Power Lunch - Countdown to Fed Decision, AI Trade Gets Trounced, Apple Hits $5T Market Cap 7/28/26

Episode Date: July 28, 2026

Major averages are mostly higher as investors prepare for the latest interest rate decision from the Federal Reserve on Wednesday. Kelly Evans and Brian Sullivan discuss the latest market action with Edward Jones’ Mona Mahajan and Clockwise Capital’s James Cakmak and get their takes on which sectors they currently favor. Later on, CNBC’s Mackenzie Sigalos reports on Apple’s plans to release a foldable phone for the first time and MoffettNathanson Founding Partner, Craig Moffett, joins the program to recap Apple’s recent stock rally to become the world’s most valuable public company. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Three big things for your radar right now, big tech earnings, Apple's incredible run, and the Fed decision tomorrow. Welcome to a true hour of power, folks. We are Kelly and Brian. How do you like them apples? Tim Cook's tenure, a CEO out of Apple going out with a bang to company, touching $5 trillion in market cap to once again become the most valuable company in the world. And the world's energy choke points are reshaping how oil moves. We'll break down the surprising pipeline proposal that could redraw the global energy map. Plus, clear skies ahead for Jed Blue. Shares of the airline are taking off after reassuring investors about its turnaround. We'll speak exclusively with CEO, Joanna Garrity. All right, so we have got the details on Apple

and energy and more coming up. But let us kick it off and focus on the Federal Reserve and your money because kind of an odd market day. The Dow is doing very well. It is up more than 1%. But semiconductors are getting slam, micron, lamb research, Intel all down today, and now down more than 20% from their all-time highs. And if you are the betting type and went super long to semis, it's not a good day. The direction three-time semiconductor bull ETF down over 12%. It was down 18% earlier today. All this, leading concerns about the AI trade, specifically with the semiconductors, where does this market? Your money go from here. talk about that and kick off power lunch.

Mona Mahajan is principal and head of investment strategy at Edward Jones and James Chuck Muck, a CIO of clockwise capital. Mona, welcome, start with you. Should we find some solace in the fact that the semi-conductors are getting crushed, but the macro market is not? You know, look, I think the semis are going through an ongoing correction phase here. And there are a few things driving that. First of all, they were up about 100% before this 20% plus type of correction.

And so they had a parabolic move higher, some form of profit taking, a little bit of de-leveraging, those levered ETFs coming off the boil. And of course, we are seeing a little bit more competition from China emerging. And then, of course, there's a CAP-X story. Are we at peak CAP-X? We're clearly not slowing down on CAP-X growth rates, but that pace of growth may be slowing. And so three things to watch for. We don't think the trade is necessarily over.

We think AI taking a step back. Could it be maturing? Yes. but probably we're going from the CAPEX buildout phase to the adoption phase. James, what do you think is going on here? Yeah, I think it's a little bit of all that. You have the circular financing, resurfacing, you've got the de-grossing, de-leveraging out of the Asian markets. And putting all that together, you know, it's had a remarkable run and now it's cooling off.

But the way that we think about it is you got semiconductors are 18% of the S&P. They're 34% of the NASDAQ. You know, we're hovering in our portfolio around 20%. So we're hugging more of the S&P. We think that the semi market largely is overdone. But we don't think that all semis are created equal. So we have been rotating our semis to some of the more higher octane parts of the group, such as the power generation guys.

We would talk to on your show about HUD-8 Corp. And we think that those are areas that will continue to outperform. but we're not leaning in heavily anymore the way that we used to, like on a micron, which is now a minimum weight for us when it used to be a four or five percent weight. Well, you wonder, Mona, how much these group of stocks mean to the market. We know how much they've meant to the market. It seems like a lot. Kind of goes to my initial point.

Markets go up when earnings go up, when valuations go up or a combination of the two. Yeah. Okay, I'm quoting, I think quoting you. Yes, I've said almost exactly. Well, that's not an accident, Mona. We like having you on. I'm quoting you back to you to be nice. Do those companies matter that much from an earnings or multiple or valuation perspective? Yeah, you know, look, it's a great point. This year we've had almost... You just said your own point was a great point. I love that.

