Power Lunch - Major averages rally amid growing optimism around the conflict in the Middle East 5/20/26

Episode Date: May 20, 2026

Stocks jump higher as oil prices and bond yields move lower on reports that the Iran War could soon be resolved. Brian Sullivan & Kelly Evans also react to the latest Federal Reserve minutes and live radar map of the Strait of Hormuz as investors look ahead to Nvidia’s anticipated quarterly earnings report expected out after the markets close. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The markets are ripping as Trump says the Iran war may be nearing an end and the entire investing world waits on invidia tonight. Welcome to Power Lunch, everybody. The next test for tech and the eye trade comes tonight as Nvidia earnings. They're out. They're expected to double. And just how much Nvidia matters to you, even if you are not invested in Invidia. Plus, the future of the Middle East, oil prices are easing after the president's latest comments. But markets are still pricing the risk of a longer, wider conflict.

Haleemakroft joins us with fresh insight from a key golf flair and what it could mean for energy, diplomacy, and the balance of power. All right, we have got a lot to do, but welcome, everybody. Let's get straight now to the markets and your money. All your major averages are ripping higher. The S&B and NASDAQ, they're on pace to snap three-day losing streaks, chips and tech, fueling the rebound. In fact, the S&P 500, small caps, up more than 2%. Now, you know this. there are some growing concerns that the AI-fueled rally may have run a little bit too far, too fast. And none other than Jeff Bezos through some cold water on that notion this morning right here on CNBC. Even if it does turn out to be a bubble, you shouldn't worry about it.

Because the bubble is driving investment, and a lot of the investment is going to turn out to be very healthy. So even if AI is not in a bubble, no one can argue that if, if you're not in a bubble, that few macro headwinds still persist. You've got higher oil prices, higher gas prices, higher interest rates, and rising inflation. They remain real risks. And as always, bespoke investment research laying it out very clearly, highlighting how April marked the 35th consecutive month where inflation came in between 2% and 4%, and that, my friends, actually the second longest streak on inflation since World War II. Joining us now is one of the people behind Bespoke. Paul Hickey is co-founder of Bespoke investment. investment group. That's amazing. Second longest run since World War II impacted inflation. Your take on it.

Yeah, so sticky inflation says Hickey, right? I bring out my rhyming. But so we've had to practice that. No, I just, I mean, it's right off the tip of my tongue there. But we've had rolling inflation over 12 months extended. And historically, when you look at those periods, fascinating, the market has averaged annualized gains of 11% when you have inflation stuck between 2 and 4%. Wow. The key is which way does inflation break out of that range? And overall, once you break out of that range, market returns are inconsistent, but when it breaks out to the upside, forward returns are much weaker than if they break

out to the downside. So as inflation gets to the higher level of that range here, we really want to see it stay in that range and not continue extending from this. Fastly. Stay right. How about this? from hickie and sticky to the ticky-taki of Fed Minutes. Steve Lee Smith is in Washington.

With the very latest, Steve, what do we learn about that meeting? A pretty hawkish set of minutes from that meeting in April, which was Fed Chair Powell's last meeting. The majority of the boards saw rate hikes if inflation continued to run persistently above 2%. And many wanted to remove the easing bias in the statement. Remember, only three dissented, but of all the 19 in the room of which 12, voted, many wanted to remove that easing bias because a vast majority saw an increased risk of inflation taking longer to return to the 2% target. The upside risk to inflation and downside risk to employment, both seen as elevated. The mid-ease conflict met rates could remain at least

on hold for longer than they previously anticipated, and several wanted to lower the funds rate only when disinflation was clearly back on track, or of course there was a weakening of the labor market. Almost all were concerned the Mitty's conflict could last longer than they otherwise expected and energy prices could remain elevated even after the conflict ended. There was concern about continued above target inflation, pushing up wages, and that's one of the Fed's biggest concern. So that concern was inside of that meeting back in April. But there was good news on the labor market. They expected that to remain stable. And GDP was expected to remain stable clear, guys, in this, from these minutes, that the hawkish wing of the committee is larger than the doveish

