Closing Bell - Closing Bell Overtime: Oracle’s Strong Earnings Driven By AI Demand; Schwab’s Liz Ann Sonders On Where Markets Go From Here 6/11/25

Episode Date: June 11, 2025

With the Fed decision just days away, Liz Ann Sonders of Schwab sets the stage for markets. Our Megan Cassella tracks progress in China trade talks, and Pippa Stevens asks: are minerals the new geopolitical currency? Francisco Blanch of Bank of America joins to break down the big moves in metals and oil. Later, former Kansas City Fed President Esther George previews what’s next from the Fed. Plus: Sam Korus of ARK weighs in on SpaceX’s soaring valuation—and we’ve got Oracle earnings after the bell.

That bell marks the end of regulation. Ameren winning the closing bell to New York Stock Exchange. Blue water acquisition. Doing the honors at the NASDAQ. Stocks losing early morning gains despite tamer inflation and a trade framework between the US and China. Yields on the move today with the 10 year closing down

six basis points following today's auction. Oil seeing a big jump, hitting the highest level since April 4th on escalating Middle East tensions. Palantir among the top performers today, hitting an all-time high, the stock now up 84% year to date. In a reversal from yesterday, Intel dropping 6% today. The stock was up nearly 9% during Tuesday's trade. Starbucks in the green.

As the FT reported, the company has received, quote, a lot of interest in the sale of a stake in its China business. Chewy's sinking as earnings beeped, the gross margins and free cash flow came in light. And Quantum Computing stocks higher after Nvidia's CEOs had Quantum's at an inflection point. Most of these names though, less than $10 billion in market cap.

Well, that's the scorecard on Wall Street. Welcome to Closing Bell Overtime. I'm Morgan Brennan along with John Fort ahead. Tech heavyweight Oracle set to report. We're gonna bring you the numbers and instant analysis plus can the move higher in metals continue with gold silver and copper at? Multi-year highs and is SpaceX poised to lift off to a two trillion dollar valuation Well, let's begin now with the market stocks wavered despite a lighter than expected inflation report and progress toward a China trade deal. Our first guest says despite that,

it is getting harder to expect earnings growth and joining us now is Schwab Chief Investment Strategist, Lizanne Saunders. Lizanne, good to see you. So did you expect to see more tariff impact in the CPI report today and how significant is it that there isn't more? So yeah, I expected a little bit more,

although we don't try to forecast CPI, but it it the fact that it came in pretty comfortably below consensus estimates. Now I think part of the reason for that is there's such a large shelter component within CPI, especially core CPI, inclusive of the big chunk of which is owner's equivalent rent. And that's been our view that you were going to continue to see downward pressure on that very heavy weight within CPI, which could serve as a bit of an offset to any tariffed goods related kind of inflation. So I think that's a plus going forward.

Now we don't have that higher weight in the Fed's preferred measure, which is PCE. And the components that from CPI that map to PCE, suggest we're not going to see is benign a report there. But all else equal, it was certainly a comforting number. Okay. Now, backing out to trade, this China trade framework, the progress there, is this good news?

Is this solving a problem that maybe wasn't so much of a problem a couple months ago? How should investors think through whether this is good news for the market overall? Well, I'm glad you called it a framework, John, because it's not really a trade deal. It just lifts what were going to be some restrictions on China's export of rare minerals as well as magnets,

and that would have been pretty devastating. So they agreed to continue those shipments. And I guess on the other side of this was the allowance by the Trump administration for Chinese students to join our colleges and universities. So that, yes, I mean, we're talking about trade of rare minerals, but I wouldn't call this the kind of trade deal in terms of being a de-escalation from a tariff perspective, the tariffs that the United States has put on goods

coming from China back here to the US, that hasn't changed. That's still running at an average effective rate of 55%. So better than not getting anything, but this is far from what would be considered a comprehensive trade deal. So, Lizanne, in light of all of this, we have the S&P closing fractionally lower here. It looks like 60-22 as we settle out. Are you surprised to see stocks trading so close to all-time highs?

Not necessarily. I think, you know, none of us can forecast what the headlines are going to be and posts about policy changes. We've learned that those can turn on a dime. I think what's important for investors to think about is not so much trying to anticipate what these policy announcements, escalations, deescalations, court cases, but what the setup is around some of these catalysts. So for instance, the setup in advance of April 2nd

was one where you got that bad news, there was complacency in the market, that setup meant that the downside was going to be pretty severe. Literally only a week later when we got the April 9th de-escalation with the delay in the reciprocal tariffs, that setup heading into that news was one of really dramatically oversold market sentiment that had completely washed out. You were seeing it in fund flows, not just in the attitudinal measures of sentiment. So you've got that positive catalyst.

