← CNBC's "Fast Money"
CNBC's "Fast Money"
Apple Potential Blacklisted China Chipmaker Deal …And Optimism In The Second Half 6/29/26
00:43:59
Tech recovering to kick off the week, but all eyes are on Apple, as the company seeks approval to buy chips from blacklisted Chinese company CXMT. How the Trump admin will respond, and what it could mean for the U.S. chip trade. Then, Jefferies chief market strategist David Zervos gives his take on the Supreme Court’s block of Trump’s attempt to fire Lisa Cook, and why he’s still bulled up for the second half of the year. Plus, Microsoft’s next move as it paces for its worst month since 2000, Comcast stock surges after announcing plans to spin off NBCUniversal and Sky, and if Nike can bounce back from its rough year with its earnings report tomorrow. Fast Money Disclaimer
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- [00:01]
Edward Jones Financial Advisor
At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are with personalized financial strategies that help protect what matters so you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich together. EDWARD jones, Member, SIPC At Etsy, we
- [00:32]
Etsy Representative
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- [00:47]
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. Apple taking a bite into the blacklist. How the memory shortage is pushing the tech giant towards a blacklisted Chinese company and the impact it could have on the semi space if the Trump administration allows it. And second half optimism. Stocks looking around out a solid first half of the year with just one trading day left. And a top market strategist is doubling down on his bull thesis. What he sees in store for the markets heading into the rest of the summer. Plus, Microsoft pacing for its worst months since Y2K, Comcast, latest media spinoff and the ABCs of technical analysis where the Chartmaster sees Alphabet heading next after its June drop. I'm Melissa Lee, come to you live from studio be at the nasdaq. On the desk tonight, Tim Seymour, Dan Nathan, Steve Grasso and Carter Braxton. Worth we off with Apple back in the crosshairs of the storage squeeze. The iPhone maker reportedly seeking clearance to buy memory chips from China's cxmt, a company blacklisted by the Pentagon for alleged ties to the People's Liberation Army. Apple shares down less than a percent today. Just last Thursday, the company said it would start raising prices on Macs and iPads given surging memory costs and saw its second biggest market cap loss on record. The campaign for Chinese made storage already meeting resistance in Washington. Longtime China hawk Senator Tom Cotton writing on X today that using blacklisted chips would be a, quote, grave mistake for Apple risking shareholder value, privacy and national security. We'll dive into what this means for the memory trade in just a moment, but first let's turn to Mackenzie Segalis with the potential impact on Apple Mac.
- [02:22]
Mackenzie Segalis
So, Mel, I'm told by a person briefed on the discussions that Apple is again lobbying the administration for more flexibility to work with Chinese memory Suppliers as it deals with one of the worst component crises in its history. Now it's part of a broader push by American tech companies more broadly to appeal to the White House, Commerce and the Pentagon for room to qualify those vendors without running afoul of US Restrictions. The appeal is cost and supply. I'm told these Chinese memory companies can undercut incumbents by as much as 30% on price, while also giving Apple more leverage with existing suppliers. Apple shares have been in sell off mode since the company raised Mac and iPad prices last week. But the real question is the iPhone, which, which has been left untouched for now. If Apple follows the same playbook as last week, some analysts say the next lineup could see price hikes of 20%. That's why Chinese memory is back on the table, at least for iPhones sold into that market. But qualifying a new supplier can mean months of reliability testing, security review and factory audits. And experts tell me that it can take up to two years to work into the supply chain. It also faces competition for that supply, with Beijing pushing Chinese memory makers to prioritize domestic device brands over American buyers.
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Melissa Lee
Mel Mac, I understand it's on the blacklist, but that only prevents Chinese companies from doing business and securing contracts with the dod. Is it actually on a list which prohibits these chips from being imported into the United States?
- [03:47]
Mackenzie Segalis
It's the Commerce list, that entity list that actually has a lot more teeth than the Pentagon 1260 list. And that's what YMTC is on. That is a NAND supplier. So it's different to cxmt, a Chinese memory maker that's actually headed for the public market in China in the next few weeks. So that's the, that the big effort is to make sure that CXMT is not added onto that entity list. And that's reportedly what's being discussed behind closed doors with the White House, a lobbying effort to prevent it from being added to the entity list because that would be a real hindrance to getting them moved into the supply chain.
- [04:19]
Melissa Lee
Yep. Mac, thank you. Mackenzie Seagallos what does this tell you about Apple's struggle with memory costs and consumers ability to pay the extra money that they want to charge?
- [04:28]
Tim Seymour
It tells me that there'll be maybe more than a high single digit price increase on the iPhone. I mean, I think what we got last week was a bit of a shocker and I think it's significant. I think Apple, who for the longest period up until this point had said we can control, we have inventory, we can push around our suppliers, we have some ability to kind of hold off on this. And so, you know that quote, that everything's on the table? Of course everything's on the table. And it includes for Washington, I mean, Washington, which is seemingly pushed Apple and Intel together. It makes a lot of sense that we have to solve the memory issues in this country. I think this is a day of headlines. I think the headlines, the most important ones, came last week. But I think this is a harbinger of what Apple. I mean, this is Apple firing a warning shot in terms of price increases for the most important product. And I think they're coming.
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AT&T Business Wireless Customer
Yeah.
