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Melissa Lee

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Melissa Lee

Live from the NASDAQ marketsite in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight. A software shocker. Shares of IBM seeing their worst day on record after a stark warning for its latest quarter. Is the move justified or is this an opportunity to buy into the stock? In a bank bifurcation? We dig into the results that had Goldman Sachs and Citigroup moving in vastly different directions tonight. One top analyst gives us his thoughts on the names. Plus Bitcoin gets a bounce, hospital operator HCA drops on weak guidance and SK Hynix rebounds in a big way. What is powering the chip stock in its third day on the Nasdaq? And how are options traders positioning amid the move? I'm Melissa Lee, come to you live from CDF at the Nasdaq. On the desk tonight, Tim Seymour, Karen Feiderman, Steve Grasso and Guy Adami. We start off with a big bummer for Big Blue. I want alliteration. I've been losing a quarter of its value today. That is nearly $70 billion in market cap. The move cutting a whopping 450 points off the do. CEO Arvind Krishna warning that clients were shifting their capex spend from software and infrastructure to hardware like servers and memory chips. Other legacy software names like Atlassian ServiceNow, Adobe Syncing and Sympathy. Oracle, which is down more than 40% just since the start of June, hit its lowest level in more than a year. But it wasn't all bad news in the space. Cyber focused stocks like Crowdstrike, Zscaler, Palo Alto all saw outsized gains today. So was this an IBM specific problem or a warning sign for the broader software sector? Your Thoughts, Guy?

Guy Adami

I think the latter. Well clearly it's an IBM problem but I think in terms of this is might be the first although it's not, we've seen it around the edges with others but it's certainly not going to be the last. And you know, IBM sort of put that out there. Karen said earlier that you know, you wonder the reasons why, but the reasons why are maybe to get in front of some things and sometimes it's best to get all the bad news out quickly ahead of everybody else. I'll say this valuation wise there in other businesses, clearly all this is a big part of it. I actually do think in a stock that today traded almost eight times normal volume, it's worth a look at these levels.

Karen Feiderman

The term capex reprioritization well done, relatively easy for me to say is something that was emphasized and it did feel that when you see the rest of the software space have a pretty good day actually IGV has been, you know, hold and serve and actually ticking higher over the last few that it does seem IBM specific they did talk about gross profit margins which came in 70 bips down. You actually had a decline in infrastructure revenues. So IBM which had transformed itself really from kind of a hardware play into a software play, kind of the opposite of what Oracle's been doing by the way is, is you know, I think they probably are an outlier on this one and I bet things aren't anywhere near as bad as they're talking about. And I do think that the valuation is interesting. Do you need to go chase it today? I don't think so. But there's no question that that different or that, that, that that spread between software stocks and IBM was fascinating.

Melissa Lee

Yeah. I mean to your point in terms of the hardware side of IBM that is sort of the, the hedge, right. I mean if they're rediverting hard the hardware side of the business should theoretically benefit and also the consulting side of the business could actually benefit as companies are looking to deploy AI and find AI solutions.

Tim Seymour

Although consulting, I mean that's one that would seem vulnerable to a displacement, right? Yes, displacement. I thought it was fascinating. A 25% move in IBM is extraordinary. However, looking at the chart that takes us all the way back to the end of May. So it's not, I mean it's been quite a run. I don't know if some of the, the last couple of months or not even a couple of months, six weeks or so of excitement there has been somewhat quantum which, which didn't change and in fact they were, you know, made efforts to talk about the Quantum part of the story. But I was surprised at the magnitude of the reaction here. And it was interesting. I know there was some talk earlier, you know, the CEO saying we faltered. I don't know if we faltered or the market has moved and they didn't pick on it, pick up on it immediately. That's. That's very hard to do when you're as big as they are. So I'm sort of intrigued by it. I wouldn't buy it day one, but the magnitude of this response is interesting. It wouldn't be shocking, though, to see some other companies, if you're in the same business as they are, and you may have been having these same issues Guy talked about at the top of the show. They didn't need to say this, right? They chose to announce this early. Are others now going to feel pressured to do that? And will this whole space trade down over again on bad news? The same bad news? I don't know. But down 25% is. I wonder how much they thought it would go down.

Steve Grasso

I think the interesting part is where you started, where the legacy names in software versus the AI software names. So. So the snowflakes, the CrowdStrike, the Palantir, those are the ones you want to be buying off of this. Karen said this was the same price back in May. It's also the same price back in 2024. And it's bobbed around here probably six times where it bottomed out. I'm thinking about buying it. I'm thinking about buying it only because around $200. So maybe you get another 10% to the downside. But this has been a spot where people come in to buy the stock for the last two years. Quantum, they were the original AI. Watson was the original. So they're usually not gifted or credited with being ahead of the curve. This is a name that I think has changed the perspective where you can get ahead of the curve with this name.

