Power Lunch - Navigating the Volatility 3/11/26

Episode Date: March 11, 2026

Interior Secretary Doug Burgum joins the show. Bank of America's Francisco Blanch joins with his energy outlook.   And what do you do with your money in these volatile markets?   Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

A bit of a mixed bag for stocks, even as oil ticks back higher. Welcome to Power Lunch, everybody. She's Kelly. I'm Brian. Stocks mostly lower right now, financials. One of the decliner is down over a percent. Oil also on the move. The Paris-based IEA saying 400 million barrels of oil will be released to help curb the

Strait of Hormuz supply disruption. And we have got a big guest at a few minutes. We are joined by Interior Secretary Doug Berger. And the stakes are high for more than just oil. Shipping of retail and other goods is also at a standstill as the midday. conflict continues. Iran reportedly struck three cargo ships in the Strait of Hormuz. We'll speak to the chief executive of one of the biggest shipping insurance brokers in the world that's coming up this hour. But we start with the markets as the major averages are moving

lower and the war in Iran continues. Our next guest is out with a new note saying the historic move in oil prices warns a re-evaluation of the risks and he's updating his strategies as a result. Joining us is Vinu Krishna. He's the head of U.S. Equity Strategy at Barclays Investment Bank. luck, no, to anyone. You know, our last guest was looking at this more from the ag space, but he said, yeah, I thought it would be days or weeks. Now I'm thinking weeks or months. What are you thinking? Yeah, I think this situation we are in, it looks like it's probably got more life. It's not going to get resolved as quickly as a market is expecting. But interestingly, the market is still as of now pricing as if we are looking through it, then there will be

an imminent resolution to that. But that said, I think it does call for us to look at just the historical precedents and to see if this were to get extended, how do you position? And like you noted in our recent work, we are recommending, you know, more tilt towards value, which historically has tended to do better. And at this point in time, if I look at the composition of the value basket, not only is it meaningfully cheaper or the longer term versus where the growth basket is, you know, At the same time, if you look at the composition, they are more exposed to commodity-oriented

areas, which obviously tend to get bid up in an environment with geopolitical risk is higher. So I think that's why do you think about it. So, you know, you say value-positive growth neutral, and yet we've almost seen the opposite kind of stock performance, or we've seen, you know, the Mag 7 kind of cushion the market. Tech has been leading the way software's been on a comeback. Whereas materials, that's going to be a tougher story. Consumer Staples, we've seen some sputtering there. Sure. So I think to connect to your point from the beginning of the year, that areas you really liked are threefold. One is tech, especially big tech. The second is financials and the third was utilities. So we haven't changed that. And you are right in saying that, you know, big tech, we have a very interesting situation where, because of the reason why we like it even more. So since the last two quarters, their earnings have continued to beat expectations per reasonable margin. And yet their multiples have been moderating.

in a steady basis. As recently as a couple of days ago, they were trading big tech as a group, which is just essentially six stocks, at about 24 times forward earnings. They were at 31 times at the start of last year. So I think we like the setup in which their earnings, revisions are going up.

Their multiples are coming down. And the profitability is actually expanded even further in Q4 by roughly 150 basis points. The one overhang is that they continue to spend quite aggressively. We spend this year up, you know, more than 60 percent, and next year it moderates, but the spending levels are very high. So I think that is what is a key issue, but we think in terms of where you would rather stay in a market like this, in which geopolitical risk going up, we would still feel very comfortable in big tech.

Small cap companies are greater exposure to oil and gas prices than larger cap because they rely on the American consumer to buy their goods and services. Gasoline prices are 50 cents. a gallon higher than they were one year ago, Vino, and probably going up, will that kill or hurt the small cap story? Actually, it's interesting. You bring that up because we actually turned more negative on small caps after having changed an outlook a few months ago. For a long time, we were negative on small caps and we changed the view recently, but we flipped

again. To your point, you know, once geopolitical risk goes up, you know, oil going up is one piece of it, but it does affect consumer sentiment. discover companies a lot more levered. They have less operating flexibility, a lower margin profile. And the critical thing is fundamentally, if you look at the revisions, compared to large-cap revision trends, which, by the way, are excellent right now. Small-caps don't look that good. What does that mean? Large-cap revision trends are excellent. We like the E-word. We like to hear excellent. What does that mean? It means that if you look at where you started the year, what was

the expectation on a consensus basis for earnings. For example, it was roughly around, you know, $307 by consensus. Right now, we're sitting at close to quality in the 317 range. That's a pretty sharp increase. If you look at realized earnings, for large caps, it was close to 12% on sales growth of little over 7%. So very strong operating leverage. In other words, the numbers compared even three months ago are going up to the right, and that is not necessarily what we are seeing in small caps. All right. The news is the new. Thanks so much for joining us. And again, you know, it's a good luck to anyone.

