Power Lunch - Energy Cost from AI, The Latest from Washington 6/27/25

Episode Date: June 27, 2025

CNBC’s Tyler Mathisen and Kelly Evans take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day’s agenda. “Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Happy Friday as stocks hit new record highs. Welcome to Power Lunch, everybody, alongside Kelly Evans. I'm Brian Sullivan. News just crossing. President Trump posting on True Social, we are terminating, not we, but you know, America, terminating all trade discussions with Canada. Yeah. Kelly.

Over the digital services tax. I don't even know what that is. We're going to have a lot more on this coming up. We will unpack it all for you. Plus the latest read on inflation shows the prices. Consumers pay rose slightly in May. Modest uptick, but enough to keep people guessing. on the timing of Fed rate cuts. Talk about what that all means. For your money, markets,

for the Fed. We'll talk about it all coming up. And more on Canada, no doubt. All right, anyway, the S&P 500 and the NASDAQ are trading at record highs. The S&P hit it today. Of course, this was not the case just a couple of months ago. In fact, since the early April lows, the S&P 500 up 22 percent, and the NASDAQ 100 is up 30 percent, literally in three months time. But it is worth highlighting several key risks to the rally do still remain. And we are still heading for that July 9th trade tariff deadline that may or may not matter. As you just heard, President Trump posting on his social media page that he is cutting off all trade discussion with Canada over this digital services tax. Negotiations are still ongoing for President Trump's so-called one big beautiful bill.

It's basically the budget bill. as lawmakers continue to face setbacks and negotiations on Capitol Hill. Tech stocks approaching record valuations, leaving investors wondering how much higher these stocks can go. There still remains uncertainty over when, if the Federal Reserve will begin cutting interest rates. Your first two guests this hour, they've handled a recent rally with differing strategies. When he joined us on Power Lunch back in April, Bill Struzzullo said, not to buy all the dips and wait for better opportunities. What Keith Fitzgerald said, he is always buying.

Both are joining us now. Bill, did you eventually step in and buy? How did you navigate the last three months? Well, it's been a good period for us, Brian. You know, I was on the show December 31st. We were the only one on Wall Street to call the move lower. I said, you know, the rally was over. We were going to have a significant correction.

That's exactly what happened. I thought it would go a little bit deeper. I thought the S&P would get down around 4,500, stopped a little bit in front of us. But we got back in, and now we're back at the old highs, a little bit above marginal new highs. And the question is, you know, where do we go from here? And I think you framed it well. Jay Powell talked about this at the end of the last Fed meeting, talked about elevated levels of uncertainty. What specifically does that mean?

It's number one, tariffs. The market's gotten comfortable with tariffs, but the bottom line is we don't know day to day with the tariff policy, and I hesitate to call it a strategy, but we don't know what that is. It's whatever Donald Trump thinks it is on that particular day. We don't know how the tax bill is going to play out. We don't know how those two things are going to impact. What changed then? Let's bring up their graphic.

I don't need to tell you. We fell 26 percent on all those things and the tariffs and Liberation Day and whatever. and now we've come back 35%. Yeah. Why did we come back in the fastest, most, or I said violent the other day, Kelly, you can't say that, I guess, the most, you can call it.

It's a violent Kelly. Aggressive rebound in stock market history bill? I think, Brian, because the Fed is, the markets are discounting a lot of this, and certainly the Powell talked about and a lot of that other people are talking about. And maybe that's the right way to be. I mean, there are people out there saying, just look forward, look to the dessert.

What's the desert? And the Trump economic agenda, it's the tax cuts and deregulation. But if you go back to Trump 1.0, 2017, we had the same thing. GDP in 2017 was 2.3%. We spiked to 2.9% after the tax cuts in 2018 and back down to 2.3%. So I think the market is discounting a lot. lot of really good news. And if you go back, because this is not a hypothetical, if you look at the tax cuts and the deregulation before, it did really nothing. The only thing it did is blew a bigger

hole in the national debt. So my point here is to be a little bit cautious that, you know, we're back at the old highs. The rhetoric is the same as it was at the beginning of the year. Wall Street totally whiffed on the 20% sell-off, and it may be doing the same thing again. So it's not to say that we can't go higher, but I think pump. the brakes a little bit because we're back at the same levels, market's expensive, and there's still a ton of uncertainty out there. So, Keith, we were joking or sort of observing about, look, your bullishness on names like Nvidia, Palantir, has been totally justified. You must be sitting on some huge gains in those names and some of the others. What are you doing here with stocks

all the way back to all-time highs and those names being a big part of why? Well, thank you for asking and thank you for remembering. We've got very lucky. We could have easily been wrong. But, you know, my view is a little different than bills. I think we had a tremendous amount of liquidity sloshing around the system, and traders are doing what they do best. They're getting ahead of what's next. They know that eventually this stuff is going to pass. So not all companies are the same, but a rising tide raises all boats.

