Power Lunch - Power Lunch 5/28/26

Episode Date: May 28, 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.

Stocks hitting more record highs, oil pulling back, but is there a deal or no deal? Welcome to Power Lunch, everybody alongside Kelly. I am Brian. Stox, their hire on the news the U.S. and Iran may be this close to a deal to extend the ceasefire, but with memories of crossfire, fresh and details scarce, is there real progress or another political headfake? J.J. Kinnaham, Sebo, Global Markets, is here to talk about that and more. And it's a familiar script for the markets with tech and the chips extending their blistering run. We'll explore where investors can still find opportunity in that trade.

And one of our guests says the next big opportunities may lie beyond U.S. borders, the emerging market trends he's betting on and how to play it. All right. So markets are moving higher partially on the headline that the United States may be ready to strike a deal to extend the ceasefire with Iran by up to two months. Now, that's good news. Any good news is going to bring buyers into the market. And indeed, they are today. Leading your charge, take a guess.

Yes. If you guess semiconductors and AI related names of the NASDAQ 100, ding, ding, ding, you are correct. Now, over in the S&P 500, consumer names, a best buy, a dollar tree, even Hormel are catching buyer interest. So kind of what's happening here? Well, you've got defensive rotation, maybe a little chasing growth, maybe a little bit of both. Let's talk about that and more. Joining us on set for kind of the whole show is J.J. Kenahanney is senior vice president of Sibo global markets. JJ, all right. So I don't know if you heard about this AI thing,

but it's done pretty well. You guys at the Sibo do an amazing job on the option side and on the order flow side. What are you seeing? What level of interest are you guys seeing from your clients? Well, I mean, obviously it is the number one story overall. As you look at particularly retail brokerage, they're coming in.

They're buying anything that has to do with AI, as you said. You know, you look at Snow was earning. That's one of the really interesting things to me. Stock up big today. Snowflake. Yes, thank you. Great earnings. Stock up big.

And yet you still see people buying higher calls. The 250 calls that expire tomorrow, we've seen a lot of activity in. The 300 calls for the June expiration, it's Triple Witching, June 18th. We've seen a lot of interest in. So it's not like this is waning. The interest continues overall. People just can't seem to get enough of this. And let's face it, every sell-off.

we've seen has been followed with awesome. Now I can buy more. So, you know, everybody's saying, oh, retail is going to get hurt. Retail is going to get killed. Will they, how are we going to sell off at some time? Yes, of course. We always do. But the difference is now the dynamics of the market of change. Do we? Well, I mean, you say we always do. And until like two years ago, who am I to disagree with you? But I would say that every time, like we get a 5% sell off and people are in Kelly Leggett's 20%, right? Forward down 5%. Sound the alarm and everybody rushes back in.

Boy, things have really changed. But that's the thing. You're right. Everybody rushes back in. The other market dynamic that's changed, primarily, in my opinion, is that retail no longer has to be all in on buying a lot of shares of stock. You've seen this incredible growth in the options market. One of the reasons you're seeing such growth in the options market is they don't have

to put up as much capital as they used to buying a part, you know, a whole lot was always considered a hundred shares. People now buy 20 shares at a time, 10 shares at a time in a way that never existed before. It's been one of the great. Those two things combined have helped retail, participate in the markets more than anything else, in my opinion. Just to follow up on these broad kind of takeaways here, as you watch this trading activity, all of this behavior, does it tell you that people are still pressing the bed and think this rally's just going to keep roaring ahead or they're starting to position? I remember Oliver was saying the other day in some areas like the triple Q's, I think he was saying, or maybe it was the small caps, that they're starting to position more cautiously. Yeah, there's no question about, you know, Oliver's right, particularly the cues over the S&P 500,

because a lot of this has been led by NASDAQ related stocks overall. But what's interesting to me is you look at a VIX. That's under 16. That right there tells me you're just not seeing the level of people looking for overall microprotection. They may look on some individual stocks. There's no question about that. And I think you'll continue to see as some of the individual stocks come out with earnings, et cetera, people will position themselves there.

But the overall picture of I have to hedge my whole position by using the SPX. Actually, we're seeing the exact opposite in SPX the last couple of days. We're seeing people going out 7,700, 7,750. I've been two of the big calls that have traded over the last few days, as again, many people think this rally continues. And you and I were chatting ahead of the show, and something fascinating that I didn't know, you told me, is that there's one of your biggest growth products at the CBO is these zero-day expiration. Absolutely. S&P calls. And what does that mean? Well, it basically means that people are betting on markets intraday using options. What does that tell you about them and their level of interest? What it tells me is that people look at the market and they say,

okay, I really don't know where the market will be overall in 30 days, but I have a pretty good idea where I think it'll be at the end of today. And I think that one of the things that we'll hear from people is, oh, these people are playing everything short term. I think what they forget is those people who have investment accounts often have 401K accounts, often have IRA accounts. That is their longer term account. And the whole joke, you tell people take more risk when they're young, and then when they take

it, you tell them they're idiots to take it. It's silly. When you're young, take some risk. because you have time to make it back. But of course, please have a 4. No matter who you are, have a 401K. But anyway, that all said, or retirement plan, they have longer term investments also.

