← CNBC's "Fast Money"
CNBC's "Fast Money"
Stocks Mixed Ahead Of Hormuz Deadline… And The Impact On Oil Prices 4/7/26
00:43:34
Stocks closing the day mixed as investors await the latest developments out of the Middle East. Why one market strategist says the worst case scenario for the market isn’t priced in just yet, and how our traders are positioning amid the volatility. Plus Apple’s foldable iPhone timeline, Wall Street turns bearish on builders, and the next move in oil prices as the supply disruption continues. Fast Money Disclaimer
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- [00:00]
Edward Jones Narrator
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- [01:02]
Brian Sullivan
Live for the NASDAQ market site right here in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight. Stocks climb back, some early losses. The S and P and Nasdaq finishing higher. Oil taking a step lower as President Trump's self imposed deadline for Iran looms large over investors like you in the markets. We'll get the latest on where things stand in the Middle east and how to protect against what is likely a lot of volatility ahead. Falling Apple, shares of Apple dropping as much as 5%. That on report of delays bringing a foldable iPhone to the market and the one time innovation leader find its footing again. We'll discuss and debate. Plus another black eye for the home builders group. Drop it on the heels of a Wall street downgrade. How much more pain may be left for the group or are they a buy right now? And right here. Hi everybody, I am Brian Sullivan. I'm in for Melissa Lee tonight. Tomorrow, Thursday. Yeah, that's it brother. Coming to you live studio. Be the NASDAQ on your desk tonight. Tim Seymour, Karen Fineman, Dan Nathan and Guy Adami. All right, lots to do but let's start with the macro markets. Okay? Kind of grasping for gains at the end of the session. And right now folks at 501pm Eastern Time there is basically three hours left until President Trump's self imposed deadline for Tehran to reopen the Strait of Hormuz or else major averages, they'd all been firmly down for most of the session. Small mid caps higher, big averages lower. But toward the end of the day buyers came in. We got A bounce that lifted the S and P and Nasdaq into the green. They ended slightly positive 1 point. The Nasdaq had been down 1 and 3 quarters of a percent at its lows after Pakistan's Prime Minister requested a two week pause in escalating attacks. We don't know if that will lead to anywhere but it was said at a high level. Wall Street's so called fear gauge though the volatility index, the VIX, it remained elevated trading right around 26. While oil WTI and Brent each paired some recent gains after the settle but still right around 100 bucks a barrel. So where do we stand exactly now at 501 Eastern Time? Let's find out. We'll get to Megan Casella who is in Washington with more. Megan.
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Megan Casella
Brian, chances of another extension in the President's deadline for Iran to make a deal appear to be rising at least somewhat after that proposal you mentioned from the Pakistani prime minister. So this proposal has three parts to it. President Trump would delay his deadline from 8pm tonight for another two weeks. The Iranians then would reopen the Strait of Hormuz for a corresponding two weeks and there would be a ceasefire everywhere for two weeks. The White House has reacted to that proposal with White House press secretary Caroline Levitt telling me in a statement, quote, the President has been made aware of the proposal and a response will come. That comes after she told us earlier in the day that only the president knows where things stand and what he will do. Now the Iranians also giving some reaction to the proposal. A senior Iranian official telling Reuters after it was released that Tehran was positively reviewing Pakistan's request for a two week ceasefire to. So nothing perfectly committal there, but a fairly significant change in tone after Iran's state run. Press TV reported earlier this afternoon that Iran would firmly reject any proposal for temporary cease fire. Now appearing potentially to be warming to the idea. Brian.
- [04:33]
Brian Sullivan
All right, Megan. So Megan, thank you very much. Guy Domi. We had a pretty muted market reaction given that in three hours time President Trump and I respectfully we're quoting Iran. This is going to be apparently President Trump's decision. What he does the markets fairly calm.
- [04:48]
Guy Adami
Why welcome and welcome for the next ensuing few days to you obviously. Why? Because I think the market has learned, I think it learned last April that the rhetoric is one thing and if you try to get ahead of it, try to trade around it, you're going to be disappointed. And I think the way the market reacted in the aftermath of the back off last April is what people are Planning for now, they're like, I'm not going to make that same mistake twice. I'm not going to get short or underinvested on the back of what could happen this evening or in the ensuing couple of days. Problem, of course is despite the fact that oil came off today and you watch this very closely, still talking about crude oil north of 110 and you're still talking to VIX to your earlier point around 26, which suggests about 1.7% intraday moves on any given day. So I think there's resilience in the stock market. I understand why. I think the equity, I think the, excuse me, the crude oil market is telling an entirely different story.
- [05:40]
Tim Seymour
Well, and I think there's also been a bounce in the stock market. I mean we've now moved 5%. I mean we're 5% off the lows. We've had this rally and if you remember, this was a stock market. I'm not saying that, that if you, if you remove war and you remove all the ramifications of higher oil prices and the strain on infrastructure, which will lead to even higher oil prices, do markets go flying? Well, sort of, except for the fact that markets even going into the Iran war were sideways all the way back to October. So when you take 5% back, you're having trouble getting to the 200 day no matter what. We heard from a New York Fed today that tells you that there is inflation. We've heard it from every different economic report that we've had in terms of inflation expectations today were part of the story. I just think that the markets now are in a little bit more of a wait and see mode. I look, I hope we find peace. We all know that two weeks helps both sides a lot. I'm saying that both sides are very happy to do nothing tonight. And I think this is a case where markets are appropriately cautious.