Do we pump on the brakes here? Yeah, I'm going to actually start to trim pharma because I think there's some problems ahead from a regulatory and legal standpoint. But I'm not letting go of those key tech names because this is like the gold rush. You know, the folks who sold shovels and whiskey made a lot of money. The gold miners, not so much. So you're trimming your, pharma stocks.

Keith, so there are some people pointing to, like, look, the momentum ETFs and all these signs of froth in the market, you know, Goldman's list of, you know, less profitable companies outperforming the more profitable, all this stuff, right? If you were somewhat concerned about

this rally becoming overextended, would you pocket some gains in some of these hot stocks, especially like a Palantir or no? Why are you sticking with them? Well, I'm sticking with them because I think we're still early innings with AI. We're still early innings with much of the data restructuring that's happening on our planet. And every one of those companies is it the key of 10 other companies

that are adopting or adapting or dying. So companies that are going to continue to spend, they no longer have a choice about that digital stuff, Kelly. They've got to spend. That to me is lots of revenue down the line. We're going to take it cautiously. We might slow down our buying a little bit, but we're still well within the statistical norms in terms of volatility. What's amazing, Bill, is that $164 billion has come into U.S. stocks, according to Bank of America, year. That's the third most ever. Now, what's particularly amazing is that the rest of the world is actually doing better than us. So buyers are buying into Germany. They're buying into Spain. They're buying into China. They're buying into Australia. Where is all this money coming from?

That's a good question, Brian. And I'm not exactly sure. But the point you make is a good one. You know, back around the highs, squeezing out, marginal new highs, you know, where do you go from here? I'm not saying, you know, to get out of the market altogether, but I like the international names. I think the international names are still cheap on evaluation basis versus the U.S. That's one place to go. You know, you can do the usual suspects, consumer staples, health care. And I also think it makes a little bit of sense here to maybe scale your exposure back

a little bit because we had a near-death experience a couple of months ago that could have been worse, could have been a lot worse, if somebody didn't put some guardrails around Trump. And we're not sure that that's not going to happen again. So sell some calls against your position, buy some out of the money put. Not to say we're not going to go up higher, but we're back at levels where the market's expensive, and there's still a lot of things we don't know. So I'm just saying be a little bit more, be a little bit cautious at the levels we're at. All right, Keith, but you're saying, you know, you sell farm.

Anything else you're selling? You're hanging on to the good ones to hang it on to your tech? Well, we try to stay with the winning horses as long as we can, as long as we win in the race, right? But pharma, again, I've got some very real fundamental concerns in terms of how they're going to be handled. But, you know, if we rotate, we're going to rotate into defense. We're going to rotate into things where technology

is going to be a logical extension. So, yeah, pump the brakes on. I love what Bill said. I agree with it. I don't like as much the international names because, you know, as much as those are challenging an opportunity, nine out of ten tech dollars still flows through a handful of U.S. tech companies that sell internationally.

So you're already getting that. Well, gentlemen, thanks. Appreciate it today. Both points of view, Bill Strasulo. Bell Curve and Keith Fitzgerald from the Fitzgerald group. As mentioned, President's comments on cutting off trade discussions with Canada. We have more details with Megan Kostella here to recap exactly what's happened, Megan. Kelly, the potential for new and higher tariffs against Canada now. Maybe the trade were heating backed up, at least, with Canada

after the President posted on true social just a few moments ago, that because Canada is moving forward with a digital services tax that will impact U.S. companies, that he says, because of that, we are hereby terminating all discussions on trade with Canada effective immediately. He says we will let Canada know the tariff that they will be paying to do business with the U.S. within the next seven-day period. So, Kelly, this is a digital services tax that Canada had been expected to, or the U.S. was hoping Canada might not move forward with after the U.S. decided to take out that Section 899 revenge tax from the ongoing negotiations over that tax and spending bill that's in Congress.

They moved yesterday. To remove that, I'd been told they were using that as negotiating leverage with other countries and hoped that countries like Canada wouldn't then move forward. Now Canada is moving forward with this tax. Trump says because of that, all trade talks are off the table and he'll be naming a new tariff rate within the next week. I will emphasize, though, Canada doesn't have quite as much to lose on the tariff front as other countries do at this point. They're not facing a July 9th deadline.

And while there is a 25% tariff now on Canadian imports, anything traded under the USMCA is exempt. So that means at least a majority of their goods are exempt from those tariffs at this point. But then again, there are sector-specific tariffs on steel and aluminum and cars as well. So we're seeing some impact there, but sort of a weight in serious as to what happens in the next seven days. Megan, Gassel, Megan, thank you very much. Very quickly. If people are wondering what this digital services tax is, basically it's going to tax 3% on any revenue that you make online in Canada, even if you're an American company. So if you're met up, I presume Amazon.

Anybody that engages, that's their word, with a Canadian consumer online, subject to the tax, and it's retroactive going back to 2022. By the way. They passed it last year, if I'm not mistaken. Yes, they did. And then they were supposed to get rid of it after, or I don't know what happened at the G7 or didn't happen.

