Energy Trade Heats Up… And Starbucks’ Stealth Move 6/11/25

0:02Live from the Nasdaq market site in the heart of New York City's Times Square. This is Fast money. Here's what's on tap tonight. We're breaking out. Energy stocks leading the market this week as oil jumps back to two-month highs. So can the sector keep climbing and what will it mean for inflation? And Starbucks getting a jolt today. The coffee chain quietly at its best level since early April. Is Brian Nichols' overhaul finally starting to bear fruit? We will debate. Plus, more upside for the S &P. Why one top strategist says the benchmark could rise another 16%. We are watching all the moves in Oracle after its latest earnings report, and our Disruptor 50 reveal continues.

0:41Tonight, we are joined by the CEO of fintech startup, Ramp, which climbed to number six on the list this year. I'm Courtney Reagan in this evening for Melissa Lee coming to you from Studio B at the NASDAQ. On the desk tonight, we have Tim Seymour, Steve Grasso, Bono and Eisen, and Guy Adami. Well, stocks giving up early gains today, initially rising on softer-than-expected CPI print and news that the U.S. and China have reached a trade agreement. But things reversed in the afternoon, with the Dow, S &P, and Nasdaq all closing in negative territory. More on that shortly, but first, some signs that the energy trade may be reheating.

1:15WTI crude surging nearly 5 percent and hitting its highest level since the start of April. The gains coming as U.S. officials are reportedly looking to evacuate the American embassy in Baghdad amid heightened tensions with Iran. President Trump has said he is less confident Iran would agree to stop enriching uranium in an updated nuclear deal. The S &P energy sector are popping a percent and a half, with those gains accelerating into the close. Today's move putting the sector just barely into positive territory, though, for 2025. Devon Energy, Target Resources, ConocoPhillips, and Diamondback leading today's gains, each of those stocks rising over 2 percent.

1:51So after a lackluster start to the year, Are we approaching a bigger breakout for the energy trade? Guy, I'm going to start with you. When you look at those charts, does it make you feel like it's only higher from here? First of all, welcome, Courtney. It's always great having you, number one. Number two, there have been many times that I've personally been faked out to the upside on these crude moves, specifically on whatever this is, geopolitical risk or concern. But in terms of the stocks you just mentioned, yeah, they do feel like they might have sort of inflected a little bit. I mean, I'll look at Valero, for example.

2:20Bit of a double bottom. I think it's breaking through about a two-year downtrend, closed around 134 today. You know, you get this above 136, and I think it's sort of off to the races. So although it's only 3 % or 4%, I think, of the S &P 500 now, the energy sector, I do think there's something going on here to pay attention to. Steve, you had some interesting thoughts that we were talking about when you're looking sort of at the entire market and what moves with bull cases, what moves with bear cases, and you're like, look, it's energy. Yeah, I think people got lopsided. And if you thought that the market and the economy was going to go into a recession, you have to be a seller of crude.

2:52And if you think, which is the fact, that OPEC is continuing to increase supply, you have to be a seller of crude. If that doesn't take place and the market continues to rally and the economy continues to do better, something has to be offsides. In this case, it was the energy space was offsides. Those stocks were priced a little bit too low. But let's remember, though, out of the S &P, the energy space is only about 3 or 4 percent of it. And when you look at tech, that's 33 percent of it. So before we get excited about the move, can it last? To Guy's point, there's a lot of head fakes in the energy space.

3:33I think there's going to be an oversupply, but this is just a minor correction, in my opinion. Tim, what about the geopolitical reasons behind this move? Does that give you any concern? Does it feel more defensive? I would not be buying oil on geopolitics, although buying oil on Russia, Ukraine was the right move. And I think a little different than what we have here. It's never really right to buy it on a hurricane. It's never really right to necessarily buy it even on. We have weekly inventory numbers all the time. There's a lot of volatility in there. I'll say the following, though. I mean, Steve's right to point out if there's a growth scare, that's to me going to trump almost any of the fundamentals around the supply side.