It's always an excellent. We've had a great run, a 10% run or so in the S&P 500. We haven't seen much participation from the MAG 7, which, by the way, is a huge earnings driver. We haven't seen clearly in recent days any participation from areas like semis. Where we have seen the participation come from is the S&P equal weight, that $493, think about financials, industrials, health care, all playing some nice catch-up here. To us, it's a good sign. We're going from an AI-driven bull market to a broadening bull market. Yeah, James, I want to know where the momentum, where the hot, the heat-seeking missile is going, because if it started in NVIDIA, let's go back to the origin story. It started at NVIDIA with these wild earnings quarters. It moved to the memory names, these wild earnings quarters.

It feels like maybe it's moving somewhere else now. Where to? It's not just me, right? No, it's not just me either. It's not just us. We lost to, James. You're out there, just hit the thing or the unmute thing, whatever. So when we get him back, Mona will go back to you.

So again, do we see a valuation expansion in this market? Because the market has gone up nicely, by the way. We've made a lot of money this year, absent the last couple of days. Yeah. But we haven't seen a huge multiple evaluation expansion. Yeah. Why not? You know, it's been actually interesting.

We've seen valuation compression almost across every single sector, including technology and semiconductors. But what we'd say is this earning story has really blown us out of the water, blown expectations out of the water. We started the year thinking 13% year-on-year growth. We're looking at 24% plus. And that continues in the second quarter of this year. We heard from Google last week.

We'll hear from the other Mag 7. in the days ahead and they look pretty strong. It's so good. It's just that it was priced into some extent. And so same question. I think we have James Bexwell ask him again on a second. But my question, Mona, is if we're shifting in the investment phase from the chip maker, NVIDIA, to the component makers, the market always wants to look for the next bottleneck kind of or the next beneficiary. And is that one reason why financials, they're going to benefit a lot from AI. Yeah. And, you know, look, we're in very early stages of an AI adoption, AI productivity cycle. We haven't really seen it come through in a meaningful way.

And we think that is certainly coming in the next 12 to 24 months. But there's still an opportunity, we think, for the hyperscalor part of the market, where they have to see a nice return on all this Kappex spending. They're still in the red this year, broadly speaking, maybe with the exception of Apple. And, you know, could be interesting opportunities forming in that part of the market. James, I want to flip it just a bit. Moments ago, Mark Zuckerberg, you might have heard about that guy, founded a company called Facebook, which has done pretty well.

Sure. He just came out with a new op-ed. the Wall Street Journal. So I'm going to look down. You'll forgive me, everybody. Nobody wants to see the top. There we go. Put up on the board so you don't see the top of my head. Zuckerberg put out a new op-ed called The Future of AI or whatever is for everybody. He writes, quote, it is surprising the discourse from many of those who are developing artificial intelligence is so filled with doom. I don't understand why anyone who believes that AI will eliminate most jobs and much of humanity's relevance would rush to build that future. So obviously, listen, he's

He's got trillions of dollars of skin in the game. He needs and wants AI to succeed. So he's not coming at this from a neutral perspective. But Kelly and I have talked about this before, too. If AI was going to kill jobs and crush humanity in the economy, there is no reason for AI to exist. So in that way, I do agree with Mark Zuckerberg. Its only service is to do better for everybody.

If it doesn't, you just end it and move on. What is your take? Does it have a future? And I bring that up because it. if the spending slows down, maybe the market rally slows down. Yeah, I mean, I think it hits home for us. I mean, I completely agree with them. Obviously, there's a lot of doom and gloom, but I do think we have to accept the fact

that the doom and gloom is right in terms of the AI displacing labor. I think that's just going to be a matter of fact as we look into the future. That being said, I think the problem is, and the doom and gloom, the genesis of that is the fact that there are no solutions being offered. I think as people start to see the solutions being offered and what could actually be done with it, I think that narrative can start to change. But it's going to be a painful cycle between now and that point. I mean, it's really home for us as well.

I mean, we're building our AI that we built internally. Kronos, you know, we built it for ourselves, but we're actually rolling it out to investors. Because what we're seeing is that, you know, because of the labor displacement, you know, people need to become owners themselves and owners of assets and really manage their cash flows. And we're using AI to do that. So we're trying to empower people exactly in the way that Mark Zuckerberg is saying. And I think until the solutions start to surface and people start to and start to permeate into the market, I think the doom and gloom is warranted. And because it's visceral for people. All right. I want a competing Chuck Muck. I want you to say, now don't listen to the tech guys.

this is going to destroy humanity. It's going to destroy the labor market for sure. I mean, I just don't see any way around it. I think the Doolingling War did that sense. You think it will destroy the labor market? Yes. Then why would it exist? What's the point of AI then?

