Power Lunch - Dow falls on earnings, inflation concerns; Nvidia boosts Nasdaq 7/15/25

Episode Date: July 15, 2025

The Dow fell Tuesday as worries over inflation and a mixed bag of bank earnings dragged the index lower. The Nasdaq, meanwhile, got a boost from gains in Nvidia. We’ll cover all of the market 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, alongside Kelly Evans. I am Brian Sullivan. And we are coming to you live from a major event here in Pittsburgh. It's called the Pennsylvania Energy and Innovation Summit put on by Senator David McCormick. We're so far today, Kelly, $90 billion worth of investments have been announced. And by the way, one President Trump will be here momentarily. Lots of headlines being made there already, Brian. It's good to see you. Before we go out, more to Pennsylvania. Let's get a quick check on the markets. Stocks opened higher. The S&P. He hit an intraday all-time high. Now, of course, we've turned negative. Inflation data relatively subdued, I think we could call it. Invidia is the reason why the NASDAQ is still positive. Banks in focus, quarter looking okay so far. They kind of kicked off earnings season this morning. Some caution, especially on the part of Wells Fargo, net interest income, I believe the culprit there,

the shares are now down nearly 7%. And as mentioned, Nvidia jumping after announcing they'll soon resume sales of the H-20 chip to China. This was, I think, Commerce Secretary told Brian the fourth most important. important chip, a lot of debate over how significant it is, but investors are off to the races, up 4% for Nvidia to an all-time high. And the health care stocks under pressure again, Lily having its worst day since May, Jared Holtz, saying it's part of a bigger rotation out of healthcare and into tech and semis, Brian. Yeah, I think that healthcare story is a really interesting one. We'll get to that momentarily, but right now let's talk about energy because this energy summit here in

Pittsburgh, Pennsylvania is filled with heavy hitters across the spectrum, Wall Street, Washington, Energy, and again, we are waiting to hear from President Trump. He was set to arrive momentarily and give a total number around all the AI and energy investment dollars that are coming out of or being announced at or around this event. Now, some of the investments have already been announced by companies. Example, Google pledging $25 billion. Wall Street, Darling, Corweave, their CEO will join us in a couple of hours, committing to $6 billion for data centers and AI infrastructure. We've also heard from some of the president's cabinet already. Energy Secretary Christopher Wright joining us earlier, breaking down how some of the investments that we've heard about will all help power AI.

I think the great thing about the Trump administration is we don't believe we should direct the capital. We think businesses and consumers should direct that capital. But Brian, my suspicion is you're going to see large data centers built here in this state. Pennsylvania is an energy powerhouse. Its production is limited only by its ability to get it out to marketplace via pipelines. So it's easy to ramp up Pennsylvania natural gas production right here in the state and generate electricity right there. Build data centers, build semiconductor manufacturing, build any kind of reshored manufacturing in this state. No, it's not just government that's here.

It's private capital markets as well. a few minutes ago, we spoke with the CEO of Constellation Energy, Joe Dominguez, and I asked him what constellation needs from the federal government in order to provide the necessary energy for both private and public use. We need to be able to move more quickly through the Federal Energy Regulatory Commission, nuclear regulatory commission. We need to get relicensing things done. We need to be able to operate, increase the output of plants, and be able to do it.

the engineering work and the permitting faster. America needs the power now. We're ready to put the money in to deliver that power, but we need regulators. You've got huge amounts of industry here at this Senator David McCormick event at Cardi. Mellon, Amazon Web Services, Google, you're in a deal or pending regulatory approval of Microsoft, right? Crane Energy Center, formerly known as Three Mile Island. How do we make sure that power that's produced by either new or existing plants, is available at a reasonable cost to the public versus just selling high-cost electricity to the alphabets and the metas and the Microsofts of the world.

Because if the public is like, well, I can't get power, I can afford because Google's using it, they're not going to like AI very much. I don't think that's going to be the issue. I think we're going to have abundant power, but we have to manage these peaks that I'm talking about. We have to have products that are available in the market where people might back off,

big businesses back off and not use energy during the peaks. We're going to do a ton of that. AI is going to enable it. Also, AI is helping us manage the system a lot better. So the cavalry is coming over the hill in terms of technology. And AI isn't just consumptive, but it's actually delivering some huge efficiency benefits. You know, we're going to be able to cover peaks just through what we call demand response or getting people curtail during peak that will support.

dozens of data centers just by itself. That's going to be a big part of the answer. The other part of the answer, again, is dispatchable energy. Now, it's not just DC and energy leaders. Wall Street Titan and BlackRock CEO Larry Fink is also here. In fact, just wrapping up a panel moments ago, we interviewed him earlier and got some, I think, good commentary from him on the need for more AI and power infrastructure.