- [05:13]
Dan Nathan
You know, it's interesting that we saw a halving of memory prices across the board from the highs in 2022 to the lows in 2023. And this was a boon for Apple. I mean, the margin, you know, benefit was great. And, you know, you turn that around and you say to yourself, they're raising prices so dramatically right now on their products, and they're really worried about those margins and they're passing through the cost to maintain them or defend them. But you know, what? Consumers didn't get break back in 2023. Right. They held pricing pretty firm. And if I'm the administration, there's so many things that I'm unhappy about this request. But it also speaks to the fact that a lot of these CEOs of the major tech companies, they knew what they were doing when they found themselves on the dais of the, you know, the inauguration back in January of 2025. And they kind of played it pretty well. I mean, think about Nvidia, the back and forth that Nvidia has. All they had to do was pay a vig. Now, the interesting thing is that the Chinese, you know, have not basically wanted to buy or the, the buyers have wanted to buy them, but the government has not allowed them to do that. So when I think about supply chains, I think about a trade war, I think about tariffs, all these sorts of things, and it feels like we're losing, I mean, for all intents and purposes, because right now we need their chips, we need their magnets, we need the rare earths, we need them to buy our soybeans. And I know that this seems like I'm broadening out too much, but I really do think it's like, it's a big issue that a lot of our companies are facing right now. And there's no reason to feel like this is going to abate anytime soon unless we have demand destruction.
- [06:40]
Steve Grasso
I think it could go either way, right? Either Trump is going to do a carve out and allow it and then the memory, memory mafia is going to all sell off or he's not going to and then they'll probably stay sideways to up from that point on, I think it only increases the cost of a phone. Tim was talking about the price range of the increase. So it depends on the lower end phone it's probably. Or the longer term finance five bucks to eight and a half. Most people will finance their phone. I don't think anyone's going to say I'm not going to have a phone if I have to spend another eight and a half hours. Does it hurt? Of course it hurts. I don't think they're going to change their, their actions on it. Ultimately, I think it's a buy for Apple. I don't think there should be a car carve out but I do think that in September she's going to be here. So what is she going to be looking for? That's where I think the carve out could be something that's worth looking at where she comes in September because the trade tariff, those tensions have been off the table. They could arise again.
- [07:36]
Melissa Lee
I think also what this underscores is this notion that is causing inflation. Right. And that's sort of a notion that we're able to put sort of in the back burner. But this really, you know, speaks volumes in terms of Apple being so desperate, desperate, but literally searching for a solution that they will go and go to a company that is on the DoD blacklist and say, you know what, we're going to put these in our phones because we don't want to charge consumers this much more money or consumers won't pay that. And this is happening not just with Apple devices, but with many other devices too, whether it be, you know, laptops or whatnot.
- [08:08]
Tim Seymour
So first of all, yes, last week when we missed you, by the way, the story was in fact oil deflation, but inflation and this is exactly what we have. I think Apple is sending a message to the biggest memory suppliers in the world that we are going to do whatever it takes and we're Apple and Washington is correspondingly responding. I do think, and Steve brought this up and I think, you know, remember how it was such great news that the ASPS and the iPhone were going higher and we were actually rewarding the stock. It was actually getting upgraded based upon that at some point back to the sticker shock, back to anything at some point there is inelastic, it's actually elasticity that's A tough economics term, but it's actually the elasticity here I think ultimately is going to hit Apple in the face.
- [08:47]
Melissa Lee
All right, let's get more on how this could impact the memory trade. For that we turn to Christina Parts Naples here on set. Christina, I mean, could this force memory prices to go lower?
- [08:58]
Christina Parts Naples
I'll get to that in a second. And I just want to preface too that Apple is lobbying Washington, we know, to keep China off that list that Mac talked about hoping to buy dram. And I bring this up because this is the basic memory chips that are inside phones and computers. It gets complicated when you have all these acronyms. But csx, C xmt, the Chinese manufacturer says in its own IPO prospectus its capacity is far below domestic demand. That is important because even if President Trump approves it, CXMT cannot fill Apple's supply gap or lower costs right now. To your question. So then why lobby all of this? Why do it at all?
- [09:33]
Tim Seymour
Sounds like a rhetorical question.
- [09:35]
Christina Parts Naples
Yeah, it's going to answer the optics, of course. Help. It lets Apple show it it tried to find cheaper memory and got blocked by policy taking some heat off of the price hikes when we're all very concerned about inflation. For Micron, this is not a near term threat. Why is that? Apple matters, no doubt, but it's not the growth engine that's high bandwidth memory powering Nvidia and other hyperscalers within the buildout. Just three years ago, Mic was losing money on every chip. Today gross margins are well above 80% in that graph. I couldn't even show you that it was negative because it didn't fit. But just believe me on that. Manufacturers are diverting wafer capacity to high bandwidth AI memory and running lean on inventory because the margins are just much better. The squeeze is now cascading all the way down to the DRAM stack, a stack to older generations. And so that's why Apple and other OEMs, Dell has talked about it, HP, Supermicro, they're all feeling it. That leverage is why Micron has and will continue to lock in long term contracts. And what they're saying is going to cover half of their revenue very soon by 2030 at floor prices above prior cycle peaks. So everyone from Nvidia to the hyperscalers are absorbing the cost of inflation for now. Apple I guess has no choice.
