SK Hynix's US Debut, Bring Back the Blockade, and a Water Break Boost 7/10/26

Summary

The Exchange — July 10, 2026

CNBC with Host Kelly Evans

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Main Theme

This episode delivers an incisive look at the day’s top business and market stories, zeroing in on the U.S. IPO debut of SK Hynix, the dynamics and future of the memory chip sector, the trajectory of MegaCap tech (the “Mag 7”), new developments at the Federal Reserve, energy geopolitics with calls for renewed sanctions on Iran (and possibly Russia), and the evolving business of sports broadcasting. Several expert guests join for original analysis and debate on where investors should be paying attention as the trading week progresses.

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Key Discussion Points and Insights

1. Market Movers: Memory & MegaCaps (01:03–12:03)

SK Hynix’s US IPO & The Memory Trade

• SK Hynix shares soar 16% on US debut, marking the largest ever US IPO by a foreign company.
  • The company is already a global power in high-bandwidth memory—essential for AI chips—and Nvidia's biggest memory supplier ([12:20], Christina Partsinevelos).
  • “SK Hynix is the world leader in high bandwidth memory…the memory that feeds all the AI chips. They essentially have about 58% of that market... Nvidia’s biggest memory supplier.” — Christina Partsinevelos ([12:32])
• Demand for high bandwidth memory remains intense given the AI boom. IPO was oversubscribed 7x ([12:20]), driven partly by anticipation of continued tight supplies and SK Hynix’s pricing at a lower forward P/E (5.8x) than competitors ([13:49]).
• Key risk: Boom/bust cycles still haunt the memory sector. All new capacity from SK Hynix won't arrive until 2028, prolonging the current supply squeeze ([13:33]).
• Bull vs. Bear cases:
  • Bull: Ongoing AI/training investment, capacity expansion, potential for major index inclusion and passive buying ($14 billion).
  • Bear: Memory sector remains cyclical, and a shift from AI model “training” to “inferencing” could shift demand away from SK Hynix’s core products ([15:01], Mehdi Hosseini).

Mag 7 & AI — Investment Debates

• Apple’s rally and AI strategy under scrutiny

  • Apple nears the world’s largest public company by market cap, threatening Nvidia’s spot.
  • Skepticism persists over Apple’s yet unclear “AI killer app”: “Where’s the AI for these price increases? … Is it evolutionary or revolutionary? … We’re not really believers yet that they’ve figured out how to really display and monetize AI for customers in their phones.” — Michael San Satera, Sylvan Capital ([02:31])
  • Host charts broader consumer tolerance for price increases, noting steady demand for iPhones despite price hikes.
  • Key Insight: Longer product cycles and a lack of meaningful innovation may marginally dent demand, but brand loyalty remains strong.

• Meta, AI leapfrogging, and the infrastructure arms race

  • Meta’s new AI model draws attention, but staying ahead is challenging due to rapid leapfrogging (Gemini, OpenAI, Grok).
  • Meta is considering leasing compute power, “more like a hyperscaler behavior… If Meta is on that move…to AWS and the CAPEX that that required.” — San Satera ([05:53])
  • Host questions: Are these tech giants morphing into utilities—turning high-growth stocks into “bonds” or REITs? ([07:02])
  • Key risk: If leading AI models become commodities, the business could lose its growth premium.

• The semiconductor cycle remains volatile

  • The sector is experiencing massive volatility, with huge Q2s for memory but no fundamental day-to-day change.
  • Longer-term, bottlenecks and supply constraints may persist until capacity comes online ([10:41], San Satera).

2. SK Hynix vs. Micron & The Future of Memory Chips (14:38–20:21)

Expert analysis from Mehdi Hosseini, Susquehanna

• Micron seen as better positioned than SK Hynix as the industry shifts from AI training (high bandwidth memory) to AI inferencing (low-power DRAM).
  • “Low power DRAM is going to be more suitable for inferencing…Micron arguably has more market share than the Korean competitors.” — Mehdi Hosseini ([15:52])
• SK Hynix’s biggest strength is current leadership in HBM (high-bandwidth memory), but if model training demand peaks, growth could falter.
• Caution on valuation metrics: Price/Earnings may be misleading; enterprise value to sales shows multiples are at record highs, demanding careful consideration.
• Active managers remain hesitant: Most have already made their bets in memory stocks.

3. The Fed’s New Task Forces & Monetary Policy Reform (22:10–28:33)

Steve Liesman reports on Fed Chair Kevin Warsh’s reformist moves

• New task forces draw from respected insiders and reform-minded academics to tackle data, communications, balance sheet policy, jobs, inflation, and productivity ([22:29]).
  • “Most of these folks are either inside the (monetary policy) circle or have one foot outside…They’re reformers within a comfortable and respected place.” — Steve Liesman ([25:21])
• Warsh is seen as building market credibility for gradual—but meaningful—Fed change without sparking a market freakout.
• Labor market participation rate analysis: Recent decline likely reflects demographic changes (aging population), not economic stress ([26:24]).

4. Markets & Geopolitics: Oil, Iran, Russia (34:03–40:13)

Robin Brooks, Brookings Institution, on energy policy

• Oil prices prove more resilient to shocks than feared: Despite renewed US-Iran tensions and military conflict, oil markets absorbed stress tests without spiking to extreme levels as predicted ([34:28]).
  • “The global oil market is much more robust and shock-resistant than those forecasts made it out to be…We have room to stress the system if we have to.” — Robin Brooks ([34:28])
• Calls for a renewed and even stricter blockade on Iranian oil: Current policies let Iran export freely, funding its regime while attacking Western interests—a status quo Brooks deems unacceptable ([35:29]).
  • “We need to create an incentive for hardliners to come around and respect free passage…On Russia, same thing. If we do things to block the exit of oil tankers out of the Baltic…I’m convinced Russia’s economy would collapse, and the war would then be impossible in Ukraine.” — Robin Brooks ([38:43])
• Impact of supply constraints: Even with depleted global inventories, practical ceiling for oil is ~$125/barrel (not $200+) if a major disruption occurs ([37:15]).