And I think the upside was more dramatic as a result of what the setup was. Now, I think arguably with the market having near at all time highs, a little bit of complacency having come back in, you've got that setup where maybe you're a little bit more either at the mercy of negative news, that could be a catalyst, or just you exhaust yourself a little bit

because we've already seen that positioning trade. So I think that may be what's reflected in a day like today. Some of that natural, not quite at a high, and then you see a little bit of a pullback. We've seen that time and time again in the course of this bull market. Another area of focus this week has been

just the gargantuan issuance of debt by Treasury as well. We get a 30-year auction adding to the auctions we've already seen this week. Tomorrow, what is the bond market signaling here? Well, we've got a little bit more stability. The move index, which measures volatility in the bond market, has come down. I think that's part of the reason notwithstanding today's reversal, why the equity market has done well. It's a combination not just of moves up in yields,

but speed, but volatility in yields. And I think this recent calm from a yield perspective added to the juice that the stock market was looking for. So I think any kind of calm, limited volatility in the bond market, I think all else equal is positive for the equity market But I think a backdrop where we get more volatility in yields Especially if that volatility is driven by the inflation side of the equation not the growth side of the equation

Suggested any move up in yields if it's more about inflation less about growth would mean probably weaker stocks and vice versa Okay, lizanne saunders. it's great to get your insights. As always, thanks for joining us. With major averages all finishing the day down. It looks like the Dow, the Dow industrials, John, finishing basically unchanged down maybe one point today. Yeah, indeed. Also looks like oracles out.

We're going through those numbers. We'll bring them to you as soon as they're ready. All right, well, let's turn to the move in commodities in the meantime, because crude storing today as the US State Department orders a partial evacuation of US embassies in Iraq due to heightened security concerns. It's not just crude though. The entire commodity complex has soared this year. Platinum's up over 35 percent. Gold, silver, better than 25 percent. Copper rallying 19 percent in 2025. Gold has notched, get this, 25 record highs this year. Joining us now is Francisco Blanch,

head of commodities and derivatives research at Bank of America's Securities. It's great to have you on. I'm gonna start with a move we've seen here in oil because it does seem that geopolitical concerns and specifically tensions in the mid-East really sent crude higher today. How much is that driving the price versus some of

the dynamics we've seen with production starting to come offline in places like the U.S.? So thanks for having me Morgan. I do think that most of the move today is linked to that incremental risk from Iran. Remember that we have two major geopolitical risks ahead of us in the second half of the year. One is what happens to Iran. Are we going to get a deal or are we going to have potentially a conflict? And certainly the evacuation of the U.S. embassy in Baghdad is going to get markets very nervous. The second, remember, Iraq has a very long border with Iran, right? And the other issue is Russia Ukraine so sort of two big big conflicts that we have

potentially- to cope with it in the old market. But this the market still insert. Open is bringing back production. And and we are seeing potentially slower demand in the second half of the year on the back of targets. So I think I think. We

believe there's gonna be a surplus in the second half around seven hundred and fifty eight thousand barrels a day. But of course geopolitics can change that very quickly and we saw it today. The precious metals rally we've seen whether it is

gold silver platinum which we really don't talk about very much but has been out performing gold so far this year what is driving that. Right so gold's been a story initially about central banks buying more of the yellow

metal and then more recently I think is investor concerns about lower weakness. And Right so gold's been a story initially about central banks buying more of the yellow metal and then more recently I think is investor concerns about dollar weakness, about trade tensions, and frankly at the end of the day remember in a world of de-dollarization or peak US exceptionalism investors are looking for no more assets and that's been behind the push for gold. Now more recently you talked about platinum. Well platinum at some point was

a third of the price of gold. And gold jewelry demand is down 20% this year despite the big rally in prices or rather because of the big rally in prices. So a small shift just a 1% shift of that demand from gold

into platinum which is a much smaller market is triggering a big rally. So we think it's just substitution. People saying, well, you know what, I was going to buy a gold ring, but it's going to be platinum this year because it's a third of the price. So we're seeing a big catch up trade in the last few weeks. Francisco, what's your outlook, your thesis on aluminum, how do tariffs affect that? Well, I mean, aluminum, of course, has been directly tariffed. outlook your thesis on aluminum how to tires affect that well i mean aluminum

worse uh... happens it's been directly tired we've seen it should be a twenty five percent uh... figure and then a fifty percent figure a couple weeks ago uh... what this is going to do is that it's going to hurt uh... u s consumers of aluminum naturally uh... i'm not quite sure is going to help bring those little filters here

by the way, aluminum takes 15 megawatt hours per ton of material to be produced. So you're going to be competing between AI and aluminum. What do you want to produce? I think AI is the better use of that incremental electricity that we need in the country. Meanwhile, obviously, some investors they decide to open smelters at the margin- but then of course. Ninety percent of. Your soul come from

