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Melissa Lee

Live from the NASDAQ markets in the heart of New York City's Times Square. This is FAST money. Here's what's on tap tonight. Oil prices jumping as the US Launches additional strikes on Iran. We've got the latest headlines out of Washington and what it could all mean for the broader markets and the details from the latest Fed minutes. The first under the leadership of Kevin what we learn where rates are heading next plus what's behind the bounce in Baba Apple shares climbed toward new records and soda popped Pepsi far underperforming Coca Cola stock this year. Can tomorrow's earnings recaffeinate the name? We'll get some answers. I'm Melissa Lee, come to you live from Studio B at the nasdaq. On the desk tonight, Steve Rosso, Karen Feiderman, Dan Nathan and Guy Adami. A volatile day for stock markets of major indices closing well off their lows of the session. The NASDAQ down over a percent at one point but finishing in the green. The S and P and Dow also off their worst levels. The action coming even as oil prices spiked to their highest level in over two weeks. WTI crude seeing its biggest gain since early June while Brent had its best day since May. Just in the last hour, CENTCOM announcing the US has started additional strikes in Iran. Let's get to Megan Casella for the latest development. Megan?

Megan Casella

Melissa, that's right, the U.S. military announcing the last hour it's carrying out strikes against Iran for the second Straight day. US Central Command says the goal here is to degrade Iran's ability to threaten freedom of navigation in the Strait of Hormuz. Iran has warned through state run media today that any attacks will be met with retaliation, but we have not seen that happen just yet. Now all of this follows what has been a lot of commentary and mixed messaging from the President on Iran. Today President Trump declared the cease fire over, but he also said he doesn't see the two sides returning to all out war. He says negotiations can continue but that he isn't sure he even wants to make a deal with Iran anymore. And the President repeating that Iran cannot have a nuclear weapon. But he also appeared to back off the idea that Iran will need to hand over its nuclear material. Take a listen.

Steve Grasso

Well, we've already got the nuclear material because it's so far underground nobody's going to be able to get it except us because we have the equipment that can get it. But I call it the nuclear test.

Melissa Lee

The nuclear material is so far down

Steve Grasso

underneath a mountain and now that's been determined that it would take massive machinery that we have that no other country has.

Megan Casella

Melissa, you'll remember one of the central goals of starting this war was curbing Iran's nuclear ambitions. And the President has long said that the US would be taking Iran's nuclear material in the MoU. The US softened that stance somewhat, saying the nuclear material would be downgraded on site. But now today the President is conceding even further, suggesting here that the nuclear material is inaccessible and that that might be good enough for him.

Melissa Lee

Melissa, earlier in the day, Megan, Iran threatened to close the Strait of Hormuz if there were further strikes. Have we heard from Iran yet?

Megan Casella

We have not heard from them yet. Most of what we've seen so far is Iran reporting that there have been explosions in different states around the Strait of Hormuz, but we haven't seen a response just yet. If yesterday's attacks and the response is any guide, it could be a few hours before we see that. But Iran has also said that it doesn't differentiate between the US and its allies in the region. Any of that could be what they target next.

Melissa Lee

Meghann, thank you. Megan casella in Washington D.C. today we did see a bounce. As we mentioned, we finished well off the lows of the session. We sort of shrugged off what was going on in the Middle east aside from the oil markets, the equity markets did. How about now? I mean, at some point don't we care that we're back into a Conflict?

Karen Finerman

I think so, but I think the markets learned how to deal with said conflict. So in terms of the s and P500, I thought it was a pretty impressive day. In terms of the energy stocks, I thought it was an equally impressive, if not more impressive than names we talk about. Steve's been mentioning Valero all time high today, Marathon Petroleum all time high. Psx, I think all time high. Exxon surprisingly closed lower, but the other integrators did well. So what I'll say is, oh, traded out of the 200 day moving average and held. It bounced. I think regardless of what you think is going on in crude, I happen to think it's going higher. You got to be long energy stocks.

