Power Lunch - Dow jumps 500 points as Trump announces UK trade deal framework 5/8/25

Episode Date: May 8, 2025

Stocks rose Thursday after President Trump announced a trade deal framework between the U.S. and United Kingdom, the first major agreement hatched since the U.S. launched pre-emptive tariffs on most of the globe earlier this year. 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.

And yes, that behind us, a giant ship unloading its cargo from China. Welcome to Power Lunch, everybody. Alongside Kelly Evans, I am Brian Sullivan here at the Port of Long Beach, California. We've got a big show focused on trade. What is the real situation on the ground or on the water with goods coming in from China? How much of that is actually being canceled? We're going to hit all that. Plus, a big interview with the White House's top man on trade, Jameson Greer.

We'll join us live. Great, great stuff. Brian, it's great to see you. Welcome, welcome, welcome everybody. I'm Kelly Evans here at headquarters, and stocks are sharply hired today. The market seeming to like the framework of a trade deal announced by the president in the Oval Office earlier. We're off the session highs, but the Dow's up 1.1 percent, 459 points. Exact same for the S&P, NASDAQ, is up 1.6 today. And it could be the first of many, as the administration has promised. Let's start this hour with Amen Javors, who's got all the very latest for us at the White House. Amen?

Hey there, Kelly. President Trump said the final details of the U.S.-UK. trade agreement are still being written up, but he called this a historic day and praised the negotiating teams of both countries, as he put UK Prime Minister Keir Starmer on the speaker phone to talk to reporters in the Oval Office. The White House has not yet released specifics of the trade agreement, but the president said he agreed to certain exemptions for Rolls-Royce in particular because he doesn't see that company as a threat to the broader U.S. car market. and Commerce Secretary Howard Lutnik said, the baseline U.S. 10% tariffs on the U.K. are going to remain in place. And I spoke with U.S. Trade Advisor Jameson Greer a short time ago, who you guys are going to be speaking to on the air. He confirms that the White House considers that 10% baseline tariff, a baseline that will remain in place, and they're not looking to go below that in any of the trade deals. Now, in the Oval Office a short time ago, I asked the president about Ford and Mattel saying this week that they're going to have to raise prices on certain products as a result of his tariffs. But the president said he just doesn't believe that in the end those companies are going to raise prices.

He said they're trying to negotiate with him by making those announcements in public. Here's how he put it. I think they're saying that just to try and negotiate deals with me. If Ford did that, they wouldn't sell any cars. And if Mattel, I don't know, I'm not so sure, they also said, they're the only country I've heard. They said, well, we're going to go counter. We're going to try going someplace else. okay, let him go and we'll put 100% tariff on his toys and he won't sell one toy in the United States

and that's their biggest market. Now for context, take a look at a chart of the U.S. trade surplus with the U.K. You can see on the right hand side there, it has been rising in the past couple of years, up to about $12 billion in surplus last year. Overall, there's a real sense of traction here, though, for this White House. They feel like they're now showing the American public that they're making progress and they say there's more to come. The president said this week, Weekends negotiations with the Chinese are not just a meeting about a meeting, but he said they'll be discussing substance in his words. So we'll wait for that, Kelly. Back over to you. Amen, separately, there are some reports from, I think, the likes of Punch Bullet and otherwise, that the president is still potentially open to, if not asking for, taxes to go up on high income earners as a result of the budget bill that's taking place here.

Yesterday, we talked to Chris Kruger down there in Washington, and he said he's heard ideas of maybe using corporate salt or sea salt. as he called it. To kind of in a quiet way, raise taxes, raise some more revenues from corporate America, which also is typically anathema to Republicans. So I'm curious how much you'd make of the White House's openness to two untraditional approaches here to raising revenues.

Well, look, it's an important point. And the report in the media is that the president has spoken privately about that. Publicly, he said he doesn't think it's a good idea because he thinks the Democrats will hammer them if they raise taxes. but we'll see where they land on that. Remember, this is a populist conservative White House.

This is not a traditional Chamber of Commerce Republican White House. And so that means that they're not, they don't see corporate elites necessarily as simpatico with their movement. They see themselves as leading a working class conservative movement in this country that's about workers. They're much more open to unions than Republicans have been in the past. And they're much more reluctant to give those big tax benefits to the wealthy, particularly on that populist side. There are some populist conservative thinkers in town who've been arguing

that they need to be willing to raise taxes on the rich in order to pay for a lot of the benefits that they want to give to the middle and working class. So that debate is continuing, and it's fascinating to watch the pendulum shift. In my years growing up in Washington covering the White House in Congress, you just never would have assumed that a Republican White House would be open to raising taxes on the top category. But in this case, I think, you know, there's a very important. There's There's certainly an opening for it, and we'll see where the president lands. All right. Amen, thank you very much.

Amen, Javers. Brian? Well, it's 2025, of course, Kelly and Aman, so anything can happen. And if you really want to know what is happening with trade and tariffs and a huge piece of the American economy, you really got to be here. We are live at the Port of Long Beach, California, because it, along with its neighbor right across the water, the port of Los Angeles, account for about one-third of all imported goods coming into America, particularly from Asia.

