Power Lunch - Dow falls as global trade tensions rise to start new month 6/2/25

Episode Date: June 2, 2025

The Dow dipped Monday, the first trading day of June, as global trade tensions increased. We’ll cover all of the market angles for you as we kick off a new trading month.Plus, White House officials are visiting Alaska to discuss a potential $40 billion gas pipeline project. Brian Sullivan is on the ground there. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch on this afternoon here on Monday alongside Kelly Evans. I'm Dominic Chu in for Brian Sullivan today. But we'll still see him later on this hour because Brian is live in Prudeau Bay, Alaska, with an up-close look at what could be one of America's biggest energy infrastructure projects in decades. He's going to be sitting down with the secretaries of both energy and the interior to discuss the $40 billion Natt Gas Pipeline that the Trump administration wants to build up there in Alaska. That's coming up, Joe. Find boggling $40 billion project in the works for decades, like he said.

We'll see if they can push it through. Before we get to all of that, our strategist is calling this the do-over market. Where he's seeing opportunities, the stocks come off their best months since November of 2023, and they're trying to extend that today. Though after U.S. China trade tensions, I should say, flare up, that's getting a little bit more difficult. The Dow is down 174, about 4 tenths of a percent. the S&P briefly went positive.

It's down a point or two now. The NASDAQ is still up about a quarter, a third of 1%. 10-year yield creeping a little bit higher up towards 450. We're at 446 today. But let's start with these China headlines. Amon Javers is over at the White House with the latest. I mean, you know, this is kind of the classic play too. Amy, and each side trying to build its leverage,

especially if there is going to be this phone call this week. Yeah, that's the question, Kelly, is when will this phone call be? We did get confirmation, not a whole lot of detail from the White House press secretary. who talked to reporters just a short time ago. Here's what she said and here's all she said. I can confirm that the two leaders will likely talk this week. And as always, when there are foreign leader calls, we will provide a readout of those calls.

So that's it. What we know is that likely this week, we don't know exactly what day. We don't know exactly what's going to be on the agenda. And you heard her say there that she's going to provide a readout after the fact. Those readouts can sometimes be very detailed and give us a good sense of what was discussed in the call. and other times they can be very sparse depending on how that call goes. So, you know, we'll just have to wait and see. But obviously, this is a White House that is looking for a deal with the Chinese government.

The question is, is the Chinese government looking for a deal with the U.S.? We just don't know any of those answers? Kelly, we're going to have to watch and wait throughout the week to see when we get this call. Right. And in the meantime, is there any sign, you know, the White House trying to say, look, we haven't violated our agreements. You violated yours. And is the next step to that going to be, as we saw with the president doubling steel tariffs Friday that we start to hear more headlines about tariffs on China going back up.

Yeah, I mean, I think you could see more rhetoric around that and certainly more action around that if the president's not happy as the week goes on. But yeah, the White House is saying that the sensitive chips issue that they've talked about, that the Chinese have complained about was not in the Geneva conversation. So therefore, it's not really the White House's fault for breaking any of the Geneva deal. They say it's the Chinese who broke the Geneva deal there are slow walking exports of rare earth minerals and magnets and things that were part of that conversation. So from the White House's perspective, it's the Chinese who broke the deal. The Chinese said over the weekend, of course, they feel like the White House has broken the deal.

It's clear that, you know, this set of negotiations as successful as it was in Geneva has broken down. And whether that's just for the moment or whether that's entirely, you know, it's still too early to say. All right, Amon, thank you. Let's see what our next guest think about this. One of them says it's clear to him that China has the upper hand in the ongoing trade war and they won't back down. Joining us as Sean Ryan, founder of the China Market Research Group, along with Waddell and associate's CEO, David Waddell, who's here on set with us. Welcome to both of you. Sean, you can go ahead. I mean, why do you think the Chinese sold the cards here? Well, it's great to be here, Kelly. It's very clear to the Chinese that China has the upper hand

in the trade war of Trump. Basically, anything that the United States can produce, except for semiconductors and ethane, the Chinese can buy from other countries. So over the last two months, the Chinese have pivoted. Instead of buying American beef, they're buying beef from Australia. Instead of buying American soybeans, they're buying soybeans from Brazil. And instead of buying oil from America, they're buying oil from Canada. So semiconductors are one of the things that the United States has its power with. But right now, China's invested hundreds of billions of dollars into indigenous innovation, which is why Huawei has emerged as one of the largest chip makers in the world. You can even hear, Kelly, that Jensen Huang, the founder of Nvidia, has said they're going to

lose $15 billion U.S. dollars in sales because Huawei and other Chinese semiconductor companies are emerging to be not only good enough, but almost as good, if not even better, than Nvidia. And so the Chinese feel they have the upper hand in the trade war because they can replace the United States. The second thing is, and this is really important, our word, or resolve, China is going to push back much harder than most Americans think because they feel they're strong, and this is part of their genesis story. The founding of the CPC was really basically China pushing back against Western imperialist powers from the UK, Europe, and even the United States in the 19th century in the run-up to the British Opium Wars. So Xi Jinping and the CPC is playing to

