Power Lunch - Major Averages Retreat from Record Highs, But Still Head for Winning Month 8/29/25

Episode Date: August 29, 2025

Stocks fell on Friday as new inflation data showed rising prices are still a risk heading into September. The S&P 500 index fell from its recent record levels but is still on pace for its 4th winning month in a row. We’ll break down what’s moving the markets heading into the holiday-extended weekend.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Stocks ending the week with a whimper as the markets head for a long holiday weekend. Welcome to Power Lunch, everybody. I'm Brian Sullivan. Kelly, still off. Happy Friday, but not so much for stocks. Markets down across the board are now heading for a very slight losing week, although we'd have an hour left in trading or two, rather, September, just around the corner. And that may not bode well for stocks.

Let's make you a little bit smarter for some barbecue or cocktail party this weekend. Historically, we are entering the weakest. month of the year. Our crack data team working for hours, crunching the numbers, and they found that the S&P 500, well, guess what, tends to fall in September. September, in fact, historically the weakest month of the year. Look at that. That's that red line going down there, going all the way back to 1928. September also really the beginning of the storm season. And with data center straining power grids, Is it time to take matters into your own hands? The CEO of Genarakis here with what you can do, protect yourself from any loss of power.

All right, welcome, everybody. Thanks for joining us on a Friday, despite some small declines today. Well, not as small as much. You can see the NASDAQ is down actually now over 1%. It's been a pretty good run for the overall markets. The S&P 500, even with today, is up four months in a row. But as we just showed you, history is kind of against us. And your first guest today says we are entering a transition point in the economy.

So how should you be thinking about the back half of the year? Let's find out and welcome in Alex Saunders. He is head of quantitative macro research at City, schlepping in on a Friday, Alex. And we appreciate it. Thank you. Thank you. What does that mean? A transition period for the economy.

Yeah. And I think markets have been trading between these two, these two regimes, if I can call it that. One is cyclical fears. As you mentioned, we have this technical backdrop in September. We also have labour markets that our econ team would call fragile. That is an environment that is particularly bad for equities and much better for fixed income. On the other side of that, we have AI, we have a potential for our productivity-induced growth period, very positive for equities, and that's what the market's been trading for the next four months. So it's going to be key, particularly, I think, as we go into next week, and we see the

labor market data, that those cyclical fears are not reignited. So who would win in that fight? So the positive side of the economy, the concerned side of the economy, who wins, and what does that mean for equities going forward? Yeah. So the winners, are the winners that we've seen in the last few months. So that is your tech sector. That's communication services. Those are your winners. On the other side, the winners would be fixed income markets. We would see a Fed that would need to cut much more aggressively. I think equity markets, those winners then become the losers because that's in the price to a certain extent. So you would see that leadership flip from the cyclical tech-related names into more defensive sectors.

Like what would be a defensive sector, Alex? Utilities, for example, would be one of the sectors that we think could outperform in that if we do get that cyclical environment. Or that would be probably our top pick on the defensive side. When will you know? Like what we've, you know, listen, this is stock market. We get data points almost every day. You had the PCE today, whatever. When do you have like a real clear vision?

Or maybe you and your team have one right now? I would say that in terms of the transition, we're still dealing with tariff announcements and how those tariffs are going to impact the data. And to get a clear read on that is going to take much longer. That we won't see until much later, probably in October, November of this year. If we don't see any pickup in inflation,

if growth still looks strong at that stage, given that those September technicals you had mentioned are out of the way, given that the technicals actually flip and potentially you have a holiday rally, we think that is a very, very good set up for equity. So to a certain extent, we have to navigate this data that we're going to see in September, plus the weak technical backdrop. And then going forward into the end of the year, potentially there's a setup that could be very equity. I like a lot of our viewers and listeners are trying to fly, I say Trump.

because Newark's had more problems, trying to fly this weekend. It sounds like we're kind of on one of those flights. You know them, Alex, where you're taking off and the captain says, listen, just sit down. It's going to be bumpy. But once we get upstairs, we can kind of, you know, continue our service and everybody can take off the seatbelt line. Sounds like September is going to be, could be bumpy.

Could be that assent where we figure out what's going on. But if we clear through that, if we get tame inflation data, if we don't get some crazy tariff headline, Sounds like you and your team are saying, we might get a market run. Yeah, that's exactly right. And for now, we would say that stay the course. Keep hold of equities. We remain overweight equities, neutral on fixed income.