These are the largest ports in the United States. They're also combined top 10 in the world and are directly or indirectly accounting for about one out of every 12 jobs in the Los Angeles and Long Beach region home to tens of millions of American. Now, by being here, we're able to bring you an exclusive look inside the very heart of that growing but hopefully de-escalating trade war, particularly though with China, because most of the goods inside the containers on the ships behind us are indeed. coming from China or at least other parts of Asia. And while last month was indeed a record here for the Port of Long Beach, it was the biggest port, busiest port in America four months in a row. Companies were rushing to get their goods into America before many of these tariffs hit, and there could be a big slowdown coming.

The port has 14 so-called blank sailings, their term for ship cancellations this month, and 16 cancellations in June. That is up from the usual two or three in a month at about, 20% of the total incoming ships plan for the next two months. Total tonnage, different than just the number of ships. That's the amount on each ship is expected to drop by about the same. Let's get more insight into what all of this means and what is happening. We're joined by Mario Cordero.

He is the CEO of the Port of Long Beach. Mario, thank you for joining us, letting us into your port. Appreciate it. Well, Brian, thank you for having me. Okay, those are some big numbers. So put them into context for us. And I know there is a difference between the number of ships. and what they call tonnage and the number of containers.

What are you guys, on a very general way, what are we looking at over the next couple of months? What we're looking at is less vessel calls to the Porta Long Beach, which means less cargo volume, which means less products that could eventually not be on the shelves. How much of a decline? We gave some of the numbers. It seems about 20%.

Is that seemingly a correct figure? That's a correct figure. I mean, in the next couple of weeks, that's the number that we're looking at. Those are anonymous signs that again, the trade numbers are going to be low here. So again, on the other hand, we have rational optimism here that things will get better. But for now, we're looking to perhaps if the status quo continues, that is, no movement on the tariff discussions, we're looking at 20% reduction in second half in 2050. Now, it is a bit hard to read because we just showed there were 14 plan cancellations this month,

16 next month. It's about 20% of the planned ships. But yet, you know, you're just a bit hard to read, you've had records, I know last month was a record higher than normal, how does it balance out and do you have any visibility into say deeper into the summer? The visibility that we have deeper in the summer right now is based on the canceled bookings or non-bookings that are being made for cargo that's in Asia. The announced canceled savings by the international carriers. So for example, right behind you is our state-of-the-art terminal, Long Beach Container Terminal. Ordinarily, you have three vessels there docked. Today, there's one.

There's one. Yesterday there was zero. So that's an indication, again, that the trade war and the concern about what we're seeing is real. But on the other hand, we have to have some optimism here that again, just this morning, there was an announcement by the White House of a deal with the UK. So it seems like it's a beginning or the embryonic stages of now starting to have these trade deals with other countries. And last, we also hear that they may be coming to the table, China and the U.S.

to have some discussions with, again, we're all looking forward to it so that we remove this uncertainty that we've been having here for a few months. Well, we have the White House Trade Rep, Jameson Greer on in a few minutes, so stick around. We're going to certainly ask about that and the UK. If this level of tariffs, this 145%, if this were to continue, if a deal is not struck either this weekend or soon, and I'm asking you to speculate, Mario, I understand that. What would that mean for the Port of Long Beach and shipping and imports three, five, six months from now? Well, those would be worse scenarios. And to give you some context, let's go back to the year 2020, COVID-19, shelters in place, the pandemic of the century, cargo wasn't moving, no products

on the shelves, job loss. That's what we're looking to if in fact this is not moving in a positive direction. I'm talking about the discussions. So again, These are red flags that we have here at the Port of Long Beach, the nation's largest container port complex. So it's indicative of the fact that, again, times ticking in terms of the short period that we need to address some of these issues. Is that hyperbole to compare it to the supply disruptions? Obviously not the health implications, totally separate, but the supply disruptions of COVID-19, or is this in some ways maybe a COVID-19 similar event as far as the import, of goods and the ability to, you know, just bring them in because nobody wants to buy anything

because they're afraid or they don't know what it's going to cost. Well, it's a COVID-19 moment in regard to cargo movement. So again, if you go back to that era and we had less vessel calls, then we got in the situation that, you know, there were no products on the shelves. So I think the COVID moment, so to speak, is, in fact, the vessel things that we were referencing, there's 34 in total in the last couple months. That exceeds the council of vessel ceilings that we saw in COVID. So the concerns are real.