5. Airlines: Navigating Higher Oil and Passing on Costs (40:13–43:29)

Delta’s response to jet fuel prices

• Delta expects to pass higher fuel costs onto customers, reaffirming robust earnings guidance and reporting strong demand across the board ([41:41], Ed Bastian).
  • “Our consumer is at the top end of the curve…When you ask our consumers what is their main use of discretionary funds, they’ll say, ‘We want to participate in the experience economy with air travel being number one.’” — Ed Bastian ([41:41])
• Airline stocks at or near all-time highs despite escalated fares; legacy carriers dominate as smaller competitors exit.

6. Sports Rights & the Value of Hydration Breaks (43:29–47:26)

The business behind World Cup broadcasting

• Hydration breaks add up to 832 extra 30-second ads during the World Cup, potentially generating a quarter of a billion dollars in U.S. revenue ([43:29], Mark Douglas).
  • “It’s a boon to FIFA, the teams, the players…for viewers, it’s a small price to pay to get these games streamed and broadcast worldwide.” — Mark Douglas ([46:04])
• Netflix’s next move? Facing engagement declines, Netflix may need to double down on exclusive scripted content, but could chase live sports rights—the platform is uniquely positioned to bid for global streaming rights ([46:55]).
• Viewers are generally not complaining about commercials; World Cup viewership is breaking records.

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Notable Quotes & Memorable Moments

• “Where’s the AI for these price increases? …Is it evolutionary or revolutionary? …We’re not really believers yet that they’ve figured out how to really display and monetize AI for customers in their phones.”
  — Michael San Satera (02:31)

• “SK Hynix is the world leader in high bandwidth memory…the memory that feeds all of the AI chips…Nvidia’s biggest memory supplier.”
  — Christina Partsinevelos (12:32)

• “Low power DRAM is going to be more adequate or more suitable for inferencing…this is where Micron arguably has more market share than the Korean competitors.”
  — Mehdi Hosseini (15:52)

• “The global oil market is much more robust and shock-resistant than those forecasts made it out to be…We have room to stress the system if we have to.”
  — Robin Brooks (34:28)

• “If we do things to block the exit of oil tankers out of the Baltic, for example, I’m convinced Russia’s economy would collapse and the war would then be impossible in Ukraine.”
  — Robin Brooks (38:43)

• “Our consumer is at the top end of the curve…the experience economy with air travel being number one.”
  — Ed Bastian, Delta CEO (41:41)

• “It’s a boon to FIFA, the teams…the viewers, it’s a small price to pay in order to basically get these games streamed and broadcast live worldwide.”
  — Mark Douglas (46:04)

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Important Timestamps

• 01:03–12:03 — The Mag 7, Apple’s AI dilemma, the memory trade debate, Meta’s new gambit
• 12:03–14:38 — SK Hynix IPO, fundamentals, and the AI chip supply crunch
• 14:38–20:21 — Mehdi Hosseini on memory supply and valuation metrics
• 22:10–28:33 — Fed’s new task forces and labor market insight (Steve Liesman)
• 34:03–40:13 — Robin Brooks on Iran/Russia oil sanctions, oil’s shock resiliency
• 40:13–43:29 — Delta/airlines, jet fuel pass-through and consumer price tolerance
• 43:29–47:26 — The business of World Cup hydration breaks & Netflix’s strategic choices

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Summary Flow

1. Opening with markets and mega cap tech, the show dives into volatility across memory, chips, and tech stocks—with a sharp focus on what investors should expect as cycles shift and AI investment requires constant capital.
2. The SK Hynix IPO is a springboard for an in-depth memory industry analysis, pulling in experts (Partsinevelos, Hosseini) to dissect competitive positions and what the future holds as AI applications evolve from training to inferencing.
3. Fed Chair Warsh’s new task forces spark a rich discussion about the future of central bank policy and the subtle art of reform, featuring insight from Liesman.
4. In energy, Robin Brooks highlights that the feared oil shocks haven’t materialized and argues for more assertive economic action on Iran and Russia.
5. Consumer behavior, especially resilience in airline ticket demand and willingness to accept higher prices, is a running theme—with implications for broader inflation psychology and market valuation.
6. Finally, the business of live sports evolves—with FIFA and broadcasters seizing new ad inventory via “hydration breaks,” and debate over Netflix’s possible pivot to live sports to maintain its market edge.

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For the Investor or Business Leader

• Memory chips: Understand where demand is heading (training → inferencing) and don’t conflate all “AI” with uniform growth.
• Tech mega-caps: Market cap winners may shift as “killer apps” for AI remain elusive and CAPEX transitions legacy firms into more predictable but less exciting “utility”-like investments.
• Energy: Despite outages and war, oil markets have proven resilient; policy decisions on sanctions could still move prices but not to the catastrophic levels previously feared.
• Monetary policy: Fed reform will be gradual, but watch for new signals as highly credentialed “insider reformers” analyze foundational questions.
• Media & sports: Commercial innovation (hydration breaks, live streaming rights) is becoming a major revenue stream as old boundaries erode.

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This episode provided a nuanced, insight-rich run through today’s market movers, global risks, and the shifting sands of technology, energy, and central banking—all with CNBC’s high-tempo but accessible style.

Transcript

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[AT&T Business Wireless Narrator]

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[Kelly Evans]

Thank you very much, Scott. The S and P and the NASDAQ are on pace for positive weeks despite today's modest moves. I'm Kelly Evans and welcome to the exchange. Gold, by the way, is on track for a down week and that says odds of a rate hike this year have jumped to 63% now amid renewed tensions with Iran. We'll have more on that in a little bit. By the way, with Robin Brooks. We're also tracking shares of SK Hynix soaring 17% on their US IPO today after increasing that price last night. As for the rest of the memory trade, microns fractionally lower, trying to avoid its first three week losing streak in nearly a year. But the rest of the group seeing some gains and poised for their first positive week in three. We'll talk more about this right now. Actually, let's begin with these questions about the future of the biggest names in the market. With several of the Mag 7 still under pressure and as they struggle to fund and win the AI race, one notable standout though is Apple. It's on track for back to back weekly gains for the first time in over a month and the company is close to overtaking in video now as the world's biggest public firm. Let's talk about it with Sylvan Capital's Michael San Satera in today's opening exchange. Michael, it's great to have you. Welcome.

