Power Lunch - Dow surges more than 1,000 points after China and U.S. agree to temporary tariff cuts 5/12/25

Episode Date: May 12, 2025

Stocks roared back on Monday after the U.S. and China agreed to temporarily slash tariffs following negotiations over the weekend in Switzerland, raising hopes a trade war won’t push the economy into a recession. 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.

It is a big day for stocks and your money. Happy Monday. Welcome to Power Lunch. She's Kelly. I'm Brian's stock surging as Trump and China agreed to temporarily suspend some tariffs an inch closer to a big trade deal. At one point, the Dow up more than a thousand points to NASDAQ Kelly now up 11% in a month. So many people wish they had piled in at the lows, but the question is what happens from here, obviously. But let's start with this monster rally. President Trump saying earlier that the trade talks, the tea, a trade. achieved a, quote, total reset with China.

Amon Javers, our senior Washington correspondent, joins us now from the White House. Aman, what's the latest? Hey there, Kelly. The statement released by the two countries came just after 3 a.m. East Coast time this morning, with both countries agreeing to temporarily suspend most of the tariffs between their two economies.

Under the agreement, President Trump's tariffs will be cut from 125% to 10%, but the 20% tariff relating to fentanyl will remain in place, so that leaves a total tariff rate of 30% on China. The pause is set to begin on Wednesday, setting up a 90-day negotiating period between the two countries. And Treasury Secretary Scott Besson said on CNBC this morning, that negotiations won't be easy, but that both sides are approaching the talks with respect and a recognition that they have mutual interests. And in the Roosevelt room earlier today here at the White House, the president said he may speak to Chinese leader Xi Jinping before the end of the

week. So that indicates that progress may continue to come quickly here. Still, a lot of the hard issues remain to be settled, including Chinese non-tariff barriers to trade. And then the open question guides of how much, if any, manufacturing is going to move back to the United States as a result of any agreement here. Back over to you. Well, I mean, you mentioned, Amon, the sort of larger question about manufacturing coming back to the U.S., but, you know, markets for now are off to the races with the idea that basically they're not going to have to worry too much about that kind of obstinative change happening, don't you think? Yeah, I think that's right.

I mean, part of the White House's stated goal here was, A, to generate revenue to offset tax revenue, but also to sort of shift manufacturing globally back to the United States and rebuild the American working and middle class. Unclear sort of where that effort goes, but you're right, the market is focused on the idea that the tariffs are going away or largely going away. And it looks like the conclusion is that, you know, people can make money at 30%, which they couldn't make at 145%. So that sort of reopens the trade spicket. Right. Exactly. And then I guess so it's 90 days now. And we see if we then have a

reimposition of tariffs or not. But I almost wonder if the market shrugs off the headlines at this point. But we'll cross that bridge when we get there. Do you have a snapback in 90 days? That seems unlikely. But you know, you've got to watch these negotiations to see what happens. All right. Amen, thanks very much. Amen Javers. Cross town of the Treasury Department. They just released the latest monthly budget report. Steve Leasman with the headline, Steve? Hey, Kelly, yeah, the U.S. Treasury is saying that the deficit is up to $1 trillion in April, that is. That's up 23% fiscal year to date.

But it was a good month. The surplus was up $258 billion in the month of April. That is a surplus. And that's 23% better than a year ago. Still, the overall fiscal year to date is deficit. Big news here, the tariff revenue rising to $16 billion. I calculate that's almost. almost $200 billion at an annual rate.

And it looks to be the highest we've ever seen. We're waiting for confirmation from Treasury. But my data shows that this number on tariff revenue of $16 billion is a single month record, almost double the prior month record of $9.1 billion again, waiting for confirmation from Treasury. Spending was up 4% in April, 7% year to date. Receipts up 10% in April, 5% year to date. Individual tax refunds.

Now, this is a good number here. that is potentially significant, that was up, those refunds were up 8% year to date. Sometimes that has an influence on consumer spending. And then interest on the public debt, you did have a down draft in yields that was down 1% in April, but they're up 10% year to date. Brian. Okay, a lot of headlines there, Steve. So if you had to use the leaseminator, we'll call that.

That's your filter, right? What would be like the main one or two takeaways on all these headlines? I would say one, still an awful lot to do if you want to get control of the deficit. It was a good month in April. There were a bunch of adjustments back a year ago that defy the amount of time you have in this show and the next two shows to actually explain it. That's one. And two is those tariff revenues were significant and they'll remain significant according to a new estimate that's out there from the Yale Budget Lab, even if you were to back out those high China tariffs to where they are now, they will remain significant.

