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The Exchange
The Exchange 6/11/26
00:49:29
Listen to the day's top stories, the must reads & a whole lot more for today's modern investor.
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Brian Sullivan
diane welcome to the exchange everybody i am brian in for kelly today the market shrugging off the possibility of a renewed war with iran stocks are higher the chip trade is rebounding semiconductors are the star with every major name going up not a star software many big stocks lower and the igb software etf on pace to lose eight in a row meantime tesla the only mag seven stock that is higher microsoft and google both down about two percent and as we said all this happening under the threat of a wider iran war as president trump threatening to take iran's largest oil shipping site called carg island but the market really right now anyway massively focused on the space x ipo tomorrow and what could be a flood of new stock coming over the next few weeks and months so let's start there and hit that part of the story joining us now jane gibbons jefferies vice president of of us equity strategy jane it's great to have you on cnbc and the exchange investors they don't seem to care much about the middle east they're much more focused on ai they're much more focused on space x how come hi
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Jane Gibbons
brian thanks for having me yeah it seems like the market is just really focused on this massive equity offering that's happening tomorrow so as we've been in conversations with investors the main questions we've heard are you know where is this funding coming from and the main answer seems to be the mag seven and that's what we've seen play out more broadly over the last week and so far in june the group has underperformed the s and p and we're continuing
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Brian Sullivan
to see that jane i know just enough to be dangerous so here's my question to you i know from talking to some traders and sources that the space x ipo is impacting the market some people selling some stocks to raise money to buy space x but there's also a lot of positioning with the hedge funds delta one desk big money stuff how do you at jefferies see this single just one company ipo impacting the broader market
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Jane Gibbons
so i think exactly what we're seeing is the impact the fact that you know this i trade more broadly is selling off a little bit i think one thing investors do have to realize is while space x is a huge stock in terms of market cap the actual offering and the size is going to be very small it's you know only three to five percent flat float so when we think about impact to maybe the greater indexes it's going to be small at first but that could increase as we see lockups expire as insiders sell shares yeah
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Brian Sullivan
you wrote in a recent note that there's going to be you think almost eight billion dollars of passive inflows from all these ipos that are set to go and that the mag seven likely a source of liquidity so do you believe jane that people are selling alphabet microsoft amazon whatever because they're trying to raise money for other things
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Jane Gibbons
yeah i think that that's what could be happening right now one other thing to consider is we are in the middle of index rebalancing season we have the russell at the end of the month the s and p next week so so there's already a lot of movement going around there specifically with the russell you're seeing big changes happen with the mag seven in terms of their style allocation so some of this could be happening ahead of time just to prepare for the fact that you could have to allocate to spacex as well because i
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Brian Sullivan
think the question that we're trying to answer or at least i'm trying to answer for the viewers and the listeners is the idea you know last week we broke a nine week win streak on the s and p five hundred up nine weeks in a row so i mean the markets have been super strong we know that but how much of the last couple of days wobbliness weakness whatever word you want to use jane was fundamental versus people just rebalancing repositioning shifting you know it's hard to
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Jane Gibbons
know for sure thinking about the retail component we have seen retail investors selling single stock equities this week which is they're typically net buyers some see that as them trying to prepare dry capital in order to allocate to this big deal that we're going to see come
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Brian Sullivan
public tomorrow jane givens from jefferies jane we appreciate you kicking off the exchange for us today have a great day and see you soon thank you thank
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Jane Gibbons
you so much for having me oh
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Brian Sullivan
you're very welcome all right in the meantime as we hit at the top of the show the rhetoric around iran heating up the president posting on truth social that the us will ramp up attacks on iran tonight and possibly even try to take by force iran's largest oil export location but even with those headlines oil is only mildly higher how come well it's likely because the market knows that more oil than reported is getting out of the strait of hormuz if you missed it on tuesday of this week in a one on one on the record conversation that i had with the secretary of energy chris wright at an atlantic council event he said that yes ship traffic in the strait is rising it wasn't a lot of words but it was enough to move oil lower and i can also report that many or even most ships it changes every day that are going through the strait are turning off their transponders so they can't be seen by certain tracking programs in a much smaller sense it's the equivalent of all of you turning off your find my iphone and then turning it back on later at a different location it also means that a lot of the official data or estimates that you may hear are likely lower than the real ship and barrel numbers we know that's confusing and a lot to take in so to stay tuned to our reporting and by the way be sure to read my weekly energy newsletter called power insider it's coming out later today there is your qr code in the meantime to the treasury markets thirty year bonds they're up for auction who else but our friend rick santelli at the chicago mercantile exchange rick
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Rick Santelli
