Scott Wapner (3:16)

The commentary Mike sent Toya, I'll come to you here just to lean on you for a moment. Seems to be anything from briefly, the markets will react a geopolitical shock. You point out today in your original pitch of the day that these tend to be short lived in terms of a market impact.

Mike Santoli (3:37)

And I think everybody had two days to sort of absorb the history of this. And it's eventually and often not very long after the event of buying opportunity. Nobody even allowed much of a dip to occur this morning before essentially buying it. I always try to ask, you know, what do you think the market ought to reprice in the response to this kind of event? And Brent crude going back to levels we saw last June was probably not going to radically alter the picture. As Joe mentioned, we have been sort of clenching up in advance of this. You had a 21 Vix going into the weekend when the S and P has been flattish. I do think it's though instructive to kind of see how the market's doing it today. More stocks are down than up. You actually have a mix of the sort of counter trend rallies in some mega cap tech along with beaten up software and you know, credit sensitive investment banks along with the usual energy going up, defense stocks going up. So the market's doing what it's been doing for a very long time, which is selling one thing to buy another and essentially rotating away from danger and keeping us in the range. So I don't think we have any kind of an all clear based on the issues we've been grappling with for a few weeks. But you also saw not much of an exacerbating factor coming from what happened over the week.

Scott Wapner (4:49)

The new variable of course is energy which is being discussed as well. As you see staff, both Brent and WTI rise substantially today. Wells Fargo declares the worst case scenario for the market would be an S&P 500 falling to 6,000. If in fact you do have a significant oil shock if you have a prolonged closure. They talk about of the strait of Hormuz that you could see oil above 100 plus dollars a barrel and then of course that would mean something more significant for the equity market.

Jim Lebenthal (5:22)

So first I think is pretty remarkable that we have thrown so much at this market. Venezuela, scotus, AI software, banks, the whole thing. And guess what, S&P 500 is flat on the year and the equal weight is up 6% on the year. And it speaks to a resilient economy and also speaks to just really strong rotation rotational action that we're seeing in a lot of different groups. And it's like you mentioned it, that there are a lot of groups that are participating today. There are plenty that aren't, but there are a lot. It's not just Mag7, it's financials, it is energy. Some materials, some software. But that's actually a very healthy sign in my mind. So still have a lot of unknowns. You asked about oil. Watch oil. I actually thought, Scott, that oil was going to be up 10 to $20 today, yesterday at this time and up almost $5. I mean of course oil has rallied 19% year to date in expectations. But if we got another ten or twenty dollar upside in oil, that would be very problematic. The other interesting note is that the 10 year hit 392 yesterday. It's now at 404. So that's sort of, kind of interesting to me too. Like we're not seeing a massive panic

Scott Wapner (6:35)

like the traditional safe haven run to spines and then you'd see yields fall. In fact, it's the, it's the opposite. Your points are well made.

Jim Lebenthal (6:42)

And I would just say one last thing. Credit spreads, credit spreads are okay, they're a little elevated but they're nowhere near Covid or they're nowhere near Liberation day. So that to me seems like a pretty good outcome.

Scott Wapner (6:55)

We'll have more just past the bottom of the hour on the fallout in the energy markets, the whole complex. When Mark Fisher joins us of NBF Trading. He of course such a great mind and a famed energy trader across the board. He'll join us with his insights and where he thinks all of that could be heading and how he is trading it. And we'll do that again just, just after 12:30. You know Jimmy, I guess a lot of this depends on how long this persists. The President you just heard suggest could be four to five weeks. We have the capability to go longer if we need to. I thought it was interesting that the President told CNN within the last hour that the quote, big wave is yet to come. So you know, we're watching all of that and that in some respects will dictate how these various asset classes move.

Stephanie Link (7:39)

Yeah. And that creates a lot of uncertainty. I'm very pleased with how the markets have responded across the board today. Whether it's equities, whether it's fixed income, crude oil is honestly not that bad. Most importantly, the dollar has been stable. I thought that might be a referendum by the rest of the world on US Foreign policy, but it's basically flat. But foreign four to five weeks for a military operation is a long time. This is not an overnight over the weekend operation in Venezuela. This is not even Operation Midnight Hammer from June of last year. I think it was June, it was the summer when we bombed the nuclear facilities and a lot can happen. The biggest wild card I think Iran is obviously trying to draw regional countries into the fray by attacking Qatar and United Arab Emirates. So far they have been restrained in their responses. But you don't want to see this become a regional conflict. Right now. It's really just the US And Israel against Iran. All of this being said, you know, we have experience over the last four years that really hot conflicts in places like Ukraine, Hamas, Lebanon that these have not upset consumption here in the US These have not upset capital expenditure plans here in the US Whether it's data centers or whether it's manufacturing. Onshoring and a somewhat trivial point today but would have been important if not for the weekend news is the ISM manufacturing survey is nicely into expansion for the second month in a row, which indicates that there is very good economic strength here in the US Unlikely to be upset by the current events unless they get meaningfully worse.

