Power Lunch - Dow jumps on solid jobs report, S&P 500 heads for longest winning streak in 20 years 5/2/25

Episode Date: May 2, 2025

Stocks are rising as Wall Street digests a better-than-expected jobs report for April, which eased recession fears and put the S&P 500on pace for its longest winning streak in two decades. We’ll tell you all you need to know ahead of the weekend. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to Power Lunch. Happy Friday, everybody, alongside Kelly. I am Brian. We got a lot of great discussions ahead. Court fights, major delays and tariff price hikes, plus a ton of news in the video game business that trust me you will care about. Also, is AI threatening job prospects for your kid? And with markets higher, what are the ultra-rich doing with their money? Well, Tiger 21's Michael Sonafeld is here, and he'll tell you. All right. Speaking of which, let's get a check on stocks with a Dow up more than five. 500 points in near session highs and the S&P on pace for its ninth straight day of gains. Forget this the first time since 2004. If you tilt your head to the side, you can sort of see it.

Positive developments in U.S.-China trade are fueling gains as we move throughout the afternoon. Again, not too much substance yet to those, but traders are eager to jump on any hint of a breakthrough. The S&P and the NASDAQ have officially bounced from the Liberation Day sell-off and are now positive since the announcement. Keep an eye on tech to Apple and Amazon offering some warnings. I mean, you could call it that on tariffs. Apple's shares are down 3.5%. Still showing some more resilience than feared. Apple is also getting pulled down, though, by this drama with Epic,

and we'll have much more on that coming up. And we should bring that graphic back up because I don't know if you notice, Kelly, Virginia Tech Colors, Chicago Maroon and Burnt Orange in that graphic. Anyway, don't see that a lot. That's the I-81 corridor, leading the S&P medical device firm is Dexcom. of 14% they reported strong guidance. Dexcom having its best days. It's October of 2022. Two major oil companies also releasing their numbers today. Chevron slowing its pace of buybacks. Shares initially lower, coming back a bit. ExxonMobil beating earnings. Profits there, though,

hit by oil prices, both stocks down on the year. Both CEOs were on CNBC earlier today. All right. Let's start with this market rally. The jobs report not nearly as dire as was feared, But the real driver, especially this afternoon, are these renewed hopes around trade talks with China. The Wall Street Journal reporting that Beijing may make an offer to help combat the fentanyl trade, clearly an attempt to start trade talks with the U.S. Along with that, our next guest says there are a few signs pointing to a bullish comeback for the market, including the fact that historically fast corrections like the one we've just had tend to bounce back just as fast. Ryan D. Tick is the chief market strategist at the Carson Group.

It's great to see you, Ryan. And, you know, there's been what I've picked up, you kind of start to get the weekend think pieces. Are people going, you know, just be careful. I think Bill Gross had something to this effect, too, where he said, look past Meta and Microsoft and there's, you know, less to love about the market. And I know he's often pessimistic,

but give some reassurance to those who are concerned that we came back a little bit too quickly here. Yeah, Kelly and Brian, thanks for having me back. Appreciate it. Happy Friday, everyone. So listen, the longest win streak, obviously, since 2004, in all likelihood here. I was thinking some things to talk about.

One thing that's interesting, and you guys might like this. We had a 19% near-bear market. We all know that. Over-the-top negative sentiment, no, the economy is not perfect. It's slowing down, but it's not nearly as bad as we thought this time three or four weeks ago. But as of right now, we have corrected more than 50% of that near-bear market. When I went back in history, when you have these near-bear markets like we just did, once you correct 50% only once have we rolled back?

over to make new lows. And so everybody knows, that was in 2022. The other like 10 times before that we didn't make new lows. Listen, this isn't perfect. I get it. We get in the weeds of it. But listen, there's a lot more positives out there. One more quick one here. You know, breadth. Market breadth has been so strong. Even on the 19% near bear market, if you look at advanced decline lines, they really held in there. Right now this second, the advanced decline line on the S&P 500 sitting an all-time high. Usually, the way I learned it a long time ago, breath leads price. I get the headlines, I get the worries, but this is a healthy market. And I'll tell you what, the lows of the year are probably in, and the bowls might have a little more fun. All right. This, you said a lot,

