Closing Bell - Closing Bell Overtime: Macro Catalysts Ahead; Chicken Feet Caught In Middle Of The Road From Trade War With China; Live From The Arctic Circle 6/2/25

Episode Date: June 2, 2025

Market start the week and month paring morning losses and grinding higher throughout the sessios, with plenty of macro catalysts ahead. Our Megan Cassella reports on escalating trade tensions as China strikes back. We take a look at the trajectory with Dan Skelly, Managing Director at Morgan Stanley Wealth Management, who expects rangebound action for the rest of 2025. Oil spikes more after an OPEC outlook hike was less-than-feared and energy investor Arjun Murti weighs in. Our Eunice Yoon reports from Beijing on how Chinese restaurants are dropping American menu items—like U.S. chicken feet—as tensions rise. Our Brian Sullivan reports on progress with the Alaska LNG pipeline from the Arctic Circle. Michael Lasser, Retail Analyst at UBS, joins Jon to break down dollar-store earnings later this week. 

Well that's the end of regulation. Grinder ringing the closing bell at the New York Stock Exchange. EW's Scripps doing the honors at the Nasdaq, specifically the winner of the National Spelling Bee. Well stocks seeing a comeback from earlier losses. The Dow had been down more than 400 points, closing fractionally higher. Now the Nasdaq was the leader today. Steel stocks soaring as the president says he will double tariffs to 50% beginning Wednesday. Auto stocks going in the opposite direction on concerns about those increasing costs. Oil closing higher as OPEC plus hikes. Output less than expected and on rising geopolitical tensions.

We've got more on that ahead. And speaking of commodities, gold hitting a three week high as the dollar weakened and trade tensions mount. The mining ETFs moving higher by more than 4%. Housing related stocks following following following a drop in US construction spending With single-family construction falling for the first time in at seven months and bioentech shares soaring on a multi-billion dollar Deal with Bristol Myers Squibb to partner and co-develop an experimental cancer drug

Chip names higher across the board with many of the names up more than 2%. Mike Rahn, the big winner in the space. And that is the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Fort along with Morgan Brennan. And we begin today with the latest he said, she said between the US and China on trade after accusations from both sides that the other violated the temporary agreement. Today the White House saying President Trump and President Xi might speak this week. Megan Casella joining us now with more.

Megan. Hey John, that's absolutely right. We don't know exactly when the call will happen, but the official word is likely this week and that the White House will provide us with a readout once it happens. And this of course is the call we've been waiting for really since February when President Trump first placed that round of tariffs against China. But the two leaders have not spoken since before the January inauguration despite all that has happened since then. Now even Trump officials, most notably Treasury

Secretary Scott Besson, have been saying in recent days that a Trump-Xi call is likely needed now in order to get trade talks back on track. News of it of course comes amid increasing tensions, the US accusing China last week of violating the Geneva agreement but Beijing since then pushing back and in a new statement overnight China's Commerce Ministry accused the US of taking unilateral actions that are damaging China's interests. They say if the US continues China vowed to take strong measures to defend its legitimate rights and interests. We don't know what such measures would look like from either side, really, but it could depend, guys, on how this call ultimately goes.

John? Okay. Megan Casella, thank you. So, how has the market been digesting all of these changing policy moves in the last few months? Well, let's bring in senior markets commentator Mike Santoli to break it all down. Hi, Mike. Hey, Morgan. Well, first, it was with difficulty that the market was trying to digest all of this economic policy uncertainty,

which is depicted here in this blue line. Yes, there's an index board. It's basically news mentions of economic policy uncertainty tabulated. We got to record highs, even higher than the COVID levels in early April. But the volatility index, which is a pretty good read on the market's expected vulnerability

or expected movements in the index in the next 30 days, has really collapsed. And so you see they've decoupled to some degree. The market has become a little bit desensitized to every tariff headline. It's probably rushed to price in some level of improvement, of deescalation, of resolution into this market. We don't know how much.

And the question I guess would be is the market getting too calm. Well if you look at COVID here you did see the volatility index also collapse way before the kind of economic policy overhang was lifted entirely. The market's going to try to move faster than the actual issue. So we'll see if that does hold as well. Didn't want to take a look at some of the kind of election year patterns and seasonals behind this market as well. You know, coming into this year,

it became commonplace to say, hey, you know, post-election years, they usually have a rocky start. Well, we did, to an extreme this year. So this is current year-to-date movements in the S&P 500. Big drop on really one of the worst years on record in terms of how fast we went down in the first few months. And then recovered.

