Power Lunch - Dow hits session high as Lutnick hints trade deal is coming 04/29/25

Episode Date: April 29, 2025

The Dow rose on Tuesday, hitting its highs of the day as the White House said a major trade deal was close to being announced. We’ll tell you all you need to know. 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. I'm Kelly Evans. And as you just saw before the break, Brian Sullivan is coming off a huge interview with Commerce Secretary Howard Lutnik. We'll recap the headlines for you shortly. But let's get a quick state of play on the markets with stocks soaring to session highs in the wake of that interview as well. The Dow's up 377 points. The S&P's up about three quarters of 1%. And both the Dow and S&P have now been higher for five straight sessions. Now, quick comment on that as we heard from the Commerce Secretary, offered some color on tariffs and so forth. He said that he told Brian, one trade deal is reached with a country, but he wouldn't name them. And he says they're awaiting approval from the other country before announcing it. I went on, of course, to say that the president is not as focused on the stock market this term as he was in the first term. But we've, I think, already come to that conclusion. Let's check on some stocks that are moving higher following their earnings today with Dow component Sherwin Williams, rising almost 6% after a beat, but said demand was choppy and softness could remain into the second half of the year. Pfizer up 4% as cost-cutting helped earnings, but on a 20-year

chart, the stock is still down 6% over that very, very long span. We're also seeing a big drop in shares Brinker, the chain behind Chili's. They saw strong sales and better than expected earnings, but we're seeing some profit-taking as the shares are nearly triple over the past year, even with today's decline. There's Brinker down about 13%. Let's bring in Megan Cassella from Washington for some more reaction to that interview with Commerce Secretary Lutnik, which could Megan be contributing to this leg higher in the market? Absolutely, Kelly. In listening to that interview and watching the market, what I noticed was what you just highlighted there, that the secretary said there is a trade deal that he has done. They're just waiting for the other country to approve it, and then they

could announce it. And of course, he didn't want to say which country, but from reading the tea leaves and from everything we've heard from the administration recently, India, South Korea, and Japan, they've repeatedly been saying are sort of at the top of the list in terms of making the most progress. It's possible. It's very possible. They've sort of been setting themselves up to potentially announce a deal this week when they're, of course, celebrating the president's 100 days. So we think that was an indication from the secretary that they're very close to that. They are hoping to announce it this week. He went on to say, with country after country, they're just working through the details. And then he said all of these deals are going to be

smart and thoughtful, but they're also going to protect our industry. And he says he thinks GDP will pop from there. I think to me that might be what's pushing up the markets to session highs right now. The other piece, Kelly, of that interview that I found most interesting, and this gets into a little bit of palace intrigue here, is how the Commerce Secretary said a couple of times in that interview, that it's the Treasury Secretary Scott Bessent, who's in charge of the China negotiations. Lutnik said that he was in charge of pretty much everyone else throughout the world, but that he was counting on Scott Bessent to strike a deal with China. I've been listening to Besson give several interviews, Kelly, over the last 72 hours

or so. He's repeatedly been asked about those talks with China. And he's repeatedly said he doesn't know if the president has spoken with Chinese President Xi, that he spoke with his Chinese counterparts last week, but not about trade. And he was the one who said this morning that with 17 of 18 trading partners, things are moving forward, but he was putting China to the side. So clearly there, not a lot of movement on China, even as the Commerce Secretary says, that Bessent is the one to talk to about all of it. Kelly? Great point. Megan, thank you very much. We appreciate it. And by the way, the president is now heading off to Michigan. Is that right? There's been some, you know, how shall we say, speculation in the markets that is he, as he turns into more rally mode,

could we hear the kind of rhetoric that actually tends to spook the market about tariffs and so forth once again? It's possible. You never know when this president gets going exactly which way he's going to go. You might be able to hear behind me, Kelly, the helicopter, the noise that you're hearing is the president's helicopter landing on the south lawn just now. The president is set to depart any moment for Michigan. We know that one topic of those remarks is going to be economy and tariffs. And it could actually be good for the markets because we know one big topic for the day has been tariff relief coming to the auto companies. Like we talked about last hour, this idea of limiting the number of tariffs to which auto companies are subjected and allowing

at least for the next two years a small rebate for these auto companies to try to offset the tariff impact. We do expect the president to talk about that tonight. We don't know of him announcing any further tariffs or things that could spook the markets, but you do never know once he starts speaking this evening. All right. Megan, for now, thanks. Megan Gisela. And let's turn to the markets at session highs with the Dow briefly up more than 400 points. Getting a boost here when Commerce Secretary Lutnik told Brian Sullivan just now that he has struck a trade deal with an unnamed country. It's just waiting for that country to give its legislative approval. And it all comes as we'll get more earnings after the bell from the likes of Visa, Starbucks and Mondalies.

