Power Lunch - Stocks Bounce Off Session Lows 3/3/26

Episode Date: March 3, 2026

President Trump announces that the U.S will give insurance and military support if necessary to allow tankers to cross the Strait of Hormuz. Memory stocks slide.   And what areas should investors be looking to right now?   Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to Power Lunch. It is a wild day for investors and the global markets, oil, gas, gnat gas, even food moving higher. But we are seeing a reversal in stocks. We'll tell you more on why in moments. The Dow is down. But at one point, it was down 1,200 points earlier. Big Tech getting caught out as well. Energy prices, they're higher as really maybe the only thing that may matter to global markets and the economy is when ships can safely steam through the strait of Hormuz. We have some breaking news in the last minute or two on. on that topic, and it is sending buyers back into the market. Quickly keep an eye on treasury yields as well as the Iran conflict enters its fourth day. The 10-year popping above 4.1 briefly, traders are grappling with the idea that inflation could heat up again. We've got an all-star lineup of experts on deck to help you make sense of everything today from policy fallout to corners of the market where you might be able to make some money right now. All right.

Certainly there is a lot going on, Kelly, obviously. And this breaking news from Politico, we're going to get to the reporter in moments that maybe the U.S. is considering military aid to help ships get through the Strait of Hormoos, something we've talked about. I think that's the only thing that may matter to stocks, and that's what we are well off our lows. Big reversal. We were down almost 1,300 points earlier on, down 335 in the Dow right now. There's the intradate chart, well off the low of down 1277. Traders are beginning to worry the U.S. Iran conflict could drag on longer than anticipated. Here to discuss amid all this uncertainty. Allie McCartney is managing director at UBS Private Wealth. Steve Sosnik is chief strategist at Interactive Brokers.

It's great to have you both here. Allie, kick things off for us. We were just talking about, look, there might be a little bit lighter liquidity this week. I mean, there are a lot of conferences going on it to your point, and the VIX is popping, but a lot of other things are talking to Katie Stockton are showing signs of breaking down. Those that had been so strong this year. So that's the backdrop now for the events of the day. Yeah, exactly. So first of all, we've had really muted volatility.

on an index level relative to what's been happening underneath the hood. We've been talking a lot about that, the broadening theme, how much dispersion there is under the hood. And now we're starting to see it on an index level. And if you talk about all the themes that we came into this with, although the last two days has been really myopically and should be focused on the conflict in Iran, you know, there's a lot of leverage in the system. And so that's also going to increase the volatility that we're seeing.

But at the end of the day, from a technical perspective and from a fundamental perspective, I haven't heard anybody talk about, you know, we're expecting 12% earnings growth this year. We got some earnings this morning from a company that talked about both situationally, it elucratically and structurally how much they, how well they are doing and brought up their earnings. I'm not about to say single stuff. Oh, thank you. It has a logo that is a red bull's eye, yes, following. But in other words, that to you was a data point that in the earnings is a data point that fundamentally things are still okay.

It's just that fundamentally things are still okay. But this oil price shock could be real. I mean, the oil price shock could be real. And that's why I think to Brian's point, the conversation really is the tenor. And that's the, that's the million dollar question that nobody can answer. And so we have a year end price target of 67 on oil. if that is where we end up, and if this is both short-lived and supported by our government in some fashion, and mind you, we live in a country that has had years of oil independence as opposed to the last time we were in a similar situation,

then I think we'll get back to fundamentals really quick. Steve and Allie, I know you guys were getting on set. There's some news out of Politico that's moving markets, and I'm not going to say that we're going to end the day higher, but we are well off our lows. The Dow's only down 350 points right now, almost. turning into an average day in the market. Politico, Steve, moments ago saying U.S. considering military support for Middle East oil and gas supply sourcing two people close to the administration, the story just out. One of the political reporters will join us in moments to get more on this

story. It's literally happening as we're talking about. I have argued that I believe that moving ships through that region, that choke point is going to be what moves the markets to Alley's point. earnings growth is good, the economy's good. This is the risk. I'm kind of putting you on the spot here. Steve, what's your take on that story, but also the relative importance of getting that choke point moving again? Well, Brian, that is the key element. I mean, that's really what should be the concern here. And that's what differentiates this event from some of the other geopolitical events that the stock market was able to shrug off pretty well because what? Venezuela, they weren't really part of the global oil. discussion anyway to a large extent. Iran and the Strait of Hormuz and cutting off, let's say,