[Michael San Satera]

Nice to see you Kelly.

[Kelly Evans]

So we just highlighted this back and forth. You know it's the memory and chip Trade is up ninefold but then it's had three down weeks and now the Mag 7 are. Some of them are breaking out, others are. The whole grouping really doesn't make sense anymore. Talk through as you have a lot of exposure to these areas, what are you doing about it?

[Michael San Satera]

Yeah, never a dull moment, right? It's a lot of volatility. They're up one, they're down one day to day. If I was a trader I'd go crazy. But we're still long term investors so we're looking for the places we think can exceed investors expectations. Apple's a place where we're actually slightly underweight. Despite its most recent move breaking out to new highs and as you said, three threatening in video with market cap dominance. But the issue really is the price increases due to memory. We're concerned that we're going to get to this cycle here in September. Having seen most of their hardware raised price 15 to 30% thereabouts. What are they going to do with the iPhones? And it could be $100 to $200 on the high end, maybe less on the lower end. But really, where's the, where's the AI? I mean I think that's going to be the where's the beef moment for Apple. Where is the AI for these price increases? What is the consumer really getting? Is it evolutionary or revolutionary? Is it just another product cycle? We are on the margin a little underweight Apple rather than overweight it because we're not really believers yet that they've figured out how to really display and monetize AI for customers in their phones.

[Kelly Evans]

I sort of want to debate you on that, although I don't know if I need to, but I could actually see, I could see people going, no. I mean look, from my point of view, consumers are so accustomed now to having to pay up every time we turn around. You know, where was I the other day? I walked in and the price of everything had been raised. Oh, at the, at Peter's Fish market, which is my favorite place to go. And you know, the prices of everything is up another $2 a pound. So are consumers really going to balk at paying more for probably their most used thing for the iPhone? I just, I don't know, maybe, maybe a little bit on the margin. But I don't know if it's going to be that much of a headwind.

[Michael San Satera]

Yeah, I think it's the little on the margin that we're worried about. I think you're right. It's not going to be drastically different. They haven't really raised prices on the high end phones in the last three years and arguably once they broke the thousand dollar mark in 2017 or 18, whenever that was, you know, it's been a new game for Apple. They've been pretty good about keeping prices consistent. However, what are you getting on the margin for this new phone and is it less 17s going to 18s and really just the folks that are a few generations behind finally succumbing because their battery doesn't work or they're just having problems with their cracked screen. You're right, it's not going to be a magnet, a magnitude, a gigantic change. Rather it's just, it's more likely going to be on the margin that you just see maybe a little bit less demand now maybe the, maybe the folding phone works its way through that. That's possible. But right now we don't see a real reason and we don't see that AI killer app yet. And we really like to see that first.

[Kelly Evans]

You know, be fun to go through almost all of, you know, the Mag 7 with you just to kind of understand. Metta, what do you make of this? Here's what I find fascinating and all credit to them. I mean they've come out with a model that sounds like it performs incredibly well, vaults it's into the maybe it is the next Gemini, maybe it is the next Google. Google and all that's fine, but I watch this and I go, well this isn't the end of the story. This might be fine now, but then Gemini is going to respond or OpenAI is going to respond or Grok is going to respond. So having to stay in that leadership position, they're already doing 70% of their revenues as capex. I just don't know if this makes sense from, from a long term investment point of view.

[Michael San Satera]

Yeah, I think it does. But you're right, it's. There's definitely going to be that leapfrog behavior from the strength of these models and we've been seeing that sort of since day one go back even, even a couple years when OpenAI was really the only game in town. And then we started talking about Anthropic and then we started talking about Gemini and little by little by little and then deep seek moment and then, and now, and now Meta is back with something much better. I think it's actually far more interesting that they're going to be interested in potentially leasing some of their compute power. That feels more like a hyperscaler behavior. You know, I look at Meta and as sort of at a crux from the way that company is viewed going forward Think back to the days in the Internet days, if you can remember that far back when you saw Amazon start to really shift away just from selling books and music to everything and then everything to AWS and the capex that that required. If Meta is on that move, hey, we're a social media company. It's all about daily average users, monthly average users, ROI for our, our advertising dollars to now looking like striking a deal. Remember when.

[Kelly Evans]

Here's my point. Or they've strict deals with Space X. Okay, fine, so, so they get a series of cash flows for their compute does that. That's not growth. That's like a bond. Right. Why is that such an exciting future growth prospect? Especially when you have to keep up at the cutting. We were talking yesterday to the analyst who covers a lot of these, you know, bitcoin miners who have turned into a data centers and his upside case, of which he has 3x upside for some of these names like Terror Wolf. But he said, you know, they're turning themselves into, into bonds and then they're turning themselves into rates. And so that rerating is happening from a bitcoin miner to a rate. But would anyone be excited for Meta to turn itself into a rate?

[Michael San Satera]

I don't think it's a permanent structure. I think it's something that helps them offset some Capex and probably just makes some of their shareholders a little bit less likely to be running for the hills when the earnings aren't there quite as much as before. If they could just get them to a better free cash flow position, I think folks will say, okay, they're not spending so crazy that they can't offset it with new revenue streams. You're right, it's not as valuable a stream as a model could be long term. But we're still fighting the early innings of AI and there's no reason not to capitalize.

[Kelly Evans]

I don't know if a model is a valuable thing long term, if that's the question. I mean, literally, if you come out with a model that is so good that it can't be imitated, copied or competed away. Absolutely. Then, then you can get a $10 trillion valuation. But look around, every time we turn around the Chinese models now, they're basically good enough. Everybody is in this race to have the latest and greatest model. And I literally wonder if that's a good business to be in.

