Closing Bell - Closing Bell: Stocks Sink in Final Hour of Trade 6/13/25

Episode Date: June 13, 2025

Solus’ Dan Greenhaus, NewEdge’s Cameron Dawson and Capital Wealth’s Kevin Simpson weigh in on Iran’s retaliatory attack on Israel. Plus, Charles Schwab’s Liz Ann Sonders jumps on the CNBC newsline with her reaction to this afternoon’s events. And, legendary oil investor Mark Fisher breaks down the action in that sector. 

Welcome to Closing Bell. I'm Scott Wapner. We do begin with breaking news today. Stocks at the lows of the session as Iran responds to Israel's attacks within the last hour. We're following the events today from the White House to Wall Street with 60 minutes to go in regulation. As you look at recent pictures from that region, oil ripping higher today. Gold is up as well. Notably though, yields are actually rising today as a tried and true flight to quality trade not working today. That's something to keep an eye on here. There's the 10 year note at 442. It does take us to our talk of the tape today. What all of this means for stocks, which had been searching for new highs within about 2% today. Before this sell off obviously has escalated into the final stretch. Dan Greenhouse is with us right now.

He's Solace Alternative Asset Management's Chief Strategist with me here at Post9. We see the pictures and we know the story that is unfolding here. How are you thinking about it as a market participant? Well, there's a... To your point, there's two questions here. One is the geopolitics of it, which is obviously an important question to be asking ourselves. And then the second question is, what do I do with it as a market participant? With respect to the latter, it's not as clear cut. And the market's off.

We're coming up with, I mean, we're clearly near the lows of the day, 2% oil up in the high single digit percentages. We've seen this before, though, whether it was the drone attack on Aramco at the end of 2019, Sulaimani early in 2020, or any of the skirmishes that have arisen in the Middle East over the last couple of years post-COVID, you get these momentary spikes and then oil comes back down and we go about our day because oil infrastructure has not been and is not affected. And I think what we have to say today is, at least thus far, we know that oil infrastructure has not been affected. The C oil infrastructure has not been affected.

There is a, the Cork Island has not been hit. That's where basically 90% of Iranian oil finds its way into the Strait of Hormuz, which has not, as we all know, been blocked as of yet. So to the extent that that is not touched, then I think this becomes temporary. The issue obviously is what happens here after. There are many issues to deal with. UBS today is speaking of this conflict and says it poses the risk of renewed cross asset volatility. But past incidents suggest that if the conflict remains relatively contained and does not disrupt global energy flows that the market

impact should fade fairly quickly. Now it is a big if obviously on the global energy flows that the market impact should fade fairly quickly. Now, it is a big if, obviously, on the global energy flow side of the equation. We've been watching the straight-up hormones, obviously, to see if there was anything going to happen in terms of a shutdown, which obviously would have more of a dramatic impact on what is already a sharply moving price of oil. But what about this note from UBS? Should none of those things happen that I suggested that the market impact should fade fairly quickly? Is that how you see it?

I think that's basically what I just articulated. I think the debate is which one of us used fewer words to say met. And I mean- This feels a little more than met. Well, but for equity investors, it always feels like a little more than meh, because the equity market always overreacts to geopolitics. And let's just look at what happened with Liberation Day, where we sold off 20% and eventually came back.

And so the volatility in the equity market is always present when these headlines occur. And deservedly so in some respects. I mentioned, and we all know, again, oil infrastructure has not been hit, but that risk exists. To use the straight of Hormuz, for instance, it's never been blocked. It's miles wide. Their ability to block it, who knows if they even can. Half of it is basically in Omanian waters, we'll say, we'll go with. It's like the equity market is going to worry about it, but what is the likelihood of that

happening, again, considering that it's never happened before? So what do you think of? I think the move in yields, as we said, is somewhat interesting today. What's your first take on that? My first thought is that the larger conversation that we've been having on air for some time now about the desirability of the US as an investment destination

being called into question in the last couple of months and quarters. Is this confirmation of that? I don't know if one day or one moment is confirmation per se, but one would think in a risk off environment that the US treasury market would be the traditional safe haven

that it has always been. Along with the dollar, which is acting as it usually does. Well, it's only fractionally higher. Gold, which is acting like it usually does. It's the treasury market that's sticking out like a sore thumb today. Yeah, I don't wanna, I tweeted about it earlier and a couple of people responded to me

with some interesting takes on it. I would be hesitant to make a larger argument about it because that narrative about the desirability of the US is a multi-quarter at least, if not a multi-year story. So I, but again, it is unusual and it's one of those things that bears watching and we can all ascribe our own personal views into why it's happening on any given day. The oil wild card though is significant if for no other

reason then it's been going the opposite direction. Yeah. And part of the, there's no more inflation story to worry about has been built on the idea that oil was gonna continue to at least stay where it was, if not weaken a little bit, gasoline prices were gonna come down. Now, if you have a whole new variable into that question and then answer, you have a different situation

to deal with. Yeah, but again, getting back to the original point, we'll use the drone attack on Aramco as a good example because oil prices were up a similar amount in late 2019 when that happened. When that ended up being, I don't wanna say much ado about nothing, because it was still something,

when that didn't derail global oil supplies and demand was still what it was, then prices which were at that point, if I remember correctly, in the mid to low 60s, eventually went right back down. And then of course COVID happened and other things, and Sulaimani in early 20. Listen, gasoline's three 10 a gallon.