So it's a big number that's being paid. And I like this idea of the refunds being high. If I could add a third one, that could help consumer spending at a trying time for the consumer. Mr. Sullivan. And Steve, can I ask you a question? I love everybody's opinion on this. The deficit is so large. It's so much worse than it used to be.

I've seen projections. Who is this from Zezas at Morgan's. Stanley, that the deficit's going to be 7% because of the Trump tax cuts and so forth. Does it even matter? I mean, what would the level of the tenure be if we had a 3% deficit? Do you think it would be significantly lower or is it even about that? Like, I can't figure it out. Well, let me give you just a very small touch of history, which is that I had for many years contended that people were way too excited about the deficit level and that the capacity of the U.S. to borrow was quite a bit higher. When we approached and near the 80 to 90 to 100% range, and I guess we're

above that now, percent of GDP, that's when my concern rose. And it rose because we were running those high deficits at a time when the economy was expanding. And I was concerned about, and I remain concerned about our ability to help the economy through federal spending in a downturn. So that's where it matters to me. I do not doubt the ability of the government to fund it. itself, if that's your primary concern, but that's like saying, how concerned are you about Armageddon? Right. At the margin, it matters and it matters how much we spend on our interest.

That matters because that means we have to make poor choices elsewhere for otherwise helping people or investing in the economy. Do we, though? I guess that's my point. It feels like at this point you can have your cake and eat it too. You can have high interest costs. You can have high Medicaid costs. You can have high everything.

You can have 7% deficits. And the stock market's up to basically all-time highs. again and it just doesn't seem to matter except maybe a for bond you. Kelly, we can have us, we can have us a high time if we want, but you know, and ask Brian about that reference if you like, but the issue there is that it does preclude other things. There's an opportunity cost to all this. Yeah, we can do it and it's going to, but it's going to be expensive. When we start spending the kind of money we're spending on interest, it's time to have to get control of it. And I'll also say, We don't actually have to get control of it as much as we probably have to show the market that we have control of it.

Well, once in a while, you get shown the light in the strangest of places if you look for it, right? Thank you, Brian. You're very welcome. See you in Central Park tomorrow. I was it in Vegas over the weekend. Steve, thank you. Right. And I'm barely here.

All right. What's that? Where you're at the sphere? I was at the sphere. It was insane. All right. There's the news. Now let's hit your money because let's be blunt.

When the Terrace were first announced on April 2nd, markets got crushed. Headlines were all over the place and not just in the business media. General news leading with stories about stocks falling. I even heard a show talk about retirees, quote, being wiped out. But Fund Strats, Tom Lee, did not take the bait. He advised clients to hold fast. Said that markets would have to make new highs or would make new highs this year. And guess what?

We are there in one of the fastest stock recoveries in history. We are not quite positive on the year yet. Maybe this is the high. Maybe it won't happen. But this has still been an amazing bounce back. Joining us now is FundStrat Global Advisors, Head of Research. Tom Lee, also a CNBC contributor. I think you're in like a studio, so you can't run like an actual victory lap.

And maybe you're not there to do it yet. But Tom, what did you see that apparently so many others miss? Because I thought we were going to zero. Well, and zero is always a possibility, Brian, but I think it comes down to three things. You know, the first is the high-yield market never confirmed the panic that we were seeing from the economists about the economy. High-yield spreads did widen to like 439 basis points wide, but if we were barreling into a recession, they'd get to 700 or so, and they're back down to like 360.

The second is that the stock market did have a liquidation event, as you point out, but waterfall declines, all of them, 17 out of 18 since 1950, had a V-shaped recovery. So we knew that whenever the bottom was established, the bottom would be a V-shaped. 2002 was the only real exception because of Jackson Hole. And the third is, we had a lot of faith in businesses. You know, these companies have been battle-tested. They survived a pandemic shut down. They survived a bullwhip effect from a recovery.

They survived the fastest rate hikes in history. So I think that businesses really should get credit, and they've delivered earnings even for Q1 and for guidance that have been way better, given the Armageddon that we expected. So I think those three things are the reasons we sort of told our clients to kind of buckle down and even add exposure. You know, I did something I almost never do, Kelly, which is I deleted it to me. Because I tweeted out around that time, I was like, you're not really losing money until you sell.