Melissa Lee

Except that there is one key question. This is a question that you always ask, is this revenue deferred or denied?

Tim Seymour

Right.

Melissa Lee

And so are these deals, you know, when Arvind Krishna talks about faltering and some big deals falling through in the month of June, does are these deals gone or are they just pushed out as their customers are spending immediately in the short term on hardware but will go back to spending on software? I felt like that was a little bit unclear.

Karen Feiderman

And I think it's. It's a good Karen question. They're often good Karen questions. And I think it was definitely a read through to, to cyber and a very positive one. And cyber, you know whether you're Crowdstrike or a Palo Alto Zscaler as mentioned, I mean I think that's the message. The message is that cyber, despite all of what's going on in cyber, excuse me in software is is been trading very, very well and that's my call I think for IBM ultimately as we're saying I think there's an opportunity here. They were overly honest. I don't think this is the end of, of where they positioned.

Tim Seymour

So they're reporting eight days from now. I don't know how much more color maybe they do. This was, was this an as of June 30th? I'm not quite sure. I'm not quite sure. And so to your question, I don't know that it'll be cleared and you know that we'll have much or maybe

Melissa Lee

they'll decide to divulge it on the analysts call or the price action leading

Steve Grasso

up to it down 25% into a print eight days away. You've taken out a lot of ambiguity into it. To your point though, is it. Are they pulling a pin on something that's going to get dramatically worse? I can't see that happening.

Guy Adami

The end of June I think the President started touting Quantum was it and I lose track of time. But it started talking about Quantum stocks and he actually mentioned that's scary for

Karen Feiderman

you if you lose track of time.

Steve Grasso

Well he's got the 40 year chart good at that.

Guy Adami

Yeah, maybe it's a sign.

Karen Feiderman

Okay.

Steve Grasso

Anyway what were you just talking about?

Guy Adami

But you know, talking about the Quantum news, he specifically mentioned IBM so you know, the same way I mentioned Oracle through the lends of the administration. My sense is you're going to sort of put in some bottom when he starts talking about Quantum names again and IBM. And to answer your question, down 25% on that kind of volume suggests the market thinks it's deals that are not going to happen going forward.

Melissa Lee

We've got a news alert on some potential new hardware products from OpenAI. Kate Rooney's got this story. Kate.

Kate Rooney

Hey Melissa. So OpenAI is now reportedly working on a new screenless smart speaker. This is part of the company's hardware push that we've been talking a lot about especially as it comes under pressure from this new lawsuit from Apple. Bloomberg now reporting that this would be a screen free basically AI companion designed for your house according to this report. Kind of sounds like an Alexa device similar to what Amazon has in the market. It is a portable battery powered device that's designed to follow users from room to room. They talk about controlling other smart home devices, managing messages, playing music and again answering questions similar to what you would hear with voice mode and chat. Cbt we have not gotten in touch with the company yet. We have reached out for comment Bloomberg though reporting that this timeline is about later this year or a 2027 release, although that could be complicated based on this trade lawsuit that we saw on Friday. As a reminder that came out that Apple did sue some of the devices team that OpenAI acquired for about $6 billion or bought Johnny Ives startup, the iPhone designer of course there for roughly six and a half billion dollars. That now under pressure as Apple claims that OpenAI, some of the team members have stolen intellectual property and stolen trade secret secrets. One last key part of this report, OpenAI reportedly does not believe that the device has any overlap with anything that Apple has in the market today. And they say here that it is unlikely that it violates trade secrets belonging to the iPhone maker. That is according to people familiar with the matter. We will let you know if we get any comment from OpenAI. But they have been extremely secretive about what these devices might look like. There have been rumors that it would be a pin or some sort of speaker or an earpiece. So this is the latest and it looks like this could be coming Mel, as soon as this year. Back to you.

Melissa Lee

All right, Kate, thank you. Kate Rooney I don't know how does that sound? You want a home speaker with no screen that follows you around. You can ask it questions all the

Tim Seymour

time, have it play things I would think turn on.

Kate Rooney

I guess so which you can do

Tim Seymour

now with an Alexa. With Alexa and say play.

Steve Grasso

Sounds like generation one of Alexa.

Melissa Lee

Right?

Steve Grasso

Seriously, this is how it started out with the speaker. We're talking about robots and they're talking about speakers that have no screen. Even the latest Alexa can follow you around the house with the tilt of the screen. This seems a little archaic.

Guy Adami

Do I have a minute here?

Melissa Lee

Not really, but go ahead.

Guy Adami

I like going to the grocery store.

Melissa Lee

Yes.

Guy Adami

I used to go to Ackerman.

Melissa Lee

You go to the bank teller, you go to the grocery store, all the things that modern day post office in person anyway.