Canada anyway so it's not coming from that far away. Our view is that prices will push higher over time. Maybe not the second half of the year but over time they'll have to push higher. Because China ultimately. Is not. Rumping up

capacity. And that requires three thousand dollars plus per Over time, they'll have to push higher because China ultimately is not ramping up capacity and that requires $3,000 plus per ton to do. Okay. Francisco Blanch, thank you. Thank you. Mention those Oracle earnings out. The stock is, I was moving lower initially here in overtime. Christina, parts of Nevel is higher now, has the numbers.

Christina. Yeah, almost 5% higher now. Beat on the top and bottom line, EPS coming in at $1.70 adjusted on $15.9 billion of revenue. Some of that was driven by their cloud services coming in a little bit stronger than stronger than street anticipated operating margins for the quarter at 44%. There was a very bullish comment. They don't provide guidance, but they did say in their release that fiscal 2025 was a very good year. But, and this is according to the CEO, we believe fiscal 2026 will be even better as our revenue growth rates will be dramatically higher. And then they go into the categories. They say that their total growth rate for cloud will increase

from 24% in 2025 to about 40% in 2026. One number that stood out is the RPO, which is the remaining performance obligations that is pretty much backlog for contracts that have yet to be recognized. They believe that will grow 100% in fiscal 2026, adding possibly to that uptick in the stock because it is backlog and they're actually able to turn that into revenue.

Guys? All right. Chairs now up five and a half, almost 6%. Christina Parts-Nevelis, thanks. Thanks. Rare Earths have taken center stage as a key leverage for China during trade talks. Have minerals become the new geopolitical currency? We're going to explore.

Plus, former Kansas City Fed President Esther George on what the cooler than expected CPI number could mean for the Fed's interest rate decision next week. Overtime's back in two. The Reds said they would. Money came on the show last November. Sales have improved. Welcome back to Overtime. I want to show you shares of Oklo. They are moving lower, almost 6% after the company announced a $400 million offering.

The company says it will use the proceeds for general corporate purposes, working capital, and potential future investments. The stock did rally 29% today on a deal to supply power to the military out in Alaska, and it's up better than 45% year to date. Yeah, so maybe a good time for them to go and raise some more capital here. We'll see. Let's turn to trade. President Trump says a trade deal with China is done pending approval by himself and Chinese president Xi Jinping. We know at least it's a framework,

but are the two sides further apart than it seems? Well, Megan Casella has the latest details. Hi, Megan. Hey Morgan. So after two days of marathon negotiations in London, both sides now touting this framework, not quite a deal, but that gets into semantics. We're on our way there. And let's get into a few of the details here. What we know is that China has agreed to grant US companies export licenses for rare earths. Although according to the Wall Street Journal, those licenses will only last for the next six months. I'm working on getting

confirmation from the White House on that. But for now, we do believe those licenses will be temporary. In exchange, if China does move to do that, the for now we do believe those licenses will be temporary. In exchange, if China does move to do that, the U.S. then will ease up on export controls on things like jet engines, as well as allow some student visas to move forward. In the meantime, tariff rates remain unchanged from where they've been for the last few weeks since the Geneva deal. So new tariffs this term on China are 30% by the U.S. China has a 10% tariff on U.S. goods so far this term.

All of this, as you mentioned, is subject to the approval of the presidents. Here's the Commerce Secretary Howard Lutnick describing the contours of this earlier today. They are going to approve all applications for magnets from United States companies right away. Think of that language, right away. You know, very much like the same day, and we're, as they do that, we'll take off our measures, and we're in a great place with China. Guys, I caught up with Lutnick briefly

after that interview earlier. I asked him when we might expect to see whether China approves this deal, he says, within days. And I also asked him whether we should expect to see anything in writing. And he sort of sidestepped that question. He said, remember, what they were doing in London this week was simply cleaning up the Geneva deal.

So this sort of roughly gets us back on track to where we were a month ago. But that's the upshot here. They weren't quite moving the ball any further forward than that. They were simply getting us back to where we were. And now we have to wait and see if and how quickly either side starts to implement this. Guys.

