In short
Episode topic: Market reaction to rising oil prices and the Iran conflict; housing outlook amid mortgage-rate volatility; software/AI trade after Oracle earnings; robo-taxi expansion via Uber-Amazon; private credit/asset-manager selloff; and a Caesars takeover bidding war.
Guests and backgrounds
Lori Calvasina, head of U.S. Equity Strategy at RBC Capital Markets; Logan Motoshami, lead analyst at HousingWire.
Key claims
IEA will release a record 400M barrels, but oil still jumps and consumer/housing costs rise; S&P resilience may reflect sector bifurcation, while cracks exist in financials/credit; housing depends more on 10-year yields and mortgage spreads than sentiment—existing home sales look fine if rates stay near ~6% and spreads don’t worsen; Oracle’s rally is driven more by AI/data-center demand than broad software strength; Uber’s partnership with Amazon’s Zoox supports an asset-light robo-taxi rollout; private credit narrative is worsening as banks mark down loans and investors extrapolate contagion; Caesars is “priced right” for take-private interest.
Notable examples
WTI above $87; ITB home construction ETF losing streak; Oracle raising guidance and saying no new debt; Uber-Zoox rides in Las Vegas then Los Angeles; JP Morgan reducing private-credit exposure; Tillman Fertitta reportedly bidding ~$34/share vs Carl Icahn ~$33.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOMarket Recap and Energy Prices
1:56 to 2:09
Discussion on market performance and rising energy prices.
“On Wall Street today, the S &P closing just below the flatline.”
Impact of Oil Prices and Strategic Moves
2:09 to 4:25
Analysis of oil prices and President Trump's comments on the Strategic Petroleum Reserve.
“Crude oil prices making a comeback from yesterday's 12 percent drop, rising well over 4 percent.”
Market Reactions and Inflation Concerns
4:25 to 6:06
Insights on market reactions to inflation and economic indicators.
“And you can be, if you're silver linings, Dan, which you are, you could say the market is digesting and it's actually doing quite well, given all of the concerns about AI buildout, private credit and now a war.”
Sector Performance and Stock Market Dynamics
6:06 to 7:16
Discussion on sector performance and overall market dynamics.
“then switched immediately to regular grumpy Dan?”
U.S. vs. Non-U.S. Market Valuations
7:16 to 8:31
Examination of U.S. market valuations in a global context.
“What we do know is that the two or three most important sectors are under a lot of pressure.”
Consumer Impact and Economic Challenges
8:31 to 11:31
Exploration of how rising oil prices affect U.S. consumers.
“And we hear, OK, this is the worst for Asia.”
Consumer Spending and Economic Pressures
11:31 to 14:00
Analysis of consumer spending patterns and economic pressures.
“the management said that we don't start seeing demand destruction until$5 a gallon, which is a far cry from where we are right now.”
Impact of Rising Gas Prices on Consumer Behavior
14:00 to 16:43
Learn how rising gas prices affect consumer spending and behavior.
“As an area, I would be underweight the space.”
Housing Market Outlook with Logan Motoshami
16:43 to 19:56
Explore the current state of the housing market and mortgage rates with expert insights.
“Mortgage spreads are the unsung hero of the housing market this year and last year.”
Consumer Sentiment and Economic Indicators
19:56 to 23:09
Understand the relationship between consumer sentiment and the housing market.
“In that context, that would be a negative, more negative story for housing than the consumer confidence data here.”
Show all 24 chapters
Oracle's Earnings and Software Market Implications
23:33 to 23:53
Delve into Oracle's recent earnings and its effects on the software sector.
“And I'm other GLP ones, kind of like him.”
Oracle's Earnings and Software Market Implications
23:58 to 28:00
Delve into Oracle's recent earnings and its effects on the software sector.
“and Ozempic semaglutide injection, 2 mg.”
Analyzing Software Market Trends
28:00 to 28:51
Discussion on the valuation and earnings revision trends in the software market.
“And if you look at software on its own, it's that P.E.”
Upcoming Show Highlights
28:52 to 29:40
Preview of topics including Uber's partnership with Amazon and private credit concerns.
“Why your next Uber ride could look a little bit different.”
Uber's RoboTaxi Partnership
30:40 to 32:05
Analysis of Uber's new partnership with Amazon's Zooks and its implications.
“The ride-hailing company announcing it will partner with Amazon's Zooks RoboTaxi unit to offer rides directly on its app beginning in Las Vegas this summer with rollout in Los Angeles slated for next year.”
Market Concerns in Private Credit
32:05 to 32:50
Discussion on the pressure in the private credit market and its implications for investors.
“Did you see the picture of the little thing?”
Stock Market Update and Trends
32:50 to 34:08
Summary of stock movements including crude prices, Nike, and Campbell's earnings.
“credit concerns and the war in the Middle East, how RBC's Lori Calvacina here is navigating all the headwinds and where she sees the biggest opportunities right now.”
Private Credit Challenges
34:08 to 35:56
Exploration of challenges faced by private credit firms and banks amidst market shifts.
“The stock's now off nearly 25 percent or more this year.”
Current State of Financial Sector
35:56 to 38:27
In-depth analysis of the financial sector's performance and recent trends.
“Like, when everyone else is, you know, like, pulling back from these things.”
Gambling on Caesars: Bidding War
38:27 to 39:07
Details on the bidding war for Caesars and insights into investor strategies.
“To some extent, risk management is better, and yet it's never quite good enough.”
Caesars Acquisition Insights
39:07 to 42:00
Analysis of the implications of potential acquisitions in the gaming industry.
“Caesars popping late in today's session.”
Gaming Stock Analysis
42:00 to 43:15
Discussion on the performance and prospects of gaming stocks.
“But the other people close to this say this is not the only company.”
Progressive's Insurance Performance
43:26 to 45:21
Analysis of Progressive's insurance stock and market conditions.
“Shares of insurance company Progressive have had a bumpy start to the year, down nearly 12 percent since January.”
Final Trades Discussion
45:21 to 45:56
Participants share their final trade recommendations and insights.
“I mean, I understand how you can make that kind of a mistake.”
