← CNBC's "Fast Money"
CNBC's "Fast Money"
Memory Losses Hit Tech… And Will Oil Prices Drop Even Further? 6/23/26
00:43:25
Tech stocks plummeting even further today as investors seemingly dip out of the AI trade. RBC’s Lori Calvasina breaks down what the losses mean for the future of tech and why she remains optimistic despite the struggle. Plus, major after-hours earnings reports from Cerebras and Fedex — what the results mean for the future of the AI chipmaker and transportation company. Then, what Iranian oil re-entering global markets could mean for domestic oil prices, and why it might be time to sell 2 powerhouse investment banks. Fast Money Disclaimer
Loading summary
Transcript211 lines
- [00:01]
Brian Kelly
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 it's smart to
- [00:31]
Discover Card Advertiser
always have a few financial goals and a really smart one. You can set earning cash back on what you buy every day. And with Discover, you can get this Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show see terms@discover.com credit card live from the
- [00:57]
Brian Kelly
NASDAQ market site in the heart of New York City's Times Square, this is fast money. Big data night. Here's what's on tap. Memory loss, tech tumbling names like Micron, Sanders, Western Digital all leading the sell off again. Is this the beginning of an AI unwind or something? Short term, it is not just tech. Oil continuing its slide as well. And billions of dollars worth of Iranian crude oil are now set to hit the market. Could prices be ready to drop even more? Plus, we are all over the after hours action in FedEx and KB Home. The latest details from those quarters and how your traders are positioning in all those names ahead. Hi everybody, I am Brian in for Melissa once again tonight. Coming to you live from Studio B at the nasdaq. And on your desk, Tim Seymour, Karen Fineman, Dan Nathan and Steve Grasso. Lot to do. Let's start with a bit of a momentum unwind. Investors cashing in on this year's hottest trades. Memory taking a big hit. Dram the Roundhill memory ETF shedding 14%. Sandisk red hot. Not today. Your worst performer in The S&P 500 micron they report tomorrow after the bell they lagged the NASDAQ 100. The entire broader chip trade also under pressure. In fact every member of the Sox the Philadelphia semiconductor index more than down 3%. But some of the most beaten down areas of tech did manage to rebound a bit today. Microsoft rose almost 2%. Salesforce also in the green and by the way with that up day ended its 14 day downstream. Amazon fractionally higher as well. Other more defensive pockets of the market picking up some slack. Consumer staples your best performer in the S&P 500 today. Health care higher some biotech names which we just talked about on this show last night hitting new records. So is this just a bit of a profit taking in an overbought market or Tim Seymour, again, a question we have asked repeatedly the beginning of something else.
- [03:09]
Tim Seymour
Well, it's, it's, it's a combination of things for a market that was definitely overbought and what was going on overnight in Asia, certainly in Korea is yet a dynamic where we know how levered up some of the retail players are there. We also know that there's at least there was some commentary that Hynix is actually looking to bring lower priced products into the market. That there is some sense that the cycle could be shortened in terms of some new supply. I think you have a case here where let's not forget that we're now after a 7% move in, in the stocks over or today in today's markets. You're back to where you were late last Thursday. I mean, you know, so this is, this is a move that I don't think anybody's questioning the demand story. The valuations on a forward basis aren't even terrible. But, but just to put it in context, all we've done for five years is talk about semiconductors. And so if you go back to that, that October 22nd CPI low, which I think was a generational low for technology, etc. Since that point to the high yesterday, semiconductors as a group were up 680%. But if you took that same low and brought it just to where we were three months ago, it was only 320%. What I'm telling you is the, that you know, only 320% but that the move that we've had for the last three months in semiconductors has been beyond extraordinary and unsustainable. So I don't, you know, I think the more interesting and probably the more troublesome part of the market is not what memory is doing, is what we talk about all the time with the biggest free cash flow generating companies in the world. Brian. That no longer are generating free cash flow.
- [04:38]
Brian Kelly
I think Dan Nathan is incredibly important point that Tim Seymour is bringing up. You know, you look at the South Korean index, you wake up this morning, South Korea was down 10%. Yes, it's up 240% in a year. The banner there says making sense of today's pullback. So make sense of today.
- [04:54]
Dan Nathan
Well, if you think about just South Korea in general and you could throw Taiwan in there also. So these are economies that are very geared towards those few companies that are driving a Lot of the activity economically there. And you know, you think about the retail investing mania is also attached to it, right? So you also have these folks know, buying a lot of these names on margin. And so there's a double whammy that could happen if you see the slightest pullback in demand. Those are going to be some of the hardest hit economies. But you're also going to have a retail investing crowd and obviously there's institutional money there too. They're going to feel that also. So those are things I think to keep a close tab on. Now here's the other thing. Okay. I've been in the markets for, you know, a little less than 30 years. I've been trading and watching Micron that entire time. This is one thing I never thought was happening. I never thought this would have a trillion dollar market cap. Never in my lifetime. I would like bet you my left pinky 25 years ago that this company was more likely to go out of business than have one trillion dollar market cap. Okay. Another thing that I never thought would happen in Micron is that they would have 80% gross margin. That's what they printed last quarter. So to Tim's point about the demand picture, it's giving them a lot of pricing power. Right. So when you hear though a company like SK Hynix or Samsung is going to try to compete on price with Micron, well that's not a great place to be.
- [06:05]
Tim Seymour
Right.
- [06:05]
Dan Nathan
And we've talked about the potential for, you know, some sor of competitive situation as it relates to the high end GPUs. Maybe it's here, maybe that's one of the reasons why Nvidia has gone sideways. But the idea that this entire semi trade is going to sit on the shoulders of Micron and the guidance that they give tomorrow is kind of a scary place to be in my opinion.