Do you have a thought now for how long this could last, days, weeks, months, years? No. I mean, to be honest, I'd be foolish about the claim I know it. I think nobody knows. But we do know that the longer this persists, the more problematic it is in terms of the impact on global energy markets, the on global economies, eventually on GDP. And you're looking at the impact on inflation expectations, hence the moving 10-year rates, which definitely is worrisome.

We are not in that range right now, but once you breach 4.5% on the 10s, watch out. Right, we're around 420 or higher even now. So 4.5 you say, watch out. Veneu, thanks so much for joining us. Good to see you, Vanu Krishna from Barclays today. Thank you. All right.

Well, speaking of interest rates, we've got some breaking news from your tax money with a release. All the big monthly treasury statement. Let's find out what is in it. Steve Leasman is here with that and those headlines. Steve. Hey, Brian, some interesting headlines here.

The February deficit. that's just the month was up 2% over one year ago, up $7 billion. But fiscal year to date, doing a little better, down 12% to 1.004 trillion, to be precise. And the issue there is that Treasury outlays were up by 2%, but receipts were up more by 6%. And this is stuff that's going to change. Right now we're watching this issue of individual receipts were up 5% per corporates were down 49%. But here's what's going to change is these custom duties. Well, we don't know if they are.

They had a good month, up $27 billion, up $19 billion from a year ago before the tariffs were put on. And fiscal year to date, they were up by $151 billion, or up to $151 billion by $131 billion. We don't know how much of that goes away. We don't know how much is coming in refunds. Speaking of refunds, this was supposed to be a big refund year and getting some mixed results here. In the Vigal recent coming in at $64 billion. That's up just $6 billion from a year ago. but looking at the year over year or the fiscal year to date numbers,

it's 104 versus 103. So we're not quite yet seeing those big refunds. There was a report from city yesterday, which used March data. This data ends in February, guys, saying it was running about $30,33 billion, which was about a third of the big expectations out there. So we're going to have to watch this, Brian. What's happening with these refunds? Obviously there's going to be tariff refunds,

also going to be individual tax refunds that are supposed to be robust this year and help propel spending, but not quite in the data just yet. Not quite in the data just yet. Do we know when we might get that? I mean, listen, one month, as you have said many times, does not a trend make. When can we establish some kind of longer term or medium term trends? So February is supposed to be a really good month for these, and they are running about 10% higher, which is a good number. I just talked to Robert Frank, who was our expert in all this stuff, and he told me that,

A lot of the refunds go to rich people. Rich people take their time, so maybe the bigger refunds are yet to come. So we're just going to have to monitor this. And it's supposed to be a big part of why retail is supposed to do good or do well, the first part of this year. And we're watching these daily numbers, in fact, to see how well they're doing. Get a refund, buy a couch. Steve Leesman. Couch.

Thank you. Pull out sofa? Maybe. Depends of the price. All right. Now to the bond market yields. They are pushing higher again today. the 10-year yield on pace for its highest close since February 6.

This folks assign markets are repricing the path for rates and inflation. It is also impacting the rate you pay if you want to buy a house. 30-year mortgage rate hitting 6.19% today. That is the highest level since early February. And Kelly, as we just heard, Vanu Krista say, if and when, if the 10-year gets back to 4.5%, things may go sideways. Bigger pressure point, for sure. Yep. All right, speaking of big, we've got a big interview coming up for you.

Interior Secretary Doug Bergam will join us live as Iran tells the world to get ready for $200 a barrel oil. But is that just a hollow threat? Bank of America's head of commodities will join us on the other side of the break. And then the Interior Secretary, a lot to do. We're back right after this. Welcome back, oil. Other commodities also squarely in focus as the shipping standoff around the Strait of Hormuz enters its second week. We've got WTI crude up five.

and a half to 88. You've got fertilizer, nat gas, and even drinking water, all impacted by a lack of ships coming and going. Some have tried. And today, the UK Maritime Authority says three freighters were hit with some kind of attacks in the area. Meantime, the IEA saying it'll have its 32 member countries release 400 million barrels of oil to east supply issues. That's more than twice as much as was released from those stockpiles when Russia invaded Ukraine. It comes as Iran is trying to hit America in the wallet and warning of $200 oil. What does Francisco Blanche think? He's B of A securities, head of commodities and derivatives research.

