Power Lunch - Breaking Down Buffett, Power Players 5/6/24

Episode Date: May 6, 2024

This hour we’ll break down what we heard from Warren Buffett at the Berkshire Hathaway annual shareholder meeting over the weekend.Plus, we have a pair of power players on the menu: Citadel’s Ken Griffin, and the Head of Volkswagen’s Americas Group. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome everybody to Power Lunch alongside Contessa Brewer. I'm Tyler Matheson. Welcome. Glad to have you with us. Coming up this hour, we've got a couple of power players on the menu. We'll break down what we heard from Warren Buffett over the weekend and then an exclusive live interview with Citadel's Ken Griffin. Plus, we're going to hear from the head of Volkswagen America Group, how strong they're seeing demand for EVs in the United States. First, let's get a check on the markets here. The major averages higher on the day. The Dow hanging onto a small gain, the NASDAQ, with the biggest percentage. gain of the three. There you're seeing it's up 0.8%. The NASDAQ now just a little more than 1% away from. It's all-time high. It hit that in late March. First, though, we have a development on the proposed ceasefire between Israel and Hamas. According to NBC News, an Israeli official says the proposal Hamas has agreed to is not the framework that was agreed upon with mediators. Israel is examining the proposal Hamas has agreed to and will respond. What we heard earlier is that a Hamas official had said that it would accept a ceasefire ahead of Israel attacking the stronghold of Rafa. It had issued evacuation orders for the civilians there.

And we have heard in the past that here you had Egypt and Qatar trying to work together to get to a ceasefire agreement. They proposed the ceasefire agreement. Hamas has announced that it had accepted the proposal on the table. Now we're hearing from Israel that the proposal that Hamas has agreed to is not. accepted to Israel. So we will continue to follow the details on the situation in the Middle East as we get them in. All righty. Key question on stocks is whether they can get back to record highs and where to find growth here. And who better to emulate than Warren Buffett in honor of his weekend's Berkshire Hathaway Annual Shareholder Meeting. Today's three-stock lunch will be a

Brookshire edition. And here with our trades is Victoria Green, founding partner and chief investment officer with G-squared private well. Up first, Victoria, Apple, Berkshire Hathaway's quarterly report showed the value of its Apple stock holdings was down 22%. But Buffett said he wasn't bailing on his biggest holding. He did sell, however, for tax reasons, he says. Shares of Apple down a bit today. Your trade on Apple. For me, Apple's a buy here.

We bounced off that 165 level, similar to what we saw in October. I think you've got room to run up to the 200s because right now a lot of bad news is priced in. And China wasn't as bad as feared. Really interesting how far off that high-free. data saying cell phone sales there were down almost 20%. It wasn't that bad. They have their event tomorrow, the Let Loose campaign, you know, relaunching a new iPad for almost two years since they've had a new iPad. They have the upcoming release of the M4 chip, and they finally figured out that maybe they should care about AI and introduce the more AI features. So for me, I could

see a much faster replacement cycle this fall, assuming they come out with new models, investors want, which I think is a pretty solid assumption. So for me right here, Apple's a buy. Okay, what about Paramount Global? This is when Buffett admitted to selling. He said he took a loss on it. Shares of Paramount are up about 3% today. What's your trade on this one, Vic? I'm with Boren. I'm with Warren on this one. It's a sell for me. I think you're going to be jerked around with the news. I think you buy the rip and try to get out with whatever you can. I think this is going to be a very, very messy fight because you have your shareholders. You've got leadership. The board of directors has been decimated. And they're trying to figure out what to do with it. But don't forget the regulators, the FCC, not going to be super happy to have a private equity forum or a foreign firm in Sony coming in and

owning the number one broadcast network. You also have other issues with the other media owned by either of the two bids. And so the concern that this administration has not liked larger conglomerates getting larger and reducing competition, I think this is going to be a really messy fight and I'd sell any rip you can and get out. And if Warren doesn't like it, then I side with him on this one. All right. Let's go to finally, we've got CNBC banking reporter, Hugh Sond, writing recently a about Berkshire Hathaway's big mystery stock wager on the financial industry, saying it's an area that Buffett has dialed back on in recent years over concerns of rising loan defaults. A classic Buffett bet would be a large one with a market cap of about $100 billion. Charles Schwab is one name that has been thrown out as a possibility.