Remember, Trump left early. They passed that deal. Maybe this is why he left. Well, now he's saying something pursuant to that, that they didn't abandon it as expected. and so because it's still in place, now here we are. Listen, Trump ostensibly left the G7 because of Iran and Israel. But we now know how angry he was over this digital tax.

Was he angry enough to leave because of this? He's angry enough about the tax that he's now saying we're not going to negotiate with Canada anymore because of this. And I believe he left the day before the big tariff talk day. So you wonder, would this have come up and been potentially resolved? Who knows? But this is something we didn't hear about until now. to Megan's point, it becomes another layer where tariffs. By the way, being taxed in a domicile where you do not reside.

So your meta's based in California, the United States. They do business in Canada. They get taxed. Very similar to what the leading mayoral candidate for New York City is proposing with regards to online taxes. He said the other day that any company does business with anyone in New York would be subject to New York City taxes. So if you're in Amazon, you're going to be taxed. for making a delivery. That's interesting.

And we'll see if that were to stay, if he's fully elected, if that whole kind of policy sticks, how those companies would react, I'd love to see. Because most of the time, a lot of them try to pull back wherever they can to avoid those levies.

Canada. Beyond trade and tariffs, a new data point for the Fed to consider for its July rate decision. Their inflation gauge today, showing prices rose a little more than expected. 0.1 in May, 2.3%. X food and energy,

the core was in slightly hotter. That was up 0.2. will call it to an annual rate of 2.7%. Treasury yields not moving much on the data. The two-year, let's see, their yield around 373. We've got the 10-year round 427. Our next guest says today's data is likely not enough for the Fed to budge on interest rates.

Next month, that will happen only after they get more clarity on tariffs and trade. Ellen Zetner is chief economic strategist and global head of thematic and macro investing at Morgan Stanley Wealth Management. Ellen, it's good to see you. And now maybe throw another Canada tariff into the mix. Welcome. Yeah, thanks, Kelly. Good to see you. You and Brian.

Yeah. So what do you think we were speaking with Dean Mackey last hour? And he actually thinks that this could keep the Fed on hold till December, all of this kind of the tariff taxes and the way the consumer reacts to that. It's possible. But gosh, there is a lot stirring in the pot here. So you talked about Core PCE coming in today, 2.7% year over year. But there are those on the Fed that really like a shorter-term trend metric of that. The three-month annualized rate of change in core PCE is below the Fed's goals. Or if you're a Governor Bowman, if you're a Governor Waller, and they're probably not the only ones on the Fed that would point to that and say, hey, what if we're wrong on tariffs coming through? Maybe companies are absorbing more of this. And yes, that means

margins are going to be hit, and maybe that means more layoffs, but maybe it means the inflationary impact is just not what we think it's going to be. So I think the arguments toward cutting are going to grow on the FMC, but I just don't think they're going to be able to get consensus by this July meeting. Your firm, I think, is predicting, you know, a lot of cuts next year, maybe seven all told. So, I mean, do you, would you kind of emphasize that that doveish view that to the president or anyone just wait till next year and we could actually see quite a few rate cuts? Yeah. So I think the, the, uh, Morgan Stanley on the, the institutional side, Michael Gapen, our excellent chief U.S. economists, they're predicting that they

don't cut until March and that they do cut seven times. And that's based on an expectation that growth continues to slow next year, that inflation is coming down pretty hard then because, while the unemployment rate is rising, because you've got that annual lap around the base effect of terror. So if that's right, then the Fed should be cutting a lot next year. I do think that they acknowledge that the risks are to an earlier start to the cutting. But, but, Here's, you know, if the Fed is going to be contending with a possible shadow chair or trying to understand who might come in to replace Chair Powell when he steps down in May of next year, the Fed is probably already going to be in a cutting cycle.

So it's not going to be that a new Fed chair comes in. And there's all that much difference in the policy that they would have implemented anyway. It's almost like you watched yesterday's show, Ellen, because we talked about this very topic about who the next Fed chair is. because the reality is this, the market's breaking up with J-Powl. It's like you're dating somebody like, in nine months, we're going to break up. But at some point, you just start looking around. And Trump's already looking around.

We highlighted some of the candidates. We got them on our wall. Kevin Warsh, Kevin Hassett, Scott Besson, David Malpass, Chris Waller, maybe Ellen Zentner. Who knows? Well, maybe you could say if you're a candidate. I don't take those calls. Yeah, okay. We'll take your name off.