And I meant it. You should have left it up. No, I should have. But I meant it, Tom, as a reference to this show that was listening to on another network where they said retirees are being wiped out. I was frustrated. I tweeted out. People got a hold of it, and it took this life itself. But my point was that unless you're retiring in a few months or a year, or your 80 years, whatever it might be, you don't.

it's better to be in the market for a long time than to try to time the market, correct? Like, if you're a trader hedge fund, that's one thing. But if you're a longer-term investor with a timeline of more than five years, the bias is clearly to the upside. But I think because the sell-off was so politically oriented that it kind of took on a life of its own. Would you agree with that? Yeah. I mean, there's a couple of factors at work. We were highlighting it during the tariff dislocation.

We know that the equity professional universe of investors, you know, looking at political surveys, more than 60% are Democratic leaning. So their interpretation of the actions of the White House was half empty. So we saw an exaggerated move in equities relative to the bond market, where in the bond market actually is flipped. In the fixed income world, 60% of bond managers are registered Republicans. And so that's why I think you get better signal, at least in this instance, from what the bond market was doing. And the second is, of course, something people have talked about as the 10 best days. You know, we were highlighting this multiple times that if you exclude the 10 best days of

2023 or the 10 best days of 2024, the S&P only returned 3% a year each of those years. So you need to stay in the market, as you point out, in order to get the 20% gains. And I think this year is another example of people rage sold at 4835 and now they're buying in today. They missed a thousand points or 20 percentage points of a gain in 2025. Do you have any thoughts on kind of bond yields at these levels? Does it matter? I mean, just kind of picking up on what we were just discussing. And for those who missed and wished that they had piled in at the lows now a month ago,

what do you say now? No one now wants to go, all right, fine. I'm going to make my move now and now stocks are back at the highs. maybe we then slide lower again. So just some kind of general advice. Yeah, I've got a couple of pieces of advice. I mean, right now the 10-year yield at 4% I think isn't a huge burden

for not only for the government, but also for the economy or for companies. So I think it's a level of funding that businesses can earn a return on capital. And then as we think about 2026, there's a lot to be excited about. We have deregulation coming. We have the tariff debacle behind us.

We have tax cuts. possibly. And then we might have better trade partnerships with other countries, meaning U.S. companies have earnings upside. I think that the market is flat year-to-date through May. So I don't think anyone should feel like they missed anything. I think that they're going to have a chance to buy a lot of companies. A lot of stocks got obliterated. And I think that these washed-out names are still opportunities. And we talk about it with our clients, you know, whether it's Tesla or the Mag 7 or the small caps. There's many opportunities still. But while we're feeling good, and we should today. It's Monday and the markets are up, so why not feel good, Tom? We're just one tweet or

true social post or headline away from maybe another market collapse. Isn't it important for your clients and our viewers and listeners to always accept that reality that one hallmark of this administration is that you could get one person saying one thing and then a few hours later or next day somebody else saying something else. If the president says, well, China's not negotiating in good faith and we're walking away. I mean, there's a thousand-point drop. Yeah, that's possible. I mean, I think that for every investor who is investing and saving, they should hope for days

where the VIX goes over 50 or the S&Ps down 7% from its highs because we know that those are dips that you really have to buy. I think people really forgot those rules because in the heat of the moment, it didn't feel like that. But remember, on April 7th, April 8th, we had a 60 VIX. I mean, you really can't lose buying a 60 VIX. Bix, buying S&P at a 60 VIX. Really can't lose buying at a 60 VIX.

The VIX, of course, the CBOE Volatility Index. Tom Lee, I'm going to start calling you holding fast. Tom Lee, a fun strat. Thank you very much. Thanks, Brian and Kelly. Let's get a closer look at the bond market now. With yields higher, as hopes the temporary trade deal of China will help avoid a recession and possibly lead to fewer Fed rate cuts, you heard Steve Leasman kind of give the other side of that argument earlier.

The two year hitting its highest level. since March up at about 4% before pairing back a bit. The 10-year has hit 446. It's just below that right now. Highest level since about April 15th, 30-year 488. And get a quick look at the yield curve, which did steepen slightly following the tariff-delay news. But as we mentioned, with the two-year-up as well, not a whole lot to see there. Always a good sign for the economy and so on.

But again, still kind of in a holding pattern, bri. All right, one block down. More to go. And on deck. Did Donald J. Trump just channel Bernie Sanders, at least when it comes to drug prices? Talk about that next. Welcome back to Power Lunch at the president signing an executive order just a few hours ago aimed at lowering prescription drug costs in America. He says he's setting a 30-day deadline for drug makers to comply.

