← CNBC's "Fast Money"
CNBC's "Fast Money"
The Next Great Rotation… And Wall Street Sours on Coreweave 7/8/25
00:43:47
Big banks head lower as investors scoop up beaten down sectors like small caps, healthcare, and airlines. Could the next great rotation in the market be underway? Plus Coreweave shedding some of its gains after the company announced a data deal, and the acquisition is fueling Wall Street pessimism on the name. What one top analyst sees in store for the stock. Fast Money Disclaimer
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- [00:00]
Karen Feinerman
Say you've always wanted to take a spontaneous trip to the Caribbean. Here's the thing. If you get smart with your money, you can do things like that. With Empower, you can start making the most out of your money so you can get out and live a little. Isn't that why we work so hard to have some fun with our money, like treating yourself to something special or spontaneously doing something extra for a loved one? So use Empower and get good at money so you can be a little bad. Join their 19 million customers today@empower.com not an empowered client, paid or sponsored.
- [00:32]
Melissa Lee
What does it mean to live a rich life? It means brave first leaps, tearful goodbyes and everything in between. With over 100 years experience navigating the ups and downs of the market and of life, your Edward Jones financial advisor will be there to help you move ahead with confidence. Because with all you've done to find your rich, we'll do all we can to help you keep enjoying it. Edward Jones Member SIPC live from the NASDAQ MarketSite in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight. A big bank breakdown. The money centers dropping as earnings season draws near. Did the names get too rich? And our regionals primed for a rebound. We'll debate that. And an energized trade after a slow start to the year. Oil stocks in rally mode today. What to make of the gain and how much longer it can last. Plus oil why analysts aren't so confident in core weaves. Latest buy Baba gets a bounce and boost. A couple of our traders acronyms. And we're heading live to Sun Valley, Idaho for the Allen & Company conference. What we can expect to hear on streaming, dealmaking and much more. I'm Melissa Lee, come to you live from Studio B at the nasdaq. I'm the best tonight. Karen Feinerman, Dan Nathan, Guy Adami and Danny Moses, founder of Moses Ventures. We start off with what might be the next great rotation. Capital flushing out of the big banks. JP Morgan, bank of America, Goldman Sachs, all seeing big losses today after HSBC downgraded. These names. Citi and Morgan Stanley down as well. Meanwhile, some recently struggling sectors of the market also catching a bid. Small caps, health care, airlines, all rising today. So what do we make of the shift in the market? Sky.
- [02:10]
Guy Adami
Hello, Melissa.
- [02:11]
Melissa Lee
Welcome back, Guy.
- [02:12]
Danny Moses
We missed you guys.
- [02:13]
Guy Adami
I watched this. Did you miss Mel?
- [02:14]
Melissa Lee
I did. Be honest.
- [02:17]
Dan Nathan
Mel knows the answer.
- [02:18]
Melissa Lee
Of course I did.
- [02:19]
Guy Adami
To which I say I have feelings. Too to which you say yes, I know exactly. So now that we're over that it is nice to be back I think it's well the rotation out of banks maybe a little profit taking in earnings next week that could be part of it I mean some of these and Karen can speak this better than I but JP Morgan at one point was trading close to two and a half times book value probably 2.6 times at its peak tangible book which again levels we probably saw pre financial crisis which maybe it's justified I don't know, maybe it is different this time but I think the run of these banks has been amazing. I also think people are taking money off the table in earnings next week.
- [02:52]
Melissa Lee
We were at highs just on Thursday and we're not too far off of them at this point I In order to justify another move higher do we have to also justify a rerating of banks from here?
- [03:03]
Danny Moses
Maybe. I mean they traded up on a lot of good news right. The hope where the market improved so everything goes along with. With that. So in credit quality being better and more activity we did start to see an IPO market open up maybe a little bit of M and A and all the market moving higher is also good for asset wealth management business which the big money center ones have. So I hate when they run up so strongly into earnings deregulation. Right. So we had new the C CAR adjustments that was very positive for banks so they went. They kept going up on the same good news a number of times I think it was overdone I think that piece was well timed it doesn't say they're bad it just says a lot of the good news is always already priced in which I agree with Always.
- [03:46]
Karen Feinerman
Good to separate the Wall street banks from the regionals. Right. So the Wall street banks benefit from higher stock market I just think the market's very rich at these levels is taking a breath but with all this rotation we've seen I actually think it's pretty healthy to get into other sectors.
- [03:57]
Melissa Lee
For sure and we did see that rotation as we mentioned the regionals were higher today.
- [04:01]
Chris McGrady
Yeah and you don't see that too frequently I don't think and so if you look at like Zion and you look at you know Citizens Finance, some of these names in the kre, the Regional Banking Index I mean they trade at like one times book, you know what I mean? So you know we were talking about this last night and you know a lot of folks I think in a market environment like this where they think they have the all clear you're happy to let stocks run. You're happy to let like a JP Morgan for instance get to a level from a. You know, the valuation is what it is, right. But like we have a story, historical norms going back to what Danny just said and certain later, you know, you have big winners. And I think what happened is a lot of folks, you know had headed for the door at the same time. And when you think about what are these stocks discounting or what are they not discounting when they're trading like this into their earnings, you know, it just kind of makes some sense in my opinion. And especially if you look at the back half of the year. I mean yeah, there is a backlog for IPOs but if you can't bring them right now with markets at all time highs, you know, you, you're going to get through Q3 and then all of a sudden there better be a rush in Q4 or these stocks are trading at valuations that don't make relative to the backlog.
- [05:01]
Danny Moses
I just want to say having said I think they, you know the setup going into earnings isn't great. I am still long. I have a lot of JP Morgan, I have a lot of Citibank. I think there is still the promise of how efficient banks could become, how they're such a good target for AI AI and that margin improvement in expenses could be so important to the bottom line. I am sure it's some upside calls. I'm not going to sell it just because they've had a nice run and pulled back. I still believe in the longer term story over time.