Scott Wapner (9:09)

Well, Joe, most are, you know, the commentary I read from this morning is is a suggestion not to bail on the story, you know, and the story is that there's enough to build on to keep the market moving higher once you get past the obvious volatility that comes from times of of war. Julian Emanuel of Evercore says more earnings plus more volatility equals more upside. Delayed, not derailed. He raises his S and P earnings estimates. There's a couple of notes from Ed Yardeni today that I thought were particularly interesting. We wouldn't be surprised if any sell off in the morning turns into a rally. That's one thing. And then he also goes further and says in our short war scenario, of course, who knows how long this will progress. Oil prices should fall in the coming weeks after a cease fire, boosting consumer spending, benefiting global economies. The weekend's Middle east developments make us even More confident in our roaring 2020 scenario.

Joe Terranova (10:00)

Yeah, I'm a little bit more aligned with what Mike said before, where I don't think you have the all clear here. I think you just get the pass on. You don't break down because of a geopolitical shock. I think we continue to have what I characterize it as rotational volatility. That's been the story all year. It's not exit volatility. It's not like people are moving to the sidelines. So I think today it's just all right, the geopolitical shock presents itself. We don't break down precipitously. You kind of go back to where you were. I don't know if I see us going very far on either side for the S&P 500 of unchanged. I think to Steph's point, the S and P equal weight, yes, that could carry itself higher. That seems to be where the leadership is so far, year to date. But I just don't think you want to get too high or low in either direction. I think that's the story so far of this year.

Scott Wapner (10:48)

That's because, Mike, you just don't know whether this is four to five weeks or four to five months. It's just too early to tell if it's a sustained conflict of that level of magnitude. Which is why Barclays today suggests it's simply too early to buy any dip until you get a sense of how long this really is could last.

Mike Santoli (11:06)

Yeah, and I think that was premised on the idea we might get a little bit more of a messy downside open today and sort of wait for it to settle out. But I agree with that. I think you can go on the premise that the market at this point is building in an expectation that this is not going to be either long lasting or particularly disruptive, whether through the oil price or trade flows or anything like that. And so therefore you test the news flow against that assumption and you assume that the market would have to adjust if in fact it looks like it's getting worse or the disruption is starting to build on that. So I do agree. I mean, I think it's worth remembering that Friday, and who knows how much of this was anticipation of something over the weekend. It had a real growth scare feel to the market.

Philippeau (11:48)

Sure.

Mike Santoli (11:49)

I mean, it was staples, it was defensives, rallying, it was a huge bid in bonds. And you do have parts of the cyclical trade have really fallen away. It's only industrials that are really holding up their end of the barGaining. Have a 6 month chart of industrials, consumer discretionary and financials on an equal weighted basis. That's what you have. You have industrials doing the work right now. It's not like the other ones are completely falling apart, but they're not really carrying the weight to the upside. So maybe that's opportunity, maybe that stuff's gotten cheaper. But I do think even today you see travel stocks, see consumer related, see housing related, not really holding up.

Stephanie Link (12:20)

Yeah, well, I mean I want to ask about energy, want to ask about materials. Even if you strip away today because there's an obvious movement, don't you think that there was some positive momentum before today in those sectors as well?

Mike Santoli (12:33)

For sure. I just don't read that as principally about the domestic macro story getting better. Right. So it's a global reflation trade, there's no doubt about it. We came into the year kind of positioning for that and I think that was part of it. Plus every sector that was under owned and really small within the S and P has received this flood of money coming out of tech. And if you looked at the charts of consumer staples, materials and energy, it's the same chart. Like they basically have had the same trajectory of move in the last month or two. So I think that's why the other dynamic, it's hard to pull apart what the, the macro story is in energy and materials. Aside from reflation, commodities supply, you know,

Stephanie Link (13:16)

we're going to get.

Jim Lebenthal (13:17)

We have seen a growth scare. The Atlanta Fed Tracker was at 5.3% and it's now at 3.3percent and it could even go a little bit lower because January was really crummy for retail sales and auto sales. You can blame it on weather. We'll have to see. So we are seeing a little bit of a growth scare. So it makes a lot of sense. I think though that you're going to see a rebound from the first quarter into the second quarter, especially as we get more fiscal policy from the one big beautiful bill.