If you do want a hedge, if you do want the seatbelt for that turbulent period potential, then credit is the place to be. What does that mean? Credit. I'm talking about corporate bonds or it can be CDX. Junk bonds or like high quality corporate bonds? The higher quality corporate bonds will move if we get sick. We think we'll move. That spreads are already tight there.

So that is the potential good hedge. The other aspect to mention for corporate credit is it's not as exposed to the AI theme. So it doesn't benefit as much if we do get a good growth environment. So you're not going to make a bunch of money on that is what you're saying. Exactly. But you're not going to lose money. You're not going to lose money. So it's preservation of capital rather than return on capital.

That's exactly right, Brian. So what then would be the worst situation? Would it be like an April, some sort of big tariff surprise? Like, because the markets, I don't need to tell you, you probably didn't sleep for two weeks, right? Markets got obliterated in early April because we got some bigger than expected tariff announcement. Yep. So, and we saw that in our data and in our models, right? And that really raised stagflationary fears.

So it's in, particularly in the U.S. So it's lower growth, higher prices for consumers, potentially layoffs, very, very challenging environment for markets in general, for equities, but also for asset allocators, because not really much works in those environments. That's the fear. We've not seen that in any of the data. We have a Federal Reserve that's prepared to ease interest rates in September. As I mentioned, credit spreads are tight, so financial conditions are loose. That's a good backdrop. But yes, as you point out, if we were to see sustained increases in inflation, and a downturn in growth, that stagflation refills, they could rear their heads.

But do we lean optimistic then, Alex? We lean optimistic. I want to end there on the positive note, right? Why not? Friday into a three-day weekend? Alex Saunders, the city, really appreciate your views. Thank you very much. By the way, speaking of the Fed,

the uncertainty over the future of Fed Governor Lisa Cook continues as the hearing in Washington, D.C. ends today without a judge's ruling, Amon Javers, at the courthouse or in the Bureau, Was at the courthouse all day to day, Aiman? What do we know? Where do we stand? Yeah, Brian, the reason I'm back in the bureau is because the hearing is over now. We saw that all the participants, including the top lawyers,

departing the courthouse this afternoon. And what they didn't get was any ruling from the judge on this question of a preliminary injunction or not. What the Lisa Cook team was looking for was a very quick injunction from the judge suggesting that the effort by the Trump administration to fire her needs to come to a stop. They didn't get that today, not clear whether they'll get that next week. As you see Abby Lowell there, her lawyer leaving and entering his vehicle. There was a fascinating debate about what it means to fire someone for cause or not for cause. There was also a debate,

Brian, about this question of pretext, right? There's been this argument that the president is just using the mortgage issue around Cook as a pretext to fire her. He doesn't really mean it. And the judge said she's uncomfortable with that argument. And you heard from the Department of Justice's attorney's defense on that, which was basically this. Look, you can't really argue pretext because you can't test it. You know, he said, what are we going to do? We're going to bring the president in, depose him, and ask him if he really meant it or not? I mean, there's no way to really adjudicate for the court whether this explanation for the cause for the firing is a pretext or is the actual reason.

And so you have to look at it on the merits. And so that was one issue. And then there was another issue of this question of due process, right? Whether Cook had enough notice in an official capacity and an opportunity to respond to be fair to her in this process. And what the Department of Justice argued was the president put it out on social media. It was out there for the whole world to see. And then five days later, she was fired. So therefore, she had plenty of time.

Abby Lowell, her lawyer said, well, wait a second. Pulte put out the initial allegation on social media. And then 30 minutes later, the president said, I think that she should resign. And if she doesn't resign, I'm going to fire her. Therefore, she didn't have enough time to respond. So all those questions now weighing on the judge as she goes into the weekend to think about this. We may get some more filings and some more action on Tuesday. But for now, Cook's status on the Fed is unresolved by this court, Brian.

And we have a meeting coming up at a couple of weeks. Do we know Bill Pulte of the FHFA adding another allegation, and these are all allegations, and no charges have been filed, and that's critical, adding a third home, that was some kind of a rental or maybe a rental in Massachusetts as well. You read it a little bit yesterday, Amon. Where do we stand right now on the issue of whether or not Lisa Cook inadvertently or inadvertently actually did put down erroneous or falsified information? Yeah, we don't know.