[Michael San Satera]

Yeah, I think you're, I think you're right. There's a real risk there. And the beauty of this is all software has always done this, right? If you Go back to the beginning of software, you end up seeing companies that get a dominant position and hold it in a certain industry or hold it in a certain segment of the market. And, and we think that's probably the way these models play out. A handful of players command most of the revenue and it should probably look like some of these guys that are existing now will be amongst those players. The question is, can Meta do it?

[Kelly Evans]

Yeah, I guess. My final comment on this and love your this is I appreciate you taking all the back and forth, probably. It seems to me like these models will ultimately become part of a suite of offerings. Right. So for Google, again, you go back to that. You say it makes perfect sense. You have Gemini, you have Gmail, you have photos, you have cloud, you have service. It's just you have everything. And that allows you to kind of keep that consumer like myself who might otherwise peel off and use an open air, a Grok or something like that. So if they're just offerings as part of a suite of different business lines, I think that makes a lot of sense. I'm just not sure, for instance, for Metta, kind of what the full vision is yet. And to their. They don't, they don't need me to understand it yet. Investors are clearly able to connect these dots, you know, more so it just, it looks like a really expensive gambit for something that is at risk of being a commodity.

[Michael San Satera]

Yeah, I agree. All of this capex has to have winners and losers and there will not, you know, will not be spoils for everyone. There'll be more, more in some buckets than others. I think Meta's goal here is to say, look, we know we can run a good model. We know we can give our advertisers higher ROI when they use it. We believe we can compete with anthropic, with OpenAI, with Gemini, and we believe that we can use that business knowledge of our clients and that model to lever it going forward. We'll see if they can execute. For now, we think they're at least back in play and there's an opportunity that wasn't there even a few months ago.

[Kelly Evans]

Who else, Michael, outside of the Mag 7 and maybe the comment on the chip trade. We'll talk SK Hynix, K. Hynix here in just a minute. What is your take on the way that the chips look right now?

[Michael San Satera]

Yeah, I got to check the tape every time I talk about the chips because it's one day up, one day down and net net not a big change. Right. Maybe on the margin A little softer. But this was the biggest quarter that semiconductors have seen in decades. And that's kind of a, that should tell you a little bit something about the magnitude of the bottleneck and the hype around the magnitude of the bottleneck, particularly in memory. You know, we're crediting every company that, but in AI the same in many instances. And I think what happens over time is we start to thin that out a little bit. So I think that, I think the fundamentals of the industry and the fundamentals of demand are still nicely in place and will remain in place for the longer term. That said, day to day again, I'm happy, I'm not a trader. I wouldn't, I wouldn't know where to begin to tell you what to do for this afternoon versus tomorrow morning.

[Kelly Evans]

And on the question of SK Hynix, is that one you're looking to put in the portfolio at some point?

[Michael San Satera]

Yeah, we know, we've looked at it. We hope we own a couple of ADRs and ADs is in the focus growth strategy at Vertical to Sullivan. And I think there's no reason not to necessarily look at it. We've looked at it, identified key metrics, haven't bought any. I can tell you that cleanly. But we like the memory play. We've got some exposure in SanDisk in the portfolio, so we don't need necessarily a whole bunch more. But we're always looking at everything that comes new.

[Kelly Evans]

All right, Michael Sansett Harris, thank you so much on this Friday.

[Michael San Satera]

We appreciate it. Yeah, thank you. Appreciate it.

[Kelly Evans]

SK Hynix shares are popping in their NASDAQ debut, up about 16%. Welcoming American investors into the second most valuable South Kore company and the biggest US IPO by a foreign company ever. Christina Parts and Evolis is over at the NASDAQ with more and today's tech check. Christina.

[Christina Parts and Evolis]

Yes, you talked about the second largest share sale ever after Space X7 times oversubscribed this morning. Priced at originally well at 149 9, trading at 173. So you can see up 16% just this morning. SK Group chairman Che telling me earlier, it's really just a dream to open here in the US and have access to American investors. And so if you're wondering what, why all the demand for a company that already lists in South Korea, that has ADRs in Europe as well? Well, SK Hynix is the world leader in high bandwidth memory, the memory that feeds all of the AI chips. And they essentially have about 58% of that market and it's also and this is clutch, Nvidia's biggest memory supplier. So there's a strong relationship between both companies. So the 26 and a half billion dollars raised is going to go to new fabs and equipment, part of a Korean build out that could reach roughly 700, $720 billion billion. None of that supply though is going to arrive before 2028, which really keeps this shortage and record prices intact for now. But memory as we know is famously boom and bust. So that's why I had to ask Chairman Shea how does he make sure investors just aren't buying into a peak right now? Listen

[SK Group Chairman Che]

everybody, expect that more chips and even I announced that the while we're going to double up our capacity within five years. But yeah, well all my customers said that that's not enough man. And we need more.

[Christina Parts and Evolis]

Not enough men. We need more. But there's still one question that hangs over today's stock pop and specifically with SK Hynix, is it bringing in new money so net new into the memory trade today or is it pulling money out of rivals like Micron, Sandisk, Samsung, the SMH, the MAG7, etc. We've seen the volatility just over the last week and a half. The bulls obviously have an answer. SK Hynix is still cheaper at 5.8 times forward earnings than Micron at roughly 6.8 forward earnings. And Barclays actually sees up to $14 billion in passive buying as the stock enters major indices over the next coming months and year. Wall street definitely wanted in. There was a lot of liquidity, a lot of demand this morning and now SK Hynix has to prove that this boom can last, especially when once the supply comes online.

[Ed Bastian]

Kelly?

[Kelly Evans]

Yeah, no, great framing because that is the question, you know, are you coming in at the highs or not? And I can be persuaded both ways, you know. Christina, thanks very much Christina Parts and Evolis. Let's ask our next guest more about the impact this will have also on the memory space here in the US Susquehanna Senior Equity Research, Mehdi Hosseini joins us now. Mehdi, it's great to see you. So what do you think of the debut here?

[Mehdi Hosseini]

Nothing new. I think it's good to have SK Hynix added to listing here. It helps with the memory industry to have a better profile and better name recognition, but it doesn't really change fundamentals. I think looking forward, the HBM that you were referencing a few minutes ago is great for training, but I think we're going to switch from training to Inferencing and is a little bit challenging to better determine the true demand for memory chips as inferencing scales.

