Power Lunch - Power Lunch 5/29/26

Episode Date: May 29, 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.

Happy Friday, everybody. Stock's heading for their ninth straight week of gains. Welcome to Power Lunch alongside Kelly. I am Brian. One of the most powerful market rallies in years presses on today. The NASDAQ 100, now up over 20% in just 90 days. We'll talk about that and more with the CEO of AI. Giant Perplexity. That's an incredible stat. And as AI reshapes classrooms and disrupts industries, one education CEO is drawing a hard line. Philip Moyer, the new head of McGraw Hill says the future of learning isn't artificial. It's human. And a new op-ed, he argues that no algorithm can replace a great teacher and warns what's at stake if we try. Look forward to that interview coming out. And a big shout out to all the teachers everywhere. All right, we'll get to that. But we begin with the two most important letters in the money world, maybe just the world world right now, and that is A and that is I. You don't have to be a teacher to know that. spending on artificial intelligence is driving nearly everything and driving it higher.

Capital spending on AI is nearly $1 trillion per year, and heck, it may actually be more than that if you factor everything else in. That spending is enough to help drive many incomes higher and not just in big tech. It's the entire ecosystem that is benefiting, land, electricity, electricians, concrete, truck drivers, and more. But as that spending goes up, so to the valuation. and the risk as well that even if we see a little bit of a wobble in that spending, prices in the private and public markets may come back down. Let's talk about all this and more. Joining of us is Arvin Srinivasa.

He is a co-founder and CEO of Perplexity ranked 31st in this year's CNBC Disruptor 50 list. Arvin, good to have you on. Congratulations. Making that list again, any sign from your side that spending is slowing down at all. Not at all. In fact, I expect that spending will get even more efficient. The ROI on the spend will get even more efficient. We are having a few announcements we're going to make soon

in terms of how you're going to rethink all the server build out for AI and where inference is going to be run. But people are going to see a lot more ROI on the tokens their spending where they get to control to spend much more effectively. Wait, so what do you mean? What are you hinting at, Arvinda? It's great to see you. Talk more about that.

Well, I won't reveal too much, but what I will say is all the AI inference today is running on giant servers. That's going to change as the year progresses. People are going to have a lot more control over their tokens. People are freaking out of how much they're spending on clod tokens without any guardrails whatsoever. I saw some article in New York Times that said

there was some company that spent half a billion dollars in one single month because of an engineer's error in clot. Now, that's crazy, right? You want to give people more control over how they manage their token spend. One of the reasons we built our product perplexity computer is to orchestrate all these models for you ourselves and be a far more cost and token efficient. Right. And allow you to even think about bringing in your own computer. that you own on your personal devices together with the cloud. So that's where the future is headed, in my opinion,

and we'll have some announcements to make towards that. But, Arvind, if you're right, does that mean we have to sell Nvidia? Forget the Dell route. Just forget all of it. We're just going to be doing stuff. I guess I'm working on a Dell laptop here, but I don't think that's what's powering them higher today. No, you shouldn't sell Nvidia.

I think Nvidia is going to do great. There's always going to be server-side compute. It's about being orchestrating, efficiently what you can do on the server and what you can do yourself. That hybrid orchestration is where the future is. And we're going to see a lot of important announcements made in this space. Nvidia is also a big player in that space too with DGX Park. And so is like other players like Intel and Apple.

But at the same time, like what you want is frontier intelligence running on the servers with personal intelligence running on local. that orchestration is what we're after. So you talked about tokenization and all that money that was being spent. Some of these companies, by the way, were spending their annual budgets in like a month. Yes. I'm not a financial expert.

That's not good. Elizabeth Warren, very powerful Senator Arvin, she would like to tax artificial intelligence, not just you guys, but pretty much everybody. CNN is suing you guys for copyright or alleged copyright infringement. There's a lot of forces that you and your industry have to kind of fight off right now, is there not? Well, I'm sure there's a lot of concerns on where this is all heading because we've

never seen a technology progress this fast ever in our lifetime. So it's insane to even grapple with what's going on. I think people are going to slowly understand the benefits. I think the more power we give to people in terms of how they own the compute, the better. So that they get to control and choose how they spend their token. how they, what kind of tokens they even want to like spend on. Where do actually see the benefit of AI in their lives or their businesses? I think AI is largely being used in large businesses today.

