← CNBC's "Fast Money"
CNBC's "Fast Money"
Markets Enjoy Short-Lived Highs… And A Possible Fed “Shadow Chair” 6/27/25
00:43:53
The S&P 500 and Nasdaq both jump to fresh record highs, but pull back quickly as U.S.-Canada trade discussions screech to a halt. Plus Big bank stress test results, Nike’s best day since 2021, and Trump-Powell tensions run high, as Wall Street buzzes with potential for the president to name a Fed successor early. Fast Money Disclaimer
Loading summary
Transcript127 lines
- [00:01]
Melissa Lee
Want to quickly create and execute trading.
- [00:03]
Steve Grasso
Strategies to help keep up with the markets.
- [00:05]
Melissa Lee
With Fidelity Trading Dashboard, you can access live data, advanced charting, portfolio insights and.
- [00:11]
Steve Grasso
Automated alerts all on one screen.
- [00:14]
Melissa Lee
We streamlined the trading experience so you can build and place trades better. Your Fidelity Trading Dashboard is ready now. For free, visit fidelity.com tradingdashboard.
- [00:25]
Steve Grasso
Investing involves.
- [00:26]
Melissa Lee
Risk, including risk of loss Fidelity Brokerage Services, LLC Member NYSE SIPC Introducing the new Dell AI PC Powered by the Intel Core Ultra processor, it helps do your busy work for you so you can fast forward through editing images, designing presentations, generating code, debugging code, summarizing meeting notes, finding files, managing your schedule, responding to Jim's long emails, leaving all the.
- [00:49]
Carter Worth
Time in the world for the things.
- [00:50]
Melissa Lee
You actually want to do. No offense Jim. Get a new Dell AI PC starting at 749.99@dell.com AI PC how those ahead.
- [01:01]
Carter Worth
Stay ahead.
- [01:05]
Mike Koh
Life in the NASDAQ Markets in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight. Record highs for the S and P and Nasdaq just barely a look at the sectors and the stocks driving those gains and whether the run will continue in the heat of the summer. And Nike swooshes higher for its third best day on record as the Elliott Hill turnaround truly taken hold. We'll debate that, plus are watching bank stocks after the latest stress test results. Boeing continues bouncing on its latest upgrade and we're going old school for the options action on Coinbase. What is next after the stock's 40 plus percent jump this year? I'm Melissa Lee coming to you live from Studio B at the nasdaq. On the desk tonight. Von When I said Steve Grasso, Carter Wirth and Mike Koh. We start off with markets eking out a record close for the first time in months. The S and P gaining half a percent, eclipsing the all time high set back in February. The benchmark index closed, closing in on the 6200 level, the NASDAQ also setting a record its first since mid December. The Dow was the biggest percent gainer on the day adding 431 points, but that index still nearly 3% from its best ever levels. And take a look at the sectors leading the gains this year. Industrials up a whopping 11% since January. They closed today at a record. Communication services up double digits while financials come in at number three. Today's gains, though, come even after a midday drop when President Trump said he is ending all trade discussions with Canada effective immediately. Trump also just making some comments about Fed Chair Jerome Powell in just the last few minutes. Let's get to the latest developments with Megan Casella in Washington. Meghan?
- [02:35]
Megan Casella
Hey, Melissa. Just a few moments ago, the president wrapping up some remarks with reporters in the Oval Office where, as you said, he went after Fed Chair Jerome Powell. Once again, he called Powell, quote, a stubborn mule and a stupid person. He went on to say he would like to see rates at 1% right now. That's where he believes they should be. He also went on to say that quite quote, I would love him, meaning Powell to resign if he wanted to. He's done a lousy job. So more of the same, but the rhetoric perhaps getting stronger there, Melissa, against Powell. But of course, a lot of what he was talking about in that appearance was Canada, as you mentioned, because the tariff tit for tat could be heating up again with our northern neighbor. The president posted this afternoon that because Canada is moving forward with the digital services tax, that he will be ending all discussions on trade effective immediately. He went on to say that he will be letting Canada know the tariff that they will pay to do business with the within the next week. Treasury Secretary Scott Bessant also told CNBC in the last hour that the White House knew this was coming, but they hoped that Canada wouldn't follow through.
- [03:37]
Melissa Lee
We think it's patently unfair to do it retroactive. This was something from the Trudeau years. So we were hoping as a sign of goodwill that the new Carney administration would at least put a brake on that during the trade talks they seem not to have. President Trump has responded.
- [03:57]
Megan Casella
Now, the backdrop here, Melissa, is Canada is not facing a reciprocal tariff like the other countries, but it is subject to steep sectoral tariffs on steel, aluminum and on cars. So there have been ongoing trade talks to try to strike a deal with Canada, at least covering those sectors. And Canada has been threatening to retaliate if they didn't get a deal soon. So now there's this new wrinkle and the question is what the new tariff might look like, what it would cover and just how much Canada pushes back.
- [04:23]
Mike Koh
Melissa, there also is, I mean, all of this is uncertain, but President Trump also made it sound like the path forward was he could do whatever he wants. And I think that that almost injects another level of uncertainty to this whole thing. I mean, whether there be deadlines or whatnot, he basically said we're going to issue a letter and Canada will know shortly what it will pay.
- [04:43]
Megan Casella
Absolutely. And adding to that uncertainty is Morgan Brennan. Our colleague tried to pin Besant down on this in his interview and she asked what authority essentially he would be using. Besant Talked about Section 301, that's that was used to impose tariffs against China in the first term. Besent has said today that he believes USTR could launch that investigation as soon as Monday. But that's an investigation. It could lead to tariffs down the road, but it would take a long time. Besant then also said, but he could also just do this with emergency powers under aipa. That would be much quicker. One's more quickly, one's more durable. We just don't know at this point. It's not clear what path they're going to take. There's so much uncertainty wrapped into all of it.