and we're glad that you're here. And we know, we don't know where we're going. Ryan, to be perfectly blunt. You're optimistic, and I hope you're right. A lot of our viewers and listeners hope you are right. Go back to that data you just rolled out. So when we have this kind of, violent correction. Like we fall and then we come back. 100% of the time, the markets are higher a year from now, correct? Yeah. That's right. When you have a lot of percent, 100. That's pretty high. Now, listen, the statisticians would say it's a small sample size, and I would agree. If there were more examples, Brian, we would use it. But that's what we've seen, these violent corrections. And at night, I know, you know, Mike Sintoli pointed this out,

you know, 19% for whatever reason in 1976, 78. in 1990, 2011, 2018. We had 19% near bear markets, intraday, you clipped it. Everyone gets all bared up, and then you hit the low. And we're there again, Brian. And that's just some positives, I guess, things to think about here. The weirdest thing about this. And you referenced, there's one time where we didn't get the stat that you referenced.

That was three years ago, 2022. It is amazing that we forget. The market fell 25. percent top to bottom intraday in 2022 lost one fourth of its value. It's up big since then. But yet it got almost no attention probably because it was slow bleed from January to October, just kind of like just a slow, a death by a thousand cuts. This one very different. How do we compare 2022, which got almost no attention for some reason, to now? Well, if you were there, you remember it. Maybe we need to have you and Howard. I was hosting specials Sunday night.

We were doing a lot of those together. I think you need Howard Ludnik on more. You've had the market rally a lot since you and Howard talked about things. But listen, Brian, what happened in 2022? All right. The whole globe sold off. What are we seeing now? Like, U.S. and India are the only two markets really down. The rest of the globe has been really strong this year. So that right there is one major difference. Also, bonds did terribly in 2022. So a diversified portfolio. Forget it. It was a rough year. Bonds have done okay this year. We all know gold has done well. So some of those diversifiers this year are doing well. That's a really good. I work with financial advisors every day, right? That's a great reminder to financial advisors and their clients why we preach to stay diversified, why you don't chase a shiny object, why you diversify, why you're rebalance, why you do these kind of boring things because then you have a year like this. And it wasn't fun this time a couple weeks ago. But being diversified, it, honest and goodness hasn't been as bad as it seems as if you're in only the Mag 7, which we have not been. I know, Brian, this isn't what you kind of spend your days and nights pouring over, but we talked to last hour to Bill Smead, who's out at the Berkshire Hathaway meetings. That'll be fun to listen into tomorrow. And we all know about the Buffett indicator, right? The measure of, I think it's total market cap to GDP.

That continues to just climb and climb and climb and climb and climb. So I take your point about staying in the market and building long-term wealth and everything, and that's what we do. But do you take a metric like that and ever work? about it or at some point, is it just a data point that's going to fall by the wayside? Yeah, I think Mr. Buffett himself has kind of said that he's not so sure if it's quite the same indicator. Maybe we'll find out this weekend. But I will say this, Kelly, along those lines. Yeah, tech has been pricey. We came into this year. Tech has been pricey. Parts of the U.S.

market are clearly pricey, but there are a lot of other parts that aren't. You know, small caps, midcaps, financials, industrials, they're not as stretch. Those are some value. Let's call it value. Value and low volatility, two areas we've liked. They've done pretty well this year. someone doesn't want to buy the pricey things, I couldn't blame them. There's a lot of other parts that are cheaper, and that's, I think, important for investors to always remember those things. I'm sure Bill probably pointed that out too. That's something to think about. No, he did. And he pointed out this irony, right? Like, you know, the company, Berkshire has all of this cash. Investors are getting a little itchy because they go, okay, in the long, T bills are fine for now.

But you've got to buy, and Warren said, I remain committed to equities. But what companies or what publicly traded or otherwise, can they buy to move the needle at this point? And if you don't jump in when you get these little market opportunities, is he waiting for a much bigger pullback, thinking that things are still dramatically overvalued here? I don't know. Yeah, it seems like he is. Let's not forget, he's made some really big bets in Japan.

He's made some big bets around the globe. So he's looking around of some of these other parts that are a little bit cheaper. I know one more quick one here. Everyone talks about selling May go away. Just know this. The last 10 years, May has been higher nine of them. And these next six months, which are usually fairly weak, have been higher eight out of ten times.

So don't just blindly sell it may go away. In fact, we think we'll probably get a pretty good rally guys in May and into the next six months on it. Should we put, should we have, your point is well taken. We're on like international TV here, Kelly, I think. Should we put that saying to rest? To rest? I was thinking, can we, like, it's not true anymore.