It sort of rhymes with the general cadence of a post-election year. This is the average there. Now note the different scales on the left and right axes. It shows you that we have much more amplitude here in the one year relative to the average. But it also shows really not a lot happening on average until you get into the fourth quarter

in these post-election years, maybe when some policy stuff does start to clear up. It is interesting and it puts it in context in terms of some of these patterns, historical patterns that we can draw back to. That being said, I mean, the spike we saw in April in volatility and then the fallback off of that, and similarly, or I guess inversely,

what we saw in the stock market too, in terms of the drop and then the recovery, how does that speak to maybe the market mechanisms themselves, just given the fact that the velocity of the moves have been so dramatic? They have. It's tough to handicap exactly whether you have sort of the accelerants in the market

or we have a more of a spring loaded market now because you have so many instruments to instantly express a short term view. It is possible. I mean, we did only have for a flash a 20% intraday decline in the S&P 500 and didn't even close below that level, and you did see a historic jump in the volatility index.

I think part of it is just exactly how much of a surprise the news was, and it was a piece of news, which was the shape of the proposed tariffs that you really couldn't handicap in advance. So the market process for trying to price in advance of it was not really that reliable. And I think that's one reason we did see it.

And therefore you had a big flush. It looks like one of those big event driven scares that does have a pretty decent recovery as opposed to a recession driven downturn. But obviously remains to be seen from here, John. All right. Mike, thank you. Now let's bring in our first guest who expects the market to remain choppy this year, but says the bottom is in.

Morgan Stanley Wealth Management Managing Director, Dan Skelly with us now. Dan, welcome. So you also seem to think the highs are pretty much in and we're near them overall. So how should investors position themselves now to be ready for 2026? Sure, John, thanks for having me.

And so look, this year is shaping up to be like a 2026? Sure, John, thanks for having me. And so look, this year is shaping up to be like a range-bound environment, which at its core frustrates everyone, right? The bulls get frustrated that you don't sustain much momentum past this kind of 5,900 level. The bears get frustrated that they can't push their shorts much below the 5,200 level. So we are in a range, and it's capped by this idea that

the full extent of earnings downgrades hasn't really happened yet we don't know the final clarity around where tariff levels will finally net out and in the best case scenario they're going to be substantially higher still. Than

they are to- over the last several years in decades. And then lastly the low end of the range holds because of continued labor market resilience in the economy. Of then lastly, the low end of the range holds because of continued labor market resilience in the economy, of this idea that the AI adoption cycle is just starting to take hold, which will eventually be good for the earning cycle, and the markets get to sniff that out. And last but not least, the White House team has shown some flexibility around the most

maximal positions. So that's talking S&P and range-bound. What about this mix between domestic and international? International have been doing better over the last couple quarters, especially to start 25. Should investors believe overall that despite all of this tariff uncertainty, that shift toward better international performance

continues or no? So from the institutional perspective, Morgan Stanley has just put out its mid-year update and the team is preferring US stocks over rest of world, specifically US over Europe. And look, European equities, which you had referenced had been on a really big hot streak, could also see potential growth and earnings downgrades

as the trade battle ens battle ensues and the last thing I would say if you haven't really even seen a pickup in sustained capital flows I think there was this massive chorus this very loud chorus in early April around sell everything America we just

haven't seen that corroborated by the actual data in terms of inflows flows into the U. S. market are still tracking- pretty strongly year to date. I guess the very last thing I would say is coming back to tech. Though in the last quarter we saw the mag seven. I have its best upside surprise and earnings really in the last two to three quarters. And that

clearly is another area of- uniqueness of defensive and offensive attributes that other parts of the world don't have. So if we stick with tech here, how do you factor in the anticipated effects of AI to this market and to the economy and the realization of all of the investment that we've seen thus far? Because on the one hand,