Tim Seymour

And he takes the bus.

Guy Adami

I go to the local stop and shop and they're these things on wheels, the robots that follow you around. I purposely walk into them and try to knock them over because I feel violated. Now the folks watching from the stop and stop know you're now on the black, but that's fine. But that's the world we want to live in is what I'm, I'm not

Karen Feiderman

sure why we got that long.

Guy Adami

Well, because we were just talking about things, following you around.

Melissa Lee

You were yawning as Kate was describing what this brand new hardware thing will

Karen Feiderman

do if this is breaking news. And by the way, this is not directed to Kate who always delivers great news news or at least the way she delivers it is great. But this is a reason to go sell open AI if you could go sell it here. And I'm overreacting. But the point is that not only is this nothing that's groundbreaking, that we don't care about them being in the hardware business, but also if it has inflamed a relationship with Apple that may be, you know, maybe they didn't care, maybe it's beyond repair, maybe they don't think that the lawsuit has merit. But it's a whole lot of noise for something that I don't see how this is a game changer. It comes at a time when we're very concerned that Open Air may be, you know, not only in third place here of the big three, but, but, but trailing significantly. So this isn't a great announcement. When coupled with that I think they've alienated many people around them that could be important customers.

Melissa Lee

Meantime, let's get to bank. Stocks kicked off earnings season this morning with beats across the board. But stocks had very mixed reactions. Goldman Sachs setting a new record after profits surged nearly 80%. The stock adding 580 points to the Dow. JPMorgan also closing at an all time high and record revenue raising guidance. But an intraday reversal in Citi sent shares down more than 5%. For more on the reports, RBC Capital's Gerard Cassidy joins us now. Gerard, great to have you with us.

Gerard Cassidy

Thank you, Melissa.

Melissa Lee

I want to start off with Citi. Why do you think the reversal happened? Was the concern about expenses? Was it the fact they didn't raise the full year despite the net interest income beats.

Gerard Cassidy

Melissa, you put your thumb right on. It was primarily their commentary about expense growth. They had a very strong first half when it came to their, what they call their efficiency ratio, measuring expenses to revenue, particularly in the second quarter. It was very good. But they didn't lower the efficiency ratio for the full year which remains around 60% suggesting expenses could grow faster in the second half of the year. And they pretty much verify that. And that was the turning point in the stock during the earnings call.

Tim Seymour

George? Karen, thanks for being on, so focusing in on the expenses, which was, yeah, I think the center of the storm there. Do you think those are expenses that Jane Fraser believes will be money very well spent, which is my guess, or do you think that the street thinks something else and she's known to be somewhat conservative in her guidance. So what did you, what was your takeaway from the whole call?

Gerard Cassidy

No, Karen, I think you're right. It's more of an offensive call, meaning they're making the investments to become more profitable. They're making the investments to continue the restructuring. And so I think what this will lead to in the medium term, higher profitability. But over the very near term, over the next three to six months, you could see an elevated level of expenses. But it still keeps them in track for those midterm targets they announced on their investor day.

Steve Grasso

Gerard, you've been all over Basel 3. It went from a headwind to a tailwind. So is this quarter, what are you focused on? Is it credit margins or Basel 3 tailwind? And if so, which is your favorite pick?

Gerard Cassidy

It's an interesting question. I brought that up on the earnings call with JP Morgan about the outlook for regulatory stability. And that could be a real positive for the group as a tailwind longer term. But this quarter, I think when you look at the total banking sector, not just the big investment banks in capital markets, you put your thumb on it with credit. Credit was very good this quarter. This is the real shining star for all the banks. Credit quality in the industry today to Q26, very strong.

Karen Feiderman

Gerard, let's talk about Goldman. What a day. And in the sense that it trades like an AI stock because it's in the middle of the industry, it's, it's at the leading edge. By the way, Goldman very well positioned in Asia. The sense here is, and if you listen to all of the comments, it was, if you know this is, you know, the rush to build out AI is, is really putting them in a place where the major facilitators, they also issued 30 billion and investment grade bonds today that were well, well oversubscribed and they've been doing more of that this year. Your thoughts on all of that?

Gerard Cassidy

It's a great question which I brought up in a few of the calls because you're right, the infrastructure throughout the US or even global economy is gigantic. And the funding for building out this infrastructure is a very large need. And Goldman Sachs as well as the other players are sitting in the center of this. The question then becomes, you know, when does it slow down it may stay this way for another two years or another six months. We just don't know. But that is really the question we have to ask ourselves with these big investment banks is the first and second derivative coming from the whole AI trade semiconductors MAG7. You guys know it better than I do and that's the part that has really helped Goldman Sachs.

Melissa Lee

Gerard, got to leave it there. Thank you. Gerard Cassidy of rbc.

Tim Seymour

Very good.