Let's come up with something positive around the derby and then we can make it a whole like, you know. Yeah. It's a big NBC event this week. Right. Right. Bet on this horse? You know what the favorites name is?

Journalism? Journalism. Really? That is the favorite. I'm not kidding. That is the name of the favorite horse. Just won the Santa Anita Derby. I've been watching with my kids.

I always pick Pink number eight and I think that's its number. So that's the number. So that's a lock. Maybe there's something around the Derby, you know, buy the Derby, sell the Labor Day or something. I'm Memorial Day, sell Labor Day. I went to the Derby once in college. I didn't even see a horse the whole time.

We were in the Enfield party and so you can do it at the Derby. You've been to the Preakus. I was going to say it's essentially. Churchill Downs, maybe called Churchill Ups. I see where you're going. We can go with that. Ryan Dietrich, always love having you on a little optimism. I know it's not sexy, but you're sexy, Ryan.

Thanks for coming off. Appreciate it. Didn't see that comment. Thank you. Appreciate it, guys. Take care. I have way too many jelly beans before the show started. That's a true story, by the way.

In the meantime, Bond yields are jumping on economic and trade optimism today. Rick Santelli, he is in Chicago, jelly bean free. And, you know, we're not trying to make too much these markets being up. But Rick, you got to admit, even for Rick Santelli, this has been a pretty unbelievable comeback the last couple weeks. Not for me. Sorry. I think it was on this show, actually. I think it was on this show where I talked to you and Kelly and said I would be dipping my toe in about three weeks ago.

Listen, to me, I agree with the last guest wholeheartedly. All the adages, farmers trading ominac. toss it all. You know what? It was a man-made event, and I sincerely believe that all the green in the markets is much smarter than all the naysayers in the economic community. Let's look at a two-day of twos and a two-day of tens on the same chart. A couple things should jump out at you. First of all, yesterday we broke an important streak you need to be aware of. We had five lower closes in two-year that ended. We had seven lower closing yields in 10-year that ended. So there is a turnaround going. And when you get a turnaround like that, and you get the kind of upside that you

see on those two charts, we're up five basis points right now as we, excuse me, we're up 12 basis points in a two year. We are now up nine basis points in a 10 year. Now, let's move to the weekly charts. Also very important. Coming in today, I thought it would be really tough to turn the weekly numbers up, but that's exactly what we did. We settled at 370 last week, 370. 3.7. I'm sorry, 375 last week. So look at what we've done. And in a 10 year, we settled at, what, 431-ish? Right now we're trading, but we're at 424.

So 325 and 424, up 5, up 7 on the week, didn't think we'd see it. And it wasn't only the 830 data on the jobs report, Brian. Even though we lost 58,000 on revisions, it was a solid report. But at 10 o'clock, we also really held on to some. of the gains in factory orders and in durable goods. And even though a lot of it was aircraft, if you look at the charts there at 10 o'clock Eastern, we started to build on the upside again. These are aggressive closes. And I contend that the statement for the 10 year for the rest of the year is not going to spend much time under 4% in my opinion. Back to you. Rick Santelli,

you did say put the toe in. Appreciate it. All right. Folks, we got a lot to do. We are just getting started coming up. The video game court ruling, you may. may not care about, but you should. And as we had to break, don't miss next Fast Money Live. That is that event on Thursday, June 5th. You got Melissa, you got the Fast Money gang, all at the NASDAQ. Behind the scenes, look at the show, special Q&A session, cocktail hour. Oh, and by the way, an exclusive gift as well.

You want to go? Yes, you do. Scan the QR code on your screen. Go to CNBC Events.com slash fast. money. Hopefully they'll let Kelly and I in for free. We're back after this. Welcome back to Power Lunch. We're turning our attention to the gaming world with some big news in many fronts today. First of all, Epic Games has scored a major win against Apple, and they'll bring Fortnite back to the iOS store after around five years as a result.

This is all because they can now use third-party payment processors, not pay Apple that 30% toll. Apple says they will appeal the ruling, but here's what Epic's CEO told us just last hour. I've always firmly believed in the righteousness of opening up all of these platforms, iOS and Android, to competition and payments, competition in digital stores and competition so that the services Apple offers can be competed with by any other developer building a better service. Apple faces a real choice. They can either determine their own destiny by changing their policies proactively in the entire world and avoid a landslide of litigation and legislative. that's coming from all kinds of developers and regulators around the world. Or they can face the onslaught. Or they can face the onslaught in other huge news.