Important perspective. Megan, thank you. Well, rare earth metals, as you just heard, proven to be a critical issue in talks between the U.S. and China. Pippa Stevens here looking at whether those minerals are becoming a new political geopolitical currency. Yeah. So amid all this back and forth, what we've really seen is that rare earths

have become a central bargaining chip for China, given its new monopoly on production. But China's dominance in minerals extends well beyond just rare earths. After investing heavily in refining and processing over the last 20 years, China is to put it simply, the world's supplier of critical minerals. China controls more than three quarters of processed cobalt,

about 70% of lithium, more than 90% of graphite, and almost half of refined copper to name a few. And after cracking down on exports of rare earths, gallium, and germanium, there's fears the country could also target other minerals. As Chris Berry from House Mountain Partners put it, the Chinese have chosen a very shrewd and calculating approach of targeting materials

that the rest of the world is truly dependent upon. Now, the U.S. is trying to break this dominance with the White House issuing a number of executive orders aimed at lifting the industry through things like faster permitting. And there is some domestic production. NP materials mines Rare Earths in California. Albemarle has a lithium mine in Nevada and processing facility in North Carolina. And Rio Tinto and Freeport mine and process copper.

But the reality is that these supply chains can't just shift overnight, and for now, guys, the U.S. remains heavily foreign dependent. Yeah, you're probably looking at years to stand up more of this capability here in the U.S. That being said, you mentioned it, MP materials, which traded down 6% on this news today is really the only game in town domestically

trying to make some of these magnets. But the permitting piece of it, I'm not sure we're talking about it enough because it does seem like there is some momentum here, just even in the last couple of weeks around the federal government stepping in and big footing local regulators. And it's not just the critical minerals. It's also things like coal mines in Montana right now to be able to start this process more quickly. So how much does the permitting

or a change in the permitting factor into how quickly supply chains can be stood up? So the US is definitely one of the longest lead time countries in the world for permitting. And as you said, the administration is now taking a much closer look at that. And that is certainly helpful. However, the issue is that it usually comes down to the state and local jurisdictions.

And so even if you can have that federal support, sometimes on the ground it looks very different. Also because you have to go through oftentimes many rounds of litigation, it means it's more expensive. And so that's one thing we've seen is that production here is just that much more costly. Now, China has cut off rare earths before. Back in 2010, they did to Japan, and Japan's government stepped in and said, we can't have this happen again.

And so they propped up the industry, they had refining and mining in Australia, so they are not in the same, but we are. The US briefly looked at that back in 2010, and then we just kind of moved on. And so that really shows that there are sometimes these disconnects between the federal policy and then what's happening on the ground.

But I do think that you are right, that we are now looking at it much more closely and particularly with critical minerals coming into the fore with China, Ukraine and Greenland, people are taking it much more seriously than before. Well, interesting stuff Pippa. Thank you. Well up next, Mike Santoli looks at whether momentum stocks can keep gaining well momentum and lead the market higher. And later, the ARK Invest Analyst who says one of Elon Musk's companies will hit a valuation

of $2.5 trillion in five years. Here's a hint. It's not Tesla. Overtime, we'll be right back. Welcome back to overtime steel stocks moving lower today on reports that Mexico and the U.S. have reached a deal to eliminate tariffs on some quantities of steel imported from Mexico. President Trump announced last month that he would increase steel tariffs from 25 to 50 percent and that change went into effect last week.

Well, now let's bring in senior markets commentator Mike Santoli for a look at the recent reversal of momentum stock leadership. Mike? Yes, Morgan, we actually saw it pretty sharply yesterday, a little bit of a break today in this dynamic, but I wanted to point out this relationship between high momentum stocks as reflected in the momentum ETF from iShares, against pure value. So it's kind of the other end of the spectrum. It's the cheapest of the cheap stocks in the market, whether they performed or not. So I want to point out here, this peaked back in February. This was the famous momentum unwind reversal

of crowded stocks into neglected stocks, mega caps into smaller stocks, growth into value, which really did destabilize the market well before we got to April 2nd and the tariff panic. Now, I'm not suggesting we have something similar, but you can see a pretty sharp peak in this chart, at least a break right now, and there's been some reports

that hedge funds have had some force repositioning, lots of covering of crowded short positions, as well as maybe some selling of the most popular long positions. So it's something to keep in mind. There's nothing wrong with an orderly rotation around the market, but when it starts to get a little bit more aggressive and stress portfolios,

