In short
Fast Money (9/16/26) discusses a market selloff after the Fed’s first rate hike in three years, plus energy and stock-specific movers.
Guests
Steve Liesman (CNBC correspondent in Washington) covers the Fed press conference; Michael Katopoulos (Janice Henderson Investors, head of multi-asset macro investing) is the guest trader; Halima Croft (RBC Capital Markets, head of global commodity strategy) leads the oil segment.
Key claims
Fed Chair Kevin Warsh (per Liesman) signaled inflation is still too high and 16 of 18 FOMC members project at least one more hike this year; markets priced higher rates (e.g., ~90% by December). Katopoulos argues the hike was a “child-sized dose” but implies multiple doses and warns higher delinquencies/defaults may hit lower-income borrowers.
Notable examples
Lenar shares fall after weak Q3 guidance as mortgage rates jump (7.24%); oil retreats after a Saudi pipeline restart announcement, but diesel remains pressured; SpaceX confirms a 9/22 Starship test flight; Boeing drops on continued 737 MAX production delays; McDonald’s hits multi-year lows amid a “K-shaped” consumer.
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 Response to Fed Rate Hike
0:32 to 0:52
Discussion on the market's reaction to the recent Fed rate hike announcement.
“Mazda has been named Consumer Reports' safest new car brand.”
Market Response to Fed Rate Hike
1:42 to 3:55
Discussion on the market's reaction to the recent Fed rate hike announcement.
“Tim Seymour, Karen Feinerman, Dan Nathan, Guy Adami, and Michael Katopoulos, head of multi-acid macro investing at Janice Henderson Investors.”
Key Insights from Fed Chairman
3:55 to 8:02
Insights from Fed Chairman Kevin Warsh and implications for the economy.
“He said a dose of accommodation, which I thought was an interesting way of looking at it.”
Geopolitical Factors Affecting Inflation
8:02 to 11:40
Analysis of how geopolitical issues impact inflation and Fed decisions.
“Let's go straight to Michael Kantopoulos, who is our guest trader for this evening.”
Expectations for Market Movement
11:40 to 14:00
Discussion on future market movements in light of Fed policies and economic conditions.
“And so, you know, it's one thing to talk about growth.”
Economic Trends and Market Reactions
14:00 to 16:43
Explore the impact of GDP, inflation, and the Fed's rate hikes on the market.
“And then all of a sudden GDP and inflation took off.”
CapEx and Economic Growth Dynamics
16:44 to 19:31
Discuss the relationship between capital expenditures and economic growth.
“He doesn't have the balance sheet, or maybe he does, but he doesn't have the power to be able to really affect treasury yields.”
Housing Market Challenges
19:32 to 22:33
Analyze the challenges facing the housing market and specific builders like Lennar.
“I don't see the big CapEx spenders really being impacted materially by this 25 or the next 25.”
Chip Stocks and Market Insights
25:49 to 28:00
Insights into the semiconductor market and recent developments affecting stocks.
“closing at its lowest level since April.”
Investment Delays and Market Impact
28:00 to 30:14
Discussion on investment commitments and their impact on U.S. markets.
“This might be a little bit more believable given the$350 billion investment that Korea needs to or promise to invest here.”
Show all 17 chapters
Market Reactions to Fed Rate Hikes
31:31 to 33:56
Analysis of stock market reactions following recent Federal Reserve decisions.
“Stocks falling today by closing off their lows of the session after the Federal Reserve hiked interest rates for the first time in three years.”
Oil Market Insights with Halima Croft
33:56 to 36:50
Expert analysis on current oil market conditions and geopolitical influences.
“What she sees coming for the energy sector when Fast Money returns.”
Forecasting Oil Prices and Economic Implications
36:50 to 41:18
Discussion on oil price forecasts and their potential economic impacts.
“right at the base of that choke point, Babu Mamdeb, means they have easier access to hit Saudi tankers.”
Boeing's Production Challenges
41:18 to 42:01
Examination of Boeing's production issues and their implications for the company.
“And multiples most likely have to come down, particularly for longer-duration equities.”
Boeing's Challenges and Cash Flow Concerns
42:01 to 43:38
The discussion centers on Boeing's current cash flow issues and regulatory challenges affecting its stock performance.
“No, he's Amazon, which is tricky because it's A for Amazon.”
McDonald's Stock Analysis and Consumer Insights
43:39 to 45:54
Analyzing McDonald's stock performance in the context of the K-shaped economy and consumer behavior changes.
“Shares of McDonald's hitting their lowest levels in July of 2024 today as restaurant stocks continue to feel pressure from a cash-strapped consumer.”
Final Trades and Predictions
45:55 to 46:58
The hosts share their final trading recommendations and insights on market sectors.
“I think in a higher rate environment, we've seen value outperform, and I think value is going to continue to outperform.”
Transcript
Automatic transcript. May contain errors.0:00Tim Seymour:At 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. Mazda has been named Consumer Reports' safest new car brand. It starts with our approach. Every Mazda comes standard with proactive safety features.
0:41So you're more aware of what's around you, more focused on the road ahead, and ready before problems ever start. Mazda. More of what matters most to you. Go to mazdausa.com to learn more. Consumer Reports does not endorse or promote any product.
1:02Tim Seymour:Live 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. The rate hike heard around the world. We'll dive into all the market reaction to the central bank's first rate increase in three years. How to set yourself up for tomorrow's trade and beyond. Plus, oil in retreat. Crude prices pulling back from more than four-month highs. But is there real relief in sight and how all the moves will impact the fuel trades. And later, SpaceX shares start to take flight. Boeing gets grounded on more delays to 737 max production and not loving it.
