Power Lunch - Power Lunch 5/16/25

Episode Date: May 16, 2025

CNBC’s Tyler Mathisen and Kelly Evans 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.

A massive media and mobile phone merger on the move today. Welcome to Power Lunch, home of alliteration. I'm Brian Sullivan. Kelly was on Squawk Box this morning. So joining us on the desk, Contessa Brewer. Hi. Hi, Brian. How you doing?

All right on deck, tracking big money deals, the media and energy space, plus a massive transit strike here in New Jersey that could have ripple effects across America. We'll tell you why. And a billionaire's take on the real estate market. First, we want to get a quick check on the markets right now. We're seeing a sort of a muted end. to a pretty decent week of gains. As you can see, Dow Industrial's up now half a percent of the S&P 500,

up almost that much, and the NASDAQ can posit up a quarter percentage point. But the NASDAQ and the S&P are now both positive for the year. The Dow has not quite regained all of its losses at this point. Contessa, in your career, have you seen this kind of a comeback before? It's two weeks. Well, if we saw that during the pandemic, right? We did see during the pandemic a sharp drop and a pretty steep recovery, but maybe not this deep.

I think somebody once said, don't call it a comeback. What did they call it? What's been here for years. All right, we do want to bring your attention back to United Health. We've been all over the story this week and really late last week. The stock is slightly higher today with three insider buys. But keep this in mind.

United Health, the biggest health insurer in America is down 25% this week. But as we just noted, maybe a little bit of good news for beating up shareholders three insiders buying into United Health Group this week. The reports came out today. So it doesn't mean the problems Contessa are behind United Health, but there have been some insiders buying in what has been probably the most bizarre and troubling stock story of the year. All right.

Let's begin, though, with our top story, a massive deal in cable TV and mobile phones. It's kind of rocking our media world. Charter agreeing to buy Cox Cable. The deal's value is about 34.5. billion dollars, Cox privately controlled and held by a family. It's been a rumored takeover target for years. The deal kind of changes the cable TV and internet landscape. It also now calls it a question really the entire media business, because as you may know, our company, CNBC, is being spun out of our parent company, Comcast. Also happening this afternoon,

the FCC approving Verizon's $20 billion buyout of frontier communications after Verizon agreed to drop. It's DEI policy. policies. So how does this all shake out for you and the investor? Joining us now, Tom Rogers, the former president of NBC cable, CNBC founder, and current executive chair of Clay Grid, he said. Tom, thanks for joining us. You might have seen the interview we did a few minutes ago with Craig Moffat on this. He pointed out, this seemed to be more of a mobile phone deal than almost a cable TV deal. Do you agree with that? Well, I think mobile is certainly at the heart of it.

It's a lot of things, but Charter has had a lot of success, packaging mobile with broadband. That's the big theory of the case in telecommunications today to sell a combination of mobile and broadband service as a package. They've done very well with it. The big wireless companies, AT&T, Verizon, T-Mobile, all are trying to pursue. that as well. But as Craig pointed out, they're going to have maybe 20% of their footprints with the ability to offer a true broadband mobile package, whereas a charter, which with the Cox acquisition will cover pass about half of all homes in the country, and they'll be able

to offer that throughout 100% of their footprint. But given still this conclusive, constant drumbeat of cord cutting, of not even just for cable content providers, but also for internet services, you're starting to see a lot of wireless services become the predominant way that households get onto the internet. What does this really mean in the bigger scheme of the way that the media delivery landscape is changing, Tom? Well, there's some real controversy as so-called fixed wireless broadband approach to delivering high-speed internet to the home over the air as opposed to through a wire,

how much capacity there really is to serve the ever-increasing broadband needs of customers which are constantly looking for higher speeds, looking to stream Netflix and other services, And so that's a hotly contested point, whether fixed wireless and internet service delivered that way is really going to be able to substantially compete over time. For the time being, it has been a factor. Whether it will be in the long run is a big question. I think what Charter's point is, is that they can offer much higher speeds at much lower cost of upgrade than other four. forms of telecommunications.

You've founded this fine network that we now sit on, Tom. So we kind of, you know, we appreciate that. And you know what we do better than anybody else. We take a story and we say, does this matter for the broader market? Like, what are the bigger implications? Maybe this has massive implications. Maybe it's just the Cox family, Contessa, that wants to sell because they're all going to get rich and there's tax thing.

