Closing Bell - Closing Bell Overtime: Stocks Pullback After Israel, Iran Strike Each Other 6/13/25

Episode Date: June 13, 2025

Krishna Guha of Evercore ISI and Bob Elliott of Unlimited assess the market landscape amid rising geopolitical risk. Helima Croft of RBC Capital Markets and our Pippa Stevens discuss oil’s spike. Atlantic Council CEO Fred Kempe weighs in on U.S.–Iran implications and potential offramps. Plus: Ivy Zelman of Zelman & Associates on housing stocks—and what’s next for builders.

That bell marks the end of regulation. VOIA Investment Management ringing the closing bell at the New York Stock Exchange. Microsoft doing the honors at the NASDAQ and stocks falling today. As Israel launches a wave of airstrikes against Iran and taking a leg lower late in the session as Iran responded with missile attacks aimed

at Jerusalem and Tel Aviv. The Dow with the biggest drop among the major averages, though that's for some other reasons. Today's declines dropping all three major averages into the negative for the week. Financial is the worst performing sector today, especially the payment companies. Visa and American Express, among the biggest drag on the Dow. This one reports Walmart and Amazon are considering their own stable coins for customers, which could replace some of the services from the payment companies.

The best performing sector is energy, unsurprisingly. The only one in the green as oil prices spike. Money moving into gold, sending it back toward the all-time highs from April. But investors selling bonds on fears spiking oil prices will lead to inflation. That's sending yields higher. That's the scorecard on Wall Street. But winter stay late. Welcome to Closing Bell Overtime.

I'm John Fort. Morgan Brennan is off today. Let's begin with the latest out of the Middle East. This afternoon we watched live as Iranian missiles headed toward Israel in response for last night's strikes by Israel on targets in Iran. Let's get to our Eamon Javers in Washington. Eamon. John, that's right.

We're learning a little bit more now about U.S. involvement in all this from NBC News' Pentagon team reporting now that the U.S. is assisting in shooting down Iranian missiles and projectiles that are targeting U.S. that are targeting Israel. That's according to three U.S. officials per NBC News. They're also giving us a little bit of background on what exactly the U.S. is using here, saying that the effort by the United States is using ground-based interceptors, including THAAD and Patriot batteries. Both of those are missile interceptors, and we know that the United States has moved assets into the region over the past couple of days to reinforce the robust US military presence that was already there. Additionally, just within the past hour, John, as we're watching these pictures, we have

seen a statement here from Benjamin Netanyahu of Israel posted to YouTube just within the past hour. It's significant because it is an explicit message to the Iranian people and a call for regime change. There you see Netanyahu giving this message. He says, the Islamic regime, which has oppressed you for almost 50 years, threatens to destroy our country, the state of Israel. The objective of Israel's operation is to thwart the Islamic regime's nuclear and ballistic missile threat to us. As we achieve our objective, we are

also clearing the path for you to achieve freedom." He goes on to say, the regime does not know what hit them or what will hit them. It has never been weaker. This is your opportunity to stand up and let your voices be heard. So an explicit now appeal from Benjamin Netanyahu to the people of Iran themselves directly calling for regime change, calling for people to stand up and change the government and saying that the regime currently in place has been oppressing the Iranian people and saying that the Israelis are friends of the Iranian people but opponents of the Iranian regime.

We'll see if that has any resonance inside Iran. We don't know, John, at this point how much damage israel has done to iranian command and control of their military or their political system clearly a number of high ranking military officials inside iran have been killed that may be uh... disrupting array iran's ability to respond militarily here and now with this additional pressure from that in yahu calling for

in effect, civil uprising inside Iran, that may further complicate matters for the regime in Iran. John. Amin, you gave us a sense of U.S. involvement in shooting down missiles, Iranian missiles incoming into Israel. From there in Washington, any sense of European response or reaction or knowledge beforehand of what Israel was doing in reaction to Iran's response? Yeah, we don't have any indication, or at least as I sit here I should say, I don't

have any indication that European officials knew in advance about this. But we have seen some statements, and I'm just looking to see if I can call one up here in real time. We have seen some statements from European governments supporting Israel's right to defend itself and saying Israel has every right to do that, but sort of limiting their statements to that and not going farther in terms of does Israel have the right to conduct regime change inside Iran, for example. There's a lot that we don't know about this and the situation is ongoing now. We don't know what forces Israel has on the ground inside Iran, what capabilities they

have inside Iran. Clearly, they're much more capable inside Iran than the Iranian regime understood as of yesterday. The question is, what is Israel's intent here? Is this message from Netanyahu simply propaganda designed to put pressure on the Iranian government, or does Israel intend to push for regime change in Iran? That is very tricky business, as we've seen over the past several decades. And we'll see where it goes, obviously.