1:33Tim Seymour:McDonald's trading on more than two-year lows. What's behind the weakness and what's it say about the strength of the consumer? I'm Melissa Lee. Come to you live from Studio B at the NASDAQ. A super-sized desk tonight. Tim Seymour, Karen Feinerman, Dan Nathan, Guy Adami, and Michael Katopoulos, head of multi-acid macro investing at Janice Henderson Investors. Michael, welcome. And we start off with that market pullback after today's Fed rate hike. The S &P, which had been higher most of the session, dropping after Chairman Kevin Warsh said inflation was still too high. Though it closed off its worst levels, the index still posted its lowest close since the end of July.
2:08Tim Seymour:Short-term Treasury yields, meanwhile, moving in the opposite direction. The two-year, crossing 4.7 percent for the first time since July 2024. Let's bring in Steve Leesman, who's got all the headlines out of that Fed press conference today. Steve.
2:21Melissa Lee:Yeah, Melissa, this was a well-anticipated rate hike by the market, but it still led to a sharp sell-off in bonds and stocks as Fed Chairman Kevin Warsh appears to have offered a more hawkish outlook for rates than the markets expected. The two-year yield surging 13 basis points after the statement and during the press conference with Warsh offering a strong commentary on his views on inflation and how the Fed should respond. My judgment some weeks ago was the inflation summer trends weren't passing the test. I've seen very little information since that would make me reverse that decision, so I've stuck with it.
2:57Melissa Lee:So in the statement and the Summary of Economic Projections, they said the hike was intended to support a timely return to a 2 % target, that inflation remains elevated, the committee will deliver price stability. And then the summary said, the projection said, 16 of 18 FOMC members project at least one more hike this year. Well, that's what the market's pricing in with. Actually, 51 % probability of a hike even in October, which is higher than I would have thought, but 90 % for that hike by December. Without naming his chosen Fed chair, Kevin Warsh, President Trump, weighed in on today's rate hike decision, writing, Interest rates in the United States should be 1 % or less because we are the best credit in the world by far.
3:36Melissa Lee:Lower the interest rates for the United States of America and fast. Well, much of Warsh's and the Fed's outlook is based on the economy being strong, unemployment being low, and the Fed having an opportunity to hike without really hurting the economy too much. Wors said, accommodation was removed. That means the Fed may have more to go to get to a place that would be restricted, Melissa.
3:55Tim Seymour:He said a dose of accommodation, which I thought was an interesting way of looking at it. Maybe 25 basis points equals one dose. You know, if you look on the dosage chart. And if you're going to remove the 75 basis points that Powell gave to the markets, then maybe that gives you your baseline in terms of where the Fed goes back to.
4:14Melissa Lee:Well, that's why I asked the question I did, but he wasn't going to play. I thought it was a fair question to ask him about the neutral rate and where he was. The person before me had asked the question. She didn't get much of an answer. But that's the way the prior Fed was talking, and I guess he's just not going to do that. But they would say the current rate is modestly restrictive, somewhat restrictive, and that they think it ought to be neutral. They would talk about it in those terms. That's the way the market thinks about it. By the way, everybody wakes up in the morning and when you make a decision to make an investment, you're thinking about what the neutral rate is.
4:45Melissa Lee:Would it be better to put it into a risk-free treasury or something more risky that has a higher return? Everybody thinks about the neutral rate. He said he's not thinking about it. And that's a problem, I think. And maybe, Melissa, remember, we had a lot of volatility last time on the long end. Now we get the volatility on the short end. And this kind of volatility around Warsh Fed meetings might be the rule rather than the exception. Steve, politics aside, can both be true? So Kevin Warsh is basically saying the economy is strong. Inflation is a problem. We're going to go on a rate hike cycle.
5:18Melissa Lee:It appears that way. I'm paraphrasing. President Trump says the economy is strong. Best credit in the world. We should have the lowest rates. Can both of those things be true? I mean, economic, just through the lens of economics. Oh, absolutely. I mean, look, if you're a bank, you're the first thing that you to get in the door to get the seat in front of the banker. You've got to be creditworthy. Right. So the president is right about that. And and by the way, that has always been true about the United States and something people don't recognize. We are a fabulous credit. We are incredibly rich.
5:48Melissa Lee:We can pay off our deficit anytime we want. The problem with this with the deficit right now and interest rates has nothing to do with our creditworthiness. This has everything to do with our political will to pay it and how we're going to do it and how much debt we're going to be issuing. If we want to get rid of the deficit, we can do it tomorrow. It's 100 percent of GDP. You know, we can see the enormous. What's our coverage ratio like three or four to one? We're a great credit. The president's right about that. But that's not the only thing that goes into judging what interest rates are. It has a lot to do with supply out there, with what's going on with AI and, of course, with inflation.
6:23Melissa Lee:The bank's going to take what it thinks it needs to make money on a loan. And credit worthiness just gets you in the door before you get a rate.
6:32Karen Finerman:Steve, Tim, so in terms of what impacts inflation, though, I thought it was fascinating if we believe that supply shocks aren't really supposed to be part of the inflation profile. The more he spoke, a bit ironic, right? The more he spoke, I heard geopolitics being a reason for the Fed to move. Thoughts on that? Is that really part of the core inflation story now with this Fed?
6:55Melissa Lee:I think the recent move in oil prices and the deterioration of the policy outlook or the military outlook in Iran has played a big deal in the Fed's thinking. And I also think if I think that would be the major cause, I think a minor cause is the tariffs on Canada. And by that, I mean, things are one off when they happen one time. But now you look at the trajectory of oil prices, you look at the trajectory of things in the Middle East, and you cannot get to a place where you see things getting better in three months or two months. And then you look at Canada and you say, oh, were tariffs one off?
7:33Melissa Lee:No, I think there may be more to go when it comes to tariff, especially if this thing escalates with our second trade partner. If these things were one off, the Fed could treat them as one off things. But they're not. They're continuing. And the policy is uncertain. It's kind of random. And so you have to say, what's the best guess here? And the best guess is probably higher oil prices, especially, by the way, how diesel works its way into the economy. And for tariffs, it's more tariffs, not less.