4:10The supply side is very important, and it has been under control and relatively stable over the last couple of years. If you listen to the EIA, though, the headline yesterday, today, whenever it came out, was that U.S. has peaked production on shale. And at least if you think about fracking and some of the drillers here at WTI, which is the grade that we trade off of here, actually they're below break-even levels right now in where WTI is. So if you think that actually the U.S. has peaked in terms of oil production, that's something that should be constructive to oil prices here. I think if you look at back to some of the names Guy mentioned, I look at the integrated players and I look at even some of the European integrated, whether it's Total or Royal Dutch Shell.

4:48And I love the story because I think their their dividends break even somewhere in the mid to upper 40s in terms of Brent. I think the the dynamic around demand and where the economy is, I think, was also a little overstated, at least for now. I think we're all questioning where we're going to be in the second half of the year. But right now, I think this is a trade that actually, with a handful of these names, these are, I can own Chevron long term. I'm not worried about it. Bono, when we look at the energy sector, are you putting any premium on the potential that some regulation could come off and make it easier for some further investment to go forward?

5:22I think we had the Williams CEO, admittedly that's natural gas, but he sort of said, look, we spend more money on dealing with regulation than we do on the steel in the pipelines. Fair, but if I was going to play the deregulation shade, it would probably be more concentrated in financials. But I do think it is a possible catalyst. I think you can also point to valuation and dividend yield as also constructive reasons to own the space. But like everyone else has kind of said, these are more trading mechanisms, you know, around geopolitical risk and whatnot. They've already spoken to the weighting 3 percent versus 33 percent.

5:53So in terms of new leadership leading as higher, I'm not sure, one, you have the beta or two, you have the weighting for the passive type of flows. for energy to really be, you know, a leading sector. With that said, they are often under-owned. And I think most recently we've seen quite a bit of concentration in the catch-up trade. And I think that's really where energy has kind of, you know, kind of popped its head up and kind of moved to the forefront. So I think there is probably a short-term, medium-term catalyst or possibility for you to trade around these names. But in terms of establishing core position, I'll reiterate, I don't think there's enough beta or weighting for that to really be, you know, your core holding.

6:30That makes a lot of sense, Guy, though, when you look at the move, are you sort of heartened to see that we're broadening out beyond those tech players that we put so much emphasis and attention on? Rightly so, because of the rating, but maybe we're broadening out to provide some more opportunity. No, it feels that way. I mean, today's reversal might be interesting on the back of the headline that we saw a deal and the fact that CPI came in a little bit softer than expected. So we'll see how this plays out. But, yes, I'll take there's some consolation there. But quickly, in terms of you said regulation, it's amazing.

7:00and I don't think a lot of people would think this, but you go back to when President Biden was elected. The OIH went from 100 to about 330 during his administration, potentially one of the most energy unfriendly administrations of the last 50 years. That's when these stocks did their best. They all topped out towards the end of it. But with all that said, I think to your point, they're going to get some tailwinds, I think, on a number of different factors, not least of which maybe some rotation into the space. I'll just say this about that. And you're right, Guy, because we're at post-pandemic lows in terms of rig counts.

7:31We've been going low. We're down 50 rigs year over year from where we were a year ago. And I think this is something that, as much as I have loved Schlumberger and some of the oil drillers, I'm not so sure you want to be in that part of the trade. I want to be in the part of the trade where I don't think energy is going anywhere. Whatever you think the carbon footprint should be for industrials, for people, for cars, whatever, The reality is that I think a lot of these big integrators that said they were going to be carbon neutral by 2030, there's no way that's happening. And, in fact, I want to own Chevron.

8:03I want to own Exxon. And I'm not sure I want to own the drillers, even though I think Schlumberger, which is a name I'm long, is one that I've had a lot of debate over over the last three weeks. Steve, what about sort of broadening out beyond the Chevrons of the world and thinking about nuclear and uranium? Sort of, you know, nuclear power grids are going to be in all sorts of demand as AI moves forward. I mean, are there any plays there? Yeah, those names have had a substantial run already. So it's a matter of buying the best quality name in the small nuclear reactor, so SMR. So if you think about those names, we've already seen sort of the pop in those.