Indeed. Eamon Jabers, thank you. You bet. Let's turn now to today's market action. Stocks closing near session lows. Only two Dow stocks and one sector. Energy again closing higher with the broad based selling. Joining me now is Bob Elliott, CEO and CIO at Unlimited Funds

and Krishna Guha, Evercore ISI Vice Chairman. Guys welcome. Bob, oil moved dramatically today off a pretty low base. Stocks moved modestly. I guess this is more about what are we set up for given the run that stocks have been on. We're pretty near all-time highs on the S&P. Yeah, I think in a lot of ways the market action more broadly is reasonably muted because

I think there's a lot of questions here about how far this will go, whether it'll be a tip for tat and then wrap up the way we've seen in previous instances or whether this is gonna be a more extended conflict in the Middle East. I think the thing that it highlights for most investors is that they're pretty unprepared for a warlike environment. Most investors holding 60-40 looked at the screens today

and they saw both their stocks and their bonds selling off, with really the only asset providing true diversification in this moment was gold. Gold, you're like Rumpelstiltskin, only without the hair obsession. You have good hair already. So what is it about commodities in these warlike times that investors should pay attention to?

Well, I think it's really a twofold issue. One, of course, anytime you're engaged in a conflict with an oil producing country, there's the question about whether those assets will get hit. And there's some ambiguity so far. There's no indication that those meaningful production facilities are being hit. But there's been some rhetoric late in the afternoon that suggests that maybe the opening up of conflict associated and targeting oil production facilities, given the retaliation of non-military targets that were hit in Israel. And so that's a real question there. The second, probably bigger

issue if you're sitting in the U.S. economy, is that rise in oil prices, combined with the fact that we got a reaffirmation of 55% tariffs from China, that adds up to a pretty concerning picture on the inflation side as the Fed meets next week and pencils out its monetary policy through the rest of the year. It's gonna be a lot harder for them to deliver the sort of cuts that many people expect

in an environment of rising oil prices and elevated tariffs for longer. Sure. Krishna Guha, there was a time when missiles flying between Iran and Israel was a nightmare scenario for markets. I'm not sure if it's getting how the markets have through the Russia-Ukraine conflict, the Hamas-Israel conflict or a combination. It doesn't seem to be the case this time

that this is being taken as that kind of a nightmare. Are investors too complacent? So I'm not sure investors are complacent, but I think it is clear that the market is not, at this point, discounting odds on for a full-scale war. The market is pricing a more limited series of engagements and some risk of escalation into a full blown conflict. In particular, as your previous guest has just noted, we haven't yet seen actions that

directly target oil. We haven't seen the Israelis strike major Iranian oil installations. We haven't seen the Iranians threaten to or attempt to either strike Saudi or Gulf facilities or, which was always the most feared action, try to close the Straits of Hormuz. So right now, the market is treating this as an engagement that is more serious than those short tit for tat episodes that preceded it, but that is probably not going to escalate into full-scale conflict. That may or may not be correct.

So in a world where we already have these tariff turbulence moments in 2025, how does this affect the global picture as you see it for risk? Is risk particularly more pronounced now, Krishna, in some places versus where it was before, or is it too soon to make any shifts in your calculations and what you expect might happen? So it's probably not a moment to overreact, right, because we don't know how far this

conflict is going to go and for how long. I think it does seem clear that this is not a one-day, one-time wonder of the kind that the market has absorbed quite well over the past year. This looks like something that's going to, even in the baseline case, continue potentially for several weeks, an extended Israeli bombing campaign attempting to degrade Iran's nuclear facilities, but potentially, as your correspondent noted, more, trying to push for regime change. In the end, of course, the only sure guarantee try to push for regime change. In the end, of course, the only sure guarantee for Israel would be a friendlier regime in Iran. So lots of big unanswered questions, but we don't

know whether we're on that path of ongoing escalation or whether after a period this thing will cool down. I do think that investors have to recognize that if we were to see a sustained and significant increase in oil prices on top of the shock from tariffs, that is adding the stagflationary pressure to an already stagflationary shock coming out of tariffs, that has to be bad news for growth and inflation has to further complicate the Fed's life. Just don't expect the Fed to jump to quick conclusions when the geopolitical side, the military side, is still so fast moving and uncertain. Echoing, Bob, what you just said. Now, Bob, you talked about the danger in this environment

to the 60-40 portfolio. A lot of investors right now have something a lot closer to probably a 70-30 portfolio, given the run that stocks and equities have been on over the past, not just several quarters, but several years, also given the strength of some of the large technology stocks, how much danger is there if there is any additional in that waiting toward larger technology stocks toward being so much overweight equities in this environment?

