A Potential Rate Cut In July… And Circle Soars After Stablecoin Bill 6/20/25

0:02Live from the NASDAQ market site right here in the heart of New York City's Times Square. This is Fast Money. Here's what's on tap tonight. A surging semi. Shares of AMD vastly outperforming the rest of the semiconductor stocks this week. What is behind the move and what does it mean for the current leader, NVIDIA? Plus, oil's next move. We're going to break down what is next for the commodity. As the world watches developments in Iran, Paul Sanky will join us coming up. Plus, a bidding war in the DIY world. The circle keeps soaring to new highs. We are counting down Nike earnings next week. The options action on Nike straight ahead.

0:44I am Brian Sullivan. In for Melissa Lee. Happy Friday. We are live. Studio B at the NASDAQ and on your desk tonight, Karen Feinerman, Steve Grasso, Tim Seymour, and Carter Worth. Welcome, everybody. Good to see you. Happy Friday. Thanks for being here. It wasn't my choice. All right. Stocks closing out. the holiday short week of the flat line with the Dow, managing to eke out a gain of about, what, three-tenths of 1%, S &P and NASDAQ down. Nobody cares. The S &P, though, down a little bit today. But we're going to focus on the future because what's happening today, we're coming off a holiday yesterday.

1:22We're going into a summer weekend. You've got a lot of Iran stuff hanging over there. Nobody thought anybody was going to take big positions today, and they didn't. There were some movers. your biggest laggards, communication services, materials and health care down, communication down about 1.8 percent. Get more on that. Energy up 1 percent. Get more on that in a few minutes with Paul Sankey at Consumer Staples and financials also rising. Now, the action or whatever you want to call it, came after Fed Governor Christopher Waller told Steve Leisman that the central bank could cut rates at its next meeting in July.

1:58Steve also sat down with San Francisco Fed head Mary Daly. That was in the last hour. Two big interviews today. Steve joining us now with all the headlines. For my guest, Steve, really the daily stuff is fresh. Great job today, working all day by the week. What do you think was sort of the main takeaway for you? You know, I think we might have started the day with a big food fight at the Fed and ended up with something of a debate around the dinner table. And let me see if I can explain all this. You know, the idea that Waller comes out and off the bat says, hey, we're going to we I think we should be cutting in July.

2:37It sounds like it's dramatically at odds with where Powell is. But then along comes Daly and she says, you know what? I think the fall is a better idea. But she's sort of in the same places where Waller is for those reasons. Let's listen to what she said. We cannot wait so long that we forget that the fundamentals of the economy are moving in a direction where an interest rate adjustment might be necessary. So she says the fall is more reasonable. Waller thinks they ought to maybe think about cutting in July. How big a deal is that? Well, Brian, one way to solve that problem is you come out in July with a statement that strongly hints at the idea of a fall rate cut, which is pretty much all the same for the market because what is the Fed going to do?

3:22It's going to guide the two-year lower through that process with a question as to whether or not the 10-year and the longer end comes along with it, which is a question that I have. But the idea that the Fed is a little less on the edge of its seat about tariff inflation is something that Daly seemed to express in my mind. And Waller certainly says, you know what, it's going to be higher, but we're going to look through it. So we'll see. And in a sense, Brian, we don't have to make up our minds The data will decide for the Fed, will decide for investors. If the employment numbers come out substantially weaker, the Fed knows what to do.

3:57If the inflation numbers are pretty high, well, then it's a bit of a bigger question. And you can kind of roll the dice. And I'll just tell you where the dice are at this moment. I don't know if we have a full screen on this. But July, 16.5 % is the probability for a rate cut. So the market buying a little bit of it, I guess that's a little bit higher odds than your odds of rolling, say, a hard 10 before you roll a 7 at the craps table. So I don't know how much you might take that bet, Brian. But then we get to 70 % for September and 72 % for December. So that's where the market still is, despite all of the talk today.

4:35I love it. Maybe the boxcars, double six reference here, Steve. You know, we often talk about inflation. The last few years, the Fed focus has really been about inflation, and rightfully so. But to your point, we kind of forget the Fed has two mandates, right? Price stabilization and maximizing employment. So just to editorialize, why not? It's Friday. What do you think is going to be the Fed's calculus between controlling inflation and protecting jobs if we start to see some kind of slowdown or job loss in the economy? Well, I think the obvious and incontrovertible job loss is kind of like force majeure for the Fed.