One of our guests here says estimates overall continue to decline this year. Companies have been cutting guidance. So how should investors position? Let's bring them in. Ellen Hazen is Senior Vice President and Portfolio Manager at F.L. Putnam. Andres Garcia, Maya, is the CEO at Zoe Financial. It's great to have you both here. So, Ellen, are we referring to your comments about kind of the direction of earnings here? And what is that telling you? So, Kelly, as we've looked at earnings season so far, what we've seen is that earnings estimates continue to decline in both large cap land and in small cap land. If you look at large cap estimates, they've only declined a little bit.

So since, say, April 2nd, when the big tariff announcement was made, they've only declined by 2%. So still looking for high single-digit growth this year. But small-cap earnings have declined by 12% since that same date. So you can really see the difference between large-cap companies and small-cap companies. Do you like small-caps here? We don't. We think that you have to be looking at earnings estimate revisions. And until small-caps are starting to see positive estimate revisions, I think it's too early, despite the fact that they're cheap.

I think it's too early. caps traditionally do really well when we're exiting an economic slowdown. And right now, we're kind of entering one rather than exiting. Although, Andres, look at the market. As we said, up five days in a row, well off kind of the recent lows from the, you know, as our guest last hour said, was the end of the bear market a few weeks back. Do you share that optimism, at least from a near-term point of view? So when you look at the last 75 years, there's been 12 times in which the market fell more than 10 percent in under 30 days. 11 out of those 12th, you look at the next nine months, they were up 20%.

Wow. Right? So, I mean, COVID's a good example of that. We're halfway there from the bottom. And I think ultimately, the market's pretty good at reading. I mean, even when in COVID, it looked like the world was ending. It was pretty good at reading through the leaves and saying, you know what? Yes, maybe we have a slowdown.

Maybe we even have a shallow recession. But this is not 08. These companies are very resilient. One thing America is good. is corporate America is very resilient and adaptable to higher prices. It was also fascinating in COVID to watch as the markets crashed, this kind of birth of the retail investor, this massive investing wave that, of course, got more legs when the stimulus checks went out, the arrival of Robin Hood on the scene and so forth.

Do we need something kind of generational like that to happen in order for the bull market, I don't know if it called bull market for the rally to continue from here or no? Is it what do you think about in terms of participation? I think that we need to see this kind of tail risk of, will they go back to, you know, 150% tariffs? Right. That's still there. And that's, I think, why we're not back to where we were in April. Right.

So you need to remove some of that tail risk. And I think if we do, the market will start focusing more on earnings and saying, yes, there is some damage done already. But this is not quite 08. This is not quite a big recession that we're facing. Right. I mean, Ellen, are you guys bearish on the market overall and on the economy and all of that? Does anything that you've heard today or from the White House in the last few days kind of make you more constructive? I think that the economy is going to be okay. We started off this year with an economy firing on all cylinders.

You had strong corporate balance sheets, as Andrea says, you have a strong consumer, you have a strong job market, you have strong corporate profit growth. And so even though the tariff announcement and some of the slowdowns that we've seen in consumer confidence and CEO confidence are causing that economic strength to wane a little bit, we agree with And We don't see a recession. We see a slowdown. Maybe we get a negative quarter of GDP. But I don't think that we're going to have anything like 08, as you're saying. And so in that light, you want to be very selective about which stocks that you own, which parts of the market that you own. So no, we're not bearish, Kelly. We're just very careful. So let's get really tactical. See if we can find any areas of disagreement or agreement or whatever. What do you like right now? What do you think is the best place to go in the market? So we're looking very carefully at where earnings estimate revisions are positive. So if you break it down by S&P sector, for example, you see the most positive estimate revisions in technology. And that's where we're looking for strength. Whereas conversely, industrials, consumer discretionary, energy are very negative.