If you kill all the jobs, there's no economy. AI's benefit ceases to exist. It's reason for existing ceases to exist. Just because the labor of today won't exist in its current form doesn't mean there won't be a new form of labor tomorrow. And people can utilize AI to further themselves and build their own assets and monetize those and grow over time. So we think that obviously there's going to be a big dislocation between that. All transitions from legacy to the future are always painful. and it's probably going to take a number of years to get there.

But I do think that there needs to be a little bit more hope communicated in the form of solutions. Because quite frankly, everyone's talking about the problem, but no one's talking about what the other side of it actually looks like. And I think that's a challenge. But it's going to take time. I think we'll get there. We're doing it. We're doing it for our clients.

Their clients are starting to see it. So I think it's just a matter of time. but I think Zuckerberg is right. Well, that's... I feel like he... You're optimistic like Zuckerberg is. You're optimistic on parts of the job market

but not parts of others. It's probably a whole hour show that we could do. Well, I'm optimistic, but I'm realistic on the pain of the transition to get from a point A to point B. Fair enough.

Listen, a lot of blacksmiths and anvil makers went out of work when the car took the job with the horse. I even think about China entry into the WTO. I mean, these shocks will have political consequences. Sometimes we can't even see how impactful they are in the day. It takes sometimes five, 10, 15 years to play out. So. Great point. Or longer, right? Take the jobs of certain things. What is the ultimate impact of all of the spending going to be on our viewers 401ks, Mona? You know, look, I think generally we're still

set up for an ongoing bull market here. It's year four, yes. So we're seeing some rotation. We're seeing a bit of fatigue, but the things that killable market are a recession or an economy heading towards recession. We don't see that. Or number two, a Fed raising rates aggressively, and we don't see that either. In the meanwhile, we have a strong earning cycle coming up ahead of us and for the full year. And by the way, we do think the labor market is holding in there pretty well and probably will do for the rest of the year. All right. Thanks to both of you. Really appreciate it. Mona Mahajan and James Chuck Muck. And we are just getting started. JetBlue shares are soaring after the carrier posted a narrower than expected loss,

CEO Joanna Garrity joins us live for an exclusive interview. While Apple quietly reclaims the title of the world's most valuable company, topping $5 trillion for the first time, while everyone else is chasing AI, is Apple simply cashing in? We'll discuss that after the break. Apple is quietly having its best month since July of 2022. That was four years ago. And today, surpassing Nvidia as the world's most valuable company,

also briefly hitting the $5 trillion market cap figure for the first time ever. It's just below that level right now, even as much of the greater tech trade falters, or perhaps because it does. Let's bring in Mackenzie Segalos to walk us through the drivers of this incredible run for Appleback. I've made all the more incredible by the fact that it comes after years of being dismissed as behind an AI, but investors are now deciding that Apple may have been right all along to not join the spending arms race. The company has always been good at pushing capital-heavy spending onto partners' balance sheets while keeping control of the customer and the economics. AI is the latest example of that playbook really working in its favor.

So Apple rents much of the model and cloud layer from Alphabet, similar to that search deal, then pushes the technology across more than two and a half billion devices while keeping quarterly capex below $2 billion. The rise of capable Chinese open-source models really only strengthens that strategy. As models get cheaper and more interchangeable, the advantage shifts from building the best LLM to then controlling the device in the customer relationship. That leaves far more cash for shareholders instead of data centers.

Apple has returned more than a trillion dollars through buybacks and dividends, and Goldman now sees even more upside, raising its price target to $370.70. And Apple is also expanding the reach of that installed base, attracting more buyers with lower-priced devices like the MacBook Neo, a big, seller for them while using Klarna's balance sheet to make premium products more accessible through its new leasing program that was just announced a few hours ago. Guys? Quickly, a new foldable iPhone. I get cool. Samsung's had one for years, but I'm also hearing the price point maybe about the same as like a MacBook Pro laptop, McKenzie. Exactly. So Wall Street analysts increasingly expect

Apple's first foldable phone to arrive this fall with most estimates in the range of 2,000 to $2,500, roughly to your point, the price of a MacBook Pro, and then higher storage versions could potentially approach $3,000. And part of this is just reading the tea leaves on supply chain, right? Samsung is Apple's longtime display partner, and we just got the Galaxy Z Fold 8 last week, which some analysts are using as the closest comp for what Apple may unveil, this wider book-style device built for video. At WWDC, we got new software that essentially introduces these interface changes that some developers see as groundwork for a foldable third. including these layouts designed to adapt across the screen for different sizes, notifications

that slide in from the side. So there's a lot of excitement about the first form factor change that we've seen to the iPhone in years. I'm excited. I can't wait to see. Are you really? Of course I am. For a $2,000 phone? Well, that makes you a little less.