She hasn't said one way or the other what happened here. Wouldn't it be helpful if she just came out and said, this is crap, you know, for lack of a better time? Yeah, I mean, and that's what the Department of Justice was arguing in court today on behalf of the president saying, look, if she had an explanation for this, we would have heard it by now. So she clearly doesn't have a good explanation. So what are we doing here in court? Let's move on. You know, what you saw from Abby Lull, her lawyer was the opposite argument, as you might imagine. said the fact that Bill Pulte had to put out new additional information about a third property

shows that these allegations weren't fully baked in the first place and they're now adding to them after the fact and adding to them after the decision to fire her. So therefore, the decision to fire her wasn't really made on the basis of these allegations. It's because the president wants lower interest rates and he sees Cook as an impediment to that and wants to get her out of the way. As we noted yesterday, the lawsuit, she's also suing the Federal Reserve and Jerome Powell. So the three defendants listed are President Trump, Jerome Powell, and the Federal Reserve itself. Is that because she has to sue them kind of almost a sort of a perfunctory thing? Or is there a real case here?

Because I think I heard Amin Javers this morning, by the way, on Squawk Box report that the Fed was not in court. They weren't defending themselves. Yes. So, yes. Procedurally, she has to sue the Fed here because what she wants, ultimately, is relief from the Fed, and she wants an adjudication of whether or not she's a member of the Fed. What the Fed said in its filing in this case was, you know, basically we're not going to participate

here. We're not going to take a position on the arguments. We just urge the court to come to a speedy resolution of this. So the Fed is going to kind of sit on the bench on this one and watch it play out between Cook and the Department of Justice representing the White House here. So the Fed's in this awkward position. And that goes to this whole question that we were trying to answer all week, which is, you know, is Lisa Cook a member of the board or not right now? Does she have access to her office? Does she have access to her devices? You know, is she taking, you know, is she taking on the work? And what I'm told, Brian, is that there has been no change in her status at the Fed. She is, she does have full access to her office and to her devices. I'm also told that she's

been traveling some this week. We don't know exactly what her whereabouts have been. But, you know, it's late August and a lot of people are on vacation this week, et cetera. So, but at least officially, her status has not changed over at the Fed. All right. Amen, Jivers, appreciate that. Thank you. Amy. You bet. All right, as we had to break, check out the world's most valuable company that, of course, in Vividia now today, big tech is down and shares of NVIDIA, they're falling for a third straight day. Invita is now negative for August. It's now on pace to post its first losing month in the last five. Coming up on Power Lunch, maybe a tale of a couple of different stocks.

One is up big, a couple down big, the stocks and the stories. Straight ahead. CryptoWatch is sponsored by Crypto.com. Crypto.com is America's premier crypto platform. All right, welcome back to Power Lunch. Huge moves on the earnings front. Some music to investors. years, others, not so much. So let's start with the good news, shall we? By now, pay later platform,

a firm soaring on results. Stocks up over 10%. CEO says that they are seeing strength in the consumer shares of a firm nearing their highest level in nearly three years. Let's get more on the story. I'm bringing McKenzie Segalos who's tracking a firm. Mack. Hey, Brian, so we started this conversation in fast money during after hours trading when those shares started surging. Here we are, nearly 24 hours later, and they're looking to lock in those gains. Now, what I'll say about the excitement that we're seeing around this stock, it's partly about stronger than expected results and guidance, but the real story here is the consumer, a firm's key volume metric, a gauge of how much people are spending on installment plans.

That jumped 43% from a year ago, which was well above Wall Street forecasts, and that reflects this big push by the company to be your payment option. everywhere, from Amazon online to the point of sale with its Affirm card where actives have nearly doubled. And now what's especially sticky with Affirm are its 0% APR loans, those more than tripled. And what's key here, Brian, is that half of a firm's new users are entering the ecosystem through those offers. And CEO Max Levchen, he was on our air today, and he downplayed concerns about this bringing in risky borrowers. His point, they're still underwritten like any other

loan and if a firm thinks someone can't afford it, they're going to decline the application. So it sounds like they're benefiting big time from the promotional environment. I would, the market doesn't care that the stock's up big today. But is anybody worried that, you know, you do it once because you get the promotion and then you're never seen again? Well, part of what they're saying is that a major growth driver for them has been point of sale, actually. So that a firm card that's competing with other credit cards because you can tap into those

0% APR loans when you're out shopping. And so that's really been a sticky point for them. And it really reflects the fact that they have been leaning into these partnerships with names like Apple and Amazon and even losing Walmart. That was something that was a big concern going into the print and it didn't show up in the numbers. McKenzie Segalis, glad you're on the story, Mac. Thank you very much. All right, that was the good news.

