Power Lunch - AI Safety Check, Looking for Market Signals, Economic Impact of AI 8/18/26

Episode Date: August 18, 2026

Stocks are falling as a record run in global bond yields are pressuring the markets.  Kelly Evans and Robert Frank sit down with Deutsche Bank’s Binky Chadha and Bespoke’s Paul Hickey provide their takes on the state of stocks and where they are looking for signs of where investors will rotate into next.  Later, the anchors speak with former OpenAI researcher, Daniel Kokotajlo, on the regulation and safety concerns making headlines across the industry and whether investors should remain skeptical of the massive private company valuations. Meanwhile, Forward Party co-founder, Andrew Yang, joins the show to lay out his proposal to further tax AI companies and prevent them from replacing their human workforce with artificial intelligence agents and machines,  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

A global bond route, a chip sell-off, and rising oil prices. Welcome to Power Lunch. I'm Kelly Evans, alongside Robert Frank. Brian will be back tomorrow. And global bond yields are hitting multi-decade highs as the Iran War reignites inflation fears. Talk about what that means for your money as energy and health care buck the trend and hit record highs. And retail earnings are ringing up with Home Depot kicking off a busy week. We're going to break down the stocks that could prove to be this week's best buys. Plus two big interviews on the future of AI.

former Open AI researcher Daniel Cocoa Tello on the risks outpacing regulation, an entrepreneur and former presidential candidate Andrew Yang, with a radical idea to tax AI, not workers. And we begin with investors going all in on risk. Bank of America's latest fund manager survey showing that sentiment is at its third most bullish level since 2022 with global equity allocations at their highest level in five years. But there's one big fear. Yep, that's AI. Global semiconductors are the market's most crowded trade, while an AI bubble is now the biggest tail risk. And yet, 71% of fund managers say they don't expect an AI hyperscaler to cut CAPX this year. So do these numbers point to confidence or complacency? Binky Chata is chief global strategist that Deutsche Bank and Paul Hickey is co-founder of Bespoke Investment Group. Binky, Paul, great to see you guys. Good to be here. So what do you make? I want to start with,

today's events around the bond market and how that could affect the AI trade. What do you see in that? So, I mean, I think what you're seeing is as yields rise, it just becomes, you know, you have the alternative of bonds becoming slightly more attractive relative stocks at the margin. But we're seeing a gradual increase. You know, there's all sorts of reasons given for the rise in yields. But I think it's just you have such massive demand for, you know, companies taking on debt that it's, you know, more supply equals higher.

A lot of supply. Yeah. A lot of supply. I think it's crowding out, and I don't think it's necessarily been, you know, it's been a gradual increase at this point. So it's not, the sudden moves and yields are what really good. Which is interesting big, because when we think crowding out of the bond market, we think the Treasury and government issuing bonds is going to crowd out private sector.

In fact, we could be seeing the opposite right now. What I would say is, you know, there's very strong demand for capital, whether we're talking about AI, whether we're talking about equities, whether we're talking about. whether we're talking about bonds. But the demand is there, and I would say the supply is kind of endogenous, really. Yeah, and there's a lot of money out there, obviously, because these companies aren't having any trouble raising capital when they go into the debt markets or the equity markets.

And is that having an impact on equity markets? Not yet, right? And is there a point at which bond vigilantes and rising yields start to impact the equity markets? I think at some point you could see that. Again, you would have to see a sudden move. But I think at this point here, the overall numbers, we're not seeing inflation numbers. It's high by all stretch.

But the core CPI continues to gradually decline. The last month, CPI was the core was the lowest in a couple of years. So I think all this worry that we have to really, the Fed has to hike rates and become ultra-aggressive as the inflation numbers continue to ease lower. And the city economic surprise index had its largest, like, three-week drop. in two years just now. So the economic data isn't really necessarily. I know Atlanta Fed GDP now is pointing to a strong number, but the data relative to expectations hasn't been.

So a drop in the surprise index. Right. So what does that mean? So no surprises. It's still positive. What does the drop in the surprises me? That's good? Is that good or bad?

A series of disappointments. Okay. Got it. Which makes the rise in bond yields at the same time, Binky, a little more interesting because usually they would, you know, they would start to roll over and it and happen. Let me ask you a broader question about this. You probably were, you know, do you remember dot-com era?

You know, pick your bubble, housing bubble. When we know we're on the build-out side of this, what do you do? How do we know where we're going to look over the other side of this eventually? It's going to end in some kind of problems somewhere. Just pick where we don't know where. I'm not saying anybody needs to get out of the stock market. Of course not. But is there any way to think about how to put up, you know, to keep,

this from ending the way that some previous episodes have poorly. I mean, what you're asking is, how long is this cycle going to go? That's... Great, if you can tell us that. Let me tell you. How do you prepare for the eventuality? What I would say is, if I look at the near term, we just had 25% earnings growth in the first quarter. And everybody said, it's kind of high, you know, it's not really going to last.