- [05:26]
Melissa Lee
Are you hedged in any way? A little bit.
- [05:27]
Danny Moses
Sold some upside calls.
- [05:29]
Guy Adami
Our crack staff and EC just put a Citigroup up so you might as well put up again because that's one I still think makes sense. And last week when the stock was close to 90 that was a 7. I think it was like a 17 year high. Ish and Citi don't at me if I'm off by a year but you get my drift and you know when it's trough it was trading 60% or so of book value and that's a stock that I think it's reasonable to suggest it could get back to those levels was somewhere between 95 and 100. I know that's not a big move from here but I still like Citi.
- [05:56]
Karen Feinerman
I think in general the large stocks, you know, across all the sectors I think people feel confident owning them if they have decent fundamentals valuation out the window. We, I think that's not a reason to necessarily sell them. I think people take comfort in that. I think we're going to see that in the quarterly, quarterly report.
- [06:11]
Melissa Lee
We've seen that time and time again across that. I mean, industrials for one, you know, pockets of discretionary. When it comes to Wal Mart, for instance, nobody's questioning the valuation of Wal Mart here, you know, at these levels and for the big banks. So do we need that comfort? Do we still, you know, with markets close to record highs going to the second half of the year now, do we pay up for that comfort?
- [06:30]
Guy Adami
Well, you know, it's funny, valuable. We say this all the time. Nobody cares about valuation until the market cares about valuation. I'm not trying to be funny, but that's just sort of the way it works. And on the way up, people look past it when something happens, they miss a quarter or they say some guidance that might be sort of if iffy, that's when everybody starts to look at valuation again. And that's when it matters. Right now, seemingly it doesn't matter for the banks, I will tell you, and this doesn't sound somewhat incredulous, but I think Wal Mart's reasonable at these levels for a myriad of different reasons. I know historically expensive to itself, but you know, that stock sold off last quarter, it's gotten almost the entirety of it back. Not a huge move, I know, but it's hanging in there. Despite valuation.
- [07:09]
Chris McGrady
Yeah, 37 times trailing. I mean, the stock, someone hit the sell button today was down two and a quarter percent and the thing has been stuck in the mud. It does not confirm the new highs in the S&P 500. If you think about all of the uncertainty that we're seeing, and I know we've talked to a lot of folks and say, well, listen, if we push these tariffs out, it's going to be pretty good. I think you got to focus on the investment. So Karen just mentioned, like the efficiency that this industry, meaning like financials might get from AI. Well, if you don't have clarity about, you know, your business going forward because of this tariff situation, you're probably going to invest a little less. And I think that's something that could be a story in the second half. And then, you know, when I think about a Wal Mart, you know, going back to Covid in the post Covid era, they had some issues dealing with inventories and the like. And if we're, we're seeing a consumer that's kind of strapped, we've been talking about this trade down. Well, the trade down went below Walmart Smart down to the dollar stores, you know. And so I think at some point people are going to start to focus on valuation.
- [08:03]
Melissa Lee
There is a tax bill though that incentivizes investment in terms of expensing and R and D. So that could be an offset in terms of the uncertainty and pausing plans here.
- [08:13]
Danny Moses
So as it pertains to Wal Mart, I think in the short term this tariff could be headwinds but I think in the longer term it's a positive. I mean if you think about who can compete with them, not very many. Amazon of course obviously. But if you look at like Target has struggled, I know the stocks bounced back recently but it's been a tough go and I think they'll just continue to get more efficient and gain share and if they can deduct more expenses they have the pocket to do it. So I'm long, it's a little bit uncomfortable multiple but I am staying long.
- [08:44]
Karen Feinerman
Massive economies of scale. Customers that come to Wal Mart are not going to leave. I think they continue to take market share I think from the higher end as people drop down.
- [08:51]
Melissa Lee
So, so this notion that we're seeing this rotation even within sectors, I mean even for instance semiconductor, we talked about this a week ago when it was happening when this sort of rotation was happening within semis. I mean you pointed out intel on the call today. Intel was an outperformer relative to a lot of the other ones. So the non AI sort of global.
- [09:07]
Chris McGrady
Foundries AMD's caught a bit. I mean I think that you're seeing some more discretion about, you know, the way people want get exposure to this kind of theme going forward. And I know that the semiconductor trade has been very narrow obviously Nvidia, some of these custom silicon names. But you know, we've seen Micron enjoy the party as far as memory and the like here. So I don't know, I think people are like kind of trying to have this trade broaden out a little bit. But we've seen this before over the last few months and it really hasn't stuck. So it'll be interesting to see how intel if it's just really this value play with a little bit of restructuring. We've seen like 10 restructuring the last few years.
- [09:42]
Guy Adami
Katie Stockton was just on the closing, I believe overtime. The overtime, I get those shows confused. The overtime is after the close. Well, you know, I'm not that bright as you know, but she was talking about how a lot of those names are now fully broken out in terms of in video that was the last thing she mentioned and she says she likes it. You know you can hear a lot about golden crosses now and those types of things, but clearly there's something going on technically as well.
- [10:04]
Melissa Lee
All right, let's get more on the banks with Chris McGrathy, head of US bank research at KBW, a Stifel company, the firm announcing just in the last hour that he is taking over coverage of large cap banks upgrading several names including Morgan Stanley and J.P. morgan. Chris, great to have you with us.
- [10:18]
Dan Nathan
Melissa, good to see you.
- [10:20]
Melissa Lee
Let's start off with, with the, the upgrades or the move highers in the ratings with your initiation of coverage, JP Morgan for instance we were talking about in terms of the valuation, do you need to see a rerating of banks in order to justify an overweight? Basically here at close to record levels.