But what they're also saying is, I may have a better idea what's going to happen over the next couple of days or there's something going on with one of the stocks I hold. And again, your 401K brokerage account might not be the same as your individual brokerage account so you don't necessarily see the whole picture. So it's interesting that people are using these, exactly as they were designed, and that is to hedge some things they'd want, or if they see an opportunity in a short period of time to go and take advantage of that opportunity, with, again,

options are going to be cheaper than the overall equity, so to take advantage of it in a more capital-efficient way to do so. Bitcoin gold cooling off a little bit. Bitcoin gold have cooled off significantly, and, you know, talking to my friends who run a lot of the brokerage firms, one of the thesis is right now is that many of the people who were crypto crazy. And I don't mean that like they're nuts. I just mean that they were really, oh my God, everything's crypto.

A lot of them have moved down to prediction markets. And so I do think that, again, a lot less capital in order to do so for most people. I don't think crypto's necessarily done, but crypto, I've never seen a product that is so price dependent for interest. And I think until you see I'll use Bitcoin, you guys have it on the screen right now, I'll use Bitcoin as really the one that represents the rest of the industry because that's where so much of the trading is from a retail point of view. But in other words, you're saying it's volumes depend on just the price going out. When it goes to 120, people are back in. Yeah. Yeah. Because it hasn't only 20 because they'll find bottom. I'm going to say something that's going to irritate all the Bitcoin and crypto fans out there,

but the reality is Bitcoin hasn't moved in a year and a half. I understand it's moved. You can trade it every day and you can make a lot of money up and down. But the price of Bitcoin today is the same as it was a year and a half ago. And as of August, it'll basically be at two years without being a capital gainer. I think that's what you're saying, right? That until it has a big breakout, you're just not going to get the interest. But the irony of that, I think is, JJ, you don't get the breakout unless you have the interest because things go up when there's more buyers than sellers.

There's no question about it, Brian. But I think as you start to see tokenization of assets and things like that, there may be something that comes along on those lines related to some of the crypto products that can help them overall, or as you start to tokenize collateral with some of these, you know, clearing firms, et cetera. So not to say that it's done by any stretch of the imagination, but those who are playing it for the quick price movement, I think have moved on to other products at the moment. We've round-tripped November of 2024. It was at the same price. So yes, it ran up in the middle of that, but you've got to have, like to Brian's point, have perfectly timed that.

on the way up and down. If you're trying to buy and hold, which was really the argument for it, you've been sitting here watching the S&P take off, watching semis, watching gold, actually. Watching gold even, yeah, to your point. JJ, we'll see you a little later on. All right, thanks, guys. Thanks for being here to discuss Ebo's expansion into those prediction markets. After the break, the oil story you aren't hearing about, but need to. Stay tuned. All right, if you miss the top of the show, here is the latest out of the Middle East.

oil prices pulled back a bit today. They're up slightly right now after White House officials said that American and Iranian negotiators did reach a 60-day tentative agreement to extend the ceasefire and begin talks on Iran's nuclear program. However, President Trump not yet given the final approval to any agreement. Still, price of oil is moving. It's down overseas, up a little bit here. Let's talk about that. Ship traffic in the Strait of Hormuz. And also, a little bit about Venezuela. We'll get to that in a moment. Joining us, though, Matt Smith, Director of Commodity Research at Kipler,

which owns marine traffic as well. Matt, the headlines come in every day, kind of fast and furious. What are you seeing? What's sticking out to you in the oil and shipping markets? Well, Brian, I'm skeptical, right? We've been through this over the last few months here where we're hearing these headlines that were making progress,

and then it's a head fake. And so at this point, I'm extremely skeptical. or there's something is coming out of this. We need concrete decisions being made here that the straight is going to be opened up from both sides. And so really, I'm just waiting further news. I'm not paying that much attention to it, to be honest. Yeah, and we've been showing your map,

the marine traffic map, about ships shifting. I don't want to say traffic is resumed in the strait. That's not accurate. There's a couple of ships that go through kind of every day. Some turn their lights off. They try to get through others pay around the toll. but we are seeing ships move around inside the Persian Gulf. What are you seeing that?