Dan Nathan

Yeah, the broad market might not have cared, but if you look at some of the consumer financials, like look at Capital one was down five and a half percent today. American Express down nearly 4%. And so there's a couple of different things going on there, right? So maybe they're taking account at least the capital one, you know, higher inflation, what that means on a certain consumer. And then on the flip side, American Express, the exposure to travel, we saw a lot of travel related names get hit, that sort of thing. And you know, just ask around, I mean people who usually go to the Middle east or, you know, some other places, they're not going, they're not taking those sort of business trips anymore. I mean by zoom, Karen, your zoom, you know, maybe that's a thing again. But you know, I just think it's interesting that those were two of the hardest hit names that I saw in the market today, despite that late day bounce and despite this strength in the semis.

Guy Adami

So a few different things. Obviously oil is a big move if we look at the curve though. So going out to January of next year was up three and a half bucks, up five bucks for September. So obviously more muted. Makes sense. I think overwhelmingly the thought is eventually there'll be some resolution there. And we've seen Trump ratchet up the heat and down the heat many, many times. The interesting thing about, you know, Iran and the Strait of Hormuz is ultimately, if they make it so unstable, it won't be nearly as relevant. Right. It won't be nearly as valuable. That's sort of a shorter, shorter play for what could be a very expensive longer play for them. And I think ultimately that works in the benefit of the United States. So I don't know. Trump, I always think was like a TV producer and he wants everyone to tune in, you know, so, oh, it's off. No, it's on. No, we don't even have an MOU anymore. The MOU from the beginning was kind of, you know, a one and a half page document of some who knows what exactly. Talking points I guess. So I think the market just doesn't really care so much but retail names do because that does hit the consumer. So was it kind of a mixed bad day with the exception of Wal Mart, Target, both but and financials is not good?

Steve Grasso

I think that's right. I think that, you know, everyone makes fun of it saying it's on again, off again but I think that's what's helped the market kind of move on to Karen's point where it just becomes white noise in the background. The most important thing is the price of oil. If oil has collapsed, collapsed from 120 down to 70 pops to in the 70s. As long as it stays below 90 or 95, the market I still think can rally and move forward. I'm nervous about rates because I think that flags recession. If it flags recession, then you have to look at the IWM and if you have to look at the IWM because 40% of those names are on floating rate credit. So look at the smaller names that you think you have, the ones that are out on the risk curve. Look at where the market is going for protection. Large market cap names are the ones that get that garner the attention every time the war is on.

Melissa Lee

We might be well off of the highs in oil during the conflict, but in terms of rates, we are going back toward the conflict era highs guy. And so at what point do rates become a bigger problem?

Karen Finerman

I've pondered that question a number of times and I thought we'd already been there, but that's been wrong. But I will tell you, if you have the belief that rates going higher for the wrong reasons, which I am, then at some point it's going to matter. And what's going on in Japan, I sound like a broken record. Their currency continues to weaken at an alarming pace as does their bond market. They're going to have to make a very difficult choice at some point. Do they want to sort of temper what's going on in the bond market or they want to sort of protect their currency? You got to pick one because both, both those things can happen in unison. I think at some point it makes its way here. We've seen it before. But to answer your question, I think rates going higher is not for the right reasons and the market will wake up to that.

Guy Adami

So this sort of brings the Fed back in play where it had not been before because, you know, he was so adamant about inflation. And then what we'll get to a little later, but talking with Steve Liesman, but that's sort of interesting. I agree. The Japan thing is interesting as well. By the way. I was talking about Brent, not West Texas moving as much as it did, but I think we haven't even talked about AI yet, which is something of an inflationary impact.

Karen Finerman

Well.

Guy Adami

Or deflationary or both. Right? It could be both. But just with this sort of a change of the market's focus somewhat today, this seemed to be the overwhelming story for sure.