5:18It has to move. It will move in that context. And then it has to kind of hope that the tariff impact is one off. And then it's going to look at not just the tariff stuff. That's kind of the key here is look at the non-tariff stuff. How is that doing? The Fed and the economy has gotten a gift. Housing inflation is down. You've heard about the softness in the housing market. You had core non-housing services also easing up a bit. We'll watch the goods. We'll watch the tariff. That's expected to go up. But watch that and watch inflation expectations. It's pretty clear what the Fed has to do. And I think you could complain.

5:59I know some around the table there do complain about the Fed's transparency. Maybe it talks too much. But the upside of that is you get to look at all the data and kind of know how they think about this stuff and what they're going to do. So there's a lot of transparency. You've got to think a little harder than if it was just one person talking. But I think you can make up your mind when the data come in. And I guess we will. And we'll watch that data come in over the next days, weeks, months, whatever it may be. Steve Leesman, long day, great stuff all day long. Steve, thank you very much. Okay, we're going to pass from Steve to Steve.

6:30So, Steve Grasso, I'm going to kick it off with you just because the name was top of mind. Nice. I'm going to have Steve Leesman on more. Well, listen, two big interviews today. Waller made comments. I just don't know if anybody has any visibility, including Jay Powell on down, about where things are going to be, given we don't know what oil prices are going to do, inflation is going to do, tariffs are going to do. So, you know, when you look at the Treasury Secretary, Bassett, he had mentioned that the Fed is tight and he used that against the two year. So the two-year and the Fed funds rate.

7:02Two years around 4%. Fed funds rate floating four and a quarter or 450. Let's call it 4.3%. If that's the benchmark, we're tight right now. And what are the things that increase inflation? What's a third of CPI? Housing. A third of PPI? Housing. So the Fed's rolling off$35 billion off of that balance sheet. Karen knows I've been on this for a while, maybe too myopic on it, that increases an inflated 10-year, increases an inflated 30-year mortgage. So if we're not going to attack that mortgage rate, then I think that the Fed is just going to remain handcuffed. And the Fed, by their nature, are always late.

7:46They're always looking at the data. They're always looking at something in the rearview mirror. So to Daley's point, I agree with her, and I agree with Waller. I think you have to be ahead of the curve here. If you were to cut 25 basis points, you just get static right on that two-year. I think that's probably the thing they should do. And I can't for the life of me figure out why they just wouldn't cut. They did cut rates last year by 75 basis points. Now, though. Yeah. I'm sort of coming around to your camp of I do think they should cut 25 basis points. I think that we haven't seen the inflation really out of control at all.

8:22In fact, it's going the right way, and it seems to be moderating a fair amount. We don't know the full effect of tariffs. But to me, it's starting to be that the Fed is so burned from having thought things were transitory that they will never see anything transitory ever again. It has to be absolutely written in stone before they move, and maybe that's not quite the right thing. How badly could you really screw up if you do cut 25 and then inflation's a little higher? All right, then you wait. You wait longer before you cut again. So I'm sort of coming around to your case. Let's give Tim Seymour a promotion.

8:53He's now not only chairman of the Federal Reserve, he's all the Fed. You are all the voting members. Does Tim Seymour cut the Fed funds rate at the next meeting? First of all, Tim Seymour wants to know if Brian Sullivan said it wasn't his choice to be here at the start of the show, because, I mean, I've got to tell you that, you know, this is. But it wasn't ours either. Don't feel bad. That's what I thought I heard. All right. I'm chairman of the Fed. is it a food fight or is it a spat at the dinner table, of which we tend to have both in my house. I just, I think this is all consistent with what we heard from Powell.

9:28Didn't he say he was not terribly concerned? Wasn't the implication we're not worried about PC at 3.1 %? Didn't he come out and say until the labor market starts to, you know, convulse, I'm not that worried about things. And that's why the wait and see. 25 basis points, OK, but why? In other words, I think we know they're going to be late. He doesn't need to be early. So again, what we heard from Waller today was reinforcing what I think is the outer edge of the dovish Fed. But I think Powell said just as much. The fact that they said they weren't worried about inflation from tariffs was enough for me to think that they are slightly dovish.