It's still just a handful, though, Brian, that's passing through there. And so you've still got, what it is, 140 million barrels trapped inside there. You know, here we are at the end of the third month, and we're still not seeing the 100, 120 vessels passing through there that we typically do. It's just the odd handful. and so really things are still ground to a halt here. This is so hugely problematic, right? Because it's not only production losses that you've got in the Mideast Gulf there

and those barrels not getting out. Refinery runs have been down on average on a global basis by about 7 million barrels a day, something like that averaged across these last three months. That is going to have implications. And so when we look at prices here, the realities just don't add up. And we can see it changing.

the flows, you know, certain countries having, like, for example, with Europe pulling in a lot of jet fuel from the US, but at some point, the US is going to stop providing that jet fuel because inventories of distillers, of gasoline, of all the products are starting to really drop to really concerning levels. And so, it's still hugely problematic the fact that the straight is closed here. There's no real progress. I want to focus on something, Matt, that maybe others are not talking about, at least right now, and that is, Venezuela, because quietly oil is starting to flow pretty heavily from Venezuela to the United States. New data that we received from you and your team at Kipler and Marine Traffic. Thank you, by the way,

for that, shows that crude is coming from Venezuela and coming at the fastest pace to the United States in nearly seven years. Your team told me today that Venezuela is now the leading exporter of oil to the United States, particularly to the Houston and Louisiana areas. In fact, this month, Venezuela accounts for nearly half of all crude oil coming into the U.S. Gulf. I understand this is not nearly enough oil and it's a different quality and type to make up for lost Middle East flows, but it's got to help a bit. What do you make of the Venezuela flows? Yeah, right.

It's definitely a positive development here. And what it is is simply Venezuelan production is outpacing expectations. And so because of that production, you know, there was talk, would they be able to get above 1 million barrels per day. You know, we're seeing them at about 1.26 million barrels a day of production. They're exporting about 1.1 million barrels a day of that. Nearly half of that is coming into the U.S. Gulf, as you mentioned. And so, yeah, it's a very positive thing for Gulf Coast refiners.

They are geared towards running heavy, sour, low-quality Latin American crude. And so as we have seen Mexican crude production, Mexican exports dropping off fairly dramatically in recent years here, this development. with Venezuela since the beginning of the year has really helped those Gulf Coast refiners, particularly at a time when you're seeing those Middle East barrels drying up too. So in a time of scarcity on a global basis, this is hugely beneficial to the Gulf Coast. All right. Matt, we'll leave it there. Great to have you today. Matt Smith. Thank you.

We have a news alert on Anthropic now. Kate Rooney with more. Hey, Kelly. So Anthropic has closed one of the biggest funding rounds we've seen in Silicon Valley so far in this AI It is a $65 billion Series H funding. The letters are getting larger here as we get to the later stages. Series H. It's led here by Dragonere, Altimeter, Sequoia, some of the biggest names in the Valley. The valuation guys, $965 billion. That is post money.

It is around what we had reported, which was $900 billion pre-money. This had been whispered that this was coming. We had reported it as well as others that the company was in the pre-month. process of really raising money. There was a ton of demand, has been a ton of demand from investors in San Francisco that have wanted to get in on the rise of Claude. Speaking of that, that has been one of the big drivers, Claude Code. They give out a new annual run rate. This is their revenue run rate, $47 billion. That is unprecedented for a private tech company. Their revenue just last year was around $10 billion. So the run rate here is eye-popping that from investors that I've talked to

is the big reason. They are backing this company. But Anthropic now, one of the most valuable companies above Open AI, its last private valuation was around $850 billion. So this officially puts Anthropic above Open AI in terms of valuations. And this company is also, from what I'm told, in the process of not as far along as Open AI in that process, but I'm told they're getting ready for it. Could come as soon as the end of this year, more likely, laying the first quarter or two of next year. Incredible increase in revenue there. And a series. H. We'll see how many more letters. Where are we getting to now? The alphabet, yeah.

Kate, thank you very much, Kate Rooney. Still to come, the head of the USGA, will talk U.S. Open AI in the Gulf world and the trend of crazy ticket prices at sporting events. But next, some sector winners and losers when the markets in rally mode, interesting area that's breaking out a little bit

today. Power lunch will be right back. Welcome back another day of new records for the S&P 500, as optimism builds on positive developments out of the middle least. With May said to wrap up tomorrow, here's a look at the sectors that have powered the rally this month. Tech is back in the driver's seat on pace for its first back-to-back double-digit monthly gains since 2009. Consumer discretionary, that's a new one. Healthcare communication services, they round out the top four this month. Zoom out, energy, still the year's top performer,

interestingly enough. The question for investors now is do you look there, jump on that bandwagon, chase tech, or is another sector set to break out? Let's ask. Michael Cagino, he's president and portfolio manager at Permanent Portfolio Family of Funds. He manages two five-star Morning Star rated funds. And Ari Wald, he is managing director and head of technical analysis at Oppenheimer. Michael, let me just start with you. And I'm just going to kind of, you know, maybe take this too far. But best buy, dollar tree, Hormel today, all with big moves. We saw this as oil prices began to drop. Should this now be the trade we start to think about moving into?