$3,000 phone? Do I hear $4,000? I don't think I would like it. And I want to see if I would. Well, let's talk more about it. And that's a lot of the, yeah, a lot of speculation around what. why they're now doing this new leasing program, not standard financing, make it more affordable on a monthly basis.

Like General Motors did with cars back in the 19 aughts. Couldn't afford it? Don't worry about it. It's put it on credit. McKenzie Sagalos, thank you very much. By the way, to help propel GM pass forward is the world's largest company. All right, let's get to a top analyst on the street and keep this conversation going. Craig Moffat, co-founder, senior analyst at Moffat Nathanson, joins us now.

It's amazing. I love this story, Craig. I don't want to say left for dead. That's not true. But everyone's like, wow, they don't have an AI strategy, you know, whatever. All of a sudden, Apple is now rocket ship, biggest company again in the world, probably going to be over five trillion market cap, maybe by the end of today, maybe tomorrow, who knows, Tim Cook is going out with a bang.

What changed with investor sentiment around Apple? I think, Brian, what changed around investor sentiment around Apple is what actually changed around investor sentiment about non-Apple. As people get more nervous about whether the spending from Open AI, from Anthropic, from Meta, and what have you, is going to pay dividends. They take money off the table and they hide out in a safe place, and that's Apple. And so on the one hand, that's great, right? I mean, I think you could overstretch the argument that Apple is a beneficiary of missing the AI cycle. But it doesn't hurt them that they're not playing. in the AI cycle. And you can imagine that open source, particularly smaller models that operate

on devices, are actually pretty good for Apple and maybe even drive an upgrade cycle. But I think you'd probably be going too far to suggest that Apple is rising because of something it's doing. It's rising because of what's happening to everybody else. It's the safe place to hide. But let me jump in here. And suddenly I'm Apple's biggest fan and defender, which is classic because it's at all-time highs. So of good, you know, but classic. You always are, Kelly. Yeah, you know that. I mean, I'm sure when it was at the lows, I was like, they're never going to figure this out. And now here I am at the highs saying, of course, this makes sense. But,

I mean, we have to give them so much credit here. For all the turmoil that they've had with their AI plans, for all the crazy chaotic turmoil that the AI division itself has had, it's a clear choice not to go spend $250 billion in CAPEX to try to come out with its own model. That is a very clear choice that other leaders might have not pursued. And that so far appears to be a brilliant choice. Now, it may have been an accidental stroke of brilliance. It may have been by missteps. But they still could have woken up in any day of the past six months and said, you know what, everyone else is doing it, we should too. And they've had the confidence not to do that. And it looks like it's paying off. Yeah, I remember when people were saying they should go out

and buy perplexity or they had to do something. And you're right. They stuck to their nitty. and they avoided making any big mistakes, and it does look like the market's going to come to them to some extent. The reason it makes me a little uncomfortable to sort of cast Apple as the winner rather than as the non-loser is because it's not clear that any of this actually has real benefit to their business model. It just doesn't hurt them. And look, they have some great stuff in their pipeline. And you guys were talking about foldables. I'm excited to see the foldables.

I don't know like you, Kelly, whether I necessarily want to own one. Not because of the price point, but I just don't know that that form factor makes sense for me. But I can't wait to see the foldables. I look forward to seeing Apple glasses. They're exciting. And so there's a lot of interesting things coming. But most of that isn't driven by AI. Most of that's not because their AI strategy worked.

It's because they're a good product company. I'm going to, it's a family show, but I'm going to say a really dirty word on television. You guys ready? Oh, no. Utility. Is Apple in some weird way a utility, meaning people are selling semiconductor stocks, right? We just talked about how semiconductors are getting crushed. And maybe some of those investors are taking that money and putting it into Apple as like a placeholder because they view it like a utility.

