Pippa Stevens (2:20)

Hey, Melissa. So traffic in this trade had already come to a state standstill in part because of surging insurance costs for any tanker that would try to pass. Meaning this doesn't necessarily change the short term picture with CIBC's Rebecca Babin saying it's saber rattling with both sides looking for escalation dominance. Still There is some 87 million barrels of crude that has been loaded onto vessels and now sitting in the Persian Gulf and unable to transit. That's according to Kepler. And there's a finite buffer in terms of how long the market is can absorb these lost barrels. Wood Mackenzie among the firms saying $100 oil is on the table. If this persists and the supply shock is twofold, it's not just current exports but it's also OPEC's spare capacity that is a key lever for balancing markets. And a lot of that could now be inaccessible. VLCC rates, that's very large crude carriers. We're already up 368% for the year ahead of the weekend. And with ship stock those prices are most likely going to keep rising over ultimately hitting consumers. Now Secretary Rubio saying just now on his way into briefing top lawmakers on Capitol Hill that about the war that Secretaries Wright and Besson have a program in place to mitigate the energy impact. No details but he said the programs will begin to roll out tomorrow.

Melissa Lee (3:35)

Melissa, what is the readout pip on the damage done to the oil infrastructure within the Middle east and specifically Saudi Arabia's oil hub?

Pippa Stevens (3:43)

Ross Tanura yeah, so the fact that that has been taken offline, that is a big red flag and it shows that this is now escalating. I think the bigger move today was f focused on Qatar and the damage there after Iranian attacks on Qatar LNG infrastructure because the market seems to be saying that this is bad for oil. This is extremely bad for global LNG. Of course Qatar and the UAE are 20% of global LNG and the Strait of Hormuz is the only exit point for all of those LNG tankers. And so the fact that we saw TTF futures rising above 40%, those are now five times as much as Henry Hub pricing. And so the LNG especially is a big deal. But I think the fact that we saw the response onto Saudi Arabian infrastructure, of course app cake back in 2019, some hearkening back to that as well, this just shows that this is very different from what we saw last June in terms of escalation. It does not feel like this is de escalating those attacks and targeting energy infrastructure specifically. The next thing, of course, Melissa to watch is Carg island because that could be another big hit given that that's 90% of Iran's exports.

Melissa Lee (4:44)

Pippa. Thank you, Pippa Stevens. And no surprise, you saw that spike in oil prices pretty much across the board. And as Pippa had highlighted specifically in lng, what do you make of this impact here? Because what we saw was sort of the straight line, connect the dots between higher oil prices and the various sectors that higher oil prices would hit or hurt or help.

Guy Adami (5:03)

And you can go, you want to do that and we go various ETF country ETFs. India is probably the most exposed. China probably number two. India ETF was probably down significantly that in look but it would make sense. But what does it mean? Well, historically, if you want to play crude from the long side into events like this, it's typically short lived and it's usually a losing game. But this is sort of an escalation clearly when you close the straits. The question is what's China do with this and what does India do And what happens to the Trump meeting with President Xi in April? Is that going to happen or is that going to get pushed off? Those to me are the things you really want to talk about in terms of the broader market. In terms of energy though, I mean, I would submit that crude, the energy stocks were headed this way anyway. This just accelerated the move.

Tim Seymour (5:46)

I agree with pretty much everything Guy just said. I do think, I know these things do tend to be short lived and I think that, you know, I don't think Trump has a ton of, I don't know, patience for very high oil costs. And that's sort of getting in the way of, you know, the whole Trump, everything's more affordable. So you have to think about, all right, how much resolve is there? He probably would want to wrap this up pretty quickly for many, many reasons. But I wouldn't chase it here. I do own, I do own the xle. I do own oih. I'm going to stay with them, I'm not going to trade around them. But I'm not adding here part of

Melissa Lee (6:23)

Pippa's report, part of Emily Wilkins reporting earlier in the last hour saying that Rubio was going to meet with the Energy Secretary Chris Wright and that they would somehow remedy this, which would imply perhaps a release from the SPRO or some other sort of. There's a backstop here it seems.

Karen Feideman (6:41)

Well, sort of. I mean, I'm not sure that we're able to really make up the difference here when we talk about the and I know strategic Reserves, petroleum reserves are different than swing capacity out of opec. But US strategic reserves aren't the answer. I do think this is a boon for US US exports, even for US oil services. And those names that are exposed to that, I think very, very much so. Karen's right. I mean you're not chasing energy names today. Having said that, if you look at some of the European integrated, which I prefer over even the US integrated, like a total TTE trades here, Shell trades here, these at $100 oil will have north of 15% free cash flow yields. So if you are looking for a solid 4 to 6% div, you've got it. And I do think that these companies were better positioned than some of the US ones going into that. We, we're going to have a conversation about what the higher oil prices mean. Guy referenced it in India. I mean there are places where higher oil prices are a disaster if they are sustained. And what's really disappointing, as someone that's been, you know, I invest a lot in Europe and we've seen a recovery in European manufacturing and industrial. It was a big day for the industrial manufacturing readings today in the U.S. but that Europe really is fragile on this front. And we saw that Russia, Ukraine, that when you had that spike in oil prices, it really hurt Europe.