LNG from Qatar, things of that nature. That is crucial, and that is why you saw bonds not have a flight to safety bid yesterday, but have a sell-off is because of those inflation fears. So if you can keep the straits open, that reduces global inflation. Otherwise, you get into a situation where we have to worry about the grinding of the gears in the global economy from, from, from, from, very strict, very difficult energy supplies moving through a crucial choke point. Yeah, I think the relative importance alley right now, because nothing has changed today for technology, for earnings for the U.S. consumer minus slightly higher gas prices, gasoline, then was the case one week ago. This war, this straight-of-horneuz issue, sending oil and energy

prices, natural gas, fertilizer food prices, all higher. somehow figure that out, do we go back to where we were before and start talking about NVIDIA earnings, or will this still be on our mind? I think this will still be on our mind, and this will still be on our mind because it's proven sort of some of the tenuousness and some of the linkages that currently exist between the oil market and some of the economic decisions. For example, one of the things that has been concerning markets, in addition to disruption of AI in other areas and CAP-X spending is how are we going to fuel from an energy perspective, all of the data centers, et cetera, that we need is our future power. So as we have

that come up and it's being looked at now, I think that will still be there. But again, you know, I think that we have a lot of narratives that we've sort of given a break, right? We saw software pop yesterday, whether that was sort of a technical covering of shorts. It's outperforming today, too. So I think that we are focusing. We are myopic today, and we should be myopic today. But as this administration has proved, whether we go back to last month and Greenland and Davos, or whether we go back to Greenland. Or whether we go back a year to Liberation Day, you know, we focus on politics when things come out of Washington that can make meaningful changes.

We usually walk back, we usually negotiate, and then we usually go back to the fundamentals. And so that's why for me and for UBS, this can be a very interesting buying opportunity, given that we see 12% upside from where we ended yesterday. We were talking a moment ago about broadcom earnings and like, to what extent is that the real tell right now? I'll tell you what I think will matter is what else we hear from the private credit funds. As we start to get more of those filings this week, whatever the redemptions are, much they're able to meet them. If we can kind of make this a one week story instead of a story that continues to build where retail investors panic and go, wait a minute, I want to get my money

out, that then has knock on effects to the broader financials and markets. Yeah, I think that's true. I think there are a lot of overhangs to the market out there that don't have a quick fix that people are looking for. And certainly that's from an individual perspective. There's going to need to be another season of earnings. There's going to need to be some commentary about what we're actually seeing in software, for example, in terms of earnings going forward, should it be 30% off in terms of terminal value? Private credit, certainly another place where we just need more information. So an emotional response either to what we're experiencing now today or a lot of these issues, I think, is short-sighted. The S&P, Steve, has come back a bit. It's down nine-tenths

of one percent now, down only four-tenths of one percent on the year. Small caps and mid-caps, by the way, are up seven percent this year. We don't know where this is going to go. the war in Iran. We don't know where any of this is going to end up, but there are buyers, I would imagine, in this market, who have wanted to see prices come down a bit. It is outside of this. It's a midterm election year, which means that we tend to fall almost 20% at one point on average. Where are your clients and customers coming in and buying right now? Well, Brian, we saw customers buying late last week into those dips. We actually saw them somewhat selling into the rally yesterday. Because, you know, again, I don't think many people had, you know, up day up with the Straits of Hormuz clothes on their bingo card.

And Vitya has been the name with us, particularly after earnings. So it's been basically by far the most active name and the most heavily bought name. in trading through yesterday. So that's pretty much a post-earnings event. But in general, what we've seen here is the buy-the-dip mentality remains very strong. We saw it yesterday. It's also very technically driven. The buyers came in right around the 100-day moving average yesterday, and the buying ended pretty much right at the 50-day moving average. I'm speaking S&P terms. We also never saw VIX really get into backwardation, which is where you have short-end futures trading above long-end futures. That's a sign that there's a shortage of available volatility protection. We haven't gotten there. Today, we broke below the 100-day moving average pretty

convincingly, but we stopped right at the lows of late December, around 67-15-ish, and now the highs, at least so far, have been the 100-day moving average. And also, we've been in a pattern where we're seeing lower highs, lower lows, on a short-term basis, but it can indicate a bit of a change in trend. And as I know we've spoken about before, volatility does tend to increase around turning points. And so this is this all part and parcel of the same feature. One of the things that drove VIX today was a very high correlation, speaking to Allie's point about dispersion. We saw a lot of that, and that has kept a lid on index volatility. But in the last couple of days, we've seen a lot of correlation with stocks moving together, where at one point we were 10 to 1 declineers to

advances, although that has ease. So it's very technically driven. But again, people just are conditioned if they see a viable dip, they buy it. And if it starts to bounce, they chase it to some extent. Steve, that said it's such a counter-trend day. Everything that has been working so far this year is down. And the MAG-7 is up. And I just wonder if people are going to stay there, hide out there, whatever, if they're going to have a little bit of a second life here, even just for a little period of time.