We don't know. In your mind, Tom, does this deal, if it happens, mean, anything bigger? Or is it just like a family? Like, we're going to be rich forever. Let's sell now. Well, they're not really selling. Remember, they're going to be the largest single shareholder of charter.

They didn't take a premium in this deal, which is quite a win for charter shareholders. They basically bought into Chris Winfrey's strategy of bundling, both mobile and broadband. And he's really become an innovative leader in the industry coming. up with new approaches, and one of those approaches is in the video space, your home territory, where he's really thought about how to bundle all the streaming services into linear cable packages. And they're basically trying to bundle in Macs and Peacock and others into the cable bundle for no incremental cost to the subscriber, striving to effectively deliver up to $100 of streaming value in the cost of the cable bundle.

And what I think this deal represents is really not something that transformative for the industry. This adds six million subs on top of the 30 that Charter has, which, you know, 36 million is a lot of scale. But I wouldn't call it in itself transformative. But I think it is buying into Chris's approach to how these. industry can really drive growth in the future. It's been a very tough couple years for cable investors and charter, which since you mentioned, Craig Moffitt, is at the very top of his list in terms of a stock pick, how cable can really rekindle its growth. Tom, it's great of you to join us today. Thank you for adding your perspective and your experience.

I just have to add Cox was the first cable system to carry CNBC, when we launched without Cox. Well, good on them. The NBC wouldn't have gotten started. So there's always a warm spot in my heart for the Cox family and how they got you going. That's an RBI. Yeah. Or like a Jeopardy question for Faber.

Next time it gets on Jeopardy. Maybe it's going to be fine. Media trivia for 800. We love it. Absolutely. That might be a $1,000 question, actually. Tom Rogers, thank you. Thanks for having me.

All right. In the meantime, another day, another big deal in Energy, Vistra, agreeing to buy seven natural gas-fired power plants for about $1.9 billion. Now, this is the latest in what has been a string of deals to buy power. NRG just agreed this week to pay $12 billion for a fleet of natural gas-fired plants. And it follows the plan $19 billion deal where Constellation Energy is going to buy Calpine as well as the potential for Constellation Energy to restart the nuclear plant, formerly known as Three Mile Islands, now called the Crane Energy Center, because yeah.

Also worth mentioning, Vistra was chosen first in this year's CBC Stocks draft. Students from Wall Street Bound chose Vistra as an AI power play. And guess what? The group of high schoolers, they are currently in the lead if you're watching Wall Street Bound. Long way to go. But congrats so far. I mean, sometimes you just got to follow the kids. What are the kids doing?

What are they into these days? Kind of works. Thus your question to Tom Rogers. Yeah. I caught that. I knew exactly where you were going. Mom of Twins. Yeah. The energy space becoming a battleground in the tax bill debate is just one reason the House Budget Committee chose to reject President Trump's big, beautiful bill. Emily Wilkins is bringing us the story from Washington. I know you've been following the ins and outs. Where do we stand now? So where we stand right now is that the committee is going to be working through the weekend with leadership to try to get the holdouts to a yes.

Obviously, this bill hitting a roadblock earlier today and a number of committee members, Republicans, rather, rejecting this bill. There is still some optimism. We did speak pretty recently with Lloyd Smucker. One of the Republicans who did vote against the bill. Give a listen to what he had to say about the path forward right now. There are just a few outstanding issues. I think everyone will get to yes. And we're going to resolve this as quick as we can and hopefully have a vote. ideally on Monday, and we can advance this bill.

Now, to be clear, Smucker did vote no, but it was for procedural reasons. There are really four holdouts at this point, Ralph Norman, Chip Roy, Andrew Clyde, as well as John Brasheen. And John Brasheen, as well as some of the other holdouts, one of their big issues right now does have to do with energy and this battle over the fate of green energy tax credits that were put in place during the Biden administration. And this is really something that is dividing Republicans and corporations on exactly what

the fate of these credits should be. But these deficit hawks who voted against the bill today, they want to make sure that while these credits are being currently phased out in the bill, they want that to go even faster. Listen to the argument that Burkine made in committee today. A tax credit given to a wind company in 2031, the way this thing is written in the quote, phase out still allows taxpayer subsidization until the 2040 era. Now, while Rakeem does want that earlier phase out, there are a number of companies that are

pushing back on the current bill in Congress saying, look, if the phase out only comes within the next few years, that's not going to be enough time for a lot of these projects to be planned and to get online. And they're trying to make the case to lawmakers that if they really want to go with what President Donald Trump has laid out in having an energy revolution in the U.S., they need to do in all of the above energy strategy. And we already know, while this bill hasn't even passed the House yet, we know it's going to be going through some changes once it gets to the Senate.

