Power Lunch - CNBC’s “Power Lunch” Broadcasts Live from the Cboe Trading Floor in Chicago 6/25/26

Episode Date: June 25, 2026

Kelly Evans and Brian Sullivan bring their daily markets coverage in a special live broadcast from the trading floor of Cboe Global Markets in Chicago. “CNBC @ Cboe” features an exclusive interview with Chicago Federal Reserve President Austan Goolsbee in his first public appearance following the Federal Reserve’s June meeting. KPMG Chief Economist, Diane Swonk, Ryan Sports Development CEO, Pat Ryan Jr., and Ariel Co-CEO & CIO, John Rogers, also join the anchors on set in Chicago to discuss the recent market swing and the latest options action in one of the most important trading floors in the world.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Chicago. This is the city of broad shoulders. It is also the birthplace, by the way, of listed options. And the CBO is one of the most important exchanges in the world. Hi, everybody, alongside Kelly. I am Brian Sommel. And we're coming to you from one of the world's great financial capitals. We've been talking about it all afternoon. Chicago, and we are live here. You can see this is the floor of the CBO right behind us. This is the SPX pits. The VIX pits are just over that way. Yeah, and if you are trading S&V options, there's a very good chance. order flow goes through the people sitting right behind us. All right. Hi, everybody. There is a lot going on in the markets on this Thursday. You got oil markets. Look at that. Crude oil is up about two and a half percent. Now, they were briefly below $70 a barrel this morning. Here's what happened. A group saying that

it represents part of the Iranian military making some new threats around the Strait of Hormuz today. Some talk about ships being fired on or maybe even being hit. Oil well off its lows. And overall, we know this. Inflation, it is still running hot. A key measure of inflation just rose four tens of percent in May, which means we are now rising 4.1 percent annually, folks. That's a big number. It's also the highest in three years. All of this not only means the prices you pay for things is going to go up. It also may raise, raise the odds of a rate hike. Joining us now at the CBO in Chicago is Chicago Fed President Austin Goulsbee. Austin, great to see you. Great to see you. Welcome to the greatest city in the world, city of big brains and

broad shoulders. Well, the big brains are yours. Broad shoulders may be mine. I have no ideas or pads, by the way. Austin, thanks for joining us. Okay, so it's been a weird couple weeks because the price of oil was over 100. Now it's at 70 bucks. It goes into so many things that go into the inflation that you and your team watch so closely. How hard is it for you and your team to get a read on inflation right now? It's hard to get the through line, for sure. And then not just at the Chicago Fed. Everybody sees that.

People trading the futures. They're trying to figure out what's the through line on inflation, how persistent, how temporary are these hikes that we've seen. The Fed, as you know, has an inflation target of 2%. We've been above that number for five straight years. I know you went to MIT, but, Four is not too. I don't know.

Do I need to tell you that? Four is not too. And so the question, we've had periods where we were making progress, then we kind of stalled out on the progress. Lately, it's been going the wrong way. But some of the going the wrong way is driven by what we hope to be temporary events, wars, tariffs. These are things that are supposed to be won and done. and then you would see the inflation going away. It's been a little more disturbing on the services side

because that's not real, that elevated inflation is not coming from tariffs. It's not coming from oil prices. So I think we've got to keep watching these numbers. It wasn't all negative in this inflation report. You have seen now a little bit of improvement on this services inflation, and I've been identifying that as something that we would want to see. But right now, as between the two sides of the Fed's mandate, the inflation side and the job market side,

clearly the problems on the inflation side. How different was last week's Fed meeting from what you were accustomed to? And to have the former chair at the table. And the former chair is at the table. Now, as you know, it's a very secret of hush-hush. So I'm not saying what anything was said. I worked pretty closely with now Chairman Warsh back in the financial crisis, 09, 010, 11. I thought he comes in with new ideas.

He's a serious guy. You saw in the press conference that he comes with a different style. Well, that statement. I mean, that statement was like one paragraph long. The statement was succinct and to the point. Do you like that? As I've said, before I was ever at the Fed, and since I've been at the Fed, I've been uneasy with the use of forward guidance and speculating about the future of rates on a routine basis. You have the dot plots.

I don't know that I hate the dot plots. I definitely don't like us committing three years ahead forecast of what we think it's going to do. But you didn't abstain. Kevin Warsh was the abstainer. He said that in the press conference. He said they were 18 and 19. I was the guy that didn't do it. So you obviously submitted your forward guidance.

But you would be in favor of that. That's the system we have. But you'd be in favor of that going away. I don't want to get with the chairman has organized a communications task force that's going to think through what all the options are. I welcome that thinking. We should constantly. I described it a little bit as a caffeine cleanse, that even if you think that there are uses for forward guidance, it behooves you to every once in a while not drink three cups of coffee every day so that when you really need it, it's more effective.

