← CNBC's "Fast Money"
CNBC's "Fast Money"
Stocks React To Iran Developments… And A Potentially “Big Shock” In Inflation Data 4/6/26
00:43:25
Stocks kicking off the week with a slew of developments out of the Middle East. The market reaction ahead of President Trump’s Strait of Hormuz deadline, and the impact on oil prices with WTI Crude sitting at triple digits. Plus, how airlines are offsetting jet fuel costs with rising prices, the strong performance in memory stocks, and the “big shock” that could be waiting in this week’s inflation data. Fast Money Disclaimer
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A
Frank, a lot of news from the White House today with the top line being the president is appearing, at least for now to be holding firm to his latest deadline of 8pm tomorrow for the Iranians to agree to some sort of a deal. Otherwise, at that point, he says he'll be targeting civilian infrastructure across the country. Take a listen.
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B
We're giving them, we're giving them till tomorrow, 8 o' clock Eastern Time. And after that they're going to have
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C
no bridges, they're going to have no power plants.
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B
Stone Ages. Yeah.
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A
Frank clearly leaning into the idea of further escalation to come there. But at other times in those remarks to reporters today, he also talked about negotiations being ongoing and said the White House at this point believes that the Iranians are negotiating in good faith. So leaving open leaving open some sort of a window there for some sort of diplomacy or deal to take place before that deadline. But what is not yet clear at this point is what exactly a deal would need to include in order for the president not to follow through on this threat. Today he did suggest that reopening the Strait of Hormuz would have to be a part of it.
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B
Listen in we have to have a
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C
deal that's acceptable to me and part of that deal is going to be we want free traffic of oil and everything else.
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A
Frank so should be at least some good news for oil markets there after last week. You'll remember the president sort of suggested that he might be willing to walk away and let other countries negotiate a reopening of the Strait.
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B
Frank Yes, I'll have to figure out there. Megan Casella, live from the White House. Let's talk about this for a second. I'm gonna turn over to you, guy. What do you make of just the president's rhetoric, a lot of very strong language related to Iran and another deadline. He continues to move these deadlines down. You and I were, all of us were actually we're talking about just the fact that when you give an ultimatum and you don't follow through with it, sometimes it emboldens the other side.
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C
And he does that all the time. I mean I do not not I
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D
do I mean I give ultimate all
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B
the time,
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C
always back down.
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D
I think the mark and this is I'm speaking for myself here, I think the others will agree. The markets learn how to deal with the president's rhetoric and understanding timelines and they're not necessarily etched in stone. So I think what's happening here my opinion, the S and P is looking past this. They're saying there's going to be some sort of, I don't know, day time or for lack of a better word, some sort of Agreement. The oil market saying, even if you have said agreement, it doesn't matter because the structural problems that exist now in the energy market are long standing. I think that's why you see the elevated price in oil. That's why the Vix is still 24, and that's why the S and P is hanging around here, I think.
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B
All right, Karen, I saw you nodding. It sounds like you kind of agree with what Guy said.
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E
Yes, I actually agree with everything Guy said. I do think the market, when we look back to Liberation Day, which was an incredible jolt, right? That was just shocking. And then he walked it back and then there was a lot of back and forth again and threatening different tariffs and backing, sort of backing down. And so I agree the market is really, if you would have heard this rhetoric and let's say, where would the Vix be? 24, you know, whatever, 26 hours before this is going to happen. I don't think 24 would have been the number. So I agree. This is. The market is sort of digesting what Trump's mannerisms and how he likes to negotiate.
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B
So you mentioned Liberation Day. Obviously we saw a big pop when the president put on Truth Social. I believe it's time to buy stocks now. And then later there was kind of a deal reached on the tariffs. Do you see a similar set up here where if you're not invested in this market, you're going to miss that pop?
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E
That is a great question. I never left the market because I wouldn't know when to get back in. So I'm always long, so I'm just staying long. But I think. I don't know. That was an interesting moment of. It seemed to be some. Some who had that news earlier than others. I don't know if they would try to not do that again. We'll see.
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B
Tim.
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C
I think we're at a place where we're balancing a lot of different dynamics for the market that might have even have been different at Liberation Time. I mean, the reality is that we have an inflation issue, even if it's not as much in the core. Although all of the data we've had over the last month, month and a half, and since the war begun, have been looking at data up until either March or even till the middle part of March. We're going to get a CPI number on Friday. It's important. But we had an ism services, the biggest part of the economy, input prices. You know, we're back to August of 22, those highs. We had a number of numbers last week. I just, I, you know, to me the market has come from a place in the last week where if we were talking about this a week ago, it would be a lot more, it would be a lot easier to be more bullish. Even though the rhetoric seemed like they were farther apart and the ultimatums were out there, but it didn't seem like there was a follow through. We've now had a 5% move in the S&P. We've had a Vix that started to make lower lows. It's kind of really at the bottom of an uptrend that started all the way back at Christmas. Let's see what happens. But I think stocks need to start with the 200 day moving average. Let's get there and then let's figure out where we're going.
