Oil Surges After U.S. Iran Strike… And Fed Minutes Results 7/8/26

21:12Melissa Lee:This is Fast Money with Melissa Lee, right here on CNBC.

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22:21Melissa Lee:Thursday, July 16th, CNBC Sport and Boardroom join Fanatics Fest for Game Plan. Groundbreaking ideas shaping the future of sports and entertainment. Request your invite at CNBCEvents.com slash Game Plan. Welcome back to Fast Money. The Nvidia shares up today, but recent weakness has made shares substantially cheaper on a forward P.E. basis. Bloomberg pointing out the stock is trading at about 18 times projected earnings over the next year. That's its lowest level since 2019. That's before the AI boom, before the pandemic, when the stock had a market cap of just$80 billion. It is now, of course, close to$5 trillion.

23:01It's as if all of that didn't happen on a valuation basis. Is this justified? You own it, right? I think it's too cheap. I do think one of the things that I mean, the balance sheet is superb. I did look at how much cash is on the balance sheet now versus then. Actually, as a percent of the overall market cap, a little bit more than just the way the market cap has exploded. Giant pool of cash. But still, they also don't include all of their investments. Right. We don't get that has to be starting to be, you know, 100 billion here, 100 billion there. Pretty soon that adds up. So maybe it's even a little cheaper than that even.

23:39And I just think that is too cheap. Revenue continues to grow above its peers. Earnings continue to grow above its peers. They still hold 80 % market share. And I'm not bullish on the stock. So every time I look at it, I think the people that they sell to are doing better than they are doing. And I think we've I don't want to use lulled again, but I but I think the fact that we've I think this could be the pinnacle of NVIDIA. But I've been saying that for a while and it has fallen. I just don't know how much safety rallies people back into a name like this. Like Karen loves the name. So you get a lot of value investors, value indexes that will follow this name right into the ground.

24:26And I don't want to make it sound cataclysmic, but you will be buying this name probably forever. And cheap is one way of saying it. And expensive is the way you would phrase it. So I think you're always going to get the invidiables. I'm not going to convince anyone not to buy it here.

24:47Melissa Lee:I think it's a pretty decent warning what can happen down the stack if you think about it, right? So this was one of the earliest picks and trouble plays here. They had that market share. They had very little competition. So there was a scarcity sort of thing. We're seeing that going on in the memory. But you think about it this way. OK, so that multiple keeps going down. Look at the price of sales. And we kept on scratching our head when it was trading at 25 times price to sales. Now, obviously, because that's been rocketing, I mean, they're expected to grow their sales 80 percent this year. And you guys just mentioned it.

25:15Melissa Lee:It's a math thing. Without the stock going higher, it gets much cheaper. But right now, it's being priced as a cyclical stock. And this is exactly what's happened in this space for every cycle. And so that's one of the things I would just say, that if you think this can't happen in the memory space, well, it's very likely to happen. And we probably have this conversation six to nine months from now. Both cases, it's cheap, very cheap, as you pointed out. The bear case is it's cheap. Why is it cheap? Is it cheap for a reason? And they're not going to, in my opinion, they're not going to enjoy 75 percent margins in perpetuity.

25:46Melissa Lee:And when that inflects, that cheap doesn't become as cheap as it was. So that's what I think the market might be sniffing out. There's a lot more Fast Money to come. Here's what's coming up next. A major new partnership. Apple taking a$30 billion bite into U.S. chipmaking. The impact on the iPhone maker and the semi-stocks that stand to benefit. Plus, a Fed divided. Kevin Walsh's first meeting as chairman revealing a policy split. The mixed messages on interest rates and what it all means for your money. You're watching Fast Money, live from the NASDAQ market site in Times Square. We're back right after this.

26:49Did we mention the cafe? So what are you waiting for? Come see all that's in store. Visit the Wayfair store today at Edens Plaza and Wilmette. Wayfair, every style, every home.

