Power Lunch - Israel-Hamas War, Plugged In, and Birkenstock’s Debut 10/11/23

Episode Date: October 11, 2023

We’ll break down the latest details from the front lines, and the geopolitical fallout as the Israel-Hamas war enters its 5th day. Plus, Exxon Mobil officially agreed to buy Pioneer Natural in an all-stock deal worth $60 billion. We’ll speak to the CEO of another energy firm trying pioneer alternative sources of energy. And Birkenstock is trading low today, and well below expectations for its public debut. We’ll dig into that for you. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome everybody to power lunch. Good to have you with us alongside Kelly Evans. I'm Tyler Matheson. Stocks have turned lower after two days of days of gains so far this week. We are now close to session lows off about a quarter of a percent for the Dow. Let's get to Steve Leesman now for the latest news from the Fed. And that would be the Fed minutes from the meeting of just a couple of weeks ago where the Fed basically left rates unchanged. So let's go now to Steve Leesman with that. embargoed news. Steve. Federal Reserve officials in the September meeting, judged that one more increase at a future meeting was likely appropriate. A majority pointed to upside inflation risk. For the record, this was back in September. We don't know if this still holds now. Some at the time, however, judged that no further increase was warranted.

So there's your split on the committee that we're kind of hearing in the rhetoric out there from Fed officials. All agreed it was critical for policy to be, quote, sufficiently restricted. That's the term that Chair Powell has used to indicate when the Fed would be done. And all agreed that once they got there, it should remain restrictive for some time. Several saw policy at or near the peak. Near means maybe one more hike. At means we're there already. Several all agreed that the committee was in a position to proceed carefully.

We've heard that from several Fed officials since the meeting. Several say the balance sheet reduction can continue even when the Fed is. cutting rates. Participants say risk from over or undershooting on rates was now more two-sided than it had been in the past. Various participants pointed to downside economic risks. They included credit tightening from the banks, overseas growth slowing down, lagged effects of monetary policy as well. Many noted that finances of some household were coming under pressure amid high inflation and declining savings. There was concern about the commercial real estate sector, concern about the availability of child care, which is believed to have brought a lot of people into the workforce, the availability of child care.

Auto workers strike was also on their mind as a new source of uncertainty. Upside risk to inflation, downside risk to economic activity, potentially from the auto worker strike. Participants hoped that new data would clarify the disinflation process in front of them. And one more thing here, the period of below, they still continue to repeat that they're going to need a period of below trend growth and labor market softening in order to bring supply and demand into balance. guys. All right, Steve, stick around as we continue to discuss this a little bit more, reaction to the Fed meetings with Mark Zandi, chief economist at Moody's Analytics. Mark, you've heard what Steve summarized as the Fed's meeting minutes. How close is the Fed to its goal on inflation? I think it's well on its way, Tyler. I think, you know, in fact, the most recent

inflation data say they're there. I mean, if you look at the three-month annualized growth and core consumer price inflation or core consumer expenditure deflator, the measure they target, we're there. We're two, two and a half percent. So that's very consistent with their target. Now, that probably overstates the case, you know, but it makes a strong case that we're definitively moving in the right direction here. And I think policy is sufficiently tight. I don't think they need another rate hike to get what they want. And that's inflation back to their target in a reasonably timely way, say by this time next year. So when you say it's not definitive, I guess what you're saying is you'd like to see more months of data that show exactly that kind of measure or maybe even a little lower.

Am I understanding correctly? Yeah, that's right. I mean, you know, obviously the data is affected by lots of technical measurement issues. And we're going to get a sense of that. You know, I think tomorrow morning when we get the CPI for the month of September, it's going to show probably a bit of a increase. and that will be the flip side of some of the beneficial technicals we were getting earlier, now being a little bit less beneficial. So, yeah, my sense is inflation isn't quite back to where they wanted to go, but it's going in the right direction.