two audiences. One, international trade, like I said before, and also to the Chinese population. They want to show the Chinese people that China has emerged strong, and the Chinese will have the R word, resolve, to push back against Trump, much harder than Scotty Besson, much harder than Donald Trump think, Kelly. So, you know, David, with all of that in mind, this is also a pendulum that has swung back and forth numerous times over the last few years, and even more so. And even more over the last few decades. China is the next best investable thing. Do not invest in China whatsoever. David Tepper at one point, buy everything China. And now we're back to sell everything, China, and then American exceptionalism. If you're going to navigate this, do you play the pendulum

or do you try to allocate based upon the longer term as some people may or may not want to do given headline risk? Well, I mean, China is a massive economy. And there are a lot of good stories going on over there. Let's not forget, U.S. GDP was down in the first corner. Chinese GDP was up more than 5%. If you invested in the SPY year-to-date, you're flat. If you invested in the FXI, which is the top 50 Chinese companies, you're up 15%. So I think one of the misconceptions during this negotiation, and I think your previous guess is right, is that Trump has told us that China really depends on the United States of America. The tariffs that went into place in April led to a reduction in exports to the United States of America of 20% in April.

That sounds pretty significant, except for the fact that exports overall were up for March. So while the U.S. is a large customer, the U.S. is not the only customer, and the Chinese do a good job of pivoting. So this is a really long-term story. The center of it really is currency. The center of it is rebalancing the Chinese economy to more consumption-based and less export-based. These things happen over decades, as you said. They don't happen over days. And in Chinese language, they happen over dynasties.

So they're not going to get anything significant done except maybe something, you know, symbolic or cosmetic, I think, during this period of time. And we have to figure out how to get out of this. But I do take some solace in the fact that D-Ewan has started to appreciate a little bit against the dollar. To me, that's a signal that they're playing nice with us, even if the rhetoric is somewhat hot. Do you think that there's probably a silly way to ask it, but do you think they're really that much in control of that, to allow it to appreciate knowing that that's going to basically accomplish a Western goal? Well, I think they have enough control that they can manipulate it if they want to. It may also be signaling that the tensions aren't really that, you know, disastrous for China. And we've seen some better economic data.

And the stimulus is real. Like the cash for clunkers program that they're using in China right now is for real. and it's stimulating consumption in retail sales, and they're stimulating monetarily, fiscally. So, you know, that may be inviting to some capital, but I do think they have enough control to move the currency around. And the gesture right now is we'll let it appreciate

because it needs to go up 10, 15 percent to help with rebalancing. I don't think the negotiations do it. Sean, it's Tom, if I might just give you the last word here on this discussion, that one point, you talked about the leverage. At one point, the leverage had swung maybe towards other people, outside of China because of the real estate market there, some of the troubles that they were seeing

with some of the banks and whatnot in the banking system there. Is that enough the threat of a possible real economic downturn to make China feel as though they want to negotiate in good faith with the U.S. because they don't want to risk having a situation where the property bubble that kind of mini-burst turns into something bigger because of the economic possible down draft. could happen with the trade discussions that are going on right now? That's a great question, Dom. Honestly, the real estate sector is weak here. It's down about 20, 30 percent from the highs in 2021.

But it's actually not that bad. I think the government wanted to have a soft landing on real estate because prices were getting out of control. I'm actually more bullish on China's economy now than any time since 2019. As your previous guest said, the United States is still an important trade partner of China, But the landscape has changed since Trump's first term. In 2017, 18% of Chinese exports went to the United States. That's down to 14%.

ASEAN as a block accounts for 16% of Chinese exports. So right now, China over the last eight years, has de-risked from the United States. They're not scared of China. They're not scared of the United States. Let me be very clear on that because China has become the largest trade partner of 150 nations, while we only trade partner with about 50 over the last 10 years. The global world order, the global economic trade patterns have completely changed. Real estate is weak, but it's not as bad as a lot of people are making out to be.

Again, this is the most bullish I've been on the economy in the last six years. One last point was that retail sales went up 5.1% last month in China. Last year, retail sales were going up 3 to 4%. The Chinese consumer is coming back. animal spirits are coming back, and that's why the equity markets went up 15, 16 percent since the beginning of the year. China is the place where investors need to be putting their money. It's a fascinating discussion. One that we could debate for hours on in. Sean Ryan of the China Market Research Group, thank you very much. We'll see you soon.

And David, please stay with us for the broader discussion here because the S&P and the NASDAQ are recruiting pretty much all of their April losses at this point and then some. But investors on the sidelines could have cold feet, according to the jury. journals Jason Zweig, writing over the weekend that they don't have FOMO or the fear of missing out. They have Fogie, which is fear of getting in. Get it, FOMO and Fogi. We don't want to say that's Aegeism either. I don't know. It just happens to work out that way. I'm just saying. It might be the millennials who are the most conservative. It could be shifting landscapes, right? So David, you say now is actually a better time to get into the stock market than at the

start of the year, even with everything that we've seen over the last two months. That's true. And the last time I was on with you, the Dow went up 3,500 points. So it's still early in the show. We'll see what happens. But if we had this conversation right before New years, I would have said, I don't like the setup going into your three of the bull market, which is typically kind of punk returns anyway, because you've got retail investors that are way too excited. You've got institutional investors that are way too excited. Earnings estimates were, they were going to be 15% higher so far in the year. And Wall Street strategists that had been really pessimistic for the previous two years had gotten really optimistic going into this year.