- [06:24]
Karen Fineman
Well, I think, I think it's better that it's traded down so much going into earnings as the bar is lower for Micron tomorrow. But I do think just, you know, these are dramatic moves. A whole index to move 10%, that is enormous. But in the context of the move up, given what's happened, how could it not have a day or two where it moves down percent? So even if you have two days in a row of gigantic moves, it still leaves you not far off from where Tim said a few days earlier.
- [06:55]
Brian Kelly
I mean, to your point, to your point, I mean bring that chart back up of the SMH because I feel like it should be retitled SMD with that move Shaking my darn head.
- [07:06]
Karen Fineman
Okay.
- [07:06]
Brian Kelly
Because I thought it was something left. Pinky comedy double doubled in three months. An index doubled that we've been talking
- [07:17]
Tim Seymour
about for the preceding five years about how it was doing. Doubled from that point. Yes. So yes.
- [07:22]
Brian Kelly
It's just, I mean, I think to your point and Steve talk about it
- [07:25]
Steve Grasso
as well, if it didn't fall right. That's.
- [07:29]
Brian Kelly
I feel like we should be worried.
- [07:31]
Steve Grasso
So I think, you know, it's coming from perception or relative fall. So when Karen talks about it, you know, when I look at that chart, you say it had a fall. You're falling from 1200 bucks to a thousand.
- [07:43]
Karen Fineman
Yeah.
- [07:44]
Steve Grasso
Like it should fall in our world it should fall to 400. Right. So that's where I think that it really got interesting on that DRAM level or NAND level. It's a commodities based business and Dan said they have 80% margins. What do they, what do they have?
- [07:59]
Karen Fineman
What's the 10 year average below 25.
- [08:02]
Steve Grasso
I thought it's 33%.
- [08:04]
Brian Kelly
Where's the trough?
- [08:05]
Steve Grasso
29%.
- [08:06]
Brian Kelly
Where should you buy it?
- [08:07]
Steve Grasso
Probably at 29%. You should be selling it at 80% margins. Maybe somewhere in the 50% margin range. You could flip a coin. But these are all overbought. But they've been overbought for some period of time.
- [08:20]
Brian Kelly
They still went up even while. They still went up while they got overbought. Bought.
- [08:23]
Brandon Oglinski
Correct.
- [08:24]
Brian Kelly
Right. And now everybody watching and listening right now is probably thinking the same thing. Okay, well, I liked Micron yesterday. It's down 13%. Is it now a better value than it was?
- [08:34]
Karen Fineman
Well, if. Did you like it yesterday because it had run up 7, you know, 600% and then you felt like, all right, there's some huge momentum here. I'm going to stay on it until that half that slows down. Has that happened?
- [08:48]
Tim Seymour
I didn't like it yesterday and I don't think I'm going to like it tomorrow after the close. But, but I do like the demand story and I do like the move in semiconductors. And let's be clear, they made new relative high highs all the way through to yesterday. And I bet they make new relative highs before the end of the end of maybe this week, if not next. I am sure that the growth that's in this sector and there will be rotation and they might go back to Broadcom and Qualcomm, but you can't tell me the demand isn't there. And I like the market that continues to see relative, relative strength. Supplies coming up is a market I want to own.
- [09:23]
Brian Kelly
But hold on. In anybody. Is anybody questioning Micron's core business or just questioning the fact that the stock has doubled in two or three double
- [09:32]
Steve Grasso
and there's a constraint. It's so now.
- [09:35]
Brian Kelly
But it's a commodity product, right? So now it has a trillion supply demand.
- [09:39]
Steve Grasso
So I know commodities, I know Dan wants to wrap it up. So what Tim said there's demands there, but the supply is going to be growing, therefore the stock has to come in queue up.
- [09:49]
Carter Braxton Worth
Dan?
- [09:49]
Dan Nathan
Yes. I mean the risk here is that this is a company that had no visibility about demand for their product going back 16 months ago, okay? And so you could add all the stock that you wanted at $40 and now the stock is at $1100. Okay? So if the company didn't have at, people don't have it, but if the company do you. If the company didn't have the visibility about something that was going to get them from a 30% gross margin, possibly to an 80% gross margin, then why would you trust them now with that guidance? And I don't mean that they're going to say anything that's out of school. They have to guide to what they see, the demand. But right now, if this is the last bastion of this trade, right now, look at the way the hyperscalers, they're the ones who make the data centers that put the servers in there, that all the components go into that train the models and they are basically setting the pricing for compute. And I don't know if you guys saw Gary Cohn this morning on Squawk and Friends and he made a really good point, a point that we've been making on this show for a while. I think he's a big fan of the show. He's like, if you think that you can figure out what the pricing is for compute 10, 20 years out based on the investments that are being made right now, then you got another thing coming, right? And like that's the history of technology. And so what these companies are doing might be perfectly rational for the business and the opportunity set that they see based on the technology. That is the biggest secular change in technology that we've probably ever seen. But Sully, I know you want to get, but it doesn't mean that you want to value these companies on hundreds of billions of dollars of backlog. That all has to come. It all has to come in the future.
- [11:14]
Brian Kelly
So before we get to our good friend kp, I just want to ask Steve Grasso, do you think people are buying stock on the Core business and we got the earnings tomorrow night or were they buying the stock because to Karen's point, they like the chart they wrote the momentum and maybe that momentum
- [11:30]
Steve Grasso
is that any number of reasons they
- [11:31]
Brian Kelly
didn't actually care what Micron did or how much money it made. They were Carter Braxton worth acolytes trading the charts.
- [11:39]
Steve Grasso
I think they bought it on high bandwidth memory. I think they bought it on that they, they cornered the market. It's an oligopoly. There's only a handful of players that are in the memory space so everyone chases all three or four of those players. That's where we're at now. When supply exceeds demand then it works the other way. It cuts both ways.
- [11:58]
Tim Seymour
So is everybody selling the semiconductor index now? Is that what I hear? I mean I'm long in video. I'm telling you semiconductors are going to continue to outperform the market between now and the end of the year.