- [05:20]
Mike Koh
All right, Megan, thank you. Megan Casella, we did see, we did see the markets react just a bit, but still pretty close to 2 highs here. Steve Grass, so what do you make of all of this?
- [05:30]
Leslie Picker
Yeah, I think that people, if you look at the response time that all of these stories that they've taken to be digested with the market, we've all been around long enough, right? The financial crisis, trade crisis.com bubble, Covid, all work through more rapidly with every consecutive crisis. So I think the market right now has moved on and said this is probably just the sausage making in the process. So we're just going to buy the market and go to where the puck is going.
- [06:02]
Mike Koh
I mean, at the same time, there's also this July 9th deadline and supposedly we're closer to a deal with the eu. Both sides have confirmed that. But still, this whole thing, this is our northern neighbor. I mean, right now we're working on exemptions under exemptions with usmca.
- [06:18]
Steve Grasso
Well, as it pertains to interest rate policy, I'm hoping that he means 1% real rates because given that we just had a PC reading slightly over 2.
- [06:26]
Leslie Picker
I'm guessing it's not real rates.
- [06:28]
Steve Grasso
Well, I'm trying to take the moral high road here and give benefit of the doubt, but perhaps it's undeserved as kind of as you said, I'm hoping here that this whole this is like essentially a way for him to push back against the taco trade and perhaps present himself as being a hard and fast negotiator with a very close neighbor of close proximity and doing this because what we've seen is a delay. And it's more likely to your point about a July, I believe July 4th or July 9th deadline, that that's likely going to get pushed out. They've already given themselves Runway to say, okay, it's not really a big deal, we're willing to extend. So I just think this is them bringing in another pillar and saying we are willing to to be tough negotiators because their recent history has suggested that they will continue to kind of acquiesce and provide flexibility. And I think that's kind of undermining a bit of their credibility.
- [07:19]
Mike Koh
You know, Mike, we started the show with this trade stuff because of the uncertainty. And in spite of the uncertainty, we're hitting record highs. So what does this tell you about the durability of this market rally, in your view, I mean?
- [07:32]
Melissa Lee
Well, I mean, I would say that it seems like, you know, you sort of hold your nose and buy it, actually. I mean, I was a little bit concerned, I have to say, when it looked like we had opened at fresh highs and then it looked like we might actually be heading lower, which it did with about an hour before the close. We did see the market actually get to negative territory. And I actually lightened up a little bit there because technically that just feels terrible to me. When you open at a new high and then close lower, that's usually the kind of reversal you don't like to see. But people bought that dip. And I think the confirmation we had that the market was in good shape came when xlk, when the technology stocks broke out to fresh eyes first. And of course, they've been market leadership. So you kind of expected some of these other things to follow along. And a lot of the news has generally been pretty good, you know, with respect to Powell and all of that. I mean, I think there's a lot of bluster there. It's not in the dual mandate for the Fed to try to help out the fiscal debt and deficit situation, which I think is really one of the things that Trump is kind of upset about with respect to rates.
- [08:35]
Mike Koh
Yeah. Carter, what do you make of the technicals behind the S&P 500 move?
- [08:42]
Carter Worth
Yeah, well, I mean, to Mike's point, if we had, after the reversal had closed at or near the low, that would have implications. But in the last, it shook it off and it was a decent day. But really there's two stories to be told, right? And the first is that the market today recouped its losses associated with essentially tariff or tariff related news and is now back to where it was. And simply that right on February 19th and an inch above how much above we're 42 basis points above where we Were then. So what that narrative is that the market in four months is up 42 basis points. That's an annualized rate of 1.2%. That's quite dull. The other story is from the April low, of course, the lows of the Tariff News. The s and P500 is up 28% in two months and it's annualizing at a rate of 203%. So you can tell any story you want. Right. We're annualizing right now from the April low at an annual rate. We'll be up 200%. We keep this going. Oh, but what about the fact that we're up 1.2% over the past four months? We're analyzing at 1.9%. Both are true. And therein is the conundrum. Are we putting in a double top? There's a big prospect for that. Or are we going to clearly break out and make new highs? It's anybody's guess. I don't have the answer to that.
- [10:04]
Mike Koh
You don't even have a hunch. Carter, you usually say but my hunch.
- [10:07]
Carter Worth
Is I can give you a hunch. I mean my hunch is that there's an internal divergence that is either the opportunity or the problem. Yes, the S and P has recouped its losses and has now made a slight new high. But right now 225 of the constituents are 15% or below their respective 52A guys, that's 45% of the index. 150 constituents are more than 20% below. That's 30%. So you're talking about roughly half the index is still some 13, 14% their respective 52 week high. So therein is the opportunity they catch up. The market will clearly make important new highs if they continue to lag and not participate. That's how a double top is made.
- [10:57]
Mike Koh
Well, in the bull case about this rally, you can say we had mentioned what led us here. Industrials, industrials are up there, financials are up there. It's not just the same old, same old technology stocks at this point.
- [11:11]
Leslie Picker
Yeah, and the. So I like the way Carter sets it out. But historically when you have a sell off that dramatic that we had in April and then a rally so aggressive back 12 months out, the market outperforms. So I think if you're a longer term investor, you stay invested.