That's also going to change. The future of American economy is going to be in small businesses that are actually going to use these AIs far more efficiently, far more resourcefully, creatively than large businesses, which are much slower to adopt new technologies. And they will end up creating like companies, that were never possible before. Like you could build $100 million or a billion dollar

or a billion dollar companies with like few tens of people. You could have like somebody who's just motivated and creative quickly spin up a website and do their own growth marketing with AI and get a few customers and have some passive income going. You don't have to drive Uber's for that. I think there's a glorious future ahead of us in that spirit.

And that's what companies like perplexia, at least we are trying to help people create that future and power small businesses and, like, you know, like address all these growing concerns about AI. Arvin, what if you lose to CNN? And what if your platform is restricted or has to pay more for the content it is using to generate replies? I mean, it's an ongoing litigation. I obviously can't speak much to that. We are very confident in our position.

We believe there is no copyright on facts and knowledge. Imagine if Newton owned the copyright to gravity, would that be a good world to live in? Wait, wait, wait, okay, okay, Arvin, you're on our journalistic turf here, and listen, this is not gravity. These news stories take tons of employees and tons of money to produce. Facts don't fall from the sky. They have to be created by news organizations, and we can quibble whether there are facts or not. But that's to decide the information, if you were to lose access to that, what would happen? Well, we let the courts decide what the right way of using information in AI's are. Like, I'm sure there's a lot.

to say here that is better, you know, we should respect the legal process. And we believe in our position pretty strongly. Right. I know. And look at this, I understand. How about the, how, let me ask a different way, because now you got me thinking, Kelly, Arvin, are you guys not perplexity, but is the industry of AI, is it a utility? Some of the people have, you know, they've criticized AI as saying, well, you're sort of collecting the basics of human knowledge and trying to sell it back to us, basically give us back our own knowledge for money. What would be your response to those criticisms? I think AI is not like reselling knowledge.

AI is essentially doing tasks for you, like labor, mundane tasks that you don't want to be doing yourself. Like your job as human beings is to be creative and be asking questions, not like writing down answers. Like actually we all, we kind of like, we kind of like, built a whole economy around like reporting people for having answers or being experts at things. But fundamentally, what's always moved the civilization and human society is to post the right questions and to question what's already taken for granted and make some changes

there. That's what led to the invention of the transistor. That's what led to the invention of the personal computer, the internet, AI itself. So I think we need to get back to that and we need to start building businesses by asking like, you know, where else can, you know, something be changed and delegate all the mundane stuff to AI. That's how I see AI. It's not about re-synthesizing or selling knowledge. It's about allowing us to be curious and be the best versions of ourselves. Yeah, and I love your point about these startups that can go and you know, you don't have to drive Uber to have a side gig and that would be fun to talk more about. That's a real thing. I actually was on an Uber recently and one of the Uber drivers, he told me that

he'd listened to my Lex Friedman, some podcast had told, and started wide, coding and he now makes more money doing that and he was telling me how he's going to give up Uber driving because he hates having to drive like these one hour, two hour rights just to make some gig. And that's what's powerful about. Yeah. Like these are the stories that are not being told in media. You're only like reading the negative aspects of AI all the time.

But the positive aspects of AI are tremendous and they're just silently, you know, we wouldn't be making this much revenue. There was not a positive impact in the world, right? So I think that's the side of AI that perplexity wants to stand for and represent. And our success should ensure that these smaller players succeed as well. Speaking of driving, if we do a wide shot, I could see over his shoulder, there's a helmet. And I believe that helmet is Lewis Hamilton. And when I watch Formula One, they go to Hamilton's helmet cam.

There's perplexity on the top of his helmet. I'm not bringing that up as a racing fan, but there are people, by the way, that notice the marketing spend. I just noticed that on air, Arvind, there was a huge battle for the AI dollar right now. What's the best way for you to spend it at perplexity to win the battle against Anthropic, which, by the way, just got a $1 trillion trillion with a T valuation. How do you win the battle? What kind of battle is there in marketing to capture the world's attention right now? Well, we're not competing with Anthropic.

Anthropic is an amazing company. I think they deserve every piece of success they've achieved. And we are very happy customers. We put Claude and all our products. Perplexi computers powered by Claude. And we are constantly working together with them on, like, you know, giving them valuable feedback along the way. And I don't see it as zero-sum at all.