7:59Tim Seymour:All right, Steve. Thank you. Steve Leisman in Washington for us. Let's go straight to Michael Kantopoulos, who is our guest trader for this evening. What do you think? Because, you know, we have what the reaction of the Fed is to these inflation shocks. And yet what they do doesn't really have any impact directly on these inflation shocks. So we're in a scenario where, you know, rates are going higher and inflation may not necessarily be immediately impacted. Yeah. You know, I thought Chair Warsh actually did a pretty good job of saying that it wasn't just because of geopolitics. I think he had three reasons.
8:33And reason number one, I would argue, is the biggest reason, which is growth is really strong. I mean, nominal GDP growth is humming along between six and eight percent, depending on how you want to measure it. that's a really, really strong economy. I mean, you look at earnings growth in Q2. I know earnings in the economy are different things, which we always talk about on the show. But earnings growth is probably going to come in about 27 percent year over year. The unemployment rate is basically at an all-time low. You know, there's just no reason to be accommodative. And I like the fact that actually Chair Warsh did say that, you know, it's a hard, hard argument to make that they're tight or that they're restrictive.
9:10They clearly are not.
9:12Tim Seymour:Do you think that the market reaction was the right reaction? I mean, it is the right reaction. It is a market reaction. But is that the way you would have played it? It's a good question. I actually messaged a colleague of mine while the market was reacting saying, yes, this is the right reaction from the market. So I absolutely think it is. You know, there's a couple of things that went on. It was a good first step for the Fed and for Chair Warsh. But that's all it is, the first step. It's a dose. It's a dose. Is that a child size a dose? Is that an adult dose? It was a child-sized dose.
9:43Karen Finerman:I mean, I really do believe that. Well, doses aren't one, two, or three. I mean, when Guy takes his medicine, I know he's well-to. He's got a baby aspirin every day.
9:49Melissa Lee:Oh, there you go. That's for hard stuff, you know. And, you know, you had a dose, right? But the market is pricing significantly higher rates than what the Fed is anticipating. And so if the Fed's not keeping up with the market, the market's going to say, okay, we're going to keep going until the Fed gets really serious. And the Fed isn't really serious yet. But it's a good first step. I'll give them that. So I agree with a lot of what you said. I mean, growth is really good. I do think, you know, he's been the chair for, I don't know what, four months now, five months. So earlier on in that tenure, geopolitical was still pretty new.
10:25And all right. So now we're seven plus months into very elevated oil prices. So I don't think it's crazy to think that that can persist. They're very clear in their message. You know, inflation is elevated. So I was sort of not surprised at the first reaction that we talked for a while about the last few days about would the farther end, you know, the long end of the bonker get some relief, which did happen. And then I was very surprised, actually, to see the market sort of sell off. I wouldn't be shocked if that, you know, a couple of days of that and then it returns. This 25, I know it's now part of a potential multiple dosage, and that was a concern.
11:07But that couldn't have been on no one's radar screen. Right. I mean, we are. I still think we're accommodative.
11:13Melissa Lee:Yeah. Warsh also mentioned that stable prices is good for a lower earning sort of part of, you know, our economy or citizenry, however you want to put it. But, you know, at the end of the day, it's actually really hard for them in the meantime. Right. If you think of what we're already seeing now, you're seeing delinquency rates, you're seeing default rates go higher. You see, you know, credit card rates go higher because of this or the perception, I guess, of a right hiking cycle. it is going to be hard for that lower K in the near term. And so, you know, it's one thing to talk about growth. And, you know, we came in with 14 percent expectation for earnings growth here in the U.S.
11:47Melissa Lee:And it's going to come in, like Michael said, 27, 28 percent. You know, what part of that is actually, you know, away from data center, away from just the kind of tailwinds that we've seen from tariff and tax returns, that sort of thing. So, again, we might be sitting on an economy that's not nearly as strong as some might think. And then if you're hiking into, let's say, an economy that's weakening from the bottom end, that just might be a tough place to be. I mean, our friend David Rosenberg, a guy and I just had a conversation with David, and he thinks they're making a very, very big policy mistake.
12:21Melissa Lee:And when you think about the growth that Michael just spoke to, I mean, we were probably the first half of this year a little below 2 % as far as GDP growth, and you're looking at this number right now, 5%. I don't know where that comes from. You know what I mean? They're likely to end up something a little above trend over the last 10 years, which puts you a little above 2 percent. Maybe I can do that math. Maybe I can't. But I'd just be surprised if we see a hockey stick to road.
12:42Karen Finerman:Well, I think we're going to see a dollar response, too. And I think we had a dollar response back in June when we first heard Warsh kind of express some of his core principles.
12:50Tim Seymour:I think a dollar response beyond what we saw today.
12:50Karen Finerman:Yeah, I think we're going beyond this. I think we're going to probably test those highs from June based upon the central bank differentials. Again, I know the ECB has been out there. We know the BOJ has to do something, except for the fact that this Fed and the other key part of I thought about today is he did his best to distance himself from the last Fed, distance himself and while at the same time pointing out that inflation has been too high for five years. And he made it really clear that the economy is strong enough to do anything he wants to do with that part of his mandate. So to me, this didn't sound like one dose, two dose.
13:19Karen Finerman:This sounded like multiple doses and equities just aren't priced for it. I mean, and what I thought was interesting in terms of the reaction, the correlation to that second move. Right. So that that move after we got a little relief. And then when we saw we saw bond yields start to trade higher. We know equities are correlated, but the S &P dropped 130 basis points. I mean, that's the point where it was today, the day stocks really paid attention. And I think they probably now have to. I think there's a couple of things. I totally agree with Tim on the dollar being stronger. But, you know, Dan has a lot to unpack there.
