Power Lunch - Dow Hits 40,000 5/16/24

Episode Date: May 16, 2024

The Dow hit 40,000 for the first time in today’s trading. Which means it took just over 7 years to double from the first time it hit 20,000.The S&P 500 and Nasdaq both reached record highs today as well. But while big round numbers are nice, and get attention, what do they really mean? We’ll explore. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good day, everyone, and welcome to Power Launch alongside Kelly Evans. I'm Tyler Matheson. Glad you could join us. And thank you for being with us on this historic day for the markets. The Dow hitting 40,000 for the first time, which means it's taken a little more than seven years to double from the first time it crossed 20,000. It's like the rule of sevens. And the S&P 500 and the NASDAQ are both hitting record highs today as well. And while those big round numbers are nice and they do get attention, we'll talk about what they really mean. We turn to Michael Santoli for more on this historic milestone, Mike. Yeah, Kelly, I mean, the more indexes make a new high when we have been rallying the better to lend credence. I think to it. Now, in terms of the actual round number, the 40,000, there's mental accounting involved.

I do think people have a general sense of where the market is. And obviously, you flip from three to four on the odometer and you sort of notice that the market's been doing well. I don't expect this level to have any particular relevance in terms of creating a barrier that would last a long. time, you know, aside from the fact that the Dow's up 5% in two weeks and we have had a nice sprint higher to recover those losses from the April pullback, it seems like it's not necessarily something that should stand in the way of further gains or, for that matter, cause a flush of new money into the market. I wonder, Mike, as well, if people will look at this and say, you know, that this makes

them feel more like they have to run into the market, it was struck to the cash on the sidelines, or more like they missed the move already. It's kind of this constant, this gnawing sense of, I'm going to be the one who gets in right before the whole thing turns lower. There's always that sort of caution, the way people check themselves and feel as if they probably wish they owned it when we were at 30 and now it's at 40. However, you know, doing this a long time, higher prices are a formula for getting people to want to be involved. They feel as if they basically the FOMO overcomes that caution. Now, that said, I don't know that we're going to see some kind of dramatic effect. I've never been of the mind that looks at the supposed cash on the sidelines and says,

hey, that's potential energy for this market. Most of that money is not really about to enter stocks necessarily. It's just kind of a cushion. And what I always say is if you've been involved in any respect in the equity market and maybe you have some bonds and maybe you have some cash, as the equity market goes higher, you don't have to buy more because the market did its rotation into equities for you in a sense. Very interesting. And I couldn't agree with you more.

We hear all the time, the old saw about there being money on the sidelines, waiting in cash. Well, it's in cash because people want it in cash more than anything else, I think. Mike Santoli, thank you very much. All right, our next guest says new highs often make room for new highs. Instead of selling in May and going away, he says maybe buy in May and enjoy the day. He's riding the wave higher. He's Brian Jacobson, chief economist with Annex Wealth Management. Brian, always good to see you.

So you think that there is more money to be made in this market, even if you don't add money to your position? That's right. Yeah, thanks for having me. Yeah, here at Annex, the way that we're looking at it on our investment committee is that earnings expectations continue to rise. And so that is actually something that seasonally speaking back in April, earnings expectations typically fall. But they actually began to rise. And we think that that's actually just showing that the sell side maybe it has still been a little bit too negative on the broader market. And so we could see some continuation of this rally. I know the old maximum is, you know, sell in May and go away.

But it really doesn't pay off in the near term or even over the longer term. If you think about what we are likely to encounter over the next few months, pretty decent economic data, the Fed probably still saying that they're in this pause. Really, we just need to wait for the earnings magic to work itself. I'm going to ask a question that may be a little off point. I was having a conversation with a viewer earlier today who pointed out that when the 2017 tax cuts came in, basically there was a 40% reduction in the corporate tax, the highest marginal corporate tax rate. And profits have risen now by well over 40% since those tax cuts came into play.

How much credit do the tax cuts deserve for helping lift this market to where it is today? You know, that's an interesting question. We've looked at some of the data as far as the effect that the tax rate has on growth. And it's really a mixed picture, as you would expect. There isn't really a definitive answer. It is nice that corporations are able to pass on more income to shareholders. They're able to reinvest for growth as opposed to necessarily paying the government's bills. But the tax cuts themselves, there's all sorts of hand-wringing over who was that going to really benefit, especially since bigger companies are pretty adept at not paying taxes.