[Kelly Evans]

So are you a little cautious on prospects for SK Hynix relative to some of the other names in the memory space?

[Mehdi Hosseini]

I argue that Micron is actually better situated than SK Hynix. And just for reference, I have been covering SK Hynix for 14 years.

[Interviewer/Host]

Wow.

[Mehdi Hosseini]

Local shares and California based analysts covering SK Hynix. I think as we switch to inferencing, low power DRAM is going to be more adequate or more suitable for inferencing. Perhaps HBM4 that is going to be more mainstream next year is going to be the peak of HBM demand and the switch to inferencing is a low power. And this is where Micron arguably has more market share than the Korean competitors.

[Kelly Evans]

That's fascinating. I'm just going to restate it again to make sure that, you know, we kind of are following this and also explaining, as Christina said, S.K. hynix trades at a very low price to earnings multiple just five or six times. But you're saying, I mean as you look at this, their best product, high bandwidth memory, which is made for training these large language models that the world is shifting away from training them to using more inferencing. And the peak for SK Hynix might be their high bandwidth model memory for next year. So yeah, that would definitely explain why the shares are trading at a discount if, if Micron, if people are going to switch to inferencing with low power dram and that's what company like Micron's better at. I can understand some of the hesitation. So what would be the bull case for SK Hynix?

[Mehdi Hosseini]

I think the bold case would be we continue to invest billions and billions in these very expensive training models and facilities. Perhaps investment sovereigns outside the US will pick up for training and then supply will be limited. As the chairman of SK highlighted, customers want more, but customers always want more. This is a page out of Apple Playbook. Apple has over the past 15 years been asking for more capacity. At the same time they make a lot of, they have been making a lot of money by, by, by buying cheap, inexpensive memory because it's been a boom and bust. So I think we've got to be very careful not to fall into this narrative that customers want more. We need to figure out what, what the next generation of a demand or AI infrastructure would would require for a memory industry. And we've got to be very careful. Margins at 80% plus, where are they going to go? At best case they're going to go sideways. So the manufacturers like Micron that have a better product portfolio could help manage the downside risk. And in that context, this is why I'm more positive on Micron compared to SK Hynix.

[Kelly Evans]

Yeah, so when you see, you know, reports that some of the US or a Micron is trading down because you know, here comes SK Hynix and here comes another big, you know, up and coming memory name. And here, here it is for us investors. You would say to them, you know, just be careful that you're kind of differentiating between what these two companies do and where you want exposure. So if you like Micron, which is still trading pretty at also at a pretty low P E, do you think that one has, you know, can that be an investment you feel comfortable about for years? What about SanDisk? What about some of the other parts of the space?

[Mehdi Hosseini]

Yeah, I think SanDisk is a different category. They're more exposed to NAND and that's also going to have a higher demand as we switch to inferencing. Just going back to valuation. I think we've got to be careful not to put so much focus on earning base valuation. I think, I think enterprise based valuation, enterprise value to sales is a more reflective of industry fundamentals and if you look at that metric, it's sitting new, new highs. So the P E is a little bit misleading and I think on the enterprise value to sell memory industry is benefiting from multiple expansion.

[Mark Douglas]

But keep going.

[Kelly Evans]

You're not saying that as a cautionary point. You're not saying they're, they're fully valued here. So watch out. Or maybe you are.

[Mehdi Hosseini]

No. Yeah. The companies that could sustain revenue growth while maintaining, protecting, minimizing downside risk to gross margin. Those are the names that I want to highlight. And by the way, with SK Heinz coming to the U.S. yes, passive investment index buying does help. But I'm not sure if too many active managers are out there buying SK Hynix shares here because they already have made their bets either buying, either owning SK Hynix or Micron.

[Kelly Evans]

Mehdi, I am so glad that we had you on today to kind of talk through. It's hard, it's, it's hard to understand all the real subtleties of this space. It's really important as more of these names are accessible to the broader public. Thanks for making the time.

[Mehdi Hosseini]

Thank you.

[Kelly Evans]

Mehdi Hosseini joining us from Susquehanna there in our SF office. Coming up, the leaders of the Fed's five new task forces have been revealed. There's Chairman Marsh at Sun Valley earlier this week. We'll tell you what his picks portend for the central bank and look ahead to their next meeting in a few weeks time. Plus, oil prices are pretty much steady after President Trump said the US And Iran have agreed to continue peace talks even despite scrapping the cease fire. Should investors prepare for a return to $100 oil? That's ahead on the exchange.

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[Kelly Evans]

Welcome back. We now know the members of Kevin Warsh's five new task forces. Steve Liesman is here with the big names and what the new Fed chair hopes to achieve. A lot. I mean, I saw the former Walmart. Doug McMillan's involved a lot of different academics. Steve

[Steve Liesman]

yeah, Kelly. He drew from academia from former international and US Central bankers as well as top level tech executives to form these task forces. And you're right, he's going to examine communications at the Fed, the balance sheet, the data uses and how it thinks about jobs, inflation and productivity. Let's look at communications. Peter Fisher, you know him. He's the former head of fixed income at Blackrock, worked at the New York Fed from 85 to 1, including heading the operations desk there. He told the Shadow of Mark Committee 2016, quote, that the Fed's decision making and communications process is broken and has been for some time. By the way, I incorrectly reported earlier he was a member of that committee. He spoke it there. Armenia Frago, Former bank of President, bank of Brazil President and Mervyn King, former Bank of England governor Like Walsh, King is also a critic of central bank forward guidance. Moving on to the balance sheet task for Karen Dinan, former chief economist at the Treasury Department Raghuram Rajan, former Bank of India governor and a well known monetary policy scholar. He's talked about the difficulty of the Fed reducing its balance sheet after it gets too big. Jeremy Stein, former Fed governor and Harvard professor. One more task force we'll go through Marc Ann Driessen, conservative tech executive. He and Charlie Jones, currently on leave at Anthropic and Asha Sharman is the Xbox CEO. Among the notables from the data task force are Doug McMillan, as you said, former president of Walmart and Nobel laureate Tom Sargent and well known economist Gregory Mankiwa there on the inflation task force.