And the worst scenarios, again, could happen. But on the other hand, I think we're seeing some light at the end of the tunnel with regard to the movement of some dialogue. So let's have, it's a beautiful day. We literally have a sea lion off your shoulder frolicing, I think, is the correct term. Because you guys, by the way, have done an amazing job of, I grew up right over there, cleaning this up, the water's clean, the air, carbon emissions, you want to be carbon emissions free by 2030. So let's be optimistic. If a deal is struck, we get a trade deal. Maybe go to 10% baseline tariffs like they just said. That seems small for now. A deal is struck soon. How quickly could all

those cargoes that we just talked about being canceled, could they restart or reignite and get in here to get us the goods. How fast? At least a month. Okay, so there's going to be a month lag. Correct. Minimum. Anywhere from six to eight weeks. Six to eight months? More month. So it's at least 30 days because I said the fast scenario would be that the shipments, orders are made, the bookings are made tomorrow, and then those translates to getting on the vessel into ports of origin in Asia, and it takes about two weeks for that card to get here. Okay, so we have, we have a, and I'm going to wrap it up with that, Mario Cordero. Thank you. Kelly, I think that's critically important because obviously a lot of CEOs and supply chain heads and executives.

I know you just recently went to a dinner in New York City about this. They're all talking about the what if scenarios. So you just heard it from Mario that even if we get a deal, let's say in the next couple of days, we could be looking at 30 plus or more days to get back to a sense of normal. So Kelly, it's clear there's going to be a huge impact regardless of what happened. Absolutely. And I think it's so important to highlight that. Brian, thanks. All you're very welcome. All right. Coming up live from the Port of Long Beach, California, right here.

We have got that newsmaking interview with U.S. trade representative James and Greer. You just heard signing a big deal with the United Kingdom. Are more to come. Trade Rep Greer up next on Power Lunch. All right, welcome back. And as we said, we are live here at the Port of Long Beach, California. And as we mentioned at the top of the hour, the president announcing a breakthrough trade deal with the United Kingdom. This was the deal that was teased last week.

If you remember, I sat down exclusively with Commerce Secretary Howard Lutnik in Phoenix and asked how close he wore to seeing any trade deals. And he said this. 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. I'm not going to tell you what country.

Let the president just you and me here. And a couple million people hopefully watching it. I let the president decide. Well, he wouldn't tell us. then, but now we know that this was the deal, the one just now with the UK that Commerce Secretary Lundick was referring to. But the UK, well, important, is not China. China, still the biggest tradefish in the pond, and Treasury Secretary Scott Besson is heading to Switzerland's week to negotiate some portions or a deal with China. Now, China accounts for about $582 billion in total trade,

439 billion of which is incoming goods into ports like this. in Long Beach and LA next door. That's all the stuff that we buy and import from China. Let's get more details on this trade agreement with the UK and what may to come. That is the United States Trade Representative Ambassador Jameson Greer. Ambassador Greer, thank you very much for joining us. How important is this deal with the UK and more importantly, does it provide the framework for deals with other nations like a China? So, Brian, great to be with you. And I can't really overstate the importance of this deal.

The United Kingdom is the sixth largest economy in the world. They have an economy that's similar to ours in terms of development and rule of law and governance, et cetera. And so this is exactly the type of deal that we should be making. The UK did a pretty, you know, bold thing a few years ago when they did Brexit. And part of the reason they did it is so they could have more control over their trade policy separate from Europe and we're seeing that today they've agreed to open up their markets to our agricultural products to our industrial goods and

importantly to align with us on the neck on economic security you know to your question you know what does this mean for other countries is a framework this certainly is the framework I've been talking to dozens of countries and I tell them this I I walk through different buckets where we need to talk about tariffs non-tariff barriers economic security etc and this is the right framework and other countries should look to this as a model. Every time we get a positive comment or in this case an actual deal on trade, the stock market goes up. We're CNBC, Mr. Ambassador. I don't need to tell you that. The president making comments about

buying the stock market today. Should we take those comments and this deal as a sign of optimism about what may be to come? Because the markets, the stock markets, which are kind of our metric, as you know, they are responding in a positive way. Well, I think any time you get positive news, you'll get a reaction to stock market. Sometimes the market will underreact or overreact. What's important to look at are the trends. And the trends we're looking at are the market's in a great place. The jobs numbers were good.

We're going to have more deals in the weeks and months to come. We're talking to China this weekend, the Secretary of the Treasury and I. I think everybody should take comfort and be excited about what's coming. The president has shown that he knows how to use trade policy in connection with other economic tools to have a very competitive economy. That's what we're seeing right now. And the market is just one aspect of that. One thing that the president of the Port of Long Beach, Mario Cordero, I don't know if you're able to hear that comment, Mr. Ambassador. We were talking also off-camera about critical dates ahead.

And Mario Cordero said that July 2nd was the next most critical date that he and his team here are watching because, that is the day the 90-day pause on reciprocal tariffs ends. And if we go past that date and the reciprocal tariffs are enforced, then we start to see hits on countries like Vietnam and others, and they're really worried here about what happens if that happens. Are you confident that we can get some kind of deals done where that July 2nd date just kind of goes away? Well, I would say, well, first of all, I think my calculation is July 8th,

So you're shorting me a week, I think. The 90 days was, I think, from April, 8th or 9th. So I would say that with some countries, we will have additional deals. You know, all these countries you just talked about, Vietnam, other Southeast Asian countries, they're in, they're talking to us, and they're being very forward-leaning. You know, obviously, we have concerns about some of these countries. That's where we have some of our largest trade deficits. And that's actually the purpose of these tariffs is to get that trade deficit down.

but we're having fruitful talks with Vietnam and others, and they understand what we're trying to solve for. So on some of these, you know, the president will have an agreement. Others of these, he may not, but we're doing our best to find a way forward to make trade more reciprocal and fair and balanced. Ambassador Greer, it's Kelly here. Well, on TV. Sorry, Brian, I was just going to quickly ask.