You know, through legal means, of course, I don't want to make any accusations, but they are adaptable organizations. And it's oftentimes the smaller cap stocks. They're the ones who foot more of the tax bill. And there's are the earnings growth that you really haven't seen participate as much as the big. companies who have been pretty good at keeping their effective tax rates low. Brian, you mentioned something that is getting a little more attention. Brian Reynolds, another Brian always focuses on it as well, but he and you both think that buybacks are and are going to increasingly be an important component of this rally.

And this takes us back to kind of the late 2010s when this was a huge phenomenon. Just talk a little bit more about that. Yeah, we do think that, you know, you saw Apple and Google announce big buybacks. They have a lot of cash flow, so why not? But other companies are likely to get in to that game as well. If they have already termed out their debt, you have seen some that are paying off the higher cost debt because of the cash flow,

so maybe there isn't this massive refinancing wall that's looming in front of us. And with the excess cash, they're probably going to be able to deploy that as far as with buybacks and also with the dividends. Now, big companies, they do have to pay a little bit of a penalty to the government.

If they do those buybacks, we thought that might tilt things a bit more in favor of dividends as opposed to buybacks, but it's not punitive enough to really incentivize them to stop doing these buybacks. So as long as we're seeing earnings expectations rise, buyback season is really coming into bloom. We think that that's really a formula for the market to continue to move higher. What sectors do you believe have the greatest potential to move higher from here? Yeah, the way that we're positioning portfolios is more in the mid-cap space.

Most of that comes from the bottom-up work that we do as far as looking at, what are the companies that have resilient profit margins, have been able to grow them relative to industry peers. Within the specific sectors, energy, still a cash cow, low investment as far as increasing productive capacity, and so they're just kind of milking the cow of high oil prices. But then also still within technology, although within tech, it has moved down more towards the mid-cap tech as opposed to the mega-cap tech. All right, Brian, thank you so much for being with us today. You gave us a lot to think about. We appreciate it. Thank you. Let's turn now from the mid-caps to some of the small

smaller ones, meme stocks like AMC and GameStop losing some steam today, but still seeing huge gains this week. Let's get some insight now on what the retail investors thinking about the meme trades and the bigger Dow run to 40K, retail trader and online personality, Ryan Mnowski, known as Stockmo, joins us now. His YouTube channel, also called Stockmo, has well over 600,000 subscribers. It's great to have you here. Ryan, welcome.

I appreciate being on here. Thank you. It's interesting that we're seeing both the broad market and the meme stocks really perking up this week. What do you think is going on here? Well, you know, I asked the community yesterday. I said, why are we moving into some of these plays? And for example, today, I see Faraday Future Intelligent Electric absolutely exploding up. And it's the short squeeze. Some people want to go ahead and get the bears. They want to attack the shorts. And you're seeing that play up 3,100 percent in what, three days? You got GameStop,

Of course, Roaring Kitty. He came out and post after what? Three years? Three years. He doesn't say a word. We get a little bit of a little guy leaning up. I'm paying attention. And now we're getting a lot of video clips through there. And of course, we know that he has a huge, just a huge community from back in 2021. And so that's driving a lot of interest in these meme plays right now. Yeah. And I think what I find so striking about it is it would be one thing if he did a one-off post or Ryan Cohen or any of these guys. But it's got to be more than a coincidence that this happens at the same time that the broader market is making new highs. And if I think back to the last time around what AMC and GameStop were jumping, it was January of 2021. The market again was in a period where it was about to go on, kind of have a blow off top later that year. So there just seems to be plenty of money sloshing around, for lack of a better word, right? It's not as if this consumer is feeling so strapped that they're thinking to themselves, I better get my money out of the market instead of pouring it in. No, I agree with that.

people are seeing opportunities out there. And I think one of the big thing that Wall Street doesn't understand about the retail community is that if they just wanted that 10% annually, they would go into the S&P 500. They are looking for bigger gains. They are also looking for reason to invest to be a part of something bigger than the individual. So when you see these meme plays and people talk about the communities are huge. It's a different time now than it was, say, 20 years ago. Online presence allows people to be.

be part of something like this. And so a lot of people, they do it for the community. Other people were just point, they just came right out and said, I'm looking to make as much money as I can. I want a little piece of the pie. Others want to put it to the shorts. They want to go out there. And thus, like I said today, Faraday, Future Intelligence, you know, I saw that two days ago pop up on a lot of the comments in my Discord, on my channel. And they, and two days later, it's up 3,100%. And now we know how this plays out in the long run. But that is one of the main catalysts that you're seeing from a lot of retail investors. They want to get a lot.