wing. And the doveish wing, they have some arguments for reducing rates, but really it's the hawks that look like they were controlling the meeting. And we might see that in the June meeting actually express itself more, not in a rate hike, but certainly in a change in tone of the Fed. Steve, thank you. Appreciate it. Let's turn back to Paul Hickey now. And Paul, you mentioned that the market has put up 11% gains during periods when inflation is 2 to 4%. But I wonder how much of that is coming when inflation is kind of falling, right? We've talked about the underpinning when you have inflation receding, the Fed easing, that can be really supportive of strong rallies. And is this one about to pause. So, I mean, I think what you see is you have the inflation

above this, you know, the optimal range, but it's steady. And I think if you have a steady level, even if it's elevated, the market can do well there because the market is nominal. And so when you have inflation rising and steady, you have revenues rising and hence earnings rising. I think the minutes here sound hawkish or whatever, but I mean, is there anything we didn't get from these minutes that wasn't in the press conference after the meeting? So I think the minutes don't really have as much of a weight as they used to in the back. Okay, but I will add this, not to be picky, hicky, that if you look at the CME, Chicago Market Hill Exchange's Fedwatch tool, the bets, the money, whatever you want to call it, is on rate hikes, not rate cuts. And yet I'm looking at a stock market that's like, looking at a S&P, small cap 200, whatever it is, up 2.2% right now. They benefit from rate cuts, and yet we're talking about rate hikes and stocks are up. Make it make sense. Well, so our argument for the last several months, if not a year now, is that you don't necessarily need rate cuts for the market to do well. I mean, rate cuts are usually because

something's going wrong in the economy or the market. So in that respect, be careful what you wish for. rate hikes would be an issue, but I don't think at this point we're going to see rate hikes come into play. While the CME Fedwatch tool may be or the markets may be showing some pricing of a rate hike out over the next year, let's see what happens going forward. The market expectations for rates and what actually happens tend to vary widely. You guys are always so good with all these trend following, putting it in historical perspective. What do you make of the run we've seen in the semiconductor names?

I mean, it's really conflicting because they are so extended. This rally is like anything we've ever seen. And at the same time, we've been calling the semis of the transports of the 21st century for a decade now. And talking about how when they outperform, it's a really good sign for the economy and the market. They've just been outperforming like nothing we've seen. I mean, we're rivaling some of the most extreme overbought levels for the sector we've seen. And so ideally I wouldn't want to chase that sector right here. And if we see, we would rather see some consolidation and sideways trading.

But I think it's an overall good sign that semis are doing well because it's a sign that the digital economy and the AI is going to improve the economic outcome. Well, and the numbers seem to suggest that. Valuations on the S&P 500 are not any higher than they were, correct? They've basically about 21, 22 times. Yes, we've seen, we've seen multiple stay contained. They're still high by historical standards. Yes, but they haven't gone higher because. We haven't reached that bubble type.

Talk about earnings because the earnings have been not only good, but pretty doggone good. 88% I think topping earnings estimates, which is then brought that, even though the market's gone up, multiples have remained fairly constant because those earnings have been so good, correct? Yeah, and so here's the thing. Results have been strong. Results are usually always strong. More stronger than normal, but we're seeing strong guidance. We're seeing about close to three times as many companies raise guidance as lower guidance.

And in an environment where the Middle East War, oil prices at $100 a barrel, you can't really fault companies if they were taking a more cautious tone or not giving guidance. But we're seeing companies, over 11% of companies, have raised guidance. And so that's a really high number historically. And it reminds us of last year's first quarter earning season, And when you had all the uncertainty around tariffs and everyone was saying it's going to be a bloodbath this earning season, not only did companies come out and report better than expected results. Again, they were raising guidance. So companies are looking past the headlines.

We always say that investing based on what's on the front page of the paper is a sure way to lose money and not do well. And the companies are looking past the headlines and looking at their actual businesses. The small caps are outperforming today up 2%, although they've been a difficult story in some ways. We were talking to Osang yesterday from Wells Fargo and he said, you know, people are overlooking the fact that small caps have rallied to large extent

on the strength of semi-names in the space or semi-adjacent names in the space. We always talk about how they're more banks and, you know, energy and rate-sensitive. But he thinks that momentum is going to slow and that actually some of those strong names will get pulled into the Russell 1K and leave the 2Ks kind of underperforming.

I'm just curious if you have a take on the small caps. Well, so the small caps, it's tough because people refer to them as such an economic barometer, But at the same time, there's, you know, the Mag 7 stocks, almost practically all of them are larger individually than the Russell 2000. So it doesn't take much a small rotation out of the S&P 500 and into the, it's like putting a fire hose through a straw. It's going to have a much more pressure in the small cap index when you have that money come in versus the magnitude of the impact coming out of large caps. So how much does what's the magnitude of the impact of Nvidia's earnings tonight? How much does NVIDIA really matter?

