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Iran Peace Framework, Tech Takes Off, and Investing in World Cup Infrastructure 6/15/26
00:44:18
Stocks pop after the US and Iran sign an agreement to continue to negotiate an end to the war. Tech stocks surge, with chips, software and the Mag 7 all catching a bid ahead of this week’s Fed decision. Plus, how to capitalize on the tax-free investments powering the World Cup host cities.
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- [00:00]
Dan Niles
Introducing Fidelity Trader Plus. With customizable tools and charts you can access across all your devices, Try our most powerful trading platform yet@fidelity.com TraderPlus investing involves risk, including risk of loss.
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Kelly Evans
Fidelity Brokerage Services, LLC Member NYSE SIPC
- [00:15]
AT&T Business Wireless Advertiser
not every sale happens at the register before AT&T business Wireless checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sale or two. Sometimes I do miss the bonding time.
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Exchange Announcer
Sometimes AT&T business Wireless Connecting changes everything.
- [00:45]
Kelly Evans
You're listening to the Exchange. Here's today's show. Boy George, has he been on CNBC before? Scott, thank you very much. We're looking forward to that. And welcome to the Exchange. I'm Kelly Evans. Take a look at the market action. Stocks are up short sharply today on a diplomatic breakthrough with Iran. The Dow hitting a new record high. The S and p up almost 2%, the Nasdaq up almost 3. And oil prices are below 80 a barrel for the first time since March. We're seeing gains across airlines, cruise lines, retail restaurants and hotels. As a result, Marriott shares there were briefly at all time highs. As we mentioned, oil prices dropping 5% to their lowest level since early March as the US and Iran sign a framework for a peace deal. With President Trump now touching down in Geneva for the G7 summit where he's gathering with the leaders of Canada, France, Germany, Italy, Japan and the UK and that's where we find our Megan Casella, who is live in Geneva with the very latest. Meghan, as signing approaches,
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Megan Casella
yes, Kelly, we do expect the signing ceremony as soon as Friday, possibly here in Geneva. The president telling us just in the last hour that he probably will be gone by then, but his vice president, J.D. vance and some other top U.S. officials should be here for that. Now, just in the last hour, we heard from President Trump for the first time on camera today. And we had some senior US Officials briefing reporters on what exactly is in this deal. So a few highlights to bring you here. At its core, what the two sides have now signed as of Sunday, they signed it digitally is they've signed a memorandum of understanding that extends the cease fire for 60 days while launching a new round of intensive talks on Iran's nuclear program and on sanctions relief and the unfreezing of some Iranian funds. There's a big question, though, around that lifting of sanctions and what the timing might look like. Here's what the president said on that.
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Rich Bernstein
Mr. President, does this, does the deal
- [02:38]
Dan Niles
involve any sanctions relief for Iran?
- [02:41]
Megan Casella
When would that go?
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Brain Health Advertiser
No, it doesn't.
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Exchange Announcer
Well, they have to. It's really a behavioral thing. If they do what they're supposed to
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Devin Ryan
do, that starts taking effect.
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Megan Casella
Kelly the other key part of this is that it should lead to the immediate US Officials say reopening of the Strait of Hormuz, although of course it will take a few weeks for traffic to increase back to regular levels. But crucially, some senior US Officials did say that there's still some question out there about what the opening will look like after the end of this 60 days. A senior US official told reporters that there are some options that people in the region may like better, suggesting that something like tolls may be on the table. They're not on the table for this 60 day deal, but maybe by the end of it, that's something that the White House says they will be entertaining. So much more to come on that the final piece of this is that as we are still all scraping together details trying to figure out exactly what has been signed, officials now say that the memorandum of understanding will be released in full. We will be able to read the text ourselves, one official said, 24 to 48 hours from now. President Trump said that won't be released till sometime after the Friday signing. But at least we will wait for it. We will get to see it and we'll bring more details on it as we have it.
- [03:49]
Kelly Evans
Kelly did you say, Megan, that the US was open to tolls being collected by Iran after 60 days?
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Megan Casella
This is a really key part of this. They're not right now saying that they're open to it. But let me read you again the exact language. This was a senior US Official reiterating that there are no tolls or charges for the duration of this 60 day period. But officials do keep telling us today that during these 60 days they have to figure out what exactly things will look like on the other side of this. And so what one official said is that while there aren't any tolls now, quote, there are some people in the region may like better and will entertain those. So the White House not shutting the door entirely, not saying there will never be tolls. Granted, the president did say in a lot of his first pronouncements on truth social overnight that this would be a toll free reopening and that may well be where we land. But the fact that there are discussions now about other options about what exactly the strait will look like at the end of this. That's really key and that's going to be a huge part of this. I should say that G7 leaders have also been welcoming this news today, saying that they want to be Europe is ready to play a part in the reopening, but that they also to be toll free, open to everyone. And they want to launch a discussion this week about pivoting away from the Strait of Hormuz to make sure that the global economy isn't caught in this sort of situation in the future.
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Kelly Evans
I hope you can squeeze in a little bike ride, Megan, because it looks so lovely behind you there, so peaceful, you know.
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Megan Casella
Sure.