I've talked with a couple Republican senators who say, look, they too are actually pushing for a change in the timeline, not to shorten it, but to expand it. So this is an issue to really keep an eye on. You have industry involved, you have Republicans involved, and this could become attention point not just now, but in the next several months as this goes through the House and into the Senate. Well, judging from the emptiness of that hallway behind you, they left that committee vote and just made a B-line for the weekend. Yeah.

Thank you for that. They did Friday's very seriously. I mean, it is a Friday, right. We'll give them back. It's a three-day work week, remote work, Mondays and Friday. Now, Brian. We're going to dig into another piece of the struggling tax bill ahead. A proposed $1,000 child savings pitch first after the break.

New Jersey's first statewide transit strike in more than 40 years. We'll tell you why it matters. even if you live in Ohio, in New Mexico, or California. And we'll explain that when we talk to the head of the New Jersey Transit ahead. Welcome back in the nation's biggest city. It has been a commuting migraine for anybody who was trying to get to work today from New Jersey. A transit strike has brought trains to a standstill throughout the state. Hundreds of locomotive engineers of New Jersey transit walked off their jobs today.

It's the first time it's happened in more than four decades. and of course it just derailed the commute of more than 350,000 passengers who take New Jersey transit trains. This happened after months of negotiations just stalled. The engineers say they haven't had a new contract in six years. But of course, the reason they strike is because it works. Last year alone, we saw strikes from port workers, Boeing machinists, and about 10,000 hotel workers across the United States. In 2023, nearly half a million workers were involved in major work stoppages, including Screen

Actors Guild, the Riders Guild. Chris Collory is the CEO of New Jersey Transit on the side of trying to get these trains up and running and figuring out how to pay for that. So, Chris, when I say strikes work, it's because we've seen in recent years when there are either labor stoppages or the threat of labor stoppages when it really matters. I'm thinking of casinos that I cover right before F1. Deals get done. Is this a deal that's going to get done? It will get done, but let me just sort of all the sectors you put up on your screen a few seconds ago.

They're all the private sector, or at least most of them are. The big difference between us and the ones that you put on the screen is we are a public agency funded by taxpayers of New Jersey or the fair bears of the system. So what we don't have are profits. All I get to use to run a system like this is through those two sources I just talked about. So a deal is possible, and I'm confident we'll get there. But I just want to sort of say to your viewers, I have an affirmative obligation to make sure I not only strike a wage that is fair for the unions, but I have to do it in a fiscally responsible manner. One could say, if I was politically expedient, I could say, what do I care? I'm going to make a deal and let somebody else pay for it.

That is precisely how we get our results into trouble in this country. We make deals that somebody else pays for it. We have to come back to run some sense of enormacy on the cost implications of decisions decisions we make, especially in an agency that is one. I think you're going to listen, most of our audience watching, I imagine, is going to agree with that. I think that fiscal responsibility is something that we understand and we can wrap our mind around. My question is, since you're working on the public dime, how do you.

do you get to yes? In what way is what the engineers asking for unfair and how do you get back to having these trains running because they are truly the engine of commerce in the greater New York? No, Brian's shaking his head. No, they're not. But a lot of people rely on them to get to their jobs. Well, look, I mean, I say this in the clearest terms possible. I understand that the 350,000 people that rely on our system to get to New York and other places, their lives are disrupted because of the strike. It was not a decision that I made. It's a decision that the union made.

But to your point, this is a deal that can be imminently had. What we have agreed on 95% of the terms. Where we need to focus on is how do you get to a yes on what they want and do it in a fiscally responsible manner as far as I'm concerned? So for us, for me and Governor Murphy, that's a line in the sand that we just cannot cross. So we are going to work very hard today and over the weekend to try and stitch a deal together that achieves both those objectives because they do not have to be in conflict. If a deal gets done at the price point they're talking about, Chris, what would be the cost impact on a ticket?