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B
So Dan, there is some talk about a cease fire. Axios put out a report earlier that the us, Iran, some other nations are working on that deal. But just your view of the market right now and the idea that inflation is weighing on a lot of different sectors and the consumer in particular.
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F
Yeah, we're starting to see, I guess inflationary pressures work themselves back into the consumer. Right. So last week I think was Amazon put a three and a percent service charge on, you know, delivered goods, that sort of thing. We're seeing, I know we're going to talk a little bit about the airlines and some of the new fees that we're seeing there. So ultimately, you know, the consumer is going to bear a big brunt of that. If you go back a year to the tariffs, I mean, that was something that at the time there was a lot of pressure by the administration with companies not to pass through those costs. They were talking about this being somewhat transitory. Well, we know that's not the case either. So if you put those two situations together, the likelihood that you have a cease fire and a lot of these input costs or at least the upward pressure on them abates, I don't think that's probably particularly likely. And you know, David Rosenberg was out this morning and he was talking about every major recession in the US post World War II, except the pandemic, has been preceded by an oil spike where it's basically doubled off the lows. He said we're about 85% there now. Obviously we could get there, we could come back, it really wouldn't matter. But it really means what is the next state of oil? Where is it? Are we going back towards those $65 levels we were two months ago? Probably not. Right. So a 45 day cease fire. It doesn't seem something the Israelis are that interested in either. Right. So if the straits not open. Listen, make no mistake about it, I mean like they're going to push this stuff out. This is what we've all been conditioned to kind of expect here and they're going to claim a little victory here. We're going to have this going here and we're going to have a couple of months to figure this thing out. And so really, I guess the reaction by investors in the stock market is like one of what, like we've had a very orderly sell off over the last week, you know, month and a half or so. I just can't imagine that we're going to be in a situation like last year where we had a down 25% what felt like in a straight line and then a V reversal. I just think we're kind of moved beyond that right now.
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B
All right, I want to go back to what we were talking about, Karen. So you're investing, you're not taking money out the market, but are there certain sectors you want to put some more money into? The idea that we could see that liberation day kind of pop. I'm looking at consumer discretionary. It's down more than 5% since this start. I'm looking at industrials actually down more than 6%. Would you feel comfortable in either one of those sectors?
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E
No, I'd go for energy. I'd like to see energy if there, if there was a resolution. I'd like to see energy come in a lot of. And I still think that this has been a great thing for energy in the short term, but I do think that before this happened there was a movement into energy and I think that valuation, I'd love to see it come in and that would be my first place to go.
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B
All right, Tim.
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C
I think it's, I mean that's, that's, that's fascinating. I agree with it and I think energy companies are slowly rerating and you know, you have these moves in energy where people aren't expecting it. I would just get back to, I look at where we are in mega cap tech land and I look at the valuations here. For the long term investor, I understand there's a problem with every one of these companies. We could talk about, I mean the top five market caps in the world. Having said that, where you are relative to the S and P in terms of valuation, where you are in a forward multiple in a Microsoft or in a matter. I mean these are interesting times and I understand we're massive capex budgets that by the way can be adjusted. So I'm not, I'm not a huge bull here. Having said that, I think investors that are looking for these opportunities. Karen talked about that opportunity energy after you get that pullback. I agree with that. I think you've probably got that opportunity now in mega cap tech.
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B
Wait, megaptech, Are you talking the tech sector, communication services? Because they've had very different performances since the start.
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C
I'm talking about Microsoft Matter, Google, Nvidia and you know, Taiwan Semi, which I think is got probably the cleanest story of the big tech companies.
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B
Guy, you've seen opportunities there as well, mobile cap tech, whether it's actually the tech sector, communication services sector, just big name tech stocks.
- [11:04]
D
It's name by name. We're going to talk about the, the whatchama faces, the Microns and the Sandex, the memory names in a little while. But I think Google to me is sort of an outlier in terms of valuation, in terms of the moat they clearly still have despite the fact that people thought it was probably gone a year or so ago. But I'm with Karen and Tim on the energy sector. I think this move obviously in crude oil sped things up, but I think it was a foregone conclusion that these names are going to be here at some point this year. I think the market's realizing that valuations make still make a lot of sense.
- [11:34]
B
All right, well, you might as well just stick with the energy sector right now. So even if Iran complies with President Trump's call to reopen the Strait of Hormuz by 8pm tomorrow, our next guest does not see a quick fix for global oil flows. Let's bring in Rebecca Babin, senior senior energy trader at CIBC Private Wealth. Rebecca, thank you for joining us.
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A
Thanks for having me.
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B
All right, so there was a report we're going to talk about from Citrini. They say there's more flowing than we actually think that you can actually see online or through some of these services. But you're saying it's not a quick fix. Why not? Why aren't just more flows better for the price action?