how to go you know what it wasn't a terrific auction brian as a matter of fact it was twenty two billion reopened thirty so twenty nine year eleven month securities adding to an issue whose primary auction was on the thirteenth of may the yield five point zero two the when issued market was a little bit under five hundred one so we had a tail of about one and a quarter basis points and my grade for demand charlie minus c minus some notable features to this auction brian this is the first time we've had back to back five percent handles on a thirty year bond since get this two thousand one and do remember for a while we discontinued thirty year bonds and i want to definitely put an asterisk it isn't what most financial advisors and traders look at obviously the ten year is the staple but but nonetheless it wasn't a good auction if we look at some of the metrics that were the most negative it would be the dealer community ended up with a little less than fifteen percent of the auction because investors weren't very interested the normal ten auction average was slightly over ten percent you could see on the charts yields moving up a bit and you could also see on the charts we're well below our peak of about three weeks ago on the nineteenth of may and this completed the supply of one hundred nineteen billion and there's a lot of supply around the globe both from governments and from corporates as you've been pointing out on a i it certainly seems as though investors do have an appetite just maybe not as hungry as they could have been for the
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Brian Sullivan
thirty year bond almost you well not we're not done with it yet rick because listen i want to follow up what you just said so much of the money being raised to build out these data centers is done with debt right the corporate markets are loaded up with debt from oracle and microsoft and these companies have been issuing debt we get microsoft one of only two companies by the way with a triple a balance sheet but let's go back to treasuries i get your point about two thousand one five percent yield there was a gap we didn't have them so to your point the asterisk is well noted but is the thirty year bond any kind of a canary in the treasury coal mine you know i think
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Rick Santelli
all maturities of sovereign debt issued by the treasury are important on some level i would think that what i would pay most attention to on the thirty year is its spread against the ten year so four five thousand three hundred ten five zero one thirty that's called the knob spread we want to monitor that for wideness to see how much premiums in between some of these key maturities but i still say the most important issue with the thirty year quite simply is on the north side of five percent it doesn't instill huge confidence and i think four and three quarters would be that equivalent level in a ten year brian well four and three
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Brian Sullivan
quarters i know a lot of potential home buyers hoping we do not get to that level rick santelli rick thank you very much all right now let's get right back to the stock side of the money story joining us now is larry adam he is chief investment officer at raymond james and larry you say there's really three t's that kind of go into the market right now time technicals and triggers might i be so bold as to add a fourth one which would be tehran because i'm sure your points are well noted but there's this stuff happening in the middle east that's pretty serious and dangerous that the market seems to be ignoring right
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Larry Adam
now yeah well that tehran would fall under the trigger right and there are some triggers that we have to keep be mindful of and as you just mentioned that is one thing that we continue to watch but our base case just like the rest of the market is that we're probably going to see de escalation over time because you even heard the president today say that he doesn't know if americans have the stomach to see much more of a kinetic type of action over there and in fact if you look at some of the missiles that are going off they're really not damaging oil infrastructure they're targeting other things so our base case is hopefully that over the next month or so we do get some form of de escalation a deal and that by the end of this year we'll see energy prices closer to like dollar seventy five per barrel and that'll be a good thing for consumers take off some pressure of inflation and you know less complicate things for the fed well it's
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Brian Sullivan
obviously clear and based on the conversations i had on and off the record a couple of days ago in dc more oil is getting out of the strait than maybe some of the the official reports if you will there's also pipelines reduced china demand all in all so oil's at ninety is oil and i'm not talking my book as the energy person but is oil kind of running the show right now or is it a sideshow to everything i
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Larry Adam
i think it's a sideshow because right now when you look at the markets the fundamental driver is the technology sector right i mean if you just combine two sectors which is technology communication services it's fifty percent of the index but to your point i don't think you should lose sight of energy because right now if you look at those sbrs right we're potentially going down to the lowest levels that we've seen pretty much in history or at least over the last forty years and that's been one of the things that we've been using really to offset to add to your point some of the oil that's been going on to the market the us increased production some of the increased production you've seen from canada venezuela right norway that's been helping to keep prices contained as well so i think that we can't lose sight of that but for the market remember the market's not the economy and it's really all about tech i
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Brian Sullivan
love you said that i've said that for years it's so true larry people say well the economy is this that and the stock market i'm like they're separate things they're related right there's a cousin that you've met a few times and maybe you know him or her pretty well but they're not living in the same house are you keeping your seven thousand six hundred fifty target for the s and p five hundred this
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Larry Adam
