Power Lunch - Power Lunch 3/16/26

Episode Date: March 16, 2026

CNBC’s Kelly Evans and Brian Sullivan take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day’s agenda. ���Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome back. Stocks are starting out the week on a high note as oil prices retreat, even as the Iran war enters its third week. Welcome to Power Lunch alongside Steve Leesman. I'm Kelly Evans. Brian Sullivan is on assignment in Paris, where he sat down for an exclusive interview with Treasury Secretary Scott Besson to discuss China. Iran energy prices. It looked like it moved the oil price. He gets to go to Paris. He gets to interview the Treasury Secretary and he gets to stand in front of the Eiffel Tower. That shot was beautiful, wasn't it? That's like jealousy times three today. He'll bring us back a croissant. We'll see. if we're lucky. Almond one.

All right now, Kelly's stocks are higher across the board, which is great, all three major averages in the green among the biggest sector. Gainers, tech and financial. Speaking of tech, shares of Nvidia are higher as the chip giant kicks off its annual GTC Developers Conference. CEO Jensen Wong set to take the stage at any moment. He's expected to offer insights in the AI race,

Nvidia's next-gen chips and key initiatives for the company. We're going to keep a close eye on that. Yep, as you mentioned, shares are up to. percent into it. And as we mentioned a moment ago, crude oil prices are down today, although still way above their levels pre-Iran war. We did touch $100 for the first time since 2022 last week. WTI is now around 94-48 this hour. Keep a close eye on it, down about 4%. So let's begin in San Jose, California, because right now, Nvidia's CEO Jensen Wong, taking the stage for the keynote address any moment. Our Christina Partsenevelis is on the ground to monitor that event. And give us a sense

You know, the market is excited going into it, Christina. Yeah, excited because the stock didn't really move as much as it normally does the week before GTC. Usually that's a big upswing. So perhaps there's some buyers along with just the general upswing in the market. The AI Gold Rush, though, really has a new frontier this time around. And for the first time, I'm going to say it, Nvidia isn't necessarily automatically the answer. As the industry pivots from building AI models to running them, rivals like Google, Amazon. on meta, Cerrevis, which is a startup, are all selling or working on chips specifically

designed for the job. Invidio's dominance is no longer a given. So right now, in this stadium behind me, Jensen Wong is about to make his case, expect a new inference chip powered by GROC technology, which is going to be faster, leaner, and built specifically for real-time AI tasks like inference. And VDVDio's GPUs essentially struggle with that part. There could be a potential collaboration with Intel on custom CPUs for enterprise data centers. So it could be a positive for Intel. And then NemoClaw, an open source platform for AI agents that puts NVIDIA inside the software layer for the first time. And lastly, a deeper push into optical networking, really the plumbing that connects thousands of GPUs and increasingly decides how fast AI can move.

But investors will be listening for something else and maybe only get it tomorrow. InVdnVos 500 billion order backlog was disclosed over five months ago back in D.C. And the company has only been guiding a quarter at a time. Any updated number and any visibility into 2027 really could be just as important as anything CEO Jensen Wong says on the stage behind me. Guys? Christina, can you just help me out with what an inference chip is and how big a deal this is in terms of a quantum leap from the kind of chips that we maybe know what we're talking about? Yeah, so the GPUs were originally used for training models. So think of it like you're going to take all the encyclopedias and study every single bit in there.

The encyclopedias are the training part. The inference part is when you ask your chat GPT, please tell me the GDP numbers over, you know, the last 20 years and how much they've deviated in a six-month time frame. I'm trying to, you know, cater to you, Steve, right now. That's what I would ask. That question, that query, that query is the inference part. which can get more technical, but it's the part where it actually answers your question. And the chips needed for that part are not necessarily the same chips that were needed for the training part. And so that's why there's just this questioning around the role of GPUs on the second stage as well.

All right. Well, thank you very much, Christina. I needed that explained. Did you know that? It was good. Well, I think that you're smarter about this stuff for sure. Listen, there's the training. We all think about the training, like the amount of data center would take to kind of just train the language model. And then there's just the answering. And, you know, I think about our business, the news business, you know, how does it scan to give you that up-to-date result and do things like that? And, you know, it takes a lot of compute, but not maybe the same kind or not as intensive.

But I think these are the questions. It's like the back room of a restaurant versus the people who are up front. You know, he's got great analogies. All about metaphor. As we mentioned, our Brian Sullivan, he's got the, he's, oh, yeah, there we go. He's in Paris today. And where do you see the shot? You'll know he's in Paris.