So as a natural contrarian, I looked at all that and said, this is going to be a punk year. We're going to have continued tariff problems, which was the source of the first segment of the show. And additionally, we've got way too much optimism in the pipeline. So now that's been cleared out, right? The optimism has come down. It's probably neutral, if not negative, at this point. Earnings in the first quarter up 13% versus the estimates, which have been marked down to up seven, which is positive, but yet the S&P's in the same place, the 10-year treasuries in the same place. And for all the concern about the end of U.S. exceptionalism and all the deficit talk, a four and a half percent treasury to me says, well, you got 2.2% GDP growth, you got 2.2%

inflation, it's right on where it should be from a nominal perspective. So, yeah, just erase the first five months of the year. And now going forward, here's some good news. We're going to get tax cuts, most likely. We'll get tariff cuts, whether that comes from the courts, from taco, or from trade deals. And we should see an interest rate cut because inflation is actually coming down. There are no real signs of it. So earnings will be there.

Because I sympathize very, very much with the investor who says, I'm on the sidelines. Oh, yeah. I guess I could have gotten in for 10 seconds in early April, and now here we are. And because of the nature of the market, you're always getting in an all-time highs, basically. So people go, well, and you mention it here, there are some on-ramps, if you look at some of the lower valuation sectors. But I worry that those are always value traps, right? That you go, well, you know, I'll go into health care.

That's a little bit cheaper. And then next thing, you know, it's, you know, you're watching the market run away from you again. I mean, just kind of address that anxiety. Well, you're right. I mean, the previous segment on health care was dispiriting. Right. Right. And it's cheap relative to its history and the earnings should be there.

But who knows what the political framework is around health care. So it is complicated. And I'm admitting I have been in the smid cap trap for a while. Have you? Yeah, exactly. The small caps are a great example of us. And they're going to work as soon as we get a rate. Eventually.

You know, as long as recession odds don't go up. Right. So you've been in a little bit of a trap there. But if you don't want to buy the mag 7 at 27 times, you can buy China for 11, right? I mean, there are other places you can go, the value side, the mid-cap side, the small-cap side, health care. To put it differently, I feel like the cautious investor ends up taking a riskier approach by trying to pick sectors or parts of the market that are, you know, attractive entry points versus just hold your nose. Going with the market. Yes. I mean, I asked

the, because I knew we were going to talk about this, I asked the guy when I left the hotel, I said, are you invested? And he said, I am in 100% cash right now. And I said, why? And he said, because Trump is crazy. A hundred percent cash. Correct. In an inflationary environment like this. Right. Well, you know, because, you know, they're trading off of all the hyperbole that's around.

So I think what traps people is this idea that you get into the conspiracy theories and you trade on possibility rather than probability. The probability is we're fully valued in this market. But the probability is also that earnings are 10% higher a year from now. So you buy the market and you go to the Hamptons for the summer and you turn off your television. All right. Quick last word. Not this one. How many people are going to the Hamptons?

Not me. Before we let you go, one quick word. We just got off the ETF Edge online show. We talked about momentum as one of the big kind of factors that people are investing more in. Do you feel as though that momentum factor continues for the balance of this year? I mean, it depends on how everything cycles through. So if you look at just the big tech trade, I mean, what we're earnings up 28% for the MAG 7. Now, they're supposed to scale down to 10% by year end, but they've been clearing those hurdles.

And I was nervous about the deep seek. I thought, well, maybe that does interrupt CAPEX. It has not interrupted CAPX and that continues to roll. So, you know, momentum seems secured because that's where everybody feels most comfortable, which, you know, theoretically going back to the late 90s and stuff, tech looked risky. Now tech looks safe. So, yeah, I think it probably continues to work. All right, David Waddell.

Appreciate it. But we need a bigger discussion for this whole thing, Kelly. I know. I can stick around. Because we got a lot out of it. We squeezed that lemon. tried to. About all the way. Coming up, health care is the worst performing sector over the past month, down about 5%. But one analyst says this recent deal action, like today's announcement,

that Sanofi will acquire the U.S. BioFarmac Group Blueprint for nearly $10 billion. That could start to turn investor sentiment around. Blueprint is surging 26% on that. We'll talk about maybe some other names that you could buy here right after this quick break. CryptoWatch is sponsored by Crypto.com. is America's premier crypto platform. Welcome back to Power Lunch. ASCO, one of the world's largest cancer conferences, is underway out in Chicago. We're getting lots of data and deal headlines.

Regeneron, for instance, at a 52-week load today before reversing course. It's key immunotherapy drug showing some promising results in a skin cancer trial. They also announced a license at GLP1 drug from a Chinese company. Those shares are up fractionally. And shares of Bristol-Myers Squibb and Biotech are also higher. Biotech by 20%. after announcing these two will co-develop an experimental cancer drug. This is Biontech's best day since May 2020.