13:49And I think he's absolutely right. It's the Fed in many ways. And in some ways, I think you're too soon. You know, I would argue the Fed made a mistake in cutting interest rates a year ago. If you look at they cut, they cut, they cut. And then all of a sudden GDP and inflation took off. And it's pretty been a one way train on GDP and inflation since they cut. So that was a mistake. What's interesting is that you're right. We're closer to a peak in the earnings cycle. Right. There's no doubt about that. Now, that might not actually roll over until 2027, but you're closer to a peak in the earnings cycle.
14:20And very rarely does the Fed start a hiking cycle near the peak of an earnings cycle. And that does concern me for next year. But I think there's room to run through the end of the year in equities.
14:31Tim Seymour:And just to sort of the companion piece of that, not near the peak of an earnings cycle, also not close to highs on the S &P 500. I mean, we're just a few percent away from highs. The last cycle, I think we were 10 percent off.
14:43Melissa Lee:That's right. There's been this they've been putting out there that the Fed and Treasury are on the same page. Maybe they are. I don't know. But, you know, this has become a tennis match now, because if you look at what happened to Tim's point, you had dollar yen at one point today go up from, I think, 155 and a quarter. The crack staff will show you from three o 'clock on closed about 156 and a half. Treasury Secretary Besson has made it clear that they want the yen to strengthen. That did not happen today. They've also made it clear they're trying to combat, get interest rates lower. That didn't happen today.
15:13Melissa Lee:So you can say they're on the same page, but at least over the last couple hours, things are going askew. Those questions will be asked. And in terms of the stronger dollar, I'm with Tim. We'll see how long that lasts. But then let's watch how gold starts to perform in the aftermath of all this, because there's a world where the dollar can go higher and gold can go higher, too.
15:31Tim Seymour:All of this is just like against what Besson really wanted. I mean, we've got the dollar strengthening, which complicates the BOJ next week. And then we have got Treasury yields still moving higher despite being active in the market.
15:43Karen Finerman:The BOJ has to go 50. Like it almost feels like and again, today was a fascinating press conference. That wasn't really supposed to be all have all that much in it. He talked about other central banks, kind of said, like, we're going to do what we're going to do. And of course, he's not going to try to implicate or even have any editorial on other central banks. But I think the pressure is on the BOJ. I just think also we had this case where today we finally started to hear about pieces of the economy that have plenty of room to be resilient. So that that to me is part of this story. I think this is a Fed unanimously was was ready to do this.
16:21Karen Finerman:And again, I don't think equities have to fall overnight. But when he reminds us that every asset in the world is priced off the 10 year, the U.S. 10 years, the most important asset in the world, it is. And it is for equities as well. And at some point that matters for a DCF. I think Treasury Secretary Bestin is quickly finding that he's pretty impotent in what he can do to. affect. But I think it's true, right? We've talked about this multiple times. There's only so much he can do. He doesn't have the balance sheet, or maybe he does, but he doesn't have the power to be able to really affect treasury yields.
Read the full transcript
16:57And at the end of the day, what matters is what's going on in global markets, what's going on with growth and inflation, and absent engineering a slowdown or a huge increase in supply dynamics, it's hard to see why rates would fall. Maybe he should up
17:10Melissa Lee:his dose. I'm not going to touch that. Well, you could. I'm not getting drawn into this.
17:16Tim Seymour:All of this being said, we saw the market reaction today. What is the anticipation? And oftentimes you see the next day the markets digest more what had happened and really, you know, think about it. And you see the true reaction in the days to come. What do you think the true reaction in the days to come would be?
17:32Karen Finerman:I think the reaction in the short run is geopolitics mean oil prices stay higher. Again, let's call it what it is and deftly referred to this as global hotspots. We're talking about the war in Iran. We're talking about really a dynamic that is putting equities on notice and higher oil prices and that correlation. I don't you know, we're a trading show and this and that. I think markets probably in the short run don't need to start start trading from the long side. I think that it doesn't mean that anything has really changed. The story, though, I think continues to be tomorrow will be is this a cycle?
18:07Karen Finerman:How many doses? Is this a case where actually the economy is as strong as we think? Because the great news for the equity market is he talked up the economy. Michael thinks the economy is cruising. We all know where CapEx is. We know this is one of the great industrial runs and it's not just AI or as a function of AI. So I think markets are cautious and technically they don't look great. You know, you say that industrial run. Look at the XLI.
18:32Melissa Lee:I think we talked about it. The industrials, they trade horribly. Look at, you know, I'm looking at the socks and I know you like to look at them. It's down 23 percent from its all time highs. Can't get out of its own way.
18:41Karen Finerman:I'm talking about CapEx for industrial. No, I understand. I'm talking about the XLI, which is outperforming the S &P all year. No, I know. But what I'm saying is everything else started to sell off.
18:48Melissa Lee:Right. I'm not arguing with you. I'm just kind of highlighting the fact that some of the most cyclical sort of parts of the economy, the way that they're acting in the markets is not particularly great. And so to me, I think that if, you know, the CapEx boom is a big part of this economic growth or at least one of the tailwinds. And we know it's a big percentage of the growth that we've seen, you know, year over year for the last few years. It really feels like through the lens of the stock market, we might be seeing a peak of that. And then when you put the headwinds of, you know, you have Republican governors putting moratoriums on new data center bills.
19:19Melissa Lee:You have all this doom stuff going on right now. I mean, to me, it feels like we're probably pretty close to the CapEx thing going from a net, a big net positive, to maybe something that turns into a bit of a drag. And that makes its way through a lot of different parts of the economy. I don't see the big CapEx spenders really being impacted materially by this 25 or the next 25. Really, this is a much bigger thing that I think, you know, if you're a borrower right now, you've got to be somewhat concerned a little, you know, the tenure didn't really move very much at all. I think that CapEx continues unabated unless there's a material change in the return on invested capital, which I think is actually accelerating, not decline.