Melissa Lee

We didn't even mention Karen's favorite JP Morgan.

Tim Seymour

I was mentioning in my head as you normally do.

Melissa Lee

Yes, JPM also hitting a record today on the back of earnings. But the question I guess is is it expensive now at almost three times tangible book?

Tim Seymour

Yes, it's expensive. It has been expensive all the way along. This though was an extraordinary quarter like Goldman Sachs that not as many, sort of not as gigantic but still an extraordinary quarter and it's not crazy expensive. To me the biggest risk is when will Jamie leave? And on the day that Jamie leaves I think it's probably down 7 to 10%. I don't know when that's going to happen. They did get that question. They always get that question. But I thought the quarter was really good. I think this happens every time they say expenses are going to be high and then people freak out. They don't have control on expenses without thinking through how do those expenses get higher. They get higher because the investment bank is doing pays fees that directly correlate with the amount of business that they do. So that's not a bad thing. But I thought it was really good Citi. I was surprised at the reaction. I actually bought about 25% more than I already have at the near the close today. 133 something. I thought it was just way overdone to the downside.

Guy Adami

Yeah, I agree with that. I mean again you said three times. It is exactly on the screws. JP Morgan and he talked about, I mean Tim just talked about the environment, particularly favorable environment, elevated level of market activity, rigorous execution, years of planning it out. I mean that sounds like Goldman Sachs as well which is why they probably deserve it. But if they deserve 3 times, Citi deserves at least 15 if not 1.8 times.

Karen Feiderman

His comment was it's getting close to as good as it gets. Now he's not a trader. Jamie is often a very conservative guy and I think that's held him in good stead. So. But the point is that the money that's being made is not just investment banking. I mean trading revenue at all of the big Wall street shops was up 72% combined to something like 72 billion. I mean, the volatility in memory and hyperscalers has been a boon to Wall street. And I don't think that's going to. Everything we're talking about in AI isn't going to change. I think it remains so.

Tim Seymour

One thing about the J.P. morgan call, Goldman Sachs quarter was so good that Jamie called it out about how good the Goldman quarter was.

Melissa Lee

Very cordial.

Tim Seymour

Yeah, right.

Guy Adami

What can happen?

Karen Feiderman

Of course, it's a cordial world.

Melissa Lee

I could see Jamie and David, you know, yucking it up, getting a coffee.

Karen Feiderman

Why would they? Pretty happy day for everybody.

Melissa Lee

Champagne, your favorite in the banks.

Steve Grasso

Well, JP Morgan is the most diversified and obviously when we listen to Jamie Dimon, he's always pessimistic. And Brian Moynihan had an interview with Sarah today on cnbc. He seems really optimistic. I like the chart. It's outperformed J.P. morgan. I would go with Bank America.

Melissa Lee

Be sure to catch JP Morgan CEO Jamie Dimon tomorrow morning on Squawk Box 8, 10am Eastern Time. Karen okay?

Tim Seymour

Already co hosting.

Melissa Lee

She might be like just be milling around. I heard the restraining order for him coming up. Crude closing in on $80 a barrel even as President Trump walks back. Protection fees in the Strait of Hormuz. The latest on where things stand with Iran and the energy market impact next. Plus a bitcoin bounce back. What is driving today's rebound and how investors should navigate the crypto volatility right now. Don't go anywhere. Fast money's back in two.

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Melissa Lee

welcome back to Fast Money. Oil settling up more than a percent today, even as President Trump abandoned his toll on the Strait of Hormu. US Launching additional strikes on Iran this afternoon. Megan Casella joins us now with the very latest. Meghan?

Mazda Commercial Announcer

Melissa, that's right, the U.S. attacking Iran for the fourth straight day. U.S. central Command saying an additional round of Strikes began around 3pm Eastern and was once again aimed at degrading Iran's ability to attack commercial ships in the Strait of Hormuz. Then at 4pm Eastern, Centcom confirming that the U.S. blockade of Iran's ports is officially back in effect. Centcom saying in the post that more than 20 U.S. navy warships and hundreds of military aircraft are now operating across the Middle east and remain, quote, vigilant, lethal and ready. Now, these latest attacks coming after the president backed off his proposal from just yesterday that ships transiting the strait should pay a 20% toll to the United States for protection. He wrote on Truth Social that he'd spoken with Middle east leadership and decided to replace the fee with trade and investment deals. He later told reporters that he liked this arrangement better because he doesn't think anybody should be able to charge a fee. And the president, Melissa, framed this as new money being invested above anything that had previously been pledged. But I will note we have not yet heard confirmation from any Gulf countries on this. And none of the countries that the president said he spoke with have announced any new investments this week. Melissa?

Melissa Lee

Megan, thank you. MEGAN casella, so what do we do with the oil?