- [12:08]
Brian Kelly
But you don't like mu.
- [12:10]
Tim Seymour
No, but, but the point as a group. Well I don't need to rehash the same conversation we just had for, for 10 minutes. I'm telling you though that semiconductors have continued to outperform the market for five years and I don't think it stop.
- [12:24]
Brian Kelly
Well guess what? We get to continue this conversation because we're just going to change companies to another one that's a big deal and one whose name I cannot pronounce. Cerebras. That's perfect.
- [12:34]
Tim Seymour
Again like five times that was it.
- [12:36]
Brian Kelly
Shares of the move the company's first report is a public company. Christina Farts the Neville is joining us now on set and it's hard to make a comparison right because we don't have anything to compare it to.
- [12:46]
Christina Farr
Precisely. Precisely. So I won't compare even though some are saying it beat on revenue. Revenue specifically came in at $193 million. You strip out the OpenAI stock sale or stock deal that they had then. It's actually 191 which is a little bit higher than what analysts were expecting. They also posted a core gross margin of 47%. That's backed by a multi year deal with OpenAI worth more than $20 billion plus a partnership with us. But we don't really have the financial details of that partnership. But it's the guidance that shows gross margins falling sequentially down to somewhere between 36 to 38%. Perhaps maybe that's why the stock reaction was negative at first. Some are expecting this keep up to keep up with open air demand. Cerebras actually has to rent extra space from its partner G42. And that rental cost eats into profitability, hence the drop in gross margins. The CEO saying in a press release that technology quote delivers solutions in less time. That's specifically their chip, you know, comparison to Nvidia, etc. And that this in turn has created significant momentum with pioneering customers like OpenAI and us. It seems to be there are only two right now, and emerging customers as well. But I doubt we'll get any names on the call. Although this is a growth coming in really at an expense right now. And that's what the market is pricing it at the moment.
- [14:03]
Brian Kelly
Yeah. Morgan Stanley saying we are not expecting a major surprise. Sounds like we didn't get one. Correct. No major surprise. And Morgan Stanley remains constructive on what they view as a differentiated architecture.
- [14:14]
Christina Farr
That's because we talked about this earlier today on the show. It's because it's a larger chip. The memories on the chip, therefore, you think of it like highways. Right. Chips talking to each other. Sometimes you lose some of that momentum. You lose. Yeah, but let's not use those terms.
- [14:28]
Karen Fineman
Right.
- [14:29]
Christina Farr
Because it's. Not everybody understands those terms. I feel like often we.
- [14:32]
Brian Kelly
No delay.
- [14:32]
Christina Farr
Exactly. Or if you. Yeah, exactly. So no delay.
- [14:35]
Brian Kelly
So big chips.
- [14:36]
Christina Farr
When you have big chips, you have it all on one chip, and therefore you may not lose as much information because they don't have to travel back and forth talking to each other as much. You get it?
- [14:46]
Brian Kelly
Yeah, I do. I just feel like we wasted 15 seconds talking about the definition of latency, which I find ironic.
- [14:52]
Christina Farr
We spent like two seconds. We can go back to Micron if you want to. I can chime in on that.
- [14:56]
Brian Kelly
I want to go back.
- [14:56]
Frank Holland
I know.
- [15:01]
Dan Nathan
You know, one of the stories of this whole GPU trade over the last few years has been just customer concentration. Right. And then, you know, demand versus supply. This big. Is this being viewed as like a decent or reasonable second source, let's say, to some of the GPUs that Nvidia
- [15:16]
Christina Farr
are making Every single. And I've read every single note, no one actually makes that comparison just yet. If anything, they're just talking up about the deal with Open Air. And I thought you were going to ask me what about the customer concentration with OpenAI, considering that's over, you know, $25 billion backlog from one company, nobody seems that worried. Perhaps in the inference stage, as we push into it, more Cerebrus will be a bigger player, but I haven't seen as many comparisons coming from experts with the exception of Cerebra CEO itself. He was even on stage at Computex making that comparison to Nvidia, you know, essentially saying that they're better. But we know the Giant won't agree with that.
- [15:54]
Brian Kelly
Yeah, that's, that's like a multi hour chart. Let's bring up like a one month or a three month chart. I know the stock has been trading at Long Dam, but the reality is most people have probably lost money on the stock. It's down 100 bucks a share from where it was a month ago.
- [16:09]
Dan Nathan
Yeah, I mean that IPO price, 185. It'll be interesting to see how some of these IPOs, obviously there's a much smaller deal than the SpaceX. But like if they can hold those prices, I think that'll have a lot to do with sentiment as it relates to new issues come to market.
- [16:20]
Brian Kelly
What if it breaks below it?
- [16:22]
Dan Nathan
I mean, listen, I don't think it's a proxy for anything. And I think to Tim's point, I mean he's a buyer, I mean he thinks that he's thinking are going to perform from 31.
- [16:32]
Tim Seymour
How about it?
- [16:34]
Karen Fineman
I just say one thing though. This is their first conference call. As a public company, it's really important that they try to set the right tone. And I'm sure they're very prepared. But you never, you got to listen to the call. It's really important.
- [16:46]
Brian Kelly
Well, it's such a critical point. We're seeing Lori Calvert here, so just follow up on that. Forget about the name, forget about the company. Right. As a, as a longtime fund manager, when you have a first conference call, there's sort of the CEO and CFO and IR people, they're kind of on display and they're kind of test.
- [17:05]
Karen Fineman
Yeah, they're on the right. The firing line. Yes. The hot seat is better.
- [17:09]
Frank Holland
Right.
- [17:09]
Karen Fineman
It is a test for sure. And we'll see what the analysts ask them. I think this concentration thing is really, that's going to come up again and again. If they have something new to say on that front, that would be a great thing. We'll see.