I think about three kind of tools of Fed policy right now in a way. There's obviously what you do on rates. There's the balance sheet. And in some ways, there's this financial deregulation piece. Can you talk about how important each of those are right now? you think the Fed Funds rate remains the focus? I think in my mind, I'm not allowed to speak for the committee or for anybody else, but in my mind, the rate decision is the fundamentally the monetary policy decision.

And the law tells us that we're supposed to be trying to maximize employment and stabilize prices when we're setting the rates. The balance sheet in emergencies, like the origins of QE, was used as monetary policy. but I tend to think of the balance sheet, not as a monetary policy decision. And financial regulation, we out in the heartland at the reserve banks, we don't set the financial regulation policy. Right. We just do the supervision. Do you think we need bigger buyers of treasuries to get long-term rates down?

And if the Fed changes some ratios to kind of, you know, is that a consideration? As I say, we want well-functioning markets, especially treasury markets, I don't think of the balance sheet decisions as a predominantly monetary policy decision. I think the rate is really bad. Do you think the stock market at record highs is inflationary? I thought you're going to say, do you think the stock market is overvalued? Hey, by the way, do you think the stock market is overvalued? Because I'm going to say something. Hold on. If you answer that question, the people right behind us would go crazy and the phones would start ringing.

And we'd be, people would be standing through. Maybe we should ask it. Is the stock market overvalue? They would ask Alec Greenspan. What's going to have with rates? And you say, can I tell you something off the record? Yes. No comment.

So is the stock market being what it is inflationary? You want to get what's causing what's effect right. But I've highlighted in a world where there are potentially big productivity gains to come in the future. from AI, from technology. If that gets factored into valuations today, and if people start spending out of

these future bounties today, they see, oh, I was in on the latest IPO, and now I'm really rich and I'm going to buy a bigger house, and that drives up house prices. That's happening. That is something happening. It wasn't a BS

question I asked. I wasn't. I didn't say it was. I just used bounty The city of BS, it's broad shoulders. It's broad shoulders. That's a BS. But if the more we see pulling forward activity into the present that's counting on future gains, that makes me a little nervous that you could see inflationary overheating in here and now because it hasn't those bounties of productivity growth have not arrived.

But there's nothing you can do about that unless you guys decided to bring the stock market down. Yes. Our motto here, you're in Shytown. There's no bad weather. There's only bad clothing. At the Chicago Fed, you tell us the conditions, and we'll pick the right jacket. And there are a lot of things in the market that we have to deal with. We can't, we don't control it.

We can't pump oil at the Fed. We can't address some of these factors. But we do have to adjust to that. So going back to the heart of the matter, which is the Fed funds rate, you mentioned the inflation report. You're looking at services and maybe seeing some signs of better news there, if we could put it that way. How much more do you need to see? A lot. And we talked to Rick Santelli and he said we're probably two CPI reports from being able to see the effects of what's going on with oil now, really more to flow through. Talk more

about that. You never want to count on one report. As I always say, one month is no months. So we're seeing some glimmers of hope on the services side, but I don't want to make too much out of it. It's still well higher than where it needs to be, even on services. Even if they waved a magic wand, the war ended today, everything went back to geopolitically what it was before. my understanding is that it will still be a fair bit of time before they can get everything stood back up. Some things have blown up and they got to rebuild. So realistically, it feels like will be some lag. We're used to thinking about core inflation, excluding energy, excluding food prices, which as I say, my mom goes crazy.

What do you mean you ignoring food and energy prices? Well, your mom is a genius. The reason we do that, my mom is a genius, but for a different reason just than this. The reason we do that is because they're extremely volatile. So there is a component that oil prices have been way up. They may go down rapidly, hopefully. If we look at core inflation is still well too high, and it's trending the wrong way, and we've got to see improvement.

on that. Well, I guess to follow up on Kelly's question, how long does Austin Goolsby, I know you can't speak for the rest of the Fed, have to wait to see the data? How long would it be before you say, okay, this is the new normal, or it's going to go back to the previous normal?

It depends what the data says. But the data's lagging. It's back data. We just had this, we just had this description that Chairman Warsh has come in and I told you, I'm sympathetic to the argument that he has made publicly, let's stop speculating so much about the future of rate path. But now you're basically saying, let's speculate about what it means for the rate path.

I don't know. We have to get the data. The stuff you do, fair. But the stuff you guys do affects what happens in the future. I don't dispute that. The rates you set matter to financial conditions, months, quarters, years out. They do. That's definitely true.

