Power Lunch - Crude Oil Surpasses $90/BBL 3/6/26

Episode Date: March 6, 2026

Stocks slide into the weekend. Crude oil keeps ticking up.   And President Trump says the U.S. will not make a deal with Iran without "unconditional surrender." Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Stocks and your money rattled over the war with Iran. President Trump saying no deal without Iran's, quote, unconditional surrender. Welcome to Power Lunch. Every major stock index is lower, but off the lows. The Iran war now entering day seven. The president vowing to make Iran great again, making it economically bigger, better, and stronger than ever before. Translation, this could be a long haul in the Gulf oil, natural gas, gasoline, all moving higher, crude, creeping back toward 100 bucks a barrel, and a big. warning on oil, Kelly, out of the Middle East. And this morning's February jobs report, also surprising to the downside big time. That coupled with rising energy costs, fueling some inflation fears. Treasury yields were up at, what was it, 416, 417 earlier in the day. They've since calmed down a little bit, as the price of oil has as well, but it's still elevated. And we're seeing more cracks forming in the meantime in the $3 trillion private credit space. BlackRock announcing its limiting withdrawals from one of its funds will have much more

on that ahead. But let's begin today with the markets as the major averages are sliding once again, building on their weekly declines as the Dow, S&P, NASDAQ, and Russell are all going to end in the red. Worst week in about a year for the Dow. How should investors be navigating the markets given the recent geopolitical uncertainty joining us here on set to break it down, how she's positioning. Stephanie Link is the chief investment strategist and portfolio manager at High Towers and a CBC contributor. First of all, great to have you here. So we're heading into a weekend. Never fun when you have big events like this outstanding. What do investors need to hear to go into this weekend and close up these markets on a little bit better note?

I think you have to think a lot longer term, number one. I have never made money in my 35 years in acting on geopolitics other than to look for opportunities, to look for best and breed on sale because they're throwing everything out right now. Good quality, bad quality, everything is down. So you make your shopping list. I was doing a little bit of buying today. And you don't put it all in today, but you put a little bit because things can change on a dime, right? And we don't know.

We have, nobody has the answers. And if this gets resolved in the next week, then we're going to say massive reversal, probably back to the 493 trade that we were all seeing, the cyclical trades. Because the economy, it's doing okay. Yeah, it was a crummy report today, but we can talk about a lot of offsets. We had some pretty good data this week. So there's sort of two different things I want to ask you. Maybe you can pick which one.

You'd like to start with. But one of them is the policy question. I mean, what does the Fed do here? The other one is what's on the shopping list. I don't know if those two things are related. What does the Fed do? I think they're going to have to wait, right? I mean, and we have a new Fed share.

We don't even know what his personality is going to be and what he's going to be able to do. Can he corral the troops? That's his troops because he's going to have to. We don't know if he's going to be able to. And there are a lot of push-poles right now. I mean, inflation was sticky before the war. So that's a problem. We're running 3, 3.5% across the board. So they were probably already going to be pausing. Now you have this other thing happening with the war, and now you've got more inflation implications if it lasts for a long time. And then, of course, you have the labor market. Now, not if our payrolls was bad. I'm not going to say anything other than it was bad. Now, there were some one times, but we had better claims. What weekly jobless claims are the coincident indicator. That's the thing I pay attention.

been fine. $215,000, four-week moving average. ADP was okay. So fine. We know that we're seeing a cooling in the labor market. I don't think it's a collapse. But that's the thing that the Fed can point to if, in fact, they are going to cut. But I think we're ways away in terms of cuts.

Okay. So we want to be optimistic. And there's no question that the women and men of the U.S. military can handle Iran. That's not an issue. We can handle Iran militarily. but Iran has the ability to just harass the global economy, right? Spike oil prices. We're seeing it again today.

They can make it worse. They can blow up pipelines. I don't want to give them ideas. I'm sure they have those ideas already. Earlier today on CNBC, Goldman Sachs's chief economist, Jan Hatzius, was talking about higher energy prices, higher oil prices and its effect on GDP. Listen to what he had to say. And then I want you to respond with regards to stock valuations. Here's Jan Hotsis.

Each 10% increase in oil prices, you know, we think probably adds a couple of tens to headline inflation and takes off a tenth or so from growth. Crude oil is up 58% this year. And if you believe the Qatari foreign minister in the FT today, it could go to 150. It may not, but it could go to 150. Anything is possible, Brian, but I don't think that's going to be the case unless it's Armageddon. And I just don't think that this administration is after that. And I'll, by the way, you and I were talking in the green room that the Trump administration, one of the victories that the Trump administration has was, was before the war, was gasoline prices. Pre-COVID, it's only up 11%.