For so, I'm not off. But I think it does speak to. maybe, you know, we're talking real short term here, okay, but it could speak to consumers feeling a little bit better about spending or spending in cheaper priced goods with oil prices coming down. I think it's too early to really tell. You know, so we're not in those names, but I could see why people might want to look at them because they have not performed in conjunction with the rest of the market, and they're interesting maybe on a long term base. Ari, what's your take on that one? I think it speaks to some market re-broadening because these have been the lagging areas. These are low momentum sectors, the sectors that have underperform

most stocks below their 200-day average. They're getting a nice oversold bounce. And as we think about, you know, market concerns for us, it's not what's working. It's what's not working. So, you know, up until this, it was kind of the consumer was worrying more than technology. So the fact that they are getting involved a little bit, it speaks to market broadening and a bull market that looks likely to continue. Let's build on that for a second. What else has not been working? There's, it's really been very consumer related because if you look at the headline indexes, you got S&P, new highs, equal weighted S&P, small caps, NASDAQ, equal weighted NASDAQ, down industrial.

So almost everything, in other words. There's a lot of confirmation. I think it's broader than a lot of people could give it credit for as much as there's been this very concentrated strength, very outsized gains in technology. And so now that you're kind of seeing, you know, there's been some lagging in credit spreads and some consumer weakness and health care. but nothing really breaking down or rolling over. So for all those reasons, I think we can at least push higher into the third quarter. You do face those headwinds in the third quarter. But for now, so far, so good. Michael, were you investing for the long term?

Well, I mean, the market's been pretty broad all year. I mean, the Russell, which is a broader index, has been up all year and saw perform the S&P 500. So, I mean, I think that story continues. Equities in general over price. We have not been buying to that week lately because they are trending up and they're not cheap. Earlier in the year, we were buying energy, which I still think is a good long-term bet, despite the year-to-date run up in the short term energy stocks have sold off a little bit, and you can get some great dividends.

You pick a name like Chevron, for example, right? Probably 4% yield trading at a low market multiple in a macro story where the world's going to need energy and fossil fuels and likely even if prices have gone out further, they're going to run that business profitably. So there's a lot of those kinds of stories. I think the software area in tech was interesting because it had a great year last year

and initially the beginning of the year, then it's sold off quite a bit. Nobody wanted to go near them. We nimbled in that area a while back too. And in the short term here, snowflakes earnings yesterday were strong and the software sector's been bobbing a little bit with that and maybe a day or two previous.

So we still like that area long term. We think that the death of software with AI is probably way overdone. And so that's been an interesting area. Financials also, strong dividends, strong balance sheets, who are the money center banks and consumer spending being strong in name like Visa, for example. And Morgan Stanley. So there's definitely some areas, but I think generally speaking, you're not finding the bargaining deal maybe you've had in the past.

Where else, Michael? Do you agree with the area that you think generally we've pressed higher here? Well, I think we're still trading on headlines. And, you know, one bad headline and things go in a 180 direction. So, no, I think corporate earnings were strong, and that's provided a foundation of a good feeling the stocks right now. But that could change if you have a recession due to an energy-led recession, given what's going on in the Middle East. Interest rate, the market seems to have gotten comfortable with higher for longer rates, a little bit of upward mobility with great. rates or volatility, and stocks will perform in that environment. People are still working and

spending. So while it doesn't provide the right argument for the Fed to Kyle, which is in the whole other story, it does show that the economy can function at this rate of inflation and with these interest rates, at least on the short term. Where that goes longer term, when you factor in long-term debt and, you know, other factors remains to be seen. Well, all right, I got some bad news for you. have a midterm election this year. I know. It's a shock to a lot of people, but I bring that up, not because of politics, but because markets tend to react negatively in a midterm election cycle year. They go top to bottom. I'm sure you've got your own data. Anywhere from 12 to 17%. We had a slight hiccup. The market fell about 5% when Strader Homoos and the Iran war began. We've recovered that

and more. Do you see any sign technically of this market topping out? And do you worry about the summer or fall as we get closer to a period that historically says markets are likely or probable to go down. You know, it's funny, we talk about this presidential cycle so much because it has historically overlap with what has been this four-year equity cycle. And you'd get these major market lows almost every four years, always in a midterm year. Midterm year was your bare market year. If you were to crunch the numbers a little bit, less so when you have, it's not an incumbent candidate when there's a, you don't have a president up for re-election in a second-term presidency, a lot of that weakness still occurs in the third quarter. Okay. So we're conscious of these.

So you're telling me I'm wrong in a nice way? Well, no. I'm going to paint the silver line. And guess what that sets up? The best part of the presidential cycle, Q4 of the midterm year, through the first half of the pre-election year is the best nine-month period of that cycle. Wow. So we're... So if we get a downturn or a sell- off or whatever word you want to use in the third quarter, that historically would seem to set up for a gigantic buying opportunity for the fourth quarter and beyond. I'm looking at the positive. It's not about preparing for possible headwinds here in the third quarter, but I want our investors to be positioned for that move to the upside. And guess what pocket of the market's breaking out?