So look, I mean, this is, so let me not get into what is actually happening in the negotiation table, but I'll just give you a broad sense of how I think about it. If a deal in abstract terms costs $20 million, let's say just for them, and if I now have to give that very same deal to others and the cost of that is $300 million, you can see the amount of money that I need to generate from either fares or from the corporate transit fees have to be enormous. That is precisely what I'm trying to wrestle with. This isn't my insensitivity towards their plight or their need. It's just I'm trying to make sure I can run a system at the end of this process. And quickly, as somebody who took the train every day for more years than I want to count, how do we make their work experience and our commuting experience better, Chris? Because we know the portal bridge in Newark gets stuck open.

Amtrak's got a problem. Guess what? We lease the rails from Amtrak. Then we got to get a delayed. People are sleeping in the bathrooms. There's fights. Like, how do we fix that stuff? So, Brian, first of all, I appreciate you taking the train every day, and that means a lot to us.

But I will, the governor and I are focused on not only the infrastructure piece, but the train itself. I'm sure you've been in cars that were built in the 1970s. It doesn't bode well for us as a country, that we're in the 21st century and we're still operating cars that were built in the 1970s. We wouldn't tolerate that anywhere else in the world, but somehow we see. seem to tolerate it here. So the governor and I pledge, before we leave this December, we will place all the orders necessary to modernize

the entire fleet by 2031. That's how you increase and improve the experience for riders such as yourself and frankly for all our employees. I'm personally focused on customer service. Look, Brian, I'm sure you've been on one of those multi-level cars that you couldn't see out the window. It drives me crazy. I don't understand why we can't fix it.

So I have now made it my mission. Even though I'm only here for a year, we're going to fix all those windows within three years. This is a street day-by-day battle, and you have to be obsessed as I am to try and move the needle every single day so the customers have a good experience. It's a fair point. The plastic gets smudged. You can't see out of the window. I had a guy sleeping in the bathroom on one of the trains, and he opened the door. He's like, what time is it?

And he'd been asleep in the bathroom. Chris Killory, thank you. Let's get this strike solved. It really is a broken windows policy. Well, I think Chris is trying to fix it, right? But if you take, and people in Florida are like, why do I care? Because guess what? Strikes may happen all over the country.

And they have been. And right. This is an issue that we pay now or pay later. Well, the good news is the roads are all broken with potholes. The airports now have major problems and the trains don't work. Kind of sounds like Atlas shrugged. Yeah. So John Galtz up next.

Coming up next. I'm angry. Big business in the Middle East are going to recap the key takeaway so the president's Gulf tour. Next. It was a very busy week for President Trump as Middle East tour, not your average diplomatic trip. Business was the focused deals and investments involving companies like Google, Salesforce, Boeing, GE, and video were announced multiple major U.S. CEOs visiting the Gulf ring as well. You got Elon Musk, Jensen Wong, Andy Jassy, Alex Karp, just to name a few. and we saw some big climbs in many of these stocks, especially the semiconductor names. Christina Parts and Nelblis, here to recap the stuff.

And I wish you had more time to chat. We do not, Christina, but it's almost like if you were there, your stock popped. For the audience, because I texted Brian asking him to chat. Keep me to chat, but tech heavyweights including Nvidia, AMD, Qualcomm, Cisco, Super Micro. You're seeing that on your screen. Look at that. All of them, Cisco up 6%. Still pretty good.

But all of these names climbing higher after announcing significant Middle East partners. ship's helping drive this whole sector, a strong performance this week. With this SMH chip index surging, went over 9%. Super Micro, for example, those shares skyrocketed more than 40% week-to-date after securing a $20 billion multi-year deal with Saudi Arabia's data center firm. That would be DataVolt. You can see up almost 42% actually. Meanwhile, Nvidia is shipping at least 18,000 of its advanced blackwell chips to Saudi-backed

AI startup Humane. AMD unveiled its own $10 billion collaboration also with Humane. while Qualcomm will co-developed CPUs. Those are the central processing units, specifically for Humane's data centers. And it's not just about Saudi Arabia. Just yesterday, President Trump signed an AI data center agreement with the United Arab Emirates.