So we're looking in the tech sector and you can see some fine companies there. At the same time, you also are seeing good performance from some consumer staples companies. But again, you want to be very selective. Sure. So I don't know if you could, hopefully you can name names. But are we talking in tech, and this is a big area of debate about the mega caps, about the MAG 7, or are you thinking kind of a little bit further down the chain? The MAG 7 is continuing to slow down, right?

That's pretty clear. And I don't think that the multiple valuation bubble there has completely deflated yet. So I think there's still downside in the MAG 7. Outside of Tesla and maybe Amazon, the valuations are not that high. They're not that high, but they're not. at fire sale prices, right? They're not garage sale prices where you really want to load up. And the question is what's going to happen to earnings estimates again?

And when you see Microsoft and others cutting back on their KAPX, that's telling you that they're seeing slower growth ahead. So we're looking for areas that are still growing. Some of them are very boring, not in tech, but areas like insurance, right? Chubb, very cheap stuff. How many people have mentioned Chubb this week? That's the only thing I go. But you know what? It's been a good place to be.

unless you're paying the premiums, by the way. Right. And on that front, you can also look at the insurance brokers, right? A Marsh Mack or an Arthur Jay Gallagher because they take a cut of whatever that pricing is. And so that's another place to be. But you can also look at a really stable company like McKesson on the drug distributor side. It's not a consumer staple per se, but it behaves like one. And that's a fairly reasonable stock in terms of valuation and it's growing double digits.

So there are places that you can go that are more interesting from a growth in earnings revision perspective. I appreciate the granularity. Andres, what about you guys? Yeah, I would look at financials as an interesting sector. I mean, it's flat for the year. And when you look at tariff exposure, it has less exposure than a lot of the other sectors. Valuations look attractive relative to other sectors like technology. And by the way, international, I know it's necessarily not a great word to say nowadays with tariffs. But now a lot of people wish they had more of it in their portfolio.

Yeah. So internationally, if you look at IFAS up for the year, despite all of these things that affect them as well from a, from a, perspective, Germany's up huge. So Germany's an interesting one where it has momentum, valuations, attractive, and they have their own color stimulus going that could get, for instance, the financial sector going there as well. So having some international exposure, even after the market has done well, could be a good place to be as well. All right. We will leave it there. Thank you both. Appreciate it today. A lot to digest. Ellen Hazen of Ethel Putnam and Andres Garcia Amaya with Zoe Financial.

More to come. But first, Telsie Group, seeing some evidence of price adjustment. on several products. By adjustments, we mean price hikes. LVMH handbags, washing machines, and sporting goods. They're saying we're seeing less promotions and also tariffs as possible reasons. We'll look at something else companies are doing to navigate these costs. That starts at the design level. And that's coming up. Stay with us. Welcome back to Power Lunch. There may not be a shock yet, but supply chains are shifting due to Trump tariffs. And our next guest expects companies will do something else as a result, tariff engineering. changing the design of products in a way that qualifies them for a lower tariff rate.

For more on what that means and looks like, let's bring in Syracuse Professor of Supply Chain Management, Patrick Penfield. Professor, it is great to have you here. Are you wearing any tariff couture? Welcome. Good afternoon, Kelly. Unfortunately, I'm not. I've bought this a couple years ago, so. Tell me about pockets and why this might be one area where we see some changes. Yeah, so Columbia Sportswear has been doing this tariff engineering.

for probably decades. And so what they look at when they're designing new clothes is they look at the actual clothes itself in comparison to the tariff rate. So they'll have the designer, they'll have the merchandiser, they'll work with customs. And what they try to do is, again, make something that will have the lowest tariff impact to their company. So it's fascinating. And so one of the things they've done is they've added a pocket. It's called the nurse's pocket to some of their shirts. And it's kind of where you keep chapstick. And so by doing that, they're able to lower the rate of their t-shirts by 40%. Why? Can you get granular? Like, why is it that the placement of a pocket or the addition or so?