- [10:45]
Melissa Lee
When you said that 6mt says in this IPO perspective that it cannot fulfill domestic supply. I mean they can build out supply and yes, it would take a little
- [10:54]
Christina Parts Naples
bit, but everyone could build out supply. Micron too.
- [10:57]
Mackenzie Segalis
Right.
- [10:57]
Christina Parts Naples
And then that's the problem. They're all being very relatively conservative because they want to protect their margins. From what I know Micron has at least four supply fabs, let's call it coming online within the next two plus years. So perhaps the market is not necessarily factoring in the fact that there is supply coming on the market and we're just treating this entire memory cycle as like untouchable over the next few years and maybe we're not factoring that in but the fact that they're seeing in their own to their own Chinese market that there's not enough supply maybe speaks to how they can fulfill Apple's talk
- [11:28]
Tim Seymour
about the Samsung Hynix news. This isn't really news, but it's News. It's the two biggest players in the world, 560 billion in terms of plants they're investing in, infrastructure. We're not doing anything here. That's part of I think at least where Washington has to feel something.
- [11:42]
Christina Parts Naples
And don't forget SK Hynix is going to be listing here on July 10th and that funding too will go to rumored, possibly some expansion specifically in China. So that would put more supply onto the market. Again though to Melissa's point it takes what minimum three years, probably even more use like the Micron Clay New York one. They said building 2022 and now it's not going to be ready until 2030. That's at least eight years but only a decade.
- [12:07]
Tim Seymour
It kind of show, I mean even we're talking about major competitors, Samsung, I mean teaming up and this is all about South Korea. In other words, this is, this is a sovereign dynamic that's now I mean yes, Korea is our friend but you know they are and they're not until you have a dynamic where they can control this market. So I think the fact that you've got two archenemies combining at a time when this is geopolitics as well as
- [12:33]
Christina Parts Naples
technology then do you believe the US government needs to step up and support Micron in order to combat what's going on in South Korea?
- [12:38]
Tim Seymour
No question. No question. And they need to be pushing American manufacturers of everything to be buying from and reinvesting in in that dynamic. But as you've just noted, I mean we don't have a short term solution.
- [12:51]
Julia Boorstin
Yeah.
- [12:52]
Melissa Lee
Christina, thank you. Good to see you Christina. Parts never list so do you believe in this? You don't?
- [12:57]
Dan Nathan
Well, no.
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Melissa Lee
I mean I know I asked that
- [12:59]
Dan Nathan
question, I don't mean to be skeptical about it but you Know, the Clay New York thing upstate, you know, like it just keeps getting pushed out. And so when you think about like being late to add capacity, you know, this is, this is what happens in, you know, cyclical businesses like memory, right? They're late to add it, they add too much, then you've got push out, you missed the cycle. Then you have like utilization rates that are dropping dramatically. Then you have price drops because you had a demand drop. And all of a sudden, you know, you're back towards having margins that look like 20%, which in normal cycles is pretty good for a company like, you know, Micron. So again, I mean, I'm skeptical because there doesn't seem to be any fear about adding this capacity right now. And the last thing I'll just say is that that's what the CHIPS act was for. The CHIPS act was to kind of stimulate demand here or the manufacturing here. So if they're going to come and do that and they're going to try to get chips from China, then it really undermines Micron's positioning right here. And they actually then don't have a lot of incentive to add too much capacity that they know at some point is going to be excess and it's going to hurt their business.
- [14:02]
Melissa Lee
Well, the chip trade today, Carter, was really interesting. I mean, if you took a look at how those memory stocks traded at first there was that sort of stutter. The DRAM ETF for instance, was down as much as 5% today. And then, and then managed to swing higher by the end of the session. What do you see in the charts, Carter?
- [14:19]
Carter Braxton Worth
Well, I mean, obviously this is the epicenter of all things interesting, if you will, the semis. I mean, Micron, I mean, think Micron's had four instances since March where it's dropped 20% within a two, three day period. This is again the biggest, most dynamic, most interesting and most maybe questionable area of the market. The question is when something does dip right, what to do about it? Sometimes dips turn in something worse and sometimes it's just the biggest opportunity of all. There are instances in the market right now where marquee names have dipped to levels where buying makes sense, whereas others are still quite elevated. I think, you know, you continue to reduce exposure to things like Micron and Western Digital and SanDisk.
- [15:04]
Steve Grasso
When you look at the chips act that you had said to Dan when you first started, that was $52 billion, this is by orders of magnitude 10x what that one was. So I agree, when you start putting on that supply at 80% margins. The normal margin is 29% for a micron. You could see this collapse and prices take effect way before supply hits the market.
- [15:27]
Melissa Lee
You're mentioning South Korea and the impact there. I mean these two companies are 60% of that market and then investors are even leveraged taking on margin debt in order to invest. So there's a sort of like all these concentrated market risks, South Korea trade
- [15:42]
Tim Seymour
that are felt here. I mean, think about the biggest days we've had. Sell off in semis. They've started in Korea and they've started overnight in Asia. And this is a market that, you know, there's a lot of good news in South Korea, not just because what's going on there, but in terms of regulation around their local markets. And it's actually encouraged retail to be involved. Pension funds are a lot more confident. But the leverage that's there is something that I think ultimately is unsustainable. And you know folks, if you own the EEM or the VWO or anything in emerging markets, you know, you're now your three biggest stocks are in Taiwan and South Korea, which, you know, because they're emerging markets. But there's a lot more volatility and a lot more exposure. It's been great on the way up. Let's see where we are.