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Kelly Evans
With geopolitics hanging in the balance. Megan, thank you very much for now. We appreciate it. Megan Costello, our next guest, says the US should now maximize its leverage for nuclear talks by maintaining its military footprint and coordinating with European and Gulf allies. Let's bring in Jonathan Pannikoff. He's director of the Atlantic Council's Scowcroft Middle East Security Initiative. Jonathan, I'll circle back to that. Welcome. Let's just start with what Megan said, which is that the administration said other options that people in the region may like better would be entertained in the future. Does that mean tolls? What other options would there be regarding the Strait of Hormuz?
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Jonathan Pannikoff
Great to be back with you. Look, I think tolls is the one that comes to everybody's mind, obviously and would be incredibly concerning. Frankly, a lot of the Gulf officials I've spoken to say, look, that is a non starter. If you don't have a strait that's free for passage, reverting back to pre war situations, this is not going to be okay with them. On the other hand, the Iranians have been pretty clear that they're not particularly interested in just reverting to the norms that existed before the war. So how you squ that circle in 60 days I think is part of the challenge that even as the war may be coming to an end is going to cause some level of concern long term because some of these questions are not going to be answered until that 60 day period is up. And if you don't answer them now, unless you actually think the president's going to go back to war, which Iran is almost certainly counting on him not doing, so, then it really leaves the Iranians in a much more advantageous position because the bombings will have stopped, the war will have stopped, and they can frankly drag on negotiations on all of these matters until they get to a resolution that's acceptable to Them, especially if the blockade is removed.
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Kelly Evans
So let's turn now to the nuclear piece of this. You say the U.S. should maximize its leverage for those talks. How so?
- [07:09]
Jonathan Pannikoff
Look, so there's two problems that we've seen throughout this war. One is that the, frankly, you did not have the Europeans involved. There is not coherent alliance that was built beforehand. We know the Europeans are incredibly concerned, just as the US Is about the future of Iran's new nuclear program. And I think bringing them back in, just as you had the E3 in the JCPOA is going to be necessary. You're going to need the IAEA to do inspections. You're going to need some sort of leverage. And the Europeans can help provide that because they're actually being a little more hard line frankly than the US Is right now on possible sanctions relief. They're much more skeptical of giving it to the Iranians. The other part of this is, look, the US has significant military assets in the region. If they redeploy out of the region, as President Trump may be expecting to do or hoping to do, then it may give be a relief and the President will be able to say, look, they're coming home, mission is complete, etc. On the other hand, it reduces US leverage. Having the military assets at least may compel the Iranians to think and at least believe if the US Uses this stick, that yes, if the Iranians do not agree to a reasonable nuclear deal, there is the real possibility of the US if not returning to strikes least trying to compel Iran to engage in the way it wants to engage, not through a full war, but through special operations, through other entities. In other words, the US can leverage.
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Kelly Evans
So you're saying they have to leave the military assets there or else the Iranians will know that they're not positioned to kind of sort of project that power at the end of the 60 day period if they need to. But does the US need to move those military assets elsewhere?
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Jonathan Pannikoff
Look, there's obviously significant concerns about where the Indo Pacific is and there is a long term challenge here because I don't think anybody actually believes the US is going to get to a nuclear agreement in 60 days given the level of technical complexities and Iran's almost certain preference to drag this out as long as possible. So yes, this is going to be a debate. A lot of people are going to want to move them to the Indo Pacific. But for the President himself, who has really pushed very hard that this war is about ensuring that Iran run have a nuclear weapon, it's the One thing that he's been really clear about, if you don't have them there, then you reduce your leverage in such a way that it's really going to make it harder long term to get to the deal you want.
- [09:40]
Kelly Evans
And I would add, this is one area where the administration's goals and the market's goals don't align. Right. The market, those involved in global commerce just want this thing kind of resolved as quickly as possible. The president wants to get rid of the nuclear program. That's probably at odds with that.
- [09:56]
Jonathan Pannikoff
Yeah, I mean, I think that's absolutely right. Look, I think the market, the energy market, you're going to have a risk premium for a little while here, frankly, no matter what. There's going to be questions on how long it takes to de mine. There's going to be questions on safety. There's going to be questions on, frankly, whether or not The Iranians, nevertheless, five, six, 12 months from now, will threaten the strait again. We know they can do it quite easily now and they've learned they can do it simply by using drones, for instance, to threaten ships. And so there's going to be a risk premium here. I think the broader question is the Trump administration ironically wants to get this over with as soon as possible as well. But nuclear negotiations are going to take a lot of time. Jcpoa, love it or hate, it took two years to negotiate. There's a reason to believe that there was a lot of work done before this war. Frankly, we saw negotiations happening. So there may be some already advanced place that you can start these negotiations. Christians. But the Iranians aren't starting from the same place that they were before the war. And so the US Is going to have to factor that in and it's going to take more than 60 days.