- [12:07]
A
So I think when we talk about more flows, I think we need to put it in context. 15 ships is more flows than 2, but it's well below the 60 to 70 ship tankers we need to see to have flows meaningfully restored. So of course it takes the edge off the top of where crude can go. When you start hearing people talk about 1:5200. Seeing ships move maybe tightens that up a little bit, keeps you inside a 150. But if we talk about getting back to meaningful, 60 ships moving through, that is a one to three month process. Why those ships have moved to other locations. They are going to Yanbu to take Aramco's barrels up through the Suez or in the Red Sea. So you got to get all the logistical pieces in place to get those barrels going. And that's just not an overnight process because the whole system has been trying to reroute. And secondly, you need seafarers to want to take that trip. And that's not something that's going to be restored overnight easily, regardless of what anybody says, even if the insurance is there. I think you've got to keep that in mind as well. So I think you're talking about one to two months. Even if we end this tomorrow.
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B
You would imagine safety concerns would be top of mind, not only for the crews, but also for the companies that own the ships. They want to lose a ship. I do want to ask you one thing. The fact that we are seeing more flows for whatever reason, whether it's transactions allowing those ships to go through, doesn't that give at least some people peace of mind or shouldn't give you some peace of mind? This isn't just about ideology, that this is also about commerce and that they want to get these oil flowing and they want to make some money on it.
- [13:42]
A
So I think when you bring everything back to markets, for sure, it gives you peace of mind that barrels will find a way. And I think that's a theme that we've seen play out through many geopolitical events. If we look back to what happened in Russia, right, you sanctioned, you price capped, you get a bigger dark fleet, it goes to the buyer who's willing to pay for it. I think again, the market is focused on this. Barrels find a way. But when we look at the big picture of how big Hormuz is and how much of a lasting impact that can have if we lose freedom of navigation, that structurally changes the idea of the price of the barrel that travels through. We rely on that spare capacity that Saudi Arabia and UAE have. Any time there's a price shock, we say, guess what? We've got this spare capacity that's all behind Hormuz now. The value of that spare capacity is now decremented, right? Because we don't know officially if we can get it. Which I think to Karen's point, when you see that pullback in energy, equities maybe you look at that and say this market may be structurally different moving forward.
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C
And so Rebecca, first of all, thanks for being here because it's great listening to an energy trader who also says there's no edge in trading headline risk in energy and you've been doing this for a long time. So. But adding to that, this, this sounds like this is an opportunity for investors that haven't been investing in energy. As you see it, there really is a change going on here, at least a longer, a medium term change that could have energy positioning still be very underweight.
- [15:09]
A
I think if you're speaking to the equities, absolutely. I mean what are they? 2.6% of the S and P? Maybe they ticked up over three over this last move. It's under owned, it's under loved, it's underweight there. Listen, we got to be careful here. We're not going to chase every rally. And I think that's the point. This is more of a trade after the trade maybe where you look for that pocket. But I do think you're right. This is a medium term potential shift in trend and something to really focus on. And the flows, if they start to come into energy in a real meaningful way, typically what people do is they rent energy, they're renters, not holders by the door. Right. And they're ready to exit. Maybe that changes and that does bring the sector kind of into a higher weight. Now I do want to be careful. It's not by at any valuation. Right. These companies are going to release earnings. We want to see continued discipline, balancing sheet strength. Right. So that's all going to still matter. But I agree over the medium term it might have changed the game a little bit.
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D
Rebecca, real quick, explain in terms of the backwardation in crude, I think there's a lot of thought that the market says in six months from now will be significantly lower. And that may be true, but it's not necessarily true. Backwardation historically is a very bullish indicator for commodities.
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A
Backwardation is extreme levels. Right Now I think ti backwardation is at 11 bucks. We're at, you know, 110 front, let's call it 98 in June. That just tells you the demand for the barrel now is extreme. And all those contracts as that continues roll up, roll up. They don't roll down, which is what you do when you're in Contango. For sure the curve says 70 ish, 72 by deck. But if they keep rolling up because that demand is there in the spot market, that's A higher market from there. Got to be careful though. This is headline driven and as much as we go up, it can come out very quickly on one headline. So I don't recommend taking shots on headlines. You trade options, maybe a call spread, a defined risk reward scenario where you play a range, but you know what you're going to lose if you're wrong.
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B
All right, with that said, Rebecca, before we let you go, looking at oil right now, WTI at about 112, Brennan at 109, almost 110. Where do you see it going in the near term?
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A
Frank, good question.
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B
I know you don't have a crystal ball.
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A
I don't have a crystal ball. And the headlines are going to make the front month super volatile. I'll say this, if we get anywhere near ti85, I think you ask yourself the question, is this resolved on some kind of blow off? To the downside, I'm a better buyer of the dip than chasing the rally and to be honest with you, I'm not sure I'm short anywhere right now just with that headline risk.