While specific US tech firms weren't named, we're going to show you some footage that shows in video CEO, Jensen Wong, SoftBanks, Masayoshi Sun, leaving a dinner with US and UAE presidents. You can see Jensen Wong on your screen right now, just shaking hands. Well, I can also confirm from my sources that Cisco's president, G2 Patel, as well as OpenAI Sam Altman, were present at this meal or maybe after the meal suggesting potential tech announcements early next week. These partnerships, though, and we've got a lot of details from the president, they just don't give you, you know, the construction deadlines, how many chips are going to be bought.

So there's a lot of missing details. But they provide these companies access to deep pocketed buyers in the Middle East that could help offset revenue losses from China-related, export restrictions. So as one door closes, another opens for America's semiconductor leaders. Contessa? Well, you know, it's kind of like campaign promises. You say something big. The promise is there. The hope is real. Let's see what happens. Christina, thanks. Coming up. A lot of uncertainty in the real estate sector. New data out today that paints a messy picture of the industry. We'll speak with billionaire developer Don Peebles. Next. Okay, we have new data out today on the home front that shows a mixed picture here.

Housing starts rising slightly in April, matching estimates. On the flip side, though, building permits tumbled nearly 5% a little behind expectations. All of this, of course, as tariff uncertainty, high mortgage rates, insurance certainly continue to weigh on industry from residential to commercial. Don Peebles is founder, chairman, and CEO of the Peebles Corporation, a privately held national real estate investment and development company. And I know you have a mix of properties, Don, in New York, in D.C., Miami, San Francisco, Los Angeles. So you have sort of a broad view of the national picture. What's the biggest headache right now? Interest rates are the biggest headache. Interest rates have nearly tripled. So the average homeowner or home purchaser cannot afford to buy anymore. They have to pay three times

the cost of what they could have bought a property for three years ago or so. And that's really the biggest problem. And then you add to that escalating insurance cost. And then the property taxes have all risen over the past four plus years as a result of COVID and the supply compression. So what you're seeing is affordability is driving that. And it's hitting at every level. And that's why you're seeing also multifamily starts declining significantly as well. In terms of developing new properties, does that just put everything on hold?

Are you continuing to pursue new opportunities? Or where do you think things go from here? Oh, no. Things aren't on hold, but it's just different. So, for example, the ultra-high net worth individual buyers, the ultra-high end of housing is doing exceptionally well, especially in places like Miami and Palm Beach. We're starting at least one new project this year in Miami Beach, which will be an ultra-luxury boutique condominion hotel in a neighborhood where single-family homes are selling for $35 to $50 million. And then we're seeing on the other side of the equation, our affordable housing business legacy, which has a pipeline now of 5,000 units and growing because there's a tremendous demand for affordable housing, and there's a backlog of about 7.5 million units. And so those two sectors are doing well. It's everything in the middle. It's the working affluent, and it's the middle class that is being squeezed in terms of housing markets and those who want to buy. You're being so nice because you're very, he's, Don's a very

nice guy. And by the way, Don wanted to be here on set with us, contestant, but because the rail strike was rightfully worried about the increase in traffic and not making it, because you want to make it, if you're going to say you're going to be here, Don. I want to focus on L.A. for a minute, okay, place of my birth, okay, I lived there as a kid, was just there. And I took a video of the Third Street Walking Mall. If you've never been in Santa Monica, it was one of the preeminent walking sort of outdoor malls, plazas, whatever you want to call it, in America, until recently. And I was shocked what I saw. Here's a short clip of my video, and then I want to talk to you about it.

The 3rd Street Promenade Walkable Mall is really hollowed out. I mean, empty, empty, empty. There's Sephora. There's nobody at that bar. That's empty. There's some restaurants and stuff here. And a few stores, but it's, wow, it's kind of. It's kind of jarring. I haven't been here on this walking mall in about a year or two, and it's just

kind of sad to see. And Don, listen, I understand that the fire's just north of that, that a lot of the traffic that would normally come down to have dinner, the PCH, Pacific Coast Highway, was closed, but I've been there every six months to a year. And I talk to a lot of people, Don, and I love L.A. What the hell's happening with that city? I mean, it's a million dollars for a three-bedroom one bathroom home, and yet it feels like the policies of the government are just trying everything they can to destroy the city.