Yeah, definitely. No question about it, Brian. It's not a utility, if you mean it as the way a consumer thinks about a utility. It's a very durable business model and consumers love it. But for investors, it's hiding out in a utility. It's a low-risk stock at a time of high volatility. It's sort of the anti-vix of tech, right? Right. Which leads me to think, and thank you for agreeing with my rather bizarre question, does it last? Because I've been doing this long enough. Craig, as of we all, to see that if somebody's putting money somewhere temporarily, it's because they're just kind of looking for another place to ultimately put it. And you're right. And eventually the fundamentals have to support the valuation. And that's, as much as I love Apple and I love Apple, I think they make the best products. I don't see, you know, when we would be more cautious on the stock than others, people would say, do you really think people are going to switch to androids. And of course, that's not what we think. The issue is that

it's trading at 35 times forward earnings and 40 times trailing earnings for a stock that is still a relatively slower grower than, it's actually growing slower than the rest of the S&P. And so you're paying a huge premium for the perceived safety. And eventually, when, when valuations get really stretched, safety isn't safe anymore. Safety isn't safe anymore. Sounds like a Gordon Lightfoot song. That's Oscar Wild. I've been quoting Oscar Wilde all morning, so.

There we go. That's fantastic. I was going to try to come up with a response, but I don't know any Oscar Wilde. So that's all I've got. It's unconfirmed, but apparently his last words as he died were these drapes are killing me.

Something like, so they're back, Oscar Wild, back to you. Craig, thank you. Very unbrowed. Yeah. There's a lot of great ones. Yeah. Thank you. All right.

Still ahead from iPhones to airplanes. JetBlue, is it cleared for takeoff? Share is soaring after earnings the airline unveiling a new cabin overhaul. The CEO will join Phila Beau. Talk about it all next. Shares of JetBlue are up 9% today after the airline posted a narrower than expected quarterly loss. They're also revamping. Uh-oh, their fair offering.

introducing four distinct cabin experiences, including a new domestic first class option set to launch later this year. Here for an exclusive interview, our own Phil Leboe is joined by JetBlue CEO, Joanna Garrity. Welcome to you both. Phil. Kelly, thank you very much. Joanna, thanks for joining us today. I'm curious, Q2, smaller than expected loss, but still wider than last year. And yet when I listened to your conference call with analysts today, you guys were very bullish. You said this is an inflection point in terms of turning towards profitability. Why do you believe your turnaround is taking hold?

Thanks, Bill. Great to be here today. First, I want to thank our crew members for a strong quarter. Obviously, fuel has been a big headwin this year. But as we think about this inflection point, we're starting to see the industry really gain some pricing power, coupled with strong demand. And then, frankly, our jet forward plan really working and paying off.

The initiatives that we've launched are starting to have a cumulative effect, and that's giving us confidence to reinstate our full-year guide and also go out with a dollar VPS. in 2028. And that's on the cost side. A lot of the jet forward is, you're reaping rewards there on the cost side. But on the fair side,

you've raised your fares and you expect to raise fares even further in the second half of this year. Do you have a percentage in terms of how much more you believe fares will go up? Yeah, you know, we're not talking about raising fares

in the second half of this year. At the end of the day, airfare needs to keep pace with inflation. Beginning of this year, it was actually 30% lower in real terms versus 2019. We've seen about a 10%. 10% improvement. So it sold 20% in real terms behind where it needs to be to reflect the price

of inflation over the last several years. So at the end of the day, we need to ensure we're covering the input costs for the business. You know, that's fuel, that's labor, that's maintenance, that's airport rents and landing fees. And that's, you know, airfares are really affordable, really affordable, and we look forward to continuing to welcome more customers aboard JetBlue with affordable fares, but we need to cover those input costs. You won the auction for the spirit slots at LaGuardia. You've expanded, essentially taken up a lot of the open space that was available in Fort Lauderdale after Spirit's demise. I think the people look at this and they say, is JetBlue now at a place where it has the size and the scale that it needs to be really, truly,

the East Coast carrier of preference for a lot of people? You know, our goal is to be that East Coast carrier for preference. We're still five or the domestic seats, though. Fort Lauderdale presents a wonderful opportunity for us to better serve customers in South Florida, Florida in Broward County. LaGuardia provides an opportunity for us to provide a more robust schedule for customers flying between New York and South Florida. And then obviously our Blue Sky Partnership gives our customers more relevance as a smaller airline. Having that ability to provide more opportunity for customers to use their True Blue program around the world is part of how we're trying to gain scale.