They want to get in. They want to take advantage of it. Put it to the bears and walk out, hopefully, holding a lot of cash. Let me ask you a kind of broad question, if I might, Ryan. And that is this. You know, here on CNBC, we have a lot of people who mention stock names, who are traders, who are in and out just as maybe you are or Hyper Kitty. What is the name?

Roaring Kitty. Roaring Kitty. Roaring Kitty. Excuse me. Hyper kitty. That's going to be my name. That's a channel right there. I got it.

I'm going home right now. I'm leaving here. I'm leaving folks. I'm out of here. But my question is, okay, so here you have people on CNBC doing essential, mentioning names, doing things like this. And then you have a whole communities, large ones built around folks like yourself, like Roaring Kitty and others who have followers in the hundreds of, thousands who are trying to learn and know how to be an investor. How should people think about this world and these individuals, yourself included, as guides to investing, guardians of capital?

Well, I can answer that pretty straightforward. You can't trust everyone out there. Myself, for those who don't know, I've been an educator, high school, college level. I also been a formal financial advisor. Two master's agrees. Lots of accolades, two national championships with my kids. We coach, 15 state championships. It's who you follow. You've got to make sure you look at the background.

Are they, are they, and can you trust them? Let's be blunt. And of course, out there, there is a lot of different communities. And Roaring Kitty, you know, Hyper Kitty, whatever you want to go with. At the end of the day, you got to have faith that the retail investors are going to do their due diligence and who they follow, what stocks they get into. My platform is all about financial literacy. And I've been pushing that since I was an educator into my own channel and, of course, making as much money as we can along that way. Quick question. Do you think this is the same crowd

who was involved in the meme stock run up the first time around three years ago? Or is it a fresh one? It's a combination. I had some people come out and they say, who's roaring kitty? And then a lot of them said, I've been here since 2021. I'm still holding. And so you get a nice combination of both. Some people said, I was a part of that. And, you know, I got burnt. And now I'm just going to watch on the sidelines.

But as you guys talked about earlier, a lot of FOMO out there, a lot of people wanting to get in multiple plays throughout today. You can see them running up hundreds of percent. And at the end of the day, it gets the community fired up. And I can see it in my channel right now, if you guys. go in there and look. Seems like you're doing a lot of thinking about and maybe investing in China. Why? I am. Well, right now, one of the big plays we have on there, and we can pull that up, just yin. Yin is up since we, if we get the right one there, boom, up about 80% since we got in.

And why? Well, because with China, you have quantitative easing. With China, you have this worldwide tour, this goodwill tour that you're seeing them go on with Western nations. with the world to drive commerce their way, to show they're open for business again. And so you have two, two and a half years of that market just getting clobbered. You have the U.S. rallying like there's no tomorrow. So it's getting frothy here. At the same time in China, you got these lows, multi-year lows. And now, as we know, they did what, I think it was a quarter of trillion dollars in

stimulus. It gives us an opportunity to buy in a little bit cheaper. You have India frothy, put it all together. There's opportunity. final question on that, Ryan, and when you're playing something like Yin, which I think is triple leveraged, what do you've said as your point of getting out? Do you get out based on a certain momentum that you can discern? Okay, enough people are in this. I'm getting out. Is it a price level? What? Because those things are, that's a tough way to ride.

One of the biggest questions retail people ask me is, when do we get out? And so for us, we like to look at the RSI, the technicals, put all those together, as you just saw. And what we see right now, RSI is up to 76.72. Wow. Way over a bot. And so when you see that relative strength index flying that high, it is a, it's the time to start taking profits or at least getting some trailing stop losses or some, we'll say, some put options as insurance.

You never want to use it. Yeah. But it's nice to have in case you do. All right. Ryan, thank you very much. Ryan Mnowski, aka Stock Moe. When you talk to me next time, I'm a hyper kitty, okay? Yeah, I love it. I'll be what? I'm subscribing to your channel.