[Kelly Evans]

Kelly so I thought it was interesting point. I forget who I saw. Maybe it was Joe was making this point. Is this, is this a little bit of COVID Steve, for Warsh to say, yeah, I've got all these task forces but you know, I already kind of know what I want to do. Or are the members themselves kind of signaling. Exactly. Kind of reinforcing that view of what he probably does want to do. What do you think about these choices?

[Steve Liesman]

I think these choices are, I was trying to think about like how to describe them. Kelly Think about a circle and inside that circle the sort of monetary policy, conventional wisdom. Most of these folks are either inside the circle or sort of have one foot outside the circle on a couple of these points like Peter Fisher, a very bright guy, he ran the desk at the New York Fed. I mean that's inside the circle except that he has different ideas about communications. Mervyn King, he headed the bank of England. You know, he's in the circle but he has some different ideas. So I think this is all part of an effort of Kevin Warsh who has ideas about how to reform the Fed. But look, there's a couple steps here. He's got to get the reports, have him do get all that out there and they may be in line with what he thinks. But then he's got to convince the Federal Reserve market maybe to do a lot of these things. He can't do them on his own.

[Kelly Evans]

I like the way you put that because it does read to me a little bit as if he's saying he's not trying to be deliberately provocative. I don't think, I think he's trying to say these are the people who are kind of reformers within kind of a comfortable, you know, and respected place in order to build some credibility. Probably around the changes he wants to make.

[Steve Liesman]

I mean, that's right. You know, he's got to not just convince the open market committee members, he's got to convince the markets. Right. He doesn't want to freak them out either. If he's going to make changes, he has to bring the market along with him. So if you pick some people who are sort of way outside the conventional wisdom and they come up with some wild ideas, well, that's going to be a market freak out. And Kevin Warsh doesn't need that. Trying to guide monetary policy right now.

[Kelly Evans]

Well, maybe Michael Gapen should be. He just had an interesting note this morning, Steve, obviously Mike over at Morgan Stanley, and he, he's talking a little bit about what might be really going on with the labor force, especially after last month's payrolls report showed that big dip. I think he's saying that it's overstated in part maybe because of those demographic estimates.

[Steve Liesman]

It may be, and it may be related to how they do it. And of course, only with you, Kelly, can we get inside the weeds of the how the Labor Department does the household serve, the participation rate. But I brought a chart along that may help explain it. Take a look at the participation rate, which has been falling and has been a worrisome sign. And Michael is saying, I think very smartly that it could be mostly an artifact of statistics. Basically, if you see that dip right above the 26 number, that's January. And that's when they incorporated new population estimates. And the population estimates are what they are. What did they find? They found more older people and fewer younger people. What does that mean? Older people don't work at the same participation rate as younger people. So that ended up changing it. So it wasn't a matter of people dropping out of the workforce because the job market is lousy. It's because of the different demographic or age population cohorts that the Labor Department found. Now, this is a weird analogy, Kelly, but I'll tell you that up in the town where I summer every year, they have a problem with their revenue for shellfish permits. Now you're going to say, well, what the heck am I talking about? Guess what? A whole bunch of people in that town aged from 61 to 62 where you can get a free shellfish permit. And that's what's going on in America. So that their revenue for seating the shellfish went down because they went. That's exactly what that participation rate number shows. More people are older in America, Fewer people are younger.

[Kelly Evans]

Yeah, unfortunately, that doesn't bode well for things future of Social Security. All of that to the side though, but so quickly we have to go see. But so his point is, yes, the labor force participation rate probably is genuinely down. It's just he's saying it's not falling for some business cycle reason or something like that.

[Steve Liesman]

A nefarious reason that makes you worried about the job market. Now the June number did make me a little more nervous. I'm not sure why that fell. But the January number and what Michael did and is in his very good report is he normalized it and basically finds no change over a period of time here. All right, not a reason to worry. It doesn't say the job market's going gangbusters. It also tells you it's not weak.

[Kelly Evans]

And now I know more about the shellfish dynamics up in your mystery. Thank you, Steve. Steve Liesman sure. Coming up, EasyJet shares are hitting a more than four year high amid a seeming bidding war by some private equity names. With Apollo now going head to head with Castle Lake, those shares are up 14%. We'll have the details next.

[Keith Landsford]

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Landsford 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 [e-mail] market update podcast or find Schwab Market Update wherever you get your podcasts.

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[Contessa Brewer]

Welcome back to the exchange, everybody. I'm Contessa Brewer here with your CNBC news update. Five top Democratic senators today renewed their calls for hearings into President Trump's crypto holdings. The lawmakers point to Trump's latest financial disclosure and questions raised over foreign and unidentified investors in the Trump family crypto business. Now they're calling on GOP controlled committees to probe any national security implications from these investments. The president defended his crypto ventures on CNBC last week. He said there's nothing illegal or wrong with them. The Chinese space agency is taking a page out of the stage Space X Playbook. According to state media, China successfully recaptured the first stage of a rocket after launch today. It's the first time China's recovered a reusable rocket, which of course SpaceX has been doing for several years. And the bio tapestry is back in England after almost a thousand years. France loaned the priceless medieval artwork to a British museum. It arrived today. It depicts the Norman invasion, which of course led to the famous Battle of Hastings in 1066. We all had to study that, right. That was the successful conquest of England. The 230 foot long tapestry was folded accordion style in a climate controlled case for the journey from France. It will be on display in London this fall through next summer.

[Amica Insurance Representative]

Incredible.

[Kelly Evans]

I'm more struck frankly by the story that China landed a rocket. As you that's. I thought that musk was years ahead on that front. So that's very interesting, that development. Contesta, thanks.

[Contessa Brewer]

Well, it shows the ambition from that country. Yeah.