Not of the bad news, unless you're some sort of short seller or something. Dell down a bit, but the bigger story really is Marvell technology, which is looking less than Marvell less right now. Sorry. Christina Parts and Elblis joining us now with more on those stories. Christine, don't roll your eyes. I have to. I have to. Marvell, the reason why you are seeing some weakness, Marvell is a custom chipmaker.

It's often compared to Broadcom, but the problem is their data center business. It came in just a little bit less than estimates during the quarter, but they, the company, the CEO, Matt Murphy, is guiding for a flat quarter. And this is a company that should be benefiting for all of this CAPEX spend. If everybody's going to be building chips, if everybody's going to be building out their AI infrastructures, firms like, Marvell should be doing well. If we talk about Broadcom, why not Marvell? The problem is it's not happening.

And there's even some issues with their customers like Microsoft. Microsoft is considering delaying some of its AI chips until 2028. And so that's another headwin for Marvell. And so really that is the focus with this name down 18%. Even though a lot of the analyst reports feel like perhaps it's a little bit overblown, but a lot of steam has left chips overall. So that's just probably adding to the further downside momentum. Yeah.

And, you know, we talked a lot about this name in regards to Nvidia and to the whole AI thing. You've talked about it. We talked about it on Fast Money. I think literally we talked about it all week. Is there a bigger takeaway from this number than just the number? for Marrell in particular? Yes. Well, it's honestly the data centers.

It's literally the data centers. And the fact that why is it falling so behind? So it's extremely company-specific as opposed to a greater theme that we should, you know, apply to other names. This is very company-specific. Okay, Dell, Michael, again, a name that we talked about last night, I don't know why you're smiling. But the stock is down. Okay, we know what Michael Dell does. He takes, he packages things, and then sort of resells it.

But again, is there a bigger takeaway on Dell? Stock's been doing very, very well. So I feel like today, is that just a move down because you can't go up every day? Or is anybody waving some kind of a red flag about this, Christina? No, the red flag about Dell is their margins. So every time they create an AI server for a company, it's just, it's really expensive, especially when you're dealing with more expensive Nvidia chips, specifically the Blackwell ones. It costs a lot.

And so there's still a learning curve that has to happen when you're creating AI servers, just as a reminder to our audience. Dell is the type of company that would buy the chips, build packaging around it, and then ship that system to, let's see, a Neocloud like CoreWeave. And so the issue this past earnings is that their margins were hurt. Why? Because Dell just really, really wants to get as many customers as possible. And so margins are taking a hit, depending on how they're expediting costs. They're, you know, trying to offer the best deal compared to competitor super micro and the Asian

original design manufacturers ODM. So there's a lot of competition in this space. Some people can say it's commoditized to a certain degree. But if I were part of Dell's comms team, I'm sure they're a little disappointed with the narrative that's on a lot of media outlets right now, focusing on the margins as opposed to their AI server shipments actually doubled compared to last year.

They're increasing their guide for AI shipments. It was about $20 billion, which is higher than the street anticipated. So overall, they're a company that's benefiting from the AI CAP expense, but it's coming at a cost. And so that's the problem. How patient are investors with the costs that surround these firms when you're building out Aon infrastructures? And I know you and I have talked about that just two days ago.

Yeah, I guess what I'm trying to get at with Marvell and Dell. And by the way, Nvidia's down 4%. We talked about it. The NASDAX having kind of a crummy Friday heading into a long weekend. I think everybody's looking for some kind of early warning sign that maybe there's a turn of some kind on the macro AI story. It doesn't sound like there's anything like that in these numbers, right? It sounds like these numbers were good. They just maybe weren't good enough for Wall Street, but there's not some huge siren blaring. Oh my God, demand is going to go down

on AI. The whole AI story is blown out of the water. Well, it's because, you can, you know, the terms that we often hear on financial news like frothy and overhyped, but that really applies to the AI, I guess, trade for quite some. time. And so you're starting to see some of that being pulled back, which is relatively healthy. For the SMH and the chip space, there were some lackluster comments coming from a Deutsche Bank conference just yesterday on semi-CEO, microchip CEO just talking about, you know, maybe the August month wasn't as strong. Second half is going to be good. Visibility is not the greatest. But still, so that I would be, I would say that that's an impact for the chips overall.