Kelly here back in studio, Joanna. You could have been a bigger airline if they let you have a spirit, just saying. We could have been a bigger airline with spirit, but we were dealt that set of cards, and we're navigating through it. And I think this is a big inflection point. We have Jet Forward, our turnaround program, a series of revenue initiatives and cost initiatives. We're two years in, and we are starting to see all of those take hold. We'll be launching Blue First later this year.

That'll ramp into 27 and 28, and that's going to drive meaningful earnings for the company giving us confidence to go out with that dollar of EPS in 2028. Joanna, Phil again here, I'm curious. You mentioned the Blue Sky partnership with United Airlines. Scott Kirby seems to be itching for a merger. Clearly, he's floated out the possibility of American. There are reports that he made an outreach to Ed Bastion at Delta and said, what about United in Delta?

Has he ever come out and said to you, look, I think United should buy JetBlue? Yeah, I mean, at the end of the day, Scott has a lot of opinions about M&A, and we're focused on our jet forward plan. Those are the things that we can control. We've been at it for two years. It's starting to drive meaningful, gain meaningful traction. And at the end of the day, you know, we spent several years going down the path of spirit, and we need to be focused on our organic strategy and delivering our earnings for our shareholders and building a great strong company for our crew members.

I understand what you're saying, Joanna, and I understand you're focused on yourself. But to get back to my question, has Scott Kirby ever approached you and said United should buy JetBlue? So we've never spoken with Scott about M&A. We've really spoken a lot about our Blue Sky Partnership and how we can really bring that to the next level. There's a ton of opportunity for us to get closer and continue working together. We've just launched cars on our Paisley platform for United. We'll be launching hotel ancillaries, vacation ancillaries this year. We've got our loyalty reciprocity now out there. selling United Affairs on JetBlue.com and vice versa. So we're focused on our partnership and making that as strong as possible. And then obviously our Jet Forward plan and trying to get JetBlue

back to profitability through that. And Blue First. You're going to be unveiling that this fall. Blue First is part of Jet Forward. The new first class cabin. Exactly. We're very excited. Thank you very much. Joanna Geri. We're very excited to launch that later this year. Thank you, Joanna. Joanna Garrity, CEO of JetBlue joining us today. Brian and Kelly, I'll send it back to you guys. Phil, really appreciate you bringing it to us. Thank you very much. And Joanna, thank you as well. All right, let's get over to Pippa Stevens with a CNBC news update. Hey, Brian, the funeral service for the late Senator Lindsey Graham underway right now at the National Cathedral in Washington, D.C. President Trump is

there delivering a eulogy for his longtime ally, also attending Ukrainian leader Voldemezzi Zelensky and Israeli Prime Minister Benjamin Netanyahu. A private burial in Graham's home state of South Carolina is scheduled for tomorrow. Democratic Governor Andy Bashir called on Senator Mitch McConnell today to verbally address his constituents to prove he can do the job or resign. It comes a day after McConnell's office released the latest image of the senator. McConnell has been hospitalized since mid-June after what his office says was a fall that left him briefly unconscious. And eBay and several former executives have agreed to pay almost $56 million in a settlement with a Massachusetts couple

it targeted back in 2019 with the harassment and stalking campaign. The couple runs a website closely followed by online sellers, and the former executives reportedly targeted them because they didn't like the tone and content on the site. Brian, I'll send it back to you. All right, Pippa, thank you very much. All right, still ahead. The Fed's next move is almost here.

In fact, we have a countdown clock, Kelly. It's less than 24, fewer? Fewer than 24 hours away? What's the correct grammar on that? All right, are we underestimating the chance of a rate hike? Talk about that and more next. 24 hours from the Fed decision, policymakers are expected to keep rates steady, but not everyone is fully convinced of that.

There's a lot more, I don't know, optionality, I think, under Warsh than usual. Citadel Securities is making a bold call. The firm's head of macro strategy expects a hike by a quarter point tomorrow, arguing the move would bolster Chairman Warsh's credibility in the fight against inflation. Joining us now was former Atlanta Fed President Dennis Lockhart and macro policy perspectives founder Julia Coronado. Welcome to you both. Dennis, do you think a hike is a real possibility? I wouldn't rule it out. I on balance believe that they'll hold, but I could be wrong. I can certainly see a case for a hike and there would be some benefit in backing up their rhetoric with some action.

so I don't think it's a clear-cut picture for tomorrow. Okay, so curious as well. I mean, there's so many different, you know, elements, Dennis, to consider. There's, you know, what does the statement look like again? You know, what does Warsh ultimately decide to do with the projections, whether there be any update on that front? You know, what does he do? Honestly, what does he do with the balance sheet?