- [11:04]
Kelly Evans
All right, Jonathan, appreciate your thoughts and kind of laying it out there for us. Thanks for Jonathan Cough with the Atlantic Council. Let's turn now to where Tech is dominating in the broader markets in the wake of this framework for a deal. After the successful SpaceX IPO on Friday, tech stocks are absolutely ripping today. The chip ETFs are up 4%. AMD is now up more than 7. Western Digital up 15%. Micron and Seagate also up about 7 to 9% there. The Mag 7 is rising. Met is up about 5%. Even software catching a bid with AppLovin and ServiceNow among the leaders there. And as for Space X itself, it's higher in its second day of trading. It's up 14% today after a 19% gain Friday in what many, many considered a nearly flawless debut. Our next guest says Space X is also reminding people that there is another deep pocketed player in the capex race. Dan Niles is founder and portfolio manager at Niles Investment Management. Dan, do you think that's why the infrastructure names, chips, memory are rising today?
- [12:05]
Dan Niles
Yeah, I mean if you go back to last week, I think the best way to view this. So last week if you look at four of the big hyperscalers, Amazon, Google, Microsoft and Meta, they were all down 4% on average last week with the market up. And don't forget Oracle was down about 14% last week because they had that huge capex guide. Then you throw on top of that the SpaceX IPO. And if you're participating in that, you're listening to Elon Musk saying we're going to have to spend hundreds of billions of dollars to achieve our goals. The Sox last week was up 9%. So you were selling the hyperscalers down, but you were buying where they were spending all this money, which is the semiconductor company companies. And so I think that just gets back to go to where the money is being spent, not the guys who are spending the money because they've got cash flow concerns or having to raise capital to fund that spending.
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Kelly Evans
Right. Although look at Space X day two. What do you think?
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Dan Niles
Well, I mean I wrote about it this weekend, right? Russell added Space X, said they were going to add Space X to their indices on June 26th. The next one will be the MSCI. That can happen in about 10 trading days after the IPO. And then the NASDAQ 100 can add it about 15 after the IPO. So it's going to be really hard to be negative on this name until you at least get out to the NASDAQ 100 add. After that, then things like valuation, et cetera are going to matter. But as we learned during the meme stock craze, right? Valuations can always go much higher, higher than you ever imagined. But eventually they do normalize out. And so I think, you know, anybody wants to be negative on this until that NASDAQ 100 ad gets happens, that's not a very smart idea, right.
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Kelly Evans
So we'll see mid July maybe where we are if it's a little bit of, of that affected by the rumor, sell the fact or however, what about the business. If the capex plans. If you hear what Elon Musk is saying and think about where all that spend is going. Again, we've had analysts doubling their price targets on Western Digital today. I mean we'll talk about that in Power Lunch is that everyone wants to know when that portion of the chase is over and does it still have a little bit more room to run? A lot more room to run. When do we start moving on from the chip stocks to something else?
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Dan Niles
Well, I don't think you can until you get to anniversary when you had a gentic AI show up. So if you go back and you think, well when did that really kick off? Open claw got formalized on January 30th. And what agency does is it means you need 10 to 100 times more tokens to do all of these big tasks versus just asking a chat based question to an AI. Right? So if you have your AI go out and say, hey, book me tickets, get me a hotel room, get me a car, figure out what sites to see when I go on vacation and put this all together in an itinerary and email it to me in word, that'll take 10 to 100 times more tokens than if you just ask your chat based AI. Hey, what are good places to see when I go on vacation at this place? That'll take at least a year I think. So you get to early next year before you put in enough capacity and you anniversary this and then there's a real problem. So I think this has a lot more room to run. And don't forget valuations. Like if you look at Tesla and you want to be optimistic and you say hey, add $26 billion in revenues to what because of the Google deal for 11 billion and anthropic deal for 15 billion that they announced, you go, well yeah, that may be all true but you still got coming up later, the fact that, you know, you have Nvidia and other companies that are trading actually at reasonable valuations on the semi side where you can buy an Nvidia at just above a market multiple, but it's growing revenues at 80% whereas you look at a space X and you say, hey, you know this thing, even if you want to be optimistic, it's trading at close to 45 times revenues, which is obviously pretty expensive.
- [16:22]
Kelly Evans
There's Nvidia adding 3%. Today it's at 212. What do you make of this skirmish with Anthropic over the weekend?
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Dan Niles
What do you mean? The fable, them being shut off from being able to put out their models. You mean, how important is that? I mean we're going to end up with the model being released, I think, but you're just having to put more guardrails around it to protect people. So I'm not viewing that as a big deal. If anything, it just shows how advanced these models are becoming agreed. And how much more useful they're going to be. I mean the problem is really simple, right? Corporations are maybe 5% in this journey to deploying agentic like this anthropic model. It is going to take at least a year. It's going to take multiple years, right. For this stuff to fully deploy. At the same time, valuations for the chip sector are actually pretty low, relatively speaking. So that's why you, I look at this really simply and I go where is the money being spent and our valuations out of control. Now the question is, are we in a bubble? Every great revolution in history has had a bubble because everybody realizes that they're the last man left standing. You're going to make an egregious amount of money. So we're clearly in a bubble. But it doesn't mean the bubble can't continue for another year or two. And so that's kind of how I'm thinking about things right now. And the good news is the valuations, unlike during the tech peak, Internet bubble peak, when you had Cisco trading at like 140 times P E you got Nvidia trading at like 25 times P E. That's hard to call that a bubble.
