Closing Bell - Closing Bell Overtime: Markets Look Past the Noise 9/11/26

Episode Date: September 11, 2026

Oracle’s latest stumble puts the AI spending debate back in focus. Jefferies’ Brent Thill breaks down what’s ailing the stock and why it went from positive to negative in today’s session. Truist’s Keith Lerner discusses whether markets can keep shaking off risks as rate expectations shift. Meantime, former Lululemon CEO Christine Day weighs in on the athleisure slump and what it takes for consumer brands to stay relevant as competition heats up. Barclays analyst Dave Anderson breaks down energy services as oil, diesel and the broader energy complex move. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The bell is bringing in to the trading day at the NYSC. The Cantor-Fitzgerald Relief Fund bringing the bell. And at the NASAC, BGC Group closes out the trading week. Welcome to closing bell overtime. We are live from Studio B at the NASDAQ market site. I'm Melissa Lee along with Mike Santoli. Stocks closing out the week with gains. The Dow up around 500 points, S&P 500 up nearly a percent.

The NASDAQ gaining 1%. But those gains not quite strong enough to erase weekly losses. The Dow down more than a percent. The other key index is off a bit more than half a percent. for the week. Stocks able to get a lift as longer-term bond yields today, hold relatively steady, following the CPI data being pretty much as expected, a decline in oil early, also easing the pressure on stocks, although oil prices did firm up over the day. And the big stock story of the day, what happened to Oracle? A jump last night after the results right here in closing bell was higher

at the open, but all those gains faded. We got much more on that story, and the story behind the stock fade right after this. But what's your take on this market here in response? response to CPI, it seemed like almost like a sigh of relief here. It was at least initially, and I think it mostly carried throughout the day. Mostly I think it's the end of the suspense about what's happening next week. Clearly the bond market raced to that moment of pricing in a rate hike and probably a couple more after it. The CPI data just warm enough on the core to ensure you get the rate hike, but not necessarily really changing the overall trend. So you didn't have to rethink everything.

In general, I mean, this market, it tries to stay in the game. It's just not really willing to necessarily reprice on an index-wide basis, even though we're kind of watching what's going on with oil and yields. I will grant over the past five or six weeks, sentiment has cooled a little bit. You know, people were maybe over positioned for the AI boom a little while ago after earnings, and now it's kind of dimmed somewhat. So maybe that means risk rewards better, but it has felt tenuous. Over the course of the day, the majority of stocks did not add to their gains in the morning. And it did sort of soft up. So it's a low-conviction rally, I was probably.

And it's worth noting the two-year yield did stay firm throughout the session in response to the expectation that the feds will, in fact, hike. And it's the 10-year yield. So 5% is still sort of insights. And we'll see what happens in the weeks to come. It is. I always say it's like it would be unusual if you're kind of that close to the hot stove and don't touch it and see if it burns. But, you know, interestingly, the market with this grind higher has been able to some degree make its peace with these levels. We'll see if that could last for much longer. All right.

Let's get right to Oracle as that stock reversed lower as the street digested its results and ended the week down more than 5%. I think, Sima Modi joining us now with Morsema. A lot of questions today, Mike and Melissa, about this intraday reversal, the excitement around Oracle's cloud infrastructure business, which saw record jump in sales initially sent the stock up by around 7 to 8%. But once the earnings call started, we started to see shares pair gains on the company's conservative guide. In a note to clients this morning, Morgan Stanley says gross margin pressure and a modest EPS raise for the year leaves us needing more evidence on the economics and visibility around the infrastructure buildout. The other concern that in Vandalists have been talking about, Oracle's data center pipeline. Now, Oracle's co-CEO, Clay McGurick, addressed the rising political pushback on data centers, acknowledging that some sites like New Mexico or is dealing with permitting issues, but he really made the point that the delays at this point are not emblematic of what Oracle is seeing across the nation.

with about 850 megawatts delivered in total for the first quarter. But it's still a wild card, guys, as well as yields, the speed at which treasury yields are rising, makes Oracle's billions of dollars in debt more expensive to service. We did see Oracle's 5-year CDS widened just a bit today, guys. All right, Seema, thank you. Seema Modi. Let's now bring in Brent Thiel of Jeffreys for more on this.

And as you recall, Brent joined us right after the earnings cross. Brent, great to get your take. You're fairly constructive yesterday on the print. You said peak negativity was going into the print here, and this is sort of a sigh of relief. Here we are. The stock is down. So what's your feeling in talking to clients today, investors today about the quarter and what it means for Oracle? Hey, Melissa, saw clients all day in London, and I would say the feedback from institutional clients here has been that it just wasn't enough, and there's still concern about the balance sheet.