And if significant progress isn't made, further action will be taken to lower prices within six months. In a truth social post, Trump claimed drug prices will be cut. by 59%. White House officials haven't disclosed which medications this order would apply to. Farmer stocks were hammered in early trading, but some names are clawing back with the XLV ETF, even now in the green. Jeff Jonas is a portfolio manager at Cabelli Funds. You specialize in health care, maybe pharma, Jeff, if I'm not mistaken. So maybe you can tell us what exactly this order is going to do. Welcome. Yeah, thank you. You know, despite all the fanfare, this is really just the start of what's

probably going to be a lengthy process. So as you hinted, that in the next 30 days, he's going to lay out his list of demands to many of the big pharma companies and probably biotech companies. And then they'll have at least six months to respond. And as we've seen before, he can be very flexible in what he determines to be a win. So I think they'll be able to come to a relatively acceptable bargain here. But what, so, okay, when we talk about, I mean, there's a lot of big reactions, Jeff, to this announcement with a lot of people, again, pointing to how the Republican president is doing something that seems more out of a democratic playbook. And this goes back to Trump's first administration. I believe the Biden administration carried it on to some extent or was defeated in courts and

trying to do so. So what can the president do now exactly? You know, a lot of this is job owning, but he would like to see European countries pay higher prices for their medicine, in part to help pay their costs of some of the research and development costs and the industry profits, and he'd like to see us pay lower costs. He also talked a lot about the middlemen, the pharmacy benefits managers. You know, there's been a lot of controversy around the high list prices that we have in this country, and then the big but opaque rebates that bring the net price down to something a lot lower than the list price, but something that's very hard for people to see and understand. Yeah, hey, Jeff, it's Brian. I mean, and we should

show, guys, let's bring up CVS, the pharmaceutical change. because they also own a big PBM, pharmacy benefit managed. That stock is down 5%. And, you know, the politics, Jeff, aside, because this is kind of Trump channeling Bernie Sanders, right? I mean, this is like, we need to lower drug prices and reduce profit margins of the U.S. But on the other side, he's saying, well, Europe needs to pay more.

Your job is not to be political. It's to figure out what the balance is. They're going to make more or less money. Do you have any sense of that right now? You know, I've been a believer in the pharmacy benefits manager model for many years. I think they do bring some important things to the table, like encouraging the use of new generic drugs and setting appropriate co-pays and really just determining the appropriate use of many of these pharmaceutical drugs. They have been transitioning to more of a transparent fee-based model and away from the rebates and away from some of the hidden fees.

So I do think they'll be able to adapt. But they have been whipsawed periodically by different proposed legislation and now executive orders here from President Trump. One of the questions, Jeff, that came up last hour when we were talking to Jared Holtz, was, is it possible that the U.S. is actually hoping that other countries raise the price of their prescription drugs more so than we lower ours? In other words, if we're looking for an equilibrium and what people charge, could that be accomplished? And is that what the pharma stocks are reacting to? That is certainly one of the things that President Trump wants to see happen. And he's having his Commerce Department and his trade representatives look at some of the practices that these European and other countries do.

And any restrictions and trade barriers that they might put into place, he even broached the idea of export restrictions here from the U.S. if they don't help comply. So he'd like to see it. But I do think it's going to be a challenge for many of these European countries to raise their priorities. I mean, they're struggling to fund a lot of their health systems as it is. They've committed a lot of additional money to defense. And I don't think that leaves a lot of room for them to raise drug prices too much in their countries. What are your favorite stocks in sort of the space, kind of broadly speaking? And what do you actually expect to come down the pike here?

I mean, as we just showed Mark, for instance, up 6 percent and so on. And it just feels like if they're going to potentially be pulling out or capping profits, that pulls money out of our It just lowers the expectations of, you know, what shareholders might enjoy in these stocks. So where are the safest or best places to go? Yeah. One of our largest pharmaceutical positions is Abfi. And they've gotten through the patent expiration of their biggest drug, Humaira. They also have very little exposure to Medicare and Medicaid a lot less than the industry.

