Power Lunch - Latest Fed Minutes, Iran Ceasefire Uncertainty, & Kospi Enters Bear Market 7/8/26

Episode Date: July 8, 2026

The Dow Jones moved sharply lower on Wednesday after President Trump told the NATO summit that the ceasefire with Iran is “over” amid renewed hostilities in the Middle East. The Fed Minutes from June’s meeting dropped at the top of the hour, and Brian Sullivan broke down the commentary with Steve Liesman, Rick Santelli, and Jefferies’ David Zervos. Miller Tabak’s Matt Maley also joins the show to give his take on the South Korean Kospi index’s year-to-date outperformance and recent plunge amid the global chip sell-off.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The future of the Middle East, unclear. Welcome to Power Lunch, everybody. I am Brian Kelly. We'll be back tomorrow. Stocks, they're under a little bit of pressure right now on another re-escalation around Iran. The Dow is losing more than 1% bond yields. They are moving higher. President Trump saying the ceasefire with Iran is over. And those words and more attacks on ships by Iranian forces, they are moving oil higher. We're going to get to all of that in moments we begin in Washington, where Steve Leesman has the readout on Kevin Warsh's first. meeting as Fed Chair. Steve, we know the minutes just crossed. What are the takeaways? Brian, what this says is all members supported no change in the policy rate. Upside risk to price stability was seen as elevated. Downside risk to job growth was had moderated. A few saw a case at this meeting for raising the target rate, but ultimately supported no change at this meeting. Before I say the rest of these minutes, I want you to remember, at this meeting, at this meeting, from the dots or the forecast. Eight had a hold or a cut, and nine had a hike.

What that tells you is this was a divided committee. The rest of these minutes will reflect that division. So if it sounds like I'm contradicting myself, it's because the committee has different ideas. Several did not see current policy as restrictive. A few saw it as slightly restrictive. Most talked about a scenario where inflation would come down and return to 2%.

In that scenario, all of these said it was, would be appropriate to maintain or eventually lower the target rate. Most also saw scenarios where inflation would remain elevated because of stronger AI demand, tariffs, Middle East, and the Middle East conflict. In those scenarios, all of these said some policy firming would likely be warranted. So if this happens, then they'll be hiking. If that doesn't happen, they can lower the rate or keep it the same. A majority highlighted the possibility that continued inflation above 2% could begin to infect

inflation expectations and color, wage, and price decisions. That's an important factor from this, that there is that concern. Many saw the current rate at or slightly below neutral rate. Many also saw the current rate above target by the end of the year. Most agreed we're moving the easing bias from the statement. I'll leave it there, Brian, except to say that several said saw price pressures have become more broad-based, and price inflation, X housing had declined little and remained stubbornly high. So these minutes, They don't sound like they're a monolith giving you a clear idea of which way the committee is going. They reflect a divided committee that reflects different concerns about inflation and where they should go with rates as a result.

Well, okay, so let's talk about that division as well, because something that you said, as you were reading through here, I wrote down, I hope I got it right. Eight members were in favor of a hold or a cut, but nine were in favor of potentially raising rates. So that would be the most divided Fed that I have heard of or read about or dealt with in 30 years. I think so. I mean, I do think that the extent of the division is worth talking about. Like, if you want to hold or raise a quarter, you're not really that far from your colleague across the table. If you want to raise by 100 basis points and the other one wants to hold, that's a bigger division. But if you're drawing the line, Brian, right at the zero line of,

do more, do less, cut or hold, you're right. It's a very divided Fed right now that have different concerns about inflation right now. Some are looking at these numbers and saying, ah, it goes away when the oil price goes away. When Brian Sullivan can personally bring down oil prices, we won't have an inflation problem, we won't have to hike. However, some doubt your ability, Brian, to bring down oil prices and say, you know what? They're going to remain stubbornly high. And not only that, they see inflation in the numbers beyond oil and match the concern. When they say stuff like the majority highlighted the possibility that continuing inflation above 2%

could begin to affect inflation expectations, that's a concern beyond just what the numbers say now. I would doubt Brian Sullivan's ability to do anything. Steve Leesman, except to say, please stay here. We're going to bring in another voice to this conversation, make this a full roundtable for reaction on the minutes, his take on the markets. Let's bring in a longtime Fed Watcher, friend of the show, David Zervos, Jeffrey's chief market strategist, CNBC contributor, who can roll with breaking news because you have not seen the minute. So we're putting you on the spot. You heard what Steve had to say, David,

what's your sort of one or two hot takes from the headlines? My hot take on the Fed in general over the last four months has been to probably, my takeaway has been that it's just not been that important, Brian. And I think these minutes also are just not that important. And the market doesn't seem to be moving so much. So I guess the market is agreeing on that. Think about this, Brian. Before the conflict in Iran began, we were priced for 50 basis points of rate cuts.