There's also concern relative to do I own Oracle or can I own? Microsoft, Amazon, and Google, who seemingly are any potentially better positioned. So I think there are multiple factors that are weighing on the story at this point. So, Brent, what would you point to as potential proof points? I mean, Oracle has traded a little more like kind of the neoclouds than it has, you know, one of the hyperscalers with the more resilient business model. But from here on out, they're going to do the spend. for now they think they have the capital necessary.

They seem to be kind of on this treadmill that's running pretty fast, but so far they're staying upright. Yeah, I mean, I think you go back to, you know, Oracle's core value prop at the beginning of this whole infrastructure build was software, right? A double-digit growth software business with a mid-40% operating margin, and now they've chosen to go after infrastructure. It's lower margin. It's capital intensive requires a lot of funding.

they have, you know, raised the potential issue for, you know, additional equity raises. So I think there's, you're going from a story that had, you know, again, lower growth, high margin to a higher growth, potentially lower margin business. And then the balance sheet, quite honestly, just a mess right now relative to other companies we cover, right? $130 plus billion debt, $30 plus billion in cash and, you know, $30 plus billion in operating cash flow. and they've said, you know, free cash flow is going negative. So it's a short-term trade-offs, and as we said, you can't look at this over the next day, two weeks. You have to look long-term.

They will be one of the few vendors that helps build out this AI infrastructure boom, and we think we'll look back, and there's only a handful of companies that can really reap the reward. So Oracle's been through transitions like this before. Larry Ellison has caught every other side of these tectonic shifts, and they've been a survivor. And again, I think most investors are just super skeptical. In my entire group, everything is trading below all the other stories because of what's happening. Do you want to own the tech companies that are spending the capital or receiving the capital?

And Microsoft, Amazon, Google, Oracle are spending the capital. And that's why infrastructure, all the liquid cooling to infrastructure, utilities, to land, the data centers, they're all outperforming because they're receiving the capital. So I think this is just more of a general fear of, hey, they're spending, why do I need to be there, and when does this free cash flow switch? And then secondarily, you have an application business that could be under duress from AI with the, you know, the likes of anthropic, and can you actually build some of these applications that Oracle once sold? So there are kind of multiple issues that are weighing on the group right now.

Brent, great to check in with you again. Thanks a lot. Brent, Phil, Jeffries. Crude prices easing a bit today, but still hovering near $100 a barrel. Meantime, diesel prices are hitting an all-time high. Pippa Stevens is here with more on this record move higher. Pippa. But let's start here with oil, because we did just get confirmation a little bit ago that the Saudi Arabian East-West Pipeline has been taken offline after multiple attacks. So the ministry did not say the extent of the damages.

They did say that there were some injuries and that they just posted that they are at some of the damages and the injuries, the human injuries are currently being addressed. But this, of course, has been a lifeline. It's about 7 million barrels per day of capacity, and they had increased their exports out of Yonbooths and south going through the Red Sea to Babel Mendeb. As this chart from Kepler shows, you can really see how much more oil was going south. But now the Houthis are targeting that region as well. We had seen a little bit of a pickup here to start the month, but then as of Sunday, that has now all been halted because the Houthis have now advanced and taken this port city of Moka along the Red Sea. So that does call into question.

question now, it's not only the straight of from moves, but now also very much Bob Belmandab. Both of those are at threat, and that's why we're seeing the spike in oil prices. We started to hear rumors about the East-West pipeline being targeted yesterday, so that's what contributed to that very big moving yesterday session. So that's why we're still in the right here, despite

this pipeline not being taken offline. Moving over to diesel, we did top $6 for the first time, and that, of course, is a very tight market, and there doesn't really seem to be a solution for that in the near term, because while we're now beyond the peak gasoline season, we're actually heading in to peak demand season for diesel.

You can see a number of states, including California now, just two cents shy of $8 per gallon on diesel. Also, Nebraska, Kansas, Iowa, Minnesota, Missouri. A lot of these ag-sensitive states are all seeing record prices today. In terms of that pipeline, is there any sense as to how long it will be offline if there can be repairs made and brought back online? So they have not disclosed the extent of the damage or the type, but there were other reports that was to pumping infrastructure. That's what's above ground and along the pipeline. That would be an easier fix than if there were damage. to the pipe itself, but we don't know. Of course, the Saudi Arabia, Saudi Arabia built this

pipeline in the 1980s in response to the Iran-Iraq war. And so you got to imagine they had some foresight and thought about what would happen to different pumping stations. Also, if it's a pumping station, it's not clear the whole thing would have to be taken offline, you know, indefinitely because you could still potentially throw oil, flow oil through, but just at a lower pump rate. Pepper, thank you. Our CPI data, pretty much as expected, but the 10-year yields only slightly higher in reactions. Shorter-term yields, go up more. Did the bond market already price in, the news, and an expected rate hike? Rick Santelli, joining us now from Chicago. Hi, Rick.