- [06:36]
Karen Finerman
So I agree. I think the VIX at this level really doesn't show a nothing remotely close to panic. Right. We've seen panic several times before in the last five years. This is not even close. Liberation Day was much closer. So I hope that we do see cooling off of rhetoric and, and action everywhere. But I'm neither ready to jump in and buy stuff. It hasn't gotten cheap enough. Last night we talked about if there were, if peace broke out tomorrow, what would I buy? I would buy energy, which would be down a lot and I think it would be interesting there. But this right here, I'm sort of just not selling, not buying.
- [07:15]
Dan Nathan
Well, it's funny, you know, the opposite market, if you look at the spy, it's implying about a 2.25% move in either direction between now and Friday's close. And that's either going to be really cheap or it's going to be really expensive. Right. And so when you think about the sort of implied daily moves that we get, generally they're under 1% coming into the week. We had a 2 and a half percent move and we had some volatility. Right. If you think about yesterday morning, you think about this morning and we're closing pretty flat. And I think to everyone, you know, his point here, listen, no one really wants it. Like the rhetoric is the rhetoric and what he's trying to do is kind of draw things back a little bit and they give it a bit of an off ramp here with this kind of two week sort of cease fire. And so when you think about it, we've got accustomed to this definitely during the war.
- [07:54]
Brian Sullivan
Too accustomed. That's what I, that's my point is I worry a little bit we're too. Well, when you have people, oh, the market's always going to bounce back. And it has, by the way.
- [08:02]
Tim Seymour
Yeah, it sure has.
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Brian Sullivan
But what if it doesn't? What do our viewers and listeners do if the worst case scenario transpires?
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Dan Nathan
There is no worst case scenario. I mean, you have Tucker Carlson, okay, calling for the generals to actually disavow. You know what I mean?
- [08:17]
Brian Sullivan
Like, like not listen.
- [08:19]
Dan Nathan
Not listen to what? It's just not happening. Like it's just not okay. What would really be the worst case scenario is the Iranians do something really stupid. If there are some, you know, God forbid, some sort of terrorist attack or something like that, I mean, then we got a problem. But right now in this scenario where we really are in the driver's seat for the most part, I mean, I don't think so.
- [08:37]
Brian Sullivan
You're so guy. Okay, let's go around. Everybody made great points. So guy Dan, we'll, we'll all engage in this markets to your point, Tim, 5% off their lows. By the way, small and mid cap stocks are actually higher this year. But we do have a Vix at 26. Vix is not at 46, but it's not at 16. Are you comfortable with the level of risk that the market appears to be pricing it?
- [08:58]
Guy Adami
No, I think the market should be pricing in more risk to Karen's point, I think at 26 Vix, and she says this all the time, anywhere between 21 and 27. You're sort of in no man's land. It's got to do one thing or another. I think the one thing it's going to do is going to find its way into the low to mid-30s at some point and maybe that's a crescendo. Warren Buffett was on with Becky a week or so ago in response to a question that we're sort of having now. I think his response was, and I'm paraphrasing, you really haven't seen anything yet. If you think this little move we've seen to the downside is all that's in store. I mean he clearly is preparing for something. Not that he's been doing this recently. I mean this is over the last year. They have now $380 billion of cash on the balance sheet. I think on the back of concerns around valuations. This is obviously one more thing to be concerned about. But he's obviously playing the waiting game too.
- [09:44]
Tim Seymour
I don't think markets are priced for any kind of a growth scare. I do think that the VIX is underrepresenting at least here where we are. Having said that, what I'll say is there is value in the top five market cap companies in the world that are not named Tesla and are and I just single because I don't necessarily want to own Tesla here. But I think if you talk about the rest of the mega caps, where they are in a relative valuation of the S and P is frankly very interesting and I think it's interesting on a longer term basis. I'm not sure investors, our investors are thinking do I need to go buy the market today? I hope you don't think you do because you don't and I think this is an opportunity for people to wait it out. What do we heard from every major, you know, whether it's the iea, whether it's the imf, these are, these are institutions have been around for a long time. We've never seen this before. We've never had this kind of an energy shock.
- [10:35]
Brian Sullivan
Let's stay there because Karen, you said something fascinating. If energy stocks go down, you'd be a buyer here because I want to say something to have been doing some work on earnings and oil from first quarter of 2021 to first quarter 2022 when Russia invaded Ukraine, earnings for Chevron, Conoco and ExxonMobil went up over 200% year over year each. We had one month of higher prices March of the first quarter. I don't think oil is going back to $65 a barrel anytime soon. I don't like it or hate it. It's going to be a lot of extra free cash flow and I think a huge surge in eps in the second quarter. Agree or disagree?
- [11:13]
Karen Finerman
Totally agree, 100%. I think that I'm worried that if, you know, hopefully peace breaks out, that oil won't come in enough that people will say, all right, there is a new, much higher floor for oil than there was before, to your point, Brian. And that, I mean, I still think, I still want to. I'm long the space. I have not sold any here, I'd like to add, but not at these prices.
- [11:37]
Dan Nathan
Yeah, I'd look at the NASDAQ 100 because prior to this war, right, we saw the top 10 names really selling off pretty hard, right. For the most part we're seeing them down 15 to 30 some percent if you're looking at Microsoft on the downside from the highs. So if you think about all the heavy lifting that those stocks had done over the prior three years and now discounting, I mean, listen, if you think about heading into earnings season, what these companies are discounting, given the fact they already given CapEx guidance for the full year, that was back in late January, early February, I think that the other, you know, 90 or whatever you want to call them in the NASDAQ 100, I mean, I think that, you know, down 10% in that index, given what we've seen out of the top 10 or something like that, that looks like a sort of unusual value in the sort of thing in this environment. Even if we were to have another lower that you probably want a dollar cost average, to me, that's the most interesting thing. I see what Karen saying, I see what you're saying about the free cash flow. But when you see a parabolic move like we've seen in a group that goes from 3% to 4% of the S&P 500, I think that could be a nice way to invest a small part of your portfolio. But I think of the NASDAQ 100, I mean that is the market for all intents and purposes. And I think you're getting some unusual values in the.