Now we are priced for 50 basis points of rate hikes by the early part of next year. So we've gone 100 basis points, 100 basis points in rate expectations. We've moved higher in the last four months and a week or so. And you know what the market has done since then? It's gone up about 9%. So the market is basically saying, I don't really care much about what this Fed is doing. I don't care if they're going to hike. It's not that big a deal.

Probably the market also thinks it's a little bit of a political morass, and it's not going to happen. But that's a different story. There are other things going on here that are much more important than the Federal Reserve. You know what? Who am I to disagree with David Zervos, except I'm going to disagree with David Zervos? I think Steve might as well. and this would be my take, David, which is that minutes aside, the fact that nine voting members were thinking about hiking rates goes to an inflation story. And I think the inflation story,

I thought, was an important one to the markets. So let me just pick a bone there with that because I think it's actually outrageous what happened on the committee. And it shows not an inflation problem. It shows a political problem, Brian. We had nobody on the committee in March that saw a rate hike by the end of the year. That's March. We go to June and now nine people see a hike by the end of the year, including one person that moved from no hikes to three hikes. We had five that went to two hikes. We saw an extraordinary move for Kevin's first meeting. And all of that time, the inflation expectations, which are really the backbone of what the Fed's mandate is, anchoring long-run inflation expectations, as measured through the tips market,

collapsed between March and June. In the front end, they were down over 100 basis points. Most of those inflation expectation numbers now sit at their lows of the year. I think this is one of the most disingenuous dot plots I've ever seen. It's almost like a pick-me dot plot. like, I'm important, I'm important, I'm trying to save my importance because Kevin's trying to get rid of the dot plot completely. They're just sort of having their heads dunked below water and they're trying to come up and

try to sort of create relevance. I don't see relevance. I think it's not a story that is going to attach for very long because the oil prices aren't going to give them the ability to attach that story for very long. There were already back to oil prices, even with today's move up a little bit, hardly at all, by the way, really, given what's happened. it's hardly moved since that March period. So I think there's a lot of political turmoil,

and the biggest risk at the Fed is not about inflation or anything related to the economy. It's about rebellion and politics. And I do think we have to worry about that. We have to worry about whether they can create a rebellion on the committee and get a 25. Even if they were able to do that at the July meeting or one of the meetings before the midterms,

we would probably see. the market, yawn. Brian, I want to make an important point here, which is you can take the man out of the Fed, but you can't take the Fed out of the man. My man and friend David Zervo says the Fed doesn't matter, but you can hear how he raises his voice and gets very animated. David cares an awful lot, and he's been watching this for many years. I would just disagree on one thing.

I think some things did change, which is that when you look at what they're saying, David, and I'm not saying they're right about this, but it's. was the inflation that they saw beyond oil prices, when they talk about it affecting other parts that services X housing had remained elevated or declined very little. And there's this gathering issue. And I will say, David, I was one of the few people, I think, that went into the meeting, not surprised when the result was very hawkish, because if you paid attention to what they've been saying in the lead up to the meeting, they have become more hawkish, more

concerned that they're not hitting their target, more concerned that there's another thing that they now have to look through that ultimately could undermine the inflation expectations story, which I would not disagree one bit with you about what's happening in market-based expectations, but some of the survey-based expectations, particularly yesterday the New York Fed, have become concerning. So I think there is reason for them to be concerned. And I think other people who have this other attitude out there that, hey, this is going to dissipate. Sure, roll the dice and play that game if you want, but let's remember one thing, David. They just went through a period where they saw inflation as transitory and they got burned in a very bad way. And I think that colors

their views right now. Let me just say one thing, Steve. And you're a smart guy and you could put a dot plot together as well as anybody. In that intermeeting period between March and June, one committee member went from zero to three. Zero to three. Can you find any justification in what you just said with inflation, the outside of energy, in housing? Was something happened between March and June that could cause you to go from zero rate hikes to three rate hikes by the end of the year? The only thing that really changed is that Kevin Warsh came in, J-Pow went out, the committee's politics are moving in a direction, and there's people who are rebelling against that political move.