Yeah, a couple of numbers. PPI and CPI made a big difference on probabilities. Let's start at the beginning this morning. You know, I understand that yesterday's PPI was definitely warm, and today, CPI very close to expectations, but I frame it a little different. I think the monthly numbers were hot, and the core was not. You know, year-over-year core, 2.4 is a 5-and-a-half-year low. And we're making progress as we see on that chart well off the 6.6 high. Now, should the Fed go? Well, now let's look at what the markets say. Look at twos and tens on one week. Wow, it's pretty clear. Two year yields on the week. Well, as they sit right now, they're up 25 basis points on the week. The tens, almost 20 basis points on the week. So 7% move on the twos, four and a half

percent move on the tens, major curve flattening, which actually is somewhat normal. It's definitely somewhat normal when you believe that a cycle of potential heights may be coming, especially when the first one right around the corner. And if we look at what's going on with oil and tens, you know, today especially, Mike, you know, first of all, oil is up 10% on the week, 10% on the week. And as we look today, they were tracking. But in the last three hours, when the pipeline news you just talked about came out, you could definitely see the effect. That's what turned yields in the tens. Higher, they were actually a little bit lower. before that. And now here we get to the Fed Fund story. This is a one-week chart of these Fed

funds. Forget percentages for a moment, even though I know they're at 86% for Wednesday's meeting. What you want to see here is how on the beginning of last week and the end of last week we sold off. Yesterday we sold off. Today we sold off. Every time it sells off, percentages go up. We've basically gone from 50% to almost 90%. And I don't see that there's enough leverage in the data out. The only real data points out that are big is Wednesdays, what, retail sales, I don't think that has enough leverage to change the percentages. So the first hike here is most likely built in the cake.

Back to you. Yeah, for sure. And I guess, you know, the debate is whether 50-50 is a tougher market to trade than just kind of knowing what probably comes next. And then you figure out the path from there. Rick, as we talk about all of this, the interplay with oil and trade. treasuries and everything. Corporate spreads have remained quite tight. I know there's some exceptions to that and some parts of tech, but I was just looking at the investment grade domestic yields

are just now, not even making three-year highs, right? So it's almost like, you know, companies have not yet felt the full effect and maybe they won't have to. Yeah, no. And the last guest really pointed out the balance sheet on some of these companies on the buildout, making some investors a bit nervous. The spreads have acted well, the break-evens have acted well, Real rates have moved up, which really augurs the question that the Fed really needs to deal with, and that is, should the conflict in the Middle East end, should oil break down, let's say, over a couple months after that to $65, where will rates go? And that is the silver dollar question.

Rick, thank you. Rick Santelli. For more than what the Fed may be thinking for next week, let's bring us Steve Leesman now. Steve? I don't have much. There's not much distance between Rick and I on this. on this question. But here's the deal, Melissa, as far as I can tell, which is that the extent to which the Fed can count on oil prices coming down. You'll remember that over a period of time when

oil prices shot up, the president would step forward and say, we have an imminent deal with Iran. And that would sort of stop the shorts in their tracks from saying, you know what, I'm going to, I'm going to sell oil along here. That's not possible anymore. The president's not saying that. and the outlook for policy augurs, I believe, for higher oil prices, at least for a period of time. And the Fed has shown that it will look through one-off supply shocks. But I think one of the things that will underlie the decision next week at a decision to hike is that the Fed can't count on anything being one-off in the Trump presidency here. I mean, I guess it's sort of the gamble that it will, in fact, be transitory.

And we saw where that led once upon a time before, Steve, to just sort of assume that something is a shock. But the other side of it is that this is not a monetary problem. This is a supply problem. So even if the Fed does something, it doesn't ease what is really driving the inflationary pulse right now. I think that's right. But I do think the Fed has to, over some period of time, address a supply shock with influencing the demand side of the economy. Paul Volker showed he needed to do that in the early 80s and the late 70s. and that's what he did, and it was effective back then.

If it sticks around long enough, Melissa, you get these anchored, or shall we say, entrenched inflation expectations, and that's where we're at. We're plus 3% on most of the 1-3-and-5-year inflation expectations. So the Fed wants that to happen. Plus, there's a pretty substantial credibility question here, both for Fed Chair Warsh and the Fed itself, to show the bond market, to show markets in general,

to show the public that it has its back on this inflation problem. Yeah, Steve, thanks. Steve Leesman. By the way, that was the University of Chicago Financial Mathematics Program, ringing the CBO close market. Having all kinds of fun, doing options math and ringing the bell. I mean, who knows? Probably off the top of their head. All right.

Stocks bouncing back today, even with oil above $100, the 10-year near 5% in yield, and the Fed back in play. With the S&P 500, still up about 12% this year, remaining strong, is this resilience or complacency? With us now as Keith Lerner, truest wealth and chief investment officer and chief market strategist. Keith, good to see you. Hey, Mike. Good to see you guys.