We believe that there's a need for, trillions of dollars investing in infrastructure related to our power grids, AI, the whole digitization of an economy, we are still going to be investing in decarbonization. So all these different investments, they go together, don't they? They all go together, plus making sure that we have adequate dispatchable energy. So all of this is all part of a plan. And we only had one target when we determined we needed to get even larger in infrastructure, and that was GIP. Yeah, GIP, Kelly, is global infrastructure partners, BlackRock making a deal for them. I mean, the deal looks like a home run right now. You've got Exxon Mobil here, Amazon Web Services

here. Ruth Porat of Alphabet is here, and many, many more. Too many to talk to. We've tried our best, but this is an event, I should add, that was put together, Kelly, by Senator David McCormick about a week ago. Wow. Pretty heavy at her lineup. including the president in a week. I mean, that's what I was thinking. He put it together a week ago? Yeah, like about seven days ago, I got a note saying, hey, can you be in Pittsburgh at this time?

I said, sure, what's going on. It was kind of top secret. They rolled it out. Cor Weave is here. Look at these commitments. Blackstone, they're making a deal with Brookfield. There's Black Rock. There's Cor Weave.

And again, that CEO will join us a bit later on. First Energy. They're the biggest power producer here in Pennsylvania, actually based in Akron, Ohio. These are some huge numbers, but I would say be careful these numbers, folks, if you want to invest around them, because as we heard from Doug Bergam, I think we'll hear from them later in this show as well, the Secretary of the Interior. If you don't get the permitting, Kelly, a lot of that money won't mean anything. It's like the field of dreams.

If you build it, will they come? Well, you can build it. But if you can't get the power to it or from it, it doesn't have much use. And that comes from permitting. By the way, is it your birthday today, Brian? No, it's your birthday. No, when is your birthday? I thought we were two days apart.

Are you today? Mine is Saturday. No, no, mine's like a week from now. When's your birthday? All right, in a couple days. Regardless, happy early birthday. And Becky, Quicks on the 18th. You're 17th.

Becky's on the 18th, and I'm the 19th. Okay, I didn't say that. We'll see you soon. Brian, thank you, Brian Sullivan. As we switch our attention back to the markets, the major averages are mostly lower, despite today's bank earnings, maybe because of them.

Inflation data not raising any real, major red flags. Optimism around the tech space is certainly intact with the NASDAQ being the loan outperformer. And here on set to discuss where he sees the markets going, Jay Woods as the chief global strategist at Freedom Capital Markets. And with us also to break down the bank earnings in particular is Dory Wiley, the CEO of Commerce Street Holdings. Dory, just first to you, Wells Fargo, what happened? Well, you know, Wells Fargo doesn't have the robust investment bank instructor J.P. Morgan does. So unfortunately, it got compared to them. But other than that, it had a pretty good quarter. You know, mortgage pressure is a little tough on them, I think,

with the high rates. But, you know, and they're still under some, a little bit of regulatory strings. But I think all in all, it's actually not a bad report from Wells Fargo or J.P. Morgan. And in fact, quite the green light for the economy to, you know, keep moving forward. All right. So you're not super concerned about it. It doesn't look like the market is either. although I know we're kind of at session lows and wells is down 7%. Dory, were there any broader signals or takeaways so far from what they've said or what you're expecting or looking forward to hearing tomorrow? Yes.

What I'm looking for primarily is, you know, we all expect that net interest income to stabilize because of rate stabilizing and the bigger banks to do better because of the investment banking activity peaking up. In fact, we even got IPO scheduled for August, which is typically a dead month. But it's really all about loans, right? Do we have loan growth? Then do we have deposit growth? And we're getting that. What's interesting is there was a little bit of that interest income squeeze, which indicates competitive measures on both of those, which is actually good, which means the banks are stepping out and trying to grow and move. And that's a green sign. And we want to see that going all the way down the line in the regionals and the smaller banks. And I think we will. All right. We'll hear from City CFO in a little bit. Jay, thoughts about the market more broadly here? Yeah, more broadly, I think the market's doing just fine. Doing very well.

Doing the financials being the leader of this technology, obviously leading us to semis today on fire. Thank you, Invidia. But to me, watching J.P. Morgan today was huge. The stock has run up tremendously, broke out to new highs, and we see it with Goldman as well. These stocks are telling us that, look, we're shrugging off this tariff concern. That is very interesting to itself. And then they passed the stress test the banks did. J.P. Morgan announced a buyback.

Their trading, fixed income, killing it. Goldman is up 60% from its low. So a natural pullback tomorrow is okay. The net interest income was the one red flag that we saw, but this wasn't unexpected. Wasn't shocking. What was shocking was that JP Morgan's investment banking gained 7% they were looking for a 14%.