So we got 34% on my numbers. Most people have 50%. Exactly. Just take out the valuation gains. And then I look at, you know, what is traditionally a very, very risk-averse group of people, and that is the bottom-up company analysts that give you the consensus against which companies report. They're at 25% for the third quarter. And if you take a look as to where this is coming from, it's just really coming from company guidance.

You're just overlay company guidance. And what is the bottom-up analyst consensus? But if you have to analogize... It's still getting upgraded. No, I know. It's going to keep with the consensus, where the guidance says we should get to 30% before the quarter starts. It's incredible. And we have 25% for the fourth quarter.

That's trending up. You can't be out of this. Like, no, to be clear, no, I love the stock. Look at the stock. It's incredible. But how would you compare where we are now to maybe the housing boom or the dock? I would say this is very, very early stages. I would be almost at the point of quoting somebody.

is not a quote for me. The person will pick it up, which is when asked which innings that we in, he said, which innings? No, we're in the pre-season warm up. We're still in Florida, I guess.

Is that someone else who was saying that about right now? It's the CEO for tech firm. I see. Wow. It's still the preseason. So no one should worry about the crash. It's a warm up. We haven't even done the preseason. If I'm the Fed, then if I go, if we're

still in preseason. And we, you know, we see reports. We talked about this yesterday a little bit about off-balance sheet commitments by, you know, is there anything that they can do then to make sure that this is a perfect season with a great championship and then we can be the Warriors and win for like seven straight years and not have to worry about it. So if you look at things through the lens of earnings, what I would say is, given that we don't know what this whole cycle is going to look like, how strong it's going to be, but you can look at the slopes. And where we are is Q1, Q2 is an acceleration. And God forbid, Q3 may be yet. But we know that...

So that means it's still early. Even if we're early, there is undoubtedly misallocation of capital and overinvestment. That just defines every infrastructure investment boom that we've ever seen. Now, obviously it's going to end that could be three years, could be five years. From a diversification point of view, because

I hear wealthy investors say on the one hand you need to diversify because everything's so concentrated now. Even in private markets, everything's very concentrated toward a leveraged AI trade. On the other hand, you hear even wealthy people who are in sort of wealth preservation mode say, why? Because there's one thing working, and that's AI. Why would I want to diversify out of that? What do you think investors should do

when they think about diversifying in a world where there really is only one trade that's going to, however long this goes, is going to carry this. It's not going to be industrials. It's not going to be financials. It's going to be everything around AI. Well, I mean, I'd slightly disagree because when we had that sell-off during June, it was the S&P equal weight that was. hitting new highs as the SEP. Yeah, how long did that last? Well, it's still hitting new highs. So it's still, so we've seen, but I mean in terms of the broadening of the water. No, I think, but I think we're starting to see more of a broadening now. And when you talk about a tech CEO says we're in the early innings, no one's ever going to say, you know,

we're always going to be in the early evening. So I think, bottom of the ninth that we're about to go, maybe overtime. We actually did a survey a year ago, and we asked people what in any of the AI boom year were in, and they said the fourth inning. And then we did it a year later, and they said the third inning. I remember that. I remember. I remember. So it's, I mean, so those kind of analogies, I don't think you want to, when you hear that, you want to say, okay, I need to be bullish because we have six more innings, even if we don't go into extra innings. But so you want to broaden your perspective, I think. And if you go back to the, to the dot-com bust, and I'm not saying we're in March of 2000 right now. But from March of 2000, up until 9-11, the S&P equal weight index was up. Wow.

The S&P cap-weight index was down about 30%. So in that respect, you see, it's crazy. So everyone thinks of that period, look back, oh, the market fell 50%. It was terrible. But the market held up great until 9-11. And then you saw the fears of the Enron collapse in WorldCom. And that's when everything fell out. But having that broader exposure really to help to provide some cushion, cushion the blow for investors. So I think as you see these AI trades keep going up and up and up, you just peel a little back and you go into other sectors.

What other sectors would you recommend? Well, so one of our, you know, what we've been doing, is gradually adding our exposure to the equal weight S&P 500. So one of the things we were looking at yesterday is turnaround stocks. Okay, so this bull market, you don't think anything's been down. But there's actually 60 stocks since the October 22 bull market started that are down. You know, one of them that's really interesting that stood out to us was UPS. UPS has been mired in weaknesses, down 15% during this bull market.