Here's the other thing. You know, I forecast lots of stuff. Some things I'm confident in, some not so much. Forecasting inflation, getting back to Target over the next year, I feel confident. And a significant part of that goes to the growth and the cost of housing. services, which is a big chunk of inflation, and we know that that's going to continue to moderate and get inflation back in. So I feel very confident that inflation will be back to their target by this time next year. But we need more evidence of that, for sure. Steve, I am confident in predicting

that the Giants will not beat the bills this weekend. But that's about all I'm confident in. How do you read what the Fed has said here? And as you say, there seems to be a balancing act going on between those who would like to stay where rates are, those who might see one more hike. You know, Tyler, the minutes come out three weeks after the meeting every time, but sometimes they're colder than others. And I'm going to say these minutes are a bit colder than other minutes. And the reason is because an awful lot of stuff has gone down since these minutes came out. You've had this rather pronounced surge in treasury yields that beneficiaries have talked about

and have said affects their outlook on policy. Obviously, the Hamas terrorist attacks in Israel have had a global impact economically as well, psychologically as well. So those two factors have had tremendous impacts on markets, tremendous impacts on the markets that make a difference for the Federal Reserve. And then you've had these comments come out, guys like Waller today saying, I think the Fed can wait and see. So they may have this other forecast.

And just one of the, I think, important context. These minutes came out, they were very hawkish and the market reacted. Sorry, the statement came out and the projections came out back in September. I feel these minutes are a little bit more dovish or suggest even the conversation at the time was not as hawkish as was portrayed in either the projections or in the statement or the press conference by the chair. It suggests a much more two-sided debate. It still leads to that one more hike. I think that hike is there. I don't think there's a lot of folks on the committee that from what I'm hearing right now want to push the button on that hike.

Steve, can I, you know, try to cause some controversy here and probe what you just said because that's interesting. So in other words, you think that the chair was much more hawkish and what he said after the last meeting than the minutes themselves reveal the discussion really wasn't and the rest of the committee really felt. So is that a policy error by the chair or, you know, what do you attribute that split, which I do think you've captured it well? well and how it feels to those of us on the receiving end. What do you think that's all about? You know, I'm never quite exactly sure how all the sauce is made of with the Fed here, Kelly. And I wonder to the extent to which maybe they emphasize some doveish aspects or maybe things turned more dubbish when they were editing the minutes and decided to emphasize those things. Or maybe there was a determined determination on the part of the chair that he wanted to portray

a hawkish takeaway from the meeting. There was a reason to do that at the time. time. So I don't know the actual answer for it. I do know that when I read these minutes, I see and hear a more vibrant debate than was perhaps portrayed at the time of the September meeting. It still says, though, a majority wanted other hike. So that was not mispertrayed. Neither was the read of the dot plot, which showed that 12 of the 18 members wanted an additional hike. So that was still there. The question becomes, just because you want a hike doesn't mean you're going to get it or doesn't tell you when they're going to do. do it. So it's still out there. They're not backing away from it. They just don't sound in a big

hurry to do it. Mark Zandi, anything you'd want to add? No, I mean, I am a little perplexed by the hawkishness of the Fed chair at the last, you know, after the last meeting at the press conference. I was surprised by it. But, you know, it could have been strategic. And he got what he wanted if it was because, as Steve pointed out, financial conditions have tightened. You know, We're looking at a 4.6 percent 10-year yield stock prices are down. So it feels like conditions of Titan, which, you know, he's got inflation expectations anchored and tethered. And I think he got the markets where he wants them and the economy where he wants it to go.

So he should feel pretty good about this. But I think they're now right at the edge. This is it. I don't think they need any more rate hikes. And I think they'll start making a mistake if they keep pushing on that, on those breaks. Hey, guys, if you give me just one more second here, I just want to give you the probability. now, already down to 8% on November. So markets don't think it's happened in November.

December's up a touch, maybe call it 28, 29% for the probability of a rate hike. And then you've got to go, they're getting more confident now, guys, in the possibility of a rate cut in June at 62%. That may reflect this idea out there that many on the committee see the risk as more two-sided than they had in the past. All right, thanks very much. Mark Zandi, always good to see you. And maybe even better to see Steve Leesman.

I don't know. It's close. Thanks. Appreciate it, guys. Or what about Rick Santelli? Let's get to the bond market now where he can react to these Fed Minutes and talk about the action we've seen this afternoon. Hi, Rick. Hi.