But you know, one area that's doing a little bit better is software. And often when you have money in chips, you don't have money in soft. And so there's this constant rotation back and forth. So that could just be assigned to within the chip world that it's rotating back into software, given MongoDB's results, given snowflakes results as well. Interesting stuff. Everybody's looking at all these numbers as some kind of a tell. We have a little one, another name at the end of the show, but we'll call that a deep tease and leave it there.

Christina Parts the Nevelas, thank you. Thanks. All right. So as you can tell, folks, there's a lot of stock movers, even on a front of the front of Friday heading into the holiday weekend. Case in point, the cat tractor, Caterpillar, falling after the company raised its net dollar impact from tariff costs about $300 million from $1.5 to $1.8 billion. Tariffs hitting the cat. It's also guiding operating margins to be at the lower end of its expected range for the year. Caterpillar down about 4%. Markets down as well. We're back right after that. All right, welcome back.

Tariffs are not causing a spike in inflation, at least not yet. The Fed's so-called preferred inflation measure is the personal consumption expenditures index, thankfully better known as the PCE. It tries to gauge changes in prices that you may know or see every day. And that number came out this morning. It came in line with expectations. So let's talk more about that. And any moves the bond market or really what will move the bond market.

And head out to Rick Santelli in Chicago for the bond report. You know, Sully, you nailed it. You nailed it. And everything is in the charts. It just jumps out at us today. If you look at 21st hour chart of twos and tens, look how everything changed places after all the data was out. And it wasn't only the 8.30 Eastern PCE.

Maybe it was even more, the University of Michigan sentiment, how some of those data metrics went lower. And 10-year-note yields moved up, and two-year-note yields were down. Now, why would it happen? Well, consider this. A week ago, the chance of a cut in September of 25 basis points was around 81, 82%. Today, it's much closer to 90%. So two-year yields are going down because the Fed's hot for a meeting and their guidance hasn't taken it away. In terms of the long end, it's not so much about inflation. Think about it this way. If inflation was hotter, the Fed most likely would try to guide all the percentages of an ease down. But the data was pretty good on income spending. real spending, and that put yields in the long end a little bit higher. Look at one week, and you can see what I'm talking about in terms of yields moving down generically. There's your inflation, there's your Fed, but even though tenure yields are a little elevated today. 24-hour chart of

2s-10 spread kind of says it all. We put the steepening back in. These days, I would view steepening as the Fed's hot and the long end kind of likes the economy. Because it was inflation moving yields up, Short end wouldn't like it as much. And finally, the chart of the day. This is the move volatility index. That's a year-to-date chart. Look at how volatility after liberation has done nothing but go down. What does that mean in English? The treasury market volatility. How much yields move? Well, the ranges are getting smaller. The close to close. The close are getting tighter. Not necessarily a bad thing. That volatility is hovering at the lowest levels in four years right now. four years. So we want to pay close attention to how that index moves over the next couple of weeks.

Okay, you're at the CBO, the capital, the home of options activity, all the guys who've got to meet there. Is anybody worried about the fact that the VIX is at 14? No, they're definitely not worried about it. They love it. They love it. In their opinion, much of the headlines of the day, much of the media of the day, or let's say for the last couple months has really not been very fond of the markets. But the volatility index and the performance of the markets maybe outside of today looks pretty good. Interest rates have been pretty tame. I don't know. I don't know how you spell Goldilocks, but I spell it M-A-R-K-E-T. The markets are Goldilocks right now. Do you spell Goldilocks with an M? Yes, I do in Chicago. Okay. It's a whole

different thing out there because I spell with a G. I'm kidding. Rick Santelli, thank you very much to appreciate that. All right. Coming up, speaking of G's, our exclusive interview with the CEO of Home Generator and Power System Maker Generac, just in time for the hurricane season as well. We'll get his take on that, the America's power grid, the energy market, and more. Stick around. I welcome back. We certainly don't want to be the bearer of bad news, but electricity blackouts are likely coming to you at some point. That is not our opinion. That is the opinion of America's largest power grid operator, PJM, which said last year that it's likely in coming years we may not be able to make enough electricity to meet demand. You throw in extreme

weather, storms on top of that, and it just adds another worry about losing power. In fact, during Superstorm Sandy, our neighborhood around here in New Jersey lost power for days. But there are ways to help yourself out. You buy a generator, maybe with backup power. Your next guest happens to do exactly that. He runs Generac, which has seen a big 50% pop in the stock in the last three months. By the way, Generac is also one of the 12 stocks in our Milwaukee area power city index, and it's helping the entire region with some decent stock gains this year. Here now for a Power Lunch exclusive is Aaron Yachtfeld. He is chairman and CEO of Generac. Aaron, thanks for joining us. Listen, it's a, it's a scary thing to say, like people may lose power during Superstorm