27:01Melissa Lee:Thursday, July 16th, CNBC Sport and Boardroom join Fanatics Fest for Game Plan. Groundbreaking ideas shaping the future of sports and entertainment. Request your invite at CNBCEvents.com slash Game Plan. Welcome back to Fast Money. Broadcom shares popping more than 5 % today after Apple announced plans to expand its partnership with the chipmaker in a deal worth more than$30 billion. The agreement would produce more than 15 billion U.S. chips and includes a$1.5 billion expansion of Broadcom's Colorado facility. That's a nice deal for Broadcom, getting to expand on Apple's dime. Good for Apple, too, huh?

27:41Good for Apple. I mean, this does go to the point both gentlemen were making about NVIDIA, right? But also to the enormous demand for chips. So I think good for both of them. I'd be very interested to see at the end of the day, does Apple really become the winner of having spent the least? Which seems at the moment, that seems to be the position they're in. I don't know. Iterations keep changing and who knows. But I think, you know, good for both of them. And I'm surprised that some of the other ones didn't do better off of this. It's a nice headline for Apple to say we are investing in U.S. chip making here in the United States.

28:20And by the way, please allow us to buy Chinese memory chips on the other side of it. Right.

28:24Melissa Lee:No, it's it's smart business. Right. And listen, Apple, we talk about a lot. Let's talk about Broadcom quickly. Talk about NVIDIA being cheap. Broadcom is equally cheap. probably trading at 20 times next year's numbers with earnings growth that probably are approaching 40-ish percent, maybe more than that. I think given the sell-off we've recently seen in Broadcom, that's a stock that I think you can own right here. Yeah, you know, to your point, and it is a great point about if Apple were able to secure a much cheaper memory from China, that would be a near-term thing. Let's be clear. And when you think about just the investment, like you just mentioned, you know, here in the U.S., it's a great thing, right?

28:59Melissa Lee:Because we know it takes one, two, three years to kind of build these fabs out, right? So you could be cynical and just say, well, they already committed to spending$600 billion over the next four years. I think they announced that in January of 2025 from the White House. And, you know, the idea is that maybe they're not going to complete all those commitments. But this one seems to make a lot of sense for a whole host of reasons. Because of the dependence on supply chains from China, this works out well for a lot of players. Coming up, reading between the minutes, the details from the Fed's latest meeting reveal a growing divide over the path for rates.

29:29How could reshape the market playbook when fast money returns?

29:34Melissa Lee:Missed a moment of fast? Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this.

29:48Welcome back to Fast Money. Stocks mostly lower in fears of prolonged conflict with Iran. The Dow shedding 580 points, the S &P losing roughly a third of a percent. The Nasdaq managed to recoup early losses and close fractionally higher. Target, a bright spot today, surging almost 4%, bringing its year-to-date gains to 35%. Late in the day, Bloomberg reported the retailer is reorganizing its strategy team as part of a broader turnaround push. SpaceX, meantime, down nearly a percent today to finish at$148 a share. The stock's lowest close since going public on June 12. This week alone, it shed almost 8%.

30:24And Levi Strauss dropping despite top and bottom line beats. The retailer also raising full-year guidance, increasing its dividend by 2 cents to 16 cents a share. CEO Michelle Goss will be chatting exclusively with Jim Cramer tonight at 6 p.m. Eastern time on Mad Money right here on CNBC. Meanwhile, the Fed releasing minutes from its June policy meeting, the first with Kevin Warsh's chairman. CNBC's Steve Leisman joins us from D.C. with all the details. Steve.

30:50Melissa Lee:Hey, Michelle. Yeah, a divided Fed on the rate outlook yielding a divided set of minutes from the June meeting, suggesting rates could go either way or nowhere depending on inflation. But on balance, these minutes left an impression that was more hawkish about inflation and the outlook than came from the meeting. Among the concerns in there was concern about inflation actually boosting inflation expectations and boosting wage and price decisions. A few saw a case for a hike at that meeting itself ended up supporting no change. Their worries that high commodity prices and supply disruptions could last longer than anticipated if inflation remains elevated.

31:25Melissa Lee:Almost all said, quote, some policy firm would likely be warranted. From the Dover side, most saw a scenario where inflation would ease and return to 2%. If that happened, almost all saw rates returning on hold, remaining on hold, or even declining. We already knew from the meeting that this was a divided Fed with seven officials forecasting rates on hold, one expecting a cut, nine forecasting at least one rate hike this year, leading the market to now put, by the way, an elevated 80 percent probability on a September rate hike, that coming after the minutes came out today. So we learned today it's not exactly how they will react to inflation that divides them.