- [10:39]
Dan Nathan
You are seeing a rerating. Right. This rerating has been occurring for the past couple of months. Right? Deregulations being built into earnings estimates, upside scenarios, blue skies. And the reality is the upside scenario is becoming more of the base case scenario. So you've seen the universal the largest six banks lead the charge. We've gotten a lot of positive news on deregulation and that's one of the three themes with this launch is deregulation. The other two themes are scale and consistency. And any way you check it, the largest banks have all three and they're the relative winners. That doesn't mean you're not going to see a catch up on the, on the small and mid cap banks and the regionals because they've lagged so much. But, but there's clear moats around the largest banks.
- [11:21]
Melissa Lee
So, for instance JP Morgan which is now at a 2.4, roughly 2.37 price to book. What kind of price to book would you see? I mean historically that is high relative to itself.
- [11:32]
Dan Nathan
It is, it's high, it's a premium and it's well earned. Right. The company through the cycle is talking about a 17% return on equity. Last year they did 20. Right. So this is a company that's going to generate a high teens return on equity and that's even before the windfall from, from capital from deregulation. So the book value multiple definitely is, is expensive but if you look at the earnings multiple, it's trading at a 10% premium to peers. Over the past three years it's trading at 12%. So great companies trade at good valuations permanently And I think JP Morgan at a 10% relative premium is quite reasonable.
- [12:09]
Danny Moses
Chris, it's Karen thanks for being on. So I'm long but I'm just going to play devil's advocate for a little bit. I understand the premium isn't so high on JP Morgan. The absolute number at 15 with the market at, I don't know, 21 2. That's kind of a high ratio. I know banks have always traded cheap relative to the market. Does that concern you at all or is the chance that we could break out from that long time trend of trading at a big discount to market multiples?
- [12:32]
Dan Nathan
Yeah, the absolutes are something we watch, we watch the relatives a lot closer. Right. If you think about the largest banks, we're trading, you know, in the low 50s to the S and P. So the S and P is at high valuations. The long term average for the banks to the S and P is closer to 60 if you go back 10, 15 years. And so the absolutes are something we're watching. The momentum is something we're watching. There's a lot of momentum in the large cap banks. Sure they could pull back. But again a mid teens P E multiple for, for the earnings. JP Morgan is a growth company or it's the largest bank in the country. But if you think about the revenue growth this company is delivering, they're generating solid revenue growth and positive operating leverage across its business.
- [13:12]
Guy Adami
Chris, Jane Fraser seems to be turning Citi around. I mean all of our plans, all the implementation seems to be working. I don't think they're getting credit for it yet. Do you agree with that?
- [13:22]
Dan Nathan
I mean the stock's 80% of books so there's not a lot of good news priced in Guy. If you think about their guide, they're 10 to 11% ROTC guide for, for next year. They took that down earlier this year so the bar has been lowered. But if you look at where expectations are, right, the street and we're in the low to mid nine. So there's a big gap between low to nines and to 10 to 11. So if they can get that right, it's the cheapest stock in the group. They've got a buyback catalyst. It's very accretive when you can buy your stock back below tangible book value. And so this deregulatory environment for Citi is hugely helpful. Now they put the pieces. The reason the ROE is so low is the expenses had to play catch up. That investment phase is done. And so what the company is doing now is they're generating revenue, they're generating positive operating leverage across their businesses. And if they can get the macro to settle in a bit. This is the company I think we can rewrite quite a bit.
- [14:13]
Karen Feinerman
Chris, I know every bank is different, but how are you thinking about corporate credit, consumer credit and then kind of rates on the long end of the curve and how that plays into your theme?
- [14:21]
Dan Nathan
Danny, the higher rates are good for a lot of our calls, but again higher rates to a point, right? You don't want to see the long end and that was the fear in April, long, long and was getting out of control of it and you started to see the credit discussion leak back into the narrative. Now the long ends calm down a little bit. Credit's been pretty good. You know, spreads have compressed a bit. We're not as worried broadly about credit. And again, you know, we, we may see some reserve building this quarter. That's possible. The banks have told us that J.P. morgan did it last quarter, Citi is likely to do it this quarter. But again the balance sheets are in such a great spot from a credit perspective today versus what we're preconditioned from gfc.
- [15:01]
Melissa Lee
Chris, I'm just curious in terms of, you know, as you look out across the sector, is there more upside in the smaller and mid cap sort of banks, regionals as opposed to larger banks and if you, you know, if you had a bunch of cash to put the money to work today, where would you put it?
- [15:19]
Dan Nathan
I think you, you, you can, you can pick your spots, right? So the smaller banks, the regionals, they're cheaper, right? They're cheaper because they don't have the scale that the largest banks have. Their business models are more diversified, are more concentrated and they're more dependent on the yield curve. So there's plenty of great mid cap banks. East west is a great company, trades at 11 times earnings for a 15 are we great company. But there are scale disadvantages that these companies have now. That playing field may get leveled a bit from, from deregulation. You might see more creation of trillion dollar banks in the next couple of years to give the larger banks a run for their money. But we've seen the rotation, we're seeing a rotation now into the stuff that's lagged, right? The small banks have lagged by a thousand basis points year to date. We've seen a 2 to 300 basis point catch up as some of the money is coming out of the universals. But again, it's time. You know, positioning is important going into the quarter. It's possible this comes a little bit further. But in general we like the largest.
- [16:12]
Melissa Lee
Banks given the scale Chris, great to have you. Thanks for your time.
- [16:16]
Dan Nathan
Great. Thanks so much.
- [16:17]
Melissa Lee
Chris McGrady, KBW or would you go.
- [16:20]
Guy Adami
Bigger, smaller, bigger in the forms of Citi. I mean I agree with them. I think Citi, listen, I thought 60% of book it was too cheap. I think at 80% it's probably too cheap as well. I think it's reasonable to think it could get to par if not a little bit higher than that. But you want to go sort of downstream or look sort of outside historic or sort of, I guess, I don't know, traditional financials. Look at the charter color Carlyle Group cg. Over the last couple of months, that stock's been seemingly on autopilot, flirting with its all time high. They report in August. I think you loan CG here as well.