Well, look, I've been to Santa Monica pretty recently and also was there about two years ago with my daughter for a father-daughter visit, and the difference is night and day. What's happening is residents of fleeing Los Angeles. I'm not like, so go into that. I didn't know that. I didn't know that. I'm not wrong. Like, what hell has happened to Santa Monica? Two years ago, we were, my daughter, Chloe, and I were there on a father-daughter trip,

and we walked along the Pramon, and it is extremely busy. It was active, a lot of activity, especially even in the evening. And then about six months ago, I was there just before the fires. And then it was like a ghost town, almost. And what is happening in L.A. is it's the most difficult city. in America to build in. Used to be San Francisco, but San Francisco, because it got hit so hard, is now business friendly.

But LA is extremely difficult to build in. Its politics are totally in shambles. It's dysfunctional. And it's an anti-business environment. And it's an anti-housing environment. And you need people who are going to go and consume these products and go into these stores and restaurants and the like. And then there's a public safety issue.

And then the city's also overwhelmed with home and now you've got a whole different level of homelessness as a result of these fires. And so LA is a city on the decline and something has to be done to turn it around. It's an amazing city. It's one of the greatest cities in the world, and yet it's been allowed to deteriorate to this level. Thank you for the honesty. And I kind of felt the same way. Now I guess the solution is they want to make the Third Street Mall like an open drinking area where you can just drink all day. I don't know if groups of drunk people at 2 PM is the answer to safety,

Maybe it is. Don Peoples, People's Corporation. Thank you for your honesty. Absolutely. Thank you. Let's get right to Courtney Reagan now for a CNBC News update. Hi, Court. Hi, Condessa. Well, the Trump administration is asking the Supreme Court to weigh in on efforts to downsize the federal government. The Justice Department filed a notion asking the High Court to block a federal judge's ruling that temporarily stops plans for firings and reorganizations of 21 government departments. The judge said the administration did not have the authority to make those changes. With the FDA just cleared the first blood test that can aid in diagnosing Alzheimer's disease. The test is used for the early detection of certain plaques on the brain that are associated with the disease in patients 55 or older.

The FDA says the new test will provide a less invasive option and reduce reliance on PET scans. And Federal Reserve Chair Jerome Powell told staff there will be a 10% reduction in staffing levels over the next couple of years. And a memo obtained by CNBC. He says that he directed leadership across the system to find ways, to consolidate functions, modernized business practices, and ensure the Fed can still achieve its mission. The Federal Reserve System employs approximately 24,000 people according to recent Fed figures. Dess it, back over to you. All right, so the Fed joining the federal government in cutting mode.

Court, thanks. Just want to flag here, the Dow is now at Session High. Let's take a look right now. Up more than half a percent, 0.68 percent right now to 42,609. Up next, a massive deal has this name climbing nearly 75% so far this year. We'll reveal today's mystery chart when Powerlunch returns. CryptoWatch is sponsored by Crypto.com. Crypto.com is America's premier crypto platform.

Welcome back. We have a quick update on a fight between Epic Games and Apple. Despite a judge's ruling Epic claims Apple has blocked Fortnite's return to the app store. Steve Kovac joins us. What are you learning, Steve? Hey, contest. Yeah, just more drama in this one. Epic games saying overnight that Apple block Fortnite's return to the U.S. App Store this morning. Following a court order earlier this month, Apple has to allow apps to offer payments on the web, skirting that 30% cut Apple usually takes on each transaction. Now, Apple has already approved some apps taking advantage of those new rules, including major ones like Spotify and Amazon's Kindle app. An epic spokesperson telling us, or rather would not say if Apple

gave a reason for the block, but Epic did say the European version of the app was blocked as well. But Apple is actually denying that, a spokesperson telling us, saying the European version can return if Epic wants to submit it alone, though would not say why Apple blocked Fortnite in the U.S. in the first place. The judge's order in the case was the most forceful regulatory ruling against the App Store yet, even accusing Apple and one of its executives of lying under oath and referring the matter for potential criminal charges. Now, this is really important, guys, because it's all a huge threat to the services business and that lucrative App Store model. And on top of that, there's more threats to the services business.