Dan Nathan

Yeah, we discussed this a little bit last night and when you think about just what the potential knocks on the market are right now, and I think, you know, inflation seems to be one, but we've kind of lived with that over the last couple of months or so. You know, the idea of rates staying higher for longer, that's something the market's actually done pretty well. You know, what I think is the most important thing is like how does this semi memory trade react right now? You know, Samsung is in the throes of a 30% sell off from its highs. I know it's up, you know, hundreds of percent in the last couple of years, but to me, that sort of sentiment. We have this SK Hynix deal coming on Friday being listed here on the nasdaq. It's a big deal. It sounds like it's going really well. It's oversubscribed, that sort of thing. If it is oversubscribed and the thing doesn't trade well on Friday, then I think we have some problems here. And when I say problems, it's just nothing fundamental. It really has to do with the supply and the demand. And you know, scarcity is something we've been talking about for a while, not just the products, but the ways in which to express it. So to me, if this thing breaks, this is this thing being like this memory trade. I think you do see the semis and I think you have tech and you see correlations go much higher than they have been. Because we've been going back and forth, you guys, yesterday we're talking about software, it was up like 3%. Today is down about 2%. You know, and we see it going back and forth, you know, in the inverse of that of semi. Sooner or later they're all going to move together.

Steve Grasso

You can say, you can say that the memory trade has broken. Right. Micron was way above $1200, now it's below a thousand. I think the, the issue that this market has though is that every time you start to get worried, then earnings start to ratchet up and earnings look good. So it's about the guidance. But I think earnings usually save the day enough so that we all sit back and get lulled to sleep again and say everything's okay.

Melissa Lee

So you think it's going to resume.

Andrew Davis

So I think you could get lulled again.

Steve Grasso

I think we could get, I think we could get lulled back to sleep again because the earnings are that good. So everyone's just going to be. Look at, looking at guidance. I mean look at Samsung, right? Samsung was the outlier there where should have been great and you didn't have that follow through in the stock price

Melissa Lee

and you had Micron to. Yeah, my memory names that had good earnings and there was no follow through even though earnings were good.

Steve Grasso

I don't, I think that's in a sector where Micron and memory are commodity priced stocks where we're paying peak at peak margins right now. And you don't buy these names at 80% margins, you buy them below 40%.

Karen Finerman

As the great Larry Kudlow say, earnings are the mother's. Remember you say there's a mother's.

Dan Nathan

No, he used to say a lot of, he used to not like tariffs.

Karen Finerman

But you know what, just so you know, he still says things want to be clear.

Dan Nathan

Yes.

Melissa Lee

Another network.

Guy Adami

Yes.

Karen Finerman

Which with that said they are. But there are times and places where earnings are important but other things sort of supersede and we might be getting close and I think in my opinion we're getting close through the lens of the bond market.

Melissa Lee

All right, for more on where oil prices could be headed next, CIBC's Rebecca Babin joins us now. She's a senior energy trader. Rebecca, great to have you with us.

Megan Casella

Thanks Melissa. Thanks for having me.

Melissa Lee

Do you think we see conflict level highs in oil again or no? I mean let's say Iran says we're going to close a strait.

Megan Casella

Yeah, I don't think we do see conflict level highs and I'll tell you a couple of reasons. First, I think we've seen this rhetoric play out back and forth between Iran and the US and the diplomatic channel remains somewhat open. And as long as there's a diplomatic channel open, crude is not going to accelerate to those highs. Right. You need not only supplies to be derailed significantly, but you also need the fear of future supply scarcity for those kind of highs to be reached again. And at the beginning of this conflict we had that there was supply scarcity and there was fear that we were going to have inventory depletion to a point where we would be operational minimums. Neither of those things came to fruition. And so the market operates with a lot more confidence now that a we can be more resilient with less supply and be the diplomatic path is the one that we're going to stay on. So as of now, that is not where I see crude going. Do I see it moving higher? Yes, I would agree with the comments earlier. I think crude probably should be repriced higher. We took all of the premium out of crude and I think that that was a bit early. We're kind of in a one step forward, two steps back scenario and we might not see flows resume to 85% of normal in August. So that pushes back the timeline and I think means you have to put a little more premium back in the commodity.