- [18:07]
Kelly Evans
And you're positive on Apple which came out with that kind of souped up Siri again last week. But this look, the stock has done really well. It's not like investors are clamoring for them to get it together. They seem to be quite pleased. Is broadly speaking. I know last week was a little bit of a disappointment, but I just wanted to kind of bring this back to the places where you possibly see the biggest upside versus the markets. And it sounds like Apple. I don't know if it's Oracle about the software names.
- [18:33]
Dan Niles
Yeah, I mean I think our, our favorite is the whole magenta GI takes closer to one to one CPUs to GPUs versus before you had eight GPUs to one CPU. So you know, the Intel's, AMD's, companies, etcetera of the world. The math is pretty compelling that that's where you kind of want to be. To your point, where do we want to be able to access AI though? Well, we want to be able to pull it out of our pockets. And in the US over 50% of the population has an iPhone. And so, you know, I'm not surprised the stock sold off Last week I wrote about that. I expected it. I mean, it was still disappointing relative to that because you're only going to get a beta version of this come September, but eventually we're going to get AI infused into Siri. We're going to be able to pull this out of our pocket and have this available with us anywhere we go. And I think more importantly, or arguably as importantly, you're going to be able to get a flip phone version of this. And don't forget Samsung users have had this since 2019. So you're going to get a foldable phone that you'll be able to pull out with a very big screen. It's almost like bringing, you know, a, a mini tablet with you anywhere you want to go, which I think will drive a huge upgrade cycle, much like it did when Apple switched form factors, going from the 4 inch screen to 5 and a half inch screen on the iPhone 6. Revenue growth went from 7% in fiscal 14 to I think was like 28% in fiscal 15. So I think you're going to see a pretty good upgrade cycle and unfortunately we're going to have to wait. But I think through the end of next year Apple's going to be a pretty good performer because of that.
- [20:12]
Kelly Evans
All right, Dan, always great to check in with you. Really appreciate it. Thanks. Dan Niles joining us there for our opening exchange. Coming up and under the radar Way to play Space X is public debut. One firm seeing plenty of upside in the retail broker space. We'll dig into that next. Plus, how important is the Iran agreement to the inflation story? Here at home, we'll look at how to position its consumer prices don't immediately drop in its aftermath. The exchange is back after this.
- [20:42]
Exchange Announcer
This is the exchange on cnbc.
- [20:50]
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- [21:20]
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- [21:50]
AT&T Business Wireless Advertiser
not every sale happens at the register. Before AT&T business Wireless checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses is it's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sail or two. Sometimes I do miss the bonding time. Sometimes.
- [22:15]
Exchange Announcer
AT&T business Wireless connecting changes everything.
- [22:33]
Kelly Evans
Shares of Space X are up another 13% today on top of Friday's 19% IPO gain. And one firm says the biggest winners from that won't be the Space or AI related names, but rather the retail brokers themselves. They helped distribute the offering and they stand to benefit from the trading activity that follows, according to our next guest. Devin Ryan is head of financial Technology research at Citizens. Devin, it's great to see you. How much of a boost should we expect?
- [23:00]
Devin Ryan
Kelly, Great to be here. So I think the main message here is it's a multiplier on activity level. So there's four firms that were on the deal so far, Robinhood, Schwab and Fidelity. So they were able to distribute it. But then the bigger deal is really the trading activity that's going to happen around this year. Options are coming tomorrow, but this is immediately going to be one of the most active names in the market. People are going to those firms signing up for accounts to get access to these deals. So if this deal does well, they're going to want access to others. But then there's all these other ancillary revenue streams. Not sure people really dialed it. So one is securities lending. So if people want to short the stock in a hard to borrow market where a company just comes public and a small amount of the float is available, they're going to have to pay a lot of money to do that. And so that's going to accrue to firms that have access to shares of firms like Robinhood and Schwab are going to get paid for that access. And so for Robinhood, that was 7% of revenues in the third quarter last year. It was essentially zero in the first quarter just because the IPO market shut down. So I think some, some pretty big revenue opportunities coming on the heels of this deal.
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Kelly Evans
And remind me, I know we've Robinhood's had a crypto headwind so far. Schwab, how have these stocks been trading this year?
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Devin Ryan
They've been mixed. Robinhood, you know, it was in the mid 150s late last year traded down to $65 and now we're back to 100. You know, 150 was probably a little bit ahead of itself, but I do think we're kind of heading back in that direction. Schwab is down a bit as well just on, you know, I think some of the AI related uncertainty but, but overall, you know, I think this is still. Some of these stocks have started to recover. I think we're still early into what could be a pretty big driver here. The IPO market is. We've had five years of effectively very little activity. In 2021 there was over 120 tech IPOs. Last year there was 50. So there's a lot of Runway for more activity there. And then that's going to drive that multiplier. And then the last piece here is agentic trading, which, which is what? Disconnected. But I think that's kind of the next thing that's coming for these companies and that's going to drive a big, that's going to drive a pretty big multiplier for them as well.
- [25:02]
Kelly Evans
When you say agentic trading, you mean allowing, as I believe Robinhood recently announced, are going to allow agents to trade on your behalf on their platforms.