8:38There's going to be an underappreciated asset, which is electricity, and we've been dealing with that for the last two years. I would rather be there than in fossil fuels, but I have no problem owning an ExxonMobil or a Chevron long-term. These are long-term investment plays, large integrated plays that are everywhere. Rather than a trade, it's a long-term for you. Got it. Well, we do have a news alert on Scott Besson's Senate testimony this afternoon. The Treasury Secretary making some comments on the U.S.-China trade deal. CNBC's Eamon Javers has the latest. Eamon, what do you got? Hey there, Courtney.

9:08A couple of things to bring you up to speed on here in terms of the Treasury Secretary's testimony. He testified, by the way, for, by my count, something like six straight hours on Capitol Hill today in front of two separate committees on three hours of sleep after flying back to the U.S. from those trade negotiations in London. He said that as the trade negotiations are going on, he thinks ultimately if things are going well, the Trump administration is willing to push the deadline for those negotiations past what President Trump has already said. So take a listen to how he expressed that and see if you pick up on the nuance here.

9:43It is highly likely that those countries that are negotiating or trading boxes, in the case of the EU, who are negotiating in good faith, we will roll the date forward to continue the good faith negotiations. If someone is not negotiating, then we will not. So a couple of open questions there. One is, you know, what does the administration mean by in good faith? That's pretty subjective. And then what will they roll the deadlines forward to? Will there be some other deadline, date certain, in the future that will reset to in terms of our expectations around trade deals? Not really clear from what the Treasury Secretary had to say today, but it is clear that if they're engaged in what they consider to be good faith negotiations, then they will push forward.

10:29He was also asked in a Senate committee hearing, a Senate Appropriations Subcommittee hearing by Senator Van Hollen on this question of whether or not the administration is willing to lower its standards around chips and rare earths, that is, to allow chips to be sold to the Chinese government in exchange for access to rare earths. And here's what he said about that. We have been very judicious in that. So there is no quid pro quo in terms of chips for rare earths. So the Treasury Secretary there is saying there is no quid pro quo in terms of chips for rare earth, but not really being explicit that the administration is not considering the idea of lowering the standards for exports on super sophisticated chips.

11:21So maybe a little wiggle room there, but he's clearly signaling that there's no deal in place with the Chinese in order to lower the restrictions on selling ships to the Chinese government. Back over to you. He has certainly been very busy, as you pointed out, that very tight schedule, very little sleep, and every word does seem to matter. And the nuances in the wiggle room matter, too. And, Eamon, congratulations to the newest graduate in your family as well. Thanks so much for being here with us. Bono, what do you make of what we've heard or known about what we know has been discussed in these trade deals with China?

11:53Does it, I don't know, give you any confidence that we've gotten a little further? We've passed that ball along. The markets didn't really move so much. I can tell you what I know. I think the knowns are that there are many unknowns. I think that's probably the most constructive way that I can put it. I think this is a step forward in terms of market sentiment and reaction. As you mentioned, it was quite a mutative response, which leads me to believe that the markets had largely already priced this in and anticipated a lot of this. The other thing, slightly deviating from the U.S., China specifically, but I think it's all wrapped in, is what this likely means for the Fed and those moves going forward.

12:36You know, if we've seen all the consternation about cutting more aggressively, I don't think the Fed can afford to put itself in a situation where they may have to raise rates. As Steve has mentioned, if the economy is going stronger, if employment remains a bit more stable, and if we have this lag tariff effect, are we in a situation where we cut in an anticipatory way and then have to reverse course? And I think that is a situation that the Fed is trying to keep themselves out of. I think U.S.-China related, I think this helps perhaps blunt some of the effects of tariff upward pressure on inflation going forward.

13:11But I still don't think there's enough. And there's been so much back and forth, extensions kind of walking back of our position, that I'm just not sure there's enough hard data to support a rate cut or raise right now until we get, you know, several more months of inflationary data. Yeah, sure enough. And, Tim, I mean, it looks like the tariffs writ large on China are still staying in place. They may not be going up, but they're not going down. I mean, they're still relatively high from a bunch of the companies that reported. So, look, we're going to do our best to mitigate through this. But these levels are still pretty high.

13:41Well, we're four times the effective tariff rate of when we went into, well, the pre-liberation day dynamic, certainly where we were last year, even if we're at 17 percent. Now, we don't even know where we are, but I would just bring it back to the market where I think we've danced around already for the first part of the show. Semiconductors are outperforming the market significantly. The to me, the risk aggression trade is slowly catching fire again. And it's kind of a crazy idea. But I mean, anybody who thought that AI was done is done. Seriously, if you were the other way on that trade, it's been very painful.