He sat down exclusively. with Treasury Secretary Scott Besant there to talk China, Iran, energy, and much more. He joins us now with the highlights. Brian? Yeah, Stephen Kelly, thank you very much. And unfortunately, just missed it. We got five minutes at the 7 o'clock here in Paris time where the Eiffel Tower is sparkling, but it's all lit up either way behind us. And listen, I think the president and Scott Besant today,

they're kind of hoping that maybe the oil markets are going to get lit up in a good way where perhaps the worst is behind us. we shall see the markets trading, as you guys know, day to day. Oil, of course, fell down today a couple of percent because there is some hope, some optimism in the market that maybe we are going to see increased flows, which means increased supplies. I mean, the markets are focused on ships through the Persian Gulf and through the strait, but really it's about what's in those ships, whether it's oil or liquefied natural gas

or even helium for semiconductor production, some of the stuff that goes into what Christina just talked about. Anyway, Treasury Secretary Besson was here earlier today. at the OECD, meeting with the Chinese about trade, but also about a potential and planned and hoped for meeting with President Trump in April in Beijing. We began our interview by asking Treasury Secretary Bessent about that meeting and about the relationships with China.

We will see whether the visit takes place as scheduled, but what I do want to parse, and there's a false narrative out, there that if the meetings are delayed, it wouldn't be delayed because the president's demanded that China police the straits of her moots. Because there was a report out to that effect this morning. That's completely false. So if the meeting for some reason is rescheduled, it would be rescheduled because of logistics, the president wants to remain in D.C. to coordinate the war effort.

and that traveling abroad at a time like this may not be optimal. Because that narrative is out there. So you're not saying that the meeting will be rescheduled, but you're saying that, and correct me if I'm wrong, please, sir, if it is rescheduled, it's because of time and travel, not because of a dispute over the Strait of Hormuz. Exactly. It would be a decision president made as commander in chief.

chief to stay in the White House or to stay in the United States while this war is being prosecuted. Because you're a market expert, obviously, longtime market participant. The markets may react to any word of a delay, pause in the meeting. And you're saying if this meeting is paused or delayed, the market should not react, assuming it's some conflict between the two nations. Absolutely not. We had very good two days here. We'll be issuing a statement in the next few days, and we'll be reaffirming the stability in the relationship between the first and second largest economies in the world. So we'll see if that meeting happens and if it is happening in April. And if not, you heard what the Treasury Secretary said about maybe the reasons why. The other issue, obviously, of course, is all the ships in the Persian Gulf,

going in and out, fill with the commodities that are moving the markets. And we asked the Treasury Secretary sort of about shipping lanes and about what might or might not happen. And he used, I think, some rather interesting language regarding the U.S. and Iranian ships, or at least ships filled with Iranian oil. We are seeing more and more the fuel ships start to go through. The Iranian ships have been getting out already. And we've let that happen to supply the restaurants. rest of the world. We've seen Indian ships go out now. So the Indians who rely very heavily on

Gulf oil, we believe some Chinese ships have gone out. So that should start ramping up before there are any flotillas or protective armadas in the Gulf. So we think that there will be a natural opening that the Iranians are letting out. And for now, we're going to be a natural opening. And for now we're fine with that. And then some later breaking developments today here, guys, where the president, President Trump, trying to build some kind of international coalition to maybe help out if there needs to be naval escorts

through the Strait of Hormuz. The French president, Emmanuel Macron, Trump's saying he's optimistic that the French here in Paris, that the indeed will help as well, but that it was not as confident about the UK and Germans coming out and saying that Frederick Merrill is the chancellor there, saying they are unlikely to help in the war. A lot of headlines, a lot of stories up on CBC.com around our exclusive with Treasury

Secretary Scott Besson earlier today. You're in Paris. But Brian, the Europeans sound pretty furious and frustrated about this way that Mertz has said, you know, I don't see this as an issue for NATO, but as some are pointing out, like analysts are pointing out, there's two problems from the Europeans with what the U.S. has done here. Number one, oil prices have skyrocketed, so that's giving Russia more money to keep its war on Ukraine going. And number two, Trump lifted the sanctions on Putin, overruling the unanimous objection. of the G7. So in other words, for the Europeans who are already trying to fight this, you know, what is it, three, four years long war with Russian Ukraine that's lifted their energy prices,

now here comes a layer that is now doubly or triply complicated that problem for them. Yeah, and you can go to CBC.com and see the full interview. It's cut up into two parts, but the whole thing is there. And we talked to the Treasury Secretary about exactly that. So the optics of that 30-day pause or removal of the sanctions on Russian oil. And his answer was, effectively this, that if we did not do that, that the Russians are selling oil effectively anyway. If we did not do that, the price of oil might be even higher and more money would then be going into Vladimir Putin's pocket than if we do do the pause, maybe free up a little bit of that oil and keep the price stable to a little bit lower.