- [25:11]
Devin Ryan
Exactly. So the first thing is bring your own agent, which I think is going to be a small portion of customers. Customers. But I think within a year many of these companies are going to allow individuals to come onto the platform, tell them what their life conditions are, what their financial goals are and then, you know, really it's not going to be churning the account but like direct indexing, tax loss, harvest, rebalance, basic options overlays, things that most people don't have the time or kind of education to do. Agents are going to be able to do on your behalf. And I think, I think the work we've done is suggesting that that could drive a 10x multiplier on trading volume. So I think that's, this is big, the IPO market, but I think the agent trading is going to be potentially an even bigger deal.
- [25:52]
Kelly Evans
I just want my money back if they screw up. That's the only thing I'm all, look, this process is. Using these platforms is so cumbersome for the average retailer. I'm not talking about the high powered user. You know what I'm talking. They're unbelievably cumbersome. Even Robinhood, to get that initial signup going. It's not the easiest lift but, but I'm not sure I'd want an agent to do anything that I couldn't have the company say, yep, that was a mistake. We'll make. We'll make that hole.
- [26:14]
Devin Ryan
I mean that you're hitting the nail on the head, Kelly. That has to happen. And I think that's why companies are kind of starting slow. Bring your own agent if you're sophisticated to use them. But over time, I think that's the protections, investor protections, then also understanding the performance of the agents is going to be critical to adoption. But I do think it's coming. I know right now it seems new and maybe scary for some people, but ultimately, you know, basic invest investing principles, tax loss harvesting, as I mentioned, rebalancing, those are things that an agent can do and in a direct indexing strategy that's not really that exotic and that should lead to better outcomes.
- [26:50]
Kelly Evans
Daily tax lost harvesting. I hear you can get like two points of outperformance. Anyway, quick last question of these companies you've mentioned. If we do See now Anthropic OpenAI and others coming down the pike, who's best positioned to capture the upside from the ipo? Those one or two of them in particular from IPO generally, I think pound
- [27:07]
Devin Ryan
for pound is probably Robinhood. The other piece is, you know, Robinhood, Vlad said a week ago that they're now approved to be an underwriter. So rather than just getting a sales commission for doing these deals, they're going to be involved in the process to the extent they can win as an underwriter in deals. So there could be I think that's going to be interesting upside but but really just shows that they're going deeper into the network of financial services more broadly.
- [27:28]
Kelly Evans
Fascinating. Devin, thanks very much. Appreciate it.
- [27:31]
Devin Ryan
Thanks, Kelly.
- [27:31]
Kelly Evans
Devin Ryan from Citizens coming up, oil prices at their lowest level since March. We're still above pre war levels, but what should we expect as the Strait of Hormuz potentially opens back up? We'll dig into that ahead.
- [27:48]
Dan Niles
At Venture Global, we think about what can be done, not what's usually done through innovation. Venture Global is not only building some of the largest energy facilities and in the world right here in the United States, but delivering American energy at a fraction of the cost in a fraction of the time.
- [28:08]
Devin Ryan
So while others are busy talking, we're busy building.
- [28:11]
Dan Niles
That's Venture Global. That's unstoppable energy.
- [28:18]
Exchange Announcer
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.
- [28:46]
AT&T Business Wireless Advertiser
Not every sale happens at the register Before ATT Business Wireless, checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses is it's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sail or two. Sometimes I do miss the bonding time.
- [29:11]
Exchange Announcer
Sometimes AT&T business Wireless connecting changes everything.
- [29:33]
Kelly Evans
3% gain for the NASDAQ today. You've got the Iran situation possibly moving in the direction of resolving itself. You've got the Space X IPO Friday added all up. We've got 2% up for the S and P today, nearly and the Dow at a record high. Now oil prices are back to their lowest level since March on news that Iran and the US have agreed on a framework to end the war. But Pippa Stevens is here to look at how quickly supplies could ramp up up if and can we say open. If the street opens pipa, what are we looking at?
- [30:00]
Pippa Stevens
Well Kelly, a lot of questions on if and when the straight opens, but just look at the price action today because WTI did briefly cross below that $80 level, taking us back all the way to March, basically erasing all of that geopolitical risk premium that was built in, although not entirely given that we were at 65 on WTI prior to the war breaking out and the reality is that traffic is not going to return to pre war levels overnight. Mines have to be cleared from the strait. Then all of the trapped vessels, and there are hundreds need to exit. Ship owners need to be confident on the safety of their crews and also have availability of economically advantageous insurance rates. And then vessels will need to enter the Persian Gulf, giving the upstream producers and refiners enough confidence to feel comfortable ratcheting up their operations. Now Sparta estimates that this will take between three and six months. Months. In the first one to two months we will see upstreamers restarting. Then at two months we'll see the refineries restarting. And then finally at three months the petrochemicals will restart. Now we will probably see additional transits this week given there was already an uptick in activity 2.9 million barrels per day going through in June according to Kepler. So that is still well below the 15 million barrels per day prior to the war. And the price action today suggests that the deal is done. But. But we'll have to watch for confirmation in the flow numbers. Maris telling me today that the limited details means, Kelly, they are not changing their operations in the region.