- [17:21]
Brian Kelly
All right, so for more on the market's next move, let's bring in the aforementioned Laurie Calvert, head of U.S. equity strategy at RBC Capital Markets. And I believe, Laurie, if I am not mistaken, that back in May, which is over a month ago, mid May I think it was, you sort of flag some profit taking in the semiconductors.
- [17:41]
Laurie Calvert
Yeah.
- [17:42]
Brian Kelly
So that was a great call.
- [17:43]
Laurie Calvert
Yes. Ms. Calvino went to Zurich in London and essentially I Spent the entire week talking to investors who did not want to talk about where the broader US Equity market was headed. What they wanted to talk about was positioning. And so I went into meeting after meeting after meeting where people said, can we just run through the sectors? Can we run through industries? In London in particular, what we found was I talked to a number of investors who said, I've been in the trade, I've been in the U.S. i believe in the trade, I believe in the fundamentals, I've done pretty well. Let's go look through other sectors and other industries. And they didn't specifically tell me they were looking to take some money off the table, but that was the implication,
- [18:23]
Brian Kelly
was talking about other things.
- [18:25]
Laurie Calvert
Right.
- [18:26]
Brian Kelly
A year ago, my guess is the same people in London and Switzerland and whatever they were saying, Laurie, tell me all about AI and Micron and semiconductors. Now they're saying, we want to move on. And the market has reflected that.
- [18:40]
Laurie Calvert
Right. And what they were, what they were struggling with is if we want to move on, what is the next thing that we look at? So we would talk about, for example, the financial sector. And I talked to a number of people who are like, ah, I've tried the banks, or let's talk about health care. Okay, I've tried that. It hasn't worked. What we talked about with health care, and I would say this conversation continued after I got back to the States, was if you're looking at health care where the valuations are reasonably attractive, earnings revisions kind of go back and forth into whether or not they're strong or not. But if you look back since October, when tech outperforms health care lags, and when tech's had its wobbles, health care tends to outperform. So we started talking about health care as a hedgehog within your portfolio for those moments when tech might take a bit of a breather. And it was really interesting, Brian, because when I started to talk about it that way, and I'm neutral, the sector, right, we're not sitting there pounding the table on it. But when I started to talk about its function in the portfolio that way, you could sort of see people's like their eyes kind of lit up. They got excited to have that conversation because it was the reframing of the sector and let them understand it might not work every day, but if I'm interested in this, it can, it can play this role for me.
- [19:46]
Brian Kelly
So, Laurie, when you look at it,
- [19:47]
Steve Grasso
though, earnings always shock the investor. Earnings put it on the forefront. So everyone sells these stocks off you pummel. And then are earnings going to make them whiplash and say these guys can still make money?
- [19:58]
Laurie Calvert
Well, here's, here's the thing that we also, we were pointing out in Europe and we've been pointing out ever since. If you look at the rate of upward revisions for semis and we do an FY1 and FY2, so this year and next year, this is a good gauge of earnings sentiment. Other people call it earnings breadth, but it's just what's the pace at which we're taking numbers up. That stat has been very, very high for the semiconductor and semi equipment group. If you look across the Russell 3000, it's at peak levels. Now in and of itself. You look at that chart like, oh, that's a little scary. That's a little squeamish. The thing I've emphasized to people is you need to see a deterioration in that before you have, you know, sort of a real repudiation of the group. Because if you look back historically and we, I forget if our chart is 20 or 30 years, you can get stuck at peak levels of upward revisions for multiple years in a row. So, you know, we've told people if there's going to be another sort of leg to this selling, we might see evidence of that if we start to see a downtick in revisions. We haven't seen it yet. Now that doesn't mean you get downward revisions to earnings. You get a slower pace of upward revisions. It's the second derivative.
- [20:57]
Brian Kelly
All right, good stuff. And by the way, great call back. Had made the power of travel, the power of getting on a plane and human beings and sort of reading between
- [21:04]
Laurie Calvert
the lines and listen and listening to people frankly, like not just talking to people, but listening.
- [21:08]
Brian Kelly
What's that? Oh, that's good advice.
- [21:09]
Steve Grasso
Yes, perfect. I like the way you played that.
- [21:12]
Brian Kelly
What I did.
- [21:12]
Dan Nathan
Yeah.
- [21:13]
Brian Kelly
Right up there with a latency joke who we always listen to. Thank you.
- [21:18]
Laurie Calvert
Good to see you.
- [21:19]
Brian Kelly
You're very welcome. Have a nice.
- [21:21]
Dan Nathan
Sorry.
- [21:22]
Brian Kelly
Coming up. Speaking of non names, dan, how is FedEx doing? The details from their latest quarter with Frank Collin next Plus buyers. They're back into Space X at least today. So what now? And Gold. Will anything stop it from keeping going down? We are back right after this. At Venture Global we think about what can be done, not what's usually done through innovation. Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost in a fraction of the time. So While others are busy talking, we're busy building.
- [22:08]
Tim Seymour
That's venture global.
- [22:09]
Brian Kelly
That's unstoppable energy.
- [22:14]
Discover Card Advertiser
It's smart to always have a few financial goals and a really smart one. You can set earning cash back on what you buy every day. And with Discover, you can get this. Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show. See terms@discover.com credit card everyone's talking about
- [22:40]
Commercial Announcer
protein lately, but how do you actually get enough of it? Muscle Milk Muscle Milk has a great tasting new formula with no artificial sweeteners, flavors or added colors. It's high quality complete protein designed to support healthy muscles with fewer ingredients than the previous formula and 2642 grams of protein for when you're stuck in meetings or need a post workout recovery. Available in chocolate, vanilla, cream, cookies and cream, and strawberries and cream. Try the new great tasting Muscle Milk today, available in stores nationwide. Muscle Milk Protein for all.
- [23:10]
Brian Kelly
All right, welcome back to Fast Money everybody. It's not just all about technology. FedEx shares, they're down 6% right now despite the fact that the company beat on both the top and the bottom line. So let's bring in Frank Holland to try to figure out what's going on here. Frank. Hey there, Brian.