Like we are going after a completely different market, completely different sort of use cases around research and, like, you know, building businesses and things like that. And they're going after the developer market. So they're a frontier model lab. and we are a product company. So I think there's a tremendous amount of difference between the two companies.

And in terms of marketing, like you have to be creative. We are a smaller player. You know, I like to believe that small players like Perplexity can still be winning. And I like to believe that our success gives hope to even smaller players than us to be creative all the time.

That's why we build this product to always seek that extra edge that people might just assume you cannot do because you don't have the capital. The Lewis Hamilton deal that you particularly mentioned, we did it first before any AI company started putting their logos on driver helmets.

And after seeing us do it, that deal got more expensive. And then Google paid a lot more for McLaren and Meta paid for Mercedes and Anthropics working with another team. So, you know, like we like to do things creatively for the first time and not follow along others. Arvin, again, like you said, the industry needs a fresh narrative, and this could be one. Thanks so much for joining us. We really appreciate seeing you today. And come back when you want to make any announcements. Sure, absolutely. Thank you. Arvin, Srinivas. For the full list, by the way, of other Disruptor 50 companies, driving change and innovation across the country, check out CNBC's annual list. You can find that by scanning the QR code on your screen or visiting CNBC.com slash Disruptor 15. And we are just getting started sticking with the AI story. It's rapidly.

changing the way students learn, but does it actually replace the people at the front of the classrooms and in-depth discussion with an industry insider ahead? But after the break, stocks, scaling records again, and our next guest says the AI buildout is creating winners across manufacturing where she's putting her money to work next. Welcome back and happy Friday. Once again, your top story, this incredible market juggernaut just keeps powering on most averages today, higher across the board, the NASDAQ 100 is up 21 and a half percent in just three months. And in that time, 14 of those NASDAQ 100 are up more than 50 percent. Eight stocks have doubled all in just about 60 trading days.

Let's talk about that and more. Joining us, Stephanie Link, chief investment strategist at Hightower Advisors and Eric Johnson, chief equity strategist at Cantor Fitzgerald, Stephanie, I am never one who is short for words. One would say that I probably talk too much. That aside, it is my job, that aside, I am running out of superlatives. Even I am running out of things to say about this market rally. Every CEO like perplexity we just had on, every energy company, AI, data center,

I asked them the same question. Any sign of a slowdown in spending? They say no. Are your earnings estimates just continuing to go higher as well? Oh, absolutely, Brian. I think you're going to see, you had mentioned earlier that the CAPX numbers are running nearly a trillion dollars a year from some of the biggest technology companies. I think that's going to be more than one trillion dollars next year on top of the $761 billion this year because these companies, all of them are saying this is a once-in-a-lifetime

revolution. And it's not just the technology companies that are confirming it. It's the whole food chain. It's the data center companies that build out the data centers. It's the stuff that goes inside the data centers. It's the grid manufacturers. It's the power companies, which we know we just don't have enough of. And this week, we got confirmation like one after another after another technology company that reinforces how strong this trend really is. Marvell, synopsis, snowflake, even IBM, Dell. I mean, the list goes on and on.

Some of them are extended. So wait for a pullback, but you definitely want to be there. So I guess if I, why am I, it's always my job like be negative glass half empty Sullivan stuff, but I'll do it. If I was going to be the bear, because my job is to try to be bullish and bearish, right? I'm not anything. If I was going to be bearish, I would say that it's a fairly narrow rally, about 198 of the S&B 500, are down over the past 12 months, and that it's really the few stocks you mentioned and

more that are powering everything. Those are true stats. Do we care? Should we care? Well, you always care. That's for sure. And you don't necessarily want to see an market. It hasn't seen to matter, Stephanie.

It hasn't seemed to matter because if a company with a $10 billion market cap goes down, I don't really, it doesn't matter if a company with a trillion dollar market cap goes up. Well, I mean, just stepping back, it is quite a few industries that are doing well, quite a few stocks that don't get the attention that a micron gets, right? GE-Vernova, Vertev, Quana services, all these stocks are up an enormous amount this year. And I like that a lot. Any other power, the independent power producer companies, one that's a really good value in my mind that's actually not up, is Vistra. So you can pick a couple of names in various different sectors that are going to participate.