Lawson. Goldman Sachs is poised. You know, it could split tomorrow. We saw a dividend increase in J.P. Morgan. This is a $700 stock in the Dow. never split in their existence. Maybe tomorrow is the day. So I expect more good things to happen.

And then the key thing, Jamie Diamond wasn't too pessimistic on the call. Is that a contrarian side? Yeah, I mean, his concerns were the concerns. We all have tariff, uncertainty, geopolitical concerns. There were no storm clouds or no weather analogies. So to me, that's as rosy as it gets. Jamie Diamond is saying, yeah, most of our sectors did extremely well. Is all of this, so health care, meanwhile, has just, we've got a couple of names,

UNH, I think it was sentient. I mean, they're down like 40. Maybe it's idiosyncratic business model challenges and so forth. Lilly's doubt, I mean, you just add it all up? And is it just capital leaving those sectors, like the previous analyst said, and going to financials and going to tech and going to all of these places that it was previously scared of. Well, without a doubt, you don't have the tailwind of an administration that's looking to favor

these industries. Plus, you have the patent cliff expiring in some of these biggest pharma names. You have Merck. They lost key Trude. They did a small deal just the other day. You know, BMI, Bristol Myers, is Bristol Myers, sorry, I have to say it the right way. Eli Lilly had their one big drug with Ozempic.

Is that the shot, Osempic, or is it? Mount Jarlo? I lose track. I do, too. But they had the big drug. And when you think about these drugs, you go back to, like, the early 2000s, Merck had Viagra. It had the exclusivity on it.

Once they lose exclusivity and they become just generic drugs, they have to find something else. So Mark did a small deal just last week. I would expect the biotech sector to start to pick up. We're seeing higher lows, so constructive price action. And these pharmaceuticals try to merge to find what that next big thing could be. And in other words, that's the risk on part of the health care space, not the big defenses, not the places where people were fleeing to in April kind of looking for safety. We talked to Barry Knapp last hour.

He said he's worried about consumer staples and health care to some extent. I mean, these areas that could be a little bit more under pressure, whether it's from tariffs or just. just kind of what's happening on the consumer front versus industrials, anything kind of related to this investment boom that we might be seeing, obviously anything with AI. And so for you, let's bring it back to Nvidia then as we leave it. Semis in an all-time high today. That you think is what, just further evidence that this investment and innovation wave is real and will keep going?

Without a doubt, we focus so much on the $4 trillion market cap, but this was a stock that was just breaking out of a 12-month base, be it a wide base, and it took off. It has an easy target of 180, it looks like it could get there, you know, in two weeks with this great news today. But that's where the innovation is. That's where the Cappex spend is. We didn't hear Cappex slowing down.

People are still spending there. I can't wait for InVIDIA earnings because I think they're going to crush it. And that could be the catalyst to take this to 200. All right, Jay, thanks. Dory, really appreciate it as well today. Jay Woods from Freedom Capital, Dory Wiley, with Commerce Street Holdings. We'll take a quick break. Then we'll head back out to the Energy and Innovation Summit in Pittsburgh,

where Brian Sullivan sat down with Interior Secretary Doug Bergam. We'll bring you that interview, a key part here. A lot of the back end stuff, the power permitting that can make all of these AI investments happen. Details on that next. Crypto watch is sponsored by Crypto.com. Crypto.com is America's premier crypto platform. All right, welcome back. We're here at the Senator David McCormick Energy and Innovation Energy Summit in Pittsburgh, Pennsylvania, at Carnegie Mellon University, where you've got DC, Washington, Wall Street, energy leaders all coming together to talk about investing in

artificial intelligence and all the power and AI infrastructure that goes around it. And of course, you can't make electricity without spending a lot of money. But we spoke with the Secretary of the Interior, Doug Bergam, former governor of North Dakota earlier, about the money that is being announced here. And he gave us some totals on American spending that kind of blew even our minds. Listen. The five big tech companies in America have $320 billion of CAPEX allocated for this next year. That's an all-time

record. It's greater than take the next five industries, automotive manufacturing combined. It's a greater number. And they need AI, they need power for AI today. A kilowatt is worth more today than at any point in time in human history. And knowing that it takes time to permit gas pipelines and transmission. lines. What you're seeing this capital is flowing towards places like Pennsylvania, the Bakken, the Permian, the Marcellus, where we've got stranded gas. Where we've got stranded gas, we can take gas, we can turn into electricity on the same site, and that's next to that electricity

plant that's generating that power, you put a data center. And then you can ship your product out, so you convert gas to electricity, electricity to intelligence. That's what's happening in an AI factory. You convert it to electricity. Now you've got this valuable product, you send it out anywhere you want to on a fiber optic cable. And right now, permitting for fiber optic cables is, you know, they haven't figured out a way to, they can protest pipelines and protest transmission lines and hold them up, but no one's figured out how to slow down a fiber optic cable. So the smart money is going to go towards co-location. $320 billion of committed capital is a gigantic amount of money. Like you said, it's a record,

