larger disruption to energy supply, a smaller rise in price and they're all performing better than if you would have read the Economist or anything else would have said that we would be in this shape. So I think the potential for us to get through this with a correction then you can buy is most likely.
- [16:01]
Karen Feiderman
So thanks for being here, first of all.
- [16:02]
Julie Beal
Thank you.
- [16:03]
Karen Feiderman
What is enough of a correction where you'd say all right back in.
- [16:06]
Stephen Whiting
I think you have to let the market tell you that. But when you look at semiconductors, who just had the strongest performance relative to software since the year 2000, it could be fairly substantial. And we're long term bullish. You know, it's like I think you should expect dispersion but still outperformance over the longer term, but a pullback of some significant magnitude. So you've got to have something else in portfolios that we pointed out. If you take a look at everything from, you know, Con Ed, the Caterpillar, if you take a look at health care, they were up today because there is something besides tech. The tech concentration in the market has been now enormous. Multiple sectors, the tech components of it. It's 50% of the American equity market and a lot of other pieces are acting very much in line of high correlation attack. So that's why when there is a real drop, it's going to be big.
- [16:58]
Melissa Lee
You said you're still long term bullish technology. So the positions in other areas of the market, I mean what we saw today was a broadening. How lasting, how durable is that going to be? I mean should investors actually reposition accordingly or should you just stay long tech because the fundamentals are still There the fundamental story hasn't changed.
- [17:19]
Stephen Whiting
I think you have to build portfolios for taking advantage. Innovation drives profits. You are able to do something better than someone else and you outperform them. And that's what you see in technology. If I looked at the 1920s, auto companies were the tech companies, they had two and a half times the performance of the S&P 500 in that decade. The economy is becoming technology and health care. You should be willing to structurally have that in portfolios, but know that the drawdowns can be massive. Now, again, I'm not calling the top on air spending, but when we do have a top, when it goes from investment cycle to maintenance, it's going to matter a lot for semis and there's still going to be tremendous advances in AI over that period.
- [18:03]
Melissa Lee
Stephen, great to see you. Thank you. Stephen Whiting of the CIO Group, what do you think?
- [18:08]
Dan Nathan
I think it's underappreciated what the economic impact would be. If we do see a slowdown in AI data infrastructure spend and you know, think about the contribution we're getting to GDP right now from that. You know, we have a lower end of the K that's not been particularly great. Right. So if you see any weakness in a consumer on the higher end, and we've been talking about the trade down that's been going on, you know, you could find yourself in a situation where you have stagflation. I know we've used that expression a lot, but when you think about where inflation is obviously going to get a great reading on it tomorrow, I mean, that's something that will not be favorable for risk assets. It doesn't seem to be the thing that investors are particularly worried about right now. But I think all of that stuff can kind of steamroll a little bit. And then you got to extrapolate a little bit. Who is heavily exposed to this? Well, South Korea, you saw what happened to their market last week when you have a couple big names driving it. And then obviously Taiwan would be affected, Japan would be affected. And they're already feeling the effects of higher oil energy costs from the war. So again, it just feels like we could be on the precipice.
- [19:09]
Melissa Lee
Precipice. The edge could be on the edge
- [19:12]
Dan Nathan
of something that we haven't seen in a while where there's multiple concerns for the markets.
- [19:17]
Melissa Lee
Julie, your take.
- [19:19]
Julie Beal
Yeah, I think that what really is central is understanding what the returns are going to be. And the problem that we have for anthropic and OpenAI is that Their costs just continue to go up because everything. It's not just that the Nvidia chips are expensive, but the memory is expensive, the CPUs are more expensive because we're so supply constrained. And so that continues to erode the profitability that they can expect to earn. And if that doesn't look great, I don't think that the appetite is going to be as large as people are expecting. Part of it is just that it's really hard to do what these companies are trying to do economically. Right. I have a newfound appreciation for, you know, pretty mediocre intelligence because it's this expensive. It's trillions of dollars to try to replace us all. I have newfound respect for us.
- [20:06]
Melissa Lee
I've always had to group us all together.
- [20:11]
Guy Adami
You know, Karen typically says intelligent things.
- [20:13]
Melissa Lee
Yes. Most of the time.