And while our next guest says health care's recent underperformance has investors cautious, understandably, the pickup and deal activity could turn things around with where he's seeing opportunities. Evan Segramon is head of health care research at BMO. Evan, it's good to see you. So, you know, the hard thing is that everyone in the space, you know, is like trying to play the lottery, but with some kind of, I don't want to call it inside information, but, you know, they have their expert network.

or whatever it is. Is that a fool's errand at this point? Listen, I think the sector has a lot of headwinds. We know the macro terrorist drug pricing hasn't helped. But when I look at a company like Regeneron, Regeneron had a terrible day last Friday, down 20 percent, not just because their COPE drug had a bad trial result, but because people were starting to question kind of the broader strategy of the company. That's why it was good to see them make a little progress with the Glipp 1 and have some good data over the weekend. But when I look at the sector, we got to see deals. I really like the Sanofi deal.

They are going all in. But what's interesting about that is they're buying an asset that's already been approved. They're not taking that early stage clinical risk. And I think that could be a bit of a paradigm shift in the broader biotech and biopharmist space. And in what sense? And who else would that implicate? Well, that means that these small biotech companies are going to have to show data that their drugs really work in a phase two, phase three, maybe even get them approved. I think you see the big biopharma companies willing.

to pay up for assets that are de-risk. A good example, Bristol Myers and Karuna versus Abbey and Seravel, Bristol paid up for the asset that was de-risk. Now that's the only muscarinic asset for schizophrenia, where the Seravel asset that Avri acquired failed late last year. So if you had, if I said, okay, you can play biotech, you can play mega-cap pharma, which is at lower valuations. Maybe there's other ways to play this. I mean, what is, you think, kind of the safest or most attractive bet for investors right now? It's a stock pickers game because you really have to understand the fundamentals and the strategies of each of these companies. While they're all in the same sector, they're very different.

For example, Lily, the darling of obesity, based in a few headwinds, there's concerns around pricing. I think that's a bit overblown. But then you look at a name like Merck. There are questions around how they're going to replace Gertruda. They're hosting an event tonight for analysts and investors. So hopefully they'll give us more color as to what that looks like. And then you have Regeneron that has just had miss after miss after miss really needing to revamp their strategy. and look internally to figure out what's going on.

Evan, it's Dom, if that's the case, and it is truly do a lot of homework and have a stock pickers market out there, is it fair to say that maybe for retail investors or investment advisors who are allocating or want to to health care, that they do it through actively managed either ETS or mutual funds where there are portfolio managers doing this, or do they try to do it themselves, or do they stick macro on a sector or industry ETF basis? Well, I think I'm always long-term positive health care because human health is very, very important. But I would agree that you need to really have folks that know what they're doing because there's a lot of nuances to clinical trials. You can't just say, oh, this trial worked. Why is the stock done? Well, maybe it didn't work as well. It's in a competitive space. There's another drug that's actually better. So there's a lot of nuance and you have to spend a lot of time. You've got to come to Chicago. Got to come to ASCO.

talk to the experts in, you know, around, you know, health care, and that may be too challenging for some generalists. Could you give us, you know, can you be our chat GPT and give us one or two kind of easy answers, best picks, best idea for the generalists in the room? For sure. So I like Vertex, VRTX. They have a non-opioid pain drug. It's launching okay, but I think we're going to see some acceleration back after the year. I like Gilead, as you see on the screen.

They're launching a long-acting prep drug. that's to prevent HIV. And the small cap disc medicine, they're kind of a little under the radar. They have an asset that could be commercial next year called Bitterpurn for a rare disease, which we like, which this FDA likes a lot. And they're also in the rare blood cancer space. So some really interesting names there. Evan, we appreciate your time today. Thanks for joining us. Of course, thanks for having me. Evan Siegerman from BMO. All right, coming up on Powell, on shares of water technology company Xylem, up nearly 8% so far this

year and JPMorgan sees more room to run, initiating coverage on Friday with an overweight rating and a price target of $148 a share. That's nearly 19% upside from here. We're going to get a look at a startup cleaning up wastewater and the atmosphere. That story when we come right back. Welcome back to Power Lunch as more and more parts of the world see increasing drought conditions. New technologies are being employed and emerging to clean and reuse. existing water supplies and investors are seeing some big potential for this technology. Diana Oleg has the details in her continuing series on climate startups, Diana. Well, Dom, water treatment is a costly business. It uses a lot of energy and produces its own

waste that usually has to be disposed of. But what if you could use that waste to clean the air? That's exactly what one California startup is doing. Capture 6 is a company on a dual mission. Its new technology repurposes in industrial and water treatment waste, generating clean water and capturing carbon dioxide from the atmosphere. That combination of water treatment, brine management, carbon capture all at once is part of what makes us unique. The process isn't exactly simple. They start with the waste from any sort of water treatment process. Once the solids are removed, that waste is called brine, which is left over water plus concentrated salt or sodium chloride. Usually, treatment facilities have to pay to get rid of it.