it's all the other industries effectively combined. Where is that money going to go? It's going to go to places where it can get electricity and where it can get permits. And one of the things under the Trump administration, from the very start with the energy emergency they declared, with the creation of the National Energy Dominance Council, every day we get up and we're trying to attack the permitting. And we have accelerated permitting across the country, whether it's coal mines, uranium mines, gas pipelines, from Tennessee to Nevada to Montana, we're accelerating. the things that we've taken on is the environmental assessment and the environmental impact statement, an EA and an EIS. In the past, these were weaponized to stop infrastructure in the

country. In Interior, we set an aspirational goal of being able to do an environmental assessment in 14 days, an EIS in 28 days. These typically take years. We've been able to do that in the last several months. But how do we make sure we still keep the safety aspect? I've been to your home state, beautiful state, North Dakota. You drive around and there's a bison over here, it's spectacular. You don't want that covered in oil. How do you make sure it's also done very safely? Well, it's because we know that we can do it. In places like Texas and North Dakota, you can get a permit in a couple weeks. On federal land, it can take years to get the same permit. But there's no issue in terms of protecting the water, the air,

the soil. In states, you know, the people that live there and own that land, they care more deeply about it than any bureaucrat in Washington. And if you take a look at these processes that would take years, most of the time of that process wasn't a work product. It was sitting in someone's inbox. He'd send it to the next person. They've got 30 days to work on it. You forward it to the next one.

When we did a 12-day environmental assessment with a strike team, we had more minutes on mission, more time on task than a typical one-year project where it's just going slowly through a federal bureaucracy. Amazon Web Services is here. Google is here. I know yesterday. Mark's

Zuckerberg of Meta, Facebook saying that they're going to build these five gigawatt, which, by the way, that's millions of homes. I mean, electricity is confusing. It's millions of homes. But a gigawatt is Denver. So when they say they're doing a five gigawatt, that's five Denver. That's five Denver. I mean, think about that. They're going to build one building that's going to use five Denver's worth of power.

It's insane. Residential developers, we also have a housing shortage in America, can't compete with those companies in terms of price. They have more money. How do we make sure that energy is not only available for them, but is also then available for a new multifamily community that wants to be built? Well, this is the key of why we're driving so hard on the supply side, because demand for electricity is going to go up.

And the tech industry, and I spent nearly three decades in tech, that entire time we never used more than 1% of the nation's electricity. Now it's gone from 2 to 4, and it could go from 4 to 8% of the nation's electricity very quickly because of the demands. It's important that we increase the supply, and that's why, through the energy emergency, that we're working with, we're bringing together for the first time and even at this conference.

You've got the power providers. You've got Pennsylvania, oil and gas. You've got coal-powered generation here. And you've got the tech companies all in one room, all talking to each other. $320 billion announced across the spectrum for energy AI. That is more than all the capital spending for the five next biggest industries combined, truly a startling number. Secretary of the Interior, Doug Bergam-Kelly, joining us here at the Energy Summit in Pittsburgh, Pennsylvania. These numbers are, they truly are sort of mind-blowing. No, and they should be because the amount of kind of AI compute that's coming online is similarly mind-blowing. So you hope to see them kind of moving step by step.

Brian, great stuff. Thanks. Brian Sullivan. President Trump announcing a trade deal with Indonesia. We're getting more details. Megan Kisela has them. Megan. Hey, Kelly, so the president now posting on Truth Social a few more of these details of this. top line trade framework with Indonesia. He says as part of the agreement, Indonesia is committed to purchasing $15 billion in U.S. energy, $4.5 billion in American agricultural products, and 50 jets from Boeing, many of them,

he says, will be 777s. He also goes on to say later that if there's any transshipment from a higher tariff country, that tariff will be added on to the tariff. Indonesia is paying. As you can see, Boeing shares moving on this. Remember, Boeing was also part of the deal with the U.K. So an interesting trend. trend there. The top line, of course, Kelly, with this deal being 0% tariffs on anything the U.S. sells to Indonesia, but 19% tariffs on anything the U.S. buys from Indonesia. Now, I do want to caution, we have not yet gotten any sort of confirmation from the Indonesian government on this. The only reporting that I can find is that Reuters exchanged a text message with an

Indonesian government official earlier today when the official said they're preparing a joint statement between the two countries that will explain the size of the reciprocal tariff, including the tariff deal, non-tariff, and commercial arrangements. So suggesting there will be commercial arrangements along these lines. But other than that, no confirmation from Indonesia. So we still have to wait to see that as well as any formal paperwork putting this in motion. Kelly? All right, Megan, thanks. Megan Kassela.