- [11:31]
Mike Koh
All right. Well, the Federal Reserve is out with its annual bank stress test results. A read on how the financial institutions could potentially weather a severe recession. All 22 banks involved this year got a passing grade buzzy Pickers got the details. Hey, Les. Mel.
- [11:45]
Melissa Lee
Yeah.
- [11:45]
Mike Koh
The KB E up significantly in after hours trading. Last I looked, it was up about 1.8% after the biggest banks saw far lower declines in their capital ratios the stress test than they had seen in prior years. This could bode well for dividend and buyback announcements next Tuesday. All 22 banks, as you mentioned Mel tested, remained above their capital requirements after absorbing hypothetical losses of more than $550 billion. The scenario by which the banks were tested against was widely seen as more moderate this year, evidenced by the aggregate decline in the common equity tier 1 capital ratio of 1.8 billion percentage points. That's the lowest in years.
- [12:26]
Melissa Lee
The 2024 results by comparison showed hypothetical.
- [12:29]
Mike Koh
Aggregate declines of 2.8 percentage points. This is the first round of stress tests with Michelle Bowman in the Vice.
- [12:35]
Melissa Lee
Chair for Supervision seat, although the test.
- [12:37]
Mike Koh
Was developed before she took that role. Under this new regime, though, there's been this broad expectation of loosening capital requirements and regulatory reform. Vice Chair Bowman said in the statement that, quote, one way to address the excessive volatility in the stress test results and corresponding capital requirement is for the board to finalize the propos proposal that.
- [12:56]
Melissa Lee
Would average two consecutive years of stress.
- [13:00]
Mike Koh
Test results, which was released in April. Mel? All right, Leslie, thank you. Leslie Picker. Let's get more on the banks of Chris Marinack. He's director of research at Janney Montgomery Scott. Chris, great to have you back. Nice to see you. Any surprises to the upside or the downs? I guess there really were no downside surprises, but any surprises there?
- [13:18]
Chris Marinac
I think you're going to see more buybacks and I think on Tuesday when the banks are free to discuss their share and capital returns, it'll be positive. The average bank in the stress test this year had a 3% decline in shares outstanding from the end of 23 through first quarter of this year. So it's more of the same and most likely higher. You know, Wells Fargo had a 9% drop in share count while their assets cap was on. So now that that's relieved, they'll probably buy back less but still be buying back shares. I do think that the results signal that the Fed is not only going to be accommodative in the banking industry, but it wants to spur the banks to lend. So the reality is bank loan demand is somewhat tepid. It's about 1.3 to 1.4% year to date. I think we'll see a little bit better second half as we have some uncertainty. Clear as we get into the fall, but more buybacks good for stock prices. And I think we're still recovering from sort of the negativity that was a little bit excessive back in April.
- [14:11]
Mike Koh
Yeah, buybacks and dividends good for investors as well, Chris. And I'm just wondering from the investor standpoint, banks have had a great, a great little rally here. I mean we've got the likes of a JP Morgan for instance, at basically all time highs at this point. And I'm wondering, you know, how much of all that expectation of, of regulatory easing is already priced into these shares.
- [14:33]
Chris Marinac
Well, some of it is, but if you even look at the KRE for a broader perspective, it trades about 10 to 10.2 times earnings today. And we were at 12.1 before Liberation Day. So I still think there's a comeback to happen. We haven't had earnings estimate cuts which is good. I think we could see actually estimate increases as we process in buybacks. And also capital and credit costs could really be more positive than investors and analysts have thought. We don't see major credit shifts at all this quarter coming up. And I think overall the bank's ability to weather the storm from credit issues down the road is still very great. The profitability this year has been higher because of net interest margins. If the Fed were to cut at a later time, that's going to be good for the deposit costs which therefore will I think improve earnings further.
- [15:19]
Steve Grasso
Chris Bono one here. Thanks for being with us. So I'm thinking back to March 23rd roughly. Could you kind of give your thoughts on finding the fine balance between making sure that we have ample liquidity within the long term treasury market and treatment of those longer term assets, particularly the hold to maturity Treasuries that kind of led to the conundrum in the, in the first place.
- [15:40]
Melissa Lee
Sure.
- [15:41]
Chris Marinac
So I think if we look at how rates have been through today, it's been a very de minimis mark to market. It's going to be flat to slightly down on interest rates as of today. That's not going to change the mark to market. What you have every year is about 10%. 12% of the portfolio is paying off because of the high percentage of residential mortgage backs. That's the predominant security that banks hold. It's less Treasuries and more rmbs. However, I do think that the payoff of these old vintage from 2020 and 21 is going to get accelerated this year and into next year. So I think it's less of a problem. Banks liquidity is actually higher today than it was pre Silicon Valley and FRC failing. I think that there's probably too much liquidity in many banks eyes. They'd like to see the Fed relieve them on the LCR liquidity coverage ratio. That's probably coming in a few more months. In addition to what we had this week on the SLR trading securities for the big banks that is getting better. I think it could still get even wider but I think it's a progress that we're making with the rule changes that we just had in the past few days.
- [16:44]
Mike Koh
If you're going to buy banks today Chris, would you buy the larger, higher quality banks or would you go down the cap scale?
- [16:50]
Chris Marinac
I would move down the cap scale because I think those stocks have not moved as much. It's been a very strong month of June for the large caps. So I think your mid cap and regional banks still have more to recover. I also think the earnings and the buybacks will be very strong for those companies as well even though they're not part of the stress test today.
- [17:08]
Mike Koh
Chris, great to see you. Thanks for your thoughts.
- [17:10]
Chris Marinac
Thank you as well.
