Power Lunch - Digesting Mag 7 Earnings, Housing Market Check, Jimmie Johnson Interview 7/31/26

Episode Date: July 31, 2026

The major averages are trading higher on the last trading day of July as investors look past rising treasury yields.  Brian Sullivan & Kelly Evans speak with tech investor and Apple shareholder , Ellen Hazen, to get her initial reaction to Thursday’s Q3 report.  Corcoran Group Broker, Noble Black, also sits down with the anchors to give his take on the state of housing as mortgage rates hit their highest level in a year.  Later on, NASCAR Hall of Fame inductee, Jimmie Johnson, joins the program to announce his new investment in Legacy Motor Club.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Markets and your money higher to end the week of some big-name tech stocks, make some big gains. Welcome to Power Lunch. We have never looked better, Kelly. Welcome, everybody. Alongside Kelly, I am Brian. Four of the Mag 7 reporting this week, Amazon Microsoft investors, they've been rewarded in a big way. Apple and meta-investors, they may have taken a hit. We've got your next move and the stocks that should be on your list. Plus, Powerbroker, the 30-year mortgage rate closing in on its highest level in a year, driving up monthly payments and putting fresh pressure on an already strained housing market. Are buyers about to retreat or can limited inventory

keep prices elevated? Noble Black of the Corcoran Group is coming up. Plus a big interview that we cannot wait for seven-time NASCAR champ Jimmy Johnson is here. He's got some big breaking news in the bold-faced names investing in his race teams. We'll talk with JJ about that and more. But you've got to wait. It's coming up. And we are going to start with the markets today. The major averages are higher. I mean, and on track to finish the week in the green with all that's been going on, the bigger story is in chips, where after Wednesday's sell-off, the group roared back Thursday as strong hyperscaler earnings sparked a relief rally. And the question now is whether AI momentum is back or was just a one-day bounce.

Eric Johnson is Cantor's chief equity and macro strategist. So, Eric, you can answer this question for us. What do you make of it? So we think that momentum has bottomed. And what we saw, you know, two days ago was the cleansing. So if you looked at what's happened over the last six months, there has been a massive crowding in that momentum factor from both institutions and from retail investors. And it's happened globally.

We know what's going on with retail in South Korea. We've seen it from both retail and institutions here in the U.S. And the reasons why they were getting along was for very good fundamental reasons. So now you have a situation where there's been this big de-risking. There's been stopouts, margin calls, you know, brokerage shutdowns, etc., that have gone on globally. And it's happened at a time where the fundamental outlook for semis, for the picks and shovels in general, is actually continuing to get better. We're actually getting data points at the simultaneously, whether it's the ARR at the frontier models getting better

or the ROI we're seeing from the hyperscalers. But the backdrop's getting better and the positioning backdrop, has gotten much better after what happened this week. You know, you look at it, top to bottom, NASDAQ 100, Eric. Early June, we hit just over $30,000. A couple days ago, we hit 27 and change. Basically, it was a 10 or 11% drop top to bottom in about one to one and a half months.

So it was actually a 10% drawdown. That's not insignificant, but is that kind of what we now can expect? Because it feels like every time this market, the last few years, has gone down, it's been quick. It's been about 5 to 10 percent, and then it finds that bottom. Yeah, so I think that is, I think that is it, certainly for now. And I think it's because you haven't seen that term negative in the fundamentals. In fact, you know, it is accelerating. So if you

look at the hyperscalers, a particular Microsoft and Amazon that reported in the last couple nights, you know, talking about the ROI on the CAPX and really explaining it to the to investors, showing the margin improvement, showing the revenues coming in, you know, the growth being higher than what people expected, and really laying out what is the roadmap for when revenue growth is going to exceed cap X growth and the free cash flow is going to show up. And I think investors in the last 48 hours are really starting to embrace that idea. And when they're embracing that idea, it's being okay sort of with all the cap X that's to come, which has really been what has led this market, led the economy, led the semiconductors,

and so forth. And so I think that has given us a runway for a longer period of time that, and I think as a result, I think we have, we have bottomed in tech. I find it, you know, all the more encouraging this happens when you are seeing a rise in the long-term bond yields, because you can easily tie the narrative to oils up, bond yields are up, you know, tech stocks are down. And that, of course, that's not always a perfect correlation, but especially today, it's not slowing anybody down. The major averages are up half a percent despite all of this.