Jamie Dimon in my interview with him on Friday was saying, we're not gonna see it, at least not this year, not yet any deflationary effects from AI adoption on the other hand I was speaking to tech investors including Joe Lonsdale who says. Look AI is going to spike productivity that's going to more than offset

the impact of job losses as companies- adopt AI to how do you think about it. Such an excellent question Morgan and a couple things to unpack there right so. in the first quarter the magnificent seven as a group reported 32% year

over year earnings growth. The S. and before ninety three was around 8% so you're still seeing four times the amount of growth coming from mag seven than the rest of the market and look importantly as you alluded to let's go back six to nine

months ago the mag seven included not just the beneficiaries but the biggest spenders related to ai and as that group took a breather six to nine months ago people were still waiting for the return on investment now you're finally starting to see that play out not just again within that same group of the spenders as well as the beneficiaries but it's broadening out you're're seeing it in software, you're seeing it in consumer internet within the tech space, and then to your question, we do think coming in next year in 26, you're going to finally start to see the Fortune 100 start to better quantify and thus validate AI adoption. That's going to play out across

financials, manufacturing, and healthcare. Okay, Dan Skelly, thanks for kicking off the hour with us. Thank you. With all the major averages, higher, the S&P finishing out 59.35 is it looks like where we settled out here. So up about 4 cents of 1%. Well, Disney announcing it will cut hundreds of jobs in its film and television units. Julia Borson has the details for us.

Hi, Julia. Hi, Morgan. Well, Disney's entertainment division is laying off several hundred employees globally. The company telling us the layoffs are across multiple teams including marketing for film and TV, TV publicity and casting and development and corporate financial operations. Now this is reportedly the fourth and largest round of layoffs that the company has done in the past 12 months that have impacted Disney's TV operations.

The company is saying that as the industry transforms at a rapid pace, they're always evaluating ways to efficiently manage the businesses while fueling state of the art creativity and innovation. Now, as Disney does these layoffs, it has been working to make its theatrical releases bigger and to make fewer films for streaming. And analysts seem to agree with this strategy.

Three quarters of analysts have a buy rating on the stock. There's only one sell rating currently on Disney. Morgan? Okay, Julia Borrisson. Thank you. Well, coming up, energy was the top performing sector today after a big jump in the price of oil after OPEC Plus Hikes production. Ahead, we're going to hear from one expert who says oil still looks cheap despite this

move. And speaking of hikes, a tax hike looks like it could be a hit to earnings of the two biggest online sports books. Those details coming up on Overtime. Welcome back to Overtime. Shares of the two biggest sports betting companies falling today. Draft Kings and Flutter getting hit by a new tax in a budget bill passed in Illinois over the weekend. That bill puts a 25 cent per bet tax on the first 20 million wagers and

then 50 cents per bet. After that analysts expect two to five percent hit to earnings. DraftKings and Fanandual control 75% of the Illinois sports betting market. Well meantime, oil prices surging today. The energy sector, the top performer with stocks like Cotera, Devon, and EQT up about 3%. OPEC Plus announcing it will raise the total supply quota for its members by over 400,000 barrels per day for the third straight month. However, that boost ended up being smaller than some had feared. Geopolitical risk factors though,

also giving support to oil as tensions between Russia and Ukraine intensify. Joining us now is Arjun Murthy. He is a partner at energy consultancy, Veriton, that invests in the energy sector. He's also a board member at ConocoPhillips and Liberty Energy. And Arjun, it's great to have you back on the show.

So let's start right there. The jump we've seen in crude oil, how much of this is the OPEC dynamics? How much of this is the fact that we have geopolitical risks specifically around Russia and Ukraine and also negotiating dynamics involving Iran? Yes, it's great to be back. And I think it's not just those two dynamics, but also the fact that oil has been very oversold. There were a lot of concerns that the trade war would lead to recession at a time that OPEC was flooding the market. And we've seen some of those tariff trade war concerns ease.

We've seen the hard data, so to speak, hold up better than the soft data. In oil markets, that's refining margins doing better. We're entering a seasonally better period. All these things have conspired to, I think, cause that sort of oversold condition oil to start reversing here a bit. So you like oil at these levels?