Why is this all affecting what tariff they would pay? Yeah, it's a different type of classification. So I guess it's less versus what a regular t-shirt was. So you're adding something to it. So there's some other things that you can do, too, like adding a band to it. But I guess it cheapens, more or less the T-shirt and customs eyes. But for the most part, you know, again, it's a clever way to, you know, be able to manage your tariffs. And we're showing some of the past examples. Even though tariffs feel pretty new, we've actually seen this before, where, whether it's Marvel action dolls, Snuggies, had no idea that they were in the middle of a tariff dispute, Converse All-Stars. Tell us about these. Yeah, so in 2003, Marvel,

more or less argued this court case that said, hey, we've got these X-Men figurines. And we don't think they're dolls. We think they're non-humanoid toys. And so by classifying as non-humanoid toys, they're able to actually decrease their tariff impact by 50%. Same thing with Snuggies, you know, that you, you know, that gift that you get for Christmas. So they are able to, you know, change the classification from a garment to a blanket. By doing that, they're able to save 60% off their tariffs. And I don't know if because these are more across the board. And with the Commerce All Stars, it was the layer of fuzzy felt on the bottom allows it to be classified as a slipper,

which I love because the slipper rate was 6% versus 20% for athletic. shoes. So do you think that all of these kind of gaps and differences are, you know, wider or narrower after the huge tariff increases that we're now seeing? Yeah, you know, it all depends. So if it's a blanket tariff where, you know, it doesn't matter, then it's really, you know, tariff engineering's not going to help. But if it's not where, you know, tariffs are left in place and they're different, then you should see companies actually do more of this. And it would be smarter and they have to actually move in this direction and try to figure out those loopholes within tariffs as long as it's done legally and ethically. And I have to imagine this applies well outside of

apparel and retail as well. Yeah, you can do this with, you know, retail goods, you can do this with electronics, you can do this with automotive parts. So, you know, there's the broad category of different products that you can actually do some of this tariff engineering with. And finally, we've seen initially during, we had kind of the simultaneous shock where on the announcements, consumer confidence collapsed and kind of incoming container volumes collapsed at the same time. Now, from what I see maybe the container volumes are coming back and things aren't quite as dire as they looked a few weeks ago. Can you give us any kind of update on where we stand now? Yeah, unfortunately, I'm hearing the opposite.

Really? From what I understand, yeah, the port of Los Angeles specifically, they're looking at 35% decrease in shipments coming into through the port in the next two weeks. So that tells me basically that there's this hole that we're going to see in the supply pipeline. And so eventually that's going to impact consumers. So you'll see, you know, kind of similar to what we saw with COVID. but you'll see some bare shelves, you'll see less variety, and you'll see increased prices. Unfortunately, and we could see even worse, you know, maybe some layoffs in those hard hit sectors as well.

So we'll wait to see if Secretary Lutnik is right and any trade deals are coming. But as it stands, not a great outlook. Patrick, thanks so much for joining us today. You're welcome, Kelly. Great to be here. Patrick Penfield, Orange, Met. Up next wing, your options with Meta. We'll get some investment ideas and market navigator for exactly how to do that right after this. Welcome back to Power Lunch.

Stocks are a bit off session highs. We have a lot of different headlines on trade today to digest. Lately, there's been a report about whether maybe the U.S. Europe deals aren't advancing that quickly, but Secretary Lutnik just told us last hour that at least one trade deal is completed and just awaiting approval by the other country. All of that said, Dow's up 316 points. S&P and NASDAQ, DOM are up about two-thirds of 1%.

We're almost back to that 50-day moving average for the S&P 500. So, you know, headlines drive a lot of the action. now. But earnings season is also a big point of this whole thing. Mag 7, very much a focus, right? They've taken a beating so far this year. But meta-platforms has managed to fare the best on a relative basis. And our next guest sees some trading opportunities with the social media giant on deck as it gears up to release earnings after tomorrow's closing bell. So joining us now is Bob Lang, the founder-in-chief options analyst over at explosive options. And Bob, the meta-planforms trade is an interesting one because there is a possible