It's not 250, but it's not 450 either. And so yes, it bears watching in the sense that, well, yes, if 70 or $80 oil becomes more permanent, then that's gonna put upward pressure on gasoline prices among other things, which complicates the inflation story. But if as UBS noted, and I argued in the opening, if this becomes, OK, we're not going to touch the Iranian facilities, Iran's not going to attack Saudi Arabia or block the strait, then how long is oil going to stay up here if the demand environment doesn't support it?

I mean, I realize that geopolitics, we all sort of view from the periphery. I'm not suggesting that you're an expert in this area or you spend a lot of your investment idea time thinking about this sort of thing, but it is noteworthy that this is a destabilizing event in the region, one in which the United States president just went to in Saudi Arabia. And there was all the pomp and circumstance

of our presence there with some of the biggest CEOs in this country who are investing billions of dollars into that region. Allies are developing in ways that they not necessarily have in the past. And now we have this destabilizing event where some other nation states may be forced to choose sides in the interim.

I'm wondering how you're thinking about what could be an escalating situation in an area that's always been fertile for this kind of activity. I would make two points, hopefully, as quickly as possible. The first is, I'm certainly not a geopolitical expert, but I've mentioned numerous times on air that we have liked oil for some time and have been invested in the space, partially because we felt like the geopolitical risk premium was lower than it should be. Not that we knew that this was happening, but like this was a conversation point about a kerfuffle, if you will, between Iran and Israel.

So we always felt like the market just didn't appreciate the risks. And so that's coming to the fore here. The second point I would make is some people would take issue with the word destabilizing and I think I've seen people argue in some sense this is restabilizing. Again, I'm not saying I endorse this view, but there is a view that Israel is in the process of redefining the Middle East, dating back to the Abraham Accords, the election of President Trump, etc., etc. Allies, as you noted, are being reassigned, if you will.

Israel refueled over Syrian airspace, I believe. Saudi Arabia is providing some support, I believe. To the extent that the Iranian regime has changed, and again, I'll defer to Halima Croft and other oil specialists on this matter, but to the extent that the Iranian regime has changed and Abraham Accord-like relationships are built throughout the region, this could be a very stabilizing,

granted not in the short term, but this could be a very stabilizing event. I just think it's interesting to consider that we have and we are making the kind of effort in that region that maybe we haven't been able to make ever, arguably, in the kind of investment, as I said, in the mere presence of these CEOs who recently traveled with our president there, putting our flags down in areas of industry and in countries where, in some respects, we haven't always had the greatest relationships with,

because we see the eye on the prize of AI and all of these other technological advancements. And if nothing else, this is destabilizing in some sense just to that effort, and then now we're dealing with this and the fallout from it if it escalates even further. Yeah, but the key to your sense is if it escalates further. Sure, I mean, that whole thing is a speculative if. Yeah, I recall when Suleimani was killed, it was going to be World War III. The key to your sense is if it escalates further. Sure. I mean, that whole thing is a speculative if. Yeah.

I recall when Suleimani was killed, it was going to be World War III. Donald Trump was a maniac and took out the head of the IRGC, and here we go. And it ended up, for lack of a better word, being not what was predicted. So I'm not saying that this is that, because this is pretty substantial, perhaps even arguably bigger than that. But to the extent that Iran responds in a manner that does not provoke or necessitate an even bigger response from the Israelis, again, on some of those oil facilities or refining facilities in the country, then perhaps we can move about our day, and some of this

will fall by the wayside. Again, the issue now becomes over the weekend—and this is part of the reason we're selling off is who really wants to be long into what could be a substantial Iranian response. That's where your focus is. That's a does statement, but it is true nonetheless. The big question obviously is going to be, you know, what our continued response is, how the White House itself is responding to now what is the retaliatory strikes by Iran. Are Ayman Javerz's at the White House in Washington for the very latest on that angle?

What do we know now, Eamon? Yeah, hey Scott, I'm actually in our CNBC bureau and I can tell you that alarms have been going off in Israel this hour as the country has been bracing for this expected Iranian counterattack. TV cameras in Tel Aviv capturing images of Israeli anti-missile rockets launching toward incoming Iranian ballistic missiles in an attempt to intercept them and to protect lives and assets on the ground. It does appear to the untrained eye, I should say, that at least one Iranian missile or fragment of a missile got through the defensive net and did impact on the ground in downtown Tel Aviv, but we'll wait for official Israeli confirmation

of that and any word on potential casualties in Israel. Meanwhile, the Israeli military says Israeli fighter jets struck an Iranian nuclear site today in the Isfahan area, which they said dismantled a facility for production of metallic uranium and other infrastructure. And so far, Israel says it has struck more than 200 targets inside Iran, including Isfahan and the nuclear site in Attan. And the military says that campaign is ongoing. I can tell you we just got a little bit more detail here from the Israeli military.