- [23:24]
Frank Holland
Those beats were strong, but there was also a pretty big miss. That was margin for FedEx Express. That includes ground and air delivery. Margin came in at 8.9% compared to the estimate of 9.2%. And margin is proxy for network efficiency. Investors may also be trying to figure out the guidance provided by FedEx as it transitions to a fiscal year that matches the calendar year. The guidance provided for essentially the last seven months of the year post FedEx Freight spinoff is 1690 to 1810. Our data team says that's not comparable. At least we're not comparing. I know you have analysts coming up. Maybe they can. However, despite the potential confusion around that and the margin missed, there were a number of bright spots in this report. U.S. volume is up 3%, U.S. pricing up 10%. FedEx also said it would buy back shares opportunistically up to about $1 billion of those shares. In fact, one other interesting part of this report, the strength of FedEx freight beat on the top and bottom line for that segment. Again, this is the last quarter FedEx will include those numbers, but it still owns just about 20% of the company. You can see here those shares have risen more than 20% since the spin. So those holdings actually gaining value over that time time. Brian Becker Video.
- [24:29]
Brian Kelly
All right. Frank Holland on FedEx. Frank, thanks very much. All right, Karen. Your type of company mine but actually
- [24:35]
Karen Fineman
it's more of a Timmy company lately.
- [24:37]
Tim Seymour
Well, I'll just say that I think I don't really care about these numbers that much. I mean the point is that there's, there's now you've got a bridge from the old all all in FedEx into now the more parcel focused one. And I don't think these numbers mean that much and I actually think it was a bad margin number as Frank hit on long. But I think you're buying this weakness.
- [24:57]
Brian Kelly
All right. We got some breaking news here folks. This is really interesting. Changes in the Dow Jones Industrial average.
- [25:05]
Tim Seymour
Does anybody.
- [25:07]
Brian Kelly
We're going to find out. Mackenzie Seagalos, what's the news?
- [25:11]
Mackenzie Seagalos
So a bit of a shake up here, Brian. You've got the S and P Dow Jones indices saying that Alphabet will replace Verizon and the Dow Jones Industrial Average before the open on Monday, June 29, really giving the Dow more exposure to mega cap tech and the AI trade. Honeywell Aerospace will join the S&P 500 on Monday replacing Conagra. Honeywell Technologies will remain in the S&P 500. What I will say this is a bit of a symbolic shift. You've got Verizon becoming almost immaterial to the Dow lately because it's a lower priced stock and a price weighted index. S and P said in this release that it represented just half of 1 percentage point in the index. Alphabet of course has a much larger share price and market cap making it more representative of that communication services sector. And I will say the change comes as Alphabet's been under pressure this week. You and I were chatting about that sell off on Monday. So shifts coming up in less than a week from now.
- [26:07]
Brian Kelly
Wow. It's kind of a big deal. Mackenzie Seagalas, thank you very much. I want to throw this out to the table because this is breaking news. We don't have anything planned. I understand that. Nobody really cares about the Dow around this. I get it. It's more symbolic. But I will say when you look at ExxonMobil, Steve Grass so got booted from the Dow. The Dow be at like 535-4000. If Exxon was still in, it's well outperformed the company that replaced it. Salesforce, right. Maybe. Is this an inverse buy signal on Verizon?
- [26:35]
Steve Grasso
So people always do this right you want to. Everyone thinks you have to buy the one that goes in, but ultimately saying the opposite, six months out, out, they reverse each other because everyone wants to buy and then sell the one that comes out. But, but you wind up, you wind up reversing that action within six months. So you're onto something there. And I think historic data proves Right.
- [26:54]
Karen Fineman
How much money is actually indexed to the Dow relative to anything or the S and P or what.
- [27:03]
Tim Seymour
The better question is why would you be indexed to the Dow?
- [27:06]
Karen Fineman
Yeah, I don't know.
- [27:06]
Steve Grasso
Well, you got a price weighted average, right. So that's, that throws you around. Yet market cap weighted with the S and P price weighted with the.
- [27:14]
Karen Fineman
Is there a ton of money? I don't know.
- [27:15]
Brian Kelly
I mean, next year none of us
- [27:17]
Steve Grasso
are going to put money. We're all paying attention.
- [27:19]
Frank Holland
Other one.
- [27:19]
Dan Nathan
I mean, the problem is the proxy for the market other than people who are in the market, you know, I mean, just look at any major, you know, news publication. They're quoting the Dow Jones Industrial Average, which makes absolute, doesn't make any sense. I mean, it's not like this stock going in there at $346 makes it the fifth largest price stock in the Dow Jones. And it just changes the dynamic altogether when you take out a low. So it just doesn't make any sense. If we could stop talking about it.
- [27:43]
Tim Seymour
Well, it's games, but there's the point. It's gamesmanship, which is absurd because, you know, the Dow has become irrelevant not only because how it's constituted is, I'll say, I'll save my French here. It doesn't make a lot of sense to me. But to say we want to be more tech heavy, I get it. I mean, it's kind of like, like emerging markets are the best performing market in the world because they had the two of the biggest tech companies there. Suddenly, for the first time, these foreign markets that people didn't want to own because they didn't have enough tech are outperforming because they have tech. I don't, you know, Great reporting by MacKenzie. So let's be clear. This is, this is, I think, you know, it's an interesting story.
- [28:17]
Brian Kelly
Symbolic. You do wonder, is it like some sort of top on Alphabet and a buy signal? Who knows? We'll find out tomorrow. It's a headline. For now, though, let's get back to FedEx's earnings and bring in Brandon O'.
- [28:29]
Brandon Oglinski
Glinsky.
- [28:29]
Brian Kelly
He is equity research analyst at Barclays, covering the North American transportation sector. Brandon, thank you for your Patience. We had some big breaking news there. We just gave you a couple more minutes to look at the FedEx numbers. So what is your, what is your take? What sticks out to you?