- [20:15]
Guy Adami
Most of the time.
- [20:16]
Dan Nathan
You know, who can say precipice?
- [20:17]
Karen Feiderman
Nobody.
- [20:18]
Dan Nathan
Claude.
- [20:18]
Melissa Lee
You just didn't.
- [20:19]
Tarek Mansour
Claude.
- [20:19]
Dan Nathan
I mean he's really good at it.
- [20:21]
Guy Adami
Well, if you get too close, you know, to the precipice, you could fall precipitously. Do that.
- [20:26]
Melissa Lee
Then you'd be a lemming anyway.
- [20:27]
Guy Adami
No, you wouldn't necessarily be a lemming, but I was going to say was she says that VIX doesn't live here and she's right. You know, we asked the question how will you know? You will know. I think we're close to a bottom when the VIX gets to somewhere in the low 30s which over the last couple of years that's been sort of your signal.
- [20:43]
Melissa Lee
Coming up, Apple's sour streak. What is feeling the tech giants losses over the past week and why the developers conference and Siri revamp failed to deliver. Plus, co founder and CEO of Prediction market Kalsheet will join us next to detail the company's launch into perpetual futures, the surge in interest and his response to the pushback. Do not go anywhere fast when he's back into.
- [21:06]
Jim Cramer
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- [21:34]
Stephen Whiting
At Venture Global we think about what
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Tarek Mansour
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Stephen Whiting
That's venture global.
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- [22:30]
Melissa Lee
We've got breaking news out of the Middle East. Let's get back to Megan Casella with the details. Megan?
- [22:34]
Megan Casella
Melissa, the United States is now formally retaliating against Iran for that downing of the Apache helicopter. We just learned on social media, US Central Command saying that they began launching self defense strikes against Iran at 5pm Eastern today at the commander in chief's direction in response to yesterday's downing of the US Army Apache helicopter. The mission is a proportional response to unjustified Iranian aggression. Now, Melissa, as we were speaking about at the top of the hour, Iranian sort sources, according to Iranian state media, have already said that in the event of renewed hostility by the enemy, as they described it, that there would be a decisive response from Iran. So these self defense strikes, as the US Is describing them, have just begun. Earlier this hour, Iran already vowing that they will retaliate to that. So now the question, of course, being how far will this spiral, how many sort of tit for tat strikes will we see from this and what will that mean for sort of next steps in this war and what will it mean for the cease fire? Melissa Right.
- [23:29]
Melissa Lee
Although we've seen the cease fire really being tested on numerous occasions and it still was deemed intact, repeatedly tested.
- [23:38]
Megan Casella
That's absolutely right. And we we just don't know to what level of attacks might be described as breaking the cease fire. Ultimately, so far, nothing has been, including Iran firing missiles out of Israel over the weekend. We do know there's been some reporting President Trump telling aides privately, according to the Wall Street Journal, that the killing of US Troops is what would get him to break the cease fire and to end the cease fire and get back into renewed military attacks. That is not what we saw here. There was this downing of the helicopter. Two pilots were rescued though, and nobody was hurt or injured. That does raise the question of does that mean that that was not the president's red line and the cease fire remains intact yet again. Or could this go further, especially with the question out there of what Iran's retaliation now might look like?
- [24:23]
Melissa Lee
All right, Megan, keep us posted. Thank you. Megan Cassell in Washington. Meantime, shares of Apple down nearly 4% its third straight day of loss as investors leave WWDC 26 feeling unimpressed despite an extensive AI rollout reveal. Some analysts on Wall street excited about what came out of the conference, but some were not. UBS saying Siri AI is not a demand. Game changer TD Cowan saying the announcements were shy of expectations. Barclays on Apple intelligence as not necessarily transformative. Julie Beal, this was not enough for you either.
- [24:57]
Julie Beal
I mean I think no one really should have been expecting anything super revolutionary for this company. I think they're continuing to take their time and slow roll this because they really believe that disruption is not necessarily the road to profits. I think that giving them time to really evaluate these models and make sure they're safe and that they fit in with the ethos makes a lot of sense. But I do think they're leaving some money on the table because I think that the ability for developers to work within the iOS ecosystem would be a great way for them to continue to grow that services business line. But I think for now it just doesn't feel like it's a very comprehensive or impressive offering.