And by the way, Apple shares are down about 4%. Take 2 is also down about 4.5%. But they were down 12% this morning after the company officially announced the release date for GTA6, which is not until May of 2026 versus fall of 2025 of this year, as originally expected. although when we say originally, this is like Tesla's next car, it just keeps getting pushed back. And elsewhere, Microsoft raising prices on games and devices, citing tariff uncertainty, although those shares are higher. Let's dig into all of this now with Polyguns Ross Frashtick. Easy for you to say.

Lightsheds of Brandon Ross and our very own Steve Kovac. Welcome to all of you. So Russ, big deal for GTA. I mean, I think we should start there because on a company basis, you know, the Apple setback is really almost more of a non-video game story. It's just it was a video game company that kind of pushed them to this point. The delay of GTA6, this was supposed to be what a billion dollar game this fall? Yeah, it's an enormous release. Take 2 has been relying on this for years and years. But all of these companies have been putting out these games.

Cypunk a few years ago, this massive game, hundreds of millions of dollars of investment, came out and was a disaster. So what they can have happened is the first two months of the game's life cycle being, oh, this game's actually broken. That's a huge disaster. Do you think there was a risk it would be broken? I think there is no chance that. any company wants to take with that amount of money where they release their thing and it's a mess. And it's just not ready. Why do you think it might not be ready? I mean, I understand that these things in order to make them are like those animated films where they spend seven years rendering or something. But what's going on behind the fields? All of video game development happens very, very late in the process up until the very last minute and one tiny number somewhere in the code can screw the whole thing up.

So it is incredibly risky. You don't always know until the servers get turned on that everything's going to work great. So it's incredibly scary for them. I get it. and they want to make sure they get it right. Sounds like TV news. Brandon Ross, a lot of our viewers and listeners are watching this right now. They're going, oh, well, that's interesting, but I don't really care about video game news. Let's be clear. This ruling, this core ruling, while brought forth by a video game company, is completely bigger

than anything related to just video games. Is it not? Yeah, it transcends video games to everything that monitoring. monetizes through an app purchase or subscription in the app store. And you've seen already a flurry of apps or app developers working on putting brand new applications in the app store that get around the Apple tax. The first major one that came out was Spotify, where now they will tell you what the prices are for various subscription plans and allow you to link out to purchase it through the web

and avoid the Apple tax. And it's going to be a pretty seamless process using Stripe or others. Steve, how many more do you expect to maybe we are going to see new entrants come to the iOS platform? Maybe we're going to see new games, new app options of all kinds now that if they're allowed to do so, these developers feel like they can keep much more of their profit. Yeah, Kellan, this is something I brought up in our conversation with Tim Swinney last hour on your show and basically asking them, you know, these smaller developers, these more independent

shops, do you envision that happening? Because you think just having Epic games do this in one spot, to modify, do it, some of these bigger players do it, yes, that'll hurt Apple a little bit. But if collectively we see all these smaller developers suddenly say, hey, we're sick of paying these fees to Apple to the App Store, and instead we're going to take advantage of, you know, let's call up Stripe, for example, and have them help us out with their payment system instead, get a better cut, get a better rate of that. And that's when it really starts to impact Apple, Kelly, is when more and more of the smaller developers.

And I know we're saying, hey, yes, a gaming company brought this forward, but it's a bunch of different apps. But keep in mind, guys, that gaming is the most lucrative part of the app store. There's a reason why when you open up your App Store app and at the bottom tab, there's a tab just for games. That's because Apple knows that's where the most money is. That's what people are spending on, whether it's transatlore. transactions within Roblox or transactions within soon again, Fortnite, et cetera,

they get to take a rake off of all of that. And that is why gaming is the thrust of this pushback against Apple guys. So, Russ, I'm looking at the most popular iPhone. And I know you're sort of the video game specialist, but you get my point on this. Sure. The most popular apps right now in the app store, in order, TikTok, YouTube, Snapchat, Tinder. Yeah. Okay.

Those are old. There's nothing new. here. Some of the games they push, I get it, are kind of new. How relevant to video game developers or other companies, do you think the App Store actually is right now, given that old, well-known apps are leading everything every day? I mean, it's incredibly important for smaller developers. You are still seeing releases there, especially in their Apple Arcade, which is the subscription service that they have. But I would say, broadly speaking, outside of the apps that you mentioned, which are obviously media apps, you're seeing mostly these big players that have,

been around forever. Clash of clans, things like that are games that have been at the top of the played list forever and just live there. And they rake in those monetization, that monetization money. So yeah, it's a huge impact on Apple's bottom line, on these companies bottom line. I wouldn't be surprised if some of these companies introduced similar to Epic, introduced their own payment model, and get that 30% back. Yeah, I mean, which goes back to Grand Theft Auto. Speaking of franchises that have been around forever, Steve, we've gone back and forth on this news over the years as they've pushed it back time and again. What do you make? of the latest announcement?