10:09You know, Carter Worth, What's interesting, it was a lot interesting because they cut rates last year, as we said. We tend to forget about that. But what's interesting is that we had a small moment for about two weeks where rates fell. Like the 10-year was at, what, 3.5 or 3.6 and everything sort of happened. And then it just shot right back up. Any way to chart the expectations? Because the bond market and the Federal Reserve, I'm not going to say they're saying different things, but they don't necessarily appear to be humming the same tune. Yeah, the key, what you said, for a brief moment. There's a lot of brief moments at the end of the day, and there's just no way around this, Brian, that the yield on the 10-year U.S.

10:47Treasury and the yield on the two-year note are the exact same level right now as they were in the autumn of 2022. It's neither higher. Isn't that amazing? It's amazing. Isn't that amazing? Exactly. And so all of the effort and the spinning and toiling as to which way it's going, it's just nothing. It's vanity. And it doesn't matter. One day it will, but it hasn't mattered. And so it's one of the reasons, I suppose, that people are willing to expand the multiple on the general equity market because rates are neither a problem for being too hot or too cold. And that's why I have that bizarre phrase from the child's story of Goldilocks.

11:26Yeah, and I think, Carter, we're going to talk about oil in a second. People will say, well, we don't buy oil, we buy gasoline. That's fair. Most people that are watching and listening, they're not trading bonds, but they may want to buy a home. They may want mortgage rates to go down. They want to buy a car. They want to pay 9 percent. They want to pay 7 percent. Is there any sign, Carter, you see anything? We're going to see a meaningful decline in macro borrowing costs over the next couple of months. No, but I remain in the lower rates camp. I mean, as they say, thank you for choosing a side.

11:54You either are buying bonds here or you are selling bonds. And I am in the camp that rates go lower. I'm a buyer of U.S. 10-year treasuries. Buyer of U.S. 10-year treasuries. Maybe. And that means yields going down. Maybe a little bit of good news there. All right. Fed bond discussion done. Let's move on to energy because oil settling a little bit lower today, but it's all on the ongoing Israel-Iran conflict. And your next guest says the commodity oil may be topping out at current levels. Paul Sankey, lead research, Sankey research. So topping out, Paul, welcome, by the way. Thank you. Very happy to be here.

12:31So with a giant asterisk, which implies we don't have a, you know, a bunker buster bomb taking out the Fordow nuclear site. Yeah, I mean, I think that. Or a mine laid in the Persian Gulf. No, I think, look, Brian, what happened was we got chopped up. We were talking short down at 60, you know, and it's gone up to 75. And I think the Wall Street view is that we're topping out here that you should fade this move. But having said that, you know, if you look back at the long history of let's bomb Iran potentially, which has been a 20 year question mark. the question was always what do you do day two you know you can bomb Iran but then what are you going to do afterwards nobody's going to invade so you get a fragmented situation probably with the revolutionary guard in charge and you probably end up with a Houthi style situation that's the big risk the dream scenario is obviously Iran becomes a new democracy and we all live happily ever after but of course the history of these things if you look at something like Venezuela is more like it's going to be an ongoing disaster area because Nobody wants to go in there.

13:29So I'm very concerned about that side of the Iranian story. Having said that, Iran has never been a reliable supplier of oil. So we're not looking at a situation like an attack on Saudi, such as we saw in 19. And we also reflect back that actually you haven't had an oil supply crisis out of the Gulf that actually physically greatly affected oil markets since the 70s. And that, of course, was a missile war against tankers. And that's not off the table. That would be a super spike in the price, right? If we get some tanker that's hit by a rocket, two just collided, but you could say, well, they just screwed up and they hit a couple of days ago.

14:04Yeah, but that's because they've got the transponders off, right? Well, were they off? They got jammed, is what people were talking about, right? So there's clearly issues. But the crazy thing at the moment is there's vast amounts of oil being delivered out of the Gulf in a huge rush to get oil out of the Gulf. And actually, the physical outages have been in Israel. So I think this is a real plot twist, which is new this time, which is Israel previously wasn't a major gas supplier. Now it is with the Leviathan platform shut down to BCF a day. That's actually constraining Egypt's gas supply is desperately short energy.