Well, you know, the Fed Minutes as you look at the intraday charts, look at a two-day chart of twos. Yes, we see that yields have moved a little, a little volatility on a minutes, but really not much. The notable factor here is that we reached up just a bit above yesterday's high yields. Contrast that further down the curve with a 10-year where investors shun the auction and yields are below yesterday's low yields. And the effects of that are quite obvious when you look at twos versus tens because the flight to safety has been more concentrated in long maturities. And that, of course, re-inverting the yield curve a bit. Now, if you look at this morning's data, I'm sorry, but here's what I see. I see five tenths on headline, seven tenths last month, which reminds me a lot of the May, June of last year,

when you had back-to-back stubbornly high numbers. And if you go year over year on the headline at 2.2, that was one-tenth of a percent in June. And last month alone it was 1.6, revised to 2%, but now 2.2. I guess the point is, is inflation hasn't disappeared. And tomorrow's CPI is going to be really interesting in the context. of the flight to safety trade. And ultimately, two-year note yields closed at a one-month low yield yesterday. First time, really in a month, they closed below 5%. But they're

very buoyant, and part of that may be the Fed. But it's the long end and how it will react as geopolitics hopefully at some point recedes and gives us a better glimpse of where rates truly want to be priced. Tyler, back to you. All right, Rick, thank you very much. Well, Republicans are moving

now in the House potentially to nominate Steve Scalese to be the next speaker. A vote is expected soon. Emily Wilkins is on Capitol Hill for the very latest. Emily, people are saying he wins an internal vote to become the GOP's speaker, but the truth is he doesn't even have half of the number of votes required to prevail in the full house. He won by a 113 to 99 vote. So that suggests that he does not, does not have his full caucus behind him here, at least at this out. Yeah, Tyler, there is definitely more work to do.

So you're right. Scalise is now officially the Republican nominee for Speaker, but he won the Republican conference by a very slight margin. And now that they're going to the House floor, he's going to have to get 217 votes. So obviously, big difference between 217, 113. And it's a huge question about how he's going to get there because you're seeing a number of members come out and say,

hey, we back Jim Jordan, we still want Jim Jordan, we're still going to vote for Jim Jordan. So it doesn't seem likely that Scalise is going to get to that magic 217 number on the first round of ballots. Now, Scalise and Jordan are meeting right now. They are having a discussion. A lot of members came out of the room today and talked about unity, talked about getting everyone together. And so we'll have to see what Jordan says after this meeting with Scalise. Is he going to tell everyone to back Scalise or is there going to be sort of a long and dragged out fight on the floor?

Steve Scalise also came out of the room really just minutes ago and talked to the reporters about what his plan is going forward. Take a listen. We have a lot of work to do, not just in the house for the people of this country, but we see how dangerous of a world it is and how things can change so quickly. We need to make sure we're sending a message to people all throughout the world that the house is open and doing the people's business. Scalise said that when he is elected speaker, the first thing that he will do is bring a resolution to the floor saying that the Congress has the backing and support for Israel. However, when that happens, that is very much unknown at this point. It could happen today.

It could happen later this week. And it could take a lot longer. Kelly? Indeed, we'll see. No small amount is at stake. Emily, thank you very much. We appreciate it. Emily Wilkins.

Still to come on Power Lunch, we'll bring you the latest on the Israel Hamas War. as it enters its fifth day. But first we'll update you on a massive deal in the energy space. Exxon, agreeing to buy Pioneer for nearly $60 billion. You saw Exxon shares down 5% there bringing down the energy sector today. Plus the official debut of Birkenstock. It priced at 46 last night. It opened at 41 well below expectations. We'll trade that and Exxon and three stock lunch coming up. Welcome back to Power Lunch, major energy deal this morning. Exxon Mobile buying Pioneer Natural resources for nearly $60 billion and in stock. Earlier on Squawk Box, Exxon CEO Darren Woods explained why this deal works now. It's the biggest since they bought mobile, by the way,

and how it will work as the energy industry continues to transform. This is betting on the capabilities, the people of our two organizations, the technologies that we've developed to basically more efficiently recover resources at a lower cost and a better environmental footprint so that we are actually advancing the ambitions of a lower emissions future by driving down, using our combined capabilities to drive down emissions, produce lower carbon intensity oil and gas, and basically push, continue to be the most responsible operator for providing oil and gas for as long as the world needs that. For more on the deal and the market in general, let's get to today's five-star fund manager.

Bill Smead is portfolio manager of the Smead Value Fund with over $4 billion in assets under management. Bill, it's great to have you back. Welcome. Thank you, Kelly. First of all, Yarexon shares down, they were down about 5% at the lows. What does that tell you? Well, that's just arbitrage. There are many people that own Pioneer that won't want to own the combined company. and then secondly, if I'm an oil investor, I don't like what you just played of what he said.