20:00Right.
20:01Tim Seymour:But to that point, too, that continues the inflationary pressures that are in the economy. I mean, a part of this is all the issuance by the spenders. And that is not going to slow down by 25, 50, maybe even 75, maybe even a full percentage point given the return on capital. But then we've got all sorts of inflationary pressures built in. Yeah, you've got massive inflationary pressures. You've got deficits that are just continued to build. You've got, you know, obviously technicals, both from the corporate issuance side as well as the treasury issuance side, all pushing yields higher. And I would argue, the thing I would argue with Dan about is that you've actually had a broadening in earnings growth in 2026.
20:38If you look at, you know, all growers in the world's equity markets of greater than 25 percent, expected long-term earnings growth of greater than 25 percent, there's one mag seven in the top 200 companies. I mean, that's pretty crazy, right? So you're seeing broadening in earnings growth. You're seeing international markets start to outperform. You're seeing parts of U.S. markets begin to outperform tech and comm services and discretionary. And that's a healthy thing. And that's indicative of stronger and broader growth.
21:04Tim Seymour:Let's get to an earnings alert on Lennar. The shares are lower after the home builder reported disappointing quarterly results after the bell. They're down 3 percent right now. CNBC's Diana Oleg has got the details. Hey, Diana. Hey, Melissa. So this was a rough Q3 across the board, both EPS and revenue below guidance. And it was the third straight revenue miss. Both new orders and deliveries were down from a year ago and missed estimates. Gross margins on home sales were basically in line, but guidance was way off. Guidance on deliveries also came in low. Now, in the release, Lenar chairman Stuart Miller called it a, quote, challenging economic environment, saying rates are responding as inflation remains above the Fed's target, driven by geopolitical tension and higher oil prices.
21:48Additionally, consumer confidence has declined as rates and affordability have driven more consumers to slow their purchase decision. Now, the 30-year fixed rate dropped a little bit this morning, but then shot back up this afternoon after the Fed meeting to 7.24 percent. That is the highest since January 2025, and an increase of 35 basis points in just the past week. Now, finally, one programming note, I'll have home builder analyst Ivy Zellman, you know her well, from her annual housing summit in Boston, live on Fast Money tomorrow to react to all of what is happening today.
22:23Tim Seymour:Melissa? Look forward to that. Diana, thank you. Diana Olick. Not to mention all the input costs, labor costs, everything else that goes into housing also higher.
22:34Melissa Lee:Not all home builders are created equal. We talk about it. On one side of the coin is Toll Brothers with north of a million or either side of a million dollars average selling price. This is Lenar, average selling price of$372 ,000. This is a stock that's probably down 60 % from its all-time high in the fall of 2024. Why do I bring that up? Because it's now backing up the story that you're hearing from all these different retailers and all the different restaurants that there is pressure on this side of the equation for those consumers. And it's problematic in a word. I think it does sort of make its way into the rest of the homebuilders.
23:06Melissa Lee:They all trade differently, but cautionary tale again.
23:09Karen Finerman:Well, the story at least makes its way into the midterm election discussion. And so, again, I'm not the politics are easy on a day like today to point to, again, the disparity between President Trump and at least what the Fed is thinking. But to the extent that interest rate sensitivity, if you're out there waiting for a mortgage to go lower, you've only watched it go the opposite direction in the last three months. And that doesn't feel great. So I just think that the housing market overall is something that unfortunately doesn't probably play terribly well into midterms if you're the incumbent.
23:43Karen Finerman:Now, I do think you get to a place with Lennar. I don't own it and I don't really want to own homebuilders. But as Guy said, the stock's down. It's down 45 percent. It's trading around 13 times forward. I mean, at some point and their balance sheet's great. So, I mean, it's it's it gets interesting.
23:58Tim Seymour:Coming up, all the headlines moving chip stocks today. What we heard from the OnSemi CEO after a rough couple of months for the stock and the potential memory deal between Intel and SK Hynix. Plus, a pullback in oil after this summer's big run-up. What to expect from the energy sector as crude lingers above$100 a barrel. Don't go anywhere. Fast Money is back in two.
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25:48Tim Seymour:Welcome back to Fast Money on Semi, dropping 9 % on the back of its investor day, closing at its lowest level since April. Christina Parts Nevelis spoke exclusively with the CEO in just the last hour. She joins us here with more. Christina. On Semi did highlight$213 billion for their TAM market opportunity, also 53 % gross margin target, but neither really offered much near-term financial details. investors actually may be selling a highly anticipated event or specifically those numbers that just didn't impress. And like you said, I spoke to the CEO who told me in the last hour that OnSemi's growth record really just speaks for itself.
26:25I don't look at revenue in these markets quarter on quarter. Let me give you a number that will disprove a lot of the headlines. Our number from 2019 till 2026. Think about that range to take out the COVID up and down and all that noise. We grew 72 % our revenue in automotive. We are the highest gross semiconductor company. He did say for automotive, though, but it's a strong statement. And now to pivot, hard pivot to Intel, because that stock also moved, but dramatically in the other direction. SK Hynix could lease part of Intel's unfinished Ohio plant or join Intel and major cloud firms in a venture to supply the memory.
27:03SK Hynix isn't necessarily denying it, but saying only that it's exploring options. It's been saying that for quite some time. Why believe this rumor this time? Politics. Korea is on the hook for a roughly$350 billion investment pledge here in the United States. And Washington wants SK Hynek, Samsung, et cetera, to build more on American soil. For Intel, a paying tenant fills a plant. It's stalled for lack of customers and it's been delayed several times. The catch, though, is high bandwidth memory. The high-end AI memory South Korea guards as a national core technology. And that fab that is in Ohio doesn't necessarily open until 2030, 2031.