Scott Wapner (13:42)

The problem is, you know, you still have those issues that are making people nervous. The, you know, on the heels of the block job cuts. You still have a greater conversation now in the zeitgeist about what is AI going to truly mean to the American workforce. That's number one and that's not going to be known for some time. And every incremental company you hear about cutting a significant number of jobs is going to reverberate in its own way through the markets. And then of course private credit is still on the minds of many. I know you were talking about credit spreads. They had widened and they're worrisome to some. They're being watched, there's no question about that. By the way, Jamie Dimon is coming up later this afternoon with Leslie Picker. I think it's at 1:40pm you don't want to miss that because I know that she is going to ask Mr. Dimon about what is currently taking place in private credit. We'll get to that in a minute. What I want to get to though are the tactical sort of decisions that you're making and other investors may be thinking about and or making themselves caps. Today you bought the Israel ETF again.

Joe Terranova (14:44)

Yes.

Scott Wapner (14:45)

So let's just discuss that for a moment. It's the eis. Take me through that. Something you had owned before now. Why again now?

Joe Terranova (14:52)

Over the, over the last several years I have traded this obviously from the long side. I believe this is a moment where it is at an all time high. It is up 5% today. I think you have to ignore that. I think you have to look at this on a secular basis and say where is this going to be over the next two to three years? The composition of it is exactly the exposure that I believe right now works in the market. It is health care led by teva Pharmaceuticals at 9% holding. There's some banks in there at a 15% holding. Then you get a little bit of exposure. I lost my exposure to some of, of the cybersecurity names. You get exposure with Cyberark and Checkpoint. So I think you're going to see significant capital formation here in the Middle east, specifically as it relates to Israel. Obviously my belief is this is a much, this is a very favorable outcome for Israel when we're looking longer term and it is worked in terms of price performance. It's proving itself once again today. And it's something that I had wanted to get exposure back into. And this is something I will hold not just for some months ahead. I think I'm going to hold this for several years.

Scott Wapner (16:01)

You trim the OI as well. We could discuss energy to some degree, actual insights into the complex itself. I'd like to hold until Mark Fisher joins us just shortly after the bottom of the hour. He's got a great handle on how he thinks all these different parts of that complex are going to move in the days and weeks, if not months ahead. But why trim the oih?

Joe Terranova (16:23)

Because it was, it was a long leverage energy play for me. On January 12th I took the initial position at 313 my cost basis has risen to 330. I've made several purchases which I've announced with you on air. And when oil prices spike in the way that they did, this isn't my belief that they go higher or lower. It's just, okay, I have significant leverage in one particular position. It's now going my way. It's prudent to trim that. And all I did was take off 25% of the position. I already have about a 30% gain in the position since January 12th. It just makes sense. It's proper risk management. I think everyone would agree.

Scott Wapner (17:03)

How closely are you guys, you two, Stefan and Jimmy, watching the energy positions that you have. It's a Chevron, Exxon, for the most part. The big guys kind of game that you're playing. UBS is talking about the majors, watching both of those. How much an increase of a barrel price of crude means to act after tax earnings. For both, obviously it's a significant jump. For every dollar that you do go higher, you have Chevron, you have Exxon. How do you think about it?

Jim Lebenthal (17:29)

Yeah, I mean, I like chevron at 11 times EBITDA and I think they're executing better than Exxon at this point. And so I was thinking about maybe trimming as well. But I think the valuation, the fact that this company beat on every single line metric that they reported just last quarter, the free cash flow that they're generating is enormous. Double digits and they actually just increased the dividend. So that's to me, very positive. I also own SLB. SLB has more juice, but it's also up 35% year to date too. So I was also thinking about maybe trimming that. But I just like the fundamentals. I like what they're doing, especially on the digital side where they're in our NAR. Recurring revenue basically is running at about $1 billion at time the same company and it's expected to grow to 4 billion over time. And so I like these two stories. On a fundamental basis, they've had a nice run, but I just think I'm going to stay with it for.

Stephanie Link (18:18)

Yeah, so ExxonMobil, I have to start thinking about trimming it. That may catch viewers, that may catch you, Scott, by surprise. But here's why. It's just been an incredible stock. Okay. And it's not just the 42% one year return. It's that over the last five years it has had a 25% annualized total return, 25% annualized. So it has simply grown to be too big in my Portfolio. I still believe in the trade. There does have to be one fundamental note of caution here, which is to say before the weekend's events, we were definitely in an oversupplied situation globally in terms of crude oil. That was something that was liable to overhang the sector until this news came out. But for the moment, I'm going to ride it until I see it starting to roll over and then I'm going to have to trim it. Now I do think. And Steph, Steph, I think this was the point you were making. There are plenty of ways to play the energy sector. You're talking about slp. I would look at Transocean, which I've talked about for quite some time. And I think for anybody who's a fundamental stock analyst, you simply look at where this company generates free cash flow from the contracts that it has versus its valuation and you say, yeah, I'm going to stay with this no matter where crude oil goes.