sometimes it has market-wide impacts. Take a look here, within one sector, how this has looked over two years. Costco and Walmart are both very, very highly-weighted holdings in all the momentum factor ETFs. It's a winner-take-most sector and a winner-take-most economy, arguably. And this is, you see them moving very much in tandem with one another against the broad retail ETF, the RTH. And again, this was back in February, and by some lights, Walmart's very, very kind of measured soft guidance

that was given in the first quarter was something that maybe triggered some of this stuff. I'm not saying it's happening again, but it's one of those things you just want to keep an eye on, guys. I do want to go back, though, to this idea that maybe when you look at momentum versus value, it's not necessarily a change in sentiment

or investors shifting to a more defensive position. Maybe, perhaps, it speaks to just how outsized the move has been. And by the way, we've seen it in some of the recent IPOs, including today's. shifting to a more defensive position, maybe perhaps it speaks to just how outsized the move has been. And by the way, we've seen it in some of the recent IPOs, including today's. Right, so there's no doubt about it. That momentum is sort of self-reinforcing

until it becomes a little bit too stretched, and then people will feel as if they have to reduce risk in those concentrated positions. Now, the IPOs, they definitely represent aggressive, maybe speculative animal spirits, but until those stocks show persistence on the upside and actually statistically say, aha, you are now a high momentum stock,

they don't really quite fit in that same basket. And I think one interesting factor is, if the economy starts to look like it's reaccelerating, you might actually see this fundamental rotation towards cyclicals and value for macro reasons, but in the process, it could sort of tip over some of those highly concentrated mega-catch-grow stocks that are not really trading up there

because of a specific economic linkage. Okay. Mike, thanks. I'll turn it now for a CNBC News update with Leslie Picker. Leslie. Hey John, the State Department has confirmed non-essential staff from the embassy in Baghdad have been ordered to leave in response to potential unrest in the region. Department added non-essential personnel and family members in Bahrain and Kuwait have also been given the option to leave. It comes after Iran's defense minister said the country would target U.S. bases if the nuclear talks with the U.S. don't make progress.

The EPA said today it wants to eliminate existing laws on carbon emissions from coal and gas-powered plants. The agency's administrator, Lee Zedlin, says the Biden-era pollution standards for these plants quote suffocate the economy. And a slew of props from iconic movies including The Whip from Indiana Jones and The Last Crusade, the Rosebud Sled from Citizen Kane and Macaulay Culkin's hat from Home Alone are going up for auction in July. Heritage Auctions executive vice president said

the items in the sale are quote, mythic option objects that tell the story of Hollywood's greatest moments. I would say the hat fits that bill. I don't know. Are you gonna try and purchase that one? No, but something for millennials, Xers and Boomers, Leslie thanks.

Up next, former Kansas City Fed President Esther George on whether today's muted May inflation data is Defying tariff years and what it all means for the Fed and later find out what Oracle's results could mean for Adobe It which reports earnings tomorrow right here on overtime stay with us Welcome back to overtime the softer than expected inflation report might not have prevented the markets drop today, but could it help bring down rates in next week's Fed meeting, or will Chair Powell wait for further clues about the impact of tariffs? Joining us now is former Kansas City Fed President Esther George.

Welcome Esther. Before we get to the tariff stuff, I want to ask about this shadow Fed chair concept. So if President Trump names his choice for the next Fed chief early, what are the chances that blunts the influence of Chair Powell and the current Fed's ability to influence investor expectations? Yeah, well, good afternoon, John. I think it may complicate communications. It may take create more confusion at some level. But I think the important point is that as long as the current Fed chair is in his seat,

he has expressed his strong commitment that he is going to pay attention to the job that he has and that that committee will focus on how the economy is unfolding relative to its mandate. So a lot of noise around that but I think the real thing to focus on is how the current incumbent and that committee are going to focus on the how the current incumbent and that committee are going to focus on the job they have. Well, let's focus as well on the current data. We just got some.

And to what extent do you think we should expect any tariff impacts that do show up in the data to show up more toward the back half of the year? Yeah, I definitely think it is too soon to try to make any call on what impact we're seeing from tariffs. That today's report was a downside surprise, more welcome than, of course, if we had gotten some kind of an upside surprise. But the truth is, these trade negotiations are currently pretty short-lived, and we have more to come.

And I think that is going to take a matter of months and not weeks to see. So my own expectation is we should see by fall, hopefully where these things have gone and where exactly the impact to inflation might fall. So it's too soon in my view to be able to really judge that. Esther, I get that the economy, the U.S. economy, is in a pretty good place right now. It allows the Fed to be patient. There's a dual mandate that needs to be fulfilled.