Transcript
Automatic transcript. May contain errors.0:00At Edward Jones, we believe rich isn't about having life all figured out. It's opening yourself to all the possibilities. That's why your dedicated financial advisor provides long-term planning built around you. Meeting you where you are and helping you get closer to where you want to be. So no matter where you're starting from, you can move forward with confidence. The key to being rich is knowing what counts. Let's find your rich. Edward Jones, member SIPC. At Venture Global, we think about what can be done, not what's usually done. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time.
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1:01Live from the NASDAQ Market Side in the heart of New York City's Times Square, this is Fast Money. Here's what's on top tonight. A historic move to increase oil supply, not doing much to immediately lower prices. And stocks are feeling the pressure from those higher energy costs. We'll break down all the action, the impact on everything consumer and housing related. And credit crunched asset management stocks sinking again today as private credit concerns continue to rip through the market. The outlook for these stocks and what our guest traders heard at our company's financial services conference this week.
1:30Plus, did Oracle give the all clear for software stocks? What's got Uber shares driving higher today? An all-in on Caesars, the casino name popping, reports of a new bid from Tillman Fertitta. The details of whether you should bet on the space right now. I'm Melissa Lee, come to you live from Studio B at the NASDAQ. On the desk tonight, Carter Braxton Wirth, Dan Nathan, Guy Dami, and Lori Calvacina, head of U.S. Equity Strategy at RBC Capital Markets. Always great to have you, Lori. Thanks. We start off with the choppy action. On Wall Street today, the S &P closing just below the flatline. While the Dow lost 290 points, the Nasdaq managing to eke out a gain for its third straight day in the green.
2:06The energy trade still front and center amid the conflict in the Middle East. Crude oil prices making a comeback from yesterday's 12 percent drop, rising well over 4 percent. WTI settling above$87 a barrel, while Brent, the global benchmark, nearly hit$92. Arbob and gas oil also sharply higher. Energy stocks higher as well, leading the S &P up 2.5 percent. the jump coming even after the International Energy Agency said it would release a record 400 million barrels of oil to mitigate supply disruptions. Also this afternoon, President Trump saying he will tap the U.S. Strategic Petroleum Reserve to lower energy costs.
2:42Eamon Javers has some of the details there. Eamon. A live look here. The president is speaking in Hebron, Kentucky right now. It's campaign style speech. He's talking about jobs and the economy, but we're going to monitor it to see if he follows up on these comments on the Strategic Petroleum Reserve. There you see the president in Kentucky. He's talked to a local TV station in Cincinnati on his way to this event, and that's where he made those comments about the Strategic Reserve. He said he'll draw it down a little bit, and then he'll fill it up later. He didn't give any specifics in terms of the amounts.
3:13But earlier today, the president also talked about the impact of the Iran war on the stock market and on oil prices. Here's what he said in Cincinnati. The market's holding up well. I figured we'd be hit a little bit, but we were hit probably less than I thought. And we'll be back on track in a pretty short while. Prices are coming down very substantially. Oil will be coming down. That's just a matter of war that happens. You can almost predict it. So the president predicting a rally here at the point at which the military action ends, but not giving us a whole lot of guidance on when that might be.
3:56White House Press Secretary Caroline Levitt saying yesterday that the president just reserves the right to end this when he sees fit, when he determines that the military objectives have been reached. So not a lot of sense of whether this is a couple of days away from concluding, a couple of weeks away, or even a couple of months. Melissa. Back over to you. Eamon, thank you. Eamon Javers. So we have the S &P 500 here holding on to 67 and change or so, holding on at this level for a long time. And you can be, if you're silver linings, Dan, which you are, you could say the market is digesting and it's actually doing quite well, given all of the concerns about AI buildout, private credit and now a war.
4:38And we're still holding in there. It is doing well. And, you know, when you think about just what's going on prior to the war and then what's going on now, it's kind of the same thing. Semis are strong. Software stinks. You know, banks kind of joined the party to the downside, following alternative managers, that sort of thing. So, like, all that stuff is in place. Energy stocks, which Guy's been talking about, broke out, you know, two months ago, and they hold firm there. So there's a lot of areas of the stock market that act well. But that doesn't mean that the kind of accumulative effects of what's going on with inflation right now.
5:06We had a reading here. The market didn't really love that reading that we got this morning on inflation. If you think about the supply chain disruptions that we've had now going back a year ago with the tariffs, going back a few years for the Russian invasion of Ukraine and then, you know, COVID. I mean, these are things that are not fixing themselves right now. So when you think about inflation expectations, they're not going lower. We have unemployment that's going higher for a whole host of reasons. And you just mentioned AI. That's in the back of everybody's head right now. and growth is slowing, right?
5:35So two years ago, we had GDP at 2.8 percent. Last year was 2.2 percent. Now it's supposed to be 1.9 percent. That's definitely going lower, at least in the near term. So you have a setup that's actually not great for equity performance, in my opinion. And then it's not great for probably earnings and probably margins where our peak right now when only input costs are going higher. So in many ways, I mean, the president is right. The stock market is hanging in there. But if some of these other economic factors start to deteriorate more that can't be supportive of equity valuations here. Did you all notice how Dan was silver linings, Dan, for the span of maybe 15 seconds and then switched immediately to regular grumpy Dan?
6:13But anyway, that aside.
6:15Lori Calvasina:You know what helped, Dan? Maybe if we bought him like, you know, those flamingos, the pink flamingos you put in the yard? How will that help him? Make it cheer him up a little bit. But he doesn't have a yard. So this is what I'll say. The S &P was down five handles today. That's a that's a non-move. VIX is still north of 24. That is not commensurate with an S &P that's not moving. So something's got to give. Either VIX is too high, which I don't think it is, or the S &P is going to start to move, which I do think it will. And we'll talk about the bond market. But the fact that now 10-year yields are back above 420, that to me is signaling some red flags out there that the market's not paying any attention to.
6:49Lori Calvasina:So, you know, Carter will correctly say we've been there before. But to me, it's ready to change in where it's going. And the bond market is signaling something. What will you say, Carter? So many subjects. I mean, the market, there's the temptation to think, and we all know that it has to be in a direction, right? And that's the case with most stocks. Are you getting better or are you worse? Your earnings are going up or down? Your products are working or not working? The market just happens to be in a period of equilibrium, even though onto the surface we've got extreme bifurcation, right? Extreme strength, extreme weakness.