So you're de facto thinking about the future. We have to think about the path and get the through line right. I totally agree. And that's not a one month. It's not a through line if you just get one month. But even just the core CPI inflation, if you just looked at that, just that top line number itself is not enough. if you had a top line number of 3.5 and where it was coming was heavily from an acceleration of inflation in services,

that would make me much more nervous that it was going to be persistent than if what you were seeing was a spike in goods that are associated with oil markets. Because then you would say, hey, I got a sense that if they can resolve the geopolitical tension, then that inflation can come down in the near term. Does that mean the labor market is a tell? Services inflation usually comes from the labor market a little bit more so than... Interesting idea. The labor market is even more than a tell in that... It's in our mandate. We have to, by law, pay attention to the labor market and maximize its appointment.

The way it's not a tell that I often caution people is wages are stickier than prices in the economist language. They move slower than prices. So when things happen, prices go up, then wages go up. Then inflation comes down. Then wages come down. Wages are not a great leading indicator for inflation. And just be a little careful. For the people saying wage growth is moderated,

so therefore there can't be a rise in inflation, that's not true at all. Inflation could go up before the wages go up. It's the tail wagging. Was it more of a family fight when in the mean? Was it more animated? And was there more back and forth than usual? Was there more challenging? I'm not going to characterize a secret meeting.

It's like the situation room. You've got to leave your phones out of there. The shades come down. Nobody can see in the room. I enjoyed very much my time. And I felt a bit like Foxhole Buddy with the chairman through the financial crisis in 2009, 10, 11. I saw him in a moment of very high stress for everybody, for here and the world. and economists, and he was very level-headed at that time.

Is there going to, are we going to hear less from you? That's not a fight. That's not a family fight. Are, is Fed speak a thing that will get less of going? Was there, is there any kind of implicit understanding about that, or is it still status quo? I told you, and whenever we're on, I don't like speculating about the future of rate paths. And to the extent that we're trying, that the chairman is trying to tone down speculation about race, in public, I totally agree with that. How about the future of mandates?

The future of mandates? The dual mandate. Just figure with me on this. I'm a little, you know, it takes sometimes I've got to, slow, Austin. I move slowly. I thought you were Mr. You and I hang out of the Brayamol. You're the only central bank in the world,

major central bank that still has the dual mandate with jobs. Almost everybody is inflation-only based, right? Bank of Japan, Bank of England, ECB, the big one. Yes. Should we kill the labor mandate out of your, the Federal Reserve's edict? I don't think. A, I mostly am, let's follow the law. Now, this is a question, should we change the law? Yes. But right now, the law is the law.

If you could vote, would you change it? I personally, I think that the central bank must respect how the economy is doing as well as maintaining price stability. even in cases like the ECB where it's an inflation mandate, there is language that ties their commitment to price stability as well to how the economy is doing. And they certainly, when they're making their decisions, they're thinking about it. No, I think your point is, in Worsh is pushing. You were half correct. I got a B minus or which? So if we, could we see less?

Would we ever get to a point? especially in memory of Greenspan's passing, where we remember that he was the one who began making the Fed, in his own way, more of an event for markets. Do you think that Warsh is going to try to pull back even more on what's in the statement, how much information is passed along? And if markets become more volatile as a result, would that be perceived as a net benefit?

In other words, is that what we need at a time like this, when there's frothy markets and everyone thinks like a certain Fed and we kind of want the opposite? I'm not going to speak for the chairman. I've told you. I'm an admirer of his. And the last statement we put out, I applauded. Let's streamline. Let's take some forward guidance out of there. Let's not speculate about the rate path. I think it's healthy that we have those resets. What's to come in the future? We will all see. Can I ask you one more quick? I know we have to go. But this is so important now. We all say, well, we've got to look to the data and to the market.

But what does that mean? When we ask, people say, well, the data's backwards looking. So you look to the markets. But what in the markets do you look at for signals about monetary policy? I was getting nervous there. I was like, you're a CNBC anchor. You're asking me, what does it mean to look at the data? What?

Yeah, what's on your dashboard? I never aspired to be a hawk or a dove or a bird of any kind. I only ever wanted to be. one of the data dogs, and one of the key rules of the data dogs is sniff every datum that hits the floor because it might be food. So I try to get a full portfolio, especially in moments when take the labor market. Historically, the headline jobs created for the month was the best number. But when you have question marks around any one number from population, growth, immigration, etc., your best off, get four or five different numbers, the hiring rate, the unemployment rate, the vacancy rate,

the layoff rate, and make a dashboard. But you're still looking, you're looking more at the data than you are looking at financial markets. In other words, you could be looking at forwards. Inflation expectations, for example, we have various market measures that supplement survey measures. To me, those are important. I think we got the Goolsbee Pop, the market. Isn't it weird that these people behind? us everything you say, they're going to listen to every single word that you utter.

What do you think of this guy? What do we think of me? What do we think of him? What do we think of him? We like this guy. What do you want to fed? Raise rates or lower rates? They don't care.

They're like, we don't care. They'll make money both ways. Both. They want both. They want all the trees. They want all the trade. They want both for the same reason. They want to make, they're going to make money both ways.