That's what I see. It's sad, but it's reality. David, I want to. But there's no economic story there that supports that. We're going to bring up in just a second, but I want to ask you this. Do you think the Fed minutes are less important here, David, or do you think the Fed itself is less important? So, Brian, I, my.

writing at Jeffries and my thought process with having Kevin there is that there is a kind of a sort of narrowing of the Fed. That's largely what I think is happening here and a creation of less forward guidance and less market guidance and by definition almost less relevance. There's not going to be this constant hanging on every word. Did they say some? Did they say many? Did they say only? Did they say? say never. All of this is going to be washed aside, and it's just going to be less of an impact on markets, and markets are going to be left to do things without the Fed pushing them in a significant direction. Hey, Brian. That said, right, I want to quick answer to that.

Yeah, but one thing I'll say is, I also just think, Brian, my opening salvo was to say that I think the technology drivers of our market, the deregulation and pro-business policy drivers of our market are so powerful that it really, doesn't matter that much that Fed rate expectations have changed almost 100 basis points in the last four months. That's the most important thing we've learned this year, that a 100 basis point shift in short-term interest rate expectations was not only didn't derail the economy, the economy and the financial markets kept going and got even stronger, and markets did incredibly well during that period. It just tells you that the underlying strength of this

economy, the resilience of this economy is incredibly strong. Just very quickly, Brian, I think the minutes become more important if the chairman is going to say less at the meeting. Finally, Kevin said he wanted a family fight at the meeting. I think he got one. I think these minutes reflect that. Well, I wonder if we're the family fight. Let's bring in now Rick Santelli as well from Chicago, who's been listening to got David and Steve still there as well. Rick, you've been listening?

What's your take? I have. I have. All I could say is if David was wrong. right here, right now, I'd shake his hand because it is so obvious he's correct. The market is looking right through this because the market understands that they were never, the Fed was never supposed to be the monster of the universe, okay? And that's what happened.

And maybe that started during the credit crisis. Maybe that started with Ben Bernanke and it carried on through Janet Yellen and Chairman Powell. But that was never what the Fed was supposed to be. The Fed was supposed to be a nudging entity, and it was supposed to monitor and make sure nothing really fell off the tracks with regard to banking and rates. But what they've done is they've gone way over their skis in a number of areas. And I think the market right now doesn't consider the Fed unimportant. It just considers what the market's doing more important, and the market doesn't need the Fed to guide it, because ultimately, as David has pointed out, and I pointed out many times, the dot plots really,

weren't anything that you'd want to give your investment advisor as a roadmap for your money. I agree. Listen, I'm not a dot-pop, Fannie. One more thing. One more thing. One more thing. One more thing. On inflation.

On inflation. Transitory may have been their biggest fo'paw. But until Mr. Warsh came in, they certainly didn't seem to be worried about inflation. And you add in the politics of Trump's war. And boom, all of a sudden this inflation's. coming from everywhere. So important. How can you say, Rick, that the market is looking right through this when we have a two-year

at $4.18 right now. Has it moved. Has it moved. It hasn't moved because it knows. Because the market's not a brain. The reason the market's in the two-year is because it was. The Santelli-Philabuster. Here we go.

And now the investors are going the other way. Oh, no. They're not going the other way. They're not going the other way. They're not going the other way, Rick. The market move, Steve. Gentlemen, you think we're at 420 because of the Fed? We're at 420 because things have heated up.

If you're both talking at the same time, the viewer does not get the benefit of your great intellect, both of you. See what I do. I'm not talking. Sometimes I feel like Ann. That's really good. Anne B. Davis as Alice, sometimes when the Brady's would have a fight, Anne would come in and she would be sort of the deciding ninth vote. That's true what I did. So Steve Leaspring, respond.

I'm just saying the market has already priced in a higher funds rate. It's at 420. It's up. The minutes maybe didn't have a whole lot of new information simply reflecting the verbiage of what we knew was the case of a divided Fed. But I have a hard time seeing at these elevated treasury yields, how the market is looking through the overall idea that there's some risk out there and a priced in risk in the future. market. It's priced in in the two. It's priced in the 10. Rick Santelli taught me to watch and believe in what the markets are saying. And these markets are saying the Fed is going to be higher. So David Zir. Now it's my turn, right, Brian? My turn now? Okay. I agree with everything Steve said,

but the market isn't doing that because of the Fed. The market's doing that because investors understand what's going on as well as what Steve thinks the Fed understands. Okay? The market It sees what's going on. It sees that energy prices were elevated. It sees the supply shock. It sees tariffs. It sees everything. And let's not forget.