catch-up scenario that's maybe even developing. Nobody knows the future, but there are certainly traders like yourself who are wondering whether there is optimism to be had with an earnings catalyst. What do you think and how are you playing it? Well, could be with you, Dom and Kelly, but really basically what I'm seeing here is the chance for META to get back to the medium March highs. Let's call it about $630. That would be a really nice move from where the stock is currently add in the 540s, 550s. But certainly the thing about the options right now are that they're exploding higher in terms of implied volatility. So the expected move dom is about 48 bucks for meta tomorrow. That would be up or down. That's about 8%, which is quite a bit higher than what we normally

see. Six to seven percent is the normal move post-earnings. So that's a big move. So the expectations are there. The anticipation for a big move is also there as well. Now, this is interesting as well, because for some of the bigger tech names that have reported so far, there haven't been that many, but the ones who have actually been less volatile than they have been over the last eight quarters or so. So this is different. How then exactly do you play it? And what makes you think that the upside is there? And how would you express that in a trade? Well, I think the upside is there, obviously, with that target of 630 sitting out there. But I would look at maybe taking at the mining or a slightly out of the money option. Now, options are going to be very expensive.

Now, if you take a look at something that's right at the money, maybe a $560 call for out to May, you're looking at something that's priced at about 5% of the stock. That is rather expensive. So what we could do, Dom, is we could take the front month, which is this Friday's option, sell the 600 call against it, and reduce our cost for the 560 call by about 25%. So If the stock doesn't make that move up towards 600, then that option for this week is going to expire worthless. And we're going to have just a lower cost on an option that has about two weeks left in time. All right. So Bob Lang with the trade on meta platforms looking for upside.

Thank you very much, Bob. We'll see you again soon. Thank you. Great to be with you. All right. So this is interesting because, again, it's not cheap to play these options right now. But he's trying to make it cheaper by selling away some of the upside. Now, if he was outright bullish, he would have just bought the call outright and paid the 5%.

because he thinks it's going to hire. But by making it cheaper, by selling away some of the upside, you make it a little bit more tolerable for people to make that. I'll take your word for it collectively. There we go. And look forward to seeing if we get an 8% move with meta. Interesting because, like I pointed out, many of these mega-cap names have been less volatile realized

than they have been going into these earnings reports. Including Tesla, if I'm not mistaken. Don, thank you. You got it. Domchew. Still to come, the economy is in a race against time. The White House working towards some trade deals, but will they come soon enough?

We'll discuss that next. Welcome back to Power Lunch. I'm Pippa Stevens with your CNBC News Update. The first of three women accusing disgraced movie mogul Harvey Weinstein of assault took the witness stand today in his retrial. The former TV and movie production assistant is testifying once again after a New York appeals court overturned his landmark conviction last year. Weinstein has pleaded not guilty. Health and Human Services Secretary Robert F. Kennedy Jr. is reportedly planning to launch a four-year public relations campaign called take back your health. NBC News obtained a request for proposals, document that calls for PR firms to bid to run the campaign, which would oversee the purchase of up to three ads a day

on five major TV networks. Sources say it could cost tens of millions of dollars. And San Francisco 49ers' tight end George Kittle is making NFL history. He announced today that he agreed to a four-year contract extension worth $76.4 million that will make him the highest tight end ever in the league. The deal keeps Kittle with the 49ers through the 2029 season. Kelly, back to you. My husband always says that our younger son reminds him of George Kittle. Apparently, he's, you know, big personality. Pippa thanks. With trade tensions rising and consumer confidence weakening is the U.S. economy in a race against time to prevent further economic damage. Our next guest recently published some thoughts asking just that question. Michael Gapen is the chief

U.S. economist at Morgan Stanley. Michael, it's good to see. I know these things are a moving target. Any updates in literally from today, from the president softening his tone somewhat on the auto front. Maybe there's a deal in the works. The president also just made some comments now, perhaps backing up what Lutnik said that were close or done on at least one major trade deal. So does that give you some reason for more optimism? Well, I do think, yes. The short answer is yes. I think there is a clear signal coming out of the White House that they would like to de-escalate some of the trade tensions that are in markets. And so I think that fits in with our view that just tariffs are too high. They make too much of the trade between the

U.S. and China not economically viable. So what the market needs and the economy needs is kind of clear evidence that there's a path to de-escalation. And at least with respect to non-China trade, these indications about, you know, deals getting done, whether they're memorandums of understanding or literal deals is a different question. But I do think it's important for the economy, the business sector, the private sector, to see that happening because right now that's all we really have to go by. Right. Or the shipping data, which I think you guys are also following closely.