Volatility is better for this business. Austin, thank you. much for making the time. It's good that you came out here. Really appreciate it. Austin Gouldsby, president of the Chicago Fed. A whole lot more to come this hour. We've got John Rogers of Ariel Investments joining us. He'll be here talking about the market outlook at just a moment. All right, but first, you know what I said earlier? You don't like my dad jokes. This place, you know what it needs to get? It's nice. It needs to get a little more swanky. We're going to get a little more swanky. Diane Swank will be our guest. She'll react.

She'll just say everything that Austin just said is wrong. See, we're kidding. We're kidding. We'll find out also what's happening in her world in Washington and why she's sticking to her guns on rate hikes. They'll go away. Welcome back to CNBC show from the CBO, where we just heard from Chicago Fed President Austin Goolsby asking him about Kevin Warsh's first news conference last week.

Markets took it as a bit of a hawkish tone. It didn't sit that well. But that's not a surprise to our next guest. She's been warning about inflation. She's sticking with her call for two rate hikes later this year. Diane Swank, it is great to be here with you in person. It's great to see you. Chief economist at KPMG.

Thank you. Did you catch, do you want to comment on what you just heard from Gouldsby just now to begin with? You know, actually, I think one of the interesting things was the issue on forward guidance. And one of the things that is really tough is we're in an environment where uncertainty's gone from episodic, you know, an episode of uncertainty, it's over to endemic. That is something that, you know, we see measures of uncertainty constantly elevated. and having forward guidance in an uncertain world when you can't forecast as well, that is not very productive because it adds to and stacks on top of that uncertainty. So I actually think there is a lot of empathy and sympathy to the idea of when do you use forward guidance,

when is it most useful? And I think that's what you heard Austin talking about. He was sort of saying he's fine getting rid of it right now. But are you saying you'd want it to stay around? You want or think this is the right time. I think it's really hard because there are a lot of mixed messages. I mean, I have my forecast, but at the end of the day, you know, could something happen to derail inflation and the economy and the Fed Act to flip entirely? Yes.

I mean, unfortunately, fat-tail risks are out there and they're real. Here's why I think it's stupid. I'm just going to say, I don't care. We're in Chicago. You know, people direct language here in the middle, in the Midwest, you know what I mean? No cursing, but direct. We brought it for the era. Let's do that as well.

Because I think it could just change the dot plots. Like you can just like, oh, something changed, so I change it. Exactly. So how good is the guidance when it could change on a dime? That's what I don't like about. In this uncertain world, I don't think it's very useful. So you'd Luca Bratzi it, sleeping with the fishes. Well, it's okay to not have it at certain times, but at certain times it's really useful.

It's useful when you're trying to get up to an inflation target, and you've had a decade of missing it. that's where we were. We're not there anymore. And also it was introduced when rates went to zero and they couldn't go any more negative. And so the options were cut to negative or used for guidance. It was another communication when you don't have anything else. But we're not in that place now. And so, you know, there's, I've watched monetary policy evolve on communications over decades. And, you know, I remember when Alan Greenspan first announced, I mean, there used to be a whole cottage industry of people who figured out what the Fed did after their meeting. And there was economists that would go out and figure out what happened in markets.

So you've watched CNBC. I've watched C&C. Yeah, no, I've just been around for a little too long. Actually, I was one of your first guests back in the day. Don't say you've been around too long. That's how long I've been around. Yes, I know. I was there.

We both look amazing, by the way. So how hard is it to gauge inflation right now? Listen, Austin, to his point, there's things you can't say because everybody here will just freak out and start trading whatever. You can say whatever you want. How hard is it to gauge inflation right now? Because we don't know where the war is going to go. Prices are down, but tomorrow they can be back up.

Well, that's certainly an issue. But what we do know is post-pandemic. Can we talk about this before, Kelly, is that the research is now showing when you have all these multiple shocks and a high level of uncertainty together, you get more persistent bouts of inflation. And we're five years in. There's a lot of reasons for.

it, but at the end of the day, there's only one institution that's charged with derailing inflation. And, you know, we talk a lot about inequality. You asked me about inequality. You asked Austin about the wealth effects, and I agree with them, actually. There is an effect that it's not that the stock market's bad. It's that people who have large stock portfolios are spending with abandon, and that's part of where the service sector inflation is. Try to go to a live event. How much does it cost to get into a live sporting event or a live concert now? wouldn't know because it's too expensive to go. There you go. And I'm only being somewhat tongue and cheek. Like the World Cup, you know, three grand to get in the freaking building. And that's probably

a nosebleed, you know. Because for some people, they've made so much money and it's a good thing. We're CNBC want prosperity. Right. But it has to be inflationary. It is. Exactly. That's what I tried to, you know, I tried to get off. But he didn't want to talk about that because he can't, you know, he's got to wait for the data to come to him. And I understand that. I have to forecast what he's going to do. I think this is a stickier bout of inflation, and we've got that underlying service sector inflation that's just not going away. And it's from different reasons that we can play whack them all, but we've also got something else going on. You know, Austin talked about the AI boom and how the wealth effects were bringing money forward and spending it before we get the productivity gains.