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B
All right, Rebecca Babin, thank you so much for your time and your insight. A lot to talk about today, especially after the President's news conference earlier. Rebecca Baggin, that's awesome.
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G
By the way.
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C
Better buyer of the dip. That's, I mean that's trader lingo right here.
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F
Trade after the trade, backwardation call spread.
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C
I mean, a lot going on here.
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E
This could be options action. It could be everything.
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A
All right, Am I good?
- [18:07]
B
You're great for a second guy. We got to bring you back. Dan already gave his review of all Rebecca's comments right there. Even with the highlights.
- [18:15]
D
We have to have her back on without question. I'll say this, and I brought up backwardation because I think there's a belief that the curve is saying prices will be cheaper six months from now. That could be true, but as Rebecca correctly points out, it's not necessarily true. So be careful looking out at the curve and thinking there's going to be some relief in the near future.
- [18:33]
B
All right, moving on, crypto currencies right now, looking at bitcoin bouncing back above the $70,000 level today, but falling below that level on President Trump's comments about the Iran conflict. Crypto adjacent stocks like Strategy, Coinbase, Robinhood and Circle, all of them higher as well, but all are still down sharply from their best levels of the year. Karen, I'm going to turn over to you your thoughts about the moves when it comes to bitcoin and crypto related Assets in general.
- [18:58]
E
So I'm long crypto. I have been for a long time. I'm staying long. I think that, you know, when things get really bad, crypto has actually not done well in the last couple of years. It has done well, but I think that we need some legislative relief for it to really get going again.
- [19:14]
B
You know, it's funny you say that. I was actually talking to Franklin Templeton's new head of their crypto division and he says he's hearing that there's some progress when it comes to the Clarity Act. If you continue to see more progress, do you think just the progress alone. Forget about it, actually.
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E
Progress alone, yes.
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B
Does that move bitcoin higher?
- [19:29]
E
Yes, I think it does. I mean, it certainly took it dramatically lower when it fell apart. So I have to think it moves it higher.
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B
Tim.
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C
I think bitcoin's here to stay. I think digital assets are. We're in the first inning. We really are. Having said that, I think much the way we've talked about energy term structure and having medium term adjustments to energy expectations, I think you've, you've at least slowed down adoption. You have a lot of institutions that came in at 120. You have a lot of retail and a lot of brokers and advisors that suddenly were saying, we're now going to give you a 3 to 5% bitcoin position. And I think, I think they'll be fine in the long term. I actually do. But I do think some of this volatility that we've had for the last six months, and it's not just since the war began, it's been six to nine months of bitcoin volatility I think is something that will take some longer to play up.
- [20:18]
B
Yeah, right now, bitcoin trading just under 70,000. All right, coming up, strong memory. We're going to dig into the surge in names like Sandisk Micron and Western Digital and why Wall street is getting more bullish on that group. Plus, travel costs are just taking off. How airlines are offsetting the rise in fuel prices and just how much more expensive it may make your next trip. Don't go anywhere. More fast money coming back in two. You're watching Fast Money here on cnbc. We'll be right back. The world of business is constantly evolving. And Comcast business keeps you totally in
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- [23:15]
F
Yeah, I mean, this tough one to chase here, right? This is something that was not on too many investors radars about a year ago. If you think about Seagate in particular, was probably trading about 60 bucks. Here we are right now at 453. I think we traded as high this morning as 470. And you say to yourself, OK, well, I think the story is pretty well known at this point. I was looking at the Morgan Stanley note. Did not appear that he raised numbers. He just put a nice little title on the thing saying it was a top pick. And, you know, if this is the last bastion of great performance in the trade, at least over the last year or so, you have to say to yourself, well, look at what's happened before this. Look at what's happened to the chip stocks, look at what's happened to the hyperscalers, then the rack makers and, you know, the Neo clouds and the list goes on and on. I'm not sure why you'd want to be chasing this. And you know, Micron is a great example. After that quarter in guidance that they gave a few weeks ago, that was a monster. It was like one of the best upsides I've ever seen on anything. And the stock went down, you know, 25% over the next couple of weeks. So. So again, I think that if you own these things, fantastic. If you are thinking about owning them, I think you probably want to wait a little bit.
- [24:17]
E
Karen, I got to agree. I mean, yes, I think, you know, earnings will be gigantic, but this used to be a really cyclical business as recently as three months ago or six months ago. And so, you know, you could see a supply response and then you get a tiny bit of demand destruction. But to your point on our noon call today about, well, if they're all feeding AI and is doing so great, why isn't AI trading better? And it just seems sort of a somewhat of a cautionary tale for how these will ultimately end up trading.
- [24:46]
B
A lot of cautionary tales in this market these days. A lot of things to watch. Tim, I want to come over to you. What about valuation? That was one thing that the analysts point out. I'm looking at our metrics here on valuation. I'm not 100% sure they're right. It might be off a bit. But sandisk at nine times forward, P E Micron at four, I don't think that's quite right. But either way, below the market, it.