year yes i mean the reason we put those three keys out is that we were approaching seven thousand six hundred fifty and we were just telling people to be a little bit more cautious here in the near term you know one thing that i would mention is when it comes to technology right the technology sector just entered corrections stage yesterday we're down more than ten percent but i've been telling investors that that's like deja vu because if you look back since we've been in this bull market over the last three and a half years the technology sector has had six corrections of ten percent or more the s and p five hundred in aggregate has only had two but over that time period technology has rewarded you for being patient and staying committed to it it's been up basically double the s and p five hundred and then the other thing i tell people is that when it comes to technology don't make your decisions during the non earnings season because if you look back during the primary earnings season of tech companies the tech sector has been up on average around five percent during non earnings season it's only been up about one percent so clearly getting back to the fundamentals earnings drive the tech sector as well
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Brian Sullivan
we'll see what happens tomorrow larry but we're pretty close to going up this week the nasdaq one hundred is basically flat if the s and p rises like a half a percent tomorrow or the rest of today we could have another win streak we broke the nine win week win streak he said last week we could theoretically be up ten weeks in the last eleven and yet we're talking about higher gasoline prices yes what's happening in the middle east it was a data center project that was canceled yesterday that didn't seem to matter at all we'll talk on the next show with the digital realty ceo about that i'm just trying to understand where's all this money coming from larry because stocks go up when there are more buyers than sellers or more buying pressure and selling pressure so people are putting money to work en masse they are
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Larry Adam
and as you've mentioned before there's still a lot of cash sitting on the sidelines trillion and trillions yes over seven trillion if you look in aggregate so there's still plenty of money on the sidelines that i think is helping to power this this market higher as i said that money though is following the earnings and again when we talk unfortunately we got to keep talking about tech but you know tech earnings are expected to be up twenty percent every quarter not just for this year or for all of next year as well so i still think we have a pretty long glide path if you will for the for the technology sector which is going to continue to be the job
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Brian Sullivan
we got to go but i'm not a math whiz larry so but if i if i'm hearing you right earnings are going to go up for the next let's call it seven quarters this quarter the last two of this year and all four next year twenty percent gain in earnings in tech for the next seven quarters that's what's expected that's
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Larry Adam
that is what is expected and that's why we continue to be bulls in
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Brian Sullivan
the tech sector i think for the first time ever ever i'm speechless larry adam raymond james appreciate it larry thank you thank you brian wow those are big numbers and by the way coming up it is your wall street call of the day it's a big name stock getting a rare double upgrade and it kind of goes to what larry just talked about plus the countdown is on spacex of this world ipo and your guests saying investors maybe aren't buying spacex for what it is now but rather what it might become we'll unravel that riddle next
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Keith Lansford
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 ten 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 at schwab dot com market update podcast or find schwab market update wherever you get
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Brian Sullivan
your podcasts one big stock on the move today it's up three and a half percent is intel intel was the company we just talked about that got a double upgrade from bank of america the analyst vivek arya says he feels confident in intel's opportunity to help address industry constraints and supply into a larger cpu market and he raises his target on intel to one hundred and thirty five from ninety six implying another twenty six percent from here for more let's bring in that analyst vivek aria senior semiconductor analyst at bank of america securities vivek good to see you again the twenty six percent price target raise is not what gets my attention it said it's on top of a stock that's already up over two hundred percent in the past year make it make sense
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Vivek Arya
thank you brian so we had our bank of america technology conference last week where we had presentations and fireside from thirty six semiconductor companies including intel marvell amd nvidia and others and two things really stood out to us brian first is that the industry debate is shifting towards constraints so it's no longer about you know can you get a return on these investments it's really about how fast can you build these data centers so anyone who can help to address the constraints in the semiconductor industry becomes more important that's point number one and point number two is the growing importance of these agentic workloads right these multi step workloads where if you remember over the last two three years the center of gravity and attention has been the gpu the accelerator but the gentic workloads are making cpu right the traditional computing processors come back into work so the reason we took another look at intel is because they address those two specific issues they are important answer to resolving the constraints and i think they can be a very important player in the agentix of our cpu market and the final thing i would mention about intel is that yes the stock has had a good run but when we look at data in terms of ownership of the stock from our strategy team less than one out of six long only investors or active managers actually own the stock so that's why we think that both the fundamentals and the positioning work in intel's favor even at these levels
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Brian Sullivan