And I so appreciate you being here because everyone's, you know, unpins and needles about these talks in Switzerland this weekend, where you'll be with Treasury Secretary Besson. The president, of course, kind of walked that back a little bit saying, I think it was yesterday, that he doesn't want to lower the tariff rate as a way to jumpstart negotiations. So what is on the table and what's not going into these discussions? Certainly. And well, today, earlier in the Oval Office, he had a very specific question where one of the press said, you know, during these negotiations, during these talks, if the Chinese move, then, you know,

are you willing to move tariffs? And he said, I might be flexible. So that's, you know, that's certainly on the table. You know, we've talked about this. The Chinese have, we have as a de-escalatory option. You know, we think, you know, this is an opportunity to find some stability with these folks. You know, China's market and economy is so different from our own. It's so hard to fit a square into a circle in a way that's fair. So that's a much longer conversation.

You know, this talk is about, do we, can we get to a stable place? And maybe that's a foundation for something more. Yeah, you know, you can't see it. I don't think, Mr. Ambassador, but the ship over our shoulder, the OOCL, Utah, that actually came from Shenzhen, Taina, and it wasn't full. I mean, it has a lot of containers, they call boxes on it, but it was not full. That's goods. Now, here's the dirty secret. Goods, while critical, are only about 15% of the entire American economy. About 70 plus percent is services, not physical things, but services we provide. Is there any? risk of potential tariffs on services, which are a far larger part of the economy than goods. Are you talking about foreign countries imposing tariffs on our, or fees or something on our services? No. Us imposing tariffs, us imposing tariffs on services of other countries into the United States. Understood. Well, listen, my low star on all of this is the trade fair and balanced.

And if we have a situation where foreign service providers, benefit from subsidies or some other discriminatory practices where they're allowed to operate here but they don't let our services operate there you know our digital tech companies are a great example where the European Union is constantly doing shakedowns right in terms of fines and penalties you know that kind of thing I'm concerned about and my view is we should take an enforcement action with the view to resolving these issues right and if countries don't want to resolve the issues then we can talk about next steps but I mean

I think services we have to worry about that Do you feel like China, and I don't know who is going to be, I know that we've got Secretary Besson and his team going to Switzerland. I don't know the players on the Chinese side. You probably do. Do you feel like they will be fair actors in this? I mean, we talk about this from the U.S. side. Do you feel like the Chinese are going to come in also wanting to make a deal?

Because as you know, better than anybody, if you don't want to get a deal done, if you don't want to play fair and actually negotiate, it's probably not going to happen. So that's right. So the secretary and I are going over. We're going to meet with Huli Feng and then some other Chinese folks in the delegation. These are people like I've spoken with Vice Premier Huli before Liberation Day. You know, some of his, the folks who work for him, I know from the first go-around when we were dealing with China in Trump 1. And so these are folks are serious, right? They're sending real people to talk to us about real issues. So I'm confident that we can have a straightforward and can

discussion with these folks and it's not just you know we're not doing this meeting with each other just to just for formalities right we're going to talk well that's it you're you're not going to go to switzerland not you but secretary bess it maybe you'll go who knows and no i i am going that room and hopefully have yes well you are going well you better get over there it's thursday afternoon and the meetings on saturday i think i'm leaving i'm leaving tonight no i'm going tonight scott and i are going and and we are we are going to uh with with a sense of seriousness of the situation Well, good, it is. And I'll tell you what, just being here at this port, a lot of the women have into work here, they're hoping for a deal because this is also their livelihood. Ambassador Jameson Greer, U.S. trade representative, have a successful trip. Keep us informed. Thank you very much, sir. Thank you. Have a great day. Really good to hear from him on the eve of this major trip to Switzerland.

And you can see consumer-related stocks have really taken a beating since all of this terrified broke out. A lot of these names are well off their 52-week highs. Just today, Shopify reported weak growth for merchants. Crispy Cream sinking to a record low, scrapping its dividend to save cash. Restaurant brands reporting a sales drop for brands like Burger King and Crocs withdrawing their full-year guidance due to consumer weakness and a trade war. But that stock is actually up nearly 11 percent today. and we will speak to the CEO about tariffs, the consumer, and more right after this. Welcome back to Power Lunch, and shares of Crocs are having a nice session of nearly 11%.

Even after withdrawing full-year guidance amid tariff uncertainty, the company said they're considering price increases as well. And the shares are still down about 17% over the past year. CEO Andrew Reese joins us now here first on CNBC. Andrew, it's great to see you again. Welcome. Thank you. Glad to be here. Are crocs still the hot thing? You know, because sometimes people say yes and then sometimes people say no. And then they say, hey, dude isn't doing as well as they'd hoped in all of these cross currents and then the consumer and then tariffs.