Dan Nathan (8:01)

Yeah, we have that problem here though too. Right. If you think about other than at the pump, you have a situation where manufacturing, there's a whole industrial, there's a whole host of other uses. Right.

Karen Feideman (8:09)

For oil here.

Dan Nathan (8:10)

And if you go back to 2022 when we had CPI at 9%, I mean gas at the pump was about $4 on average. Right now we're about 3 bucks. Right. But that is down, you know, considerably obviously. But we have not been, you know, going, you know, we're 310 last year we were 350 the year before that, that sort of thing. So if this is prolonged here and you start seeing inflationary pressures not just for people's consumers, but as it's worked into the input costs of a whole host of other things, I mean that is obviously going to put a floor on inflation at some point. And so, you know, one of you guys just mentioned that, you know, they're going to want to wrap this up. This is probably the genius out of the bottle here. You know, this is not June and the bombing. There's a whole host of other things going on. So again, I think we should be prepared for inflationary readings that start to tick up a bit.

Melissa Lee (8:53)

Is that what was behind the 10 year yield going above 4% I think it was.

Karen Feideman (8:57)

I mean I think it's a combination of the fact that, you know, all we heard about for the second half of the day is how the Fed has got one cut out in September and everything else is off the table. So from a interest rate perspective, from an inflation perspective, again, I mean the ESM numbers this morning, the prices paid component were the most since 22 when we had all kinds of inflation bottlenecks around us. Make no mistake, prices for at least building materials, whether it's aluminum, steel, copper are going through the system. We're seeing better industrial but it's going to lead to higher oil prices and it's going to definitely lead to higher producer prices.

Tim Seymour (9:33)

Yeah, I was surprised to see with that number though is really hot. It might be, it might be something we look at later and there was something to explain why it was so far off from what expectations were. But normally we saw the dollar strength. So you would think US Treasuries maybe that's shorter into the curve. People want to flight to safety. It's still I think a flight to safety trade. But the 10 year I was surprised at the magnitude of the move not good for home builders.

Guy Adami (9:55)

PMIS on Friday sort of then back up everything just talked about in terms of ism. Inflation is a problem regardless of what you hear. I mean it's still there. And I was surprised on Friday that the bond market traded as well as it did. But maybe that was the flight to quality in anticipation of maybe the right move in the bond market is lower. And I read some articles over the weekend talking about how events like this historically you can make an argument especially with this whole de dollarization thing which is either alive and well or still holding on by a thread. It's bearish for the bond market. So stay tuned for that.

Melissa Lee (10:27)

Meanwhile, President Trump speaking about Iran today for the first time since launching strikes over Israel over with Israel over the weekend saying the war could go on for weeks or Eamon Javors got the very latest from the White House.

Guy Adami (10:38)

Amen, Melissa.

Dan Nathan (10:41)

We've got a new update now from

Guy Adami (10:42)

US Central Command on American casualties so far in the war with Iran. This out from US CENTCOM just over the past hour. They say that as of 4pm Eastern time March 2, six U.S. service members have been killed in action. They say U.S. forces recently recovered the remains of two previously unaccounted for service members from a facility that was struck during Iran's initial attacks in the region. We also learned today that three American Fighter jets have been shot down during the course of of the war. So far those air crews were able to safely eject and they're reported to be in stable condition. We heard from the President, as you say, in the East Room earlier today. He talked about those American casualties based on the information that he had at the time. Here's what he said.

Karen Feideman (11:33)

Today we grieve for the four heroic American service members who have been killed in action and send our love and support to their families in their memory. We continue this mission with ferocious, unyielding resolve to crush the threat this terrorist regime poses to the American people.

Guy Adami (11:55)

The president said the military campaign is expected to go on for weeks. He said the main objectives are the Iranian missile program, their nuclear program, and their capacity to push terror into the region. So at some point, we'll see what the next level of US Military engagement is. Secretary of State Marco Rubio saying on Capitol Hill late this afternoon that the major thrust of US Military action hasn't even happened yet.

Dan Nathan (12:21)

Melissa, back over to you.

Melissa Lee (12:22)

Yeah, the hardest hits have yet to come. Eamonn, thank you. Eamon Javers from a snowy White House here. Were you surprised the market reaction or lack of reaction in today's session? The ability to come off the low set right at the beginning of the session?