Yeah, let's start right there. I mean, you know, this market had a pretty decent head of steam through earnings season. We got a lot of reassurance on the AI theme, the tech earnings story. Since the peak of earnings season, it's been a little bit more subjective to, you know, other influences from the macro. So where does that leave us in terms of the risk award? Yeah, well, I think you kind of laid it up pretty well. I mean, one of the main thesis that we've had is we've moved from this earning driven bull market, which was really positively skewed over the earning season, this macro market, which, as we've seen the last couple of days, last couple of weeks, it's much more mixed, and we're seeing that reflected in

price action, which is really just more of a grind right now, Mike. So overall, I still think the positive is the uptrends are in place. I still think we have to give this bull market the benefit of the doubt. You know, but you're in between, like, as far as, you know, a lot of the indicated is they're moving towards oversold, as an example, about 31% of stocks above the 50-day moving average. Not deeply oversold. You know, valuations have reset down to about a 19 multiple, so that's good. But what you're lacking right now is clear leadership. And to be fair, this is pretty typical of a midterm election year as far as more of a grind during this period. And then even next week, if the Fed raises or hikes rates as the market's pricing in,

when you look forward after that, the near term tends to be a bit of a mixed picture as well. So You know, I think that's what we're in for. I think during this period, we still think that, you know, leadership likely returns to tech. And you are seeing these higher rates bite in some areas. You've seen the equal weight index relative to the S&P, you know, roll over a bit. You've seen about small caps down, about 5 percent, industrial is down as well. So you're just seeing it, as you mentioned earlier in the program, just more internally focused. At what point do rates change your sort of bullish outlook to the end of the year?

I mean, I understand that you think it's going to be a grind, that there's going to be some hurdles there. but ultimately the path sounds like you think it's going to be higher, Keith. 5% north of 5%. Does that sort of put some grit grist in that and make slow down? Yeah, it's the magic question. You know, when we were probably here a year ago or six months and you talked to strategists, I think, you know, people thought 450 would be it. Then it was 480.

And, I mean, look at the last couple, like really the last three weeks. We've seen oil prices up 25%. The 10-year-go from 4.6 to 5. and the market at the headline level has just basically, you know, shaking it off. So I don't know that there's a magic level. I think some of the discussion that was just discussed around credit spreads or important. Credit spreads at this point are very well behaved. But I do think it's the character of the market that changes.

And we're seeing that. So, you know, we had a lot of discussion about the broading trade as rates continue to move higher. If they do move higher, that will continue to be under pressure. You're seeing housing and housing-related stocks near the lows. you're seeing utilities and REITs. So I think it's really, you know, the character of the market changes. I think that also bodes well for a return back to tech leadership during this kind of grind process. So from one perspective, Keith, you know, rates are a potential hurdle for stocks and maybe

they pressure valuations if they go much higher. From an investor's perspective, I guess you have to ask the question if they're presenting you with some value given these initial yield levels. I do note that, you know, equity exposures at the retail investor level remain very, you know, is pretty elevated versus history. A lot of that's a market appreciation. There's not a ton of love for bonds, cash levels even down. I have those data from, you know, B of A private client.

And I wonder what you think you ought to do with that allocation now that yields maybe give you some cushion here. Yeah, so we're still maintaining an equity overweight, partly because it's, you know, an inflation hedge as well. And, you know, as we look into 2027, the earning estimates which normally start to go down this time of year are still moving up. But to your point, we do see that there is value in bonds in our view at 5% and especially even after inflation as well. The other thing we've done recently is a stress test. And even if bond yields on a 10-year go up to, say, close to 550, because that coupon is so healthy on a one-year-forward, even if we got to 550, even if we got to 550, the overall return would be still positive. And, you know, our view is more likely that, you know, even if we have a little bit of an overshoot, that yields are probably at the higher end of this range. So we do think there's value there, even though, you know, you may be subject to a little bit more of an overshoot.

You know, in some ways, if rates keep moving up, I think it'll be self-correcting because you'll see some of those other areas of the market start to bite as far as the economy where we're seeing already, you know, as I mentioned in the housing market, which is still, you know, still being weighed down by these higher rates. Keith, great to speak with you. Thanks. Have a good weekend. Thanks so much, guys. Hot topic from Wall Street to Silicon Valley this week has been the alarming claims that AI wiping out humanity is a real possibility and maybe only just a few years away.

But now, some are shooting down those claims as gross exaggerations. We'll have more on that story coming up on overtime. Pushback over AI getting some pushback itself after a former anthropic researcher warned of a real possibility that AI could wipe out humanity within a few years. But some in Silicon Valley are firing back, including Altimeter Capitals, Brad Gersner, calling those claims hyperbole and rejecting the idea that threats aren't being taken seriously enough. Here's what he had to say earlier on the halftime report.