You think it goes higher? I think we're starting to take off the worst case for oil, which was that we'd test the 50s and even $40 oil if we plummeted quickly to recession due to a trade war and OPEC was flooding the market. We're now seeing signs that faster than they usually do it, E&P companies are cutting back on capex. There's more talk and recognition

that the best days of shale are increasingly behind us. And I think where markets also starting to recognize a view we've had, which is that OPEC may not have as much spare capacity. Yes, they have some to bring on, but not bringing on at an otherwise great time. But maybe we're starting to get towards the end of how much they can bring on after perhaps this increase

and maybe one more after this. Arjun, how exposed is oil to the potential storyline for the back half of 2025 that supply has been pulled in because of these 90 day tariff windows and some consumers, particularly in the working class, are getting tapped out. I think that's the still key risk period to remain for oil. So as I mentioned, we're going through a seasonally better period for demand, the summer driving season in the U.S., the air conditioning season in the Middle East. These are big near-term demand drivers. I think there is

concern that when you get into the fall, that would also be the time where we're going to reconcile is the weakness in the broad economic south data correct or will the hard data kind of win the day. If we do get kind of a little bit of a weaken in the hard data at a time of seasonal weakness for oil demand, I think that's your next big risk period. But I might also call that perhaps the final risk period again, the signs that Shale is peaking and OPEC is running through its spare capacity, you're setting up for a pretty good upside over the next couple of years. You just have to get through this demand choppiness that you're alluding to. Right, which makes me wonder if it is just a little bit of choppiness or if the data

is just a little bad, might that provide support to people who are longer term bullish on oil and have the price go up because at least the nearer term worries perhaps evaporating. I mean that's exactly right and I think this the real question oil from an investment standpoint is what is your horizon? If you're trying to be a short term trader I think there is legitimate concern to worry about the middle to back half of this year. But again this shale has been 90 percent of global oil supply growth over the last decade

and there's no one who believes that we can get that kind of growth going forward. And we're at a time, we're just coming out of all this energy transition mania, where people said, hey, we're not going to need crude oil anymore. That is proving to be not true. And yet, no one's trying to find oil. Everyone's doing understandably stock buybacks, dividends. We support all that stuff.

But at some point with global economic growth, it returns and all the economic needs of the rest of the world You're going to need new oil supply now is that second half of 2025? 25 maybe not okay if you get into 26 and 27 I think that's when you start thinking about a stronger potential upside for oil markets arjun I know you keep saying the best days of shale are over But I also realize you have permitting reforms happening, you have deregulation happening. There was a big Supreme Court decision that actually moved in favor of enabling more infrastructure

to be built in places like Utah. There's a sense from some of my conversations with people in the industry that Utah could be the next big area where you see investment and oil production coming forth as well. How are you handicapping some of those dynamics and what it actually means for U.S. oil production,

maybe being more resilient? I actually love where you're going with this question because this is what's needed. So we are very supportive of having permitting and regulatory reform and infrastructure reform. And we do need to think about in a world where the Permian Basin is not going to grow as quickly, it's still going to be a big and important basin, we need to look towards Canada and that requires infrastructure. We need to consider Alaska, in particular the National Petroleum Reserve of Alaska is a very prospective area, as well as places like Utah. And I might even say California, believe it or not, actually has oil, and maybe they are deciding shutting

down the oil industry is not such a good idea. So I think trying to figure out where we can go as a country to ensure that we have a substantial oil production, which has been so beneficial to us, that is gonna be one of the big questions and permitting reform, you're absolutely right, is a key driver of that. Arjun Murthy, great to have you on.

Thanks for joining us. Thank you. Well, speaking of Alaska, we'll be talking about that a little bit later in the show and coming up, the trade war causing American shoppers to miss products from China or pay more for them. In China, they're missing American foods from Chinese restaurants. And what are restaurant goers missing?

Spoiler alert, it's something folks eat in the American South and it's not chitlins. Full story when we return. Welcome back. Steel stocks surging today. President Trump announcing plans late Friday to double tariffs on imported steel, also aluminum, to 50%. The new duties are set to take effect on June 4th. Trading partners, including Europe, are already threatening retaliation. But Cleveland Cliffs is the top performer, up up over 20 for its best day since 2016 new corn steel dynamics also

shooting higher finishing up about 10 a piece u.s steel though that was the outlier that was down on the day president trump delivering the tariff news from a u.s steel plant in pennsylvania now on the aluminum side alcoa finishing lower down about half a percent since much of the aluminum consumed in the u.s is imported and in alcoa's case mostly from half a percent since much of the aluminum consumed in the U.S. is imported and in Alcoa's case mostly from Canada to the U.S. Well let's stay with tariffs as the U.S. and China go back and forth over which side violated the trade agreement. Consumers in both countries are starting to feel the impact, especially Chinese diners

who are having to do without American delicacies like chicken feet. Eunice Yun has that story in this week's China Lens. At his restaurant in Beijing, owner Gongxiao Yun used to offer a special dish, salt-baked chicken feet, or Phoenix Talons as they're called here, imported from America. But after prices rose 30% from March due to tariffs, he's had to pull the Chinese delicacy from the menu. American chicken feet are so beautiful, he says. Chinese feet just aren't as good.