Shares of Schwab up about 11% this year, your trade on Schwab, whether it is a Buffett kind of stock or not. For me, Schwab's a hold. I've liked this stock since last year. I think it got so unfairly punished during the regional banking crisis. And people didn't understand that Schwab is just not a small bank. There are so much more than that. Their mergers almost complete with TD Ameritrade. They've got about 10% more to migrate. They're focused on cutting costs. They're focusing on retiring expensive debt. I think the deposit flight, it is what it is, right? If you were going to move your deposits out or go into money market, you've already moved it. So now we don't necessarily have the deposit risk. And you're seeing all the way Schwab is so much more successful. than a smaller regional bank, especially with their brokerage arm for getting more and more fee-based assets coming on to that platform.

And yes, everybody's held to maturities look pretty awful again because you've seen interest rates kind of jerk around bond prices. But Schwab is much more than just a small bank. And I see it as a huge opportunity. We've liked it for a while. So for us, this is a whole because it has had a very nice run up over the last six months. But I see potential you could see this stock continue to move forward. A lot of the worst is behind it kind of ripped the Band-Aid off last year. and I see clear skies ahead.

Anytime you have a completed merger, you can continue to work on synergies, which means cost cutting and head cut reduction, lean into technology to further reduce overhead costs. I see the stock has a lot of upside. What is your overall view of the market at today's levels? Fairly priced, richly priced, room to get richer? Rich will get richer, Dow 40K.

I'm on that bus. I think I'm very bullish here still. Look, earnings have been absolutely great. Yes, we have sticky inflation. I think it's going to be sickier. I don't necessarily see a cut this year. But again, the equity market has priced this in fairly well. And yeah, we got a little bit of a dovish push

and a little bit of dovish help yet last week, both with Powell taking rate hikes off the table as well as the weak labor report. But for me, right now, as long as the consumer holds up, then you can still see continued earnings and there's no profit recession, no earnings recession. That's very good for U.S. stocks. And we like it here.

We're watching the U.S. dollar. That could be a drag on some multinationals. But for now, it's keep calm and rally on, baby. Victoria, great to see you. Thank you for the insight and the perspective. Appreciate that. So when we're looking at the markets in general, are we seeing signs of weakness in the economy?

Is it good news for investors waiting for weight cuts? Joining me now to discuss Rich Bernstein, CEO and Chief Investment Officer of Richard Bernstein Advisors. It's great to see you today. Do you think that it matters now, whether we get a cut this year, or not, or is all of this speculation about what the Fed is going to do sort of already baked into what we're seeing in terms of refocus on companies reporting earnings, and are they going to be

profitable, Rich? So it's great to be with you. I think it's a little bit of both, right? I mean, earnings and interest rates are always the two factors that drive the equity market. The earnings front, I think we should expect earnings to continue to rev up. The profit cycle is accelerating. I think we should see that continue for the next. several quarters. The interest rate side, I think, is a little bit more interesting right now

because the reaction to the weakness, let's say last week that we saw in the employment report, was not for defensive stocks to outperform. It was for speculative assets to outperform. In other words, the expectation that the Fed would cut that there would be more liquidity for speculation. We're still very much in this speculative period of the stock market. Yeah, you had consumer staples and health care, two of the three worst performing sectors than on Friday. And all of that against this backdrop of the geopolitical tension, we've been reporting today on the headlines coming out of Israel and whether Hamas has accepted the ceasefire and whether Israel does it. Does that factor at all into how you're thinking about your investments more broadly right now, Rich?