It's a false narrative. It gets a straw man argument. It's simply not true. Every single person in Silicon Valley has kids. We take this very seriously. We want to usher in a safe world of AI. But that doesn't mean that we need to stop, shut down, overregulate. because of the fears, the hyperbolic fears of a few who have their own political agenda.

I do worry of these massive distillation efforts because I don't believe the Chinese are going to scrutinize themselves to the same safety standards that the United States is going. And I don't want to hand our adversaries capabilities that we shut down ourselves. The worries over China were echoed by President Trump last night saying that if we don't win the AI race, we're going to be put in a very bad position. Those are his words. I've heard a couple conspiracy theories that maybe it is the frontier models, the companies themselves, putting this out

in order to make themselves look better ahead of an IPO that their models are so powerful or that they're putting it out themselves in order to sort of spur action on the regulatory front so they actually have a firm regulatory framework with which to work. Yeah, I mean, you can sort of seem scrupulous and public-minded at the same time, you're highlighting the fact that, look, we've built something

that is about to maybe escape our control. There's such a big, we don't know what we don't know problem when discussing all these things and you don't know what the probabilities might mean. I still go back to the kind of the dawn of nuclear weapons. The difference was you had a couple of governments who had that. It wasn't like the private sector with incentives to just build as fast as we can. I do wonder if all of this plus the data center pushback is just kind of, you know, having the market question whether we're in for a bit of a tapping of the brakes, a bit of a stutter step in the growth of data center capacity and everything else. I don't know, but it seems as if it's not, you know, we're not going to escape this.

I think the S-1s will be interesting, the IPO filings of Anthropic and Open AI. But, I mean, in terms of sort of the caps on development, it could either come from within, as we heard, Sam Altman, you know, in a memo that was circulated that maybe we should sort of slow down here, or it'll be from external. So either way, wherever it comes from, that does slow down the story, that slow down the timeline for these things and slows down the return on investment. Yeah, I wonder if it was, if it were explicit, what liability, where the liability would sit if something happened. Well, that's a question. If they were on the hook, they would probably slow down. They would actually be more controlled about it.

All right, cash is once again king. The big AI spenders are under scrutiny and money is going back to where the money is. We'll look at the recent gains for stocks generating cash flow. That's next on closing bill over time. Welcome back to closing bell overtime. Well, with some of the biggest and most profitable companies in the market, spending all of what would be their free cash flow to build AI, we now have a market that sees the scarcity of free cash flow and says, we need to pay up more for what's left of it.

V-Flow is a free cash-flow yield ETF. It's like 50 stocks with the highest free cash flow yields. And what I like about the three-year chart is how close it's stuck to the S&P 500 for almost that entire period of time until a few months ago and then absolutely launched relative to the overall market. Now, what's inside the CTF now, rebalances every three months, a ton of software, believe it or not. Sales Force is the highest weighted stock at the moment, and then as well as health care and energy. No surprise. So maybe that stuff's temporary as the price goes up, free cash flow, let's go down. But it is fascinating how the market has found its way

here. And I would imagine that a year ago or six months ago even, the composition was completely different. Completely. It would have been kind of the hyperscalers without a doubt. Now, even something like Micron is going to screen out as having massively positive free cash flow. So we'll see if that stuff starts to get in there and influence them over months to come. Time now for a CNBC News update with Frank Holland. Hey, Frank. Hey, good afternoon, Melissa. A letter is reportedly circulating among U.S. House members calling for Speaker Mike Johnson to cancel the chamber's recess until Congress passes AI safeguards. That's according to Axios. It comes after an anthropic researcher earlier this week said he was quitting the company and accused Anthropic and Open AI of, quote, gambling with

our lives. Government documents reviewed by the New York Times show contractor errors led to issues with the summer renovations of the Lincoln Memorial Reflecting Pool. President Trump has repeatedly blamed vandals for causing the pole's new American flag blue liner to peel. But according to the documents, the liner peeled and tore because workers used two chemicals that turn to not to be incompatible. The contractor blamed the issue on human error. And Jimmy Kimmel is reportedly in talks to renew his late night show on ABC. The report comes from variety. Just days after ABC denied a story from tabloid page six claiming the network didn't plan to extend Kimmel's contract past 2027. Last year, Kimmel signed a one-year deal with ABC that is due to expire in May of 2027. Back over to you.