And they have a great pipeline of new drugs like Rinvoke and Skyrizi that should get them good growth through the rest of the decade. And you did talk about Merck. actually like that stock, although it has underperformed recently. We do think they can switch a lot of their patients on Ketruda to a new subcutaneous formulation that's more convenient for patients and probably will be priced at a slight discount. They also have a great R&D pipeline and have worked well to build their business over the years. Nice recovery there. That I guess is a final word, Jeff. You know, you're at a dinner conversation and someone says to you, wow, these drug price controls, let's call them from the president. Huge news, aren't they?

Would you say yes, they are or no, they aren't? I would say no, they aren't for now. Again, this is the start of what's going to be a lengthy, you know, six-month process or longer. I don't think they could come into place until 27 after the midterm elections. So I think this is a lot of noise, a lot of volatility in the near term, but I think the industry is going to be okay over time. All right. Jeff, thanks for joining us. Good to see you. today. Thank you. Jeff Jonas with Cabelli. This is a big deal. Yeah, it is. By the way, a big deal. Yes. Yes. Coming up, while oil prices are on the move as Trump prepares to make a big

move to the Middle East. Oh, and there's a big airplane kind of involved in the middle of the story. That's next. All right, a few days ago, we were live at the Port of Long Beach, California, highlighting many of the big trade issues. You heard some warnings to the port president and the head of a big trade association about the risk of jobs and the economy around tariffs and trade. We also featured the U.S. Trade Rep. Jameson Greer on the program as well. Well, today, news at the start of a possible deal with China and you got trade-related stocks booming. Stocks like Mattson, Navios Maritime, and Navigator, bless you. They're all higher. Bless you. The European and Asian companies like Hypatloid and AP Molamask, they're also up 12 and 10%.

warehousing stocks like XPO, RXO, and Hub Group, they're also much higher. XPO is up 14% today. And the trucking firms, Knight Swift, J.B. Hunt, and Old Dominion, they're also higher by 11, 10, and 11%. Remember, we showed you a lot of these names with Wall Street's projection upside at the end of Power Lunch on Thursday and said, if you thought the trade war might end, maybe some of these names were worth keeping an eye on. We weren't advocating them. We're just pointing out the facts. Of course, you can still take a turn down.

But for now, hey, enjoy some of these moves. And you're welcome, America. Also, energy is in focus today. The price of oil is higher on talk of a trade deal. That is suddenly Exxon and Chevron and others higher. You've also got a $12 billion deal on energy, big power producer, NRG, soaring today up 25% in RG. The biggest, one of the biggest energy producers in America is buying assets from L.S. Power. You're going to buy 18 natural gas fired power plants across nine different states.

This adds, Kelly, to NRG's power generation capacity. It comes on the back of the Constellation Energy Deal, where they're getting closer to closing on the deal to buy Calpine. The race for power is on. And correct me if I'm wrong, because the race for AI is still on, as we were discussing with Stacey Razgun last hour. I thought that was all we talked, whatever happened to AI, because we talked about it for two years every day. Then the tariffs hit and it was like we forgot about AI. It was going to take a lot to push that back from the front burner. Also the underperformance with a stalling out like you said of Nvidia, which goes back to last summer.

That said, to quote Stacey, he was like investors have been much more concerned about AI CAPEX stalling out than any companies are. I mean, you've seen the numbers of chat GPT users 600 million. You know, a lot of us are continuing the usage of pace. And so that remains a place where if that cycle and that KAPX continues, that power demand. It's going to stay hot. And this deal should signify to all the haters out there that there are companies. It's not the only reason energy is buying these plants. I want to be clear, but that deal along with Constellation at Calpine, Doug Kimmelman, who we had on last week for Milken. These are signs the spending is not slowing. All right. Coming up, we'll get you a market reset as we gear up for the final hour of trading. Power lunch. We'll be right back with the Dowitt session high. All right, welcome back. And happy Monday, by the way. And it is a happy Monday right now because stocks, they are soaring to start.

the week. It's on optimism that a real trade deal can get done between China and the U.S. Not done yet. I want to make that very clear, but there's a lot of positive signs and markets are up. In fact, all of this the last couple of weeks has kind of culminated in one of, if not, the biggest market bouncebacks of all time. Let's get more context on the market with Michael Santoli at the NYC. Mike. Yeah, Brian, it looks a lot like some of those event-driven mini-crashes that we've had in the past. In fact, I keep pointing out the weird tendency of the S&P sometimes to go down just less than 20%.