Putin is going to make the money, but he would make less than he did. That was the idea behind that thing. And the president, to his credit, was in that meeting, you heard last hour saying, 32,000 people according to what he, the information he has were killed by the Iranians, and he felt it was the right thing to do, that it was the moral imperative. But so he's trying to put the moral onus back on the Europeans to stand up here. And as he has said before, this is a test as he views it of NATO. Yeah.

Yes. But I want to be clear, too. And there's some reporting I've done as well, not in the interview today. Some reporting I've done on my own with intelligence sources. And I want to say this. There is a big question out there about who exactly are we dealing with? Kamani's son, they really believe this is public information, is injured? And is he really the leader or just kind of the faceplate or the nameplate, if you will, of Iran?

And if indeed we are kind of fighting not the head of the snake, but rather a bunch of, say, Iranian Republican Guard leaders who are kind of acting in a rogue way. So we don't even really know right now who were necessarily. dealing with and who to either, I would say, make a deal with or be able to prevent those people from firing a shoulder-powered missile or a rocket or sending a drone out at a ship in the Persian Gulf. The market's obviously today taking it as if the story is not over, but winding down. And then if we look at the market, if we go out what they call, it's backward-dated, higher prices here versus the April, May, June, or July contracts, those are lower than they are now. the market sort of betting on a more calm outcome,

but we will see, and I know that we've got the great Dan Yergan on, who has forgotten more about oil and energy than I will ever know. He'll be on in a few minutes and look forward to talking to him about just that, Steve. Brian, thanks very much. We're going to hear from you later this hour, and I have some questions for you coming up later this hour, so get ready. A lot of big tech headlines to get to. Also, we're honing in on chips with Nvidia, AMD, Broadcom,

and Intel all higher as G-T. T-C gets underway. A lot of abbreviations right there. Meta META up almost 2% after reports it's planning massive layoffs to offset its rising cost in AI. Dan Ives of Wedbush will join us to discuss all of this on the other side of the break. Welcome back. Invidia CEO Jensen Wong could get on stage to deliver his keynote address on the next generation of AI any moment now. Bringing those headlines as they happen, the market for its part still around session highs. The stock is up too, Invidia is it's up nearly 3% now in the session, and it's up, you know, a cool 22,000% over the past decade. But as you can see, it has made you zero money over the past six months or so.

As sentiment around the AI trade has cooled off. So can today's announcements get its shares moving again? Let's ask Dan Ives. He's head of technology research at Wedbush. Great to have you here, Dan. Appreciate you coming in studio with us. Maybe let's just start with this question. We started to get into a little bit last hour, but this competition,

with Google. You know, if Google can answer questions with Gemini really well and fast and they're using their own chips and their TPUs, how does NVIDIA answer that? You look, the reality is, I mean, Nvidia is two to three years ahead of anyone, including Google. So look, with TPUs or even when Open AI is going to come out with, I mean, there are some alternatives, but the reality is you want the gold standard when it comes to NVIDIA. Now, if you look at meta and others, you can get for every 10 chips that you want to get, you can maybe get three of them. Wow.

So it speaks right now. We're talking demand supply is 12 to 1 for Nvidia chips. But when it comes to GROC and what they're showing in inferencing, this is them saying we're not losing that market. Rock with a Q, not Grock with a Ket. Rock with a Q, exactly. And that was from the acquisition, you know, in terms of essentially what they did.

This is basically Jensen and Vivida saying that is going to be our market as well. And it speaks to a 3 to 4 trillion market opportunity they're going after because right now, it's their world, everyone else paying rent. So this is like the Lollapalooza for chips and learning and inference chips, everything like that, which a Lollapalooza has a lot of different acts. But you're saying there's really only one act going on there. Look, their third rate chip, a restricted H200 in China, is still, what, two years ahead of Huawei? Right.