So how is how is it looking from your point of view? Yeah. Look, I would say the proof of the pudding is look at our Q1, right? So we had a great Q1 crocs up about 4%, including the U.S. and international. Hey, dude, beat our expectations, the guidance we provided. And we were able to produce $3 a share in terms of earnings per share, you know, 20% ahead of what I think the market was expecting. So really good Q1, strong performance in the Crocs brand, strong performance in Hey Dude. And so, you know, we withdrew guidance because there's tremendous uncertainty in the future, both actual costs, how much we would have to spend on tariffs, consumer uncertainty, and how that might play out over the year.

But I think we've got two strong brands that have a bright future. And today we're executing very well. You know, I have to end up buying them for my kids because they want the little. What are the things that you like the jewel, the gemstone things that you stick on to? I was. Thank you, Jibbitts. And I was walking by a lacrosse store in town earlier. And they were advertising not, I saw the word crocs, but they were not actually selling the shoes.

They were just selling, I guess, those gibbets as they're called. Are these like the AirPods to your iPhone? Yeah. So, gibbets is a way for the consumer to personalize, right? So, but it's also an incredible revenue on profit stream for us. So the consumer buys a pair of classic clog, a white classic clog. We literally sell tens of millions of those every single year. And then they can select a series of gibbets to go with them.

And what they're doing is they have a completely customized shoe that nobody else in the whole world has. And now that trend and that desire for consumers to have something It's a one of a kind. They can do it with a combination of our classic clog, our gibbets, and sometimes, you know, we see consumers spending as much on their gibbets as they do in their, for the, for the shoe that they purchased. But, and then, you know, as you indicated, they also have the opportunity to renew and buy new gibbets as maybe they have someone to celebrate in their life or something they want to be recognized for. All right. But again, you're doing a disfavor to the parents out there who have to just go,

Okay, all right, you want the gibbet, so we have to keep track. But I think it is a fascinating way to kind of leverage the brand. So a little bit on the tariff front, on the consumer front, you know, if you didn't have any macro data or any CNBC in front of you, how would you describe the landscape right now? I mean, I think there's probably three things going on for us, right? One is there's uncertainty about what we're going to incur in terms of additional costs for tariffs, right? So right now we're sitting in a place. We've got 10% on most of the countries we bring our merchandise in from and 145% incremental on China. We're in a 90-day pause and we don't know how that ends up, right?

So I think we were on our call this morning really transparent with our investors about where our goods come from. We've spent probably the last six to seven years diversifying our sourcing base so that we have, you know, sourcing a number of different countries so we minimize our risk. But we still have a lot in Southeast Asia, whether it be Vietnam, Indonesia, et cetera, or even India and some in Mexico. So that's an uncertainty. I think the second uncertainty that we're faced with is the consumer. I think in the prior segment, you had the University of Michigan Consumer Confidence data up, and you see a very steep declining consumer confidence. I would say in our actual business, that's not showing up today. As we look at March and particularly April, we see pretty strong business.

So we're encouraged by that. But then we see that uncertainty. And when does that show up or does that show up in their desire to purchase footwear in general, and particularly at Crocs and Haydood? So we're worried about that. So we've got these compounding uncertainties. I think what we have to do as a company and as a brand is focus on what we control. So we did initiate some significant cost reduction activities over the past couple of weeks

to make sure that we're proof. in our investments and our expenditures. But we also have to be offensive. We have to make sure we're bringing to the consumer a new product, that we're marketing to them effectively. We're reaching them on TikTok. We're selling to them on TikTok shop. And we're doing that around the world.

So we're focused on being prudent and conservative in certain areas. We're also focused on making sure that we're really bringing the best product, the best marketing to our consumers. So we can encourage them to buy. TikTok shop, as long as it's right? We have to go, but about $40 or $50. a pair, if I'm not mistaken, if I just kind of scroll Amazon. Could that go up to $75, $80?

It would never go up that much. I think we do have to pass on a little bit of cost if we get incremental costs, and that's the only reason we would do that. But, you know, we still give a tremendous value to the consumer. All right, Andrew, thanks for joining us. It's good to see you today. We appreciate it. Thank you.

Andrew Reese is the CEO of Crocs. And as we had to break, check out this mystery chart. The stock is hired today and up nearly 30 percent in a month. Our next guest says it's a good hedge for tariffs and inflation. The reveal and market navigator next. Welcome back to Power Lunch with the market still near session highs. Dow's up 543 points. NASAC up 1.8 percent.