But to your point, I do think that we can see an expansion in terms of the sector. and the breadth because the economy is running hot. It is running up 3.8%. And if there was one data point that it was really interesting to me from an economic point of view this week, it was today's Chicago PMI, which was the best in four years. And that speaks to onshoreing. It speaks to the tax code changes. And it speaks to this AI food chain frenzy. And Eric, jump in here. I mean, is there any where you would differ on that? No, I think the CapEx story is B driver in the market. And so you mentioned the $1 trillion of Capx.

The denominator is important. This is CapEx has doubled over the past three years for the S&P 500. It's gone essentially from, from $1 trillion to $2 trillion. And so the sectors that have done well, and I think will continue to do well, are all those that sell into that $1 trillion. And that's everything from, you know, semis to, you know, companies that make turbines, energy servers, et cetera. And I think that trend is going to continue.

Now, what the market's going to be looking for is when they see six to nine months ahead, that that trend is going to start to plateau. And that's when these stocks will sell off. And I think that's what the market's going to be on high alert for. and so any potential signs that come, and it could be a small sign, the market, you know, is probably going to jump on, you know, sooner rather than the layer. But ultimately, you know, this trend is certainly going to go for many quarters to come. And so these numbers that we're seeing from those that sell in to the capback cycle is going to continue. Eric, where would you say your most favorable,

you know, and you kind of just look across the markets right now? So I guess if I had to say over the course of the next, you know, three to six months, I would say what's been working, which is, you know, the stocks that I just, that I just mentioned. I do think that in the very short term, you've got the weekly RSI for the semiconductors at 87. That's the second highest in history. The highest was 89 back in March of 2000. And you've got, you know, if you look at what's going on in the options market, what's going on with Leverty ETF, sentiment right now is extremely exuberant, long, especially from the retail community, in this subsector. So I think in the very short term, we are ripe for a pullback in this theme. But I think that will be a viable, certainly a viable dip

for the next three to six months. Well, every dip has been viable the last three to six years, it feels like, Stephanie. But you talked about this spin sort of spreading out. One of those companies that might be, again, maybe a second or even third derivative play, is an Alcoa, that's a name that you just bought. Yeah, absolutely. So I like copper a lot and I like aluminum a lot and it all plays into this whole electrification theme. And we are going to see industrial demand growth, Kager, 40% between now and 2030. Alcoa is a vertically integrated company. So they mine the stuff and they also have the finished product. So they win all over the food chain for them. And they have, I think,

think they're going to see production growth actually start to see expansion into the upper single digits. And they have an efficiency program as well. The stock trades at 11 times earnings. And it's not really talked about a lot. And so I think that's a way to play this whole theme, which may not be as obvious as some of these other names that have worked. All right. We'll leave it there. Have a great weekend. Thank you both. Really appreciate it. Stephanie Link and Eric Johnson. Let's stick now with the Bond Report. Wells Fargo out with a new note on Fed Chair. Kevin Warsh, they say while he may hold some unconventional views on monetary policy, any major shift at the Fed is unlikely to happen quickly. Given that policy decisions require broad support

from the voting committee, as a result, they expect long-term treasury yields to move higher, citing persistent inflation pressures, heavy treasury issuance, and rising term premiums, and they are highly favorable on owning the S&P financial sector as a result. All right. On deck is the consumer really starting to break down or other consumers just starting to break out. Stocks are going in opposite directions. We'll try to clear this up with Stacey Woodlitz. Next. All right, folks, got a little good news at the gas pump.

With today's move, oil's down about 2%, oil is actually on pace for its largest monthly drop in six years. That means that gasoline prices are going to come down as well. And the market is optimistic that prices will continue to fall. It's not my opinion. Look out on the futures curve. Your August, your September, your October contracts were shown right there. They are all lower and lower and lower. And in fact, the October contract at $81.20.