You know, one of my rubrics about geopolitics, and you and I've discussed various times that markets or equity markets are perhaps the worst at geopolitics. And one of the things I always ask myself is, what is this going to do for Microsoft? Because they have such earnings power. They're in every part of the world. You know, is this going to affect them negatively? And, you know, to the certain extent, what's going on if they're throwing, if missiles are being fired in various places, it doesn't do much to Microsoft. If there's a global inflationary spike or an economic pullback as a result of a global inflationary spike? Yeah, that does affect Microsoft and the other Mag 7s. But I do think over time, this has evolved to be the equities version of a flight to safety

trade is going into these tried and true names with great earnings power. We can go into whether these remain the best places to be. But from a behavioral point of view, that's why we see some relative outperformance in these places. Now, evaluation reset, LHCRIP. We got to go, but it's, it's funny. Microsoft is the new gold. That's my take. takeaway from the market action today. Ali McCartney, UBS wealth management, Steve Sosnik, interactive brokers. Really appreciate you both here to kick off the hour.

Thanks. All right, so stocks, they've come well off their lows, but they are still down. It has to be down just under 1%. But the irony is as stocks fall, bonds are also down. The two-year yield hitting 3.59. Kind of an odd move.

Rick Centelli, joining us now from Chicago. Rick, I assume that when stocks go down, we would see bond yields maybe go down with them as buyers came in to buy bonds themselves. not been the case. Well, you know, here's the thing. Look at a 24-hour chart of twos, and everybody's talking about how we hit 359,

about 6.30 in the morning, before our time zone, and the high-yield close of the year is 361. But really the story here is how narrow of a closing range the two-year is had and how it's still so calm. You know what the entire range for the year for a two-year is? Okay, it's 361 on top, 3-30-8,

on the bottom, 23 basis points divided by two. The midpoint is exactly where we're trading. 349 and a half is the midpoint. The real story is that treasuries have been compressed. The tenure has a 35 base point range on a closing basis for all of 26. And if you look at how the two years trading against the dollar or how the two years trading against oil, you see the very high correlations. It's a very strange time that we did. don't see more of a hedge in the Treasury complex with the volatility in the equities. And the only conclusion I can draw is that we should be buying equities because this isn't going to last.

And I think the Treasury market is pretty smart about that. Wait, Rick, you should be buying equities because the conflict isn't going to last and the Treasury market is seeing past that. Is that what you're saying? Yeah, I just don't see. You know, if things were so bad in the equity markets at their worst levels was something we're going to see ongoing. Then a two-year note should be at 350, okay?

Or three, I'm sorry, the tenure should be at 350 instead of 405. But we're not seeing that. We're not seeing a big flight to safety for a reason, because I don't think investors really believe that they need it. Yeah, or to quote Steve Sosnik a moment ago, equity markets are the worst at geopolitics. I couldn't agree more with Steve on that comment. Totally agree.

All right. Ten years telling us maybe not all clear, But we'll see. After the break, oil and gas prices are higher for a second day. But new reporting indicates the U.S. is considering military protection for oil and gas tankers traversing the Strait of Hormuz. We will talk to that reporter next. Welcome back. If you missed it, you probably did because it only happened moments ago. We had a pretty big headline crossing from Politico. Politico is exclusively reporting that the Trump administration is considering providing military protection

to oil and gas tankers sailing through the strait of Hormuz. Nothing has been decided yet, but they are citing a couple of different people inside the administration or with knowledge of the administration's thinking, let's get more knowledge and insight into this story. Joining us, one of the reporters who broke it is Politico's energy reporter, Ben Lefebvre. Ben, this is a big deal. It's moving markets. Markets are still down, but well, well, off their lows. What can you tell us right now?

Yeah, the administration finally seems to realize that they have an energy issue on their hands with the Iran conflict. We had a president and cabinet members who kind of go out of their way to talk about low energy prices, you know, whenever they're on TV. Since the Iran strikes, they haven't mentioned energy prices at all despite U.S. oil being up, I think around $7, $8 since the strikes happened. What we've been hearing now is they're actually taking this really seriously. They're throwing out ideas, they're considering ideas, including, as you mentioned, having U.S. naval ships guard tankers that are traversing the Straits-Ohr-H Moos. which is obviously a huge choke point for oil tanker and natural gas deliveries out of the Persian Gulf. So that's something that's still being decided. We're expecting to hear later today from the administration.

Energy Secretary Chris Wright is supposedly meeting with Secretary of State Marco Rubio and Treasury Secretary Scott dissent right now. We're hearing that hopefully by the end of the day we'll have more details. That's one of the ideas they're considering. Yeah, and we've got a live time lapse map to your left, our viewers right, showing how ship traffic came to an end. And this choke point, 20% of global gas and oil, 30% of food and fertilizers. To your point, Ben, I think the administration, if they didn't realize it, and I know they did because I talked to people inside it too, but maybe not realizing how fast the market might react. It sounds like from your reporting, nothing has been decided yet, correct?