So definitely longer term. I don't think we think we think we're smart enough to know it's going happen in the next, you know, two weeks or two months or something like that any more than anybody else. But I think as you look out, these are symptoms of globalization contracting, right, whether it's in the Middle East, whether it's in Eastern Europe, whether it's our relationship with China, some of the things are going on in Africa and Latin America are all symptoms of the bigger picture, which is globalization is contracting. That, we think, continues to be the major long-term investment theme. I know everybody's up on AI these days, but I think that, and I think my colleagues here would agree with me, that the de-globalization,

the re-industrialization of America is a critical theme to the U.S. economy. And you think that's going to happen? We think it's starting to happen already. It's been in the background happening. We think it has to happen. I mean, if it doesn't, Tyler, then we're going to have tremendous. then disinflation here in the United States because we have a massive trade deficit in the United States, which was no big deal as long as globalization was expanding. But to be dependent on the rest of the world for everything, it's not just semiconductors. We're dependent on the rest of the world for everything at a point where globalization started to contract. Not a very good combination.

It changes the story from secular disinflation to secular inflation. Except corn. We have a lot of corn here in the United States. But if that's the case and you're watching at a contraction in globalization, then where do you put your money? How do you make money on that trend? Right. So I would say, look, there's the energy sector. We need a lot of energy infrastructure. You know, whether it's ground or green or green, I think is just a political question. We need to be energy independent. We're not. We're not even close to energy independent. Utility infrastructure. Right. Everybody in California is hyped on electric vehicles, but nobody's figured out that the grid can't support that. Maybe a better investment theme is the industrial companies are going to build out California's

electric grid as opposed to the EV companies themselves. United States ranks last in shipbuilding, last in infrastructure among major economies, not for a second, third, last. So imagine we went from last to like fifth. That would be a pretty good investment theme. All right, Rick, very interesting picture you paint. Rich Bernstein, thank you. Always good to see you.

And I love the Ranger jersey, by the way. They're doing well. All right, coming up, today's power player is a rare, an exclusive interview with Citadel's Ken Griffin. That's next on PowerLunch. Be right back. Welcome back to Power Launch, everybody. Stocks are up today on renewed hopes that the Fed could cut rates this year after Friday's weakish jobs data. Let's head West now to the Milken Institute to hear from an investment titan for his outlook on the Fed, the markets, and more. Now by Sarah Eisen. She's there, joined by a person whose thoughts are always worth listening to. Ken Griffin, founder and CEO of Citadel. Sarah? Hi again. And yeah, it's a pleasure to be joined here by Ken Griffin. We just got off the stage, the CEO of Citadel. Thank you for doing this. Such a pleasure to be here. Tyler was just talking about the market, the fixation on the Federal Reserve and what's going to happen in the economy. I think one of the central questions right now, Ken, is how big of an inflation problem do we still have? What do you think? So we still have an inflation challenge. In goods, clearly the inflationary surge caused by the pandemic, caused by supply chain challenges, has peaked and dissipated. But now in services, there's still a very steady level of inflation right around 4%.

And at 4%, it's a challenge for the Fed, which is why they're staying the course, leaving rates on change for the foreseeable. future. It's the right policy path. They need to bring inflation down over time. Right. The question is how challenging that will that be to get all the way back down to 2%. So we don't know. We don't know how sticky inflation is going to be when it comes to services. With goods, it was really great to see that inflation did dissipate. Now, with goods, there's a, There's a bit of a back story that we need to worry about. With de-globalization, we're likely to see the level of inflationary pressure in goods be higher than it was for the last 30 years.

And the Fed has to know that. They're thinking about the fact that goods are likely to be a higher baseline effect for the foreseeable future, and service is still unacceptably high with where they're running today, which is why Paul and the team, I think, has made the right choice of staying higher for longer and looking to bring inflation down. And yet everybody here, I've talked to, you know, I'm talking to Bruce Flatt at Brookfield about commercial real estate. They're private equity players here.

They're excited about the prospect of rates getting cut. Absolutely. If you borrow money, you want to pay less in interest. I mean, who would not be excited about that? Are you excited about the prospect of that as a market catalyst and an economic? economic catalyst? Look, the Fed has a very clear dual mandate. Inflation 2%.

It's an unwritten rule, but that's where the Fed's heading, and trying to maximize full employment. That's the dual mandate of the Fed. They have to be independent in their decision making and their actions to best try to hit that dual mandate. And right now, with employment near full employment, inflation well above where it should be, they've got to stay with higher rates to bring inflation back in check. How does the overall equity market look to you, Ken, right now, given this kind of benign economic environment, a path toward rate cuts, AI tailwinds, that's what's fueled us so far.