This is all starting to translate into a little bit of relief for you. Yes, we know. Gas prices still elevated. They're at their highest level since the summer of 2022, when $5 a gallon was common across America. And yes, we are still up relative a year ago. It's painful for many. According to AAA, the national average for a gallon of gasoline is at 439. The good news, though, it's down 16 cents a gallon from last week, though, as we said, still up more than a dollar from one year ago. Let's talk more about the impact of gas prices on retail now, because it's been a mixed

bag for a couple key retailers this week. Look at Gap, tanking after the company cut sales guidance on disappointing Old Navy performance, while Best Buy is rising again today after better than expected results, and it's poised to end the week about 20% higher. Let's bring in Stacey Widlet's president of SW retail advisors. Stacey Gap did say this was not a consumer problem, so is there a consumer problem? Well, first of all this, we need those prices at the gas pumps to come down here. Two-thirds of consumer surveyed are saying they're decreasing their spending and other things because of gas prices. Walmart talked about the fact that people are putting fewer gallons of gas in their car. They haven't seen that in years. So it is impacting behavior. But if you look at the stocks that are really moving today, for example, Gap, American Eagle, they're talking about, they're taking it on themselves, saying this is an execution problem. It's a product problem. So Old Navy was disappointing, kind of surprising considering they're the value segment where you should see a lot of people migrating. Gap, on the other hand, that's promoting less and raising prices, killed it with a 10 comp.

And some of this, don't forget, is largely thanks to that nice $600 extra tax refund check that so many people put in their pockets. Right. So then are you positive? We're looking at the retail ETF, which against this tug of wars is kind of flattish. So is this a company-specific environment? Who do you think is, you know, where would you go? Okay, if the space is safe, and we've seen it start to break out a little bit. I mean, you go back to an oil price that started to dip earlier this week. It's shown that it can act as a little bit of an area of leadership. It is very company specific at this point, and you're hearing from Walmart. They're gaining share from the wealthier consumer, their ticket, their traffic's up.

You look at Dollar Tree. They talked about the fact that, yes, their lower income consumer is very cautious. They're gaining share from the higher end. So those are the places you want to go. You listen to TJX, they're like, the customer's perfect. The consumer is on fire. Those are the places that are gaining share. So I would stick with those.

And the other couples that are like a Ralph Lauren that's really elevating their brands. And they're able to push the prices through to the consumer. This is why we wanted you on, Stacey, because nobody cuts through the noise like you do. Because the reality is for American Eagle, okay, down 38% the stock this year. But on the flip side of that, you got to. Target up 18 or whatever percent. Starbucks, Joe Kernan talked about it this morning in Squawk Box. We was kind of making a comment about $7 lattes and gas prices, but people are still buying that. Our kids are begging for them, yeah.

So it's weird because we know that high gas prices hurt so many, but at the same time, we're layering it on the inflation of other stuff, and I'm looking at the price of food and the price of health insurance. I'm thinking what costs haven't gone up in a year. So who's figured out? What companies do, Stacey Woodlitz admire right now. So, and again, you talked about, you look at American Eagle and you look at the Airy brand, their apparel comps are up 45%. That is insane.

And that's because they're running an airy real campaign. They're not AIing. They're not airbrushing. And that is resonating. That is resonating with a consumer. On the flip side, their AE brand is losing share, maybe to gap. So you have these houses of brands where there's several brands inside. And one is always nailing it and the other is kind of trailing behind.

It's very hard to balance. So, you know, I'm looking at the companies, again, that are gaining share in this environment, especially as we roll off of these tax refund checks. And again, that's going to be a Walmart. That's going to be a TJX. That's going to be an Ulta. You think about how much share coals is losing in general and in beauty. That's walking over to Ulta.

Alta Target relationships ending. That's going to walk over to Alta. and innovation in the sector continues. So those are the ones that I would stick with in this particular environment. All right. By the way, Stacey, I can't resist. But, I mean, do you want to fleck it who you would avoid?

It sounds like Gap has some challenges. So, you know, again, the thing is Gap is with this 10% comp, it's 20% of the business. So Old Navy has to work. You can't hear about execution missteps at the brand that represents the bulk of their profits and the bulk of their revenues. So that's a challenge there until we see them correct some of their missteps.

And again, American Eagle, they've spent a lot of money on Sydney-Sweeney and campaigns. It's not translating through to market share. The market share is going elsewhere. So again, if they can replicate what they've done at Erie, you know, you'll look at it again. But for now, it's very difficult to buy these multi-brand houses. All right. Stacey, great to see you. Thanks so much.