These are ideas that may or may not be enacted. I've heard from a few people that we have heard from our sources who are familiar with these discussions that it is being seriously considered. But obviously the administration hasn't said anything publicly yet. But as you mentioned, we've seen oil prices jump up even after the first few days of these strikes. And we're seeing tankers just kind of hanging out outside where moves. They don't want to go in. The Iranian Revolutionary Guard has said, you know, hey, we're going to start, you know, they've already started firing on any tankers going through. We had Secretary of State Marco Rubio's tell reporters yesterday that they're basically going to go after the Iranian Navy.

They think they have to destroy the Navy to kind of make sure tankers feel secure going through. Another big issue is even if tankers aren't struck, we're seeing maritime insurance companies saying, you know, we're not going to protect ships going through there. We're going to lift our wartime policies. It's just too dangerous. Another thing that we are hearing, and I think Reuters has reported this also, is another idea is having the government try to do something to make sure these tankers stay insured if they do decide to go through the streets. Right.

I'm not sure exactly what that would look like. Government's backing the insurance companies. Well, but I mean, do they make it explicit? Do they just say, hey, we're going to work this out? But for it, Ben, in the meantime, the administration has two options here after this report of yours, which may well have caused the markets to sort of turn around and continue their comeback, they can either come out and deny it. They can suggest an alternative that you've mentioned,

or if we hear nothing, then we might infer from that, that indeed they're working on something like this. Correct. You know, we're really getting the sense that the administration knew that oil prices were going to go up. I mean, it's a war in the Middle East, right? But they didn't necessarily have a plan in place ready to go to see, you know, what happened. I think there might have been an idea that, well, look,

you know, we're not planning to be there forever. You know, the strikes may go away in four or five weeks, the president said. And in that case, do we really need to have a plan B? But now I think given the scale of the market uncertainty with, you know, prices coming up during, you know, when midterm elections are going to start up, that they might think, oh, we really do need to have something that we can get into place to help calm nerves. Ben Lafave, really appreciate your time and breaking news. Great job by you and your team. Ben, thank you very much.

Thank you. Appreciate it. All right. Let's get now reaction to the story. Joining us now is Kevin Book. He's managing director at Clearview Energy Partners. Kevin, we asked you to come on to talk about a lot of things. I know this is all just breaking right now, but any insight you might have, you've been doing

this a long time, any insight you might have into the feasibility, the possibility, the probability, of what we just talked about happening and its impact, certainly appreciated. Brian, good to see you. There are two things at work on the price right now. One of them is throughput through the straight. So as long as ships stay bottled up, either outside or inside the straight,

energy equivalent in oil and gas terms alone to about 7% of global consumption is offline. That's obviously very price elevating and duration is a critical factor. But production is also a critical factor. We have production sites that are offline now for LNG. We have sites for refined products. There are other producing assets that could be targeted as the conflict goes on. So this solves a problem if it happens. And it is also

not the only problem. And I think I'll start there. What is the only problem? What is the other big thing that we're missing here? The other problem is production. If there are if there are no volumes to go through because production is offline because of Iranian attacks, that too is a So there's a lot going on, I think, to look at the way the world has changed. We used to try to do things with economic sanctions, and we've moved back to military engagement. This is a very resource-intensive way to prosecute economic policy. Ideally, the tankers going through the strait, escorted by U.S. military ships, no problem. But it does create, it's a narrow waterway, and it creates a lot of room for risk.

How much is our exposure, the point, Kevin, versus, as I understand, a lot of the targets for these ships are really in Asia. Yeah, 80% of the volume going through the strait goes to Asian destinations. About 50% if China's crude slate, import slate, is going through the strait. So it is, in terms of the molecules, that's definitely where the biggest impacts are. But petroleum and increasingly natural gas are globally priced. And so it's not as though the problem doesn't wash ash ashore in other countries. I understand, but they have a bigger problem than we do. And so China and Asia, if they're taking 80% of the cargoes that need to move through here,

what are they going to do about it? Well, I think there's questions about whether Iran might preferentially try to get cargoes through, even if this plan doesn't happen. There's questions also about whether or not, if you look at it sort of in the final analysis, If Iran's on its back foot, this is the existential moment. Maybe those concerns about Chinese uptake don't matter as much as once they did. The idea being, if we're going down, we're all going to go down together. We're going to take down the global economy, Iran.

Whoever is, by the way, we don't even know who's running Iran. We say Iran like it's a cohesive, coherent government nation right now. Kevin, do you have any idea who's in charge of Iran? because I haven't talked to anybody that seems to know. And as somebody you may know said to me over the weekend on the phone, if you tell me who's running Iran, I'll tell you how this thing goes out. Yeah, I don't think sitting here where I am with the Capitol behind me, I could honestly tell you that.