Mag 7 across the board there. And that's a big part of the S&P. So that could be a potential drive. Dan Skeley called them stupid cheap, a little bit less stupidly cheap, but still pretty cheap. I saw that open a second. So you like that too. Mag 7. All right. Ari, I should say, Ari Wald, Michael Cagino, really appreciate it. Thank you both for being here.

Thanks guys. Glass half full walled here. I kind of like it. All right, it is time for the bond report. And St. Louis Fed President, Alberto, Moussela, warning that inflation is still too hot. Says real rates are below neutral and expectations are rising. Musulam says the Fed risk losing credibility. If it doesn't defend.

its target is message, lean against inflation now with rate cuts only, only if pressure's ease. But important to note that Muslim is not a voting member, not this year. And I don't think we'll be a voting member until 2028. But Steve Leesman can correct me out there somewhere if I'm wrong. All right. Up next, opportunity alert. Your next guest says when geopolitical risks go down, look for emerging markets to go up. But which ones?

you'll find out next. Welcome back. It's time now for our market navigator segment. The Iran war headlines continue to drive a lot of the market action, but our next guest thinks things are on the right track for a de-escalation in geopolitics, and he's looking at emerging markets as a beneficiary of easing tensions. Derek Irwin is portfolio manager of the Emerging Markets Equity Fund at Allspring Global Investments. Derek, good to see you.

Now, the market's already kind of agreeing with you a little bit. How much of this have we priced in and how much more is there to go? Well, look, I think there's a lot more to go. That's a great question. The market is clearly looking forward. But I think when we start to see oil prices coming down sustainably and when is the hard part, but assuming we're on the right track for that, when we start to see oil prices coming down and beginning to impact the consumer on the ground in emerging markets and the macroeconomic picture in emerging markets,

then I think we start to see some real opportunities. Where in particular? because we just spoke with Tim Seymour last hour, who's a little worried about the Korea trade. And I don't know if you didn't – that one got a little bit hit by oil prices, but not much. So where specifically are you looking? Yeah, you're absolutely right. I think that the emerging markets have been very resilient in this crisis, but a lot of that has been Korea, Taiwan, the AI-related trades. And we would look for this rally to really broaden out as oil prices come down.

And we'd start to look at markets that may have been laggards and there may have been – more impacted by high oil prices through this period. The obvious ones for us are India, very large market, very sensitive to oil prices, big importer of both crude and gas from the Middle East, and then Southeast Asia, and maybe in particular Indonesia, which is struggled. Its currency is an all-time low. Again, very sensitive to inflation, sensitive to fiscal balances. So we think all those things start to turn as oil prices come down, and it actually turns from being a significant headwind to a pretty interesting tailwind for these markets. And with 20% down this year for Indonesia, maybe some bigger opportunities there.

Derek, thanks very much. Appreciate it. Thank you. Derek Irwin of Allspring. Brian. All right, Kelly, thank you very much. Coming up, we tee it up with New York Sports Red Hot right now is the upcoming U.S. Open Golf Tournament just as on fire. We'll talk about that and more.

The head of the U.S. GA. Next. The U.S. Open is about the tee off at Shinnock Hills Golf Club in Southampton, New York. Now, this tournament comes as prices for other major sporting events here in the New York area are soaring. For example, entry-level tickets just to get in Madison Square Guard to see the Knicks in the NBA finals start at about $3,000. That folks is like the nosebleed seats. U.S. Open tennis tickets for later in August, also skyrocketing about 20% from last. year's average. Let's talk about the frenzy that is New York sports and more. Mike Juan is the

CEO of U.S. Golf Association. They run the U.S. Open among many things. Mike, great to have you on set. Great to be here. All right. So, Knicks, Tennis, U.S. Open at Shittacock, you guys purposely limit the number of tickets because you don't want people to have a bad experience. We do. Shinnock's not a big piece of property from a standpoint of how many people we can get on it. And let's face it, getting out to the Hampton sometimes isn't the best experience. So we'll only have about 25,000 people out there on the weekend, which is versus maybe Pebble Beach next year. We might have 45,000 out there on the weekend.

We also just listening to your intro about pricing. I mean, you can come to a practice round for $75. You can come to a tournament. Okay, so you don't have, I want to be clear. So Kelly and I, that's fun. Rory probably has six seats on his helicopter. She's one for Rory, his girlfriend, you, me, Kelly is one other person. Maybe can, I'm kidding.

I'll text him to see if it's face for. By the way, because it is not the, the end of Long Island, but you don't have to be a millionaire to go to this. It's about $75 for a practice round day. It's about $2.75 for a championship day, but a couple hours on the Long Island Railroad, we've got a temporary train station that we build right across the street. So you don't even have to get in a car or get into parking. You take the train, get off, walk across the street, and you're in Shinnock Hills.