But Capture 6 takes that brine, strips out the fresh water, and separates the salt into sodium and chlorine. It then turns that sodium into Lye. That Lye has a really neat property that if you expose it to the air, it will bond with CO2 and strip it from the air. This process is very attractive in areas most in need of clean water. Capture 6 is working in Western Australia, in Korea, New Zealand, and in draft. outstricken California where they're building a pilot facility with the Palmdale Water District which estimates huge cost savings in its brine management but it'll save us 10% on that capital cost as well as saving us 20 to 40% in operational

costs we're recovering anywhere from 94 to 98% water out of water that would just normally be wasted capture six is backed by Tetrax corporation, Hyundai Motors, Energy Capital Ventures, Elemental Impact and Triple Impact Capital. Total funding so far, $27.5 million. Capture 6's CEO says its entire process could run on renewable energy, so all of that CO2 that it captures will be net negative, and the company is able to add to its revenue by selling carbon credits. Now on Friday, the Trump administration canceled $3.7 billion in grants to companies working on reducing carbon, including carbon, capture. Capture 6 has received some government funding, but that was not canceled. Dom.

All right, Diana, thank you very much. Appreciate it. Diana, Oleg, and as Dom points out, we go from clean energy to, well, LNG is pretty clean. Traditional energy. Traditional energy, thank you, as construction on the Alaskan oil pipeline began more than 50 years ago. Now the Trump administration is pushing for a gnat gas pipeline right alongside that would export U.S. natural gas to parts of Asia. Brian Sullivan is on the ground in Prudeau Bay, Alaska, and he's now joined by by Energy Secretary Chris Wright. Welcome to both of you. Brian, take it away.

Kelly and Don, thank you very much. Yeah, as we said earlier, that is mile marker zero. This is the beginning of the famed Alaska oil pipeline, but we have for the first time ever in Alaska history, three sitting members of cabinet, all in this, not just in the state, but up here at the same time.

We're joined now by Secretary of Energy, Christopher Wright as well. Secretary, thank you very much for having us here on this trip. It's really eye-opening in many, many ways. Let's talk about the Alaska potential LNG pipeline. You bet. 40 plus whatever billion dollar project.

You're confident it will get built. Why? Natural gas is the fastest growing energy source on the planet. It has been for the last 15 years. It's 40% of the growth in energy. So demand for natural gas is simply huge. Alaska has a great oil pipeline and a huge amount of natural gas, but no way to transport the natural gas.

We've already got the natural gas. the right away along the oil pipeline. We lay a twin pipeline down through Alaska, LNG export terminal in southern Alaska, six-day sail to Japan, to Korea, another day or so to Taiwan. So I think it's a tremendous opportunity to have natural gas leaving from the west coast

of the United States and very close to our Asian allies. So over your left shoulder, Alex, we could show that there. They're actually burning the gas off because they don't have a use for it. They'll put some in the ground. That's literally just burning money. We get that. But at 40 plus billion, some of the industry insiders I've talked to said, gosh, this has been on the table for decades. It's just really

hard to justify the economics. How do we justify the economics of this $38 to $44 billion pipeline? Well, because there's multiple pieces to it. One of the other challenges in Alaska, think of Anchorage and Fairbanks, the population centers. They're actually running out of energy. Expensive energy costs in Alaska have been pushing population out of the state and reducing industry. So the immediate use of this natural gas pipeline is going to be to power Alaskans. Mines and commercial business here, bring data center, bring industry to Alaska. So Alaskans benefit as well as the export project. But demand for natural gas is growing fast and geopolitical concerns are growing.

So it's a uniquely located asset where you're taking just through a USC lane along the the Aleutian Island change to our neighbors in Asia. Of course the math has to work. That takes engineering, that takes innovation. But the biggest capital by far is liquefaction trains. They're the same, whether you're building them in Louisiana or Alaska. Only the pipeline is the special part of this project, but already got a right away. So you're confident that down in by the water, because the pipeline would basically, this

is the start of the oil pipeline here, kind of follow the same route until the very end, and then oil goes this way and gas goes this way. They need to build that liquefaction facility in the Kiski down by south of Anchorage. Are you confident you can get a buyer or a backer because the Conoco's, the Exxons, the others of the world, they have not committed their capital yet. Yes, the key thing is off-takers. If you have customers for the gas. Japan, Taiwan, Thailand.

Exactly. The geographically advantaged locations to be off-takers of this, a number of them are here. We have people from Taiwan, from Korea, from the Philippines that have traveled with us to this trip right now. Oh, I think the interest in that is tremendous. If you get the commercial off-takers for the gas, financing is pretty straightforward. Are tariffs a part of that? Because there's a lot of questions of the courts about what the future tariffs may be. Do tariffs play into the ability of a Japan or Korea to purchase enough gas to give the final investment decision to fund the pipeline? I don't think tariffs are a huge part of the conversation. But of course,

there's countries around the world looking to shrink their trade deficit with the United States. And of course, a very easy way to do that is to buy more American energy. Now they're here. There's also a meeting tomorrow in Anchorage, Alaska. I know it's the beginning of a, of a conference. I assume you and potentially Secretary Bergam will be meeting with some of these potential buyers, primarily Asian buyers. What has been their level of interest so far? Oh, quite, you know, their biggest interest is, you know, what's the timing, what's the logistics, when does it come on? Nobody has any doubt about their desire to buy more natural gas. Again, fastest growing energy source in the world. Better to buy it from the United States.