- [16:49]
Karen Feinerman
Chris said it well, credit spreads are the be all end all for the Wall street banks. And if consumer credit starts to dive, regional banks will suffer. But I believe there'll be a ton of M and A at that moment. So I think that that's going to be the long term secular play here at the bank.
- [17:01]
Melissa Lee
Yeah. I mean if you believe the economy is okay and that deregulation is on the bank side, wouldn't you want exposure to the smaller end of the cap scale in banks?
- [17:12]
Danny Moses
I'd rather go bigger. I would. So that's how I'm positioned. I mean a truist maybe, but I'd rather be in Citibank.
- [17:20]
Melissa Lee
Yeah. All right. President Trump announcing a 50% tariff on copper imports at today's White House Cabinet meeting. Also teasing more sector specific levies in the weeks ahead. Megan Casella is here with the key headlines out of Washington. Me Hey, Mel, so that's the key headline here, that even while those country specific tariffs have been Delayed now to August 1st, these sector specific ones are moving forward. So besides copper, which we do expect to be formally announced as soon as later today, the president also said at the Cabinet meeting that he's considering tariffs of up to 200% on pharmaceuticals. He did say he'd give those a long Runway for implementation, potentially a year and a half or two years to give companies time. Commerce Secretary Howard Lutnick then later told CNBC that the copper tariffs will likely take effect later this month and that the investigations into pharmaceuticals and semiconductors, two of the six other ongoing national security investigations, should be completed by the end of the month. Tariff announcements then would follow shortly after. And you can see here a reminder of just how many of those investigations are ongoing. And then as for ongoing talks with two of our largest trading partners. The President said today that he's about two days away from sending the EU a letter telling them the tariff that he'll place on their exports. It suggests talks there might not be going so well. Lutnick also later said that he, Treasury Secretary Bessant and the US Trade Representative, Jameson Greer will all be meeting in early August with their Chinese counterparts for the next round of trade talks with China. So potential progress on that front. Melissa, there had been some hope surrounding an EU deal, correct? Megan? There was a report earlier, earlier this week, yesterday that there would not be a letter sent to the eu. That's right. They said earlier this week there wasn't going to be one. There's been news out of the EU that they're still optimistic that a deal could be coming. I should say. The President said today there was a quote, I think it was, let me be clear, a letter means a deal. But even in the letters it still says that if you strike a deal you might see a lower tariff. So it doesn't necessarily mean there isn't a deal coming. But it's sort of his way of trying to prompt things along. Maybe it means that he's not seeing something from the eu, not some sort of concession that he's been waiting for. Right. Megan, thank you. Megan Casella in Washington Today we really didn't move on any of the trade headlines. We're not going to move on them.
- [19:37]
Chris McGrady
I mean, like listen, the only way this happens is a full out trade war and you know, let's just call this what it is. It's a joke, right? And they know what happened in April. They know what happened to stocks, they know what happened to, you know, like interest rates and that sort of thing and they're not going to let it happen again. And maybe they're playing around a little bit because they think they have a little leeway with the stock market back at up to, you know, at prior all time highs, but it's just not constructive. I mean they're trying to negotiate all these bilateral deals. No one's rushing to the table. Japan's not, South Korea's not, the Mexicans are not, the Canadians are not, the EU is not. So it's a bit of a joke.
- [20:11]
Karen Feinerman
Taco Tuesday, right? That's, that's what we're doing here. So see what you did. Why copper, right? It goes into everything. It's homebuilders, it's autos, right. It's semiconductors. It's everything I can see from a defense perspective, why they want to build up, you know, a lot more resources here, but it's just counterproductive here. And if you want the Fed to start cutting rates and you're trying to browbeat them and no, inflation's not here. This is directly inflationary, period, end of story. So I'm not sure why. I think it's a lot of noise. I'm with Dan on that. But Taco Tuesday, you can make an.
- [20:37]
Guy Adami
Argument that copper is the most important commodity out there. Maybe not named crude oil or maybe more important to crude at this point to Dan. And if you look at the chart of copper over the last month or so, if Tim Seymour here, he'd be talking about as well, well, it's making all time highs. It's absolutely breaking out and it's probably doing it for some of the right reasons fundamentally and some maybe not right reasons on the back of these tariffs. But Freeport McMoRan FCX, I mean that stock continues to be lower left, upper right.
- [21:01]
Melissa Lee
Mel coming up, oil pumping higher as the OIH ETF sees its best day in months. The names feeling that jump in. Our traders are handling the moves. And it's not just energy climbing. Shares of Alibaba getting its own bounce. A check on China Tech ahead. Do not go anywhere. Fast Money's back in two.
- [21:21]
Chris McGrady
This is Fast Money with Melissa Lee right here on CNBC.
- [21:32]
Melissa Lee
On WhatsApp, your personal messages stay private between you and whoever you send them to. So things like the passport numbers for your honeymoon stay between you and your fiance. And that video call for your gran's 80th stays in the family. Even your streaming password stays between you and your college roommates who still ask for it every week in your group chat. Because on WhatsApp, your personal messages are yours. No one else can see or hear them, not even us. WhatsApp message privately at Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at capella. Edu.
- [22:19]
Danny Moses
Substance use disorder and addiction is so isolating.
- [22:24]
Melissa Lee
And so as a black woman in recovery, hope must be loud. It grows louder when you ask for help and you're vulnerable.
- [22:34]
Danny Moses
It is the thread that lets you.
- [22:36]
Chris McGrady
Know that no matter what happens, you will be okay.
- [22:40]
Melissa Lee
When we learn the power of hope, recovery is possible. Find out how@startwithhope.com brought to you by the National Council for Mental well Being. Shatterproof and the Ad Council. Welcome back to Fast Money. Apple announcing a transition in its C suite. Steve Kovac's got the details. Steve?
