Power Lunch - SK Hynix Pops in Nasdaq Debut, Recapping the Russell Rally, Energy Market on Edge 7/10/26

Episode Date: July 10, 2026

The S&P 500 is on track for a weekly gain as mega-cap tech stocks lead the index higher on Friday. Brian Sullivan and Kelly Evans are joined on set by Hightower Advisors’ Stephanie Link and Advisors Capital Management’s Joanne Feeney to react to SK Hynix’s U.S. market debut on the Nasdaq. Dan Veru, Palisade Capital Management CIO, joins the program to break down his small-cap winners from the first half of the year, and the anchors chat with Caryle Group’s Jeff Currie on the demand for global energy as the SPR hits its lowest level since 1983. 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 set to end a good week hire. Welcome to Power Lunch, everybody. I am Brian with Kelly, the big tech market momentum holding today. Index is on pace for a second straight week of gains. Once again, leadership coming from the place you like to keep coming back to tech chips and AI trade. And that brings us to energy with WTI and Brent under some pressure. Crude sliding as traders weigh the future of the Middle East and rising oil supply. Jeff Curry, longtime commodity strategist, now senior advisor.

at Carlisle joins us on what the latest moves are telling us about production and supply. All right, let's kick things off in Korea today, because Korea is actually the home of a big test for the AI trade. South Korean memory chip giant S.K. Hynix, raising $26.5 billion in a record-breaking ADR, American depository receipt offering. S.K. Heinex shares having a very good day up 15%. But not everybody right now is chasing the stock. And one investor says you've got to take more of a longer term approach on earnings. Joining us now to talk about that and more. Joanne Feeney, partner and portfolio manager and advisors capital management. Also with us here on set, Stephanie Link, CIO of High Tower Advisors, chief investment strategist and a CNBC contributor. Stephanie,

Joanne, great to see you both. Hi. Good to see. So, Stephanie, are you putting all your clients' money 100% to SK.K. Heinex today? I don't think so. No, but I will tell you what I bought new, first time ever. Okay. Invidia. Okay. Today is the first time you've ever bought Nvidia? I bought it two days ago. Wow. You, I've never owned it. I've owned Broadcom, to be fair, and I did well with that. Yes. And Marvell, I mean, I've participated. Totally. And also, by the way, the whole AI food chain, we talk about all the time, right? The data centers, the power the grid.

So I have plenty of exposure, but Invidia is just... So why not S.K. Heinex? I know the full trade is Tuesday. Today is kind of a win-issued basis. A bit of a technical thing, but whatever. Why not S.K. Heinex? Because Invidia is trading at levels we have not seen since 2019. And their earnings growth was over 100% last quarter.

Revenue's 85%. Margers are in the mid-70s. And the free cash flow is going from $96 billion to $206 billion next year. They have the cash flow. almost 4% to date. Yes. 21 P.E. It is, but it's the cheapest we've seen since 2019 at 15 times EBITDA, 18 times earnings.

And so to me, to own best in breed on sale, I think, and it's totally lagged. By the way, it has lagged the sector, 52% year to date. Wow. And 72% over the past year. There is someone sitting next to you. Who knows as much as anybody could know more than me about the semi-space. So I am very curious, Joanne, for your thoughts on on Vividy and on all of it. Well, it's wise to be able to do.

jump into NVIDIA when it's pulled back like it is. And we actually did that in early 22 after it pulled back about 20 percent. And, um, was this before the launch of, it was. It was. It was early. It was like January. Wow. It had come down from its high. It was just a video game chip maker back then, I think. You know, it was, but we also knew about their work in high performance computing. So we knew they had these advanced accelerators. Um, we didn't expect to see the big announcement from, from, from, uh, with chat GDP in the fall. But, you know, the stock continued to go down and one has to be prepared for that to happen. Um, and, um, and, and, um, and, and, um, and, and, And we actually doubled up on it when it went down.

But I agree that there's an opportunity here in NVIDIA. They are clearly going to be the market leader for a long time to come. Not to say that they're not going to face more competition. They are. Broadcom is something we've owned since 2015. Two of the biggest broadcom fans in the world. Over the past, it's like the fan club. I think we also both own synopsis.

Do you own synopsis? Yeah. So we both own. And they sell into them. So it's like it's a lot of different exposure, a little different. Yeah, the challenge of chip design is only going to grow. Yes. And so synopsis is well positioned.

But again, no S.K. Heinex. No S.K. Hynex. And I'll tell you why. Which is our top story. It's the reason I keep saying S.K. Heinix. I'm not just randomly saying that. Say it. Just say it. If I say it enough, maybe like, you know what, darn it. Well, you know, we aren't so interested in it.

