The market reacts to President Trump's Iran threats

[0:00] We do have the specter of that SpaceX IPO coming up. [0:02] A lot of talk about people selling out of technology stocks and chip stocks [0:06] with the idea that they're going to fund their purchases of SpaceX stock. [0:09] How big of a factor do you see that being in this market [0:12] and some of the volatility that we're seeing? [0:13] It's important to know Oracle after the bell, fractionally higher. [0:16] That seems to be one of the more sensitive stocks to AI questions [0:20] and technology questions. [0:21] Still managing to hold on to some very slight gains. [0:24] I think that's probably an element. [0:26] I don't think that's the main driving factor. [0:28] If you look back last week, I had been sort of thinking about this through the week, [0:33] and now I think this week this is what happened. [0:34] So last week we had this basically prevailing wisdom or commentary in the market. [0:40] Investors were getting increasingly more concerned. [0:43] Everybody was worried about the parabolic moves in semiconductors. [0:46] All of the technical charts were off the charts. [0:48] It didn't make sense to enter at that point. [0:51] Yet we had continued enthusiasm about AI. [0:55] There was sort of this market action that everybody thought downside protection wasn't necessary. [1:00] It was full steam ahead. [1:02] And I thought at some point those two narratives need to meet in the middle. [1:06] And I think that's what we're seeing right now. [1:08] I don't know the future for any certainty, [1:11] but I do feel like this is a pause in a continued upward trend. [1:15] I think we will continue to stay in a bull market because the enthusiasm and the expectations are still there. [1:21] I don't think fundamentals have changed. [1:23] I think the technicals have broken down a bit, and they needed to. [1:26] Semiconductors are up 100 percent since the end of March. [1:29] So I think this is OK. [1:31] And up until some of this news, the market today even looked pretty orderly and pretty healthy. [1:36] I think that the breadth that we're seeing in the market, even on down days, is still promising, [1:41] and that we're just seeing capital move from some of those extended places [1:45] into other spots where investors are looking for opportunity. [1:48] So while we're talking about volatility right now, we actually want to return to the White House. [1:51] The president is still speaking not only about Iran, but also about oil prices we're going to listen at. [1:56] In my short time here, 74 days, we had stock market all-time historical highs. [2:01] Nobody can believe it, the Dow, the Dow, the S&P. [2:05] The S&P was at 7,000, they said, in four years, maybe five years. [2:11] It will never hit it during the term. [2:12] It was too much. [2:13] I hit it in my first year. [2:15] I hit on the Dow. [2:18] It was 50,000 was an impossible number. [2:21] They said five, six years out. [2:23] Well, I hit it in my first year. [2:26] And now I get everyone in the room. [2:27] I say, congratulations, but now I'm going to take it down a little bit [2:31] because we cannot let Iran have a nuclear. [2:32] My weapon. [2:33] And they all agreed with me. [2:34] Todd, you remember. [2:35] Everybody agreed. [2:36] And we took a little journey down to Iran. [2:39] We first stopped off at Venezuela, by the way. [2:41] And we have paid for that war many, many times over. [2:47] And we have great relationships with the people of Venezuela. [2:50] We get along with them great. [2:51] It was a great success. [2:52] It was a one-day war. [2:53] It was really, to be exact, 48 minutes of fury. [2:58] And it was over. [3:00] And Venezuela is doing great relationships with the people of great. [3:05] It's become a happy country, believe it or not. [3:08] I mean, it's become a happy country. [3:09] And we're taking out millions of barrels of oil from Venezuela. [3:13] And then we went to Iran. [3:17] And essentially, we've done the same thing. [3:19] It doesn't look as pretty, but there's no Navy. [3:23] 159 ships at the bottom of the sea. [3:26] There's no air force. [3:27] All of their planes are blown up. [3:29] Most of their drones are gone. [3:31] Most of their drone-making ability is gone. [3:33] Most of their missiles are gone. [3:35] All of their leadership is gone. [3:37] So they replaced it. [3:39] All of that leadership is gone. [3:40] So they replaced it. [3:42] And that's the people we're dealing with now. [3:44] And I think they're going to want to make a deal. [3:47] But we're going to find out. [3:48] Do you expect inflation