Bon yields, though, Dom, those are moving to the upside, but not enough to kill this rally. I mean, and also maybe just to kind of return to a normal dynamic, right? Stocks are up, bonds are down. Maybe that kind of works out every once in a while. But anyway, so we have the possibility of higher inflation and maybe slower economic growth, right? Those concerns are growing on Wall Street about the possibility of stagflation. But is it stagflation or something different? And what exactly is on the horizon should traders just adjust their portfolios accordingly, given the stagflation narrative? So joining

us now is Jay Hatfield, the CEO and CIO of infrastructure capital partners. And Jay, this is interesting because we are talking about stagflation and kind of people are getting more familiar with it, but you're thinking about something that's more something called stag deflation. So take us through what that means. Thanks, Dom and Kelly. It's great to be on. So if you really look at stagflation, that happened during the 70s. And we follow oil. I founded an energy company. Inflation was driven primarily by higher oil prices. They won up an unimaginable 1,200 percent, so the equivalent of oil being over $1,000 a barrel, well over $1,000 a barrel. So that's the equivalent of oil. So that's the

That's what caused stagflation in the 70s. Here we have the opposite. So we call it somewhat tongue-in-cheek, stag deflation. You have oil down 20%, so not just flat, but down 20, as opposed to up 1,200. That's a tax cut for individuals. It will offset most of the inflation from tariffs or price increases. I wouldn't even call it inflation. So and the money supply is negative.

Money supply is the best leading indicator of inflation, even though the Fed. ignores it. So we do think growth will be one to two percent, so that's pretty stagnant. But we think inflation is heading down. Real-time inflation is at 1.3. We think it's going towards zero. All right. So, Jay, if that's the case, how exactly then do you position, what exactly do you kind of put in your portfolios to play for that stag deflationary environment? Well, one company's or type of companies that we love in which your money management business is way better than ours because they're really the Roach Motel of money management. So all the private equity firms, you know, we've mentioned KKR, are great companies. And they're

down about 30% off their highs. But their fundamentals are unchanged. Nobody can take money out. Maybe the realizations get postponed, but there's still great companies that can be sold. And they have great growth. So KKR just reported that grew their fees, 15% AUM, 50%. 15%, fantastic, possibly the best brand name financial services. So if there's some, we think it's tariff panic or tariff tantrum. It's a great opportunity to go by these permanent capital businesses, great franchises, and you can write it out knowing that it's not really affected by the market, like an investment bank would.

It's really just long-term holdings of great companies. All right. Stagg deflation and the playbook is, buying blue chip private equity companies. Jay Hatfield, infrastructure capital, thank you very much. We'll see you soon, sir. Thanks, Tom. Thanks, Kelly. First time I've heard that term. There you go. Thank you very much. Brian, over to you. Well, I wish we would have done this segment yesterday, guys, because I saw one of those case, Henry Kravs at the Milken Institute just yesterday. All right. Coming up here live at the Port of Long Beach, California, two and a half

million jobs and nearly $100 billion intact dollars. That's what could be at risk. if things grind to a halt. We'll talk about the risk of just that. Next. Pharmaceuticals, baby strollers, computers, and much more. What comes here into the port of Long Beach behind us is not only critical to what you either want or even need, but it's also a huge part of the overall American economy. The Pacific Merchant Shipping Association finds that the combined port of Long Beach and Los Angeles, to our right, account for about two and a half million direct and indirect jobs, 450 billion added to the gross domestic product of the United States, and about $100 billion paid in tax dollars. That same study also found that about 43% of

everything that moves through here ends up going into other larger products built or assembled in America. So bottom line, it's not just about the millions of products a day that come through the port, but it's also about the millions of products that those products, they then go into. Let's talk about it all with Mike Jacob. He is the president of the Pacific Merchant Shipping Association. Mike, we appreciate you joining us. Thank you very much. Yeah, thanks for having you know, the point we're trying to make, and this is not pro-tariff or anti-tariff. I understand there's people that are pro-tariff that maybe this will help manufacturing. This is just the data. And right now the data does show that if this slows or stops, a lot of the stuff that we make in

Texas or Ohio or Indiana, wherever it is, could also stop. Right. Yeah. Yeah. Exactly right. We basically have two different types of streams of commerce that are going on in these ports. We have retail products that are finished that everyone thinks about when they're thinking about what's coming in from China. They're thinking about furniture, toys, or phones, or what have you. And those things are manufactured overseas and they just show up here because they've been ordered and they're American consumer goods. But then there's a whole other component of that, and that is about 45% of what's moving through these ports are actually business inputs. So you've got just about under $200 billion of business inputs that are then processed into manufacturing, their component parts, there are things for everything you could think of that an American manufacturer might need,

but there are prices that are global. Do we know what those are? I'm guessing the answer is we really don't, because I don't know what's on. I mean, I don't know if anybody could ever know, one person could know what's on that ship behind us here and what all those things ultimately go into. It's a huge question mark. It's the entire economy, right? So you span the breadth of everything that could be going into anything

that's manufactured here on that component. And the other half of that, obviously, is the question about just how many different parts of this economy are touched, not just what you're thinking about when you're looking at the total volumes that are moving through here in big gross numbers. They're very hard for people to understand what they are. You can't touch and feel those numbers. What does 20 million containers mean to someone? Well, it means something when you break it down like we did in the study, and you look at what happens. Well, for every million dollars we import here, there's a business that turns that into $2 million of GDP and supports 12 American jobs.