So it tends to track the market over time. I think we'll focus a lot of, we'll focus a lot of attention on the results. Historically, the short-term reaction of the stock to earnings has been relatively weak. You know, it's been down five of the last seven earnings reports. The stock tends to always rally. Since ChatsyPT was launched, there's only been one time the stock has gone down between quarterly reports. Wow. So it's always been strong.

the magnitude of the rally coming into this earnings report is actually weak relative to some of the others. And so when you've seen this, you know, when it's been up under 20% between earnings reports, the earnings reaction day performance has tended to be negative two-thirds of the time. Paul Hickey. So we'll see. Sticky. Hickey. Paul really appreciated. But never tricky. He's very direct.

Never tricky. He's very direct. Paul, thanks so much. Thanks for having me. All right, let's get a check now on the bond market because the rise in rate certainly has been really one of or the other huge story in the markets. The 10-year yield trading near the highs at 4.58% right near the highs of the year. It's impacting mortgage, 30-year fixed rate mortgage at its highest level since last July. And in an effort to ease the soaring cost of home ownership, the House and Congress just passed a long-awaited housing affordability bill in the increasing housing supply as well.

as other initiatives. That bill, if you remember the I'm just a bill, pass in the House, then Kelly goes back to the Senate, could go back to the House, and it gets signed by the president, and then the paper gets stuck with the... We should have that graphic, I think, you know, how to make it, but why not? Just put it up every time we're following this. Just run the cartoon. Exactly. Oil prices are getting some relief today is the worst behind them. We'll ask top oil and commodity analyst Helima Croft with WTI breaking under 100 today. That's after the break. All right, welcome back. You can see the markets are up, and we've got some more good news for you.

Oil prices, they're down. They're back below $100 per barrel. President Trump saying the Iran war may be nearing an end. Now, we know that many of you may be skeptical about that, but there is one data point to look at that might surprise you. This is a live marine traffic.com map of the Arabian Gulf, formerly known as the Persian Gulf here. And here's what I want you to focus on, right up here, kind of doing my best Steve Kornacki with the white thing. It looks like ships are moving in the Gulf. Many of the ships here, these red dots and arrows that you see on your screen, they were anchored off the UAE coast right around here just a few days ago. It was a huge cluster for weeks all sitting in anchor. And now you can see they're spreading out, headed toward Kuwait and Iraq and Bahrain and Qatar here.

Those are all on the move. It looks like, we don't know, but it looks like they are going to load oil. And this is not just our imagination. I actually was going back and forth today with a shipping industry source, and they pointed me to an article in the trade industry publication, trade wins today. If you're listening on the radio, here's the headline, quote, Iran relaxes grip over straight of Hormuz as it lets batch of ships through. The Navy, the Iranian Navy said,

It allowed, I don't like that term, but that's what they used, a mixed fleet of 26 vessels to cross, end quote. Here's the question. Is this a potential real breakthrough, or is this another head fake? Joining us now is RBC Capital Markets, Global Head of Commodity Strategy, Halima Croft. You're in D.C. And Halima, earlier today, you spoke with Dr. Sultan al-Jabber, who basically runs Adnock and the UAE's energy strategy. He's arguably one of the most powerful people in the world, in oil and gas. He's in the UAE. What did he tell you? So first of all, we had a wide-ranging conversation with Dr. Sultan.

He's also a minister of industry and advanced technology in the UAE. He came out with the big headline of saying essentially that even if this war ends tomorrow, it will still take four months, Brian, to get back to 80% of pre-war flows through the Strait of Hormuz. And so, again, even if we get some miraculous breakthrough, and you mentioned in the setup that there have been these headlines saying, once again, over soon and an anonymous Pakistani source saying within hours, even if we get to that point, it's still going to take four months. And he really emphasized the need to build more resilient systems going forward. Aside from that, which is pretty, I mean, listen, that's a big comment.