200 missiles have now been fired in two salvos here. We're waiting for any confirmation now on any casualties in Israel. The Israeli defense minister now issuing a statement saying, Iran crossed red lines when it dared to fire missiles at civilian population centers in Israel. We will continue to protect the citizens of Israel and ensure that the Ayatollah regime pays a very heavy price for its criminal action. So this is clearly an ongoing campaign on both sides in real time right now, Scott. With the threat of more escalation, obviously, given that statement that you just read from the Israeli defense minister passed on by our colleagues at NBC who continue to follow what's taking place in real time in the region.

Yeah, absolutely. And you think of this as a number of tears, right? Because the Israeli effort last night clearly involved some sort of subterfuge, some sort of espionage in order to get assets inside, potentially drones inside Iranian borders and attack Iran from within. Also deception in terms of luring Iranian officials into certain locations where they could strike them. I don't think we know all of the details yet about how that happened

and what's going on precisely with Israeli forces on the ground inside Iran right now. Then you have the Israeli air forces over Iranian targets now Now we're told that they are dominating Iranian airspace, which makes it difficult for the Iranians to fire these retaliatory strikes. And then you have this Israeli defensive effort over Israel, the so-called Iron Dome, to knock down any ballistic missiles that do get through either those first two tiers of offense and defense. So this is a multi-layered effort by the Israelis. One of the big questions here is going to be how much American support is ongoing right now to this Israeli defense effort and to what extent is the United

States going to get drawn into this after the statement from Marco Rubio last night attempting to distance the U.S. from this Israeli action and the president warning against it late yesterday. Now on social media sort of embracing it, positive statements from the U.S. president about this strike overnight in Israel. We're looking at live pictures as you're talking, Eamon, of Tel Aviv in downtown Tel Aviv. I'm wondering as well since you brought up the Secretary of State and the White House, what this does to the relationship between President Trump and Netanyahu, which at times has been close and certainly at other times has appeared to be more distant.

Yeah. I think we don't know fully as we sit here. We don't know how much coordination there was between the United States. The president has said today that he was aware of the Israeli intent to strike here, but that the United States did not participate in the offensive action. We don't know to what extent the U.S. pushed back on that.

There's reporting out of Israel that there was a green light, sort of a tacit wink and a nod, if you will, from the United States. We need to understand that all better before we can look at the relationship between Netanyahu and Trump and understand really what happened here. Amon, thanks for the very latest.

Come back to you as needed of course. That's Amon Jabers in our bureau in Washington DC. Let's now bring in New Edge Wells, Cameron Dawson and Capital Wells, Kevin Simpson. Dan Greenhouse of Solace of course is still with us. Cameron, how are you thinking about all of this as it relates to where this market seemed like it wanted to go before all of this began?

It is easy to write off geopolitical events when we look at the long history of them and say that markets tend to look through them, but there are exceptions. And a really good reminder of an exception is a year like 2022. Russia invades Ukraine. Oil prices rally 35% through the summer.

CPI hits 9.1% by the summer. The Fed is backed into a corner and can't, it has to accelerate rate hikes. And so the big question for us is whether or not this oil price move can be sustained. We are overbought in a downtrend, but if we start to see that trend change higher, it means that the Fed will not be able to deliver the rate cuts that so many market participants want. It means that we likely see a re-acceleration in inflation, and now we'll have that really tough choice of if we continue to see the labor market weaken, oil prices higher, inflation

stickier, it looks a lot more stagflationary. And again, it's a lot of ifs obviously built built into that idea which may not come to pass. I mean the market obviously is still expecting a couple of rate cuts this year. Yeah exactly and and I think that to your earlier point the move in interest rates is so very interesting because it is across the curve. You have the two-year moving up expecting that we're not maybe going to get those rate cuts but you also have the ten-year moving up expecting that we're not maybe going to get those rate cuts but you also have the 10-year moving up which means that this bond market cares more about inflation than it cares about growth and so if we see that 10-year yield continues to move up it's another sign that

the Fed is losing its degrees of freedom to be able to give the market what it wants which again is trading at 22 times earnings so there's not a lot of room to absorb bad news. Is that what you think the move in yields reflects today as a result of what we're witnessing there? Yeah, I think it's reflecting stickier inflation. It's reflecting the risk that you're not going to get rate cuts at the front end. It's reflecting the risk that if you do see

that stickier inflation keeping around, we're not going to get deficits coming down in this environment if we have to have potentially more military spending. That might be looking at a bit too far. But we think that this move is reflecting this worry that inflation just doesn't go away. And isn't it ironic on the week that we had CPI and PPI missed to the downside and a lot of people said inflation's gone and dead. And now we have this wrench. Kevin, for somebody who literally is a professional hedger, I mean, that part of your investment strategy is built with that as the backbone. What are you thinking about right now as you watch this? If not for what we're seeing on the camera, I would

have agreed with everything that Cameron said. But the defensive playbook is we're going to buy gasoline, we're going to buy oil, we're going to buy defensive stocks, and we're going to buy treasuries. And it doesn't seem that that part's happening. Now, I don't know that the earlier trades this morning were as reflective as they are now because the markets are responding immediately the way they should have this morning, which is we're seeing something that isn't just a little schoolyard bully pushing one another. This is something a lot more strategic by Israel. The good news is that they're not being pounced upon by other bullies in the yard.