Karen Finerman

How problematic is the SPRO reserves? I mean, we're at levels we probably haven't seen what, 40 years? You probably know exactly. I don't, but I know I'm pretty close.

Megan Casella

Yeah. So you're right. If we look at inventories, we're at kind of 1983 lows with SPR and commercial inventories, it's a concern. Right. We're not below 300 million barrels yet. We will be below 300 million barrels by the end of August should the next round of 40 million barrels be tendered. So that's very significant and I think that's a factor for, for the broader market. But when we look back at the 80s, we were not producing 13.9 million barrels of crude like we are right now. So there is a view out there that maybe we don't need as big as an SBR as we've had in previous instances with the amount of production we have. I push back on that pretty heavily. I think we actually want that spr. We need to rebuild it and it is a factor. But the market's a little more willing to give that a pass at this point Point. And I think when you see maybe commercial inventory start to really decline is where you'll see more fear get priced into the market.

Melissa Lee

Have we figured out a world in which the Strait remains this sort of politicized waterway that is not dependable? Rebecca. I mean, you know, to Karen's point, maybe the longer this goes on and the more threats there is in terms of free passage to the Strait of Hormuz, the more it becomes irrelevant.

Megan Casella

That's fair, Melissa. And I thought that was a great point by Karen, but that is not going to happen right away. Right? We yes, the UAE is already trying to build another pipe to circumvent flows through Hormuz. Saudi Arabia is trying to ramp up their exports through Yambu to keep diverting flows. But these are a year, year and a half out multimillion dollar investments. So yes, over the long term it could become less relevant. And I think what Karen said was interesting. I think it's pretty for US producers and US crude for a number of reasons. One, I've already heard India say they want to diversify more of their crude imports away from the Middle East. China is probably going to look further afield to diversify as well. So I think there's going to be a strong pull for ti barrels with freedom of navigation. But that shift away from Hormuz is just not instantaneous. And I feel like at times the crude market has a short memory. When these scarring events happen, they kind of revert back. If it can go back to normalcy and we talk about, you know, how much it's going to change but if it, if we don't continue to see escalation, you know, we might see a little bit of investment to divert. But the market tends to look for the cheapest, fastest alternative and forgets events pretty quickly. And that's certainly the case with crude oil. You can see it back in the 70s now it's completely moved on from what happened.

Guy Adami

Rebecca, it's Karen. Thanks for being on. I was really surprised with how quickly it went from 100 and I don't know, two in May down to almost 70 in pretty short order. So this bounce back to me as I think I read it as a little bit of oh was over overdone to the downside before. Would you agree with that? Or there are other things going on.

Megan Casella

So I think the reason we moved down so aggressively is the fact that the market pre priced okay, we're normalizing and oh my gosh, look at 2027, UAE is going to start pumping at, you know, 4 million barrels. Saudi Arabia is going to bring back production. Demand is still kind of wandering around. We're not sure if it fully comes back. And China has imported about 40% less barrels through this conflict and do they return to the market? So I think that's what drove the move lower is worrying about the surplus that comes after this event in 2027. I thought it was absolutely overdone but with crude you cannot get long just on the fact that things are overdone. You got to have the fundamentals behind you as well. And so right now, when I look at this, this is a trade that does have some fundamentals behind it. If we look at product inventories, the SBR and we had the positioning which got over short as we were heading lower. CTAs were short. Managed money was at the most short it's been in 10 years heading into this week. So I think you had positioning and fundamentals on your side, which sets up nicely for a good bounce. But with crude, you really always have to have both, both those things working in your favor in order for a trade to work. If you just have fundamentals and positionings against you, you don't win.

Melissa Lee

Rebecca, great to speak with you. Thank you.

Megan Casella

Thank you so much.

Melissa Lee

Rebecca Babin. Meantime, Alibaba is bouncing 11% today, the Chinese tech company's best day since August of last year. The gains coming in, some optimism ahead of earnings. UBS out with a note saying revenue growth likely drove margin expansion in the latest quarter with its cloud computing division expected to grow by 45%. Baba shares though still down 26% this year.