- [22:59]
Dan Nathan
Yeah, big shakeup here, Melissa. Apple CEO Chief Operating Officer Jeff Williams, he's stepping down from his role at the end of the month. And replacing him is Sabi Khan. He's the exec currently in charge of operations. By the way, that's the job Williams used to have before he was promoted to CEO. Now, Williams, he's going to stay at Apple until the end of the year when Apple says he will formally retire and leave the company. And in the meantime, he's going to continue to run Apple's design team and health division. That includes the Apple Watch. He's been running those groups for a number of years now. Now those teams are going to end up reporting to CEO Tim Cook after Williams retires. This is the second member of Tim Cook's senior leadership team to step down within the past year. CFO Luca Maestri, he stepped down from his role at the end of 2024, but he's still at Apple. He's running the facilities teams. Now. Williams was viewed as a top candidate to potentially succeed Tim Cook as CEO. Apple says today's announcement, though, it's part of what it is calling a long plan succession. So Williams is out of the running for that gig for now. And also he's leaving at an interesting time for Apple as it reorients its supply chain to mitigate those effects of President Trump's tariffs. We heard during the last earnings call, a lot more focus producing phones in India and other products in Vietnam to get around the worst of the tariffs. That's going to be a big challenge for this new CEO. Melissa.
- [24:18]
Melissa Lee
So this is all part of a plan. So it sounds like they wanted Williams to be out so the next guy could be the heir apparent, effectively, potentially.
- [24:27]
Dan Nathan
I mean, this is also the same job, by the way, Melissa, that Tim Cook had. He was the operations guy then CEO, and then when Steve Jobs passed away, he became permanent CEO.
- [24:37]
Melissa Lee
All right, Steve, thank you. Steve Kovac. Danahan, what do you make of the shuffle?
- [24:42]
Chris McGrady
Yeah, I mean, a lot going on there. You know, I don't even know who the successors are. I mean, a lot of us don't really have a sense of what that bench looks like. I'll just say this. You know, as far as Apple, we've placed a lot of emphasis on the lack of sort of AI and the integration within, you know, the iOS, you know, operating system. And listen, maybe this comes down to maybe they just see themselves as a delivery mechanism for all the software and all the other capabilities. And maybe they're not going to go make some big acquisition and maybe they're going to continue to kind of fortify that sort of moat that they have on the hardware front. And that might be something that we hear a bit more of over the next year or so when everyone is expecting some big stuff out of them. If you look at the way that Open Air and some of these others are spending right now, you'd say, well, this is a sort of arms race that they've never committed to over the last few years and so maybe they're not going to do that.
- [25:30]
Danny Moses
So of all the Mag 7, this is my least favorite. And I feel like there is nobody in the crosshairs as much as they on so many things. Right. Reshoring or shoring elsewhere or. I mean, the cost differential will be enormous. And Tim Cook has played it masterfully up until now. I don't know, he seems to is not in the good graces of Trump, I guess, but maybe that turns around still. I just. It's not crazy expensive, but I don't want to own it here.
- [25:59]
Melissa Lee
All right. Meanwhile, a winning day for the oil trade. The Vaneck Oil Services ETF seeing its best day in three months, jumping nearly 5%. The gain comes despite news over the weekend that OPEC is planning to up output by more than expected next month. Today's high energy winners include Transocean, Expro and Weatherford, all up about 8% or more. This is part of Karen's trade. I forget which letter it's supposed to be.
- [26:25]
Guy Adami
Well, energy.
- [26:25]
Melissa Lee
E for energy. O IH of course.
- [26:28]
Danny Moses
Yes, of course.
- [26:29]
Guy Adami
It makes perfect sense to me. Danny can wax poetic here. I'll start real quick. I mean, we've talked about it. It hasn't really made a difference, but valuations are absolutely compelling for many of these companies, whether it's oil service or the Big Cap integrated names. And the market doesn't seem to care why? Maybe because it's only 4 or 5% of the S&P 500. Maybe they don't have to care because of that. But at a certain point the market wakes up and says energy is just too cheap here, regardless of where the price of crude oil is.
- [26:55]
Danny Moses
That's what I think, I hope is happening. We've seen a lot of areas of rotation, right. And I really hope this is one and this is a very nice day. I think we would need three or four more in a row. Just as good as this to get back to break even this year. But the whole space is so cheap.
- [27:12]
Karen Feinerman
This sector has been 7% of the S and P over the course of its life and we're currently I think actually under 4% still. I think the pop in oil a few weeks ago was kind of a beauty pageant for some of these stocks. And I'll say this again, in the last five years with the ESG and all the stuff that happened, the amount of M and A that has occurred, the amount of efficiencies, the rig counts at a five year low here you look at names like Noble and E. Right, which I think you know, did a massive accretive deal with Diamond Offshore. I think those are the names you want to look at.
- [27:38]
Melissa Lee
All right. There's a lot more fast money to come. Here's what's coming up next.
- [27:42]
Chris McGrady
China Tech on the move.
- [27:44]
Melissa Lee
And Alibaba helping fuel the climb.
- [27:47]
Chris McGrady
How the traders are navigating the overseas surge next. Plus weaving in and out why Wall.
- [27:54]
Melissa Lee
Street is turning bearish on coreweave after its post IPO surge and why its latest deal isn't helping the stock. You're watching Fast MONEY live from the.
- [28:05]
Chris McGrady
NASDAQ market site in Times Square. We're back right after this.
- [28:15]
Danny Moses
Substance use disorder and addiction is so isolating.
- [28:20]
Melissa Lee
And so as a black in recovery, hope must be loud.
- [28:26]
Danny Moses
It grows louder.
- [28:28]
Melissa Lee
When you ask for help and you're.
- [28:30]
Danny Moses
Vulnerable, it is the thread that lets.
- [28:32]
Chris McGrady
You know that no matter what happens, you will be okay.