Some of them have Russian gas contracts from the Sakhalene, also near the Asian area. No one's signing new contracts from Russian gas, but those contracts will roll down. And of course, they all want to fill that with American gas. So the questions are more just about the logistics. What's the time of the pipeline? When would delivery start? I know you guys were giving your talks, you couldn't hear what I said, but it's like you read my mind because we actually talked about the Alaska purchase. I mean, $7 million in 1867 looks like a pretty good deal now. But Russia, and we've told this story in CNBC for a few years, Russia's exporting records amounts of LNG. I mean, Russia is making a lot of money, selling natural gas around the world, a lot of that to Europe, but some of it to Asia as well.

How much could this pipeline sort of eliminate the needs? for partners for Japan, Taiwan, etc., to buy gas for Russia and buy it from the United States instead, because I think we all agree we don't want Russia to profit right now. Oh yeah, this pipeline itself is probably roughly equal to 40% of Russian LNG sales today. Just this project would displace a good chunk of Russian LNG, liquefied natural gas exports. But absolutely, the United States can fill the gap of the entire Russian exports. But that hasn't happened yet. That hasn't happened yet.

Russia is still the third biggest supplier of natural gas to Europe. You know, the place most desire... We've got a pipeline through Turkey. Obviously, the Nord Stream 2 is out of line. But the pipeline through Turkey is still running. In fact, that's accelerating. This LNG story, it doesn't get a lot of attention. We've tried to tell the story on CNBC, but Russia sells many, many shiploads of natural gas.

If this gets done, you're talking about one LNG shiploads. roughly per day, right? I think that's about the number. Theoretically, when could the first shipload go out? If this were to all, you know, start tomorrow. That's that engineering challenge that we're working on. I think we can get gas to southern Alaska, you know, maybe in three years, three or four years from now.

The LNG is probably a couple years after that. But that requires, you know, quick engineering and capital. The capital raising, I think, won't be a problem. But we need to unleash American energy again. Things move very slow under the Biden administration. We need to make them move fast under the Trump administration. Well, there was certainly some commentary about the previous administration. I don't want to bring the world of politics into it.

But Willow, we're here. Conoco Phillips is a part owner of this facility. Willow, their big oil project, did get approval under the previous, the first Trump administration, but it was allowed to progress under the Biden administration. They took a lot of heat for that, to be honest with it. A lot of people, environmentalists said, no, this is out. Absolutely disgrace. So will it stand at 170,000 barrels a day if Conoco gets done or can it expand and even do more barrels from that? Because the pipeline has actually gone down since 1980. It has. And that's another great story about unleashing Alaskan energy.

There's been two huge conventional oil discoveries in the last 20 years. One of them's offshore Guyana that everyone knows about. First well drilled in 2015. The other is the PICA discovery up here in Alaska. is part of that. There is a dozen fields that could be produced from this PICA formation. Million barrels a day of production could come from PICA, and the first discovery well there was drilled in 2013. Two years before the Guyana offshore discovery, they're producing 600,000 barrels a day. Soon a million barrels a day, not one barrel of Pico oil yet has flown to the marketplace. That's going to start with Willow, but that's crazy. A hundred miles offshore

Guyana can bring on oil faster than the north slope of Alaska? We've got to get our act together. It is warm there. I will say it since it's not warm here. And that's of course, Giana is Exxon, Chevron, and Hess, and there's a little bit of a lawsuit action. Here you've got Conoco, you've got Hill Corp, which is private, you've got Marathon Petroleum down in the Nekiski. You got Exxon Mobil as well. I'm sure your office and you personally are in communication with Darren Woods, their CEO, Ryan Lance, CEO of Conoco, Phillips, are you discussing with them actively what their economic plans are with the pipeline? Oh, absolutely, absolutely, quite regularly, in fact, quite regularly in fact.

They all have great resources up here. It's just Alaska's been so slow, so hard to operate in, mostly because this federal overreach and overstretch, they are all keen to see a liberation of Alaska. I'll tell you the local in-apok people, they're the most motivated to see economic activity an opportunity for them get unleashed again. These are their lands. We heard from some of them last night. I know we got some local representatives here as well.

Secretary of energy, put on some gloves. I think it's below, I think it's below zero. And this is spring. These are tough people doing hard jobs, and we really appreciate it. And coming up, guys, in a few minutes, we're going to speak with Secretary of the Interior, Doug Bergam, talk about some of the other challenges, including how to get them to stop using diesel fuel to eat their homes,

because that's actually a terrible environmental aspect that we never talk about, but we will in a few minutes. It's great stuff. We think, I mean, not just braving the temps, but kind of traveling to a part of the country that probably never gets any attention and what could be a really momentous moment here with the flow of this of this LNG if it gets going. So thank you guys both very, very much. Really appreciate it.