- [25:04]
C
Well, you know, Nvidia at 18 times forward. I mean, you know, you say what you. I mean, I think I'm with this group here, which is that Sandisk is a 10 bagger. Seagate's a 10 bagger. You couldn't give memory away. I think there'll be a point where we may not get back there, but I think we'll get back to a lot of memory out there. And I think we're describing essentially the sequencing of what's going on. If you own the semiconductors as a sector year you've watched different pieces outperform all the way through and you've watched the group continue to do very well. Which is why I continue to watch the entire semi space because it's. It really is important to see relative new highs. I am not chasing a Seagate. I'm not chasing a Scan, a Sandisk or Micron. Those are really interesting Ford multiples. But again, I would just go back to the mothership and look at Nvidia right now. People don't know what multiple to put on it. I feel a lot more comfortable buying in video well below or at least below a market multiple here than I would some of these names that are. Yeah, below. But they're up eight times.
- [26:02]
B
All right, big run up today for some of those names though. We're going to turn our attention now to a news alert. A new addition to the S and P. Canadian store operator Casey's General Stores is going to be added to the benchmark S&P 500 at the start of trading on Thursday. Tim, give it out. They must have something that you like.
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C
Cowboy hats, boots, what goes on in the general store?
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B
It's replacing med tech company Hologic which is being bought by TPG Global. No, it's just like a convenience and
- [26:27]
C
gas station general store guy. You have a general store in your growing up.
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B
These are staples.
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F
Put the one year chart up of Casey's. Like are you sure this is not like a memory story here? Like please give us. And this is. The S and P is so good at doing this is putting in stocks after they basically doubled in the last.
- [26:44]
E
That's how they get in though, right? I guess they get big enough.
- [26:47]
F
It's not the best way to get in.
- [26:48]
D
That's where the phone was in town as well.
- [26:51]
C
Yeah, that's where you guys went in. They had to kind of crank it up.
- [26:55]
D
Yeah, I know you're making fun of me. I mean it was hard, especially when you had to call an ambulance. I mean a lot of sick people.
- [27:00]
C
Did they have running water there too?
- [27:01]
D
Didn't make it through. At Casey's we had running water.
- [27:03]
B
In my mind this has turned into. Casey's is like potsies there. The Fonz is there and everybody's just kind of hanging out.
- [27:09]
D
Bag pals.
- [27:12]
B
On a more serious note, there's a lot more fast to come. And here is what's coming up next. Rising altitude and rising prices. Why your next trip to the airport could hit your wallet even harder as airlines look to awkward offset the jump in jet fuel costs. Plus Iran oil and the Fed. What our next guest is watching this week on the inflation front and the big shock he thinks could rattle the markets. You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this.
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Learn more@chase.com Sapphire Reserve cards issued by JP Morgan, Chase bank and a member FDIC subject to credit approval. And welcome back to Fast Money. With travelers just reeling from hours long TSA lines and higher prices due to soaring jet fuel cost. Airline stocks, they've been under a lot of pressure since the start of the Iran war. Philippe joins us now with much more on the impact to the industry, Phil. And it's going to continue for some time, Frank, I think until you see steady flow of oil in the Strait of Hormuz and a decline, a steady decline that people can count on when it comes to oil prices and thus jet fuel prices. The airlines are going to be hurting. And as a result, take a look at what they're dealing with. Jet fuel prices, they have essentially doubled since the beginning of this year. The crack spread has just been killing the airlines. United and JetBlue last week raised bag fees. Don't be surprised if the others follow along and do the same thing. They've already put through two fare increases. I've heard talk of a third one possibly coming in soon. And they're also trimming capacity mainly on your Tuesdays and Wednesdays, your Red Eye flights, the least profitable flights. Those are the ones that the airlines are cutting. Keep in mind, capacity is still growing in the second quarter, though it continues to grow at a slower pace. Now it's expected to be up about 2% year over year, though that could even be dropping down to maybe 1.7 or 1.5% as the airlines continue to trim capacity. As for Delta, it is the first airline to report its Q1 results. That will be happening before the bell on Wednesday. It's interesting to listen to Delta and its CEO Ed Bastian not only talk about managing this, but also remember Delta has a refinery in Pennsylvania. So it is intimately familiar with the challenges of dealing with jet fuel and the prices that go along with that. Though like everybody else, they may have their own refinery, but they're paying more for jet fuel like everyone else. We'll be talking with Ed Bastian. This is an exclusive you do not want to miss on Wednesday morning. The main question for Ed, how much is demand holding up? A couple of weeks ago he said it was still strong, especially on the corporate side. Is that still the case, Frank? We'll find out on Wednesday morning on Squawk Box. Yeah, a lot to talk about there. I'm sure it's going to be a great interview. Our Phil LeBeau, thank you very much. Again, exclusive interview with the Delta CEO coming up on Wednesday morning. Tim, you're over there. Not I'm going to turn over to you. How do you view the airline stocks right now? We were talking about these dips and maybe places to put money. Is this another place that, that maybe there's an opportunity for a big bounce?