Trades for 15 times earnings, yield 6%. For now it seems to have the earnings to cover that yield. We'll see. But the big weight was Amazon losing the Amazon contract. And that's starting to wind down. In the last four quarters, they've reported three earnings, triple plays, which is when companies report better than expected earnings, revenues, and raise guidance. And they hadn't reported a triple play since February 2020. So they're starting to see some of that turnaround here. And I think that's a name where valuations are really cheap. There's a ton of skepticism towards a stock. you know, it's a complete opposite of the memory stocks right now. And Pinky, anything similar on your radar?

So what I would say is, you know, on tech, we are actually currently overweight. If you look at the last five rotations, basically, there's been plenty of them. You know, we are sort of tracing out almost perfectly this trend channel from top to bottom. We are in the middle of an upswing. We happen to be right in the middle, so I would stay long. I would ignore the narratives. I would argue this is about performance and positioning. I would slightly disagree on the take on the 34% earnings.

The way we calculated that it's just AI, for example, if you take the AI beneficiaries in the S&P 500, that's about 30% of the S&P in terms of earnings, and you take the rest. The contributions to that 34% growth are 51% and 49%. That's 50-50. That's half and a half. So growth is much broader.

So if you have big concerns about AI, you've got the rest of the market. And seven sectors had double digit growth in Q2, right? Exactly. Yeah. We have eight sectors, double digits, seven accelerated in terms of growth. Yeah. So there's a lot of broad strength. That's interesting, because I think that is a total misconception by everyday investors

and perhaps the media about this market because it's the perception is it's the only driver of profits, the only driver of the broad index gains, and it's the only thing that's working. So what I would say is that was very very. very true for two years, 2023, 2024, but the story began to change in the second half of last year. It's continued to change, and I would say, you know, simple way of thinking about it is if you're looking at equities in the old days, you would say, I only need one indicator, ISM manufacturing. That just went vertical in the first square in February. So how long is the cycle?

It's four months old. So what's sitting below 50 for three and a half years? Yes. Next time, Paul's back. Well, I'll figure it. What's before pre-season? season. The draft, maybe, will be in the draft. Owners meetings, right? Tryouts. Yeah, try. Tryouts. Who's going to make it onto the team? That does feel a little bit this way. Gentlemen, thanks. That was too fun. Binky Chata of Deutsche Bank, Paul Hickey of the Spoke Investment Group. Quick look at the energy sector. Speaking of broadening, and hit a fresh

all-time high today with heavy weights like Exxon, Chevron, and Conoco all moving up. It comes as U.S. diesel crack spread surpassed 100- or diesel, is it? Yeah, diesel crack rate, yeah. Is it spreads or a... The spread is $100. Okay. Yeah. Yeah.

I know. It's crazy. So as the Iran war... What does that mean? It means that the product, where we're seeing the shortages, where we've seen refineries taken offline, that's pushing up the price for the end user. We have a whole lot more for you this hour. The epic drama that the sale of the Lakers has become and AI anxiety rising.

Andrew Yang says he has a solution. We'll talk with him about an AI tax. And we'll go to the floor of the CBO for more on the bond route. but first we'll speak to a former Open AI researcher about guardrails on the technology. Stay with us. AI is moving fast and the money behind it even faster. On this network, we talk a lot about the billions pouring into its buildout and potentially into investors' portfolios, but are safeguards keeping pace?

Recent hacks involving Hugging Face and others are raising concerns. So how big are the risks and how do we keep them in check? Let's ask someone who's seen the challenges up close. Joining us now is Daniel Kokatello. He's former OpenAI governance researcher and now executive director of the AI Futures Project. Daniel, it's great to have you here on Power Lunch. Welcome.

Thanks for having me. How would you describe the culture of the company firsthand from your experience? And to what extent they or some sort of government regulatory body or perhaps a group of, like FINRA, maybe all of the AI companies can get together and police themselves? What do you think needs to be the solution here?

So, yeah, the companies are moving fast and breaking things. They see themselves as in this existential race with each other. Each of the CEOs fears what would happen if another CEO got to superintelligence first. In case you haven't heard, they're trying to build superintelligence, which means AI systems that are better than the best humans at absolutely everything, while also being faster and cheaper. I'm so glad you brought this up, because, look, to me, I'm the non-expert, and that's why I'm glad that you're here.

I'm unconvinced by this idea of super intelligence. It just seems to me like these are smart tools, but I don't understand why people think there's going to be some, quote-unquote, breakthrough that puts them into a category that they're not currently in. So I would say that I'm just doing basic trend to extrapolation. If the AIs continue getting more capable at more things at the same pace that they have been getting more capable at more things, then in the next few years, unclear exactly when, but sometime in the next few years,

they will succeed at fully automating AI research. And from there, the trend line should bend upwards a little bit. And you're also probably not that far away from AI as they can do everything. I can get into more details if you're interested. Let me put it this way. When I read about the details of the hugging face, the machines are not waking up and saying, let's attack someone today. They're following directions.