7:16It's unch. What we do know is that the two or three most important sectors are under a lot of pressure. Financials down more than 10%, tech down. The top five sectors of the 11, which account for 78 percent of the weight, are all down. And so whether energy is up, who cares? Three and a half percent. It might be good if you own energy. But even that, sideways for almost seven, eight sessions as crude has spiked. It should be, in principle, with a flat bench, a stock picker's market. And that's essentially what it is. You have not changed your price target for the year on the S &P 500. You're just pat.
7:48Right. And we've actually changed our methodology this year. We're doing a rolling 12-month forward target. But the reality is that we've been pretty balanced throughout this whole thing. And I will give you a silver lining, a very silver lining playbook. I think that one of the things that happened on the way to coming to this Iran crisis is that we got to a really interesting point on U.S. versus non-U.S. valuations. We published this in our weekly on Monday, but we actually saw last week after the market had gotten hit a little bit that you had gone back down to the 20-year average on U.S. relative to non-U.S.
8:21on the relative P.E. And then if you looked at the post-COVID average, we had fallen way below it. And so you had opened up the door for valuation opportunity in the U.S. for global investors. And we got this crisis in Iran. And we hear, OK, this is the worst for Asia. It's not so great for Europe. It's not great for the U.S., but it's better than the other regions. And so what we started to see was U.S. outperformance and a difficult tape. That also allowed the growth trade to stabilize. And I think that's very important because we had gone up into this point where it was all AI jitters, all kind of the AI scare.
8:53We put that on the back burner a bit, frankly, to focus on this crisis. And I think the mechanics of the market actually favored some stability in the S &P. I think that's a good point that not often enough do we look globally in terms of the choices people are making in allocations. And the same thing goes for the bond market and what is keeping U.S. bonds in pretty decent shape. I mean, right here, sort of at 4.21 or so. So, I mean, what is going on and the impact of higher oil prices, higher energy prices on Europe is much more detrimental, severe than here in the United States.
9:25Lori Calvasina:Carter had a tremendous call the other night on the COSPI and a lot of different things. And Tim talks about this all the time. So, yeah, there is a relative thing. Obviously, we focus here on the United States for good reason. But you have to sort of look relative to what's going on with the rest of the world. I will say, though, Lori's been spot on with everything. There are things, there are definitely cracks out there. And we're going to talk about banks and some other things that are concerning. Now, the S &P does not exhibit any of those fears whatsoever. But as Mike Wilson said a couple weeks ago on Squawk Box, you know, there's a lot of things happening below the surface.
9:54Lori Calvasina:And typically the last thing to sort of break, and he's not calling for a crash at all, but is the S &P 500. Well, you know, the crude oil thing is really interesting, right? So it's not just gas. It's not just jet fuel. There's a whole host of other things, right? So whether it's fertilizer. But I think when you think about a U.S. consumer, you talk about this K-shaped economy, right? Well, what is$3 gas on its way to$3.50 at the, you know, a gallon? What does that mean? That means a lot to a consumer that's already pretty strapped. Right. And so if you have crude oil in the face of these releases, you know, 400 million barrels and maybe there's some other things to get around to.
10:25You know, it doesn't really speak to the fact that we're going to be able to fix these supply chains going forward. The idea that we pull out of or stop bombing Iran and that this all goes back to where it was three weeks ago is not a particularly high probability event. Right. So if a U.S. consumer has to deal with the effects of tariff, they have to deal with and especially a lower earner consumer has to deal with higher health care costs. People keep talking about this tax return season. Well, I guarantee you if you were the 20 million Americans that just had your premiums go higher or you lost health insurance, that that tax return that you might get in April is not going to be doing you a whole heck of a lot, especially when, you know, a gallon of gas at the pump goes from three dollars to three fifty.
11:06So to me, if you were worried about that bottom part of the K-shaped economy, and then if you're looking at the top part of it, just look at American Express. Guys mention this a lot. You know, it's down 20 percent from an all-time high just in the last month and a half or so. And what are investors saying about a higher-end consumer right there when you think about that? So I think the consumer across the board could be in a difficult situation, especially the longer that this crisis goes on. Although, hat to Peter Bookbar, on the Casey's General Store conference call, the management said that we don't start seeing demand destruction until$5 a gallon, which is a far cry from where we are right now.
11:43That's like such BS. I mean, there's just no way that that could be the case. You know what I mean? It was shocking to me as well. I mean, it's$5 a gallon. I love Peter. Peter's the man. He's just quoting what the guy said. I don't mean Peter's quoting him. Yeah, it has nothing to do. I'm just saying that Peter pointed it out, and I thought it was worth bringing up. But you actually did some research, right, in-house research about the impact and how analysts sort of factor this in. Yeah, and I actually wanted to bring that up in regards to Dan's point on the consumer, because I absolutely agree that the consumer, this is not the time for this to be happening with gas prices, given the affordability issues, but you have to put the impact of the American consumer in the context of the stock market.
12:19So last week, a couple days after this crisis broke out, I think it was Tuesday and Wednesday, and we kind of updated everything Thursday and Friday, we went to all of our analysts in the U.S. And we said, we have three questions for you, and we want you to assume$100 oil for an extended period of time or higher and in a crisis that lasts for more than four weeks. So put that kind of bearish Iran scenario out on the table, and we said, we have three questions for you, and you have to tell me if the impact is none, a little, some kind of mixed, not relevant, some a decent amount, or a lot. So there were five choices that they had.
12:51If you looked at the broader market X energy on the earnings question, we asked them, what's the impact of higher oil and natural gas? 72 % were in low impact categories, none mixed, not relevant, only a little. And we saw that similar stats if you looked at our questions on knock-on effects and if you looked at our questions on revenue impact from the Middle East. Now, the two sectors that jumped out as having, you know, kind of more significant impact, one was consumer staples, which has been pretty weak today. I found that very interesting. And another was materials. Consumer discretionary also scored very poorly on knock-on effects.