- [31:29]
C
I think in the case of Delta, for sure. By the way, good for Ed Bastian. I mean, he's been one ahead of the curve and I think the peer group for some time now, the fact that they do have that refinery, it does seem to help Delta, who filed an 8K, I don't know, two weeks ago. 3. We know these numbers are going to be solid. We know that they've upgraded EPS. We know it's going to be 7 to 9% and that actually if you look at year over year, there's some really interesting margin gainers, including their essentially their MRO business, which is maintenance and overhaul. And it's something that's a very high margin business. I like Delta here. I've always liked Delta. Again, I've always said they were some of the greatest trading stocks and I mean airlines. I think Delta is an investment and I think it's cheap here and I think you're going to get through this period and you can own Delta now.
- [32:14]
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All right, we're going to shift from travel back over to tech. We got a newsletter on Broadcom. It's popping after hours. Our Julia Boorstin has all the details.
- [32:21]
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Julia, Broadcom, Google and Anthropic expanding their collaboration.
- [32:25]
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As part of this deal anthropic will
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access 3.5 GW TPU AI capacity starting in 2027. This all from an SEC filing revealing that Broadcast and Google have entered into
- [32:38]
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develop and supply custom tensor processing units or TPU's for Google's future generations of TPU's. Also saying that there is a supply assurance agreement for Broadcom to supply networking and other components for Google's next generation AI racks up through 2031. Separately, Broadcom, Google and Anthropic have expanded their current strategic collaboration under which anthropic beginning in 2027 will access through Broadcom about 3.5 GW months as part of these next generation TPI use TPU's based AI compute capacity committed by Anthropic. You see Broadcom shares Now of about 3%. Back over to you our Julia Boorstin with the very latest on Broadcom. Coming up here on Fast stocks in limbo was the conflict in Iran weighs on markets and on oil prices. But our next guest thinks a bullish backdrop is starting to build. But also warning one piece piece of data could deliver a big shock to the whole market. He lays out the full case coming up next. Fast Money back in two. Missed a moment of fast. Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this. Welcome back to Fast Money. Stocks starting the week with a small gain as investors digest the latest developments out of the Middle East east. The Dow jumping 165 points. The S and P and the Nasdaq both climbing right around a half a percent. Both now riding four day win streaks. Crude oil also higher as well with the President saying the Strait of Hormuz deadline is now about 26 hours away. WTI settling above 112 a barrel. Meanwhile new inflation data this week it could rattle the markets as Iran war risk just continues. And let's bring in Ben Emmons, founder and Chief investment officer at Fed Watch Advisors. Ben, always good to see you.
- [34:36]
G
To see you Frank, sorry, I can be there, but great to see you.
- [34:39]
B
It's all right, man. We're going to work it out remotely. So, Ben, I want to go into your notes very quickly. You say coming up, the PC report, it could be a shock for the markets and you're looking at core pce. You got to explain this one to me because core PC is obviously without food and energy. What shock comes from core PC,
- [34:55]
G
Frank? I think we're looking at one of the Inflation Friday will show a big jump. You know, we saw the same thing play out in European numbers. I've seen so driven by energy. But as a result of headline jumping, you do get an effect core as well, because it spills over into services in particular. And I think we're in for a little hotter number there, actually headline being being significantly higher. The key there is that this, if this sets the stage for several of these numbers to follow, you know, the shock is that substantial. That's, you know, I think a bearish signal to the markets. At least the narrative may shift from this de escalation story around Iran to what will the Fed do in reaction to this inflation. I think that's why it's important.
- [35:41]
B
All right, Ben, you do a lot of great writing about the Fed and your expectations for the Fed. How does this play out with the fomc? I mean, could this potentially be seen as transitory? Could we see a resurgence of that thought that this is a temporary shock that's going to go away and things are going to normalize?
- [35:57]
G
I don't think so, Frank. I think they're very cautious about that this time because it's a similar kind of shock, if not bigger shock to what we saw with Ukraine, where at that time it was viewed as agree economy reopens and this is conflict, but it eases up quickly and it won't really matter to prices too much. And that was a miscalculation this time around, though, as Rebecca, the earlier guess was, you know, describing, you do deal here with a significant disruption of flow of oil across the globe. So we're not just talking US Inflation, we're talking inflation everywhere and it affects everything. So I think this Fed will be cautious. It will be watching this playing out in terms of the next two months. If these inflation numbers I say show acceleration, I don't see this Fed sitting on its hands. It will start signaling that it wants to raise rates at some point. Inflation.