Steve Grasso

So this is why there's going to be a bid in energy. Right. On again, off again, the circumstances change. So there'll always be a bid. There'll always be some sort of a risk premium. But when you think about we came into this war oversupplied. Now we have Iraq flirting with or tempting opec, saying they want to pull out of OPEC so that they could pump more. They squashed that, but that was their threat. Then you have Saudis pumping more. Then you have China importing the least amount of oil in the last decade. All these things are a host of reasons why oil should be lower. But the hostility, the volatility that could keep a bid in it. I'd still rather play it with Valero up 85% or PSX, up 85% or 56% versus CVX or ExxonMobil up 10 or 15%. You're going to get the refiner bid because as oil comes in that's their input costs and the large integrated names don't react the same way to the barrel.

Guy Adami

Yeah, yeah, I agree. And Exxon I do think you can own, I mean July 31st they report. I think the quarter is going to be good. If you look, we're about I think to break in the downtrend that's been in place since the all time high I think we made in late early March or so. So, so listen, we've been consistent on the name Steve mentioned. I think you can buy the integrated still.

Tim Seymour

Yeah. So I agree. I think there's a bid for energy and related stocks and oil but I think you guys have been on the refinery trade which has been really an excellent place to be.

Melissa Lee

Crocs reds at record still.

Tim Seymour

Yeah.

Karen Feiderman

And I think therefore Conoco looks very interesting. Chevron certainly. And I think oih though getting into at least drilling for new stuff. I'm of the view that oil demand is never going to go down. I'm of the view that the more people on the planet, the more demand we're going to have for oil. The power demand dynamics that are in the world today have never been higher and right now fossil fuels are still a major part of it. I don't hear anybody downgrading global oil demand forecasts. I think that if you look at, you know, we've been growing about a million barrels a year over the last five years and as much as we want to be less carbon footprint dependent, I don't think it's happening.

Mazda Commercial Announcer

All right.

Melissa Lee

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

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Bitcoin coming off the bench as the token closes in on 65k inside today's rebound and what's ahead for the struggling crypto complex. Plus CPI beats the summer heat. The June inflation report offering some relief for consumers. But could it complicate the Fed's next move? A former central bank official weighs in. You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this.

Karen Feiderman

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Melissa Lee

back to Fast Money. Bitcoin bouncing 4% after this morning softer than expected inflation data. CPI seeing its biggest month over month decline since April 2020. Other token crypto related stocks in crypto miners also seen gains Today, though, bitcoin still down 26% this year. Is this the beginning of a permanent bounce? What do you think?

Steve Grasso

I don't think we could talk about a permanent bounce in bitcoin ever, probably. But in this, in this environment, I think you have to wait until it clears 75,000 before we even start to cross our fingers and obviously ultimately 100,000. But we're a long way from Kansas.

Tim Seymour

So I don't even know that lower inflation is necessarily pro bitcoin. You can make the case higher inflation is pro bitcoin, but I don't think that's what it was. I think that it's about the Clarity act and whether it's moving along. And I think Trump is trying to push it along and even sort of talked about maybe a Lindsey Graham dedication or something like that is what, I don't know if it was Claude or Gemini, which told me that because I was sort of wondering why it was moving and that's what I got back. So Clarity act, you know, if they were to pass that, that would be a big catalyst.

Karen Feiderman

Yeah, I don't think it's really about. Well, to me it's about thinking about the trades that were a big part of the bitcoin trade. And Robinhood is a name that I'm long and has traded very well. And after giving a lot back has been, I think building on days, even when bitcoin has had down days. This is a story of more products. This is a story of a different demographic. This is a story of the same people that love bitcoin yesterday may not love it tomorrow, but they do love Robinhood. And I think you can stay long.

Guy Adami

This one rate hike came off the table today according to CME Fed fund stool, but the bond market really didn't. I mean, maybe in the front end a little bit, but 10 year yields moved slightly today, which I think if you were looking for yields to go lower, today was your day. It did not happen. So I actually think bitcoin probably fails at these levels.

Melissa Lee

Coming up, the flight path for the Fed. Former Dallas Fed President Richard Fisher will join us with his take on Chairman Warsh's Capitol Hill testimony today and where he sees rates heading in the second half. Fast Money's back right after this.