27:39So you may say, yes, we'll do this deal, but will it actually produce chips anytime soon? Yeah.
27:45Tim Seymour:And we've seen Intel move higher on this notion that it's also going to spin out Altera. So it's sort of got a couple of things going on in terms of the move that we've seen recently. Altera. But every time there's anything with Intel, there seems to be a stock pop, right? Where TSMC was going to be involved in a joint venture with NVIDIA, AMD. This might be a little bit more believable given the$350 billion investment that Korea needs to or promise to invest here. I do think that's going to be delayed. And that's being reported in South Korea news just over the last 24 hours that they haven't presented it to all of their politicians on the floor.
28:18And so that could delay things here in the United States.
28:20Tim Seymour:Christina, thank you. Christina Parts Nevelis.
28:23Melissa Lee:Amazing. In a world where there's no clarity, they're giving 2030 guidance on this investment, which is remarkable to me. They're talking about operating margins at 38 percent for context, about 22 percent now. And if you believe them, this is a stock that's not been cut in half since that all time high in June. It makes it ridiculously cheap, yet it's not getting out of its own way here. But if you take them at their word, you've got to buy the stock with both hands. Yeah. On the United States of Intel, this is an interesting one, right? The politics of this. It's a pretty easy one. You're on the hook, as Kay Parch just said, for this commitment.
28:56Melissa Lee:We know that a lot of this stuff came in in 2025 when the new administration came in. This is something that's very important to them. Listen, it's important to us to have this sort of manufacturing here. But if we're talking about 2030 or 2032, you're going to take that backlog? And what are you going to value that? And, Tim, you just talked about DCFs and rates here and this and whatever. Who knows what demand is going to look like? And so what sort of multiple are you willing to put on a deal like that that comes into Intel when the third largest holder is the U.S. government? You know what I mean?
29:24Melissa Lee:So to me, I just think we're getting into kind of sillyville a little bit with some of this stuff.
29:29Karen Finerman:Well, I think I think Hynex has every I mean, look, they're riding high. It's not like they they're they're desperate. Far from it. But I mean, they have every interest in being successful in the United States and having partnerships here. They they I think Intel sold them their their nan flash memory business, you know, seven or eight years ago. I mean, for 10 billion dollars. I mean, they've done big deals together. It makes sense that they would work together. But I agree. I mean, Intel famously has held on to a lot of these just kind of discussions of partnership. I mean, stock hit all-time highs or just under 130.
30:00Karen Finerman:And without any of these deals coming to fruition, stock is down 20 percent and a difficult take for semis. That's pretty good.
30:08Tim Seymour:Coming up, a lot of single stock action catching our eyes today. The headlines and details moving GE Brunova, SpaceX and more. You're watching Fast Money Live from the Nasdaq MarketSite in Times Square. Back right after this.
30:42We'll see you next time.
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31:35Tim Seymour:Welcome back to Fast Money. Stocks falling today by closing off their lows of the session after the Federal Reserve hiked interest rates for the first time in three years. The Dow dropping more than 600 points. The S &P down half a percent. The Nasdaq and Nasdaq 100, both virtually unchanged. GE Vernova rising nearly 5 % after the CEO said he is not seeing signs of a slowdown in power orders. The comments coming at the Morgan Stanley Industrials Conference. GEV also expects to meet a$200 billion order backlog target of very early in 2027, based on the current strength of orders. SpaceX also jumping 5 % after the company confirmed that the next test flight for its fully reusable rocket Starship would take place on September 22nd.
32:14Tim Seymour:The first mission expected to send the ship into orbit and deploy Starling satellites. Shares up more than 40 percent from their August lows, but still about 30 percent off its intraday record. Karen, what do you think of GEV? Very promising guidance there. Very promising guidance. I mean, it was a was it a 25 billion dollar increase to the backlog in early 2027, which is not that far away. So, I mean, the story very much intact. We talk a lot about, you know, will there be any appetizer for data center growth? It seems yes, resoundingly yes. So, I mean, they are right in the center of it. Yeah.
32:51Very impressive.
32:52Tim Seymour:Industrials are trading weak of late.
32:54Melissa Lee:Well, I mean, if you just look at the S &P again, like there's very few sectors. You have IBB, you have energy and stuff like that. And, you know, XLI is outperforming the S &P just a little bit. But everything else is underperforming the S &P. So when you look at, again, I'll just look at the most cyclical things in the market and just say, why are the investors willing to discount relative to the S &P 500's performance? So I still think you have a lot of that concentration, which is driving a lot of the performance. And a lot of it does have to do with energy. I think, Michael, that's where you're getting a lot of this brightening out.
33:25Yeah, I mean, you definitely, I was just looking at small and mid-cap industrials companies. And they've obviously pulled back quite a bit in the last month or so. But they're still doing really, really well year to date. up nearly 8%, 10 % or so. You're at 8%. Yeah. And the S &P is up 10.5%. It's not a terrible outcome, though. It's not a terrible outcome. It's not a terrible outcome.
33:46Tim Seymour:Coming up, RBC's Holly McCroft will join us next to dig into the latest moves in the oil patch. Will today's cool off and crude continue, or is there more pain coming for fuel-focused consumers? What she sees coming for the energy sector when Fast Money returns. Missed a moment of Fast? Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this.
34:16Tim Seymour:Welcome back to Fast Money. Oil prices dropping after the U.S. said a damaged Saudi pipeline will restart operations in just a few days. The Fed's rate hike also keeping prices lower, but gas and diesel prices have been steadily on the rise across the country. Joining us here on set to break down energy markets is RBC Capital Markets, head of global commodity strategy, Halima Croft. Halima, great to have you with us. Great to be here. And you brought us a statistic, which I didn't really realize. It's how long since the war started? 200 days. 200 days. I think soon is the most overused word in this war.