Guy Adami (12:37)

It's going to sound like Monday morning quarterback. It's not intended to be, but the answer is no. I mean, historically we've seen, you know, over the week these things typically happen over a week. And the market initially has that reaction on a Sunday night, all negative things. And then over the course of the day you start to realize that this is not the end of the world. And through the lens of the market, you know, things start to even themselves out. So the answer is no. I was surprised at how poorly the bond market traded and I am was surprised that for Some reason around 11 o' clock this morning or so, you had a huge bounce in bitcoin, which had previously been under pressure. Short of that, the day made sense to me.

Karen Feideman (13:12)

Yeah, I mean, it's interesting to see how gold and silver reacted at times. Gold was showing its safe haven, then it gave some ground back. Silver, like now I'm all about spec and bitcoin, as Guy said, recovered at some point. The rotation that we have been seeing for markets though, plays very well for the kind of a backdrop that we have here. So rotation into small and mid cap equal weighted industrials, you know, the transport space is kind of mixed. You think that there are a lot of people that are affected FedEx has talked about they have to shut down certain parts of their business. There will be delays but for the most part a lot of the shippers, a lot of the rails actually have a tailwind to EPS from this. Airlines tend to trade off right away. But quoting note in Wolf's research that they said the six months after that initial sell off is actually a great time to own airlines. So we'll see.

Melissa Lee (14:00)

All right, for more on what the war in the Middle east could mean for energy stocks, let's bring in Piper Sandler's Derek Pothzer. He's a senior research analyst at the firm. Great to have you with us. How do you walk through? You put out a note today saying this is going to be the energy the playbook basically. And you use the past as a guide. And it seemed like all the scenarios that you went through, the historical scenarios point to land drillers being the place to, to be. How did you get to that conclusion?

Derek Pothzer (14:26)

Yes, well, no, thanks for having me. So we use the past as a guide to inform our decisions of what we think is going to happen. When we see an oil price spike like we saw over the weekend. And all the, the history shows us that it's US land stocks that typically outperform. So we looked at four different examples. We looked at last June 2025, Israel strikes Iran. We looked at May 2025 when US and China agreed to a 90 day terror pause. February 2022 obviously Russia, Ukraine and then September 2019 when the Saudi Arabia's oil oil facilities were struck. And what we've seen every single time, it's the US land centric, centric stocks. That's the land drillers, the pressure pumpers, the smid cap names in particular for a large cap, a Halliburton. And then on the flip side we've seen some of the more defensive names underperform. Think of like a technique fmc, that's fti, Baker Hughes, anything more production oriented. So that's the conclusion we came to. And today that's exactly what we saw. We saw Patterson kind of lead the charge. That's really the last remaining North America pure play. On the drilling and completion side, we saw players like Propetro Pro Frack outperform. And then on the, on the other side of things we saw, you know, was surprisingly Halliburton actually just stayed flat during the day. That was the biggest surprise. And then more of those international names, those are the ones that are underperforming, which is quite interesting. Think about Nestor. That's your Middle east pure play name, Helmer campaign, H and P neighbors and a cactus. Those are, those are other stocks with more international focus and that's why you're seeing them pull back today. Just given what's going on around the

Melissa Lee (15:57)

Persian Gulf area, how long does outperformance last according to what you found, Derek? I mean is this sort of a one day phenomenon or is this actually a lasting bump?

Derek Pothzer (16:06)

It really depends and I think it depends on where oil prices go beyond this. I think that the duration argument was, was big today when speaking with a lot of investors, you know, will this be a one and done? Is the fighting over? Is the fighting going to last? Obviously with the straight or moves closing, that's an indication. This might go on for a little bit longer, but we don't know. But if that continues to go on, then I would still suspect that the US land names will outperform because they really are on both sides of the barbell. When we see an oil price spike, the US land names will go first. And on the flip side, if we see an oil price collapse like we saw during Liberation Day last year, and that was really the driver behind putting together this playbook, we saw the US land names fall first. So it really just depends on the duration, whether this gets faded or not. And if there is duration here, then I would, I would assume that the US land names would continue to go.

Guy Adami (16:54)

Yeah, Derek, I don't know if you heard the conversation earlier, but what we're saying was the energy stocks in aggregate were sort of on this trajectory anyway. This sort of sped things up. So there still seems to be some valuation cushion with all these names regardless in my opinion of outcome. Is, is that fair?

Derek Pothzer (17:11)

Yeah, I think it's fair. I think when we put our on our outlook last December, we were starting to get positive on the group as we saw these cyclical tailwinds beginning to converge both international U.S. land and offshore. And then when Venezuela happened beginning part of the year, it really accelerated everything. I mean most of these stocks are up 30, 40, 50% to start the year and there really is valuation cushion, there is precedent. We took a look back to see where multiples could re rate to particularly of the large cap service names. And there is precedent that shows there is room to run from a multiple perspective. So I think this does accelerate it. I think going back to US land, if the, if oil prices remain elevated and The E&Ps believe in the duration of the trade of the oil price, they get more comfortable putting supply back into the market. If supply is going to be curtailed overseas, that's when you could see the service opportunity really present itself, particularly with those drilling completion names. You need more land rigs, drilling and particularly you need more completion crews, the frac crews to be out there pressure for the pressure pumpers. And that's. That provides a whole nother dynamic whether whether we're short equipment or not. We're much more short equipment on the pressure rubbing side than we are the land drilling side. So that would be the pro Petros, the liberties, the Pattersons, the Prof. Racks. Those are names to look at if this trade continues to have legs.