14:11And that includes all the periphery trades. That also includes software companies which are starting to take off and the parts of the market that I actually think will continue to do well. It doesn't mean that we're where we were in mid 2024. But again, I look at that Nasdaq, which is dancing very close to a new relative high against the S &P, which didn't achieve. And, you know, the last time it did that was back in July of last year. Those are the dynamics. I think, you know, VIX sub-17 tells me semis are going higher. These headlines continue to tell me the market is going higher because the worst of tariff and not the economic impact, but the worst of the tariff dynamic for the market is behind us.

14:47Well, Wall Street's biggest bull predicting the S &P 500 will jump 16 percent from today's close. By the end of the year, Chris Harvey is the Wells Fargo Securities Head of Equity Strategy. He is with us here. So why are you so bullish then? You're looking for 16 percent upside from here when there is still so many known unknowns or unknown known. If you look at things right, there's a narrative and then there's the fundamentals. Credit spreads, 85 basis points over, not very recessionary. If we look at the IPO market, the M &A market, we were worried about that. IPO market is hot. M &A market's beginning to come back.

15:21If we talk about the change in regulation, we haven't even seen the benefit in the change in regulation just yet. If we get some sort of trade progress, and we're all talking about China, but when I look at what happened with India and some of the rhetoric coming out of the Indian-U.S. negotiation, that was actually pretty positive. That could be the template. And what did Waller say not that long ago? hey, if we only have 10 % tariffs, we can start cutting rates. Now we start cutting rates, that's a whole new ballgame. And if we do have resolution, not resolution, we won't have resolution, but if we do make tangible progress on trade and tariff, you can start looking through that bad news and you'll start looking to 2026 and that's pretty good.

16:02How do you look past, though, the way that investors and or consumers feel when we talk about the soft data? I discount the soft data heavily, right? We're not, I will talk, I am trying to talk to anybody who will talk to me on jobs, right? We're hearing a lot of noise about jobs, but I can't find the real pain, right? We're talking to economists, we're talking to corporations, we're talking to analysts. You see pockets of it, but there's nothing systemic. And the soft data, it's just not there. We went through the presidential election cycle. Soft data didn't work. The predictive data did work.

16:37And that's where we're placing our bets. That's where we're placing most of that focus. And that is supporting the hard data. My worry about the jobs, though, is that we may not have seen it yet. If companies are going through these various mitigation strategies to try to cut costs elsewhere. And that one big way to cut costs, unfortunately, is to cut payroll. And so maybe we just haven't seen that yet. I mean, is that factored into this? That's fair. Right. So the comment before was, does do tariffs work with a lag? Possibly. Right. And the other thing that we talk about is uncertainty. And I'll throw out a comment that probably won't make sense at first.

17:09If you don't know, you know. If we get to the middle of summertime, we still don't know, then you know you have to make those hard choices. You know you have to cut costs. You know that you have to reduce the labor force, and everyone will do it together. And that is the big fear. Chris, when you look at rates, you talked a little bit about it before, but when you look at the CPI number, the biggest in CPI and PPI are shelter costs. Right. So those went up, but gasoline went down, and that dragged down the overall headline number. Where do you see that going? How does shelter costs come in? Because that's the only tailwind for this economy is if the mortgage rates come down.

17:45Right. So mortgage rates can actually come down if you get volatility in the rate market down. The way you get volatility in the rate market down is the Fed starts giving you forward guidance. The Fed starts telling you what we're going to do three months, six months, 12 months in advance. We may get that, right? And then you can have rates stay where they are. That volatility starts to compress and mortgage rates come down. That would be a real plus. But also what I would add to that is I think we missed a big opportunity. The U.S. administration could have done something on tariffs, not tariffs, on a deficit.