Francisco, it's good to see you. Are we going back up to 119 or we're kind of going to look back on that and say, yeah, no, that was just a one-off thing? I really think it depends on the duration of this conflict. We are looking at, in our baseline scenario, we are looking at Brent averaging $77.5 for a year, which would imply prices like. peak sometime this quarter, next quarter, averaging, so this month, next month, averaging about $85, $90 a barrel. But that's only if the conflict ends shortly. I think if we are

looking at a prolonged conflict where it spills into the second quarter, prices will be meaningfully higher where we think that we could see highs of $130 a barrel. If we spill into a second quarter, if we spill into the third quarter, we think the highs could be $160, 170. And of course, If we start carving into a fourth quarter, we could be over $200 bail. But that would require a pretty extended conflict here, in our view. Right. I mean, we're hoping it doesn't do anything like. Does it make sense to you, Francisco, the market action, the price of oil stocks here?

I think oil is reacting with the view that this war is going to last days, if not maybe a couple more weeks. And that kind of makes sense to me. the deficits that we estimate for this quarter barrels from Hormuz but it only goes on for again, it's only, our numbers only work if this lasts for days, not months, right? So there's a clear time limit

as to how much the market can take and there's a risk that it goes up exponentially if somehow the conflict extends itself into, in time. That's, I think, very, very important. So market's confidence is going to end up soon And that's kind of what President Trump has been guiding everyone to think, I think. Oil may be the least important major commodity going through this trade of Formoos. I mean, fertilizer, you want to eat over wanting to drive.

And fertilizer, 30 to 50 percent, different types of chemicals going through, potable drinking water, natural gas, which goes into even things like pharmaceuticals, all going through that straight, Francisco. But you've got to admit, sort of to Kelly's point, this is remarkable. I want to kind of just highlight to our audience, We have the greatest supply disruption in oil since the early 1970s and sort of the Suez Crisis and War. And yet the price of oil, while higher than it was a while ago, is still the same price it was two years ago, three years ago and lower than it was four years ago. Even you, Francisco, have got to admit that is remarkable.

It is remarkable. There's no question about it. But I also think that a lot of it is because the market still prices in a pretty short duration of this conflict. Remember, the U.S. today is a net energy exporter. There is, of course, the potential response from U.S. shale. There is strategic stocks. China itself has built a massive strategic reserve. So there's a number of buffers. But as I said, if it goes on in time, this is 20% of the world supplies we're looking at here for oil and gas.

It will impact all markets. In fact, it's already impacting markets. We are seeing factories in different parts of the world slowing down and shutting off temporarily because of the lack of feedstock for petrochemicals, for instance. And again, if you look at the Russia-Ukraine war, it kind of started a little bit like this. It just went on forever, and we ended up with essentially $600 a barrel global gas or $99 an MNMBTU global gas. So again, a lot of its duration, we started in the duration.

started in February, the war started in February, Putin-in-vaded Ukraine, gas didn't peak until September. So it took six months for that. So let's just keep that in mind. It really is how the duration of the company. Fair enough. And, you know, to quote the great poet philosopher, Mike Tyson, he said, everybody has a plan until you get punched in the face. And we're talking about a two-week war, three-week war. And we'll talk about this a little more with Secretary of Interior, Doug Bergman, a moment. But yet Iran is going to have. say in all of this, we don't know anything about the new Supreme Leader, the Ayatollah Khomeini's son. We don't know anything about who's actually running the country. And we do know that, like today,

some ships are hit with drones. Thankfully, I hope everybody was okay. Oman may or may not be partly on fire. What if this does go on for five months? Then what? Well, if this goes on for five months, as I mentioned, we are going to have a massive energy supply shortfall and therefore the matter of all demand rationing exercises. Energy and GDP are closely interlinked. So 1% energy is about 1% GDP. If we lose, let's say, Hormuz we are talking about 20% of oil supplies and 20% of LNG, put it all together. You're probably losing roughly about 10, 15% of aggregate energy supplies. So, so, So, you know, unless we can reroute, we are probably going to lose several percentage points

of global GDP. That's the reality of this war if it goes on for six, 12 months. Now, I'm not sure that the Iranians have the ability to do that. I think we've heard messages from the Trump administration saying they are confident they're going to reopen the straight. But also, we saw it happen with the Houthis in Yemen. And on Haba, that went with Babelmandev and the Red Sea. So those are some of the big concerns we all have as to the duration of this war.