Scott Wapner (19:25)

Let's, let's take a look at the S and P now as well, which has gone green. And you know, Michael, there was a lot of concern, consternation watching of the screens in the banks last week.

Mike Santoli (19:34)

Yes.

Scott Wapner (19:35)

Did not end the week well. Followed through negatively this morning and we've had a turn and it's worth watching. Goldman was not good last week. Goldman's now up 2%. You do still have these conversations about private credit. Blank fine again over the weekend. Again this morning. Using the word A reckoning will potentially need to happen here.

Mike Santoli (19:54)

Yeah. And the absolute kind of, you know, tip of the spear there on those stocks, they're not necessarily responding that well. We were showing Blue Owl before. The business development company ETF Bizdi is also to the downside. But I do think the market is in the zone of. Let's look at where you've had things get short term overdone to the downside. You know, I don't know that Jefferies is another example of that. We're straight down to the end of last week and you do have a little bit of a bounce. So, you know, I guess it's kind of like, you know, we priced in a lot of potential stress. We're not seeing incremental evidence of it. It's almost like we got something else to worry about that's a little more front and center than is going to eat the world. And exactly how much erosion is there going to be in terms of credit quality on the, in the private?

Scott Wapner (20:44)

I mean, Oracle's credit default swaps are at the widest since the gfc. So that's an area, a huge wall

Mike Santoli (20:52)

of supply coming with new corporates. You know, I think it's, you know, a bunch of things. LBO finance and the tech companies are not going to stop issuing. So the market knows that, that they have to account.

Scott Wapner (21:03)

These are so linked. I said last week, multiple times, you can't talk about private credit and not talk about software. You look at Oracle and the cds, you've said that the market continues to make too much of the issue, that the concerns aren't nearly as deep as some would have you believe. And you, you stand by that?

Stephanie Link (21:22)

Yeah, it's a broad, you just painted with a broad brushstroke. So I need to narrow that a little bit. What I was specifically saying is in the realm of private credit, this does not appear right now to be a systemic credit crisis.

Scott Wapner (21:31)

I was talking about private credit specifically.

Stephanie Link (21:33)

Okay, I wasn't sure if you're talking about Oracle, which I would like to

Scott Wapner (21:35)

talk about private credit.

Stephanie Link (21:37)

Okay. So there is a liquidity issue here, and we know what it is, is if you're offering, and I know Mark Lasry talked about this with you last week, Scott, if you're offering in some cases daily liquidity through publicly traded Business Development Corporation stocks, then you've got a problem. If the loans that you have are three to four years. Now, that doesn't mean that the whole industry is somehow tainted with a credit crisis. It means it needs to figure out its liquidity issues. Those liquidity issues in the short term are still going to stay in the spotlight. Why is that? Because we have upcoming redemption windows across many different product offerings from all of those companies. And everybody's going to be watching to see how many people, particularly from the retail channel, redeem and how does that compare to new money coming in. So unfortunately, if you are an investor, as I am in Apollo or if you're in Blue Owl, the stock, the actual company stock, you're going to have to wait this out for a few months. But I don't think this is a credit crisis that leads to a long term degradation in the stock price. It is something that's going to take a little while.

Scott Wapner (22:35)

I mean, Blue Owl for, since you use that as an example, has had a prolonged degradation in its stock price. And I thought Zuckerman had a good read today in the Journal about the big bets that the company has made in the very areas that seem to have the most acute issues in terms of public market perception right now. Yeah, the trade itself and the outsized bets that they have made on that and software, data centers, etc.

Stephanie Link (23:04)

Yeah, I mean it was a good article. It was a summary article. It didn't produce new information that would have frightened me. And I am looking for things that might frighten me. Okay. I'm not just heading the sand here,

Scott Wapner (23:15)

but it all chart doesn't frighten you. I mean you, you cast this as, oh, it's, you know, it's just this too will pass. The stock's down 42% in six months.

Joe Terranova (23:25)

Months.

Stephanie Link (23:25)

Yeah. Look, I'm not in the stock but

Scott Wapner (23:28)

you, you mentioned it specifically though.