- [16:20]
Melissa Lee
Our next guest warns that easing restrictions on Chinese memory could unlock or could lock, excuse me, the US into long term reliance on those suppliers. Shahzad Kazi is the chief operating officer at China Beige Book. She's great to have you with us. So there's a lot on the line in terms of whether or not to even allow this to happen. Sounds like.
- [16:37]
Shahzad Kazi
Yeah, there absolutely is. I mean, you know, YMTC is on the entity list, which means that you have to apply for a license and usually you'll get denied. CXMT is not, and industry is hoping of course, to keep it off the commerce entity list and to potentially get it off the Defense Department's list as well, which really doesn't prohibit anything. But you know, you don't, you don't want it on there either. If you're, if you're Apple or Nvidia actually has argued for that as well.
- [17:03]
Melissa Lee
What kind of leverage does this give China, if anything, over the U.S. i
- [17:08]
Shahzad Kazi
would say think about it in the same format where we are so heavily dependent on them for a variety of our supply chains. This would be just taking that one step further. Especially as our team notes in that, in that note that we're referencing when prices go down, that's where the real problem comes in because then you're locked in. And this is same thing playing out with rare words, same thing playing out with pharmaceuticals, etc. This is a big national security risk.
- [17:33]
Steve Grasso
So Shazad, when you see the Trump XI meetings, it seems that they've taken on a softer tone. So you had mentioned that he's coming here, she is coming here in September. What do you think is going to be on that list? And since it is a trading show, what do you think things could be on the ask list and what could be affected in our markets?
- [17:51]
Shahzad Kazi
Yeah. So, you know, hypothetically, you know, what if senior leadership from Huawei shows up and there are talks that maybe YMTC should no longer be on that list. Right. There's Huawei's got a big relationship with all of that concern. You know, our fears that ultimately they're getting the chips, they're working for the People's Liberation army, those sorts of things could start coming up again. They might be great for a company like Nvidia, they could potentially be seen by the markets as great for Apple, but they start to create real national security risks for, for us.
- [18:18]
Tim Seymour
She's switching on. I'm not asking, I'm not asking you to be a semiconductor analyst. But to the extent that this is the kind of a news when coupled with also the open source AI models, Deep Seek, we've been hearing about the Chinese AI companies that are suddenly a lot more dominant and possibly, you know, I'm not sure that US enterprise customers are ready to adopt these, these, these, these sources. But I do think it's part of the story we're having today, which is China's introducing a cheaper alternative and again state funding that has unlimited pockets when in fact we don't even have those that that CapEx put in place in legislation in Washington.
- [18:57]
Shahzad Kazi
Yeah, I think this is a philosophical question. We can either stick to loving free markets and capitalism and assume that's going to make us number one, or we can realize in my opinion that that's just not. Those are not the rules of the road anymore. The state in the US will have to step up in a much bigger way or else we're going to be faced with having no option but to use maybe Chinese models in many instances at least because they're so cheap, they're
- [19:20]
Melissa Lee
so good, it's amazing. And I wonder if you think back the parallels with 5G and with Huawei when we are right, I mean they're basically state sponsored enterprises. They got, you know, unlimited funds from from the Chinese government. They're able to undercut on price. They made their way here. Chinese companies adopted it because it was, it was fine, it was cheaper, the technology was good enough. And then it was found to be a national security risk. And they spent millions, if not billions of dollars to take out that equipment and replace it. I mean, we're almost here. Except it's not hardware this time.
- [19:53]
Shahzad Kazi
Yeah, I think that's a great example. And then that Harvard story is playing out over and over again right now. You know, my friends over at the FCC are doing something on this left and right every day.
- [20:02]
Melissa Lee
Yes, yes.
- [20:03]
Shahzad Kazi
So we really don't want to go down from, from, from a U.S. interest standpoint, down that rabbit hole at all, regardless of what industry is telling us to do right now.
- [20:10]
Melissa Lee
Great to see you. Thank you. She's a kazi.
- [20:12]
Shahzad Kazi
Yeah.
- [20:13]
Dan Nathan
I think the Chinese are looking at us and saying like our national champions, spending hundreds of billions of dollars, that's going to end up being trillions of dollars for, you know, products that are ultimately going to be commoditized. There's going to be price wars. If you think about, you know, how these companies are meant to monetize their models right now, it's through their cloud businesses. Right. So when I just kind of take a look around and I say to myself, okay, if the Chinese are gaining steam, if they are not not going to have export bans on their own models and they're open source and they can actually have the rest of the world start to use them, then that becomes a big problem for our companies. Because look at Microsoft. I know we're going to talk about it, but it's basically spending all of its cash flow on building out an infrastructure. And they don't even have models like the company that they partnered with that they invested in that they own 25% of. Obviously that's OpenAI. They're not even getting along well one way or another. So if you look at what's going on with some of the these companies and the way that matter and Microsoft and some of these others have rolled over over the last couple of months or so, I think investors are starting to get hip to that.