- [31:24]
Kelly Evans
5% down. We like it. Maybe we want a little bit more, but it's not like we're down 30. I mean, granted we're off the highway moving in this direction, but there's still a little bit of hesitation in there.
- [31:33]
Pippa Stevens
That's right. And it feels like this was very much already priced in by the market again and again. We saw the market really wanting to believe that there would be a deal coming, as well as the increasing realization that both sides seemed to want a deal at some point. And so that was definitely priced in. And this same time we saw a lot of traders exit and move to the sidelines just because they kept getting stopped out. If the market is going to move so drastically on every latest headline, why would you be in this market if you don't have to be? So we saw CTA volume at a 15 week low. People are just on the sidelines now.
- [32:04]
Kelly Evans
Look. And I wonder how much of this gets rerouted. We've talked last week about the pipelines and different efforts that maybe the straight is honestly less important going forward than it was before this broke out.
- [32:13]
Pippa Stevens
That is definitely true. We've seen and through Yambu and Fujairah, exports at about 8 million barrels per day. But there is no question here that looking forward, Hormuz is not going to be nearly as important. And also countries are going to say this cannot happen to us again. So they are going to look to diversify their supplies. Watch Argentina, that is seen as a major growth area. We're going to see rerouting more pipelines, no doubt. And also the US and our exports, I mean, that has really saved the day here. We've seen them rise, you know, about 3 million barrels per day higher than what they were last year here. The extent to which that changes political calculations and, you know, the US's footing on the geopolitical presence is definitely something to watch. But it's certainly going to be a case of countries not wanting this to happen again. That's also going to feed through in terms of restocking their inventories, maybe even increasing their inventories. And that is one thing to watch in terms of demand looking forward and boosting the tail end of the curve.
- [32:59]
Kelly Evans
US and Argentina, Western Hemisphere. Pippa, thanks very much. Pippa Stevens over to Contessa Brewer now For the CNBC news update.
- [33:07]
Contessa Brewer
Contessa hi there Kelly. Shareholders are suing Microsoft, accusing the company of defrauding them and inflating the stock price by failing to disclose a slowdown in its Azure cloud. Business. Shares fell 10% January 29th after Microsoft's disappointing second quarter earnings. It was the biggest one day decline in nearly six years. But of course it's common for shareholders to sue after unexpected declines in stock price prices. Microsoft has yet to comment. Officials with the National Transportation Safety Board have arrived in Butler, Missouri to investigate a plane crash that killed 12 people yesterday. The plane crashed shortly after taking off for a skydiving trip. Butler county sheriff has said they believe it was an accident, but now you've got aviation experts investigating. And Florida officials have sued TikTok and its parent company ByteDance for failing to comply with state laws surrounding social media access for children. Attorney General James Utmire said TikTok is liable to pay potentially billions of dollars in damages allegedly for deceiving parents and exposing children to harmful content on the app. We will follow the progress of that litigation. Kelly.
- [34:16]
Kelly Evans
Indeed. Contessa, thank you very much. Contessa Brewer. Coming up, our next guest calls the SpaceX IPO one of the biggest, biggest misallocations of capital in history. He'll explain next. Stocks are rallying on the framework for an Iran peace deal, maybe the Space X IPO as well. Record high for the Dow, oil prices down. But my next guest says inflation that we're experiencing right now wasn't just related to the war and he's sticking with the pro inflation trade. Joining me now is Rich Bernstein, global head of Macro at Janus Henderson Investors. But the real news, Richard, is the biggest misallocation of capital in history for the SpaceX. I shouldn't, we should have talked to you on Friday.
- [35:00]
Rich Bernstein
Well, you know, I guess, I guess I'm the skunk at the picnic. I mean look, I think, I think there's an easy way to think about this, that certainly going to Mars is a good goal and there's, there's, it's very sexy and exciting and everything. But realistically what does that do for the productivity of the US Economy? And how does it make the US Economy more productive and how does it allow us to compete in the, in the global economy right now? And the fact is that we're US Economy is still very dependent on other countries for supplies of various kind goods of various kinds. And obviously in an era of globalization we want to rid ourselves of that dependence. I don't understand how these big IPOs are alleviating that need that we still have on the rest of the world. And so I think there's still a huge inflation component that is sliding out. There is inflation impulse, if you will, and people are underweight and underexposed to pro inflation assets.
- [36:06]
Kelly Evans
Let me circle back to that in a second. I love this and a lot of people will relate to it. But you say, look, going to Mars might be cool, but the US economy needs to get through the Cross Bronx Expressway in under an hour. It takes two hours to get home from LaGuardia Airport. If you live anywhere other than next door to. It's unbelievable. It takes longer to get home from the airport than it does to fly across the country. So that's just an impossible problem to solve because of entrenched interests and existing infrastructure. I mean it'd be great if someone raised a trillion point eight in order to rebuild some of those broken highway systems across the the country. But you know, you got permitting here. You don't have that in space.
- [36:41]
Rich Bernstein
Right, But I think exactly what you, what you just said, Kelly, is exactly the point is that capital is flowing freely. I would argue too much capital is flowing to Mars, is flowing to data centers, to all these different things, but yet there is no capital flowing to things that we actually need, like getting you, getting you home from the board again under two hours. That's, that's, that's exactly the point.
