PodcastThe Real Investment ShowLance Roberts

6-25-26 The Micron Report: What's Next for Semi-conductors?

The conversation separates politics, markets and tech: a DOJ probe into oil companies targets the wrong link in gasoline pricing, which explains why pump prices lag crude. In tech, memory is viewed as cyclical with high Micron margins inviting new supply, while NVIDIA’s durable moat and outsized growth highlight structural differences. On the macro side, PCE timing and lower oil could prompt markets to 'look through' prints and extend the bond rally, even as mixed Fed voices and divergent yield signals raise policy uncertainty. Market action is concentrated in semiconductors, driving recent gains but increasing the need for hedging and position sizing given valuation and technical exhaustion.

SemiconductorsRisk ManagementEconomic GrowthFixed IncomeEnergy MarketsFinancial Regulation

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Key Takeaways

President Trump’s request that the DOJ investigate oil companies is misplaced because commodity traders set crude while local gas‑station owners set pump prices; that dynamic helps explain why crude has retraced to near pre‑crisis levels while gasoline and futures have retraced only a fraction and will likely decline more slowly, and because May PCE data were collected before the oil drop and retailers often hold prices to protect margins, the PCE print may look hotter than current commodity moves justify.

The Fed plans to lean more on market‑based, real‑time indicators and pare public guidance to avoid a Fed–market feedback loop, but mixed Fed commentary and a persistent disconnect between two‑year yields and fed‑funds/futures (which are pricing roughly two‑to‑three hikes) create policy uncertainty — and if lower oil feeds through to inflation expectations, the ongoing bond rally could extend into July and further complicate Fed signaling.

Equity gains remain concentrated in semiconductors — which account for about 18% of S&P market cap and have been the main driver of recent moves (supported by hardware/data‑center suppliers and large ADR activity such as SK Hynix’s ~ $28bn filing) — leaving breadth weak, technical indicators (RSI) showing exhaustion around the 50‑day moving average, and increasing the likelihood of consolidation even if semiconductors lead short‑term upside.

GEO-POLITICS

Pump Pricing — President Trump asked the DOJ to investigate oil companies for price‑gouging, but commodity traders set crude prices and local gas‑station retailers set pump prices. Targeting producers therefore misses the main drivers of retail gasoline pricing and explains the lag between crude and pump moves.

“In fact, President Trump has told the DOJ to investigate oil companies for price gouging the consumer. Oil companies have nothing to do with that.”—

TECHNOLOGY

Cyclicality vs moat — Speakers compare memory chips to oil: frequent boom‑and‑bust cycles and overinvestment. Firms like NVIDIA have a much wider moat, so memory players are more exposed to cyclical risk and competitive pressure.

“I was just going to say that memory chip business has proven to be a lot like the oil business with the boom and bust and then over investment at…”—

ECONOMY

PCE Timing — The PCE release was collected before the recent oil drop, so it may appear hotter than current commodity prices imply. Because PCE can be largely estimated from CPI/PPI and oil fell sharply afterward, markets are likely to 'look through' the print rather than treat it as fresh evidence of rising inflation.

“We've got PCE reports coming out today. So again, this is one of the measures that the Fed actually looks at.”—

Retail Pricing — Retailers with pricing power often keep prices steady and expand margins when input commodity costs fall, rather than passing savings immediately to consumers. Because May personal income and PCE data were collected before the oil move, upcoming prints may overstate near‑term consumer relief and distort headline/core relationships.

“Consumers are the ones that set the price in Right. Consumers are the ones that set the price in the markets…”—

Fed Shift — Kevin Warsh said the Fed intends to rely more on market‑based, real‑time indicators and pare back public forward guidance, potentially including the dot plot. The goal is to avoid a Fed‑market feedback loop so the Fed observes market signals rather than feeding markets with frequent policy forecasts.

“But, you know, kind of the interesting thing was, is the slashing of the Fed statement to about a third of its normal length.”—

MARKETS

Crude vs pump — Crude has corrected close to pre‑crisis levels while gasoline prices and futures have only retraced a fraction, creating a persistent disconnect with retail pump pricing. Station owners set retail prices and face little pressure to cut while demand holds, so gasoline will decline more slowly than crude.

“About this, and he made a very big mistake yesterday, and he was talking about the drop in oil prices, and he's very upset that the price at the pump…”—

Bond rally via rebalancing — Bond yields have fallen and long‑dated Treasuries rallied, including a large 30‑year move, as rebalancing and end‑of‑period flows pushed demand into fixed income. Managers expect portfolio rebalancing (pensions and others) to trigger tactical equity selling and bond buying near term.

“I think bonds kind of look like gasoline when we're comparing gasoline to crude. They've come down a little in yield, but not back to where they were.”—

Technical Support — Equity indices closed around the 50‑day moving average, a near‑term support. Implied open is large and concentrated in semiconductors, but technical indicators (RSI) show exhaustion, so consolidation is likely even if semiconductors drive initial upside.

“Market closed right at the 50-day moving average. And we talked about this previously…”—

INTRO

Host opens the show, previews key topics including Micron earnings and market positioning, and welcomes guest Michael Leibowitz back from vacation.

Economic Data Preview & Trump's Gasoline Gaffe

They preview PCE data and explain why President Trump’s claim about oil companies gouging at the pump is incorrect; pump prices lag crude due to retail pricing dynamics.

Narrow Market Rally Obscures Underlying Weakness

The morning rally is narrow and semiconductor-centric; outside of chips, most of the market remains weak despite headline gains, masking underlying breadth problems.

Micron Recap

Micron reported blowout quarter, topped revenue and profit estimates, shares surged ~18%, and SK Hynix ADR issuance will add U.S. liquidity to chip markets.

Nvidia vs Micron - Comparing the Fundamentals

Michael and Lance compare Micron’s cyclical, commodity-like memory business to NVIDIA’s durable GPU moat, highlighting different predictability of future growth and margin sustainability.

When Will Demand Slow or Supply Catch Up?

They discuss when demand might slow or new supply will arrive, noting high prices invite capacity additions despite expensive build costs that will eventually rebalance the market.

"Your High Margin is My Invitation"

High Micron gross margins are an invitation for competitors; other producers could accept materially lower margins to capture market share and compress Micron’s profitability.

The Law of Large Numbers Will Eventually Apply

The law of large numbers will slow Micron’s blistering growth rates as revenues scale, increasing the risk that forward growth assumptions won’t persist indefinitely.

Calculating the Risk

Technicals are extreme and valuations stretched in the semiconductor rally; investors should hedge, take profits incrementally, and manage position sizing to control downside risk.

Crude Oil Pricing vs Gasoline

Crude has fallen sharply back below $70, but gasoline retail prices lag due to station-level pricing and demand; pump prices will decline only gradually as crude weakness persists.

Economic Data Preview - What Will Markets Do?

They preview May personal income/spending and PCE prints, noting reports won’t yet reflect recent oil declines and markets may largely ‘look through’ hotter prints.

Will CPI, PPI Indicators Matter to the Fed Now?

Discussion of Kevin Warsh’s Fed messaging: shorter guidance, fewer public forecasts, and possible shift to market- and real-time indicators instead of traditional Fed guidance.

Bonds Look Like Gasoline

Bond yields have fallen but lag economic reality in some ways—guest argues yields may continue to fall as inflation expectations decline and markets chase lower inflation data.

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Important Disclaimers

Not Investment Advice: For education only — not financial, tax or legal advice.

AI-Generated: Made by AI from source transcripts and may contain errors.

No Guarantees: Past performance does not predict future results; investing carries risk.

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