We don't know, as you said. I think we haven't even heard the voice of the new Iran leader. Many people haven't heard his voice, right? He wasn't even at his own installation rally, apparently. I heard he was injured in the first day of the attacks, fractured afoot or something to that extent. It doesn't sound like people think too highly of Kamani Jr., but we'll see. Francisco Blanche, Bank of America Security, Francisco, thank you.

All right, so the oil gets all the headlines. Just remember this. That 21-mile-wide shipping straight, which I've actually seen and been in in-person, is a critical choke point for many other major commodities and refined products. One of those is fertilizers. Now, fertilizers, this is not, you know, what your horse used to produce. These are chemical pellets. They're about the size of a small gumball or a large BB,

and about one-third to one-half of some of these chemicals head through the straight-of-four-moos. So that puts a spotlight on American fertilizer producers like CF Industries, Mosaic, and Nutrient. They're up 7, 7 and 3% right now in Nutrient at a 52-week. I just remember, we're talking about food. But interestingly enough, as our last analyst just told us, this is not yet showing up in crop prices. So the squeeze is actually on some of the farmer, some of the deer, those kinds of companies. We don't want it to pass along to food prices. Don't get me wrong.

He said it's been contained so far. But all of this goes back, as Francisco said, to the duration of the conflict. Coming up, Interior Secretary Doug Bergam. He'll join the show to talk the Iran War energy prices and the IEA's decision to release those 400 million barrels. Stay tuned. He's after the break. All right, time for another big CNBC interview. The news of the day is Paris-based International Energy Agency saying it wants member countries to release a record 400 million barrels of oil, the move designed to mitigate any impact of the Iran-war oil supply shock.

Now, the numbers vary. and everybody seems to have their own estimate. I want to make that clear. But anywhere from a couple of million to over 10 million barrels of oil per day are not reaching where they need to in global markets, primarily due to shipping fears and a massive slowdown around the aforementioned straight of Hormuz. Oil prices, they are a little bit higher right now, but they are still below 90 bucks a barrel. And as I just said, oil prices while up from where they were are at the same prices that they hit a few times over the last five years.

there are still real worries about the impact of the war on longer term prices. So let's talk more about that and more with U.S. Interior Secretary Doug Bergam. He oversees about one-fourth of all-American oil production on and offshore. He is also the chair of the National Energy Dominance Council and working no doubt closely with his friend and fellow cabinet member, Energy Secretary Chris Wright on this issue. Secretary Bergam, thank you very much for joining us. And people, they don't think of that. They think of state parks, but they don't realize that so much oil production. More than Exxon, by the way, is done on land that is owned by the federal government and the taxpayer onshore, offshore.

So what is your role in helping protect against any oil supply shock? Well, Brian, great to be with you. And, of course, this started the day that President Trump got in office. He summed it up simply energy abundance. His words that resonated with the voters was drill baby drill. we'd come off of four years of the Biden administration not holding the legally required lease sales, which gave the private sector the opportunity to lease land, gave the private sector an opportunity to lease minerals to send a check to the Treasury,

and then develop those minerals with their own capital, and then send a royalty check to the federal government. I mean, this is a business where the federal government on public land, we're in partnership with the ranchers, with the timber providers, with the people that do mining and certainly with the oil and gas industry, and that's why we went to work last year over 6,100 permits in just nine months from when President Trump took office through the end of the federal fiscal year at the end of September, record number, more than any other full 12-month year,

we got out to people, which again gave them the ability to generate revenue and generate production. And again, meeting with the American companies over the last, last weeks and months and including some today that are here in town, I think you're going to see them all announcing that they've increased production here in the United States in response to the price signals and in response to the need that we have right now. So President Trump, putting us in a spot as a country, this is the most energy security the nation has ever had because we're number one in the world in producing oil. We're number one in producing natural gas, number one in LNG exports, selling energy to our friends and allies so they don't have to buy from our

adversaries, but also keeping prices down here for Americans consumers in American industry at home. So President Trump's energy dominance policy is working. We are at 13.5, 13.6 million barrels a day. It's a record high. But we do use about 19 to 20 million barrels a day. So there's a supply and demand gap that has to be filled by imports, much of that from our friends in Canada. And by the way, thank goodness for Canada these days, right? I think we can all kind of agree on that. You're North Dakota. I think you might know something about Canada up there.