Stephanie Link (23:29)

Yeah, because it's the, it's the canary in the coal mine or whatever you want to call it. It's the bellwether for the industry. But I do think that the sector again of which Blue Owl is a bellwether, it's going to take some time to heal. This is not something that I'm saying. At the end of March, this stock is going to be back on its feet because of what I said. Redemptions. People are watching how many redemptions, redemptions come out of the investment vehicles that are in Blue Owl or any of its competitors. And that's going to take time. Much like with be REIT with the Blackstone Real Estate Investment Trust from several years ago. It took months if not quarters to get through, but then it got through and Be Read is back on its feet. I suspect that's what's going to be the case here as well.

Jim Lebenthal (24:08)

More opportunity just in the big banks because they've they've gotten hit really hard. The financial services sector is down 6% year to date or sector year to date. And they have, they don't have big exposure. Exposure. They have exposure, don't get me wrong. But it's like 10, 12% of their total assets. In the meantime, member JP Morgan actually raised numbers last week. So we're going to start to see numbers go higher for this group. And buybacks are coming. Basel 3 endgame is coming at the end of March. That's the speculation. Okay.

Scott Wapner (24:35)

Well, we'll squeeze in a quick break. We'll come back. You know about travel stocks obviously down today. Airlines are weaker. Who better than Philippeau to give us an update on exactly what is happening in that space. And later, later, of course, our headliner, the famed energy trader Mark Fisher. He joins us live on the latest moves in that space and where he sees everything heading from here. We're back after this break.

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Scott Wapner (26:29)

All right, welcome back. Airline stocks under pressure as you might imagine following the weekend strikes in Iran. Ones that do continue, of course. Philippeau joins us now with how we as investors should be thinking about all of this.

Philippeau (26:40)

Phil, it's sort of a wait and see mode, Scott, at this point when it comes to the flights in the Middle East. Here are the latest numbers from Syriam and these are just cancellations across the Middle east today. A total of more than 1500 flights. That's about 41% of the schedule for today. With Saudi Arabia and the UAE, they have the biggest impact with more than 1,000 flights cancelled by for those countries. We know what's going on by the way, with Emirates and Etihad essentially shutting down their networks, they're not really flying in and out of Dubai right now. Understandable, given the situation. As for the American carriers that fly into the Middle East, Delta, American and United, that's the focus here. All of them down anywhere between 2 and a half and 3%. The main problem for these gentlemen or these airlines, I should say, is the fact that they have canceled their flights here for the next week, whether it's to Israel or to Dubai. But they have to do that because they don't know the situation. And jet fuel prices adding to the pressure on the airline stocks. We talked about this last week. This is one of the primary reasons why you see the airline stocks under some pressure here in the first quarter. Very little is going as planned for the first quarter, whether it's been the storms on the east coast, jet fuel prices or now the situation in the Middle East. And I know there will be some people, Scott, who, who will sit there and say, well, look how much of the flight schedules for United or Delta go to the Middle East. It's only maybe a half percent to a 1.5% depending on the carrier. But the longer this goes on, that has ripple effects. And these have been areas where all of the airlines have been looking to grow their exposure. The Middle east has been a red hot market, especially when you talk about Dubai. That's a market that we've talked about it for years. It continues to grow. Well, that's essentially shut down right now. Does this last couple of days, does this last a week, two weeks, three weeks? That's the reason for the pressure on the airline stocks today.

Scott Wapner (28:37)

I mean, as you've seen in the past, I would assume that you would agree if nothing more in the earliest stages because as you say, the, the, the market to those areas is, is reasonably small considering it's a hit to confidence if, if nothing else. And that's what's more reflected in the stock prices than the cutoff in flights to the region.

Philippeau (29:01)

Oh, it's not just the region. It's mainly the first quarter. Remember when we were talking with the airline executives in during earnings in January, they were also optimistic that 2026 was going to be record profitability and it still may work out that way. But the first quarter hasn't gone as planned. Scott, you had the storm shortly after we talked with the CEOs that essentially shut down the eastern half of the United States for a couple of days. That's going to be a big hit. Then you add in jet fuel prices moving higher. Then you add in the Middle East. I think within the next couple of weeks, when we hear from these executives at like say JP Morgan's analyst conference within a couple of weeks, I wouldn't be surprised if we see new guidance from these guys.

Scott Wapner (29:42)

Phil, I got one more thing for you to be not, not on your list, but maybe something we need to think about. Air related job losses. I mean, if you start taking away jobs, number one, that that's a hit. And a willingness by business to travel like they have in the past, front of the airplane being the cash cow for these airlines now more, more than ever. Isn't that an impact? Potentially. To keep our eyes on.

Philippeau (30:07)

Potentially. But I should point out that when we talked with Scott Kirby, when we talked to Ed Bastian, Robert Isom, all three said that they have seen very strong demand for corporate travel, at least that's what they had seen as of the end of January for the first quarter. Could that change? Yeah, that's possibility. But I think when it comes to these business trips that are being made, Scott, it's similar to what we saw with Zoom during the pandemic. Could there be an impact? And there was an impact. But ultimately nothing beats face to face travel, especially for those executives who are closing deals or making the connections that need to be made.