- [17:11]
Mike Koh
Chris Marinac, Carter Worth Would you agree with Chris midsize and regionals over large cap?
- [17:20]
Carter Worth
Well, I guess I'd prefer if you were to play it. There's an ETF KBWB versus the carry and that really is focused on the big banks. And while the big banks have just now returned to their former highs similar to the market, the big banks are still so far behind the S and P going back five and seven years. In fact I was just looking that up. I mean right now going back to June of 2018, the S&P is up 120%. The BKX is up 45. Think of that. So there's plenty of catch up, so to speak playing big banks to the market. And I'd rather speculate that way than than playing small and regional banks as catch up to the big banks.
- [18:02]
Mike Koh
Mike?
- [18:04]
Melissa Lee
Yeah, I mean what's interesting if you're playing on the big bank side, if you're taking a look at XLF for example, I think that you could play this one for a potential breakout. First of all, it didn't hit a new all time high today is just just short of it. But the second thing I would say is that this is an area where actually the upside options are quite inexpensive. So it's not like you have to take a lot of risk if you want to get long some deltas and financials, you know, buy some upside calls and XLF if you're Taking a look at the regional bank index by contrast. And this is Carter's bailiwick. It's not mine, but. But that one still looks pretty weak to me.
- [18:37]
Leslie Picker
You know, when you look at JP Morgan, you said it, it's been leading the pack. But we don't know when Jamie Dimon is leaving, right? Or 2026 or is that, what, is that a given yet or. He hasn't announced. I know he said he would stay.
- [18:50]
Mike Koh
At the official date. He said he would stay. Whatever. It's, it's getting closer.
- [18:53]
Leslie Picker
Yeah, it's getting closer now. Now they're professionals, so they're going to stack. There's going to be a lot of news flow that's positive into him departing. So if you're going to play this, you either go with Wells Fargo, that continues to be make up for the last couple of years or you stay with the best in breed J.P. morgan.
- [19:09]
Steve Grasso
Yeah, I tend to agree in terms of the large banks only because I kind of have the opinion that we are later in the economic cycle and I just don't want to take the risk. I think if I'm really chasing alpha, there's other ways that I can play it. If I want to take risk, I don't really want to take it in like an economically sensitive situation. I'd probably do it within parts of the tech market.
- [19:29]
Mike Koh
Coming up. Boeing flying high. And one analyst says it can rise much, much higher. But do the traders agree with the call? We'll find out. Plus, Nike sprinting to its best day in four years. What is next for this sportswear stock as it tries to break out of its slump?
- [19:46]
Melissa Lee
This is Fast Money with Melissa Lee right here on cnbc. This episode is brought to you by Square. Your favorite neighborhood spots run on Square. Did you know Square can help you turn your small business idea into a big success? Yes, even that wild idea for Squirrel Fuel. Your squirrel themed coffee bar. Square is so much more than just a point of sale for local businesses. What started as a little white card reader is now powering things behind the scenes, helping you manage finances, schedule staff and cover cash flow gaps. With Square, you could keep things at squirrelfuel running like clockwork. No caffeine needed. Well, except for the baristas. And good luck finding ones willing to wear a squirrel costume. Square gets it. Local business can be big business, yet with growth comes complexity. But whether you're expanding to new locations or building your loyal following, Square meets you at every opportunity. Square helps you handle today and dream bigger for tomorrow. Go to square.com. go fastmoney to learn more. That's s q U-A-R-E.com g o fastmoney square. Meet you there.
- [20:59]
Mike Koh
Okay. Close your eyes. Exhale. Feel your body relax. And let go of whatever you're carrying today. Well, I'm letting go of the worry that I wouldn't get my new contacts in time for this class. I got them delivered from free from 1-800-contacts. You guys, they're so fast. Oh, sorry. Namaste. Hi there. Did you find everything okay? Yes, I did, because I found the exact same contacts as my eye doctor prescribes. F1,800 contacts. Here, give me that. Attention shoppers. Did you know 1,800 contacts has 45 million contacts in stock?
- [21:36]
Melissa Lee
Okay, we checked the brakes. Everything looks good.
- [21:39]
Mike Koh
You know, speaking of checking, did you know 1,800contacts triple checks every order? Yeah, they make sure you get exactly what you need when you need it. 1-800-contacts. So good, so fast, so accurate. You'll want to tell everyone, too. Download the app or visit 1-800-contacts.com today and save on your first order. 1-800-contacts.
- [21:59]
Melissa Lee
How will you shape the future of energy with confidence? What does it mean to deliver affordable and reliable energy for all? From evolving supply and demand to pricing uncertainty. Ey understands the disruptions energy companies face and how to drive the outcomes that matter.
- [22:15]
Steve Grasso
So whether it's in the plants, at.
- [22:17]
Melissa Lee
The pipeline, or on the grid, EY's full spectrum of services help energy companies maximize operations to drive profitability and performance. Ey shape the future with confidence.
- [22:33]
Mike Koh
Welcome back to Fast Money. Boeing flying higher today. Analysts at Rothschild and Redburn upgrading the stock to a buy from a neutral, hiking the price target to 275. That's up from 180. The firm citing improving financials, culture, industrial processes and strategy, saying those factors combined with accelerated production should boost the stock. The stock, though, still hasn't quite recovered since a deadly Air India crash earlier this month. It is positive, though, for the month of June. Mike, I'm curious as to what you think. They, they had some pretty bold predictions in terms of the number of planes it would eventually produce every year. And it's a matter of if they can get the production actually up to meet that demand.