Karen Finerman

It's been awful. You know how many times I thought okay, this is it. Nolib on the downside, it's been wrong every single time. So today looks different in so much as it traded, want to say almost four times normal volume. That's a good sign given how low we've come. I mean the stock has effectively been more than cut in half since its all time high. Yes. And earnings should be good. And if you get the average price target, not that it matters, but it's about $192 according to facts that so the setup in earnings, even though it rallied today I think is very good.

Melissa Lee

It's also cheaper than a lot of the hyperscalers. Much the NASDAQ cheaper than the S&P 500.

Dan Nathan

Well I guess importantly, they're spending far less money to build out their data.

Guy Adami

They're spending a ton though, no question.

Dan Nathan

I maybe, I don't know. I mean I think it's a fraction of like the trillion dollars that's going to be spent here. If it's like it's single digit percentages and then you think about their models and Quinn, I mean like they are going about things very different than we are and you know, we are actually like with brute force trying to make sure that our way of AI is the way. But the Chinese are doing it a little differently. And I'm not saying I'm rooting for them by any means. But I think our hyperscalers could probably take a lesson from what's going on over there.

Melissa Lee

You're still in it.

Guy Adami

Still in it. Yeah. No, I've been wrong. It's been, you know, from, I don't know, the felt like a rock from 136 or so down to here. So it was well overdone. They are, they do spend less for sure. But they are, you know, currently at about free cash flow flat ish, which is down materially.

Steve Grasso

It's probably the cheapest way to play the AI boom in China for all the reasons that have already been mentioned. But if you look at it on a chart to Guy's point, this has stopped here four times before in the last year. So if you're going to take a shot right around these price levels, really pays off.

Melissa Lee

Coming up in video on sale, that valuation at multi year lows even as revenues hit record after record. Is it a rare chance for investors to get in or a lurking value trap? We'll debate that plus biting into Apple inside the iPhone, maker's biggest ever US manufacturing deal and whether it can help shares ripen to fresh highs. Don't go anywhere. Fast Money's back in two.

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Welcome back to Fast Money. Nvidia shares up today, but recent weakness has made shares substantially cheaper on a forward PE 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 boom, before the pandemic when the stock had a market cap of just $80 billion. It is now of course close to 5 trillion. It's as if all of that didn't happen on a valuation basis. Is this justified? You own it, right?

Guy Adami

I think it's too cheap. I do think one of the things 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.

Steve Liesman

Right.

Guy Adami

We don't get. And that has to be starting to be, you know, 100 billion here, 100 billion there pretty, pretty soon that adds up. So maybe it's even a little cheaper than that even. And I just think that is too cheap.

Steve Grasso

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 I do every time I look at it, I think the people that they sell to are doing better than, than they are doing. And I think we've. I don't want to use Lulled again but, 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. And I don't want to make it sound cataclysmic but you will, you will be buying this name probably forever. And cheap is, is one way or where you would of saying it. Inexpensive is the way you would phrase it. So I think you're always going to get the individuals. I'm not going to convince anyone not to buy it here.

Dan Nathan

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 shovel 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. Okay, so that multiple keeps going down. Look at it. A price to sales. I mean, we kept on scratching our head when it's trading at 25 times price to sales. Now obviously, because that's been rocketing. I mean, they're expected to grow their sales 80% this year. And you guys just mentioned it, 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.

Karen Finerman

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% margins in perpetuity 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.

Melissa Lee

There's a lot more fast money to come. Here's what's coming up next.

A major new partner chip Apple taking a $30 billion bite into US chipmaking. The impact on the iPhone maker and the semi stocks that stand to benefit. Plus a Fed divided Kevin Warsh'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.

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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 US chips and includes a 1 1/2 billion dollar expansion of Broadcom's Colorado facility. That's a nice deal for Broadcom getting to expand on Apple's dimensions. Good for Apple to. Huh.

Guy Adami

Good for Apple. I mean this does go to the point both gentlemen were making about video. Right. But also to the enormous demand for chips. So I think good for both of them. Well, I'd be very interested to see at the end of the day does this 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, 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.