Well, they go to my plans for the fall to spend all the back half of the year playing Gretafter.6. But look, really, this is to their point earlier, is these games take a long time to develop. And there's a human toll that goes into it, too. It's called Crunch, where, like we were just saying, you build it up to the last minute, get everything polished and ready to go out the door. And they're really, Rockstar has actually kind of a bad reputation. Rockstar is the division of Take 2 that makes Grant Theft Auto.

They have a kind of bad reputation for really pushing their workers to get these, meet these deadlines and get the games out of the door when it's just not possible on a human toll to do. So it is kind of good to see that they're realizing that, that they're going to let a little more time breathe instead of paying attention necessarily to what Wall Street wants to see. Let's get this game right. Let's make sure our workers aren't being overworked to get this game in the way we wanted to do. And again, to the point earlier, if they release a broken game or partially broken game, that is a really bad precedent of set and can hurt things quite badly for Take Tier Interactive. No, absolutely. It's like a movie release.

You have to get everything just right. Russ, quickly before we go, Microsoft is now raising prices for Xbox. You said Nintendo kind of paved the way for doing this. So inflation is really coming to the video game world, it seems. Yeah, it's funny because back in the mid-90s, there were video games sold for $80, and they kind of go in these waves. I think you're right, inflation is part of it. I also think it's just the market's going to tell them what they can do.

If people are going out and buying $80 games, great. But I think a lot of the games aren't worth $80. So you'll see these top tier titles, the GTAs of the world, will be at $80. Maybe a smaller title, new IP, something like that. Might be at 60, might be at 50 even. So I think there will be a range in the market's just going to tell them what they want. It's weird that they were charging more per game in the 90s than they, the 90s today. I know.

It's very bizarre the way the sales have gone. over the years. Yeah, but that's just, I guess, what the consumer is comfortable with. We thank you all for joining us today to break it all down. Russ Fresh Tech, Brandon Ross and our own, Steve Kovac. All right, coming up, do you want to invest like a one percenter? Well, you're going to get a sneak peek into where the ultra-rich are putting their money right now with Tiger 21's Michael Sonnafeld. Next. All right, welcome back. Let's talk about money. Because while they say the rich are just like the rest of us, It's not exactly true, at least when it comes to investing.

How do we know that? Well, because we get to talk to them and we get to ask them and find out what kind of investments they love right now. And one big group we love to talk to is Tiger 21, which called itself an ultra-high net worth peer advisory network, but in reality, it's just a great group of people who have become very successful in life. I go and speak at their annual conference.

We're joined now by Michael Sanofeld. He is the founder and chair of Tiger 21. By the way, made his fortune by working first, working on the docks of Jersey City, going to some dump called MIT. Apparently it's, you know about that? I've heard of it. She's heard about her husband went there as well. Coming back, buying those docks and developing the harborside.

At that point, I think the best real estate deal in the history of New York. Certainly one of them. We did well. It was great. You've done well, and now you launched Tiger 21. So you guys come out with these asset allocation reports. What I'm always shocked by, and I probably shouldn't say this on this network, Is that stocks?

Your teams love them, but they like them. They don't love them, right? They're still not the highest. They love real estate. We love real estate, private particularly, and private equity. Both are at 28%. So 56% in the private markets, 24% in public equity, and a lot of it in ETFs and indexes. So stock picking is sort of fourth on the list.

Is that because you're a real estate guy? Like, do you just have, is this your cabal of, if you know real estate, and a lot of us don't. And so we're afraid to even approach it from an investing point of you. Like, I look at it and I'm like, what's available to me where I'm going to have some kind of edge? So if you made your money in real estate, you're going to want to invest in real estate even after you cash out from your company. If you made your money in private equity, you want to be able to roll up your shirt sleeve, On a board, you want to be involved. You don't want to, as a shareholder, you're the last to know of a problem.