I mean, at the big picture level, equities at these prices are still implying quite strong growth ahead. And the combination of the higher tariffs and the risk of an oil shock call into question whether that strong growth is going to actually play out into the future. And I think one of the things when you're looking at, if you're looking at, maybe you still are not so concerned about the economy, maybe this will be a transitory story,

you can get access to growth exposure without necessarily having to buy equities at all time highs. Take high yield spreads, even today, high yield spreads traded basically flat on the day, in a day when stocks are down, I think they represent the fact that as long as we don't get into a world where there's a significant economic contraction, those might be a better place to park your capital and take a little capital off the table from stocks at all time highs. Krishna, how much does this complicate the second half of the year and consumer spending power if these oil prices stay high? An oil price increase is like a tax hike on consumers.

And we've already seen consumers, of course, turning a bit cautious in the face of trade wars. You've seen precautionary savings move up and seen consumption a bit softer than it was late last year. Not outright dangerously weak but softer. If oil prices stay high, then you're going to likely see some further softening on the

consumer side. Of course, the US is, roughly speaking, self-reliant in energy and oil, So one would expect that these impacts over the whole economy would be more serious in Europe and Japan, let's say, where there isn't an offset of people working in that industry, firms in that industry benefiting just the oil tax that everyone has to pay. Do we know that Krishna Guha, Bob Elliott, thank you. Thank you. Well, coming up here on Overtime, we'll continue to follow this fallout from the Israeli strikes and Iran's retaliation.

We're going to look at oil jumping to its highest levels since late January. Could it head even higher if this conflict drags on? We'll be back in two. Welcome back. Markets fell as Israel strikes on Iran played out. Oil spiked, though, to its highest level since January joining me now are Halima Croft from RBC capital markets and CNBC's Pippa Stevens. Halima there's a lot of talk about the Strait of Hormuz a very narrow passageway from the Persian Gulf out into

the ocean I think what something like a quarter of all, yeah, a fifth of all oil consumed globally passes through here. Iran might not shut it down, but why is it such an important choke point? I mean, it is the key choke point for oil, and I think a lot of the conversation today has been, well, Iran hasn't closed the Straits of Hormuz this morning right after they sustained a massive attack targeting their top generals.

Let me fade this story. And I would just remind people that we did see a long time ago in the 1980s during the Iran-Iraq war there were multiple attacks on tankers in the straits. Hundreds of tankers were attacked. You did have the straits mined and the U.S. actually had to reflag Kuwaiti tankers to get them through the strait. So there is a historic precedent of disruption of maritime traffic within the Straits of Hormuz. Again, we have not seen that for a while, but in 2019, after we reimposed maximum pressure sanctions on Iran, two tankers off the coast of Fujairah,

the main UAE port, were hit with mines. They weren't sunk, but damaged. But there was a view at the time, and if the Iranians had wanted to sink those tankers, they could have done so. So again, I think we should not entirely write off the risk of the straights of Hormuz. And I don't think we should set it up as a straw man either. Just because they may not close it doesn't mean if this conflict doesn't escalate that they will not disrupt traffic there. And it's globally important, Pippa, right? I mean, even though as Krishna

Guha was just mentioning, the U.S. now has quite a bit of access to our own oil, China relies quite a bit on Iran. That's right, so about a third of all the oil that's passing through the Strait of Hormuz is actually now going to China. And so that does mark a little bit of a shift in how the global oil flows are now shaping up. And that also does then beg the question,

what is going to be the nature of Iran's response given that China is now so reliant, their teapot refineries especially are so reliant on buying that. And of course they have been overlooking some of these sanctions, the maximum pressure the US has imposed on Iranian oil. And so if they are the only buyer,

you don't necessarily wanna cut off the one person that's buying your oil. But I guess also Halima, to your point, even if the strait itself isn't closed, how quickly could we see disruptions from things like insurance costs spiking for tankers because people don't want to send their ships through it? They still want the risk of going through there. And we had the UK Navy yesterday talk about canaries in the coal mine that we may not have paid attention to.