- [28:36]
Melissa Lee
When we learn the power of hope recovery is possible, find out how@startwithhope.com brought to you by the National Council for Mental well Being, Shatterproof and the ad Council. On WhatsApp, no one can see or hear your personal messages. Whether it's a voice call message or sending a password to WhatsApp, it's all just this. So whether you're sharing the streaming password in the family chat or trading those late night voice messages that could basically become a podcast, your personal messages stay between you, your friends and your family. No one else, not even us. WhatsApp message privately welcome back to Fast Money. Shares of Alibaba up almost 2% today. The Chinese e commerce company trying to bounce back from a recent sell off that's seen the stock fall more than 25% from March highs. The company under pressure amid US China trade tensions. Even with today's gain, it closed under its 200 day moving average for the second day in a row. A is the Alibaba, is the A in carved? Actually, no.
- [29:45]
Danny Moses
You act like that. So crazy. A for Alibaba even guy gets all.
- [29:51]
Melissa Lee
Doesn't make any sense. But anyway, it was also your final trade yesterday.
- [29:54]
Danny Moses
It was my final trade yesterday. I just think it had fallen so far. I did look, they did a big buyback. The stock was significantly higher, close to the 140 area. I believe at me if I'm wrong about that. I just think, I think we all know it's extraordinarily cheap. Giant, Giant cash. Word. I just think things will cool off with China. This stock has a long way to go up.
- [30:14]
Guy Adami
I think Vinnie and Porter, they're watching right now. They talked about it with Danny. I think maybe in the fall of last year they were talking about how cheap Alibaba was and they're spot on. And look, you got up to 140 a couple of times. Failed both times. I didn't think we'd get back below 105. Here we are basically. But it's still too cheap on valuations, too cheap on a number of different metrics. It's the B in tube. I know, as you know and I think it continues to go higher from here.
- [30:38]
Chris McGrady
Yeah, we all got something. Starts with a B. I like Baidu here, the way that they're investing in AI and I just think that right now you might see a little bit of a pause in some of the developments and some of the models that are going on. Obviously a lot has to do with these export restrictions for these H20 chips from Nvidia. They become really tight over there. There's an expectation that this deep sea model R2 is going to be coming out pretty soon. And I just think about cloud, some of the cloud players over there, Baba is going to benefit from that but they're all working on their same, the same sort of open source model. So there are other values there. Baidu trades less than 10 times earnings.
- [31:11]
Karen Feinerman
I think the anti China rhetoric has died down a little bit. And like you said, these companies have great balance sheets. Baba is buying back stock here. So I think you can own it.
- [31:19]
Melissa Lee
Coming up Core we've pulling back more after its core scientific data deal and after a big run up since going public, Wall street is starting to turn sour. We'll talk to one top analyst about why he is seeing some near term risks when fast Money returns back into. Missed a moment of fast.
- [31:37]
Chris McGrady
Catch us anytime on the go Follow the Fast Money podcast. We're back right after this.
- [31:50]
Melissa Lee
Welcome back to Fast Money. Another check on how stocks close out the day. The Dow dropping 165 points the S&P 500 with a small loss in the tech heavy. Nasdaq virtually flat but notching a small, small gain. Shares of Moderna jumping nearly 9%, notching its best day since April. The pharma stock the best performing name in the S&P 500 today. And shares of intel also with an outsized move today, up more than 7% now up more than 17% over just the past month. Meanwhile, Core Weave dropping for a second day in a row after announcing its buying data center provider Core Scientific. The company getting a slew of downgrades today as analysts worry about near term overhang. Citi putting the cloud infrastructure company on a 90 day downside catalyst. Watch the analyst behind that call, Tyler Radke, joins us here on FAST now. Tyler, great to have you with us. Nice to see you again. This all has to do with lockups, so it's sort of a technical alert. Can you walk us through? Yes.
- [32:44]
G
I think there's a few things. One is the traditional IPO lockup window expiring. So next month when Core weave reports their second quarter earnings shares, you will see roughly 85% of the class A shares come onto the market. So that's a significant increase in volume for, you know, for a, for a stock that's been Super Squeezy, it's up 4x since the IPO. I also think the second thing that's, that's maybe even more interesting if you look at what happened yesterday after this deal was announced. This was an all stock deal. Core Scientific, the deal price was basically a little over $20 a share. Core Scientific is below $15 a share. So you're seeing about a 30% spread. That's not reflecting a view of uncertainty of this closing. It's actually reflecting the high borrow cost. So the options market is actually suggesting that the forward price for Core Weave in October is 120. So you look at those two things, a bunch of shares coming online, some really unusual pricing in the options market and the stock being up 4x since the IPO and doing an all stock deal sort of at the near term peak, we think there's downside ahead for the stock.
- [33:55]
Chris McGrady
Are you concerned by any chance, like all the debt that's being raised to finance the purchase of the chips? The chips are being used as collateral. The depreciation in which a lot of these companies are allotting for these chips is probably pretty generous. So if you have a slowdown in demand, let's say you have this continued upgrade cycle where videos like okay, you got to go. Hopper, Blackwell, Rubin. And there could be a little bit of a problem with the slightest slowdown.
- [34:21]
G
Yeah, I think, I think that's true. Now our view on fundamentals in the near term is positive in terms of where we think revenue is headed over the next year. So we actually did take up our revenue forecasts just because of, you know, what we're seeing out, you know, with some of these large contracts. Last week we saw a $30 billion annual deal from Oracle. Obviously that was coming off a really strong quarter for them time. We're very bullish on Microsoft. But yeah, I mean Core Weave is absolutely, it's, it's levered to the data center build. So if you do have near term disruptions, whether they be delays on the chipset side, slowdown in demand, this is, this is going to be impacted more than anyone out there. But you know, to be clear, we really do think AI demand is ramping up now long term we do have some concerns to some of the points you mentioned how they're accounting for depreciation, rising competition and ultimately, you know, our view is that this is more of a data center provider rather than a true software company like some of the other hyperscalers out there.
- [35:24]
Danny Moses
Tyler, it's Karen. Thanks for being on. Do you like the deal yesterday outside of all the other things that are going on with the stock and would you anticipate them doing more of them?