We're not interested in Micron either. And the reason for this, as I've spoke to Kelly before and you guys before on this show, is that a lot of the earnings boosts that we've seen has been. in pricing, right? And pricing is likely to come down, and the stock price is likely to come down well in advance. Now, what's going to cause the price to come down? When all of these guys, all three major players, start to add capacity, and that's going to begin over the next year and two years, and it's going to go up a lot. Now, that's one reason why one has to be a little skeptical, right, about these memory companies. And it's also why they trade so-called cheaply. It's not

cheap. You have to look at the earnings power across the cycle. Now, S.K. Heinex is arguing a cycle is dead. The cycle is actually not going to be something that's going to threaten them because, and there's some truth to this, the AI agents will be the ones, you know, using the AI compute. And they're going to operate 24-7 and there's going to be a lot more of them, as opposed to the people that used to use smartphones and PCs. Right. And so it could be the case, right, that demand remains far more resilient. that growth remains far more resilient than we're currently modeling. But there's just a much bigger risk and better to own a Broadcom, better to own an NVIDIA.

It's also the momentum trade. All of these are momentum. And Broadcom and Invidia are like the anti-momentum trade at this moment in time. They were the leaders over the last several years, and they have fallen. And the valuations, both of them, are actually more attractive. And nobody wants them now. Everybody wanted them over the last couple of years. Now they want these momentum names.

And momentum is great on the way up, but on the way down, it's very hard to catch a falling knife. And here's your S.K. Heinex sort of fact of the day, Brian, which is we were speaking to Medi Hesani last hour. And he, the stock trades cheap is five times, or five or six times. But he said to him, they do high bandwidth memory. That's for a lot of the training of chips. We're moving to the inference phase. We're all just using the LLMs more. And he said he thinks that shifts the business away from an S.K. Hynex more towards, for instance, a micron. He thinks the peak for S.K. Heinex could be next year with HBM 4, as he calls it. So this is the discussion, even as it's entering the market today, I don't know if that means. I have no idea what this means for the stock price and whatever.

But there are people out there like him who's followed the company for 14 years and aren't so sure that this is the moment. Well, I'll tell you, we had a 13% drawdown in the SMH from June 22nd, the peak. And the Cospy was down 23% from the peak. But they're still up 60 and 70% on the year. So it's not like, okay, the pullback is maybe attractive, but it's not like these things, even though they're cheap. They could go a lot lower if you continue to see this rotation, which we have been seeing a rotation.

The nice thing about the market as a whole and the rotation is in the face of seeing a correction in the semiconductor industry, in some parts of tech, you had health care gain 9%. You had financials gain 6%. You had cybersecurity of 20% in the same time frame from June 22nd until January. just this week, right? You also have the MAG 7 up 7%. So you have a broad... A lot of numbers there. A lot of numbers, but the reason, my point being, is that there is a rotation and the numbers are good. And I think the reason we're seeing rotations is because the economy as a whole is still hanging in. They're doing better than hanging in. It's actually great. Okay, Link.

That change in technology, though, that you raised, Kelly, is really important for the other opportunities. It isn't just the memory is going to become more power efficient. The point is micron has this low power DRAM, this very efficient DRAM. That's what's going to give them the opportunity. But look in the chip space as well. Invidia's chips are pretty power hungry. They're always trying to make them more efficient. AMD. Yeah, but they're not. The next version is going to require like twice the amount of energy is the current version. I mean Rubin. Not necessarily per compute. No, not per compute. Fair enough. Fair enough. But let's be clear. That's the reason we talk every day about data centers and all this inferencing and all these companies

that have to do all this stuff because they require so much computing. I want to broaden out for one second, link. I was going to see your numbers and then raise you a 28. And 28 is the number of executives at tech companies who have bought their own stock recently. According to sentiment trader, which Joanne is the highest on record. 28 execs at big tech buying their own stock. highest ever. Insiders sell for a lot of reasons. They need new boat, new pool, whatever it might be. They buy for one reason. They think the stock is going up. Do you like that kind of data? You know, it's a bit iffy. I remember as an analyst, some folks would be concerned that a CFO of a company I had a buy rating on was selling the stock. It's like, well, you know, he wants to

diversify. It's smart. All of his life is in that company. But in this case, you have to recognize that the insiders do have better information than the rest of us, right? They're going to see a lot of what's coming before the rest of us are. But you have to be a little bit skeptical, too, that they might be drinking their own Kool-Aid a little bit. Well, I'll tell you who did the best job buying his stock, was the CEO of Palo Alto back in February, about $10 million worth at the low. The stock is up now, 65 percent year-to-date. It's been a home run. And also, I was thinking about meta, which there were some analysts saying they had this YOLO options package a couple of months back. And now all of a sudden come all these announcements,

about its new model, and they're trying to get into the chips business and everything else. Joanne just quickly, you're sort of heading the direction of almost to me, it sounds like suggesting that as we transition from, you know, training to inference, are we going to need less power? I mean, were you going that far as to say that we might be transitioning kind of in the AI infrastructure plays as well? I think there's two things that they're going to need. They're going to need more compute, but they're also going to want it to be more power-efficient. And so that gives, for example, AMD an opportunity, right?

