Power Lunch - Dow climbs 700 points on EU tariff delay, consumer confidence surge 5/27/25

Episode Date: May 27, 2025

Stocks rallied on Tuesday after President Trump said over the holiday weekend that he agreed to delay tariffs of 50% on the European Union. We’ll cover all of the angles for you. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to Power Lunch, everybody. Kelly is off today. So today I am with Leslie Picker. Hi, Leslie. Hi, Brian. Hi, I'm Brian Sullivan. Your money popping today. Big gains across the board.

And now the S&P 500 and NASDAQ are both back positive for the year. All this comes is Trump talking back. The tariffs on Europe, consumer confidence also coming in solid. But of course, everything could change tomorrow because Nvidia earnings are out. And I'm told, Leslie, they're a really big deal. They're a very big deal, which is why. We should always be watching Power Lunch every day. We start today, though, with the markets. Tech in particular, seeing big gains with the NASDAQ up over 2%. Investors will be paying close

attention to that tech bellwether that Brian was mentioning in video, which is jumping today up 3% ahead of its critical earnings release after the bell tomorrow. Our next guest sees opportunities in select tech. She just raised her S&P 500-year-end target to 6,000 from 5,800 last week, but still predicting a bumpy ride ahead overall. Allie La McCartney is the managing director of, is a managing director of UBS's private wealth management. Allie, thank you for being here. So tech is a tricky one.

I was looking at best performing sector over the last, since the end of the last quarter. From here, when you say selective tech, what do you mean? So you have to play the AI trend. The best thing to do right now in, I think, any sector is to play those parts of the sector that are going to be driven by the secular themes, not just the day-in, day-out volatility that we're seeing, right? And so obviously, NVIDIA tomorrow is a big deal. It's a big deal because it's NVIDIA,

and it's always a big deal. It's a big deal because we've been in a risk-on environment. You saw this week, you know, the sort of wobbliness in the fixed-income markets globally seems to have found a bottom. We have some progress on trade, not only trade with the U.S. and its counterparts, but maybe with the EU and China. Nvidia is going to bring into that another dynamic, I think,

which is that not only are people going to be looking for confirmation on the AI secular theme in terms of what are they seeing from their own buildout and CAPEX build out and data centers from their clients and their competitors, but you're going to start to understand what they're seeing and experiencing in China, which is about 15% of their revenues. So that's going to be interesting. If you're investing on a thematic base,

A.I. and so forth. Does that suggest in the current environment is better to have a longer-term horizon when you are making these decisions? And if so, how far out are you looking? Yeah. Well, look, the beauty of what I do and the investors that I service, and largely in wealth management at UBS and any firm, you know, we focus on that long-term. And so, yes, in an environment like this, it is specifically helpful to have that environment. Right. Fast money, what we're hearing right now, which is probably why you're seeing a little bit in a pickup today has really not been a buyer, right? They sort of have fixed the selling. They're a little bit balanced, but they're looking for another catalyst to get us up. Right now, what we're

finding is that we've had some great opportunities, both on the index basis and on individual stocks and sectors, to get in for the longer haul. It was a shorter window than we expected, given we did not expect a V-shaped recovery like we've had post-pandemic, given everything that's happening with trade. But right now, we still think we'll have some opportunities. And what we've seen in the past is when you have extreme bouts of volatility or sort of up and down, and we've quantified that from a data perspective in terms of when the VIX or the S&P volatility index hits over 30, we tend to have outperformance in the next 12 months.

So if the S&P usually performs about 8 to 10% to 10% a year, that number tends to be 15%. Which is why you just raised your S&P 500 target, I assume, because a month ago, we were all doomed. Mm-hmm. Right? You remember that? Liberation Day. Yeah, it was like 82 days in April. Yeah.

And every day the markets fell 1,000 points. I think somebody I know hosted a special on a Sunday night. But yet, when you look at a lot of these internal trends, as scary as they were, the data that you guys have and some other providers have, show that for some reason, maybe you can answer why, when markets do do that. Yeah. They tend, like 1987, come roaring back. Do we know why? I think you get, so swings in markets have always, and this was before algorithms and the way that we trade now technologically. But there tends to be you sort of over purge at the bottom and then you over buy at the top.