- [28:43]
Brandon Oglinski
Yeah, Brian, and thanks for having us on. And look, you know, talking about news that maybe does matter tonight, I think what's important for FedEx here because the numbers are hard to dissect because they're moving from a fiscal calendar to a regular calendar quarter reporting season as well as spinning off the freight business. So it's going to be hard to really pin down where consensus expectations were. But we think maybe north of $18. So maybe on the headline of 4 to 5% miss here, but I kind of agree with the prior comments that's somewhat backward looking here. We're talking about a company that's guiding to 20% EPS growth for the remainder of the year. They're seeing, you know, plus teens revenue growth here and I'd argue probably the first time in about three or four years that we're seeing both consumer, international and industrial demand really firing on all cylinders for a company like FedEx that has enormous potential operating leverage here. Let's not forget as well they're also merging their express and ground networks across the US where we think there's still 2 to 3 billion dollars of cost takeout opportunity over the next few years. If you play out the math here, this could be more than a double in earnings in three to five years.
- [29:45]
Brian Kelly
Wow. So you're good with the numbers, you're good with the valuation, Brandon.
- [29:49]
Brandon Oglinski
I mean we're very bullish on this especially in the context of the struggles at ups. I mean this is still duopoly for end to end business to business shippers that want to move small packages in the U.S. i'm sure a lot of, you know, UPS is undergoing a network shrink activity right now that's really driving their fixed cost higher. It's driving a lot of price for UPS customers, objectively potentially lower service for them too. And here's FedEx actually becoming more efficient, faster and likely cheaper to the end consumer. So we think this is actually a very bullish long term trend for FedEx.
- [30:22]
Karen Fineman
It's Karen, thanks for being on. So you have a $425 price target. So how do you get there?
- [30:29]
Brandon Oglinski
I mean that's really looking at standalone earnings power of Federal Express, which is now the name of the company because they've spun out FedEx Freight which will have their earnings call in two nights here. But we're really just putting kind of you know, an even below average market multiple on what we think is their future earnings power here, Karen. And I think if anything, that's probably a conservative outlook if this company can keep delivering.
- [30:53]
Brian Kelly
All right, Brandon Oglinski, Barclays. Really appreciate your time, Brandon. Thank you very much.
- [30:58]
Brandon Oglinski
Thanks, Brian.
- [30:59]
Brian Kelly
All right. Stock down about 6% right now. Coming up, the rebound at least today out of Space X briefly falling below the 2 trillion market cap number. The move lower in gold, by the way, is a little bit of that investor luster just continues to fall away. We got a half an hour left. You're watching Fast Money live for the NASDAQ market site. And we are back right after.
- [31:25]
Discover Card Advertiser
It's smart to always have a few financial goals and a really smart one. You can set earning cash back on what you buy every day. And with Discover, you can get this. Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show, see terms@discover.com credit card.
- [31:51]
Commercial Announcer
You know that thing where you get an amazing pair of shoes at a really great price and want to tell everyone about it?
- [31:57]
Christina Farr
Yeah.
- [31:57]
Commercial Announcer
So do we here at Designer Shoe Warehouse. We'll give you something to brag about, like the latest styles from brands you love or the trends everyone's obsessing over
- [32:06]
Brian Kelly
or shoes that make you feel like, well, you.
- [32:10]
Commercial Announcer
So go ahead, show off a little. Find shoes that get you and prices that get your budget. Head to your DSW store or dsw.com today. DSW. Let us surprise you.
- [32:20]
Brian Kelly
You know what's worse than a long wait? Flipping through old magazines in a waiting room. Instead, I power up Champa, casino slots, blackjack, solitaire, roulette, bingo and more. Boredom doesn't stand a chance. Take a few virtual apps with me. Let's Chumba play now@chumbacasino.com no purchase necessary.
- [32:41]
Dan Nathan
VGW Group void where prohibited by law. CTNC's 21/plus sponsored by Chumba Casino.
- [32:47]
Brian Kelly
All right, welcome back to Fast Money, everybody. Hope you're having a great Tuesday no matter where you are. Technology did not have a great Tuesday. It led the broader market sell off today. The SV falling about one and a half percent. The NASDAQ tumbling more than 2%. The Dow did end the day virtually flat, by the way. You might have just heard the news. Verizon is going to leave the Dow, Alphabet, Google in. Tim doesn't care. Gold dropping again. Gold down another 1% today. It is down more than 21% really since the Iran conflict began. Meantime, you might care about SpaceX shares did begin the day down again briefly. When that happened, stock was below 2 trillion in market cap. Then the buyers came back in. The stock did end up higher and with a small gain, not a lot, but still down 20% from its highs of last week. So SpaceX stock, really, unless you bought at the low today or the first trade you ever, you've probably lost money. Shares of Nike, by the way, higher after announcing a planned CFO transition. Company also saying it will include a benefit from tariff refunds in their earnings report next Tuesday and that it was not included in the company's previously provided guidance. In other words, it might get a one time lift on the tariff side. Some after hours action. Shares of KB Home are higher. They topped revenue estimates. Steve Grasso, you got a comment on KB home stocks up 2 1/2 percent.
- [34:17]
Steve Grasso
Obviously the elephant in the room are rates. Rates are definitely a headwind to this whole group. But on a valuation standpoint, this is probably where you want to buy. The homebuilders. You know, we're talking about where you buy, where you sell the memory chip makers. If you look at what, what their metrics are across the whole homebuilder spectrum, they're all being thrown out. They've underperformed the entire group.
- [34:41]
Brian Kelly
So you can go Home Depot, you
- [34:42]
Steve Grasso
can go Lowe's, you could play it. But they're all placed from the same bucket because for those high end products you need lower rates anyway. I would probably, probably be a buyer of the group on weakness because I think lower rates are coming and I think no one thinks they're coming and I think people are pricing in. Bank of America I think has it up to two rate hikes by the end of 2026.