But let's talk about the SPR. I know it's not your or Secretary-R-Rights job to call for the release. That's the president's job. But do you agree with the IEA decision? Well, I think what you're hearing out of the IEA today is reasonable on their part. But clearly, whether the U.S. participates is up to President Trump, he'll make the final decision on that. The markets are reacting to supply demand.

They're also reacting sometimes, as you've seen, the volatility, the last few days, to information, misinformation, what they think of as either progress on freedom of navigation or progress on taking away the capabilities for the terrorist regime of Iran to do what they've been doing for 47 years. Literally, I mean, let's remember Americans that are old enough. can remember, they started their regime with taking Americans hostage. That's what they did on day one. Now they're trying to take hostage the entire world economy by saying, we are going to, we meaning the terrorist regime of Rajan, not the Iranian people, but the terrorist regime, that they're going to control the flow of oil to and from. I mean, that impedes on the rights of many of our Arab neighbors and allies that are there. And as you know, as you've highlighted, a huge

center of production for global energy. The fact that that risk has always been there and could have been executed on at any time as part of the reason why President Trump said, we've got to build energy security here at home. And one of those things is Venezuela. I was just down in Venezuela last week for two days with the new leadership there. And what an opportunity for the Western Hemisphere to move the geopolitical center of energy back to the Western Hemisphere because of their enormous resources, our resources, and of course, you know, again, Alberta and Saskatchewan also having great resources. You know, I would love to know. Mr. Secretary Kelly here, your colleagues deleted tweet. I mean, if we'd ever want to be behind the scenes,

yeah, we're there, yes, the market's up and then it's down, and there's so much drama and so much uncertainty about what's happening in the street. And I don't know if you're the right person to ask this question to or to tell us the current state of things, but, you know, how much do you think is flowing through the straight right now? And what are the prospects for those flows to go back towards normal at any point soon? I'm amazed at how relatively resilient the energy markets and the stock markets have been in the face of this. Well, I think the resilience is a function of the confidence that the markets have in President Trump and in the U.S. military. I mean, when you take a look at the fact that in this short of a time frame,

You take out Iran's the terrorist regime. You take out their air force. You take out their anti-aircraft missile capability. You take out their Navy. You start knocking out, you know, mining these small fast boats that they would do mining from, like taking out Coke boats in the Gulf of America. When people start seeing that visually, the speed at which this happened. Now, I know expectations are high because President Trump took a sanctioned adversary

Venezuela and in less than two hours turned them into a strategic ally. This is going to take a little bit longer here. But the speed at which our military is moving ahead of schedule, I think the markets are reflecting that they've got confidence that we're going to have free flow of navigation again in the future and that the U.S. is going to get the job done. Energy dominance. So you mentioned Venezuela.

I'm still waiting on my invite, by the way. Happy to go down there as well. How much oil do you reasonably believe that we can get from Venezuela? Venezuela in the next year, one year from today. Well, I think again, the initial expectations were that what Venezuela was producing, that they could increase that by 50% fairly quickly. And that was, you know, get them started. I mean, they were at about 800,000 barrels a day, getting them back to 1.2 quickly.

You know, historically, they were as high as 3.5 million barrels. And that was before all the new technologies came in. So it's reasonable to expect that these guys could be a 4 million barrel and oil day contributor to world supplies as they come back online with investment. But having been down there in the speed at which Venezuela is moving, Venezuela leadership is moving at Trump speed. That's what their goal is. You know, they passed the new hydrocarbon law in three weeks. And when we were there last week, obviously the mining sector, huge opportunity in mining. They've got precious metals, in particularly gold.

They've got some of the largest gold reserves in the world, over $500 billion worth of gold reserves. But bauxite for aluminum, which we need for both consumer and automotive and for defense tech, they're just rich and rare earth minerals. The mining executives that were there said, hey, it would be great if we had a law like the hydrocarbon law. The Venezuelan leadership said, hey, well, give us your input by Saturday. The mining executives said why? They said, because we're introducing a bill next Monday. That Monday was two days ago.