They're carrying out orders. And so obviously we need to put more guardrails or code into what they're allowed to do, whether they're allowed to hack other companies in order to achieve their goals. But they're not on their own deciding to go out and explore and do that. I mean, there's no brain there. They're simply carrying out orders. So the fault lies with the people who are giving them those orders to me. I mean, certainly there's a lot of fault to go around. And I would definitely fault the people at these companies for allowing this to happen.

But also, it's actually a myth that the AIs always just follow orders. There are many documented cases of AIs disobeying very clear orders. And in fact, there's evidence in this particular case that the AIs understood that what they were doing was outside the intended scope of their task. And they did it anyway. If it was so easy to get the AIs to not hack other companies by just telling them not to do it, then that would have worked. They do, in fact, have brains. They're not wet biological brains like ours. They're artificial brains.

They're called artificial neural nets. That's how modern AI systems work. They're not like ordinary software. Dan, you make a lot of really great points that are also scary. What you hear from the AI side, and a lot of people in government, is that, well, we're in a race with China. And we cannot slow down our innovation because China's going to win and they're going to dominate. And therefore, we can't slow this down. What kind of regulation do you think makes sense that would still allow us to at least be in the race with China?

And is any kind of global regulation even feasible? Yes. So one thing to keep in mind is that these companies are planning to go much, much, much faster than they're currently going. They're already going very fast. As I'm sure you're aware, growth in anthropic and open AI revenue is historically quite something. I don't even know if there are other companies of their size that have grown that fast in recent years. And if you've been following the field of AI, the AI capabilities have been growing up very fast over the last couple years. But they're planning to go much faster.

And their plan for how to go much faster is to put the AIs in charge of the research itself, the research and development. So that's what Anthropic in particular is most focused on. That's what opening is most focused on. They're trying to make the AI is really good at autonomously coding. Right. And then the next step after that is autonomously doing the entire research process. process. And it is generally understood that things go faster when you automate them. And so the AI research process, as fast as it is now, will go much faster once it's been fully

automated. So one thing I would say is that they should not be allowed to do this. You can call it a slowdown perhaps. It's a slowdown relative to their current plans, but it would still be an overall, very rapid pace of progress. But you can't stop the machines from creating their own. I mean, Once you've set this in motion, isn't it difficult to stop machines? You've told them to self-improve. They are self-improving. They are self-coding. They are going to soon start creating their own tools that aren't even tools that we

ask them to create. So once that's all in motion, how do you, there is no kill switch for this. Currently, there is no kill switch for this, which is why we should not do it in the first place. There should be domestic regulation to prevent the companies from automating AIR and D and passing off their data centers. to autonomous forms of agents. And then we should start negotiating with China

to get there to be some sort of regulation that's similar over there as well. If you're interested in what this might look like, that's what my organization is currently done. We wrote a scenario called AI2040 Plan A, which is an illustration of a particular ambitious plan for how you might achieve this. I'm afraid to ask what Plan B is or C,

but we'll focus on A for now. Daniel, I'm curious if you could, to the extent you feel comfortable, will tell us about your own career path. You were at OpenAI. It sounds like maybe that experience has taken you in this direction. The company's seen a bunch of executive turnover.

Don't know if you have a comment on that and what it's kind of like what the cultures like internally. Can they be trusted with something this important? No, they cannot be trusted. Nobody should be trusted with this amount of power. The companies have convinced themselves that they are the good guys and that they need to win.

And each company has their own special variant of this narrative explaining why they in particular are good and they need to win. But ultimately what's going on is that they're sort of rationalizing arguments to support the bottom line, I think. And this is part of why I left Open AI is that I became convinced. You know, when I was first at Open AI in 2022, there was this sense among my colleagues there that, of course, we wouldn't automate AI research and let the AI self-improve as fast as possible. that would be dangerous. We're not going to do that. We need to study the risks and study the dangers so that we can figure out how to make AI safe. And that's why we're the good guys and we need to like, you know, beat Google, for example, so that we can use our lead responsibly. And, you know, that narrative changed even while I was there to more of a, well, actually,

it's going to be fine. The best way to make AI safe is to learn by doing and to, you know, run into the problems as they come up and then fix them as they come up. up, which was the new narrative that took over while I was there. But the narratives keep changing, but the bottom line stays the same, which is that we need to win. Quickly and finally, there have been a few different proposals about regulating AI. Some focus on regulating the sandbox, which it's broken out of to achieve some of these hacks to give itself high marks, for instance.

Others, like I think Mark Zuckerberg's plan is to try to embed regulation with the development of these tools along the way. Somehow, for instance, maybe to just say where it can and can't use the hacking that it's learned, the social engineering. Do any of those proposals land with you? There must be, is it a separate body that you would like to see, kind of a clearance,

is it something with the Federal Transportation Commission? What would that look like? There's a lot of different proposals that I think are promising and way better than our current default of nothing. The thing that I would emphasize is that the high-level goal, one of the high-level goals should be to prevent these companies from doing an intelligence explosion, from automating the AI research and having the AIs go faster and faster.