You build a temporary train station. You just make it permanent? Why? It just should be in the lead of our segment. Exactly. It would be a great aerial photo for you guys. It's good enough to be permanent, but we do take it down after we leave. actually built the bridge over Wilshire Boulevard, and we played at LACC, and then took it down

after we played. So these, what we call temporary probably are a bit more. But yeah, we're going to have, you know, we'll have probably 80,000 people come off that over the course of a week. So it's pretty serious. You're familiar with putting on big high stakes events and all of that. What do you make of the FIFA melee that is playing? I, you know. He's glad he doesn't run side. Is there any operational thing that can be done? Is it just, how do we make? How do we make? this something that, or is it like the Olympics? I remember being in London in 2012. And for months leading up to it, it was all this drama and it's not going to be this. And then the event came and went and it was magnificent and everybody had a great time. I'm sure everybody had a great time.

Listen, if you're trying to maximize profitability, you dynamically price and whatever you can get, you can get. When Brian started, he's right. We could put 40,000 tickets every day at Chinnecock and sell them. I'm not sure the people that would go would love the experience. And we want to make year if you come to a Yosopin when you leave, your experience is special. It's a special day. We finish on Father's Day every one of our Sunday championships. So if you're going to come out there with your dad or take your dad out there, you want it to be a special experience. So, listen, if you want to spend a lot of money at Chinatacacacac, we've got places for you. 1895 Club. I can get you a champion's pavilion. For you, Brian, I have a special deal.

For a couple thousand dollars, you're going to love your Sunday. But if you want to come out there, I get to sneak in the back tent to the Champions Pavilion. I'll slide the glass on the side. So yeah, we have pricing across the board. But we also want to be. make sure if you just want to come out there with your family and enjoy a day, we don't want to price ourselves out of the market. Tell what is going on with this? You have a new AI initiative. Tell me more about that and how you guys, because every company, I'm sure, watches this big new

technology and things, okay, how exactly are we going to integrate this? I appreciate you bringing it up. I know there's a lot of stories about AI and people get nervous, but when it comes to Rules AI, which is what we just announced, it's nothing but great. The rules of golf can be complicated and hard to understand. Even if I gave you the book, you may not even know where to look to find them. Rules AI is in the palm of your hands now. You can ask Rules AI a question.

It's an app. It's an app. It comes right on our GEN USDA handicap app. And what's different about it is, yes, you could go to any AI site or Google a rule. The problem is you're going to get an answer, and that answer is going to sound really confident. It might just be really wrong because rules have changed over the time. What we have at the USDA is 25,000 asked questions and correctly answered questions as a database. So like when you ask a question, my ball's on a tree root, we've had that question asked a thousand times and answer that question.

even when the rules change, we've adjusted what the right answer is. And so now you have at the palm of your hand a way to, you can literally be in a fair way, have a situation, ask Rules A.I. And get your options. I see one that might take some of the bigger. I don't know. The drama out of it. If Joe Kernan were sitting here.

I was actually going to run for Joe. Because he knows, I know nothing about the rules of golf. So, yeah. If I golf with Joe Kernan, and I love Joe, right, I golf with Dom Chew. Don beat me by like 40 strokes. But there might be a, there might be a, there might be a, a bickering over the rules. this is now a device where I can be like, see, Kernan, you're wrong.

I'm sorry. Because the USGA's AI app said that I'm right. Exactly right. I mean, you're going to get a right answer. You're going to get it in seconds. It's going to be in the palm of your hand. And yes, there's every, every foursome has that guy who thinks he knows the rules better than everybody else.

That guy may not love rules AI as much as the rest of us. But I will tell you, our qualified rules officials, people that have been rules officials at the highest level have said, even when I'm in making a ruling, I might just check on it because it's good to have a, a reference to go to. Yeah, they need it for girls lacrosse, too. That's an aside. What is the status of all these players who went to live? And now that, as I understand it, that has collapsed. Some of them are coming back. But what is exactly the relationship and who should we expect to see showing up at the U.S. Open and your event? Yeah, I'm not sure I'm a live expert, but I think they would probably argue with that is collapsed. I think they're going to run out of money in September. And they're in the open market now trying to find funding to keep going. I'm sure some of their players want to continue with them. And I'm sure there's players who don't. I'm not sure that the ones who do or don't have been public on that stance yet. I think a lot of them want to see, can they go to the market? Can they raise real money? And can they continue with whatever that business model looks like?