Melissa Lee (18:32)

Derek, great to have you with us. Thank you. Derek Bodh with his energy playbook. We are not anywhere near what the worst case scenario has been projected to be for the price of oil. CSIF says worst case scenario is 130 bucks, which is a whole different kind of trade when it comes to energy stocks and also consumer stocks and the markets overall.

Tim Seymour (18:54)

So if you're in the business, what do you do at the spike to $120 oil? Do you turn it on? Right. You need how long, right. How long do you need to be that way before the production sort of, you know, the cure for high prices. High prices. But also we have more production. But I don't know how long it has to be that way before it really starts.

Karen Feideman (19:13)

But I would just get back to positioning and what has been the trade going into. I mean, as we all know, the energy weight in the S and P and what people need to do in terms of being invested in energies is not much except for the world that we've lived in for the last six to nine months is one where I just think that these trades have more legs because I think people have seen where resources where kind of hard asset trades continue to have some viability. And if we do have industrial production at these levels, this is two months in a row. This a notable change from where we've been. I realize this isn't the entire US Economy, but this is important stuff. I think these trades go on.

Melissa Lee (19:47)

Coming up, we'll have much more on the global impact of the conflict in the Middle East. But first, what JP Morgan CEO Jamie Dimon had to say about the state of private credit and whether the worries surrounding the space are warranted. Plus, a heavy dose of software trading, the big move in the igv and the names leading the charge today do not go anywhere. Fast money's back in two.

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Melissa Lee (21:44)

welcome back to Fast Money. JPMorgan CEO Jamie Dimon speaking today with our own Leslie Picker, covering a wide range of topics, including the impact of the Iran war, inflation and his thoughts on the recent credit concerns. Here's what he had to say so

Karen Feideman (21:58)

credit will have a normal cycle. I believe that will be worse than

Dan Nathan (22:02)

a normal one when it happens.

Karen Feideman (22:03)

So there will be one.

Dan Nathan (22:04)

And that's because of complacency.

Karen Feideman (22:07)

You know, asset price are very high. Credit spreads are very low.

Neal McDonnell (22:10)

I don't think a lot of people

Karen Feideman (22:11)

have seen a credit cycle.

Dan Nathan (22:13)

Not everyone who makes loans is very good at it. So those bad actors may be banks, not private credit.

Melissa Lee (22:22)

Sounds like he's saying nothing to see here, Karen.

Tim Seymour (22:25)

Well, I'd love for that to be the case, but I think we are going to see a, you know, I think we'll see the normal credit cycle. One thing that maybe people don't think about is JP Morgan and other banks all on the street do lend to private credit. So it's not that they're without exposure. So you know, the smoother the cycle the better.

Dan Nathan (22:46)

Yeah, and I think that was the point he made last week, right, that some people are making dumb moves and he was talking about competition. And so it's interesting to mention that that private credit, some of the risk taking there or the lack of transparency or you know, just kind of different quality of credit is not going to be the problem. It's going to be some of his competitors were lending to them. You know, to me I don't know enough about this but when I saw the banks, the money centers in particular, particular kind of joined the party about a week and a half ago after we saw whatever you want to call them, investment managers, private credit, private equity. I mean the swoon that we saw there over the last two months was pretty remarkable. And then when you had the banks start to join that weakness, to me that was saying something different. On a day like today where you saw a big reversal. I mean Blue owl opened down 4% after this traumatic move over the last two weeks or so. Apollo, Blackstone, KKR, all of them. And then they reversed higher. It's interesting that JP Morgan did not close higher and a couple other banks. So again, it does feel like a normal credit cycle is probably going to be very different than the last couple we've seen. And maybe it's going to be a bit more engrossing because you think about how financialized the AI build out has been and then some of the headwinds as it relates to AI on enterprise software. I mean you put it all together and it seems like a pretty confusing sort of package.

Guy Adami (24:00)

Last year around this time American Express made an all time high, I think 330 something or so. And then by April, like everything else, it had cascaded lower. Now that was obviously for other reasons, but in terms of the credit story, look at the move in American Express over the last couple of weeks. And if you want to go to the beginning of the year, I mean the stock is probably down now 23ish percent from its all time high. And that one day move is probably one of the biggest downdrafts we've seen in a while. To me, that might be a precursor to some credit stuff.