That means you might get them. You didn't say you don't get them. Yeah, yeah. Is any one of these... And they're all men. Any one of these men are better for the stock market than anybody else? Well, you know, I think so that's going to be interesting because the stock market might love whichever one would represent lower rates than another leader. But at the same time, the bond market might say no. If they're going to appoint someone that's a mouthpiece for the president that's not going to give careful consideration to the economy and the needs of the economy.

and the needs of the economy, then the term premium at the long end may raise higher. And then that's going to weigh on stocks. And in the end, I think there is a healthy list here of capable, possible leaders for the Fed. And so, you know, I think that the Senate ultimately wants to go with somebody that's probably been through the process before. And you're asking for the Senate to give up two votes for somebody to get to Fed chair. and they've probably got a lot on their plate. Also, it's not unusual to get the suggestions this early. And let's be fair and let's be patient. Those names may shift around. And the president could settle on one name to put at the forefront.

And that person could fall out of favor well before Chair Powell steps down. It's great points because you do wonder who's going to be really in charge. The Federal Reserve of the bond market, me thinks, it will ultimately be the bond market. In Zetner, really appreciate your views, as always. Thank you very much. By the way, quick programming note, one of the aforementioned gentlemen on that wall, Treasury Secretary Scott Bessent, maybe future Fed chair, Scott Bessent, will be a guest on closing bell overtime. That is at 4 p.m. Eastern time today. Excellent. Looking forward.

And by the way, as my Canadian friend just texted me, Canada Day, their 4th of July is in like three days. So it's kind of rough timing on our friends up north. All right, lots more stories to come. Why Bitcoin, he said, stuck in the mud. Even his stocks are soaring, Tesla's Robotaxy Rupp patch. It's a fascinating look at how much power artificial intelligence really uses. Welcome back to Power Lunch.

The so-called stable coin summer taking a breather today. You can see shares of USDC co-founders, Coinbase, and Circle are both lower. They've been up huge this week, though. And Circle is up sixfold from its IPO earlier this month. Coinbase hit a record high just yesterday. is the best performing stock from the April lows. Elsewhere in the crypto space, Bitcoin has been struggling a bit, though the S&P and NASDAQ have marched to new highs.

What's that about? Joining us now is Neo-Classic Capital Managing Partner, Michael Buccella. Buccella, you know, like, Buchella is the new Cochella. Anyway, Michael, is the bloom off the rose with crypto to some extent? How could conditions get any more bullish than they have been the past couple of months with the new administration and everything else? Okay. So on the demand side, you have billions of dollars being raised through Bitcoin Treasury products. Those have been announced more recently. So Anthony Pompliano's at ProCap, David Bailey and Akamoto, Canada Fitzgerald Tether and SoftBank with 21 capital. That's creating huge demand. The ETF inflows have been enormous, I think $4 billion in June alone. So where is it all going? Why is Bitcoin not mooning? So the supply side are a few different things. I think one, there's been a bit of risk replacement. So you have some of these major public companies. becoming proxies for where crypto can go.

And so there's people replacing Bitcoin spot risk with Circle or Coinbase or Treasury companies. The other part that's a bit more technical, and I think maybe less discussed, is a lot of the Bitcoin miners who have been holding Bitcoin are operating in very narrow margin profiles now. And so if you don't have highly credible,

high top assets with great operating teams to pivot to at least attempt to get an AI contract or a hyperscalor contract, you have to sort of run these sometimes loss operating models, and those are seeming to be financed by some Bitcoin sales or other capital markets activities. But it is a bit, like you said, I think it's a bit surprising to have seen the price of Bitcoin stay stuck in this sort of range. It's performed well year to date. It's up 15%. It's performed well since the April lows. But yeah, the two things

aren't pairing off as well as you think. Also, I took notice. I think a lot of people did back when the Israel-Iran conflict was escalating, Bitcoin sold off. So that's fine. It doesn't have to go up in all situations, but if it's not going to, to me, its most valuable kind of selling point is what it acts like digital gold. And when instead, when it acts like a risk asset, I'm like, well, I can just own the S&P 500 for a risk asset, and it can at least be something with a track record and cash flows. Yeah, I suppose you can look at, I mean, gold is up and around your all-time highs, and with the S&P at all-time highs, it depends on what time frame you look at, but everything can look like a risk asset. I think it depends on what you're correlating it to, and if you're

diving down into sort of quantifying, you know, the VIX versus the asset or the S&P you rise versus the asset and your time frame on that. Bitcoin continues to be a great beneficiary of global sort of reserve currencies or global currencies cratering against most other assets. And so Bitcoin, I think, has been the best of those. It's the hardest asset. And the demand on these Bitcoin Treasury companies is indicative of that. So you have both preferred equity pipes and convertibles. The convertible market is wide open from very institutional players. They have seemingly unlimited demand for these Bitcoin Treasury companies, the preferred equity pipes, they're getting a bit more commoditized, some of these Bitcoin companies. So they need to have

some new model, whether it's we're going to operate as a Bitcoin asset management firm, or we're going to do something different than just hold it. Okay. Michael, can I go into that just quickly? Because I'm not picking on any company in particular, but circles a recent IPO that is sort. Okay. As far as I can tell, the company effectively buys treasury bonds and then issue stable coins in a very rough way. Right? That's not in video. That's not some great new business model. Why is the market treating it like it? What am I missing with the story? So to be clear, I think a lot of people miss this. I think right before when public, there was talks of transactions in the few billion dollar