It sees the equity markets cooking in Greece with historic records multiple times every week. That is an environment for higher rates. It isn't all due to the Fed, which is what Mr. Zervos is saying, that all roads don't lead to the Fed, even though many believe that they do because it gives them a top. to talk about where they're never wrong. David Zervos? I just want to know who's who on the Brady bunch here, Brian. Which characters are we playing?

We got Greg, we got Marshall. I don't know. I think everything was said. I think Rick framed it very well. I think Steve framed the other side very well. I don't think there's much to add. The Fed is priced. The market is priced a hike because there's a risk of rebellion.

Let me ask the final question, then, as well. And I actually don't know who anybody is, but it seemed funny at the time, and I'm a nice guy, David. So if the minutes and the Fed right now aren't that important, to your point, the market reaction has not been great, what is? What is David Zervos watching most closely right now? I think the most pivotal thing for the markets will be the midterm elections. And I think where we are headed in fractured politics is probably the single greatest thing for the rest of the year

that we have to watch. New York is really bad at figuring out how Washington, D.C. works. and we need to spend more time thinking about how Washington, D.C. works. And whether we go, you know, hard left or back, hard right, or whatever the politics are going to be, the markets could move a lot on this, in particular, because this isn't, we're not deciding on, are we going for a Clinton or a Bush. We're talking about, you know, an AOC or a J.D. Vance. These are far more extreme political outcomes as we move forward on the congressional level and on the state level,

and ultimately a few years down the road at the presidential level. These are, like, if we are really talking about a rise of democratic socialism in the United States, our equity markets have a lot of repricing to do. And I think people haven't put that risk into the system. And this, by the way, that's the biggest risk. The fair point, David, and this is why, shout out to the one in the two o'clock Eastern Time shows. We have been in D.C. two weeks ago, and we were in Chicago, well, whatever it was, a week and a half ago, because we're getting out of here, and we're going to see what they're saying in D.C. and Chicago and more,

because he want that point of view, and I completely agree with you on Washington. I felt like that was a good, friendly, family fight. David, Rick, and Steve, Greg, Peter, Bob, I don't know. Thank you guys. Appreciate that. Who's Tiger? Where's the dog? All right, let's...

There's a lot more ahead. We're going to talk about Iran. We're going to talk about oil and more with Lima Croft and Iran expert, Mied Maliki. Plus, Sunruns AI play what the CEO says. A deal really means and also why the most important stock market in the world may not be here in America. We'll tell you where that is. Coming up.

All right, there are lots of headlines around oil, energy, and Iran right now. President Trump saying that, quote, as far as he's concerned, the Iran ceasefire is over. President adding, the U.S. will hit Iran hard again tonight. We shall see. This comes after Iranian forces fired on a couple of Saudi and Qatari commercial ships two days ago, and that re-escalation is popping oil a bit. Oil's up about four and a half percent. That is also impacting some of the oil stocks, Conoco and Chevron, up about 1%.

The good news may be for oil and gasoline prices that if you look out more on the forward oil curve, a little more calm. For example, that's CME contract for November and for December, really sort of just above 72 bucks a barrel. So what is the current status in the Arabian Gulf and Hormuz area? Of course, we've been showing you the marine traffic by Kipler Map since the conflict began. But there's also another one that you need to look at and maybe bookmark. It is from the UK Marine Trade Organization. And it highlights any recent attack or problem with shipping in the

Hormuz, Red Sea, and Arabian Gulf regions. Some of those icons you're seeing on your screen right now are attacks on ships. Others are reported problems, things like fires that may or may not have to do with Iran. But insurance companies and shipping companies, look at that map constantly. And they get updates from this group about the relative safety or lack of in the Hormuz and Red Sea areas. That is a critical, critical map for you.

Joining us out to talk about all of this, RBC Capital Markets, Global Head of Commodity Strategy, Halima Croft, and senior fellow at the Foundation for Defense of Democracies. Mied Maliki previously helped design some of the U.S. Treasury sanctions against Iran.

Great to have you both on. Halima, this took a turn for the worst, obviously two days ago. US responded. Trump threatening more responses. In your mind, where do we stand right now? I mean, Brian, the big question is, is this now just a weekly cycle of violence? It was usually happening on the weekend after market closed. Now it's midweek.