- [25:37]
Guy Adami
You know, it comes back to the fundamentals and technicals and we addressed it earlier in the show but two days whenever we talked about this, the reversal we saw an Apple all time high closed on the lows. This came out big volume day. We said on the desk to 85 was a logical place. That was a prior all time high ish back in December. I think it got there today. A breach of that probably gets you to 2 Dan probably has an abrupt 265 is a 200 day moving average which you probably haven't visited since early April or so. But those are your levels I think right now in Apple.
- [26:07]
Melissa Lee
All right, want to get back to Washington. Breaking news out of the House. Emily Wilkins got the details. Emily?
- [26:12]
Megan Casella
Hey, Melissa. Well, the House just passed along party lines that $70 billion package to fund ICE as well as customs and border Patrol. Obviously this is something Congress has been debating for months now, but the bill has passed. The House will be going to the president's desk. This of course happened along a party line vote after Republicans decided they were going to go their own way on it, leaving Democrats out. Still a lot of drama in getting this done, but at least these two agencies now do have their additional funding, a key priority for Trump. And this might be one of the last bills that we actually see Congress be able to move this year. Still a few more things on their agenda, but of course, with the midterms around the corner, it's going to be very difficult to start getting anything else done like this.
- [26:56]
Melissa Lee
Melissa, Emily, thank you. Emily Wilkins. Coming up, prediction markets platform Kalshi has surpassed $1 billion in perpetual futures trading less than a week after launching. CEO Tarek Mansour will join us next. You're watching Fast MONEY live from the NASDAQ markets at in Times Square. Back right after this.
- [27:18]
Jim Cramer
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- [27:46]
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Never bet against American grit or American Energy through innovation. Venture Global is not only building some
- [27:54]
Stephen Whiting
of the largest energy facilities in the world right here in the United States,
- [27:58]
Tarek Mansour
but delivering American energy at a fraction of the cost in a fraction of the time. So while others are busy talking, we're busy building.
- [28:08]
Stephen Whiting
That's Venture Global. That's unstoppable energy.
- [28:16]
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- [28:43]
Melissa Lee
Welcome back to Fast MONEY Prediction markets platform Kalshi surpassing $1 billion in trading volume since launching perpetual Futures contracts last week. It is the first CFTC regulated exchange of its kind. And just a short time ago, the Journal reporting Kalshi plans to require users to disclose where they work to make certain trades. Joining us here at the NASDAQ for an exclusive interview, Kalshi CEO and co founder Tarek Mansour. Tarek, great to have you with us. There's a lot to talk about but I want to first talk about perpetual futures of $1 billion. That is notional plus leverage. Just to be clear in terms of that that number so the demand is there. There have been a lot of criticisms. We had Terry Duffy on from the CME last week. Can you talk to why this product is suitable for the retail investor when it has been around the world? The U.K. for instance, has a ban on it. The EU has concerns over and limits leverage. Why should it be offered here in the us?
- [29:35]
Tarek Mansour
Yeah, well, so yes, we are honestly the results of an incredible billion in five days. You know, you might know this, but our prediction market product took three and a half years to accumulate $1 billion in notional volume. The demand is there and actually offshore in some of the, actually a lot of European jurisdictions and others. Perpetual futures have been legalized and they've grown dramatically and they're doing $90 trillion of volume now. So the demand is clearly there. And the question is why? The main thing, like the way that perpetual futures are different from futures is that they don't expire. So all you, they're simpler for retail participants and institutions. Sometimes you have a view on where something is going and by when, but a lot of times you just have a view on where something is going, not exactly by when. And futures, the issue with them is that they force you to basically have a view on when. So you have to close out the position and open it again if you want to hold it for longer, which makes you pay fees, fees, whereas perpetuals avoid you those fees. So at the end of the day, they're simpler, they're cheaper and they're more accessible for consumers. And you know, I have a lot of respect for Terry. I think he's, he's built an incredible company and, but, but I think the incumbent don't love them because of that specific point, which is futures have to roll over where you pay fees and perpetual put competitive pressure on those fees. But at the end of day they're improving consumer costs and that's where we see the world heading.