All right, Frank, thank you. Well ahead, we've talked about the decline of the atleisure trade, Nike, down 50% in the year, below $40 a share. Lulu Lemon, down 40% in a year, and even the new players in the game, like On Holdings, down 36%. So what will it take to see a turnaround in this sector? We'll ask the former Lulu Lemon CEO next. Welcome back to closing bell overtime, live from the NASDAQ market site. Stocks with a strong Friday, snapping a four-session losing streak. The Dow up 509 points, the S&P 500, closing right around 7,6-50,

slightly less than a 1% gain for the NASDAQ. But today's gains not enough to erase weekly losses, 1.5% down for the Dow, less than 1% declines for the other averages. A decline in oil prices clearing the way for today's gains, but still up 10% this week and at $100 a barrel still, a couple of stocks moving after hours. Astrozenica says its breast cancer treatment did not meet the goal in the trial. It was not a statistically significant progression-free survival.

rate. Those shares down 3.2%. Corning also falling. It's filing to sell up to $2 billion of common stock, taking advantage of a stock price, which is up 90% this year. Those shares down 2.5%. Check out the discretionary sector, the worst-to-date, on pace for its worst year to date, on pace for its worst year since 2022. With elevated gas prices and a more cautious consumer investors have pulled back from many of the sector's biggest names, the two worst performers in the group, Lulu, Lemon, and Nike. So why are customer and investors shunning these two of heavyweights and what signs should you look for in a potential turnaround. Joining us now is Christine Day. She was Lou Lemon CEO from 2008 through 2013.

Currently sits on the board of Western wearmaker, Tukovus. Christine, great to have you with us. We'll talk about boots and Western wear in just a minute. But what is, is it specific to the athleisure sector that there's something deeply wrong there? I think both brands suffer for some structural issues. You know, I do believe that Elliott Hill in particular is the right person to re-engage the culture, re-engage the product. But you've got to remember the cycle, you know, is at least 36 months to get new product, really, through the cycle in wholesale. And he has to rebuild five years of culture and a breakdown of going away from sports, going away from small,

especially wholesalers, where really brand creation occurs. So I think it's going to take a little bit of time, but I have faith in both the size of Nike and, frankly, the size of Lulu. And what I would say about Heidi joining is we should all want her to be successful. I mean, and I think she deserves all of our chance. This is her first gig as a CEO, right? She's always followed everybody else's direction. And so this is a chance to see what she can do. She certainly has the background and depth of experience,

but you know, you've got to be a culture fit. But she certainly has an eye for the segment, and I think we should all get behind her. There's too much to lose there. But the size and scale of Lulu and Nike, when you compare it to the Viori's and Allo, both good companies, decent product. I would say that Lulu still is ahead in the product fabric.

They've fallen behind in fabric innovation and some of the fashion, you know, in that. But to me, those are easily fixable problems that with care and attention, I think that Heidi should be able to get ahead of. You mentioned Nike having strayed away from sports and performance. And I guess arguably Lulu has also kind of diversified the products chasing things outside of its core. presumably those were rational decisions, or at least they were based on some motivation to say, hey, maybe we've exploited as much as we can in the core, because maybe the category is growing as fast as it was before. I would say, you know, when you need a leader, and this is where I do agree with Chip, which I don't agree with much, right?

But that, you know, having a CEO, and if you look at Nike versus Donahoe, you know, he wasn't a product CEO, right? And, you know, Calvin was the president of, you know, Sephora and other things, but he wasn't a product. At Lulu, right. Yeah. So when you're not leading with product innovation, when you start to put too much into marketing, you're buying consumers, you know. And then if you overbuild infrastructure and sales drops, you know, you've got flow-through issues. So the reality is they've got to get back to, you know, really looking at that product engine and really reembracing the feminine customer. You know, they've done a good job with men over the last few years, but they've really left.

the whole women's re-engaging the store partners. You know, being a store operator is really, really important in the Lulu business and re-engaging the ambassadors and more localized. When you centralize things, you miss things, like what happened with a China drum, you know, situation, right? So making sure that you really allow local to be local in the Lulu brand is particularly important. Is there anything about the period right now, post-COVID, back to work back to wearing normal clothes to normal non-athleisure sort of clothes to work more and more that is difficult for these brands in terms of staging that turnaround. I do think so. I mean, I think when I look at the trends and why I'm so excited about Tocoba, you know, you've got this

whole Americana heritage, aspirational, you know, wanting to go back to a simpler time, a past that we think existed, but maybe didn't really. You know, you see that in the women's shirtdresses that are popular right now. You know, the June Cleaver look. You see this in Western. You see it in Ralph Lauren Polo, which is really the look for fall. So all of that kind of speaks to this kind of heritage.

You know, America wants to find its story. And so that is, and these aren't, to me, trends. These are really segments. And you see the depth of the segment really playing out in the consumer psyche right now. So, you know, 51% of adults listen to culture, country music, it's the fourth largest streaming segment. You know, you've got five million people going to rodeo and arena bullfights, right?