their chips tend to be more power efficient than invidia's. And they've only recently, right, gotten into this AI accelerator space. So that's something we have in the growth strategy, for example. AMD is. AMD is. Along with Nvidia, you know, we think it's wise to own the key companies providing the picks and shovels. There's no question.

Eventually, right, that lower power, that greater efficiency, is going to make using AI a lot more affordable. And that's when we're going to see it spread into adoption much more rapidly. Right. We're already seeing it in some industrial companies. We're seeing it in some of the banks. right, taking advantage of this. We're going to hear more and more stories about this.

You know, back in the day when I first got into this world, it was nanotechnology. Remember that? 2001, 2002. And I said then nanotech isn't an industry. It's going to be an enabler. Same thing with AI. It's going to be an enabler. Kelly brought us up yesterday. Does that commoditize it, though?

You have to worry a little bit about the models becoming commoditized, right? That's going to be the hardest. When I hear commodity, I think lower prices, lower value, Jim Kramer was tweeting out today. And you know who's the best voice? That Microsoft should buy, basically buy Open AI. Exactly. Because the value of their, and I'm summarizing what Jim was saying in the tweet, but like sort of the value is going to decline.

Yeah, that's clearly what we're trending towards. If you look at all the different models, right, we're seeing that become very competitive in what they offer. You can use chat TPT. You can use Klaude. China models are going to be much cheaper to use. So if anywhere there's a risk to commoditization, it's in the models. It's going to be very hard for them to continue to differentiate.

Without differentiation, you don't have price. above cost. What's cost, nearly zero. Do I think of the models? I own meta. I own meta. I mean, it's breaking out, so But that is a different story. Meta is not about the model. Meta's about it's

subscribers, it's advertising revenue. It's 97% advertising. So to the extent that they can change and pivot to a different kind of business, I think that's what people are applauding. But the rumors are going to spend $220 billion in CAPEX this year.

Up from 145-ish, right? And they're just spending and spending and spending, and there's also a rumor that they're going to do an equity offering. And that just doesn't sit well with me. Absolutely. But that being said, it's at 15 times earnings. And they are growing, and they are monetizing their business. I mean, the time spent.

Yeah, the time spent has gone up from AI, especially in video, up 30%. Time spent in general up 12% from AI just last quarter. And so they are monetized. it. They're just not doing it fast enough and as much as what people want them to do. But you see it show up in the advertising revenues. Whenever they increase their capital spending, it shows up in their advertising revenues. So they have a good ROI on that. What you worry about is, okay, all this recent spending to build data center AI capacity,

why are they turning around now and renting it out? Right? Did they build too much? Or do they just want to show that, hey, there's an alternative way we can monetize this? It doesn't have to be about us turning it into advertising bump up. Exactly. So it's probably a good strategy that keeps them a little diversified to make sure they have cash flow coming in from other sources. I prefer Amazon of them, all of them. I'm just going to say it. That stock is awfully cheap on a relative basis as well. Apple's just sitting pretty on the sidelines. Yeah, you guys do get out.

We like them both. Do you do Apple and Amazon? Apple and Amazon. All right. Thank you both. Really appreciate it. Joanne Fini, Stephanie Link, joining us to kick things off today. And a notable move overnight in Japan. The yen strengthening against the dollar, while long-term Japanese government bond yields moved. down. The Japanese finance minister said the government wants to encourage its major pension fund to invest more in domestic financial assets. That's raised speculation that the pension complex in Japan, including the $1.8 trillion government pension investment fund, could eventually tilt back towards Japanese stocks and bonds rather than overseas securities. After the break, a whole lot more for you to close out this busy week. Is it time to take profits in small caps?

That's the big question. We'll have a money manager answer later on. And maybe you shouldn't be so crude. Carlisle's Jeff Curry joins later with what you should be watching besides oil. He's the person to ask, by the way, about the commoditization of AI. But first, why is SpaceX stock struggling? One of the few skeptics on the street joins us after the break. The countdown has turned into a comedown for SpaceX. The stock is trading below its 150 first trade price from its IPO. It's lost a quarter of its value from its closing high since the IPO. And our next guest says that maybe more to come. Here on set with us is Moffat Nathanson's television's television. telecom analyst Julie Shue. She's one of the few skeptics on the street with a neutral rating and a 131 price target.