Now, pre-COVID, that's right, only up 11%. Now you have the war, it's a different story. So I get that. But if oil were to pull back, that he can then go after that gasoline is only up 11%. That's why I don't think he's going to let this thing go on for a long period of time, especially into the midterm elections. But I take Brian's point. I'm like, I don't think he wants to either.

But now you've unleashed this kind of global antagonist. And how much longer can Iran keep? So we see the headlines now, maybe this $20 billion fund to kind of help people get through the straight. But that issue has to be resolved. And it sounds like Iran can harass that straight and other, they were targeting areas up to 1,500 kilometers away for quite some time. It's alarming that Iran is doing what they're doing, of course. But, I mean, we are so much bigger than Iran. We have so much more in terms of power, in terms of authority, in terms of the missiles, and our defense in general.

I mean, so we're so much bigger. I wouldn't be surprised if over the weekend and the next week, they really go at it hard, the U.S., to really take them down and get this thing a little bit more under control. So, okay, let's go. There's a lot here, and you've got some individual stocks. We're going to get to those. but just to kind of wrap up to Kelly's initial point. Let's say this weekend, and let's all pray this is the case. Iran comes up and says, hey, guys, let's knock it off.

We're going to kind of, quote, surrender. They want to be treated with dignity, right? It's a soft, proud nation. But we're going to, let's stop fighting. Let's say there is some peace-ish done this weekend. You think the market rips five limit up on Monday? I sure do. And I think oil is going to pull back pretty substantially.

agree of 15%, 20%, that's why I say then we're going to go back to what is the economy doing? And the economy is doing okay. 2%, 2.5%, maybe even 3%. And guys, we haven't even gotten the one big beautiful bill. Tax refunds are going to be a lot higher this year,

a lot higher. By the way, so, I mean, corporations are also going to benefit and deregulation has really yet to get into the system as well. We're going to get Basel 3 end game. The rumor is at the end of the month. That's a big deal. So, and those stocks, the financials have gotten absolutely hammered. And I think those are

buys. Perfect time to bring this to the stuff. This is all the viewers want to know stuff is what is on the list. So maybe start with the financials as we're continuing to kind of realize that this credit issue is going to be in the markets for some time, whether it's private markets, you know, software, whatever it is. But what would you do? Yeah. I mean, I think the big six banks are actually taking share from the private markets companies because they have had their hands held behind their back since 2008 great financial crisis because of regulation. That now is starting, they're starting to chip away at the regulation. And these companies, these big banks are actually going to have a ton of cash flow to buy backstock to increase dividends. And oh, by the way, to lend.

That's what we really care about. And the Basel, all these changes from the Fed that you're mentioning are potentially supportive of that. Absolutely. And these stocks are trading at like 11, 12 times earnings or one, one and a half times book value, which is very attractive. So Morgan Stanley, I like an awful lot. Bank of America is my biggest position. Truest is my newest position because they have a ton of excess capital, and they're doing things internally to get to increase market share, and I also own Wells Fargo. So I own a bunch of them.

Those are on my short-term list, for sure. You also like Snowflake. You say you can't disrupt this company. No. And IBM, because of quantum computing. Quantum computing. Quantum computing is like 2029 story. But this company, this CEO, has done an amazing job at just transitioning it away from mainframes,

which is not very exciting, and it's not a fast-growth business, into software, into consulting. And consulting is going to benefit from the AI disruption. These companies, every enterprise needs help and guidance. How do we implement AI? And how is that going? How is AI going to actually help these companies consult and give them advice and give them perspective? And so to me, that stock got hammered on the whole Armageddon software, because they do have a big piece now.

And Red Hat is a big part of the growth story. but that is totally, I mean, that in my mind, it's way, way overdone. Not to get too in the weeds. Is Databricks a disruptor to Snowflake? That might be an IPO to come this year? No, I absolutely do not think so, because Snowflake has had so much in terms of product innovation over the last two years under the new CEO, and so they're taking more and more market share from their clients, and they're already entrenched.

So, no, not with a company, this growth. Product revenue growth of 30%. That's amazing. And the only other one I would suggest to buy, which was the one I was buying today, is Palo Alto, because I think cybersecurity is bigger than AI because of AI. Do you have a view on Boeing, getting some breaking news out of Bloomberg right now? China may be in talks or is in talks to buy 500. Phil reported that as well. Boeing 737s.

Phil did? Yeah. I couldn't tell you the exact matter, but Phil was. I did not know that. Phil, LeBoe, I apologize. I'm like sourcing others when you broke the news. He bit. But that sounds like pretty good.