Is this going to lead to another sort of tenuous truce, or do we have a more serious escalation? Your point, though, about the ongoing problems. terms of attacks on tankers, we continue to see that deterring Western and Japanese shipping companies to make any two-way transits through the Strait of Hormuz. So while we have seen an increased post-MOU, we are nowhere close to normalization. I think this is only going to increase the reticence of those shipping companies about going back through the Strait of Hormuz once they exit. Yeah. And it's, Miat, listen, it's very easy to get ships to go out of the straight of Hormuz. A little more difficult to get them to go in. And you tweeted out a couple of

hours ago that the Saudis and the Qataris have been maybe the nicest, for lack of a better term, to Iran. These attacks run their ships. Should we read into that? Or do you think it was just some rogue Iranian general with an RPG who was shooting at anything? You know, I wouldn't say these are rogue. I think they're very good at coordinating with each other at least within the RGC, I think the way that I would look at it is, you know, I had this experience watching these kind of negotiations with Iranians, with the Iranian regime. They don't really negotiate to resolve issues or problems. They negotiate to manage pressure.

And they never know when to stop asking for more. Or they never stop at the right moment to try to create more leverage for themselves. During the Biden administration, they were very close to get a very good deal from President Biden. And they walked away from the table thinking that they can get more. In this case, you know, Qatari's are the ones really trying to cut these negotiations, they're trying to cut deal, yet they're being targeted. And, you know, I've seen that by the Iranian regime. One part of the regime would do things like this. The other part called diplomats, the so-called diplomats, the regime diplomats, they would try to turn that into a leverage and put more

pressure on the Qataris and others to get a better deal. So it's really just a playbook. that they've been deploying under every U.S. administration, I think with the Trump administration, it hasn't been playing well for them. You know, Halim, respectfully to the White House, I don't know if revoking the sanctions waiver matters because Iran was selling a lot of oil to China through other ships and turning off the transponders. It seemed like more of a political move as well. But you know better than I do that many of these sovereign nations, maybe all of them, inside the Gulf, they are not going to pay Iran atoll, period, hard stop.

Well, we've heard that, Brian, as you've said, from a number of officials in the Gulf, that they are not going to pay the Hormuz toll-booth fee to access what they say should be a shipping lane open to everyone. So I think that is part of this escalatory cycle, is Iran trying to force ships out of the Omani channel into the Iranian channel. And I think the real thing to watch for our next, Brian, is does the U.S. reimpose the blockade? Because that would essentially remove one of the material benefits Iran has received from this MOU. So I think it's going to be really important to see what happens with that blockade.

What do you think, me out, the U.S. response from here will be. The president threatening more action. We'll see. You know, I couldn't agree more. I think the blockade, the lifting of the blockade was probably, I mean, I would say definitely was the most important part of the deal that Iran received. I mean, they were unable to import some very essential goods that they need, let alone the oil that they couldn't get out.

But it's also another element. There's a paragraph 9 of the MOU memorandum of understanding, which I call the memorandum of misunderstanding, because it's unclear really every party to this MOU walked away with. It really said, you know, what aspect of it is that there would be. be no new sanctions. That is what I'm going to be being on the lookout for. If you see in the next couple of days, U.S. Treasury Department rolling out new round of sanctions, that would be a signal to the market that U.S. government is not just walking away from the MOU, but it's also enforcing sanctions that would have real effect on the banking side, not on the oil necessarily, as you

said, the Chinese who are buying Iranian oil. They're probably going to continue to buy, probably be less because the sanctions risk are higher. But those front companies, those shadow banking type networks that helping Iran repatriate some of the funds, they're going to be operating in a higher sanctions risk environment. So that might actually turn into more pressure on the region. We'll watch that and we'll let you guys go. But I also wonder if China will just keep buying maybe at a discount. Maybe it could even bring prices down, not up, because they got to sell it on the cheap, on the secret. Halima Kroft, Myanmar-Lakey, thank you both very, very much. All right, folks, just a quick programming note before you go.

We got a big one for you tomorrow. Baker-Hugh CEO Lorenzo Seminelli will join us exclusively right here at 2 p.m. Eastern Time. They made a deal today. We'll talk about that and more with the always outspoken, Lorenzo Seminelli. All right, coming up here on Power Lunch today, we'll do a little soul searching. Why South Korea's stock market may be the most important stock market in the world to watch right now. That's next. All right, South Korea's stock market, once the hottest in the world has gone cold.

It fell another 5% today, meaning it's on track for its third straight negative week. And here's maybe kind of a mini RBI. Three down weeks in a row for the Cosby has not happened in more than a year. And some of you don't think the Cosby is going to get back on track. At a poll that we posted on X, only 10% of you said the Cosby will be the best performing index for the rest of the year. If you're on the radio, by the way, 41%. The winner was NASDAQ 100. Let's talk about it all with Matt Maly.