And there are these major swings that you see. And I think those get exacerbated a lot by the fast money and by the short covering. that you see and so on and so forth. In this, in the last number of months, in those days that you're talking about, retail has actually been a consistent buyer. It's largely been institutions that have sort of been off the sidelines. But, you know, this has been a really quick paced recovery. And although there's good news, and we did raise our target, largely because we went from expecting zero earnings this year, so flat earnings to up 4%. And you've seen what happened in the market and the earning season that we had. But there are definitely still reasons to be cautious.

You're making a really important point. And I want our viewers and listeners to hear what you're saying, because you keep saying fast money. You're not talking about the awesome show at five years. Oh, sorry. No, no, but you kind of are. But why not? You're talking about people who come in and out of the market all the time. Yeah. Every minute, every hour, every day, whatever it is. Or computers. Or computers, algorithmic traders, synthetic delta one strategy, CTAs, whatever it may be. Yeah. That's very different. And you and I spoke at the same. conference earlier this year in Florida. Exactly.

Those people buy stocks forever. Yeah. They don't sell, right? Like they just give them to their kids, their kids, give them to their kids. They're very different ways you have to look at the market. And I think, tell us, if I'm wrong, that for people with a timeline of 5, 10, 50 years, when markets go down, they've got to be buyers. Because in 50 years, if the markets aren't higher, that means we're probably starting fire

with sticks. And we've had some kind of nuclear Armageddon and money won't matter anyway. Completely. Look, it's the Warren Buffett, you know, cash and courage in a crisis are priceless. And I'm lucky to have a mentor named Bill Miller who said that every 10 to 20 years, the market gives you a really unpleasant and uncomfortable buying opportunity that changes generational wealth. And so when you get down to levels like we got to when we started to get into the sort of 4900s, and when you have these secular themes and you have the amount of money,

through the system that we do, you really have to get courageous. And so we have gotten courageous. We still think there's upside. Some of these trends, again, tomorrow's going to be a big day. This is going to be an interesting month, I think, because what we have now is, you know, Friday, we had the passage of the bill by the House. The Senate's not going to look at it until next week. Probably not going to get movement on that, giving all the back and forth that has to happen into, I guess the date that's been thrown around is hopefully by July. That, by July, by July, by fourth, we'll also probably have some clarity on some of these tariffs days, be they 30 days or 90 days. So my sense is that we are going to see some volatility that you can take advantage of between now and then,

and then we'll have more information. But at the end of the day right now, a lot of what we're watching, also we've gone from, I think, trade to the budget deficit. You know, we have, we spend about 12.5% of our government revenues on deficit and debt, you know, interest. that's more than any other country managed by the IMF or looked at by the IMF. So the concept of getting interest rates lower of the Fed dealing with growth, of the Treasury having solid auctions, the amount of the U.S. government and the globe and the investing public that is, and I mean this literally and figuratively, invested in getting us going the right direction in terms of growth, labor market equities, is really, really big.

still think you also see a 4% 10 year by the end of the year. Yeah, that element of kind of of crowding out private investment as a result of just this enormous debt load that we've seen. Exactly. What does that tell you, given just the dynamic with tariffs, the dynamic with the ongoing budget debate, what does it tell you about kind of U.S. exceptionalism versus opportunities abroad? And I ask this because, yes, you raised your S&P target. But if my mental math serves me correctly, it's still about one and a half percent from kind of the levels we're seeing today with the S&P, which either suggests, you know, somewhat range bound over the next year or so, or, you know, you're pretty cautious about what you see here in the U.S. from here.

We are cautious. We're cautiously optimistic. The other thing that we've been telling people is that that's our base case, but we do have an assumption or a plan for what if actually all of these things move quicker, faster, better, and they have been. And that has upside to, like, 6,500, which I think is definitely a possibility. I don't think U.S. exceptionalism is dead. I don't think there is any superpower either from a trade perspective, a governance perspective, or a mass of capital markets activity. We have 70% of capital markets, you know, of the world here. And the AI trend, although we talk about the rest of the world and China, you know, is really that Mag 7 trend that is coming from here. So I think we're going to keep on

With that said, you know, Germany being up 21%, dividend payers of 5.5% in Europe, that's interesting, too. I wrote about Germany a year and a half ago. I don't provide advice, not my job, but I wrote that they look, so I'm very happy about this. I will say, and we'll wrap it up, but you talk about people say American exceptionalism is dead, and I will remind them of this fact. The entire German Dax, the Dow Jones Industrial Average of Germany, the entire one, lumped together, is smaller than Nvidia. Yeah. Europe is terrible at creating big companies because the rules and regulations in Europe

make it nearly impossible. And with all respect to my European friends, if you're born poor in Europe, you're probably going to stay poor. It's very hard to elevate socially because just sort of the even the... So we hear about American exceptional. I don't know.