I wonder how much more it has left to go. We'll find out. And that's the best you can ever do late in the cycle. We'll see how much further this has to go. AI has really transformed the mindset of corporate America towards using technology again to really try to jumpstart productivity, and corporate America's rising to that moment. It's been really exciting to see how many CC groups

of executives are really focusing on how do we use machine learning, how do we use digitalization to drive up productivity. This really improves the quality of life for the average American and helps to keep our economy strong and robust. You've also been monitoring the regulations coming out of Washington. We have been speaking for months now about Gary Ganssel,

the SEC, there's a new one that I wanted to ask you about because you guys have really taken the lead in fighting it. And this is the SEC's new tools. They call it for transparency and surveillance. You find it very problematic. Just fill us in on what the big issue is here. Well, the issue with the CAP program is twofold. Number one is it creates a repository of every trade done by every single American with all their personal identifying information. As an American who had my tax return stolen from the IRS and published all over the pages of American papers, I can tell you I worry about whether or not the federal government is going to take steps to protect my PII, your PII. They're very, very strict in making corporate America protect that information, but the SEC has yet to even agree on their own cybersecurity standards for the PII in the CAPERA.

And that should give every American pause. Is the government working for them to protect their privacy? That's number one. Number two is the program has been just an absolute out of control spend fest. Spending? Spending. We're going to spend $200 million plus a year in administering this program.

That's roughly, rough numbers, 20% of the entire budget of the SEC. And yet not one member of Congress, member of Congress approve this legislation. This is really the regulatory state growing out of control. And who pays that $200 million? American investors pay it. SEC would say that they're just trying to gain more transparency to spot fraud, and they're not using it to spy on you. Well, it's always about cost-benefit analysis, which has been woefully lacking in this entire undertaking. Now, of note, since we launched our litigation, they've been able to find tens of millions of dollars of cost savings.

And I'm certain we'll see announcements over the months to come about how they're going to try to address security. But it's sad. It's really sad that it took a lawsuit from a private firm against their regulator to really drive needed cost savings in this program and to drive home the point that we need to have better security protocols. For choice, I think they should go back to the drawing board and think about the most cost-effective way to hit that sweet spot of good market surveillance, protecting PII, and achieving both the regulatory compliance goals they seek to achieve in a manner that doesn't deprive American investors from the returns that they should have in investing the stock market.

This is just the latest SEC rule that you've been critical of. There's been a long line of them. Is it having an impact end, do you think, on the markets and on the economy? economy, that kind of overreach that you accuse them of? Yes, it does. And in particular, it makes it harder for active managers to be successful. Why is that matter? Roughly 35, 40% of the entire U.S. equity market is owned by passive investment funds.

The entire theory of passive investing is predicated on markets being efficient. That happens because of the work of active money. managers like Citadel, like Wellington, Capital Research, all these big firms and these really big commitments to active management make America's equity markets efficient. When the SEC introduces rules that make it much more difficult, much more expensive to be an active money manager, they take away those participants who create the fairness and equity in the U.S. capital markets that allows the promise of passive investing to work. And that's important, because that's how we, capital moves across our economy.

That's how millions of Americans save for the retirement is in passive investment funds. What about the FTC? It's been a lot of action there as well, blocking deals, suing to block deals, the non-compete. I'm sure you have thoughts on how that's going to impact businesses even like your own. Well, I mean, we've had the most hyper-aggressive FTC in modern history, and I really don't understand their agenda. American businesses consolidating under longstanding principles of undue concentration is good in terms of the rationalization and efficiency of our economy. And of note, one of the key ways that venture capital-funded businesses actually realize their full potential, is when they're bought by large companies that have the distribution and scale to really capitalize on the innovation that was built.