It's going to take months to get back to 80%. And yet the oil market, let's be clear, it's not a $50 a barrel. Okay, so we're a little bit below 100. And we can go back above 100 tomorrow if there's some other conflicting headline. What is your take on what we just showed on that map? I'm not saying everything's fine. I want to be very clear you could have a missile launch tomorrow and things changed. But it does seem right now, based on that map,

ships are moving in ways they have not for weeks? Well, Brian, I think the interesting question is a follow-on is, is this the normalization and consolidation of the Tehran toll booth? Because I am assuming, and you can correct me if I'm wrong, those ships are moving through the Iran channel, and they are likely paying a fee or at least have negotiated the use of that channel with the Iranian Revolutionary Guard Navy. That is the end state the Iranians are seeking at the end of this war, that they are essentially deciding every ship that traverses that critical waterway. The really important question,

though, as I'm sitting in Washington, is at the end state that President Trump is going to agree to. Certainly a number of Gulf countries have said that that is not the way they want this war to end. They are seeking full normalization of flows to the Strait of Pormuz. So yes, you're talking about, you know, 20-odd ships moving through. it used to be 100 on any given day. The question is, is this sort of near-term ceiling? Again, is this going to be the shape of the future that every ship has to get approval from Iran

to move through that waterway? And I don't think we'll normalize, Brian, at the 100 ship level, if that is the case. Fair enough, and they're paying that toll, which raises the cost for everybody. But, Halima, I've got to imagine, and I don't know where we might be able to see your interview with Dr. Sultan and the Atlantic Council,

or maybe we can't watch it, we'll just rely on what you tell us. Did he talk about this new pipeline? Because the UAE has a pipeline already going across their peninsula. They're building a second one. And if I know them and if I know that region, they're going to get this darn thing finished pretty quickly. And that's just going to maybe permanently or semi-permanally reduce the influence and the importance of the straight and more importantly of Iran.

I mean, Brian, this is such a great question. question, you brought this up on your social media account yesterday. Are we basically at peak Hormuz? And Dr. Sulton really did emphasize how fast, UAE, their shovels are in the ground, are moving with this second Hormuz bypass pipeline. They are 50% of the way there in terms of completion with expectation that that second Hormuz bypass pipeline will be operational by 2027. So I think this is the future in the region. Basically, we saw it with the Saudis, with the East-West pipeline. Everyone's going to be trying to replicate that type of infrastructure project. How can you avoid Strait of Hormuz going forward? But again, there's no silver

billet for the summer in terms of bypass routes, and we are heading into peak demand season. And so every day, Brian, we don't have that straight fully open. There may be more ships moving through. but it's nothing close to the levels that we saw in February. That's fascinating. This topic is getting so many different. People aren't quite sure what to make of it. Again, is it all clear? Is it the whole thing going to shift?

Is it far from business as usual? So Halima, appreciate you weighing in on that. Thanks. Helima Cross joining us. Before we go, an energy-related market flash, airline and cruise stocks rising for lower oil prices take Carnival in United Airlines. They're leading the S&P right now with gains of nearly 10%, Delta as well. And stocks are on pace for nice gains broadly today after that Monday and Tuesday sell-off.

But is it still time to de-risk your portfolio? Our Market Navigator guest will tell you after the break. And welcome back to Power Lunch. I'm Dominic here with your Market Navigator today. Just a couple more hours till arguably the most important earnings report of the season. So should traders use this InVity report and its influence on the broader AI and chip trade as a reason to reassess their overall risk profiles. Joining us now for this conversation is Todd's own chief ETF strategist over strategic securities.

And here's to give, he's here to give us his take on what exactly it means that we are seeing the kind of market action we are with certain stocks driving the action and whether or not this is a sign to get more cautious. Yep. Hey, Dom, great to speak with you. And the wonderful part about ETF is that you can get access to basically any strategies out there. Given the move in the semis, it's now pushed the performance of high, relative low beta into. historically extreme. We're seeing leveraged semiconductor activity explode. And so we think that this is a great time to de-risk portfolios to hedge. You want to go the alternatives route, manage futures, and even consider stuff like low-val equity, which has not been on the playing field in quite some time.