- [23:11]
Melissa Lee
Yeah, I mean, I expect obviously some of the snafus they were experiencing on the production side and some of those issues related to quality control, inspections, and the culture essentially in the workplace, I think those things, they've been working hard to get that solved. And I think they, they are doing that. And I think they will continue to do it. My only challenge here really is that, you know, in the duopoly, if I'm comparing Boeing to, for example, Airbus is just. And that's really what we have. I mean, the tailwind for both of these manufacturers is that there is a duopoly. There's going to be increased demand for commercial aircraft, both single and dual aisle, and that's obviously going to continue to be a tailwind for both of these. But it's just that Airbus trades at a, at a significant discount. It has a better balance sheet and, you know, it's hard for me to understand why one wouldn't sort of look favorably on that. So I kind of favor Airbus over Boeing at this point.
- [24:03]
Mike Koh
Yeah. The other part of the analyst argument is that they're going to, Boeing is going to reduce the debt to the point where in a couple of years they might be able to actually return capital to shareholders. Bono and I don't know if you believe that. They do have a lot of debt, as Mike was addressing on their balance sheet.
- [24:18]
Steve Grasso
They have a ton of debt, I think, I mean that's going to be there. They, they needed to do that to kind of get through the snafu's as he, as he mentioned. I do think investor sentiment clearly has shifted. I think we touched the lows around 1 4,145 and you've seen a very sharp recovery from them. I think that a lot of the production issues have been resolved. They have a strong backlog. So I understand the bull case. The real issue is do I really want to chase it at this point? I think if you've been in and there was a lot of us that said, hey, things are getting so bad, or sorry, things have gotten so bad and they've gone from terrible to bad, from bad to not so bad, that was likely the time that you wanted to get in with the stock. I just don't think at this point with the market making new highs, I just think there's, there's so many other places where you can be investing that incremental dollar that I don't know if this is the name that you really want to chase.
- [25:04]
Leslie Picker
Yeah, this is, this is not something I don't like. I owned Boeing 20 years ago and then I would sell it and trade it, but you can't trade these events. And there was no clear evidence that they were at fault in the India crash. That's why the stock rallied back. And where Mike started off, it's a duopoly. And it's 40% government paid revenue. But to Bono its point, there's plenty of other spots in the market to make money.
- [25:29]
Mike Koh
How do the charts look, Carter?
- [25:32]
Carter Worth
Right. Well, it's always the case. I mean, compared to where it was at 450 ten years ago, here we are at 220. That's a sad story. But the here and now chart, a typical standard one to two year chart, this has all the elements of a bearish to bullish reversal. And debt, of course, is a thing that can kill you off and choke you. And yet it's what leverage is all about. Think of the huge debt assumed by the cruise ships. And they've been great performers. My hunch is the momentum here is intact and that Boeing is going higher.
- [26:06]
Mike Koh
All right, there's a lot more fast money to come. Here's what's coming up next.
- [26:11]
Melissa Lee
Just buy it. What's next for Nike? After a big earnings report sent the athletic wear stock soaring today, the traders lace up for the sneaker trade debate next. Plus, the Fed in full focus as chair Jerome Powell's tenure comes into question how one former insider thinks the future of the Fed head could shape monetary policy and the outlook for rates. You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this.
- [26:48]
Mike Koh
Okay, close your eyes. Exhale. Feel your body relax and let go of whatever you're carrying today. Well, I'm letting go of the worry that I wouldn't get my new contacts in time for this class. I got them delivered free for 1, 800 contacts. You guys, they're so fast. Oh, sorry. Namaste. Hi there. Did you find everything okay? Yes, I did because I found the exact the exact same contacts as my eye doctor prescribes at 1-800-contacts here. Give me that. Attention shoppers. Did you know 1-800-contacts has 45 million contacts in stock?
- [27:24]
Melissa Lee
Okay, we checked the brakes. Everything looks good.
- [27:28]
Mike Koh
You know, speaking of checking, did you know 1,800contacts triple checks every order? Yeah, they make sure you get exactly what you need when you need it. 1-800-contacts. So good, so fast, so accurate. You'll want to tell everyone too. Download the app or visit 1-800-contacts.com today and save on your first order. 1,800contacts.
- [27:48]
Melissa Lee
How will you shape the future of banking with confidence? Industry consolidation, crypto, the rise of fintechs all create a complex landscape for banks to innovate and grow. EY provides domain led insights to navigate today's fragmented banking sector. So whether you're tackling regulatory complexity, integrating digital assets or seizing M and A opportunities. EY sees your business from every angle working together to deliver outcomes that create strategic value. EY shape the future with confidence.
- [28:22]
Mike Koh
Welcome back to Fast money. Nike soaring 15% on the back of last night's earnings for the stock's best day in four years and its third biggest gain ever. The company reporting a broadly better than feared quarter, stoking optimism that its turnaround efforts are taking hold more quickly than expected. Expected. So is the bottom finally in for this retail giant? Carter, what do you think?
- [28:42]
Carter Worth
Well, we discussed this last night and I think the circumstance is the same. Obviously last night we had what the perspective pop because after hours moves often undone. But now we have an actual pop. It's in the books. So the question is what this does at a minimum is confirm the lows of this year as important lows because the lows this year match the COVID low. Now the question is is there a lot of upside or has today's heavy volume up thrust and gap priced in on an intermediate basis? Whatever news is coming, I would be in that camp. In fact we sent out today to clients a strangle which is where you sell calls and puts your naked both sides and bet on a contraction in volatility. A volume crush happens in the market and it happens in individual stocks.