They're on the outstage. Look, and the reason, look, they're on, I mean, going back to that, they're the main state. Everyone's waiting for wins Jensen coming out. But it's really all about getting people to sign on and sign up for more invidioch. Because once you're in it, you're not leaving. You can't leave. And it speaks to what they recognize where they are. And they'll talk about, Jensen will talk about a GTC, just saying how, like, demand continues to accelerate.

You look at like the $500 billion that Christina talked about. I mean, that's probably closer to, what, six to seven hundred? In terms of their order backlog? In terms of the order backlog that they haven't appreciated. Do you think he's going to talk about the backlog today? I mean, I think he's going to touch on it, but it speaks to this whole point where streets giving, I think, minimal credit after what was just what I think of Michael Jordan-like quarter that they just had to what is actually happening on the AI demand store. And it just speaks to the cap-backs. You got to follow the numbers.

And the reality is that those cap-x dollars, the vast majority, it's coming. to NVIDIA. But I just want to get this because what you're, it sounds like what you're saying is, winning perforce creates more winning. So there's this order book, but there's this whole other thing happening underneath here where when you bring somebody on, you're going to create more orders down the road. Yeah, to put it like maybe in numbers. Yeah.

Let's just say like 20, 30% is right now what they may be like, they already have stamped. Right. But they're focused on what's the 70, 80%? percent down the road. And that's really what the whole conference is about is that as when it comes to things like physical AI, autonomous and robotics, I mean, that's really something that Jen and Vida are going after. None of that is factored into the stock. It just speaks to our view like you're in year three of an eight to 10 year build out. And I just think a lot of that is not being factored into this stock. And I also think when it comes to software and the AI goes trade and anthropic and everything, I think it's being very significantly miscalculated and underestimated.

how software is going to play a huge role in the use cases. Yeah, you're more bullish on that piece of it, yeah. So not factored suggests there's a number in your head. At 185, what's not factored in? I mean, I'd say $130 to $150 left is not factored into the stock. It's already like $300 a base case. What are they going to be an $8 trillion company? Look, I believe, but 2007, $6 trillion in terms of where this market is.

Now, I get it right now in terms of geopolitical white knuckle period, New York City cab drivers barris and tack. But we will get to a point as the numbers play out. And I say it's still a cheap stock. And like, Jensen's going to come out. This is going to be no holds barred. I think you're going to see a very aggressive Jensen talking about. This is our market. Quickly on that point, I don't know if you heard last hour we're talking to Eli Patel and Alex Rosenberg about this.

But we're kind of likening it again, trying to find analogies here to the state of the union. I was just observing we used to cover Apple events like this kind of don't anymore. But they said, yeah, he also has, he's communicating to the public about AI. And they're making the point that AI actually not that popular with the public, even though apparently a lot of people are using these things. But I think they're just kind of worried about the impact, the little uneasy about it. Does he play a role in messaging that, do you think? I think there's no better messenger in terms of the godfather of AI Jensen.

But again, it comes down to like for Apple and Cook, they're waiting for their moment. a lot of that self-inflicted, but the consumer AI revolution will go through Apple, which speaks to our view. And that's why there's such a key moment for them when it comes to Siri AI and ultimately them monetizing AI. But look, they've been on a treadmill 2.0 speed. And now this is a huge sort of time for Apple to shine. What about what Met is doing? What's your take on that real quick? I think right now that it's a smart move in terms of the capbacks every they're doing.

I think in terms of the layoffs, I think that's probably, you know, way. overdone relative to what will be the reality, probably half that. But they are in, they're in really an offensive mood to monetize. I think Zuckerberg ameta is doing all the right things. Streets not giving it credit because we're in this glass half empty. But to what end? I just can't visualize to what end. I understand if it's better ad load for Instagram, fine.

I get that. But is there, people keep saying, no, no, he's got a bigger vision now. Well, what's the vision? I think it's two to three billion users. You all of a sudden monetize that from an advertising and upsell another 20%. Yeah. But within the existing, you know, verticals that we know about. But for them, it's really all about monetizing their install base.

I think that is going to be the key, whether it's on advertising or whether it's going to be on the hardware side and ultimately the future. It's much more going to be about revenue than a cost optimization. Or a product introduction. Dan, we have to go. But this quick question, if your view was less rosy, would you wear more muted colors? Is that a meta thing? I'd be here in a, I'd be a three-piece black tuxedo. If I was bearish, if I was bearish, I can see a bearish.