The tariffs and uncertainty they cause is why some American products have been vanishing from stores and restaurants. Beef supplier Liu Li says US beef supply is unstable and now 50% more expensive. He switched to Australian beef, which has zero duty. US beef is fattier and tastier, he says. It's a shame we're in a trade war. The high price is just too much to bear. I'm taking you to a restaurant in Beijing that is famous locally for its American-style

barbecue. It's known to source all of its beef from the U.S. Until May. The menu has already been completely changed. The staff here tell us that all of the beef is Australian. Chinese customers are forced to adjust. I don't think there's much difference, he says. Not everyone is willing to compromise.

Restauranter Gung can source chicken feet now from Brazil or Russia, but says they just don't stand up to the American ones. He keeps a small stash for himself, but hopes to serve his salt-baked American Phoenix talents once again. The price of American chicken feet will come back down, he says, as long as there are no big changes in the world's political situation.

Quite a feat, with U.S.-China tensions so high. Kang says that another consideration on pricing is that while tariffs are pushing up costs, The American chicken foot and its pricier price is a bigger sell. John? Somebody's got to tell the American chickens. I'm sure they'd be very proud. Now, it sounds to me like at least in the near to medium term, these shifts won't be permanent because the Chinese are going to be able to sell their chicken feet at a higher price.

So, John, what do you think about that? I think it's a good idea to have a chicken foot. I think it's a good idea to have a chicken foot. I think it's a good idea to have a chicken foot. I think it's a good idea to have a chicken foot. I think it's a good idea to have a chicken foot. I think it's a good idea to have a chicken foot. I think it's a good idea to have a chicken foot. Somebody's gotta tell the American chickens, I'm sure they'd be very proud. Now it sounds to me like, at least in the near to medium term, these shifts won't be permanent because the American food product is differentiated, kind of different from the European situation, no?

Yeah, well, it definitely has its own selling point, so that is something that longer term would be good for the industry. But for the moment, one of the problems is also just that overall uncertainty that people have. And one thing that was interesting with the consumers who we spoke to is that they were saying, well, it's something that we can live with.

They were kind of adjusting to it. And one thing that we've learned here during the pandemic is that once people start switching products, you know, over the long term, there's a big question as to whether or not you go back. So that's another consideration that a lot of these businesses are thinking about here. This is giving new meaning to the term game of chicken,

Eunice. Fabulous reporting as always on all of this. Our Eunice Yoon. Well, it's time now for a CNBC News Update with Julia Borstein. Hi Julia. Hey Morgan, a federal judge this afternoon said the Trump administration likely broke the law when it stripped 50,000 TSA officers of their ability to unionize and use collective bargaining. The judge ultimately blocked the Department of Homeland Security from canceling the union contract while a lawsuit by four different unions plays out in court. The

FDA has approved the first AI tool to help predict the five-year risk of breast cancer from routine mammograms. In its announcement, the company behind the technology, Clarity Breast, noted that the AI can help because most current risk assessment models use age and genetics, but that 85% of women diagnosed don't have a family history or any identifiable risk factors. And Philadelphia Eagles star running back Saquon Barkley was announced today as EA Sports cover athlete for Madden NFL 26. In addition to helping the Eagles win another Super Bowl, Barkley also took home the single

season rushing record last year. He's the first Eagles player on the cover since Donovan McNabb in 2006. Back over to you. All he had to do was jump over a grown man. Julia, thank you. Well, stocks higher again today. The Nasdaq the biggest gainer continuing its May run. Our next guest warns of slowing growth and higher inflation in the second half of the year.