category and people said it's not worth a few billion dollars. And now it's worth 50 bill or 40 billion, $45 billion as of today. The what circle represents is not, it should not pair off with the of USC that exists in the market. What it represents is potentially destabilizing the traditional payments and traditional capital markets rails. So if you say the entire foundation of transfer of value, of dollars, is going to shift into something. You probably want to own that something. Now, that is a very, very kind of far outreaching perspective that is very hard to quantify. But it does go to show you how insatiable the market is to have exposure. to this asset class and to have exposure in a way that, you know, you can sort of talk to your

friends about and say, this represents the new form of U.S. dollar. I can get behind that. Even people that can't get behind some of the other trailing assets like Ethereum and Solana and others, they can get behind this idea of a new form of dollar and better settlements, better payments, better money. He satisfied? Is that the new Nvidia? Maybe it's the new Visa. Is it the new Charles Schwab? Is it the new visa? I don't know. I, I, I, I, I think Michael did a great job explaining because... I think it's like a money market mutual fund from 2007 is what I think. And, you know, it's fine.

It is a very, it's a boring business. Yeah, exactly. But it's very exciting in terms of what it can be. Today it's down 15%. But it's not trading like a boring business. That's the point, Michael. Yeah, correct. I mean, again, this goes to the delta between fundamental value that you can model out today

and the market capitalization of a company is the expectation of what it can do. Right? That is, that is people's server for innovation in crypto and digital assets. People want to own this space. There's only so many assets you can actually own that give you the exposure. All right. Michael, thank you. We appreciate it today, answering many, many of our questions. Anytime. All right, let's get. We got a news flash from Pippa Stevens regarding housing and the government people. What's going on? Yeah, Ron. Take a look here at shares of Fair Isaac, Equifax and TransUnion because they are all now in the red. after Bill Pulte just said on X,

that, quote, we are doing a full-scale review of all credit bureaus, and that is sending all three of those stocks lower there. You see, guys? Indeed. And, of course, he's already singled out, FICO, some of the others, talking about whether these companies charge too much, have a monopoly or there need to be other ways. All of this is an effort to try to increase homeownership, Brian,

and lower the cost. So we'll see. Yeah, and Bill Pulte, who's been on this show, and I know well, you know, Bill's family is Pulte. That's Pulte homes. Yes, it is. Bill's grandfather, Bill. that business and you come from a housing background and now you're in this job, you're going to

look at things like somebody who wants to promote home ownership. Speaking of crypto, they also looked at whether crypto should be used to kind of back or help do down payments on housing this week. What do you think about that? I mean, if you had a million dollars in a Bitcoin account, shouldn't that count toward getting a loan because it's real money? I guess. Unless it collapses to zero, I guess.

No, I mean, I don't know enough about it to understand. So you just think this should be counted as part of wealth? It's part of collateral, yeah. Right, or is it part of collateral or is it something? If you have $500,000 in stocks in Schwab, right? They're going to count that against borrowing money. If you have $500,000 with Circle, they're not going to count that. Right. Again, maybe all of that, wealth is wealth.

I mean, if you have it on that. That seems fairly straightforward. If we're talking more about kind of using it in some kind of more, one-on-one direct way. I think that raises more cry. I haven't looked at the details. I'm going to use your favorite AI to make a poster that says wealth is wealth, Kelly Evans. As EV sales continue to rise, a lot of car batteries are

piling up and up next are immediate company that's using those old batteries to help make new forms of power. CryptoWatch is sponsored by crypto.com. Crypto.com is America's premier crypto platform. Welcome back.

a ton of news in the EV space this week, most of it around Tesla. Elon Musk firing the company's long-term vice president. Comes as some reports claim the Robotaxi rollout may not be going as smoothly as expected. Negative reviews coming in from online, the stock has lost its gains since that launch. And to make matters worse, rival Xiaomi is undercutting Tesla's China business with shares of Xiaomi soaring to record highs. Phila Beau is out in Sparks, Nevada, where he sat down with former Tesla's CTO, J.B. Straub, who's currently the head of a company aiming to recycle EV batteries and get this,

turn them into microgrids for data centers. Hi, Phil. Hey, Kelly, that's one of those microgrids right back there. There are about 80 old EV battery packs that were scheduled to be recycled that the folks at Redwood looked at and said, wait a second, more than 50% of the capacity or the life of that battery is still here. We can harness energy from a solar grid, bring it in, and then dispenser, transmit that energy to a data center, which is over here for Crusoe AI infrastructure.