Maybe I'm coming off a long weekend. That's the whole drogy report. You know? That was the whole idea, was that having a kind of a ground jewel. reference your drop and it's in the A block of the show. It's too early. I know. Well, I'm on my third coffee. So, you know, I've been up since, since Wex this morning. You remember that show, right? Yeah, I did it for five years. I love people who did do it for a day. Like, I'm exhausted.

I know you did. No, the Draghi Report. They said that it's, it's just systematically difficult to create these tech companies like we have in the U.S. in Europe because of the restrictive. And capital and people want to come here. And with that, I need some apple pie. An eagle will clap. Show's over. I'm kidding. Ali McCartney, if UBS private wealth management, Allie, thank you. Thank you so much. Now to the credit markets, we were just talking about them. U.S. Treasury selling 69 billion of new two-year notes in the last hour.

It's the latest test for government bonds as Congress negotiates a budget bill that would increase the national debt. Rick Santelli has the bond market, the bond report for us. Hey, Rick. Hi, and indeed, maybe the debt ceiling is another issue that we ought to mention because it's going to change the complexion of issuance, especially from a T-bill perspective. Now, let's look at two-year and 10-year on one graph over the last couple of days. A couple of key points here. First of all, but remember, durable goods was weaker than expected on the headline. If you stripped out transportation, it improved a bit. But capital good orders, non-defense X-Ary proxy for capital spending by business

was weak as well. Now, it's been weak over the last handful of months, October of last year, but we want to pay particularly close attention. Now on those charts, you notice that the 10-year yields are now below Friday's lowest yield. The long end of the market is taking the lead to lower yields. And when that happens, you're looking at what we call a bull flattener, meaning prices are going up, yields are going down, and the yield curve is getting flatter. Right now, it's hovering around 47 basis points between twos and tens. And do remember, briefly, we're over 60 basis points when we were really looking at,

long end moving higher in rates. Now, 30-year across the globe is getting so much press, especially in Japan. But do remember, benchmarks aren't 30-year bonds. But having said that, let's look at a two-year chart of the 30s here, the 30s in the UK, and the 30s in Japan. And something should jump out at you. The 30 years are off to the races. And indeed, they ruin the scaling they're so off to the races. Moral of the story is, yes, yields have gone. up on the long end internationally, but in Japan, it's gone up to the extent that you really have to question that controlling interest rates for so long seems to have a rough payback. Leslie, back to you. All right. Rick, Santali, thank you so much. All right, after the break, the perhaps

overlooked indicator that might be flashing some big-time recession signals, at least right now. We'll tell you what it is. Next. All right, welcome back and happy Tuesday. It is kind of a happy Tuesday. Stocks are up, gold down a little bit, but overall, the markets have done very well. But there is a potential warning sign in housing. The latest reading of the K. Schiller Index showing that home prices have significantly softened in parts of the country in March. It could be another indicator that the U.S. housing market is contracting, again, at least in various pockets of the market. Your next guest says that housing could be a canary in a coal mine for a session and warns when investment in housing declines, the rest of the economy will often follow. Joining us now for more as Andrew Holenhorst. He is the U.S. chief economist at City Research. And I read your piece at the end of last week. Thank you very much enough for coming on to talk about it because we know housing is important.

But what dots have you and your team, Andrew, connected between housing and the macro economy? Yeah, so you have two different ways that housing plays into the broader macro economy. One is the more direct effect. If you think about housing investment that's slowing or even declining, which looks like it is going to be the case in the second quarter here, then that's less construction jobs. It's less things that get purchased and produced to put into a new house. So you think about appliances, you think about the cars that go in the driveway, right? All of those things, you have less activity.