Melissa Lee

It's a nice headline for Apple to say we are investing in US chipmaking here in the United States. And by the way, please allow us to buy Chinese memory chips on the other side of it. Right?

Karen Finerman

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. It's probably trading at 20 times next year's numbers with earnings growth that probably are approaching 40ish percent, maybe more than that. I think given the sell off we've recently seen in Broadcom. That's a stock I think you can own right here.

Dan Nathan

Yeah. You know, to your point, and it is a great point about if Apple were able to secure much cheaper memory from China, that would be a near term thing. Let's, let's be clear and when you think about just the investment like you just mentioned, you know, here in the US It's a great thing. Right. Because we know it takes one to three years to kind of build these fabs out. Right. So you could be cynical and just say, well they already committed to is 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, 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.

Melissa Lee

Coming up Reading between the minutes, the details from the Fed's latest meeting reveal a growing divide over the path for rates. How could reshape the market play but when fast Money returns?

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Welcome back to Fast Money. Stocks mostly lower in fears of prolonged conflict with Iran. The Dow shedding 580 points, the S and P losing roughly a third of a percent. The Nasdaq managed to recoup early losses and closed fractionally higher target a bright spot today surging almost 4%, bring its year to date gains to 35%. Late in the day, Bloomberg reported the retailer is reorganizing, reorganizing its strategy team as part of a broader turnaround push Space X meantime down nearly a percent today to finish at $148 a share, the stock's lowest close since going public on June 12th. This week alone it shed almost 8%. And Levi Strauss dropping despite top and bottom line beats a 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 6:00pm 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. Steve Liesman joins us from D.C. with all the details.

Megan Casella

Steve?

Steve Liesman

Hey Michelle. Yeah. A divided Fed on Melissa, Pardon me, 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. If you saw a case for a hike at that meeting itself ended up supporting no change. There were worries that high commodity prices and supply disruptions could last longer than anticipated if inflation remains elevated. Almost all said quote, some policy firming would likely be warranted. From the dovish 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% 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. It's the outlook for inflation itself that separates the hawks from the doves.

Melissa Lee

Melissa, do you think, I mean given the resumption of of hits in the Middle east right now, new new strikes, etc. Do you think that would have impacted how hawkish those Fed members tilt?

Steve Liesman

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 so saw it as weak. 57,000 may be seen as the run rate but certainly was weaker than the prior month. And then 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 we maybe these prices are going to be more are going to be higher for longer than we anticipate.

Melissa Lee

All right, Steve, thank you. Steve Liesman in Washington. Let's now bring in Andrew Davis who runs investment strategy at Bryn Mawr Trust Advisors. Andrew, great to have you with us.

Andrew Davis

Great to be back to the minutes.

Melissa Lee

Change your outlook in terms of hikes and your outlook on the market.

Andrew Davis

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.

Melissa Lee

So how do you feel now now that there are a result, there's a resumption of 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?

Andrew Davis

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 bio polar world really focused on national interests that really hasn't gone away. I feel like would be more worrisome if 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.

Steve Grasso

So 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 at is what is earnings estimates? Are they moving higher, they're 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?

Andrew Davis

Well, on the macro side of things, I think it's underwriting that low fire, slow, higher environment that we've been in for the last year. As 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, that corroborates what we're seeing in the data. Wage growth has come down, 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.

Karen Finerman

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.

Andrew Davis

Yeah, I mean like I wouldn't, I didn'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. Cease fire, ended, yields went up, financial conditions tightened, market kind of did the dirty work for the Fed a little bit.

Melissa Lee

In terms of the market reaction today, were you surprised or not surprised?

Andrew Davis

I think it 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 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.

Guy Adami

So how do you think the economy is doing?

Andrew Davis

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.

Dan Nathan

Hey, I was going to ask Sam Liesman 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 Wash 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% 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?

Andrew Davis

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 around kind of wanting to change communications around the dot plot. I 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, you know, is evolving in real time.