Scott Wapner (30:44)

The fewer people, fewer faces. Talking to fewer faces is a potential issue. Phil, thank you very much. We'll follow the story, of course.

Philippeau (30:51)

You bet.

Scott Wapner (30:51)

That's Phil LeBeau with the update on the airlines. Let's get an update now on the headlines with Christina Parts and evolve us. Hi there.

Jim Lebenthal (30:58)

Hi, Scott. The late civil rights leader Reverend Jesse Jackson is back in his home state today as part of two weeks of events to honor his life. He's lying in state at the South Carolina Statehouse after dying last month at the age of 84 years old. Jackson's body will be returned to Chicago next for a large celebration of life and final homegoing services at the headquarters of Rainbow Push, the social justice nonprofit organization he founded. Ukrainian President Vladimir Zelinsky says US Brokered peace talks with Russia are still set to take place this week despite the war in the Middle East. He said Kyiv was considering a new location for the negotiations, which had been due to take place Thursday and Friday in Abu Dhabi. And India and Canada agreed today to boost economic cooperation in a bid to reset ties nearly three years after Canada alleged India was involved in the killing of a Sikh activist near Vancouver. The two countries say the partnership will increase bilateral trade to $50 billion by 2030. Scott back.

Scott Wapner (31:58)

All right, Christina, thank you. See you in a bit. Christina. Parts and Nevilles Coming up, the Iran energy fallout oil and Nat gas is natural gas prices are higher today. Legendary energy trader and our halftime headliner Mark Fisher gives us his take next.

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Most plans range between 499 to 1199amonth. Your first year terms apply on covered repairs. We're back. Energy complex a major focus today with oil prices, natural gas prices higher. For more on where things could go from here and how to trade it, right now we're joined by the famed energy trader himself, himself, Mark Fisher. He's the founder of mbf. It's good to talk to you today. Couldn't imagine not doing so given these news events.

Mark Fisher (34:08)

Hey, Scott, how are you?

Scott Wapner (34:10)

I'm good. So I guess first, what do you make of the moves in. Let's just take oil first. Both WTI and Brent, $3 and $4 higher respectively off of their, you know, off the big jump. What's the message in that?

Mark Fisher (34:26)

Well, the messages are this way. If this was five years ago, three years ago, the price would be $110. So obviously the marketplace realizes that there's a, a general oversupply. At least that's the fundamental view of it. And with all the added production being added by the Gulf states, this has kept a damper on, you know, both crude and Brent.

Scott Wapner (34:48)

But something that could occur in, in the Strait of Hormuz could change this now.

Mark Fisher (34:54)

Yeah, but I think the more interesting, interesting that may be the right word. But where, where everyone has no idea what could happen is, is in gas oil, heating oil, and that you can see that all the cracks have blown out tremendously. Well, well, crude oil is only up $4. I think he was up the equivalent of $12. Right. And that could go much higher. Which leads back to the point is what is the real threat in the Middle east from everything. And it's really the refinery capacity. You saw Saudi Arabia shut down their main refinery today. And that to me is the biggest risk in this whole equation.

Scott Wapner (35:34)

What do you make of the Qataris shutting down their LNG output? It's no small output. 25 to 30% of the, the world's natural gas supply is now offline. How are you thinking about that?

Mark Fisher (35:49)

Again, that's the second part of the equation. But the Qataris, if things calm down, could go ahead and you know, they have that, that supply can get, can be, can be put back on the market with, you know, a couple of days. The problem is if, God forbid, something was happened to the refinery capacity in Saudi Arabia Arabia, because of a strike and with no new production, no new facilities here in the States and very little, you know, refineries being built, because everyone wants to put these refineries out of business. The real risk is sort of like if you and I were building, you know, if I was buying it, if we were going to make pizzas and was plenty of dough and sauce like which is crude oil, but there weren't enough ovens, the price of pizza would go up anyway because there's not enough ovens. An example I just gave you, you the refineries of the ovens and now the biggest oven in the Middle east just put themselves offline. Not, not to diminish the fact that what happened in Qatar, you know, doesn't affect, you know, TTF and LNG prices in Europe. Right. But to me, the bigger concern is refinery products, which, you know, heating oil is created. And with the precarious position we're already in in these product markets, that would be my number one concern.