UK Navy was out yesterday warning about going through these key waterways because of potential military engagement. So again, I think it's too early to entirely fade this story on the Straits of Hormuz because the Israelis have already signaled this is going to be a multi-week operation. They've just come out and called regime change a key goal of this operation. If you are the Iranian leadership, you are now facing an existential crisis. So you may not care as much in the short term what China needs, you may decide you have to raise the cost,

essentially internationalize the cost of this conflict for everybody else. How do you do that to disrupt energy supplies? Again, we're not saying that's gonna happen, but we have seen past precedent of the Iranians targeting energy facilities in the region. So Halima, what's China incentivized to do itself? I mean, China wants to de-risk the situation, but again, a lot of moving parts.

It's unclear what influence they would have over the Iranians at this stage. Again, I would also be paying close attention to Iraq. And part of the reason why we drew down our embassy in Baghdad was a concern about the security environment there. There are a number of Iranian-backed militias in Iraq that have targeted U.S. personnel in Iraq, but they pose a clear and present risk to Iraqi oil infrastructure. They are located in the south, close to Basra.

Iraq produces about 4.4 million barrels a day. That oil is at significant risk in an intensification situation. If the Iranian leadership is coherent enough at this point, because again, we don't know what the command and control structure of the IRGC looks like right now, they've lost their top commander, they've lost the commander of the Quds force. So do they have the personnel ability

to retaliate in this manner? But if they do, watch for the proxies, look to Iraq, look to the Houthis. The Houthis retain ballistic missile capabilities. Do they start firing cross-border? So PIPA, global contingency plans, are there other routes, shipping routes, that we would expect for logistics chains to start looking at implementing even with the chance

that the Straits of Hormuz might be impacted. So you can go around the tip of South Africa, but that does add on significant time and then also significant money because you're paying a lot more for your fuel and especially with oil prices higher, that bunker fuel will cost more. And so I was talking to Kepler earlier today and they said that so far they're not seeing any disruption to the ships. Everything is looking normal as per usual in the Strait of Hormuz.

But I think that the longer this escalates and the more there is some perceived sense of risk, then maybe we will start to see some oil flows diverted. Saudi Arabia has invested heavily in a pipeline that's east to west, so they can export through Yanbu and then avoid the Strait of Hormuz and Hormuz and then export to Europe. So maybe we'll see a little bit more volumes there. The one thing I would remind viewers though in

2019 again when we started to see Iranian attacks in response to maximum pressure sanctions they first hit those tankers off of Fajr which is outside the S-curve of the Strait of Hormuz. Everyone said de-risking Iran but the Iranians also did a drone attack on the east-west pipeline as well. So again, they showed they had the capacity to hit de-risking infrastructure. That was 2019. The command and control structure of the Revolutionary Guards was in much better shape than now. So again, that is an important caveat, but we should not be complacent about the Iranians' past ability to hit this infrastructure.

What's the path to de-escalation? I mean, the path to de-escalation is the Iranians essentially saying that they just are not up for this fight at the moment. And so taking whatever deal potentially is offered to them by the Trump administration. Again, it looked like there was a deal on the table if they opted for zero enrichment.

The Iranians were balking about that. Question is, at this point, are the Iranians gonna come to the table? Are they going to try to convince us it's time to climb down? Again, odds are not on the Iranian side right now. And given that, you mentioned that the Iraqi infrastructure is at risk, what about Saudi Arabia? Because ever since relations have normalized between Iran and Saudi Arabia, how do you

see that playing out? Well, I think the Saudis, look at their statements today. They were quick to come out and condemn the Israeli action. They were quick to release a statement that the Saudi foreign minister had called the Iranian foreign minister. They do not want this conflict, in part because they've invested so heavily in their own economic transformation plan. They have significant infrastructure on the Red Sea.

Tourism is a key component of Vision 2030. So having a better security environment, ensuring that the Houthis do not target their infrastructure, do not target Red Sea infrastructure, top priority of the Saudi government. Okay, Halima, Pippa, thank you. Thank you. Up next, a short time ago Iran retaliating sending missiles into Israel. What could be the next step in this conflict? Should we expect more attacks from both sides? We will discuss that next on Overtime.