All right, man. Oh, don't do that. Thanks a lot. All right, Kel. Coming up, as lower income consumers continue to struggle with higher prices, Walmart is betting on the higher end. Shares are up almost 7% today continuing to power the Dow. We'll discuss it all next. Welcome back to Power Lodge. Walmart is sharply higher after a strong earnings beat this morning. The shares are up nearly 7%. They're seeming to win over higher income customers. Melissa Repko is here to discuss. I almost wonder if this is great news for Walmart, but what does it tell us about the broader economy

or the state of the consumer? You know, it's an interesting time because Walmart is seeing gains from households we don't typically associate with it. But it's also talking about how it's seeing a silver lining in a different way with inflation because it is picking up customers who may have gone to fast food restaurants before.

So in general, stepping back for a moment, Walmart's really seeing four drivers. It spoke about market share gains from these higher income shoppers. It's seeing e-commerce. gains 22% in the U.S. year over year. It's gaining from people who may be cooking at home rather than going to fast food. And it's also getting a boost in its business from things like advertising and its third-party marketplace, which are newer businesses for the company. Interesting.

So talk to us a little bit more. Elaborate on this potential switch from people who would eat in quick-serve restaurants and now are not doing that. Are they coming in and buying prepared foods? Are they coming in and buying foods that they have to cook a little of both? That's a good question. I spoke to. CFO John David Rainey and he told me that the gap is widening between fast food and grocery shopping that he was noting that as prices come down a lot of the ingredients at the store if you look at the the sticker price on the menu at a lot of restaurants that stayed high so Walmart is offering both prepared food and also

ingredients that might be a little bit more interesting for people who are bored with cooking at home it recently launched a new premium line of food actually called better goods and most of the those items are under $5, but they include things like curry chicken umpennatas or restaurant-style chicken wings. And again, it's going after people who might be looking for a cheaper alternative. One risk then could be, as we talked yesterday, McDonald's launching this $5 value meal. But for now, also talk to us about the higher income customer. What was it saying exactly about the shopper? So the CFO told me that one of the reasons why they're attracting this

customer is, of course, everyone is more value conscious. But also, Walmart's really leaned into kind of classing up a lot of its stores. It's remodeled a bunch of stores. It's remodeled a bunch of stores in recent quarters and it's full steam ahead with that plan. So it's putting a lot of its more fashion forward merchandise front and center. And even that food line I mentioned does have a look that people might be surprised to see at Walmart. They might associate it with someone like a target. It looks a lot like that. And so those types of moves may end up attracting a more affluent customer. Walmart said it's not intended necessarily to attract them, but that is what's happening. And another thing they're doing is they're adding a lot of convenient options like

delivery to the home. Interestingly, for the first time, delivery has now surpassed store pickup. Really? For online orders for Walmart, which is a big... And you said online or digital is up 22%? 22% for the U.S. and 21% globally. And that would include, that would be, they would be competing head on head with Amazon on those areas, Target and others. Yeah, and that's a combination, again, of the store pickup of online orders, delivery to the home, delivery and the cardboard boxes, both from the store, you know, in paper bags and then also in a box, all of those different things that they offer trying to lean into their storefront. It's very interesting to me that you say that affluent customers are part of the pickup here.

Effluent customers like bargains too. Exactly. I mean, they may be going to a store like Walmart for a different reason than a lower income customer is, but they like the selection. They like the low prices. Exactly. We've long thought about T.J. Max and places like that. You know, people would often brag, I got this dress at T.J. Max.

Well, maybe perception is changing in the world of grocery as well, where people are comfortable looking at a place like Walmart because they see places like Aldi and Lidl growing. Sure. And I was just going to mention that this may help them fend off Amazon, which we were just mentioning, in a week and time when they're battling, who's the biggest company in the country? And Amazon's hot on Walmart's heels. It's almost there.

And so the more that Walmart's kind of acting like Amazon, the more they might think that they can keep that crown. Exactly. And that's why they are trying to lean into those alternate revenue sources like advertising, because they know from Amazon's playbook that you cannot just be a retailer. You have to make money in other ways and higher profit ways. Fascinating. All right, Melissa, thanks very much.