Yeah. I don't think if you look in the charter of the Exxon Corporation, it says to make a few bucks and kowtow to the body politic. Their job for shareholders is to make them wealthy by being in the oil and gas business. And behind the scenes, they're doing that by extending the life of their oil and gas production in a very attractive place. We think it's the right thing to do, but we think that all of this gibberish is just gibberish. And then secondly, from pioneer standpoint, the guy that's a seller, he wanted to retire. And I think it's very bullish that he's taking stock in Exxon rather than cash.

And Exxon's got a pile of cash sitting on their balance sheet that they could have used in this deal. But because they know most of the people in Pioneer want to stay invested in the oil and gas business. Why is it bullish and why didn't they use cash for the reason you just said, in other words, that people want to stay invested in the sector? Yeah, if you pulled up a chart for the last 30 years on what part of the S&P is in the energy space, and that's the overall energy space, it's tiny. I think in 81 it was 29.74. In fact, the magnificent six. were the six large oil companies, the top eight market caps in the world in 1980. So, and it dropped to about 2% around Saudi Sunday in 2020. That was a 220-year low in commodities versus stocks.

So we're in a super cycle. You said everything you needed to say already. You said they bought mobile in 1999. Where was that in this cycle for oil and gas stocks? That was at the beginning. Yeah, $11 a barrel. And no one was talking about a brick trade back then in 99. But that's exactly what ended up happening is everybody got so excited of providing oil and gas to the economic revolution in China.

And, you know, Brazil, Russia, Indian China. So nobody could see that forecoming. And that's where we are in the cycle. This is the third big super cycle in oil and gas. The first was 71 to 81. The second was 99 to 2011, and this is the third one. Scarcity creates value. Let's talk about some.

You do not own either ExxonMobil or Pioneer Natural, but you do own some energy and you do own some real estate. Among your top holdings are Occidental Petroleum, Conoco Phillips. I don't know whether that is really the total of your energy holdings or most of it. But why don't you walk us through energy and real estate and why? Well, it's a little depressing, Tyler, so I apologize ahead of time. We are completely convinced that inflation is too many people with too much money chasing too few goods.

That's what happened from 71 to 81. It was the Vietnam War and Johnson's Great Society, created massive government monetized debt, followed by a whole bunch of baby boomers and then the Arab oil embargo. The Chinese was 1.2 billion people that hadn't practiced capitalism before, suddenly with a whole bunch of money chasing two few goods. And this is 92 million millennials who have been very slow to get started, by the way, in forming households and buying houses, but kicked into gear the last two or three years. Ninety two million of them are out on the hunt, more weddings last year and this year. So the game is engaged. Too many people with too much monetized.

10 trillion dollars of federal government monetized debt. And it's the biggest number in relation to GDP other than World War II. So it's it's the game is engaged. They are inflation beneficiary securities. Real assets and labor are the winners of the next 10 years. And so that is, labor is a winner, real assets, and that would include companies like Oxy and Devon and real assets like Simon property, which owns malls and other kinds of developments. So that's where you want to your money now, right, Bill? Yes, and any companies that are going to suckle on the necessity spending of the households formed by the 92 million millennials.

And that would be your banks like J.P. Morgan Bank America, who have their deposits, America Express, who is their credit card? Because even though they get married and have kids, they still take their kids on all kinds of travel and they want those points from America Express. She's laughing. I love that. And they shop at Target and go to Home Depot on Saturday. And so we just got these people blanketed in our fund with necessity companies.

And then we want to keep people my age alive with Amgen and Merck. And we're diversified. No, we're actually laughing here at the most memorable phrase of the day, and that is to suckle on the millennials. I'm going to remember that one. That's beautiful. Bill Smead, thanks. Thank you.

You got it. Coming up, the latest in Sam Bankman-Fried's historic trial. All the details emerging around his fraud misconduct and presidential hopes. And tomorrow night, be sure to check out ExxonMobil at a crossroads ACNBC documentary. That is on Thursday, 8 p.m. Eastern Time. David Faber, that's the guy in the helmet on the right. He'll be covering it for you. Power lunch to be right back.