okay i want to get to that second point in a minute the under owned part of that that data is interesting vivek you've been doing this a long time i think i first talked about intel on tv in like nineteen ninety eight so i've been following the company for a long time what did people miss what did maybe the media miss as well because all of a sudden intel in the last year has been kind of this i don't say powerhouse but workhorse whatever term you want to use for ai when two years ago it was basically left for dead so much so that the ceo was
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Vivek Arya
pushed out right no it's a fair point i think brian what has happened is that since intel hired libertin the current ceo i think there's been kind of a grad build up of confidence in intel's ability to execute and that is coming at a time when the semiconductor industry is dealing with a lot of supply constraints so intel if they can get their manufacturing right and i have to stress execution is still key right that there is a still there's still a risk to this call because they still have to prove that they can keep up with the manufacturing from somebody like a taiwan semi which is not easy to do but i think there is growing level of confidence in the ability of this team to execute and also i think this rise of the cpu market right what you mentioned is absolutely right then in the last few years people kind of lost touch with the cpu they thought it would be kind of relegated to the background because it was all about the gpu the accelerator the ai processor so this rise in i think agentix cpu workloads has added another dimension of growth i think those two things have happened now different people have turned positive on intel depending on how soon they can think intel can start to execute and i think over the last few weeks we have started to get more data points intel signed a deal with cadence who is their leading eda ip provider you usually do that when your external business is building up you know there is a collaboration between them and terrafab right that could use their capability so the point is that we are slowly starting to see some of those proof points also come through okay so those are
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Brian Sullivan
fundamental reasons let's go back to your previous point sort of a mechanical if you will reason your team has said that intel is the second least owned after sandisk which i still find hard to believe itself intel is the second least owned semiconductor and ai infrastructure stock in the s and p five hundred so the i guess the idea is that fund managers may buy it because they have to if they're trying to balance things out is that correct absolutely
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Vivek Arya
look it's a half a trillion market cap right at this point so the larger it becomes right the more investors that have to make a call right when it's a very small market cap then you can choose to ignore it when it becomes a half a trillion market cap and i would say a comparable kind of example that we have is with amd amd used to be a very small company it was only owned by fewer than one in six or one in seven investors and now that ownership has doubled you've seen the market cap do of course a lot of it has been driven by fundamentals but the point is that you know positioning plays a very important role in driving a lot of these stocks and intel is just over intel is just
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Brian Sullivan
under owned at this i'm going to reiterate something i said in the previous interview not about me not being lost for words but about being a math expert vivek you just said one in six well if it's sixteen percent for intel that would effectively make it the same as amd was a couple of years ago because i think one in six is about sixteen percent that's exactly
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Vivek Arya
right and amd right now is close to forty percent right and more than that if you look at even people who own intel don't even have it as a market weight relative to intel's weighting in the s and p five hundred so you have both the opportunity for kind of the breadth of ownership expanding and the depth of ownership expanding
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Brian Sullivan
from here i like it we often forget and this is a critical point that you and your team are making vivek that a lot of times stocks go up there's a lot of great fundamental work but sometimes there's also rebalancing mechanical work that has to go into moving a stock as well you hit it from both sides vivek area double upgrade on intel vivek thank you very much thank you brian all right coming up call it fool's gold we'll tackle the mystery case of gold's lost luster
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Jane Gibbons
foreign
- [26:09]
AT&T Business Advertiser
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- [26:38]
Keith Lansford
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 ten 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 at schwab dot com marketupdatepodcast or find schwab market update wherever you get your podcasts before we
- [27:07]
AT&T Business Advertiser
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- [27:31]
Brian Sullivan
though at and t business wireless connecting
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AT&T Business Advertiser
changes everything
- [27:38]
Brian Sullivan
despite the risk of a wider iran war being back on stocks are also back on the dow is up one percent the s and p up seven ten of one percent the nasdaq up just under one percent and the nasdaq one hundred is very close to back going positive for the week still got two and a half hours here and of course all day tomorrow elsewhere though gold prices hovering near their lowest level since november and we are watching a rather growing divergence in the options market for gold oliver reinek is at the c boat with a closer look oliver what's going on hey brian
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Oliver Reinek
gold is one of the worst charts in the market right now it is down a ton off of of its all time highs thirty percent from the record earlier this year and trading at the lowest price since november and options flows suggest the beating might continue until morale improves about one hundred million dollars of the one hundred sixty million traded in gold options today is tied to puts and while calls outpace puts by volume some of the biggest trades we're seeing on the call side are sales for example a trader this morning sold one thousand of the three hundred seventy strike calls calls expiring this time next year a four million dollars bet the etf will stay under about four hundred and twenty bucks that was the biggest trade of the day until some monster whale bought twelve and a half thousand four hundred strike puts expiring july seventeenth a thirty five million dollar trade that could be someone with physical gold hedging their position or maybe just a synthetic short trade by a bear but here's the divergence if you think gold is cheap here you might want to look at the miners gdx is up two percent today and flows have been much more balanced there including one trader who stuck their neck out betting on a long term bounce back in gdx buying the one hundred five one hundred fifteen call spread expiring eighteen months from now brian that's a trade looking for the miners to go on a marathon fifty percent run over that period quickly any