34:47Tim Seymour:So when we heard today from Secretary Wright, the pipeline will reopen soon. I mean, think about it. President Trump two weeks into the war said it would be over soon. So we have no viable end date for this war at this point. And so the real question is, like, what is the U.S. military commitment to this conflict? How much can we continue to get out through U.S. assistance through Hormuz? Are the exit routes essentially over for now? But there is no near-term off-ramp on the horizon. OK, so given that and given the change, you know, since the last time we peaked in oil prices in Brent, for instance, during this war, the circumstances were different in terms of worldwide reserves, the role of China now buying in the market.
35:26Tim Seymour:So with that context, where do you see prices going? I think it's a more supportive backdrop just because China looks like they're back in the market. I mean, the reason why we didn't go to 150 or higher is that China dramatically slashed imports. China's imports have been rising. Also, we've burned down our reserves. But I think the real question is going to be, you know, how much further does Iran expand the conflict? Do we really see that Babam and Dab viable alternative route close down? Like, how quickly can this pipeline come back?
36:00Melissa Lee:Historically, geopolitical pops and crude oil have been selling up. It's different this time, in my opinion, because now the world sees there's a national security risk around energy for every country on the planet. How has that sort of changed the equation?
36:15Tim Seymour:Well, I think what has changed is that people are now starting to settle into this could be a long term conflict. and what I think is worrying about what has happened to the east-west pipeline. That was the most successful alternative access route. Like, the most barrels were exported away from Hormuz through that pipeline. And yes, the pipeline will be coming back maybe partially in a few days, potentially six weeks for the whole pipeline, but it doesn't mean the pipeline can't be hit again. And the fact that the Houthis have taken so much territory now right at the base of that choke point, Babu Mamdeb, means they have easier access to hit Saudi tankers.
36:56Tim Seymour:So the question is, what is the strategy of de-risking these waterways? And you can build alternative infrastructure, but as long as a part of it is above ground, it's at risk. First of all, thanks for having you here in person. Good to see you. So there's some talk of Venezuela maybe filling in some of the gap. Is that realistic at all? I mean, the scale of the disruption is still so large. And if we want to talk about, like, why U.S. consumers are paying so much for retail gasoline prices, why diesel prices are at historic highs, that's because of a lack of spare refinery capacity. I mean, that is not solved by incremental increases in Venezuelan production.
37:36Tim Seymour:And that's why you saw President Trump put pressure on Ukrainians to tell them to stop hitting Russian refineries. Now, Ukrainians have said, look, we'll stand down if the Russians stand down. And there's no indication yet that either side is standing down. Ukraine hit another oil refinery, you know, just days ago. And so that problem for the oil market in terms of refined products is persisting. And even if more crude is moving through Hormuz, natural gas is not moving and products are not moving.
38:03Melissa Lee:You just mentioned China coming back to the market to some degree. President Xi is coming here in a couple of weeks. We have Besson, who's going to be meeting with some sort of trade delegation here in New York. You know, last month there was an attack on one of our bases and very sadly three of our service people were killed. Supposedly that just some of the, I don't know, satellite imagery came from Chinese intelligence. Right. How does this all shake out? I think this has a big part. I mean, if we were to have some sort of, I don't know, resolution to the war, China kind of has to be involved in that.
38:35Melissa Lee:Or am I just I don't know.
38:37Tim Seymour:I think the working theory for people who said the war would be over soon is that China is such a large purchaser of Iranian crude, they will want to put pressure on Iran to end the conflict. But the other side of the equation is we have moved military assets out of the Indo-Pacific that could be used for the defense of Taiwan to the Middle East. And so you could say, has China's strategic position in its own neighborhood been enhanced by this war? And there are some people saying if you look at the drones that Iran is using, some have said that you have Chinese chips, Russian parts, Chinese chips.
39:10Tim Seymour:So this is obviously a big part of the conversation, but it's unclear really how much capital China is going to deploy to try to bring this conflict to an end. So where are your forecasts for Brent? So we actually moved to a scenario forecast. Like, you know, if this does not expand and stays relatively contained, we saw Brent prices for the quarter around$96. Still high. Yeah. But in an escalation scenario, wider war, which, again, that's why we're watching very carefully what's happening with the Red Sea, then you're talking about Brent prices$122. $122. So, again, our, like, medium forecast is, like,$96 if we basically can get Hormuz flows, if we get flows back through Red Sea.
39:54Tim Seymour:But if this thing escalates, that's the scenario we're thinking about. And what's your forecast for diesel? I mean, diesel is a real challenge. We see no imminent end in sight for diesel prices. And again, that's why you have the refinery industry asking President Trump for things like a scaling back of the renewable fuel standards. They're basically like, that is the policy we're looking for in terms of being able to lower retail gasoline prices. But for now, there's no indication that President Trump is pursuing that path. Halima, always great to see you. Thank you for having me. Thank you, Halima Croft of RBC.
40:28Karen Finerman:Well, a couple of things. Always tons of great information from Halima. And her whole concept even of we're upgrading our price on Brent, but we have scenario analysis. I mean, one of the dynamics just with oil equities is I believe we have a mechanical follow-through just in terms of the underlying input prices. So, Spot, wherever analysts are putting their models here on Brent, I think there are a lot of upgrades to come. The second part of this is you've actually seen oil services underperform called the integrators or the XOPs or some of the upstream guys. I think oil services really gets you into the technology, gets you more into the place where the value added products, which have the highest margins and are making the biggest impact for these companies are.
41:08Karen Finerman:I think you want on oil services here.
41:10Tim Seymour:Scenario analysis, which is almost like choose your own adventure. I like that. Brent to 122, what does that do to stocks? Yeah, I think it definitely is going to hurt. I mean, it feeds right back to inflation, right back to what rates are going to do and your discount rate. And multiples most likely have to come down, particularly for longer-duration equities. We always talk about long duration in the fixed-income market, but it exists in the equity market. And higher multiple, higher PE stocks are going to get hurt if Brent goes to 122. Coming up, Boeing in the red as the company faces new issues with the 737 MAX production.