Remind me why, because others were easily at 150, 180, 200, 210, you name it. The arguments all to me sounds somewhat plausible, but what for you isn't adding up? So I think, and we had discussed this before, I wouldn't characterize myself as a bear, but the way that we thought about the valuation is here's a component of the business that we can analyze, and that gets us to call it 8, 8, 850. And then on top of that, we have this optionality that comes from SpaceX's dominance in launch. What's the 850? So you've got your connectivity businesses that we can see. You've got your AI kind of eye-ass terrestrial businesses that we can see. And I think where we probably end up a little bit more skeptical on the near term is do we think that orbital compute is going to get to the place that maybe others on the street is going to get to? Do we think that D-DD is going to be real without an NBN?

How hard is it, Julie, to analyze space? From a pure, you're smiling, from a pure numbers perspective, because so much of SpaceX is, and Tesla, too, by the way, all of Musk companies have an element of Muskean optimism in them. Right. Well, this may not exist on paper yet, but it's going to. How hard is it to actually analyze? I think that's kind of how we think about what we call the unknown unknowns. And the way that we think about that piece of the business is, look, we don't have the hubris to say we know everything that could possibly come out. But if you own the bottleneck, it is completely conceivable that you could own other components of the space economy. When you say the optimism, I would say, actually, this is probably more of a stock that's kind of an option or a publicly traded venture type of investment. We'll call it optionism.

I just made that word up, Julie. you can use that in your next report. Because let's say tomorrow, Musk comes out and says, we've solved data centers in space, we're going to launch one next year. SpaceX probably doubles. The stock, I'm making that up.

But if they're like, we figured it, we figured it out. Or if he comes out and says, data centers in space are further off than we thought because of X, Y, Z, whatever the problem. I don't think I'll ever say that. I don't think you want to be a fair point.

But you get my point. The stock, part of the thesis, I think, on owning SpaceX or Tesla. Tesla's worth more than every other major car company in the world combined. Yes. Combined. Right. At a certain point, that stock, though, when it first traded,

it was actually about the profit pool and the EBIT per car that they could sell. It was about the EV penetration, et cetera. And yes, there is an upside component of it once AI 2022 came along. The same thing here, data centers in space, for instance. What we want to do is couch for investors. This is what you should think about in terms of, how you frame the probabilities of these things happening. Musk has said data centers in space

we're going to hit 100 gigawatts launched by 2029. We think that's probably closer to low single digits by the end of the decade. And that's all analyzable stuff. So you can use that as an investor to frame, here's what the probability is. Musk believes this, Julie believes this, I believe this, and then you can put a number on it.

Speaking of Tesla, what's your kind of read on that situation in terms of a potential merger? between the two companies? Look, they first have to digest cursor, and this is a behemoth of a company. I think the industrial logic has remained to be seen.

They've obviously discussed TerraFab as a joint mentor working together. Personally speaking, it's tough for me to kind of understand it today, but it's... The logic behind a merger? Correct. Because I've heard some people argue

they're practically already... They're not saying they're sharing resources, but that there's a mind-meld sometimes with Musk companies. And we've seen him move assets back and forth between different properties before. We've seen him buy something like Twitter and then integrate it into other existing properties

like SpaceX. So why shouldn't we expect at some point this is all coming under one roof, especially if he has incentives to grow its market cap? Totally fair question. I think ultimately it's about what is the strategy of the business going forward if the focus is indeed on the chips.

I could see that potentially being real. But at this point, we're talking related party transfers. I mean, it's still a $2 trillion company, even with the stock declines that we've seen. And Elon Musk, arguably one of the greatest about the greatest business people in modern history. But just hard to value. Hard to value that aspect, right? That intangible Musk element. Right.

Some people buy the stock only on that. He's an incredible industrialist. We would never, ever question that. He has a team of incredible operators and executives below him. So, again, that's why we. wouldn't call ourselves bears. I like the preamble on your whole coverage. It's almost like the beginning of a novel.

It's like, let me set the scene first. I mean, because you have to cover him, unlike you cover any of the other. Yeah, and you also, you say, you're not a bear. It's just that you're just trying to value it like you should. Julie Shoe of Moffin-Nathson, really appreciate you coming on the program. Thank you. Thank you. Coming up, we'll take a quick break.

And then, Bri. Big time money in small cap stocks, Kelly. An historic first half to the year, while your guest says there are three stocks. No wheel on musk. Three stocks that you should be buying that. It's been a year to remember for small caps so far. The Russell 2000 way outperforming the S&P 500, nearly doubling its return up 20%.