And even with headlines like this, President Trump's tariff fight is far from over. So our trader wants to do some tariff immune stocks in his portfolio that will reveal a couple of names. Things will weather any volatility they could still be to come and market navigator next. Welcome back to Power Lunch. Despite today's declines, markets have made a really strong comeback from the April lows. But the tariff back and forth lately is leaving some to wonder if negotiations work worsen again, which stocks will be safe. Could any be relatively immune even to the effects of trade policy? Well, here's a hint at a couple of them. Our next guest thinks will be. Skyler Wine and his chief investment officer at Regan Capital haven't heard MSG in a while. Skyler, welcome. Evan is on. Talk to me about that one, Verizon and more broadly. I mean, does it even excite you to get into these names? Or do you just think, no, you've got to stay in like the risk assets and let the market be off to the races? I think staying in yield, high yield companies like Verizon holding pattern here, kind of wading out the storm is a great idea. Two New York-based companies, Verizon and MSGS, which owns the NICs and the Rangers amongst other assets, just, Great place to hold out completely undervalued.

But let's take a look at Verizon first. Almost six times the dividend yield of the S&P, about a 6.6% dividend yield, 2% dividend riser per year, sub 10 PE. So really an anathema versus Mag 7. And if you want to play that value story versus growth, this is one of the best places to hang out. U.S.-based company, both these companies are based in New York City, and almost completely United States-centric customer base.

I'm going to ask about MSGS, but MBS was another place we could have gone with this argument. Just real quick. So you're basically looking at yield place then, aren't you? Which is ironic because we're in a situation where you can go, I don't know, I can just get treasury bills for like 4%. I can get the 30-year for 5% these days. Right, but the Fed may cut here, call it September and December. You're going to very quickly see a three handle on Fed funds rate.

And that's $7 plus trillion in money markets, four and a quarter is kind of like five, but three and three quarters. I think folks are going to run for the exits and start looking for five or six percent yield, whether it's in bonds or dividend paying stocks. Yeah. We love mortgage bonds. that offer high fives right now for government guaranteed protection in Fannie, Freddie, and Ginny Mayvon. Well, keep buying them so we can get those spreads down. Just a final quick comment then. Why MSGS? What's the

dividend yield there? None. Oh, none. Earnings stink. Dividend yields stink. But you're looking at a $5 billion company with assets that are worth at least $10, if not $15 billion. The Lakers just traded for $10 billion. You get the Knicks, you get the Rangers, you get e-sports, you get a bunch of minor league teams. Put that all together for $5 billion. Sounds like a tremendous play, especially with all the hub around investing in sports lately. No, I always find it so ironic that in the private markets, these things trade like pieces of art. Then they go public and like no one wants them. We'll see if that changes as the asset class keeps maturing.

Skyler, thanks for bringing our attention to all of it today. Good to have you on. Thank you. Skyler Wyden, she said. Lots more to come here on Power Lunch. First up, Bank on it. We'll hear from City's CFO after their earnings beat today. Plus, missing the mark, Target continuing to slump as the company struggles to recover from past strategic errors. And we'll wrap the day with some good energy, final thoughts and observations from Brian Sullivan. And we'll be back with more Power Lunch right after this. Welcome back, three big banks kicking off second quarter earnings season this morning.

but the only one in the green is Citigroup. They beat on the top and bottom lines, reported a 25% jump in net income versus last year, upped guidance for the full year. But if you zoom out and look at the past couple decades, City has still been a huge underperformer compared with its peers. There it is next to JPM and Wells.

Wells, Wells having a tough date today. So what's kept them down? And is this the beginning of a turnaround or an inflection point? Let's get out to Leslie Picker, who is joined by City's CFO, Mark Mason. Kelly, thank you so much and thank you, Mark, for doing this. Thank you, Leslie. Good to see you. Good to see you. So it's interesting because in listening to the calls today, you and several of your peers use the term firing on all cylinders, which makes me wonder just about the overall environment that we're in right now. Do you feel like it's kind of as good as it's going to get for the banking industry? Like, is this the peak macro environment that we could see? Well, first, Leslie, we had a very, very strong quarter this quarter. Our revenues were.

up 8%. And when you look across each of our businesses, we were and are in fact firing across all cylinders. And so we can say that with confidence as we look at the franchise. This is an interesting quarter because if we look back to the beginning of the quarter, many people would not have predicted that the environment ended up where it ended up. But in fact, it does speak to, I think, the strength and the resilience of the private sector and of capital markets. And that's shown up in the results. We've seen across each of our businesses, clients lean in, to more activity with us, and that's driven some of that top line revenue and underlying performance, there is still some uncertainty that's out there, what happens with tariffs, what happens

with trade policies, how that shows up in pricing or in corporate margins is still a question. But what I think we've seen is that corporate clients have learned to deal with different bouts of uncertainty, and that's what's showing up, I think, in the broader macro performance that we're seeing. How are you seeing them deal with that uncertainty? What's the behavior of changes that you've seen take place? Well, it's a whole host of things. So we're very engaged with clients, as you would imagine, across our banking business, across our services business.