Is there anything significant from what's happened with Warsh this week or, you know, with inflation that you're worried about? So this move in real yields is definitely concerning. So if what's interesting is that if you look at inflation break-evens, they're actually close to the lows of the year. So the market is not necessarily concerned about. the inflation outlook, but you've seen real yields move sharply higher, and that's moving nominal yields. So why are real yields doing what they're doing? It's not always exactly clear. Our view is that, number one, it is the supply of tech debt paper. So not only what has come already, but what the market is expecting, just an increase of that supply. And then I think there's also

just this unbedded uncertainty that the market is pricing into rates and then there's some other factors around the BOJ. But yes, that is concerning. But what I would say is if you look at the chart of real yields over the last three years, it's been in a range. We are now at the top end of the range. So it's really going to be critical around what yields do from here, but they're likely going to find some sort of a short-term ceiling because it has been a pretty sharp move with, again,

inflation expectations being kept in check. Let's end it with this. Finish the sentence for us on this Friday as the strategist, Eric Johnson. The best place to invest right now is what? It is in tech, and specifically semis and hyperscalers. I think that correlation turns positive and that they can both work in unison. There you go. Clear, simple.

You can debate it all weekend long. Eric, really appreciate it. Eric, really appreciate it. Eric Johnson. Thank you. All right. Meantime, Apple, down 9%. It's on pace for its worst day since the pandemic. Company warning component shortages will hit sales. McKenzie Segalis, bring it in. McKenzie, so this is interesting. If we're seeing shortages in something, Apple's going to want to build those things at some point. So I do wonder, is it a temporary shortage? Like, it will be fixed at some point?

I mean, that's a big debate in semis, whether or not this is cyclical. certainly seen that trade happened before, but some names like Micron want to think that this is enduring and it's lasting. But for Apple right now, it's bad news for them. They're tracking toward their worst day since March of 2020. We were talking about a market wipeout of over half a trillion dollars, with the streets concerned mainly that the three pillars supporting Apple's valuation are all faltering at once. You've got UBS saying that the stock entered earnings at a premium of more than 70 percent to the S&P 500. Now, Barclays says Apple, burn through most of its lower cost inventory and may be losing priority for chips as suppliers

favor AI customers. Then Morgan Stanley flagging the services miss and falling margins as undermining two of Apple's biggest profit drivers at once. Guidance on the call dimmed investor hopes for one more quarter of outsized growth before Apple faces tougher comparisons against last year's 20% iPhone surge. But the bulls say supply constraints merely delay revenue. It doesn't go away altogether. And then the Bears say Apple's entering tougher comparisons with less supplier leverage, slower services, and fewer ways to protect margins. Guys? All right. Big, again, they're giving back about half of what they've had a year today.

And Tim Cook is about to step down. But look, this is a rounding error. The total return, what, they have 2,000% since he took over? 2400%. Wow. Not bad. Going into the print yesterday. One of the greatest, you know, next generation, not next generation.

That makes it sound like they were all in the family. but leadership transitions of all time, really. Today, notwithstanding, McKenzie Banks. You remember the beginning of Tim Cook was rough? Yeah. It wasn't a great start, but boy, he performed. All right, let's bring in an Apple shareholder. Ellen Hayes and his chief market strategist,

FL Putnam Investment Management. All right, Ellen, are you selling all your Apple stock because Tim Cook is leaving? I think Apple is a solid hold here going forward. I'm not saying I would go and buy it today, despite the 10% decline. line because as your previous guest just pointed out, they face at least three headwinds going forward. Number one, the memory prices have not come down. It looks like there's going to be memory

shortages well through calendar 27 and maybe into calendar 28. So that really hurts their gross margin. Number two, there's component shortages generally. And Apple mentioned on the call that they are seeing revenue constrained because of that. So that's going to be a headwin until the component shortages are fixed. And then finally, part of the bull thesis on having a big position in Apple is that you want to see the services grow faster than the devices over time. And services were disappointing. They came in at 12 percent. We were looking for a little bit higher than that. And if they can get services going, then that helps the margin mix going forward. But I think we need to wait at least a few quarters before adding to this position. Let me quote a viewer who says, if Apple's going to miss on services,

is why are we to let them trade it 35 times? If that's just as cyclical as other parts of the business, shouldn't they get a lower multiple? I think that's a fair question. I mean, I'm looking at $10, maybe $11, in a couple of years, or by $29, 2020, 2030. And so as we look at that, then it's already at 30 times earnings. And what do you want to pay for that?