- [12:45]
Brian Sullivan
Because I know, and I'm a quote Tim Seymour to Tim Seymour, you said a couple of months ago, why do we even talk about small caps? I get it. But they're higher this year and I only bring that up because it's a very domestic index. Some people suggest it's an economic sort of indicator. And if you believe that small caps are Telling us that the market for now doesn't believe the American economy is going into recession.
- [13:05]
Tim Seymour
I think that's right. And again, with all due respect to the small cappers out there, I hate them. I hate you people. No, no, not at all. My point was the significance of investing in small caps relative to the rest of your portfolio was something. I've always been surprised at how much bandwidth they get. But, but I'm going to say, you know, we're on the show every night and we don't have to say something new every night. So I'm therefore going to say something I've said a lot of times in the last three weeks. We're not going back to 65 oil. And 65 oil in hindsight, looks really, really good for consumption in this country. And Wal Mart, which I love. You can't tell me the people that shop at Wal Mart, I know we're all shopping at Wal Mart these days, but you can't tell me it was as good as it's going to get for a while. In terms of the tailwinds. In terms of actually there really was inflation that was under control. Especially we are starting to even see food inflation come down. So I think that's the most important part of the market. Multiple and where we may be looking out two to three months. You don't have to go right there. It's not necessarily recession tomorrow. It's telling you that things were pretty good.
- [14:03]
Brian Sullivan
It does matter. Well, I know the average American uses 50 gallons of gasoline a month. The average car gets 25 miles per gallon. It's about an extra at a dollar above where it was a year ago. It's about 50 bucks extra a month. It's a lot for some families, but it's manageable for others.
- [14:18]
Tim Seymour
What about that Plymouth you're driving though?
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Brian Sullivan
That's eight miles to the gallon, but it's no Chevy Vega. All right, up next, your guest says worst case scenarios for the market still are not priced in. Huh? Is PNC Asset Management's chief investment strategist Young. Thanks for coming on. So what is the. And I'm not trying to be dire up here. Okay. But we're kind of trying to look at all the scenarios. What are the scenarios as you and your team see them?
- [14:47]
Guy Adami
Thanks.
- [14:47]
Young Yoo
First, it's great to be here. I would say that worst case scenarios, as was talked about relating to the VIX and even oil futures curves are not priced in here. There's some risk priced in for sure. But if there were energy infrastructure to be destroyed and taken offline for a year or two, that would certainly cause a much, much greater disruption than we have currently. And, and that is currently being priced in our anticipated into the markets. Now we don't expect that's going to happen. We do think that is more of a worst case scenario right now, but the markets are not braced for that even if it's low probability at this point in time.
- [15:23]
Brian Sullivan
And again we, nobody, nobody is hoping for this. But I will add that President Trump this morning basically said they're going to end civilization or whatever, whatever the words were. We don't know what they mean, but it's not out of the question to believe they could mean, to your point, the destruction of a lot of that infrastructure that you referenced. Are you surprised by a Vix at 26, not a 46, not even a 36 by a market that is flat to maybe higher over the last week?
- [15:56]
Young Yoo
Well, I'm a little surprised. I think a little more risk should be priced in here, but I don't think dramatic more risk should be priced in here. I don't think we should see Vix at 40. I, I don't think we should see a extreme drawdown in the equity markets here. I would like to see a little bit more nervousness out there and people not jumping as quickly on the smallest tidbit of information to try to get long here. And like we saw that rally in the last 30 minutes of the day. But that said, I, I think the market is probably being rational here. There's some element of the wisdom of crowds that this probably isn't going to get to those more extreme scenarios. And the market is looking at some of the underlying pillars, some of the, some of the plays where there are value in the market right now and wanting to make sure they don't reduce their longs the way that they did in April of last year when there was that type of concern that turned out to be largely misplaced.
- [16:49]
Guy Adami
How does China insert themselves into this conversation and potentially what does it mean for their markets?
- [16:55]
Young Yoo
Well, China has leverage over Iran. Certainly China has a strong vested interest in seeing stability in the Middle Middle East. China has a lot of investments throughout the Middle east and Iran buys a tremendous amount of its infrastructure and goods and electronics from China. So, you know, to the extent that Iran relies on China, China has some ability to influence those discussions. And China is looking for peace in the region or at least stability in the region given the extent of its investments, not just in Iran, but especially across the Middle East. So I think there Are a lot of backdoor channels at work right now that are applying pressure in various directions, both in Iran and in the US and that amount of pressure that's being applied right now probably leads to somewhat of a de escalation in the coming days.
- [17:47]
Tim Seymour
But is China front foot or back foot? And I asked that going into Trump Xi Summit, and I asked that as a member of the global markets who wants to see a stronger Chinese economy, who if anything, was starting to show a little bit of traction. So China front foot or China back foot?