Welcome back to Overtime. Shares of Walmart falling a bit today. That extends the stock's losing streak to eight days. Last time it had a losing streak, as long as eight sessions was 2014. That's about 11 years ago. It's still up 4% for the year, though. On the other hand, we've got Tesla up for the fifth time

in six sessions. At the peak of the day today, the stock had recovered all the losses from last week's Trump-Musk feud. Now let's bring in Senior Markets commentator Mike Santoli for more on the market's reaction to the Middle East flare-up, Mike. Yeah, John, so far you would have to say relatively contained.

And by the way, that move in Tesla you just mentioned, as well as the pop continuing in Oracle, really did mitigate the damage in the S&P 500. But it's brought it back down to levels seen, oh, we could go Thursday. Interesting staying above the May high. That's also the 20 day moving average. Yes, 20 day, that's sometimes a short term trend line

you wanna keep an eye on to see if anything's changing about the tone of the market. I think we can go down three or 4% from here and it's still on the chart, gonna look routine. Who knows if the news flow is gonna seem routine, who knows if there's gonna be other elements that are flaring up along the way. But right now you're working from you know a pretty

good cushion that was built up from the April lows that said 10% in a one year basis that's fine that's not too far from the historical average but from the July highs of last year it's a good deal less than that so the markets actually been sort of having a labored time of getting beyond this this general area take a look at the globe Sachs Commodity Index over five years. I want to point this out because you have this spike in oil, we're talking about that just now, but in general really contains. So since the Ukraine war spike, it's been pretty much hovering below these levels and

it's not something that seems like it's feeding through necessarily to broad goods driven inflation. Want to take a look at the volatility index that did wake up today and it actually is not fully relaxed. It never got down below much more than 17 or so on this big rally. But in perspective, 20 or thereabouts is kind of like we're on alert but we're not necessarily just paying hand over fist for downside protection. So keep that in mind here. Sometimes it's the

boundary between normal market conditions and agitated ones. Like if we can pull that first chart back up, I think it was the S&P. To what degree do you get the sense that investors are just, you know, after this crazy year, especially post beginning of April, they're shy on reacting too much to macro headlines, macro issues after the Trump policy trade. I mean, if you took all that too seriously, you missed out on a lot of money. Yes. And I think that there are echoes of what happened back in 2020.

People have been pointing to that, right? After the market came roaring back from the COVID crash, that was kind of like, well, what doesn't kill you makes you stronger. So you might as well just err on the side of buying sooner when you get a pullback than not. Now, it only lasts for so long. You can't have a real deterioration of the fundamentals

and still have that, you know, keep that brave face on for the overall market. But I do think that dynamic is at work here that we so recently felt burned for getting scared out of the market that maybe we're gonna try to lean in the direction of maybe things will turn out okay this time. Ah the old Kelly Clarkson trade. Mike Santoli, see you again in just a bit. Well it's time for a CNBC News Update with Kate Rogers. Kate. Hi John, the Trump administration says it doesn't plan to release pro-Palestinian activist

Mahmoud Khalil. That is despite a federal judge's ruling this week that Khalil cannot be deported or detained based on Secretary of State Marco Rubio's determination that he's a threat to national security. U.S. Attorney said in a letter today that they would keep holding Khalil on other charges such as immigration fraud. About 200 Marines have moved into Los Angeles amid protest against President Trump's immigration crackdown. The commander in charge of the deployment said today that those Marines will protect federal property and personnel.

It comes a day after a federal appeals court ruled the administration can, for now, maintain control of the National Guard members in California. More protests are set to take place this weekend nationwide. And deliberations are underway in the murder retrial of Karen Reed. Reed is accused of fatally hitting her Boston police officer boyfriend with her SUV and leaving him to die in the snow outside of a house party. Her defense team has said she is the victim of a police conspiracy. John, back over to you.

Okay, thank you. Stoxx said came late in the session as the Iran launch of retaliatory missiles strike at Israel. Does this latest flare up of violence make a nuclear deal with Iran more or less likely? What happens next from here? We'll discuss coming up on Overt Welcome back to overtime stocks sliding late in the day as Iran retaliates for Israel's air strikes. The S&P 500 and Nasdaq both down slightly more than 1%.