I don't know if services is as cyclical as hardware. I don't think it is. I think it's higher margin. It's less capital intensive. But you still do need to have it happen. And the question, a different way to ask us, same question is, what do you want to play for mid-teens growth rate? And can you find other areas of the market where maybe you can find mid-teens a little bit cheaper? Well, here we're going to,

Ellen, sit tight. We're going to do a quick RBI random but interesting and then come back to you. All right. I'm sure you know this, but a lot of our audience may not. Yesterday, Microsoft's stock rose over 15%. It was Microsoft's best day since 2008. With that gain on top of its already high market cap. Microsoft added 448 billion to its market cap, Kelly Evans. That is the single most gain of any company in global history in one day. We just lived through history. By the way, it briefly surpassed barely Nvidia's gain earlier this year, but it's still number one. Good for them. I mean, they had best week since 1999, Ellen, is this enough of a narrative shift? Have they proved now that they are not, you know, going to be left out sitting on the sidelines of this AI

race? So far, so good. Of course, they are very much buttressed by their very strong position in Azure. And you saw the same thing with AWS on the Amazon side. So regardless of whether or not they have or have access to a top tier frontier model, they certainly are going to be growing on that side as well. And you saw what, 43% growth in Azure, which was terrific. I thought it was also really important that Nadella committed to being free cash flow positive this year because that puts him in pretty rarefied territory among the hyperscalers. So I think that that was a big sigh of relief to the market when looking at Microsoft. Great point about the free cash flow. Finally, Ellen, broad thought about the market here. Again, I'm impressed by the resilience today. Yes, we have Amazon,

you know, jumping. Yes, the Mag 7 is becoming uncorrelated with each other. Our previous guest just said he thinks you bet on the MAG7 and the chips that that correlation is going to reemerge. How are you thinking about this? So, earnings season has been fabulous for the whole S&P, not just tech, but for the whole S&P, revenue has been up 13 percent, and earnings have been up over 50. And if you look just at tech, revenue is up 26 percent, so double the rest of the market, and earnings are up over 60. Now, it depends on if you count companies that have 500 percent earnings growth, et cetera,

which can skew the numbers. But still, it's been a strong. earning season all around, not just in technology. So you look at consumer discretionary, energy, financials, some other areas really doing well. So I do think the strength in earnings is definitely broadening out. And to me, it's great to own the hypers. It's great to own some of the Mag 7. We're selective there. But you can own things outside of that, too. And a lot of stocks are at reasonable multiples. All right. Those numbers are, I think we include them. Look, I think we include them. It's like to be living through where the

multiples, the revenue, the earning is just crazy. So, Ellen, thanks for the reminder. Good to see you, as always. Good to see you, Kelly and Brian Hayson, F.L. Putnam. 448 billion dollar gain in one day. They gained more than most companies by far are worse. And still, I'm a nerd to it. I go, yeah, all right, you know, that's... We need to find a way to get you, are you, do you like NASCAR? Your husband loves NASCAR, right? Yes, he does. So how about this? We're going to get Kelly going on this Friday because coming up, we have an interview with seven-time NASCAR champion Jimmy Johnson. He's got some big news and big names and big money coming into his team. Plus, there will be profit. Exxon and Chevron reporting a combined windfall of over $26 billion and wait until you hear

what may happen next week. Our welcome back bonds and yields and borrowing costs also front and center as three Fed presidents dissented in Wednesday's Fed decision and they reiterated. their calls for rate hikes. Yields are backing up at 10 years at 4.74 percent, yields on pace for their highest close since January of 2025, especially on the shorter end of the curve. Rick Santelli, you and I have talked about this. You have said you wouldn't be surprised if we sniffed or got close to 5 percent again. I mean, my man, we're getting close. Absolutely. You know what? In the old days, we talk about duration trades. talk about a duration trade now, but I'm not talking about maturities or treasuries. I'm talking

about the calendar. The duration trade I'm referring to is the length of Chapter 2 in the Mideast crisis. And it really has dramatically altered confidence. What was confidence in a short conflict in Chapter 1? Well, in early July, that all ended. And it really does now have a driving force in interest rates. And the longer the clock ticks, the more investors are worried that it's going to metastasize and the Fed will have to deal with it. Look at a week to date of tens. Right now, they're hovering at just under 4.3 quarters percent. Last Friday, they closed at 467.

Last Thursday, they closed at 469, and that was what usurp the May 19th high yield close. We continue to see pressure. Two-year yields are still down on the week. They settled last week at 433, so they're down a bit. And I think that's significant. You see that January that Sully you referred to there. That was last time we were at these yields.

We'd have to close above a 479 to extend this comp a little further back. And if you look at the 210 spread, that was a big issue this week, literally, just leaped up. And that was one of the reasons that we're seeing the high yield close different on the short and versus the long end. Finally, Bank of Japan around midnight last night didn't do anything. I thought their statements and their comments were actually. rather dovis. And you see there, that's the dollar yen. The intervention seems to be holding right after they had their announcement last night. We did see a brief retest to that 160 level, but it's back down towards that 158 where the intervention level was originally from Thursday.