to come down between that and that? [3:53] Oh, when the war is over? [3:54] Yes. [3:55] It's coming down. [3:56] I know you can't. [3:57] It's going to come down like a rock. [3:59] And again, we're taking out millions, [4:03] which I'm just announcing today for the first time. [4:06] But we've been taking out millions of barrels of oil. [4:12] Millions of barrels. [4:14] Every night, we took out oil. [4:16] But now I'm going to tell you because they just figured it out. [4:19] So now that they figured it out, I can tell you. [4:21] It was very hard for me. [4:23] I wanted to say it so badly, but I didn't want to ruin it. [4:27] But it was very hard. [4:28] But millions of barrels of oil has come out. [4:31] That's why it said $85, $90 a barrel instead of $250. [4:35] But we have the greatest military in the world, [4:40] the toughest military in the world, [4:42] just the best in every way. [4:44] Nobody even close. [4:45] There's no military that's even close. [4:47] I rebuilt it during my first term. [4:49] I'm using it now. [4:51] When this conflict is over, [4:55] Todd said, please go into conflict, right? [4:57] As opposed to the word war. [4:58] He didn't like the word war. [5:00] But it's sort of a conflict. [5:02] It's a military operation. [5:04] When it's over, you will see oil drop to where it was before. [5:08] We're getting gasoline just before it started. [5:10] I was in Iowa. [5:11] And we passed gas stations $1.85 a gallon. [5:17] And we'll be back at those levels very soon. [5:19] Thank you very much. [5:20] Thank you, Russ. [5:23] Thank you, Russ. [5:23] Thank you, guys. [5:24] Thank you, guys. [5:25] Thank you, guys. [5:26] Thank you. [5:26] Thank you all. [5:28] Thank you. [5:31] All right. [5:36] As you can see, the president just wrapping up his comments. [5:38] We want to bring in our Megan Casella live from D.C. [5:41] with more on the president's comments. A lot of things to break down here, Megan. [5:45] USMCA saying we'll see, talking about oil prices, saying they're pulling millions of barrels of oil [5:50] out of Iran, and that's the reason why oil prices are potentially not even higher. The [5:54] president's saying around 85. It's actually about 90. I just want to get your take on some of his [5:58] comments. Absolutely, Frank. A lot there to unpack, hitting a number of topics as always. But one of [6:03] the top headlines there was right at the beginning when the president said the U.S. is going to [6:06] continue attacking Iran over that downing of the U.S. Apache helicopter earlier this week. Take [6:12] a listen here to some of his comments right at the start. We hit him hard yesterday, and we're going [6:19] to hit him again hard today in case you miss it, in case you don't turn on your television set. [6:25] And we'll see what happens with the deal. We were really close to a deal, but they keep tapping us [6:30] along. They keep playing us for suckers because, you know what, they dealt with some very stupid [6:35] president. Frank's saying we're going to hit them hard again today. That's the first confirmation [6:40] we had that the U.S. was planning further attacks against Iran, though, of course, the president [6:45] also saying there that a deal remains on the table, as he's been saying now for weeks. I also want to [6:50] talk about that USMCA bit. He said we're not looking to renew the deal, but we've known he didn't want [6:56] a sort of rubber stamp renewal. July 1st is the renewal date for U.S., Mexico, and Canada to sign on [7:01] to renew it for another set of years, 16 years. And the president said he doesn't want that. He [7:06] wants to renegotiate it. So we know that the USTR, Jameson Greer, has begun those negotiations. [7:11] And I will say as well, this is important here for markets, that even if the president [7:15] ultimately says we can't get to an agreement, I want to pull out of it, the deal has a safety [7:19] measure within it that will keep it intact for at least another 10 years while the parties keep [7:24] talking. So there's not going to be a collapse of that trade agreement in this term, even if he says he [7:29] doesn't want to renew it right now. He went on to say, we'll see if we can do something to make a [7:33] deal, especially with Canada. Frank. Yeah, Megan, the president also addressing inflation, of course, [7:39] hottest headline CPI in about three years. The president is saying once the war is over, [7:43] he believes, he made a hand gesture, inflation is going to go down. [7:46] I'm Megan Casella, live from D.C. Megan, thank you very much. Good to see you as always. [7:50] Jason, got to