- [36:49]
C
Hey, Ben, is Tim. No one cares. My views, my view on this, they, I'm sure they care more years and, but I feel we've had inflation for a long time and I understand core has not shown it. But I look at CRB rind, I look at input price costs that for months have gone higher. And we've seen it also in the ISM manufacturing, which is nice because even though we're not a manufacturing economy, it's been nice to see that uptick. But talk to me about, about what's baked in and what just might not have fed through to the consumer yet. Do you have a call on that? And again, I'm not just talking about what's happened post Iran. I'm talking about what's gone on for the last nine months.
- [37:26]
G
I think then that if you think of inflation that we had some moderation over the last year up until yes, now where we're going to see this data change. But within that, the expectations of inflation have never normalized the way the actual inflation did. And that's really key because people continue to think that inflation is going to be at least 3, 4, 5% in the future as opposed to where headline inflation was ending around 2.5%. So that's clearly a difference. And if you take this energy shock and people read about it then, because I think about seeing high gasoline prices, it's only going to go higher from here, not lower. And I think this is the real challenge, I think, for inflation going forward. In addition, that you have services to stay sticky, rents that haven't really come off too much and that's why they're not all together. I think you're keeping a high elevated inflation rate.
- [38:23]
E
It's Karen, thanks for being on. So what do you think that means then for the market?
- [38:30]
G
I think, Karen, that one, if you think of the treasury market currently, we had a flattening of the yield curve throughout this conflict, mostly because we have been kind of playing with thought that may have to move to a hike. It was even at some point we priced in about 50% of odds of a hike about a week and a half ago sort of taken out. But getting flatter is actually not a good sign in terms of like one, it doesn't give much opportunity in fixed income, two, it's maybe not as beneficial to banks, but three, for the macro economy, the flat yield curve is uncertainty. So I think that's what that says. I think if you have inflation going accelerated higher and you're getting a flatter for the curve to ultimately potentially inversion, that's where the negative economic story comes about.
- [39:16]
B
All right, Ben Emmons from FedWatch Advisors Ben, it is always a pleasure to see you. Thank you very much. Guy, I want to come over to you. You didn't really chime in man. You didn't have a lot to say there.
- [39:25]
D
I got a lot to say but you know we had a lot of people on the show. We have a 10 year auction on Wednesday with 30 year auction on Wednesday. We got inflation data this week. This is the week where I think the bond vigilantes, if they want to play, they're going to do it. And I still remain. Yields are going higher for the wrong reason. So we'll see how the rest of the week plays out.
- [39:43]
B
By the way, he gave us his what he calls the war portfolio. I guess it's not his, it's what the market is doing. Overweight energy. Karen, you were just talking about this. Some cash and some gold. What do you think about that, Dan? Guy.
- [39:56]
F
Guy.
- [39:57]
E
Guy's been on the gold thing since.
- [39:58]
C
Gold's 29 since.
- [40:00]
D
Yeah, since. Since they found it for the first time. The gold standard, it's pulled back. It held a 200 day moving average. I don't think the gold story is over by any stretch of imagination. I think there's concern that some of these Middle Eastern countries may be selling gold. I have no indication that's been going on but I think that's the overhang. I think when things get sorted out, the gold story is still intact.
- [40:17]
C
Remember that trip to Arizona for the Brady Bunch where the gold rush Jim Bacchus locked him up in jail.
- [40:23]
D
That was who played by the way.
- [40:26]
C
Mr. Howell.
- [40:26]
D
Mr. Howell.
- [40:27]
B
But it was, it was all about gold.
- [40:29]
C
Like he still thought, you know, he was nervous they were going to get his claim right. So this is just interesting stuff when
- [40:35]
B
we talk about deep pool right there.
- [40:37]
D
It left him in the lurch.
- [40:39]
B
Middle of the desert was coming up delivering a bounce with the Chartmaster season store for doordash as the stock tries to climb back from being cut nearly in a half. We got the technical take when Fast Money returns. And welcome back to Fast Money. Not the best start to the year for doordash. Those shares are down 31 and a half percent since January and off 46% from their all time high. But the Chartmaster believes this food delivery stock could actually could start delivering some gains. Carter, Worth, you're here. What are the charts at? Let's get right to it, Frank. Yeah, what a disaster. And in general buying stocks and downtrends is bad technique but let's do a little bit of that. So first chart they're all the same charts. A 49.81% decline. That makes it over the past six months. There are 490 stocks in the S and P that are better. It's one of the worst in the entire index. Next iteration. What we find here of course is that the sell off leaves it to the penny at this well defined multi year uptrend line. Third chart, same chart again just with some arrows. It is literally responded to this line over and over and over to the penny and it bounced last week at said line. Let's keep going. So last two charts, what we had of course was an epic bull trap. People playing for a breakout in October. It was a trap meaning bulls come in, money's drawn and then it only disappoints. Now we have the opposite final chart. A simple buy time. So again, a 50% sell off down to a well defined trend line. Doing something that's generally wrong as a matter of technique, but we're doing it buying a stock in an aggressive downtrend. For a perspective bounce. There we go. Carter worth laying out the case for doordash. Dan, I want to come over to you. Charlie laid out the technical case. How do you view his thesis and just the company in general?