13:26But sectors like comm services, health care, utilities, even financials, very, very low impact was assessed. And I think that mix is something else that can allow the market to be resilient in here. I mean, the consumer discretionary sector is such an odd thing, right, with three stocks being half the weight, right, Amazon, Tesla, and Home Depot. But if you look at the equal weight S &P 500 consumer discretionary sector, relative performance to the S &P, you're talking about we're at 20-year lows. The consumer, from what I see, is not in great shape, right? Autos have been great, but we know how poor restaurants have been and a lot of individual retailers.
14:00As an area, I would be underweight the space. Yeah. I mean, we should get an interesting read on the lower-end consumer tomorrow from the dollar stores, Dollar Gen reports. And so I'm sure that the consumer, in terms of rising gas prices, that will come up. 100%. But it does seem that in light of all the other things, like if you take a look at consumer spending as a pie, and more of that pie is being eaten up by housing because housing affordability is so terrible, then gas price is a higher percentage of the remaining pie, even though it may be. Cuts into it. Yeah.
14:31Lori Calvasina:You know, well, I find it interesting. People think nothing of spending however much on a bottle of water or a Starbucks. It seems like there's an elasticity to it. But something about gas prices, when people see it, they react to that. And that affects consumer behavior. Whether it's justified or not, that goes on. And when people start to see in the tick up, when they see the guys and gals at the gas station change into prices, they start to say, hmm, maybe things have changed here. And consumer behavior is a powerful thing. And this is an economy 70 percent driven by said consumer who are already under pressure and a labor market that I think is deteriorating.
15:05Lori Calvasina:deteriorating. This does not help the situation. Well, rising oil prices also having an impact on the housing trade fears over the higher costs for paint, plumbing, flooring, as well as pressure on potential homebuyers, sending the ITB home construction ETF down for an eighth straight day, its longest losing streak since the end of 2024. All this coming at the start of the spring selling season. But our next guest isn't worried just yet. Joining us now, Logan Motoshami, lead analyst at HousingWire. Logan, great to have you with us. It's good to be here. Ten-year yield at 4.21 percent. I mean, is it really is it just focused on the mortgage rate?
15:39If the mortgage rate stays tame or around where it is, then it's going to be OK? Or are there other concerns out there? You know, it's the best start for the existing home sales market we've had in years. But it's also because mortgage rates have been below six and a quarter and very, very calm this year. Even with all the crazy headlines, private credit, AI, Iran war, oil, everything, mortgage rates have started the year at the lowest levels. we've had in years, and demand has picked up to go with that. Now, if mortgage rates start to go back above 7 % and mortgage spreads get bad again, that's a whole different story.
16:12We've had that in the last three years. Home sales start to decline on that. But as of today, even with all the drama, the housing market looks fine, especially in the existing home sales market. The builders have other problems as they have too many completed units of sale right now. So you're not going to get much growth in housing starts, but the existing home sales market looks to have a good year this year. The band, though, between below 6.25 % to the 7 % that you mentioned is a long way. That's how much cushion there is in terms of it being okay for the housing market? Mortgage spreads are the unsung hero of the housing market this year and last year.
16:50Mortgage spreads, which is the difference between the 10-year yield and 30-year mortgage, was over 3 % in 2023. Now it's under 2%. So it's very hard for mortgage rates to get above 7 % unless the labor market is going to start growing again. Or inflation is just there's too many input costs rising. So I don't think we have that problem. I think for now, as long as the volatility is compressed and mortgage rates stay near 6%, we're good this year for the existing home sales. The builders, on the other hand, it's really a corporate profit margin story for them. They need to keep paying down rates to move product.
17:27They sell homes as a commodity, which is different than the existing home sales market. So for right now, two tails of different markets advantage existing home sales this year versus what the builders have to deal with.
17:38Lori Calvasina:Logan, we talk about rate of change a lot, and I'm not suggesting a 4.5 % unemployment rate or wherever it currently is in dire straits. However, if it starts to move in a precipitous way, people's antennae go up. What's the magic number, in your opinion, where the housing market starts to take notice? You know, oddly enough, whenever the unemployment rates rise, rates tend to fall. If the unemployment rate rises or rates rise, that's a detriment to the housing market. But if you look at the history of existing home sales going back decades, it actually tends to outperform when there's a recession because rates make that next leg lower and stay there.
18:17And since majority of homeowners and home buyers and home sellers, that will be buyers, are employed, advantage to the housing market in that front. However, if the job market doesn't do anything like it has in the last 12 months, and inflation starts to pick up and bond yields go up, that's a negative for the housing market. So oddly enough, it's a weird thing to say. If the labor data starts to get worse, the Fed will start to get more dovish, bond yields will kind of go down. That's the story of last year, right? Inflation was picking up, but mortgage rates went lower. So to me, it's more about if the 10-year yield stays low.
18:54If it starts to pick up and spreads get worse, that's a detriment to the housing market, even if the unemployment rate went lower. This is Lori Calvacino. One question for you. How are you thinking about this moment where we are in terms of consumer sentiment and consumer confidence, where the indexes have been pretty lousy, look like they've been trying to stabilize, and now we're throwing this gas price Middle East issue on top of it? I'm wondering how that kind of factors into your broader thinking? I mean, the consumer sentiment has been terrible for some time, right? So now you would think if sentiment is going to change behavior, then people would be running the purchase application data higher this year.
19:31Purchase application data has been positive year over year, every single week, even with the AI headlines, even with Iran oil. So to me, it's always going to be a 10-year yield and mortgage spread story for housing, even more than sediment. But again, we are at the lowest levels of rates for some time. That story could change like this if, oddly enough, the labor data gets better and inflation picks up, the Fed gets more hawkish. In that context, that would be a negative, more negative story for housing than the consumer confidence data here. Logan, great to see you. Thank you. Pleasure. Logan Motoshami.
20:08All right. So if it's all about yields, Carter, what do you see for the 10-year yield. We're stuck. It's the incredible thing that we'll neither get down into the mid threes nor get back up into the high fours and low fives. It's what a pair of twos is and it's one of the reasons that equity valuations have remained so high. Ultimately, I'm in the lower yields camp and we shall see. So that is actually good then for the housing trade.