But we do want to point out it's about how long the intervention lasts. They spent about $55 billion to push it down. Brian Kelly, back to you. No, Rick, listen, there's so much we could get into, but this, what I would sort of restate this as in the debate over our rising yields, Warsh's fault, you know, Japan's fault. You're saying oil, it could be oil's fault. So you think there's a lot of culprits to this story, not just him? I don't think there is a lot of culprits. I don't know how Worse could be involved in this whatsoever, in my opinion. I think the way the market's acted doesn't really point to Warsh.

I think the two-year would be more aggressive if it did. I think it's pretty simple. After Chapter 1, we got the tenure all the way back down to 437. It zoomed up to four and three quarters pretty darn fast. There's much less optimism about a short conflict now. And investors globally, they're definitely pushing the debt and deficit and conflict issues. Those are the driving forces, in my opinion. All right.

Rick, thank you, Rick Santelli. Coming up, Big Tech, not the only story we're following. hardly. Big oil as well. Rick just talked about it. The flip side of what's happening to yields is that they're pumping out the profits. What's fueling the surge? How long will it continue? We'll dive in next. All right, let's talk energy earnings because the numbers are big and they may get even bigger. First up Exxon Mobil. Earnings came in at $3.52 a share up from just $1.16 last corner. Revenue. Soaring to more than $115 billion up from $83 billion. Similar story for Chevron. EPS. 606 on 67 billion in sales, up from earnings of $1.41, three months ago, revenue of $47.5 billion,

higher oil prices due to the Iran war, one big reason for the pop. Speaking of Iran, ExxonMobil CEO Darren Woods on CNBC earlier today, and aside from earnings, he also talked about the importance of the Strait of Hormuz, and he said it has to open up. that resource in the region has to get to market. The strait has to open up. It is the main artery of supply for the world that powers economic growth everywhere. And so eventually those barrels are going to have to flow. Now, ship traffic at least measured by ships that we know are going through the strait is still very far below where it was a few months ago.

That is very important to global markets. Looking ahead to next week, more big oil earnings and numbers to watch. results of Conoco Phillips. Marathon. Phillips 66, along with OxyTransocean and more, these numbers expected to be huge. Listen to this. Conoco Phillips seemed coming in at 288 per share. That would be up 52% from last year.

But companies with big refining divisions are going to be the real winners. Marathon Petroleum earnings seen jumping 732%. Phillips 66 earnings per share seen popping Kelly over 1,400 percent. in just three months. Yeah, I mean, and this is where when we talk about earning season, it's not just the chips. It's also the refiners because of what's been happening. Shortage of product, high oil prices, that's also a big squeeze. And those numbers out all next week?

I won't have them because I'm off. Oh, come on. You'll have them. I'm doing refining earnings. Oh, you know you can't wait. All right. Speaking of high energy, having energy for you. Are you interested in anything and everything energy?

Be sure to sign up for my weekly Power Insider newsletter. Big take on the big energy stories that week. Some of Wall Street's favorite energy stocks picks for you. Exclusive interviews and more to sign if you can hit that QR code on the screen right now. We just make it so easy. Except that it's not on the screen. It's not on the screen? Imagine if there was a QR code on the screen, you should hit that.

Up next, why celebrities, champions, and top investors are racing to invest in Jimmy Johnson's NASCAR team. The seven-time NASCAR champ joins us after the break. All right. some big news in the world of motorsports. Jimmy Johnson's Legacy Motor Club race team announcing a huge new lineup of investors. Don't believe us? They include baseball star Bryce Harper, Surfer Kelly Slater, business guru Jen Rubio, as well as Andy Roddock, Darius Rucker, Enmore, and also Guy Fieri.

So let's take this interview to Racetown with the man himself, Legacy Motor Club majority owner, seven-time NASCAR series champ, could have been eight, maybe nine, and apparently former England resident, Jimmy Johnson, also like myself, a native San Diego. Jimmy, it's a real pleasure to get you on. Thank you very much for joining us. Taking legacy, up a notch,

two to three cars, why these investors, why now, what are you trying to do? A few agendas here are concepts in how we can scale and grow our organization. And first and foremost, competition is king. That's our North Star.

But is the series continues to evolve all the interest that's in the sport of NASCAR in motorsports in North America. I just have a vision of, if you look at stick and ball sports and the brand awareness, the brand value of the team, in addition to the stars that play on the team or drive your race cars, there's an opportunity there. And so to bring in these strategic owners that, one, are friends, first and foremost, and two, are builders, creators, champions all in their own rights with the tremendous legacies. There's just a great play here for us to expand

and to try to modernize in a way and have this parallel path to what other stick and ball sports are doing. Now, listen, we're obviously bits of homers here because we work for Versant. Versant televises a bunch of upcoming NASCAR races. I want to be full disclosure on that, but I'm a longtime racer, race fan. I love watching NASCAR.