Apple may lose that arrangement. It has with Google after Google lost its antitrust case. That would be an estimated $20 billion cut to the annual service business, guys. Well, this really shakes up what they're offering then on the App Store. Steve, thank you for monitoring for us. I know you're on top of it. Let's switch gears a little bit. Yields mostly lower today.

We saw some big clans in the bond market this week, even though, even on days that most traders were expecting they would see declines. Rick Santelli is tracking all the action for us. Hello, Rick. Hi, contests. Indeed. As a matter of fact, we've had such an energetic day and weekend rates. They reversed. They're now up not only on the day.

They're up on the week. But let's start at the beginning. Let's look at a chart of University of Michigan sentiment. We had the May preliminary read today. And it was crazy wild. If you look at the chart, remember, this series on sentiment began in the 1940s. Today's read at 50.8 was the second lowest reading ever. And that is something really to think about.

Now, granted, it's a survey, so it's not exactly hard data. And that wasn't where it ended. If you looked at the inflation numbers, the one-year inflation moved up to 7.3. You know the last time we were there? 81, 1981. And if you look at the 5-10 year, it moved up to 4.6. 4.6. That's the hottest read since 1991.

And the issue here is many are just not necessarily buying into the fact that that's reflecting a reality, but nonetheless, look what the markets did after it was out. How do you spell stagflation? After that date was out, 2s, 10s, boom, straight up. And the dollar actually followed rates for a change. And if you look at a one week of twos and tens, not only as I said are they up on the day, they held the week on the left side. Very important stacking it up there along with the dollar now of over 101 and really having a pretty good run the last couple of days.

So what are we considering here? I'm not sure what the data reflects for University of Michigan, but I can tell you investors are a bit nervous, even when the data isn't what we call hard data points. Brian, back to you. Rick, thank you very much. All right, time to reveal today's mystery chart. And I would call this my stock of the week. Contessa, apparently you didn't submit one.

Dun, dun, I miss this. But next time I'm coming back. It's NRG, NRG, the energy company. I'm talking to my book here, but I will say this. The stock soared this week. That's today. But the week was up 27 whatever percent. Stock popped 25 percent early in the week because they made a deal to buy 18 power plants

from a big of L.S. power for 20. $12 billion. Normally when somebody buys something, the stock goes down because they're spending a lot of money. They spent a lot of money and the stock soared. And it's all on this thing we've talked about a lot. So my stock of the week would be NRG. Thank you for sharing. Next time people, I'm sorry to deprive you of my stock of the week, but I had one. I just didn't know I was supposed to deliver it next time. C minus. Well, watching, Berkshire Hathaway's 13F reveals some interesting moves for Warren Buffett. we're going to trade some of those and more in three stock lunch. That's next.

Welcome back, everybody. Time for today's three stock lunch. We're hitting three names, making headlines today and asking our trader whether investors should be pying, selling, or holding. Here's our trades with James Demert, the chief investment officer at Main Street Research. James, good to see you. First up, Novo Nordisk, the pharmaceutical stock slipping after the company ousted its CEO. What's your take? Buy, sell, hold. Happy Friday, Contessa. It's a sell. This is a GP1 story. Lily's taken their market share and had their lunch with it. Stock's down 52%. The company's fired the CEO, I think, to get a reaction from Wall Street. It's a value trap. It's a sell. A number of fund managers are also filing their 13F forms. They're disclosing new positions. We've learned that Warren Buffett's Berkshire Hathaway doubled its stake in Constellation brands. James, should investors join in with the Oracle of Omaha? Are you drinking what Warren Buffett's serving up?

You know, we don't think the stars align for Constellation. We think it's a sell. You know, and here's the thing. The company expects a billion-dollar hit from tariffs just this year alone. Stock's down 30%. And let's remember, this is a lower margin business, and there's a growing trend of non-alcoholic mocktailed drinkers. That can have an impact. We're a seller. Yeah, I haven't really bought into that yet. They keep trying to foist it on me, but I'm sticking to it. And sticking with Buffett, he removed his stake in Citigroup. James, should investors follow suit? Yeah, here we're on the other side of Buffett. I hate to be that way, but we're a buy-on Citigroup. Investors should overweight financials in general.