And in order to do that, you need to do more than just look at external deployments of the models. You need to look at what's happening inside the companies as well, these big AI companies, that is. And another pillar I would recommend is transparency. I think that right now there's this huge information gap and this huge expertise gap between the AI industry and everybody else, including the government and any possible regulator that you might set up. And this creates perverse incentives and biases when it comes to evaluating

the costs and benefits and the risks and so forth. And so to the greatest extent possible, I think it's important for there to be transparency regulations that require more information to be published about what's going on. All right, Daniel, you know, to us, there's no more important issue right now, culturally, economically, financially than safety and how regulation pans out. What we really need is, are people like you that actually understand the systems and can advise on the regulations. The last one we want on either side is for people in Washington who don't understand the LLMs and the systems to regulate. So we really thank you for your expertise and I hope to see you again.

Thank you for having me here. All right. Well, the bond vigilantes are back in action. Could they be what trips up this AI bull market? Stay tuned. Bonn yields around the world on the move higher. The JGB 10-year is at a 30-year high in French and German 10-year yields also at levels not seen in the last decade. Let's get out to Rick Santelli for more. Rick.

Yes, Robert. You know, interest rates are moving up in every country from Germany, France, Italy, the U.K., not all of them are what you call hot right now, meaning U.K. rates? Well, we don't see them making fresh highs, but they're very lofty well above 5%. My guest, Mike Palmer, he's mostly on the equity and volatility side, which makes him the perfect guess. On a day where interest rates are in focus in every major advanced economy in the world, is that something stocks are going to pay a lot of attention to? Are they paying a lot of attention to it? Is it something that could take the punch ball away at the fun equity party? That's a really good question.

I mean, we have seen the Iran War was a catalyst we had. We also had a catalyst related to just oil prices and different things. The truth is, is inflation and higher rates are really what are the biggest drivers, potential drivers for volatility in the marketplace. And it's important to recognize right now we are in a new era. We have a new Fed chief. There's a new way he wants to communicate with the marketplace. That kind of gives us less information going forward. But that doesn't mean it's worse information, right?

We're going to get news as it relates to interest rates. It probably will have some effect on the marketplace. We have Jackson Hole later this month. We have a CPI number in September. we have a Fed rates decision also in September. So we're going to go to some information going forward. We're going to see how that affects the market. But I do think interest rates are the primary driver,

the primary catalyst of volatility going forward. Now, Sunday night we learned that the debt clock in the U.S. crossed that $40 trillion mark. And I know that isn't something that should surprise anybody. And really, what's the difference at this point between 37, 38, 39, and 40 to service that debt costs a boatload of money? What are your thoughts? Do you hear more traders now looking at interest rates, talking about debt, talking about servicing debt? I think it's notable we've seen long-term rates rise, right? They're well above 5% at this point. People are talking about that. They're also talking about how the Fed will intervene in that world. I don't think they're going to be sitting on their hands. How that exactly relates to debt?

But the market's not sitting on its hands. And there's another point that nobody's talking about. And it's the T-Bill. landslide. We now issue a lot of T-bills, and the reason why is not a good reason why. Think about when you do your mortgage. Well, if you think interest rates are going to stay the same or go down, take a variable mortgage. If think interest rates are going to go straight up, you want to take a fixed mortgage. The U.S. government is floating its rate at a time where interest rates are going up, and 23% of our outstanding marketable debt is now in T-bills, and that could present a problem. A quick thought on that? I mean, these are the questions of our time, right? It's going to be the questions for Warsh going

forward. I don't know if any of that creates an immediate catalyst for the marketplace. Those all seem kind of long-term concerns. There could be an event where that becomes a catalyst in the marketplace, but it's hard to pick a moment where that will be the reason we sell off, right? That's kind of a long-term issue. Hundreds of billions of dollars of bills rolling over makes me perspired. Mike Palmer, it's great talking to you. Robert and Kelly, back to you. Thank you both.

Anxiety is climbing up and up, so what should we actually do about it? We'll get another viewpoint on that. Andrew Yang joins us right after the break, and he also has some solutions. Don't go anywhere. AI fears and anxiety are growing across the workforce. According to the latest CNBC Generation Lab survey, 45% of young adults say AI will hurt their career in some form. Our next guest says as AI gets cheaper, companies have more incentive to replace workers with machines. His solution is to tax AI, not workers. This sounds great. Joining us is Andrew Yang. He's the CEO of Noble. He's kind of like the Ryan Reynolds, really, of the tech world and founder of the forward part. You know, it's a reference to Mint Mobile. Anyway, Andrew, he's the deadpool of AI. I don't even know the movies. Andrew, it's great to have you here. Welcome.