- [30:50]
Melissa Lee
Some would say that the funding rate mechanism in and of itself can erode any sort of profits or can really eat away at the position of the retail investor without them understanding that that has to exist in order to tie that contract to the spot price of whatever they're trading.
- [31:06]
Tarek Mansour
That's not a new mechanism. I mean, there's two main criticism, right? There's the leverage that people talk about. These products have too much leverage. And then the funding rate mechanism and default, you know, the margin model. So two points. And I really think it's not about that. So, so leverage, we're offering around 6, 6 and such, 6x leverage, that's what we're offering in these products, which is Actually lower than a lot of retail futures product on CME. So S&P futures are 15x. I mean Dan, you might know this. I mean I think effects is 60x, gold is 20x. So all of which are actually higher leverage than these products. So I don't think it's a question of leverage. And in terms of a risk model, I mean this always been Cauchy's approach. We're not trying to innovate on the risk methodology. That risk methodology that we're using, the auto liquidation model, is actually a replica of the robust, well tested model that CME and some of the incumbent exchanges have use of the CFC level. The innovation really comes on this expiry point. They just don't expire, which helps people essentially avoid paying these fees that we just discussed, avoiding these rollover fees.
- [32:03]
Dan Nathan
You know Tarek, you guys, obviously sports has been a great way to start. How do you think about finance markets, economic stuff? Because it's very small for you guys right now and do you see like a big opportunity there?
- [32:16]
Tarek Mansour
So the growth in like the finance markets for us is actually one of the largest actually they're growing faster in sports, faster in politics, some of the other markets. So the opportunity ahead of us is massive. The mission and the vision of Kalshi has always been we want to build a next generation exchange, an exchange that captures a broader set of assets, that is simpler and more accessible for the average consumer and that is dynamic. It's capturing the things that are happening around people's lives that they understand, they relate to. And so yes, our act one was prediction markets. We've grown a lot during the 2024 election and politics was a huge sort of propeller for us. Sports was incredible. And now with perpetuals launch, I think it's really spearheading us into our entry into more financial like products. And as you seen, you know, $1 billion in five days. You know, if I'm here in a month, I think those numbers and percentages will look very different.
- [33:05]
Melissa Lee
Right now the perps are specifically for crypto, but are you envisioning that they will be offered on other assets? And I'm asking because I wonder, I'm wondering if you think the regulatory environment is extremely in your favor, extremely in polymarket's favor. I mean a strategic adviser of yours is Donald Trump Jr. He's also a strategic adviser to Polymarket. And there have been reports that the CFTC, the staffing there is completely decimated and that things get through. And I'm just wondering how you perceive the environment right now for you to get new products approved.
- [33:33]
Tarek Mansour
You know, I think, you know, like, yes, on more asset class of perpetuals. And I think that obviously perpetuals are happening now. But the call for making perpetuals, you know, a thing in America, legalized and regulated in America has been around for a while. I mean, Shiller has basically been talking, has been talking about these in the 90s about the idea that a perpetual future for certain asset classes is better than a traditional future. And the way to kind of really sort of divide them is some asset classes is like agricultural products. They have a natural expiry. So you want a product, a derivative product future that has a natural expiry tied to that date. Others, like digital assets, don't have a natural expiry. Right. Bitcoin lives on forever. And so you want a product that fits that sort of tenure, that doesn't have to unnecessary expire and get people to pay fees unnecessarily. So I think the move and the work to bring perpetuals onshore has been ongoing for a very long time. And the cash playbook will always be the same. Take something that is working, that consumers want. Oftentimes it's proven either by our own consumers and their demand or offshore and bringing it in a safe, responsible, regulated way in America. And that's what we're doing. Perpetuals.
- [34:40]
Guy Adami
I'm sorry, you probably watched Terry on the show the other day. He made the point that perpetuals by the law, the way the law is written, are not futures. Maybe at best they're swaps. But my question to you is not to debate that. Is there a world where they can live in tandem with one another here in the United States?