As a private equity direct owner or investor, sometimes they call you when they have a problem and ask you to how to fix it. So our members have a bias because of their unusual skills. Our members are 1 in 10,000 by accomplishment. It's like Major League, Football, Baseball, Basketball. This is the major leagues of entrepreneurs around the globe. 1,600 members, 200 billion in assets. So when they are interested in real estate investing, I mean, what, that's such a broad thing to do.

You can own apartments directly or you can be in a reed or you can be in, I'm sure, many of these private vehicles that maybe they have access to that people wouldn't. What kind of real estate investing? So obviously there's all these sectors office, but residential would be the largest direct ownership, garden apartments across the country, multifamily, high-rise, a lot of retail. In the last five years, industrial has been screaming, coming back a little now. But you'd have to say industrial's been the strongest and multifamily the most constant. Biggest flux is retail and office. And one of the benefits of Tiger is that they will often like trade ideas. They'll say, well, I've got this investment here.

Do you want in? Yeah. And I've seen commercial realists. I'm not any of these, by the way. I don't have the money and not invited. But they're investing in these sort of retail developments with Whole Foods and Anchor Tenants and good returns. So is it, does it come down, Michael, to more of a knowledge thing and a control thing? Next Tuesday, we have members flying in from all over the country to look at a member's mall in the south.

It's a multi-hundred million dollar mall, and he can call on a network of members that are now flying in to spend a day to help him strategize what the best execution is. Do I develop the mall? Do I sell it? What are my options? How can I do it? When's the last time that real estate had a real deal? cycle. You know, when I think about, because it makes a certain amount of sense that I hate to use the term dollar debasement again, but here we go. You know, when there's a fixed amount of physical

space in the country and when you're developing these properties and whatever, it's almost always a bull market, it seems. Now, we know there's pockets where there's pullback. There's an S&L crisis and things like that. But how do they navigate? Well, the worst. And this is one of the things that's so important. In the late 80s, the real estate markets froze up. That was the S&L crisis, if you're not in business 40 years, you don't believe markets can freeze up. So you invest. That's the problem with not having experience. You just don't believe it will happen. But I live through it. I saw the markets freeze up. It's an example today in the venture capital area. It's freezing up a little. It's not the same. It's not stopped. But if you're in the

venture capital business today, it means you're investing in a company that doesn't have revenue or cash flow or profits. That means you're. you're going to need to raise capital in the next 12 to 24 months. Will the markets be functioning better than they're functioning today or not at all? Because you're not just making a bet on the company. You're making a bet on the markets 12 to 24 months. I know we got to go. This is critical.

You worked at Goldman Sachs out of MIT. And so forget about Tiger for a second. I think the point making is very critical because people make fun of age. Let's be honest. I'm like, oh, old man, okay, boomer. Here's the reality. If you're under 45 years old, you've probably never managed money in a really bad market on Wall Street.

And that's the bare minimum. Yeah. Right? Yeah. There is a value to age and experience that you can't replicate. You can't read in a book. There's also a reason why fighter pilots, firemen,

grain operators are 28 years old because at 28 years old, the male, on average, will take risks that others are afraid of. So having the combination of wisdom experience, temporary, that ambition, that peaks at a 28-year-old is really the magic combination. Is it ultimately come down then when you've been through these cycles to saying,

well, I know what projects not to say yes to, or I have enough of a buffer that I can kind of hang on and ride this out when liquidity freezes up? So our whole art, our meetings take place. What's an all-weather portfolio? How do I have a portfolio? Right now, our members are very long, 80% between public-private and public equity, private,

equity in real estate. But we also have 10% cash. So how do you balance almost no debt? So having an all-weather portfolio that can do well in a good time, but not too badly in a bad time, that's easily said but hard to execute. That's what our members are learning from one another and really honing as a skill. I feel I've got a little bit of a window into it. If you're interested to check out Tiger 21, but Michael really appreciate you coming on doing the allocation service. Thank you very much. Thank you. And still ahead, the top line jobs data may have been better than feared this morning, but some troubling trends are emerging when it comes to hiring,

what young graduates and entry-level job seekers need to know. That's next. Welcome back to Power Lunch. I'm Julia Borsden with your CNBC News Update. A judge sentenced an Illinois man to 53 years in prison today for the racially motivated killing of a 6-year-old, a Palestinian-American boy in 2023. He was convicted of fatally stabbing the child, days after the Israel-Hamas war erupted. His mother was also hurt. The victims had been renting rooms in his home at the time of the killing. The Trump administration designated two powerful

armed gangs in Haiti as terrorist organizations today. The designation means any individual found to be providing material support to the gangs could face sanctions and penalties. And Prince Harry said today his father, King Charles, won't speak to him anymore following his public fight over his police detail in the UK. The statement came after he lost an appeal to restore the government-funded security that he lost when he stepped down as a member of the royal family in 2020. He also said he would like to reconcile with his family. Buckingham Palace responded by only saying the issue has been repeatedly examined and the courts have all come to the same decision. Brian, back over to you. Julia Borson, Julia, thank you. By the way, see you in L.A. next week. Julia, thank you.