So that's the more direct effect when you have housing that's slowing down or contracting. Then you have the indirect effects. And this kind of goes to what you were showing with the K-Shiller House Price Index, which has slowed on a year-on-year basis. It actually declined nationally on a month-on-month basis, which is quite unusual. We usually only see that in a very weak housing market. And that starts to go to consumer confidence and how people feel about their financial position. So those declines in house prices are slowing house prices.

that can also slow down consumption. So here's, I guess, the big, the trillion dollar question, Andrew, which is home prices can go down for a lot of reasons, really higher rates might ultimately take their toll. We also had COVID, where a lot of people moved from, you know, New York to Florida, wherever it may be. They surged home prices in one place. The point is, there's some variables we didn't have in 2007. That said, when I think of home prices going down as somebody who covered this intimately from 05 to 08, I do worry what housing can do to the economy. Is this 2007? I don't think it's 2007.

I think there are some important differences. Probably the biggest one being that we don't have an economy that's over levered to the housing sector, which was the case in 2006, 2006, 2007, into 2008. That's not the case now. But like you were saying, home prices can go down for different reasons. In 2022, we had home prices that were going down, but they were going down because the Federal Reserve was raising interest rates, higher mortgage rates meant less demand for housing. It made sense that house prices would correct lower, and that's how I would have seen that move. That wasn't concerning.

What's concerning now is that mortgage rates have just stayed high, and now it looks like consumers just no longer have the willingness to go out and buy a new. home and you're seeing inventory levels that that are building up, the more that inventory builds, house prices can fall further. So there are some echoes of earlier house price issues that we had in 2008 and beyond, but I think a very different economy than what we saw back then. How much does the Fed pay attention to a slowdown in housing when it considers lowering interest rates? So I think that is something that they will pay attention to and they're probably already paying attention to. Now, we just are spending so much time right now on issues regarding

trade policy and fiscal. These kind of more basic issues with the business cycle are getting less attention. But if you think about interest rate policy, how does that really affect the economy? It really affects the economy through where can corporates borrow? Where can individuals borrow when they take out a mortgage? So what's happening in the housing market goes directly to where interest rates should be set. And what about the just the distortions that we've seen over the last few years? I mean, you talked a little bit about, and Brian mentioned it too, just kind of the people's inability and lack of desire to move homes, just given the affordability challenges that we're facing in this country, you know, does that create sort of supply and demand

distortions that may mask some underlying issues that otherwise may be a potential canary in the coal mine indicating a weakening economy, but just given kind of where things are sitting right now, it looks relatively okay. Yeah, so you could argue that house prices would have actually fallen by more in 2022, maybe into 2023 when the Fed raised interest rates, if not for the fact that people were becoming locked into their houses. And that was partly because of changing work requirements regarding going into work. But that was also because interest rates just moved higher so quickly that people said, I don't want to sell this house and lose my low mortgage rate.

If I'm sitting on a 3% mortgage rate, I don't want to refinance into a 7% mortgage rate. So that really restricted the supply of homes to the market. that meant that there was some residual pressure and home prices. It was hard to get home prices to go down. And that's why I am highlighting this now, because those inventory levels are starting to creep up again. You're getting home prices moving down. It's starting to look more like a normal cycle in housing.

Andrew Hullen Horse, city research, really fast-thinating stuff and certainly housing. We talk about it. Maybe it deserves an even closer look. Andrew, thank you. Thank you. The race between crypto and traditional finance to control the next financial rails on full display in Las Vegas as the Bitcoin 2025 conference kicks off. We'll head out to Sin City for a live report next. Crypto watch is sponsored by crypto.com. Crypto.com is America's

premier crypto platform. Welcome back to Power Lunch. Bitcoin 2025 kicks off today in Las Vegas as Bitcoin itself has been on a tear. The cryptocurrency hit a record high recently, soaring 20% This month alone, let's get out west to CNBC's McKenzie Sagalos, who has all the details from the scene. Looks like quite a scene indeed, McKenzie. Hey there, so it's a full court press from the Trump White House at Bitcoin's biggest event of the year. Vice President J.D. Vance, Don and Eric Trump, Crypto Tsar, David Sachs, and other top lawmakers are all here in Las Vegas as the administration leans into crypto as a pillar of its economic agenda. Bitcoin is climbing back toward its all-time high, fueled by institutional inflows.