But Dan, your point in the beginning was like the whole genesis of what comes next. Do you protect the oil infrastructure? And if so, then Cameron, we can have more conversations about rate cuts. We can put some of the inflationary fears in the background, but we'll have to wait and see over the weekend what happens

to the oil infrastructure. That's what I'm watching. You feel like doing anything in the market ahead, because it over the weekend what happens to the oil infrastructure. That's what I'm watching. You feel like doing anything in the market ahead, because it is the weekend, trying to game out where this goes into next week? So we sold covered calls on Home Depot while we were sitting here preparing for the show. We had sold calls on Agnico Eagle because we got a big spike in gold, which you would expect when a geopolitical event like this happens. And then earlier in the week, having nothing to do with it, we sold calls on Apple because of the subsequent tepid meeting you had

in Cappuccino. But what about the, where does the Home Depot move come in with in relation to any of this? It's just premium. What we look for is when there's enhanced volatility and you saw the VIX go over 20 today, we look at every position

and sometimes options misprice. And for whatever reason, and you look at even just the stable coin conversations today about some of the retailers, maybe it it affected that space but the covered call that we generated today had an annualized premium of like 16% so we were playing a ballgame there. Are we in for now a renewed campaign of volatility? Well I mean it's hard for vol to be too much slower than it was. Well it was 16, the VIX is at 20. There was a thought that, again, we were in, Brad Gerstner told me yesterday that this

is a bullish environment. Now, this was before any of this happened. AI super cycle, earnings were better than expected, tax cuts come in, deregulation, M&A, animal spirits, IPOs. What happened to that? Well, I mean, we're not talking- That was supposed to depress volatility. Yeah, and that's been a fun conversation for several weeks and months now, but something's

happening in the meantime. So I don't think what happened to that is fair. I think we obviously have to assess new information as it comes in. We have a pretty substantial... To Kevin's point, it's not two little pups. This isn't Equatorial Guinea, no offense to Equatorial Guinea. I think this is two real countries that have been on the brink of war for some time, so let's pay attention to it.

But I think, to all of our points, I think we are emblematic of the uncertainty, and the, not confusion, but I'll just stick with uncertainty, that exists, because again, if this was all there was, then oil shouldn't be up 7% and the market shouldn't be off 2%. And there was a good feeling coming into today, or any other day, that people were too complacent

anyway. That it was a foregone conclusion that with the S&P less than 2% from a high coming into today that it was a foregone conclusion. You're going to get there and beyond. Do you think people were too complacent about, you know, not just geopolitical flareups, but kind of everything? Yeah, when you're priced at 22 times forward, that doesn't leave a lot of room for bad news. And I'd flag that you had been starting to see things

like high betas start to roll over, IPOs started to roll over a couple of days ago, Russell 2000 started to roll over a couple of days ago, all suggesting that at the margin for the last week or so, we've been losing some of the risk on momentum, which just kind of gets catalyzed even further by negative news headlines like today. Last quick thought, Ted, before I got to move on. I mean, there was also a foregone conclusion that Israel was going to attack Iran.

And I think we knew that yesterday. Another reason we were talking about RTX and buying Raytheon in advance of that. So I don't think it comes as a surprise. And the good news is we were aware of it, whether we have contributed or not. This didn it comes as a surprise and the good news is we were aware of it whether we have contributed or not This didn't come as a surprise and hopefully that tempers what happens over the weekend and we're having a much easier conversation on Monday All right. I appreciate everybody being here Dan Cameron and Kevin. Thank you so much We're continuing to watch oil prices a big story today. Obviously is tensions flare in the Middle East Let's send it out of Pippa Stevens who's tracking that move and has been throughout this day, Pippa.

Hey, Scott. Well, oil is now around the highs of the session following Iran's retaliation on Israel, although it does remain below its overnight high after WTI at one point jumped 14%. Now, the market does remain focused on the fact that so far no oil supply has actually been disrupted, with several street firms saying prices cannot sustain these levels unless barrels actually come off the market. Iran itself is not a major supplier, exporting about 1.7 million barrels per day, but the fear is that a wider conflict could disrupt the region's oil supply, including possibly

from Saudi Arabia or Iraq. But the biggest possible impact could be a potential blockade of the Strait of Hormuz with about 20 percent of global oil flowing through the key waterway every day. CIBC private wealth Rebecca Babin said it's still a low probability scenario but that the odds are rising as the situation evolves. Scott? Pippa, thank you. That's Pippa Stevens. Coming up next, more on this late session sell off. We are about at the lows of the day. Charles Schwab's Lizanne Saunders standing by on the other side of the break.