Let's get back now to the markets and your money. And you've probably heard the April jobs report came in a little bit better than expected. That's good news, but let's be honest. The job market right now is not easy overall. It's not our opinion. If you're looking for a job, it can be very hard to find. And if you have a college student looking for an internship or an entry-level job, good luck. Indeed.com recently out with a new report that not only showed overall jobs on the decline since the COVID peak's gone down every year, not just the last couple of months, but also this chart highlighting how internship postings are now below 2019 levels, a five-year low and falling. And one reason is not just an economic uncertainty. It's that AI

may be starting to take some of these jobs that would once go or gone to recent college grads. The Atlantic Monthlies Derek Thompson said something alarming. It's happening to the job market, and Derek is joining us now. He's also, of course, got new business. book out with those recline called Abundance, which we had them on a few weeks ago to discuss. And I know the book is still doing well. Derek, so congrats on that. But this job market thing is legit. Like, this is a real, I know kids, there are 21 Yale, Ivy League, top of the line, cannot even get a callback. AI is really starting to chip away at the job market for young grads, I think. Yeah, it could be AI. It could be something else. So I think which we should do is

Let's talk about the numbers first, and then let's talk about the interpretation of what those numbers mean. So here's what we know. The New York Fed is out with a new survey finding that the unemployment rate for recent college grads is 5.8%. That is significantly higher than it was just a few months ago. So something is, in their words, deteriorating rapidly in the job market for recent college grads. Number two, the Wall Street Journal reported that MBA students, recent business school grads, are having a much harder time finding work and then maybe data point number three in addition to the indeed statistics that you just put up on the on the screen it's pretty clear to me that a lot more people

are applying to law school than were just a year ago for anyone who is around in 2007, 2008, 2009 when a lot of people start applying to law school that's a very clear sign that they're trying to bunker down during what they perceive to be a slack in labor market so you put all this together. I think it's pretty clear that the labor market has weakened, especially for this group, young college graduates looking to get into the labor market for the first time. So, Derek, kind of building on that, let's turn now to speculating about what this means. You know, if we leave AI out of it, it just sounds like a symptom of a weakening job market. Right. And so what I do in this piece is I walk through three different interpretations.

I say interpretation number one is that it's just a normal weak job market. We've had a weakening job market now for the last few months, even few quarters. We've seen the hiring rate coming down. It was like sky high, record high during 2021. People were talking about the great resignation. Now more people are talking about the great stay. People are staying at their jobs and the hiring rate has come down. Number two is that this is really a 15-year story.

If you go back over the last few decades, you had what's called the college wage premium go up and up and up and up, and then it's stagnated at a relatively high plateau for the last 10 to 15 years. So maybe this is all about the fact that the growth of the college wage premium, that is the benefit of college wages has started to stagnate. But the number three, I think, you know, look. No, no, hold on. Before we go to rule three, Derek, I got to go back to rule two. Okay. So let me just ask it directly.

Not for everybody, but is college writ large a waste of time for some? Absolutely not. For some. No. Oh, sure, for some. I mean, there's not a single asset in the world that is good for. for every single person in every single way. And college is like anything else.

It's a little bit of a lottery, right? You're taking a bet on yourself, you're paying money, you're sometimes taking out debt, and it depends what you major in. It depends what kind of economy you are submitting or jumping into after you graduate from college. But overall, the college wage premium is really quite high. And it's stabilized at a high level.

So you could say it's stagnating. I've used the word stagnating before, I think just here, but if, you know, A plateau that's like, you know, 15,000 feet over sea level is also stagnant if you look at it sort of step to step, but it's still much higher than the ocean. And the same is true for colleges. Overall, the college wage premium is quite strong. It's just that it's not getting strong over time and there might be a little bit of deterioration. But I would say overall, college does pay off for the vast majority of people who go.