I love what's happening. I love the San Diego Road course. I love some of the, I love SVGs. success. It's not just about going left, Jimmy, as you well know. Is this a bet on the future of NASCAR and media rights in particular?

It's certainly a bet on NASCAR. It's different than a bet, though. I mean, I firmly believe that we have the most exciting and compelling racing on the planet. You know, we have stars within. There are so many elements to our sport that

you know, make us unique and different. There's so much attention on it. Yes, there's a media right still out there in the future. Michael Jordan's in the sport. He won the lawsuit against NASCAR for permanency of our charters. So now we actually have franchises. And a lot of my vision here is around franchise mentality and how we can scale and create a profitable business at the end of the day. Jimmy, do you think he's driven some positive change that was needed in the organization? Yeah, Michael's presence has really risen all ships in the harbor. And now post-settlement, where we sit in the alignment with the league, we're on new ground here. And we literally have franchises.

And our franchise, our core products, winning races, being an elite team within the NASCAR space is our top priority. Now, how we get there and how we create the capital to reinvest in our team and all of our assets, It's, you know, I'm just going about it a different way. I don't have an auto empire or a previous business that I can lean on for that capital infusion when needed. And so I need to create a business model. And when you look across sports and entertainment, this is quite common. I think you do know something about racing, like anything with an engine, I'm told, Jimmy. And, you know, when I look out, this year we've seen a lot of success with 2311 racing.

And it's not Penske. It's not Ganesi. There's this Rick Hendrick. I don't know if you heard about that guy. What we've seen this year is that these other teams can race, they can win, they can challenge maybe four and win a title. You confident you can do the same thing? We are. You know, our pathway is a little different than what 2311 has, you know, the road that they are on.

We're trying to build everything internally ourselves and set ourselves up for, you know, a long, long tenure, not saying that Michael isn't thinking that way. but we're developing a lot of our own technology and processes in-house where 2311 has an alliance with Joe Gibbs racing. And so it's been a little slower an assent for us, but one that we've chosen and one where we want to own all of our IP. Jimmy, we often like to ask celebrities, especially people outside of our normal realm, the following question when they come through. So I hope you don't mind. What, looking back on everything that's happened over your career, what do you think has been your biggest money mistake? Hmm. Because funny, a lot of other people will often say buying the sports car.

But I don't know if you're already in the racing industry, maybe the, you know, maybe that looks a little different. No, that's helpful for me because after I own it, I'm able to put a little markup on it. But I would just say some early startup stuff. You know, we all see these things pop and you want to find that unicorn. So some early bets that, you know, I would take back. Yeah, understood. Again, you're not the only one far from it. Well, how often, Jimmy, how often, listen, you're one of the richest athletes in the world, not just in racing. How often do you get pitched? Like every day, every week?

It's nonstop, yeah. And it's a great situation to have. But yeah, without a doubt, there's certainly a lot of opportunity. Okay, so next year, very exciting. By the way, Daytona 500, you get your former number back for a one-off race. I think it's going to be amazing. You got John Hunter Nemechek, got Eric Jones, you got this Jimmy Johnson guy. You ready to announce like a third full-time driver for Legacy Motor Club right here on CNBC? I mean, we're a versus partner. Coming soon. Coming very soon.

I appreciate the opportunity and the offer. It's very kind. But yes, we're expanding to a third program next year and very excited for that. I'm curious, Jimmy, how long a career can race car drivers really expect to have? I mean, we know what LeBron's doing in basketball now is on. fathomable. Tom Brady, Aaron Rogers, people at the top of their careers. But I've always thought race car driver is supposed to be a young man's game, and you guys are constantly proving that wrong. Yeah, sports science is helping us all extend, you know, extend into these advanced years,

so they say. But I truly feel like in motorsports experience really does carry you and can extend that runway. We don't take the physical shots as often as, say, a football player or someone like that. So we tend to see guys into their 50s, mid-50s and still winning races and championships. Let's have a little fun. It's Friday. We got the news out, Jimmy. I love these track additions that I mentioned. I'm just a road course guy, so I like a little bit more of that.