We've been watching a big developing story in the oil market today so too is Mark Fisher. He joins us now on the CNBC news line certainly one of the most astute energy traders ever. So through the trader's eyes here, Mark, and a good one at that, what are your thoughts as you watch what's unfolding there? Well, Scott, there's too much uncertainty, obviously. There's too much asymmetry up or

down to really do anything. I mean, everyone's antenna was raised about a couple weeks ago when OPEC said they were gonna raise production over the weekend, a couple weekends ago, and the price instead of responding, which normally would do it go down, which would be additional supply, actually opened up higher and has gone up, straight up since then.

So obviously, the market knew something that most people didn't know, straight up since then, you know. So, obviously, the market knew something that most people didn't know, because obviously that bad news did actually happen. But again, there's too many wild cards, what happens here now with the attack now in Iran on Israel's civilian populations. Now I'm sure there's gonna be another response. It's gonna be even more drastic than the first response and

You have you know what happens in the shape of her moves This is you'll go after not just the nukes, but now after than just the oil refineries It's too many. It's too many variables to really know from where it was on I mean, obviously if this was two three years ago, the price would have been $100 something, but now with all the excess production that we have from Saudi Arabia on the market, it seems that it's just one... Trading right now is a very, very tough call and very, very risky call. And I just, my heart goes out to everyone in Israel because this is obviously not what anybody wanted, but I guess what had to have happened.

And so now where we are is that as a trader, it depends, the easiest trade in all these things is always to be along heating oil cracks, which obviously rally tremendously today in gas oil. And again, the safest part of the thing would be basically long refinery spreads. Where we go from here, my mind is really preoccupied with the people in Israel and I'm really concerned what goes on there, but it's a very, very tricky and, you know, there's too many wild cards here to really say what can happen from here. And I don't want to go ahead and put this up in the loop. I understand.

When you hear the Israeli defense minister say that Iran crossed a red line by going after civilian areas. Does that only ramp up your expectation that oil has the risk of moving higher because it just further raises the stakes of an even larger escalation now and a response to that by Israel? Well, that's absolutely going to happen. The question is, you know, this is like like this is not three-dimensional check this is a dimensional test i mean obviously is those response and it's going to be

uh... you know even more catastrophic for our land and where we go from here in terms of what what's ireland's next move do they go ahead do something in the shape of our moves do they do something against the u.s. military assets whether it be in in iraq or in israel or anywhere in the shade of our moves do they do something against the US military assets whether it be in in Iraq or? in Israel or anywhere in the Middle East There's the Booty's, you know respond in some crazy way. I mean, there's too many variables here and obviously, you know, I'm you know

I'm not my mind's not really thinking properly because obviously this is a, you know, a very sensitive subject for me. But if I'm looking at this trying to be objective, the risk reward here is refinery experience because that's the easy, that's the most straightforward, most liquid way that, you know, in terms of, you know, where we are, what's the world we could be. Because if, I'll tell you one thing though, I really think that, and I'm not a stock guy, and you know that, I never progressed to be a stock guy, but if I was a stock guy and there was a way to buy the Iranian stock market over the next week, I would do it because it can't get much worse.

And if this situation ends the way I think it's going to end, I think the Middle East is going to be a lot better off. And the time to buy something is going to can't get much worse, and that's probably what's going to happen in Iran. When you look at the possibility, I think when people look at the situation there, and they think of, well, what could be a real game changer in terms of the price of oil as if as you said the Strait of Hormuz gets closed down. What do you think the likelihood of something like that is rather than just suggesting it or speculating about it? You think it's anywhere

close to a possibility that something that dramatic could happen? I'm an energy trader. I'm not a military specialist and I don't pursue it. So, you know, my viewpoint on what the probability of the state of Maryland being closed is no better than someone else's. But I will tell you what will happen if that happens. You know, I can't assess the probability and that's why that's not in my wheelhouse. But I will tell you, I mean, it's pretty obvious what would happen if that happens you know i i don't i can't accept the probability that's why and that's not in my will have but i will tell you

i mean it's pretty obvious what would happen if that happened i do think though i mean who knows what what else you know desperate people to test the people do desperate things i don't know what else is the iranian arsenal what they would do to uh... you know to the neighbors to you know started to start a review toE. I mean I have no There's too many variables and I'm too concerned about

civilians and I think that If you look at it if I'm looking at it objectively, okay, and I'm trying to like step back to me the Risk reward traders in products and heating oil spreads, gas oil spreads, and cracks. Because that's basically where you're going to lose X to make 2, 3, 4X. And it's already happened today, by the way. I mean, so who knows? But I don't really know. I'm not a military expert. I just know what would happen if something—I just know what would happen if something i think that what would

happen if this happened but i can't have the probably of the happy and that's that way out from my will have understood i just was curious as to you know how if you if you think about certain trades and you try and model in certain outcomes is as many do uh... if that was in your you know legitimate calculus or not i'm gonna let you run, Mark.