Sandy, my home was without power for seven days, seven days without electricity. We had a portable generac generator. We upgraded to a whole home generator. We're in a financial position. We can do that. What options are there for the middle class family watch in CNBC right now with your products to protect themselves? Yeah, thanks for having me on, Brian. Obviously, you know, something like Superstorm Sandy or frankly, a lot of the events that you're seeing are turning into multi-day outages. It used to be power outage would last a couple of hours, you know, and you could kind of work through it. But, you know, as time has gone on here, and there's been a lot of data collected over the last, you know, 20 years, outages are happening more frequently and they're lasting longer.

So what can people do about it? Obviously, we have products that can help you out with that. You know, I think more affordable products are going to be those portable generators. At gasoline, you've got some extension cords. You can cover yourself, you know, some lights, maybe the refrigerator, some other critical things in the house. The best way to do it, though, is exactly what you ended up doing with your family is you buy one of these whole home backup systems really to cover the entire home. And you can go days, right? You've got it run off a natural gas or propane. And it really is the best way to protect your home or a small business. Yeah, and I want to be clear. I'm not here to tout your products. There are competitors out there. But we have one when power goes off, literally within one minute, it fires up and lights up the house. Again, we're lucky and blessed to be the position.

to do that. But I would imagine that this is, as I'm seeing it, by the way, at least here in New Jersey, Aaron, and I'm also part-time Wisconsin resident, by the way. This is not almost like a nice to have. It's almost becoming a must have because the grid is fragile. Absolutely. I mean, we're in about 6% of U.S. households today have some kind of backup power permanently installed system, not a portable generator. So, you know, 6% is not a lot of households, but, you know, there's millions and millions of of units out there already. But you're on to it is that in the last 10 years in particular, and especially after some high profile events like Sandy, 2012, Winterstorm Uri, down in Texas in 2021, you've got these high profile events that create awareness around the need for backup power. I think a lot of folks don't think about this until the lights go out,

and at that point it's too late, right? I mean, at that point, you're going to have to suffer if you can't find a way to get through that. And that's unfortunate. So you really have to be proactive. You've got to get these things installed now. And it's a home improvement project. We tell people, yes, it's expensive. The average ticket is somewhere between $10,000 and $12,000 fully installed. But if you get that planned and you can roll it into maybe a helock or you might be able to pay for it a different way with some other kind of refinancing your home in some kind of a broader project. But this is, like you said, it's become the must have product. It's an appliance that people are finding, especially as we figure out just how dependent we are. on a continuous source of power. Home medical devices, right? You've got, you medic, your, pharmaceuticals have to be refrigerated in a lot of cases. You've got pets, right? If you've got pets at home, it's hard to just pick up those two dogs and head to a hotel somewhere, right? You're not going to be able to find that. So being thoughtful, planning and taking care of, you know, your power and your reliability of your power is something that, you know, a lot of people are really

thinking about these days. Do you see a spike in sales around storms? Because I remember, obviously, Sandy's an extreme, extreme example, and everything for a five-hour radius around us was sold out. We actually drove to Western Pennsylvania to find a generator. True story. And I'm just wondering, do you see people kind of rushing out around it? Because it's, I guess it's good for you, but it's not proactive thinking in some cases. Yeah, I mean, obviously, you know, we classify. Most people are either proactive people or they're reactive people. Unfortunately, about 80% of Americans are reactive, right? So we react to the things around us, and that is exactly what you said. You know, you get an event, your lights go out, and you drive to the local Home Depot

or Lowe's or Ace Hardware, Costco, and you look for one of these backup products, and they become in short supply very quickly. I mean, it's hard for us. We can get as much product into a market. You know, the weather forecasts have gotten pretty good. We can plan ahead, maybe a couple days, if it's not something that sneaks up on us, but that gets wiped out pretty quick. And really, it's the time after that. So you can go anywhere from six to 12 months after a major event, even with Sandy, it was maybe as long as two or three years,

as people went through the rebuilding process, that they started looking at more permanent solutions like home standby generators that cover really the whole home, and they're fully automatic. You don't have to think about it. What about the battery back? Are you seeing a lot of interest in batteries? I mean, I get it.