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Melissa Lee

Welcome back to Fast Money. Stocks broadly higher Tuesday trade. NASDAQ up nearly a percent s and P closing within a percent of a record. The Dow Eking Out a gain of just 10 points. Uber falling 3% as the company looks to bolster its international presence. Germany's delivery hero confirming today that it is in advanced talks to be bought by Uber, though the exact terms of potential deal are not yet public. Biogen dropping 8% on a mid stage Alzheimer's trial miss the company's experimental treatment failing to meet a key disease metric when compared to drugs already on the market. Boeing meanwhile, rising almost a percent after reporting 64 jetliner deliveries in June. That brings its total deliveries in the first half to 314 aircraft. That is the most going back to 2018. And SpaceX down another 2% for its third straight losing day. It's now trading just $1 above its initial offering price of $135 a share. And this just crossing after hours. Lionsgate shares are jumping. Reuters is reporting the company has attracted takeover interest and is working with an advisor to evaluate potential deals. The stock is now up 10% on this news. I mean, that makes a lot of sense in a way. Content is in the middle of that

Guy Adami

Paramount, Warner Brothers, Netflix thing. I know collectively we said if you want to look someplace that nobody's looking at, look at Lionsgate. And these are the reasons, reasons why. So where there's smoke, there's fire. And I think this probably does happen.

Steve Grasso

Yeah.

Karen Feiderman

MICHAEL burns, FRIEND OF the SHOW They've been a content machine and that's what people are looking to buy. It's not a big acquisition in some sense on a relative basis.

Melissa Lee

Meantime, consumer prices seeing their biggest monthly drop since April 2020. CPI fell 0.4% in June as oil prices fell last month. The data coming hours before Fed Chairman Kevin Warsh got grilled on inflation by lawmakers on Capitol Hill. Let's bring in former Dallas Fed President Richard Fisher. He's now senior adviser at Jefferies and is on the Warner Brothers Discovery and Tenet health care boards. Richard, good to see you. You got a big resume. What can I say? What did you learn from Kevin Warsh's testimony or in his answers? I mean, did we, it seemed like we didn't get any clues on where he stands on the economy, on where he stands about, you know, what the data point to. Any sort of indication of what the reaction function is for the Fed?

Richard Fisher

Well, you remember he started out by giving praise to Alan Greenspan and he's talked about that quite a bit, actually. He was much more direct in his answers than Alan ever was, who we called the great Mumbler. Alan would dodge every question he was asked I think Kevin did a good job and I think it's important to remember he's only 56 years old. That's the same age I was when I took over the Dallas Fed or when I was given the Dallas Fed. And he has to think about what presence he's going to serve. And I think he made it very clear. Obviously, the one commitment that is ironbound is not to let inflation raise its ugly head and to bring it down. And I think that was what the takeaway was. And making clear one month's CPI does not decision making do. He really made that very clear. I was impressed. I mean, I think he's got great interpersonal skills, he's smart. But he also has to realize, like Machesney Martin, he could serve five different presidents at this age. And I, I think that came through very clear.

Karen Feiderman

And Richard, it's Tim. Thanks for joining us. He can't control fiscal policy either, which is a lot to do with inflation. But what I thought was fascinating about today is he's kind of carved out the five pillars in which he's going to do things differently. And he talked about how he's going to communicate. He talked about the data that the Fed will actually look at. I mean, there's some people that would argue some of the core measurements, of course, of core inflation are not really accurate reads. What do you think is the change that he's at least referenced that will be most meaningful for how the market has to interpret the Fed?

Richard Fisher

You know, I really don't know. The five task forces are staffed with people that have been advising Jay Powell and the Federal Reserve. Going back to Alan Greenspan, the one I get a kick out of, by the way, is a central banker from Brazil and then Mervyn King from England going to do the communications. Maybe we'll change it to Portuguese, I have no idea. But it's, it's, I think it's important to have these task forces. Kevin's talked a great deal about the Dallas trim mean, which, you know, I puffed my chest out a little bit. We perfected that when I was there. And yet the trim mean in March was 2.9%, in April, 2.4%, in May, 2.4%. It seems to be stuck. And you look at that data, which he's talked a great deal about, it doesn't come out the next one for June until July 31st. So it's not really contemporaneous, which he's also talked about getting good measurement.

Guy Adami

Mr. Fisher, if they go the Portuguese route, they can call me. And as you know, because you watch the show, I speak affluent Portuguese, but we're not here to talk about that. But take us inside the room. What do you cats talk about? Like you guys sit around when you were there and say Japan is a problem. We are watching this very closely. They're the largest foreign owners of our debt in the world. They are blowing up before our eyes. Those conversations that are going on, well,

Richard Fisher

they have 1 point trillion dollars and with us in Treasuries and of course everybody's worried they're going to begin to sell them as the. They keep talking about now investing more and more in their own securities. But yes, that's part of the conversation. But the real conversation is the health of the credit markets and really the inflation, deflation, employment, unemployment, what's going on with the economy overall. And that's really what you're focused on and focused like a, like a laser. And he made that clear, I think in his testimony today. Inflation will always be a preoccupation of the Fed. Inflation, deflation, employment is always a preoccupation to the politicians because that's what they run on. That's how they get elected. As long as inflation doesn't get out of control.