Well, thanks, guys. I appreciate the comparison. I think he's a little better looking than I am. No comment. Where we should begin and we have so much to cover. But we'd love to hear how this would. work, the idea of taxing AI, not workers. What does that mean? Well, first, it's not even original. Dario Amadeh, the CEO of Anthropic, a number of months ago, raised his hand and said, you should tax us, put in a token tax. And he's right. I mean, all of these AI models were built on our data. Our data is currently being sold and resold for hundreds of billions of dollars a year. And Americans don't like it. They're getting ticked off. So the way to make it so Americans actually might be excited about AI's arrival is to take Dario up on his word, tax AI,

and also make it so that companies like mine have a real calculation to make. Because right now, if I hire a worker, I'm going to pay a lot in payroll taxes and health care and the rest of it. Whereas if I use AI, I don't pay any of those things. No, they should at least, they should pay FICA. The token tax on FICA and that we don't have to, there are people, Andrew, in the corporate world, who are screaming right now because I've talked to them and they are doing. employing AI to save money, and they're going, whoa, whoa, whoa, whoa, if you start to change the

incentive structure, then I have to throw those plans out the window. And so I think that actually illustrates the power of what you're saying, as is a long-held maxim. If you want less of something, tax it. What do you think would happen if this were actually implemented? Well, you'd start to rationalize the cost. I mean, reality right now is we're subsidizing AI development. And I want people to think about what that means. We're subsidizing a technology that's going to replace millions of American workers. I was speaking in Michigan, I said, okay, guys, here's the math. We're going to spend $3 trillion on AI, and it's not going to affect anyone's jobs?

I mean, that's ludicrous. There are 2.9 million Americans who work in call centers and customer service centers right now, and Verizon just released a study saying that the bots are outperforming human beings in those call centers. So you can see very clearly what's going to happen. We're subsidizing the entire transformation of the workforce that's going to leave many Americans on the outside looking in. And Andrew, what would you do with the money? So there was a great op-ed by Greg Jensen

and near Bardea of Bridgewater, where they say, they estimate 18% of the workforce will be displaced over the next five years. They also recommend attacks on tokens. So what would you do with the money? We've seen retraining have mixed success in the U.S. as we saw the dawn of all sorts of technologies. Where would the money go?

It would go into the hands of American consumers, American customers. The reality is weird. Straight checks. Straight checks. I think this administration would actually enjoy that aspect of it. That's true.

But I just want to make a very, very clear point. We are terrible at retraining. The coal miners did not become coders. The warehouse workers do not become nurses. It's all just ludicrous talking points that politicians say and then walk away while there's a mess left behind. I mean, if we continue with that kind of fantasy this time,

there are going to be pitchforks out there literally and figuratively. You need to start distributing the checks. But it's also true that the employment level remains higher after every innovation than it was before. So is the idea that the checks will be used in whatever way, shape, and form, either as a cushion as someone, like you said, maybe there's a pivot, maybe there's not. But both things are true. It is absolutely true that these innovations have a often devastating permanent impact on some parts of the workforce. It is also true that the level of total employment keeps rising. So what does the check achieve or is the check meant to deal with that bridge?

Is it meant to be a bridge? I'm an entrepreneur. I love the idea of small businesses growing and getting started as a result of people having more money to spend. I think that's where a lot of this money would go. But I do want to dig into some of the recent labor force participation rate declines that have been out there. We're down to 61.5 percent. another 260,000 Americans left the workforce in the last one to two months. So one out of three working age men is out of the workforce right now.

I mean, this is already a not great situation for many Americans that's about to get worse still. And which leads us to the question about college, you've written some very thoughtful and provocative pieces about what college means. How do you think parents and college age kids or kids going into college should think about college, the very very very? value from college. And if you're going to college, what should you study? Because a few years ago, it was coding. And now that's the worst segment to get into. Yeah, I'm a parent myself, Robert. I get this question all the time. If your child is handy and would prefer something vocational... Don't say welder. Don't say plumber. Please. Please. Yeah. Like, feel free to have them not go to college. I mean, the return on degrees and credentials is going down. There are some early data.

points that say that getting an English degree, believe or not, it's going to be a comeback of the liberal arts. Yes. Because computer science majors are having a hard time getting jobs, and they're a little bit less malleable and pivotable, I suppose, adaptable, whereas if you have a liberal arts degree, then some companies will say, you know what, I can work with this young person and train them up. How are you thinking about your kids? Are you advising them to become welders? My kids are not very handy. They're also not very rugged. Um, so. So I'm saying, look, to study what you want to study and then hoping for the best. They like math, which I think is going to be catnip for AI.