Thank you. Stacey Widlitz with SW Retail Advisors. Speaking of the consumer, look at that. Do not miss Gapcio Richard Dixon on Mad Money with Jim Kramer tonight. Jim will ask Richard Dixon about the consumer, about sales, about, I don't know, acid wash jeans. Are those hot again, Kelly? I don't know. The baggy gene is definitely in.

I see the baggy gene everywhere. The wide, like the 90s are so back. Are they back? Yeah, well, look. The 90s? Yeah, productivity, you know, technology companies. Can we bring back the meat? Music?

AI is showing up in more classrooms, but don't hand the lesson plan in just yet. An industry insider explains why great teachers remain irreplaceable. As companies race to weave artificial intelligence into their business models, some college graduates aren't on board. At three college commencement ceremonies this month, graduates booed invited speakers who praised AI. Former Google CEO Eric Schmidt was among those who didn't get a. very warm welcome during his speech at the University of Arizona. Take a listen. We do not know, we do not know the precise contours of what this transformation will look like. Well, our next guest says that when it comes to education, you shouldn't fear AI. He recently wrote an op-ed in Fortune on why AI will never replace a great teacher.

Here now on set with us as the author of that piece, Philip Moyer is the president and CEO of McGraw-Hale. It's great to see you. Good to see you as well. Recent IPO as well. Yes, absolutely, last year. You'd think kind of not the time for a textbook company to, you know, be coming into the space when everyone's talking about how much learning and education and knowledge is going to change. Is it going to change? Education will change.

You know, we're at a seminal moment in education. You know, you and I were talking about the fact that I think analytics has come to a lot of industries and it's coming to education. Because I think teachers and parents are skeptical. We have more tools than we've ever had. You know, we have more screen time than we've ever had. And we're not getting the results. The outcomes are terrible. People are looking for ROI in a college degree, and they're looking for outcomes in literacy and math.

You're saying that despite all of these tools, you don't think we're on the verge. Because so I do worry a little bit. The teacher's going to turn into like a Chromebook administrator, right, where they go around, kind of like you experienced the doctor's office. They're pulling them out of classes, I think, aren't they? They're starting to, but, I mean, only should. They're banning phones, which is a start. screens are coming out of classrooms. And, you know, the science is there.

No one wants a teacher-beater replaced by AI. The parents don't, the students don't when you talk to them. And the science says you shouldn't. As a matter of fact, literacy, one of the most important areas, and quite frankly, where we've fallen behind, 87% of our states have fallen behind in this area. Screens are not solving it. You know, we're just releasing a new technology or new, I'm sorry, a new curriculum for literacy.

And we only allow 20 minutes of screen time per week in the younger grades. As you get more self-regulation, it can help. but books are here to stay, a print is here, and teachers are more important than ever. Yeah. You're just saying to Kelly, by the way. I mean, that's, right? Well, the weird thing is, this is your thing. I don't think, look, I didn't know this was a thing that kids were learning on Chromebooks.

I'm not sure you can learn on a Chromebook, you know, but the problem is. During COVID, it was full on, of course. No, but COVID's over now. Yeah, but is it over? I think COVID was over? I don't think so, because my, my, my first is COVID, but. friend was a middle school principal in a blue-collar area of New Jersey. And he told me during COVID, 70% of kids did not log on. They simply vanished. And there's nothing they could do. They had no

power to check on them or do anything for years. He would have somebody log in the last day and be like, I'm here. They're 13 years old. He had ninth graders that could barely read when they went up to high school. How do we fix that? You know, I think the problems of education were really accentuated when it came time to be in COVID. When we saw in COVID, parents were seeing. firsthand that students weren't learning. They were seeing what was happening in the classroom. They were seeing the disengagement. They were seeing the screen time wasn't solving the problem. You know, the problem we have in education is we have so much information to teach, so many teachers, so many students to teach, and so little time. What we actually need is we, and we don't

understand who's learning and who's not. And now, as I mentioned, with outcomes, when we're focused on outcomes, we're able to see at a much more granular level, who's learning and who's not. A couple of challenges. And by the way, the Chromebook came about before COVID. This was my district in 2017 declared the Chromebook is the educational instrument of the 21st century. I'm not sure according to who, you know? I mean, I think this is an open experiment. We're seeing the result, according to Google. So as the issue is state testing is done on these computers, state testing is done on computers. What do schools want to be good at? They want their students to test well. So if your child is not, that's why they Chromebook usage starts. That's why it starts creeping down to second. first grade, and yes, kindergarten, all because of the state testing requirements. I feel like that has to change. Here's part of the problem going back to paper. Paper's expensive, and all these districts are in budget crises. And so I'm curious, as your company is navigating this as well, textbooks are expensive and they've gone away. If you want to bring them back, you have to buy them again for millions of dollars. Paper's gone away. If you want to bring that back, it's millions of