Thank you. We appreciate it. All right, still to come, we continue our anatomy of a consumer series. Today we look at how spending is holding up in travel. Are consumers tightening their belts this summer? We will be right back and explore that and more. Welcome back. We continue our week-long series on the consumer. Today we're looking at the travel space, which has been so strong.

And this Memorial Day is expected to be the busiest ever for flying. Phil Abo brings us the details. Phil? Kelly, it's not just Memorial Day that will be the busiest ever. This summer will be the busiest ever for the U.S. airports in terms of the number of people who were going through the airports. In fact, the TSA says it'll be an increase of 8 to 10 percent compared to the number of people who are flying last year. Starts next Friday, Friday before Memorial Day with a bang. 2.9 million passengers are expected. And we've been seeing a steady increase in the number of daily average

passengers being screened by the TSA. It was a record last year. We will likely see it cross over three million a day at some point this summer. So what is the TSA doing? Well, ahead, the administrator in charge says they're adding staff. We've added lanes, we've added staff, we've added technology. And we've also had the benefit of finally paying our workforce what every other federal employee would be paid for that kind of a job. And that has had a big difference in our ability to retain talent. And so our retention rates have gone up by 50%. So it's a significant improvement. So what about the airline stocks? Well, they really haven't done much this year. And that's reflected in this chart compared to the S&P 500. Look, there's a lot of reasons

why the airline stocks haven't moved, even though we are starting to see a number of the airlines swing into profitability. We're going into the busiest season of the year. The average one-way airfare is basically flat from last year, about $180, according to Syria. So this is going to be a very busy summer, guys. And we, I know I hear this all the time for people saying, really, are there more people working at the airports? It seems crowded. Yes, there are more people working at the airports for the airlines. I'd like to find that one-way airfare for $180. I've been doing a fair amount of flying, and I haven't found anything like that lately. When we think back a couple, a few years, I don't know how many years ago it was,

when there were those incredible snarls at O'Hare, most maybe especially, in TSA and moving through checkpoints, hours long waits. What changed to make it operate so much more smoothly now besides the fact that they're paying more and retaining more their workforce? Well, they've added a lot more staff. and they have added more security lanes at various airports where they can. Look, they are constrained in many places physically with what they can do, but in other places where they have been able to add more security lines, they've been able to do that. And that has helped the flow. And they will point this out at the TSA. Yes, you will sometimes see what appears to be a long line. It's the wait time that they are focused on. And according to their own data, they have been generally speaking,

heading the expectation in terms of how long they expect those wait times to be. All right, Phil, thanks very much, Phil Lebo. And so does the travel area have the legs to hold up the consumer, or will we see some belt tightening this summer? Joining us now as senior airlines analyst at TD Cowen, Lane Becker. Lane, welcome. Good, as always, to have you with us. I expect you're going to tell me that consumers are still looking for experiences and that you expect a pretty lucrative summer for travel generally,

and airlines particularly. I know, right? It's exactly right. That's what we're thinking. To your point, I think two things are happening. One, to the experience, sector of the consumer, you're seeing more international travel than we've ever seen before. Interestingly enough, I won't tell you how many years I've been covering airlines, but it's, you know, more than four decades. And what I will say when I first started, less than 10% of Americans had a passport, and now 48% do. So you've seen this enormous increase in international travel. And one of the things we thought we'd have happened this summer was that the Atlantic would be in an overcapacity situation. But in the past six months, two things have changed. One, you've seen aircraft delivery delays. So the airlines haven't been able to grow capacity as much in the international markets as they might have wanted to.

And the result has, and that's not only U.S. airline. because the U.S. airlines were always going to be a low single-digit capacity growth this year because they were first back in the market last year, but you're seeing European airlines cut capacity growth. So that benefits. Let me gore in on your coverage list and ask this question. It seems to me, and you can correct me if I'm wrong, that you have a higher view of what I will call the larger legacy airlines,

Delta, American, United, Alaska, than you do. of the more upstart budget-conscious airlines like Allegiate, Southwest, Spirit, Frontier, Hawaiian, et cetera. Is that right? And if so, why? Yes, that's exactly right. And a big part of the reason for that is the international component. American is probably the smallest with 35% international, but Delta is about 45% and United is almost 50%. So they're benefiting. Asia Pacific is, is another area of growth. In addition to the North Atlantic, we're seeing good growth in Asia,

ex-China, and Delta and United have the biggest component of travel in that market. So that pretty much speaks to why we like those airlines better. Alaska's kind of the outlier, because, as you know, they're predominantly U.S. domestic-focused airline, but up in Seattle, they don't tend to play in Florida. I've jokingly said in the past, Americans only go three places, and that's South Florida, Las Vegas, and maybe Southern California.