Like what's happening with container ships and imports and freight volumes? That's right. And that's the, you know, our narrative at the moment is we are in possibly in a race against time, that given, as I said, where tariff levels are and it makes so much trade just not viable. What we are seeing in the very high-frequency shipping data is a collapse in trade volumes. Now, that doesn't mean the world is ending today because those orders can come back on. So maybe you delay a month and then they come out in the next month. But yes, the high-frequency shipping data suggests that the Trans-Pacific shipping routes have really taken a step back.

So, you know, we probably have a window of, let's say, 60 to 90 days where we might hope to get some de-escaly de-escalation and trade policy in order to allow for a resumption of trade flows. But that's the tension, as I see it right now. What are your expectations for the GDP number Wednesday for payrolls Friday? Yeah, expect a very weak headline GDP number. We think it'll be around minus 1.4, 1.5%. That's mainly due to the big front-loading of imports. You saw the trade data this morning at 27, 28 percent, month-on-month.

increase in the imports of consumer goods. So big front running and front running of purchases, front running of imports, and the GDP adding up that's going to drag growth lower. Did you say, did I catch you, did you say you think we're going to get a minus one and a half percent print? Around minus one and a half percent at the headline. Do you think that's going to start all the markets? I mean, and just so people understand the math, C plus I plus G minus NX, if there's a lot of imports, you get a big drag on GDP, but it's not like it's just mathematical. It's weird. It's like the one benefit that we might get the front loading of all of this is going to be a huge GDP drag.

And then I don't know if we're expecting a rebound in the quarters to come. Right. And so you're getting some of the idiosyncrasy and the high frequency GDP data here, which is monthly or quarterly for high frequency on this front, where we're getting a lot of imports. Normally you'd say, hey, those imports are going to be spent or they're going into inventory. So you should get a big offset from inventories. It's just not kind of adding up. But you're right. In the pure GDP math, imports subtract from growth. But if you, there's a way to look at final sales. So you kind of, if you take GDP and subtract out trade and inventories, which are the volatile items quarter to quarter, that number is two and a half percent. So about where the economy has been for quite some time.

Healthy. Yeah, healthy. If you look at that underlying demand number, we expect that one to be fine. Now, on the employment report on Friday, we're a little above consensus at 160,000, but that the Joltz data this morning does give us pause, right? There was a big move lower in job openings in March. I think you'd anticipate probably did that again in April. So the data claims and others don't suggest the firing rate has picked up, but that Joltz data suggests, hey, maybe the hiring rate really slowed down. That's a good point, that that was in March. That was before, you know, quote a full liberation day. That's right.

So if we took that big of a step down in March, maybe we took another similar size step down in April. Right. And this is the trick from our economist forecasting perspective. We don't really get any revelation of the employment side of things, you know, the hiring rate, until the actual employment report hit. So I do think there's downside risk to our 160 forecast, maybe close to the consensus number of, say, 135. given a slowdown in the hiring rate. Well, buckle up for a lot of volatile data, I think, in the weeks to come, not to mention trying to figure out if that trajectory is changing, literally announcement by announcement.

Michael, for now, we'll leave it there. We appreciate it. Good to see you. Thank you. Michael Gapen is the Morgan Stanley, Chief U.S. economist. And don't miss tonight's CNBC special 20 years of Mad Money with Jim Kramer. We're going to take a look back at the show's incredible two-decade run on air. 20 years of Mad Money airs tonight, 7 p.m. Eastern right here on CNBC. And we'll be right back. Welcome back to Power Lunch. Let's get a quick check on the markets as the Dow and S&P try to extend their winning streak to six sessions, believe it or not. And yields are markedly lower today after that weaker job openings data that Michael Gapen just referenced.