The Fed is data dependent. Expectations that you could see some changes to that data here in the coming months. That being said, so many other central banks across the world, whether it's Canada, Australia, ECB last week, we've seen it with Mexico, I could go down the list here, have actually been cutting rates in anticipation that all of these trade dynamics are going to slow their economies. Is there a case to be made for that here in the U.S. as well, then? Well, I think we're talking about very different economic outcomes across the world right now. And so these countries that are cutting rates have seen, I think, more direct impacts.

They have seen a more actual slowing. And the U.S. has come into this in a much stronger position relative to many of those countries. So some of these dynamics could well play out in the United States, but I think we start from a very different position. And that of course is gonna affect the policy stance that accompanies any change

in how the economy's performing right now. We've got a lot of bullish commentary, or at least I'll say positive, constructive commentary from credit card companies, CEOs, you've got those stocks actually trading at record highs as well. Is that a positive in the sense that the consumer is holding in there and continuing to spend here in the US?

Or is that another shoe that could drop if consumers are racking up charges on credit cards because they're overextending themselves? Yeah, it is the key question, I think, when we're trying to form an outlook for the economy today. The consumer is everything when it comes to economic activity and watching consumption is really the area you have to watch. And remember, we're dealing with a consumer watch. And remember, we're dealing with a consumer that is bifurcated in many ways. The good news is, though, that the unemployment rates suggest to us that people have incomes. And while they may be stressed on the lower end of the income spectrum relative to upper, to the extent that you have income, what you're doing right now is making choices about how you construct that spin

So again the consumer holding in there, but I think very key to watching what unfolds in the rest of the year Okay, Esther George. Thank you. Great to have you on Thank you. Well two and a half trillion dollars with a T That's how much ARK Invest thinks Elon Musk's SpaceX will be worth in five years. ARK's head of autonomous technology and robotics explains that call next. Plus, we're awaiting the pricing of Chimes IPO. Could come at any minute. We're going to bring you that number as soon as it's announced.

Overtime will be right back. Welcome back to Overtime. Chip Stoxx snapping a three-day win streak after the VanX Semiconductor ETF hit its highest level since late January earlier in the session. Intel on Semiconductor, Skyworks, and AMD among the group's worst performers today. Speaking of AMD, I'll be speaking exclusively with AMD CEO Lisa Su that's live from the company's advancing AI event in San Jose, California. That's right here on overtime tomorrow.

Well, let's look to space. Voyager Technologies, a space and defense tech startup making its debut at the NYSC, raising $383 million in a traditional IPO. We don't tend to see space companies going public in traditional IPOs. They've tended to do that in specs. Shares surged more than 100% before closing up 82%. I spoke with CEO and co-founder Dylan Taylor earlier about this milestone moment, not just

for Voyager but for this emerging sector overall. I asked him about SpaceX and the competitive landscape, especially on the heels of the Elon Musk-President Trump feud. I'm very bullish. I mean, SpaceX is a key player. They have key capabilities, but we have Blue Origin, we have Rocket Lab, we have Firefly, we have other new entrants. And then also in Europe, they're trying to build a launch capability. Japanese and India have a launch capability. So I'm actually very bullish about the future of launch. And then of course, what that enables

is all these great hardware and infrastructure projects. And that's really what we play. So we're not playing in launch. We're playing in the infrastructure layer being built in space. For example, building out a commercial space station will ARK Invest meantime out with a report today expecting $2.5 trillion valuation for SpaceX by 2030.

What will drive that move? Sam Kores, ARC Investment Management Director of Research, Autonomous Technology and Robotics, joins us now. Sam, you just put out a very big, very comprehensive report. How do you get to $2.5 trillion for SpaceX, which sounds like an incredibly eye-popping number. Why is it not eye-popping? Sure, so this is a report we put out in collaboration with Mach 33.

And in this five-year timeframe, it's really driven by Starlink. And so we see this really as a flywheel, right? You have SpaceX, they start with cash, they convert that cash into rockets and satellites, and that creates bandwidth. So essentially the internet that Starlink provides. From there, you get customers.

Right now, they're at six million customers. We think that's going to rapidly increase. And then those customers, right, they give you more cash, and that spins the flywheel. And as you're doing this, they're siphoning off money for Mars. So in this five-year timeframe where our expected value is $2.5 trillion, which is the median of a Monte Carlo, the bear case $1.7 trillion, the bull case $3.1 trillion is really just that internet connectivity.

And then as we look out further, that's where things can get a bit more speculative, a bit more interesting with what happens on Mars. Okay, so before we get into what happens on Mars and how we get to Mars, we have NASA in flux right now, as the administrator nomination was pulled amid this Elon Musk,President Trump feud.