Brian Sullivan with U.S. Energy Secretary Chris Wright. All right. Let's now get over to Christina Parts of Nevelis for a CNBC News Update. Good afternoon, Christina. while the Trump administration asked the Supreme Court today to let it move forward with mass federal firings and agency restructurings. It comes after a judge blocked the administration from making the cuts in a May 22nd ruling involving the U.S. Departments of Commerce, Health, and Human Services, as well as Treasury, among others. The Supreme Court asked the plaintiffs to respond to the

government's filing by June 9th. My Pelosi and vocal Trump supporter Mike Lindell goes on trial today in federal court. He is facing a defamation lawsuit after he claimed that the Colorado Colorado-based voting system company, Dominion Voting, and one of its employees rigged the 2020 presidential election. Lindell says he plans to testify on the trial, which is expected to last up to two weeks. Air quality alerts remain in place today from Minnesota and Michigan to South Carolina, from smoke coming from wildfires in Canada.

Officials in Canada say 180 fires are burning across the country, with 91 burning out of control. The haze from the wildfires could be seen as far south as the Charles Nerean, in South Carolina, this morning, actually. Dom? All right, Christina Parts and Ovales with the news update. Thank you very much for that. A mixed bag for stocks overall today as trade tensions once again flare up between the U.S. and China.

Treasury yields are ticking up slightly as a result. We're going to drill down on the market for the bond side of things with Rick Santelli in the bond report coming up next. Welcome back to Power Lunch. As you can see, their treasury yields are ticking higher today as the trade tensions with China flare up yet again. Let's now get out to Rick Santelli in Chicago for more on the bond market in the bond report. Rick. Yes, indeed, Domyn. You know, tariffs and trade tensions and uncertainty, there's something that the market's sort of getting used to.

I would think that they'd be worth more than four basis points, which is how much a two-year yield is up right now. There's a lot of moving parts here. Let's look at an intraday of that two-year, and notice at 10 o'clock Eastern, you see a downdraft there. Those were the slightly weaker PMIs, but it rebounded. And once it challenged the existing high yield of the session, well, you could see what happened. Yields moved higher. And it isn't only the uncertainty in tariffs in China

that are pushing yields up. And those are obviously not good reasons, but there is one good reason, okay? First of all, look at a year-to-day chart of tens. Notice that it launched right in the middle of that chart there at 4%. That is huge from a technical perspective. And as you look at it,

Atlanta GDP now, it hit 4.642% is the estimated second quarter GDP. That would be the highest since the fourth quarter of 21. So there's upward pressure on yields for that as well. And we want to continue to pay attention because as you drop on imports, it boosts GDP. And the import drop was record size, if you recall, that trade deficit last week. Dom, back to you. All right. Thanks very much, Rick Santelli, with the 10-year-at-Fort. 4.46% right now coming up on the show. We're going to head back out to Prudeau Bay, Alaska. Brian Sullivan will be joined by the Secretary of the Interior, Doug Bergam, coming up next.

Welcome back. Let's get back out to Brian Sullivan up in Prudow Bay, Alaska, the tippy, tippy top. He's joined now by the Interior Secretary Doug Bergam as they talk about the new pipeline project that could or should be underway shortly behind them. Hi, guys. Yeah, we'll see if that happens. Kelly, thank you very much. We're here with the of Interior, former governor of North Dakota, and I never imagined I'd be in a place doing an exclusive interview where we got to go a thousand miles south to get to North Dakota. But thanks for joining us. Yes. This is spring for you, I think. It does. It reminds me of home. Flat, no trees. And a lot of oil and gas. Oil development.

All right, so here's the weird thing about energy policy. We just had the Secretary of Energy on. The Secretary of the Interior controls as much energy policy through land use and permitting as a Secretary of Energy. So he kind of referenced some permitting. The Alaska LNG pipeline's been talked about for decades. It's not a new thing. I want to be clear, where do we stand right now with permitting?

If there's funding, could this actually go forward? The permits virtually are all in line, issued, and ready to go for the Alaska Pipeline. And what you've had in the background of your shot here, Ryan, is this amazing technological marvel called the original pipeline celebrating its 48th anniversary. Starts at sea level, ends at sea level, crosses over 4,100 feet, goes through three mountain passes.

You see it above ground here because of the thermophrost. This thing was built in two years and two months, and it's been one of the great gifts of technological innovation that's helped our whole country and helped the world. Building the Alaska LNG pipeline on a route right next to it is simpler than what these guys did 48 years ago because the route is there, there's a road there,

They had to build all the infrastructure and the road the same time they were building this. So, yes, the permits are in place. There's additional land transfers that are occurring between the Department of Interior and the state of Alaska. And then, of course, we've got the resource. I mean, where in the world do you have an existing oil pipeline that's got can double its capacity? You don't have to build a new pipeline. It's just an existing pipeline. At the peak, it carried 2.2 million barrels a day.

Now it's only 500,000. You could actually quadruple what you put through it. Then you take, and then when you produce... So what's been the problem? Why doesn't this gas pipeline, we're literally burning gas behind you? Why hasn't the gas pipeline existed? Like, why are we only re-talking about it now? Well, I would say we're burning a little.

What's actually happening is when you produce oil and gas in most fields. When you produce the oil, gas comes up. They capture that gas here. They use a little bit of it for the electricity to run this plant. They're re-injecting billions of cubic feet of gas every day, re-injecting it back into these fields up here. So this isn't like, oh, is there gas here? We've been re-injecting gas for 48 years, pulling that gas out, and using it for Alaska, using it for our Department of Defense installations here, using it to sell to our friends and allies.