It passed the initial hurdles in their legislature the same day. And of course, that's Delsey's brother that is the president of the Senate. This sibling leadership team in Venezuela wants this country to be competitive for U.S. capital and for foreign investment to come in to help get their economy going. And the U.S. is not dragging them forward. They are going fast to get back into being a place where capital can be safely deployed. I was at a conference show yesterday put on by the Royal Bank of Canada. Again, another Canadian reference. And there's a lot of Canadian companies, T.C. Energy,

Enbridge, some others that send us a lot of their oil. Would you as Interior Secretary and former North Dakota governor right up against Canada support more importing of Canadian oil? Well, we've been a great partner with Canada. And I think one of the things that maybe people that are paying attention understood, but under President Trump's leadership, There have been zero tariffs on Canadian energy since he took office, and it hasn't been contemplated. And again, that's for smart strategic reasons. That's a benefit to both of our countries. And again, kudos to Alberta and Saskatchewan in the leadership there.

Danielle Smith, Scott Moe, doing a great job developing their energy resources. And obviously, we all win together on that one in terms of both affordability and energy security and reliability. So that's one area where the partnership is really working between those two provinces and the United States. Interior Secretary Doug Bergam, Secretary Bergam, know it's been a busy time. We appreciate you taking some time to join us here on CNBC. Thank you. Thank you. Brian. Great to be with you. Always. And I believe, I think we're going to be speaking with Secretary Wright at some point in the next 24 hours as well. We'll see. Looking forward to that. Lock on. Very fluid. Indeed. Very.

The risk premium, speaking of which has soared to get ships through the Strait of Hormuz. We'll speak with the head of one of the largest insurance brokers in the world about that right after this. Tensions are boiling over in the waters of the Middle East. Iran striking three cargo ships off its shores this morning, according to the U.K. Maritime Trade Operations Center, including this Thailand-flagged cargo ship, transiting the Strait of Hormuz with 23 people on board.

Its operator says the vessel was hit by two projectiles of unknown origin. shipping traffic through the vital waterway has grown to a near standstill since the start of the Iran war. And in the last hour, news crossing that insurance giant Chubb will be the lead underwriter for a U.S. government-led insurance program for ships in this region. Joining us now for more is Marcus Baker, the global head of marine cargo and logistics at Marsh, one of the biggest shipping insurance brokers in the world. They also work with Chubb. It's great to have you here, Marcus, and just a comment on the significance of this Chub deal and what you think, the current situation is for ensuring ships through the straight. Yeah, thank you so much for having me on, Kelly. Look, I think any announcement like this serves to create a degree of certainty

in the announcement that the president made last week in terms of the involvement of the DFC. And our perspective on that is that's a good thing. So anything that's going to help to increase confidence in the market and increase confidence amongst ship owners is going to be good. In terms of the current situation there, look, it hasn't changed an awful lot. And I think the primary reason for that is that it's not an insurance issue. Insurance is the insurance market is vibrant. It's working.

It's offering terms. I think it's a safety issue. And that's going to be probably one of the next hurdles that we need to get over as an economy or as the economy to actually figure out what that's going to mean, how we're going to do that to protect seafarers and assets going through the region. Let's repeat what you've just said. important. This is not an insurance issue. It's a safety issue. And this echoes what we've heard over the past couple of days. People say you can get coverage to go through. The freight rates have surged. So it's actually profitable if you can make it through. So from your industry's point of it, while it's good, we put these vehicles in place. Don't get me wrong. We want to make sure that the

insurance backstops are there. But that's not necessarily the biggest thing keeping things from flowing right now. You would say it's safety. Can you describe in more detail what we have to do to get those safety concerns taken care of? Sure. I mean, look, I think, let's just look at the mechanism that's in place to take care of things like this. This is a well-trodden path, unfortunately, I suppose, is the right phrase to use there, because there is a mechanism within the insurance industry that assists ship owners, even aviation business, to make sure that we can provide cover in periods of extreme stress like this. And that's the whole purpose of perhaps what the war insurance market provides. Now, in terms of what do we need to

see, I think there would be more confidence, more ships trading through the region with some armed support. Now, that's difficult at the moment. We've got obviously a lot of the ships that are there, the military ships that are there are involved in other things. And I think once that starts to settle down and we can start to see some maybe multinational flotillas to support ships trading through that area, then things are going to start to move. So you would like to see multinational flotillas to help ships get through that region safely. Right now, how expensive is insurance? And, you know, how might that change if all of a sudden we have multinational flotillas on the scene

and able to kind of play a role in assuaging those concerns? Sure. So, look, I mean, before things kicked off 10 days ago, we were looking at rates for ships trading through that area of between 0.25 and 0.5%. And that's on the value of the ship. So let's take an example, a 10-year-old VLCC, that's a very large crude carrier, might be worth $100 million. So that's somewhere between quarter of a million and $500,000. And that is just for the additional premium to go into that area.