The 10-year at last check was around 417. For more on the bond market action, let's get to Rick Santelli in Chicago. Rick? Yes, it wasn't only jolts that really portrayed the economy, or at least the labor market in a slightly weaker stance, but it was the conference numbers from the conference board that really hit home. If you witnessed this morning, the expectations came in at 54 and change, the lowest in 14 years. Now, let's look at four sessions of twos, shortest maturity, 30s, longest maturity,

and Dow Jones Industrial Average. We see that the interest rates continue to stack lower, trading below previous days' lows, and the equity markets are loving it moving higher. Even though it was clear today, yields are dropping for reasons that might not be positive for the economy, as much as they've been perceived as positive for the equities, at least at this point in time. And finally, the two-year right now is on pace for its fourth consecutive lower yield close. The 10-year on pace for its sixth consecutive lower yield close. The 10-year on pace for its six consecutive lower yield close.

And as you look at two-year yields, you can see they're now on pace for a seven-month low-yield close. So we continue to see that fertilization of the equity markets. Kelly, back to you. Rick, thank you, Rick Santelli. And President Trump talking to reporters just now on his way from the White House to Michigan. Megan Kisela has some headlines on Amazon and a few other areas, Megan. Hey, Kelly, that's right. The first time we're hearing from the president himself today, and he appeared to confirm that report that he called Amazon founder Jeff Bezos earlier today to complain about that move that had been reported that Amazon was considering showing the impact of tariffs on its website, by which I mean adjusting its prices to show exactly what portion of it was due to the tariffs. The president was asked about that. He said that he had the call with Jeff Bezos, that Bezos was very nice. He solved the problem very quickly. He did the right thing. and he later said, quote, I appreciated what he did.

So this confirms that report that Amazon first came out and said they were sort of downplaying the scope saying this was only under consideration for one small part of their website and not for the main site. Then they clarified later that the tariff surcharges were never approved and were not going to happen. All of those moves appeared to follow this reported call that the president has now confirmed. Just a couple of others. He was asked about how talks are going with China and he very quickly said no update

there. He did not want to talk, especially around that mystery of whether or not he's spoken with Chinese President Xi. And then he spoke a little bit about his auto tariffs and this relief that he's planning to sign later today through executive order. He said this is, he sort of downplayed the impacts of this will just be short-term help for companies during this transition. He didn't want to penalize them as they work to move more manufacturing back here to the U.S. He emphasized, of course, this is short-term. It's just for the next two years that they'll see some of this relief. And he said, overall, he's not worried about the industry at all.

Kelly. Megan, thank you very much. Megan Cassella, Dow still up 345 points, and there's more power lunch right after this. Welcome back. It's time for today's three-stock lunch with three different stocks and what you should do with them. Here with our trades as Nancy Tangler, the CEO and CIO at Laffer Tangler. I'm excited for this, Nancy, because your enthusiasm about these names is going to match, I think, the market mood lately. So let's get right to it. Starting with Microsoft, they report tomorrow afternoon. plenty of kind of concerns circling the name, but why do you think this is a buy here? Well, hi, Kelly. One of the reasons is because the stock is down on a year-to-date basis and down 15% from the July highs. And yet the business is still pretty robust.

Revenue should grow around 11%, 10 to 11%, EPS around 10%. And we think that the company is relatively tariff-proof because software, seems to be a little bit of a carve-out. Of course, machines and OEMs devices, those will be impacted, I think, in the office portion of the business, which is expected to be flat. Dividendant growth of 10.3%, a great management team. We think you use these periods of weakness to add to the holden.

All right. That brings us to Spotify. What a performer this has been this year. You know, a little down today after falling shy on expectations for Q2 users and gross margins. but it was still 35% year-to-date, so you're sticking with it? Yeah, and we've owned it for a long time. It was one of our 5 for 25 and a member of our 12 Best Ideas portfolio.

We think it has plenty of room to run, and that is because management has made really strong decisions around ad-supported growth, so that as-supported subscribers of 8%, premium up 16, and just regular subscribers up 12. And it's going to be lumpy, Kelly, but they have a strong balance sheet. And we think as cash flow improves, we will begin to see an attractive capital allocation plan for the benefit of shareholders. All right. Let's move along then to AbVee, which we don't talk quite as much about. They did have a beat last week.