What would be one track you would love to see NASCAR add to the calendar? Whether it's Oval, Roadcourse, International, whatever. Silverstone? I think it's a huge opportunity. Oh, that would be incredible. Absolutely. Yeah, I wasn't thinking that grand, but yes, without question, I think Spa would be an incredible circuit for our cars and the size of them and how tight those corners are. Some of the F1 tracks are so fast and flowy that maybe our cars don't perform as they should,

but Silverstone would be off the charts. You'd have to lift, do you think, at O'Rouge at Spa? You think, honest, it's a serious question. Oh, in a cup car, absolutely. Yeah. Yeah. I was there in a historic GT40 not long ago, and TV does not do that corner justice.

is steeper. The elevation climate is more significant, and the corners are a lot sharper than they look on TV. Which I came and imagined, having never been there but watching it in every form of racing. Jimmy Johnson, Legacy Motor Club, really exciting announcement. Some big name investors look forward to seeing you at the track, and hopefully on USA Sports and Versa. Jimmy, thank you. Thank you. I appreciate it. All best of luck. It was fun. Let's get over to our economics writer, Matt Peterson, with more on Fed Chair, Kevin Warsh, and the market's response to what happened. on Wednesday. Hi, Matt. Hey there. So I think everybody saw how bad that press conference went for Kevin Warsh on Wednesday.

You know, the markets really hated it. So I went back and took a really close look at what he said. And in particular, I paid a lot of attention to what he said in his prepared remarks, the little bit he read out at the top of the press conference. And I came away with the impression that Kevin Warsh is probably a lot more hawkish than people who heard that press conference think. What changed then, Matt? What did you hear on a second or third listen, right? The press conference, everything else. What did you hear that makes you think that? Maybe there is a more, there's a hawk hiding inside this falcons costume?

What word do you use? Well, I'll leave the birding to you, but what I heard is sort of a short-term and long-term muddle, right? He's got kind of two things going on here. One is that he's looking at the inflation data and he says right up top, you know, we got this CPI print. It, you know, was pretty soft. You know, inflation actually fell in June for the first time in a while. And he said, actually, we really don't put very much stock in that. That's what he came out there and planned to say.

Then what he came out there and said in response to reporters' questions was stuff like, you know, he cast doubt on PCE, you know, whether the Fed was really going to stick to this long-term PCE target. that it's always had. He said something that really confused a lot of people there. But again, go back and look at what he said in these pre-written planned remarks. And he says very clearly, you know, we don't have a soft 2% inflation target. We just have a 2% inflation target, period. So I think the market missed part of his message here. All right. We'll see if they, you know, maybe they, if he's more hawkish, maybe rates will fall and we can all look past this and not have to get so worried. And Matt, thanks very much.

Appreciate it. Matt Peterson. And over to Sima Modi now for the CNBC News update. Seema? Kelly, here's what we're watching at this hour. California Governor Gavin Newsom is reportedly concerned about the state's antitrust lawsuit to block the Paramount Skydance acquisition of Warner Brothers Discovery. The Wall Street Journal reports that he's concerned that employment would suffer in the state if the deal is blocked and has encouraged state attorney general Bob Rob Bonta to find a resolution outside the courts. In other news, cyclospora outbreak is depressing produce sales and forcing some farmers to destroy crops, even though they haven't been linked to the outbreak. According to the Wall Street Journal, California lettuce growers have plowed under about 300,000 pounds of romaine lettuce this week because they haven't been able to find buyers. Lettuce has about a 30-day growing cycle.

And a drifting SpaceX rocket on a collision course with the moon. It comes from the launch of a pair of lunar landers more than a year ago. Now, the rocket's upper stage is expected to hit Wednesday and send a plume of dust and rubble that scientists will be able to observe. It's believed to be the only second rocket to hit the moon. A Chinese rocket hit the far side of the moon guys back in 2022. Seema, thanks very much, Sima Modi. Up next to check on housing with power broker Noble Black as the 30-year mortgage rates that's near its highest level in a year. We're back after the break.

Welcome back. We have a lot going on in the housing market. K. Schiller data for May earlier this week, continuing to show some home prices lagging inflation by a decent margin, as the 30-year mortgage rate is about its highest level in a year. We also, of course, here in New York, have Mayor Mamdani's Piettaire tax that's coming. Let's talk about all of it with the Corcoran Group, real estate broker, Noble Black. Noble, it's good to see you. Thanks for having. I hear from agents, the market's softening, but in New Jersey, what that means is instead of, you know, what they say, instead of 12 offers, you get six, or maybe instead of six, you get three or something. In other parts of the country, it is worse, though. I mean, like, it's significantly shifted to a buyer's market. Totally, yeah. I mean, like Las Vegas, I was looking at the difference between Vegas and Chicago and New York, it's huge. I think, like 12 percent, basically, right? Yeah, it depends on where you are in the country.