20:32Lori Calvasina:Potentially. So pull up a couple charts. Our crack staff and EC can effort this. Look at Lennard, Pulte, Holmes, Toll Brothers over the last six to nine months, and you'll see these stocks have not traded particularly well in a benign rate environment. So there's clearly something going on. And I think these homebuilder stocks are just getting started to move to the downside. Yeah, you have input costs going higher. Labor is a big part of that, too, right? So if you want to stretch out that disruption in the straight of her muse, there's a lot of different ways that you can kind of go that way.
21:00So to me, I think Guy's been saying this. He thinks rates are going higher and they haven't gone anywhere. Like it's been a pair of twos. They've been banging around between four and 425 or something, but it really does feel like that if we continue to see this sort of move, I don't know why you would have thought that usually, you know, you see rates go lower in than for demand for treasuries, but they're moving higher and they really look like they want to go break that downtrend that's been in place. Four and a half, maybe you have a view on this, four and a half in the 10-year, what does that mean for equities that held in here pretty well?
Read the full transcript
21:27I was actually going to jump into that. So at one point on that, one point on homebuilders, and I'll say on homebuilders real quick, they tend to act like small caps. And we've actually pulled back on our constructive view on small caps saying as long as we're, you know, dealing with heightened tension, small caps are going to be in risk-off mode. I think that filters into the home builders as well. But we actually ran a stress test last week where we put in 3.6 % inflation for 4Q, which is my economist stress test for$100 oil. And so we put that into one of our equity valuation models where we bake in 10-year yields in Fed funds in addition to the inflation rate to come out with a target PE.
21:59And I struggled a little bit with what to do with the 10-year yield number. I put it in at 4.5%. I kept the Fed flat. It cut the multiple by a couple points. But I'll tell you what, when we had flat earnings, similar to what we saw in 2015, 2016, and 5 % earnings growth, which is what we saw in 2022 during the last big oil spike, we came up with a fair value range on the S &P 500 of 6 ,600 to 6 ,900, which is exactly where we've been hovering. And to your point, you know, the fact that, you know, I'm debating with my rate strategist if 4.5 % even makes sense because he thinks it could potentially be lower, you know, that is giving a boost to equity prices as well.
22:34I wish I had a model like that. He plugs different assumptions in, right? Isn't that amazing? You don't want to know the story behind how I built this. It's called Claude Cowork. It is not called Claude Cowork. It will be in a year. Hopefully you're juniors. It's called Laurie Real Intelligence. Hard work. Can we just say who are there? She's the real AI. We should be a break right now. We'll go ahead. I'm the real intelligence. How long have we been doing this show? I mean, the show, it's 19 years. 19 years.
23:02Lori Calvasina:Logan had the best hair shirt combination in the history of Fast Money. That silk shirt with that hair, I mean, that was hot. It was hot. I hope Logan is hearing this. He hears every word of it. Coming up, a divine day for Oracle. Shares surging on the back of strong results. Can the gains hold? And will they help lead a software rebound? That is next. Plus, the latest partnership in the robo-taxi space, why Uber is teaming up with Amazon's self-driving company, and how your next ride may look a little bit different. Don't go anywhere. Fast Money is back in two.
23:37Hello, I'm Ozempic. And I'm other GLP ones, kind of like him. Are you shaking a maraca? Nope, I'm shaking the pill version of Ozempic, which no one should ever do except in ads like this. A nice disclaimer. Hey, thanks. Ask your doctor about which FDA-approved uses of the Ozempic pen or pill may be right for you. Call 1-833-OZEMPIC or visit Ozempic.com to view the medication guide and learn more about Ozempic semaglutide tablets, 9 mg, and Ozempic semaglutide injection, 2 mg. There's a pill version of Los Angeles. At Venture Global, we think about what can be done, not what's usually done. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time.
24:27So while others are busy talking, we're busy building. That's Venture Global. that's unstoppable energy I want to grow the game so every kid can fall in love with soccer like I did so I asked myself what would you like the power to do my answers inspired me to invent a pop-up soccer goal that can turn any basketball court into a street soccer pitch Bank of America champion street soccer advocate Kyle Martino and everyone who dares to ask what would you like the power to do Bank of America proud to be the official bank of U.S. soccer and FIFA World Cup 2026. Bank of America N.A. Member FDSE. Welcome back to Fast Money.
25:11Oracle shares rallying after last night's big earnings beat the software giant, impressing the street by raising revenue guidance, posting massive cloud revenue growth, and saying it doesn't expect to issue more debt to fund its expansion plans. Oracle also mentioned the stronger capital footing of some of its biggest partners. OpenAI just announcing a$110 billion funding round at the end of last month. So did today's move give the go ahead for the software trade? What do you think, Dan? I think a lot of folks who were set up along this as a trade into it were obviously selling into it. I think you got like a nice 10 % trade.
25:41I think the sentiment was so poor. I think the company did just as much as they needed to do. But when you start picking through it and you start saying to yourself, okay, well, we're going to build these data centers. And we have, you know, one of our biggest customers who's actually not fully funded. They raised$110. I'm doing that billion. It's going to be pieced out over a period of time. And you know what one of the big investors were? that was SoftBank. And they don't have the money also, too. So all this stuff needs to continue to be funded. And so I say to myself, I don't think much has changed.
26:06And your revenue number that you're guiding up, well, if you have a half a trillion dollar in backlog or RPOs or whatever, you better be guiding revenue up or it's just going to be all on the come. So to me, I think it's set up as a good trade. Let's see if it can kind of hold this level. It really feels like it wants to fill in that gap, though. By the way, Oracle is a software name by, I don't know, But it's not really. I mean, the strength that we saw in today's session is not because of the strength in its software business. It's the strength in the AI business. So you could make the case that strength in that AI business, the data center build out, his firm, et cetera, that's actually bad for the software sector in terms of the fears of displacement of software functions by AI.
26:46And from a margin perspective, by the way, for this company.
26:49Lori Calvasina:Right, for a margin perspective. And actually, Dan alluded to that last night. He said it seems to be more of an Oracle-specific thing. And you're right to point that out. And I actually thought that IGV could trade well today. It did not. It closed unchanged on the day. I will say, though, I still think IGV put in a bit of a short-term bottom here against the lows we saw last April. And I do think Oracle has some legs left on the upside. I think the pessimism around the name over the last three months is akin to the optimism we saw in the fall. And it's going to level out at some point. I think it's in the 190s.