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Brian Sullivan
idea who we who this whale may
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Jane Gibbons
be
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Oliver Reinek
you know it's very possible that this could be some sovereign nation because as we know there are a lot of gold holders and gold assets that have been built up say for example countries like uae qatar or saudi arabia they need to fund defense mechanisms around the war one individual i talked to said that that could be a reason for some of the gold weakness but it certainly has become a big disappointment as you mentioned brian given the geopolitical tensions and gold holds deep well said
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Brian Sullivan
listen years ago there was a captain that died going after a white whale now we we're going to go after a gold whale apparently oliver renick thank you very much all right now to sima modi for a cnbc news update
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Seema Modi
brian here's what we're watching at this hour the trump administration said it will appeal monday's order from a federal judge striking down the president's one hundred thousand dollars fee for h one b visa applications the judge on monday sided with a group of states who argue that the fee is an illegal tax that would need congressional approval the doj did not immediately respond to a request for comment on the appeal in other news a new york judge has ruled that congressional candidate brad lander is not guilty of misdemeanor charges related to his arrest at a new york city immigration court last fall lander was arrested along with seventy five others in september as they attempted to inspect the conditions of ice holding cells lander backed by mayor mohamdani is running to unseat representative dan goldman in new york's tenth district and just as the world cup ceremony begins kicks off hong kong authorities said today they seized an estimated twenty million dollars worth of counterfeit items brian including about thirty thousand jerseys as well as footwear and watches officials said nearly eighty percent of the goods were set to be shipped to the us where the games will be played got to check those labels
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Brian Sullivan
my extra flammable argentina jersey is not real i am i paid dollar seven for it i'm heartbroken wonder why seema modi thank you right now though we got some breaking news out of washington dc let's get down there megan casella
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Megan Casella
has more megan brian president trump saying just now on social media that he is no longer going to be moving forward with planned strikes against iran tonight remember earlier today he said there would be further attacks in the region tonight based on continued iranian aggression that would have made it the third straight night of attacks against iran now he's saying he will not be moving forward with that plan here's the president's true social post he says based on the fact that discussions the islamic republic of iran have been brought to the highest level of iranian leadership and approved i have as president of the united states of america canceled the scheduled strikes and bombings against iran this evening discussions and final points have been in both concept and great detail approved by all parties involved including the united states and a number of countries across the gulf he says the naval blockade will remain in full force and effect until this transaction is finalized time and place of the signing to be announced shortly so brian it's not clear what exactly he's talking about there in terms of what's what exactly is going to be signed and what they have agreed upon but he is saying that there's some level of discussions that have now been approved in iran that will continue to be finalized and because of that he's going to hold off on these strikes it doesn't seem like this is the final deal or even the interim deal that we've been waiting for perhaps this is just something to sort of call off this latest round of talks but at least it shows that negotiations are moving forward the parties are still talking and now he says no further attacks for now that had been planned for tonight all right
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Brian Sullivan
so i got i got a few things i got to say i'm hitting a couple of people on on text and whatsapp about this so what we're looking to do by the way so it's big news and i want to give a market reaction first stocks are going up they were up already they're going up more oil is now down three percent guys can we put up look at that i say oil and that just comes up on the screen oil is down three point two percent right now to dollar eighty seven so basically the lowest price in a couple of weeks we're right at that dollar eighty five mark a couple of weeks ago we'll see where we go stocks are up on this news as i understand it meghan you could please correct me if you know more i know you know a lot is that what we're looking to sign is some kind of mou the memorandum of understanding it's not a permanent long term peace deal as again as i understand it based on conversations that i have had the last couple of weeks this would be effectively a deal for a deal correct a sixty day pause aggression and i would add this as i've also reported i know you guys have talked about it as well there are multiple people in iran that are effectively claiming control or asserting their control over parts of the country the president possession some people say is powerless galiboff mohammed galiboff kind of works for the ayatollah the supreme leader he's more the hardliner then you got a couple of the irgc generals around the fringes but if we got something signed megan it would be an mou only a deal for a deal
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Megan Casella