I don't have one of those because I'm like, oh, it's eight hours or whatever the number is. Right. Yeah, battery technology has improved. The cost keeps coming down, performance keeps improving. Really, where batteries are great is if you already have invested in a solar system on your home's roof, right? So if you have solar already on the rooftop, having a battery is a very competent way to create some amount of reliability. To your point, it only gets you about eight to 12 hours.

So it's kind of an expensive option for that. And unfortunately, with power outages, you just don't know how long they're going to last when they happen. So, you know, we do see interest in batteries where it makes sense. A lot of those types of products are used, you know, in concert with storing some power off the rooftop and then selling it back to the grid at a time when it's, you know, you can get that arbitrage and it's more advantageous because that's the other thing, too, is power rates are going up. It's not just that reliability has gone down. We're also seeing, you know, you mentioned PJM. Those auctions that they've had every year, they keep going up in price. And so you're going to see your power rates. The last one, Aaron, I may be one of the few people on national media talking about this because I'm an energy geek. But the last one, that prices keep going. up. You're right. It's unbelievable. It's pretty unbelievable, actually. Yeah, yeah, it is. And this is that it's kind of, there's two megatrends here. You've got the reliability issue, which has been entrenched for a long time, whether it's been the primary driver of reliability challenges. Now we've got a whole new wave of demand with AI. So that's going to create

stresses on the grid that are far beyond what Mother Nature's done. But aside from that, you set that aside, and you've got this cost issue. Power prices across the U.S. are up 30% in the last five years, and they're projected to almost double in the next 15 years. So we're talking about, you know, where your power bill is going to be second only to your housing cost, you know, your mortgage or your rent payment. And that is a significant chunk of money for a lot of people. So people are looking for solutions. How do I manufacture my own power? Put a solar system on the roof, geothermal loop, batteries to protect myself, generators to protect for long duration outages. Erin Yockfeld, it's an important topic.

We're glad you're bringing it to us as well. The brewers have the best record in baseball, the Bratstaff has an Adams family pinball machine. Everything's coming up, you know, Milwaukee in Wisconsin. Aaron, we appreciate it. Thank you very much. Thanks, Brian. Take care. All right, let's get out of Julia Borson for a CNBC news update.

Thanks, Brian. The Air Force said today it is offering military funeral honors to veteran Ashley Babbitt. She is the Donald Trump supporter who was shot and killed by police during the January 6th riot when she tried to enter a room near the House floor. President Trump has long supported Babbitts. saying she was unjustly killed. The officer who shot Babbitt was cleared of wrongdoing after an investigation. Elon Musk asked a federal judge to dismiss an SEC lawsuit against him that claims he wanted

to long, waited too long to disclose his purchase of Twitter shares back in 2022. Musk is accusing the regulator of overreach and said in a filing late last night that the delay was inadvertent. The SEC says that delay saved Musk $150 million at Investors. expense. And you'll get to root for Team Jacob or Team Edward again this fall. Lionsgate and Fathom Entertainment are bringing the Twilight movies back to theaters to mark the 20th anniversary of author Stephanie Meyer's original book. The five films will be shown around Halloween from October 29th to November 2nd. The Twilight saga has grossed more than $3 billion worldwide. Brian back over here.

Which team is Julia Borseton on? I don't know. It's been too long since I've seen the films. Maybe it's time to go back and watch them again. That's what they're hoping. Julia Borson, thank you very much. All right, coming up, an obscure rule around tariffs just ended, and it could end up costing you more money. All right, welcome back. An obscure trade provision you likely heard very little about just expired overnight. It is called the de minimis exemption. For almost a decade, it allowed shipments valued at less than $800 to enter the United States virtually duty for. basically smaller, cheaper stuff doesn't cost anything.

But now that's over, and it's sure to disrupt many parts of our global supply chain, and not to mention the prices we pay. Courtney Reagan covering the story here now with the full story, Courtney. Yeah, so it's really interesting, and I think there's a lot of focus on the Shians and the Tammuz of the world that are Asian-based, that ship directly to consumers that took advantage of this de minimis exception, which basically says you ship these packages in. If it's under $800, you don't have to pay duties. You don't have to pay tariffs and so they could basically build a business model around this rule.