And those are the markets where we have enormous capacity growth. And as a result, fares have come down quite a lot. And so those airlines are having a little bit of a struggle in terms of generating revenue and operating margins are under pressure. And then the other part of it is costs are up a lot, right? Labor costs her up a lot. And on a relative basis, since the big four, Well, specifically maybe American Delta and United, they set the bar pretty high.

And even though their labor costs were up 11 or 12 percent, the labor costs of the smaller airlines that you referenced are up 30 and 40 percent. Interesting. That is problematic from a margin perspective. Helene, what would you do with the airlines, typically speaking, as we move throughout the cycle? And maybe this is a 90-style bull market or maybe it's late stages. I don't know. But can you kind of just put this in perspective as we try to figure out, you know,

what the macro message might be about the consumer here? Yeah, I think that we're going to see a shift eventually as three becomes the new four or four becomes the new three, right? People are being required to go back into their offices more often. And what we've seen over the past two years is as people return to office, they return to travel. So right now you have this, what I call a slight inversion where you have more leisure and visiting friends and relative traffic than you do business traffic. And it's still not at or above pre-pendemic levels. And it won't be, especially the short-haul markets. They'll probably take a longer time to come back. But the longer haul, the international will come back.

And you'll see that swap. And when that happens, profitability should improve. For all the records that we've talked about and that Phil was talking about in terms of record traffic, the summer that people are forecasting, including us, we don't see that reflected in earnings. We see record revenue, but we also see record expense. And expenses growing faster than revenue, putting pressure on margins, and cost of capital is going up. So that is impacting the valuation for the equities, you know, even on a PE or price to cash flow basis, where we're lagging until we get those numbers to be, the earnings numbers to be a little more stable. And that's probably a 25 event. Yeah, exactly. So if they can kind of write that ship, then it becomes an even more compelling thesis.

Helene, thanks for your time today. We appreciate it. Thanks for having me. Helene Becker. As we head to break, let's get a quick power check. On the plus side today is AMD of 4% following Invidia, which has been moving toward new highs. On the negative side is Pool Corp continuing a recent down cycle. It's down 7% and 2 months, 3% today. That's your power check and we'll be right back. Welcome back to Power Lunch, everybody. Money moving into stocks today, a little bit out of bonds, sending yields higher. Rick Santelli's covering the action

in Chicago with 4. Rick. Yes, Tyler, there was some major U-turn. action today. Let's start at the top. At 8.30 Eastern, we did see our April redone housing starts, and it was on the light side. But like many numbers lately, it's not what you see in the windshield that moves the market. It's what's in the rearview mirror. Last month revised $1,287,000. That is a four-year low. That definitely was an issue, and we saw yields drop on that, and then almost immediately did a U-turn. Why? because import prices were at a two-year high, up nine-tenths of percent. And even X Petroleum was up seven-tenths.

These are hot numbers. So interest rates went up, as you see on that intro of twos and tens. And how did it all begin? Well, yesterday we closed twos and tens at the lowest yield since the 4th of April. So a bit of a U-turn there as well. And it probably would be advisable for all you traders out there to be paying very close attention, especially in tens, to the low 430s. There should be good support there.

There was good resistance in the high 460s. It barely made it over 470 before it reversed. We could say a lot of things about the volatility of treasuries, but one thing is for sure they have been trading technically pretty hot. Kelly, back to you. Interesting. Thank you, Rick. Rick Santelli.

And more tariff news out of the administration today. Pippa Stevens is looking at the latest and its impact on solar companies. What now? Okay, so a couple of things. So the White House announced this morning that's reimposing Section 201 tariffs on bifacial panels. So these are double-sided panels, and they actually make up the vast majority, almost 100% of our utility-scale panel imports. Now, back when the exemption was first implemented, they were a very small portion of our imports. But because they didn't have those tariffs, then they grew to become our major imports on utility-scale panels.