The trial of Sam Bankman-Fried getting even more interesting today as his ex-girlfriend continues to testify, and we're getting some salacious details from Caroline Ellison's testimony and her time running Bankman-Feed's hedge fund. Let's get to Kate Rooney outside the courthouse. Hi, Kate. Hi, Tyler. So Caroline Ellison described what she called living in a constant state of dread. Every day she said she was worrying about not being able to meet customer withdrawals from FTA. and that everything would come crashing down at some point. In order to plug a hole that FTX had, Ellison says Bankman Freed at one point was trying to raise money from the Saudis,

in particular Prince Mohammed bin Salman, MBS, as he's also known. At another point, Ellison says that Alameda executives paid a $150 million bribe to the Chinese government to unlock some accounts they had on a Chinese crypto exchange. Before they did that, guys, they tried to use fake accounts to withdraw some of that money, Those accounts, she said, were actually Thai prostitutes. You heard me right. There was an employee who pushed back on SBF around all of this. He allegedly told her to shut the F up in a meeting.

He was also known for some of these types of outbursts in stressful situations, according to Ellison. Some details about the relationship as well today. At one point in the Bahamas apartment that is now infamous, Ellison saying that Bankman-Fried confronted her about the financial mess. He said it was her fault, said that she didn't hedge early enough. and that she got very upset. She said she started crying. She also talked about his image that he tried to cultivate, tried to frame himself publicly as an intelligent and somewhat eccentric founder.

The Toyota Corolla that he drove, she said, was completely for PR optics. Apparently he had another backup car. She later made a list of things while she was running his hedge fund called Things Sam is Freaking Out About. That included getting regulators to crack down on another competitor, Binance, in order to improve market share, And then guys, buying the company Snapchat. That was apparently on the table.

Also was worried about potential bad PR for the company in the next six months or so. There was some awkward tension between those two in the courtroom today. When she was testifying, Ellison would not look at Bankman Fried. Avoided his eye contact completely. He looked stressed. He never looked at her directly. Finally, Alison described Bankman Fried as what she called utilitarian, said that he didn't think lying was wrong if it was part of a bigger goal and that the means justified the ends somehow.

The defense will get a chance to cross-examine Ellison as soon as today, but she's back on the stand right now. Back to you guys. This is a book waiting to happen if there's not one already out. Thank you very much, Kate. Appreciate it. Let's get over to us, I believe it's Steve Kovac for a CNBC news update. Yeah, Tyler sure is Steve Kovac. The White House said this afternoon, 17 Americans are unaccounted for in the Israel-Harmaz war, at least 22 U.S.

citizens have been confirmed dead in the violence. The updated numbers come as the Israeli military says fighter jets have hit 450 targets in northern Gaza in the last 24 hours and after an IDF spokesman warned fighting would further intensify. Also, the commissioner of the European Union shared an open letter to Facebook and Instagram parent META asking the company to stay on top of disinformation on its platforms. The letter says following the Hamas attacks on Saturday, there was a surge of this content along with violent imagery. META says it created an operation sensor staffed with experts to closely monitor content surrounding the Israel Hamas War. And finally, President Biden officially kicking off his 2024 presidential run by filing paperwork to appear on Nevada's

Democratic primary ballot in February. Nevada's October 16th filing deadline is the first in the nation. New Hampshire is next with the filing deadline of October 27th. Tyler, set it back over you. Oh, grab it. Steve. Thank you very much. We've got some breaking news out of Goldman Sachs. Let's bring in Leslie Picker. Leslie, what's happening? Right, Kelly, yeah, Goldman Sachs announcing the sale of its green sky and related loan assets to a consortium led by Sixth Street partners. The transaction expected to result in a 19-cent negative impact to earnings per share in Goldman's third quarter results, which will be announced next week. Until closing expected in the first quarter of 2024, subject to closing conditions, of course, Goldman will continue to operate the digital consumer lending platform.

Goldman paid $1.7 billion to acquire the platform, a deal that closed at the end of Q1, 2020. But the quick pivot is a reflection of Goldman's shift in strategy, as Goldman's CEO David Solomon said in the press release, quote, the transaction demonstrates our continued progress in narrowing the focus of our consumer business. The Sixth Street Consortium also includes funds and accounts managed by KKR, Bayview Asset Management and Cardworks. And it includes, quote, significant support from PIMCO through an act, an act. asset acquisition and strategic financing from CPP investment. Goldman shares down about half a percent. They were down a little bit more than that before this news crossed, guys.