I got to watch CNBC. See, I heard it's a really good show. You're getting ready for your own. I was getting makeup on. You don't look like this by accident. I'm 147 years old. By the way, helping the Dow to some extent. And I do wonder this ahead of their big summit is that, look, can peace rain if we're the U.S. and China are doing a big deal with Boeing? Well, that's what I thought, actually, right? I'm like, how's this going to work? If, you know, Venezuela is one, that was a dig on China. Iran is a dig on China. So like, and yet they're buying more planes. So I don't really know if this. But look, I mean, this has been in the works for. many years that Boeing has been shut out from China. So this is great news. But Kelly Orpberg, he's a rock star, and he has totally changed the culture of this company. It has never been a demand problem. They have almost 7,000 planes in their backlog, almost nine years worth.

It's amazing. It's a duopoly. So that's why I like it. I own it. I like it. Because it's never been a demand problem. It's been a quality control problem. It's been a culture problem. Kelly Orkberg came in almost two years ago, totally changed it. This is icing on the cake. Oh, by the way, this is a free cash flow story. So that's what we pay most attention to. The 737 and that whole series, the max series, the more that they produce, the more they deliver, the better free cash flow.

And that's what we're rooting for. Quick due diligence thing, synopsis we showed on the screen. You're still a fan of that one? Yes, that was one that actually was buying most recently. Their mission critical software. They have a 41% market share. 70% is recurring revenue. And I like this ANSIS deal that they did.

It increases their total addressable market from 31st3,000. billion to $59 billion by 2028. And they, oh, they are, Nvidia owns a 2% position of the company most recent. And they just announced a $2 billion buyback. See, there's plenty to do folks and not just cower on the sidelines and try to figure out. It's a opportunity. Fridays I like to do that. Like opportunity Fridays.

We want to go to the weekend. Quickly. CNBC Pro Live event. Yes. May 28th. May 28th. At the NASDAQ. Women wealth.

Four women, but it's not just for women. No. Like, I could go. Anyone can go. We have rock star females that are going to talk about investing and their stories. And what kind of investments that they believe in. We're going to give people lots of different options. Why it's women-focused is because there's this huge wealth transfer that's going to happen.

In the next 25 years, $100 trillion is going to get passed through to women and their kids, men and women. 100 trillion. Trillion. Trillion with a T? Trillion. It's huge. And when I go and see... I'll take a small sliver of that.

Me too. When I go and see advisors, I talk to a lot of different women and men. And at the very end of my presentations, it's usually the women that come up to me afterwards saying, I didn't want to look and ask a stupid question. So that's why we're focused. That's why we're calling it women. But men, they should learn to. Nice ratio for them, too, if they show up.

No. Stephanie, thank you very much. Easy now. I'm just saying, you can make it a match. thing as well in the future. Whatever. All your kids are welcome. Thank you. All right. On deck, we kind of just touched it.

Why a formerly quiet corner of Wall Street is now getting a lot of attention. Plus, much more in energy crude creeping back toward 100 bucks a barrel are real shortages, getting closer. You'll find out. Next. The situation around Iran continues to change by the hour. Headlines, they are constantly crossing, and there are a lot. lot of them. But there are a couple of big ones that we are focusing on right now. First,

number one, Wall Street General reporting Kuwait, now cutting oil productions because much of their storage is full. Also, the Qatari Energy Minister telling the Financial Times that oil could hit $150 a barrel if, big if, if the war continues and more oil production shuts down. Let's be clear, we are a long, long way from $150 bucks. But every day this week, the price of oil has gone higher as the world loses maybe 10 or more million barrels per day of new supply in the Persian Gulf. Now, right now, let's be clear, there is enough oil in storage to cover the gap, but as storage comes down, prices go up. And as we've been talking about, this is not just about oil. One fifth of global LNG, liquefied natural gas production, may be offline due to strikes

on Qatar, things like chemicals, fertilizers, even food and water impacted by sheep. shipping slowdowns or shutdowns in the Persian Gulf. Nobody follows these flows as well as Kipler, which owns marinetraffic.com and their lead oil analyst, Matt Smith, joins us now. Matt's great. I really appreciate you and your team's work. It has not stopped. Any sign that the situation around the Strait of Hormuz is getting any better? Brian, no.

And the situation within the Mideast Gulf is getting worse, right? And so you've got a situation where there's, you know, 15 million. in barrels a day that we normally see being exported out of the Mideast Gulf there, just in terms of crude. That is being stuck in the Gulf there. They're loading as many empty tankers as they can, but you can't get other empty tankers into the Gulf. You can't get the loaded ones out.