In one of these, that was 1998, that was 2011, that was late 2018. And we now basically went down 20% intraday and have gotten back almost, I guess, three quarters of it, 70% of it at this point. Now, it's understandable today. You get the S&P up 3% in direct response to those very punitive and kind of crazy and unsustainable tariff levels on China coming down. to a maybe manageable, maybe they can be worked around and absorbed. You had market implied one-year inflation come down pretty hard on this news today. You've had market implied recession risks

come down pretty hard. So right there, there's your fundamental basis for the market feeling a little bit better than the tactical kind of more positioning-based issues, which are some people fighting or sitting out this rebound rally we've had since April 7th, especially on the hedge fund side, probably forced into this market. I do think it's important. important to kind of understand where we are bouncing up to. We are at a level on the S&P 500. We first reached in mid-October. We are basically almost back at the year-end, 2024 level, and we are almost back at the level we opened at November 6, which is the day after election day. So it's much more about an overshoot to the downside being partially or largely recovered. And then from

here, it's kind of the question of what does it take to carry us further? And maybe that means more substantial trade progress. Maybe that just means the economy hanging in there. because this retreat on the tariffs has come in the window when the real economy has not really buckled yet. And even though all that soft data and survey work was suggesting it might. That's true. It's kind of snuck in there just before things started, you know, or we got the bigger stories about empty shelves and whatnot. Mike, Tesla's back above the trillion-dollar market cap. At least it was at last check.

Some of the other tech stocks like that are performing well today. And we were speaking in the past about, you know, are you supposed to go back to what was winning before the sell-off or are we, is there supposed to be some kind of rotation or broadening out? It's interesting, Kelly, a lot of folks will say that, right? You get a severe correction. You want to see what leads on the way up to sort of see if there's a new leadership profile. Semis, I still think, have a lot to prove. They were leaders for a couple of years. They're not quite back there. Yeah, Tesla above a trillion, but it's not as if it's necessarily kind of back to kind carrying the load for the mag seven just yet. I do think one reason you're seeing some of the

mega cap growth stocks work today is we got a reversal of the sell America trade, right? So everything, dollars up. And what that usually means is the largest market cap companies get disproportionately benefit from the rest of the world buying our indexes. So I think that's what's happening right now. Key is consumer cyclicals are outperforming today. Industrial's outperforming. It's the stuff you want to see, but they were so depressed that I think that has to continue. for us to believe that essentially we've completely dodged the bullet on the economy. Semis up 17% in the month. It's just wild to watch it roar back like this. Mike, thanks. Mike Santoli. Let's get to Kate Rune now for the CNBC News update. Kate. Hi there, Kelly. The first

group of South Africans granted refugee status by the Trump administration landed here in the U.S. today. Nearly 50 white South Africans known as Afrikaners were on board. Their arrival comes after the administration ended. refugee admissions into the country, but did create a pathway for the ethnic minority to resettle in the U.S. to escape alleged racial discrimination. Meanwhile, California's Democratic governor, Gavin Newsom urged cities in the state to ban homeless encampments on public property that includes parks, local streets, and near overpasses. The state released a model ordinance today for local governments to adopt and to crack down on those encampments. The

announcement came as he released a $3.3 billion funding announcement to expand housing and treatment options for homeless residents. And finally, ESPN announced today that legendary broadcaster Chris Berman will remain with a network through his 50th anniversary. The contract extension will keep Boomer, as he's known, on the payroll. Through 2029, he will become the first ESPN employee to hit the 50-year mark after joining that network the month after it launched back in 177. Kelly. Back over to you. Kate, I got to jump in. I'm not Kelly. Yes.

Once again, your parents were on my flight. Once again. Twice. This has happened twice. Peter and Kathy Rooney were on my flight. I ended up changing flights. I only had a five-hour delay. Did they ever make it home? They made it home at two in the morning to Norke Airport.

But this is like divine intervention. Sully and my parents keep running into each other at random airports, Chicago. And then they were all at this sphere enjoying Dead & Co. And Vegas. And they were on my original flight. I was able to switch planes. I only had a five-hour delay. They had like an eight-hour delay. Yeah. You got to bring them on as North Airport. They're lovely people, by the way. You're good friends. They are big fans. And they love you, by the way. As their daughter, they should. Just coordinate next time. I'm going to coordinate.