Well, we're also seeing costs. Look at the announcement we've seen today. And consumer electronics were falling in price for decades. 20 years. I mean, in the 1990s, boom, that was part of the miracle, was the productivity gains that we got, but also the fact, I mean, I remember being on the phone back in the day when I ordered a computer and it came in such a big box that the kids used it as a house, you know, and they were little at the time. But as I was on the phone, the prices were falling and they're offering me more as I was on the phone. That was stunning. That's not going to be happening. And those are things that you need offsets elsewhere. and we're not getting them.

Well, I think your hawkishness, he didn't want to be a bird, but I think you've been you've been hawkish, and maybe now there's more sort of flocking to that point of view. But, Diane, thank you for joining us here in Chicago. It's just so fun to get together in person. It's so wonderful. Instead of looking. You're a hawk.

It might be a pteradactal because you're too great high call. You've been sticking with it. I think it's going to be right. Forget about the hawks. You'll eat the hawk. You know what I mean? I've never been called a pterodacto, but you know what?

My daughter loved dinosaurs. I was trying to think of what would eat a hawk. Yeah, it was more hawkish than a hawk. We wouldn't because we're nice and we'd never do that. You're going down. Indeed. She's going back down. It's.

We're going to learn all about the ins and the outs of that floor. And exactly what it's for, what it does, and why it matters to you. By the way, thanks to the Cubs. Love that. We love being in Chicago. We love it here. We're back right up. Nice little bit of a bounce for the markets.

You're looking at the markets right now. The Dow is up 3 tenths of 1%. S&B is up 2 tenths of 1%. NASDAQ still down. He said, well, Sullivan, what's going on? That's not a big move. I didn't say it was a big move, but the S&P was down. So we've seen a bit of a turn higher.

The NASDAQ was so close to being positive. We'll wait and see. What about the so-called MAG-7? Those are the names. I know Micron is not in the MAG-7, at least not yet. That's your big story today. Well, the MAG-7, guess what? Is not doing great.

It's down 2%. percent right now. So intraday, the mag seven, not one of the good performers. One reason for this might be oil, and I know listen is the energy person I'm talking to my book, but here's the reality. Crude oil is up right now about two and a half percent to $72 and $15. Here's what happened. We were below $70 a barrel when we woke up. Then you had members of the IRGC, the Iranian Republican Guard. Remember, as I have reported extensively, there are different. factions fighting for control inside of Iran. One of those groups effectively made new threats around the threat of Hormuz today saying that the, quote, Omani route, which is the toll-free,

for lack of a better term, southern route through the strait, is one that should be avoided. And there are rumors, or at least some talk, that a ship may have been fired on as well. Any jumpiness, any jumpiness in crude oil is going to do that. Kelly crude oil up 2.6% might be a reason why even Micron's 17% gain, stocks overall not really performing. And welcome back to our special show here, CNBC live from the CBO. I'm in the SPX pit with someone who knows all the ins and outs of what happens on the floor. Not only all of these gentlemen, but CNBC Options reporter Oliver Renick. Oliver, talk me through this a little bit.

What are we, what are you listening for? Anything and everything. The best part about being here is that it adds a new dimension to the market. When you're looking at your screens, when you're pressing buttons, when you're watching things. Being live here, you hear the market. Yeah, we can hear it all the time, but what are they saying? Lots of buy, lots of sell. Today pretty quiet.

Markets only changed by eight points. Vix has barely moved. The rules kind of, I've noticed when we're below VIX 20, it's pretty quiet. But this morning, we whip back and forth real quick, and I'll sit at my computer and I'll try and hear it. And I'll say, that sounds like we're going up. And you look, and we're going up. But what's with the hand signals? So then it gets pretty loud in here, right?

So the hand signals are actually, they call them ARB signals. Only a few of them kind of survived and only really make sense when it's very loud. But it's basically when people were in between pits, they need a way to communicate to say, I need one, I need 10. And that's literally what they say? I need 100. I need 100. This is 100.

100 goes across. Okay. Thousand if you want big money in the elbow. Okay. And then you add it in. So let's say you want 60 on tap at that. 1,060. Yeah, exactly.

It's like sign language. So you see people shout things out. You hear things. this guy's doing push-ups every now and there. Like, I look over. Is that a market signal or that's just... I don't know. I think it's basically usually Vic's sub like 16.

You get time to do a couple. Oh, you get push-ups when it's a quiet marketing. Okay, so we're maybe not quite there yet. What else goes into the communication back and forth here? Because they're executing based on that. Yeah, a lot. It's amazing. You see all the different parts of people moving around.