Melissa Lee

Andrew, great to see you. Thank you. What do we make of the minutes? I mean, does it change your view in terms of me? You heard Steve. The odds have increased greatly.

Karen Finerman

Yeah. Now, 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 the listen, given everything that I know, and I'm not an economist, I said 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 for the foreseeable future.

Melissa Lee

Coming up, soda pop on the clock. What to expect from Pepsi when it reports tomorrow morning and whether strong or results can put some fizz back into the stock. That's when he's back right after this. Got some breaking news out of Washington. President Trump just posting about birthright citizenship. Let's get back to Megan Casella for the details. Megan?

Megan Casella

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. 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. This 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. So 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 US 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 Lee

Melissa Megan, thank you, Meghan Casella. Meantime, 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.

Steve Grasso

Well, I think that's the, that's the real thing yet to discuss. 58% of Pepsi are food and snacks. Coke doesn't have that. More of a very direct beverage play. Go Peas have gotten in the way of Pepsi's 58% of their revenue. So 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.

Karen Finerman

The valuations, though, at this point, in my opinion, you look at Pepsi is 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

Melissa Lee

here on Pepsi, it will be Interesting to hear what they say about the pressure on pricing, particularly from Wal Mart as they announced lower prices across the board.

Guy Adami

Right. So pricing pressure and that consumer, I think also the food business of that consumer is that's a high user, I guess, or consumer of Pepsi food products. So you are right, 16 and a half times and 25 and a half times for Coke. Look at you. Look at the brain on that one.

Karen Finerman

Amazing blind squirrel.

Melissa Lee

Do not miss a CEO of Pepsi tomorrow on Squawk on the Street, 9:38am Eastern Time right here on CNBC. Coming up, a look under the hood at the used car market with the latest data signal about consumer demand and how higher pre owned prices are impacting automakers. That's next. More FAST Money into. Welcome 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. Philippe's got the details, Phil.

Phil LeBeau

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 in terms of the used market right now when 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. As 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 Lee

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?

Phil LeBeau

Not as much. It's, it's still a little bit, but not as much as it used to be.

Melissa Lee

Okay, Phil. Thanks. Phil LeBeau, you bet.

Karen Finerman

Auto parts is the first thing that comes to my mind. Genuine Parts was a monster. It sold off. I think it's okay here. O'Reilly, looking at, we don't talk about these stocks a lot, but pop on O'Reilly chart, that was lower left, upper right until, I don't know, 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.

Guy Adami

I was just, I'm surprised that there's strength. Right. And because cars are expensive and new and used cars are also expensive, I'm wondering if the lack of housing transactions, those buyers who would have bought a

Melissa Lee

house, they don't need a car.

Guy Adami

What 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. So they're going to say, oh, maybe we can trade up on a car

Steve Grasso

or living in a car.

Guy Adami

Excellent point.

Steve Grasso

I think interest rates get in the way to your point, 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 guys 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.

Melissa Lee

No comment.

Karen Finerman

If you could buy one car, this

Melissa Lee

is not a topic. Dan's jam.

Karen Finerman

I'm sorry, that Mustang and then he gave it back.

Melissa Lee

Is that great TV right there or what? Like we are like, why'd you give it back?

Dan Nathan

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 on a, you know what I mean? Like, so it was, it was a great car.

Melissa Lee

Up next, final trades, Final trade time.

Steve Grasso

Stephen Walmart developing story. I like the chart. Walmart right here.

Melissa Lee

Karen.

Guy Adami

Yes, Alibaba. I love, love the bounce off of this very, very oversold condition. So if I own none, I'd buy some right here.

Melissa Lee

Dan.

Dan Nathan

Yeah. Xlf nearly half of the holdings in their report earnings next week. The at the Money puts the ETF at 55. The 55 puts that expire next week are 1%.

Karen Finerman

Very cheap, like an old school stuff right there.

Phil LeBeau

Petroleum Melissa all right, thanks for watching

Melissa Lee

Fast Mad Mike at Jim Crane Research Right now,

Phil LeBeau

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