- [29:33]
Mike Koh
This is just like options action used to be. Mike, is that what you would do?
- [29:38]
Melissa Lee
Well, you know, it's interesting because of course I am on the worth charting distribution list. So I did see that, I did see that note that Carter had sent out earlier. And I agree with it. You know, here's the thing. So if you look at the sort of the pre pandemic situation in Nike, you were dealing with, you know, mid high single digit revenue growth and maybe on the best case we're looking at 9, 10% net income margins. And then right after the pandemic there was just a sort of a huge demand and all of a sudden you saw both of those things expand. And I think that priced in a whole bunch of irrational exuberance into the stock you had nearly 20% year on year revenue growth. You were seeing 13, 14% net income margins and neither of those were going to be sustainable. So if you take a look at it right now and you say all right, well let's assume that 18 months from now they're going to be doing a run rate of about $50 billion in revenues and you can get $5 billion the net income out of that, which seems reasonable Remember Elliot? I mean he was at the company for decades during some of its best years. So let's just go back to those prior kinds of performances and that gets us to sort of a fair value where we sit right now. So I'm not really a buyer or a seller. Yeah.
- [30:52]
Steve Grasso
I think what the other two are essentially saying is that there's probably the makings of a base effect. So. So in terms of do we have we seen the likely low in the stock? I think so and I think the turnaround efforts have, have really worked here. Let's focus on the positive here. So they've essentially re established their relationship or are working to re establish their relationship with wholesalers. A lot of things that they've done to kind of like undermine that under the previous leadership. They went on ahead and kind of took it on the chin with the promotional activity to clear out inventory and they've made a new commitment to kind of innovation around performance. And we have seen weakness and a lot of their competitors as well. So listen, I tend to think that momentum can ride here. With that said, I do think the upside is limited. I really don't know. The question that still remains for me is is the cool factor there for Nike because outside of the performance there's really kind of like a brand awareness there and I do think that has eroded substantially to your Vuoris and your ons and things of that nature. I do think they are willing to make the, the marketing spin and I think that the competitors are not in a situation where they can make that same type of investment and awareness is value. So I still do think they have that card to play.
- [32:00]
Mike Koh
Yeah, I do wonder if they are able to actually regain that market share that they lost. If it's that easy to do that, you know, in a, in one or two product cycles which is basically when analysts are saying they will start seeing the results.
- [32:13]
Leslie Picker
Yeah, I'm going to say no. And for all the reasons there's so many non public companies that are taking market share from them. Time go back on a five year chart. There's a declining trend line with Nike. It breaks out of that declining Trend line above 80. We still have some wood to chop. I don't. I think the product is exhausted. They have no more innovation and there's fatigue and I haven't seen anything other than a rally that, that people were so tired of the stock not performing and the bar was so low for it to actually just walk over. So I'm not to going convinced yet.
- [32:45]
Mike Koh
Coming up, a hot inflation number and big decisions ahead at the Fed, where next guest says could be the breaking point in a Trump Powell feud. Right after this.
- [32:59]
Melissa Lee
Missed a moment of fast. Catch us anytime on the go follow the Fast Money podcast. We're back right after this.
- [33:16]
Mike Koh
Welcome back to FAST money. Stocks recovering from a midday dip into the red after President Trump announced he's ending trade talks with Canada. The Nasdaq and S and P both setting record closes. The Dow finishing 1% higher and McDonald's getting 2% today, helping the stock end a five week losing streak. Shares hit five month lows just yesterday. Meantime, President Trump's criticism of Fed Chair Jerome Powell ramping up this week. Reports emerging he could potentially appoint a shadow chair even as Powell has about 11 months left in his term. Trump reiterating his push on Powell and lower to lower rates. And just a few minutes ago with reporters in the Oval Office, here's what he had to say.
- [33:54]
Carter Worth
But you can't go out to the market and say, well, we have a guy that's got us at 4% or 4 and a half percent and we want to pay 2% or 1%. I think we should be paying 1% right now. And we're paying more because we have a guy who suffers from I think Trump derangement syndrome, if you want to know the truth. But he's not good for our country.
- [34:15]
Mike Koh
For more, let's bring in former Dallas Fed president and senior analyst at Jefferies, Richard Fisher. Richard, great to have you with us. We played that clip for President Trump, but he had a lot more to say about Powell. He also said we have a guy that's just a stubborn mule and a stupid person that is making a big mistake. And he basically said that he will get another Fed chair in who wants to cut rates. There are plenty of people out there who want to cut rates. What do you make of this strategy, if you will?
- [34:43]
Richard Fisher
Well, first, it's schoolboy taunting, by the way. He's nothing compared to Lyndon Johnson. There's a history here. We had a Fed chairman, Bill Martin, from 1951 to 1970. Lyndon Johnson took them down to the ranch in Texas, shoved him up against the wall, punched him and said, my boys are dying in Vietnam and you will not cut interest rates. Martin did. He went to his deathbed, he said in his memoirs, ashamed of himself. Jay Powell is not going to do that. Moreover, it was because of Bill Martin set the stage for the worst Fed chairman in history, Arthur Burns, who is a disgrace to the Federal Reserve System. Now, if you were to name A shadow chair. Unless it is Scott Bessant, who, as you saw today, is articulate, knowledgeable, has a great background as the next successor, no one's going to pay attention to the shadow chair. They will immediately be labeled an Arthur Burns. Burns gave in to two presidents and he led to the great inflation that Paul Volcker had to come in and break its back. So I don't think much of this idea. I wish the President would tone down his rhetoric. I think I know Jay Powell pretty well. He's a strong individual, by the way. He's not a moron. He's very smart, he's capable, he understands markets. And it's not affecting him at all.