You know, so, you know, you're seeing these trends that are quite deep, even like visits to Montana and Wyoming, for instance, five billion non-residents visited those states. So there's a lot underneath here that I think brands embracing this whole Americana heritage are going to be the winners. It certainly seems like it is, you know, a segment of the mainstream as opposed to some one-off. But there has to also be some cyclical fashion element. I mean, I remember urban cowboy. I remember after the bicentennial, people wanted to go back to a simpler time, too.

That was 50 years ago. But I think that's when you think about kind of Western as costumes versus Western as lifestyle. When you think about the number of people that go to NASCAR and F-1 that wear cowboy boots. You know, I was just at Ella Langley's concert last night. you had 14,000 people in New Jersey singing along. So I think this has some deeper roots than just a trend. Great to see you, Christine. Thank you for joining us.

Thank you. Energy is this year's top sector as oil prices jumped during the Iran War. But the other side of the energy market is AI's insatiable energy demand. Up next, we'll hear the bulk case for this AI buildout stock, even with its 25% gain just this week. Over time, we'll be right back. Oil pulling back today, and that's giving relief to some of the travel names, which are sensitive, of course, to rising prices. Gains for the airlines and cruise lines, but all those stocks you see here are down at least 10% in the past month.

Well, despite oil's decline today, the energy sector was slightly higher. The sector is leading the S&P 500 this year, up 44% as oil continues to stay elevated. And as the AI build out intensifies, energy service companies are emerging as beneficiaries. Names like Solaris Energy Infrastructure, Halliburton, and SLB are all up. double digits this year. So should investors keep pouring into this sector moving forward? Joining us now is Barclays Energy and Tech analyst David Anderson. Good to see you. Thank you for having me. So all of a sudden, everyone needs to figure out this space, right? You feel like it's multiple super cycles. Everyone needs their own energy. How does it manifest

from an investor's point of view from your perspective? Well, there's really kind of two concurrent things happening at the same time. First of all, we have the largest supply shock we've ever seen in history. That's going to have global ramifications well into the next decade. That's the first part. We're going to need to see massive amounts of capital of being invested just for whether or not you're talking about supply diversification or energy security or refilling SPRs. We see a new cycle developing, a new upstream spending cycle developing over the next several years. The second part, as you mentioned, is powering AI theme. That's a theme which is pervasive throughout my sector. And as you mentioned, Solaris is one of the companies. My companies are providing what we call speed to power.

So we know all about the GE-Vernovas and all the kit and all the industrial turbines that are coming out on the market. Those aren't coming on until 2030, 2031. The hyperscalers don't have that much time. They need it now. So we're seeing it through distributed power. That's through reciprocating engines, through turbines. We're now seeing hyperscale starting up long-term contracts with these companies. We mentioned Solaris.

I mean, that SOC is up 25% this week. Were they at your conference? They raised their guidance, right? They raised Fulier as well. they said they already supply power to two data centers, and they have two more sort of coming in the offing. When you hear, you know, like from the Oracle Conference call, for instance, that permitting issues and things like that are prolonging the time frame. How does that impact a name like a Solaris or other names in your universe? In our view, that's going to push more and more to behind the meter.

Clearly there's a lot of issues that are out there about citing these. Citing these is critically important. So that's sort of where we're seeing and where we're seeing this. This is really technically mobile power. So it can really go to anywhere they needed to be. But it's not just the megawatts. It's not just getting the power. It's actually the infrastructure around it.

Managing power is very critical. That was why Solaris raised their numbers. They've been building out their power services business. So bringing it in, but also maintaining it. It's the balance of plant, they call it. It's maintaining it. Because the reliability is absolutely crucial to these hyperscalers. And there's big penalties for distributed powers if they can't meet those requirements.

You characterize it as the biggest supply shock in history. The price response was not the biggest in history, right? We never got, in terms of crude, up to certainly even on a nominal level, let alone inflation-adjusted, where we have in prior shocks. Does that tell us anything about the usage intensity of petroleum or longer-term what it's going to mean for the energy mix? Not really. I think markets are just very confused of the direction to go here.

I think there is a general view that once this event ends, whatever that looks like, like, you're going to see an oversupply. It'll be probably a temporary oversupply, but we have a refining issue right now. So that oil can't seem to get anywhere. So it's causing this sort of strange dislocation in the markets. I think everybody knows oil's not going to stay at 100. So if anything, oil today at 100 is sort of a disincentive to own the group. We know it's going to happen.

We know it's going to come down. But what's interesting is that our conference this week was our 40th energy conference, 40th annual energy conference. remarkably, investors are pretty bearish on oil prices, yet they're very bullish on oil services and E&Ps. So I think they see there's a big structural shift happening. And I would say the biggest change from our event this past week was the generalist investor. We haven't seen that in probably 10 years. This has been all energy specialists for a long time.