The feud itself actually raised attention and awareness around SpaceX with the threat to pull government contracts, which has come and gone as well. So without a more comprehensive space policy, at least at this moment in time, what does that mean for SpaceX and how real is the risk of Muskks falling out with the White House to this valuation? Look, I think they've already, you know, they've had conversations since then. It seems as though the the feud is in the past with space. I think there are far greater risks on the technical side and launching and catching skyscrapers that are our rocket ships. And I think really SpaceX is providing a capability that is critical for the United States, for national security.

And I think both Elon recognizes the importance of Trump and the government. I think the government recognizes the importance and the cost savings that SpaceX offers. One of the most remarkable things about SpaceX is that they've been landing rockets for 10 years. and the cost savings that SpaceX offers. in the same way, an orbital rocket. And this year, right, there's a lot of exciting things. You have China trying, you've got Blue Origin, Rocket Lab, Stokes Space. So everyone trying to match this capability from a decade ago.

So Sam, quickly, how does Starship factor into this valuation? Yes, Starship is a key component here. The ability to rapidly reuse it and to launch larger satellites, which have more bandwidth capability, is really a key factor here. And so we're watching all of the progress that SpaceX is putting in, each launch attempt they're learning more.

And so we're excited to see, and we invite everyone, they should play with this model. The reason we open source it is so that if you think our assumptions are crazy, you can go in and modify it yourself. And so one of those key inputs is when do you think that it will be reusable? All right, Sam Kouras, thank you. For more on all things space, check out my podcast Manifest Space,

wherever you get your podcasts. Up next, Mike Santoli looks at whether the market signaling the Fed should cut interest rates next week. Be right back. Let's bring back Mike Santoli charting the debate on whether the Fed should rush to cut rates after this morning's cooler inflation report.

Mike? Yeah, John, some certainly think so, right? The president lobbying the Fed for another rate cut. But if you look at the way the market is set up relative to when the Fed first cut rates this cycle back in September of last year, that was a 50 basis point cut. And compared to where CPI was then and is now, there's not as much of a spread as there is right now, right?

I mean, even though inflation CPI is at a similar level year over year right now, and a half percent was a little higher than that in September you know the Fed funds rate was a full percentage point higher so therefore you don't quite have as much restrictiveness in Fed policy at least by this measure similarly if you look at the market signal that's implied in the two-year Treasury yield that back then had a you know 1 1.8 percentage point spread between where Fed funds rate was and where the treasury yield was trading.

And that's often the most sensitive to Fed policy going forward. And here what you see is a much narrower spread, right? Fed funds rate is 4.3, let's call it. The two-year yield is just under 4 right now. So we could be building toward the conditions under which the Fed is gonna feel as if they can be less restrictive and cut, but the market is saying maybe 50-50 for September.

Obviously the data between here and now, it's gonna matter quite a bit. Okay, we'll be watching. Mike Santoli, thank you. Oracle's analyst call is just moments away. Up next, the top analyst tells us what he wants to hear from management and what the company's results could mean

for Adobe when that company reports tomorrow. ["The Daily Show Theme"] Welcome back, we have an earnings, excuse me, a news alert on CoreWeb. Christina Pardson-Avalos has the details, Christina. me, a news alert on CoreWeave. Christina Pards and Avalos has the details. Christina. Yes, a news alert because CoreWeave has emerged as a winner in Google's newly signed partnership with OpenAI. Reuters was the first to report this and then I also spoke with a source close to the deal who told me Google was the next CoreWeave customer, although things are still being worked out at the moment. It's a little bit sticky.

CoreWeave, for those that don't know, is a GPU focused cloud provider. They essentially rent their GPUs, and they would be supplying the computing capacity to Google's cloud unit, which would then resell the capacity to OpenAI for services. This deal, though, comes as Microsoft as once was Corweave's largest customer,

accounting for roughly 61% of its 2024 revenue, and it's been said to be re-evaluating its data center strategy and renegotiating terms with OpenAI regarding their multi-billion dollar investment. So there's been a lot of murkiness about you know customer concentration, if Microsoft's going to leave, is OpenAI going to fill in and so this is a big deal the fact that Google could be next to sign up and why the stock is up a little bit over two percent right now. Guys? All right. Christina, thank you. On mid-type Oracle shares popping here in overtime,

just off session highs after reporting in earnings beat. The company is saying, expect fiscal 2026 revenue to be dramatically higher as it benefits from AI and cloud services. That earnings call kicks off in just a few minutes, and joining us now is Brent Thill, Jeffrey's tech research analyst, has a buy rating on Oracle.