Now, if you are going to go west of the Straits of Hormuz, those rates have moved up to, let's say, 3%, maybe a fraction more from today because so far we've had. around about 21 ships since things started last Saturday. So that's a, I mean, nothing, nothing major apart from, unfortunately, the tug that was hit. But there has been damage. So I think people will look at that and say, okay, this is becoming an area of stress. And so we need to appropriately price that. So if that, if we got the flotillas in place, and I think a multinational force would be appropriate, I'd certainly like to see that 3% come down to something approaching sort of 50% of that over the course of a period of time when we could show that that was a safe passage.

That's Marcus. Thanks for giving us that granularity. We really appreciate it and explaining what we need for this to move forward. Thanks for your time. Pleasure. That's Marcus Baker with Marsh. All right. Let's get now over to Kate Rooney with the CNBC News update. Hi there, Brian. The American military probe into a deadly missile attack on Iranian on and Iranians. Iranian elementary school has reportedly determined that the U.S. was at fault. That is according to the New York Times, which reports investigators have determined the bombing was a result of a targeting mistake because U.S. forces were using old data to conduct strikes on an adjacent Iranian military base. Iranian officials now say at least 175 people were killed,

most of them children. And after defending the filibuster for years, GOP-Senator, John Cornyn reversed his stance today, writing in an op-ed that the Save America Act, which mandates proof of citizenship for voter registration and photo ID to cast a ballot is more important than the filibuster. President Trump has repeatedly called for the end of the tactic. Cornyn faces Ken Paxton in a runoff election. President Trump has yet to endorse a candidate. And finally, the Defense Department has reportedly banned press photographers from briefings on the Iran War. The Washington Post now reports that Secretary Hague says,

staff made the decision after they deemed some of the photos taken of him at the podium as, quote, unflattering guys. Back over to you. That's every photograph of me. Thank you very much. Amen. To me, not to you. Uh-huh, uh-huh. Take a look at this. I'm 107 years old. I look pretty good. Take a look at this mystery chart. This stock's soaring 330% of the last year. And if you listen to your next guest, when he came on our air in late August, you would have more than doubled your money in that stock. Huh. We'll join us on the other side of the break with more picks.

Welcome back. It is now. Power Check time. Jay Peters is here on set with us. He's portfolio manager at New Edge Wealth. And first of all, it's great to see you. Yeah, thanks for having, Kelly. I don't know if you like or hate these kind of markets, but it certainly creates some entry points, shall we say, some tactical opportunities and you brought us some defensive

growthy names. Yeah. Is that right? Okay, welcome. Thanks. And, you know, the saying is defense wins championships. And, you know, I think there is merit to having some of these in your portfolio. You know, what we've seen lately, I think, is, you know, a reminder that volatility is here with us in this market. And, you know, these companies are typically more economically resilient, more interest rate resilient. They offer more durable earnings growth. Well, let's talk about the first one, which is AutoZone. And, you know, so there's, like,

is AutoZone the one that's bought back, like 80% of the flow or whatever? Okay. So why do you like this one? Yeah, so countercyclical industry, for sure. Not a name you think of when you think of a growth of your company, but this is a company with a lot of attractive characteristics. You know, ultimately, we all need to get to work at the end of the day. People opt to repair, over-replace their vehicles when they do see environments of sluggish economic activity or pricing pressure. AutoZone is a company trading at roughly 23 times earnings today, mid-single-digit, same-source sales growth, consistent double-digit earnings growth.

Love it. It's like same multiple as NVIDIA, you know, which would you rather? Yeah, it's good question. I think a company that buys back, as you said, 80% of the stock since inception, 50% of the stock over the last 10 years is certainly interesting for long-term investors. And just, you know, looking big picture, the average age of the cars on the road is about 13 years today. That's a record high, record high miles driving. And I don't know if you guys have been driving around in New York City.