But with some of this year's biggest winners like Terawolf and Bloom Energy graduating out of the index and with it seeing a slight slowdown lately, is it time to take profits in small caps? Your next guest, it says the rally may be due for a breather, but he'd be buying the dips. Dan Veru is chief investment officer at Palisade. capital management. It's good to see you, Dan. Great, thank you. So you are, you're a small cap guy.

Well, we know small caps. We've been doing it a long time. Not my first rodeo. Okay, not your first rodeo. They've been quite the outperformer this year. I mean, you have to sort of feel good about that. Does it make you, though, feel a little cautious, or do you double down? There's a couple things in there. First of all, this was a very, very concentrated rally. We talk a lot about the concentration in the S&P 500, but profitable companies way underperformed for the third year in a row relative to loss-making companies. That's never happened before. In the Russell 2000?

Within the Russell 2000. So the weakest parts of the Russell 2000 did really, really badly this year actually. But the strong marks, we've talked about how it's almost an AI play these days. The strong parts really outperforming. Not really the weakest. They're highly profitable companies. They just didn't get any attention. There was almost this crowding out effect that was really caused, I think, when we entered the war.

You know, and what happens, you go back to what war. worked previously. So everything that's AI-related, data center related. And then, of course, the semis were up 100 percent, more than 100 percent in the quarter within the Russell. That's never happened either. Then there's three companies we want to quickly get to. You always bring in names, and we love that, Dan, and we appreciate it. Kelly and I, two weeks ago, we were in Chicago, and we ran a sort on great Chicago stocks. And John Rogers, a very old comment on some of these. One of them with AAR, who was based out by O'Hare and I think Rosemont. Correct.

Not even downtown. No one's ever heard of them, except for you. And a few investors who made a lot of money in AAR, who are they and why do you like them? Look, it's a, it's, it, it, they service the airspace industry. So this is about takeoffs and landings and parts, spare parts. There's a whole ecosystem of companies that service this industry. This is a company that is improving its returns relative to other great companies that we've been involved with like HICO and others. And we're replacing Woodward Corp, which has been a

fantastic, also in Illinois-based company, with AAR, because we think that the prospects going forward for the next three to five years are very exciting for the company. You have a couple of others. MI Homes. Is it Vestis? Corp. Fort Worth tell us. And Vestis. Yes. So M.I. Homes is a Midwest home builder. They focus on the starter home market. We owned it Taylor Morrison, which is being acquired by Berkshire Hathaway, and Vestis, which is a company that's in the uniform business for companies. You know, this is a company that was spun out of Aramark. They had real stumbles last year.

Very bad execution. They brought in new management team. So bad, the stock's up 115%. Well, I'm just saying, but when it was spun out, the stock was much, much higher. So we're seeing really strong free cash flow generation at the company as they really streamline and move things forward. But getting back to small caps, I just think that right now you're seeing the market somewhat in rotation, away from those hot areas into the more profitable segments of the market, which have been really just been left for debt.

Three years in a row were profitable companies have underperformed loss-making companies. It's never happened. Okay. Again, this is like the, I'm going to see your stat and then raise you. Here we go. So it was the best first half to a year for the Russell 2000 since 1991. That's right. I mean, that's a long time even for me, Dan. And when I hear those kind of stats, I think, two things.

Number one, wow, the momentum is good. It's amazing. Or two, wow, it's all gone. We just basically, those were our gains for the year. How do you view it? So it'll be a choppy quarter. There's no doubt because typically when you go into an election cycle for the midterms, markets get concerned about any changes in policy and things like that.

Plus, we have a new head of the future. Federal Reserve. Oftentimes, new Fed Reserve chairman make a mistake early in their tenure. And the market has a real problem with that. But any dip should be bought because the Russell is the best expression of the broader economy. And the economy, I think, is doing extremely well and is likely going to pick up more momentum as the year goes on. Dan Vrew-Palasade Capital Management, MI Homes, AAR Vestis Corporation. And always a pleasure to have you on where you love your views and your picks on Opportunity Fridays. And we did a small cap webinar, which is on the Palisate Capital website, with one of the great analysts of the small cap world, Jim Fury.

It's worthwhile taking a look. All right. Dan, we appreciate that. Thank you. Thank you. Have a great weekend. All right, coming up, we are going to look beyond the barrel. Why Carlisle, Jeff Curry, says, oil prices are not really what matters right now. and he will lay out what does matter. Next. The market is trying to keep up with a barrage of geopolitical headlines.