- [18:07]
Young Yoo
Well, it kind of depends what the dynamics are. There a lot of geopolitics in play that China is being influenced by here as well that are also in flux. I would say that what is interesting about China right now is the extent of its innovation in technology and innovation in AI, and that is not slowing down. And that is going to remain kind of neck and neck with the US in a leadership position globally. So I do think if we, if we're looking past the current events, we're looking, you know, 912 months out thinking about where China's growth is coming from. It really is going to come from the tech sector, from innovation, from AI as well. So, yeah, you know, I think their tech sector is probably pretty well positioned. But of course the geopolitical questions around China can cause a lot of volatility, especially in the short term.
- [18:56]
Brian Sullivan
Yeah, but you know, you worry, you look at, you look at South Korea, look at Taiwan, even China to a point. They rely so heavily on energy imports from that region of the world. Young you just wonder, will they have to stimulate or would that be the exact wrong move because you want to bring down your economy to mitigate the loss of energy. I just don't know why we're not talking more about negative impacts to markets globally, even more so than our market here, which luckily or thankfully, whatever word you want to use is relatively energy independent.
- [19:30]
Young Yoo
Yeah, some of these countries, such as Taiwan and especially China, have reserves that they can use for a while, but if this lasts another couple of months, certainly a lot of those reserves are going to be drawn down even in countries that have more robust reserves. So you're getting to a crunch point very quickly in the global economy, which, which is why that pressure is building so much here. You know, I think right now the market is a little bit complacent. I was talking about this and how perhaps more risk be priced in a little bit too complacent that some of those pain points aren't well appreciated. That could take place in the coming weeks. I think the administration understands that. I think a lot of world leaders understand that and a lot of global companies. But I think right now the market is hoping that that doesn't come to the fore right now.
- [20:20]
Brian Sullivan
Lot of hope out there. We'll see what happens. Yeong Yuma, PNC Asset Management Yong Yoo, A real pleasure. Karen, your take.
- [20:25]
Karen Finerman
So I agree with what he says that it's surprising that it's priced here. But I think history with Trump has shown us that this is the far, far, far more likely way to bet it will work out in the near term.
- [20:41]
Brian Sullivan
All right, we've got a lot more fast money coming up. And coming up, Apple seeing its worst day in about a month has something to do with a foldable phone. We'll give you the news, the trade and more coming up. Stick around.
- [21:04]
Eight Sleep Narrator
She loves it hot, he loves it cold. However you sleep, the pod by eight sleep adapts to you. Personalized temperature temperatures keep you in deep sleep longer, so you wake up refreshed. Learn more@8sleep.com Men are struggling with their
- [21:21]
Dr. Guy Winch
mental health at some of the highest rates we've ever seen. But most aren't getting the support they need. And that needs to change. I'm Dr. Guy Winch, your host for season three of the Visibility Gap presented by Cigna Healthcare. This season we're focusing on men's mental health, bringing together real stories and expert insight to explore the pressures men face every day and why opening up can feel so difficult. Join us for the new season wherever you stream your podcasts.
- [21:49]
AT&T Business Narrator
Before we had AT&T business wireless coverage, our delivery GPS wasn't the most reliable. Once our driver had to do a 14 point turn to get back on route. A 14 point turn. An influencer even livestream the whole thing. Not good for business. Now with AT&T business Wireless, routes are updating on the fly and deliveries are on time. And the influencer did get us 53 new followers though.
- [22:14]
Young Yoo
AT&T business Wireless connecting Changes Everything.
- [22:22]
Brian Sullivan
All right, welcome back to Fast Money. Let's talk about Apple. Because Apple stock fell as much as 5% today. It was a report from the Nikkei in Japan that production issues may cause a delay in the release of a foldable iPhone. Now later on in the day, a Bloomberg story refuted those headlines saying the device is still on track for a September launch. The stock came back, but only by about half, so it finished the day down about 2%. Dan, you were talking about the the big tech stocks earlier on in the show, a little headline battle With Apple, does it matter?
- [22:58]
Dan Nathan
This does not matter. I mean I didn't know they were
- [23:00]
Tim Seymour
making one of these.
- [23:01]
Brian Sullivan
Are you kidding me?
- [23:02]
Tim Seymour
And this is a 5% move.
- [23:04]
Dan Nathan
It was really odd, right? And just tells you maybe investors were looking for a reason to sell. If you think about it, last year in 2025 there was like 1.2 billion cell phones that were sold globally. Apple has about 20% market share. Samsung has about 20% market share. SAMSUNG owns, they own the Photovolt market. It's like 2% of total. I mean they, they are the only ones shipping them and I just don't think it moves the needle. It's a very premium niche, that sort of thing. But I think the obviously the biggest expectation for Apple is what are they going to introduce in WWDC in early June, what is Apple looks like, how are they integrating Google's Gemini? What is Siri going to be at the tip of the spear? And if they get that right, then it will be good for the hardware in the fall. It will not be an upgrade supercycle but then we really start modeling in services as it relates to applications. On top of that's the story for Apple.
- [23:53]
Brian Sullivan
At 253, 50 per share is Apple
- [23:57]
Karen Finerman
a good buy for what time frame? I mean I don't own it. Tim's owned it and that's worked well. Well, I don't know, I've just sort of always found to be expensive. I agreed something like this story doesn't matter at all. And I always think the stock fell
- [24:10]
Brian Sullivan
5% for some reason.
- [24:12]
Karen Finerman
Yeah, just you know, nervous holders, nervy market. Yeah, I think so. I don't think the long term means anything.
- [24:18]
Tim Seymour
Well, my earlier comments mean that Apple's probably less interesting than it was, you know, a couple of months ago. If you look at the rest of tech that's come down in multiple. Apple's not cheap but. But again today's headline is is an excuse to sell Apple I a foldable phone. Will we count on that technology?