- [34:55]
Tarek Mansour
I mean, they do, right? I mean, Terry called me after the show and, you know, he mentioned I was a little upset. It's like, you know, why did you have to, you know, call out cashier that way? And he's like, well, they mean it. Specifically with Kashi. I know you're building a great company. I think you mentioned in a call or conference the day after. But I have a lot of respect for Terry. I mean, I think we disagree on this point. I think what this is about, they are living in tandem. They have, for example, Sammy has bitcoin futures and Kalshi has bitcoin perpetuals. And other companies will have perpetuals as well. And probably Sammy will have perpetuals as well. The main difference is if you want a position on where bitcoin is going to be in November before perpetuals, what you have to do is open the CME Bitcoin future, pay fees at opening and then you pay rollover fees every month from now till November. You pay fees six times from today till November with a perpetual same exact leverage, same risk model, the well regulated, robust, tested risk model that CME offers. The difference is you open the position today and you can close it in November and you pay significantly less fees. You don't have to pay fees six times from now till November. That brings competitive pressure on these rollover fees. Right. And these fees are, you know, a part, a decent part of the revenue of some of these incumbent exchanges. And so it's normal for them to take that position. But I think they will coexist, they will be together and the consumers are speaking loudly, you know, things that bring innovation to consumers in a regulated way and they reduce their costs at the end of the day, better for the end consumers. And we're excited to do more on that front.
- [36:15]
Melissa Lee
I want to ask you about this effort to get ahead of the insider trading issue by asking people where they work because as I see in the, in the Journal article, you're not going to actually enforce it unless there is suspicious trading activity. So what do you think that does? Do you think that people actually are using the. Like a big source of insider trading is because they work at a place and they're used to using that information to place bets.
- [36:40]
Tarek Mansour
Yeah. Well, so insider trading is ban on Kalshi because it's been under the law. So the Commodities Exchange act bans insider trading. And putting the law aside, I mean, insider trading is bad because if people feel like the marketplace is unfair, well, they stop trading. That's why insider trading is bad in the first place. So I can't speak about the offshore markets and a lot of the headlines that we've been seeing, but Cash has had a very stiff and robust approach to insider trading and there's rules around how we should monitor it. But this falls in the bucket of cash going above and beyond what is required by the current regulations. So we're doing a lot of self regulation based on the data and what we're seeing in the marketplace. And so one of the things that we've done, and I think a lot of you, most insider trading measures in traditional stock market, whereas nasdaq, nyse, all the others are retroactive. So something happens, the surveillance system flags it and then you run an investigation and then you find wrongdoing and you punish. We do all of that. Now we're going beyond that where we essentially proactively ban people from participating in certain markets. So, for example, if you're a member of Congress, we ban you from participating on anything that may relate to Congress. If you're an athlete, we may ban you. We actually ban you from participating in your own league. Now, this measure falls in that bucket. So we have a risk scoring around certain markets that may have a heightened sense of manipulation. For example, company KPIs. What a company. You know what Tesla is going to report in terms of number of cars. And we use a sort of employment check to check if somebody that works at the company is trying, is attempting to commit insider trading before they place a trade so we can ban them before they do it. And I'm very excited about these types of measures they're working. And they're also an education tool because you tell people stop before they try to do something wrong. And we're going to do more on that front.
- [38:12]
Melissa Lee
Are there any bets right now open about when Kalsha will go public?
- [38:17]
Tarek Mansour
No, not on, not on us. Not on reggae venues yet. We need regulatory approval for that.
- [38:22]
Melissa Lee
And what do you say to it?
- [38:24]
Tarek Mansour
Well, once you have the market, we'll listen to market. That's the whole point of the market. Listen to me.
- [38:28]
Melissa Lee
Tarek, thanks for coming by.
- [38:30]
Tarek Mansour
Thanks a lot for having me.
- [38:31]
Melissa Lee
And a quick note. CNBC and Kalsi have a commercial relationship that includes customer acquisition and a minority investment. Coming up, the technical take on today's chip crunch, where the Chartmaster sees the group heading next. And if there's more pain ahead, fast money's back into. Welcome back to FAST money, a volatile session for markets today. Stocks starting the day higher before tumbling midday, but all three indices cutting their losses into the close. The S and P ending the day down just a quarter of a percent. The NASDAQ down about a percent and falling as much as three and a half percent at its lows. And the Dow managed to turn positive. Shares of United Rentals continuing to climb. The stock hitting a fresh record high today. Shares up more than 35% so far this year. And shares of Supermicro dropping after hours. The company announcing a proposed $7 billion offering of equity and equity linked financing, the proceeds of which will help fulfill nearly $40 billion of a server orders the company says it received in recent weeks. Stock is down 8%. Karen, I don't know where you, I mean, you point out supermicro, but you are in rentals, which was the R carved.