32:02Melissa Lee:It's the outlook for inflation itself that separates the hawks from the doves. Melissa? Do you think, Steve, I mean, given the resumption of hits in the Middle East right now, new strikes, etc. Do you think that would have impacted how hawkish those Fed members tilt? I do think so. Now, there's two developments now since the meeting. One is the somewhat weaker jobs report. I'm not sure that every Fed official saw it as weak. 57 ,000 may be seen as the run rate, but certainly it was weaker than the prior month. And that's on the dovish side of data. On the other side, this renewed fighting, this renewed increase in oil prices is something that backs up one of the lines from the minutes, Melissa, that said, hey, maybe these prices are going to be higher for longer than we anticipate.

32:54All right. Steve, thank you. Steve Leisman in Washington. Let's not bring in Andrew Davis, who runs Investment Strategy at Bryn Mawr Trust Advisors. Andrew, great to have you with us. Great to be back. Thanks for having me. Do the minutes change your outlook in terms of hikes and your outlook on the market? I don't think it does. I mean, I feel like the minutes really just confirmed what the market had already sniffed out. And I don't know that it changes materially the outlook for the macro landscape. It remains a Fed that is focused more on the price stability mandate than the employment mandate.

33:23So how do you feel now, now that there's a resumption of strikes in Iran and Middle East? How do you feel about what the Fed does next, and how does that impact your view of the markets? Well, I don't know that it changes too much. I feel like we're still operating in the same global macro regime, kind of a polar, biopolar world, really focused on national interest. That really hasn't gone away. I feel like it would be more worrisome if oil maybe gets up to 90. But I think what I heard overall, the Fed's not urgently in a position to hike, and they're not urgently looking to cut. So I think the main takeaway is that the bar for easing rates has really been raised, and they'll remain patient around that.

34:06So if where we were through the prism of the markets were rates were the most important thing and now they're not so important because the market went up without worrying about rates. Are you focused now? What's your main thing? You get into work every day and your metric that you look at is what? Is it earnings estimates? Are they moving higher? Are they moving lower? What are you focused on to give you your first step in the market right now if it's not if it's not rates? Well, on the macro side of things, I think it's underwriting that low-fire, slow-hire environment that we've been in for the last year.

34:38As long as that stays intact, the Fed called it out. They said, I mean, look, where the labor market is right now, that's not inflationary. And that corroborates what we're seeing in the data. Wage growth has come down. So that's encouraging. But I do think the debate is kind of shifting from recession risk and maybe now just beginning around earnings, kind of that earnings debate. What does that look like? That sort of thing.

35:01Melissa Lee:Is there a scenario where nothing happens until spring, summer of next year? I mean, I could see them sitting on their hands if all things remaining equal here with everything we know. That's not out of the realm of possibility. Yeah. I mean, like I wouldn't confuse a patient fed with a comfortable fed. But I think that they reiterated that they really want to see the data. Right. And so I think, look, at the end of the day, what has changed and what's evolving is their communication framework. What remains the same is the reaction function. I feel like today was a great example of that. Ceasefire ended.

35:35Yields went up. Financial conditions tightened. Market kind of did the dirty work for the Fed a little bit. In terms of the market reaction today, were you surprised or not surprised? I think it, you know, came across as expected. I mean, surprised by the headline. But the encouraging thing was really the reaction function, like I mentioned. The fact that the market kind of tightened, that's healthy. I don't think there's much debate on what the Fed's looking at and how they're going to think about this. I mean, the Fed's hearing that or the market's hearing the Fed loud and clear. We're focused on the inflation side of the mandate.

36:08So how do you think the economy is doing? I think we're still in this slow growth environment, but I wouldn't mistake slow growth for weakness. Like I would be focused on which companies can still generate earnings in a higher rate environment, the slow rate environment.