41:40Tim Seymour:How long will the turbulence last when Fast Money returns?
41:47Tim Seymour:Welcome back to Fast Money. Shares of Boeing dropping nearly 4 % today. CEO Kelly Ortberg telling investors it's taking longer than expected to stabilize 737 max production, but adding that the company expects to increase output of the planes next year. Shares down nearly 13 % over the past month. What do you say about Boeing, Karen? Yeah, well, it's in my bedank. Yeah, it's all you want. Okay. Or is it A for aviation? No, he's Amazon, which is tricky because it's A for Amazon. Yeah, no, it's a little disappointing. I mean, you know, for years, Tim's in the Boeing camp as well. We talked about cash flow, cash flow, cash flow.
42:23And that's what they're going towards. And now it's just going to be delayed. So I don't think it'll be denied, but delayed isn't as good for sure.
42:31Karen Finerman:It's frustrating. It's been like molasses in the winter. But I do think the story has been slowly improving and re-rating. and that cash flow that really was a surprise by the end of 25, which was 30 points in the stock, has slowed down. There's still a regulatory pathway for them that is unclear. But their order book is without question got a lot behind it.
42:55Melissa Lee:Buck 85 on the downside has been supported a couple times. I mean, it's been in this range now for a period of time. And I will say this. Nobody likes molasses. People that make molasses don't like molasses. What do you use it for?
43:06Tim Seymour:It's a sweetener. You can use it in baking. But what about honey? Is honey different than molasses? It's a different kind of sweetener.
43:13Melissa Lee:I see this. I don't like it. Gingerbread cookies. The viscosity of molasses, I guess, in the wintertime. Particularly slow, guys.
43:21Tim Seymour:Coming up, investors not loving it. Shares at McDonald's at their lowest level in more than two years. The next move for the fast food chain and what our traders see in store for the Golden Arches. And here's a sneak peek at the Kramer cam. Jim is chatting exclusively with the chairman and CEO of Palo Alto Networks. Catch a full interview, top of the hour on Mad Money. More Fast Money in two.
43:44Tim Seymour:Welcome back to Fast Money. Shares of McDonald's hitting their lowest levels in July of 2024 today as restaurant stocks continue to feel pressure from a cash-strapped consumer. McDonald's now down 27 % from its highs of the year, Guy.
43:58Melissa Lee:Trying to make valuation cases along the way. It's been fool's errand, and that's on me. But when you go from an all-time high earlier this year to a multi-year low today, that's got to be telling you something. And, again, it's not in a vacuum. It's what we heard now. Look, we just talked about Lenar a few minutes ago. You hear from the other restaurants. You hear from some of these retailers. And it paints a picture about the consumer that I don't think is that great. I mean, retail sales are really strong this week. So it's not, you know, I wouldn't say it's necessarily that. But I do think what it's highlighting is that there's two different types of consumers.
44:28And it goes back to the K-shape economy. And, you know, some are struggling and some are doing really, really well. And so I think you're going to see a lot more dispersion within stocks and within retailers. And this could be the start of that.
44:39Karen Finerman:I just think McDonald's, which can at least beat its competition in a value promotional environment, is getting to value territory itself. I'm not sure what the multiple is supposed to be. I know that there are analysts out there that are actually putting a couple turn premium on the last two or three year historical average. And they're getting to a 350 price, at least a couple of reports I just recently read. I think that's aggressive here. But I think you can be building a position at McDonald's. Is that right? And I think you can own it.
45:04Tim Seymour:Sorry to interrupt. Is there anything about what the Fed did today that makes you feel like McDonald's fortunes are a little less certain in that hiking interest rates really hurts that sort of bottom K kind of consumer at a time when, you know, when inflation is already high?
45:19Karen Finerman:There's no question that we learned today we should kind of buckle up for at least higher rates, but that there's some sense that the economy is very strong. And we know it's a K-shaped economy. But I think it's a tough place to be indiscretionary. I think there's certain parts of the hospitality place that are going to get ugly. So I don't think you have to chase them. McDonald's, to me, is a safer place to play. And at this valuation, get there. I mean, I think at the end of the day, it depends on if the Fed can bring down inflation with these sites. And if they can't, it actually could help the lower income.
45:53Tim Seymour:Up next, final trades.
46:04Tim Seymour:Time for the final trade. Michael Cantopoulos. I think in a higher rate environment, we've seen value outperform, and I think value is going to continue to outperform. Timbo.
46:13Karen Finerman:My sense is there's going to be some picks in the energy sector, so let me get out there first and say OIH, I think, underperforming the rest of that group. Take it. Chairwoman. Yes, I'll see your OIH. I will raise you an XLE. I like the space. days like today, provide some opportunity. Definitely. Diesel Dan.
46:34Melissa Lee:You know these Intel rumors, SK, I just don't think you buy them on that at all. Shout out to Pete Alonso. Hit his 300th dong last night at Shea Stadium. He's a huge fan of the show. We're huge fans of him.
46:51Melissa Lee:ConocoPhillips, Mel. Staying with oil. Love Pete.
46:54Tim Seymour:Thanks for joining us, Michael. Thank you for watching Fast Mad Money with Jim Cramer. starts right now.
47:27many 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.
47:57. Thank you.
From the publisher
Stocks dropping after the Federal Reserve hiked interest rates for the first time in 3 years. The persistent inflation warning from Chairman Kevin Warsh, and the areas of the market that could see the biggest impact from the rate change. Plus, Lennar reports results, semi stocks make some moves, and the crude climb cools off; where RBC’s Helima Croft sees WTI heading next after the recent energy spike.
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