that is what we expect what you just laid out in terms of the division among the iranians has been one of the president's biggest frustrations as well he's always saying you know it's so slow to get a response they can't agree on what they want that's part of why the white house says things have been taking longer than they initially wanted but that is what has been under negotiation most recently is this interim sort of deal whether it's sixty days or thirty days has been a point of discussion but it is a crucial point here because we're not ending the war even if that's what the president is referring to and if that's the reason why he's holding off on these strikes tonight it still means that they are moving forward on an interim deal that would push all of the most difficult issues further down the road things like the nuclear issues for one and possibly even the strait of hormuz would be further discussed invest down the road while in the meantime they agree to stop the aggression and maybe they start allowing some traffic through the strait so we're still a long way towards getting really to the end and i know
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Brian Sullivan
you and i and eamon jabbers were actually talking about this in the dc bureau yesterday in person and this idea and i know this is why it's confusing for a lot of viewers and listeners because they'll hear one headline and then the next day they'll see another headline or maybe hear about a us helicopter being shot down or missile attacks on our ally kuwait and yet then we hear about cease fires and i want to be clear in what i have reported and what i have learned which is that again one party is speaking to us in the white house but there may very well be other people trying to assert control over iran that have a very different i guess decision making authority or goal in the outcome so even though this is a positive headline we're hoping it's true megan is it not also possible that we could tomorrow morning wake up to news of more drone attacks from iran on kuwait on israel or on a us
- [36:40]
Megan Casella
asset of course there are so many moving pieces here and so many parties involved it is remarkable or it's worth noting that the president lists you know it looks like a dozen countries here that he says have all signed on to some sort of agreement that is leading him to hold off on these strikes but of course iran could continue to strike overnight regardless of what the us does the us could change its mind and move forward with strikes and there's so many other issues going on in the gulf israel and lebanon just a few days ago were firing at each other and that's part of what led to the renewed aggression between the us and iran as well so it's always key to see is every party on the same page here we don't know yet but it means that even when we have something like a very fragile cease fire which apparently is still intact as it has been since early april even though there's been a number of attacks going back and forth it only goes so far as every party agreeing to it and they haven't all
- [37:34]
Brian Sullivan
been on the same page yeah and i understand and i want to give you credit naming credit and everybody here credit that's been covering the story and writing about it because it's it not only changes day to day it can often change hour by hour and oftentimes megan i know the viewers may not care about this but i want them to understand how hard everybody's working to try to make sense of a story that will often not only change but is often contradictory to what we may hear correct you get one headline from somebody and then the next day a missile flies or vice versa and the markets have kind of gotten inured to it but at the same time it is a story with multiple players just like i'll give you an example secretary wright telling us a couple of days ago that ship traffic was rising and rising meaningfully iran then went after a helicopter a couple of days later ended up shooting down a us helicopter centcom today us central command saying the strait of hormuz is open while some in iran are effectively saying no no no the street is quote closed it has been an incredibly fluid story to try
- [38:42]
Megan Casella
to understand absolutely brian i have to tell you that it's gotten really difficult we no longer really write scripts for most of these stories because things are changing so frequently that we're always trying to get the latest and we're always trying to run down each one of these stories before we bring it onto tv because we're dealing with a lot of unreliable narrators here to use a term there that we don't know you know we're trying to run down what the white house is saying how much of that is true what are the iranians saying reporting what is iranian state media reporting and how much of that is true it's changing so quickly and it's always impossible to really be able to know what's happening day to day one example i know you were speaking earlier this hour about how ships going through the shade of hormuz are turning off their radar and making it impossible to track that's one of the reasons why that's just one data point that we haven't you know and we at large outside of just this newsroom have had so much trouble tracking what's really going through that straight because of all these different things that are going on that's just one example but every day we're dealing with that it is and
- [39:39]
Brian Sullivan
it is hard to nearly impossible because you got very reputable firms that are reporting certain numbers these are very expensive very very high level research and then maybe i'll go on and say well my numbers are different it's hard to contradict that you better hope you're damn well right because i'm talking to people that are telling me stuff that's actually happening on the water i trust my sources but if it goes counter to what the narrative is it's a risky proposition megan sit tight can you this is all kind of happening to meghan's point real time and no scripts joining us now on set is somebody who's going to lead off power lunch in the next hour but we chased you out early michelle caruso cabrera mcc global enterprises cnbc contributor and somebody maybe the only i think western journalist who has been to carg island which is what the president sort of threatened to take or take over whatever word you want to use tonight we got megan casella there as well what is your take on this new headline so just this
- [40:43]
Michelle Caruso-Cabrera
morning is when he posted again saying that they would take carg island perhaps very soon i remind everyone that when he about the time he said i'm going to decide in two weeks what i'm going to do with iran and then of course operation midnight hammer took them by surprise and took the whole world by surprise so i see the market reaction i see oil reacting they're very very you know everything's everybody's calming down but i just wait to see what what this actually all means in terms of operations because he knows what