Because that's a different kind of experience. I've been to a live event. Different experience. And I didn't know. I just walked in thinking I was going to a golf event. And then there was a lot of drinking and a lot of loud music. And so I see that they were trying to do something different with the sport. But I'm not sure if the audience wanted it. I don't know if that was the issue or the other financial reasons. They had, I would say they had real success in some of the international spots where the best in the world weren't coming on a more regular basis. But I don't think from a business perspective, they had a business that was turning a profit anytime soon. And I think that's where they kind

of got in trouble. So when they're in the marketplace, I'm sure there'll be some adjustments to their business plan in an effort to try to get funding on something that can turn profitable sooner. I don't think they felt the pressure to turn profitable sooner initially, and then that turned quickly. True. I know you love all of your courses equally, Mike. How are we going to do this? No, but if, is there a course you haven't, personally, you haven't played that you would just love to play. You're next on your like bucket list, time and money, no object. I probably would put Tara Eady in New Zealand high on my list. I just don't have excitement about the 19 hours to get to it. But I would tell you that for me, if you told me I'll have

one more time, one more round to play, I'd probably go play it at Cyprus Point. I can't think of I can't think of it. I always tell my friends from the RNA that that little area, Monterey, just like out on the east, on the east here where we're playing at Chinnecock, there's a couple places in America that are Scotland, these pieces of land that God gave us, that these amazing, because if you're playing at Cyprus, you could almost ride your bike to Pebble, you can ride your bike to Monterey Peninsula Golf Club, you can ride your bike to Spyglass. If you're playing at Chinacock, when you're walking down the first fairway, you can see Sabonik, and a couple fairways later, you can see National Golf Links, and those are three of the best golf courses

in the world, all right next to each other. Wow, it's cool. We're showing the odds right now. Scotty's always on top. It's hard to bet against Scotty Sheffler. I mean, Yeah, when he has a bad day, he has the top five. But it was also cool to see Aaron Rye win the last tournament, like, because here's a guy nobody really ever heard of that came out of nowhere. So it's kind of fun to have the stars. Yep. And then the long shots who perform.

It's fun. It's kind of cool about the U.S. Open. I know you know golf and you know tournaments. What makes the U.S. open different and has been since 1895 is half of our field, half of our 156 players came out of qualifying. And pros go to qualify too. So we have, you know, hundreds of qualifies. And at the end, of the 156, about 80, 85 will have qualified through professional events and other means.

But the others actually had to go tee it up and beat – and this year it's 10,200 people playing for those other kind of 75 spots. So you're going to see some amazing stories. I mean, I remember a couple of years ago we had an Uber driver, you know, who kind of made it through and, you know, a local pro who can make it through. But it's the one championship that you can have the dream that may be someday and some day is a reality. Could be me. Could be you. Could be Brian. Could be Dom.

Probably not, Brian. Maybe. Probably dumb. Definitely not me. If you whiff and the ball falls off the tee, does that count as a stroke? I'm going to ask AI, Mike. Mike, Mike, Juan, CEO of the U.S. Golf Association. Really appreciate your time, Mike.

Thank you. Thanks for having me. And let's get to Kate Rune now for the CNBC News Update. Hi, Kate. Stay there, Kelly. The $71.5 billion-dollar deal to merge Union Pacific, Norfolk Southern Railroads, is on pause right now. Regulators said today, they need more information on a revised merger appellers application saying there are several aspects that are unclear or underdeveloped.

Meanwhile, California governor Gavin Newsom said today that anyone in the state who gets money from President Trump's nearly $1.8 billion, so-called anti-weaponization fund, will be taxed at 100%. Senate Minority Leader Chuck Schumer recently made a similar pledge. The fund is facing legal challenges and criticism from both sides of the aisle. And finally, the Washington Post reporting that the Trump administration officials, rather, are pushing the Bureau of engraving and printing to design a prototype, $250 bill featuring the president's portrait. No living person, guys, has appeared on that currency since 1866. It was actually outlawed back then after the image of a mid-level treasury employee ended up on a five-cent note. Congress

would have to change that law and it may to change it into legal tender guys. Back over to you. $250 bill. Who knew? Sounds real. Yeah. I mean, it's just, it's odd when it ends in a 50. I got a $61 bill for you, Kelly. I'll trade you a couple hundreds for the 61, no?

Is that a movie reference? No, it's just a made-up thing I just made up. We'll put your face on it. I don't know how to react that story. Up next. Rolling the dice and placing your bets, we've got major news coming from Las Vegas. And we'll tell you what that is right after this. I got some big news of the world of gaming and entertainment billionaire and ambassador to Italy and San Marino.

Tillman Fretta expanding his empire, buying Caesar's entertainment for $17.6 billion. That deal does include debt. A lot of cash in there too. Contessa Brewer has more. Contessa, what can you tell us? Okay, so the offer is $31 a share, Brian. Total deal worth $17.6 billion, including $11.9 billion of that in Caesar's debt. I'm told Tillman, Fertita wrote a check of about $2.5 billion and is borrowing roughly $4 billion to make the offer. A source close to the deal told me, Cesar's and Fertita Entertainment will maintain separate capital structures at the beginning of the deal if it goes through, but operationally, it will be one company at closing. CEO Tom Rieke told me today he's excited for the continuing opportunity,