So this, we can know right away when you come in, your view. This is a bullish, this is a pre-booking and ready for the godfather of AI on stage. All right. Dan Ives, ladies and gentlemen, dressing the part. And don't miss our exclusive interview with NVIDIA founder and CEO. Yep, Jensen Wong tomorrow at 10 a.m. Eastern on Squawk, Squawk on the street, that is. And more on mad money at 6 p.m.

coming up. stocks are higher as we gear up for a busy week for the markets and the Fed, all while investors monitor the ongoing war in the Middle East and in-depth discussion with Jeffries David Zervos. Next step to the break. Welcome back to major averages are bouncing higher to start the week. This comes ahead of the expected penultimate FOMC meeting for Chairman Jerome Powell. We think we'll talk about that later.

While the Fed is wildly expected keep rates unchanged this week, investors, trying to predict what the Fed's rate cut path might be going forward. let's bring in David Zervos, Chief Market Strategist at Jeffries. He has it all figured out, right, David? I don't know about that, Steve, but I'll give it a shot. Go ahead, go ahead. What do you expect now? The market has gotten way bearish on rate cuts now.

It essentially has one priced in. We'll have our Fed survey tomorrow that will give a slightly different view, but there at a 66 probability of one cut, but only a 25% probability of two cuts. Is the market wrong there, David? So I think the market is reacting to this oil price shock the way you might expect, but actually probably even a little more resiliently, particularly looked at through the lens of risk assets like equities. So I've been pleasantly surprised at how much the risk asset complex has held up in the face

of extreme movements in energy and lots of risks of what's happening in the region that we in the financial markets are really terrible at evaluating. geopolitical types. I call us geopolitical tourists, generally speaking. And I think I'm happy with that. How the rate market has evolved, I think, you know, pricing out one cut seems to make sense. I think that's going to get priced back in once this is all said and done and oil is back down. And I don't know if that's one week, two weeks, one month, two months. But I think we'll be back to where we were, Steve. And I think we will be talking about lower neutral rates in 27 once Kevin Warsh is appointed chair and confirmed.

And I think we'll be talking about even more than just two. You know, David, you raise a great point, which is this question about rate cuts delayed versus denied. I think there's a difference. I'm going to come back to that and just a second because you've given me an opening for something I've been meaning to talk about, which is through all of this, markets have behaved very well. And I mean the functioning of the market. We haven't had any dysfunction. I think that's an important fact that the process of price discovery goes on unabated or not hampered.

by some of those other issues that could come up. But let's talk about this because what I am seeing are some forecasts to say, okay, this process of this, you know, of high oil prices making their way through the CPI into the economy will simply cause the Fed to stand pat for a little bit longer. But as one forecast I saw said, we're going to get more of it that means probably either towards the end of 26 or into 27. Does that make sense to you? It does because I think this really does affect the growth trajectory and the employment

trajectory, Steve, you know, those numbers last week on the, yeah, on the employment side just are not great numbers. We're not making jobs. We're seeing relatively strong GDP growth, even though that got revised down, still, you know, north of what people think is potential. And we're just seeing job market stasis, and it's not just immigration. It's really been happening now for three years or more that the unemployment rate has been rising as growth has been strong. And I think that's That's really an AI story and it's a tech story like Dan was talking about in the last segment. But it's also a testament to the fact that I think policy is a little restrictive and that's feeding a negative demand side impulse, particularly for that cohort that's being most affected, which is the younger, more educated cohort.

So I'm going to add that I think that the Fed might think that it's in a good place being a little bit restrictive with this inflationary impulse coming down the pike for better or worse. But tell me what your markers would be that, you know, when you start to put things on the cut side of the ledger, what would you be looking for that would prompt the Fed to start to change policy and start talking about cutting rates again? Yeah, I think it's a good question, Steve. I think it really is about the change in command. I don't think under Powell or if there's a temporary move to fill the vice chair who might have to take over if Kevin's not confirmed by then or can't get through the Senate. I think it's going to be the change of command that really changes that storyline that we're seeing. This is probably not a Fed. that wants to be particularly cooperative with the administration. It's sort of dug its heels in many times, not just in the recent past, but it did that way back in 2018 as well. So I just don't think the cooperation is there or the benefit of the doubt is there when it

comes to tariffs, when it comes to negative supply shocks and energy, they're just going to, it's easier to sit back and just say, hey, we've got to watch the inflation a little bit. You're going to have someone, and I assume you'll have folks on the committee that are going to side with this thought that there are more supply side drivers that are disinflationary and that there are real risks in the employment side of the equation that have been around for a while and seem to be getting worse, not better. Let me try the other side of the risk equation here, David, which is that the Fed has inflation above target.