And so you've got these producers in the region that don't have a lot of storage because they are large oil producers, large exporters, but they're used to just sending that stuff out. And so the concern is that we're going to be seeing storage getting full. and we're starting to see certain players such as Iraq. You mentioned Kuwait. They're starting to shut in production because there's simply nowhere to put that crude.

The kicker is also coming through from the refineries as well. As you get refineries struck, as we have seen, across a number of different countries there, that frees up more crude. That only exacerbates the situation in terms of barrels being stuck there. And so we're going to be starting. That's why you're seeing prices charging higher here because we're likely seeing production cut in.

Matt, let me ask you, I'm going to ask you to editorialize slash guess, just your best estimate. I'm sure you guys are talking about this internally there as well. There's a lot of talk about this new reinsurance facility. The U.S. government wants to, you know, sort of, you know, start. $20 billion number confirmed from the administration. Insurance is one thing, right? Like if something were to happen, we're going to cover the ship.

But let's be clear, there are human beings on these ships that don't want to die. And so insuring ships is one thing, but risking lives is another. Matt, do you think that even with this new insurance mechanism, which will probably start up in a week or two, whatever it may be, that ships are going to be either willing or maybe forced, because some of these owners are probably not very nice people either, Matt, we know that, forced to go and make these dangerous runs, even if the ship's cargo is covered? No. So it's our simple expectation. You can, with the insurance side of things, even if you have a naval convoy, a naval presence there to get these tankers through, that's little comfort if there's still a very high chance that you're going to get struck with a missile or with a drone. And so it's our expectation until you get some type of resolution with Iran there, that there isn't going to be any material pick back up in this traffic going through the Strader Hormuz. It's as simple as that. And Matt, what about the rest of the supplies? It was based on your data that I realized that there might be potentially more of the global fertilizer supply than the oil supply traveling through this area. No, exactly. It's just wild numbers you're talking about, right? So in terms of the crude side, it's a third of all seaborne waterborne exports.

In terms of fertilizer, 15, up to 30%, something like that. In terms of clean products as well, we're seeing about 20% going through there. In terms of talking LNG as well, so in terms of that Katari exports, you know, 60% of LNG exports on a global basis come out of three players. One is the US, one is Qatar, and one is Australia. And you can just see in our data that you've seen those Qatari, LNG exports, just been halted. And so this is having massive ramifications, right? And we are very much focused both on what is happening inside the Mideast Gulf as well as outside,

because we're watching that straight. But, you know, in a matter of days here, you're going to have refiners, terminals, et cetera. They're expecting to get jet fuel, gasoline, diesel, whatever that commodity is. And it's just not going to be showing up there. Yeah. So, you know, we spoke with a trader last hour who said he was hoping to see the things flowing again by Friday to avoid kind of worse case scenarios with the oil price. From what you're describing, the vital importance of this, when do we need, from your point of view, to get ships moving back and forth so that we don't avoid oil going over 100 and other price spikes? Yesterday, Kelly, right?

And so you're seeing that kind of reality pricing into WTI here. When you look at WTI, it's over $90 a barrel now, right? back last Thursday, we're at 65. And so that's the concern here is that every single day that this goes on, there's disifications not just from the producers and that shutting in inside the Mideast Gulf, but outside as well in terms of not getting that supply. And so this is a massive concern here. We're not talking about the price of gasoline here either, right?

We're seeing as quickly add on 30 cents a gallon on the national average there. And we're still going to be playing catch-up. So it's not beyond the wrong. realms if you continue to see oil rallying into early next week, that we end up with prices at the pump being $4 a gallon. There's a pipeline that goes across Saudi Arabia from the Persian Gulf to the Red Sea. It's called the East West pipeline goes from their ab cake refinery to Yonbu. The Saudis have been turning this on, basically.

We've seen more ships on marine traffic by Kipler, by the way. You could see them all kind of floating around loading. And we want peace. But, Matt, what were to happen if an Iranian drone, by the way, in 2019, the ab cake refinery was hit. So I'm not just making something up out of the blue. If something were to happen to that pipeline, what happens to the price of oil? Oh, my gosh. Yeah, that's kind of a worst case scenario because Saudi Arabia is in the best situation out of all of those Middle East producers, exporters.