- [24:37]
Karen Finerman
I think people are excited about a foldable phone.
- [24:39]
Tim Seymour
Wow.
- [24:40]
Karen Finerman
Wasn't expected right away but if you
- [24:43]
Tim Seymour
want one, I've always wanted a foldable phone. I mean I need a foldable phone really badly. Having said that, I spent a lot of time at least reading research and reading Apple research. I'm not an Apple analyst but the fact is this has not even made the radar screen for what people were talking about in terms of drivers for the stock. Stock. I mean I'm, I'm really surprised this is a trigger for the stock. I think there's a big seller out there. I think there is a couple of dynamics and I would be buying weakness
- [25:08]
Guy Adami
if the world of valuation ever matters again. To Karen's point and Tim's mid single digit revenue growth, high single digit EPS growth margins that have been flatlining ish obviously their install base is ridiculous at 27 times next year's numbers. It's not cheap. And if people focus on valuation in this, in this new market or new world, I think Apple is a very expensive stock.
- [25:33]
Brian Sullivan
Well apparently they did for a couple of minutes there as long as that headline lived out there. All right, coming up, the next move in housing as one Wall street analyst turns more bearish on the builders, seeing bigger drops ahead. Loss President Trump's deadline for an Iran deal is approaching fast. About two and a half hours from now. What will it mean for oil, energy and the markets? We're going to talk about all of it coming up. You're watching Fast Money live from the NASDAQ market site in Times Square.
- [26:11]
Eight Sleep Narrator
She loves it hot, he loves it cold. However you sleep, the pod by eight sleep adapts to you. Personalized temperatures keep you in deep sleep longer, so you wake up refreshed. Learn more@eightsleep.com Men are struggling with their
- [26:28]
Dr. Guy Winch
mental health at some of the highest rates we've ever seen. But most aren't getting the support they need. And that needs to change. I'm Dr. Guy Winch, your host for season three of the Visibility Gap presented by Cigna Healthcare. This season we're focusing on men's mental health, bringing together real stories and expert insight to explore the pressures men face every day and why opening up can feel so difficult. Join us for the new season wherever you stream your podcasts.
- [26:56]
AT&T Business Narrator
Before we had AT&T business wireless coverage, our delivery GPS wasn't the most reliable. Once our driver had to do a 14 point turn to get back on route. A 14 point turn. An influencer even livestream the whole thing. Not good for business. Now with AT&T business wireless routes are updating on the fly and deliveries are on time. And the influencer did get us 53
- [27:20]
Young Yoo
new followers though at&t business Wireless connecting changes everything.
- [27:29]
Brian Sullivan
Welcome back. Let's talk about homebuilder because homebuilder stocks fell today, Seaport securities downgrading the sector saying slower job growth puts a cap on any potential upside. In fact, the analysts, they're saying names like Lennar, KB Home Pulte could fall another 15%. And Seaport adding stocks are currently trading somewhere Between a quote guy value trap and catching a falling knife.
- [27:56]
Tim Seymour
Never heard of those terms before.
- [27:57]
Brian Sullivan
Yeah a lot, a lot of. Lot of euphemisms there. But it's a pretty big call. Your take.
- [28:02]
Guy Adami
I could not agree with more of the call. I think they're late but better late than never. The saying better to plant a treat today or you should have planned it 20 years ago but today is the next best.
- [28:11]
Brian Sullivan
You almost pulled off that joke but then by screwing that up.
- [28:14]
Guy Adami
I screwed it up. I rushed it.
- [28:16]
Brian Sullivan
You rushed it was a little because I saw where you were going. You're trying to double trigger and then. Okay.
- [28:23]
Guy Adami
Anyway that said, I mean pulpit chart at Toll Brothers it made its high two and a half years ago. Broader markets done extraordinarily well over that period of time. The homebuilders have not participated. People say when rates come down the homebuilders win. Negative it is about the labor market and I'm with them on this call. Rarely do see initiation as sells. They have a couple of them. I agree.
- [28:45]
Karen Finerman
Yeah.
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Brian Sullivan
To your point guy Tim, it's yeah because there's so few cells, you know you almost feel like you have to listen to them a little bit more because they are so rare. What are they like 7% or 10% whatever Karen of the market. It's a pretty big call. Do you have a take on the homebuilder group or any stocks in it?
- [29:05]
Tim Seymour
Well, I always love to look under the hood, especially of the XHP and if you look under the hood there's no homebuilders in the top 10 in there. I'm looking at Owens Corning, I'm looking at Allergen, Williams Sonoma, Johnson controls, Masco Trane, Dr. Horton number 10. So there are other places and other ways to play in here and clearly some of these names also fall under data center and infrastructure build out and things that really do continue to look interesting in this country. So no, I don't like homebuilders. I've rarely invested directly in homebuilders the sector. I agree with the call here which is very interest rate sensitive. But even if interest rates were your friend, I'm not sure I'd be a buyer.
- [29:45]
Karen Finerman
I agree with you. I do like the negative calls actually we saw yesterday the Tesla I guess JP Morgan reiteration with a very very significant target price of 150something. It's bold to make those calls but I don't know. The balance sheets are in okay shape. I can see them getting cheaper for sure. I don't I do think though the idea about employment and what AI unemployment might do could weigh on the home builders.
- [30:15]
Brian Sullivan
Yeah, apparently. I have to apologize because I don't think it's a euphemism. A euphemism is something different.
- [30:20]
Guy Adami
No, but I screwed it up.
- [30:21]
Dan Nathan
It doesn't matter.