- [36:04]
Mike Koh
If that chair is appointed by President Trump, who is effectively a lackey, let's say, which is basically what you're positing, we know that that person will be cutting rates and whether rate cuts start again in the back half the of of the year. We know whoever comes in in 11 months or so, they will cut rates further. What does it matter if they're regarded as somebody who is just bending into Trump if in the end cutting rates down to 1% will start the greatest growth period of our history? I mean, I'm playing devil's advocate here. Is there a danger to cutting what the numbers are?
- [36:42]
Richard Fisher
Even Kevin Warsh has said, and he and I were there at the same time, it will never cut rates to zero again. 1%, a thin margin, assuming he's talking nominal rates above zero. Cutting rates to zero, distorted decision making allowed people to discount the present value of future cash flows to infinity. We did it on purpose because we had a mega crisis. There's not a mega crisis right now. So I think the biggest problem is going to be people will remember the last Fed chairman who gave in to the presidents. And the worst Fed chairman in history of the Federal Reserve System was Arthur Burns. We don't want another Arthur Burns. We want a Fed chairman who can stand up to and do the right thing. Whatever any president wants, whether it's Richard Nixon or Lyndon Johnson or Donald Trump. And I think the only one that I've seen in terms of the names have been posited, all the photos you showed earlier today that could be a good successor to Jay Powell and have credibility would be Scott Besant. He's mature. He's the biggest adult in the Cabinet. He's experienced in dealing with the President. He talked about Richard.
- [37:53]
Leslie Picker
So just jumping on that Scott Bessant is too important to Treasury, I would assume, to let him go.
- [38:02]
Melissa Lee
So.
- [38:02]
Leslie Picker
So I agree with you. I think he would probably be the best candidate, but he's too important where he's at. But in his words, Bessant's words, the Fed is tight because the Fed funds rate is above the two year and the Chairman thinks that he's mildly tight or moderately tight. So I think this is what the dynamic, excluding all the rhetoric from President Trump. Do you think the Fed is tight, moderately tight, sort of tight right now? And does that make it a more complex issue with all of the rhetoric coming from the President?
- [38:36]
Richard Fisher
I think it's running a good monetary policy. Again, the President said, look, inflation's down to 1.7%. Scott Besson said the same thing. Guess who that's due to? The Federal Reserve. Unemployment is still hovering in the 4% plus range. That's historically fantastic. So it could be that what the President's doing is setting up somebody else to take the fall. If the fiscal policy just doesn't quite work, I hope it does. But right now I think monetary policy is normal range and that can be a bit of a debate whether the 2% lower than the three month treasury, etc. But what this really comes down to is what affects businesses, the Fed funds rate. No business runs their business according to the fed funds rate. They key off the 10 year or the seven year or the longer part of the curve and that will be determined by supply and demand in the marketplace. It's not the Federal Reserve's influence that.
- [39:34]
Mike Koh
Moves those instruments in the contest though. Richard, for a Fed chair, could that influence, do you think the, the actions, the, the words, the votes of current FOMC members who may be under consideration. No. Immediately. You said no.
- [39:52]
Richard Fisher
Well, I mean we've seen one name in particular. He's a very talented fellow. I know him well, I think highly of him. And by the way, Jay Powell thinks very highly of him, I'm sure because we've been in social situations together. But no, I mean, you have 12 bank presidents, as you know, the vote rotates amongst them. You have other governors and so far with a couple of small dissents, there's been near unanimity at the committee. And I think all those members, the governors, the bank presidents, all seriously believe in the Fed being an independent institution, not subject to political pressure. So you might get a dissent. We've seen a little indication from two governors, they still won't carry the table if that's the case. And by the way, both of them are very capable people, so they may be credible alternatives for succession. But as soon as they're labeled a shadow chair or early the next chair. The Arthur Burns stamp is going to go right on their forehead and the markets will not like it in the end.
- [40:55]
Mike Koh
All right, Richard, great to speak to.
- [40:57]
Richard Fisher
You for a strong opinion.
- [40:59]
Mike Koh
Always love it, Richard, thanks. Have a great weekend.
- [41:02]
Richard Fisher
All right, love you guys. Thank you so much.
- [41:04]
Mike Koh
Richard Fisher. Coming up, the OA OGs, they're all here to trade the crypto rip. What is next for Coinbase as Bitcoin hovers near records. Plus, not one, not two, not even three. We got four charts of the week for you and Von Wins call on the VIX coming right at you right after this. Welcome back to Fast Money June Pacing to be a monster month for Coinbase. Even after today's pullback, the crypto exchange up more than 40% on the back of legislation that gives crypto assets a stronger federal framework. But are the gains here to stay? Let's find out with an old school edition of options action. And of course, first we go to Carter for the charts and then Mike for the trade. Carter, what are the charts say?
- [41:52]
Carter Worth
Sure. So we've got just one chart and let's talk about it. Obviously, I mean, an incredible thing to think what this stock has done since its April low. And that is a big thing you're talking about much more than a double. But where it is in relation to where it's been, of course we know it IPO'd in April of 2021. First print, $381 a share, and here we are trading at 353. So the real question is, can this. Will this. Is this in a position to finally recoup all of its losses associated with its initial foray as a publicly traded security? And I would say yes, I think it breaks out here as depicted by those lines, and goes to its former high of 381.
- [42:42]
Mike Koh
Mike, what's your trade?