We've been in dialogue with them about how trade corridors might shift. We've actually seen them build inventories in certain instances. We've seen them invest in efficiencies, technologies that drive efficiency in order to help the bottom line or the expense base as things continue to evolve. We've seen them access the equity capital markets. We've seen continued M&A activity. That pipeline looks strong. And as you look at where equity markets are in the direction of rates, I expect that we'll see continued momentum and activity as this continues to kind of unfold over the next couple of quarters. Speaking of technology, there are a couple of things I want to ask you about.

Number one, AI and your investments there. That was an interesting data point in the presentation in a way that I hadn't necessarily seen it before. And then also on the call, the CEO Jane Frazier talked about how the company is looking at issuing a city stable. coin. And obviously there are some regulatory changes on that front and a potential consortium of big banks that could come together to issue a stable coin that could be used, you know, between different banks. How are you thinking about this technology strategically? And what does it mean for the firm? Yeah, well, look, the first thing, to go along with that top line momentum that I reference, 8% top line growth and growth across each of those segments was very good expense

discipline throughout the quarter. So you saw our expenses were up about 2%. They're down 1% at the half. That expense discipline does come with investment as well. We've been investing in technology. We've been investing in our transformation work. And we've been investing in AI tools to your question. We've taken kind of a multi-pronged approach as it relates to this. The first is really just arming our employees, more than 150, 140,000 of them with AI tools to assist them in their day-to-day task. Everything from combing through large documents to summarizing those documents to developing talking points for presentations that they may be using or developing. These tools become part of their day-to-day activity to make their work more efficient. The second is actually

using AI tools in areas like our service centers, our call centers, to assist in our ability to serve clients, whether they're card customers or clients of our Treasury and Trade solution business. And so that's kind of a second category. The third is really use of agentic AI. And think about it as aiding coding developers, writing code, checking code. So those are the examples of how we're using AI to improve the efficiency of our operations. And that's an important investment that we're going to continue to make. Because in many instances, these types of tools will transform the operations of banks and other institutions alike. And the stable coin. I know that was the subject of Kelly's newsletter today as well. Yeah, it's interesting. If we take a step back and you think about city,

and you think about our Treasury and Trade Solutions business, we're in over 90 countries with clients. We have an expansive network that enables our clients to manage their liquidity, manage their payments, manage financings, and vendors, et cetera, et cetera. What clients really want is the ability to be multi-border, multi-asset, and be able to do these things 24-7 all the time. And our token services business, our city token services business enables our clients to do those things and we're continuing to invest in that. Where stable coin comes in is with this genius act, I think it creates an opportunity for us to be able to serve people who will be issuing stable coins and to have an option for those clients that we serve today.

Whether it be reserving, whether it be on and off-ramping conversion from coin to cash, those are services we'll be able to provide. So we view that as an opportunity for us, but we feel very good about the competitive advantage we have with our network and with our city token services. Absolutely. Thank you so much, Mark Mason, CFO of Citigroup. Really appreciate your time today. Kelly, I'll send it back to you. Thank you both, Leslie and Mark. And in fact, we have some breaking news on the stable coin front. As that bill has failed to advance in the house, I believe, let's get the details from Emily Wilkins. Emily. Hey, Kelly. So yes, this House was just holding a procedural vote that would have then led to the vote on three different crypto bills. And that procedural vote has failed. Now, we should note, of course, here that that rule was not just on crypto bills. It was also going to set up a vote on funding for the Defense Department. We're trying to learn a little bit more about why the bill went down. But this definitely puts a wrinkle into House Republicans' plan to have this crypto week where they were going to pass crypto bills. You have to get that. process vote in place to actually move on to the other votes.

One of the members who did vote against the process, Congresswoman Marjorie Taylor-Breen actually tweeted a bit this morning, voicing some of her concerns with the bill in relation to a central bank digital currency. She was concerned that the bills did not do enough to prevent that from being created by the U.S. government, saying that more oversight was needed. Of course, we'll be speaking with more of these lawmakers who voted against the bill to better understand their concerns, how many of them had to do with crypto versus defense. But again, this is a huge wrinkle.

There were a lot of folks, crypto industry lawmakers, who were expecting these bills to get done this week. It now looks like Republican leaders might need to go back to the drawing board to figure out how to get this done. Certainly a big delay that I don't think many folks were expecting today to happen and could pump delay these bills to potentially next week and maybe even longer. Kelly? We're looking at Bitcoin selling off slightly Robin Hood down about two.