What I will say is that there are signs that some of the decisions may be made that are coming out from the Secretary of the Supreme National Security Council, Ali Larjani. And so he's one to watch. The process for naming a new Supreme Leader is apparently underway, but discontinuities driven by our attacks, an Israeli attacks, on individuals who might be part of that line of succession would make it pretty hard to know who's in charge right now for us. Kevin, in all seriousness, what would happen if the U.S. needed to rely on energy supplies

without them going through the Strait of Hormuz? Other than the energy price, which I take your point is globally related, but in other is there a way that we could simply kind of self-supply or draw on supplies from other parts of the world? This is where duration is so operative, Kelly. And if you ask, well, do we have strategic reserves that are sufficient to cover the gap? It depends on how you count the gap. Demand balances supply on price if you don't have enough of the supply to meet the demand. But if you look at westbound routes out of Saudi Arabia into the Red Sea, assuming that the Houthis don't threaten those cargoes. There's somewhere north of 5 million barrels per day that could go west.

If you look at the Emirates sending pipeline liquids into the Gulf of Oman, there's another nearly 2 million barrels per day right there. Add in something like 8.5 million barrels per day of strategic crude and liquids outside of the U.S. and then somewhere between 1 and 2 million barrels per day of U.S. Strategic Reserve draws. And you're getting pretty close to the 20 million bottled up in the strait. But you're not necessarily. all the way there, and that assumes everything goes right. Yeah, and God forbid. May it, but who knows?

Kevin, thanks for joining us. It's really great. No one can break it down in terms of the numbers there, especially, as we try to figure out our way out of this. Appreciate it very much. Thanks for having me. Kevin Buck. Like we said, folks, stocks, they are rebounding fairly sharply off a session lows,

but let's be clear, they are all still down. So coming up, we're going to ask a trader where this might go, but also what he's buying now for every seller, there's a buyer, and we found one. Next. Welcome back. Not many days. You can say we're 900 points off the lows,

but we were down 1277 earlier this morning before bouncing in the early afternoon. We're down about 376 points right now. That brings us right to the key here. The key question for our next trader, do you join in? Get your teeth. Buy this dip now. Jay Woods,

a Freedom Capital is here with us. He's a CEMC contributor. So you're just saying it's going to be an interesting hour into the close. But as a tell for what you think equity, Ed Yardinney is in those saying, look, we're priced for short war. And I think everyone's watching this to see, like, are the markets casting a vote for a shorter, perhaps less messy, you know, conflict? I believe that to be 100% the case. The news coming out of the Strait of Hormuz now could be defended. The biggest concern was, one, boots on the ground.

concern? How long will this war last? And then, two, you know, the disruption in oil. If the trade is closed for an extended period of time, and I would yield to Brian's expertise here, that is going to drive up the price of crude, which is the biggest tax on the U.S. consumer. So if we can get anything to lessen those fears, we're going to get a rally. And this has been a bend but not break market. As a technician, watch that 100-day moving average, 6830. We're 10 points below that in the S&P 500. We have a heck of reversal. last hour of trading, most important hour of the day, it's going to be very telling as to if we can actually get above that 100 day or does that old support become resistance going

into the next few days as this continues on? Yeah, no. And so you mentioned kind of, look, I think the truth is we're all gaming this out hour by hour with new information. If this report or this idea that the strait's going to be defended is denied and things look worse tomorrow in the oil price, you have to say the oil. price looks a little bit like a coil, like it's been coiling for a move. And maybe this is it and maybe it's over now. But what happens if it keeps going? And not just because of this

conflict, because we're in the midst of a massive global cap-ax cycle where we seem to be short of a lot of physical stuff. Well, you said the bright word coiling. This whole market has been coiling. You look at the range in the S&P 500 this year alone. It just gets narrower and narrower. And we're looking for that break or that breakout. Last week, we talked about NVIDIA. That's finally going to get us over. Their earnings were great. We didn't get that follow-through. Now oil is going to take us lower. It's still not. So we are waiting to see.

Scotus was supposed to take us lower. We held off to that. So this is a very confusing market. It's been one of the most volatile markets, the greatest trading market for those traders on the desk. They're loving this volatility. But I can't say with certainty which way we're going to go. So I'm going to go back to individual stocks and earnings. And I look at something like Target.

It got lost in the shuffle. Everyone's talking about targets. It was really that interesting? What a turnaround story they are starting to make. the new CEO whose last name I can not pronounce, Fidelke? Fidelke? Fidel? Yeah, he's doing a great job regard. His first name's Mike.

I don't know your Mike, but he's got the turnaround coming. And from a technical point of view, all right, you go where the puck is going. And right now, risk reward, target looks good. Then risk reward, let's follow Broadcom. Let's follow CrowdStrike. These names that have been beaten down. You know, when it comes to Broadcom symbol AVGO, that stock is at a crucial threshold, just like InVD was.