So the FTC's adamant anti-merger stance is really reducing the efficiency of capital formation in the United States. We don't know how big that number is, if that's a number in the hundreds of billions, trillions of dollars. We don't know where this is going to land, but it's a big hit. The most recent position on anti-competes, I mean, three unelected officials just throughout tens of millions of contracts between employers and employees. And these contracts were written in good faith, entered into good faith by consenting parties. Why is this a problem? American companies have to invest a tremendous amount in building. their workforces given how broken our K through 12 education system is and frankly how off

point so much of America's college education is. American companies want to know as they make this investment in training their workforces, how will they be treated fairly? And much of this legislation is going to discourage the investment of training in American workers. So maybe some employees will be able to secure a short-term bump in pay. But overall, the federal government's not doing its job of educating American people. That burden falls on the shoulders of American corporations. American corporations are going to be far more hesitant to invest money in training people on the back of this legislative shift.

For us, it's a whole different story. It's about protecting trade secrets. There's a recent case between Jane Street Millennium, where Jane Street argues that a trade secret, that they developed was taken by one of their traders to millennium. Now, for Jane Street, that trade secret was a billion dollars a year of revenues. And they spend billions of dollars a year developing their intellectual property. They lost that trade secret to millennium.

Their revenue is cut in half. In going to protect their trade secret, it was disclosed to the world just enough hints about what they were doing that now Citadel knows exactly what Jane Street was doing. So for all intents of purposes, Jane Street's trade secret, it's forever lost. It's gone. And all the money they spent to build it is forever gone. And that's what happens if you get rid of non-competes. Is that what you're saying?

Well, the judge, the judge said to Jane Street, why don't you have a non-compete? That's why we have non-competes in America. It's to protect trade secrets. Well, Leah Kahn just took away one of the only ways that Jane Street could protect its trade secret. They chose not to have a non-compete at Jane Street. They lost that trade secret and they lost forever. When you lose your trade secret, you lose your incentives to invest in R&D. It's part of what makes American business so successful

is we've been so good at creating insights in whether it's technology, financial markets, healthcare that leads us as a world leader, a world leader in innovation. And Leah Kahn just said, I don't care about America. Well, we'll see if she prevails in the courts. It's going to be obviously a big fight. Back in the courts. Here we go again. Does it make you less enthusiastic about President Biden? We have an election coming up. I know that you were betting on Nikki Haley. That didn't happen. You're going through the state. You're focusing more on state elections as far as where you're giving money.

But how do you think about the world after this election? And who would you rather see? for all of these key priorities that you have? Look, I would like to see both Biden and Trump really put forward their best foot to the American people as to why they should be elected. We have elections for a reason. It's a chance to really vet our candidates and their policies. And I think it's more important that we have a good,

fulsome debate about the future direction of America. I do worry about the regulatory overreach of the Biden administration. I worry about the profligate spending. And I worry about the fact that we're now in two wars around the world of consequence. The war in Ukraine, I mean, it's a war in Europe. You and I never thought we'd see a war in Europe again in our lifetime.

I'm willing to bet that's the case. I never thought we'd see one. I can't imagine you did either. A lot of things that we're saying I didn't think I would see in my lifetime. And that's really, really, really worrisome. So I'd like to know for President Biden, what are you going to do to keep this country and the Western world out of wars? Like, I want concrete answers.

And he's going to have a test of that over the weeks to come. He drew a red line with China about China's support of Russia. Let's see what he does. This is a really critical moment in the Biden administration. But I think the American voters need to see from both Biden and Trump, what's the path forward for America. How do you envision at this point another Trump presidency if that happens for the country, for investors? How are you thinking about it? Well, you know, what gives me the greatest hope about the Trump presidency as a prospect is the short,

list of names I'm seeing for key cabinet positions, really qualified, qualified, capable, thoughtful Americans who will give some of the prime years of their life in service of our country. So that's a good sign. And I hope Trump's in a position to really talk about his future cabinet. It's the biggest weakness in the narrative that he has in running for president is this sort of theory. He'll have a hard time finding good people to serve around him. I don't think that's true. I'd like to see him put that question to bed. Ken Griffin. Thank you so much for the time.

Sarah, it's great to be here today. On a number of issues that people are talking about here. I know you're thinking about it. You know, these are important issues. A friend of mine runs an auto dealership. He takes real pride in training people to be mechanics. I was at his house for dinner on Monday, mutual friend's house, and he talked about a man who is homeless.