18:16They did not. That would have been a home run trade. That would have rallied mortgages. That would have rallied treasuries, mortgages, so on and so forth, made things much more affordable. That was a big missed opportunity. You were here at the end of March. You were bullish. That proved to be right. How do you wrap your head around, though, the current S &P valuation, which is high by any historical standard? So in my take, you talked about it before. There's a great secular AI trade. And I lived through the late 90s, and we went back to the late 90s, and we tried to make the comparison. And at the end of the day, it's not a fair comparison.

18:49Back then, you had WorldCom, Quest, Global Crossing, Level 3, all super levered companies going to the credit markets, tapping those credit markets and leveraging up even more to put fiber in the ground. And the philosophy was build it and they will come. Today, you have some of the best and the brightest, right, spending on CapEx out of their own pocket. And what you have is something more analogous to Wintel, where the infrastructure or the innovation is sitting right on top of the infrastructure and one is feeding the other. Jensen over at NVIDIA, that phrase that he has, we are producing AI factors.

19:24We're producing AI plants. it's a good one. And I believe with that or I believe in that. And so there's still that great secular. I hate to cut you off. We have no time. But 16 percent market jump. Nobody's asked about when. I mean, in other words, that's the second half of the year. We're going we're going up 16 percent from here and two half 25. So if the Fed starts cutting rates, if we have more M &A activity, if we start looking to 23, if we have some sort of progress or template for trade and tariff, Where do we go? Up or down? And sorry to open a new can of worms because I know we have to go to a break.

19:56Sorry about that, Courtney. Thank you, Chris. That's okay, Tim. Thank you so much, Chris Harvey. Thank you so much. Thank you so much for being here, Bonwin. I'm going to give you the last word before we do have to get to that break. Listen, I think Chris makes a very compelling argument in terms of how we can go hard the second half. I would, if I had more time, I would ask him the flight path there and whether or not, you know, he expects more volatility. Because that's the way we think he's buzzing the light tower right now. Well, I'm not even sure I know what that means, so I'm not going to answer that.

20:25It's not UD. But anyways, is the move higher also going to be lockstep with more volatility? And will that present trading opportunities? Because for the fast money cohort, you're going to want to kind of pick your entry and exit points. And if you're able to kind of trade around and add a little bit more juice to your portfolio, I think, you know, perhaps, you know, those of us that are a little bit more bearish might feel compelled to dip their toes in. We're going to have to have him back so we can finish up that conversation. Well, coming up, a quantum leap. The high-tech stock surging as NVIDIA CEO Jensen Wong weighs in on the space.

20:58Why he says the technology is reaching an inflection point. But first, some after-hours action to bring you shares of Oracle on the move after reporting results. The details from that quarter next. Don't go anywhere. Fast Money is back. Me too.

21:19Welcome back to Fast Money. We've got an earnings alert on Oracle. Shares popping after the company reported EPS and revenues that came in above expectations. Currently trading near January, highs of 7%. Christina Parts of Nettles has the details. Hi, Christina. What can you tell us about Oracle? Well, there's also some rosy earnings commentary from its C-suite. CEO Safra Katz saying she expects fiscal 2026 to be even better this year, the, quote, dramatically higher revenue growth rates. Oracle chair and CTO Larry Ellison. Ellison also appearing optimistic, saying growth rates for Oracle cloud infrastructure revenue, OCI, which is really important, also, quote, skyrocketing along with demand.

21:54The biggest draw from the release is the company promising 100 percent growth for remaining performance obligations in fiscal 2026. Essentially, that means the backlog, so 100 percent growth for backlog. On the call, they're saying that that number is only going up from here. That's a quote. Oracle CEO also saying they will exceed, and this is just happening now, their revenue guidance. They're saying they're going to exceed previous revenue growth targets for fiscal 2027. They say now confirming that for fiscal revenue, for this fiscal year, revenue will be$67 billion, slightly higher than estimates.

22:26And remember, Oracle just has this massive backlog. And reaffirming that revenue guidance of$67 billion shows that they are turning that into revenues. And so that's why you're seeing the stock pop even higher to 7%. Guys? Got it. Christina, you're just being on TV at the same time as you're listening to the call. Thank you very much for bringing us the headlines. Yeah, it's one year. Literally, it's one year in one year and the other. I can tell. The updated guidance. Yeah, and I'm trying to read it at the same time. People don't know. We have to write what we're saying and, yeah, multitasking.