Could tomorrow be the day that we get maybe a surprise on that front? I kind of doubt it. I think his task force is going to consider what they should do, and I don't see any particular reason why they would change their balance sheet policy at the moment when they have their task force working on that. It really is a longer-term kind of question, so I wouldn't expect that. Julia, what about you? Yeah, we're in the hold camp on balance, but certainly there's a higher degree of uncertainty reflecting the new Fed chair and his sort of unknown reaction function as well as his inclination not to provide. any guidance. I mean, we did get fairly clear signals from the other members of what we call

the Troika, so New York Fed President Williams and Vice Chair Jefferson, both came out after the big data releases ahead of the quiet period, saying in as clear as we get from Fed speak, policy is good for now, but we may need to adjust rates soon if inflation doesn't moderate. the data did show progress. We got a big downside surprise on core inflation for June. The employment report showed some cooling. So if you're following the data, you might want to gather some more information, some more data. They'll get two full months of data ahead of September. So that still feels like the more likely outcome to us. That makes sense. Let's talk about the family fight, Dennis, that is in the media now. Do you think?

people are wincing about that? Do they welcome the public understanding their differing points of view? And is there really more heat on Warsh kind of behind the scenes than we might otherwise have thought from his relatively smooth debut? Well, you couldn't make an argument. The clock is ticking on Warsh's backing up his leadership, backing up what was said when he came on the scene. the emphatic recommitment to restore price stability, the zero tolerance that he mentioned

on Capitol Hill. So yeah, there could certainly be some contention in this meeting. I think he's just looking for a little bit more active discussion

and having been an 80 of those meetings, they have evolved into 19 people reading prepared statements. Right. You know, very, very little true, very little true discussion. Do you, what would you say was the most contentious meeting basically, like, kind of that you were ever a part of? I mean, did it amount to one person's rebuttal? Like, it was like

a presidential debate? What was it like? Was there ever even a contentious one? Well, there were contentious meetings during the financial crisis because even though we're in the middle of the great financial crisis, there were those who were very concerned about inflation at that time turned out not to be the big issue. It's really disinflation that took over. So we had some meetings in which there was a lot of difference of opinion, but in the FOMC, it never gets, you know, very animated, really. It's people who are expressing their views, and then the chair tries to sum it up at the end. Julia, final word. Yeah, I mean, I think it's where, We're learning a lot about Chair Warsh's leadership style.

We don't know how he's going to lead this committee. Is he going to seek to build consensus? Is he going to have those big debates out in the open? He's got 19 people that he has to corral, though. So we'll see how he does it. He's kind of said, you all have failed at your job walking in the door. So that's kind of he's stirring the pot, walking in the door, even as he's trying to get consensus on policy.

So it'll be an interesting meeting no matter what. We're going to learn a lot. 460 on the 10-year 427 the day before. We'll see where we are on those levels tomorrow. Dennis Lockhart and Julia Coronado. Thanks. Well, let's get now to Rick Santelli. Speaking of the Fed, who's watching the bond market closely in the lead-up to that Fed meeting.

And really, their comments, it's not just about Rick. Is it the meeting tomorrow? It's about what they say. It's always the wording of what they may do because I don't think, and I'm looking at the predictions markets, I'm looking at the CME Fedwatch tool. I'm looking at all that stuff. There's not a lot of expectation for tomorrow.

It's what's going to happen later in the year. Well, I agree with that, but I also think it is about the market because if we're looking at a 30% chance on the CME probabilities and they raise rates tomorrow, indeed, what that tells us is that that tool isn't going to be as useful. On the other hand, I think the 30% is actually pretty high considering everything, and that if it's accurate, that'll be a good work. relationship with Mr. Worse, because the market is trying to do its job, in my opinion,

without all the leadership by the Fed. And if you look at two's intense today, obviously yields are down. If you look at them versus oil over 12 hours, you can see that the tens have followed. As a matter of fact, opening up to a four-week chart, the treasuries are following oil up and following oil down. And this is a huge dynamic, because ultimately the war chapter two as it's coming down, oil coming down, Mr. Worsh and company, you have to decide, is fossil fuel inflation going to be more important than kilowatt inflation with the AI and the data centers? These are all very big questions. Finally, look at the break-evens. On the 27th of February, the war began, and we were under 4% in the 10. It hasn't hardly moved, but yet interest rates went