Will that derail the rally? Plus, what will we learn about the state of the consumer? When the two big dollar stores report results this week, we've got your preview when Overtime returns. Welcome back to overtime stocks mostly higher today tech leading the way the Nasdaq picking up where it left off in May up more than half a percent the chips among the top gainers a potential fall between the US and China may be helping their also a couple of big deals in health care Sanofi buying blueprint medicines for nine and a half billion dollars and

Bristol Myers collaborating with Biontech on a cancer drug. Outside of stocks, oil up more than 3%, gold closing at its highest level in nearly a month, just shy of $3,400, and then the 10-year yield at 4.45%. Well, let's stay on the market. As uncertainty over tariffs and fiscal policy continue, our next guest expects a slowdown in economic growth and higher inflation in the second half. So joining us now as well as Fargo Investment Institute head of global equities and real assets, Samir Samana. Samir, it's great to have you on. Let's start right there because we have seen a slowdown in economic growth, but we are also coming off of years

of record fiscal stimulus. So how much of this is just normalization and how much of this is the calm before the storm of something perhaps more pernicious? Yeah, Morgan, great questions. And honestly, we won't know until probably Q3, maybe even Q4, because right now, there's a lot of front loading of inventories. There's probably a lot of purchases on the part of consumers to kind of get ahead

of those tariffs. So we won't know what the actual run rate of the economy is probably until Q3 or Q4. Now we will go out and go ahead and say, you know, look, we don't expect a recession. So while it will be slower, it's not going to be recessionary, but it will be probably a little bit, you know, again, to your point, not as strong as it was over the past few years, which makes the economy a lot more vulnerable to a shock. So that could come from geopolitics, could come from those long rates, could come from tariffs.

And I think that's what worries us is just the fact that we are heading towards stall speed. So in light of that, how do you protect yourself from being vulnerable? Where do you invest in this market right now? So we think you can still pick up four to four and a half percent, kind of in the short to intermediate part of the fixed income curve. And we wouldn't take on too much duration at this point given some of the factors going on there. So you know what we would do is probably rebalance at a high level from equities into fixed income.

If you have you know over allocations to areas like small caps like emerging markets you know we would probably pull back there first just because of the lower quality and the fact that they're more economically sensitive especially in any kind of pullback. Samir, we went from equities, from stocks reacting to the Fed for a couple of years up to last year and then to policy this year. How long does that back and forth between reaction to Fed and policy continue before something else kicks in? Yeah, I mean, look, I think we have moved on really from the Fed to tariffs right now.

I think the blow by blow of tariffs over the next few months really will be probably the primary driver of markets. I mean, I think the Fed is telling you again and again that they may not cut rates this year. I mean, we only expect, you know, a few between now and year and 2026. So really, that's not the main driver for markets. The main drivers will be tariffs. And then I think, honestly, what will happen with corporate earnings, you know, who will actually pay the cost of the tariffs?

I mean, we believe tariffs are taxes, and somebody has to pay them. It's some combination of U.S. companies, U.S. consumers, or international producers, and you know, the people making the goods. So are there stocks, are there industries that are sheltered enough from the tariffs themselves that you feel confident placing bets there that sort of aren't as dependent? Or does the entire global economy hinge on this terrorist question so much that there's nowhere to hide?

Yeah, I mean, I think in early April, it was pretty clear to see that tech had probably sold off too much on some of the deep-seek news and on some of just the lower glide paths from an expectation standpoint. Now you've had a very nice rally. So I would say from a timeliness standpoint, energy jumps out to me. Still very cheap, not as impacted by tariffs unless there's a recession. Financials, very domestic industry, should see lower deregulation, is enjoying kind of that steepness in the curve. So I would say that's probably an opportunity.

And then mid-cap equities, we wouldn't go too far down the market cap stack to small caps, but we think mid-caps are in a little bit of a sweet spot if things come back to the US in terms of manufacturing and production, but also from things like M&A, which could pick up later this year. All right, maybe some place to hide. Samir, Samana, thank you.

Thanks, John. Up next, Brian Sullivan is in Alaska for an up-close look at a nearly $40 billion battle over a natural gas pipeline. It's only 1240 or so in the afternoon here, John. This is our second city in Alaska already today. Coming up after the break, we're gonna hear from the Secretary of Energy who is with us or we are with them today in