and renewed fears over U.S. debt after Amudi's downgrade last week, which is boosting Bitcoin's appeal as a store of value. But the rally is shadowed by scrutiny. Since headlining this event last year, Trump has rapidly expanded his personal crypto empire. Trump media just raised $2.5 billion to build one of the largest corporate Bitcoin treasuries, and shares drop 10% on the news. The family is now tied to four crypto tokens,

each structured to funnel up to 80% of profits to Trump-linked entities. That includes a UAE-backed stable coin and a meme coin that helped bring in $148 million at a donor gala last week before crashing, leaving hundreds of thousands of investors in the rent. Now, with Congress advancing stable coin legislation, Trump's team is pitching it as a way to extend dollar dominance while Democrats call for ethics probes and warn of deep conflicts of interest. Now, it all sets a stage at Bitcoin 2025 as Wall Street reportedly explores a unified digital

dollar in stable coins, surpass visa and master cards. with $28 trillion in volume last year. All right, Matt, you went through all the facts and the stats and the details and Bitcoin soaring and it's this huge thing. Talk to us about the feel because Bitcoin's at a record high. There's probably people that bought it at like 500 bucks a coin. They still own it at $110,000. You've got all these heavy hitters there.

This is sort of quickly and quietly become one of the biggest and most important conferences in the world. what's the vibe like? I've got to imagine it's pretty doggone good, considering a lot of people there have gotten really, really rich the last few years. I've been covering this conference every year since 2021, and it's been interesting to see how the crowd has changed here.

It's very much institutional and buttoned up, and that's part of why you've seen Bitcoin's market cap go to $2.2 trillion because of the $134 billion of institutional money that's flowed in through those spots. crypto ETF, specifically those spot Bitcoin ETFs in the last year. And it's only begun to build that momentum in the last few months. You've got the OCC, the FCC, the FDIC, even the Fed revising guidance when it comes to how banks interact with blockchain technology.

And that's really been a bullish signal for the industry. And so when you talk about the vibe on the ground here, so much of it, it just has to do with optimism around Wall Street getting skin in the game. You've got the Wall Street Journal reporting that some of the major banks, Bank of America and City among them, are looking. it launching a unified digital dollar. That's also what's very interesting, Brian, because it used to be purely talk of Bitcoin at this conference, but we're now seeing the conversation evolved into infrastructure plays, and that's very much about U.S. dollar peg stable coins.

That's interesting, Mack. I'm curious whether that has changed in the sense that, you know, I read kind of the stable coin entrance among the traditional finance players as being essentially, you know, they're worried about some of their business getting clawed away by some of these start more nascent fintech companies that are operating more heavily into the stable coin space. So they wanted to kind of protect their turf in that way. Does that sentiment not kind of cross over to the non-bank players as well? Absolutely. You saw a strike pay $1.1 billion to acquire a bridge network, which specializes purely in

stablecoin infrastructure. And there has been this arms race of sorts to get that kind of stable coin tech integrated into your platform. And so with the banks, I think that a lot of them are looking at this consortium, in part to be competitive in the digital payments space, but also the biggest player in stable coins is tethered. They hold more than 60% of the stable coin market right now. And there's this concern that if stable coin legislation stalls,

as it has in the last few days as Senate Democrats are up in arms over this mean coin contest dinner, that the U.S. might miss its window to be competitive again in stable coins. It's a really interesting conversation. It's a very important conference, and let's not forget the most important thing behind you at the Venetian. It's a place called Noodle Asia. It doesn't look like much, but they have amazing, amazing Mongolian beef. Give it a shot. I'm not kidding.

I'll check it out. Thank you very much. All right, let's now get over to Julia Borsden for a CNBC news update. Julia. Brian, a U.S. and Israeli-backed foundation began distributing aid today in Gaza. The Gaza Humanitarian Foundation claimed Hamas tried to block civilians from reaching the distribution center and Rafa near the southern border. Hamas has denied the accusation. The United Nations and other aid groups have boycotted the organization saying aid should not be distributed by parties involved in a conflict. Texas

Governor Greg Abbott signed bill into law today that requires Apple and Google to verify the age of users in their app stores. If the user is under the age of 18, they will need their parents consent to download apps or make in-app purchases. Apple and Google have opposed the law citing privacy concerns. And Canada's oldest retail chain is closing all of its stores and terminating more than 8,000 employees by Sunday. Hudson's Bay, which is founded in 1670, announced plans in March to undergo a full liquidation of its stores after initiating restructuring proceedings. Hudson's Bay, like other brick and mortar department stores, has recently struggled with declining foot traffic and competition from online retailers. Brian, back over to you.