So that was a big change for us to see this week, big change in tone. So when you say that you're seeing generalists now, are they just starting to allocate? I mean, where are we in that sort of, you know, cycle? It's a tricky setup, right? I mean, it's this tricky setup where we are right now. I think what we're seeing here is a lot of investors are coming out here. They're trying to figure out what's going on. They haven't been in the sector.

I had one investor come and say, I haven't been here in 10 years. Help me understand what's happening. Help me understand the companies. I mean, Halliburton, Baker, Hugh, Schlambejeet. These are not the same companies from 10, 15 years ago. These are very different companies today. They're trying to do their work. I'm not expected to say a big buildup right now.

What I think you're seeing here is they recognize there's a change. They recognize they need to own energy. Energy is only 3% of the S&P 500. If it goes from three to five or six, most of my stocks are probably doubles from here. Yeah, I mean, it's fascinating because many investors have just decided that energy stocks, commodity stocks in general, mostly act just as a counterweight, right? It's not so much. We have to care about what the earnings are going to be.

It's just like, you know, tech goes down, energy appreciates. This is just a way to play this cycle. I think what you're going to see, I mean, we're seeing it across the board. So we have a Middle East rebuild happening. We have international unconventionals. We have deep water is all starting to inflect. Argentina is a huge topic. Venezuela now.

People are all talking about Venezuela. So we're seeing this kind of across the board. So everybody's trying to figure out, how do I play this? Maybe the one area when I'm seeing growth is in North America right now. North America looks pretty flat. It's really the international and offshore stories which are really driving this. Dave, great to see you. Thanks for coming by.

Thank you for having. David Anderson. Coming up, we've heard a lot of retailers reference higher prices as a headwind in their results. But Kroger is sourcing a different kind of pressure, lower prices in one department. We will discuss that next. And coming up on Fast Money on this 25th anniversary of 9-11, we'll be speaking with this year's FDNY Foundation Honorary Goldman Sachs CEO David Solomon, his reflections on the day and the revitalization of downtown New York 25 years later.

That's coming up next on Fast Money. Meantime, closing bill overtime, live from the NASDAQ market site. Be right back. Shares at Kroger falling today after reporting results, missing slightly on revenue, cutting its sales outlook, as it says middle and lower income consumers are feeling pressure for macroeconomic factors, including oil. prices. The company also said that margins will be hit due to the Inflation Reduction Act,

which lowered prescription prices for Medicare beneficiaries. That weighed on pharmacy revenue. Historically, pharmacy revenue has been growing as a percentage of total sales, hitting 12.3% in 2025. That's up from just 9% in 2021. On the day, though, the sock was higher. It was higher on the day. It had been very weak, obviously, coming into that. And this is also a factor I do believe in Walmart's last quarter, too, where pharmacy felt like it was a bit of a headwind probably also shows that they don't have a lot of other options in terms of getting it somewhere else in the store in terms of pricing and margins and all the rest of it. All right, let's take a look at the key events for next week. No major earnings on the calendar,

but we will get some economic data. That includes retail sales on Wednesday, housing starts and pending home sales on Thursday, as well as initial jobless claims. But of course, the big event will be the Fed rate decision on Wednesday afternoon. The decision is expected at 2 p.m. Eastern with Fed Chair Warsh's press conference. conference at 2.30. As we mentioned, the market's now pricing in a high overwhelming odds of that. Since the last meeting in late July, the 10-year yield has gone from 4.66% to 497. Oil's risen from $84 a barrel to $100. Employment is held steady, while inflation has remained sticky by most measures. The last time the Fed raised rates was in July of 2023.

So remember, we were on hold for over a year. Then we got the rate-cutting cycle, in 2024. And then, you know, maybe it's easier to forget. We got three rate cuts late last year. So down 75 basis points. I think the question is going to be, because we also are going to get the summary of economic projections, the dot plot, how many rate hikes might be priced in or at least projected. Although the dot plot has been sort of minimized. No, exactly. And maybe it's the last one we're ever going to get. Exactly. Who's going to be the dots at this point. Give us plenty to talk about in terms of the baseline of expectations because it be unusual. You hear people say, oh, maybe to be a one and done. It'd be very unusual for the Fed to say there's grounds for a hike, but we only think

25 basis points is as far as we have to go. I mean, the markets believe now next week's in the books, there's another one pretty much in the books as well. And that doesn't take away those three cuts that you had mentioned before. Right. No, exactly. So it wouldn't be strange if we got there. Four and a half, four point six is where the two-year note yield is. That's almost a full percentage point above where the Fed Funds rate is. So that would give you an idea of the market's headroom. And of course, Kevin Moore says he wants to listen to what the market has to say. That does it for overtime this week. Fast money. By the way, David Solomon is in the wings. He's going to join us on Fast Money, which starts right after this break.