Karen Feideman (24:27)

I just think banks have had the perfect storm of being also part of, just somehow part of an AI trade too. I mean, banks were suddenly going to be disintermediated. I mean, I'm sorry, but this is a beneficiary for banks. I think it's creating opportunities for blown out, you know, blown out names and whatnot. Having said that, if you look over in the mortgage space, whether it's a Walker Dunlop, whether it's a Rocket, whether it's a loan depot, I mean these are places where you've actually seen very much concern. And it's not software. It really gets into both the consumer and it gets into parts of the mortgage world. So I think you do have a mix. I just think it's, it's, it's nice for the money center banks to say and Jamie Dimon has been largely right and there's no question that JP Morgan has a position of which they can be conservative because they can be. They don't have to reach out for bad credit and good for them and that's why they are best of breed. But I do think a lot of the private credit players have taken a lot of scraps off the table for Wall street and I think Wall street wants them back.

Melissa Lee (25:23)

Coming up, software stepping up. The group rebounding after its recent rough patch. But can the gains last? And should you be adding these names to your portfolio? Right now you're watching Fast Money live from the NASDAQ marketsite in Times Square. Back right after this.

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Not good for business.

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Guy Adami (26:05)

And the influencer did get us 53 new followers though.

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Tim Seymour (26:13)

What's going on?

Dan Nathan (26:14)

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Melissa Lee (27:17)

welcome back to Fast Money. A rebound in software stocks today amid heavy volume. The IGV which tracks the group, up more than 1% percent today with volume exceeding its 30 day average by 40%. The software ETF now up almost 8% over the past five sessions. Among the notable gainers today, Microsoft up almost 1 1/2 percent, shares up nearly 4% over the past week. Although interestingly Microsoft was on light, lighter than average volume here. So I don't know what you make of that.

Dan Nathan (27:41)

Well, you know, there's been a lot of talk after that was Cintrini report about how basically is going to rip the face off of software. Well, what's going on right now is that it's ripped the face off the valuations and the way people are thinking about the terminal value of these companies. But there's been a lot of defenses since then. A16Z had one Berl Gurley was on Stratachary podcast yesterday. They're saying that there's unusual values here and people are kind of misunderstanding that there are massive moats for these companies. There's network effects, right? They're switching costs, there's a whole brand, there's a whole host of other things going on. So it really does feel like the folks that are in the trenches, even the ones that are investing most in AI, still feel like there's some great opportunities in the software space right now.

Tim Seymour (28:20)

So the one that I have the most exposure to is Zoom Communications and you saw trade down a lot in the Zoom apocalypse. I mean, the SAS apocalypse. But I don't know. I find between the huge amount of cash that they have, the anthropic position when you back those two things out, it's now trading at maybe six or seven times earnings. The quarter was very good. But, you know, one could argue, all right, this quarter doesn't matter. It's irrelevant. We're going to be seeing this in the very near future. Not yet. It's sort of like, you know, being told you have a terminal disease, you might survive or maybe not. It'll be really bad. That's what, that's the sort of, you know, prognosis for some of these. I sort of think of Zoom as a survivor, I want to add. I'm kind of inclined to do it though, with calls to know the downside.

Melissa Lee (29:09)

Right.

Karen Feideman (29:10)

I just think Microsoft at this point, which has been dead money for two years and, you know, a lot of pain for people that bought it significantly higher, is not only at levels on the charts that are interesting, but when you're starting to say you got a 23 forward handle on this thing, I mean, it's, it's interesting. And I realize that some of their business may be different, but I feel in the broader sense of, in the same way we give Apple credit for this installed base, I give the same credit to Office. It's not going anywhere. It may be they may be able to not have to charge as much, but I think they're going to still get their pound of flesh. So again, I like Microsoft here.

Guy Adami (29:48)

Glad you mentioned the volume in IGV 33 million shares typically trades 14 and it traded from lows to highs today which is a good listen last week we said it today helps. I think the low for the short term is in an IGV come yet

Melissa Lee (30:01)

more market reaction to the Iran war. Why our next guest says the risks to the economy are being underappreciated. More on that when Fast Money returns.

Dan Nathan (30:14)

Missed a moment of fast. Catch us anytime on the go follow the Fast Money podcast.

Karen Feideman (30:19)

We're back right after this.

Melissa Lee (30:24)

Welcome back to FAST money. Stocks recouping most of their early losses as investors digest the latest developments of the war in Iran. The Dow which had been down 600 points at the lows end of the day down just 73 points. The S&P 500 virtually flat while the NASDAQ gained 3.10 of a percent. Paramount holding an investor conference call this morning detailing its acquisition of Warner Brothers Discovery. CEO David Ellison announcing that following the merger Paramount plus and HBO Max will join to form a single streaming platform which could rival Netflix and some after hours action. Software company Asana topping earnings and revenue estimates. Hydrogen fuel cell developer Plug Power higher after posting a beat on revenue expectations. And database software maker MongoDB plummeting after topping EPS estimates and revenue estimates, but lowering Q1 guidance. Well, even with the muted market reaction today, investors still face geopolitical uncertainty after President Trump said the US Is equipped to go far longer than the projected four to five week timeline in the war with Iran. Our next says markets are underrating the risks to the end to energy and the economy. For more, let's bring in BCA Research chief geopolitical strategist Mackerkin. Matt, great to have you with us.