He is chief market strategist at Miller Tayback. You know, Matt, I don't want to date myself, but I remember 99 to 2001. I would look at the Kaspi every day before I'd look at the U.S. tech stocks, because that kind of was the leading indicator. It has been for the last two years as well. Is it still? Yeah, Brian, I definitely think it is. I mean, back in the 99, 2000, you know, South Korea was a major expert.

in general, but also a major exporter of technology inputs. Well, today it's even more so. I mean, it's 68% of the memory chips come from South Korea, 68% around the world. So this is very, very important. And we'd also note that back in 2000, the Kaspi Index topped out about two months in front of the U.S. market. And when it rolled over, it was definitely a yellow warning flag for the market. So the fact that it's dropped 20% this time around is a bit of a concern. Yeah, your notes, I think, are must reads on the street.

Matt, so what's the first thing you look at when you wake up? Is it the Cosby? Absolutely. Because the tech stocks right now are the most important group in the world right now, in the marketplace. We know we're focusing a little bit more on geopolitical issues this week. But, you know, the chip stocks are what have led the market for decades, the last three decades, just the last couple of years under the AI phenomenon. So if you want to know where the market's going, you've got to be following this group. Yeah, and you've got these huge, you know, Samsung numbers

are coming out, S.K. Hynix, the IPO. These are not companies that are household names to everybody from a stock perspective, obviously the products they are for our audience. Why do they matter so much? Why is the Kaspi such a leader when it's market cap? Let's be honest. I mean, is big, but it's not that big. Well, a couple of different reasons, but the main one, of course, is that the investors in South Korea are very, very aggressive. Use a lot of leverage, and they invest in the U.S. in a major way. The survey reports that the 35% of the leveraged DTFs in the U.S. every day are traded

by South Korean investors. So if they start to get margin calls or crack in their market, they may have to sell U.S. stocks. And, of course, again, it's a good leading end of course. for the global economy, especially for China as well. So it's something that people have been looking at for decades, as you mentioned. I think it's important to continue to do so. Yep.

And S.K. Heinex, by the way, we'll start to trade on a win-issued basis on Friday. The full share is on Tuesday. But as a Friday, we might get just two days for now a good indication of how investors feel about this. Matt, Miller-Tayback, Chief Market Strategist, Must-Reid. Matt, thank you very much. Thank you. All right.

All right, coming up, how you, all of you out there, can help power data centers and maybe get paid to do it. Talk about it with Sun Run CEO next. I got a big piece of news from Sun Run today. It rolled out what's called Distributed AI compute. It's a concept designed to push solar and battery storage company into the growing world of what they call edge computing. Let's talk about all of this with Mary Powell, CEO of Sunrun. So I guess, Mary, my first question about distributed edge computing is what is distributed edge computing? Great question, Brian.

Great to chat with you. I think it's so cool, actually, that we're talking, like, right after we all celebrated Independence Day, because this is, like, everything we do is about bringing Americans independence. And now it's so cool, because not only are we bringing them independence in terms of how they generate, store, and use their energy, but we're giving them now the opportunity. but we're giving them now the opportunity through this program to actually then participate in the AI buildout by having a device in their home where they can be generating the energy that then supplies the energy needed for AI through distributed compute.

So it's really, really exciting because it's really about flipping the script and instead of having Americans just on the receiving end of whatever is coming at them from a grid perspective and just being asked to pay whatever the grid demands. They are now taking ownership of their energy independence, and now they can use it in this pilot to export back to supply AI demand.

Is this a direct response to some states, including the big one that you're probably in right now of California, which for some weird reason tried to reduce the economic benefit of having solar panels and storage, because the amount of money you can make from selling energy back into the grid has been reduced? I mean, oh, no, Brian, this is absolutely about the next level of innovation. So, you know, we are providing an incredible value proposition for customers today all across the country.

So they can generate and store their own energy. And then, as you know, we also announced a deal with Tesla and Renew Home where we're using that energy. We've been the leader in the nation for years and using that energy to supply it back to the grid to provide the kind of energy capacity demands that the grid needs. So customers are in the driver's seat when they have our systems in their home. And this is just another example of the innovation that we can drive around serving a critical societal need like AI. I mean, the reality is we depend on it. We all depend on it every day. And now this is a way for individual homes to become part of this demand by supplying this energy and getting paid for it. It is a pilot program, though.