14:33And so they're importing oil and Israeli refinery has been taken out. So that's had a major impact. So I think what people have missed here is that the actual energy impact has been on Israel. And that's been what's hurting European gas prices, where, again, they're behind on. I know everyone wants to jump in, but this is fast money. It's a stock show. So what does this all mean for the Valeros of the world, the Exxons of the world, the Chevrons, the refiners, the Marathons? The volatility is not good, right? So for the equities, you know, it's almost an argument to be a private refiner because the market's not going to reward you with this level of massive uncertainty.

15:06It's very hard to capitalize an oil price here. The market, as you know, from the futures point of view, says this isn't going to last. It's heavily backwardated. And then it's very flat forever. And one thing I always point out about a flat futures curve for oil is that it's nominally priced. So actually, if we're in a world where we're trying to buy gold, hard assets, anything that's hard to defend against inflation, it's interesting that the oil price implicitly real is really backwardated, if you know what I mean. So if you would deflate it, that's a little bit of an involved point. But there seems to just be an absolute conviction on Wall Street.

15:39And I've been as guilty as this is anyone that this is a peaking out. And in fact, a couple of big hedge funds I've been talking to this week are just using the argument, hey, everyone thinks fade this. Everyone says, you know, this is not going to last. and they're actually tempted to get back in. The original 40 call that we made was about if there's far too much oil, how low do we have to go to shut down the U.S. E &P? And in fact, what happened, as you know, is the U.S. E &Ps cut back capex at the first sign of trouble. We've never seen them cut back capex with oil in the 60s as a preemptive move.

16:09And of course now, you know, so the idea that they would just keep producing onwards and onwards. And finally, there seems to be pretty good demand for oil out there, but it is summer. So I think the real time to get negative oil is always after Labor Day. So we've seen oil, the energy sector, underperform for quite a long time now. Is there some, I understand the potential pervasive bearishness and the backward, or profound backwardation that we don't really see that way. Is there anything that makes you bullish aside from everybody so bearish? I mean, I genuinely believe that these oils will generate a cash return to shareholder that's undervalued in the market over time.

16:48But this is not a market that buys the Warren Buffett school of Benjamin Graham style, present value of future free cash flows. And so even with the oil age seemingly lasting a lot longer than we would have thought five years ago, or certainly that was discounted in the market in 2020, 2021, when it was the energy transition and oil was dead and BP was saying, we're going to have to not be an oil company. Everything that's happened since then tells you the oil age, particularly the gas age, is going to continue for another 50 years. And the market's not paying enough for the cash returns that are implicit.

17:20I know we've got to go. BP, they try to change it to Beyond Petroleum. Yeah. I mean, BP's been a disaster for years. The CEO got whacked. Yeah, I mean. Does BP get bought by Shell? You know, I'm not sure. Potentially, it could be a deal ultimately because BP is so, so cheap. Or it could be, for example, we've seen Abu Dhabi get into Australia. You know who knows how much they're going to pick up around the world in terms of buying assets But at the moment I think that well someone is very clear that he's going to run shell to get shell right And he's there's a really good message at shell which is it's sequential.

17:54Let's get shell right first Let's think about if we're not being rewarded moving to the US and maybe one day we'll do a BP deal But I really don't know why he would confuse the story and get involved with the UK government And, you know, every time I talk about the U.K. government, I'm just so disappointed with what they've done with the North Sea and how badly our energy policy has been run. It's been, to me, a disaster. Yeah. Well, they found out that you can't run the world on windmills and dreams. Imported wood chips from America? No. No. And that's what they're doing. I loved your comment about Abu Dhabi getting into Australia.

18:26They bought Santos or buying Santos, which is also a big producer in Alaska. So Abu Dhabi is now buying into Alaska. Yeah. And also, by the way, Brian, Mitsubishi, Japan, buying into U.S. E.M.P. You know, so other people will see the value in oils if the public markets don't. So I think when you really look at these things, do we say goodbye to the guests? We did. He's still here, but we're going to say goodbye. So to your point, when you look at the refineries, if you look at Valero and you look at MPC, those are the ones who have outperformed large integrated names. I think you stay with those names going forward.