Great time to diversify just in case things start to get a little bit bumper. We've seen volatility really start to pick up in that space. All right. So if we're talking about that, you talked about the ETFs that you could use, the types of investments that you have, are there any ways that you are specifically looking to kind of hedge that high beta type trade, that high vol trade. Are there ones in particular that you were focused on those funds? Yeah, I want to look at return stacked bonds and managed futures RSD, because you're going to get no correlation there relative to the broader market. I want to look at natural resource funds like CSNR from Cohen to Steers because you're going

to have anti-Beta. And frankly, I want to look at Chatecas's macro-thematic opportunities, ETFSAMT, thematically diversified, barely holds any of the top 10 stocks that are out there. This is all about taking a risk away from the semis, which are 18% of the $500,000 of the rare groups to get that high in terms of weight. Look at other stuff that's out there. There's plenty of opportunities in this market. It just has to be non-tech oriented, lower correlated to the broader benchmarks that are out there. And Todd, one final point before we let you go. Are there any things that you would be looking at metric-wise, performance-wise, in the broader markets that would actually get you to feel more

constructive that that momentum AI-driven trade still has more upside ahead. It's not even that. It's more about what else is participating. Look at the Equalate S&P 500. If that can start to make a new high here, that's reflective of participation's okay. Thus far, it's been a little bit of divergence. That can be problematic as time goes on. All right. Todd Sone, it's strategic. Thank you very much for how to hedge that high beta trade. Brian, I'll send things back over to you. All right, Dominic Chu, thank you very much. Folks, the SpaceX IPO is getting closer and closer. We reported earlier. We reported earlier,

SpaceX has picked Goldman Sachs to lead the IPO. We'll speak with a SpaceX investor about that after the break. As America celebrates its 250th anniversary, CNBC spotlights the companies that rose with the nation and continue to shape its future. My name is Juan Andrade. I'm the president and chief executive officer of USAA. USA's story is part of American history. And it's part of the American history. And it's part of that innovation and risk-taking culture, we have been around for 104 years. We were started by 25 soldiers who came together because nobody would insure them. All the insurance companies at the time thought they were too high risk because of their profession, so they came together, not for business, but for a purpose to protect each other. When I look at the company now 104 years

later, that same mission and that same focus remains today. We represent over 14 million members, And we have 38,000 colleagues that work here in the United States, but also in continental Europe and the UK, where we all support our active duty members who happen to be deployed there. I do think that our history, our success is part of the American success story. I think that the country has been shaped by that culture of entrepreneurship that you see. This is the reason why people had the courage to go over the Rocky Mountains. This country gives you a lot more opportunity.

Access to capital, you don't get access to capital. You don't get access to capital in places like China, Russia, as easily as you do in the U.S. All these startups that we have out there, well, that's venture capital, right? These are Americans taking risk on an idea. And I think that is what makes our country so special. The free market system, our ability to adapt, our ability to overcome, our ability to be on the leading edge of new technologies, new manufacturing techniques. This is what's made America great over the last 250 years. The countdown is on to the earnings report that all of Wall Street will be watching.

NVIDIA's first quarter results are due after the bell. Shares are higher into the print, but a lot is riding on what they say. With a market cap over $5 trillion, Nvidia is roughly 8% of the S&P 500, and over 13% of the NASDAG 100. Let's bring in an NVIDIA shareholder. Dryden Pence is CIO of PINCE Capital Management. NVIDIA is one of your top five holdings. Welcome, it's good to see you.

It's good to see you. Thank you. So we've heard some concerns raised about the sustainability of their gross margins at 75% about their market share, and the stock has been a little less impressive after results in recent quarters. So does any of that bother you? No. And the reason why is if you look through the rest of this year and into next year, the order flow, you've got, you know, Microsoft, Amazon, meta, all, I mean, it's like they're all buying tremendous amounts of invidia. And in 27, you're estimated $922 billion of expenditures. That's all. That's all.

almost the size of the Department of Defense budget. And when you look at something that big, Nvidia, they're the rails of the Transcontinental Railroad of AI. They're absolutely essential. And we think it's going to be several years before anybody breaks that through. All right. So, InVIDIA's results today, I mean, at what point does this company, do you have to do more work on it? In other words, if we just keep hearing from the biggest technology names that their CAPEX is going to continue, you can kind of, I think, it sounds like you're saying, kind of put it away and not worry about it. But do you have to then look each quarter to hear if meta or Microsoft or any of them are pulling back on those plans? Or do you think in videos that buy and hold it for the very long run?

I think when you define long run, but I think so. And the reason why is this is completely transformational. And it's going to go on for a very long period of time. And we're just in the, we're spending 2% of our GDP right now on building out AI. From 1850 to 1859, we spent 2% of our GDP building out the transcom. on the railroad. But people loved railroads. There is a big push.