We put through training who now makes 100,000 plus a year. that's the person I worry about when we think about Leah Kahn's decision at the FTC, is that story will no longer be written. And that's a heartbreaking reality. Wow. Sarah, thank you for your time today. Thank you. I really appreciate it.

Yeah, thanks Ken Griffin, the CEO of Citadel. Back over to you. Contessa, and Tyler. All right, Sarah, thank you very much, and our thanks to Ken Griffin as well. Further ahead on the show, we have another power player from the Milken Conference. We're going to speak with the Volkswagen Group of America CEO about, the electric vehicle market. We'll be right back.

We have a bit of a discrepancy here about the news of a potential ceasefire between Hamas and Israel. We had news that Hamas said it would accept the ceasefire that had been proposed by Egypt and Qatar, which had been mediating the negotiations. But Israel has come out and said it was a softened proposal. It was one that it could not accept. And so as we stand right now, we don't know what the next step is in the ceasefire. But let's see how the oil market is reacting.

Pippa Stevens joins us for that. Pippa, what did you learn? So we can see there on the chart, if we just pulled that up, that oil was solidly in the green for the entire morning and into the afternoon trading before taking a turn lower. You see there right before 1 p.m., which is, of course, when we got that first report that Hamas had agreed to that ceasefire. You mentioned proposed by Egypt and Qatar.

Of course, now NBC is reporting, an Israeli official said that it was not the ceasefire proposal that had been talked about with the mediator. and so they are examining the proposal and will respond. But Dennis Kisler over at BOK Financial said that this clearly takes the tailwind out of the geopolitical risk for oil, but that he doesn't see prices dropping significantly from here for three key reasons. The first one, of course, is OPEC.

They're holding their production meeting in a couple of weeks. They'll decide whether or not to roll over that 2.2 million barrel per day cut into the second half of the year. Then the second reason is that we are in the summer driving season, and so people are hitting the road more in May and June. That means more gas and more oil demand. And then finally, the Russian-Ukraine war is still relevant here.

Ukrainian drones are attacking Russian oil infrastructure. So I think what the oil market is telling us is that until we get more details about what this actually means and what this looks like, it's going to kind of trade it in the flat range for the time being. But there, yeah, there you see it coming down in sort of stair-step fashion from this time last week. Yeah, so much of that risk has already been priced out of the market now. And so that's why we're not seeing some sort of big, knee-jerk reaction is that we saw

last week. All right, Pippa. Thank you very much. Let's get to Asimam Modi now for a CNBC News Update. Tyler, the White House reportedly halted a large shipment of offensive weapons to Israel last week. Sources telling NBC news the shipment included bombs and other ammunition that would likely be used in a ground invasion of Rafa. The news came, as Israel said, it was reviewing a ceasefire proposal Hamas agreed to that differs from the one negotiated with mediators, as you guys were just discussing. Meanwhile, far-right representative Marjorie Taylor Green is set to meet with House Speaker Mike Johnson in just about an hour. She is pushing to force a vote this week to depose the speaker over his decision to pass billions of dollars in Ukraine aid.

Johnson and his allies are expected to defeat the motion. And the maker of planters nuts issued a recall for possible Listeria contamination. The recall affects certain planters' honey-roasted peanuts and planters mixed nuts, shipped to public supermarkets and dollar tree warehouses across the southern U.S. There had been no reports of illnesses yet, but Listeria can often be serious. and sometimes fatal. Tyler, I'll send it back to you. All right, Seema, thanks very much. Still to come, we'll take a look at one startup looking to help consumers reduce their grocery waste. That's today's clean start when we return.

Welcome back. Do you ever do this? Go and buy a bunch of stuff at the grocery store and then you look in the refrigerator and some of it is rotting. That waste contributes to global warming. And what's the solution? Diana Oleg joins us with her continuing look at climate startups. Hi, Diana. Hey, Contessa, yeah, it's not just us, it's supermarkets too. Food waste is one of the largest contributors to greenhouse gas emissions. Some estimates say it's twice as much as commercial aviation. Now, one food delivery service says it can cut that waste dramatically using what else? AI.