- [30:21]
Brian Sullivan
You screwed it up and then I
- [30:23]
Karen Finerman
know you're thinking aphorism.
- [30:25]
Brian Sullivan
That's it.
- [30:25]
Karen Finerman
Okay, thank you.
- [30:27]
Guy Adami
See, Karen, University of Pennsylvania. Actually Wharton, which is different.
- [30:31]
Dan Nathan
Really? No, both really just US Quakers. We don't get to say Wharton.
- [30:36]
Brian Sullivan
All right, coming up, middleman black two Georgetown, two upens and a pair of twos.
- [30:42]
Bill Stone
State school kit.
- [30:43]
Brian Sullivan
Here we go. All right, guess who's hosting? Coming up, oil prices pulling back ahead of President Trump's deadline on Iran. But where do we go from here? The front month contract on Oil at 110 bucks. We're back right after this. All right. Welcome back to FAST money. Kind of a wild Tuesday. Stocks staging a pretty solid late day rally. The NASDAQ erased a nearly 2% loss. It was down 2% earlier in the session. And the Nasdaq actually closed with a slight gain. That index and the S and P both up five days in a row. The Dow at 1 point down 455 points. It did end down, but just barely inside the market. Shares of Alibaba dropping more than 2% today. Stock now at its lowest level since last August. It's lost 20% so far this year. What about some after hours action? Insmet is down saying that phase two trials for its inflammatory skin disease drug did not meet objectives. At stocks down just a touch while Levi Strauss higher. They topped earnings and revenue estimates. Stock up almost 6%. In the meantime, of course, we the markets, the world watching energy, we approach President Trump's again self imposed deadline tonight for Iran to basically reopen the Strait of Hormuz and come to the table with some more good faith negotiation. Now WTI, the oil traded here and Brent crude both up 50% or more since the beginning, beginning of the Iran war of precious and industrial metals have fallen. Let's talk about all this joined on set by John Connell. He is director of Greenlight Commodities, institutional brokerage for event based Contracts. John, good to have you on the program.
- [32:35]
John Connell
Thank you for having me, especially on a day like today.
- [32:37]
Brian Sullivan
Well, it is and we don't know what's going to happen tonight by the way. We're two and a half hours away from this sort of deadline. We're not sure exactly what it means, what might happen or what may not by the way happen. There's a variety of scenarios. Worst case, base case, best case. How do you see the variety of outcomes and the impact on what you talk about?
- [32:57]
John Connell
We a lot of things could happen today. I have faith that the, that that something will be resolved by 8 o' clock by the time the President his self imposed deadline comes about. I think that aftermarket prices, price action, we're seeing oils off just a tad here. I believe trading 110 that that price action tells me that we probably have a resolution.
- [33:19]
Brian Sullivan
Why? What about 110 says that to you, John?
- [33:22]
John Connell
Well I thought we saw 115 was resistance. If we, if we saw we went north of 115post close I think maybe the next stop in the local is 1 5175. The fact that we've traded off a little bit just gives me an indication that something's going on behind the scenes. Perhaps the Prime Minister of Prime Minister of Pakistan.
- [33:39]
Brian Sullivan
Is that relevant you think? I mean I know the market did move a little bit on that but I mean is that where we are now?
- [33:45]
John Connell
I believe that yes, that's where we've been for a long time. People will are very reactionary. Markets are reactionary these days. You see a tweet or a headline and I think sometimes that's, that's what people put their, their faith in.
- [33:58]
Brian Sullivan
Well, Karen and I were having a conversation in the commercial break and we're talking about earnings growth because between the first quarter 21 and the first quarter 2022 when Iran or Russia invaded Ukraine oil doubled, earnings doubled for Exxon, Chevron and ConocoPhillips year over year. We saw prices spike in March. So one of the three months of last quarter only. Do you have any gauge or thought John on how long oil prices stay? Maybe not at 110, maybe at 9085 but not 65.
- [34:31]
John Connell
I think we stay here for a little bit longer but I think we probably trade off here. I think that, I think that with. Even with the straits, the straight moves and the issues we have going on over there and the possible disruption of the east west pipeline and in the kingdom. I think that we're probably here for
- [34:53]
Tim Seymour
a short time John, where your clients positioned. I mean to me the most fascinating thing is really where the institutions and again sitting in Houston, your commodities broker resource funds, some of these energy funds are big giant sophisticated players. Then there's people across the pond and you know, anyway, so I'm just curious how people are set up for this trade.
- [35:13]
John Connell
Most people have the war Risk trade was put on a long time ago and I think people, most people right now are sitting on their hands and it's a wait and see game. I think if you haven't positioned yourself, head yourself properly at this point, you're probably too late.
- [35:27]
Guy Adami
John, the 70s had two separate instances, instances of oil crises. Put into context what we're seeing now versus what we saw in the 70s.
- [35:36]
John Connell
I think 73 and 79, I believe it was. I think what we're seeing now is worse. I hope I'm wrong, but it seems like, you know, the 12 million barrels a day we're missing because of the close of the Straits is, is worse than 73 and 79 combined. So I hope that that's the worst of it.
- [35:56]
Karen Finerman
So let me ask you, if peace breaks out tonight and there's a unified, I don't know, opening of the Straits point, where does oil open tomorrow?
- [36:05]
John Connell
I think we open up down five bucks at least.
- [36:08]
Karen Finerman
Only five?
- [36:10]
John Connell
At least. Maybe ten.