There is a big push against data centers, against AI. AI speakers at colleges are getting booed. People are afraid it's going to steal their jobs. Do you worry not about Nvidia Dryden, but just about the fact that maybe AI and data centers, they get knocked down a peg because a lot of the population is afraid of it. Well, they're afraid of what they don't see and they're afraid of like, oh, is it going to take my job? What it's going to do is actually open up tremendous amount of jobs that we never even thought about before. It's going to increase labor productivity to a point that we're going to be able to pay people more, have better careers and all of those kind of things.

So I think that in any time you've had this, I mean, people were upset if they were shoeing horses when the Model T came out, you know, and yet their jobs changed and their careers changed. So human beings are the most adaptive species on the planet. We'll be able to get through this. they'll be able to find new jobs doing something. Well, I think also if AI kills all the jobs and there's no reason for AI to exist and the economy just shuts down and we just pull the plug on the computer. It's purely labor productivity. I want to pivot to SpaceX.

Sure. Because we have reported that SpaceX expected to file an IPO, open AI as well. You're an early SpaceX investor. How optimistic are you? What are your expectations for what could be, I think, the biggest, IPO of all time. I'm so excited about SpaceX, not necessarily because of its IPO, not necessarily because of pricing, not because of anything like that.

Those help. It helps. It helps. It helps. Absolutely. But it is as transformational to industrial development as AI is. When you think about if Nvidia is the tracks of Transcontinental Railroad for AI, SpaceX is the transcontinental railroad to the stratosphere. When you, we don't even know what we can do yet with the fact when you lowered the cost, it was in 2010, it was $20,000 per kilogram, which is about two of these bottles of water.

Now it's $2,000 per kilogram to hit orbit. By 2028, it's going to be roughly maybe $20 per kilogram to hit orbit. You're going to be able to take data centers, which people don't necessarily like, and launch them into space. It solves the power problem, solves a cooling problem, solves the environmental problem. problem. You're going to be able to have constellations of much more powerful communications globally. And countries who are developing nations are going to be able to skip entire periods of infrastructure. So it's going to integrate with the AT&T and Verizon. But we're all going to be much better connected. We asked our audience today, which company, another closely watch company is expected to file for its IPO as soon as Friday. Maybe we get that debut in September, and that, of course, is Open AI. So we asked. asked people today, which IPO would you rather buy, SpaceX or Open AI? So forget that you're

an early investor. If you had to just buy it with the rest of the public, on IPO date, which one would you go with? SpaceX. And the reason why is Open AI already has competitors. They already, you can, technology, terrestrial technology, you can, your choke point is not as, as aggressive. It's not as firm as getting into orbit. So Open AI already has Anthropic. It has all sorts of other competitors trying to catch up to it, much easier for their dominance to be weakened than it is SpaceX, which is miles ahead of everybody else on launching things into orbit. Well, Jeff Bezos, we talked to him this morning. Andrew did down in Florida. He's a competitor. He is a competitor, but I think if you think of the total volume of what, I mean, SpaceX is already

launching multiple Falcon 9s. They're, you know, they're kind of well over. And relanding them in some cases. Yes. That to me is the most amazing thing. It's not just that they're launching. it is that they're landing it. You can catch the darn thing. Totally agree. It comes back to Earth. Totally agree. And I'm going to get to go watch a launch, I think, in June, and I'll send you a picture. But the fact that these things go

on their abledication and reuse them is pretty, pretty amazing. Pretty cool. Pretty cool. Drieden, great to have you here today. Thanks so much. I love it. There we go. Best dressed man. If you're on the radio, he's got a picture of a rocket, SpaceX rocket,

sewn into the inside, well, it is the interior lining. I have your suit coat. It's amazing. Thank you. By the way, NVIDIA CEO Jensen Wong will be on Squawk on the Street tomorrow morning. First on CNBC interview at 10 a.m. Eastern. Always look forward to hearing from him and you won't want to miss it. Let's get over to Mackenzie Seagalos now for the CNBC News Update, McKenzie. President Trump today demanded that the nonpartisan Senate parliamentarian be fired just days after. She ruled that Republicans couldn't include funding for the White House ballroom in an