18:58And if you look at E &P companies, they have really not performed. I'd stay with the refinery. trade. Oh, a marathon had a huge fire at its biggest refinery last Sunday. No one paid attention because what was going on in Iran. Luckily, nobody was hurt. All right. In the meantime, AMD separating itself from the rest of the semiconductor stocks, AMD stock up 10 percent this week, while the rest of the chip sector up just one percent. So why? Well, the Wall Street Journal reporting that the U.S. is preparing to revoke certain waivers for foreign semiconductor makers that use American technology in China.

19:34So Tim Seymour, explain this to us like we're fifth graders, because there's a lot of double negatives in that revoke, not use waivers. What exactly is happening? I think this is about promoting the, you know, the American or the, sorry, the U.S. producers here. But I don't think that today's news is part of the AMD outperformance. Remember, AMD's underperformed NVIDIA by 60 percent in the last 12 months. This is about both positioning, underperformance. AMD just came out of their event where they gave a lot of insight into the 350 and the 400 chips. These are chips people had forgotten about when in the first early days of AI, it was really seen as they were a distant number two, but they were a number two.

20:17So to me, this is, I wouldn't call it relative value because NVIDIA is cheaper. I think this is relative positioning and where I think there's a lot more momentum. Meanwhile, their core business, their CPU business is actually doing quite well. I don't think today's news, I think it just highlights the fact that there is rotation going on in the chip space, even though, yes, U.S. producers and those that are strategically aligned with this administration and government are going to outperform.

20:43Yeah, yeah, I think on a relative basis, NVIDIA, everything that you said to start off this segment is negative, more negative on a relative basis for NVIDIA. I'm not sure what I said. Yeah, no one is at this point. I can't remember what you said. No, but you get my point. They're revoking a waiver. I think I remember you saying you weren't happy to be here. No, I'm kidding. I'm joking. It was obviously my choice. I'm joking. I'm joking. I'm trying to make it Friday. But the idea is that the government may revoke the waiver. So right now they allow the TSMCs of the world to sell technology developed in America to China.

21:14The idea of this story is that they want to revoke that waiver, which allows them to sell into China. I think anything that hurts an NVIDIA helps an AMD. AMD is 5 % reliant on China revenues. NVIDIA is probably 10 % to 16 % thereabouts. So if AMD can gain market share, that's why you see a relative outperformance. I would say AMD over NVIDIA. Okay. Well, it certainly worked this week. Coming up, a building bidding boom. The nuts and bolts on why Home Depot may be ready to join the battle for a big distributor you probably never heard of. But it's a multi-billion dollar deal. Plus, is there any stopping Netflix while analysts see even more room to run for the streaming company as shares inch back up toward record highs?

22:05We got a lot more to do. Fast Money back in two minutes.

22:13All right, welcome back. Home Depot reportedly joining the battle to buy building products distributor GMS. The offer reported by the Wall Street Journal comes after rival QXO bid$95.20 a share for GMS on Wednesday, valuing the company nobody's heard of, unless you're a builder, at$5 billion. GMS shares close the day above$100. They're up 32 % this week. Karen, you're watching all of this roll in. Yes. So I am long QXO, which is Brad Jacobs' next vehicle to roll up an industry. Brad Jacobs started XPO. He started XPO. He started United Rentals, rolled up that industry, very fragmented. The whole sort of theory here was this whole home building related distributions companies around America are very fragmented, not run particularly well or efficiently.

23:03We can roll them up. We can do so much better. They did their first deal, Beacon. And right after that, other targets started trading up like this one. and then they sent a letter with a$95.20 proposal, allegedly, and I believe it Home Depot put something higher out there. We'll probably see on Monday what that is.

23:28Now, QXO bumped their bid for Beacon. I think they have more in their pocket here for sure, even though they're trying to talk that down. But we'll see. It's sort of an old-fashioned bidding war, I think. Yeah, and Brad Jacobs, they called him a serial dealmaker. You're right. United Rentals, XPO, now this. Carter, chart this. Well, GMS, interestingly, it has a high of 105 back in November and today's high 105. It always is a mystery, but it's not, meaning I have a lot of friends who are in the investment banking world and they ask them, what do you think? Why do you determine the price you might propose to have something taken out?