At a true social post today, President Trump, said that Iran has asked to return to the negotiating table. But then he also reiterated the ceasefire with Iran is over. That after some Iranian military attack commercial ships earlier this week and the U.S. responded with a blistering attack on Iranian infrastructure. But while Iran certainly gets most of the headlines, the bigger energy story right now, Maybe what's going on in Russia because Ukraine keeps hammering Russian energy assets inside that country. Look at that. A Russian refinery left in flames after Ukraine hit it with the drone.

It is the latest Ukrainian attack deep inside of Russia and is consistently hammering Vladimir Putin's money flow from oil. It is also impacting pricing on oil-related products. And that is something that Jeff Curry says you need to watch more closely than maybe just oil. oil prices right now. Joining us is Jeff Curry, senior advisor at Carlisle. Very easy, Jeff, for us in our defense to throw up the price of oil and say, well, here's a barrel of crude. It's up or down, a little harder to track some of these other markets. You say, though, they may be more important right now. Why and what are you watching? Well, ultimately, the consumer does not buy oil. The consumer buys gasoline and diesel.

And when we look at gasoline diesel prices, you do not see the ceasefire that occurred on June 17th. They just keep wiggling higher and higher. And if you look at the spread between refined product and crude oil, that spread, we call it the crack spread. It is nearly the same level as the price accrued in some places, and it's at all-time high. Obviously, you know, I like to think about what happened with the straits as being like a pimple being popped. You push a lot of oil out. that hit the crude price, but what's really going on is we have huge losses of refining capacity all over the world. Let's start with Russia as being the big one that you pointed out.

They are, the Ukrainians are going 1,300 kilometers inside of Russia doing precision strikes on the CDU units, the crude distillation units in these refineries and taking them out. We estimate 60% of Russian refining capacities taking out. That's 3 million barrels per day. You know, to give you an idea, there's lines, you know, gascation lines in Russia. But more importantly, the Russians are importing product from India right now. They're supposed to be the big exporter. So this, I think, is really serious.

And one thing it's important is we do not have strategic reserves on refying products anywhere in the world. Before we could solve the problem with crude oil, you know, with the disruptions in the Gulf. But let's take what's happening in Russia. It's on top of refineries not operating in China. Refinery is not operating in the Middle East. You had an earthquake disruption to the large refineries in Venezuela. We have a lot of refining capacity online. I think the market needs to pay attention to this because it's not just what happened in the straits or hormones,

but it's what's happening, as you pointed out, geopolitically on a global basis. Jeff, it's Kelly here. And just to double down on that point, we spoke with Robin Brooks last hour, who has been saying a blockade of Russian oil. should be a move considered if we're serious about ending the war. Yes, it would be a huge deal, but that's kind of the point. And he thinks the oil market has proven flexibility in response to these shocks. I'm just curious. He said, look, even in the case of Iran, if you double down on the blockade, maybe prices go to 125 a barrel. Again, he thinks not catastrophic. So I'm just curious

for your reaction. From the point of view of trying to achieve those goals, do you think that the oil market and with the product situation you described, that it can still take that in stride. By the way, these refineries are built in the old Soviet system. They're a refinery sitting in a city with a crude pipe going into them. There's no way to get to redirect the crude. At most, maybe a third, 30 to 33 percent of that crude could be redirected, and most of that's already been redirected. This is lost supply, and it's really difficult to redirect because the system was built to round that these refineries would be operating, you'd be able to move the product out. So this is not, the blockade is there.

The Ukrainians are hitting them in creating the blockade that you're referring to. So it's not like a large amount of crude can be redirected. And that's something that's very different about the old Soviet system. It was built. We export crude here. We export products. And these refineries are built in the middle of nowhere with pipes going straight. That's my point.

That one that we're showing, by the way, is in Omsk. I'm not super great on Russian geography, but that's like a thousand miles away from Ukraine. This is not, bless you, this is not on the border of Russia and Ukraine. This is in the middle of Russia. This shows that Ukraine is able, pretty much it will, to hit Vladimir Putin where it hurts, and not on the border. Deep inside the country,

it'd be no different than some foreign adversary striking something in Nebraska for us. This is a big deal. How does this factor in and layer on top of the Iran stuff, which, by the way, is not fixed because the number of ships going into the Arabian Gulf is way less than the number of ships going out. Yeah. I mean, these problems, it's just you have one bottleneck shifting to the other bottleneck. You know, the core of our super cycle thesis in commodities is decades of underinvestment in physical capacity of the global economy, particularly in the West. And so the ability to adjust to these things becomes increasingly more difficult.

The more times they happen, the more depleted the inventories become the bigger the price spikes. And everybody goes, oh, the thing spikes and it comes down. Oh, it's over. No, a super cycle or underinvestment. And I like the hard asset local operations, Halo, as being the theme. We've underinvested in these hard assets. And it's not like the prices trend up. They spike.