dollars in these districts feel like they don't have it. You know, we provide a wide variety of choice McGraw-Hill. We're shipping books and paper every single week. We've done it for 137 years. When you have more self-regulation, you can deal with a little bit more screen time. There's an amount of screen time that's appropriate at each level. In third grade, fifth grade, you might need some gamification. When you get into higher ed, we have tools like sharpen that you get 47 percent higher grades, you know, in your final exam if you have study aids outside of the classroom. And so we believe in a variety of choices. And economically, and at scale, we do this around the world. So it's not like paper and books,

have gone away. It's when is the appropriate time to use paper versus when are the appropriate time to use screens. It's not just kids. I know medical has been a big growth opportunity for you, learning at all ages. Talk to us a little bit about how big the opportunity is for people that are not in grade school that want to learn, whether they're graduate students, professional degrees, or even outside of that. I think learning should be a lifelong endeavor. Learning is. And we have this idea is the same way that you think about a health record, the health record that you have throughout you're like, we believe in a longitudinal learning record. Let me give you some perspective on size and scale. When you're learning literacy, you're learning about a thousand concepts. It's hard. When you start

learning biology, it's like 4,000 concepts. My son just graduated at medical school. He had 54,000 notes. Fifty four thousand concepts. You have to do that in a sequence. And then, increasingly, what we're hearing is we do the one precision education. Those same doctors now, they may need to brush up before they walk in to see a patient. And so when we look at the opportunity, We believe we can serve them, you know, with existing technologies, with paper in younger ages, but when you get into medical school, we believe with agentic technologies and AI, we'll be able to answer questions very quickly for that doctor to give them a refresher right when they need it before they walk into a particular situation. So the opportunity is huge. It's good to hear from me, I mean, because you are the one out there kind of seeing this across so many age groups and industries to know this change that's coming and how people are doing.

We didn't even really talk that much about AI because it's bigger than that in many ways. Phil, come back. Really appreciate it. Philip Moyer is CEO and president of McGraw-Hill. All right, let's get down to Julie Borsden with a CNBC news update. Brian, the U.S. Postal Service proposed new rules today that would require states to provide voter data on mail-in ballots in federal elections. It comes one day after a judge declined to immediately block President Trump's executive order aimed at tightening mail-in voting rules. If adopted, it would require states to submit names and addresses of mail-in voters along with a unique barcode tied to ballot. envelopes. Meanwhile, Louisiana Republicans today approved a new congressional map, which will

eliminate one of the state's two majority black districts. Voting rights advocates are expected to sue, and there's a chance Mercedes could be banned from selling its vehicles in the U.S. New legislation making its way through Congress is trying to limit Chinese involvement in the U.S. auto market. Mercedes largest individual shareholder is state-owned Chinese automaker, B-AIC. Several people familiar with the legislation say that depending on how the law is ultimately interpreted, it could ban Mercedes from operating here unless the Chinese company sells its stake. Brian, back over to you. Volvo's owned by Chinese. So interesting for them. All right, Julie Borson, thank you. Coming up, the CEO of Cracket on Bitcoin, Sea Monsters, and more. Second part's not true. We're back right after

this. All right, Bitcoin ETFs on pace for their ninth straight day of Outflows. That's actually the longest losing streak since the launch of the products. The fund seeing net outflows about $2.8 billion between now and May 15th, or going backward, because May 15th was backwards, is institutional demand for crypto fading or our investors simply putting money to work elsewhere? Or is it somewhere in the middle? I don't know. But Morgan Brennan's next guest probably does. she is at the Reagan National Economic Forum with a very special guest that has nothing to do with giant octopus-like sea monsters. Morgan. Yeah, nothing to do with the sea monsters, Brian, but I love that you went there. I am at the Reagan National Economic Forum.