Matt Mackerkin (31:31)

Hi, thanks. Good to be with you.

Melissa Lee (31:33)

What are the markets getting wrong? Because the market shrugged it off today.

Matt Mackerkin (31:37)

Yeah, they pretty much did. I mean, a 7% move in oil. If you had told people five or 10 years ago that the Strait of Hormuz would be blocked and the US And Israel would conduct a joint campaign to cripple the Iranian regime, they would have thought that the oil price would rise by maybe 30%, maybe 50%, maybe even 100%. Given that this is a fifth of world oil flow and 15 or 20% of world natural gas in liquefied form.

Melissa Lee (32:02)

Is the risk, the broader risk to the economy in the markets, does that really stem from a bump in oil prices beyond what we're seeing already, or is it something else?

Matt Mackerkin (32:13)

No. I mean, the Middle east economies make up about 4% of the global economy and they will slow down as a result of slowing investment and uncertainty and some of the damage. But the real risk here is the oil channel and the oil is reacting as if we're having a minor shock. But when you look at the profile of the war itself and the actions taking place that are preventing shipping from going through the Strait of Hormuz, that should be a major shock. So what we should see is either that the President declares an early victory and starts to negotiate with the existing remnants of the regime, or the regime is just completely thwarted and rejected in their various attacks and the market moves on. Or worst case, and I think the most likely case, the price action has to move back up to price, a major oil shock, which is what we seem to be having in this trade.

Guy Adami (33:02)

So, Matt, let's play the geopolitical game. Because China imports more oil than any other nation in the planet. I think it's 10 million barrels a day or something. The majority of it comes from this region. President Trump is supposed to meet with President Xi in April. Does this jeopardize that in any way, shape or form?

Matt Mackerkin (33:19)

Yes, this attack definitely jeopardizes their meeting. It could go on, but it could get canceled. There's not a lot of trust between the US and China anyway. And you're correct, about 42% of China's oil comes from the Middle East. And this is a stranglehold that the US Is demonstrating that it has over the region. It's not just the direct oil supply because of course the US Wouldn't really cut off China's oil unless they were having a war over Taiwan or something. And that's not what's happening. But what's happening is the US Is showing that it's the dominant player and that the Middle east will not be a bloc that's part of the Eurasian bloc of the de facto Russian and Chinese alliance that's been taking shape. And in some way that's sort of what this war is about.

Karen Feideman (34:01)

But Matt, you know, you mentioned Taiwan. I mean, what does this do between this and Venezuela? The Chinese have carte blanche, right? I mean, especially when were arguing this isn't regime change and that this is actually really just about specific threats. And in Venezuela's case, they were absolutely regional threats to us. So just talk about China, Taiwan. And is this now something that you put a probability on? What is that?

Matt Mackerkin (34:27)

Well, I do have about a 1/3 chance that China uses hybrid or quasi military action to increase the pressure on Taiwan. And that could happen this year or next year over the long run, unfortunately. I think we should be somewhat, we should be very vigilant and very guarded about the situation. I'm afraid that China may not see a pathway and Taiwan may not see a pathway to maintaining good relations without having some kind of significant conflict. But that's way down the road. I mean, what you're witnessing here is that the US is flexing its muscles and taking low hanging fruit regimes that have already squandered their domestic stability and flexing its capabilities. And then China, you know, invading a mountainous island that's defended by Japan and the United States. That's very costly. And they've seen the problems that Russia has faced in Ukraine, which should have been an easier invasion.

Melissa Lee (35:20)

Matt, in terms of what is going on specifically around the strait and the oil infrastructure. What strait is closed now? So what are some of the other sort of points of pain that you're looking for to actually get oil prices to spike higher? I mean, is it further Hits, for instance, to specific infrastructure sites. I mean, what are we looking for? What will the markets finally react to? Because it seems like the Strait of Hormuz was a foregone conclusion. Or maybe it's because it was de facto shut down already because insurance costs were so high for shippers going through the channel.

Matt Mackerkin (35:52)

Yeah, I think the markets believe that President Trump will wave his wand and sort of declare an early victory and start negotiating quickly like he did in Venezuela, and effectively accept that the regime is going to stay in place, but they'll just be a personnel rotation. The problem is that the Iranians face a much more dire situation, and it's in great part because of their destroyed economy and the uprising that's happening there and the fact that the US And Israel are then going to be attacking the regime from the sky. So the regime is facing existential risk, and that means that they'll continue to strike infrastructure and shipping. And it could look like what we saw with Qatar. We could see facilities, refineries, ports, pipelines get damaged. That would clearly escalate and that would push the oil price up significantly. But also just longer duration of inactivity in the Strait of Hormuz would force the market at some point to recognize that there's going to be a big drawdown in inventories and the price needs to move up.