Get in a text group. I had to bring it up. Thank you, Kate. Coming up, could the positive trade news with China help loosen up a struggling travel sector? A first look at some encouraging new data on travel. That's next. Welcome back. The removal of some tariff uncertainty now, but let's call it that, could help seal some of those cracks we've seen forming around the consumer. Take recent commentary in the travel space where Delta has cut growth plans, Expedia lowered booking guidance, Marriott trimmed its forecast, and look at the stocks with some big declines over the past three months. Delta's still 23% below those recent highs. But yes, we've seen a bounce back in recent weeks. So what should we expect from the space going forward? MasterCard, conveniently.

is that with their 2025 travel report. And joining us now for a first on CNBC interview is Michelle Meyer, chief economist and head of the MasterCard Economics Institute. And here in person. Yes, it's so fun to be. Great. It's not quite the sphere and the, this is my sphere.

You know, this is like me watching the great, Michelle and I getting to walk out about whatever. So is it as bad as people say or no? Not at all. You know, we're looking at the travel economy in terms of what we're seeing in our unique data so we can understand how consumers are traveling, how they're spending, where they're going.

And our sense is that it's really important to think about the why consumers have been traveling and what's going to motivate them forward. Before you get into that, though, so we've seen, it seems like travel was the place where we first saw things break. We go back to that commentary from the airlines a couple of months ago where

they said, yep, suddenly we're seeing a pullback in consumer travel, we're seeing a pullback in business travel, and then one after the other, these companies seem to be, now maybe that's just international and I don't know if that changes now as well, but why is it that this now an area where you guys are saying things are actually steady? Well, I think there's the idea of short-term versus longer-term trends, right?

So yes, there was a heightened period of uncertainty coupled with a lot of really idiosyncratic factors in the airline space in the sense of the weather and air flight issues in terms of safety concerns. But we're now getting to a point where we hope we're going to have a little bit more clarity on the economic front, as we were just talking about and clearly what the markets are reacting to. And our sense is that it's important not just to think. about what's happening right now in terms of travel, but what's going to happen, what has been

driving consumers to go out and prioritize travel, and what will continue to motivate them to go out and move and see the world. Well, business travel is critical, I imagine, right? Because you have to go, maybe you get to spend a little more money because somebody else is paying. Global Business Travel Association April survey, nearly one-third of global travel managers expect their company's business travel volume to fall significantly this year with an average forecasted drop of 21%, not 2.1%. 21% is a big number, Michelle.

Yeah, it is a big number. And in periods where uncertainty was so high, you're trying to take the information you have at hand, which was that the economy was going to be facing significant risks associated with tariffs and the uncertain economic environment. Those numbers can make sense, but they're forecasts. So I think it's, you know, you have to react as the headlines change and as the information changes. And that's why I think it's extremely important to look at the trends. What we've been seeing for the last several years in terms of how consumers and businesses have prioritized certain

aspects of travel and why they've done that and what that might mean going forward. And when speaking about corporate travel, one of the things that was really interesting that we saw in our data is that when people do travel for work today, they're staying longer at destinations. It's becoming a more meaningful decision to go out and make that trip. But maybe because of the work from home flexibility or Perhaps. We've heard that over the year. So what are the headlines from this? The most important data points, just, you know, shower us with them.

What did you guys find from this? So many, but I'll offer a few. So when looking at trending destinations into the summer, particularly from U.S. and Canada, top destination remains Tokyo. Presumably the currency there does play a role, even with some of the recent move. It's still an attractive area place to visit. San Juan, Hawaii, still very much on the top of the list. Japan's one and two.

Got Tokyo and then Osaka. the world. If you're on the radio, we have a graphic showing the top 10 with flags and the first two are Japan. More so than Paris. Yeah. So that is from world travelers. And then if you look at U.S. and Canada, you have San Juan and Hawaii and some of these beach destinations also rank very high in the list in terms of trending destinations. But here's another stat that I find to be very interesting in terms of people traveling for certain events. So we looked at a number of different sporting events to see cross-border spending and tourism. So one of the One thing that was fascinating is the World Series last year.

We saw a big increase in Japanese tourists for... Shohai, Otani. Yes. Six times as many spending from Japanese tourists and overall cross-border spending during that game in L.A. I could tell you there was a lot of people in tie-died shirts in Las Vegas this weekend. And the tickets aren't cheap. I just want to throw that out there.

It matters. It matters. I feel like those destination things matter. Yes. I went to Santa Monica, California, and it was the deadest I've ever seen it. I was actually shocked at how bad it was. It feels like it's hard to read how the economy is doing. It is hard to read. Yeah, for sure. But for us, if you look at the full swath of data that we are examining on a regular basis, it very much shows us that consumers are still out there spending. They still have purchasing power. The labor market is still supportive. We cannot forget that. Even in a period of high uncertainty, purchasing power is there. They're being very mindful about how they're using it, but travel still seems to be something that is being prioritized, but they're doing it to find value for certain experiences or for these moments and time. And that's what I think we have to focus on. We spent a lot of time on this idea of purposeful travel in the report.