I so much appreciate you calling in and sharing some of your views with our viewers, given how well you know these markets in that area of the world. That's Mark Fisher of MBF. Let's bring in Schwab's Lizanne Saunders now. She joins us on the CNBC Newsline. It's good to have you on as well, Lizanne.

Welcome back. Your thoughts on these markets? Yeah, I mean, it's not a huge, huge reaction down. We've had, obviously, worst days just tied to trade news. But if you look historically at other surprise military attacks, you do tend to see a big downward move on the day. The two biggest ever were most recently September 11th, maybe no surprise there. And then when North Korea invaded South Korea, you had both about 5% drop, so much more significant. And then it's a question of what happens to oil prices?

Is it on a sustainable basis? For instance, September 11th, you had the spike in oil prices. Is it on a sustainable basis? For instance, September 11th, you had the spike in oil prices initially, but then oil prices rolled over as recession fears took hold. Turned out, we didn't know at the time, we were already in recession. So it's the sustainability of the oil price move and does it add to downward pressure on the economy that ultimately defines how much worse it gets for the equity market. Outside of that, you tend to see fairly quick rebounds. You know, I'm thinking about what Cameron Dawson said, making the case that this potentially

puts the Fed in a box. They're stuck because if you do have this escalation of the tension in and of itself, if you do have oil prices continuing to rise and thus you're once again worried about an inflation picture that seemed to be all but tamed to this point, then you now have to introduce the idea that you don't have the Fed on your side as you thought you did just 48 hours ago. Well, it's a question, though, of the growth side of the equation, too. So yes, all out sequel, this puts upward pressure on at least headline levels of inflation,

less so on core levels of inflation. But even within core levels of inflation, you've got forces moving in the opposite direction. You've got the prospective force on the upside of inflation tied to tariffs. That's still somewhat unknown. You've got the downward pressure coming on the shelter components of core CPI, but now you have this headline pop on the upside. But sustainable moves up and they'll put downward pressure on growth. It starts to impact the labor market.

That might give them the leeway to start to ease. But you might be in a situation you're absolutely right where their dual mandate each one is moving in the opposite direction and it does put the fed potentially in a bit of a pickle. Sounds like if nothing else you would not be surprised in any way by an increase of volatility in the in the days certainly but maybe even weeks ahead. Yeah that's kind of a no-brainer i think we were real faith in volatility anyway just because of that the move now between here and july ninth when the reciprocal care extension it

fire actual court rulings and now that so yeah i think uh... more to do volatility recently i think that that ship failed for it was animal it's around we rely on people like you at times like these. Thanks so much for coming to the phone. Luzanne Saunders of Charles Schwab. Thanks, Scott. I want to go back to Washington now.

Our Aiman Javers has more. Aiman? Scott, a couple of updates here from Israel and then also from the United Nations Security Council, which is meeting now from Israel first. The IDF, the Israeli Defense Forces are saying to Israeli citizens that they can leave their secured facilities for now. The guidance they're giving to the Israeli public is stay close though to those bomb shelters and other secure areas, but you can go and move about and leave the actual shelter

right now. Now, the IAEA chief has been speaking to the UN Security Council with some updates on exactly what's going on with the nuclear facilities in Iran. The UN Security Council meeting getting information that there is no indication of an attack on the underground enrichment halls at the Natanz facility inside Iran, but the attack on the power supply there may have damaged the centrifuges. So no indication of an attack on the underground facility there, which is extremely hardened, but that there does appear to have been an attack on the power supply, and that may have damaged centrifuges there.

Also that there is radiological and chemical contamination inside the facilities at the tent. So that is something to keep an eye on. The radiological contamination, we are told, is manageable with appropriate measures inside that facility. The IAEA Chief, Grossi, additionally telling the Security Council here that the above-ground plant, where Iran was producing uranium that was enriched up to 60 percent uranium, that has been destroyed. So some information now coming to the UN Security Council. Also, Reuters reporting just within the past couple of minutes here that President Trump spoke today with Israeli Prime Minister Benjamin Netanyahu.

That's according to a White House official coming from Reuters. That presumably no surprise as we continue to look at pictures coming out of Iran here, Scott. So the picture as we have it now is damage to an above ground facility in Iran, damage to an underground facility in Iran that appears to have been done through a power source and that facility seems to have been damaged, centrifuges there seem to have been damaged and there is contamination, radiological contamination at that site, but that that is deemed as of right now to be manageable, Scott.