And you just repeat that over and over and over again with all of these containers. Kelly? I was just going to say that much has been made of what's been happening with kind of the slowdown in in port traffic up in Seattle. So I don't know if you would say that there's a big difference in kind of where we are geographically at this point. Yeah, thanks, Kelly.

The entire US West Coast is the locus of trade with China. We're seeing slowdowns up and down the coast. Obviously these impacts that we're talking about with the study we just completed with S&P Global focus on the US West Coast because of that, that leverage you have with access to China, but also the Far East in general. So we are seeing

to slow down in all the trade lanes with China. We're also seeing an actual acceleration from Southeast Asia, from Vietnam. There's a lot of repositioning of containers into that economy because folks try and take advantage of that 90-day pause that that ends in early July. Well, and that's, and that, by the way, that seems to be the risk, because Mario talked to us and I brought it up with the trade representative ambassador Greer, although our dates were different. Mario said July 2nd, he said July 8th, whatever the actual date is. If that 90-day pause on reciprocal tariffs, if that ends and the reciprocal tariffs hit, so they hit Vietnam, they hit India, they hit other countries, then what? Do we have a scenario for that?

Yeah, we know what the scenario is. It's happening right now in China. We also have all of the conversation you just had with Mario Cordero about the pandemic parallels. That's what's happening. That's what's happening right now. We are slowing down. And we are watching demand a road. And it's because of the uncertainty of the tariffs. We know what's going to happen with China, right? In the short term, we are not having the productivity out of that. Very quick. I'm started jumping around at time. Is it going to hit the pay of these truckers too? Some of these stevedores that work on the docks, because I understand a lot of them are paid by cargo. Truckers, warehouse workers, distribution center workers. Like, they'll hit their wallet, their actual

paycheck. Absolutely. Every single one of them. We do work on volume here. So when you lose volume, you lose business. When you lose business, you're losing pay. Not pro-tariff or anti-tariff, but sort of just the reality, I would say on the ground, but it's probably more likely on the water, although it then goes to the ground. Mike Jacob, PMSA, appreciate your time. Thank you very much. Kelly. Thank you very much, Brian. Some breaking news in the crypto space and maybe on the tax front as well. The first of its kind, stable coin bill failing to advance in the Senate. Emily Wilkins with more. Hi, Emily.

Hey, Kelly. Well, this is a huge blow to the crypto industry. There was really a lot of bipartisan momentum behind this stable coin bill. Just a few weeks ago, you saw bipartisan support, you saw Democrats go ahead and back it in committee, and yet you have had recent issues where Democrats came out and said, look, there's some language in here, we're not super happy with it. They tried to negotiate this week and work with Republicans, but they were unable to get to a yes, and now the bill has gone down, failing on a procedural vote, 48 to 49, way far of that 60-vote threshold that they needed. And Treasury Secretary Scott Besson has actually weighed in here,

saying that this was very much needed legislation to promote the U.S. dollar and to be able to continue American dominance. A couple Democrats have said that they do still want to keep working on this legislation. They are hoping they can find a path forward with their Republican colleagues. Meanwhile, we'll be keeping a close eye because the House has a similar bill that they will be trying to move. Kelly? And quickly, Emily, you did confirm this reporting about the White House pressing to maybe raise taxes on high earners? Yes, Kelly, and I think one of the big things here to keep in mind is that one of the concerns for many lawmakers is that if they created this new higher tax bracket, they were worried that

it would hurt a lot of small business owners who have that pass-through income. And according to a source, that small businesses, there would be a way that they would not be included in this higher tax bracket, so it would really just be focused on those who are getting the higher earnings and not impact business owners. Of course, a long way to go still here on this bill. We're expecting to get some more details tomorrow. Really the big thing, though, is that Republicans have to find these revenue raisers. They've talked about some that would put more taxes on corporations. You've seen a strong pushback from the business community. So now it looks like they might be looking for top earners as a way to get that additional tax

revenue. Right. Raising corporate or raising high income tax. Either way, an interesting message here. Emily, thanks for now. We appreciate Emily Wilkins. To Rick Santelli, now for more on the bond market, Rick, which is selling off today. Yeah, absolutely. But I don't look at it quite as selling off. Let's start at the beginning. A drop of $13,000 on initial claims. You know, there's a lot of talk about slowing economy, labor market.

Look at four years of initial jobless claims. Does that look like something's jumping out at you that's negative? Sorry, but I don't see it. And as far as what's going on in the market, short rates like a two-year leading the way up a dozen base points, tens are up about nine, the 30-year bond up about five. Look at this chart with two-year, 30-year, and the NASDAQ, okay? Because you say selling off. I say rates are going up and stocks are going up, and that is not a bad thing necessarily.

The fact that the two-year is leading is a post-fed issue because if you look at the Fed Fund futures, they're pricing in a bit less easy. It all makes sense. And if you look at a year today to the dollar index, this is very important. It is stabilized. It looks like it might have turned. It's up 1% today. Kelly, back to you.