- [21:11]
Tim Seymour
But the Chinese tech companies have rolled over even more than our companies. And so I would just bring this up in the context also shazaded some notes that he sent through. And I totally agree with what his view is on the Chinese economy, which is that I think things are stronger in China than people expect. I think we've not priced in any second half green shoots or otherwise. And in fact I think this is an interesting time to be owning China Tech for the reasons we just talked about.
- [21:33]
Melissa Lee
Coming up, another spin off of Comcast, the new Sunny shares higher and what it means for the future of media, M&A plus what is wrong with Microsoft stock trading near its lowest level in a year, on pace to close out its worst month in more than 25 years? Where traders see this stock heading next do not go anywhere fast when he's back into.
- [21:57]
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Tim Seymour
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- [23:32]
Melissa Lee
Welcome back to Fast Money. Shares of Microsoft continuing to drop down 1% today, falling more than 18% in June. That is on track for its worst month and worst start to the year since 2000. The tech giant the worst performing Mag7 stock so far this year, down nearly 25%, with the company planning to spend $190 billion CapEx this year. We got to go straight to the Chartmaster on this one. Carter, what do you see?
- [23:58]
Carter Braxton Worth
Well, I mean, first of all, it's not unique to Microsoft in the sense that software as a space right. Is under incredible pressure. The one thing about the Microsoft chart which is of course very important is that it is down some 35% from its peak and not to a random level. It is exactly to the penny at its tariff low meaning In March of 2025 the stock breached 350 was trading around 345 and last week we got around 3. We're sitting here a little bit above that level. I think those lows are good lows and so my hunch is to add to Microsoft here on this very severe instance of no love.
- [24:35]
Etsy Representative
Right.
- [24:35]
Carter Braxton Worth
I mean it's all about trying to find things before they're embraced and then when they're over embraced quietly backing away while others are perhaps buying at the top.
- [24:48]
Melissa Lee
Would you concur?
- [24:49]
Tim Seymour
First of all, I love to hear Carter getting bullish on it's not a simple call and, and the work he just said you could have bought Microsoft at $450 back. Excuse me, $350 back in November of 21 basically made no money. I think the big story here is what's going on with gross margins and I think it's a question of is the street too high, is the buy side too high? You know you have a Azure business which is the fastest growing business they have and that's bringing down margins and margins are down 450bps year over year. So I think the company's cheap. I like it. I have been nibbling not huge bites but I think Microsoft will rise again.
- [25:25]
Dan Nathan
Yeah, the silver lining here is that that 450 million installed base. Right. If you think about Office 365 and last quarter they added 5 million users and they're getting some big customers. Accenture I think it was, you know, 750,000, that sort of thing and you know investors kind of like that. But there were some things about the spend that they didn't like after the quarter and that's why the stock sold off. So. So at 20 million Copilot users, you know right now you have an opportunity here if you start to see an acceleration. So to me they got to find the right solution. I think was a couple of weeks ago they said they're considering Putting deep seeks R4 model on there and if you think about how much cheaper that might be and on the consumption based bottle if you do see more uptake of that relative to let's say quad or gbt, that could be, you know a nice tailwind for Mike Microsoft I
- [26:12]
Steve Grasso
think to Carter's point, if you look back on a three year chart, you could see those levels pretty, pretty substantially as support. They're looking at this as capex is a perpetual impairment. They could turn that switch whenever they want. That makes it a buy. I think it's a buy. I think it's a buy right here.
- [26:28]
Melissa Lee
Coming up, a media split. The spin off pushing shares of Comcast higher and what it means for the future of M and A in the media space. You're watching Fast Money live from the NASDAQ marketsite in Times Square. Back right after this.
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- [28:38]
Melissa Lee
Welcome back to Fast Money. Comcast shares jumping more than 4% after announcing plans to spin off its remaining media businesses. Including sky and NBC Universal into a new publicly traded company. The stock surging as much as 17% before losing steam throughout the day. CNBC's Julia Borson's got the details here.
- [28:55]
Julia Boorstin
Julia well, investors are welcoming Comcast split for unlocking value now within the next year, Comcast expects to spin off sky along with Bravo, Peacock, Universal Studios and Parks as well as Telemundo, with Comcast retaining a stake of 19.9% for as much as a year after the deal is completed. Now this split admits the lack of synergies from the vertical integration of Comcast acquisition of NBC universal back in 2011. But Wolf Research Project predicts that the breakup won't actually occur, saying this split strengthens the ability of one or both units to merge with peers or competitors. Wolf projecting that Charter Cox will engage with Comcast by creating a national cable company and that Netflix will make an offer for NBC and possibly for sky as well. Comcast executives though shooting down the idea that this split is designed for M and A, saying it's the right move for each company to create Mali value and better monetize its assets. Mike Cavanaugh is set to run the media business, saying that the separation today gives each team a clearer mandate, a more focused capital allocation framework and the ability to move faster with partners who are specific to their respective businesses.
- [30:09]
Melissa Lee
Melissa I mean this happened so quickly after the version spin off. Julia, you have to wonder, I mean things haven't changed that much in terms of, you know, the lack of synergies between a media business and a in a cable broadband company. I mean that existed back then too.