Back over to you. I'll come back to you one more time on the issue that we spoke about prior as we watched those live pictures of downtown Tel Aviv and what the Israeli defense minister suggested were civilian targets and that thus crossing a red line. When speaking with a trader and one so astute and established like Mark Fisher, for example, hard to even focus on the market itself and what the ultimate reaction could be in the markets because your focus and concern turns to the real possibility now of escalation in what's already sort of trending in that direction, thus complicating this whole situation even further and how

the United States might respond to that. Yeah. I mean, first of all, Scott, you know, your heart breaks for the potential loss of human life anywhere as you watch this, and you've got to keep that first and foremost in your mind. But then, as you sort of try to understand what the geo-strategic implications are, and certainly the global financial market implications are

of all this, it's just difficult to get your arms around it in real time because the event is ongoing. So you don't know what it is that people are going to be reacting to tomorrow because you don't really know what's happening. And we should always bear in mind this idea of both fog of war, which is that it is confusing to read these things because, you know, we have certain live cameras, we're speaking to certain officials in Israel and here in Washington, but we don't have total information awareness of what's happening.

And then the other element is intentional deception, right? There's a lot of intentional deception that takes place in any event like this. And so you may be following the misdirect and think you understand what's going on, but you may not have the full picture. So I think there's an element that we as commentators and observers and reporters on this have to have an element of humility to admit that we don't have total visibility into what's going on.

Sure, Eamon, thank you very much for that. Saman Javras again with us from Washington. We'll come back to you again as needed. Up next, Mohammed El-Erian. After this break, we'll find out how he is going to navigate all of this in this developing story That has the market down the Dow down 800 points below its 200 day average 200 day moving average S&P gives up 6k We're back after this We're back now on closing bell joining me now is Ali on Alian's chief economic advisor, Mohammed Al-Aryans.

Good to see you and thank you so much for being with us. Mohammed, how should our investing audience be thinking about this? Well, first, as you said, Scott, and thanks for having me, lots of ifs. Having said that, I think there's four clear things in my mind in terms of the economic effects. One, this will accelerate the ongoing slowing of the global economy. Two, it will limit policy flexibility even more, including for the Fed. Three, it will remind companies that their supply chains are really uncertain. And

finally, as you've discussed, it is eroding the role of U.S. Treasuries in the global system. So the magnitude of all this will depend on the duration and scope of what's going on right now. But I think the direction of travel is very clear on all four of these things. What do you make of the move in yields? Can you expand on that? They're certainly not acting as they normally would as history would suggest they should. Absolutely correct. And you had a debate. Is it because people are worried about the inflationary impact of higher oil prices or is it something deeper? I believe it's something deeper because it's been happening all year, Scott.

Yields haven't been behaving normally. They have gone up during days of risk off, they've gone up during days of risk on. We are seeing foreign holders buying gold. And what's happening is something actually quite fundamental, is that the role of the US at the core of the system is being eroded and when that happens the world finds out it's overweight US Treasuries it's overweight the dollar and there's little appetite to become more overweight so you don't get the buying that we used to get in the past the good news for the dollar is there's nothing to replace it.

So people can only reduce their dependence slowly over time, and they have to do it by many other assets. So it's a gradual process, but it's one that the U.S. should take really seriously. So you're saying that where there was speculation over the last many weeks on the idea of a flailing US exceptionalism, that this is evidence for maybe the very first time concrete in a true time of what is perceived

to be global crisis of any level, that that is a confirmation of your view? Yes, and I would qualify it in three ways. One, it's not the first evidence. We've had quite a few smaller ones. This is the really visible one, and I think that is important. Second, it's about two things. It's about the loss of exceptionalism, but it's also about policy unpredictability. The good thing is that foreign investors are making a distinction between the sovereign

side and the high quality corporate side. And they're not extending their concerns about the sovereign side to the high quality corporate side. And that's really important. And the third issue is just recognize this is a slow moving process because there is no ready substitute for the dollar. So it is gonna be going on for a while. And I stress again, the world is overweight the US,

it's overweight treasuries. And once you lose trust, then you are looking to reduce this overweight, but it takes time. The other thing you said I find very interesting is almost pointing to an extraordinarily tricky situation for the Fed. One in which you predict, of course, as you said first, that it's only going to accelerate a global economic slowdown, but also one that limits the Fed. That's how you described it just a moment ago.

What do we do in that scenario if we have a faster, you know, slowdown globally in the economy, a Fed that can't do much about it, then what? So absolutely no policymaker likes the notion of stagflation. And that's what higher oil prices do. They lower economic activity and they increase inflationary pressures. So whenever you see stagflation, you know that it's going to put policymakers in a difficult situation. And

that's not just monetary policy, but also fiscal policy that we don't talk enough about, because this will make revenues lower and expenditures higher on the fiscal side. On the monetary side, already the Fed was delaying rate cuts. This Fed will become even slower in delivering rate cuts because it has been shaken so much by its big inflation mistake. So it is more likely to risk a slowdown than risk an inflation. Whether that's the right thing or not, we can debate it until tomorrow morning, but I suspect this is what this Fed will do.