So what you're looking at here is what they believe should be a growing business, because these can be quickly deployed at a much lower cost. There's no water involved. The environmental requirements are very minimal relative to the other requirements to power data centers around the country that are being built. And one last thing. Take a look at this graphic. This comes to us from Alex Partners, the consulting firm that does a lot of work with a number of industries,

including with the auto industry and the electric vehicle industry. We ask them, how many EV batteries are scheduled to hit end of life? Go to recycling. Look at where it's headed. It is exploding, and it will continue to grow over the next several years. That's why Redwood is starting the Redwood energy business, because they believe there are a lot of companies that would say, yes, set up a microgrid as microgrid as quickly as possible.

Right. And all of this said, Phil, I mean, there's so many hopes for recycling these EV batteries, but how realistic is this at scale, at least for now? Very realistic. It's just a matter of how quickly they can do it. This one is relatively small compared to what the data centers will be looking for. It's just a question of, look, they did this in four months. In four months they put this together. It's a question of which projects, and they're talking with other companies, how quickly and how big is the scale. That's really going to be the question.

Yeah, exactly. All right, Phil, thanks. By the way, do you make any comment about what's going on to Tesla? If you're talking about the videos, yeah, I wouldn't pay attention to them. Here's the deal. For every video you show me of a Tesla Robotaxi that may be doing something inappropriate or, you know, stopping when it shouldn't be stopping. I can show you one where it's doing exactly what it should be doing.

until NHTSA says, hey, we've got an issue here. These videos don't mean a whole lot. Go read the analyst notes. None of them sit there and say, stay away from Tesla because the robotaxie may be having some issues. It's a matter of how quickly it ramps. So I wouldn't get too worked up about these videos one way or the other. Okay.

Are they quick, sorry to go backwards. Are they getting the batteries from junkyards? Like, where do these car batteries come from? Some from junkyards, from automakers. Look, many of these have come from EVs that are not with the original owner. They've been sold and sold again. But at some point, somebody says, you know what, I'm only getting 50%. I'm not getting the full energy amount that I thought I would get.

I don't want this vehicle anymore. So some of them do come from junkyard. Some of them come from automakers. Bill, thank you. Phil LeBoe, we really appreciate it today. Thank you very much. Let's get to Contessa Brewer. We're now for the CNBC News Update.

Hi, Contessa. Hi there, Kelly. The president of the University of Virginia is stepping down, according to a report from the New York Times. The Justice Department reportedly has demanded James E. Ryan resign to help resolve an investigation into the school's DEI policies. His resignation comes as the Trump administration targeted billions of dollars in funding for elite schools, including Harvard and Columbia. German prosecutors have charged a Syrian teenager with helping to plan an attack on a Taylor Swift concert in Austria last summer. Investigators say he translated Arabic bomb-making instructions and an oath of allegiance to ISIS for the main suspect. The terror threat forced Swift to cancel three Vienna shows that were expected to draw 150,000 fans.

And the TV ratings for the first round of the NBA draft were down 15% from last year. ESPN and ABC combined to average 3.77 million viewers throughout the broadcast. The viewership dip comes as the Dallas Maverick selected. Cooper Flag with their first overall pick. That's the news. Brian, I'll send it back to you. Contessa Brewer, do you know which state from which Cooper Flag hails? No, but I bet you do because otherwise you wouldn't ask. It's one of the states you grew up in, Maine.

Oh, how about that? My link to someone famous. That's why I brought that. Well, you have more than that. Contessa Brewer, thank you. Coming up, just how much power all your AI questions are really using. And on the way to break, continued boom and many AI-related stocks rolling on, Vertive, Vistra, Vernova, and Aco.

Well, Aco's down. We're back right up for this. All right, welcome back. AI-related power stocks. Seeing some gains today, markets at new record highs, by the way. This, after reports, the Trump administration is preparing a package of executive actions aimed at boosting. energy supply to power AI, kind of already had that. It's the Department of Electricity Dominance, whatever they call it. The Energy Department estimates that data centers, which are used to power your phone, your apps, your AI, will potentially use 12% of all electricity in just a couple of years.

Now, 12% may not sound like a lot, but consider it's more than a doubling of power demand right now and would basically create an entirely large new U.S. state worth of electricity demand. So your next guest wanted to find out just how much energy it takes to generate things like a video made with AI. It's a fascinating piece from Wall Street Journal. And she is here to share those results. Joanna Stern, personal tech columnist at the journal. I urge everybody to go read it. I'll tweet it back out again.

What did you find, Joanna? Well, I found that it's really hard to figure out how much energy each of our AI prompts take. But here's what I did figure out. Text likely takes a lot less energy than, the images or videos that you're making, which may seem obvious, but the big problem is that the big AI companies, the big tech companies, aren't forthcoming with how much energy each of these prompts take. And honestly, they're not that forthcoming with how much energy all of this takes. That said, Sam Malman didn't give a number a few weeks ago that each or the average chat GPT

query is 0.34 watt hours. Though the research I was looking at says that a video, to create a video, you could use anywhere between 20 watt hours and 110 watt hours. So that gives you a little bit of the scale there. You know, it's the same as a phone. You know, our viewers, and I know this is all, you're exactly right. It's a weird world. I cover electricity. I talk about it.