Literally started, Julia, as fur traders in like the late. 6,100s. I mean, this is the oldest retail chain and maybe not the world, but it's close. This is a big story. The end of an era for sure. And we'll see what happens with SACs, which they also then bought. Julia Borsden, thank you. All right, coming up, are you looking for some safer ways to invest, maybe one with less downside risk? It's what we all want, right? But does it exist? Market Navigator is on just that topic coming up. And happy Tuesday, the S&P 500 is a 2%. The NASDAQ is up 2.4%. And Dom Chu, did you know? Of course you did. With these gains, and I got something else to say to you too. With these gains, the S&B and the NASDAQ are now positive

for the year again. And I want to give a big shout out to Dom's alma mater, the Big Red of Cornell, winning the lacrosse national title. Congratulations. First time in nearly 50 years. Taking down the hated Terps, Turps in Maryland. 77 was the last time they won a lax men's title there. So congratulations to the Cornell big red lacrosse team. My daughter is a big lacrosse player, so I kind of watched it intently. Anyway, let's get to our market navigator because let's talk about the volatility and whether or not it's here to stay. Our next guest thinks that the choppiness is not going away anytime soon.

He's turning towards tech stocks, shocker, that blends strong growth outlooks and low relative risk. We're going to define what that is. So joining us now is Thomas Martin, the Vice-Roy. Vice President and Senior Portfolio Manager at Globalt Investments. And Thomas, you've got some picks that you think will outpace the market going forward, but blend two of those factors together in less relative volatility and stronger growth profiles. Right. Well, thanks for having me on your program, guys. So the two stocks that I picked, and keep in mind that what I do is manage a portfolio of about 60 to 70 stocks against the S&P 500.

And not all of them are as attractive as when we first bought them. And things change around, but you don't necessarily trade them. For these two names, the focus is on their end markets and the growth opportunities that they have, regardless of the economy or the tariff outlook, et cetera. I mean, I say regardless, there's always risks in names. And these are not unrecognized. The first one is vertive, which I think folks. recognize as a big infrastructure player in AI and in data centers and that they have

competitive advantages in the way that they're structured and the way that they work with the other data center infrastructure providers to be able to capture that growth and we're looking at you know high teens kind of growth for the next five and possibly beyond years as we meet this demand for the data centers. So that's one of them. All right, what's the other one that you have now? It's App Lovin, because we've just showed

that the graphic up there. Why App Lovin? So App Loven, which is down from its high of right around $500 is in mobile advertising in gaming. And really, they have that market leadership there and have been able to grow substantially, there. But they've been able to make a move into just regular web and e-commerce, where they have very little penetration less than 1%, and they think they can grow that to 10% fairly quickly and then

beyond. They have the technology and the AI in their program to be able to onboard their customers and make their return on advertising spend be stronger than some of their competitors. All right. Thomas Martin, global investments, thank you very much for the picks on App Lovin and Vertev. We'll see you again soon, sir. Thank you, Tom. Okay, two quick things I want to ask you, sure. Okay, number one, am I the only one that when I hear App Lovin, I think about Mick Lovin from Super Bad, okay? I mean, I can't get out of my head. But we talk about mobile ads and games. Respectfully to App Lovin and Thomas, like that's not a new market. Video, I'm older than you.

Video games have been around a long time. Ads have been around a long time. I think the question on App Lovin is, does it deserve the valuation? What do they do that's so good? And it's had a big run-up since then. But I mean, paradigm-wise, you and I grew up in a time where there weren't ads so much in games as there are now. The App Lovin stories. But it's not a new market.

No, it's not a new market at all. But if they can show growth and if people keep on adopting the way that they do, I mean, my kids are small. And they're pretty much talking about Minecraft all the time right now, which I didn't do with Super Mario Brothers when I did it. Wait you get into Roblox, my friend. I don't want to do it. No, no, it takes real money, too. I don't want to. And I'm just going to say this.