Do you think that now that this is all unfolding, and that is your clearly stated view, that this would cause the administration and the president to capitulate even further on where their tariffs currently are? I don't know because I don't know what the basic objective of tariffs are. If it was escalate to de-escalate and you want a fair trading system, you can do this later. late and you want a fair trading system you can do this later if however it's to raise revenues if however is to reassure manufacturing activities back to the US then you should not ease on tariffs so as long as we don't have clarity on what

the primary objective of tariffs are I find it very hard to answer that question Scott unfortunately. Mohammed I find it very hard to answer that question, Scott, unfortunately. Mohammed, I appreciate it very much. Thanks for sharing your views with us, Mohammed El-Arian. We're all over the sell-off, as you know, as we head towards the close. As we said, the Dow Jones Industrial Average below the 200-day moving average.

The S&P 500 giving up the 6,000 level. Mike Santoli's waiting in the wings. We're 10 from the close. We're back after this. This is the Closing Bell Market Zone, CNBC Senior Markets Commentator Mike Santoli and 314 Research's Warren Paes are here to break down these crucial moments of the trading day on what has been a very busy day of breaking news for us. Mike, you want to put it into some perspective for us as you watch these markets. Yeah pretty decent little test of the dip buying it reflex and

it looked like it was going to be a real pure example of that by midday and then we get the retaliation. Now structurally not a lot has changed in terms of this market you know in this modest pullback zone it had sort of decelerated on the way up to we got within a couple percent of the high so it seems seems as if this is just, could be just kind of reloading the market frankly and doing what it was supposed to do anyway.

But it did bring home that we had too low a risk premium in the market after this run. Just for the potential range of outcomes. So VIX going above 21. Next week, you got maybe some bumps to get over when it comes to the Fed meeting and you know some Various expiration so I do think that we have to be mindful of the fact that we've come a long way But we've not even broken the 20 day moving average in the S&P 500. Yeah Warren. How are you watching all this?

Yeah, you know I think it's not surprising to see that we're kind of weak going into the close Nobody really wanted to hold risk going into the weekend when you know headlines could flare up but um Overall, I think we have to take a step back in a deep breath and I heard a lot of the guests previously You know worried that the Treasury market's not acting how it's supposed to I'm not so worried about that You know I think that we've had a nice rally in bonds and we're kind of selling off a little bit. Not surprising given the fact that oil is spiking. I think all you need for the bond market to really work and for the equity market, for EELS to stay in a place that works for the equity market is for the market to believe that there's still like five to six rate cuts

ahead of us. And I think the Fed's going to confirm that next week with their SEP, their June SEP. So I think there's still, I think what Mike said is right. There's some fear that's coming back in the market. Obviously, if we get worst case scenario geopolitically, then all bets are off. But the history of these kinds of conflicts, and this is, oil is the market I started my career in. The history of these kinds of conflicts is that they fade

in relatively quickly. I mean, that is the view, Mike, and nobody is as historically astute on the markets as you, as we find every day. I mean it's one of those things where at some point one of these conflicts is going to spill you know beyond containment and it's going to have broader implications but even if you look back at you know the the Russian invasion of Ukraine now obviously the Fed was hiking

right into that. You had massive concerns about this explosion inflation. It really was reinforcing of this idea that the macro was getting out of hand. I'm not sure we're in that same boat here because of the starting points. Again, oil being depressed before this little pop. Yields I've not been alarmist about the absolute level of yields. Yeah, it looks as if maybe there's a little slow, slowness to migrate back toward Treasuries in a pinch.

But to me, the broader asset markets are not in panic mode, and it's not as if bonds are sitting it out. So I think that's why I'm a little bit less concerned about that. That being said, again, look, we rebuilt evaluations. I don't think Sentiment has gotten over its skis, but it's certainly not as fearful as it was a little while ago. And you have to be aware that after a 25% run,

the risk reward has probably flattened out a bit. Let's be clear. The S&P 500, Warren, is only down 1.2% today. So the market has managed to afford itself rather well in what on television looks pretty bad, obviously. We're still within 2, 3% of an all time high. And it sounds to me like you think that march towards it doesn't get interrupted for very long. Yeah, as I said said nobody knows if we're gonna have the worst-case scenario but

nothing has really changed. The supply-demand equation for the oil market hasn't changed. There's been nothing, no supply has been impacted. We run studies every week for our clients and I just have a catalog of bullish technical indicators. The market's message is bullish and I don't see a ton of buy-in sentiment has not gotten stretched. We had a study for our clients this week. I had more bears than bulls last week.

Yet two-month momentum was above 10%. That's like a 1% in all of history kind of occurrence. And then we have forward 12-month EPS is about to hit a new all-time high. These are the kinds of things that, if you want to look through the headline stuff that scares you and focus on the core of the market, which still looks healthy.

You can hear the clapping here. The bell's going to ring. It's going to ring us off the lows too. It's still going to look like a nasty day, but below the surface it's maybe not quite as nasty as the overall numbers would suggest. The S&P is going to close below 6,000 as I said and we did give up the 200 day on the Dow.

Whether they close above that I think is still in some questions. We'll continue to follow that in no overtime with John Forbes.