They come down. The way I can do it is you have supply drop below. demand, price is spike, bring demand down in line with supply, then the price is dropped. And then demand goes back up and boom, you just go over and over and over. It's not going to be an upward trend. And even when you look at investment vehicles like the U.S.O, which is a rolling front month on the crew curve, it's up 33 percent since the beginning of the war, despite the oil price hadn't been lower. Why? Because you're banking those spikes every time one of those spikes happen. And that's really the key theme here is this underinvestment. You know, you look at Targa and

Williams, you know, trading at record highs right now because midstream is a bottleneck in the U.S. Refining in Russia and the rest of the world is a bottleneck right now. A few months ago, it was the upstream. It doesn't mean it's not going to happen. It was silver. It was copper. Right. You know, I can keep going down the list. It's a rotation of the bottlenecks, but the underlying cause is exactly the same, these decades of underinvestment in the ability to produce these commodities. We have to go, which is why I should not ask you the following question, which opens up an entirely new can of worms and different subject altogether, Jeff. But because we've been calling attention to it, I just want to give you a quick moment to respond. The massive capax and the model

introductions that we're seeing by the Mag 7 feel like more of what you've been saying, which is you as a commodities guy, have been watching these tech companies turn themselves into something like commodity producers. And I just would love a comment given all the headlines lately. They're putting steel in the ground. They're sickical. Their old model was infinitely scalable at zero marginal cost. That's what software does. Now, the problem is, as you scale up a commodity or a physical business, that supply curve goes like this and goes vertical, and you start getting pricing pressure. And I think that's being missed. But another important point, you start putting steel in the ground, you become cyclical. You become cyclical. You're not getting the 30 multiple anymore,

or 32 or wherever they are. You're getting re-rated. You know, our commodity world's a 10 to 12 type multiple. And I think that that point is being missed on the markets that these guys are just another commodity producer. They produce AI compute. And it's a very cyclical business. I want all of them to respond. I would call every single head of all the men. I would say, I want a direct response to what Jeff Curry is saying. They're dancing while the music is playing. Jeff, really appreciate it. Thanks today. Jeff Curry from Carlisle. Let's get over to Contessa Brewer now for the CNBC News Update.

Hi, Contessa. Hi, there, Kelly. A Legionnaire's disease outbreak on Manhattan's Upper East Side has made at least 28 people sick. New York City of Health officials say they have tested nearly 160 cooling towers and ordered at least 19 buildings to clean and disinfect their systems. Officials say the risk to most residents is rare, but anyone who has a fever or cough or shortness of breath should go in and see the doctor.

The White House is considering a plan to add permanent fencing near Pennsylvania Avenue and Lafayette Square. CBS News reports that proposal is still in the early stages. It has not been approved by President Trump yet. Officials say the goal is to improve security and reduce the need for temporary barriers during major events. And the European Union is warning meta to change parts of Facebook and Instagram that regulators say are designed to keep users hooked. The EU says features like infinite scrolling, auto play videos, and personalized recommendations

may violate digital safety rules, especially for children and teens. Meta disagrees. It says it has added teen protections. The company could face major fines if those violations are confirmed. That's a story that is ongoing. We'll keep our eye on it, Kelly.

Yeah, and that Legionnaires, there's been everything going around and people being sick. Is it Legionnaires? Weird stuff going around. I don't know. Contessa, thank you very much, Contessa Brewer. The latest in the options market, a big nuclear call. We have details after this.

Traders are going, well, nuclear over one stock. It's Oclo. And there's been a huge bet just made on the nuclear startup stock and options. Oliver Renek, joining us down for the CBO in Chicago. Saw your piece yesterday, read your piece on CNBC.com, and that Oaklo News really caught my eye all over. Thanks, Brian. Yeah, we're seeing bullish flows following up today into nuclear business.

Oaklo is the AI trade, power trade, holds year-to-date lows. Traders are looking for underperformers to catch up right now. That's the theme here. The stock's down 2% today, but call volumes double puts, and traders bought more than three times more calls than puts today, possibly encouraged by that big $21 million purchase of 50,090 strike calls in Oklo yesterday that expire in mid-December. Those contracts now go for just under $4, which means they need Oklo to almost double over the next five months. The interest in the stock appeals to a