New York has started this often at the high end, but overall, we're still doing very well, surprisingly so, frankly. If you're looking at the suburbs and the northeast, still very, very strong. Is that because we're finally catching up to the impact of high mortgage rates? It was crazy. Normally, I mean, classical theory, if the cost of buying something goes up, the price should go down or, but that never happened because of what happened with COVID. It was just a swell of people into the burbs, worked from what everything happened. Is it now catching up?

It is slowly catching up. And I think that is, that's like we're slowly acclimating to the rates. I think there's also like there's a huge amount of demand that just all went at one time, right? So like that's slowly working through, we're getting back more towards what's normal in terms of people exiting the city moving to the suburbs. It just, there was a lot of that demand that all of a sudden got compressed and it took a while to work it out. Yeah. And I think, I'm guessing, you're at the high end. Noble, Black, Corcoran, you're at the high end.

We do everything, though. I know, but just you, so I'm betting that if somebody's buying a $13 million condo in New York City, they are not using a mortgage. They're not. No, they're going to, if they're not going to pay cash, they're going to borrow money against other assets they have. Right. So they get a pledged asset loan or something like that. Yeah, even when rates were lower, I think the market in general in New York, for all of the market, it was like 50% cash. That's gone up as high as 80% the last few years.

So here's where I think we've got to, here's where I think we've got to. Here's where I think we've got a problem. And I went to law school. I don't practice, but some of my law school friends went to Brooklyn Law School, they are now practicing attorneys in the city. Some of them are in real estate. And here's the take.

Tell me, yes or no. The Pietitare tax, while ostensibly targeted to $5 million homes in up, number one, is going to capture a lot of people that aren't rich that may have an asset that grandma left them in 1979, so it's more than $500, $5 million, and they rent it out.

I don't know what's going to happen to them, but also, are rents for the middle class going to soar because what I'm hearing is people aren't buying, they're going to rent more, which means more demand, already high rents are going to go up even more, which means trickle-down effect, which means the unintended consequence of this is likely going to be to squeeze higher rents out of the middle class and maybe even not the middle class. Yes or no, yes. Unqualified, yes.

Absolutely, it will. There's so many unintended consequences of this. There's so much mess around this. There's so many questions surrounding this. It's going to be amazing for attorneys, for accountants, for appraisers. But it's going to be terrible for renters. It's going to be terrible for the average homeowner. It's not going to raise that much money at all.

And the mess that it's creating is absolutely terrible. There's so many unanswered questions right now. Did they literally publish names of people with addresses? Yes. Yes. I have friends that are on that list. Because I imagine. They published a doxed people's home addresses.

Some people, by the way, they're not rich. It's just the level of, even if you, it's the level. of detail that now is public? Are there, I mean, New York is a highly desirable market, but I have to mention there are some people who are now going to have to scramble to go to some extremes. So to be fair, the information that they published and that they highlighted was already publicly available. Oh, of course. But not in one Excel. Do you know what's crazy? This is an Excel spreadsheet. Any jurisdiction, and you can find people's name and address on property tax records. What are these local websites thinking? Well, it's crazy. But it's,

It's hard, but that's a one-off. Like, this was a spreadsheet you could sort by street. Absolutely. And to your point, what's been so harmful about this is the messaging. The actual numbers that they passed, or, you know, people can afford this. They may not be happy about it, but that alone is not going to make them sell or make them not look for something. But it's the messaging. It's the vilification of the people that are at this level that the clients that we've had that have backed up are saying, look, I just don't feel welcome or I don't feel safe.

I don't feel like I'm wanted here. There's not an effort to make people partners of the city. It's really vilifying. Is there any market impact? you think this will really have? Yeah, the high end of the market has started softening the last few weeks. Now, look, we're in the summer. There's always a bit of a seasonal slowdown.

We're below what is traditionally the seasonal slowdown. We're below the 10-year average for the high end, above $25 million. If you're looking at the like 5 to 10, 5 to 15, that's not showing up yet. But we'll see. But again, not to be a little of the point. What I worry about, and by the way, I think you're right. I think the New York City Department of Finance, I know it's not going to be a popular thing to say, I feel sorry for them.

The workload they're going to have now for the next 10 years, because every one of these people that's getting hit with this is going to fight it, right? Particularly if there's somebody who is gifted a home, Grandma bought it in a place nobody wanted to live 40 years ago, now it's worth $10 million, good for them. They're renting it out. Suddenly now they're on this list. They're considered rich.