- [42:33]
F
Yeah, if you have a favorable fundamental view that this company has nearly 70% market share in the delivery market that inflate in what's called margins, gross margins expect to get better. They have this advertising business that growing. We've seen this across a number of other digital businesses. That should help margins too. And so I look at this story and I say, you know what, you got a little support as it relates to the technicals there. And if you go into earnings and you see sort of, you know, some sort of anticipation of better margins, I think this stock trading about, you know, a market multiple should do better with revenue expectations for growth like 30% this year. So I like the set up here, both technical and from a fundamental standpoint.
- [43:10]
B
All right, we're going to leave the conversation there. Doordash shares pulling back as you can see on the chart. All right, coming up with the trouble. Coming up, we are looking at the trouble with Tesla, the EV maker, trading near seven month lows, there may be a lot more downside to come while one Wall street firm says the stock's about to lose his charge in a very big way. Also here's a sneak peek at the Kramer cam. Jim's chatting exclusively with the CEO of US food giant Cisco. Catch the full interview at the top of the hour on Mad Money More fast in just two. And welcome back to Fast Money. Tesla dropping over 2% today and closing at its lowest level since last September. Analyst at JP Morgan warning that a move into higher volume segments with lower price points poses a risk to that company. The firm reiterating its underweight rating and 145 price target. That's nearly 60% lower than today's close. Tim?
- [44:07]
C
Well, I think the dynamic around Tesla is one we've, we've debated a long time. This is not a car company, so therefore I'm not sure what we got so worked up on those deliveries. If you look at the chart on this one though, this does appear at least a stock that's looking to find a bottom and it's going to need to find a bottom. On the next catalyst, obviously Robo self driving. I mean, these are things we've been waiting on. There's certainly some headlines out there. Never been my cup of tea in terms of valuation and what I would actually be investing in. Therefore I leave this one alone.
- [44:37]
B
Karen.
- [44:37]
E
Yeah, I agree. I mean, you know, so the car now, we used to be that the street was sort of ignoring the car story, now they really are ignoring the car story because as Tim said, it doesn't matter. Whatever they deliver doesn't matter. But the promise and of what is to come for Robo taxi, autonomous vehicles and robots is so far out there. I know it's coming sooner and sooner, but you know, that's not Musk's strong suit. Delivering sort of when he said, But I wouldn't be shocked though if one day SpaceX, Tesla was all one thing,
- [45:12]
B
similar to XI and Space X kind of a combination.
- [45:15]
E
Yes.
- [45:16]
B
All right, Dan, any thoughts on this? By the way, I don't know if you've seen this. The former president Tesla is out doing a book tour and he said the same thing you guys are saying, that Elon Musk has given up on cars. He feels like the Chinese are going to win, but he's all in on robotics and all of his efforts are going towards robotics. Does that make a difference that he's not so split? Of course he still has Space X, but he's very laser focused on robotics.
- [45:35]
G
In your mind.
- [45:35]
F
Yeah, I think that's the point that you're talking about. The robotics probably finds its way into Space X and Xi, that sort of thing. You know, it is interesting in the quarter that just ended that, you know, Tesla's cars were down 14% year over year. And if you look at, I think it was used EVs are up 12% year over year. So you got rid of that credit. So it made those cars less interesting, right, the tax credit late last year. And then you have EVs that really have not held their value particularly well of late. They did do well at some point during the pandemic, that sort of thing. So now people want used EVs and they don't want the new EVs and they're not even focused on them. So you're not going to see any innovation and you're going to see China flood, I guess the planet maybe not here with really cheap EVs.
- [46:16]
C
All right.
- [46:16]
B
Tesla shares pulling back about 2% today. All right. Coming up on Fast Money, final trades. Don't go anywhere. Welcome back. Time for Final trades. Tim.
- [46:32]
C
Frank, great to have you here. Also a good sport around the Brady Bunch. Hijinks, Taiwan, semi. No hijinks there. I think it's the cleanest story in big tech.
- [46:41]
B
Karen.
- [46:41]
E
Yes. So, unh, the CMS news, this is very big. The day they announced that flat rate in January, the stock closed the next day at 305. I'm sorry, 351. Now it's 305. Better on my Benning.
- [46:55]
B
Dan.
- [46:56]
F
Yeah, I like Carter's doordash call for a bounce into earnings.
- [46:59]
D
Happy birthday, Matt. Michelle DeMartino on the set here. Broadcom Avgo.
- [47:05]
B
What was your pick?
- [47:06]
D
Broadcom.
- [47:07]
B
Broadcom Avgo. There we go. 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
- [47:28]
A
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- [47:30]
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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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