[Kelly Evans]

And how quickly they can catch up. Absolutely. Contestant Brewer there. Coming up, oil up for the first week in five and rising by the most this week since May. Our next guest says lifting pressure on Iran is a mistake and is proposing a stronger economic blockade. Brookings. Robin Brooks joins us next.

[Keith Landsford]

As America celebrates its 250th anniversary, CNBC spotlights the companies that rose with the nation and continue to shape its future.

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[Kelly Evans]

have been remarkably steady, hovering around $71 a barrel today, even with the increase this week after two days of heavy strikes by the US On Iran. My next guest says there will probably be more to come and a blockade of Russian oil will, could, or maybe should be next. Robin Brooks is a senior fellow at Brookings Institution. Robin, it's great to see you. And so the status quo you think is is untenable right now between the US And Iran.

[Robin Brooks]

Hey, Kelly, great to be with you. So I think we have good news and bad news. The good news is, you know, if you think back the past couple of months, we've had all kinds of fear mongering that oil prices could go to $200 a barrel or 150. Those forecasts didn't come to pass. And I think that's really important because it means that the global oil market is much more robust and shock resistance than those forecasts made it out to be. So that's really good because it gives us room to stress the system if we have to. And I think we have to.

[Kelly Evans]

So this to you was in some ways a stress test. You know, one of the worst case scenarios we've all this reminds me back in my Econtext books, they would talk about what if a hurricane ever struck New Orleans and then it happened. And that's in this case it was always what if the Strait of Hormuz is closed and it happened and it maybe wasn't as catastrophic? You would say totally.

[Robin Brooks]

And you know, this is the second data point that we have in that regard. Remember when Russia first invaded Ukraine in 2022, there were similar forecasts at the time that oil prices would spike. The forecast at the time was that oil prices would go to $400 a barrel. That didn't happen either. So we've now got a series of data points that the global oil market can handle shocks. So it's exactly the stress test that you're talking about. The bad news on Iran is that we basically ended up in the same place where we started back in March, which is we took off the blockade. Iranian oil tankers are traveling freely. Iran is exporting oil. It's making all the money from that, which basically is funding the regime. Meanwhile, it's lobbing rockets and drones at Western ships and encumbering that ship traffic. And obviously that's not sustainable. This is why I suggested back in March we need to do a blockade in the first place. And I think that's what we have to do again.

[Kelly Evans]

Right. And you've said it is, you know, it has been successful, it's hurt their economy, it brought them to the negotiating table. Here are some ideas that you have for if we did it again, why you think it might need to be even a little bit more successful, severe, in order to bring this to some kind of conclusion back here. I'm curious about the impact. You know, the folks who still warn about what could happen with with spiking oil prices point to the fact that we've really drawn down global inventories, we've drawn down strategic petroleum reserves. What happens if we now do as suggested with Iran or blockade Russia? To your point about trying to end that conflict and we have such a low level of inventories and strategic reserve? I mean, then could that be a perfect storm kind of situation?

[Robin Brooks]

Yes, that's a great question, Kelly. So go back to first principles. You know, we're talking economics here, and I love the discussion that you had on the participation rate about market Michael Gapens piece earlier. First principles are the straight of. Hormuz is responsible basically for 20 million barrels of oil per day. Okay. So we know that there are pipelines that Saudi Arabia has that the UAE has that give a workaround. So if you make a reasonable assumption on a shortfall, say a shortfall from 20 million barrels of oil per day to something like 10 or 12, then that should take oil prices at most up to about $125 per barrel. The fact that we've drawn down our inventories to a significant degree doesn't change that basic calculate calculation. It means that back in March and April, perhaps they blunted the rise a little bit. But 125 is still the cap.

[Kelly Evans]

Yeah. In 125, as we've seen with the American consumer, they actually handled this period while unpleasant of higher gasoline prices somewhat in stride. So then the next move for you would be perhaps, if needed, I don't know if you think it should be an anticipatory or reactive kind of move, but that perhaps it's something that should have been done four years ago, which is to blockade Russian oil.

[Robin Brooks]

I mean, fundamentally, Kelly, the question is how do we deal with autocratic regimes that cause trouble? And the answer can't be that we do nothing. The doing nothing strategies, basically what we've done on Ukraine and here we are four and a half years later, that war is off, awful with countless innocent deaths. So I think both on Iran and Russia, you know, the Late Senator John McCain had this great quote, these are gas stations masquerading as countries. We do have to step up and find ways to use economic measures to hit back at places like that. And here at Brookings with Ben Harris, I've done a lot of work on weaponizing sanctions, using them effectively. And I think here, in particular with Iran, we need to create an incentive for the hardliners to come around and respect free passage through the Strait of Hormuz. On Russia, same thing. If we do things to block the exit of oil tankers out of the Baltic, for example, I'm convinced Russia's economy would collapse and the war would then be impossible in Ukraine, you know, you've

[Kelly Evans]

said they're kind of doing too much of looking the other way and allowing some of those ships to pass through. Robin we didn't even get to talk about Japan. We didn't even get to talk about debt and the currencies and all the rest of it. So come back and hopefully we'll do that next. Thanks for walking.

[Robin Brooks]

I would love to. Thanks for having me.

[Kelly Evans]

Appreciate it. Robin Brooks, the Brookings Coming up, speaking of oil prices, this week's climb is pressuring the airlines. The Nike index down about 5%, but at least one carrier isn't worried about higher fuel costs. We'll tell you which one next. Delta are down a percent or so even after their earnings were stronger than expected today. They did say they expect to pass along higher fuel costs to customers. Philippeau spoke exclusively with CEO Ed Bastian and joins us now. So are they the airline who's not worried about higher fuel prices? Phil or maybe they're not worried.

[Philippeau]

They're just going to I wouldn't say they're I wouldn't say they're not worried. I mean, all the airlines are doing this. This Kelly. They have all raised their fares. They did it in the second quarter. They all expect to probably recoup. I can't say for all I can say for Delta, they expect to recoup all of the higher jet fuel costs in the third quarter. Let's look at the guidance because that's what so many people are focused on. When you look at Delta and you look at the other airlines that are going to report over the next couple of weeks for Delta this year, they expect their free cash flow to be 3 to 4 billion. They reinstated their guidance or reaffirmed their guidance. The street before this guidance was reaffirmed this morning is at 3 billion in free cash flow. So more optimistic than the Street. Continued demand in all regions domestic, internationally and strong premium cabin bookings. It was up 17% in the second, 17% in the second quarter. It's strong already in the third quarter. Here's Ed Bastian on squawk box.