immigration enforcement bill. Senate Majority Leader John Thune responded that doing so would create even more issues over votes on the Hill. Elizabeth McDonough has served in the role since 2012 and is the first woman to hold the position. The Sandy Fire in Seamy Valley, California that broke out on Monday has grown to nearly 1,700 acres and is 15% contained as of this morning. More than 17,000 people were under evacuation yesterday and at least one home has been destroyed. Schools in the area remain closed today and an emergency shelter is open for overnight stay. And finally, a proposed class action lawsuit has been filed against Disney, alleging that the company doesn't adequately disclose its use of facial recognition technology at Disneyland

in California and that the company isn't transparent about how that collected data is used. According to the Disney website, the technology is optional and meant to help with re-entry to the park and that the data is deleted within 30 days. Brian? back you. All right, McKenzie. Thank you very much. Regime change in Venezuela. Possible regime change in Iran. Could Cuba be next? It could. I'll tell you why and what happened today. Next. All right. The U.S. has indicted former Cuban president Raul Castro. The charges stem from his alleged role in ordering the 1996 shootdown of two civilian aircraft. Now, Cuba is dealing with

the collapse of its economy. President Trump is called Cuba, a threat to national security. But is it? Let's bring on Michelle Crusher Cabrero, the CEO of MCC Global Enterprises, CNBC contributor as well as somebody who knows the country very, very well. I'll be direct, Michelle. I think there's a chance that Marco Rubio, who is a Cuban-American, would push for and maybe get regime change in Cuba? Oh, he's made very clear that he's pushing for. When he's been asked to, when he's testifying in front of Congress, he said, yes, they absolutely welcome. regime changed. That's for sure. And that was, you know, Todd Blanche, the acting attorney general,

was down in Florida, in Miami to announce these charges. The audience there was extremely excited and very happy about Raul Castro being indicted. And many of the reporters asked over and over again, okay, so you've indicted him. Now, are you going to arrest him? What happens next? And he responded saying, listen, we indict people who live outside the country all the time. And we have many, many ways of getting them here. And to some of the questions, he said, listen, the prosecutor would bring the charges. Those questions you have to leave up to either the Pentagon or the State Department. But certainly, this is definitely a signal to the Cuban government that you saw what happened to Nicholas Maduro in Venezuela, right? We arrested him on a criminal charge. That's what this is about

a signal as well. Yeah, but you know, you've been to Iran. So here's a thing. In Iran, I think there was a thought that maybe if we can get some of these Ayatollahs, these hardcore religious leaders that the people might rise up. The problem is, Michelle, they don't have a way to rise up. They don't have weapons. They don't have guns. They can't fight back against the very well-armed and aggressive Iranian-Republican Guard. I wonder if it's the same way in Cuba.

No matter what the people want, do they have the ability? Do they have the means, the methods to take back their own country from a regime that still has them driving around in 1955 Studebakers? Yeah, so the situations are quite different for better or for worse, Cuba doesn't have any oil. And so as a result, Iran always had money to have very advanced weapons to pursue a nuclear program. Cuba has no such thing. Cuba, if you look at the videos of their military, it's from the 70s. And the people, yes, you're right. A lot of them don't have the ability to rise up because what the Cuban government has done is basically like with letting air out of the tire, they've let most of the young people leave. hundreds of thousands of them have left. It's a very elderly population, and they would struggle to

rise up. So the U.S. government is hoping to not do anything militarily. They would like to actually see a more natural transition. I was there in March and April, Brian, for family reasons, personal reasons, I'm Cuban-American. And the Cuban people there, not knowing anything about me, just knowing that I was an American, said to me, when is the change coming? Please tell Trump to hurry up. They don't use words like invasion. They use words like being saved, being rescued. They saw what happened in Venezuela and they very much wanted to happen there. Michelle, real quickly, when do you think that changed my home? Quando El Cambio. Well, you know, I don't think Marco Rubio can go home again to Florida once his term is up,

unless this has been done. He'll have to go into exile in Massachusetts. So sometime under Marco Rubio's watch, this is going to happen. Oh, I see you have the voting, the Calci results there. Interesting. Yeah, what do we call it plurality, think before September 1. So people are looking for action really imminently here in the coming months. Michelle, thanks for now. We really appreciate it. A pleasure.

Michelle Caruso-Cabrera from MCC Global Enterprises. It's been nearly impossible to know how family offices are moving their trillions of dollars. Until now, Robert Frank joins us next with a look at what the world's wealthiest are actually doing with their money. Welcome back in News. The CNBC partnership is pulling back the curtain on family offices. It's been notoriously difficult to track their value because it's not required for family offices to disclose their investments, at least until now. Robert Frank has details on CNBC's new family office portfolio tracker, Robert.