- [30:24]
Julia Boorstin
Yes, the version business is such a small business compared to this NBC Universal asset version which is of course CNBC's parent company is really just a handful of cable companies which are developing other ways of monetizing such as the Golf Channel which now derives 50% of its revenue from from booking golf courses in addition to to the 50% of the revenue that's from the cable business. So my understanding is is that the version assets were seen as not contributing synergies to the rest of NBC Universal and from a valuation standpoint, maybe dragging down the value of those assets. Whereas the remaining NBC Universal is really about the media business and the entertainment business plus NBC. And there are specific strengths here, right? There is a great library, a great studio. In Universal you have the theme parks, really one of two theme park businesses second only to Disney. And then sky has the international distribution which is really rare for a US based media company to have that type of international strength.
- [31:30]
Melissa Lee
Julia, thank you. Julia Boorstin, this new NBC Universal plus Sky business, whatever you want to call it, I mean it's. Should it be like Disney? I mean, in terms of valuation?
- [31:40]
Tim Seymour
Well, that's the question in the sum of the parts. I mean, going all the way back to the spin off of Versant, our parent company, which I think was a good deal. But I mean, bottom line is you have a dynamic where a lot of the analyst community wanted to see more of that. And so a lot of people were asking, well what, you know, why did this happen now? And you know, Wolf wrote about it, a lot of people and I think they're looking at the merger kind of landscape right now out there. I think ultimately valuation is something that has a chance to be pushed higher, especially as you get into the media assets.
- [32:09]
Melissa Lee
Yeah, Moffitt, Nathanson, we had Craig Moffitt on in the last hour and he basically said he doesn't think M and A is going to come of this.
- [32:16]
Steve Grasso
Yeah, well, when you look at all the charts, they're thrown out for debt and when you think about what they're paying for its parks and connectivity. So there's a lot of things that can die off before we get to the crown jewels and those and we see how quick they pivoted after the Versant deal. So it doesn't seem like there's a clear cut strategy in the entire sector.
- [32:35]
Dan Nathan
Yeah, you know, one of the things that it just strikes me, we talk about this a lot, you know, like you got to separate companies and their performance from the stock market. Make no mistake about it, when you have a stock like this down 65% over the last, you know, sort of five years or something, like you have to do something, you have to make changes. You can't keep going to shareholder meetings and telling the same story and having, you know, the businesses that let's say are slow moving are deteriorating and keeping keep talking them up and have these other building businesses that are just being overshadowed and you know, investors don't care. So, you know, stock market performance does have effect on a lot of corporate action.
- [33:07]
Melissa Lee
Coming up, all the fast movers from today's session. The bitcoin sale actually boosting strategy. Tesla's charge higher in a deal in the satellite space. Plus the the next move for markets after today's jump higher. All that when fast money returns. Welcome back to Fast Money Stocks starting the shortened holiday week in the green. The Dow jumping 300 points. The S and P climbing more than a %. Tech heavy Nasdaq leading the gain surging more than 2%. Shares of Strategy surging nearly 13% today after its rough sell off this month. The company saying it will buy as much as $1 billion of its preferred shares and up to $1 billion of its class A common stock, adding it may sell over $1 billion of Bitcoin to raise some cash. Shares still down more than 40% in the month of June. Tesla also jumping Today more than 8%, its best say in over a year. CEO Elon Musk posting on social media that Tesla is rolling out a new version of its full self driving driver assistance hardware to Tesla owners with A13 hardware. And more news in the space sector. Rocket Lab jumping nearly 16% after agreeing to buy satellite communications firm Iridium in a cash and stock deal worth $8 billion. Iridium surging more than 25%. This is one that you mentioned, grass on the call earlier.
- [34:25]
Steve Grasso
Yes, A Rocket Labs is doesn't earn any money, all right. They're just spending every which way and loose. And when you look at Iridium, they actually have the cash that's coming to it. So they could launch rockets, they could put satellites up. But Iridium actually has their satellites and they have spectrum. So this is the moneymaker for Rocket Lab. Very rare to see both in an M and A. Both stocks do well. One usually sells off, one rallies. They both rallied here. The street likes the deal. I think Rocket Lab needed to do the deal.
- [34:54]
Melissa Lee
Now to a developing story out of Washington, the Supreme Court ruling. President Donald Trump does not have the authority to fire Fed Governor Lisa Cook for now, but the opinion leaves a future dismissal a possibility. Eamon Javors has got the details on this. Eamon.
- [35:08]
Eamon Javors
Yeah, that's right, Melissa. The Supreme Court ruled this morning that President Trump cannot fire Federal Reserve Governor Lisa Cook at least. But the ruling came on narrow procedural ground and the court said that the ultimate decision will depend on the facts of the case. Now the president argued that he sought to fire Cook because of allegations that she committed mortgage fraud, which she denied. But Cook argued in part that her firing was invalid because she wasn't given due process, which was an argument that the court was receptive to. But in one of the big questions on this, the court said it would take a pass the issue of what for cause firing actually means. The court said it's not going to define what a for cause firing is, but set a couple of criteria, writing whether cause for removal exists in any given situation will depend at least in part on the seriousness of the alleged misconduct and the extent of any nexus that may exist to the governor's professional duties. Now, that sets two tests, suggests that the current mortgage fraud allegations don't quite seem to meet relative seriousness and a nexus to Cook's professional duties. Now, as for what due process would look like, the court didn't spell that out specifically either, but suggested that at a minimum, Cook was entitled to some explanation of the evidence at issue, some avenue for a response, and a deadline by which the response would be due. Still, all of that doesn't mean the president will be unable to fire her in the end. The court also said the president's ability to do that will depend on the facts of the case once they've been adjudicated. And President Trump signaled on social media today that he's going to press ahead, writing, we will take appropriate action immediately. Melissa, back to you.