- [37:05]
Kelly Evans
What do we do about that? Because look, I would say the pro side of the space X IPO is I think actually coming from a point of view that space is the next frontier. It's the next frontier militarily, it's the next frontier just for basic utilities like providing Internet, which you know, Starlink has already demonstrated. Even for someone like me a few years ago I thought space was kind of like, you know, for a cult talking point. I recognize now. I mean the race is on and I'd rather the US be first. I'd rather the US have great companies and great assets with which to go and try to conquer.
- [37:37]
Rich Bernstein
Yeah, well, you know, your points are well taken and I'm not saying that's not important or there's too many negatives there. That is very important what you're saying. However, it can't be so much capital allocated to these very kind of interesting futuristic type investments. Investments and then ignoring the capital allocation that's needed in the existing economy. That doesn't do any of us any good. So my point simply being as an investor, you can be the provider of scarce capital by definition through time. Higher returns come when there's a scarcity of capital. Right? Think you're bad analogy for a second. It's almost like you're a loan show, right? And you can go out and charge exorbitant rates for investing and that's kind of the way an investor should think. Especially in an environment where, you know, data centers and Mars are getting way too much capital relative to the needs of the economy. You can be the provider of scarce capital, right?
- [38:40]
Kelly Evans
Look we we're out of time. Dividends and non U S are two of your favorites for people who are underweight the pro inflation assets come back. We'll talk about that next time because to your point and now we, we have war coming up on Wednesday and I think now that we've some of these events are out of the way and the boom is inflationary itself. Ironically in many ways the way it's driving up costs in the supply chain. Rich always appreciate it. Come back soon.
- [39:05]
Dan Niles
Thanks Kelsey so much.
- [39:06]
Kelly Evans
Rich Bernsee with Janice Henderson Coming up, Anthropic disabling access to its latest AI models following a few federal directive. It's not necessarily an Automatic win for OpenAI though why the move could actually end up benefiting China is next. The feud between Anthropic and the US government reignited after regulators raised national security concerns about its latest AI models. So Anthropic is suspending access to both Mythos and Fable in response. Now some work worry that might expose another risk. Deirdre Bosa has more in today's tech check. Deirdre.
- [39:43]
Deirdre Bosa
Hey Kelly. So this exposed a risk for enterprise and for government. If you rely on a top tier closed source model like Fable, access can get cut off. It can be suspended, restricted or pulled into a political fight like it was over the weekend. And that is why open source AI is gaining momentum and may have the most to gain in this fight. There was Jeep who a Chinese AI lab that builds open source models surging in Hong Kong overnight after the anthropic fight. Partly on that premise that this is an argument for open source and what it means. Open source is that a model can be downloaded, it can run on your own infrastructure, it can be customized for your own needs. More like owning the tool than renting it through someone else's account. Now Satya Nadella he's making a related point from the corporate side in an expose. He says that companies should not just plug into the biggest AI model and hand over their knowledge storage. He says they need to build their own learning systems around their own data workflows and enterprise. Now the catches is that open models are getting real adoption and increasingly the best ones are Chinese. There's Deep Seek, Alibaba's Quinn Jeep, who's glm, Moonshot's Kimmy. Now there's also an irony here, Kelly. A move that is meant to protect America's AI lead could actually push more developers, companies and countries toward AI systems that Washington doesn't control. They may want to build their own. And for investors, the winner may not just be open model companies but also model routers and neutral infrastructure, not just the big closed model lab. So you see this dynamic Kelly, changing from the idea that anthropic and OpenAI had the field for the last few years. But that is quickly changing. And the episode over the weekend, really big argument in favor of open source.
- [41:22]
Kelly Evans
You were early on the story, Deirdre. Now I read in the Wall Street Journal today about how you know the Chinese name names trade it still a discount. Investors are looking in that direction. We have some more IPOs coming so it's going to get busier and perhaps transiting more commerce their way. More e commerce that is. Deirdre, thanks. Certainly coming up, the World cup back in the States for the first time in more than 30 years. As the tournament enters its second week, we take a look at the tax free investing opportunities it's presenting. Oh yes, there's a muni angle on the World Cup. Stay with us. Watching markets. The NASDAQ is up a round 3%. The Dow set a new record. The S and P up 1.8% today. Strong gains across the board. Really between the NBA finals and the World Cup. Kelsey has set a new daily trading volume record of $1 billion on Saturday. More than 360 million of that came from World cup wagers. And prediction markets aren't the only ones that benefiting. For more on how it's boosting the muni bond market, let's turn to Dan Close. He's the head of municipals at Nuveen. It's good to see you Dan. Good to see you. The World cup angle? No, what is the muni angle on the World Cup?
- [42:30]
Dan Close
Munis are making the World cup happen. All 11 host cities have one thing in common and that they are using municipal bonds to finance the infrastructure for the World Cup. So we saw Boston and Seattle put in new public transit improvements. A new terminal in Houston, international terminal using 700 million immuniproceeds to build this terminal where the World Cup International broadcast is happening in Dallas. A billion dollars to improve the convention center. So what we see is a lot of infrastructure coming in place that needed this catalyst, you know, maybe even an excuse use to build this infrastructure to have lasting impact.