category of traders. You guys are going to love this. I've heard labeled the bottleneck bros. They're retail traders communicating across online venues looking for stocks that might be the next micron benefiting from tightening AI supply chains and tracking the trades of one guy in particular, Leopold Oshenbrenner, the 24-year-old former Open AI executive who's grown his first try hedge fund into reportedly $20 billion in less than two years, according to the New York Post, guys. So glad that you're all over this. Oliver, I was reading, I love the bottleneck bros. That's hilarious. It's a little bit of what was going on during the meme stock era. You're basically trying to find a shortage where people are shorting a stock. Now you're looking for a shortage literally of supplies and trying to push those things higher. Okay. And Leopold, Brian, we need to invite him. on the show for sure. Okay. Meantime, Oliver, triple Q's. There was, okay, explain this to me. What's the action you're seeing in one of the most important ETFs out there? Yeah, this was massive, and this kind of dovetails right into this. A lot of this action

happened around midday yesterday in the tape. What we saw was someone with a giant $20 million plus bet against the cues. Take that bet off, most likely. Judging, by the way, we saw it open interest versus volumes. So what they did is they went and they bought back calls that were paying off basically right at the all-time high for the NASDAQ. They had met a bet that the NASDAQ's was not going to make a record by the end of this month. And that trade still had a very high probability of making even more money, maxing out the profit for them. But I think all the dip buying gave them cold feet. They snatched back the calls. They closed out the position. And lo and behold, we're firming up again here today, guys. Oh, all right. Oliver, thanks. Really,

Appreciate it, Oliver Renick. All right. Coming up, it is our Power City Index's mid-year checkup. What city is number one in America in the stock market, not the top state for business, the top city for the stock market. The answer to that. Yesterday we heard from Scott Cohn about the top states for business. Well, today it seems like a good time to get a check on the best cities for the stock market.

We do that with our exclusive Power City Index, looking at the average return for the biggest 11 or 12. stocks in 38 different metro and city areas. And there are some big gains this year, but maybe not from the cities you think. All right. Kelly, I was going to count down to the top three, but we actually have a tie. Second and third are exactly the ties. It's not any particular order. Portland, Oregon's biggest company, Nike, has been in a rough investment this year. It's down 30%. But ABS, NWPX, lattice semiconductor. They have powered Portland to a 40% average gain. It's tied with Rala, North Carolina, which has a 40% percent. average return from big gains in biotex like liquidity, TG therapeutics, and then extreme

networks. But right now in the lead this year, Austin, Texas, 45% average return at Adel, Flex, Silicon Labs, and more so. Wow. Hookham Horns. Congrats to the capital of Texas for being the capital of the stock market so far this year. But as I look at the calendar, I'm reminded, Kelly, we have about six months to go. I still think, I think you need to go to Austin and talk to these. I think you need to go to all three of these places. Don't tell me twice. Austin, Raleigh, Portland, Oregon. I think we should go to Austin.

I think you should go to Austin. We, the show. We should go to Austin. I have some good friends in Austin who I would love to see. And those companies are fascinating. I mean, from what I understand, it's kind of a growth town. I've heard about this. That's sarcasm.

Listen, it's also a growth. We do this, and it's exclusive. And we run the date. It's for fun. They're all equal-weighted baskets. Don't you all come out me and be like, well, what about the price weighted. These are all equal weighted. I get it. Listen, if you work for Dell or Flex or Crowdstrike or Silicon Labs, it's such a great reminder. You're feeling wealthier than even just your home price

appreciation. And there is way more going on in this country than just Wall Street and Silicon Valley. Kelly Evans, live from Austin on Monday morning. It's going to be great. It's hot down there. More power lunch after the break. Ask and ye shall receive. Earlier in the show, Kelly Evans was like, I wish we could talk to a data center company about cooling and things like that. Well, guess what? Vertive CEO Giordano, Albertazzi will join us on Monday. We'll talk about data centers, cooling them. Demand.

That stock, by the way, is up a cool 1,100% in the past three years. Best SPAC ever, Chairman, Dave Cody. And namely closely watched this week as well is Tara Wolf, speaking of this data center idea. Even with today's pullback, it's on track for a strong week, and it comes after Anthropics signed a 20-year lease for its Kentucky Data Center, which got us thinking, Calling them a Bitcoin miner doesn't even feel like the right name anymore.

These companies have shifted from crypto to powering AI. So what should we call them instead? Here are some of the top suggestions you sent us on X. Power factories, power accelerators, megawatt miners, and AI reeds. Which one would you vote? I'd go for AI rates. AI reits? They're not going to want that.

Except that changes their pass-through taxation. Well, true. They're not technically. Maybe they will be. It doesn't capture that. kind of group. But that's kind of the point. Once they re-rate, that's what I was saying to Prager. At some point, it is kind of a boring

business. Yeah, but it's a boring business that made a lot of money for investors, which is not boring. By the way, you know what else is not boring? Fast money tonight. I'll be hosting it. So tune in. Looking forward to that. Are you? Thanks for watching, Power Lunch, everyone. I am. I am. Closing bell starts now.