You see the pit boss, Tony, here. You hear market makers shouting out earlier this morning. A great example is I heard someone say, Don't want that bid. That's the worst bid I've ever heard. The computer's not going to tell you that. You can't tell that to the computer. It's almost like being live on the helpline here.

As orders are coming through from New York from anywhere, the guys have an opportunity to make sure everything's clean. It's precise. It's exactly what they want. Which one's the call and which one's the put? Call, put. Bye. Sell.

I don't want it. I don't want it. Get it out of here. Oliver. Thanks very much. Oliver Redick is our options reporter. and for more on all of this. The hand signals of the CBO, by the way, head right over to our CNBC social page.

You can find on TikTok and elsewhere. They did a great job with it. Brian. All right, you know what? I'm all about the hand signals, baby. I like it. And TV, sometimes we give different hand signals. I mean, it all depends.

All right, coming up, we're going to help you try to make some money with one of the best investors in the world. That is aerial investments, John Rogers. We'll talk about tech. Talk about Mike Ron, talk about AI, whatever else is on John's mind. This is his town. We're just happy to be here. We're back right up. All right. Welcome back, everybody. Thanks for joining us again. We are live here at the CBO trading force small caps. Kind of a big moment lately. They're hitting a new record high to date and actually year to date. Small caps outperforming the S&P 500 by more than 10 percentage points. In the past 12 months, the Russell 2000 has given you returns of 40%. That's leaving behind. behind the S&P 500 and even beating, and don't tell anybody, the NASDAQ 100.

So can these small and medium-sized companies, which are growing every day, continue to deliver outsized gains? We don't know, but your next guest does. He is one of Wall Street's best-known small-cap value investors. Joining us now, John Rogers, Chairman, co-CEO, and CIO at Ariel Investments, and really, Mr. Chicago. I mean, this is you live here. You went to school. This is your town. We love being here. I love Chicago, and we had last week left to celebrate the new Obama Center, which is absolutely, you know, fabulous for our city.

And it's great for the country. It is. Amazing stuff all around. Let's talk about some of these companies that you like, one of which I know nothing about. So I have no question to ask you other than who is Covista and why do you like it? Was that a good question? Yes. Covista is a for-profit education company focused primarily on educating doctors and nurses. And as you know throughout the world, there's a shortage of nurses, a shortage of doctors, and having a great for-profit company like Covista to be able to bring that education is really, really important.

Stephen Beard, the CEO, has done a fabulous job of getting them on track, and we still think there's a lot of room to run for this great Chicago company. What do you think in the markets more broadly right now? I think the broad, broad market is expensive, driven by the AI craze. I was watching Bill Nigrant earlier, and us value investors have been suffering as these hot companies just go booming higher and higher and higher. So I do think that the AI craze will end the same way things into the end of the century when the Internet bubble finally burst. And I still feel really strongly about that because everyone's coming up to you now. All they want to do is talk to you about AI.

And as Bill said, everyone thinks it's easy to get rich quickly in this new market. Even in the world of small caps, there have been a lot of AI beneficiaries. Though, you know, in the Russell 2000, there's a lot of companies whose market cap has mushroomed because they might be. I mean, are there genuine opportunities there to chase where the money is going? Or are you preferring to stay outside of that entirely and look at companies and the industrials, which are at an all-time high today and elsewhere? Well, we look for companies that can benefit from AI. and our best company in the last year has been the sphere. And if you think about it, the Wizard of Oz would not be as fabulous if it wasn't for AI.

And then being able to repurpose a great IP will take really great, great AI. And they were able to use it to make a wonderful movie even better and to do it in a cost-effective way. So we're looking for ways to play the game in that way. Do you want the AI trade to come down a bit, John, because it might benefit? And the Russell's 2000's done well. We just highlighted that. But that's mostly because a small group of small companies have gotten really big. Like they kind of pulled the whole index out.

Would it benefit the, quote, broader market if a little bit of error came out of the AI? I think they would. And when it comes to the small cap indexes, as you know, as these hot AI stocks go up and up, all of a sudden they're mid-cap or even large-cap companies. And they'll be leaving the index when it gets reconstituted. And that will sort of hopefully dampen some of the ball of axillary. and some of the craziness going on day-to-day and intraday in the markets. I've never seen so much short-term volatility from one hour to the next in the 43 years that,

you know, I've been running aerial. Really? I've never seen anything like it. You mean, even the moves where, you know, an AI component maker might be up, you know, an inordinate percent, is that kind of what you're talking about? Exactly. If one of those AI stocks is booming, then the index is, you know, looks really tough to beat. But then all of a sudden it goes back down and then all of a sudden you can outperform.

We've had days where you're 100 basis points ahead. better your benchmark in the morning and 100 bases behind by the afternoon. Just never seen anything like that. No, and you know, at the top of the show, we highlighted some smaller-cap Chicago companies that have outperformed. Names that are based in the Chicago Lineary Method, AAR, CTS, Little Fuse, and Knowles. I did that all by myself. On top of my head, it's amazing. Do you own any of those companies?