All three major averages finished the week in the red. Oil spiking nearly 8% today to its highest level since January. Energy was the only S&P500 sector finishing in the green and the safe haven trades Also working gold rising more than a percent getting back Near the recent all-time highs and that leads back to today's major geopolitical story Those strikes and counter strikes between Israel and Iran the latest Israel's defense minister saying Iran crossed red lines with its strikes against Israeli cities. Joining me now is Fred Kemp, president and CEO of Atlantic Council and a CNBC contributor.

Fred, Israel's positioning this moment, it seems to be an existential threat to the Iranian regime, is it? Look, we have someone working for us now at the Atlantic Council. He was the chief negotiator in the Biden administration for the Middle East, Brett McGurk. And the Israelis are calling their action operation a roaring lion or something, a rising lion. And he's calling it Operation Kitchen Sink. So they've taken out the whole military command structure.

They probably could have hit the supreme leader if they wanted to. It certainly is a signal to Iran that they can go further. The air defenses in Iran were nothing to hold back, so I think they feel really threatened. So Iran has struck back, but most of the people who could plan the strikes back are dead. And so we're in a really curious situation where we're watching to see what Iran is going to do next, but I'm not sure they have the capabilities to do all that much. And so my guess is you're going to see Israel pressing its case in the next days, taking out as much around the nuclear structure, the nuclear infrastructure of Iran as they possibly

can. And then in the end, knowing that they don't want to do this all over again, and really putting the region in a position that it can move on maybe even to greater regional integration built on the Abraham Accords with moderate modernizing a forward-looking Arab states Normalizing with with Israel and really reordering the whole Middle East that would be the best outcome of all of this That would be the best outcome, but it also sounds like you're painting a picture of a desperate nuclear armed state in this situation now Well, they're not nuclear armed and that's just the point. I don't think Israel is if you're talking about Israel They're not desperate at all at this's just the point. I don't think Israel is, if you're talking about Israel, they're not desperate at all at this point.

No, no, I mean Iran. I mean, we don't know what their capability is to actually take advantage of whatever nuclear capability they have left right now, but it sounds like you're saying their backs against the wall. Yeah, their backs against the wall, and you know, part of the reason the Israelis struck now is that Iran is about two, three weeks away from having enough fissile material to put together in a bomb-like device. But then they would have to figure out a way to deliver it. They would have to figure out a way to put it on a missile.

So for the United States, this was not a today problem. For the United States, the Trump administration was willing to negotiate a little bit further and put a little bit more pressure on them. But for Israel, it was a today problem. It was an existential problem. So we saw this as a medium-term problem where we, the Trump administration, they saw it as an existential problem. And I think now, you know, Trump would like to use this situation to leverage Iran into

doing more serious negotiations than they were willing to do. But in many respects, we've achieved or we've achieved, Israel has achieved through hitting these various targets, a lot of what perhaps a nuclear deal might have achieved. So I think Iran is in a position where it's going to want to strike back, probably can't strike back, and has to think really hard whether it needs to come to the negotiating table.

Well, perhaps I'm too cynical, but I couldn't help but wonder if perhaps the US and Israel weren't more tightly coordinated than it appears in the end goals here. I mean, it seemed a month ago when President Trump was in the Middle East that he wasn mean, it seemed a month ago when President Trump was in the Middle East that he wasn't paying Israel

all that much attention, but now the United States certainly helping Israel with its missile defense and not seeming to have much problem with this preemptive attack. I mean, perhaps the coordination was a bit tighter than it appeared? We'll find that out over time. I think it's a good question to ask.

What we do know is the Israelis were unhappy with the Trump administration negotiating unilaterally with Hamas to get an American hostage release, but not really helping at that same point with their hostages. Israel was not happy with the Trump administration negotiating with the Houthis unilaterally when they were also being hit by Houthi missiles. So there have been tensions, and one knows that Trump really preferred, really doesn't want the US military involved. In a way, he's got the best side of the deal, because he's been able to take out the capabilities

of an adversary. He's been able almost certainly to set them back from a nuclear weapons capability by some margin, and he's been able to do it without the use of American soldiers or American attack on Iran, although we do think that the U.S. has been involved in defending Israel from from Iran's counterattack. We do have that reporting. Fred Kemp from Atlantic Council, thank you. Thank you so much.