excited for Cesar's shareholders. But Carl Icon owns 4.9% of Cesar's shares plus swaps. And he made his own bid in this whole process. In fact, insiders tell me he now may privately try to pressure for Tita to raise its offer, but publicly he's apparently limited by a standstill agreement, which limits the kind of disruptive actions he can take publicly unless he releases two board seats that he has and sells his stock. Vichy, which is the landlord on Caesar's Palace and Harris Las Vegas on the strip, plus nearly 20 other regional casinos, its CEO says this will be a formidable port. portfolio of hospitality assets. And of course, the leases won't change right now. We haven't seen the

stocks move much today. Look at Cesar's. It's up a percent. You've got Vici down by a percent. Largely this news, Brian, has been baked in because we've been talking about it since February and March. Yes, we have. And as you know, and our audience knows, I am friendly with the ambassador to Italy. Tellman and I have known each other for a long time. He's also, by the way, I think, the single biggest individual shareholder of win. So there's another layer of intrigue here. You're on the street and the strip. What is the word in Vegas about this? Because Cesar's, listen, people know him as friend.

When Tillman touches stuff, it gets better because he knows how to make things better. What's he going to do to Cesar's? What sort of is he bringing to this deal? Again, so it's not a done deal yet. But if it happens, you've got all of these synergies with the restaurants that he owns, with the Houston Rockets, with all of these other entertainments like Aquarium and things like that. You have now a massive customer database in the hospitality industry that you can create synergies with Caesar's rewards, which is one of the biggest in this industry and really

effective way of creating a kind of flywheel of customer loyalty. And so you can expect to see more of that going through. Plus, because he already has his gaming license, not just in Nevada, but in other places, it makes it easier to get business done. Katessa Brewer, a big deal there. Timon, again, my friend, but I think one of the best business people in America today. Contessa, thank you very much. Sure. I remember when we were talking about how he said middle class billionaires like him couldn't buy a sports team any. He started with one restaurant.

I think he's moving up. He's a guy who started with one restaurant. VOI, born on Island, Galveston Island, Texas. Yeah. And now look what he's built. So it's hard to bet against that. And he's a, he's my buddy. So it's, you know.

Well, speaking of wagers, the prediction market frenzy is heating up with more play joining the field. Sebo launching its own product next month, joining the likes of Kalshi and Polymarket. Let's bring back J.J. Kinnahan to tell us more. So tell us more. All right, Kelly, I'll be happy to. So I think one of the big things that differentiates us is we're going to do this on products that are already trading to start. That being the XSP, which many people refer to as the mini SPX, because it's one-tenth the size. And so it becomes a much more retail-friendly platform. I think one of the things that really we have seen in a prediction, markets is it's a great way to get retail involved in the market overall. We talked in our earlier

segment about many of the people who were in crypto coming to the prediction markets. They wanted the big things about this that we're building in not only a yes, no. And so if you were to look, as we have on a screen, if you thought we were going to be above 760, you could bet yes, no. But what we're also doing is you can bet the 759-760. One of the basics of options is you don't always have to be exact. You can be directionally right and make money. And what we want to do is teach people that's called a vertical spread. We won't call it a vertical spread. We'll call them a plus zone. So it's not intimidating to people. The retail brokers like it very much because we're trying to help them create long-term clients. And we're trying to have their clients understand that these

are strategies. Yeah. And the way where I think, and this kind of goes, Kelly, to your earlier point about crypto. The way we think about prediction market. is going to totally evolve, I think. The smartest people I know that I talk to, right now you go on whatever and you can bet who's going to win the Knicks of the Thunder, right? Whatever. In the financial markets, these are going to be huge, effectively, almost like options, what you guys do so well at CBO. Thank you. Where sophisticated people and retail investors alike can bet or hedge on positions without having to take the cash on positions without having to take the cash.

capital risk of the position itself? This product is... Is that fair? What I just said? You're 100% looking how I'm looking at this. This product's going a little backwards. And what I mean by that is many products start with institutional. This started 100% retail.

So now, okay, how can we make this... When you get retail, you tend to get market makers. When you get market makers who can make deep markets, you're going to get institutions who want to come in because they know they can get filled with the kind of size they're doing. And where you're talking about, Brian, I think eventually the... will be as big as sports because we'll be talking about insurance. We'll be talking about all these different products that service the market.

You probably saw this, but the American Gaming Association CEO is on Squabbox this morning. He said they've lost a billion dollars the states have in what they thought was going to be the sports gambling windfall. And now it's going to the prediction market. So even though the president's behind the CFTC maintaining jurisdiction, I don't know if we've heard the end of them. Well, we're going to be on the SEC side of the business. So it'll be very interesting to see there also. Because the market's going to want sophisticated predictions, products like Sebo can build.

Not just betting on specific outcomes. JJ Kenninghan, we're very good. The outcome was you slept out to New Jersey. We had a little weird monsoon in the middle of the day, too. JJ, thank you. Really appreciate it. See you again soon. Always great to see you guys. And by the way, thank you all for watching or listening to Power Lunch.