We do. In our small-cap products, we've owned Little Fuse for probably more than 20 years. I remember it's a really cool company and really a great local company. And Knowles has also been a wonderful performer for us, and it's also in our small cap product. What other stocks do you think show a lot of, I don't even know if we need to talk about their growth and their promise, or if it's just like we were saying really, is it a re-rating that you expect, you know, where there multiple goes from five to seven. What are some of the other names you're excited about?

I think, you know, the financial services sector, we're finding some stocks have done incredibly cheap. And this is an environment where deals are getting done all the time, going to happen even more in this deregulated environment. So companies like Lassard, you know, being a premier investment banking company with a money management subsidiary. You're a big fan of Peter Orszag. Yeah, me too. I said you are. I am a friend. I mean, I'm a fan when he comes on the show. He says, no, we don't like him. I saw him last week at the opening of the Obama Center. And he's a great leader. He's brought in a lot of fresh perspectives. And Ray McGuire, one of his top deputies, is also a brilliant investor. So they're going to benefit from the deals happening.

And then a company like Carlyle, you know, private equity's been under a cloud. A lot of things been going on, a lot of headlines that are, you know, discouraging people who invest in in companies like Carlyle. But these companies now are selling it, 9, 10, 11 times next year's earnings. Historically, very, very, very cheap. A lot of value in some of these smaller, mid-sized financial services companies. Just quickly going back to Goalsby, do you worry about inflation and some of things going on there with the Fed or no? I'm not worried about inflation internally. I really do think that the Fed's on top of its game,

and I think Kevin Warsh is going to do a really, really good job. Austin is, of course, an extraordinary leader. So I think there's some thoughtful people there that will really work to keep inflation under control. So at three companies in the Chicago area, I think you said you like Covista, Little Fuels, Little Fuse, and Knowles. These are names we've got to write down, Kelly, because I think next time we come back,

and there better be a next time. We should get those companies on. I think it's a great idea. We'll say John Rogers said you have to come on. Or else. Come on. We drop your name. Go for it.

We're going to do it. Thank you for making the time. We really appreciate it. John Rogers. And we are done yet. After the break, we'll talk energy. How does Illinois stack up? Can you guess which category of energy production they lead the country in?

Send your guesses in. Oh, I know. We'll reveal it after the break. All right. Welcome back, everybody. for a special power insider, and today we're focusing on where else? Illinois, because when it comes to energy, the land of Lincoln packs a lot more power than many of you may realize. According to the EIA, Illinois is the sixth largest energy-consuming state in America. Its industrial sector uses more

energy than any other sector in the state, right? It takes a lot of power to make stuff. But here's where it gets really interesting. Illinois actually ranks fourth in America. in crude oil refining capacity, only behind Texas, Louisiana, and yes, California. Illinois's four refineries can process nearly one million barrels of oil every single day. Illinois also a biofuels powerhouse. It is the third largest ethanol producer in America. I mean, maybe not a surprise given all the corn, not here in Chicago, but, you know, about 50 miles outside of town. But the biggest number of all is going to be nuclear. Illinois generates more electricity from nuclear power than any other state in America.

In 2024, it provided about 13% of the entire American nuclear power generation. So whether it's oil, biofuels, or nuclear energy, Illinois, not just a Midwestern economic engine, It is literally one of America's most important energy states. Kelly, so the answer to your question, nuclear. I'm not hearing anything like that. I had no idea. I'm not going to say it's an RBI, but it's definitely interesting. Brian, I'll see you in a second.

There's a lot of buzz around Chicago sports. The Bears are on the rise and on the move, by the way. The White Sox are finally winning games. The Bulls may have found their next star, and in less than 100 days, Northwestern will debut its brand new stadium. Ryan Field. It's the most expensive college football venue ever built. The price tag is $862 million for what you're seeing in this rendering here. Unlike most stadium projects of this scale, it was funded entirely with private dollars. In fact, joining us now is one of the people who

helped make it happen. Pat Ryan Jr., the CEO of Ryan Sports Development, his family financed and developed the project. It's great to have you here. Really appreciate it. How did this happen? Can others replicate this? How much of a lift was this? Well, you know, when we started, I think people thought it would be one of a kind. It's a little, hearing the first NFL-type stadium in college football seems daunting. But when you look at it, these are done every 100 years. You make a 100-year decision.