Scott Wapner (37:08)

I mean, you've obviously lived and traded through many of these geopolitical episodes, including ones that have taken place in the very same region with the very same players. What does history tell you on how long you should game out these kind of kinds of moves in these kinds of markets before they settle back? Because I ask you the question in the context of someone like Ed Yardeni putting out a note in our, and he says, and I quote, in our short war scenario, oil prices should fall in the coming weeks after a cease fire. Now that might be something that's so obvious to many, I guess I'm asking you, are you in your own mind thinking that, that this is a short war scenario? Just how are you thinking about it in the context of how you've thought about similar incidents in the past?

Mark Fisher (38:01)

Well, similarly, that's what happened is the market has reopened immediately corrected itself. You know, when, when we had the Iraq crisis, The price was $31 overnight, opened up at $20 the next day. Here, I think the way I look at it is when you look at where we are in the markets right now, I don't know, I mean, I'm not, I'm not in the military. I have no idea if there's going to be short or long or long conflict. But I do know that because of the various factions in Iran, even if there's a ceasefire, does that mean everyone's going to stop lobbying missiles from the irgc? Does that mean everyone's going to play by the same set of rules? Or you can have renegades that are just, you know, take matters in their own hands. I don't know, I'm not that smart. So to me, the, again, I would be concentrated on the product spreads. I'd be looking at the refiners because I think long term these refiners can be worth a hell of a lot of money because again, it's, everyone needs, everyone needs the pizza ovens and there's not enough of them. And they can be, you know, and if you blow a couple of these out of the water, you can't just build them back in two minutes. This is not like a Lego piece,

Scott Wapner (39:10)

you know, and that's, that's even from the public, public equity standpoint, if you know my viewers and those on, on my desk, some of whom obviously, you know, well, we're even talking about, you know, publicly traded refinery names, the ones that are at the, at the top of the list. Correct.

Mike Santoli (39:31)

Right.

Mark Fisher (39:32)

Which I would leave to Joe and you guys, because what do I know? I know nothing, you know, but, but what I will tell you the interesting thing is the market that's come off, that's acted like marks pass where it's, you know, buy the rumor, sell the fact have been the metals markets. Right, right. The metals markets opened up much higher last night and have come off substantially from the highs. Typically markets that are going to. Correct. That's the pattern that you look for Right. But on the other hand, not that you know, I mean, you know, heating oil and gas oil have been basically in the same place or higher since last night. So again, to me, as my intuition and what, I don't know how many years of it, 40 something more than that. Oh my God, I'm so. How many years of doing this? Right. I would think that, you know, everyone on Wall street has, you know, you know, typically has been selling it. You buy methods, metals. I don't know if that works anymore. On the other hand, every time, how many times is, are people going to get short energy crude oil in the mid to high 50s and then get stopped out in the mid to high 60s and lose $10? It's happened three times. Ready, get short in the 50s, get stopped down the mid-60s or now in the 70s. Right. And then what's the appetite going to be to get short again at $55? What are you going to make a $10 to lose $10 and do it three times. So again, post this event and hopefully then sooner rather than later and, and the world can get back to a stable environment. But to me, selling oil at $55 is a rose game because we've seen the three times you, you know, think about, you and I are playing in a poker game and we've lost three hands of doing it. Are we going to do it a fourth time and a fifth time? At some point you just got to say enough is enough. So I would think to me, I'm concerned about, you know, will everyone, you know, if, when there's a ceasefire, is that going to be for everybody or they can people, you know, are there going to be renegades, are going to take matters into their own hand in their own hands? In Venezuela, on the other hand, it looks like everyone's playing ball. It's a different story here. I don't know.

Scott Wapner (41:39)

Well, we'll see how it plays out. There are a lot of unknowns, of course. Can't thank you enough for joining us, Mark. Thank you very much. It's Mark Fisher with his insights on, on what's happening in energy. You were pointing out to me right before the show. You're watching charts of tankers and prices and prices of stocks.

Joe Terranova (41:55)

Well, and you have to pay attention to that right now as it relates to floating storage. We're probably 20% higher than we were over the last month. Very large crude carriers are seeing a significant, significant premium right now on their, on their cost, up 700 plus percent over the last year at some of the Highest levels we've seen since 2008. So here are some of the names. It's frontline ticker symbol fro. It's tk Ticker symbol tnk, and then also dht. If you were to believe that there's going to be a significant disruption as it relates to the Strait of Hormuz, this is exactly where you would go. I don't foresee that happening. And I think these, the price action today, and these stocks is telling you that, remember, India, China, Japan, for them to get their oil, it has to come through the Strait of Hormuz. That's not. I think Mark made an excellent point. As it relates to the refiners, I think that's where you have fundamental tailwinds as it relates to where pricing is going to go, don't you?

Scott Wapner (42:58)

Do you still have exposure? I still have Valero.