InVIDIA was a tell to me yesterday. That key reversal held the 200-day moving average. I think the Mag 7 are going to hold us up, but can they break us out? Right now we continue to tread water. I take profits in those energy stocks that have had a tremendous run, and I look to put work, and where I want to put money to work right now are those beating down technology names, the IGB. Software resilient today. And what's getting crushed?

Sandiskin Micron, the two biggest stocks of the year. So money is not. So final question. And I know we don't know until we know, but is this just a one day or a short-lived kind of counter-trend move? Does the trend so far from Jan until, let's call it, March, reassert itself? Yeah, the trend has not changed yet. It is at a delicate spot. If this prolongs, if there's another surprise, heavens forbid something happens on American soil,

then maybe that will be the panic. But overall, the trends are intact. Earnings growth, which you talked about in the first segment, is there. So this market has been resilient. I think it's going to go higher over time. but we may go sideways for a lot longer with all this uncertainty. Yeah, it looks like the U.S. consulate in Dubai just got hit by, you know, Iran at this point feels like it's just lobbying stuff up. And I want to be bullish on this, but I will say,

Jay, that we've got the straight of four moves and we've been showing, and I've told everybody this is the most important map. It's not my opinion talking a lot of smart people, insurance, executive, shippers, whatever, all the last couple days. However, Iran hit the Rastanoa refinery, biggest refinery in Saudi Arabia. They hit Qatar Energy's LNG factory. So even if the ships are flowing, if there's no energy that can be produced, at least at scale, what if energy prices keep going up even if the straight-of-four moves is, quote, and I hate that term, reopen? That's the problem, because what is the biggest?

Well, that's the risk. You're a trader. You analyze risk. Yeah, well, that's why I'm kind of mumbling through this segment. We're at that threshold, and I'm going where there is activity. I'm not going all in on equities right now because I don't think that this is resolved. if crude stays elevated for a long period of time, it's the biggest tax on the consumer. Now you're going to go back to the Fed.

We're going to focus on, hey, new Fed chairman, we want to lower rates. Well, we have inflationary concerns because of the price of oil. So these next few weeks, how they play out, are crucial, not just for the market, but for Fed policy and the economy going forward. And that I don't want to make light of. So I'm not going to come in here and say, yes, it's time to buy this dip when there are serious concerns going forward. So you'd be nimble, as the great R-cash and would always say, and you trade this market. And right now, I think there are opportunities in some of these beaten down software names. And if you have profits, which thankfully, knock on wood, I had a few with ExxonMobil and some of these energy names,

taken a little off the table and just waiting this one out. There you go. Moving to the sidelines on a sector that could be, you know, some might be going into right now. Jay, thanks. Thank you. Jay Woods, Freedom Capital Markets. Before we go, the Dow is off session. lows led higher by Salesforce, IBM, Verizon, and Microsoft. There you can see some of the stalwarts

in this market. We'll be right back. Welcome back to Power Lunch. I'm Angelica Peebles with your CNBC News Update. A Justice Department lawyer called the concert ticket industry broken because of Ticketmaster and its parent company Live Nation. The remarks came today during opening statements in a civil antitrust trial hoping to break up the company's alleged monopoly. The defense rejected claims and said the companies faced fierce competition in the industry. Two top aides to Labor Secretary Lori Chavez-Darmer were reportedly forced out amid an internal watchdog investigation into alleged misconduct. According to the New York Times, they were given 24 hours to resign after the White House said to fire them.

The New York Post previously reported that the aides were placed on administrative leave following a whistleblower complaint, accusing the Secretary of travel fraud and an inappropriate relationship with a subordinate. The Trump administration was barred today from its attempts to end New York City's congestion pricing program. A federal judge ruled that Transportation Secretary Sean Duffy does not have the authority to revoke federal approval for the first in the nation traffic reduction plan, which took effect in January 25. Brian, back over to you. All right, Angelica, thank you very much. Got some breaking news right now about the straight of four moves. Pippa Stevens has more. Pippa. Hey, Brian, so President Trump saying on true

social just now that effective immediately he has ordered the United States Development Finance Corporation to provide at a reasonable price. Political, risk insurance and guarantees for the security of all maritime trade passing through the Gulf, especially for energy. He said that it's available for all shipping lanes and that if necessary, the U.S. Navy will begin escorting tankers through the strait. He said ultimately, no matter what, the United States will ensure the, quote, free flow of energy to the world. Of course, Brian, a lot of people watching this right now, and the president was scheduled to meet with Secretary's right. And Besson, today we don't know how, we don't have a real,