It's still very, very confusing to me, much less people that don't study it. Just pay attention to your phone, right? If you have more apps open, your phone battery will drain faster. That's it. Data centers kind of do that on an extreme. scale? Well, yes. I mean, well, let's talk about the phone. I think it's a really good benchmark for people. So your phone, the average iPhone or smartphone, takes 10 watt hours to charge. Okay, that's when you, let's say you go from zero to 100 percent, right? In the case that

I was just talking about, that's 20 watt hours to 100 watt hours just to make one video, one AI video. Now, I will say that sounds like a lot. And I actually, in the video, I'm sure you appreciate this, Brian. Wanted to figure out how much energy that really could be. And it turns out that if you were making about one or two videos, that's the equivalent of grilling one stake on a electric grill. I know probably not the most accessible equation there, but I just wanted to know what AI was equal to in stakes. But just to give that sense, right, a text prompt at 0.34, or let's say, we can give it two watt hours at the max, is a lot less than using 20 or to 110 watt hours at the video end.

I think it's a, listen, I think it's a very good analogy because I think for, like we talked about, it's like when you own an EV, and I don't know if you still do. I know you've owned some, you've driven some. I do. It's like trying to figure how much more power. So can you tell us your personal experience? Has your EV increased your electric bill noticeably? Because I assume you charge at home. I do charge it home, and honestly, not a ton because I charge at these off hours and the off peak hours. So I charge on the weekends.

I charge at night. And so they give you a deal. The PSCNG here in New Jersey gives you a little bit of a deal. I mean, I've noticed some increase, but also I don't charge all that often. And I think that's the question with AI, too, is we don't actually see that power. It's a little bit of a difference, right? We see that power with the EV. It's coming from our home.

In the AI space, that power is coming from the data center. as we saw in that last segment where they were using those EV batteries. Well, they're recycling those and sort of using those as the grid in that situation. And so when we think about the power drain of our own AI use, it's not actually coming from our homes. It's coming from these data centers. And there's really no transparency to the end user about how much power that is. And we've seen a lot of freak out in the AI industry about how much water am I using,

how much energy am I using, but we don't really quite know. And it's hard to, probably something we'll never be able to figure out, I would say that 12% of total energy demand is basically a California of power use. It's a lot. That's a lot. Let's just leave it at that. Huge amount as we send each other AI generating graphics. I was making Joanna a picture of Kelly on a book cover.

It said wealth is wealth because that's what she said. And now I'm worried I've used too much electricity. Joanna, thank you. Water, probably. Or water. Yeah, thank you. Treasury Secretary Scott Besson just left to Senate lunch making some comments. Emily Wilkins has that for us. Emily.

Hey, Kelly. Well, Secretary Besson was, of course, there to talk about the Trump Megabill. Sounded very optimistic about the ability to get it done as he left. But I did ask him about the Canada imposing that digital services tax and his response to that. And what he told me is that it sounds like that he and Treasury might want to be implementing what is known as a 301 on Monday. That would be an investigation into Canada's tariff and trade practice. It was used during the Trump's first administration on China as a way to increase the tariffs there.

It wouldn't happen immediately, but it sounded like that is at least one thing that Besson is considering in light of this news on Canada. I also asked him what his reaction to Trump saying that he was going to stop negotiations, but Besson said he had been in the lunch and so he did not have a comment on it at this time. Of course, this comes as the Senate is trying to figure out a way to get to yes, on the Senate. the actual text of the bill so they can begin voting. What we're hearing now that they might try to start voting or get the text out on Saturday, that would mean a long weekend for them, but it does tee it up if they can get this through for the House to then move it by July 4th. And of course, you've seen President Trump again take the truth social to call for Congress to meet that deadline, guys.

Right, so a big escalation all of a sudden with Canada, Emily. And thank you, Emily Wilkins. Just want to point out to everybody as we were just showing on your screen there. This all goes back to about an hour ago when the president on truth social posted that he was upset. Canada was moving forward the digital services tax and we'll be looking at further tariffs. Treasury Secretary now backing that up. The S&P has turned negative for the day. It was previously up about half a percent.

Same for the NASDAQ, which has also turned negative. S&P is now flirting back and forth between positive and negative. Dow is still hanging on to a game because Nike and Boeing have been quite strong. You can see there that this all added up over the past hour has finally kind of tipped us from the rally we were experiencing to end the weekend. into something a little bit more questionable. And the Treasury Secretary will also be joining closing bell overtime today around 4 p.m. So definitely look for him to elaborate on all of that.

Power lunch will be right back. Welcome back a lot of huge movers this week and today. Let's go to get a quick power check on Robin Hood, which is one of them. It's been on an absolute tear hit an intraday record high on Wednesday. The shares are up more than 120% this year. And it's on pace for its third straight month of double-digit gains. This all comes as Ark Invest, Kathy Woods, actually, dumped over $4.5 million worth of the stock, but it's still one of her top holding.