Melissa Lee (36:50)

All right, Matt, great to speak with you. Thank you. Matt, thank you. Of bca. So do you think the markets are underestimated, underestimating the risks, or are we taking it in stride?

Karen Feideman (37:02)

I think there's no question that the markets today spoke, and I know tomorrow's, you know, at 930 is going to be a new day, but markets are telling you that right now they don't see those risks, that those risks were out there again. This was a Vix that was north of 20 going into the weekend. We kind of knew some of this was happening. I'm not saying that there's no outcome. There's an outcome here that's that's perfect. But right now, markets see just that. 4 to 5% of global GDP and oil under control.

Guy Adami (37:32)

You know, Karen will say, and I'm putting words in her mouth, but a Vixit 21 is sort of no man's land and trade up to 23 today. I still think you have these tremors over the last couple of months. I still think there's a move north of 28 coming to a theater near you. I don't know what it's predicated on, but I think it's out there in the weeds.

Melissa Lee (37:48)

What do you actually say about.

Tim Seymour (37:51)

I'm sort of agreeing with everything the guy says today, but also I think we touched on it before. Trump's resolve for a long drawn out is not there and so I think he is. I don't know what the pain point is but he'll reach it and then he'll resolve it quickly one way or another.

Melissa Lee (38:07)

Coming up, cost concerns. Why skepticism over AI build out expenses is spooking some datacenter investors. The details and fast money returns. Welcome back to Fast Money. Oracle's five year credit default swaps hitting levels not seen since the 2008 financial crisis. Investors increasingly concerned over the cost of the company's buildout. Oracle stock meanwhile was up almost 3% today. The company expect to report earnings early next week. Dan, you've been sort of voicing concerns over this, particularly after coralweave's report last week.

Dan Nathan (38:45)

Yeah, I mean listen, we're getting down to the fourth, fifth, six players in this thing, right. And so these are the last ones to get these contracts. I know Core Weave in particular as a Neo cloud, I mean they've had contracts for a while. Microsoft was predominantly that business, 70% of it. And you know, as we get to a point where Microsoft has actually we don't know what the demand is for some of the products. Obviously Azure is a really important part of their business going forward. But if we do see a pullback in capex because there is basically a flattening demand, then the guys at coreweave and Oracle, they're in a lot of trouble. And Core Weave in particular, if they can't get the funding to build out the capacity and they can't fill the deals that they've done, well, then that business goes away. And I think a lot of the investment case for a Core Weave is that ultimately they're going to get to a place of profitability and they get a lot of leverage on that build. But I don't just don't think that's happening anytime soon.

Tim Seymour (39:31)

There's an odd disconnect that the GE Vernova, which is very much tied to the same play, up big. You have another one, Quanta Services, up big as well. So is there going to be all this building or is there not right one. One, you know, one sector is telling you, yes, absolutely. And the other is telling you, oh wait, wait, wait a minute, not so fast.

Melissa Lee (39:54)

All right. Or is it sort of the, you know, you're going to buy the stocks that are receiving the money as opposed to the ones that have to fund a build out. And so there's more safety, energy Renova and an Nvidia and you know, the memory makers for instance, as opposed to the core ways of the world. I don't know.

Karen Feideman (40:11)

Well, I don't think there's any question that safety is where investors have been leaning. And it's just the conversation we were having during the break which you didn't hear, but we were talking about how the mega cap tech stocks weren't as defensive today or they could have been more defensive in the past when they didn't have balance sheets that had debt that had. People start to at least wonder where free cash flow with Oracle. There's no question people are concerned. Now part of the rally in Oracle stock today I think is also the fact that you had a convert that was priced last week and you had a lot of people selling the underlying. And I think some of this is just kind of share class.

Tim Seymour (40:44)

What we were talking about,

Melissa Lee (40:48)

nobody heard during the break.

Guy Adami (40:50)

We're talking about Family Affair, the show.

Melissa Lee (40:54)

Yeah, but of a different era.

Karen Feideman (40:56)

I don't want to. I want to. I don't think anybody wanted to really hear about Buffy and Joe. Sorry.

Melissa Lee (41:00)

Coming up, how is shaking up the investing landscape and how the growth in prediction markets is changing the trading world? The CEO of Moomoo Trading joins us on that and for his read on investor sentiment, more Fast Money into. Welcome back to Fast Money. As ase involvement in trading predictions markets continues to evolve, investor strategy must also adapt. Mumu is an online trading platform with over 28 million global users and $159 billion in client assets, according to its website. CEO Neal McDonnell joins us here on set for more. Neil, great to have you with us.

Neal McDonnell (41:36)

Thank you.

Melissa Lee (41:36)

What is the retail appetite been for stocks particularly as there have been so many concerns about displacement and credit concerns.