- [36:12]
Brian Sullivan
But would you agree, John, that that 85 is going to be the new 65 for months or quarters to come? We're not. I see. By the way, I see nothing to indicate we're going back to 65. Karen, I were talking about. I talked to people all the time in Texas. There's been no drilling rig counts down, but no increase. Significant increase in activity in the Permian Basin indicating that the Exxon, the Chevrons, the Conocos and Diamondbacks and whatever. They're not indicating. At least stuff I've read, talked to them, heard about whatever, any major jump in capital spending plans. So that said, are we likely to kind of have that risk premium in oil longer than we might think?
- [36:49]
John Connell
There's that possibility in 85, the new 65. That's. That's probably right, but I don't think you can hang your hat on earnings for just for oil price, if that's what you're asking.
- [37:01]
Brian Sullivan
Ish. I'm trying to gauge how long oil might stay elevated versus where it was before because it falls directly to earnings per share.
- [37:10]
John Connell
Gotcha. I think we stay here another two or three months.
- [37:12]
Brian Sullivan
Okay.
- [37:13]
John Connell
That's it.
- [37:14]
Brian Sullivan
But not two to three years?
- [37:15]
John Connell
I don't believe so, no.
- [37:16]
Brian Sullivan
John Collins. Hey, John. Real pleasure having you on.
- [37:19]
John Connell
Thanks.
- [37:19]
Brian Sullivan
Thank you very much. All right. On deck. What your next guest says investors may not be taking into account. Count around AI. All right. Welcome back to fast money SS&C technologies ringing the closing bell to NASDAQ today, the AI enabled software and services company marking its 40th anniversary congrats to them. And Chairman and CEO Bill Stone joining us now in Studio B. Congrats on the 40th anniversary of S and C. It's a big one. Employees happy.
- [37:55]
Bill Stone
Thanks a lot, Brian.
- [37:56]
Brian Sullivan
All right, so you're in the space where AI, everybody's jumpy, they're nervous. What is AI going to do to anything that has the word software or services in it? What does AI mean to you?
- [38:10]
Bill Stone
Well, you know, SSNC was built on intelligence, right? So we now we're a big place. We got 29,000 people and there's a lot of human intelligence. We're not losing human intelligence because we get some artificial intelligence. All we do is ensconce artificial intelligence in what we do, and it'll do some things a lot better. It's going to put risks into things. You don't really want it to put risk into it, so you got to monitor it. You've got to put guard.
- [38:36]
Brian Sullivan
Put risk into it. That's interesting. I'm sure it's going to put a lot of benefit, too, but it's going to. What is AI risky about?
- [38:44]
Bill Stone
Well, you know, it, it's models, right? It's almost large language models that come out. And if you run those large language models, you're not going to get the exact same answer every time. Get close. Pretty close, maybe close enough. I mean, I have a lot of very large portfolio managers that close enough don't cut it. Right. You know, they'll slice the last basis point. Right? So you've, you've got to be accurate,
- [39:07]
Brian Sullivan
very accurate, because you guys do a lot with banking and wealth management and finance, which is one reason you're, by the way, on this fast money. Fantastic.
- [39:15]
Bill Stone
Largest hedge fund administrator in the world. Almost every is.
- [39:18]
Brian Sullivan
Let me ask you more directly. Is AI going to kill half the jobs in finance?
- [39:21]
Bill Stone
No. You know, every time you get new technologies, it starts off everybody scared to death, and then it's like, okay, well, it's going to give us some better jobs, gives us more opportunity. Now, look, people don't work hard, it's going to be a problem. But people that embrace it and understand it and work at it, it's going to be going to be an advantage. That's what it's going to be for us. It's a tailwind, not a headwind.
- [39:48]
Dan Nathan
So, Bill, talk a little bit about the disconnect right between the way investors see SAS models, right? When you think of a lot of your customers, your technology works alongside probably a half a dozen at least. You know, SAS you know, protocols that are within a financial institution, that sort of thing. And so a lot of that's being discounted right now in the investor community. Talk a little bit about the replacement cost. You want to rip this stuff out. I mean, this is one of the. I think it's probably underappreciated. When you see the baby with the bathwater, a lot of these software names.
- [40:15]
Bill Stone
Yeah. You know, when you look at us, you know, we're the, we're the book of record, right? So you base your tax returns, you brace your SEC reports, you bake your OSFI reports up in Ottawa or the Ministry of Finance in Tokyo or the Australian Stock Exchange reports.
- [40:32]
Dan Nathan
We do all of that.
- [40:33]
Bill Stone
You know, all the large global macro funds are our customers. High iq, low patients. Right. So you deal with that on those
- [40:42]
Brian Sullivan
two things go together.
- [40:43]
Tim Seymour
It's kind of opposite on this desk.
- [40:47]
Bill Stone
I was not going to agree with that, you know, but. But I do think that, you know, people forget that it's that relationship, that trust, that ability to have, you know, I mean, a couple of our clients might do 5, 10 million trades a day, you know, so they trust that we can get those in, ingest them, process them, and have their positions ready to trade again. You know, and once you don't do that, because there's 5 or 10 million coming tomorrow and then 5 or 10 million coming the next day. So, you know, it's an avalanche. And so you always have to be prepared. You have to be ready. You have to, you have to do it. You know, you can't talk about it.
- [41:22]
Tim Seymour
So. So, Bill, by the way, as a former client, yes, you guys are definitely been a standard in the hedge fund space for a long time. Congrats on 40 years. What does this mean for margins in your business? I mean, let's, let's, let's talk about why your company's worth more on the back of AI. And, you know, maybe you're not. You know, that that proud group of employees you have are not necessarily in jeopardy. But, but why are they more accretive to the bottom line?