That's been a lot of the focus. But what I found interesting is that there are a lot of U.S. retailers and brands that use it too because why wouldn't you? So Tapestry is one of the few publicly traded retailers that spoke about this, but only just recently for the first time, and they called it out as a potential 20-cent drag on their earnings for the full year to not be able to use de minimis anymore. because how it would work for many companies that are U.S. brands is that they may manufacture overseas. And instead of importing those goods into a container into the United States, they would import them into Mexico because they would not have to pay that tariff and then store them in a Mexican warehouse. And so maybe that coach bag that you ordered online technically was stored in a Mexican warehouse and then every day trucks would do what I've been told are called milk runs and literally drive those parcels across the border to a UPS. or USPS or FedEx just across the border

and then be mailed to U.S. consumers from there. And so the CEO... And that gets around the tariff? It does. And it's totally legal. The CEO of Ministry of Supply, which is a direct... That's good for trucking companies on the border. Which is a direct to... Ministry of Supply is a direct-to-consumer apparel company. And he said, look, people don't recognize how many packages that we get

that are coming from a warehouse not housed on U.S. soil. The border was open for small parcels. And now a new cost is... emerging. And he also said retailers used a minimis because it was safe, legal, common, routine, smart. People are panicking. There might be some weird market dynamics in the next 60 days, weird sales, even ad withdrawals from some of these companies that need to sort of get their ducks in a row now that they have to get you your goods as before, but in a way that's going to cost them more. So are they going to figure out how to move that product from a Mexican warehouse to a U.S.

warehouse, which then, by the way, is good for third-party logistics players. Because they're saying, hey, we've got capacity stored here at our warehouse. It's not ideal for the environment. Is somebody who grew up in L.A. and San Diego, I'm not sure I want to more trucks going back and forth. I understand. You know what I mean? I understand. But sometimes the trucks aren't full anyways, right?

They're the less than truck load full. And so they could. L-TL. Yeah, they could put in Lingo. But I think there was so much focus on the president trying to close this. People called a loophole, but it was legal. I mean, it exists there. I hate the term loophole because it's like, and that New York Times, a tariff loophole.

It's not a loophole. It's in the law. It was a law. It's in the, it's in the, like a loophole is now taking a mortgage deduction or something. Give me a break. Right. So he was an exemption for parcels under $800, which previously I think had been $250. So the value had gone up. But again, you know, why wouldn't you take advantage of this?

If this is a way to get your products to consumers for a less costly way, And then maybe you can pass those costs along to consumers. Well, now that it's gone, as of today, we might see some of those prices go up. And a lot of companies that use it... So stock up on socks now! A lot of companies that use it don't necessarily advertise that they use it. I mean, it was really hard for us to figure out exactly who, but when we spoke to the CEO of cart.com, who's a third-party logistics player, he says, look, we've gotten a ton of in-bond calls and new business as a result directly of this exemption expiring.

So like everything, there's some winners and maybe some loser-ish is? Absolutely. If you own a giant warehouse on the board of Tijuana, it's great news. Courtney Reagan, thank you. Appreciate it. All right, earnings season, far from over. We're going to highlight some key reports that you need to watch. Plus, our stock of the week. Stick around. Well, next week may be a holiday shortened week of trading. Monday is a holiday, but there's still a number of key quarterly earnings reports on deck to report starting off with Tuesday. Signet Jewelers and IT security company Z-Scaler, both names surging over the past six months. On Wednesday morning, we're going to go with soup, Campbells, as well as Dollar Tree Stores and Macy's. Wednesday night, it's some big numbers from Salesforce.com, Hewlett Packard, American Eagle, and C3 AI a day later. A potentially market-moving report from Broadcom.

That's going to be a big read into AI and data centers. You've also got DocuSign and Lulu Lamont out that day. And last but certainly not least, Figma, The newly public company had one of the hottest IPOs ever. That is not kept up. Figma shares down nearly 40% in the month of August, although still well above their IPO price. All right, still to come, we'll reveal our stock of the week,

and it's a name you've probably never heard. All right, let's wrap it up for the week with this, because we do this on Fridays. It is our stock of the week. And this week, our stock of the week is Fabrinet, ticker is FN. It is a Cayman Islands-based option. engineering company. What does that mean? Well, we don't know, but the company is basically engaged

in a semiconductor spending cycle. Shares of Fabernet are down today, 7%. But overall, they have popped this week. In fact, on pace for its best week since March, shares hit a record intraday high yesterday. J.P. Morgan Chase upgrading Fabernet this week, saying the market is underappreciating large concurrent program ramps. Whatever that means, stock got an upgrade. It's up. big this week. Thanks for watching, Power Lunch. I'll see you on Fast Money 5 p.m. closing bell. Starts right now.