She often talks about trimming when you get to a certain percent of the portfolio. Our next guest still believes in Robin Hood and is joining us to explain her trade. Eva Ados, the CEO and chief investment strategist at ER shares. Hardly a permable, Eva. Half the time we talk, we're always talking about which stocks you're selling. So why does Robin Hood, after this huge run, one that you think is still worth holding on to? We're really believing it. In fact, it's one of our biggest way, the next of Yonzovian.

RETF. It's been a compelling story not just for this year, but for last year too. And it's not in the Russell 1000 growth, but if it was, it would have been the number one performer this year. The truth is that the current administration is very much pro-crypto that has benefited many crypto companies and Robin Hood is one of them. But Robin Hood is not just anymore a mean stock trading platform. He has expanded beyond brokerage. So now it offers retirement accounts. It offers private banking, credit cards. It has become a very comprehensive financial platform. And it's not just Gen Z or millennials trading now through Robin Hood,

but many older people too. So we see that growing from here, in fact, we believe that it was a very smart strategy, just like social media platforms, that they enter the market with the younger generations, and then they grow from there. Robin Hood followed that strategy and sworek very, very well. Yeah, no, I thought the IRA incentive. I mean, it was a big one, a big handout,

but also, again, seems to have worked in terms of attracting more kind of stickier dollars to the platform. So you mentioned the crypto piece of this, though, Ava, that's the only thing that might give people some pause. Bitcoin's kind of stalled out. Coinbase circle are starting to stall out, you know, could that be an overhang for Robin Hood? Well, if you look at the financials of Robin Hood, so we mentioned the story and why we like it, but from the fundamental basis, there are very few companies that look so attractive. The company two years ago had $1.9 billion in revenue now has almost doubled to $3.3 billion.

It has increased its margins, dropped the SG&A, actually plummeted. The SG& plummeted by two-thirds, and it has widened its EBITDA from negative 200% to positive 150%. And it's very rarely that you see companies have such a quick, turnaround in profitability. We think that the growth will continue going forward. I appreciate going back to the fundamentals, you know, for a lot of people who just wonder how the stock has done what it's done.

Eva, thanks for now. We appreciate it. Eva Ados with ER shares. More power lunch right after this. All right. It is time for an RBI. And today we get bullish on bulls because we just noticed that cattle futures are at 20-plus year highs.

The futures are at $213 bucks per hundred weight. up from $125 before COVID hit, and we were below $100 15 years ago. Now, Kelly, Beef Magazine, who knew there was something called Beef Magazine, says the bullish move is because the demand for beef is rising at the same time that fewer cattle are being, shall we say, culled for meat. So get ready for you have many miles to feed. I gave up on grilling. Spend more on burgers.

Do you know, it's exhausting cooking out. You have to bring everything out and get it. set up and then I never get the stakes right. It's just a funny reference as well. By the way, not only people have sticker shock here, it reminds me a little bit of what happened with chicken a couple of years ago kind of during the pandemic. But Joanna Sturm was just talking about the amount of power that it takes to, you know, grill your stakes. And here we are talking about how expensive it is, too. Yeah, all-time record high for beef. All right, before we go, quick check on oil, it is on pace for its biggest weekly decline in more than two years.

Now, on July 9th and 10th, there was a five-year OPEC seminar. Happens, every five years, all the senior executives from OPEC and Allied nations will be there. We expect to be there as well. I'm off next week, but excited to hit that when we come back. Yeah, and would you say that they are going to actually potentially change anything at that meeting? The oil price has been so volatile, and Iran is the head of that delegation right now. I don't know. I mean, this is a seminar, too.

So they have a meeting, but this is almost like a convention, for lack of a better term. They called us seminar. Iran is the president. We're hoping the Iranians, if you're watching right now, we'll talk to us. The Saudis will talk to us. The Secretary General, because the path of oil prices may determine the path of the stock market. Yeah, no, absolutely. Inflation, the consumer, so much more. Let's do a quick check on the markets also because we've gone from having this almost exuberantly positive tone this morning

to having yet again a flare up on the trade war front takes some steam out of that. So the S&P is now negative. The NASDAQ is down a third of a percent. The Dow was hanging out some gains helped by Nike and Boeing. Stay tuned to closing bill overtime. Treasury Secretary Scott Besson, who just left a lunch where he said they might be looking at putting on those Canada tariffs on Monday. Subsequent to the president's post from a couple of hours ago, we'll see what more he can say about that situation. And the market wants peace. You saw it real time, folks. When the president, you know, fighting with Canada over tariffs, boom, the market fell. Didn't fall a lot, but it did fall. We were very sensitive to tariff headlines.

We were at record highs today. We talked to them, but maybe now we're not going to close. Big interview coming up in the overtime. Thanks for watching Power Lunch. Yep. Closing bell starts right now, followed by overtime.