- [42:44]
Melissa Lee
Yeah, I mean, this is an interesting situation as the price of Coinbase has appreciated as markedly as Carter was just talking about, the options, prices really have not gone up very much. In fact, of all of the options I'm looking at in a very active single stock option landscape, these are some of the cheapest. And it might not seem that way when you first look at it, because the implied volatility is around 60, except that over the last six months, this thing has been realizing over 80% realized 30 day volatility. So these options still remain very cheap. And you can actually see that in today's price action, the stock moved more than 20 bucks. I think if you want to play it for further upside, simple thing to do would just be buy an upside call spread. I was looking out To August the 350 very slightly in the money calls as of today's close. Sell the 430s again, that that whole package would cost about 24 bucks, which as I pointed out is very close to the move that we just saw in the stock today. That gives you some further upside and it also is going to capture their next earnings release.
- [43:41]
Mike Koh
All right, well, there are a couple of questions here, Bono, and first of all, do you like this trade? Do you agree with the forecast that Coinbase is headed higher?
- [43:52]
Steve Grasso
I think there's a lot of support for the bull case, just the, the global and just the way that the market has kind of embraced crypto as a real legitimate asset. And as I've said throughout the show, I really am a bit hesitant to chase things that are making these highs and have yet to break out from former highs. And so I do like the call spread trade. In terms of the way to get leverage there, I wouldn't be putting new money in the base equity. But upside call spread to me makes a lot of sense. And if you really are willing to kind of take on some risk, you might consider selling some downside puts as well.
- [44:26]
Leslie Picker
If you go back to the chart in January, you see a lot of these peaks and then it comes in pretty, pretty substantially. So I would hold back if you're thinking about establishing a position, I would give it, let it breathe a little bit. But 15% of their revenues is stablecoins. That's moved up pretty dramatically pretty quickly. So that's going to be a bigger story going forward. I think there's room for this in your portfolio.
- [44:48]
Mike Koh
Coming up. The traders pick their charts of the week. What Mike co has to say about famous Holly index name Lululemon that is next. More fast money into. Welcome back to Fast Money. The S and P and Nasdaq close out the week at Records but there were some ever more noteworthy market moves that grabbed the traders attention. So we thought we'd ask them for their pick for the chart of the week. So Mike, we'll start off with you. What is your chart?
- [45:21]
Melissa Lee
Yeah, I was taking a look at Lulu and part of this was being prompted of course by the big move that we saw in Nike. As you referenced before, this was a long time Holley index name. It got displaced by Vuori which isn't publicly traded and on holdings right before the holidays of last year. But the stock has Actually gotten pretty cheap at this point. And I'm thinking that maybe buying some upside calls that go beyond the August earnings release I think is a way to play this one for a little bit of upside.
- [45:47]
Mike Koh
Is she starting to buy a little bit more Lulu? Is that why you're willing to.
- [45:50]
Melissa Lee
Well, it's interesting you mentioned that, but yeah, because some of the other, you know, we're not buying. I haven't seen a whole lot of boxes coming from either on holdings. We have a local viori story, but yes, we are seeing some purchases coming back to Lulu. So it's coming out of that third place.
- [46:05]
Mike Koh
All right. Carter, your chart.
- [46:08]
Carter Worth
Well, of course, I mean I think it has to be the chart of the week. Not to say that the other charts of the week aren't good, but it's, it's crude oil. I mean crude oil dropped $12 a barrel. Crude oil is down 15%. What if it had done the opposite? Gone up $12 a barrel. What would that mean? That be the world was burning be the war is on. So the most important chart of all has to be, I think, at least in my estimation, the collapse in crude oil. And I would point out of course that when it spiked, and this is Wall Street's knee jerk reaction, there were price targets issued of 110, 120. When we spiked to 130 in the Ukraine invasion, 250 was actually put in print. Never believe those things. Oil spikes and it almost always gives it back.
- [46:51]
Mike Koh
Steve, your chart.
- [46:53]
Leslie Picker
I'm going to go with MP Materials. It's a name that I've spoken about frequently and this to me is the China trade barometer. And when you look at the stock move from $18 in late May to $38 just this past week and then collapse on China trade productivity basically where, where we're working towards something. This is one to watch in the future, but definitely a barometer following.
- [47:19]
Steve Grasso
I'm looking at the VIX here and I'm looking at over a one week period and a three month period. So maybe I'm not exactly playing by the rules, but I want to tell the whole story here and I think it tells one of a lot of comfort now in terms of our path forward. The spike was really on the back of tariffs and I think that you've seen that dissipate and subside.
- [47:37]
Mike Koh
All right, up next, final trades, final trades.
- [47:48]
Melissa Lee
Mike Lulu September call spreads Carter Williams.
- [47:54]
Carter Worth
Company's natural gas processor buy it finally.
- [47:58]
Steve Grasso
META on the back of AI monetization.
- [47:59]
Leslie Picker
Strategy Steven the economy is not as bad as people thought. I'm going with Home Depot.
- [48:05]
Mike Koh
All right, thank you for watching Fast Money. See you back here on Monday for more fast don't go anywhere. Mad Money with Jim Cramer starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their 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 on WhatsApp, your personal messages stay private between you and whoever you send them to, so things like the passport numbers for your honeymoon stay between you and your fiance and that video call for your grand's 80th.
- [49:12]
Melissa Lee
Stays in the family.
- [49:14]
Mike Koh
Even your streaming password stays between you and your college roommates, who still ask for it every week in your group chat. Because on WhatsApp, your personal messages are yours. No one else can see or hear them, not even us. WhatsApp message privately.