from 394 to current level of 460. Those are real rates. So yes, Mr. Worsh's plate is full go in either direction. I still say the market's going to be right. Rick, thank you. Rick Santelli. People, you know, it's true. All the opinions. It's often got the best one. A quick programming note, don't miss our special Fed coverage

from Washington, D.C. tomorrow. We have a terrific lineup beginning at 1 p.m. Eastern, taking you all the way through the decision, the reaction, and the press conference. We'll be joined by NEC director, Kevin Hassett, and so many more. Up next, investors may be missing this AI play. Our market navigator says it's a beneficiary trading

like a casualty, the name and the story after the break. Let's do some navigating through this tricky market, really. My next guest has been sifting through the wreckage of the AI disruption and says one company in particular is misunderstood and could have upside potential. David Miller is co-founder and chief investment officer at Catalyst Funds. David, am I correct that you're here to talk about Wix? That's right. Wow, why? This is the website design tool that some of us have used in the past and loved.

it's publicly traded, I guess, and people think this is a total AI just being disrupted company now. Absolutely. The company is being treated as if they're about to go bankrupt imminently when they've been growing 14% annualized the last year or 400 million in free cash flow. They bought back over 30% of their stock, 65% gross margins. It's a business that's really benefiting in a very big way from AI and it's being valued as if it's about to be done. Are there any other peers to, I mean, if people like the sound of this, I'm trying to think of what of the other internet names that might have been treated the same way. I mean, you could look at a firm like a GoDaddy, but there's something really specific going on with Wix, which is they recently acquired a company called Base 44 that grew their vibe coding business from just a few million in ARR to over 150 million in ARR over the past year. And that's likely to grow exponentially. So they really have a business that's growing incredibly quickly from AI while they're being valued as it. if the opposite is the case. Yes, it is melted 61% over the past year,

so we'll give people perhaps some homework to do and see what they think about this. David, thanks so much. Appreciate it. Thank you. David Miller of Catalyst, Brian. All right, still ahead. How Middle Eastern oil producers want to literally miss the boat,

the latest possible new pipeline that you've got to hear about, and you will next. The animation gives it away time for a Power Insider special segment because for months, the markets have been rightly focused on Iran and straight of four moves. And also how some countries and oil producers are looking for new options to avoid sending ships through those areas. Trudeau homoos right here.

Maybe permanently. Let's talk about them. Case in point, the huge Saudi Arabian East-West pipeline to the Red Sea. It enables a few million barrels of oil per day to not have to transit near Iran. You put it through here, so you don't have to ship through there. The UAE, racing to build its own new pipeline. This one right here, one that pretty much cuts right across its peninsula and also avoids having to use ships. Then there was about two weeks ago with that big Iraq investment initiatives, Chevron saying it's exploring, spending big money to sort of rebuild an older pipeline that goes from northern Iraq, the Kirkk region, to Syria.

And now there may be a surprising fourth new pipeline in the works. Israel's energy minister has floated a proposal for the U.S. to help build a pipeline. maybe from Saudi Arabia. This is proposed. The dots being proposed. And then connecting to an older but existing pipeline from Islaat Israel that would go to the Mediterranean. And then from there, the oil could get on ships bound for Europe. There would be no need to send that oil through the Red Sea and run the risk of the Houthis terrorizing the ships.

To be clear, there is no indication this is going to happen. The Chevron pipeline may not happen, but both these ideas being floated and being looked at. All right, with that in mind, where exactly will oil prices end the year? Well, Kalshi, our partner, has a contract for that. And right now, 54% of the bids are going to over $75 by December 31st. There are just two things that we talk about in this week's Power Insider, my new weekly energy intelligence piece, these pipelines, the Kalshi contract, and much more. Scan the QR card on your screen now to subscribe.

The new issue out sometime later on this week. More power lunch right after the break. We are excited for our special Fed coverage tomorrow. Two hours from Washington, D.C., beginning at 1 p.m. Eastern. Kevin Hassett, Jason Trennner, Roger Ferguson, Josh Bolton, Jared Bernstein, Brian. You're supposed to act. Safe travels off CNDC. I'll race you there. Closing bells starts now.