Yeah, so Kelly, family offices are the biggest investors that no one really understands. They have $5 trillion in assets expected to grow to $9 trillion by 2030. We have no idea where they're putting their money. some guesses from surveys until now. So we teamed up with Atapar. They're a software company. What they do is put all the family office investments on one screen. This is the holy grail for family offices because they have private equity. They have hundreds of LLCs. How can you put it all on one screen so they can see everything? Atapar actually solved that problem. A lot of ex-Palentier guys moved over to this company. And so now they have visibility into hundreds of family office

portfolios with over one and a half trillion dollars of investment. So right there, for the first time, we're able to tell people where the money for the richest investors in the world is actually going. Two big surprises here. One, we think stocks are for little people. Stocks are for the rich. It's the one category publicly traded equities that they're actually adding in recent years. And the biggest one, too, 33% there. By far the biggest category. Now, the other thing is that private equity, which we hear a lot about is only 6%. And private credit, the big selling point for private credit was, well, the rich have it. It's good enough for you.

Well, the allocation to private credit among family offices was less than 1%. So not much private credit among family offices. And so, you know, you see on the whole alternatives to everything outside of publicly traded stocks and publicly traded bonds is about 48%. So that's a lot. But you break that down, it's hedge funds, private credit, private capital, it's real estate. It's all these categories. And one of the biggest categories is direct investments in private companies.

Brian, you know, rich people, most of their money is in private companies. Often because they created one. They created them or they get access from. Well, that's how you get rich. You start a company. You build a company. You probably sell the company. Then you're rich.

Right. Jeff Bezos said that this morning with Andrew. I mean, it's not hard. Now, sometimes grandpa started to do. Your burgers have to taste good, he said. Chicken. He said chicken. Chicken has.

Sometimes grandpa started the company and you get the benefit of grandpa's hard work. That's rare. But, you know, hey, we can dream. My grandfather had a Gulf gas station in Stephen City, Virginia. But that aside, I was a little surprised at 5.8% private equity. It's very low. Very low. And I thought it would be much higher as well.

And the other interesting thing was cash. They have twice as much cash. They have even more cash than bonds. You think about it. 60, 40 portfolio. His bonds. At least give you something. Yeah.

And they have 8% in fixed income, 10% in cash. Now, the cash has been coming down. What that tells me and what I've talked about from family offices, they want dry powder for if and when there is a crisis. They are the ultimate investors that like to do the opposite of what everyone else is doing because they're very long term. So that cash holding to me was quite high as well. But this is so revolutionary to actually have real portfolio data. We're going to do this every quarter. Even better, we're going to be able to compare it to last year, last

quarter and five years ago. So we'll see the long term trends and the short term trends. And this is a lot of money moving around. It's fascinating. Robert, great stuff. As always, folks. If you want more of this type of content and more, you just want more Robert Frank. could scan that, and who doesn't? Scan that QR code right there for more on Robert Frank's Inside Well. All right, coming up, the results of our power poll. It's time. I know you've been waiting. Let's reveal the results of today's power poll, and we asked,

which IPO would you rather buy, SpaceX or OpenAI? Most of you overwhelmingly, 86% said SpaceX. You agree with Dryden & Pence, our guest earlier. Just 14% chose OpenAI. One important caveat, though, this poll was posted on. Brian, which of course is owned by Musk. So a little bit of a bias there. But is it that much of a bias?

86%. I don't think so. Big vote of confidence. All right, time now for an RBI as well. And this one is about a driver being underwater on his car. Literally, police in Texas arrested a man for Kelly intentionally driving his cyber truck into a lake. There's an image of the moment. Police said the man was trying to test out something called a Wade Moore feature, which raised the car suspension and pressurized the battery pack.

Apparently, Musk made some comments years ago that the car might be able to get through water or something like this. But I don't think he meant become a boat. Why was the guy arrested for doing this? Is it against the law? It's probably an environmental thing. I don't know. So he drives his car into a lake. He's lucky to have his life when he gets arrested?

Yeah, that's a good question. I actually don't know the answer to that. I assume it's some sort of environmental thing or maybe he's trespassing. True, true. I don't know. But it won't float. Don't do that. No, please.

Please watch us again. Thanks for watching. Power Lunch, everybody. Closing bell starts right now.