36:24Melissa Lee:Hey, I was going to ask Sam Leesman this, but, you know. Oh, sorry, Steve. But, you know, Jackson Hole, in late August, this has been like, you know, this sort of opportunity for a lot of Fed chairs to kind of, you know, pivot a little bit or kind of give some more clarity. We know that Kevin Worscht doesn't want to give that sort of forward guidance. Is there a chance, though, if we start seeing some data that maybe doesn't speak to a 70, 80 percent probability of a hike, you know, going into the fall, that they would use that opportunity to kind of lay some sort of pivot out? I guess I'm not ruling that out, but I also question whether that kind of symposium really matters anymore, given everything that he's telegraphed around kind of wanting to change communications around the dot plot.

37:05I mean, let's be real. The dot plot really was a global financial crisis tool where we are today. The market kind of treats it as a promise. And so I think it's right to not be married to these dots in this world that is evolving in real time. Andrew, great to see you. Thank you. What do we make of the minutes? I mean, does it change your view in terms of, I mean, you heard Steve, the odds have increased greatly.

37:27Melissa Lee:Yeah, I think he's right to point out that the labor market below the surface is not as robust as you would think. But I think they're obviously aware of that as well. I think, listen, given everything that I know, and I'm not an economist, I say it all the time, I'm not smart enough nor humorous enough to be one. But sitting on their hands at this point makes a lot of sense. And I think they can do it for the foreseeable future. Coming up, soda pop on the clock. What to expect from Pepsi when it reports tomorrow morning and whether strong results can put some fizz back into the stock. That's when he's back right after this.

38:05Got some breaking news out of Washington. President Trump just posting about birthright citizenship. Let's get back to Megan Pasella for the details. Megan. Melissa, that's right. President Trump just posting on Truth Social that he will be immediately asking the Supreme Court to rehear the birthright citizenship case. Now, first the news, then a little bit of context. The president posting that American citizenship is not for sale. He says, in fact, that is a crime and therefore the Supreme Court's ruling is wrong. I will be asking for a rehearing by the United States Supreme Court immediately.

38:34This miscarriage of justice will destroy America if they don't change their absolutely insane decision. Now, Melissa, a little bit of context around this. This is technically possible. The Supreme Court can agree to rehear a case, but it's exceedingly rare. It last happened in 1965. A majority of justices, including some that were in the majority on this decision, would have to agree to rehear the case. And usually this has to happen in some sort of specific set of circumstances. If there was, for example, a change in the law since the decision was made or something like that, the president simply not liking a decision on its own would not be grounds for the Supreme Court to rehear the case.

39:10So it's a long shot here, but the president clearly making his discomfort known with this ruling. Now, I need to make a hard pivot here to another piece of news that we also got from the president in the last few moments. He was reacting to the U.S. military carrying out those strikes against Iran, and he's warning Iran further. He says this is in retribution for yesterday's bombing of ships by Iran. And if it happens again, it will get much worse. So as we spoke about earlier, Iran had been vowing to retaliate. Now the president saying that if they do, things will get even worse from here. Melissa.

39:42Megan, thank you. Megan Casella. Me and Time focus on earnings here. Pepsi reporting earnings for the second quarter tomorrow before the bell. It's been a rough couple of months for the food and beverage maker. The stock has far underperformed its chief rival so far this year, basically flat in 2026, while Coke hit a record just yesterday. Pepsi, of course, has snacks, which is a whole other set of, you know. Well, I think that's the real thing you have to discuss. 58 % of Pepsi are food and snacks. Coke doesn't have that. More of a very direct beverage play. GLPs have gotten in the way of Pepsi's 58 % of their revenue.

40:20So I think if you want the clean way to play it, you play with Coke. If you want a bottom fish and think that maybe it'll alleviate itself, maybe you take a dabble in Pepsi.

40:29Melissa Lee:The valuations, though, at this point, in my opinion, You look at Pepsi's trading at maybe 15 times, 16 times. Karen's probably has it up right now, as opposed to Coke, which is probably trading almost double that with a similar earnings growth profile. So I get the GLP ones. And if you put up a chart, it happened in 2023. They were both trading in lockstep and boom, it all changed from that point on. But I think you take a flyer here on Pepsi. It will be interesting to hear what they say about the pressure on pricing, particularly from Walmart, as they announce lower prices across the board. Right.

41:04So pricing pressure and that consumer, I think also the food business of that consumer is that's a high user, I guess, of a consumer of Pepsi food products. So you are right. Sixteen and a half times and twenty five and a half times for Coke. Look at you. Look at the brain on that one.