So not reacting as if this is, you know, a huge deal. And maybe it goes back to the October time frame that Coinbase's chief policy officer told us about last hour. Yeah, and Kelly, remember, of course, for these bills, there are two different bills on two different tracks. One of them was stable coin. That's the one that we thought was going to clear Congress this week. The White House already planning to do a signing ceremony on Friday. But the other one is kind of the bigger prize for the crypto industry. This market structure bill saying when a digital asset is a security versus a commodity. That's the one that a lot of these crypto companies wanted to see get done.

And even if the House did vote to pass it this week, it would still need to go to the Senate where there's been a lot of debate, a lot of discussion, likely wouldn't see final passage of that until the fall at the earliest. So still a long way to go, it sounds like, to get some of these bills done, a lot that can potentially happen. And we'll see too. House leaders might be able to resolve what some of these differences are, get back on track for this week, next week, still be able to move these before that August recess that's coming up. We're just going to have to be learning more from lawmakers about exactly what their concerns are and how they can potentially be addressed.

Coinbase probably the hardest hit among the kind of names we're quickly checking here. It's down 4.5%. Again, they were really looking for that clarity as the policy officer himself told us. Emily, keep us posted. Emily Wilkins is on Capitol Hill amid that surprise development this afternoon. Let's get to Condessa Brewer for the rest of the CNBC News Update. Kelly, hello, good afternoon to you. Former National Security Advisor, Mike Walts, defended the use of signal to discuss military plans. Trump administrations were on the chat,

discussing military plans in Yemen. And what we saw is that Mike Walts admitted that he was there, but he said that he inadvertently added a journalist to the conversation and said he wasn't disciplined for doing so. Waltz also claimed the use of signal stemmed from a Biden-era recommendation. The testimony came during Waltz's nomination. hearing to become the UN ambassador. Jeff Bezos tapped Amazon veteran Tom Taylor to oversee his $10 billion climate and biodiversity fund. Taylor, who previously ran Amazon's Alexa voice

assistant division, will serve as the new president and CEO of the Bezos Earth Fund. Taylor retired from Amazon in 2022 after roughly 23 years with the company. And Major League Baseball could be coming back to the Olympics. The MLB commissioner and the players union heads say They're exploring the possibility of using the league's players in the 2028 games in Los Angeles. The tournament could be played based on an extended all-star break. MLB clubs will still have to endorse that plans, but that would be super exciting for the Olympics, Kelly. Interesting. It certainly would. Contessa, thank you.

Contessa Brewer. Let's get to Rick now for a check on the bond market, which, wow, Rick. I mean, lots of headlines today and lately. Yes, lots of headlines. and actually some nuances that we should explore here. If you look at the year-to-date of both the year-over-year metrics in today's CPI report, there's no doubt that they turned higher. They're not as high as they were earlier in the year, but they did turn higher.

And if you take a bigger view and move back five years, maybe the other part of the equation shows up. We see the glide path, for the most part, to the right side of that kind of camel hump, has been moving lower. That's a good thing. But you could also see it's a bit choppy. For the most part, today's numbers didn't make the market nervous, but let's be real here. First of all, two out of the four metrics, you had two month over month, two year over year. Two out of the four were lower than expectations. That's a good thing.

But all four were higher sequentially than they were last month. And that is a big deal to pay attention to, even though the numbers are small. and it's very difficult in this politically charged climate to say, aha, that's because of tariffs, because it may not be. But next month may be even more important if the mission is to try to correlate where the inflation is coming from. Finally, how did it affect the markets? That part's easy.

Look at twos and tens on an intradate chart. They both moved higher, not in a big aggressive way, but they didn't. Finally, the dollar index is hovering at a three-and-a-half-week high benefiting from higher rates. Kelly, back to you. All right, Rick. Thank you very much, Rick Santelli. Still ahead, CNBC.com, out with a new piece highlighting Target's recent struggles to win over both shoppers and investors. And the challenge is steep. We have those details next. Welcome back to Power Lunch. It's been a tough year for Target, with the shares down more than 30% just since Jan 1 amid ongoing sluggish sales.

Back in July of 2021 at its peak during the height of the pandemic, Target's market cap was 120. $29 billion. Now it's just $47 billion. So what's behind the big drop? CnBC.com's Melissa Repco has a new piece out today looking at why they're struggling to win over shoppers and investors. She's here on set now. Run us through this, a litany of problems. Yes, Kelly, and the list is long and it's really wide-ranging as well. I spoke to customers, former employees and vendors, and some of the themes that popped out as targets weaker in some of the areas it was once known for. Stores are sloppier. Employees aren't. as helpful or as friendly. And it just feels like they're experiencing a lot of digital growing pains where they're pulled between the priority of online growth and store sales. So they have a lot of problems like out of stocks as they fulfill those orders. On top of that, they're facing stiffer competition from Walmart. They're under some cost pressures, especially in this tariff environment.