- [43:12]
Kelly Evans
This is kind of hilariously timed because we were just talking to Rich Bernstein, I don't know if you caught this segment, his frustration about why is it so hard to improve kind of day to day infrastructure when we can go, you know, finance a moonshot for $1 trillion. Well, I guess the muni market is trying to fill that gap.
- [43:28]
Dan Close
That's exactly. We should just have more World Cups and more infrastructure and have more cities host.
- [43:33]
Kelly Evans
Is that what it takes?
- [43:34]
Dan Close
I think sometimes, I mean, because people
- [43:35]
Kelly Evans
are always tell us this has been true for the Olympics, World Cups, any special events that cities are going to overspend, they're left with these kind of albatross. What's the plural of that? That, you know, are not necessarily great investments for the long run. Is that true or are these events actually a catalyst to make some improvements that are much needed?
- [43:51]
Dan Close
Yeah, what we're seeing with the World cup, the 11 cities, the other thing they have in common is that they're making these one time improvements. But it's not like 2004 where you have an aquatic center in Athens that's never used again or you have a bobsled track in a Winter Games cup that just gets, you know, a week of great airtime but no lasting benefit. So you know, we saw it with Seattle, for instance. They're putting in public transit that's going to connect Bellevue to the city center over Lake Washington. And that was an excuse, an impetus, the same thing we're seeing with respect to Houston putting in a new international terminal. So, so everything we're seeing, it's, it's really integrating this finance, this public finance into the structural long term plans. And I don't think we're going to see these abandoned.
- [44:36]
Kelly Evans
I think that's great. And so from the investors point of view, the reason to ask is there. They want good investments, they want things that, you know, there's going to be that steady revenue stream for years, if not decades to come.
- [44:48]
Dan Close
That's right. And I think all of these public projects do have that in common. So. So some cities use their GEO obligations. So we saw Atlanta do that, we saw Kansas city do that. MBTA, which is in Boston, they put $35,000 into a new platform at Gillette Stadium that's going to get backed by sales taxes and by motor vehicle Taxes. So each, each different project is unique in its own way. But I think the exciting part for Muni Bond nerds like me is that we're leveraging this to have a lasting public interest impact. It's very purposeful. It's going to outlast the World cup and it's not going to be something that's abandoned that you're going to see on websites. You know, where is the aquatic center in 2004 now? It's, if you Google that it's, it's overrun.
- [45:32]
Kelly Evans
I love it. And we should be grateful then for the, the chaos that the World cup is causing. Leaving some long term positives I guess. Where else kind of broadly speaking in the Muni world right now, some opportunities kind of. How is the market market been lately?
- [45:46]
Dan Close
So the market we really dramatically underperformed in 2025 and we've had this catch up trade since Labor Day. I think the most commonly asked questions we get from investors is have I missed this trade? And absolutely not. I think we're still very much in the early innings or early in the soccer match as you would have it here. And we do think that there is a lot of catch up to be had. Yields are fantastic right now, especially on a taxi taxable equivalent. We've had 48 billion come into our asset class which is the most important technical of all. And I think that we are really seeing municipals outperform. So municipals up a point and a half to 2 points with US Treasury 10 year backing up more than 35 basis points. Munis have outperformed. And we think that it's just the beginning.
- [46:29]
Kelly Evans
And why is that, you know, is talk about inflation for just one more second? Because that's the bogeyman. I mean that's the big problem for, for all of these investors. Also a big reason why people look to this maybe sometimes as a hedge. So is that because the inflation dynamic has shifted this year?
- [46:44]
Dan Close
I think partially it is. But I think for the municipal bond market in particular, we had just such dramatic underperformance that it is more of the catch up. And I think folks are looking at highly appreciated equity making a rotation in and saying on a taxable equivalent basis I could be 6 and a half, 7% percent for a 5 year duration asset which is historically speaking a very, very good yield relative to where we've been.
- [47:08]
Kelly Evans
Now just going back to your list, this great map, I mean you show host cities, the number of matches but nowhere on your list. New York, New Jersey, obviously we, I think we're hosting the playoffs.
- [47:18]
Dan Close
That's right.
- [47:19]
Kelly Evans
But I don't think there's any big new investments that they're making.
- [47:22]
Deirdre Bosa
No.
- [47:22]
Dan Close
New York, New Jersey took a little bit of a different approach. They would normally charge $12.90 to get from Penn Station to MetLife. And for the World cup, they had a special price of $98, so took a slightly different approach than others.
- [47:36]
Kelly Evans
Could we get a fast train out of it or like a Evtol or
- [47:40]
Dan Close
something, perhaps for the next World Cup?
- [47:42]
Kelly Evans
All right, Dan, thanks very much. Good to see you.
- [47:44]
Devin Ryan
Good to see you, Dan.
- [47:45]
Kelly Evans
Close of Nuveen. That's it for us. And thanks for watching the Exchange. I'll join Dom Chu for Power Lunch right after this break.
- [47:53]
Exchange Announcer
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- [47:56]
Kelly Evans
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- [48:03]
Exchange Announcer
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