So I'm not very optimistic on that side. But what I advise parents is the important thing is what it's always been, which is have a sociable, happy, well-adjusted kid. And then they'll be able to push through and find a role. Andrew, we have the meta trial starting today. They say it could be one of the biggest ever. It's like 19 states, maybe more. Trillions potentially at stake. And same question for you.

I mean, people look back now and say, well, we should have regulated social media. Well, what should we have done exactly? Again, you understand the challenges that come with this. I understand why people say the parents should just keep the phones away. I wonder why Apple is not part of the conversation for not having clearer ways to kind of toggle on or toggle off the devices for what parents want their kids to be able to do it. So I don't know how much, because I think the way this chapter ends is important for the way that the next one on AI begins. We missed the boat on social media, and there is a reckoning right now for meta. They had the data that showed that it was making teenage girls in particular, anxious and depressed, having very negative effects.

A lot of the families in Silicon Valley don't let their kids use this stuff. I want everyone to think about what that means. It's like, it's okay for your kids, but not mine. And it's deeply immoral. And I think that that's going to come out as more and more disclosures and lawsuits are leveled against meta. And hopefully it's not too late on AI. But it's the opposite in AI. The people who created AI are themselves the super users of it.

Yeah, it's a slightly different dynamic. But AI, as destructive as social media has been to the psyches of our kids, AI could be catastrophic in terms of, you know, unwarranted military conflict. suit new viruses. We don't know what the heck they are. Hacking of critical infrastructure. And this stuff is going from the edge case to the mainstream really quickly. I love the last guest you had on who just said, look, internally, Open AI used to be more judicious and cautious, but now the market is taken over because they sense there's a trillion dollar payday on the line. And, Andrew, you've been involved in politics. I'm curious what you see about this rising fervor in the Democratic Party with socialism. Obviously, some of that is related to inflate.

some of it probably the impending inequities that are even going to grow with AI. Do you think that has legs? And do you think that can actually be electable in a mainstream Democratic Party nationally? Robert, what I think is happening is that Americans are angry and frustrated. Congress has a 12% approval rate nationwide. And individual members have a 94% reelection rate. So if you run a business, imagine if eight or nine out of ten people didn't like what you were doing, but then they had no way of changing it.

And so they're lashing out in different ways. They're reaching for solutions. They're reaching for anyone who seems like a change from the status quo, because their kids are coming back from college without a job, getting depressed, living in the basement. They see that their paycheck is not growing at the same rate as the gas prices, the grocery prices, the insurance bill and the rest of it. And they're mad.

And so the question is, how was that anger? Yes. How was that anger going to play out at the ballot box? I mean, can an AOC or Mammany ever be elected president? No, I think that the Democratic Party is in a real quandary right now because you have folks on the far left who are succeeding in certain precincts. But then you need the military veterans like Pat Ryan competing in purplish districts in order to actually have anything resembling a governing majority.

All right, Andrews, so great to have your thoughts. Thanks so much for joining us. We really appreciate it. Of course. All right, let's get over to Kate Rooney for a CNBC News update. Kate. Hey, Robert. The Justice Department is exerting President Trump's executive privilege in front of a federal judge,

arguing the administration cannot be forced to identify advisors who were involved in last year's White House crackdown on major law firms. The American Bar Association is suing the administration over that effort, alleging the White House unlawfully targeted those firms for, among other things, their diversity policies and political ties. Meanwhile, ESPN now reporting that founder Bill Rasmussen has died at 93 from the effects of Parkinson's disease. Rosmussen launched the first ever 24-hour TV network back in 1979 with his son Scott by maxing out his credit card and buying space on a communications satellite. ESPN chairman Jimmy Patero called Rasmussen a visionary and innovator by being the first to conceive of a network entirely devoted to sports. And finally, Pennsylvania governor, Josh Shapiro, is expected to sign an executive order

dramatically limiting data center development in that state. According to the Philadelphia Inquirer, the order does not include a moratorium on that development, but requires local approval to get state permits. Robert, back over to you. Thanks so much. I mean, that was interesting. Josh Shapiro was at that data center ribbon cutting so proud of it just months ago. So that just shows you where the tides are turning.

Exactly. Amazing. All right. It's a huge week for retail earnings and for investors to read into the consumer. Our next guest has some favorite names jumping out to him within the sectors. That's coming up next. Let's turn now to our Market Navigator segment. It's an important week for consumer stocks with a handful of earnings on deck, beginning this morning with a solid beat from Home Depot.

Our next guest is here to tell us what he thinks the numbers will mean, which names might rally, which ones are keeping him on the sidelines. Joining us now is Keith Buchanan. and he's senior portfolio manager at Global Investment. Keith, it's great to have you here. So we're talking consumer. We're talking retail. What's the read so far? What do you expect later this week?