In the U.S., about 30% of food from our grocers and our refrigerators ends up not in our stomachs, but in our landfills. Food delivery services like Hello Fresh, Bluewood. apron and every plate reduce that somewhat by sending you just what you need for the recipe. But a food delivery startup called Hungry Route is taking it one step further. They're curating exactly what consumers want for all meals and how much of it they'll use. Hungrude is entirely designed to give you just the foods that you're going to need for your week and it gives you simple recipes so you know exactly what to do with them. And as a result, food waste with our customers is significantly reduced.

Hungry Root asks its customers a slew of questions, everything from likes and dislikes to food allergies, to health goals, to how and when they cook. And then there's AI. We also use machine learning to infer additional data points about you. There's hundreds of thousands of customers that have been using hungry for years, and we can reference their data to infer which recipes, which grocery items you're going to love. It then sends you a list of what's in your weekly card and you can approve or change items. Investors say the unique model sets it apart from the competition. They have been profitable for three or four years now, which is unusual for a lot of these

e-commerce, you know, food businesses. And they've been able to drive that through efficiency of spend. In addition to light speed, Hungry Route is back. by L. Catterton, Crosslink Capital, Carp Riley, and Lear Hippo. Total funding to date, $75 million. Hungry Route claims to not only reduce consumer food waste, but also its own waste. For example, if it determines that you don't have a preference between your broccoli and your Brussels sprouts and they happen to have more broccoli in their warehouse than sprouts, they'll recommend the broccoli. They say that results in 80% less food waste at their facilities compared with a traditional supermarket. I love this, and I have been a subscriber for meal delivery service Blue Apron for many, many, many years.

And I have found that the food waste is almost nothing. What I don't get, Diana, is if you're out to do it for the environment, there's still the packaging that's a problem to solve. Did you talk to them about that? Right, we absolutely did. And they're using more echo-friendly packaging, more paper, less plastic that's all recyclable. compostable. They're on that as well. So yes, there is packaging involves and there's also, you could say, look, if they deliver it to you, then there's the truck that has gasoline emissions that has to deliver it to you. So there is carbon emissions in everything that we do, of course,

but this is just a way to reduce them overall. And unlike those delivery services that are specifically for a recipe, this is for your entire week's shopping. So it's helping you a bit more. That's amazing. Thank you, Diana, for bringing us the story. All right, folks, be sure to join our CNBC Financial Advisors. summit. That is Wednesday, May 22nd. Top investing experts will share insights about the current bull market, whether it will last, and everything in between. Scan the QR code to register or visit cnbc events.com slash f a. We will be right back. All right. Let's give you a quick market check. Stocks are just off their session highs. The Dow is up about 146 points 38, 822, about 1,200 points

from 40,000. The NASDAQ gaining nearly 1% on track for its third straight session of gains. Chip stocks leading the way higher. Micron getting an upgrade from Baird. Contessa. Coming up, losing juice, data showing that electric vehicle sales flowing here at home, but we'll speak to Volkswagen's America's chief about why he's still betting big on EVs. We're back in two. Welcome back to Power Lunch. Recent data shows electric vehicle sales. sales continue to slow in the United States. According to Kelly Blue Book, EV sales in the first quarter rose 2.6% over last year, but fell more than 15% from the previous quarter. Our next

guest still betting big on EVs. Pablo DeCsi is the Volkswagen Group of America CEO. He joins us first on CNBC Live from the Milken Institute Global Conference in Los Angeles. Pablo, it's good to see you. Let me just ask you, if you're looking at the fact that Europe saw EV orders more than double in the first quarter compared to last year, if you look at 50% growth in orders for lots of EV makers in the United States, nine of them, recording more than 50% year-over-year growth in the first quarter. What is the key factor in making sure that first quarter sales can match what you see in the previous quarter? Well, first of all, good morning. I'm glad to be here. First, the economy and the industry is on a robust way. We're growing 5% year over year.

As you correctly pointed out, the EB segment is slowing down versus previous years. And I think it has to do with the pace of consumer preference and infrastructure. So what we need to focus is that the long-term vision for Volkswagen Group is still electric, but that speed that will take us from point A to the future will be dictated by that speed between consumer infrastructure. The more infrastructure, the more renewable energy we put into the grid into the U.S., the faster that transition will be. Okay, that makes sense.