And last but not least, they are also facing some backlash from DEI rollbacks. Right. So they've had both backlash to some of their more diverse efforts years ago. and then when they wound that back, now they have backlash on that front. So what's the plan to fix all of this? So the plan to fix it is kind of getting back to vintage Charger. And that's been something that Target's spoken about more recently.

But the challenge here is that Brian Cornell, its CEO, is expected to leave soon. He had a contract extension for three years that's expected to wind down this fall. So really it will be his successor that will have to come in with a new formula for the company to run. I mean, I was thinking about the story this morning, and I was at a strip mall is going to sound weird.

It's kind of a lovely shopping center that the Target is one anchor of and Whole Foods is another. I thought to myself, I wonder if you're a landlord. Like, do Target's problems now start to run so deep that you look at that tenant and you say, are they hitting there? I don't know if they have goals and so forth. You know, do you think about swapping it out? Even those kinds of questions. That is a really good question because one thing I've long heard from commercial real estate sources is actually

Target was the desirable tenant. They were actually thought to be part of. of power centers. So if you had an open-air mall, it was called a power center if you had a tenant-like target in it. Now, they're facing a lot of struggles that we've heard from companies like Macy's and Coles where they're in this bit of a mushy middle. They're not necessarily known for offering value. And in this environment, it's just tougher to sell discretionary goods, and that's what they're known for. And so they seem to be missing the mark, according to customers, on a lot of their merchandising. A lot of the issues boil down to execution and them not seeming

like that place that you walk in for one thing and walk out with 10. Right, exactly. And so perhaps it will be the next CEO now who has to tackle all these big challenges. Melissa, thanks again. You can read more at CNBC.com. And congratulations again. You'll come back and married laughs. Thank you.

And a few days' time, Melissa Repco. Still to come here on Power Lunch, we'll head back out to Brian Sullivan at the Pennsylvania Energy and Innovation Summit in Pittsburgh. Lots more still on the docket, Sully. There's a guy named Trump who just got here, literally moments ago President Donald Trump arriving here at Carnegie Mellon University. He's going to lead a big roundtable with business leaders from Wall Street to Washington. There is a live look at part of the president's motorcade, some onlookers as well.

The president coming in. We'll talk about what to expect from his arrival and his talk right after this short break. All right, welcome back. Let's wrap it up here at the Pennsylvania Energy and Innovation Summit where Kelly, we just showed you part of the president's motorcade. We caught the motorcade, obviously not him, but the motorcade coming in. There's the tail end of it. He kind of pulled in. He's going to be going.

He's going to lead a roundtable discussion with a ton of CEOs and leaders from D.C. Kelly, we're going to go try to watch it and then come back on afterwards with more guests and more commentary from it. Now, this isn't exactly what's going to be discussed or anything we'll hear the president weigh in on. But, Brian, you probably just saw the House failing, the GOP, sort of. of committees or whatever we call failing to advance the key crypto legislation. That just happened in the past half an hour or so, really taking everybody by surprise. Maybe it's not quite fully baked. You know, maybe there's questions about the banking system.

How this all is going to work. Still needs to be ironed out. As mentioned, the stocks and crypto, I mean, they're only selling off two, three, four percent right now, nothing major. But I do wonder, you know, they just got this huge budget bill across the finish line, right? this is kind of the next big thing on the docket. And I don't know, maybe they're just exhausted. Honestly, I did not see that.

But David Sacks, the Cryptozar, is here. He was on in the 11 o'clock hour, not with us, but he was on. If he's still here, I'm going to try to see if I can get some comments from him about this. Maybe we can lure him back to the camera. But he is here right now, Kelly. It's amazing. And going back to your point, if Pennsylvania, if your senator there, put this together, Dave McCormick, a week ago, to have the president show up as a pretty big deal.

Why do you think this rises to top billing for Trump's calendar? And what do you expect to hear from him? Well, Pennsylvania is pretty important for the elections. I mean, let's remember that. I think also president just over one year ago was almost assassinated, not too far. From where we are, I think there's a personal aspect of it. I don't want to speak for the president, but I think there's certainly that as well. Remember the Democratic governor, Josh Shapiro of Pennsylvania, he's also here as well.

I think the point that we've tried to make today, while we have Republicans in control now, we've done the same thing with Biden. In a couple of years, we'll do the same thing with whoever may be in charge then. This should cross party lines because the AI race doesn't care. Ask Rock or Ask Anthropic, whose CEO is here. It doesn't care who's in power. That's right. Brian, it's been great.

Thank you so much. I really appreciate everything you're doing out there. Brian Sullivan. And thanks for watching Power Lunch. Closing bell starts right now.