It looked through the tariff inflation and you're telling it you should look through the oil inflation and therefore you undermine the credibility. of the target and its commitment to it. You know, I look at things like the break-even inflation rates in the forward, Steve. They don't suggest anybody's nervous about long-run inflation and that it's anchored as anchored can be. I know it's not perfect. The survey data has come back down as well as you've seen in your surveys, as well as in

the Michigan and the New York surveys and the consumer confidence surveys. And the bottom line is this is not a period of time where people are freaking out about inflation risks. We've just come down from 9.1% CPI to basically two and a half after, I think with the lowest core CPI or CPI print since March of 2021 before we had the major liftoff. PCE's been a little stickier. I think that will ebb as time goes on, but we will see. And in a large part, I just think the inflation's sort of dynamic and story of we're going back to the 70s or there's some sort of de-anchoring of inflation expectations is just a garbage story. And the market's pricing it that way. The Fed is not.

The Fed's being a little stubborn, and they have been for a while. But I think that's more politics than substance. And I've been saying that for a while now. All right, David, thank you so much for your thoughts on this. I think I got it right. We're going to be cutting rates just holding off for a little bit, I think, Kelly. All the way until September? It's risk on, but maybe a little risk on hold for a little bit, Steve.

Like those clouds gathering behind him. He's so cool about it. It's terrible sky in D.C. It's scary. Yeah. Oh, I've seen pictures of tornadoes coming through Southern Maryland. It's crazy what's going on here. It's ironic, David, because I feel like you're one of the most constructive people generally.

You're like, enough with the geopolitical tourism. Wait, are those literal clouds or figurative clouds? It's like the sky is supposed to open up here between three and six, so it's going to get really messy here in D.C. No, I didn't, I don't, that's not a, that doesn't portend anything for my economic outlook. I thought that was a figurative characterization of political situation in Washington. Never mind. We're looking for metaphors all day here. Always. David, thanks, David Zerbos.

President Trump, meantime, calling on allies again in the past hour to help protect tanker traffic through the Strait of Hormuz. Oil prices are now below 94 a barrel. These are session lows today. At 93 and change, we're down 5%. Brent is just a round 100 on the mark. We'll have more with a noted expert on the situation next. As we just mentioned, we are seeing oil prices fall almost $7 a barrel. Intra Day. We were at 100 on WTI this morning and we're now around 93 in change.

The president has threatened to hit Iran's oil infrastructure, but he did say last hour that prices would come down rapidly after the Iran war. Brian Sullivan is live for us in Paris, where he spoke exclusively with the Treasury Secretary earlier. That might have had something to do with the oil price drop today. Dan Yergan is vice chair of SEPI Global and Sierra Week conference chairman. Dan, Steve and I were just singing your praises back here. We're both thrilled to have you on the program here.

Thank you. Can you just react, just literally extemporaneously, to what you think the current state of play is in this conflict and with the oil situation? Well, I think that we're in the second week of it. I think that, you know, prices down a little bit. Note that they've actually prices on real terms have been higher than this. But the real question is how long this persists. The U.S. strategy is pretty clearly laid out four to six weeks of attacks to undermine.

Iran and the Iranian strategy has also been years in preparation, which is to wage war in the world economy, which they're doing right now. Hey, Dan, it's Brian Selvin in Paris. I'm really looking forward to Sierra Week next week, by the way, super timely. Always a great event, but this year, I think incredibly timely. And one of the things I'm going to ask all the guests, we've got a great lineup coming up from your conference, gets better every year. One of the guests, the questions I'm going to ask a lot of the guests, and I want to

get your take on this as well, is how does what's happening? now, this realization of just how important the Persian Gulf and the Strait of Hormuz is and global insecurity on supplies. How does this, if at all, change longer-term thinking among American oil producers? Will they start to produce more oil? Because suddenly now we realize that maybe we've taken for granted a little bit of energy security. Well, I think we certainly took a lot of energy security for granted until the Russians invaded Ukraine. And now we're taking a lot of, a real lot of energy security into consideration, particularly, by the way, in Asia, which has been the hardest hit so far. I think one of the other questions at Syriuk is going to be, is this great