Well, home builder Lennar set to report earnings Monday during overtime. Coming up, housing expert Ivy Zellman on how you should be trading the stock ahead of those numbers. And later, how fairly, broad financial conditions could impact next week's Fed rate decision. Be right back. Welcome back to Overtime. Let's get a check on some of today's big movers.

Payments, technology, and some credit card companies getting hit today on a Wall Street Journal report that Walmart and Amazon are considering issuing their own stable coins in the US, which could bypass traditional payment systems, save the retailers billions in fees. Rural pool shareholders, meantime, are cleaning up Bank of America, upgrading that stock from underperformed to neutral, hiking its price target from $68 to $94, saying the appliance

maker is relatively well positioned for tariffs. And another home-related stock, paint maker Sherwin paintmaker sure when Williams getting downgraded from by to neutral at City citing high interest rates sluggish existing home sales and a challenging home builder environment So is that more bearish outlook by City the correct call ahead of Lenar's earnings on Monday? Well housing expert Ivy's Elman's gonna weigh in next expert Ivy Zellman is going to weigh in next. Welcome back. Shares of Echo Star or Soaring up more than 40 percent here in overtime. On a report that President Trump intervened to encourage the company's CEO, Charlie Ergen,

and the FCC chair, Brendan Carr, to make a deal. Trump even met with Ergen at the White House yesterday. The FCC is investigating whether Echo Star was meeting obligations for wireless and satellite spectrum rights. There had been reports Echo Star was preparing to file bankruptcy. Well, next week we get clues on the state of the housing market when Lenar reports earnings on Monday right here on overtime. We're also going to get updates on housing starts and building permits for May, but in the meantime, housing research firm, Zellman and Associates, putting out a home building survey today which shows home builder confidence

dropping to its lowest level since January 2023. Joining me now is Zellman and Associates Executive Vice President, Ivy Zellman. Ivy, welcome. So the bar, is it set low enough for Lennar earnings given what you're hearing out there? The bar, is it set low enough for Lennar earnings given what you're hearing out there? You know, I think that they'll have not a lot of good news to report.

So I think the stock will likely come under pressure. And while they're doing things internally to reduce costs, I think they're probably taking staff down, headcount reductions, trying to take costs out of their direct building costs. I think that the demand environment is pretty tough. So I'm not expecting good news, but I think they're doing everything they can

in a tough environment. What would good news be coming out of this environment? How should investors know when it might be coming? Well, you know, Lennar, as largest builder in the country, is really leading with a strategy to move inventory at whatever price they need to move the inventory. So that's really taking their competitors down as well. So I think if Lennar starts less homes and is looking for less absorptions, that could

perceive to be positive news, which would mean less supply coming to the market. It wouldn't be good for the building product companies necessarily, but I think that we need to absorb so much spec inventory in the market before we're going to see demand resume or the competitive pressures be alleviated at all. What were you seeing in this survey with some of the policy impacts? Immigration, tariffs, any issues on supply of workers or is the fact that the general environment isn't that great, is that helping in a way because it's not like they'd be building tons of homes anyway? Well, interestingly, the cost to build the direct costs are actually under 2%, which is definitely

the direction that they want costs to be going down. So they're not increasing despite tariffs and attempted price increases by their vendors. Part of that is they're able to be going down, so they're not increasing despite tariffs and attempted price increases by their vendors. Part of that is they're able to negotiate back, push back on vendors because the business is very weak. So you're right. I also think when it comes to labor availability, they're really having no problem with securing labor. So the risk of deportation is yet to materialize

as a factor. What we are seeing though, are qualification issues. And consumers that are unable to meet qualifications, even at a mortgage rate buy down as low as 4.99. Some builders are going down to 3.99, buying 30 year fixed. And that to me is concerning, because while they can qualify at 3.99,

the fact that they couldn't qualify at 4.99, really looks like they're stretching to purchase this home. So those are things that concern me. You said availability of labor has yet to materialize as a factor. How much of that is regional and do you expect it to materialize at some point? You know, at this point with starts pulling back

or survey indicated that starts had the biggest pullback that we've seen in quite some time, down 10%. I think the weakness in overall supply coming is going to mitigate that as a factor, at least as of right now. I don't see it in the near term. I wouldn't say this year we're going to feel it. Probably something in 26 we have to be watchful for. Any impact from credit scores overall and student loans coming due again for folks, that impact, is that more of a

first time home buyer issue, which is a market that is in less play than it has been historically? You know, I think that we're concerned about the student loan credits getting dinged. Certainly we haven't heard that student loans have been a real problem for the builders as of yet, but qualification and overall weak FICO scores are clearly already present even without student loan credit scores coming down. I do think that this is the future generation of home buyers. And while we have some student loans for people over 60, clearly students that are graduating now and having the last few years are going to be challenged to buy homes.