Brent, welcome. So we're just talking about CoreWeave, and people might not think of Oracle as an AI infrastructure provider, but the argument in this report, I guess, would be that it is total cloud growth rate applications plus infrastructure. Sofra Katz is saying here it's going to increase from 24% to more than 40 in fiscal 26. How important is that? Oracle had a great print, John. As they say, the last 20 years, you never want to bet against Oracle, and they're a

fiscal Q4, which ended May, and they just put up another great Q4. They are an AI beneficiary, there's no doubt. They obviously are fighting against giants with Microsoft, Amazon, Google, but their strategy is very different and unique. The most important comment of this entire report is 100% backlog growth expected in this next fiscal year. That is materially ahead of the 41 they just did. It tells you that they've got a lot of big contracts in AI coming to them over the next year. Obviously, everyone's been talking about Stargate, Don Abilene, Texas. When does that turn on? You would assume this growth in the guide that assumes some Stargate revenue, as well as some of the other big AI companies. They're not

participating at the same market share as companies. So yeah, they're not participating at the same market share as Amazon and Microsoft, but they're certainly doing a really good job. And they, because they're the lowest share provider today in terms of market share, they actually have the chance to grow the fastest. And so, you know, really good growth. I think the highlight of the entire release so far

has just been the backlog commentary, which tells you this AI trade is alive kicking. There are no constraints. There are no concerns over what's happening in the economy around AI. But it also, doesn't it, makes Oracle less of a software comp to Adobe. I mean, it always was a different type

of software than Adobe. But Adobe moving more into enterprise and investors really waiting to understand the firefly growth model and to what degree that will monetize and how soon. Yeah, Adobe's got the worst sentiment of all large cap software. It's amazing when you talk to the users of Adobe,

they love it, and when you talk to Wall Street money managers, they hate it. And so there's a disconnect. And I think Adobe has to continue to execute, show double digit growth, show that they can continue to hold the mid 40% margins and show that they're not AI roadkill. And right now Wall Street's made its mind up

that effectively all these new AI models are gonna run Adobe over. Our research says that it's not. It's the cheapest name in large cap. We think that no one likes it. It's been hard to change the sentiment. It's going to take multiple quarters for Adobe to put up good numbers, but we adore this management team. We think they're one of the best. We think they're doing the right things. They just have to keep telling the message and at some point it's gonna get recognized. It again, it's the cheapest name we cover in large cap at 15 times EBITDA.

So I think if they can just hold the double digit growth, it's probably gonna be good enough. I don't think they're gonna put up numbers like Oracle just did, but I think, you know, again, just holding to their script should be enough because the embedded expectations for Adobe are massive de-sell, AI is gonna eat them, and they're just roadkill as it relates to AI. And again, I don't think that thesis is really true.

Let's talk a little bit about remaining performance obligation because in the case of Oracle, they're talking about expectations that that's gonna grow 100% in fiscal 2026. At a time where you are seeing so much uncertainty, volatility in the market, does it make a name like Oracle feel a little more defensive even as it grows? I think so. I mean, it's again, it's a re-accelerating growth story. Wall Street loves re-accelerating growth.

So they check that box and then they have 40 plus percent margins and while margins should contract because of the investment in AI, they're still well north of 40, well higher than the majority of their peer group. We think they're in good shape. As it relates to the economy, I don't think any CEO or CIO is saying, I'm turning my back on AI. Jamie Dimon spoke, the CEO of JP Morgan, at a Databricks conference today and said they're going to spend $2 billion in AI this year

and that number could double or triple in the next year. So these are huge numbers and one of the biggest banks on the planet says they're gonna double or triple their AI budget, tells you a lot about where we're at and where big firms are going with AI. And we think Oracle will be a foundational piece along with Microsoft, along with Amazon, as other core names that we want to own.

All right. Brent Thill, thank you. Thank you. This software landscape, you can't even really just call it software anymore, Morgan. So much more interesting with AI. Oracle made that infrastructure move more than a decade ago under very difficult and different circumstances, but it's certainly paying off now.

As Brent said, Adobe in overtime tomorrow gonna be interesting to watch. I'll be in San Jose, not far from headquarters. We'll see what we hear from Sean Tanu and the gang. Yeah, it also seems like the IPO window has sort of burst open here with some very successful debuts and you've got Figma potentially poised to go public at some point too. So another name to watch in this universe potentially here in the future. In the meantime, a down day for the major averages. But that's about it. It's going to do it for us here at Overtime. Fast Money starts now.