And we spent a lot of time talking about the lack of infrastructure and what's required to turn that around. Let's talk a little bit about customer preference. What are you seeing in terms of American demand for EBs that makes a difference about whether you're, you're seeing that 50% year-over-year growth from, like, your competitors, BMW, Cadillac, Ford, Hyundai, Kia, Lexus, Mercedes, Rivian, and VinFast. So I think, you know, you cannot generalize because the U.S. is as big as a continent.

So depending on the city that you go to, you have a higher penetration on electric vehicles because you have a lot more density on infrastructure. But if you go to Middle America, it can be the state of Tennessee where we have a manufacturing facility or Idaho or Wisconsin. maybe the infrastructure there is not ready yet. So you need to understand from the consumer point of view that they're not questioning that technology because the electric vehicle is a great technology.

It's really nice to drive an electric vehicle. But maybe in these transition years, even some other type of technology that can be a plug-in hybrid, a hybrid vehicle, to bridge us from today until the future. And do you think that that's all up to the U.S. government or is there something that the auto manufacturers, the dealerships, the service stations could be doing to facilitate that.

Yeah, I think it's everybody's responsibility. First, I'll tell you about Mosaics Group. We have a company called Electrify America. We're more than doubling our superchargers in the next year. But that's only Electrify America, and we, that supercharger stations are open to all consumers, all brands. So I think it's the job of us, manufacturers, innovation, There are many companies that are bringing new technologies that are faster, faster charging,

and also government. It can be federal government, states, local governments. I think the combination of everybody pitching in and putting more infrastructure will help us. Also, I put a lot of emphasis on renewable energy. Our network in Electrifier America is 100% renewable because it's not good if you have an electric vehicle and then you charge it via cold or other means that are not renewable efficient. So I put a lot of emphasis on renewable energy, and the Inflation Redaction Act is a great act that intensifies that transition in the next couple of years. So I assume what you're doing is getting a renewable energy, supplying it to those charging stations, and that closes that loop. Let me make sure I understand. You said that as you double

this infrastructure of fast or superchargers, everybody with any kind of electric vehicle will be able to use those facilities. Did I hear you correctly? And conversely, will your automobiles be able to plug into the existing Tesla network of superchargers? That is correct. So when you, in a consumer, VW, or Volkswagen or any other brand can go to Electrify America and charge their vehicle in our network. They can do a subscription or not. They can go as a one time. So it's quite open. Also, that's a... that dual charging going back to the grid and forth, it is in the works, and we're going to be able to do that in the next couple years. How quickly are you going to get to an automobile, an EV, that has more than 400 miles per charge range?

I think it comes to the question of innovation and technology. I think in the U.S., there's a lot of smart people, also around the world, that brings that closer. We are talking about today's ranges between 300, 320 miles of range, where I think it's pretty. good. So I think in the next couple of years, probably before 2030, you will see ranges close to 400. But again, I put a lot more emphasis on the infrastructure and on the renewal energy because that will allow us to move into that transition in a faster way. Thank you so much for your time, Pablo. Pablo D.C. of Volkswagen of America. Thank you. And remember, you can always hear us on our podcast. Be sure to follow and listen to Power Lunch on your favorite streaming service.

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All right. We are excited here because Kelly Evans makes her return tomorrow and she joins us now via Zoom. Kelly, welcome back. There they are. They're all there. Come back and have some vacation. Holly, what do you say? There they are.

Is that Eric? And Paul? Hi. Oh, my gosh. This is so cool. Are you looking forward to coming back? Yeah, I'm very dialed into what's been going out with the market. Yeah, absolutely. You're very dialed in. I can tell. I can tell. Well, we can't wait for you to come back.

Welcome back. Welcome back tomorrow. Enjoy the last of the Madness and Mayhem. Oh, they're all happy. Those kids are happy. All right, Cal, we'll see you tomorrow. Thanks for watching. That would be a fun show. We should do a show from her house. The closing bell starts now.