It might affect the rental market as well as those students are going to be unable to qualify for rental availability rental product. So it's not good for any of the housing shelter choices really. So there's the idea out there that with oil prices higher with this conflict in the Middle East that might make it tougher for the Fed to cut rates. Is there an expectation you think in the industry around home builders that rates will come down and so if the fed doesn't make a move that could hurt I think that that expectation has been pretty much diminished I think people are adjusting

how to rates higher for longer which is why when we surveyed the builders we asked how many of them are actually reducing headcount. I think 20% indicated they're reducing headcount. So I think they're at least contemplating higher for longer. And keep in mind, even if the Fed were to cut rates, they really can't control the long end of the curve. And we want to keep reminding people of that because the long end is going to be dictated by the fiscal debt issues and other factors and less foreign

buyers. I think that the long end is going to stay higher for longer and we have to live with that. All right. Ivy Zellman from Zellman and Associates. Thank you. Thank you. Up next, Mike Santoli looks ahead to next week's Fed rate decision, as we were just

discussing, and how current financial conditions could impact Jay Powell's next move. And don't forget, you can catch us on the go by following the Closing Bell Overtime podcast on your favorite podcast app. We'll be right back. Welcome back to Overtime. Market's closing out the week lower after trade talks with China

and the current flare up between Israel and Iran. But next week could also be crucial as investors get ready for the Fed meeting. Let's bring back Mike Santoli for a look at how financial conditions are set up as we head into that, Mike. Yeah, John, the financial conditions by most measures have loosened up a bit.

Now the Federal Reserve itself considers its current policy where short-term rates are to be somewhat restrictive relative to the potential growth of the economy and inflation levels. This Goldman Sachs financial conditions indexes, it goes down when conditions are loosening. And what's included in here are fed funds rate, 10 year treasury yields, level of the dollar,

level of the stock market, credit spreads, things like that. And you saw a little bit of a perk up in the tariff panic. And before that, of course, during the inflation scare and bear market of 2022. But right now at pretty benign levels, in fact, kind of going back to where we were in 2019, which by all accounts was a pretty kind of loose set of conditions for capital markets. Now, within that, the 10-year Treasury yields getting all this attention, right?

We didn't get that much of a flight to safety bid in Treasuries today on this kind of notable geopolitical unrest out there. Now, is that something to worry about? Well, a two year chart of the 10 year treasury you chose, we just really haven't gone anywhere. It's been pretty trendless. It's been mostly contained within a relatively defined range. And also if you look at kind of what the normal

quote unquote yield should be on the 10 year based on various metrics, what nominal GDP looks like, where the Fed funds rate is, where you think maybe the yield curve should be shaped as, all those things. I don't think it gets you that far away from where we are right now, just under four and a half, so I don't know that you need those extraordinary explanations of flight of capital overseas or all the rest of it, even though those factors might be mitigating just how strong treasuries have traded under certain conditions here, John. At the same time, Mike,

with these attacks back and forth in the Middle East, it seems, it feels to me like if the market had a soundtrack, the violins would be speeding up right now, right? How, if at all, will the Fed respond to that and the color in the language as, you know, you gotta add potentially the flow through of that oil price spike to tariffs as some of those unknowns and how they might affect the overall economy in the coming weeks and months? It definitely exacerbates the tricky position

that the Fed was in, although I'm sure Fed policymakers are glad that they were already in this posture of wait and see we have to see how the data come through on a multi month basis we're not going to jump to any conclusions we're not going to proactively predict any

particular scenario and act on that in advance so that could be the message now next week we are also going to get that outlook among policymakers among the committee or where they think rates are going what growth is going to be where unemployment is going to go that's going policymakers, among the committee, where they think rates are going, what growth is going to be, where unemployment is going to go.

That's going to fill out the picture a little bit, but I don't think they're going to necessarily really respond too much or try not to to these latest headlines. Steady flow of news for sure. Mike Santoli, thank you. What a week it's been for the markets overall, but particularly for Oracle is up 23% this week to a market cap now over $600 billion. Tesla and Palantir also doing quite well. That's gonna do it for overtime.