But I think as we enter the spring, summer driving seasons can be a lot more maintenance for vehicles given some of the conditions. You've seen the potholes then. I had a pothole that required a ladder to get out of it the other day. It's unbelievable. Anyway, our mystery chart, which has just soared last August, you recommended Argan, A-R-G-G-A-N, And Virginia-based company, they're the ones that do, I hate to say this, I'm not offending them, the boring work of actually building some of these natural gas facilities that we talk so much. Do you still like it, though? It's had a heck of a run. That's correct. It has had a heck of a run. It's incredibly well positioned to benefit from the buildout of power generation facilities in this country. I think a lot of that theme has been priced in here recently. I think you have to have a little bit more modest expectations for earnings growth and performance. But I think it's a name you add to your watch list on on any pullbacks. You know, it's certainly a company that's known for bringing on these facilities quickly and

efficiently. And ultimately, a company we still like, but, yeah, certainly been a great performer in our portfolio. Totally different name here. Brookfield, the data, kind of a data center play. Brookfield infrastructure. And I worry about data center plays sometimes because broadly speaking, it seems genius. But then you get into the nitty gritty sometimes, like, what's the credit structure?

What are the cash flows? What if they move on to the different data center with the latest and credit? greatest, you know, what's the valuation, all of these things. Yeah, and I think those are valid points, Kelly. And, you know, this is a company kind of synonymous with the global infrastructure assets. There's not just data centers, but, you know, transportation pipelines, electrification plays. So, you know, it is more of a steady grower, for sure. You know, 4% dividend yield, solid balance sheet, reasonable valuation relative to utilities, peers.

I do think that the AI infrastructure theme, you know, is interesting. This partnership with Bloom Energy, which they've talked about, bringing fuel cells to power data centers, certainly an interesting angle. But, you know, I think at the end of the day, a durable grower known for kind of premium assets, high returns on capital, and offering, you know, a healthy dividend yield as well. All right. Something less scary, I guess, in the private space right now. Jay, thanks so much. Good to see you again. Jay Peters with New Edge wealth. Coming up, the name's moving most on our screens today. We'll bring them to you right after this. Welcome back. We have some news on OpenAI. Kate Rooney. What's happening?

Hey, Kelly, so Sam Alman, CEO of Open AI, just got off stage at a BlackRock Infrastructure Summit in Washington, D.C. A couple headlines from the OpenAI CEO talking a lot about energy demand, the data center buildout, and semiconductors. Starting on a custom chip that OpenAI had been reportedly building, this is inference-only, Altman, confirming that this is on track to launch. At the end of this year, he says it's going well, it's a specialized chip and will be the cheapest and most efficient on the market. it is for inference only, not training, does say, given the constraints, energy and being efficient, basically, is going to be important in the future. They're designing their chip around that. Speaking of the energy demand and build out, he talked about current power capabilities

and says he is, quote, hoping for a miracle in terms of figuring out how we can get more efficient per watt, talked about some of the existing resources. But again, hoping for a miracle that we can get more energy capacity. then says on AI in general, says that he's a huge believer, governments should not interfere too much, says it's an exceptional time. Society has a legitimate interest, says it shouldn't be up to companies or the government

to impose any particular will on how AI will be used, guys. That's the latest from Allman. Back over to you. So this is the guy, I want to be clear, this is the guy that is going around saying we need X number of gigawatts to power the AI future. It's been kind of handed out gigawatts like people give out cars on talk show. And yet he's hoping for a miracle.

Okay, Kate Rooney. Yeah, sorry, got to go. I shouldn't have asked that. Kate, thank you. We're back after this. Add former Starbucks CEO Howard Schultz to the growing list of billionaires flocking to Florida. He announced on LinkedIn that he and his wife,

Sherry, have moved to Miami, and that their family office will also be moving to Florida. Their foundation will remain based in Seattle. The Wall Street Journal reporting earlier that Schultz recently purchased a $44 million $10 penthouse, Brian, in Surfside, Florida. Yeah, I mean, listen, a new first ever income tax for the state of Washington, by the way, but you layer that on higher property taxes, the highest, I think, sales tax in America.

Gasoline and all are viewers in Seattle area, they're paying, what, five bucks? It's amazing. It's a beautiful part of the world, but it's going to keep layering on higher costs. And what about our neck of the woods, where they're talking about austerity for the budget and cuts the, you know, the schools that can't meet their health payments. And so, you know, in property taxes are already. Where's the money going? That's it.

We should launch CNBC 2. Where's the money going? No, seriously, where's the money going? I totally agree. I totally agree. Thanks for watching, everybody. Closing bell starts right now.