Joe Terranova (43:00)

I still have Valero. I'm holding on to that. You could go marathon, Jimmy. I know you like that one. You could also go Phillips. Phillips. That's one of Josh's names. I think that actually is the best trade of everything Collective. We've talked about surrounding energy.

Scott Wapner (43:15)

Okay, well, that's why those stocks are the ones that are reacting the most. All right, we'll take a quick break. We're back right after this. We have an alert for you. JP Morgan's global head of capital markets talking some private credit concerns just moments ago with our very own Leslie Picker, who's gearing up for her own interview with Jamie Dimon later this afternoon. Hi, Les.

Commercial Narrator (43:36)

Hey, Scott.

Jim Lebenthal (43:37)

Yeah, I just sat down with Kevin Foley here at the JP Morgan Global

Commercial Narrator (43:40)

Leveraged Finance Conference in Miami Beach, Florida.

Jim Lebenthal (43:43)

I asked him about what's going on

Commercial Narrator (43:45)

in software and AI right now and

Jim Lebenthal (43:47)

how it's affecting their deal flow. He said the challenge is that, quote, people are painting with a broad brush and making a lot of assumptions, noting that we need to be more nuanced.

Stephanie Link (43:58)

The AI disruption theme is an impact

Scott Wapner (44:01)

across the entire credit market. Right. And across all industries.

Stephanie Link (44:05)

So there's software exposure in the broadly

Scott Wapner (44:07)

syndicated, the software exposure in the private credit. There are other businesses that can be negatively impacted. There's also a lot of other business getting positively impacted by this. So I think it's part of what I would call a natural adoption of technology over time. We've seen this, in other words, cycles,

Stephanie Link (44:24)

just like the economic cycle, the credit cycle has a default cycle to it,

Scott Wapner (44:28)

and we go through that. So, yeah, perhaps during this transition to

Stephanie Link (44:31)

an AI world, we're going to see some disruption and maybe we see some elevation defaults.

Scott Wapner (44:37)

But that's natural and that's going to happen.

Stephanie Link (44:39)

And whether it's a broadly syndicated market

Scott Wapner (44:41)

or a private credit market,

Jim Lebenthal (44:44)

Foley said we've gone quite a while without a big uptick in defaults. So history would say that we're late in the cycle. But he noted that the economy is still strong, which of course bodes well for credit quality. As you mentioned, Scott will be sitting

Commercial Narrator (44:57)

down with chairman and CEO of JP Morgan, Jamie Dimon from this very conference

Jim Lebenthal (45:01)

in about a half hour's time. I'll send it back to you or

Scott Wapner (45:05)

to that very much, Leslie, thank you. We'll do finals next.

Mark Fisher (45:11)

All right.

Scott Wapner (45:12)

So first for all of us this weekend, Berkshire's first earnings report without Warren Buffett. Michael. Stocks down 5% it is, which is

Mike Santoli (45:19)

one way, you know, it's not a pure risk off day because it's the ultimate defensive stock. You probably have a bid and it wasn't a great quarter. There were sort of a net decline in profits from the operating businesses. Nothing too surprising. I thought that Greg Abel's letter kind of hit all the notes you would have expected about maintaining the culture, having the same type of investment discipline. If you're reading between the lines, he's spotlighting some, some maybe underperformance at the non insurance businesses. Obviously the railroad has margins that lag. He's put somebody in charge of the sort of consumer businesses. So you could sort of say he wants to raise the metabolism of the operating businesses. I do think there's going to be questions about all the cash, $370 billion when it's sort of potential energy for the greatest investor of all time to do something with, investors are okay with it. If not, maybe not.

Scott Wapner (46:07)

All right, I'll see you a little bit later. Thanks for being with us today for the hour. It's great having you. What's your final trade there, Farmer Jim?

Stephanie Link (46:12)

Lockheed Martin. We're obviously going to be restocking missiles.

Jim Lebenthal (46:16)

Okay.

Scott Wapner (46:17)

Steph, is that you with Netflix?

Jim Lebenthal (46:18)

Yeah, I don't own it yet, but we now can focus on the very strong fundamentals.

Scott Wapner (46:22)

Well, you said you don't own it yet.

Jim Lebenthal (46:23)

Not yet.

Scott Wapner (46:24)

Leading us on a little bit.

Jim Lebenthal (46:25)

All right.

Scott Wapner (46:26)

Well, you're going to, if you buy it now, you're going to buy it higher than it was a couple of weeks ago.

Joe Terranova (46:29)

Joe Farmer Jim should own some CF industries.

Scott Wapner (46:31)

Maybe he does. All right, I'll see at 3. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.

Commercial Narrator (46:47)

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