- [36:52]
Melissa Lee
The language of the court, Eamon, was very interesting. I mean, it really sounded like maybe a win for Fed independence when the court says things like the fact of independence and the appearance of independence are key to the Fed's design. But it was only five to four, which tells you that, you know, at any time you can have one voter move over and then that's it.
- [37:13]
Eamon Javors
Yeah. And the circumstances will dictate, you know, whether you get that kind of a split. You know, look, I think that what the Supreme Court said is the Fed is different. Right. I mean, in the other case today, in the Slaughter case, they said the president can fire, you know, effectively whoever he wants from independent regulatory agencies, agencies. But the Fed, because of its history, and the court went into this long preamble about the early American national banks and the whole history going back to the founding fathers of how we got to the Federal Reserve act in 1913, that all that history makes the Fed a different thing. And because of what the Fed does, it is different. And so I think they set a higher bar. And you just heard some of the criteria they set. So they are sort of putting a little bit of a ring fence around some of these members of the Fed board and saying, you know, you if you can, fire them, but you're going to have to do X, Y and Z. And I think that X, Y and Z is a relatively high hurdle.
- [38:10]
Melissa Lee
Yeah. Eamon, thank you. Amy Javerse in Washington. For more the Supreme Court's ruling on Lisa Cook, let's bring in CNBC contributor David Zervos, chief market strategist at Jefferies. He did work at the Fed once upon a time. David, it's always great to get to your perspective on things. Does this change anything? Does this change your view or does this, you know, inform you about the independence of the Fed and maintaining that independence, even despite various political pressures that may be brewing?
- [38:38]
David Zervos
Well, I don't think it changes much. I think we've, we've largely expected this decision to not go the President's way in terms of an immediate firing. And so the market was probably set up for this. I didn't think the market reacted much to it, to be honest with you. Didn't see much in the yield curve or in stocks that you could point to was related to this. So I don't think that's the story. Whether it sets up some precedents, whether it sets up a sort of a more independent or a less independent Fed, I'm not really sure that I can buy into that story. I think the Fed, I've argued, has always been a political institution. It just depends on which side you're looking at and where the entrenched politics are. The entrenched politics have been outside the Republican Party and now they're slowly moving toward the Republican Party. And there's a tussle, there's a fight, there's a, a desire not to see that happen from the vested interests. And that's largely why Jay Powell stayed. And I think, you know, this may allow the President to come in and do something with a court case against Lisa Cook if they prove that these allegations of mortgage fraud are real and substantial and do affect. But, you know, I think that'll be a long way down the road. It's something the market's not going to spend an enormous amount.
- [39:49]
Tim Seymour
Hey, David. Tim. Yeah, I mean, I think the House serious for cause is something that leaves open interest interpretation in the future. And, you know, frankly, I believe that should be there. Let's go to the Fed though, as it is right now. Kevin Wash, you know where we are in a world of lower oil, you've been pretty outspoken over the times you've been on our show that you think there's, there's an environment where we aren't overrun by inflation. Just refresh for us where you believe the Fed should be. We see where Fed fund futures are. We know where the market is.
- [40:19]
David Zervos
Tim, I'm not a big, big should guy. I'm a big, you know what they're likely to do guy. And I think Kevin is likely to be quite opaque. We've made that clear in many of our comments. And he's kind of come, come, come out with guns blazing and Green Span esque Opaqueness, which I quite enjoy, to be honest with you. I think it's quite refreshing. And I think we'll get, we'll get a healthy debate, we'll get a lot less forward guidance. We'll get a committee that I think will look at this inflation and sort of come to the conclusion that many investors are coming to, which is oil prices are down, they're likely to keep heading down. This Iran conflict is finding a way toward an end. The President wants a dead end. He certainly wants energy prices lower by the end of the year. I think there's a lot of reasons to be optimistic on that and I think it'll be very hard for these relatively rogue members of, of the FOMC as to come out with a inflation scare idea like they did in the last set of dots. You know, we had nine people on this committee who basically back in March when we knew about oil and we knew about the conflict, were saying there were going to be no rate hikes. And now we've got one of them saying three rate hikes by the end of the year, five, I think saying two and then the rest three others saying one. That's an amazing switch, I mean almost frankly astounding switch given that oil and energy prices have come back as much as they have. So I think it's going to be a really hard argument to push for rate hikes. The market is a little scared of rebellion at the Fed and that was what that was back on Wednesday a week ago, not this Wednesday before, but when the, when the FOMC first came out. And I think that rebellion risk is there. That's really Kevin's biggest problem is he's got a raucous and somewhat rebellious, maybe politically motivated crew inside that he's going to have to fight against because politics does run rampant in Washington even if people don't like to talk about it inside the Federal Reserve.