bounty of shale oil? Is it plateauing or is it going to continue to be able to increase because of additional technology? I think what this does is it puts more emphasis on exploration worldwide to drive for diversity of supply. So do you think the companies that are coming are going to be a, if they wanted to, now they've got the profit incentive now. Can they produce more oil? Will they produce more oil? Can the U.S. go above 14 million barrels a day? Well, I think the, I mean, the incentive is there. I don't think anyone is thinking that this is going to last for a protracted period of time. If it does, then we do move into the nightmare scenario. I think that, people are pretty much producing at their maximum.

I think that they can push more out. They will push more out. But I think the general supposition is this time, this doesn't go on, you know, it's not over in a day or two, but it doesn't go on for more than a few more weeks one way or the other. There has to be some kind of resolution. Dan, first of all, I love Brian's questioning this long-term idea, but I want to bring it back to the short-term and the immediate deficit that's out there. And I wonder if you could school us a bit on this issue of stock. versus flow rates, which I've been trying to follow.

When they say they can put 7 million barrels in the pipeline and ship it across east, west, and Saudi Arabia, sounds like a big number relative to the deficit of 20 million barrels, but how much can actually be offloaded onto ships? Same thing with the 400 million barrels of the SPR, which sounds like a big number, but how much can they actually release? So what is the actual amount of the 20 million barrel deficit that can be attacked, given what needs to be not just the stock, but the flow rate onto the ships? Well, it appears with the Saudi pipelines, they already had oil in it that they were feeding

into their refineries and their facilities on the west coast of Saudi Arabia. So maybe add five million barrels there. There's the UAE pipeline that skirts the Strait of Hormuz that does keep getting bombed, but is operating, which is maybe 1.6 million barrels a day. And then we've never taken out four million barrels a day from the SPR. people think maybe we can do two million. And by the way, that 400 million is not just the U.S. SPR. The U.S. is about 162, 172.

They're talking about it's other people's stocks. And those take time. There isn't just a switch to turn on. And then the oil, you have to figure out how that oil gets into the market. So that's not overnight, but it's over maybe a week or 10 days. But it does send a message about confidence, which is one of the things that's SPR. which, of course, was originally established to deal with a crisis in the Persian Gulf going back to the Iranian Revolution. One more question on this line.

I read an analysis that said the problem is not that we don't have, we lack the oil. It's that the oil is in the wrong place, that we have all the reserves in the Atlantic Basin, but really the deficits in the Pacific Basin. How much does that matter for our ability to overcome this challenge? Well, that is it. I mean, you know, in the U.S., you're seeing the impact in terms of gasoline prices. In Asia, where 80% of the oil goes from the Persian Gulf, because the Strait of Hormuz actually economically goes east to Asia, there you're actually facing real shortages. And that can affect everything from plastic production to semiconductor production, as well as just people's ability to get oil to do their cooking, which has been the real problem in India, why India was able to negotiate a deal with Iran to get a couple tankers through the Strait of Hormuz.

Dan, I want to wrap it up with this, and I hate asking the question because we've had a tremendous day here. Great work by the crew sort of on short notice coming overseas. So I want to be optimistic crude oil is in backwardation, meaning future prices are low than they are now. That said, you said at the top, the nightmare scenario. I don't want to think about it, but what is it? Well, I think the nightmare scenarios, if this persists, not for weeks but into months, and then it becomes a real problem for the world economy. And in a way, that's the Trump card that the Iranians are trying to play because they're attacking, by attacking the oil facilities, by bottling up the Strait of Hormuz, they're really trying to hit the world economy.

And of course, please note that those Arab Gulf countries are important now, not only the sources of energy, but also they're major players in the world economy. Dan, what's your, I know this is really pedestrian for a guy like you, but what's your price of oil in the nightmare scenario? And sort of incorporating Brian's really good question, which is, let's say we do end up in a place where we are incorporating more risk, reality risk in the price of oil. Where if we put this back in this back in the can, where does it settle? down to the price of oil? Well, I don't want to put a price target out there, Steve, but just to say that it would be clearly a lot higher than it is today, but we're not there yet by any means, and it's important to convey that. Where it settles, I think, you know, before this all started, the price of oil was in the low 60s, and that's the baseline that you have to compare it to

as to where we are today. Even $90 were up 50%. Yeah, it's a big move. you know, if it doesn't, you know, you hope it comes down as fast as it goes up, well, we rarely see that being the case. Yeah, but just, Brian's notion is we're not going back to Kansas when it comes to oil prices. No, I think there will be a security premium going forward, but I do think that if this is resolved, you know, pretty quickly, then, in fact, prices would retreat because there's both fear in that price, as well as the real fact of shortage, particularly in Asia.