So you're going to test it out before rolling it full stop? Oh, yeah, absolutely. So we're really excited we want to announce the pilot. And we're going to get a lot of learnings over the next few months as we do this. But we absolutely, we wouldn't be doing a pilot if we didn't believe that there was real value in edge computing. You know, just like on the energy grid side, Brian, the, you know, we celebrated 250 years as a country. The grid, I think, celebrated 180 years in terms of how old that infrastructure model is. And it really is time for innovation.

And this is such a great example of how Americans can take ownership. They can grab a hold of what they need to do for power in their home and in their vehicles. And now they can even be part of getting paid to export it back as part of the incredible AI demand, which I think we all know. Demand is expected to go at 40%. energy demand, and the AI buildout is expected to be about $5 trillion. So this is just a really incredible innovation for our customers, and we're excited about the pilot. Listen, I'm not saying the grid is old, but I think Ruthford B. Hayes may have had a hand

in laying part of our power lines that still exist. That's a rare Rutherford B. Hayes reference. So when will you decide whether this is worth keeping? How will you measure its success and kind of know, say, we're making enough money, this is something we want to keep full time? Yeah, the economics on it, we already tested the economics before we even got to the pilot. The economics on it are very strong. So we just expect to learn more. We want to make sure we're very customer obsessed. So we want to make sure that anything we do is in a way that our customers understand, embrace,

and enjoy the benefits of. So we'll learn a lot there. And we'll also learn a lot from the partners we're working with on, you know, the marketplace for the edge compute demand and the value that could bring over the next few years. Mary Powell, CEO of Sun Run, distributed edge computing, really fascinating stuff. Great times to live in. Mary, appreciate you coming on. Thank you very much. Always good to see you. Thanks. All right, take care. Let's get out of Seymombote with a CNBC news update. Brian, good afternoon. Here's what we're watching. Former Wisconsin judge Hannah Dugan will avoid

prison after being convicted of felony obstruction for helping a Mexican defendant leave her courtroom as ICE agents waited. A federal judge fined Dugan $5,000 saying her actions were a bad decision, but not enough to warrant prison. Dugan says she acted to protect courtroom safety and plans to appeal. A federal judge ordered that E. Jean Carroll received a $5 million set aside after a jury found President Trump liable for sexual abuse and defamation. Judge Lewis Kaplan ruled the money, plus interest must be paid after the Supreme Court declined to hear the president's appeal of the 2023 civil verdict. He has denied Karel's claims. And New York attorney General Atisha James and dozens of other attorneys general have secured a $45 million settlement from Block, the company

behind cash app and run by CEO Jack Dorsey. They say Block misled users about safety protections and failed to help scam victims. Block must now improve fraud support to offer live customer service and stop misleading marketing. Brian, that is the latest. Back over to you. All right, Cima Modi, thank you very much. All right, coming up, a very cool story of some friends who quit their jobs to start a clothing company, and now they've got some big names and big money involved. What happens when LVMH teams up with more than 200 pro athletes? The answer, a new investment fund that is making its first deal. Dominic Chu joining us now with what I thought. Did I set it up? It's a very cool story.

story. So Brian, this fund is called Champ, which is short for champion athlete managing partner. It's a partnership between LVMH-backed private equity firm L. Catterton and then athlete-focused investment advisory firm Patrickoff Company, alongside over 250 of the world's most recognizable sports personalities, some of whom you are seeing right there on your screen. The fund's very first deal, investment is a $50 million one in sportswear company Roeback. So we have with us, today. Roback co-founder Kevin Hubbard, alongside New York Giants quarterback, Heisman trophy winner, and former number one overall pick in the NFL draft, James Winston. So thank you gentlemen, both for being with us right now. We appreciate the time. Kevin, I'm going to start

with you first. Humble beginnings, three friends at the University of Virginia getting together. What does it mean to now get a $50 million investment for a company that you've turned over the course of a decade into a $150 million revenue operation. Yeah, Dom, first, thank you for having us. You know, when we started the brand, it was just the three of us, myself, Matt and Christina, and we had three shirts, six hundred shirts. We negotiated net 30 days with our manufacturers, and the race was on. We just kept using our profits from each run to keep growing the business and growing the community, the road back community every year. And, We were fortunate enough to be able to grow the business up until this point without raising any outside capital.