And so the White House said that they should no longer be exempt. Now, the White House also said it's ending the anti-dumping and countervailing duties waiver on June 6th that applied to four Southeast Asian countries where essentially Chinese producers were found to be running their solar systems through those four countries without meaningful manufacturing taking place there in order to not have to be subject to these duties. Separately, the Department of Commerce announced yesterday a new ADCVD investigation and this, of course, all comes on top of Tuesday's 301 terror. when we doubled, when the administration doubled the tariffs on the solar cells. What's an ADC? I don't know how you keep all the straight pit, but it's the new investigation? So that's the anti-dumping and countervailing duty. So essentially it's saying that Chinese producers shifted their footprint to Southeast Asia, where we get more than 80% of our panels now in order to avoid those tariffs. But I think the broader point here is that it's incredibly confusing.

And I think the American Clean Power Association summed it up well when they said that the whiplash caused by constantly changing regulatory policy is bad for business certainty. Because if you don't know what your costs are going to be, you can't build one of these long-term projects. So a lot of confusion, hard to keep track of all these. That inflation reduction act was supposed to be the greatest gift to clean energy industries we've ever seen. And again, I think to American clean energy industries, as they increasingly raise tariffs on all of these outsourced goods. Well, it's de-globalization versus decarbonization. And I think the reality is the inflation

Reduction Act went a long way. We saw all these announcements. But when it comes down to it, shifting supply chains takes time. And China controls more than 80% of all these different steps. Even if you look at the module level, what if you go higher? What if you go all the way to wait for ingot cell polysilicon? I mean, it goes all the way up. And where do you stop? Wait for ingot cell, polysilicon. So it's really complicated to then, you know, have these supply chains reoriented. So the IRA is trying. And so this is the White House saying we went this whole way to incentivize American manufacturing. It's not quite working how we wanted to. We have to go even further.

Interesting. All right, Pippa, we've got to leave it there. Thank you very much. Pippa Stevens. Let's get to Kate Rogers. News update time. Kate. Hi there, Tyler. Senator Bob Menendez revealed during his bribery trial today, his wife, Nadine Menendez, is battling breast cancer. She was supposed to stand trial with her husband and two other defendants, but a judge agreed to separate her trial last month for then unknown health reasons. Menendez and his wife are accused.

used of accepting hundreds of thousands in bribes in exchange for political favors. The House passed a bill today that would crack down on concert fees. The so-called Ticket Act would require sellers to list the total cost of a ticket to buyers, including fees. The bill would also ban deceptive websites used by secondary sellers and require sellers to provide refunds when an event is canceled. And a seven-foot statue of the late Reverend Billy Graham was unveiled today at the U.S. Capitol. Each state gets to place two statues on display inside the National Statuary Hall to honor notable figures in history.

The North Carolina born Graham died in 2019. He is the most widely heard Christian evangelists in history, preaching in person to more than 200 million people worldwide. Tyler, back over to you. All right, Kate, thank you very much. We celebrate Asian-American Native Hawaiian and Pacific Islander heritage all month long. Here is DiPali Goenga, the well-spun living. CEO. I come from India.

I come in from a patriarchal community, you know, earlier where, you know, it was about having a male child and I had two daughters. For me to lead by example was so important, but they really saw that yes, there's a legacy that leave for them is about financial independence, about being empowered to do what you want to do and really make an impact. Tesla plans to launch a robotaxi in August, but several companies already doing that in China. Baidu even collaborates with Tesla. So how well do they work? We asked Yunus Yun to take a ride. I'm at my hotel in Wuhan and I'm going out to dinner and I decided that I'm going to take

Baidu's self-driving robo taxi. You need a special app. But not everyone can ride. A notice pops up and warns, no young children, pregnant women, elderly, the infirm, or anyone with a bad heart. I'm in the right part of town to get the service, but the app says that I need to walk about 100 feet to get to the closest station to board the robo taxi. The trip costs about three dollars, and thanks to steep discounts, that's about the same as a regular taxi. We got one, and it's coming in 15 minutes. So here's the robo taxi, but there's a driver inside. The staffer told us to catch an unmanned cab, we needed to go to another. pickup point. Less than half of the taxis still come with safety personnel. We did, and another

showed with another assistant. Finally, we got one without a human. Wait, no one is inside, except for us. We're on our way, but we're moving kind of slowly, about 30 miles an hour. On China's notoriously chaotic roads, the robo-taxie drove up a ramp, made a U-turn, and negotiated its way around bikers riding tandem and a timid driver. In an emergency, you press this for help. So it took us a little bit of time, but we finally got here. The Baidu Robo Service is 24-7, and it looks like the car is going to go off for another trip. And Baidu has a fleet in Wuhan of 500 robo taxis that wants to build up fast.