Steve Grasso

Richard, when, when the chair talks about the economy, he always takes out the housing market. Is there any way. And he almost alludes to the fact that he wants to do something or collectively with the Fed, do something for mortgage rates. I don't know what he would do except for using the balance sheet. What's the answer to that? Have you thought about that getting that mortgage rate lower?

Richard Fisher

About a lot. Because I was against the acquisition of mortgage backed securities. And actually the head of the Richmond Fed at the time argued the most articulate argument con and now they're stuck with over $2 trillion. I haven't looked at the H4 1 report. I thought it was up to $2.7 trillion of mortgage backed securities. Now how would you bring down rates? You'd have to buy more. And if anything, that's one thing that he and Besson have talked about stripping out of the portfolio somehow. So I don't see how you would help housing by expanding a portfolio without jeopardizing the size of the portfolio which they want to make smaller. It doesn't compute.

Melissa Lee

Richard, always great to see you. Thank you.

Richard Fisher

Okay, I'll practice my Portuguese.

Melissa Lee

Obrigado, Richard Fisher. All right, so what do we make of. We play this game a lot. If you saw if I told you what the reaction the markets would be headline.

Karen Feiderman

What would the market be?

Melissa Lee

The two year yield chart. Did that make sense to you today? It did, yeah.

Guy Adami

Ten year yield, as I said earlier, did not make sense to me. Backed off slightly. And I think there are a lot of reasons why inflation notwithstanding, why I still think yields are going higher.

Tim Seymour

I do think the. Are you talking about his testimony or the print?

Melissa Lee

Because it's the testimony.

Tim Seymour

Right.

Melissa Lee

And. Right testimony. And, and the chart. So the print. The print, the reaction to the print made complete sense.

Tim Seymour

Yes, although I think the print is so fleeting. I mean we had a big oil move down.

Melissa Lee

Right.

Tim Seymour

And we had a big oil move up before that and now it's back higher. So I don't know. I was. I don't know. I do think he's sort of being. He's very clear that he wants to address inflation. He's very clear on that and he seemed to be pretty clear on. I will not answer to the President clear on that. Other than that, I'm not sure. So I think that's what he wants to do though.

Melissa Lee

Yeah.

Karen Feiderman

As a gold bull, you know, what war says is not gold positive. I just want to be clear about this. This is a guy who's going to root out inflation. Market in the past has said the Fed's not really focused on inflation by gold. This is not good for gold.

Melissa Lee

Coming up, high times for SK Hynix. NASDAQ listed shares catching a bit in their third trading day inside the memory melt up and how options traders are approaching the move when Fast Money returns. Welcome back to Fast Money. US Listed shares of South Korean chip giant SK Hynix soaring today back into positive territory since Friday's NASDAQ debut. Options on the stock launch this morning to a surprisingly chilly reception among traders. Our Oliver Renick is live from the CBO in Chicago with the action. Hey, Oliver.

Oliver Renick

Hey, Melissa. SK Hynix options had a solid first showing by the close with just shy of 220,000 contracts traded. That's more than the 190,000 contracts traded in SMH. But about half the options volume of DRAM. The ETF or micron flows were almost perfectly divided between puts and calls by volume. But the top 10 trades by dollar amount were either neutral or bearish. That said, a few big call sellers we noted early in the day actually got run over as the stock ramped 27% by the closing bell. It's possible that the dozen leveraged ETFs that also launched on the stock today competed away some of the options volume. But there's also the possibility that options traders may be rotating away from the memory trade a bit and into the SMH sector generally, or Nvidia, both of which saw more notable bullish call skew today and in the case of Nvidia the past week.

Melissa Lee

Melissa Oliver. Thanks Oliver Renick. Really interesting action. I mean on a valuation basis that makes sense.

Kate Rooney

Yeah.

Guy Adami

Listen, the volatility, I'll continue to say the volatility in these names you throw SK Hynix in the mix over the last month. Ish in micron sandisk up 8% down 8% not on a daily basis but a few times a week for sure. To me it's a little bit concerning. You typically see action like that on the lows which we're not at, or at the highs which I think we might be at.

Steve Grasso

Yeah.

Karen Feiderman

The premium that the US ADR trades to the underlying in Korea is extraordinary and it tells you that I think there are a lot of technical things going on because this is a great case of share class arb. You know you, you can't necessarily own

Melissa Lee

the technical in Korea.

Karen Feiderman

Yes, yeah, yeah. And I, and I think it's, it's something you have to be very cautious about here. I think some of that, that premium's got to come out.

Melissa Lee

Well in Korea there's all sorts. I mean there's a lot of leveraged ETF margin calls that are happening, etc. Yeah. So it's like a spiral 00 room

Steve Grasso

for error on these names. So all of these other things we're talking about mechanical structured selling, structured buying. But the underlying, these are priced truly for perfection. But this is a name that holds 60% of the high bandwidth memory. That's a huge share for them. I don't know, they're not going to grow from 60% but they cannot afford to stumble whatsoever with all those levered bets behind it because an 8% miss reacts with a 30% stock fall.