- [42:26]
Melissa Lee
David, always good to see you. Thank you.
- [42:28]
David Zervos
My pleasure, Melissa.
- [42:30]
Melissa Lee
David Zervos Interesting that when oil prices, prices were going up, some people are saying, oh, it's such a small part of consumer spending, a small part of the economy in terms of energy prices. We use much less fuel, etc. And when they're coming down, then it's okay. Now inflation's up, but we have AI inflation at the same time in other areas of inflation to contend with.
- [42:51]
Steve Grasso
Yeah, I think we could quantify the CPI and PPI to energy and energy 60% of the rise. I think the other thing was the straight of her moves. We only took 2% of our oil from there. So that, that was a very small thing. So we should never run to the same extent. But to David's point, in the next two months when you see PPI and CPI come in drastically, probably a month out to be very hard die grace rates.
- [43:17]
Dan Nathan
Yeah, I guess the other way to think about it is that we had what 25% earnings growth year over year. So companies seem to be doing just fine right now. We have jobs, the labor market is kind of firmed up a little bit and if we have, we have the all important jobs number this Thursday morning if that thing runs hot, you know, like it's not a, there's not a strong argument for rate cuts I guess. And so you know, at the end of the day I look at this and I say to myself, you know what with rate hikes, stock market's doing just fine if you go back to 2023. Right. And we kind of stayed elevated for a bit. And even with expectations for rate hikes, the market still doing just fine.
- [43:52]
Melissa Lee
Coming up with the chart master season store for Alphabet as the stocks look to climb back after extreme drop and a beaten down cybersecurity name that may be ready to bounce. Fast Money's back into. Welcome back to Fast Money. Shares of Alphabet popping nearly 5% after joining the Dow Industrial average today. The stock looking to bounce back after a rough month still down 7% cent in June. But the chartmaster says the bounce may just be starting. Carter Worth, what does the chart say?
- [44:25]
Carter Braxton Worth
Well it is only day one, so it's just a one day bounce. I think it's gotten more to it. But let's look at a chart. The, the circumstance to my eye is what Garp looks like pictorially, definitionally. Right. GARP is a growth stock at a reasonable price. The only way it could be reasonable or implied to be more reasonable than it was is that it sold off. So this is a 19% sell off over a five week period and it touched the 150 day moving average to the penny and bounced smartly. And I think again one day is probably not all there is going to be. And I like it here for a second day or a third day, so forth and so on.
- [45:04]
Melissa Lee
And then you also put out a bullish note this weekend on Akamai.
- [45:09]
Carter Braxton Worth
Yeah, you know this is a similar circumstance. It too has sold off. A lot more beta involved here. This in this instance a 34% sell off after break breaking out with a big sort of news related thing about a month, two months ago it's given all of that back and then some. So a major level of support here to playing for a bounce as a
- [45:31]
Melissa Lee
trade here too is really an underutilized word on television. Do you like. Well I know you like Alphabet, Tim,
- [45:38]
Tim Seymour
but yeah, I don't have a strong opinion on acquire. I mean I really think that in the case of Google it's a 20 almost 23 times so multiple and in fact you didn't ask this but I mean we talked about Microsoft which has got the same forward multiple and I'd rather own Google.
- [45:57]
Melissa Lee
All right.
- [45:57]
Dan Nathan
Yeah, it's worth noting with Akamai. This is the name that until Carter put a note out today, I hadn't thought about like maybe 20 years. This was like a poster child for the Internet bubbles. One of the last big IPOs back in 1999. The only thing I'll say here is like this is a great example. Example. That gap that we saw a few weeks ago was on an anthropic deal, right? It shows how much they are looking for compute. And it's not just compute, but it's also the services that Akamai provides. You know, I like his technical call. The fundamental thing is just really interesting to me how quickly it came back after that announcement.
- [46:28]
Steve Grasso
If you get any type of momentum, it's easier to push Akamai around versus Alphabet. So if I had to pick, would you rather you didn't ask? Once again, like Tim said, Akamai Join the party.
- [46:39]
Melissa Lee
Up next, final trades
- [46:43]
Dan Nathan
Missed a moment of fast. Catch us anytime on the go follow the Fast Money podcast. We're back right after this.
- [46:57]
Melissa Lee
Time for the final trade.
- [46:59]
Livy Dunn
Carter
- [47:02]
Carter Braxton Worth
S&P 400 Mid Tech Biotech Network game up and out for buyers.
- [47:06]
Tim Seymour
Sam this has been a brutal run for Alibaba valuation. The charts say stay away the valuation and the story says by Dan yeah,
- [47:15]
Dan Nathan
I like Carter's Google call. I think it runs into earnings. I wouldn't own it in earnings.
- [47:20]
Steve Grasso
Steven I love the Space X story with the squeeze and we have a shortened week. We have light volume so that squeeze could be pretty intense being with the ads to the index.
- [47:29]
Melissa Lee
Thanks for watching. Thanks for watching Fast Money. See you back here tomorrow at 5. Mad Money with Jim Cramer starts right now.
- [47:38]
Fast Money Disclaimer Narrator
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 another medium. 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 At Etsy, we
- [48:11]
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