I'm joined by Argenti, the co-CEO of Cracken, also the chairman of Tribe Capital. A lot to talk to you about. But first, let's start with what you're seeing within the crypto space at this moment in time. look, I think what you're generally seeing is that over the last 10 years, we moved from speculation. I have speculation around one asset, so it's BTC, Bitcoin, then Ethereum, then all coins, and meme coins, and so on and so forth. And then what you're seeing over time is that people are also moving into commodities and equities, but that's also happening on crypto rails. So when you think about just overall risk management or asset managers are looking at investing in a certain

sector within equities or within commodities, I would call that actually a part of the maturation cycle of what you see in the markets. Yeah, I actually want to throw up a chart right now because what's really interesting to me is if you look at this year the price of Bitcoin against the IGV, which is a software ETF, they've actually tracked pretty similarly. And I wonder how much it actually speaks to this trend that I know you're very focused on, which is the convergence of AI and things like agenic AI with the infrastructure that blockchain and crypto is going to enable. When you have any sort of new paradigm shift of a new technology, there's a what I call a hope of what the asset's going to look like. And so you definitely start pricing that in. So if you

remember during COVID, Zoom just shot and their revenue and the speed I wish they were growing, it has continued to grow, but their market cap has gone down. If you look at what's happening in AI, supply chain, power production, distribution, you know, everyone's moving and trying to find, okay, where are the tidbits of where there's going to be an inflation or pricing change or margin change? I think that's what you see across the board. And so, yeah, well, you might see, you know, Bitcoin, like, follow parts of the technology stack. It's just, again, it's just more and more folks saying, okay, I'm going to have it as another sort of onboarding source of, you know, capital. We're also people, you're also seeing people move over to stable coins,

and you're seeing them move over to tokenized equities. We're one of the largest. And so we see a huge inflow of capital coming in for BTC and stable coins, and then they immediately move into commodities and equities. And I think that's a part of a natural cycle of the rails of risk management rather than one specific asset. So what does all of this mean for Cracken and for Cracken's parent company Payward, which has filed, if I'm not mistaken, to go public at some point here. Yeah. So if I, you know, we start off as a crypto exchange. So we built out the rails. And so payward financial is what we do today. So there's one side of the house that's just trading. So it's derivatives, spots, margin. It's going to be crypto. It's going to be stable coins, like large

amount of FX movement and then tokenized commodities and equities. But it really just means equities and commodities and risk management. And the other side of the house is that we spent the last decade plus building out trading, but a lot of our customers worldwide wanted to be able to increase their collateral, increase their assets and grow it, not extract, which is what you see typically from financial services companies. So we moved into banking as well. And not being a traditional bank. It's more store your assets, store your stable coins, store your commodities, etc. It's about 20% of our assets on our platform. It's just, you know, fiat currencies that are being deposited and they want to yield on top of that. And just quickly, because I know we're running

out of time here, but you're also a longtime space investor, including in SpaceX through Tribe. Your thoughts as we look to that IPO. Look, I think you have to, if you read the S-1, one of the most exciting pieces that they, you know, they use this term that we found the future Tam and that Tam is going to be, you know, on Mars. All of these technologies that we're talking about what the future is going to look like. So we talk about power production. We talk about, you know, internet movement, AI mobility, AI agenetic services, etc. What you're seeing Elon and the Elon companies building and then other companies that are following suit are, what does this look like when you're able to extract this out of Earth? And I know this might seem like sci-fi, but like you have a

dual internet where you're not relying on government, but you're just able to rely on people. So it's bottoms up. You're able to build, you know, an economy, like a heartbeat of a worldwide economy. And then what does that look like when you start extending that out to the moon and to Mars where you think about, again, power production, materials? What does the world look like? And I think it looks a million X better than it is today. All right. We're going to leave it on that hopeful and optimistic note. Argentethe, it's great to speak with you. Thanks for taking the time. Kelly, I'll send it back to you in studio. All right. Thank you both very much. More power lunch right after this.

It's an old saying on Wall Street, sell in May and go away, but that definitely would not have been wise this year. The S&P 500 hit 11 all-time highs this month. According to Ryan Dietrich, that's the most new records of the month of May, Brian, since 2013. So conclusion to me, sounds like old sayings need to go away. Well, sometimes you go, oh, yeah, there's a reason for that. Lately, you're wondering, is there?

Or is this just too powerful to miss out on? Thanks for watching, everybody.