27:18By the way, Atlassian in an SEC filing this afternoon saying that it's going to cut 10 percent of its workforce, blaming in part AI and the different mix of skills that will be needed going forward in its workforce. It's interesting. I mean, 10 percent is what I think the challenger layoff report said has been attributed to AI in terms of layoffs year to date. So I know that sounds like a bad number, but it's sort of similar to what we've heard so far. If I could just weigh in on software real quick and taking your point about the specific company, but when we kind of zoom out and look at the broader Russell 3000 software industry group and compare it to semis, if you look at the relative P.E.
27:54between the two, you've been, you know, I've kind of described it as like an eighth inning, you know, sort of low. I mean, we're not quite back to financial crisis lows, but you're pretty darn close. And if you look at software on its own, it's that P.E. has sort of hit some important, you know, kind of lows of the past 10 years or so. So you can make a case from a valuation perspective to hold your nose and buy. I get a little bit more cautious when I look at earnings revision trends because we've sort of gone from peak rates of upward revisions in software down to kind of like balanced between upward and downward.
28:24You haven't really had a downward revision cycle yet. Sometimes that happens in these charts. I'm sort of waiting to see how that earnings revision data does. I mean, look, software has been basing and bottoming for the better part of three weeks. This helps set the low for Oracle. But, you know, the headlines mean Oracle surged 15 percent. Or you could say this, there's a different headline. Oracle, which was down 57 % going into earnings, is now down only 53 % from its peak. I mean, you know, it's the story you want to tell, right? I love Carter's headlines. A lot more Fast Money to come. Here's what's coming up next.
28:53Why your next Uber ride could look a little bit different. The partnership with Amazon that could change the way you ride and what it means for the robo-taxi race. Plus, financial woes and the private credit crunch. RBC's Lori Calvacina isn't throwing in the towel on her market bull case. But what does she see in the asset manager meltdown? You're watching Fast Money, live from the NASDAQ market side in Times Square. We're back right after this.
29:26There's a pill version of Ozempic. Hello, I'm Ozempic. And I'm other GLP-1s kind of like him. Hey, did I hear there's a pill version of Ozempic? Yep, you sure did. Ask your doctor about which FDA-approved uses of the Ozempic pen or pill may be right for you. Call 1-833-OZEMPIC or visit Ozempic.com to view the medication guide and learn more about Ozempic semaglutide tablets, 9 mg, and Ozempic semaglutide injection, 2 mg. There's a pill version of Ozempic! At Venture Global, we think about what can be done, not what's usually done. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time.
30:15So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy. My mom inspired me to dream big and work hard. Siner Adams! What would you like the power to do? Bank of America, proud to be the official bank of U.S. soccer and FIFA World Cup 2026. Bank of America N.A., member FDST. Welcome back to Fast Money. Uber shares hitting the gas today. The ride-hailing company announcing it will partner with Amazon's Zooks RoboTaxi unit to offer rides directly on its app beginning in Las Vegas this summer with rollout in Los Angeles slated for next year. It's the latest step in Uber's RoboTaxi push.
30:59The company already has driverless options in Atlanta, Austin, Dallas, Austin, Dallas and Phoenix and aims to expand to a total of 15 cities by the end of the year. But this just proves that Uber is not displaced in this whole robo taxi push. It is a key component of it. Well, they also have the thing that, let's say, Tesla doesn't have or, you know, they have this app where they have, you know, like millions and millions of very happy customers who actually Uber things like we Google things, that sort of thing. So they're going with an asset light strategy right now before it's actually well known whether this is a business that scales.
31:32So I like this. If I'm an Uber investor, like this is what I want to hear. I don't want to hear that they're going to go build out this Robotex fleet, which no one wants to own those things.
31:42Lori Calvasina:30 percent earnings growth. It trades at a decent multiple. I mean, I think you get a couple turns on the multiple and the average price, according to facts, it's 105. And I think it eventually gets there. It's had some pitfalls along the way. Every time there's a headline about Waymo or something, Uber seemingly goes lower. But I think when people sort of piece it together and realize that valuation-wise it's compelling, I think the stock goes higher. By the way, what is this thing? Zooks? Yeah. Did you see the picture of the little thing? It's a heel old car. Can we have it? There's a crack.
32:11It doesn't even look like a car. It looks like a little box on wheels. What? It's tiny. See, look.
32:15Lori Calvasina:Oh, come on. Tiny car. That's here in the United States? Yeah. They have an SF guy. I mean, that's like you just basically said, I've given up. Like, that's it. A golf cart. It's like, don't succumb. I mean, do we have anything? Huh? There's a lot wrong with it. I mean, I'd love the Uber the stock, but I ain't getting one of those things. Uber the stock, though, is it? I mean, it's down 30 % from its peak of September. Relative performance is poor. There's better choices, I would say. Better choices for the stock and for the vehicle. Better choices just in general. Yeah, both. Coming up, financials under pressure.
32:51credit concerns and the war in the Middle East, how RBC's Lori Calvacina here is navigating all the headwinds and where she sees the biggest opportunities right now. Fast Money is back in two. Missed a moment of Fast? Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this.
33:15Welcome back to Fast Money. Stocks closing mixed as crude prices continue to edge higher despite despite the IEA releasing a record 400 million barrels of oil amid the Iran war supply disruption. The Dow falling nearly 300 points. The S &P and Nasdaq virtually unchanged. WTI crude settling more than 4 percent higher. Shares of Nike rising more than 2 percent at the start of the day, but losing steam, closing out negative territory. Analysts at Barclays upgrading the stock to an overweight, hiking the price target to$73. That's up from 64, citing recent operational progress and a more attractive risk reward.
33:46And shares of Campbell's falling 7 % after missing top and bottom line estimates this morning. The company also cutting its annual forecast as consumers shift to cheaper alternatives. Campbell's down nearly 18 % so far this year. Meanwhile, more pain in the credit trade. Aries management dropping almost 5 % today. KKR, Blackstone and Apollo also under pressure. This as JP Morgan reduces its exposure to the space, marking down loans held by the bank as collateral. The stock's now off nearly 25 percent or more this year. So brace for more trouble ahead in private credit. I don't know. What are your thoughts here?