- [35:34]
G
Yeah, so I think this deal is interesting. You know, there's, there's kind of two sides to it. I mean a year ago, so they were rumored to making an offer to buy core scientific for $1 billion. So now they're paying 9. So obviously a 9x increase suggests maybe they should have done the deal a little bit earlier. But they are getting about 2 gigawatts of incremental power, which 9 billion for that is, is a pretty good deal provided they can execute and realize a lot of the synergies. But ultimately what Core Scientific is, they do a lot of bitcoin mining, they do a lot of kind of lower level stuff that Core Weave partners with today. So they will be shutting down and repurposing some of that infrastructure. Ultimately we view this as a play for them to increase their share in a hyperscaler market. We think it's probably a good deal, but it does carry some execution risk and it's a little hard to analyze just because they are going to be turning some of those services off and repurposing them.
- [36:34]
Melissa Lee
Tyler, thanks for your time. Thank you Tyler Radke of Citi Guy, what do you mean?
- [36:39]
Guy Adami
Corey here, he's obviously the expert. I'll say this, Dan brought it up. The depreciation schedule. I mean they're doing it over the course, I think five or six years if I'm not mistaken. I mean Jensen Wang talks about this. I mean they should be doing it over the course of five or six months. In terms of how quickly these GPUs get sort of outdated. If they were to do that, you're looking at a much different company.
- [36:58]
Melissa Lee
Company.
- [36:58]
Guy Adami
I'm not saying they're doing anything wrong because historically that's what companies do. But if you looked at it through that lens, it's a much different stock price.
- [37:05]
Karen Feinerman
You brought up a great point, Tyler, about the risk Arb community can't get involved because you can't get a borrow to short core weave. I will tell you that if you buy core scientific at $14, it's equivalent to $113 price on Cory. So if you want to own Corve, $113 and you think this deal is going to close in a normal period of time, it's not a bad way.
- [37:23]
Chris McGrady
To get exposure and there's some ways to think about it. Okay, if they're canceling $9 billion of leases, okay, that's fine. But it also seems like a lot of financial engineering. If you think about Core weave, they own 250,000 of Nvidia GPUs. Core Weave is not public today. If Nvidia did not come in on the deal and save the deal, they were already an investor. It just seems like a lot of financial engineering right now and it'll be interesting to see if this deal even closes.
- [37:48]
Melissa Lee
Coming up, the stars are out at Sun Valley. Tech titans, media mogul, high profile investors all gathering in Idaho for the annual conference. What they are saying about the future of AI M&A and how trade uncertainty could impact growth. The details when Fast Money returns. Welcome back to Fast Money. Business and media moguls heading to Idaho Sun Valley this week for the Allen & Co. Annual leadership retreat. Top on the agenda, deal making the race for AI leadership and the impact of terrorists. CNBC's Julia Borson is in Sun Valley covering the retreat. Julia? Melissa, Media moguls and tech titans are already here. Warner Brothers Discovery CEO David Zaslav talked up his Superman movie which is opening this week and it dodged my questions about what deals he might do after his company's split. Disney CEO Bob Iger is here along with his deputy co chairman of Disney Entertainment, Dana Walden and Alan Bergman, Disney's Parks chief. Josh Tomorrow, along with ESPN chair Jimmy Pitaro, he was talking to the newly appointed head of the PGA, Brian Rolapp. Also here, I caught up with OpenAI CEO Sam Altman. On the heels of Metta hiring some top talent away from him, he said he's not concerned and he expects to see Mark Zuckerberg here in Sun Valley. And with Trump's new bill enabling states to enact their own AI regulation, Altman said he'd like to see smart federal legislation. And I asked him about the regulatory environment, his relationship with the administration. How's your relationship with the Trump administration and what kind of talks you've been having with them?
- [39:35]
Karen Feinerman
Good. I think they really care about infrastructure and building that out and seeing the US Succeed here.
- [39:43]
Melissa Lee
We'll have more all day tomorrow from here in Sun Valley and including an exclusive interview with SNAP CEO Evan Spiegel. That's coming up in the 10:00am Eastern hour tomorrow. Back over to you, Melissa. I have a couple of questions, Julia. First of all, the Sam Altman glasses, everybody on the desk gasped. Are they some sort of a device or are they just. So I asked him this question, Melissa, because how could I not ask that question? I said, are those smart glasses? And he said, no, I hate smart glasses. So then I said, well, what can you tell us about your hardware that you're working on with Johnny? I He said, all I can tell you is it's going to be amazing. Okay, so not really an answer to the question about the glasses. Specifically, when it comes to Emmett Glass, they're not smart glasses. They're not. They're just weird looking. They're ordinary, ugly sunglasses. High fashion glasses. High fashion glasses. Okay, let's call it that when it comes to M and A. We know that, you know, when our parent company spins off Versant, Versant could be on the hunt for deals. We have have David Zaslav on the hunt for deals after his spin. Who are the targets here at this conference? Are they at the conference? Well, the other question to discuss also is what's going to happen with, with Hearst and Disney and Amy, because now there's speculation that Disney could be looking to sell its stake in Hearst as well. So I think what's important to keep in mind here is that a lot of these pieces might fit together. And then there's the question about the regulatory approval approvals. So David Zaslav made it very clear that his split does not require any regulatory approval. So he's happy to get that done right now in this environment. And then there's a question of whether or not maybe some of those assets could fit up with some of the Versant assets or perhaps even with other pieces of it with, with the remaining Comcast, NBC Universal. So a lot of different pieces in play here. And then we also have to keep in mind that the tech titans have been very interested in, in sports rights. And of course, the media, media companies are the ones who control the sports rights right now for at least most of them. We've seen some go to Google, YouTube. We've have Neil Mohan here as well as more increasingly to Amazon. Julia, thank you, Julia Borson, who we'll see from Sun Valley a lot more this week.