Alaska about what is at stake and why Russia is a big part of this story. That's next. Welcome back to overtime. President Trump is making a bet on the future of American energy by backing a nearly 40

billion dollar natural gas pipeline in Alaska. Brian Sullivan is in the last frontier with the details and the potential risks and rewards. Brian Morgan, we are not just in Alaska. We're at the Arctic Circle. We are at the top of the world. We were in Barrow, Kievic earlier today. Now we're in Dead Horse, which is also known the top of the world, we were in Barrow, Kivik earlier today, now we're in Dead Horse, which is also known as Prudhoe Bay, probably a more well

known name, to talk about this potential $40-plus billion pipeline. Everybody knows the oil pipeline, okay? That's famous Prudhoe Bay where we are right now, by the way, all the way down to Valdez, Alaska. There is a new push, a renewed push, for this 40 plus billion dollar natural gas pipeline. Take some of the gas that's out of the ground here, put it in a pipeline right next to the oil pipeline,

down to the sea, turn it into liquefied natural gas, sell that to Japan, Korea, Taiwan. By the way, not only here with Secretary of Energy, Interior, EPA Administrator, Governor of Alaska, Senator Dan Sullivan, but also representatives from Asia, Japanese, Taiwanese, Thai, Filipino, Korean, others, those buyers are all here. Now, whether or not the pipeline ultimately gets built, that's a question that only time will tell. ConocoPhillips, ExxonMobil, some of the names that are based here that have operations here,

they've been non-committal. I've reached out to pretty much all of them about whether or not there will be capital, their own money invested. So we asked the Secretary of Energy what role does Russia play in making sure that this pipeline ultimately may happen, and here's what he said. This pipeline itself is probably roughly equal to 40% of Russian LNG sales today. Just this project would displace a good chunk of Russian LNG, liquefied natural gas exports. But absolutely, the United States can fill the gap of the entire Russian exports.

But that hasn't happened yet. So we sell more gas, Russia sells less gas, they have less money, we have more money. That I think I summed it up pretty well, Morgan and John. Yeah, and I think that gets at such a key macro topic in all of this, Brian, and what you being their highlights, and that is the role that LNG can play, not only in trade talks, but also in peace talks, or at least ceasefire talks, given the geopolitical backdrop.

Here's the dirty secret, and we've said this for years on CNBC, we've shown this to you from Europe. The Nord Stream pipeline may have gotten blown up, but Russia's selling more LNG liquefied natural gas than ever. That is adding more money to Vladimir Putin's coffers. The BBC a couple of days ago just did a story

on how much money that Russia and Putin are making from LNG. So some of the idea is not just use the gas that's here, don't burn it off, but also sell some of that gas, take some customers from Russia, and give Russia less money at the same time. Sounds like an easy win. The problem, guys, is that the pipeline at 40-45 billion, a lot of people in the industry that I've talked to on and off the record have said it's a great idea, it's just simply non-economic because well economics of this place have changed a lot well Brian they built it 50 years ago that's that's the tariff and Trump administration

angle trying to get Japan South Korea and Taiwan to foot part of the bill here right that is it those some of those representatives John they are here on the same sort of trip that we are. They were not in Ukiyavik, Barrow, yesterday, but they're here in Prudhoe Bay now. And tomorrow there's a meeting and conference in Anchorage, Alaska, where we're going to go to tonight, which is effectively, can you pony up the money? I mean, that's it. Yeah, everybody agrees it's a pretty good idea. But the difference between what do they say a contract and commitment is a check? Will somebody write a $10, $20, $30, $30 year check that would effectively fund this pipeline getting built? By the way,

very quickly, Alaska is actually running out of natural gas down south. So domestic part of the story is just making sure they have enough gas to power their own economy even outside of selling it to Asia. It has been a mind-blowing, eye-opening experience. It's about 10 degrees. There are some really tough good people who live and work up here. This is a whole part of the American experience I've never seen and couldn't have imagined, but it's amazing. It really, really is an amazing trip. Yeah. Well, Brian, wonderful reporting today and thank you for bringing that to us here. Stay warm, Brian Sullivan. Well, space stocks falling back to Earth after President Trump scrubbed Jared Isaacman's nomination to run NASA, the potential fallout

for the commercial space industry, next. Plus, healthcare has been the worst performing sector over the last three months. Mike Santoli is gonna take a look at whether these stocks are starting to look cheap when overtime returns. Over Time returns. Welcome back to Over Time Meta, a big winner in the S&P 500 today on a Wall Street Journal report that the company plans to use AI to fully create ads by the end of next year, advertising stocks getting hit hard as a result.