- [41:14]
Brian Sullivan
do you think it means it's hard to say now you work for yourself yes right and i know you're you are not somebody that lacks intelligence in the subject matter but also an opinion
- [41:27]
Michelle Caruso-Cabrera
yeah so i don't trade oil i wouldn't trade oil right now because as you can see it's incredibly volatile i would also say that the president keeps a lot of things close to the vest when he's going to decide he and he likes to keep all options on the table and the other thing i think is he says there will be no strikes tonight does taking carg island mean strikes like could he still take carg island without strikes if there
- [41:51]
Brian Sullivan
were no strikes and we just did it i don't know i will report meghan and you and i talked about this and i talked to mc wellens our bureau chief about it as well that there is an extremely large us military buildup and presence in the arabian gulf in some of our allies and countries around there there are not only jets there are refueling jets there are amphibious assault vehicles and there's a lot of people all of my friends in the tidewater area the seven hundred fifty seven of virginia you know who you are they have got friends family sons daughters that have been deployed from fort bragg as well all of which gives
- [42:27]
Michelle Caruso-Cabrera
the president enormous optionality and leverage correct
- [42:32]
Brian Sullivan
iran knows we're there and they're there yes i know i'm not even sure i know who speaks for iran the media says iran says this i don't even know to my earlier point to megan possession golly bob these other people i don't my sources have said they're not clear who's in charge who do you think's running iran we don't know
- [42:51]
Michelle Caruso-Cabrera
that's that's the whole issue we haven't seen the the new ayatollah in person
- [42:55]
Brian Sullivan
ever apparently he's alive that's what they
- [42:57]
Michelle Caruso-Cabrera
say but we've never heard hide nor hair of him we've never seen him actually speak we haven't even gotten the you know the classic photo with with the newspaper with the date we know nothing about him i mean no proof of life there's no proof of life exactly so it's not clear who they're negotiating with or and remember there's always competing factions within iran who are battling amongst themselves not just with the outside
- [43:23]
Brian Sullivan
world this is a critical point okay and michelle i know we've got you for the next hour as well we'll continue this critical point again reporting that i've done suggests and my sources are pretty pretty good that there are some people for whom if there is a certain pro western outcome to this they're dead they're not going to make it because their entire existence in iran has been to hold the people down they're warlords effectively they make their money off of the ircg and sort of fear and if the pro western there's no pro us but more western aligned moderate voices win out that there's going to be really bad outcomes for some of
- [44:08]
Michelle Caruso-Cabrera
these people for some of these entrenched
- [44:09]
Brian Sullivan
interests correct they have in other words let me be more direct they have no choice but to fight they have no there's nowhere to go do you
- [44:16]
Michelle Caruso-Cabrera
believe that yeah it didn't have to be this way right the president asked for certain things the us administration has asked for certain things and if they had gotten them i think they would allow whoever's there to remain in charge remove the nuclear material open up the strait of hormuz they barely have any missiles left stop funding hezbollah and all the malign influences that you have throughout the region there are things they could do and they could still be in power but they have chosen not to do them and that's how we've ended
- [44:49]
Brian Sullivan
up here and maybe this idea and we'll let you go because we're going to bring you back in about fifteen minutes to kick off power lunch your former show by the way which is if you cut off carg you cut off the oil you cut off the cut off the revenue the money because iran is effectively a petrodollar state they have one export well one and a half oil with a little bit of gas on the side michelle will see in a few minutes michelle thank you very much megan casella i know you're out there as well markets rocking higher on these headlines oil down three and a half percent we're back right after this some major breaking headlines have the markets that were already higher by the way but the markets have not quite doubled on the headline but president trump saying that he is not going to attack iran tonight that there is some hope maybe that they will get some kind of mou memorandum of understanding peace deal pause whatever word you want to use done and that headline those comments from the president send buyers into the market the market again that was already up but now you've got a nasdaq up one point six percent you've got a dow up one and a half an s and p up one and a quarter percent all as oil prices fall price of crude oil down three percent to eight thousand seven hundred twenty five all right don't tell anybody but space x is set to go public tomorrow this will be the biggest market debut in american history space x as the name implies is known as a rocket company but your next guest says this is more than just a rocket ipo spring and daniel newman he is a ceo of the futurum group dan good to have you on on a day like today how big how important is the elon musk space x factor
- [46:35]
Dan Newman
look founder led companies get a premium brian and founder led companies by elon musk get an even higher premium he's proven that over the years tesla has been an outlier of the mag seven commanding multiples of three five seven times higher than his contemporaries across the mag seven but if you look at this company there's never been anything like it you know you said to me off air you said i can't go without starlink it's great okay well that's probably a few hundred billion evaluation and then you look at the launch business eighty five percent of the market that's a few hundred billion evaluation you look at the ai business and now they've got all this just google and anthropic give it a great multiple on that that's maybe another two so you get to
- [47:11]
Brian Sullivan
see so hold on do them let's do some math here yeah this show's all about math it's like the third time in the show they told me there'd be no math yeah two hundred three hundred billion for spacex for the rockets for let's be generous three hundred billion for watch market three hundred billion for rockets how much for spacex for