But we're really, really excited about this moment and what was just announced this past week, to be able to have partners like James Winston, somebody that's incredibly competitive and has dominated everything they've done, whether it's college sports, Heisman Trophy winner, the New York Giants, and to have that competitive spirit at our back and the brand's back, but to couple it with a person and athletes that also have a fun, loving spirit. It really epitomizes the brand and the ethos of Roebuck, and we couldn't be more excited for this moment and what it means for the brand going forward. You know, James, an interesting point here among these 250 plus athletes who are now investors

in many of these ventures, you are one of them. Many of your colleagues from all over professional sports are there. What exactly brought you to the table with regard to sports investing, especially joining with private equity investors like those at L. Catterton. Well, anytime that you're analyzing investments, you always look at the people. When I met Kevin Matt and Christine, I was so inspired by them by being able to go to their main campus in Charlottesville and see the little wooden truck that they worked out of initially. You know, you hear a lot of athlete stories about, you know, starting from the bull.

bottom and having to go through those dark days to eventually become successful and getting a chance to just see their story and be able to support them in it, it was very impactful for me, especially as having an opportunity to be an athlete investor with people that are such genuine and as hardworking as those three founders. I loved everything about this story until I found out they're all UVA Cavaliers. As a Virginia Tech Hockey, this is, this hurts me. I mean, this is like physical pain. That said, James, listen, you're a co-owner, you're not a paid endorser.

How many companies come to you? You're doing stuff with Grankowski, becoming more of a media guy. Like, how many times are you saying no versus yes? Yeah, it's very intentional. And I think the relationship that I was able to build with the team here, Roeback has just been an ungrown relationship. It doesn't just start off as like, oh, my gosh, I believe. But I can't say this.

When we had dinner, when we sat there and talked and I got to hear their story in their why, right? Everyone has an idea. Not a lot of people are able to apply that knowledge and execute. And since they started out of the back of that wooden truck, you know, they have been executing. So that's the difference for me because I know on the field and off the field, you know, actions will always be louder than words. And Roebuck, they have been showing up and. showing out ever since they became available on the market.

Hey, Kevin, what's been the maybe one or two things that have been the secret to your success? Again, coming out of a wooden trailer selling shirts, you've got now men's and women's clothing, full lines everywhere. How do you grow a business from a startup out of a truck into a $150 million annual revenue run rate? Yeah, Dom, it's an awesome question and something. I can't put it just to myself, Matt and Christine, it's the team. that has kind of rallied around us down in Charlottesville, and we've been able to build out that it's allowed us to get to this point.

But first and foremost is product quality. If you don't have the investment in innovative fabrics, if you don't have the investment in innovative technology that will stand out, we will not release anything unless we believe it is better than or at a minimum equal to the best on the market for that product category. And we recently got into women's that part of our business is scaling fast, than the men's, which we're super, super excited about. We just opened our first brick-and-mortar retail store.

In Virginia, we have plans to open them in Dallas, Texas. Our biggest market is Texas, Houston, Cincinnati, Maryland, etc. And that's why we're so excited about this partnership as well. And to have the expertise of El Catterton, Patrickoff, and these amazing athletes, as we take this next stage and move to this next level, we couldn't be more grateful to the road back community. I know them on the golf course. them all over the golf courses, all over the place.

Anyway, thank you guys so much. James Winston, Kevin Hubbard. They're from Roeback as well. We appreciate it, Brian. What a great story. Well, I think a great color combination for any athletic wear is Chicago, maroon, and burn orange. I think those two colors together unique, very pretty, right?

We'll go with that. Only two colleges in America have them. What's the other one? Susquehanna. All right, we'll be back right after that. CNBC's Top States for Business will be unveiled tomorrow, and we're giving you a chance to guess before the big reveal. Scott Cohn, joining us now live from this year's Top State,

which apparently is in a pond. Scott. How about this? I hope this doesn't give it away, Brian. As you know, because you don't know what the Top State is, there is only a very small circle of people at CNBC that knows where I am. A lot of people, though, all day long are texting me and emailing. I say they're just fishing. So let's give you another diabolical hint. Where is America's top state for business, which we will reveal tomorrow?

Your next top state's diabolical hint is stop and go. Stop and go. 138 metrics and 10 categories of competitiveness. This is the state that emerged triumphant, and we will reveal it tomorrow morning on Squawk Box. And you'll be able to see where your state ranks in our full top state study posted online at Top State's CNBC.com. Brian? Are you fishing for an alligator gar?

Well, if I told you that, then you're fishing. I am, because if you said yes, I would narrow it down to a couple of states somewhere in the lower southeast, I suppose. We do not know. I want to be clear. Scott's right. I have no idea where you are. You could be in Maine. You could be in Alaska.

We'll see if I real anything in here. No, we don't. This is part of the deal. It's like I feel like I should be the one in waiters because I'm fishing. Scott Cohn can't wait to tomorrow. Thank you. Good luck. Happy eating.

Closing bell. Starts right now.