Yep, this was in talks or reported for quite some time and some confirmation of this unwind. Leslie, thanks so much. We appreciate, again, maybe some cleaning house before earning season as well. Ahead on power lunch, the first U.S. weapons are arriving in Israel. Defense names taking a slight turn lower today, but showing significant gains since this conflict started. 11 percent. We'll discuss the latest on the war next. Welcome back to Power Lunch. Let's get the latest on the Israel Hamas war now. Israel says it has struck 450 targets in Gaza since yesterday and is also adding more troops at the border.

Let's get a live report from NBC News's Ellison Barber in Israel. Ellison, good evening. Hey, Kelly, yeah, we've been watching all of that in the last 34, 30 to 40 minutes or so. We've seen a number of rockets fired from Gaza. in the direction of Israel over the more populated part of the city of Ashkelon. We earlier today, we're making our way down south, a little closer to the Gaza border. We're about two miles away from the northern Gaza border right now.

Further down that way, we were stopped by Israeli forces and told that we could not go further. We did notice a large amount of Israeli tanks and Israeli military equipment amassed in that area. Israeli military leaders, they have said that they have hundreds of thousands of troops on the border with Gaza and that they are prepared to do what they believe is needed next. Presumably, what we are expecting is some sort of ground assault to be launched. But right now, and this has been throughout the day, we have seen waves at different periods of missiles being fired both from the direction of Gaza into Israel and both from this side, Israel, back in the direction of Gaza. Most of the ones that have come from Gaza flying over in this direction have been intercepted by Israel's Iron Dome.

But we have also seen a heavy flurry at different points of ambulances coming through this area and just a lot of military equipment making its way towards the south. There is a focus right now also on the north border where there is some concern about what could be happening with Hezbollah coming out of Lebanon. There was a warning that went out to a lot of the parts in northern Israel telling people to stay in their homes while they were seeing whether or not there was some sort of infiltration via zones from drones across the border with Lebanon there. It's an active situation. The big question still remains, will there be a ground assault and how soon it seems like everything we have seen here and everything our teams are hearing as they report on this that Israel is inching closer and closer to some sort of larger offensive. possibly into the Gaza Strip where there are millions of civilians living in very densely populated area without really any opportunity or access to leave and finding shelter inside Gaza is incredibly difficult. It's largely non-existent, but hundreds of thousands of people, according to the UN, have gone to UN schools because that's the only place inside of Gaza where they can seek a bit of shelter,

more safety because their schools are more structurally sound. Is, Ellison, is there any word from Egypt that, they would consider allowing the people of Gaza through that border. So that's been the big question, right? And you had the UN the other day and World Food Program asking Israel and Hamas, militants in Gaza, Islamic jihad, everyone involved in this if they would allow them to create some sort of humanitarian corridor. Anthony Blinken was asked just as he was about to board a plane to leave to Israel,

whether or not there were conversations with Israel about opening that border, doing something there, and what the holdup was. and with who, as they were discussing things, he didn't get into details on that, but that's certainly a question, something to watch moving forward. There was this situation in the last 24 hours where you had a spokesperson with Israel's defense forces

telling civilians in Gaza to leave and suggested they leave via that one crossing that goes into Egypt. But then there were reports from journalists inside Gaza and video that surfaced where it appeared that that crossing nearby a missile had been struck. And according to Egypt, it wasn't even floating open at that time. It was only open periodically and to people who had pre-approval to travel. So there are still a lot of questions there. A lot of people saying something needs to be done

to allow some sort of green corridor, some sort of humanitarian corridor. But so far, that hasn't happened yet. All right, Alison, thank you very much for your reporting tonight. Ellison, Barbara. All righty. As Israel takes new steps to root out Hamas, our next guest says it is poised to win this battle, but not necessarily the war. And both parties are nowhere near a long-term sustainable solution. For more, let's bring in Hagar Shemali. She was the spokesperson for the U.S. mission to the United Nations under the Obama administration and a former spokesperson for terrorism and financial intelligence at the Treasury Department. Hagar, thank you very much for being with us. You have pointed out that in the past, Hamas has taken actions, which it can

somehow put a fig leaf on, i.e. that their motivation was to hopefully, affect some positive change for people in Gaza and for Palestinians in the broader context. But you also point out that this has never, ever, ever worked, that the terrorism has never achieved any goal such as that. So why did Hamas do what it did on Saturday? What in the world could their goal be other than simply to sow horror and terror? Well, I think the first part, maybe it needs a little bit more clarification. Hamas is a terrorist organization only, full stop, through and through. I worked in counterterrorist financing. Hamas was within my portfolio for a couple of years. And that's, and that is their motivation. They are a terror organization.