- [39:34]
Karen Feiderman
Of course it was. Yeah, it was the RN carb. That was a great one. Last year still is a great story, but it hasn't, it hasn't really changed much, just the valuation has changed and I'm actually looking to sell some upside calls. I love the management, I love the business, but the valuation can fluctuate.
- [39:51]
Melissa Lee
Meantime, chip stocks selling off midday before recovering some losses. Micron, amd, Marvell, Broadcom, Intel, Qualcomm and AAM all still end of the day in the red. Several of these stocks seen double digit losses in just a week. For more on semiconductor technicals, let's bring in the chartmaster Carter Braxton Worth. Carter, where do you see the group now?
- [40:10]
Carter Braxton Worth
Well obviously this is the center of the storm. Both on the way up. You wouldn't call that a storm out on the way down. It's where all the money is, it's where all the hopes and dreams are and it's been great. But the crack I think is real. Let's look at some charts and try to divine the way forward together. Here is the SOX index with no lines, no judgments. Let's put some lines in. What do we know? If you look at the next iteration, it's this very steep move. All equities moved off the March 30th low S&P up 20 in that period. 20% Q's up 34. Tech sector up 47. Stocks almost double up 97. Just a real runaway hysterical sort of move. And then of course the crack, the crack of the past several days Starting with Friday's 10% down day next iteration. So the question is are we still okay or are we likely to give back more? My hunches give back more. It would hardly damage the chart. Now do we get all the way down to that trend line? That trend line connects two points. Now remember, any two points can be connected. That's hardly a trend line. That's the of course the lows of tariffs in March and then the lows of the Iran US dust up. And so last chart, that trend line is also just about where the smoothing magnitude 150 day moving average comes into play. My hunch is you just have to make a decision. Do you increase exposure to semis here? Buy the dip. Do you reduce exposure? I'm in the latter camp. Reduce exposure. I would use any day to day bounces such as the one yesterday to take measures.
- [41:40]
Melissa Lee
Carter. Thank you. Carter Braxton Worth of worth charting. Which camp would you be in?
- [41:44]
Guy Adami
Guy Carter will say correctly that all gaps inevitably are filled and there's a huge one in the SMH from April when we gapped higher I think it comes in around like that 430 level and I'm with him again. It's not about the fundamentals changing. I don't think they really have all that much. The technicals have changed in a meaningful way and I think there's an inevitability to fill that gap to the downside in the smh.
- [42:07]
Melissa Lee
Coming up, ports in the storm where investors found some safety in today's market swings and fast money returns. Welcome back to FAST money. A few bright spots in today's market. The consumer staples sector jumping more than a percent as investors rotate out of tech and into defensive names. JM Smucker surging 10% after topping earnings estimates this morning, its best day since 2008. Homebuilders boosted by some positive home sales data this morning. The ITV up more than 4%. And health care also continuing its climb. The xlv up nearly 8% over the past month. Coming up, how option traders are hedging against the volatility and the action we saw in today's whipsaw on Wall Street. The details next. And here's a sneak peek at the Kramer Cam. Jim is chatting exclusively with the president and vice chairman of Metta. Catch the full interview. Top of the hour on Mad Money. More fast Money into. Welcome back to FAST money. Volatility ripping back into stocks today in the form of massive reversal in software and setting up for a make or break moment in the red hot trade and perhaps the broader market. And we get CPI data before the bell and Oracle earnings after the bell tomorrow. Our Oliver Renick is on the CBO trading floor with more on how options traders are playing the volatility in this space. Oliver.