Indeed. I think so. Although we all kind of think through this now with the next generation, is that still going to be the case or not? and especially with some of the changes in the economy happening, what about AI then? Where is there any way to pick up? So the jobs that ORA said where they saw big AI hiring this past month were in insurance and marketing, two areas where you say, okay, I can see how some efficiencies there, especially a lot of jobs younger people might have done could be, you know, could result in some headcount loss.

Yeah, I like to think about this from first principles, right? What is it the generative AI, chat GPT, Claude? What is it so good at doing? It's so good at reading. at synthesizing information, and producing 500, 1,000, 10,000 word reports, and organizing information and presenting it exactly how the person dials it up.

This is a lot of what paralegal work is. It's a lot of what eye banking is. It's a lot of what 22, 23-year-olds in consulting or marketing or PR are doing. They're writing emails, they're writing reports. They're synthesizing information. And so you'd think, if you're going to look for an economic indicator

that represented the idea that AI was beginning to do, the work of young college graduates, where would you look? You would look at the gap between recent grad unemployment and overall unemployment. You would look at specific weakening for recent grads. Look, guys, that's exactly what we're seeing right now. The relative strength of the recent college grad labor market compared to the overall labor market is at its lowest point in 35 years. That's trash. It's complete garbage. It has crashed. And so I'm not saying this is only AI, right? I wanted to make sure that we've worked our way through all of the interpretations,

but could this be the beginning of a canary in the coal mine suggesting that some types of companies, you mentioned insurers, are beginning to lean more on chat, EBT, and so for every 120-year-olds, they might have hired 10, 15 years ago, they're only hiring 80, 70, 60. Yeah, I do think that's possible, and this is an indicator to watch. It's a good discussion, and I root for everybody, I will say this, you know, you can't get an electrician, and the guy that owned the electrical company near me who sold it has a plane. Of course. He's got his own plane. Down in the Carolina. Like, I know, and it's a hard job and it's a skill. I'm just saying, I wish more people learn the skill. Yeah. We'll see where it goes. Derek Thompson,

this discussion is not over, my friend. It's not over. I'll talk to you soon then. Okay. And how do you know I'm real? And as we hit the break, Berkshire Hathaway's annual shareholder meeting kicks off tomorrow morning at 8.30 a.m. Eastern. We'll have live coverage right here on CNBC on dot com and on CNBC Plus from the first moment. And coming up, we'll also trade some of Berkshire's top holdings in a special three-stop lunch. Welcome back, Berkshire Hathaway, hitting a new all-time high ahead of tomorrow's annual shareholder meeting. And we'll have exclusive coverage on CNBC.com and CNBC Plus starting at 8.30 a.m. Eastern. So let's trade some of Berkshire's top holdings for a special three-stock lunch today and welcome Courtney Garcia to do that. She's senior wealth advisor at Payne Capital and a

CNBC contributor. Courtney, let's start with Chevron. Chevron, I would be a buyer of here. They actually had some disappointment when it came to their share buybackers. They actually reduced, but this is a company you really want to buy for the dividend, almost a 5% dividend. They have consecutively increased out for 38 years in a row. As long as oil stays above $45 a barrel, which is much lower than it is now, they can continue to fund all of it. their CAPEX and that dividend, so I would stick with this year. All right, one of their biggest holdings. The next one is much smaller for Berkshire, and it's Lenar. The home builders have actually been a really tough space here, just with a slowing economy and consumer sentiment so low. It's down over

20% since the beginning of the year, much more than the overall markets. But I think a lot of that pessimism has probably already been priced in. But that supply demand constraint is going to take years at the soonest to fix. And they're really at home to bridge that gap with especially the new home buyers like your millennials, they're really going to be able to fix that gap. So I would say longer term, this is absolutely something you want to take a look at, especially after that sell off. All right. That brings us to Apple. Got to ask about this one down 4% today. What do you do here? Apple would actually stay away from here. And while Apple is a fantastic company, I think this is one you need to separate the company from the stock. And the fact that it's trading about 27 times

forward earnings, which is at a premium to the markets. But realistically, their growth is slowing. They're facing margin pressures. You're seeing their demand. especially in China is going down. They're really at risk of these tariffs. And they really don't have an AI story to fall back on at least this point in times. That super cycle everybody was hoping on really hasn't been happening.

So I think for all those reasons, I would actually stay on the sidelines of Apple here. Two out of three of the Bursher portfolio is sell for Courtney Garcia. Courtney, thanks. We appreciate it today. And you can recap every three stock lunch using that QR code anytime you want.

We'll be right back.