Their one sole purpose is to create an Islamic state that includes the land of Israel and all of the Palestinian territory. So that's the West Bank and Gaza. And the way they try to achieve that goal is particularly specifically by targeting innocent Israeli civilians and Jews. And the reason for that is because they believe that by targeting innocents, by instilling this kind of fear and terrorizing people, it will place pressure on the Israeli government so that they can make gains on behalf of all Palestinians. But the farce with that, by the way, is that the majority of Palestinians don't support Hamas. Certainly the majority in the West Bank don't support them.

the Palestinian Authority doesn't like them. And around over half of the Palestinians in Gaza support Hamas. However, they took control in 2007 in elections. There haven't been in elections since then. And I would say that they govern Gaza. I would put it in quotes because it's not exactly that they do a very good job at it, especially given, as you just reported, that the schools in Gaza are the best schools are really set up by the United Nations.

And so that's to explain to you, Hamas. Hamas is a terrorist organization. I take all of those points, but I remain curious, even for the insanity that is a terrorist organization. That's both of my words, not yours. If terror has never worked to affect what they think it is going to affect, why do they keep going back to it? Why do they expect Israel to do something that might benefit Palestinian people? Indians more broadly or Ghazan specifically? Because they're not rational actors.

Most terror organizations aren't rational actors. Their number one goal usually is to terrorize victims. Now, granted, they have broader ideological and political goals, and this is the way they go about it. But the fact is, and you highlighted this, since 2007, there have been five rounds of violence between Gaza and Israel, including this one. And nothing has come from it other than a very brutal response from the Israeli side. And I would add to that, by the way, Hamas knows this. They know that when they lob rockets into

Israel, they're going to be faced with a very brutal response. And deliberately, they put their mobile launch rockets these days, it's very easy. They can put mobile launchers wherever. They deliberately place them in residential areas. Why? Because they either they believe it will shield them, or because they know that it will garner criticism when Israel ends up hitting civilians. That is precisely the next and final question that we'll have time for. When, if ever, does sympathy for Israel begin to shift towards sympathy for civilians in Gaza, who for exactly the reason you say now become targets because Hamas has placed military offices, rocket launchers in those civilian areas, may be hard by a hospital, a school,

a market or more? When does or does it at all shift sympathy towards the plight of the Palestinians in Gaza who are now without electricity, without water, without power, heat, etc.? Well, I'm a believer that there's room for sympathy for both. The greatest tragedy of this entire conflict is that the majority of people who will die will be innocent Israelis and Palestinians. And this is why I said earlier this morning that Israel will win this battle. Hamas is very small compared to Israel. And Israel's military is much, much stronger and much more well-equipped and advanced. But the fact is that the reason I said that they may not, that they're not going to win this war for a secure and peaceful Israel is because this response. And by the way, they are limited

in their response. What else can they do? They are actively being hit with rockets by Hamas, continuing until now. And so they have to try and obliterate Hamas's willingness and ability to fight. But that said, when you have all this civilian, these death tolls and children being hit, half of the population of Gaza's children, then it doesn't do anything to serve Israel's broader goal of a peaceful and secure Israel. Now, in government, we used to say that it's often in these situations all bad options. And it is all bad options, but I do hope that Israel can find a way to limit civilian casualties in order to not undermine their own cause. Hagar Shemali, thank you very much. We hope we can count on you to come back again. and help us understand this situation. We appreciate it.

Welcome back to Power Lunch. The talk of the day in energy world has been Exxon buying Pioneer and a deal worth almost $60 billion. Exxon shares are down 4%. Pioneer up about 1%. But let's switch gears to a company hoping to be an innovator in alternative energy. Shares of plug power up 13% this week kicking off their annual Green Energy Symposium today and also projecting a big jump in revenue to $6 billion by 2027. Stocks still down about 60% year-to-date, though. Joining us to talk about that and much more. Andy Marsh is CEO of Plug Power.