Just this week, the company launched the 6th generation Robotaxi or the RT6. By the end of this year, we're going to be over 1,000 robo taxis. We currently runs about 800,000 orders per quarter on a quarterly basis. And cumulatedly, we have achieved over 6 million orders for our passengers. In addition to growing the usage, the company wants to make the car cheaper. So the price of the RT6 at $28,000 was less than half the cost of the model that I was in, guys. So it looked like when you began your journey, Eunice, it was light outside. By the time you got to your dinner appointment, it looked like it was dark.

It seemed it took a long time from beginning to end. Were you late for your date? Yeah. Yeah. Yeah, let's say that it took four hours just to get the unmanned cab. Yes, but once we were in the cab, as you saw, it was working. But the sad part is that because it was so exhausting, finally getting the cab and doing everything, I didn't end up having dinner.

That is the greatest ending to the story. I think I've ever heard. Eunice Yun, thanks for staying up late for us. See you later. We should send her, you know. Send her out somewhere. Yeah, we'll send her an Uber. Coming up, a special Dow 40K edition of three-stock lunch.

Welcome back. Time for today's three-stock lunch. Boris Schlossberg is managing director of FX strategy with BK asset management. He's got our trades. He's a CNBC contributor. And to begin, in honor of Dow 40,000, Boris, we've asked you to pick a Dow stock you think will help drive the Dow to 50K. Your answer is? Mr. Softie, I think there's no argument. that Microsoft, the world's largest $3 trillion company, is well on its way to guiding the

Dow forward, simply because they have a dominant place now in AI. And they're very, very good at exploiting their dominance in the marketplace. I think it's not out of the realm of possibility to imagine in a couple of years that we may be paying Microsoft subscription fees for AI agents the same way we pay them subscription fees for office at this point. So I think they can have an amazing opportunity here to monetize. They're doing a huge amount of investment. obviously have a ton of cash, $80 billion of cash on hand.

So company, I think, is firing at all cylinders, a very solid bet going forward, given everything that's going on in tech. Up next, Boris, we ask you to give us a stock in the Dow that you would not own right now. And you said, so I think Boeing continues to be radioactive. Now, I know that everything's that sort of like the worst is over, sort of all the bad news has been taken out. But, you know, there's still a tremendous amount of problems on the culture side there. The DOJ is suing them for essentially breaking their agreement with them.

I think it's not out of the realm of possibility that if something terrible happens to any of their planes, they could be sued essentially into oblivion. And to me, this is just too much of a danger point right now. I really want to see a year of peace and calm and stability out of Boeing before I would even consider investing into them again. All right. Then we also asked you, Boris, to give us a stock that's not currently in the Dow, but could be by the time we hit 50K. And you said, alphabet seems like a solid choice. Yeah, you know, I was wrestling between meta and alphabet,

and I decided alphabet is just simply such a solid choice, just because the company is really also a master of dominating in all of the sectors that it performs in, especially if you think about this, YouTube really now is the television of the world. They are such a dominant presence. We all watch far more YouTube than we ever watch any shows at this point. And that translates into massive amount of advertising for that. them. And then add to that the fact that they still have a very healthy albeit number three

business in the data center, which is growing a double digits for them. So they have this opportunity here. And of course, they've had some setbacks in their AI, but they still managed to, I think, create a very, very strong space in AI. And if they can marry AI with search going forward, there's lots of monetization opportunities for them. I was that way. You reminded me that it's not currently in the Dow. That's how obvious it seems to me. I think these are great picks. And when Super Kitty comes on there. I just imagine. Got to go. Thank you, Boris.

We're back after this. Thanks for watching, everybody. See if we can close above 40,000. Closing bell starts right now.