I wonder, I mean, if you're right and if that holds in, because it makes sense to me, still surrounded by people traveling and going on trips all the time, that these stocks might bounce back. I don't know, but that maybe the pessimism is overdone. It's all about the headlines versus what the data is showing. And I think we had some pretty scary headlines of the last several weeks, naturally, when it comes to this heightened uncertainty. But now we're going to let the data talk. All right. Michelle, thanks. Appreciate it, as always, Michelle Meyer.

So how should you trade this mystery stock that's been building some big momentum? It's one of the best stocks in the S&P today. And we'll ask our trader in three-stock lunch next. Our time for three-stock lunch. Joining us, is Ariwold. He's the head of technical analysis at Oppenheimer. Ari, welcome stock one is Apple. Reports that it may raise prices on the iPhone,

regardless of the tariff outcome. What's your take on Apple? Well, we're bullish on the theme. We still think we are in a large-cap growth-led secular bull market. And I think Apple benefits over the long term for that reason. Looking at the stock, I think the positive is that it has paid to buy the stock when it's ugly. And it was ugly in April. It corrected into its four-year average for the first.

time since 2019, 2016 before that. I would say, though, from a training basis, still there's some resistance to get through. He's pushing right into its 50-day average. So there's some more technical weakness on the near term than, say, versus the market. So not necessarily our top-ranked stock right here, right now. But not your bottom ranked one either. I'm hearing up 6% today. Okay, let's move on to another Mag 7 name then, which is meta. It's been a lot more kind of positivity around this one. It's still up 8% today. 17% over the past month. Do you chase it? Yeah, we still like this one. So I think this was a great segue as we think about thematically.

Here's two socks that I think should benefit over the long term based on this large cap growth led secular bullet. But I think meta in particular benefiting from strength that we're seeing in communication services, it's moving up in our momentum ranks. We recently upgraded it to overweight. And I think it's between the two. Meta looks better from a, near-term training basis. It's correcting from a position of strength that made in New High in February on the downtick. The relative uptrend did a much better job of being maintained. And now that it's turning higher again, our assumption is that long-term strength is resuming. All right. Stock number three, the mysteries chart from earlier, Black and Decker, solidly in the

green. Obviously, they import a lot of stuff. It's made a medal. All right should investors be buying into the rally today on a stock up 16. All right, so here we go. A lot of stocks are up. There is strength to buy meta and there's strength to sell, Black and Decker. We would not be chasing this. We would use this as an opportunity to sell Black and Decker simply stated because it's still in a downtrend.

Now, listen, it's up big today. It's reclaiming $70. That's an important level. That's the low point from the stock from both 2020 and 2022. So a possible failed breakdown. Let's see if the bulls can continue to outmuscle the bears here. But here's a stock still below. It's key long-term moving averages.

It's 200-day average. And so for that reason, I prefer to sell strength. And with that said, listen, that 200-day average is $15 higher. So it could work a lot. But as far as trades that I got a buy right and then I have to sell it right, no, I want stuff that I can hold for the long run. And I don't think this is it. All right. Ari, thanks so much.

Appreciate it today. Thank you. Harry Wald. And remember, you can recap every three-stock lunch anytime you want using that QR code on your screen or just head over to CNBC.com. And we'll be right back. All right. We're wrapping up power lunch. Solid day for the markets.

The Dow is up 1100 points. Not quite positive on the year, Kelly, but not far off. Right. And we're talking so much about the president's policies. And that's, of course, been an influence and whipsawing the markets. Kind of under the radar, but worth a mention, is the EPA is now proposing a rollback of that starts. stop technology in new cars. Oh, thank God.

Thank God. I can't stand. Where your car shuts off and is stopped. The first thing I do, I hit the button, turn it off. So I used to do that until I got so sick of hitting the button that I now just leave it on. I've kind of gotten used to it. I know it's good for emissions. Does it make a difference?

It must. It does. It does. It does. But I just don't think starting to stop in a car like that is ultimately. I always try to hit the positive. I feel vulnerable. I feel vulnerable.

Speaking of vulnerable, thanks for watching Power Lunch, everybody.