- [41:47]
Bill Stone
Well, you know, again, right. You're going to have to move people to places that, you know, drive margins, drive the business. Right. And, and make sure that, you know, the stuff that's repetitive that I can do easily or add to doing easily. You got to let it do it. You can't sit there and, you know, Dutch boy in the dike, right? You can't do that. You got to say, hey, we can do this better, and we're Going to do this better. But that doesn't mean you lose your job. You only lose your job if you're unwilling to do anything different. Some people can't. Can't, you know, can't change. That's a problem. Right.
- [42:20]
Brian Sullivan
But that's true with every industry, not just yours. That's any industry that you're in.
- [42:25]
Bill Stone
Yeah.
- [42:25]
Brian Sullivan
So how's Wall street doing? Because you, you benefit if Wall street grows. When I say Wall Street, I mean the global world of finance is kind of the euphemism.
- [42:35]
Guy Adami
Nice job, Brian.
- [42:36]
Brian Sullivan
For global terms.
- [42:37]
Tim Seymour
Good term. You got it right this time.
- [42:39]
Bill Stone
Yeah. I think that Wall Street's doing pretty well, you know, and you're going to see good earnings this quarter. And you know, we beat revenue and beat earnings for three or four quarters in a row and our stock gets rerated and our stock falls 40, 25% that everyone has. How come? So Wall street so herd. One person sees something, everybody runs.
- [43:00]
Brian Sullivan
Yeah.
- [43:00]
Bill Stone
You know, and somebody finally looks above the bush and says, well, maybe it's not so bad. You know, and so then they start coming back and I say, well, maybe it's not so bad. So like last year, we generated a billion 750 in operating cash. That's $7 a share plus we pay a $8 dividend. So every share we buy back, we get $8.08. Stocks trading at 68, that's about 12%.
- [43:22]
Brian Sullivan
Yeah.
- [43:23]
Bill Stone
So we can buy back stock and make 12% on what we think is cheating.
- [43:28]
Brian Sullivan
Well, 40 years is a heck of an accomplishment. To Tim's point. Everybody's point. Bill Stone, we're really glad that you're here. Congratulations to you and your entire company and team. Thank you for coming on Fast Money.
- [43:38]
Bill Stone
We appreciate it.
- [43:39]
Brian Sullivan
All right, thank you. Coming up, we're talking about Medicare moves because some insurance stocks surging on the latest payments plans out of the White House. We'll change gears. We'll talk about that. Fast Money returns. Two minutes. All right. Health insurers catching a bid today. This after the Trump administration finalized better than feared Medicare Advantage payment rates amounting to an increase of more than $13 billion. UnitedHealth by far leading managed care providers higher up more than 9% for its best day. Karen, since August, United Health has a. A lot going on all around it. What's your take on Unh.
- [44:23]
Karen Finerman
Well, that news, that CMS news yesterday was really, really good. We were talking about last night where it was trading much higher than here on that. Even on the sell off from that terrible CMS number. What came out yesterday was great. So I think it's much more interesting here than it was then. I like it.
- [44:43]
Brian Sullivan
You like it because there's still some things that are going on with the company.
- [44:46]
Karen Finerman
There are. But I think they have gotten out of the disappointing guidance business and I think they're righting the ship.
- [44:54]
Tim Seymour
I think at least on the MA front, this, this gives you something to trade off of. And I think there's a lot of concern about even near term earnings power and therefore a company that's very cheap relative to its recent self and a company that was almost too good to be true for five or six years in terms of their earnings profile. Carter talked about the chart that way. I think you're buying it here.
- [45:15]
Brian Sullivan
All right, That's a good take. Unh. Medicare Advantage rates. That was your MA, I assume?
- [45:21]
Karen Finerman
Yes.
- [45:21]
Brian Sullivan
Wasn't a euphemism for MasterCard.
- [45:23]
Tim Seymour
That was an abbreviation.
- [45:26]
Brian Sullivan
You go to Georgetown. Up next, it is your final trades. All right, it is final trade time. Tim, kick it off.
- [45:47]
Tim Seymour
Brian enjoyed the euphemisms tonight. Apple is a euphemism for. You're not selling it because of a foldable phone.
- [45:53]
Dan Nathan
Yeah, I'm on the other side of it. I'm not buying it because it. Yeah, yeah. I'm just saying I think you wait a little.
- [46:00]
Brian Sullivan
Not trading.
- [46:01]
Karen Finerman
Karen yes, Alibaba we talked about a little earlier had a really very steep drop over the last couple of months. I think it's overdone. Remember, they have a ton, a ton
- [46:10]
Brian Sullivan
of cash and guy.
- [46:11]
Bill Stone
Adam, we dig Bill's own.
- [46:15]
Guy Adami
We learned he's from Evansville, Indiana, which is a lovely city.
- [46:18]
Brian Sullivan
Hard up against that river there.
- [46:20]
Tim Seymour
What does that mean?
- [46:21]
John Connell
It's one of the rivers.
- [46:22]
Brian Sullivan
Ohio, I think.
- [46:23]
Guy Adami
The Ohio River, I believe so. You know, people won't like this, but Marathon Patrol and the energy stocks still work. Brian Sullivan.
- [46:29]
Brian Sullivan
Alright, appreciate it, guys. We'll see you tomorrow night. Thanks for watching. Fast Money everybody. Mad money starts now.
- [46:36]
Fast Money Disclaimer Narrator
All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such to view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer the day begins
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John Connell
Mm.
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Brian Sullivan
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