Andy, welcome to the show. Well, thank you, Kelly. Listen, this is a part of the energy complex that goes through periods of excitement and periods of not excitement. And what would you say is the biggest issue these days? Is it, you know, cost of capital to kind of fund some of your ambitions? Or is it the reality that hydrogen may not be. playing a huge role in the energy transition? I guess when I step back, I've been doing this for 15 years, and I've been in the energy

world for 40. And if you look at hydrogen, this week when you look at Europe, they've made the commitment that they'll have 10 million tons of green hydrogen by 2030 and within the region, 10 million by 2030 imported into Europe. That's about a $50 billion opportunity there today. We announced a deal in Europe just today for electrolyzers. I think that people are, you know, aren't thoughtful about how long it takes to be successful. But over the next five or six years, I think when you look at the commitments you see around the world for hydrogen, we did a deal with Fordus Q today for 550 megawatts of electrolyzers,

in Queensland, an announcement for a broader relationship. I guess I don't, your premise, I just don't really buy that, sure, there's ups and downs in the market, but, you know, the company directly has the products, have the offerings, has the customers that will allow us to continue to grow, and the stock will be fine. So fundamentally, my understanding is that fuel cells are helpful in maybe warehouse settings and kind of places where potentially batteries don't work as well, you know, long haul trucking, for instance. Is that right? Is that still kind of the market opportunity that you're targeting? Oh, I think you're missing a big opportunity, Kelly, is where the grid doesn't exist

and what the future is for replacing natural gas turbines. The work we're doing today where we're powering vehicles and distributions and vehicles and data centers where the grid doesn't exist because it's hard to get two to three megawatts of products. We can deploy one of our fuel cell hydrogen plants, but when you really look at it, the future of gas turbines is going to be part, is going to go away. And hydrogen is going to replace it. And by 2026, with the work we're doing with SK and South Korea, there'll be hundreds and hundreds and hundreds of megawatts of deployments. of peaker plants, which are fuel cells. Dr. Jack Broward today from UC Irvine pointed out a tremendous point how fuel cells are more efficient for seasonal storage than batteries will ever be.

And if you're going to manage seasonal storage with renewables, hydrogen fuel cells, storage using caverns like natural gas today, is really the only path to net zero. All right. Andy, appreciate checking in with you today. Thanks for your time. We very much appreciate it. Thank you. I appreciate. Bye now. Andy Marsh, Plug Power, CEO. All right, shares of ExxonMobil remain lower after striking a deal to acquire Pioneer Natural Resources for $60 billion.

We'll talk about that. And an update now on the race for the Speaker of the House. That and more will we return. Now on the race for the Speaker of the House from our Emily Wilkins, the 3 p.m. vote that is anticipated will not be on the speaker. It's not clear if there will be a speaker vote today or not. So we will have to wait to see. Power lunch. We'll be right back.

Time now to look at a couple of names in the news today. Forget three stock loans. We got two. And we start with Birkenstock, which started trading just about an hour ago, currently above $40 a share, but that's below its offer price and its opening price. Here with our trade is Michael Landsberg, Chief Investment Officer at Landsberg, Bennett, private wealth management. Michael, what do you think of Birken stock? I would run away, Tyler. I take those shoes and kind of move away. It seems like the only people who got a good deal on this were the bankers and the private equity company. They bought it two years ago. It's doubled

in value. I don't know of another retail stock that's actually done that. So I would not be a buyer here. Burkin, don't buy the stock. Okay. All right. Then what about ExxonMobil? Those shares are down nearly 5% after they agreed to buy a pioneer for all stock, nearly 60, billion dollars. What do you think of this one? I think Exxon Kelly's an interesting story here with the idea that they're buying the pioneer extends their ability in the Permian with shale to 16 billion barrels. I think it doubles their production, you know, horizontally as well. The only thing that's a little bit concerning from buying the stock right now is they're paying in stock, which makes sense as a CEO, the stock's up 80% in the last 18 months. I'd pay with it to and

keep my cash. So I like the deal. I think along the term it's great. I'd probably like a little bit of a pullback or an entry point simply because they're paying in stock for this deal. It means they think their stock's expensive. Quick thought. Does this move usher in a period of consolidation or M&A in oil and energy? Heather, certainly might. I think also what's happening in the Middle East, obviously, with those are not oil producing areas, but there's friction over there. So I think there's going to be more of a push to see if we can actually produce more things here. This is going to put a bigger footprint for Exxon in and around the U.S. So I think it's going to be something that we're going to look at. All right, Michael, thank you very much for your time today. We certainly

appreciate your thoughts. Wish we could have gotten to that third stock, but another time. We'll do you on three stock lunch instead of just two. And that third one was Walgreens, which reports in the morning along with Domino's and Delta. Maybe we can do that one tomorrow. Yes. How about that? All right. Thanks for watching, Power Lunch, everybody.