[Ed Bastian]

Our consumer is at the top end of the curve, the top end of the K. And as our consumers, financially very healthy, tremendous amount of wealth accumulation. When you ask our consumers what is their main purpose and use of discretionary funds, they'll say we want to participate in the experience economy with air travel being the number one.

[Philippeau]

Take a look at jet fuel versus the airline index. And we're essentially looking at the second quarter here and there you see the split. Once jet fuel really started to go down, it was down about 23% for the second quarter. Also, when you take a look at Delta year to date, they also reaffirmed their guidance for full year earnings between 650 and 750 a share. Kelly, for a point of reference going into this report this morning, and I haven't seen the updated estimates from analysts, but going into this morning, the street was at 597 for the year. So listening to the call, listening to the commentary of Ed Bastian, it's clear they're optimistic about the second half of this year.

[Kelly Evans]

Well, again, what do we say? Yesterday, the average price of a ticket in this country, 600 and something dollars and it's up 100 bucks from last year. And yet the airline stocks are basically at all time highs. So there's a recurring theme here. Prices are up but people are paying them. And I guess that's just, you know, we talked to David Nealman about the demise of Spirit Airlines and he said, look, they just had too many overlapping routes with the bigger carriers and there still could be a route, a place for a lower budget airline. But he said the big ones have just figured out how to offer those budget seats and maybe that's where the consumer goes for a break.

[Philippeau]

You are going to have to find lower cost and that's going to be tough if you're trying to compete with the legacy airlines, especially when they offer basic economy seating. That's just going to be really tough. It's not impossible. Somebody could come along and come up with a better mousetrap. But if you're going to try to fly into New York, Chicago, here in Atlanta, it's going to be really tough indeed.

[Kelly Evans]

Phil, thanks very much. Appreciate it. Filiboe coming up, 832. That's how many extra 30 second ads World cup fans might see this year thanks to the hydration brakes that have been introduced, which could amount to a quarter of billion dollars in revenue in the US Alone. What it means for broadcasters and audiences alike, that's next. Flick shares down 3 1/2% today and down 6% this week with the Wall Street Journal reporting. They are exploring live TV options. It comes after their viewership dropped nearly 8% in April to its lowest since May of 2025, according to Nielsen. Let's bring in Mark Douglas, the CEO of Mountain. Mark, so much to talk about, so little time. I apologize, I'm talking too long about all these nerdy economic things today. Let's just start quickly. I mean, is, is Netflix buying TV channels, NBC, abc, you name it. Getting into live programming, do you think that's a good and necessary move?

[Mark Douglas]

Well, I think the catalyst is that essentially their engagement is down and they're getting a lot more competition. What happened this year is that you're seeing a lot of the major networks have brought their full live programming schedules, including live sports, including the World cup, online with full advertisers support, everything they have. And it's actually is competing with Netflix for the first time. I think the other thing is, honestly when I use Netflix, this is anecdotal, I find it harder and harder to find a new show. So I think, you know, some of

[Kelly Evans]

this, should they be spending more money on new kind of scripted or content versus, you know, going with live program in which apparently they have been doing some market tests in France.

[Mark Douglas]

Yeah, I think absolutely. Because look, the thing is on Netflix today, it's always been the first place most people go to see what's on tv. And maintaining that spot is critical to maintaining their position in the market. And if they give up that spot, because now I'm going to HBO Max because I like the content there, you know, new shows that White Lotus shows like that, that's a massive, you know, impact the Netflix. So they have to invest in programming.

[Kelly Evans]

By the way, I agree with you. As much as I'd love to wake up and see Netflix is buying, you know, versant as something like That I would. I think scripted programing is where they should double that. Just my opinion. Mark, I want to talk to you about the World Cup. These. Tell me again, okay. For how much impact adding hydration breaks has. The people are seeing 832 ads.

[Mark Douglas]

It's. I mean, I know people hated it at the beginning, but you have to pay if you want these games broadcast worldwide, something has to pay for it. And so they introduce hydration breaks. It's a boon to world. To FIFA, the teams, I think, you know, ultimately the players. And for the viewers, it's a small price to pay in order to basically get these games streamed and broadcast live worldwide.

[Kelly Evans]

I haven't noticed people complaining about the commercials.

[Mark Douglas]

No, I haven't. If anything, it's a break for you too, right? Like the players. Not the only ones that need a hydration break.

[Kelly Evans]

That's how it used to be back in the day when the commercial came on, we'd all run around the house trying to grab, you know, a snack and run to the bathroom and this and that. So it does happen. Some value in the viewership has been incredible. So, yeah. Who do you think lands these deals going forward?

[Mark Douglas]

While talking about Netflix, I think that they should. They are likely to really bid on the next World Cup. The challenges is they are the only major streaming company right now that streams worldwide. So if they. If they would need worldwide rights in order to make that work. But I think streaming is really what's happening, enhanced the viewership on the games. And obviously it being in the U.S. they're just picking up. Me, myself, personally, honestly, I wasn't much of a soccer fan. I am religiously following the games.

[Kelly Evans]

In this world, you're not allowed. You have to. We. We stay on today. There's no turning the channel. And Netflix does have the Women's World cup next year, by the way. Mark, thanks so much. Good to see you. Mark Douglas, that's it for us. Thanks for watching the exchange. I'll join Brian Sullivan for Power Lunch after this quick break.

[Keith Landsford]

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[Kelly Evans]

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[U]

With Fidelity, it's easy to get an outside opinion from independent experts in a single score. And then when you're ready, trade US stocks and ETFs with no commissions.

[Steve Liesman]

That's right.

[U]

I am always right.

[Interviewer/Host]

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