- [35:04]
Brian Kelly
I think America. Rate hikes, you're talking about rates.
- [35:07]
Steve Grasso
I think we're going to see a rate rate cut.
- [35:10]
Brian Kelly
Do it at once. It's already risen.
- [35:12]
Steve Grasso
Bond market always does what it wants and it goes ahead on verbiage from the Fed. And right now all the inflation is from energy and that got sucked out of the room.
- [35:22]
Brian Kelly
It did well by the way. Great transition because coming up we're going to talk more about oil and energy. Crude oil continuing to crumble. How the latest developments in the Middle east could send prices even lower. More on energy oil and more when fast Money returns. Right after all right, welcome back. Let's talk about oil and energy. Crude oil's drop steepening today comes after the US treasury issued a 60 day license authorizing the production, delivery and sale of oil from Iran in US dollars. John Collins follows oil at Greenlight Commodities, an institutional brokerage for event based contracts. John, welcome. I mean I'm looking at this thinking 79 or 73. 72 bucks bucks for a barrel of oil and there still should be some kind of war risk premium. So to me that tells me the tape wants to take oil a lot lower but nobody cares what I say. What do you say?
- [36:21]
John Collins
Well actually thanks for having me. I can't react to Brian, I agree with you on that. I think we've already seen Crash crushed
- [36:28]
Discover Card Advertiser
a little bit here.
- [36:30]
John Collins
We're probably going to see something with a six handle. I don't think we're going to see it overnight. It's probably a slow grind down. We've got a lot of people on our side of the same opinion here. Hedge funds I think about $18 billion in new shorts in the last week. Short sales account for about 80% of new trades from hedge funds this week. And I don't know if we've, we've seen the floor yet.
- [36:55]
Brian Kelly
What do you think the floor might be?
- [36:58]
John Collins
It's a great question. I said earlier I believe a six handle. I mean maybe 65 is the old 65 again perhaps.
- [37:07]
Brian Kelly
What's the time frame on that, John? 65 by August.
- [37:11]
John Collins
It's going to be a grind about August. Yeah. A month, Six weeks. Four to six weeks I think.
- [37:16]
Brian Kelly
So you're actually ahead of the forward curve because I look out at the futures contracts through November the low is around 71 bucks.
- [37:24]
Frank Holland
Right.
- [37:24]
Brian Kelly
Grass. So it's like 71 for November, something like that. So you're actually a little more bearish on the price than the futures contracts might indicate.
- [37:32]
John Collins
I am. Right. Sometimes I wake up and I eat nuts for breakfast and then I'm a bear and I can't help but being that way. But yeah, I think I would still be short here and then maybe adding to a position.
- [37:44]
Brian Kelly
So John, I'll help you.
- [37:46]
Steve Grasso
We're all talking about the same thing on the, on directionality. So pre war we were probably had a supply glut of about 8 million barrels per day. Once you have this resolution to the war and the Saudis, Iraq and then even Iran coming back online and then the US not exporting, I could get us back to probably filling that gap back to 8 million surplus. So to Brian's point, are we, if the Hormuz Strait is open, no tolls, do we get to a point where we can start talking about this as it's not a geopolitical risk anymore or is it? It all depends on Oman and Iran now charging fees. That's the only risk. The obvious risk left.
- [38:32]
John Collins
That's certainly an obvious risk. I think that depending on which way the wind blows sometimes inside Iran or which factions has more control, you're going to see you're going to see tolls being asserted. I don't believe I don't believe that's in their best interest. They know that they sold 30 million barrels last year last week. I believe in the market, in the dollar, not the one So I think it's in Iran's best interest to not charge tolls and to try and be as copacetic as possible with this whole rental agreement.
- [39:07]
Brian Kelly
John really appreciate that. I know a lot of people out there filling up their tanks with gas all summer long. Certainly hope that you are right. JOHN Conlon Greenlight we really appreciate it John thank you very much Tim. Energy trade take I still think oil
- [39:22]
Tim Seymour
services are a great place to be especially given the world that there's a search for technology and innovation to new barrels of oil by every country in the world that three months ago felt like we don't ever want to find ourselves in this position again. I think restocking is a bigger deal. I understand how markets have overreact. I just said it. I think markets have overreacted to correct a lot of uncertainty that's still out there.
- [39:46]
Brian Kelly
Mean sent oil too far down.
- [39:47]
Tim Seymour
Yeah yeah. I mean we may or may not have a deal. I'm not let's just assume we do. The the I think it's a very tenuous balance right now and yes there's too much supply of Iranian oils out there but I don't think we live
- [40:02]
Karen Fineman
in that world so I've liked the space for a while and every time there's some bad news on the Iranian war situation I buy some more because I think that even if it gets resolved that still there's going to be new buyers that want to be in the energy space as we talk about
- [40:19]
Brian Kelly
buy some more what large cap cap
- [40:20]
Karen Fineman
oil and gasket well OIH which is you know for the oilfield services XLE you know relative to the market it's a it's moved a fair amount but it's still attractive place to be less than around a 3% yield not quite so I want to be there. I am there.