You have to get it right. And the NFL model is an interesting one where you have larger budgets and larger buildings but fewer seats. Because you're really building for a different age than 100 years ago when TV didn't exist. to see a game was to get there. Let me ask you something. I live in New Jersey. I mean, to me, when I think college football, I think, you know, SEC, I would have thought the billion dollar, let's call it stadium,

would be an SEC stadium. Why Northwestern? Well, a couple things. First of all, we're a Big Ten team. We're one of the founding members of the Big Ten. You know, stadiums are expensive today. You do it every hundred years. Frankly, we're just bringing our stadium up to the quality level

of our academic buildings. I would add that, you know, this is Chicago's Big Ten Stadium. Chicago is the home of the traditional Big Ten, largest alumni bases. So you have the number one conference and the number two sport in America. This is the home for the conference and the home for the wildcats. And it was completely privately funded. I mean, that's incredible for something of this size. So explain how that works.

Well, it was a combination of the money the university would have spent on renovating the old stadium, which frankly would have been almost not noticeable at all because all that money would have gone into infrastructure. And the rest is donation at a little bit of internal lending with the university. But to put it in perspective, Florida just announced they're going to do a billion five renovation. Wow. A billion five just to renovate. Just to renovate. Wow.

I mean, that's Northwestern money right there. All they got to do, Pat, is start winning. Oh, well, this will be the number 26 defense in the country last year. And we have Chip Kelly as our new offensive coordinator of the best offensive mind in college football and a great head coach. I'm with you, brother. I'm a Virginia Tech coach. So I want these teams, the Northwesterns of the world, to come back up. I don't want the same five teams and NIL money, you know,

and you've got teams that have higher payrolls and some professional teams. 27-year-olds playing college football. Literally 25, 26, 27-year-old, grown men are playing college football. But that genie's not going back in the bottle, is it? It's not. So how do we, how do we, how do we, I don't say fix it? How do we live with it? How do we adjust?

Well, it's hard because, of course, this wasn't anybody's plan. Courts made decisions and, you know, the unintended consequences are what everybody has to deal with in the fallout. You know, I would say a couple things. One, really what they said is you have to share revenue with student athletes, which makes sense. We all agree. It's a job. They need to be paid $10 million a year. Well, you know, I'm not the person to answer that.

But I would tell you that, you know, the idea of sharing revenue, if it's run well, if the business side is run well, it's important. But at Northwestern, you know, our kids come to get their degree. They're student athletes first. There certainly is a revenue share. We had a basketball player drafted last night. You know, he both got a degree and made money. I think it's an important thing that we're looking for kids who are looking for the best of both.

And there's a lot of kids who really want that. Just to raise that amount of money, I mean, this again goes to what we've been talking about this whole time of being here. There's a lot going on in the Chicago area, the investment world, the business world, and the sports world. And a lot of these companies that we talked about that are not even household names by any stretch,

but a lot of household names too. So I'm just curious, kind of business-wise, where you see this all going? Where are the biggest areas of opportunity for you in the next couple of years? Well, I think the biggest thing to think about here is that we live in the experience economy, right? People crave experiences.

TV is fantastic. Football is the perfect TV game. The problem with TV is it's too easy to do. The hardest way to experience football game is to go to it. So you have to create great experiences. When you create great experiences, people will pay for that. And so really what we've been focused on here is how do you create great experience? How do you make it when you watch it on television?

You say to yourself, God, I wish I were there. I wish I were there, yeah. Can I ask these guys, can I ask you all a question? Hi, Brian Sullivan, America's 16th most trusted news anchor according to surveys. The Bears in Indiana. Will that work? Wait, whoa, yes. Are the bear?

Yes, yes, no. Yes, no. Are the Bears really moving to Indiana, Pat? I'm not the one to answer. I know, but you built stadium. The Northwest Indiana Bears? Is that going to happen? You have to ask George.

Okay, Packer. I hear that. We got a Packers fan in the house. I heard that. Packers. What do you think? Is that good for the area? I think, you know, the Bears will end up building a great stadium.

Wherever it goes, it'll be great for the region. You know, the Bears will probably spend $3, 4 billion on that plus a development around it. It's a huge economic. It's all privately funded. That area needs some help. Well, but the Bears are funding everything. Only the infrastructure they're looking for. So, you know, the Bears will be doing something unprecedented,

and they're funding all of it themselves. And they just need an environment where if they invest a lot of money, it doesn't create a tax bill that's untenable. I try to get it out. I mean, I know that's what they're talking down there. It's the end of the show so we can talk a little sports. Pat Ryan, really appreciate your time. Glad to be here.

Yeah, I can't wait to see what that new stadium is like. It's going to be something. That one and many more. Yeah, so it's just been a bit. Guys, I want to say from all of us that I can't speak for Kelly here. No, thank you. Thank you for hosting CNBC. Midless, nice.

And everyone's so tall. Give me for yourself. They are. I've never felt so short in my life. So really appreciate everybody's time and all the hard work of everybody around us here. Some of our curve drove here from New Jersey. So thank you all. And, by the way, that's it.

Rossier on the CBO. We'll see you for their closing bell, but CNBC's closing bell starts now.