They're up 9% year to date, not shabby. And this one also is a buy for you. Yeah, and up 25% on a trailing one year. So begging the question, has it run too far? but on our valuation work still attractive, dividend growth of 7.2%. And they delivered a triple play, which is a beat, beat, and a raise. They're well positioned, we think, to replace the Humera revenues with Skyrizzi and RIMVogue very soon. And we think they're going to raise estimates on those two names. And then they don't have any loss of exclusivity anymore for another 10 years.

Tariff-proof, much of the manufacturing for Skyrizzie, for example, is in the U.S. for domestic sales. So we think this is the name you just want to continue to hold on to. It's our largest holding in health care. Nancy, overall, we got to go, but like literally 10 seconds, I'm just so curious. Thoughts on the market overall here. Oh, my gosh. Well, I think we're pulling out of it.

I did see how, you know, Scott Besson is now the spokesperson. That's a good thing. I think we could just tone down Howard Lutnik and we'll be off to the races. Well, take your point, Nancy, and thanks for joining us this afternoon. Nancy Tangler with Laffer Tangler investments. Remember recap three stock lunge anytime with that QR code or head to cnbc.com, and you can get all of our archives as well. We're back right after this.

Treasury Secretary Besson is focused on China. That's his that's his portfolio. He's got to get something done with China. And my portfolio is the rest of the world's trade deals. So they are coming. That's a big portfolio. Oh, it's the greatest thing because we have every, country in the world, just like Donald Trump has said, who wants to do a deal with us. Now, here's the

point. I have a deal. Done, done, done, done. But I need to wait for their prime minister and their parliament to give its approval, which I expect shortly. That was Commerce Secretary Howard Lutnik, just the last hour on CNBC. Those comments helping to lift stocks to session highs. The Dow and the S&P now could extend their winning streak to six sessions. And Brian Sullivan, who did that interview, is back with us having just toured the TSM plant where he met with the Secretary. Brian, welcome. I tried to get the Commerce Secretary to tell me what country it was where that deal was done. You got clip that I said, what country? He said, I'm not going to tell you. I said, come on and let me know. So apparently, Kelly, there is a deal, as the Commerce Secretary said,

done. It's not China because he said Treasury Secretary Besson is doing that. But there is a deal that's basically done waiting on some final things. I don't know what country that is. If you know, Kelly, let us know. President Trump himself on the plane also then said something similar, like there is a deal that's done. Who knows? We can all speculate. But I also thought it was interesting how he carved out, like, oh, Secretary Besson is doing

China. I'm doing the rest of the world. It was very clear. And you picked up on it. The Commerce Secretary said it like four times about how Treasury Secretary Besson was doing China. There's a clear demarcation line. Now, this deal that Treasury Secretary Lutnik or Commerce Secretary Lutnik referenced,

if it's with Vietnam, will that move markets, Kelly? I don't think so. It's not for us to say I would just speculate. But if it's with a major European nation or India, like I know you guys were talking about right when we came to us, that might actually move the markets. Sure. I think, look, Vietnam, India, all of, that's where it's got to be. Maybe Japan, although they've seen.

soft-pedaled that a little bit. Europe sounds like it's a little bit of a thornyer one, so I don't know if we should expect much on that front. And I mean, I don't mean to overlook, Brian, the reason why you guys are there, which is really to emphasize the U.S. manufacturing piece of this. And even with the auto announcement, there was some confusion today about, okay, well, what's going to happen to the foreign automakers, right, relative to the domestic ones? What should we expect on the reshoring front in the next couple of years? Well, you heard Secretary Ludnik say he was very bullish on building cars. and selling them abroad and we'll say goodbye, but just over my shoulder here, the TSM facility, very impressive. I know Christina, our colleague, Partsenevels has been here. It's quite impressive.

And what's interesting is that they just got the permit, whether it was like late Friday afternoon or this morning, and they're already building. There was no waiting around. There's just doing a little walk and talk, but you can see over the shoulder, Kelly. They get the permit and they go. The speed of this buildout is truly remarkable. Yeah, this is like year six now of this It started in 2019, I think, under the first administration, then with Biden and the Chips Act, and it just keeps going. Brian, we'll leave it there. Great stuff. Thank you so much.

We really appreciate it. Brian Sullivan, and thanks for watching Power Lunch. Closing bell starts right now.