Because they can ship, as you mentioned on the East-West pipeline, that has capacity of about 7 million barrels per day. And so we have seen those export loading spiking there already. So that makes sense. And so if that were to be cut off, then that's going, that's when you're really going to see prices supercharging higher. All right. Matt, really appreciate you making the time. I imagine we'd like to check back in next week,

see how things go over the weekend. Thanks so much. Sounds good. Thank you. With Kepler. And keep an eye on the defense names. As President Trump and Defense Secretary Pete Heggseth are scheduled to meet in the Oval Office with executives from these firms any moment now,

starting around half past to press them on accelerating their weapons production. These stocks are largely still higher this afternoon and we'll bring you those headlines as we get them. All right. Coming up after the break here on Power Lunch, why one sleepy corner of Wall Street is suddenly waking up, and it's cranky. Lazzley Picker will join us next. It's officially called private credit, but it's really just non-bank loans to companies. And for years, many big firms on Wall Street got really, really rich off this market. But now parts of it are cracking. And some of those big names, they're cracking with it.

Leslie Picker joining us now on set. I mean, these are like names blew out. We never talked about now every day. Something's going on. And we should be talking about it, right? Because this is a barometer for the health of what's going on in the economy because all the consternation centers around what does this credit quality actually look like. And it's creating this skittishness among retail investors,

which have piled into many of these funds. And now we're seeing over the past few weeks, weeks, waves of redemption requests. How these firms are responding to the redemption requests is another story. That's why you're hearing about gates at 5%. That was the case with BlackRock today, where they basically had investor requests for redemptions of 9.3% of shares outstanding. They were only able to grant 5% of those, which means that if you wanted $100 out of this fund, you got $54. Other firms have taken different tactics. If they take Blackstone, for example, with its flagship private credit fund B-Cred earlier in the week,

they basically had 7.9% redemption requests, and they were able to fulfill those, but they had to kind of change their policy in order to do so. Blue Owl also changed the structure of their funds in order to return capital to shareholders, halting redemptions completely. So this is just a byproduct of retail investors piling into these funds at the request of the firms,

and now we're starting to see what happens in a market that's not as liquid as they may be used to. I think for me it's all about keeping it from spreading. And, you know, a lot of the frustration by these executives is they don't want their retail investors to panic. Because every time they see a headline like this, retail investors and other private credit funds want to pull out as well. And it's their policy.

It's usually this 5% is a longstanding policy. So it's kind of a feature, not a bug, really. But, you know, not to sort of throw them into the mix here. But when you look at a Jeffries and when you look at some of these other names that have had exposure to different, you know, loans that have gone bad or have you, if I were regulators, if I were these companies. If I were anybody in this, I just think, let's get some sunshine on this. Let's talk about maybe how we got through the real estate period in 2022, black, black, and try to calm people down and make sure that they understand. And if that means understanding

maybe how bad some of the underlying loans are, then fine. I mean, let that be part of the discovery process. Yeah, I think you're spot on in terms of just education and understanding. And then the contagion aspect as well, you talk about the financial crisis. Something that we don't often talk about is the fact that the traditional regulated banking system is now very interconnected with the private credit world. They're making a ton of loans to the funds themselves, which a lot of people have brought up this idea of kind of leverage on leverage here, which, you know, to many people reminds them and smells a little bit like the crisis. But if there were some sort of serious cycle, that would affect everybody. That would affect private credit, that would affect public credit. And the fact that you also have these kind of, they call them NDFI loans,

which are from the public banking sector to the private credit funds themselves, you know, we just don't know how that will all be unwound if it needs to be unwound. And so I think that's the attention that a lot of people are. Did this all start with that first brands and tricolor, those car parts companies, they're kind of quiet. Was that sort of the match? The irony is that the situation, with tricolor and first brands is those issues were largely in the syndicated market.

Those were bank-sponsored loans. Those weren't really private credit. The structure of the facilities looked a little like private credit because they were negotiated on a one-to-one basis. But Jeffries is a bank, essentially. We saw news this morning from Western Alliance, how they're taking an impairment charge related to something. So were they just loaning then to, like, bad credits, like your uncle that doesn't pay you back? Well, they would say those are alleged fraud. So when Jamie Diamond talked about this in the fall, and he mentioned cockroaches, he was talking about basically, you know, when you see one fraud, there's probably another fraud. You know, at this point they're going through the court system to kind of figure that out.

And we've seen a couple of those. Frauds to many people, maybe kind of a late cycle thing that pops up. But it gets conflated with the whole private credit issue as well. And the only thing is it because, you know, when you're looking for a catalyst, like, why now? Like what is happening? It's really the software sell-off. It's all because of clot. It's all because of open-claw-cloth.

When these tools made people panic out of publicly traded software names, and you imagine some of the privately held ones are doing worse, but you don't have that clarity on which companies are in which portfolios and might be worth what. So even the action this week is interesting because the software publicly trade names are coming back, but we're still seeing pressure on this space. I think it would help with these companies, for better or worse, said, again, here's exactly what's in this. here's what we think the marks are.