You can see right there, many of those names lower today in trading. Yeah for sure. Turning now to retail, more earnings on tap for tomorrow. Before the bell we get results from Signet Jewelers and Dollar General. Later in the week will be Dollar Tree's turn and joining us now is Michael Lasser from UBS. Michael, you like these names overall it seems but I'm wondering about this tradeoff between consolidation that might help some of the players that are still standing versus reductions these names overall it seems, but I'm wondering about this trade-off between consolidation

that might help some of the players that are still standing versus reductions in SNAP benefits and just the overall stretched consumer that could reduce their ability to pay for anything. So John, it's a good question. We think the environment for the dollar stores is more favorable than not, meaning the upside opportunities are greater than the risks. Specifically over the next couple of days, as Dollar General and Dollar Tree reports, we expect two key factors will drive upside to the sales estimates, which will then translate to better earnings. That includes better execution, as well as some trade down for the very reason that you

mentioned that it is a challenging environment for the consumer and they need to stretch their dollar. And there really is no better retailer around than Dollar General and Dollar Tree outside of Walmart to help the consumer stretch their budgets. We think we'll see signs of that this quarter. How much control do they have over their costs? They have a good amount of control. Dollar General, the abundance of what it sells

is sourced domestically. Only a very small percentage is sourced from overseas. Dollar Tree, about one third of what it sells is sourced from China, or at least it has been historically historically There's a case where it's gonna need to take some pricing in order to offset the tariffs That are in place on on those goods But with that being said it's shown an ability to pass along Increased costs in the past and we expect it to do the same. It's still gonna look relatively attractive on an on an absolute and relative basis. So the value

proposition in the mind of the consumer should still be quite good, even with modest amount of pricing that Dollar Tree has to take in order to offset the tariff. So is the way to think about this that even if you are talking about modest pricing at Dollar Tree, it's outsized impact on Xi'an and some of these other Chinese e-commerce players who basically bring inventory in to deliver almost as soon as the order comes and the fact that they're getting hit harder. So that therefore makes some of the American retailers that are still at least somewhat dependent on China more attractive here. I like the way you're thinking, Morgan. That's exactly right. The fact that the de minimis rule

has now been changed, such as Ti Mu, Xi Yan have to play duties on the goods they were bringing into the U.S. makes the dollar stores more compelling, where their prices are, their price gaps with others are lower. And so we think that the consumer is now more willing to spend at Dollar Tree and Dollar General in lieu of going to some of those Chinese e-commerce websites. And that is going to help not only this quarter, but in the forward quarters ahead. Are we still overboxed as a nation? And I ask that knowing we've seen a number of bankruptcies in recent months.

Yeah, we are. We have way too many retail stores in the United States. There's almost a million retail stores. We expect over time that to go down below 900,000. What that will do is benefit the well-positioned larger retailers. We expect Dollar General and Dollar Tree to be in that beneficiary bucket, especially as retailers like the drug stores, the department stores, and others close locations.

That will just put more volume in the hands of those that are either have their full store base that is ongoing or even opening more stores like some of these dollar stores. I think of these players as neighborhood strip mall mainstays, maybe that's wrong. Tell me how exposed are they to being just in the wrong place physically? So Dollar Tree is definitely more traditional retail, suburban, script

center focused. Dollar General tends to have more of a lean towards rural locations. I would not say that the real estate of these companies is ill-fitting or ill-prepared for the current state of the environment. I think the opposite is true that they stand to benefit from other store closures around them. So the real estate is in a good spot. There is some debate on how many more dollar stores we do need in this country given how rapidly they have expanded over the years. But as there is more consolidation in the sector that will create opportunity for these retailers to expand into those locations. And the overall number of stores can still go down

even as the dollar stores become a bigger portion of the retail sector. Okay, we're gonna watch all of this this week with earnings, Michael Lasser, thank you. Outside of retail, we'll get earnings from a few tech names too. We're gonna hear from CrowdStrike, HPE, and Asana after the bell.

And on the economic front, we will get the April factory orders report, the April job openings and labor turnover, survey jolts and May's auto sales as well on this first trading day of June. Yeah the crypto stocks the crypto stocks are on quite a run lately so it'll be interesting I'm sick crypto I meant cybersecurity stocks have been on quite a run lately so it'll be interesting to see how they perform at and after earnings.

Yeah, that's been a secular growth story as well and a dangerous world has helped to propel that further as has AI implementation. Well, major averages finished higher. That does it for us here at Overtime.