- [41:55]
Chris McGrady
All right, Sam Altman hates smart glasses because he hates Mark Zuckerberg. Mark Zuckerberg just took a stake of $3.2 billion in Luxottica and they have the smart glass glasses in town. So again, Sam Altman probably better off with some smart glasses than those dumb.
- [42:10]
Melissa Lee
Glasses I fashion on his high fashion glasses. Sorry. There's a lot more fast money to come. But first, take a sneak peek. Here at the Kramer Cam, Jim is chatting exclusively with the CEO of electronics manufacturing company Flex. Catch the full interview. Top of the hour on Mad Money. More fast money into the.
- [42:34]
Danny Moses
So now it's Jenna and friends. What's your plan for this?
- [42:37]
Melissa Lee
Yeah, well, it's been, it's been an amazing opportunity, really. Like, and in the same sort of way that I didn't envision myself working at the Today show, I never envisioned Hoda leaving. And in fact, she kept saying, don't sign your contract. Don't sign your contract. And I thought she was saying that so we could kind of link up our contracts and so we could be there really until the same time. But what she was doing was protecting me because she knew I was going to be doing the show on my own, which is a different story than when you're sitting next to a partner you've had for six years. You know, that's a different thing. That was our very own Karen Feinerman talking with Jenna Bush Hager in the second season premiere of her podcast How She does it, which launches today. Episodes are available on YouTube, Apple or wherever you get your podcast, so you won't want to miss it. Season two. Wow.
- [43:26]
Danny Moses
Season two. Yeah. So we started with Jenna Bush Hager. Every person on this that I speak to has had a career that is not linear. Right. And she started off as a correspondent. Now she's sort of the host of today's show and talked about that, the burden of that.
- [43:41]
Melissa Lee
Her whole.
- [43:42]
Danny Moses
Her whole sort of how much. It's sort of a lot of work. It's a lot of energy. But I hear, I love hearing their stories. I love hearing how they got there, how they make things work. She has three little kids. She also runs. She has a Jenna's book club. She has publishing. I did one. Kate Gallego, the mayor of Phoenix where they have the big TSMC project. She ran for mayor when she was pregnant and getting a divorce. So I love hearing the stories of women, the advice I find interesting, the struggles and the victories as well. So it's fun for me. My very first one was you.
- [44:13]
Melissa Lee
I know.
- [44:14]
Danny Moses
With your very non linear story.
- [44:16]
Melissa Lee
Yeah, it was very.
- [44:17]
Chris McGrady
You don't have to be a woman to listen to it either. I just want to be really clear on that because I listen to a bunch of of the first season with great pod.
- [44:23]
Melissa Lee
Thank you.
- [44:23]
Guy Adami
You know, Jodie Foster is a big fan of Fast Money as I know.
- [44:26]
Melissa Lee
You all know she's watching right now.
- [44:27]
Dan Nathan
I'm sure that's.
- [44:28]
Guy Adami
I mean that's a wish list. I'm sure.
- [44:31]
Danny Moses
Interview for you.
- [44:32]
Guy Adami
So Jodi, I mean, give Kay Fine a call. Let's get that done in season two if you're not booked out already in season two.
- [44:38]
Melissa Lee
Yeah.
- [44:38]
Danny Moses
Make room for Jodi no matter when.
- [44:40]
Melissa Lee
How do you identify the women you want to talk to you? Just from reading from, from it just.
- [44:46]
Danny Moses
Sometimes it's oh, this one leads to that one. Right, right. And then I don't know, I find I want to try to very different industries. You know, last year we did one from the head of breast cancer surgery at the Dubin center to. I mean to politicians, to cooks, to women who are starting their own thing. There was the model who went to Columbia as a finance major. Super hottie. You would find Dan and now has, you know, a makeup company. I don't know. I find each of their stories so interesting, inspiring.
- [45:15]
Melissa Lee
And your sister was also interviewed. Wendy Fyndyndy, who is extraordinary.
- [45:19]
Danny Moses
She is Wendy Feinerman, the producer. She's something else. So that was a good one as well.
- [45:24]
Melissa Lee
All right, check it out, how she does it. Up next, final trades, final trade time.
- [45:43]
Karen Feinerman
Danny Long, Noble Corp. Neck.
- [45:46]
Melissa Lee
Great to have you back, Dean.
- [45:47]
Dan Nathan
Nice to be here, Karen.
- [45:48]
Danny Moses
Great to have you here, Danny. In Danny's honor. But I was gonna say this anyway. Even without that OIH on a one day streak. Could be the start of something more.
- [45:58]
Melissa Lee
Dan guy, we gotta do this. I hope 30 seconds, 15 each.
- [46:04]
Chris McGrady
And then you know Kweb last night.
- [46:06]
Danny Moses
Kweb Bob, we were on the same wavelength.
- [46:09]
Chris McGrady
You and I had that moment.
- [46:10]
Danny Moses
Yeah, Mr. Sunshine, I know Joe Kernan.
- [46:13]
Guy Adami
Is watching and I'd just like to.
- [46:14]
G
Say I love how you keep him.
- [46:16]
Guy Adami
In line on the swap box. Excellent job by you. Danny is marginal at best. ConocoPhillips cop the compliment.
- [46:23]
Melissa Lee
Danny. Thank you for watching Fast Money. See you on Squawk Box tomorrow. Mad Money with Jim Cramer starts now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of cnbc, NBC Universal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer gas, groceries, eating out it all adds up fast with the Verizon Visa card, you get rewarded every time you spend. Get 4% in rewards on gas, dining and at grocery stores, and you can put those rewards toward your Verizon bill or on new tech like a smartwatch and earbuds. Apply today at Verizon. Application required. Subject to come to pass approval. Must be a Verizon mobile account owner or manager or FIOS account owner. See verizon.com Verizon Visa card for terms and restrictions. The Verizon Visa Signature Card is issued by Synchrony bank pursuant to a license from VC USA Inc.