34:22Lori Calvasina:It feels that way. And again, it might have nothing to do with fundamentals. But once sort of the narrative's in place, it's very hard to change the narrative. And I will say again, the Blue Owl thing, once you heard the word gates around it, that got everybody's antenna up. Now, they were able to sell$1.4 billion of assets or whatever you want to call them at 99.7 percent. So there was no real concern in terms of how we were able to sell it. But everybody heard that word, and now everybody's focused on it. Then you hear the comments out of Jamie Dimon and J.P. Morgan. We hear from Goldman Sachs today, and it starts to build on itself.
34:54Lori Calvasina:Pull up an XLF chart, and you'll see, I think now, we're below the 200-day moving average for the first time in a while. So it started with American Express. Obviously, it's made its way to private credit in the form of these Blackstones and other names. And I think it's just a matter of time before the big banks get hit as well. So when you think about what Jamie Dimon just said a few weeks ago about some of their competitors are doing dumb things, right? So you see what they did today, right, with their lending to private credit, okay? And then you think back, it was about a few weeks ago also, when Bank of America said they were committing$25 billion of their own capital to lending in the private credit space.
35:28So just think of the juxtaposition of what's going on right there with what Jamie Dimon is doing. Go back and think about what Bank of America was doing. Remember when they were, like, loading up on treasuries when, you know, we were at zero? Oh, so you're thinking Bank of America is doing yet another dumb thing once again. Yeah. It's basically what. Well, it's kind of what Jamie is alluding to. I'm just going to agree with him. Well, you're connecting the dots. Oh, yeah. Jamie didn't actually say. He said some competitors. But you're actually pointing out Bank of America as potentially that dumb competitor.
35:53Well, I just, it's like the oddest, like, headline. Like, when everyone else is, you know, like, pulling back from these things. These guys are going to get all involved. It's like them buying Countrywide. Well, that was Merrill Lynch, like, in the 2000s. What are your thoughts on this space? You're just coming off a big conference, and I'm sure this has come up. Yeah, no, and look, we had a BDC panel at the conference yesterday that was, you know, standing room only, and I think they couldn't even close the doors. And, look, you know, I think, Guy, how did you put it that once the narrative's out there, it's hard to change?
36:21I think that hits the nail on the head. And, you know, Ken Lee, who's our BDC analyst, did a really nice write-up on that panel yesterday, and he, you know, he talked about how the companies are really defending their portfolios, you know, talking about software, you know, kind of making the case that not all are susceptible to AI. You know, and I think the other theme, right, that he mentioned was the idea that there's a disconnect between the headlines and the fundamentals that all these companies are seeing, right? The problem that I see from my seat, right, is we've been hearing this time and time and time again.
36:50And I think to, you know, Guy's point, this is not an industry that inherently has a lot of transparency and sunlight, right? It's not what we're used to in public equity. So it's kind of hard to disprove the narrative that's out there. I want to give you a sense of starting point. And let's put this in context of what we talked about with software earlier. So software, you know, kind of rock bottom valuations relative to semis. You may not like the fundamentals, but sure, they've been beaten up a lot. If I look at the capital markets group within the Russell 3000 financial sector, it's this little bastion of like everything risky.
37:23So it's got investment banks, not regional banks, but investment banks. It's got all the crypto retail trading firms. It's got asset managers, which I know are a little bit sleepier, and then it's got the alternatives, right? And if you looked at the valuation on this relative to the broad market late last year, early this year, you're just at this crazy high level, right? And it's come down, and it's come down to average, but it's not near, you know, any kind of historical low where you can look and say it's washed out. And so I think that's, you've got a problem of narrative, and you've got a problem, yes, there's been weakness, but maybe it's not enough to, you know, start to move past some of these things.
37:56Well, let's see. We know it's the second most important sector by weight, and we know that it's been under pressure for quite some time. First, it was insurance stocks. Those have been peaked over a year ago. Now it's these huge high-flying private equity stocks all down 50%. Now Goldman's rolling, Morgan Stanley, JP. On a relative performance basis, the sector is making all-time lows since the beginning of GIC's sector date in 1989. So the absolute low was 2009, financial crisis. We touched that low on a relative basis again in 2020, COVID. and we are right there again. I mean, it's just not a great space over time, highly cyclical.
38:32To some extent, risk management is better, and yet it's never quite good enough. How, at what point though, Carter, does that assessment turn from that to it's so bad, it's good? Sure, remember, that's relative performance, okay? Absolute performance. The sector's coming off an all-time high, right? And we've only rolled a slight bit. But the fact is that we're now breaking trend, the 150-day moving averages turning over. It has all the elements of something that I would say can get worse. Coming up, gambling on Caesars, another billionaire reportedly bidding on the casino operator, the two names fighting for the firm and who's closer to winning the pot.
39:07The details when Fast Money returns.
39:14Welcome back to Fast Money. Caesars popping late in today's session. Billionaire investor Tillman Fertitta's firm reportedly in talks to buy the casino operator for roughly$7 billion after topping a bid from Carl Icahn's firm. Contessa Brewers here with all the details. Why this bidding war for this property? Well, because the price is right. Come on down. I mean, you know, the public equities market thinks that this is a bunch of crap stuff so that they've been punishing casinos. And what you have is two billionaires in here going, nope, we're going to throw off, you know, Caesars has a billion dollars a year in free cash flow.
39:51That's not nothing. OK, you come to the table with that. They've got something in the neighborhood of$4 billion a year in EBITDA. And they're trading right now, closing price right now,$26 a share. It's basically back to where it was way before the pandemic, getting no credit for the pop that they saw after the pandemic. So the report from The Wall Street Journal hit today that Tillman Fertitta has come in at$34 a share. That would put a value of the deal at$7 billion, dollars, a 64 percent premium to where the stock was trading before the FT said that Tillman had some interest there. By the way, I did ask him back then to comment and he said, you just say Tillman always talks to you and I'm not talking to you.