Melissa Lee

Yeah. It is the biggest pure play memory

Tim Seymour

name out there and a beneficiary of the IBM news.

Melissa Lee

Yeah, yeah. I mean doesn't that sort of underscore the notion that there is longevity to this notion that the span will continue

Tim Seymour

in memory and it just seemed to gain momentum. I mean we're three days into a really volatile history, I guess but I mean it's been public for a long time elsewhere. But that arbitrage, there's no way I would ever set that up. No way.

Karen Feiderman

Yeah, semi equipment names start to report to. I mean you got ASML tomorrow and I think it's, it's a really big print for sentiment, which has been fragile, especially in other parts of the world.

Melissa Lee

Coming up, a hospital hang up as it gets slammed on lower guidance. The health insurance headwinds the company faces and what it could mean for others this earnings season. More fast money into. Welcome back to fast money. HCA shares sliding 7% after the hospital operator lowered earnings guidance for the full year. The company citing a rise in uninsured patients and a drop in the number of surgeries. The stock now down five days in a row. Other health care stocks falling in sympathy. Tennant health down nearly 6%. What do you make? I mean, it's inpatient and outpatient surgeries were down significantly. And then also uncompensated care was up significantly.

Tim Seymour

Well, the first thing I thought of was health insurers that have, you know, and medical loss ratios and that being the benefit going to them. So that's where I would go, though. Unh. Ended up down a little bit. But I don't know. Geese and geese. Been a hospital space guy.

Guy Adami

I mean, remember the old days of tenant health care? I'll say this quickly. There's an uptrend that's been in place in HCR. Crack staff from in Englewood Cliffs in 2022. We closed basically right on it today. Valuation. You can't play the valuation game with these names. But it did trade almost four times normal volume. So I actually think it might be worth a look here.

Melissa Lee

I mean, healthcare overall today was sort of weak. I mean, we mentioned the Biogen news in terms of the disappointing Alzheimer drug trial. This had been a safety area, I would have thought.

Tim Seymour

So Lily was down. I don't know if Lilly was embedded up on that Biogen news because of their Alzheimer's alkali, but then they had that Teva thing, Teva bringing back a lawsuit, or I guess it was allowed to bring back a lawsuit about improper behavior from Lilly. Oh, I thought that's why it was down. But it's had a huge run.

Melissa Lee

Yeah, huge.

Karen Feiderman

UNH is the one to own. To me, this is a stock that's still cheap relative to its recent history. I understand there have been some concerns about their earnings power, but they've. They've answered a lot of that uncertainty. So I think you stay long this one.

Steve Grasso

You know, when you, when you led this segment off, you said the comments were more underinsured people and, and more procedures that weren't covered. You can't have. So the HCA or the aca, whatever that was called, Substitute.

Melissa Lee

Yes.

Steve Grasso

So people are rolling off the ranks. They're not covered anymore. Who's left? The person that's writing the check, paying the bill. So there's a lot of these names that I wouldn't touch. Although Humana's chart looks actually pretty extraordinary for the space right now. And I don't think fundamentally it's a great name to buy, but the technicals tell me it moves higher.

Melissa Lee

What did you make of the Biogen move? We didn't get to trade Biotech B

Karen Feiderman

and Timbo, by the way.

Melissa Lee

Is it the B and Timbo?

Steve Grasso

Yeah,

Melissa Lee

I have like a block

Richard Fisher

just

Karen Feiderman

letting you know, just to be in Timbo. Anyway, keep going.

Kate Rooney

No, Is I IBM?

Guy Adami

IBM?

Karen Feiderman

What's that?

Melissa Lee

Is I I Depot? I'm breathing a sigh of relief.

Karen Feiderman

I know where this is going.

Fast Money Advertiser

It's not going to assume that the

Karen Feiderman

letters in Tim's acronym aren't doing so well.

Melissa Lee

Guess what?

Steve Grasso

No one's assuming Tim.

Karen Feiderman

But Timbo not doing so well. You know what I mean?

Melissa Lee

Final trades.

Tim Seymour

Oh, no.

Melissa Lee

Final trade time. Timbo.

Karen Feiderman

I think the freight world is turning. I think FedEx is cheap. And I think you stay in this one.

Melissa Lee

Darren.

Tim Seymour

Yes, Citigroup bought some today. Overdone, Steve.

Richard Fisher

Fireman Street.

Steve Grasso

Everyone's running out. I'm running in an IBM guy, you

Guy Adami

know, I forgot, but put it in the comments.

Melissa Lee

Exxon Xom. Mel Kramer starts now.

Guy Adami

Good man.

Edward Jones Financial Advisor

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