And for the same reasons we own Citigroup, valuation at nine times earnings, which is cheap. They've got increasing eye bank and trading revenue. De-regulation. and tailwinds are coming their way. And let's face it, the financials are tariff immune. So is city, we are a big buyer. All right. James Demert, I like that.

You're taking a notable position opposite of Warren Buffett. That might be your claim to fame in the future. James Demert, Main Street Research Chief Investment Officer, Brian. And just remember, Contessa, you can recap every three-stock lunch. Anytime you wait 3.30 in the morning, can't sleep. You want to recap it. wake up, scan that QR code, or head over to cnbc.com for more. I'm right.

Up next is the job market outlook for new graduates getting more. It's already grim. Is it getting grimmer? We're back with that right after that. All right, we got kind of a double feature to wrap it up with our friend Sharon Epperson tracking two very different and interesting stories, both of which could impact your kids depending on their age. All right, the first one, Sharon. Welcome.

Good to see you. Good to be here. All right. It's an old proposal, but they're dusting it back off. Give every kid that's born a thousand bucks at birth. What do we know? Well, what we know is that's going to be funded by the Treasury. They're hoping that it'll be invested in perhaps U.S. stock funds.

That money is going to grow tax-deferred, and families could then contribute up to $5,000 a year into this account. But the child cannot take any money or any distributions from that until they're 18. This is just for their use. This is not for the parents' use. So if they try to dip into it, there's some issues with that, too. Penalties, too. All right. The other one is for college grads. You might be looking for a job and wondering,

are there going to be jobs or is Chad GPT going to just take all the jobs? Well, there's concern there because the unemployment rate is higher for new grads than it was a year ago. And we're also looking at the number of job postings far less than the number of applications that are out there. A lot of college seniors are very familiar with ChatGPT, but what they're worried about is that it's going to take their jobs away. And particularly computer science majors, overall, about 62 percent of new students. grads are saying they're worried about the impact of AI on their job prospects, but computer science majors, they're the most. You used to want to be a computer science major. Now it's like the worst job in the world. Right. They're worried that those entry level jobs are gone and that's going to be

all AI. Meanwhile, the NBC HR person said to me yesterday, they've never seen such a qualified group of job applicants because they're all running their resumes through AI now. And so the resumes now reflect. Why were you talking to the head of HR? I have. It's anyway. It's a lot. But Sharon, so you're not just covering the story. No, I'm not just covering the story. There is a young man by the name of Dylan. Dylan, Dylan Farley. I think we have a picture of Dylan.

Sharon's son is graduating right now, like today. graduating from Columbia on Wednesday. On Wednesday. Wow. So Dylan, your son, now, by the way, your husband's like 6'12. He's 6'5, Dylan 6'4. Okay, I was going to say your son's a big guy too. So how is he finding the job market?

He has a job. He has a job. He has a job. working as a registered behavior technician with a small firm that does applied behavioral analysis. He wants to be a psychologist. So he's in a good place. But I have friends whose kids went to Yale and Dartmouth. They've applied to 100 plus jobs and then I'm even getting a callback. Well, what's interesting is a lot of students are applying to these large companies and what some economists are finding that smaller firms, that's a better deal for you to find a job and perhaps

to progress in that job or in that environment. So it's something to think about. If you're not even getting a call, you might want to put your resume through AI and see how it can improve your resume and then land the interview so that you can land the job. And also continue to network. That's part of it. You've got to talk to people and know who's out there that can be somebody who can help you get that job. And you can find out a lot more on Money 101 newsletter. Sign up for free. Are there? Are there certain areas, though, that are really still in desperate need for workers? I mean, as health care, we saw that for a while. We're health care. And I do think that they're looking at what we've seen some increases in hospitality. We've seen some increases in.

information type jobs. So we'll see where that continues. I think people just have to be very strategic in terms of where they're sending it and make sure it's not just the same companies that everyone's doing. Try to find those hidden gems, those smaller companies. But I do, I do like it. The real world advice, look for maybe a smaller company. Not the big wigs, which by the way, can afford to implement AI probably. Exactly. And I think we call that one to grow on. That's a throwback. I haven't spent like three decades. I actually said it yesterday. But apparently you didn't watch the show. You're too busy with the head of HR.

We'll talk about that later. Sharon, thank you. Appreciate that. And thank you for watching Power Lunch. Closing bell starts when? Right now.