40:34I've reached out to Carl Icahn. I have not heard back. I've reached out to Caesars. They said we don't comment on rumors. So there you have it. Now, you have an Icahn offer reportedly at$33. What I have learned from sources close to this situation is that the details in the Wall Street Journal report are very close to actually what's happening. So, look, Icahn owns right now 5 percent, maybe with forward somewhere in the single digits. If Tillman comes forward and pays more than that, Icahn makes money. It's sort of a win for him. It's not clear that the digital spinoff is part of this. Right now, digital has been under pressure.
41:11So and Vici, by the way, that landowner in Vegas and 20 other properties, It doesn't have a say in the deal.
41:17Lori Calvasina:And Tessa breaking it down a lot better than I can, which is not hard to do. But I will say this. I mean, the shareholders, at least the board can't be thrilled about this price, I don't think. I mean, pull up a longer-term chart. You'll see where it's been. Not that that means anything. But this is the pressed asset, and you're getting it on the cheap. So what I think is going to happen here, you know, Carl has a vested interest for this stock price to go higher. So I think they'll play the bidding game. This could play out for a while. This is going to be like a Netflix, Paramount, Warner Brothers thing, I think.
41:44That's sort of a little dangerous of a game if all you want is the stock price to go higher so your stake can be worth more.
41:49Lori Calvasina:Think about the seat that he's in, where he is in life. I mean, that's a game that I think he would enjoy playing. This company has, like she just said,$7 billion. It's got$25 billion in debt. I mean, like it's upper left, bottom right for a reason. And so I don't know. I mean, like, have it, people. But the other people close to this say this is not the only company. If you look at these gaming companies in general, look at how much money Wynn is making and where the share price is. Look at Las Vegas Sands. It has the most lucrative casino in the world in Singapore. It's doing gangbusters, the share prices, just sitting right here.
42:22MGM, the same. This is just an area right now that doesn't have a lot of favor with stock investors. So are you going to see more toying with the idea of taking them private? Right. Any possibility that if not Caesars, that another property out there? For either party? Well, not for Carl because he already has a stake in C-C. Okay, but look at Tillman Fertitta, which he owns the Golden Nugget. He's one of the largest shareholders, if not the biggest, and DraftKings already sold them Golden Nugget online. He owns 12.5 % of Wynn Resorts. So here's a guy who really loves gaming. Is he going to find value in what?
43:03Maybe he's going to go and look at MGM. Maybe if you want to be on the Strip, that's where you go next. Thank you, Contessa. Contessa Brewer. Coming up, insurance can get technical, but good thing we've got the chartmaster here to help break down the nitty-gritty. What do you see in Progressive's chart? That's next. More Fast Money in tune.
43:25Welcome back to Fast Money. Shares of insurance company Progressive have had a bumpy start to the year, down nearly 12 percent since January. And the chartmaster is saying it is time to sell. Carter, what do you see? Well, and it's not just progressive. The whole group is under pressure, but it's the worst of so many insurance locks. So a couple of charts, they're always identical in terms of duration, but we put different lines. So let's first do this. This is a fairly well-defined formation, which we're going to look at later. But moving forward, next chart, you'll see the same chart, same setup.
43:57It's this current setup we're toying with and just now about to break out of this minor formation. Take a look at the next iteration, another way to draw the lines, but similar. Again, we're about to come out to the bottom side. At least that's my judgment. From this formation, let's look at another iteration, bringing this line all the way back. We're about to break an important trend line. And so the final one would be you'll put the head and shoulders back in. And this is a precarious kind of thing. So, again, I think we're at risk here of a big break and not good. If you compare it to Hartford, you compare it to Allstate and other, Chubb, something's not right.
44:40Sell progressive. Does anybody like insurance?
44:43Lori Calvasina:You know, real quick on this chart. This was a parabolic. You don't see moves like this in this sector. I mean, pull up the chart the longer term and you'll see what I'm talking about. I mean, the stock went from$130 to$250, almost in a straight line. So I'm with Carter here. You know, you look at the formation, the valuation is not compelling. I think he's right. And I'm looking at the level. This could easily get back to$1.50 or so. Look, I can't speak on any individual name, but on our work, the broader insurance group does look pretty cheap and still has good earnings revision trends. Now, it is in the financial sector, right, which is a sector I do like longer term, but is seeing some outflows right now.
45:16So you can get a situation where the baby gets thrown out with bathwater in the short term.
45:21Lori Calvasina:I mean, think about that. What? Who would throw? I mean, I understand how you can make that kind of a mistake. That's an odd mistake to make. I think during the plague or something, they used to throw their babies out with bathwater. They lost a lot of babies. Really? No, I don't think it's something like that. I think it's something like that. Was it a little de-fenestration or what was going on? Let's be clear. No babies were hurt in the filming of this show back then, maybe. Who knows? Anyway, up next, Final Trades.
45:56Time for the Final Trade. Carter Brax North. I think you've seen the high in oil and I would fade it. Lori Calvacina. I like health care. It's cheap. It's got low Middle East exposure and good earnings. Great to have you, Lori. Thanks for coming by. Stan. All right. The optimistic take is that guy is probably right in software made of bottom, but I think he can sell semis against it. I know that's been a trade card.
46:21Lori Calvasina:A couple things. John Justin Alasier, the rock star. Look him up. Go to the Google machine and check him out. He's actually here watching the show. There are a lot of people in Wichita, Kansas right now. A bunch of them just think. In Wichita. Yes. I can't drop names, but Wichita, Kansas is in the house. All right. Valero, I'll take the other side of the car to work. All right. Thank you for watching Fast Money. See you back here tomorrow. Mad Money with Jim Kramer starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, internet, or another medium.
46:58You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money Disclaimer, please visit cnbc.com forward slash Fast Money Disclaimer. I want to grow the game of soccer and give every kid the chance to play. What would you like the power to do?
47:26Bank of America champion street soccer advocate Kyle Martino and is proud to be the official bank of U.S. Soccer and FIFA World Cup 2026. Bank of America NA member, FDIC.
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Stocks ticking lower, as crude oil edge higher after the IEA announced it would release a record 400 million barrels of oil to address the Iran War supply disruption. The latest developments out of the Middle East, and how global markets are responding. Plus RBC’s Lori Calvasina lays out how she’s navigating the volatility, and where she sees putting money to work.
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