out from that or if it happened, but this coming just now that they will be providing insurance guarantees, guys. Pippa, thank you. We're showing WTI crude, which is almost about to go lower on the, think about how insane this. And Brian's like, don't get out of yourself. Look, it's up one or two percent. We are way off the highs of the morning. And so two things are happening here. Jump in right. Two things are happening here. Number one, the president in this truth social post is saying, if necessary, the Navy will begin escorting tankers through the Strait of Hormuz as soon as possible. Number two, and this is a good. And this is a good. And this is a

exactly we're talking about top of the hour. He's ordered the U.S. Development Finance Corp to provide political risk insurance and guarantees for the financial security of all maritime trade, especially energy. And we've said this, and I said this a little bit yesterday. I've been hinting around about it, talking to insurance executives, shipping executives, oil executives, people in the administration. We kind of hinted around about it yesterday that the insurance issue. Iran is not, quote, closing the straight-of-four moves. It's not a canal. It's not a gate. It doesn't have a lock. What Iran can do is make it so expensive and risky that no ship is willing to go through there because the insurance canceled their war risk premiums.

I've been talking to insurance executives the last two days. And I can say right now, as I've kind of hinted around, we'll say it directly, that there has to be a solution on the insurance side. One of that might be the government backstopping insurance. And it appears that's exactly what may be happening right now. And it is possible, Kelly, that crude oil goes negative today and the stock market goes higher by the end of the session. Dow's down about 245 points. It's only half a percent right now. but can you illustrate the economical difference of what you're talking about? I mean, to get a ship through, which some people weren't trying to do the last couple days could cost, what, half a million dollars, compared with $10,000, $15,000? No, it's $423,000 a day.

A day, exactly, a day for a VLCC, very large cruise. Put that in perspective. It was $15,000 a day in peacetime. $15,000, now $423,000 a day to take a crude oil tanker in that region. There's no cost to go through the straight-door moves because, there's no insurance. You've got to cover the insurance issue. Iran can threaten and make threats and raise costs and risk. But let's be clear, Iran has no power to close it other than simply saying if you go through it, we're going to lob a missile at you or try to mine it like they did

in the 1980s. Solve the insurance problem. About 10 dudes in London are the ones kind of control in the straight-of-form moves right now. The market is smart enough to note they will figure this out behind the scenes, but there is still something to be figured out. He's saying he's ordered the Development Finance Corp to provide, quote, at a very reasonable price. I'd love to know the precedent for a move like this, political risk insurance and guarantees. So the onus is still on these organizations to step up and figure out how exactly to do so. The quicker they can, of course, the quicker we can potentially see. So guys, we're going to produce.

I'm sorry to try to jump in. They call producer for the chair. I want to highlight this a little bit more. Lloyd's of London, they've got really the decision-making power here. They have boards that are comprised of a bunch of different insurance companies. You got brokers like Aon and Marsh, who are the ones out there trying to find insurance. Right now, there is no insurance because they canceled that war risk premium. You know when you book a flight and it'll say, like, would you like to insure this trip or a hotel?

That's effectively what's being done at a spectacularly high level with ships, but they canceled that. So no shipowner is willing to risk the life and hopefully the lives of the humans are a lot more important than the material. goods, but there is a profit motive here for people, too, to not risk that going through it without insurance, period. 72 is the number on WTI crude. Again, we'll keep an eye. The Dow is now at, we'll call it session highs. It's still down 2.15.

We have a whole lot more coverage on this story and more power lunch after this. All right, markets are on the move. They are still down right now, but the Dow is only down about 250 points. In some ways, a spectacularly average day. markets are coming back on a report that President Trump, not a report, President Trump himself basically saying on true social, his social media feed, that they want to establish or try to establish some mechanism to backstop insurers who would then insure the ships to go through this trade of four moves. Moving from one-ass ships to another semiconductors. Let's talk about semiconductors. The chip stocks, Mike Ron and others, Christina Parts and Evellis, I don't want to steal your thunder.

You're here to tell us what's going on with the semiconductor stocks. Yeah, you mentioned those names, Micron Sandus. Those are the same ones that were the market's biggest winners this year. But Sandus, Micron, Western Digital, we're all up roughly, what, 40% through Friday's close. Sandus has literally more than doubled up until today, and now they're among the biggest drags on the S&P 500. Broadly, every single name in the SMH, which is a CHIP's ETF, is in the red today, except Synopsis, and VEAS off about 1%. The Middle East conflict doesn't necessarily directly hit chips, but it could actually ripple through. defense spending could pick up, which is good for chip makers with heavy aerospace and defense

exposure. Think analog devices, Texas instruments, microchip. On the industrial side, we could expect companies to start building inventory buffers. That's a tailwind for STM and Infidion. And there are some reports that are the Economic Daily News, which is an Asian outlet, that Israeli foundries are facing disruptions. Intel runs a fab over there, which could, hypothetically in the near term, push mature chip pricing a little bit higher. And then last but not least, there's CRETO. They make kind of They're down about 14.5% right now. Despite a strong print, they've already pre-announced massive upside back on February 8-9, so that could be part of it. The April quarter guide came in more in line, just pretty much more in line than what the market wanted, which is an ongoing theme.