Rick, thank you very much, Rick Santelli. It's time now for some three-stock lunch. And here with our trades today is Matt Maley, the chief market strategist at Miller-Tayback. Matt, these are names you wanted to look at. So let's start with Blackstone, which is up 4% today, down 18% this year, though. And why does this one jump out to you? You know, Kelly, it's funny. you're looking at times of real uncertainty, you wonder, geez, you know, let's really dig into the

numbers and see what's really going to work well in the next, you know, six, 12, 18 months or so. But sometimes you also want to step back and just look at a broad picture. And this is what I'm doing here with Blackstone. I mean, look what, first of all, these are the smartest guys in the room, as they say. I mean, back in 2020, sorry, 2007, guess what they did? They sold their company to the public because they saw what was coming just before the big top. But also look at 2022. That stock went down 50%. Sorry, went a lot more than the market down 50%. And when it bounced back and outperformed in a big way. Well, guess what? It's down 40% or was down 40% at its lowest level. I think it's oversold. These are the types of environments when they come out of this downturn are going to, they're going to make a lot of money. So this is a name I think is a real good play down here. That's a recommendation for Blackstone and for KKR this hour. So I see a theme here. Let's move along to your next pick, which is Travelers. But now, perform.

lately, soared to another 52-week high. Can anything stop these insurance stocks? I mean, at some point, they, we have to say, okay, the hard market is changing and they, you know, I don't know. What do you think will happen here? Yeah, it's fine. This one is more of a, I say, shorter-term play, maybe over the next six months, more of a trade. But one of the reasons I have it on this one, is number one, you know, we do have to figure out what's going on with the catastrophic issues, which they had last year. But they, you know, they had their performance and under writing was still very good. That's number one. Number two, we're a long way from hurricane season, so that's helpful. But this is really more of a technical call for me. You see how the stock's been

bumping up against the 270 level for basically six months. This is the fourth time it's bumping up against it. It's finally breaking above it. So if it can push just a little bit higher and confirm that breakout, it's going to attract a lot of momentum money. And I think it should run quite a bit further. Fifth times a charm then. And quickly before we go on defense stock general dynamics, It's up about a percent today, nearly 8 percent in the past month. What do you do here? Well, I like this one because I hate to say it, but the world's not becoming any safer, especially now with what's going on between India and Pakistan.

But this reminds me very much what happened with RTX a couple of years ago. They had problems with their airplane engines. The stock got hit really hard. When it came back, it came back with a reckless abandoned. I think General Dynamics can do the same thing because I just think that the defense spending around the world, Europe, U.S., everywhere, is going to be much better in the years ahead. Well, we appreciate you highlighting these three stock setups. Matt, thanks for joining us today.

Matt Maylee. And remember, you can recap every three-stock lunch anytime you want, just using that QR code or head to CNBC.com. Brian? All right, Kelly, we're going to wrap it up with our port and trade focus. Some good old-fashioned CNBC stock data because many trade-related stocks have been hit hard the last couple of months. We're talking shipping, trucking, trains, logistics.

So what do we do? Well, we took these big name stocks. We compared them with the average price target of Wall Street analysts who cover them. And we're going to find the names with the most projected upside. Dom Chu would be proud. Of course, remember, analysts can change their mind. So take these price targets with a giant grain of sea salt. But here we go. In the rail space, Norfolk Southern Union Pacific, there we go. We're seeing in CSX. We all see upsides of about 18 to 14 percent in the truck and logistics, RXO, Hub Group, 13. 39 and 34% XPO. We see about 15% upside there. And in shipping, you see Navigator Holdings. This is a group, by the way, they got hit the hardest. 62% potential upside.

Mattson, which is big in Hawaii at 49%. Scorpio, 43%. So, Kelly, there you go again. That's the gap between the current price as of last night and the average analyst price target. Things can change, but those are the projected upsides of some stocks related to why we're here. Brian, I'm curious, what's your takeaway?

You've seen, you know what I've seen on social media or heard one thing from the Oval Office and another thing from analysts. What is the status on the ports on the West Coast right now? They're scared. They're nervous because the truckers and the stevedores that we just talked about, they get paid on cargoes. We've already seen overtime canceled. Some of these loads may actually cancel some of their time. Some of them have minimum floors in the union agreements, but their actual paycheck may go down. Right now, we saw record volumes last month. There's a ship behind us. but there's not three ships behind us like there were. The next couple of months, Kelly, you heard our date at the top,

14 and 16 ship cancellations. The normal is two or three. It's not zero. We're not seeing no ships come in, but it is coming down, and all that stuff goes into the stuff that we buy and make. Are you coming back tomorrow, or does the West Coast tour continue? My West Coast tour continues, but not on TV. I will come back and see you on set on Monday.

It's been a long few days, but hopefully from the Milken Conference and this, We got it all done. It's been jam-packed. A great, great week. Thank you so much, Brian for everything. We really appreciate it. Thank you. Brian Sullivan. And thanks for watching, Power Lunch, everybody.