That's where a lot of the pressure is emanating from. And we have these business development companies, which are publicly traded private credit vehicles, that do disclose this type of data. And you're right to point out the software exposure because private credit does have outsized software exposure relative to the syndicated market, the public market. That said, you know, we've seen that the default rates are pretty modest.

The question is really around the marks and whether you can trust the marks. We saw that yesterday with news. that Black Rock, it was actually older news, but it caught a lot of headlines about Black Rock. Not Howard Marks. He's fine. He's fine. Richard Marks, the singer, he's fine. A private loan that they had made to infinite commerce, which was an Amazon aggregator. Exactly. So, you know. So these are kind of basically investors, look at that and they say, oh, that was 100, you know,

that was basically valued at 100 cents on the dollar, and then it was zero. And wait, how did that happened? It caught everybody kind of off guard. And there was another. situation with Renovo that happened back a couple of months ago where that's a home renovation roll up essentially. And they saw something similar where, you know, it kind of went to zero very quickly and everybody said, you know, can we actually trust the way that private firms are marking these things? So that's kind of another issue as everybody's just trying to sort things out. There is transparency. Whether you can trust the transparency is another question. That's a good point. Leslie, thank you very much. Great stuff. Really appreciate it. Leslie Picker

covering the space today. Now on bonds, Rick Santellie's in Chicago. Rick, what are you eyeballing? Well, I'll tell you what, before we get to anything regarding the bomb market, I think I want to talk a little about options today. Interest rates, suffice it to say, down big on the week, down a little on the day in the long end, not the short end. But I have Chem Carson here today from Kai Volatility Advisors.

When it comes to volatility and options, he's the man. Chem, thanks for joining us today. Let's get right into it. What are the options markets telling us since the conflict began really on Saturday? So March OPEX is a quarterly OPEX, and every options expiration is the biggest options expiration ever created nowadays. But you're being serious. Absolutely. And I mean that because we have so much increase in options volume and structured products that the amount of effects that this is having on the rest of the markets is dramatic.

If you thought today, right, what happened today, Black Rock stopped redemptions, right? Oh, yeah, their funds go from 100 to zero. You have unemployment numbers, awful, right? Never mind, right? All the other things that are happening with oil in the Middle East, right? If you put those all together, you would think we'd be down two, three, four percent, one percent. And off the lows meaningfully here, why? Because index vol is incredibly compressed.

The S&B 500 options are compressed. Structured products, sell ball, dealers, market makers, banks. They are all along that ball. And so if the market moves big, they have a lot. stock to buy. So quick translation for some of you not, two in the options. The products have just exploded in all the different products

there are. And having said that, it actually creates this wide landscape that absorbs risk. That's exactly right. It's reflexive. At the end of the day, if the street is longball, if the market moves big, that's good for them, and that means they need to lock in those profits. How much of premiums move?

How much is the added dough you have to pay to either have a put or try to sell a call? Like, Is it gotten juicy? Not really, candidly, and that's because everybody's long, right? So when it goes up, they're quick to sell. I mean, the VIX is at 26.5 right now, up only like 2.8 points. Again, given what we're talking about, the risk over the weekend, anything can happen here.

Let's get into that. Because back in the days when I used to trade options, eons ago, we'd always see volatility come down in front of the weekend. I can't imagine that's happening because traders have two days now of uncertainty. Yeah, actually, what we're seeing more and more, and I think it's going to be very important, this year. So look for this going forward is as you go into the weekend, VAL is always compressed, right? But because that tail, even though the at the money is compressed skew, the downside options are bid, right? So these dealers are actually short those out of the money put. So there's a tail risk. And so what happens as you go on the weekend

is the people can't hedge that risk as well. And nobody's going to catch a falling knife right into the weekend. So VAL can actually move, and Marcus can move a little bit more into these Fridays into Mondays than you would otherwise see. So I suspect with VAL compresses, throughout this year with all this ball compression, they're going to get a lot of moves Fridays and Mondays. Now, we're out of time real quick. But has it been an orderly move since last Friday? Incredibly orderly, and I think it will continue to be until we hit about March 18th, until OPEX. VIXPRAC's March 18th, March 20th is OPEX. After that thing's kind of unpinned. Put an X on your calendar, folks. All right, Kelly, back to you.