Just not high enough for the market in chips. Guys? All right, Christina, thank you very much. By the way, folks, if you're just joining us, there's a lot going on right now. Stocks are down, but they're well off their lows. President Trump announcing moments ago that they're looking at ways to make ships effectively entice them, encourage them, protect them to go through the Strait of Hormuz, whether that would include a naval escort and or some sort of insurance backstop or maybe both. Let's talk about it all with Chief Market Strategist at MAI Capital Management, Chris Krasanti. Chris, we invited you on to talk about other stuff. This is happening all right now. We have been saying for a couple

days that ships going through that little 20 miles straight that we talk about every decade or so, maybe the key to the entire stock market, yes or no? In the short term, you're absolutely right, Brian. And I think it's wonderful how you say there's 10 guys sitting around London. It's probably some women, too. And they're Lloyd's of London, and they're deciding which ships are insuring which ships not to insure. So what the president is doing, he's saying, look, I'm going to make it easy for those guys to make that decision. I'm going to guarantee it, or he's going to just do it himself. He's going to insure it. And the U.S. Navy, if necessary, will escort the ship. So we have a lot of tools at our disposal to solve

the Strait of Hormuz problem. I'm, you know, evidently we did this, something kind of similar following 9-11. We had a terrorism risk backstop. So I'd love to ask you, Chris, how much this might ultimately cost taxpayers. But it reminds me a little bit of like the Fed with Muni Bonds or, you know, to some extent the government with Fannie Freddie. Once the guarantee is there, it pretty much, prods the private sector to act. And in a best case scenario, it doesn't really have to go to that backstop. I wouldn't be shocked if we made money on the deal, Kelly, in the sense that we'll collect hundreds of thousands or millions of, low millions of dollars.

And there won't be an incident because we're also going to send the Navy and have air power there. So my guess is that oil prices will slowly come down and that we'll keep, you know, chugging through. Yeah, the Terrorism Risk Insurance Act has cost taxpayers $0. Right. Because, again, once the backstop is there. So, okay, so that's kind of playing out. In the meantime, this large question about what to do with energy was the best performing sector into the year, but now it's so ironic, right?

The very moment that oil's breaking out, investors are feeling like perhaps they book their gains in the energy space. So I'm just curious how you would process all this. I think investments in this case are kind of right. I think that historically, if you buy energy on the incident instead of beforehand, you don't really do that well. And I think that's probably especially going to be true in this case. I mean, I think if you look through this war is going to probably last weeks, not months, there's a decent chance that energy prices are going to be considerably lower now in two months than they are now. So I would be a seller, not a buyer there. That's a considerable chance energy prices are lower in two months to be a positive outcome. So then does that make you, you know, happy to own consumer stocks? Don't know what you think about the Mag 7 here, having definitely a countertrend to kind of break out. Well, Kelly, I think at the end of this year, if we get back together, I think what we're going to see is the war wasn't going to be the story.

It's going to be AI and AI spending are going to be the big investment stories of 2026. So all of the sudden, as you know, I'm a value guy. I own Verizon and Kimberly Clark. But for the first time ever, I'm buying Nvidia, and for the first time in 10 years, I'm buying Microsoft, both below next year's market multiple. And I'm super excited about that. So I think this war gives us an opportunity to make investments on things that will work out later in the year. And I don't think it's going to be tough for them to work out. You should buy shares of publicly traded marine insurance companies, Chris. I'm not kidding. And I'm not sure who they are. I'm not going to recommend stocks on the air.

It's not my job. But I will say they're going to print money and a business. because they're already raising their insurance rates anyway, and they're probably going to the backstop now of the United States government, so they might get backstop for any losses as well. This is truly a remarkable development if, and there's a big if. Chubb, Tokyo Marine, if it happens. Alliance, maybe AIG, Zurich. There's some names in the public markets.

There's some names, but also. I don't think the risk is quite what folks think it's going to be if the U.S. Navy steps up to bat. And I think they almost have. Chris, really appreciate it today. Thank you. We're going to see you guys. Chris Grisanti with MAI.

All right. More power lunch right after this break is markets fight hard to come back. Here are some of the names to keep an eye on that could potentially have exposure to Lloyds and others moving with the president's backing to write more insurance and help companies kind of get through the straight. Beasley, Hiscop, Shoebs, those are just some of the names, Brian. People are going to start to dig through. more to talk about. We're done. I will be hosting fast money. So maybe the market's in higher. Who knows? Wow. We can't wait to see. And thanks for watching Power Lunch today. Closing bell starts right now.