come over to you on this one. It doesn't seem like this conflict is de-escalating, [7:56] and that seems to be what the market thought was going to happen. A lot of people thought it would be [7:59] a few weeks of conflict, maybe, and things would potentially be over by now. I heard a lot of [8:04] traders tell me they thought it'd be over by the 4th of July. That does not seem as likely right now. [8:08] Since the war began, the S&P is up over 6 percent. Your view on his comments on the market implications. [8:13] Yeah, so I think there's a lot there. I think as I kind of comb back to what we saw on CPI, [8:19] right, CPI first, headline number up the most in three years. Core, month over month, [8:23] was a little bit lighter, and you saw kind of yields come, right? But as I kind of look at the numbers, [8:29] gasoline is up 42 percent. Fuel is up 60. These are real numbers that are affecting [8:34] the consumer day to day. And I think the other thing, as I kind of turn back the clock to last [8:38] week and look at all the employment data that we saw, we got good labor statistics, right? And we [8:44] think about what policy is going to look like from the Fed's perspective later on this year. Now, [8:49] 98 percent chance of a hike in December is a very different story. And then as I kind of roll into the [8:55] markets, and to Liz's point, in terms of breadth, nine of the 11 sectors were up yesterday and the [9:00] market was still down. But when you think about the math, obviously the semiconductors are now 30 [9:06] percent of the S&P. So the math doesn't work out. So if you're seeing semis, we're rolling with that. [9:11] So I want to continue to see health care, financials, industrials play into this rally going [9:17] forward. And I think that's going to be healthy as we look over the next couple months. [9:21] All right, Weiss, got to come over to you. I mean, a lot of factors are influencing the market right [9:25] now. It does also seem, in addition to the idea of the SpaceX IPO coming up on Friday and maybe [9:30] people rotating to other unloved parts of the market, that now the market seems to be at least [9:35] aware that this could be a lot longer than they previously expected. How big of a fact do you think [9:40] that is in the market action today, at least? You know, the rest of the week or so, it's hard to [9:45] figure out, but for today. Well, first of all, it's obvious the president doesn't subscribe to Tom Lee's [9:51] newsletter information because Tom's been calling for the market here. So not no one's been calling for [9:56] it. Moving aside to your comments, rotation. I don't see a rotation last couple of days into other [10:03] sectors. I see rotation from green to red. And that is extremely broad. I don't believe that SpaceX has a lot [10:11] to do with it, frankly. It may be hitting some stocks like a rocket lab or others. Maybe you're [10:16] freeing up to take some profits. But keep in mind, if you're smart, you're doing the calculation. [10:23] What's my gain going to be in SpaceX now versus the taxes I'm going to have to pay from liquidating [10:29] a position? So if you're a taxable account, that's the equation, right? That's what you got to go [10:35] through. Nonetheless, what's killed, for example, the biotech sector in the past has been, always been, [10:44] except for this time, and it was interest rates and other things, is when massive supply comes on [10:48] the market. And we're seeing that broadly here. The market's got to absorb a lot of supply. And just [10:54] under simple economics, supply and demand, you really need demand to exceed the balance of supply. [11:00] I'm not sure we have that in terms of everything. But it's coming on in a layered amount. Overall, [11:05] today is more about, I'd say, the inflation numbers. That got it off to a bad footing. [11:11] But then we heard about escalation of the war in Iran. And that's not going to settle anytime soon. [11:18] To give you some perspective, the last time they went to Pakistan, both delegations, U.S. [11:25] and Iranians. U.S. came with Kushner and Witkoff, right? The Iranians came with over 80 people [11:33] representing many different factions. So the Pakistanians spent all their time mediating [11:40] between those factions. So is the Republican Guard going ahead and executing the attacks [11:47] while you have a cleric saying, we want to negotiate peace? So you just don't know. [11:52] But one thing's for sure is that because of the way their country is structured, [11:58] that they can withstand the war for a longer period than Trump can in front of midterms.