Gentlemen, thank you. Appreciate it very much today. Rick Santelli with Chem Carson. Coming up, our trainer says now is the time to load up on the mega caps and has a catchphrase to match make tech value again. Make tech value again. Do we want tech to be value? Should we make tech growth again? We'll get into it after the break. Welcome back. Dow is down. Can't believe I'm saying this, only 450 points. It's still about a 1% drop this afternoon. Russell down 2%. It has been a help. The administration clarifying that might provide some reinsurance backstop to the tune of 20 billion. Our next guest says investors are perhaps under appreciating the risks from the Iran conflict, though. Let's bring in Lee

and president and CIA at portfolio wealth advisors. Lee, it's good to see you again. Let's run through some of the trades that you are making. You want to make tech, what, value again? Yeah, you know, I mean, we're either going to get time compression on 25, 30 percent earnings per share this year on the NASDAQ. So if I just have the Q's, you know, the QQQQQQS go sideways for another six months, we're going to take those forward multiples down to what they were back in 2015

before people were concerned about overpriced, you know, markets. I think the big message here, we don't need a 10, 15, 20% correction in the NASDAQ to make it cheap again. All we have to do is have time compression, have this thing kind of flatline for a little bit, and the multiples will come down. And that's where I want to load the boat. And I'll tell you right now, value is getting pricey. I love it. I've always been a value player. But right now, I could see this summer, I could see by Thanksgiving trimming all that value that's done so well that's been killing the NASDAQ over the last five months.

and trading it in and start overweighting tech again. But in other words, you're waiting because you think that what we're currently seeing has more room to run. Like you think the Iran conflict maybe presses all of this to an extreme before you get involved? Well, you just heard the option traders in Chicago. Everybody's long. There's a structural reason.

There's just a perfect little reason why we'll never see the VIX over 30. I don't believe that. Everything's fine until it is. This has been the most shocking week I've seen. Now, I know we've had a 2012 Shell revolution. I know that we're energy independent. But at the end of the day, this is not going to go away. This isn't something that Trump's can get bored with in another week or two.

This is a real war. We're going to keep pounding them. And I think that's going to have repercussions as people start seeing. We're going to get drawn into this in the whole Middle East. And it's about time that this happens. But remember, from an energy perspective, let it go to 100. Let the correction happen. China is the one who's buying 90% of Iranian oil.

They've got the problem. India is the one that needs liquefied natural gas out of the straits and can't get it. So it's a Europe, it's a China issue, but I still think people are going to come to their senses over the next few weeks. Plus, a couple weeks, option expiration, we've got the Fed talking. The Chicago Fed president said it best. If you got slow higher and you've got the threat of inflation, what's the policy response? I think the policy response could be nothing and that could rattle the cage. So what are the moves finally that you're making right now?

So I would love to see five off the S&P. Could we get 5%? Could I get 6 or 7? The NASDAQ's down about 5 from highs. Small cap value is where I want to put my money right now. If I had to buy some individual stocks, I'm going for the big value plays in the Mag 7, which are Amazon, which are Google. If I want to speculate, not for my clients, but if you hate your money, I'm all about P-Sky right now, Paramount SkyDance. I think that people are undervaluing the UFC situation and bringing that to that network. But overall, I think now more than ever, I would look at broad-based indexes. And if we see a bad Monday or a bad Tuesday or just three days of a little bit downward volatility, I want to be in small-cap value.

I want to be in the S&P. And then, like I said, wait on the NASDAQ a little bit, but then you've got to go and deepen those forward multiples compress because the earnings are strong. It's just the sentiment, I think, will bleed off soon. Lee, appreciate it very much. Great to check in with you. Have a great weekend. Thank you. Lee Monson.

Let's get it over to Sima Modi with a CNBC news update. Brian, here's what we're watching at this hour. The Justice Department has formed a working group to look at possible federal charges against Cuban government officials. That is according to a report from the Washington Post. President Trump hinting yesterday that he would return. He would turn his sights to Cuba after Iran, saying it's just a question of time. Google and Amazon say they will continue offering Anthropics non-defense-related

products to customers after the Pentagon officially designated the company as a supply chain risk earlier this week. Microsoft was the first major partner to say it will keep working with Anthropic. Late Thursday, Anthropics said the Trump administration had left them no choice but to challenge the risk designation in court. And Texas Attorney General Ken Paxton says he will stay in the Senate primary race as it heads to a runoff no matter what. Paxton forced a runoff against incumbent Senator John Cornyn earlier this week. But President, Trump said he would endorse one candidate in the race soon and asked the other to drop out. Gordon had a slight edge over Paxton in Tuesday's election results. We'll be watching it.