- [43:25]
Oliver Renick
Hey, Melissa. Options traders are leaning optimistic into those two big events. First, CPI. It's expected to hit above 4% for the first time in three years. But options trading around interest rate sensitive stocks today suggests it might be priced in call buying outpaced puts in the regional bank etf, KRE Homebuilders XHB and the long term bond ETF TLT even as odds of a hike in December moved up to 43%. And that other big event we're watching of course is Oracle earnings after the bell. The stock is the biggest weighting in the popular software ETF IGV and could be the deciding factor for the next move of the big tech trade. Options traders think we'll get a 12% swing in Oracle after earnings, the biggest implied move going into a report since March 2020. It's high pressure for a stock that's leading the IGV by 15 percentage points this year. Calls outpaced puts more than 2 to 1 in Oracle today. And the most popular contract by volume was the 250 strike call expiring Friday. A bet the stock will rally more than 20% into the weekend.
- [44:32]
Melissa Lee
Melissa Oliver, thank you. Oliver Renick at cbo. Interesting the bullish trades in the sort of the interest rate sensitive stocks. Those are though also the areas in the market today where we just saw rotation into. Because the tech trade came off Home
- [44:45]
Guy Adami
Depot one of the best things had in a while. Target very quietly up 50% from the lows. Tim and Karen been talking about that retail's done well. Homebuilders surprisingly so maybe it's optimism around the numbers. Maybe people think rates are going lower. Obviously the unemployment rate helped, but I'd still be a seller.
- [45:01]
Karen Feiderman
Homebuilders here could ask Dan a question.
- [45:02]
Melissa Lee
Sure.
- [45:03]
Karen Feiderman
Oracle straddle at 12ish percent seller.
- [45:08]
Dan Nathan
I mean I think it's hard to pick a direction here because if you look at that move off the bottom, I mean any disappointment there? The Stock's in down 10%, you know what I mean? But 12% seems a little much.
- [45:19]
Melissa Lee
Yeah. Julie, you're nodding in agreement.
- [45:22]
Julie Beal
Yeah, I agree. I think it's go time for Oracle and you know, these quarters have been pretty tough for them. I think any kind of disappointment when you've had this much move this quickly, you really, really have to deliver.
- [45:35]
Melissa Lee
Yeah. I mean is it your sense, Dan, that Oracle has Oracle specific issues or will it be sort of the bellwether kind of impact on the igb? Because we've already been through a period where we've had a number of companies service now workday come out and their earnings were good and it helped lift the IGB overall.
- [45:51]
Dan Nathan
Well, I think there's a battle going on in the igb. If you think about Oracle, think about Palantir. I mean these are huge two component or huge components of it. And you know, Oracle has had this huge rally off the bottom and Palantir can't get out of its own way. But Palantir was one of the reasons why it was acting so well, let's say a year ago, I think, I think Oracle is far from a software stock right now. They've gone to very, very asset heavy and they've had to raise a lot of debt to do that. They said they're not doing any more good. Good luck with that. I mean look at this deal that Apollo and Blackstone just did. Private credit deal $35 billion to buy GPUs. I mean, at some point Oracle is going to have to get a bit more creative, especially if they want to stick to the guidance that they gave about capital raising. So to me this is like probably one of the worst stories in the entire infrastructure trade.
- [46:34]
Melissa Lee
Quite a call. Up next, final trades, Final trade time.
- [46:43]
Megan Casella
Julie Beal yeah, West is one of
- [46:45]
Julie Beal
those higher quality, durable names that I think is a good port in the storm.
- [46:49]
Melissa Lee
Karen yes you are.
- [46:50]
Karen Feiderman
I love so much about it except valuation. I got to sell some upside calls.
- [46:55]
Dan Nathan
Dan yeah, smh. I think it's on the precipice of a big drop that probably takes out the lows from earlier today and yesterday.
- [47:01]
Guy Adami
Guy the fans want to know Melissa did watch parts of the NBA basketball game last night you did not watch in in its entirety, but you'll be watching tomorrow night. Is that true? Perhaps we'll see McDonald's while you're watching
- [47:14]
Melissa Lee
Melms all right, thanks for watching Fast Mad Money. Jim Cramer starts right now.
- [47:20]
Jim Cramer
All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or in other you should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer your data lives everywhere on prem in the cloud across apps. Bring it all together with Everpure, the platform that acts like a living system, delivering the latest in data performance, security and innovation without ever slowing you down. Sophisticated enough to anticipate your ever changing data needs, yet simple enough to feel like second nature. Tame your data chaos with Everpure and make storage and data management the simplest part of your business. Visit everpuredata.com to learn more.