Watch your credit card. I'm not going to do it. You're going to do it. Leslie, is he going to do it? All parents say that. I don't know. I'm not going to do it. One of my kids' friends had Minecraft crocs this weekend, which I feel like is the peat.

Jibbits or gibbets. What are those things that you stick on crocs? The gibbets. Yes, I've seen those. I don't even know what that is. There are accessories that you put on Crocs, and they have like Minecraft and... Oh, on the physical thing. I don't know what we're talking about the real world or the...

They're a total tripping hazard, but that's another story. We've gone down all kinds of rabbit hole. Congrats to Cornell, McLevin. Yeah, thank you very much. Thank you. As we head to break, does this mystery stock that's up 12% in the past month have the right energy for investors? We'll ask our trader and three stock lunch next. Welcome back.

It's time now for today's three. stock lunch where we hit three different stocks that are moving the markets and ask our guest how investors should be trading them. And here with her trades is Nancy Tangler, the CEO and CIA at Laffer Tangler Investments. Thank you so much for being here. The first stock up is Nvidia. We haven't talked about it enough on today's show. What? We probably won't be talking about enough over the next day and a half or so, but that stock is on a tear over the past month jumping more than 20% leading into the company's quarterly earnings report after the bell on Wednesday. Nancy, this is an interesting one.

How would you be trading this chip manufacturing giant? Well, thanks for having me, Leslie. We've been buying it. We bought some before Liberation Day. We bought some after Liberation Day. We bought some around the deep seek news. I think what you want to do with this company is use the weakness from the headlines to add to holdings. If you look at where they are in the stack of AI, they're in the sweet spot.

They are the go-to chip provider. And all of the hyperscalers have told us that their capacity constraint. So we expect to see the company continue to have Blackwell demand that far outstrips supply. And then now you've got the Middle East announcement, which may, in fact, be able to replace the limitation in China. So what we're watching for on the earnings is what happened to growth margins and what's the guidance around that because we've seen input cost increase, of course. And then what is the impact of the H20 limitation to China or ban to China? And how are they going to move around that? But I think Jensen Wong has navigated this one pretty darn well.

What's wrong, Nancy, with Starbucks? The previous CEO, Brian. Starbucks lost their way. And Brian Nicol came in, and as you might recall, the stock popped about 20, 25%. And then around the tariffs that sold off again, I think it's presenting an opportunity for investors to step in. He said last quarter, Brian Nickel, that is. And by the way, he has, you know, he turned around Chipotle. Before that, he was at Taco Bell.

He said that his optimism has turned into confidence. new CFO is adding a level of urgency, and they are really investing in labor, which was a weak spot of the company. You're getting paid to wait. I think this is a name that you can add to just take your time because it's going to take a little while to turn it around. But they're also looking for a partner in China, and they're focusing on Middle America. Right.

And finally, we have EQT, our mystery stock from moments ago. The Pittsburgh-based energy company just announced it will be repurchasing 5.5 million shares, which has that stock move. higher today. What's your take? Yeah, we own it. We like it. We actually own all of these names. This is a company that's pledged to return 60% of free cash flow to shareholders through buybacks and dividend increases. They are also generating free cash flow at two times the competition. And we think there's a tailwind behind natural gas prices and LNG export prices. So we're pretty optimistic on the group. And we've used weakness to add to it. And we will continue

to do that. All right, Nancy, thank you so much. And remember, you can recap every three-stock lunch any time you want. Scan the QR code on your screen right now or head over to cnbc.com for more. All right, still to come. A note to all you frequent Southwest Airlines flyers. There's a big policy change coming. It's going to cost you. We'll tell you what it is coming up. Welcome back to Power Lunch. We're following two key stories today. First up, the recent rate volatility whipsying banks that have more commercial real estate exposure on their books. New research by KBW found that the recent rise in interest rates have caused a big valuation gap between banks that are more exposed to CRE compared to those that have less

exposure. As of May 23rd, that discount for the CRE sensitive firms widened to 17%. So, Brian, they basically took firms that have a lot of CRE exposure and they put them in a bucket. Commercial real estate. Commercial real estate exposure. And they took those that are less sensitive as a percentage of their risk-weighted assets, and bank jargony term. And they've seen this massive discount because of the rise in interest rate, the interest rate volatility, which, of course, those of us who are old enough to remember the spring of 2023,

some interest rate volatility during that time contributed to the downfall of several regional banks and created this kind of concern over. So is that, go bring, that graphic is a little bit busy. was that, so CRE heavy banks did worse? CRE heavy banks did worse. Because that would make sense because we've been talking about this commercial real estate fear and people said, well, it's not a fear, nothing bad is going to happen, blah, blah, blah. Right.