Brian, for now, back to you. All right, Sima Modi, thank you very much. All right, President Trump vowing on social media, there is no deal with, hi, Kelly, with Iran unless unconditional surrender occurs, it's the likelihood of that happening. Talk to somebody that knows Iran probably better than anybody else. That's next. All right, as the Iran war enters day seven, and it's so truth social post, President Trump, Trump vowing, there'll be no deal except unconditional surrender. He goes on to say that after the selection of that and a great acceptable leader, that's his term, we're going to work to bring Iran back from the brink of destruction.

But exactly who could this new leader be? What is the ultimate end game? Let's get some insight from Michael Rubin. He's not only senior fellow at the American Enterprise Institute. Former Pentagon official, he actually lived in Iran. So, Michael, there's nobody better to speak with than you right now. Thank you. You know, I was talking to Stephanie Link earlier, and I was like, it's like a fist fight, right?

You know, you can say there's an endgame, but once you throw a punch, you just don't know how it's going to end up. Iran's a proud nation. We can beat them militarily, but what do you think is the ultimate endgame? What does Iran want? Well, at this point, what Donald Trump wants is what's more important, and that increasingly seems to be regime change. The question is whether it's going to be complete regime change or something like a Venezuela model, increasingly it looks like Donald Trump is leaning towards the ladder. Venezuela, the new, for now, leader of Venezuela, Darcy Rodriguez, you know, she's no fan of ours.

She's called the United States names publicly, but people I talk to say we can work with her or she will work with us. Is there somebody in Iran that would fit that same mold? They don't have to like us, but they would be willing to work with us, particularly around their nuclear program. You know, I think it's possible that the Iranians will compromise on their nuclear program. In 1988, when Ayatollah Khomeini was forced to accept a ceasefire with Iraq, he likened it to drinking from a chalice of poison. The late Supreme Leader, Ali Khomeini, could never make that compromise because Iran has lost more than $2 trillion under his watch because of sanctions and lost opportunities. He couldn't tell the Revolutionary Guard that this is what their sacrifice was for and then give it all off. but his successor could.

There's three names being mentioned. Hassan Rouhani, the former president, Kalaubov, who used to be a Revolutionary Guard Air Force General, as well as Ali Ladajani, who also comes from a Revolutionary Guard background. But this is where I think Donald Trump gets it wrong. He underestimates the ideology that these men embrace and how they're going to consistently try to undermine it.

Well, Laura Johnny may be dead. I heard that. Yeah, Rouhani is 77. years old. So, you know, 77 years old is that when you want to start to run a nation effectively? What's the variable of the Iranian people? Okay, we've seen 10,000 or more reportedly killed at the hands of the government. These are people that probably most of them just want to be free, love of life, put food on the table. Is there a chance, as Donald Trump said at the beginning of this, that we could, that they could step up and sort of take back in some way their own

country, or does the theocracy, the Ayatollahs, do they have such a grip on this country that change will not happen? Hey, Brian, this is what you need to understand about Iran. In 1979, when you had the revolution, people united what they were against, the Shah. They were promised in Islamic democracy. They got neither, but they got the Iran-Iraq war, a war that killed a million people. This has led the Iranian people to be very, very, very, very. of change and the sacrifice that might come next. And look, the chance of a civil war inside

Iran is very, very high. That said, they are willing to step up. They hate this regime. It has no legitimacy. The worst thing we could do, however, snatch defeat from the jaws of victory or by supporting a Kurdish model and signaling to the Iranian people that perhaps their country is going to be dismantled. That would be the worst option at this point. It does feel like kind of peering into the abyss to some extent there. Michael, thanks for now. We appreciate it. Thank you.

Michael Rubin, senior fellow at the American Enterprise Institute. More power ledge after the break. All right, like Stephanie Link said at the top of the show, anything could happen over the weekend. We get a peace deal of some kind. Let's pray for that. Markets probably rip higher Monday, limit up. Either way, big week oil.

In fact, biggest week ever for oil, Kelly, in the futures market anyway, 35% gains for oil. We're up 12.5, 13. percent today. We're back above 91. I hate to say it. I want to be optimistic on a Friday. Gas prices have been higher. They're going higher. Unfortunately, if we could quickly show shares of Blue Owl as well, let's watch the private credit space. Again, to just make sure that whatever exposures there are to whatever types of companies, software and otherwise, that the situation remains calm and contained.

And they're down about 4 percent today as reports continue to swirl about to what extent their investors may come in and even bid for some of these portfolios that have been distressed. So that's the space to watch. Yeah, big weekend. Keep it on on CNBC.com. Live updates all weekend long. Thanks for watching, everybody. We'll see you on Monday.

Closing bell starts now.