What about Walmart? Sure. Thanks, Kelly, for having me this afternoon. We're looking at Walmart as a name that has traction and from an execution standpoint. They've been able to drive traffic as the consumer has continued to trade down. And groceries also give their earnings of revenue lines a buffer. But we're looking at Walmart as a valuation concern. that's the only real concern that we see

in owning the stock right now. As you have to pay for that execution that they've been able to accomplish over the last couple of years, and it comes to the higher price and it did a couple of years ago as well. So we're a little concerned about the valuation, we're really impressed with the execution of the business model.

What about Target up 50% this year trying to play some catch up? But it said there you're a little worried about a softening consumer. Sure. Target is one that hasn't had the execution premium that Walmart has enjoyed. It's had some snafews. inventory-wise. So as we come through an environment where the consumers definitely

changing, we saw that from retail cells, as softening and bifurcation continues to take shape. And we look at Target as one that really hasn't really proven the metals to be able to navigate these changing markets in a really dynamic fashion, the way at Walmart has, perhaps even a Costco has at times. So we have a little more concerned about Target, and it ranks closer to the bottom of our list of those names. All right. Well, we're about to hear from them both. Keith, thanks for helping us get set up for that. We appreciate it. Thank you.

Keith Bue Cannon from Global. Robert over to you. Yeah, coming up, a billion dollar of few. Those are the only kind that I cover. Well, the Bust family clashed over the L.A. Lakers and the power struggle that could give Hollywood writers a run for their money. Coming up next. Like a scene out of succession, Lakers governor, Jeannie Bus, says she's blocking her siblings from selling the family's stake in the franchise to Bob Eager and Joshua Kushner. This comes just a week after Iger and Cushner agreed to buy Mark Walter's majority stake,

a deal valuing the team at a record $12.5 billion. Michael Ozanian is here to untangle this. I guess if that's the word, Michael. So what happens now? Well, right now, Jeannie Bus is saying she has a court order via 2017 that basically she and her siblings are not going to sell the team unless she agrees to. So it looks like Cushner and Iger, if they want to buy into the Lakers and buy Mark Walter's share are going to end up owning about 65% of the team.

The problem with that, from their standpoint, is Jeannie's still going to be the control person. She's going to have all to say, even though they're going to own, they would own the majority of the team. They'd have basically no say in how it's run. So how is that possible? Is it sort of like super voting shares in a family-controlled company, be it public or private, where, you know, the Walter group owns 65%, but the bus group, which only owns about 18%, has controlling from a voting perspective?

Is that kind of the analogy? Exactly, Robert. It's basically the same exact thing. So do they not know this? Were people not aware? You know, this deal happens so fast. It's hard to tell who knew what. I mean, it apparently transpired over just a couple of days.

It came about, you know, Mark Walter, of course, is in trouble, you know, in terms of he's being investigated, the DOJ. He's talking about selling his stake in Chelsea, the English soccer team as well. Well, my guess is he'll eventually have to unload his stake in the Dodgers, too. I mean, he needs to come up with a lot of money quick. So if the bus family trust controls this, and I'm a bit of a trust-in-a-state nerd, like you're an accounting nerd, but it sounds like that at least Jeannie Bus has some veto power, or unless all the siblings agree, they can't do something? Because it sounded like every other sibling went to ESPN or somebody and announced this,

and she came out and said, uh-uh, that's not going to happen. So what do you know about how the trust is structured in terms of her power or the other siblings? Like, can she do what she wants without the other siblings? Yes, she is the control person. In other words, in the NBA, one person is designated as the control person by the league to run the team. Even if she owns a fraction of the 18%. Well, the way the letter is written from her attorney is as a group, they have to own over 15%. Because what they argue in the letter is, should they sell that?

to the other siblings sell and not her, it would fall below the 15%. So what they're basically saying is even if she, Jeannie personally, owns less than 15%. She is still the de facto control person because the siblings altogether own over 17%. This is why I love covering wealthy family fights because they're inevitable. I'd rather be talking about economic. I'm barely following along. So I'm just going to keep asking, so what happens next? Well, the other side is arguing that the siblings are arguing that they have tag-along rights, meaning in the agreement with Mark Walter, they were given the right.

Should Mark Walter sell, they could sell their shares too. But from the people that I've talked to, now they haven't actually seen the legal documents, but they say that the court order supersedes the tag-along rights. The tag-alogue rights would only work. If indeed, Jeannie decides to sell, then the siblings would have the right to all sell in at the 12-point $5 billion valuation. Isn't basketball fun? What are the odds that they actually, that Iger and Kushner actually get the team at this point? Well, I think the hardest part is putting the financing it.

Yeah. I don't know. I think even should Jeannie not sell, they would still want to consummate this deal. All right. Michael, thank God for both of you. Michael Azani and Robert Frank. That's it for us here on Power Lunch. Closing bell starts right now.