41:22Melissa Lee:Amazing. Blind squirrel. Do not miss the CEO of Pepsi tomorrow on Squawk on the Street, 9.30 a.m. Eastern Time right here on CNBC. Coming up, a look under the hood at the used car market with the latest data, a signal about consumer demand, and how higher pre-owned prices are impacting automakers. That's next. More Fast Money in, too.

41:47Welcome back to Fast Money. The used car market cooling after a recent surge, but resilient demand and tight supply are keeping prices firm, according to the latest Mannheim report. Phil LeBose got the details. Phil. And you see the numbers and you realize that the used auto market, if you thought we were going to see a drop off in prices and demand this summer, that's not happening. Here's the latest data for the month of June. According to Cox Automotive, which puts out the Mannheim used auto index, up 2.1 % versus last year, up fractionally compared to May. Strong EV pricing. That's really where you notice the biggest increase in terms of the used market right now.

42:25When you look at the supply of vehicles, as you take a look at shares of Carvana and CarMax, a couple of things to keep in mind here. One, the day supply is 26.9 days, relatively normal for this time of year when it comes to used vehicles. Also, remember that the supply of new vehicles, as you look at transaction prices, they are not, it's not increasing dramatically, Melissa. The automakers have become very disciplined in terms of the supply of new vehicles. That's why the transaction price is close to a record high. By the way, the sales pace was better than expected in June at 16.7 million new vehicles.

43:01As you take a look at the major automakers here in the United States, keep in mind that JP Morgan raised its price target on General Motors today, essentially saying, look, if you look at their valuation, if you look at their execution, If you look at how they're positioned compared to their competitors, we think they should have a higher price target. So that's essentially the story when it comes to not only used vehicles, but new vehicles, Melissa. The sale of rental car fleets, that used to be like sort of a swing factor. Is that much of an impact on this market at this point? Not as much. It's it's still a little bit, but not as much as it used to be.

43:35OK, Phil, thanks. Phil LeBeau.

43:38Melissa Lee:You bet. Auto parts is the first thing that comes to my mind. Genuine Parts was a monster. It sold off. I think it's OK here. O 'Reilly, look at we don't talk about these stocks a lot, but Pope and O 'Reilly chart, that was lower left, upper right until, I don't know, a year or so ago. It's been lower highs, lower lows since. But I think these make sense in this environment. O 'Reilly is one I would look at very closely. I was just I'm surprised at their strength. Right. And because cars are expensive and new cars and used cars are also expensive. I'm wondering if the lack of housing transactions, those buyers who would have bought a house, they don't need another car.

44:16What that they don't need? I was going to say they now have the money to buy a car. Oh, they're not spending the money on a house. They're going to trade up on a car or living in the car. Excellent point. I'd be terrible. I think interest rates get in the way to your point. But I but I think they get in the way of whether it's a house or whether it's a car. They get in the way of it. I like Guy's idea of buying the auto parts because people are keeping their cars longer. I think that makes more sense to me. But Ford over GM, I like that chart better. And I like the parts over the used car sellers.

44:52Melissa Lee:No comment. If you could buy one car, no. This is not a topic that is Dan's jam. Well, no, Dan is a car person. He bought that Mustang and then he gave it back. Is that great TV right there or what? Like, we are. That's true. Why'd you give it back? It's a great car, by the way, the Mustang Mach-E. And it just says a lot about, you know, whether consumers are ready for them. You know what I mean? So it was a great car, though. Up next, final trades.

45:25Final trade time, Stephen. Walmart, developing story. I like the chart. Walmart right here. Karen. Yes, Alibaba. I love the bounce off of this very, very oversold condition. So if I own none, I'd buy some right here.

45:38Melissa Lee:Dan? Yeah, XLF, nearly half of the holdings in there report earnings next week. The at-the-money puts, the ETF at 55, the 55 puts that expire next week are 1 % of the underlying. It's very cheap. That's like an old-school OA right there. That's like OA stuff right there. Marathon Petroleum, Melissa. All right. Thanks for watching fast. Mad Money at Jim Cramer. Search right now.

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