- [40:36]
Brian Kelly
All right. Coming up some financial fury out of Goldman Sachs and Morgan Stanley over the past couple of months but have the banks Flown just a little bit too close to the sun, the aforementioned Chartmaster Carter work digs into the technicals on just that next. All right, welcome back. It has been a winning month for the financials so far. In fact it is June's best performing sector. The financials up about four and a half percent. But don't get complacent. The chartmaster sees some trouble in a pair of investment banks into the group Group. Let's find out what that is and who those are with Carter Worth Carter
- [41:17]
Carter Braxton Worth
yeah I mean it's not so much trouble is that these have been so good that the risk is that they don't have as much upside potential as they do prospective give back risk. But let's look at them. These are the two leading lights, the biggest well known names Goldman Sachs and Morgan Stanley. What you have is a two year comparative chart and it's a two stock equal weight basket of those two GS and Ms. Versus the BKX versus the S&P and versus the sector. And you see of course who's leading the way by a long margin is that first blue line. That is the GSMS2 stock basket. Let's do a five year comparative chart just to put this in perspective. Let's do a 10 year comparative chart just to put this in perspective. And the point is that this is excess any way you cut it at least to my eye. So now the the stocks themselves. Let's look first at what the basket looks like. You'll see that here this, that two stock equal weight basket 50% Goldman, 50% Morgan Stanley. We're about as far above the 150 day moving average as you're typically going to get in this basket's life but also in in many instruments life. Let's look at a longer term. That's a five year here's a ten year let's do even longer. It'll be the last chart. This is going back some 20 years. So. Well what's interesting of course is that each of these brokerage firms have a rating on each other that calls for each stock going down in the year ahead which is remarkable. And in fact Wall street itself all analysts currently hold price targets for these stocks that suggest that both stocks will be 7 to 10% lower in the coming 12 months. Either way most people are long only 98% of the capital is. If you have some of this trim sell call calls, take some measures. For those who are short sellers we'd hit them here.
- [43:13]
Dan Nathan
All right.
- [43:14]
Brian Kelly
Carter Braxton Worth appreciate that Karen. It's Fair to say that they've been warned.
- [43:19]
Karen Fineman
They've been warned. And so you know, long JP Morgan, long Citibank. I don't love when they run up as they have into earnings which are only three weeks away, maybe even a little less. I'm not sure when they start exactly but so I kind of agree with Carter on the near term. So I would be looking to sell some upside calls.
- [43:36]
Brian Kelly
Sell some upside calls. All right, coming up, why Wall street is bulled up on the bullseye and where they see at least one analyst see shares of the aforementioned beaten up Target headed to be headed higher. We're back right after this. All right. Tape might have been down, but not Target. Target shares were up today more than 3% W research upgrading target to an outperform with a target price of $162. The analyst citing store resets, improved execution, new leadership. And Tim Seymour, the analyst naming Target his new retail topic.
- [44:21]
Tim Seymour
I think the stories resets are powerful. I think the customer trends are certainly the ones that the trend is an accelerating trend. And it's been multiple quarters now for Target.
- [44:32]
Commercial Announcer
It.
- [44:33]
Tim Seymour
It's a case where also aggressive change in the C suite. You know, people thought you've kind of kept, you know, the insiders. No, they really have outside of the. In the CEO's chair. I mean they really have made some changes here. So same store sales in last quarter. Surprised. I think at five and a half, 5.6%. The expectation is very low. The feeling is that they are also becoming a destination again at some point. This plays into the multiple. What are you willing to pay for this name? It is the Tee in Timbo and therefore I'm willing to pay a little something extra. Brian, I think, I think you stay here.
- [45:08]
Brian Kelly
Premium, huh?
- [45:09]
Tim Seymour
Yes. Yes, sir.
- [45:10]
Brian Kelly
You're willing to pay a Timbo buck too?
- [45:13]
Karen Fineman
Oh, nice.
- [45:13]
Tim Seymour
Okay.
- [45:14]
Karen Fineman
Very nice.
- [45:15]
Laurie Calvert
Okay.
- [45:15]
Karen Fineman
I. I've been. I have.
- [45:16]
Brian Kelly
Karen, I appreciate your genius by the way.
- [45:18]
Karen Fineman
Oh, thank you. Yes. You're funny. Yes, I know.
- [45:22]
Tim Seymour
Funny how?
- [45:22]
Karen Fineman
Yeah, clown. Everyone's funny. So I haven't been on the Target train as Timbo has and it's been a good place to be. I actually do think the turn is really happening. There does seem to be momentum here. That part, the Target part where they had really interesting goods instead of trying to be everything to everybody, they're getting back to that. That's where the high margins are. I'm reluctantly saying yeah, it's good.
- [45:50]
Carter Braxton Worth
Yeah.
- [45:50]
Tim Seymour
Don't be so reluctant.
- [45:51]
Brian Kelly
One and a half on water's fine. Up next your final trade. Tim, see what kickoff. Final trades, please.
- [46:03]
Tim Seymour
I think the reaction in copper is. Is way too high. I think there's fundamental demand by report.
- [46:08]
Karen Fineman
Yeah. So I got to agree with Carter. The run up in banks. I'm going to sell some upside. J.P. morgan calls into that. They report July 14th. I still love Jamie. Of course.
- [46:16]
Carter Braxton Worth
Of course.
- [46:17]
Tim Seymour
Come on.
- [46:17]
John Collins
Yeah.
- [46:18]
Dan Nathan
I think is overdone. Play it through USO while you say it's not a great vehicle to do.
- [46:23]
Brian Kelly
Steve Grasso, tell the audience what an
- [46:24]
Steve Grasso
SMR is in the nuclear space.
- [46:26]
Brian Kelly
Small modular reactor.
- [46:27]
Steve Grasso
That's right. I bought 1X Energy.
- [46:29]
Brian Kelly
You bought a small modular reactor? Yeah, a little one from the backyard. Thanks for watching Fast Money, everybody. Mad Money with Jim starts right now.
- [46:37]
Commercial Announcer
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.
- [47:13]
Brian Kelly
Good morning, students.
- [47:15]
Commercial Announcer
Soccer teaches us teamwork, leadership, geometry, art,
- [47:18]
Brian Kelly
physics, and a lifetime of lessons we
- [47:20]
Commercial Announcer
can take with us long after we leave the field.
- [47:24]
Brian Kelly
That's why bank of America and US Soccer are committed to helping bring soccer to every school.
- [47:31]
Discover Card Advertiser
Soccer is officially in session.
- [47:34]
Brian Kelly
Raise your hand to help bring soccer
- [47:36]
Commercial Announcer
to schools@bofa.com soccer at schools.