They make $150,000 a year, but this asset is their retirement. The renters who live there are their retirement, maybe they live out of state, so now it's a piettaire. They're even going to have to sell if they can't afford the tax. Well, what they may do is just, rented and require that whoever's renting it be a New York City resident, right? But they're

going to have to change. Okay, fair enough. Maybe I'm wrong. But what if the owner lives in New Jersey has a place in the Bronx? As long as the tenant lived and paid taxes in New York City. But they're not, then they're absolved then. The owner would be. But it's the owner's responsibility then to ensure that. So if the tenant, you know, kind of like works them over on that, lies to them, then they have to go after that tenant. One other illustration of just how complicated this is. says the determination if it was a pitater or not goes back to January 5th. So this past year, if you closed on an apartment in February or March this year and the past owner was using it as a pitaterer as of January 5th, guess who gets the tax bill?

It goes with the property, not with the owner. So even if you bought it, you're using as a primary resident, if the person you bought it from on January 5th was a pituitary tier, you now get this tax. It's so poorly thought out. I'm going to make a prediction, and there's no way to prove that I'll be wrong, so it's a great prediction. But I think the cost of administering this tax, like the wealth tax in Europe that got scrapped by most countries, is going to be greater than whatever revenue they bring in. They're going to spend more money trying to enforce the tax, because everybody's going to fight it that can.

Years and years and years and years. Accountants, IRS, to your point, surveyors, whatever, I think the cost of administering this tax will be higher than any amount of money they bring in, and the net effect of the people who really need the money will be zero. I've been saying that from the very beginning. Okay. Putting you back to you. I think you're exactly spot on because by best estimates, they were saying $500 billion. The comptroller was saying it's more like $300 million.

That's assuming that there's no knock-on effects, that there's no unintended consequences, right? And to deliver and administer this, there's a huge cost of that. And again, that's to say nothing of the dissuasion that they're putting out there. Like, you know, we don't want wealthy people or the wealthy people are vilified. It's so misguided for the city. Noble, thanks. Appreciate it. Happy to be here.

Crazy time. Noble Black of the Corkman Group. All right, after the break, is the AI cooling boom losing a little steam? We'll get a power check on a big player. It's called Verve. It's up today, but down double digits this week, that and more. Welcome back. Despite Verve, Racing Full Year Guidance Wednesday, its shares are still on pace to their worst week since April. They had a big drop that day. Our next guest is buying it. Says this is an opportunity. Adam Phillips is Director of Portfolio Strategy at EP Wealth. Adam, a lot of people, they watch this stock. absolutely rock, and you think now is a chance to get in it a little bit lower. Just me again?

It's not a mime, unfortunately. Let's see if I can. Can you imagine if we had a, hold on if we had a mime on the show? He initiated vertive. Wouldn't be good for people on the radio, serious 112. He reduced his software exposure. He's been underweight information technology, and he has Netflix, Abbey, and Well Tower to talk about. In any case, we'll bring Adam back, obviously, as soon as we can get that sorted out.

You know what, I stand by my call for a mime. I really think that would be an interesting segment, right? It wouldn't be, again, it wouldn't be good for people listening on Sirius XM Channel 112, who we love very much. All you radio listeners stuck in traffic on the way to the shore. By the way, Vertev is up today, about 7%. So it's already rebounding from that decline. Quick programming note before we go.

Take an eye on keep an eye, she said, on shares of strategy. Under pressure after missing on both earnings and revenue, obviously is formerly micro strategy. They were hit by billions in unrealized Bitcoin losses, although the shares are only down a little less than 3% today. and tune in Monday for our exclusive interview with CEO Fong Lee. We will check back in with him. Bitcoin is also slightly in the red today.

I will tune in from the rural Upper Midwest. Let's check out some of this week's biggest movers, by the way. No shocker. Microsoft, one of the biggest movers, as we told you, the biggest single market cap gain day in the history of the world. Garmin, Cognizant, Chipotle, all doing well as well. And in fact, if somebody says tonight, Kelly, what's the best performing S&P stock this month?

You're going to say? Cognizant. That's it. 42% Accenture, workday, and PayPal are also ending the month 30% higher or more. By the way, if you do go to a party and somebody asks you that, leave that party. It'll probably be my kid. It might be a mime. That's that kind of house we have.

Big Tech dominated this week, but there are still plenty of earnings to come. Lots of companies next week, including AMD, Disney, Warner Brothers, and SpaceX will notably join the lineup. They report on Tuesday for the first time since going public in June. July has been a rough month for the stock. Out of 22 trading days this month. Stock's only positive for five. That is space X. But we're wishing you all a great weekend, a happy weekend, a healthy weekend of profitable trading.

Thanks for watching, Power Lunch, everybody. Closing Bell starts right now.