- [47:27]
Dan Newman
starlink about two hundred fifty if you give it a thirty five times forward
- [47:30]
Brian Sullivan
multiple really profitable business how much for the the xi business we'd say about
- [47:35]
Dan Newman
eight times on sales and i think it's roughly thirty thirty billion annual is what they've got so another two hundred
- [47:41]
Brian Sullivan
forty rounding up okay so that's eight hundred billion we just got to that's that's anybody out there it's good at math tell me if we're wrong that's not one point seven trillion daniel because that's what we're hearing about is the ipo valuation we just got to half
- [47:53]
Dan Newman
that well you get it to some of the parts argument you got synergy there you got elon musk he trades above and you've got a company that is novel their ability to send loads to space and do what they're doing with spacex and with potential orbital data centers all of these things they have a unique market advantage however supporting elon musk historically has proven that entry does matter meaning if you've been with him a long time when you got in you will have done very well if you come in later and tesla has shown this you probably haven't done as well the ipo is very favorable to people who held his stock for over ten years you see retail's interest i i'm hearing it subscribed to about seventy billion of retail interest i think people will do very well if they're five year minded about space x but i do worry there will be some serious
- [48:38]
Brian Sullivan
volatility so there are players in sports that when they play they would move the line right like you know let's let's say a tom brady right retired now but when tom brady played you knew jalen brunson jalen brunson probably a more current reference in tom brady as
- [48:53]
Dan Newman
the first fan it hurts yeah so
- [48:55]
Brian Sullivan
i didn't know that how big is the elon musk factor how important is elon musk to a company's valuation and
- [49:04]
Dan Newman
stock price i mean it's been absolutely historically proven with tesla you just look at how tesla has performed in the multiples and the pricing the fact that it sits in the max seven despite the car industry he is an entire index in the automotive industry and there is a graphic that looks very similar to he is now an entire index success in the aerospace industry he has created more value because people genuinely believe not in what the business is doing today fundamentals do not get you there i don't think anyone is there fundamentally on the business being worth one point seven seven trillion it gets you there because elon musk is building orbital data centers he's launching reusable rockets into space and he's going to basically own an industry he says is going to be thirty trillion dollars that no one right
- [49:47]
Brian Sullivan
now can a lot listen a lot of people have very strong opinions both ways about elon musk that said we've got the ceo of digital realty on power launch they're one of the biggest data center builders in the world you think we're going to have data centers in space i'm not so sure i
- [50:00]
Dan Newman
think it's ambitious i think people believe him but the thing about elon has always been brian is not if he can do what he says it's when remember that cross country autonomous drive in the mid twenty fifteen sixteen well it took a little longer but he he got there and so the point is is does this business warrant devaluation and more in the long term yes is there probably going to be an entry for most investors at a lower price than what it will go out on new issue day i think a lot of people would agree yes in two
- [50:26]
Brian Sullivan
thousand nine i drove a tesla roadster it was the old lotus the little tiny lotus it was up route one in california that new roadster and i'm pretty sure that it was musk that i didn't know him at the time but i'm pretty sure that it was musk who gave me the key to the car but i don't know enough but it was unbelievable dan newman futurum group really great stuff appreciate that thank you very much all right speaking of spacex here's a big one from my friend and colleague morgan brennan in an exclusive interview tomorrow morning the company's president and coo gwynne shotwell by the way amazing just life story as well well join morgan the interview will kick off five am eastern on her show morning call big interview do not want to miss that if you're out west maybe you're asleep i always used to say it just set your dvrs or go to cnbc dot com of course we're going to have live coverage of that ipo throughout the day tomorrow expert analysis shareholders investors are unmatched team of reporters that you can only get right here on cnbc they even made an amazing graph on the radio you missed an amazing graphic all right another company that could get a big bump from tomorrow's space x ipo is actually alphabet it's amassed significant stakes some of the hottest private companies coming to market mackenzie sagalos has more as part of today's tech
- [51:48]
Mackenzie Sagalos
check brian alphabet has stakes in some of the biggest startup names here in silicon valley we're talking equity in databricks multiple ai labs space x and cursor which could potentially turn into even more space x linked equity if that acquisition goes through now space x is the big one it's their legacy windfall alphabet invested about nine hundred million in twenty fifteen that's now a roughly four point nine percent stake that could be worth north of one hundred billion dollars when spacex lists tomorrow investors i've been speaking with say there will be pressure to monetize at least part of that stake once it becomes eligible for sale but selling space x stock is not simple beyond the lockup there are liquidity limits strategic reasons to stay close to the company and a potential tax hit on an outright sale and then there's alphabet's anthropic investment that fourteen percent stake is more strategic the ai lab is a major customer of google's tpu chip so this isn't just alphabet buying equity upside in a hot air lab it is tying a frontier model company worth nearly a trillion dollars dollars now to google's infrastructure and potentially turning that investment into long term cloud revenue that helps explain alphabet's recent capital raise because if it doesn't immediately cash out on these stakes it can be very advantageous to tap equity markets now before a crowded slate of names come to market brian mackenzie
- [53:08]
Brian Sullivan
seagal is kind of leave it there but do appreciate that thank you very much that's it for us power lunch right after this short break
- [53:20]
Megan Casella
hello from
- [53:20]
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