To absolutely great point. And we hope that that does happen, you know, that we just see it go. right back down. Dan, thanks. Click your heels and come home, Brian. Yeah. Only were that easy. Yes. Dan, you're going to S&P Global. Brian, thanks as well.

And a quick programming note, Sully will be out live in Sierra Week in Houston with some of the biggest names and energy next Monday and Tuesday. Who else is exhausted? Brian, I don't know how you do it. This man is like the Energizer Bunny. Let's get to Julia Borson for the CNBC News update.

Julia? Hi, winds, blizzards, and severe heat, putting more than half of the country in the path of extreme weather today. More than 3,000 flights have been canceled nationwide. Mid-Atlantic states are being hit with high winds and tornado warnings. Blizzards have buried parts of the upper Midwest, including Michigan, Wisconsin, and Minnesota. And a heat dome over the southwest is expected to push temperatures into the triple digits in Arizona for most of the week. Envoys from President Trump's Board of Peace have reportedly met in Cairo with Hamas.

as they try to safeguard the Gaza ceasefire, which is under intense strain since the war in Iran began. Reuters reports representatives met this weekend in the first publicly reported gathering since the start of the war. And seven members of the Iranian women's soccer team filed claims for asylum in Australia after the war with Iran began. Now only two remain, according to the Australian government, with the other five withdrawing their claims. They're expected to join the rest of the team in Malaysia where they are now playing. Steve, back over to you. Thanks, Julia. On deck, a check on yields as we monitor the fallouts of the war in Iran.

And as we look ahead to the Fed's rate meeting, which begins tomorrow. The bond report with Rick Santelli coming up next. And welcome back to Powerlun. Let's turn to the bond markets. US yields turning lower to start the week as the markets way the outlook for inflation and the Fed's next move. Rick Santelli, joins us now. Yes, I'll tell you, Steve, it's very interesting because it's not only the equity markets, obviously shadow boxing what's going on in cruise pricing.

It's the entire treasury curve. I picked a two-year to put up against a 12-hour chart of crude oil futures, and you can see how they are definitely tracking each other quite closely. And if you look at December Fed Fund futures, and this is a chart starting on February 1st, you see that big sell-off that started pretty much the... The February 28th, the day that the conflict began, and what's going on there? Well, it's pretty telling because the further down that contract goes, the more easing it's taking out. Pretty logical, a very aggressive move.

And, of course, with tomorrow being the first day of a two-day meeting, do not look for any major changes with regard to rates, but it'll be very interesting for the Q&A to hear how the chairman discusses all the uncertainties that have been added into it already, uncertain equation. And finally, the dollar index, one close above 12026, and we reverse back down, down now three quarters of percent on the session. Steve and the gang, back to you. The gang will pick it up. Thanks, Rick. Coming up a possible leadership gap at the Federal Reserve and real concern on Wall Street about what comes next, why a court fight could delay Kevin

Warsh's path to the top job. A high-stakes question hanging over the Federal Reserve, what happens Jerome Powell's time as chair runs out before a successor is in place, Steve. Well, we don't have a lot of time, but I'll do it really quickly. I'm going to talk about more in the next hour, but Judge quashes the subpoena on the federal. Janine Piro says, I am going to bring two actions. I'm going to do a motion for reconsider and an appeal. She filed the motion to reconsider. Bottom line is she's continuing the case.

The fight. The fight. Tillis has said, as long as there's a criminal investigation, I'm not, letting any people go through. Right now, about a 66% chance that Warsh is approved before May 15th when Powell's term ends, 34% chance it doesn't. So that's the key number is May 15th. Key date. May 15th. Yeah, exactly. Thank you. May 15th. And we'll see if it goes further or if this thing resolves and they can do the Warsh hearings and get him in place for Mif 15th. If not, he'll become the, they'll probably elect Powell's chair pro tem. Pro tem. You did. You did. You

Did that well in 75 seconds. Few can do that. A couple seconds of spare. See ya. Closing.