Neal McDonnell (41:44)

I think you find our client base tends to to be longer max 7 they tend to be very, very well versed on I with the big rotation that's happened over the last month. You've seen, I think someone described it as a duck market. The index isn't moving but everything else underneath is kind of moving furiously. But 120plus stocks move 20% and the index hasn't moved. Great for dispersion traders but confusing to investors. So that big rotation out of the tech names into Staples and Energy, all clients didn't sell. They were writing calls, right. Call spreads, buying puts. But Thursday, Friday and today they've been lifting those hedges and using as dip buying today so we saw upside buying in Nvidia, in Tesla and Amazon today.

Melissa Lee (42:29)

Who is your trader? I'm just curious. It sounds like they're very active. It sounds like they use options very often. So.

Guy Adami (42:36)

Yeah.

Melissa Lee (42:37)

What the returns are on their portfolios too.

Neal McDonnell (42:40)

They amaze me on a daily basis. So you're in the markets for a long time, Guy and retail used to be who everybody wanted to trade against. They didn't have the information, the access or the tools.

Karen Feideman (42:51)

Right.

Neal McDonnell (42:51)

So the Internet solved the first one. Firms like ourselves gave you the access and then social media gave you a distributed help group of people. We've got this big 28 million person community in the global and so it's like a. It's like having a crowdsourced risk management. You say, what do I do here? So we find our clients, don't panic out the more long term. We have clients who've owned Nvidia since the end of 2223 and they've never sold. They bought every dip. Liberation day last year was our biggest single influx of cash. When I trade by myself, I get fomo, I get panic out, all this emotional stuff. Having that community means you tend to do that less.

Guy Adami (43:34)

Yeah. There's a lot of sophistication, without question. And over the last couple of weeks, energy, which was nobody was talking about last year. I'm sure a large percentage of your client base has found a way into energy over the last couple months. Does that seem sustainable to you?

Neal McDonnell (43:48)

It's never. So if I look at our top 10 list, top 10 traded underlies. Oil was never there. We saw that creep in gold and silver went from. For our option trading activity. Went from gold was number 25, it got to number five, silver from 15 to number three in our most traded options list. So I think they're opportunistic around where they see movement.

Karen Feideman (44:13)

What separates you from some of the other new upstart platforms? I mean, other than apparently you love the New York Mets like I do and you offer all kinds of incentives for people to get to games and have an enjoyable experience. Guy Dami. Unlike what's happening in the Bronx anyway. Why Mumu? Why Mumu over any of the number of legacy players?

Neal McDonnell (44:30)

There's lots of great companies out there. There's lots of great. I think our difference is the community, which is something you can't, you can't build in a day. It's taken us 13 years to build this interactive like an internal Reddit. I think that's our main difference. And then talk about retail investors Being when you were a trader, there were people you like to trade against. The progression from having the tools, having the information, now having the risk management. The AI is the next step to really level the playing field. We introduced it last year and I thought, I'm never going to use it. And I use it every single day. Our platform and others have AI, but it's being our investors use it on a daily basis.

Melissa Lee (45:13)

Great to speak with you, Neil. Thanks for coming in. Appreciate it.

Neal McDonnell (45:15)

Thank you very much, guys. Thank you. Let's go, Matt.

Karen Feideman (45:17)

Yes, Right on.

Melissa Lee (45:20)

Wow. I mean, I haven't heard that on our air. I mean, well, you haven't asked it, but no one else.

Dan Nathan (45:25)

What is it about Guy that everyone looks at? You've been in the market for a long time.

Melissa Lee (45:30)

It's like something, but you have also.

Dan Nathan (45:33)

Listen, Guy seasons, Neil, I had to say, is really important. I mean, like, yeah, we're fun, we sound smart, we look great, you know, that sort of thing. But at the end of the day, I mean, you know, technology is really changing the game and it's been democratized and so have at it, people. Have a ball up.

Melissa Lee (45:47)

Next, final trades, Final trade time. Timbo.

Karen Feideman (45:56)

Yeah. So love me some energy. Love me some upside energy volume to sell calls on the XLE.

Melissa Lee (46:01)

That's right, Karen.

Tim Seymour (46:03)

Yes. So my Saspocalypse 1, I'll be looking at Zoom calls tomorrow. No pun intended. Just the calls.

Melissa Lee (46:11)

Dan.

Dan Nathan (46:12)

Yeah, I'm with you guys on the Salesforce Zoom SAS apocalypse. I think it's getting a little overdone in CRM. I think you play it, obviously through IGV without the idiosyncratic risk.

Guy Adami (46:22)

You know, it's great that we're all back together again. It's gonna be great for us to be back together again tomorrow. Melissa, isn't it?

Derek Pothzer (46:27)

Oh, boy.

Guy Adami (46:29)

Excuse me. Anyway, Devin Energy tv.

Melissa Lee (46:32)

Thank you for watching Fast Money. Mad Money with Jim Cramer starts right now.

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Guy Adami (47:03)

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