It's not over. Right? No, it's not over. It's not over. Is trillions of real estate debt still outstanding? And it's tied to the market rates, right? So it's, you know, regardless of what the Fed does, it's what is going on with the markets that impact these regional banks that have so much exposure to commercial real estate.

Even though we haven't talked about as much as we did maybe two years ago, this is still kind of a looming issue. It still is. And people are like, oh, it's not a big deal. Everybody I talked to said it's still a thing. Do you fly Southwest Airlines? Oh, I do. Because you're from Kansas City.

Because I'm from Kansas City. And they're big at the MCI. They are big at the MCI. They're big at MCI all over the Midwest, really. Well, you know, the two checked free bags policy is over. I know this. 35 bucks a bag, 45 of the second bag, check bags, They're also, if you have never flown Southwest, you want to be first on the plane, right?

Because they had that first come, first serve seating model. Oh, yeah. I remember it was the last guy on a Southwest flight. True story. I was in like 36B. And if there's somebody you don't want to see in the middle seat, it's me. Okay? It's just, there's a lot going on a lot of, a lot of, a lot of, a lot of, a lot of, a lot of,

require some room. There's a lot of skin. So change, this is a big change for South, Southwest Airlines, and the stock got an upgrade from Jeffries. Maybe this is good for the stock, but one wonders how flyers will react. So answer me this. Riddle me this. If you live in Kansas City, do you have an option, or do you have to fly South? So you have an option, but my mom is the perfect case study of this because she is so loyal to Southwest. She would rather take a 6 a.m. flight out of Kansas City to New York to visit than an 8 a.m. flight because she does not like

paying for her backs. So this, now she may, now she may say, whoever has the best flight wins, unless Southwest Fares are still relatively lower, even with the check bag fee maybe. I don't know. I hope she still comes to visit,

because we've got some grandkids for her to see. I just wonder if this is going to force people to do what they do on every other plane, which is that people bring on giant bags hoping to store them in the overhead, and the last 10 people are screwed, and then some people cause a problem because they don't want to pay for the check bag.

I mean, in a way, it just kind of levels Southwest with the other airlines that are already doing this. People just suck it up in there for it. American Airlines. They're now United. They're now right at the same. Yeah, I know. But they do bring down the fares of other airlines. So if you have a market like Kansas City and Southwest comes into that market, it helps drive the fares lower in that city. The greatest day I ever spent on TV, I swear one of them was that the Southwest Airlines lost and found. Don't ask. True story. There were literally three prosthetic limbs in there.

and I thought, who leaves a prosthetic limb on an airplane? It's a true story. The stuff that was in the lost and found at Southwest Airlines was the most incredible stuff you've ever seen. Well, maybe they were bringing it to someone who needed it. Well, apparently a lot of people have backups, and so they forget it was a six-foot in diameter hat. My guess is there was some alcohol involved in that purchase.

There was literally a kitchen sink. The stuff people bring on planes, if you're watching for Southwest, you know what I'm talking about. Yeah, I'd like to be a fly on the wall with those TSA security guards and what they talk about, what they find in those bags every day. Did you miss an episode of Power Lunch? No problem. You can check, catch audio-only versions of every episode anytime on the Power Lunch podcast. Download and follow us on your favorite podcasting platform. We'll be right back. We're going to wrap it with the deal. Salesforce.com is buying Informatica. That is the deal du jour of the day. I just, I know du jour means of the day. I just did that for fun. Why not?

And by the way, Mark Benioff and the CEO of Informatica will be on with Jim tomorrow night. There we go. Tomorrow is not today. It is Wednesday on Mad Money, Bennyoff. Well, that's because it's merger Monday on a Tuesday after the holiday weekend. But that's a big deal in this environment. It's literally and figuratively a big deal.

Mark's always a great interview. So, Matt, tune in tonight, but you can also tune in tomorrow night. Sounds great to me. Any night. Thank you so much for watching Power Lunch. Closing bell. starts right now.