They don't have to buy from our adversaries. So I don't think anything is really holding it up right now from a standpoint of people that understand the need for us to have. U.S. natural gas as a path to prosperity and a path towards peace in the world. If everybody's gung-ho and moving ahead and you see the amount of foreign press, there's more foreign press here today than there is U.S. press because we've got the South Koreans, the Japanese, the Taiwanese, they're all here today because guess what? You've got 120 million people living in Japan in the size of North and South Dakota with no oil and gas. You've got 51 million people living in South Korea and half the size

of North Dakota. They have virtually no oil and gas. They want to have a secure supply for their own futures. And right now, they're buying most of their energy from the Middle East. That's got to come past Taiwan, South China Sea. China's got the most ships in the world. The national security thing. The national security thing. Can we just admit? CNBC is here.

I want you to know that. Yes. And we came a thousand miles worth of the bank. And thank you for doing that, Brian. Well, listen, the story is important. And we talked about it a bit with the Secretary of Energy about Russia. Russia, 34 million metric tons of LNG a year, a new record high every year. Putin is raking in money on the LNG. We want to sell them this gas, not the Russian gas, but everybody in the industry I talk to kind of says, listen, it's just this is an expensive project?

Is it too expensive to be successful? Well, the numbers that I've seen, it all pencils out, and it pencils out for a number of reasons. One is the first part of this pencils out just to get gas to Alaska. We need more power in Alaska, and Alaska has powered itself a lot from Cook Inlet, LNG from the south, but that is... Running out. Declining. I mean, it could be gone in the next five years.

So this is a central just for Alaska. Then we've got the Department of Defense. They're ready to sign on to take an off-take agreement from this pipeline to get gas to our super-strategic, important bases across Alaska. And then, of course, to be able to sell it to our allies. It's an eight-day trip for an LNG tanker to leave Alaska and go to Japan. And it's 24 to 30 days from any place else in the world, including our own south coast of Louisiana and Texas because of all the backups and jam in the Panama Canal or going around the tip of South America. But would this be super competitive to the cheneers, to the venture globals of the world?

Like, is this, does this benefit them at all, or does this hurt them because it's competition for the Asia buyers? Because those are American companies that might have a say in this as well. The more American LNG we sell to our allies around the world, the safer the world is going to be. And in terms of price competitive, if there's a slight higher cost here in terms of transportation to get it from the north slope down to the southern tip of a southern. portion of Alaska. It's made up because the transportation cost, if you can ship for eight days versus 24 days, you've got one-third the transportation cost to get to a place like Japan. And so net-net is going to be very competitive from a pricing standpoint. And I'm not going to, you know, it's hard on TV to say that you don't know something,

but I was ignorant of a couple things before I came up here. Number one, that the southern part of state is running out of gas. Yes. And that we talk about the environmental issues here, and there are environmental issues, but a lot of the villages, from here down to Anchorage still use diesel fuel for heat. And so they have respiratory issues. The air is dirty. I think Fairbanks has some of the most polluted air, which seems bizarre in Alaska. If this gas, this pipeline is able to be sold, can we guarantee that some of that gas will be

used by the locals in Alaska so they can get off of wood and diesel, which is filthy air for that. Yeah, absolutely. And not only just in Alaska, but 81% of the homes in the state of Maine are still burning heating oil, which is again a component of sort of the heaviest, worst end of a barrel of oil. And about 41% of the homes in New Hampshire, high percentage in Rhode Island, all because we've blocked pipelines from crossing New York, not we, but the state of New York has block pipelines coming from the Marcellus with clean natural gas. So you've got higher priced electricity in New England, you've got filthier, dirtier home heating environments, all of that can be solved with clean US natural gas. We need a little bit of infrastructure. And in those cases,

that's the Constitution Pipeline is 124 miles across basically flat ground. That can be built in 60 days once they start putting the pipe in the ground. So we need infrastructure for all Americans. We need them for Alaska, but we also need them for people to live in New England. We need it for everybody. Well, I know somebody may be posting sometimes how New England ISO makes that energy. Sometimes they're burning wooden garbage. We'll save that for another hit. Maybe Cape Cod, mid-Aug that sounds pretty nice right now. Secretary of the Interior, Doug Bertham. Thanks for having seen, B.C. come up here on this amazing trip. Appreciate you being, appreciate you coming all the way up here

to tell this important story. Well, it is an important story, and it's been great to meet these people. Thank you very much. Kelly, I'll send it back to you. and we're going to go inside and, like, thaw out. Cape Cod in mid-August, you deserve it. Brian and Secretary Bergam, thank you very much. You guys, really appreciate it. All right now, we are at the highs of the day so far. The Dow is down maybe roughly 30 some points at this point.

But remember, we were down 416, Kelly, I think it was, at one point. So, you know, per our earlier conversation with Mr. Waddell, there is this kind of by-the-dip mentality that continues to keep permeating. So we'll see if that sticks around. Everybody. No, not Foggy, FOMO or Fogg. Tom, thanks very much. All right, thanks very much, guys. Thanks for watching Power Lunch.

Closing bell starts right now.