Power Lunch - Power Lunch 8/21/26

Episode Date: August 21, 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 are in the green right now, but the S&B and NASDAQ on pace, at least for now, to stop three-week win streaks. Welcome to Power Lunch, everybody. I'm Brian with Contessa Brewer today, and we've got a big Friday show ahead. First, some straight talk on oil, the energy sector hitting new record highs, but questions growing over oil flows to the straight of Hormuz. How much oil is actually getting through? More Texas.

David Weck will join us with that. Plus, the Walmart markdown. That stock on pace for its worst week in more than four years ever cores Greg Mellick cuts his price target, but he says, still buy the stock. He'll tell us why. And has San Francisco lost its tech crown? A new report shows another city has overtaken the Bay Area as the nation's top market for tech talent will reveal which city and how AI is driving that shift. And by the way, we're also going to show you the top performing and the worst performing cities in the stock market with our power city indexes. And one of them is related to that Silicon Valley

story. You know what they call that in TV? What do they call it? A tease. Deep tease. Which means we're going to get to it later. But we're going to kick off this Friday with a closer look at what is under the markets hood. Now, based on returns the last couple of years, stocks certainly seem healthy, at least on the surface. But they may not be. J.P. Morgan Chase out saying warning signs are building. JPM's technical team saying stocks could, quote, be setting up for a period of weakness after Labor Day, a seasonal trends turn negative. And maybe more ominously, the team also says that the action and AI hardware and hyperscalers is showing similarities to the run-up in the March 2000 tech peak. So is the market heading for a fall this fall?

Let's kick that out with our Friday panel. Albium Financial, CIO, Jason Ware, and FedWatch Advisors founder Ben Emmons. And Ben, I want to start with you. And then I want to add on, I don't know if you saw this, Lloyd Blank Fine, the former CEO of Goldman Sachs minutes ago tweeting this out. I'm going to look down to read it. You'll forgive me. Risk management 101.

Every exposure should have a limit. Even when you're sure nothing can go wrong. After all, the Titanic sank and AAA mortgage bonds went to zero. I worry about the markets and the economy's unlimited appetite for exposure to the positive AI revenue story. Lloyd Blankfein, who doesn't tweet much, is out on the tape concerned, Ben, are you? Well, somewhat there, Brian. Like, you know, we've got to acknowledge that, you know,

the economy is doing really well, but it's risk for overheating, I think, because the more we pump in this investment into the economy, yeah, the greater the chances is that we're going to get with GDP so red-hot that inflation becomes just simply a significant more bigger risk than we're dealing with right now. And as you said, like, you know, Hormuz, that's still not, solved at all. We don't actually know what's really happening there. There's a huge uncertainty

factor that's overhanging the market. So I would echo someone like risk management at Lloyd Blankfine is saying, like, it can't be fully exposed in this market. You've got to have some, let's say, dry powder on the sidelines to see what happens from it. And then in the meantime, we're seeing a three and a half basis point rise in the 10 year right now. Just moving, as my colleague said, they're in the wrong way after a buyback announcement. Steve Leesman, just send around a note here at CNBC about it, saying that the 10-year is now higher by that much. Is that a warning sign to you? What do you think, Ben? It's interesting that that is happening because we're dealing actually with stronger data while this buyback is announced.

So, like today, Contess, you had the PMI data. It was actually been expected yesterday at a regional manufacturing data house. That's what yields are actually reacting to. And then Broadcom was out today with this new funding deal that they're going to come out with, like $60 billion or about. So I think that's what these yields are really doing, is supposed to reacting to this buyback plan, which now let's say it's actually just swapping old death for new death. I think the market figured out that pretty quickly that that's not going to move the needle, is the economy that's going to drive rates higher or lower. So, Jason, what tells you whether this is just rotation and rebalancing or whether it's the start of something more serious?

Well, I mean, I think as far as the equity market is concerned and as far as the AI trade is concerned, our touchstone is the fundamentals. And I think as long as the economy remains resilient, just looking at it from a macro perspective, and it has, we expect it will continue. And as long as earnings continue to be incredible and they have and we think that will continue, then I think we have the right underpinnings for the equity market to continue higher. You can go down the list of all the positive things, I think, that are driving both of those things, the economy and earnings, and I think, you know, we can make a strong case that they'll continue

from an AI perspective. It's really about follow the money. We're seeing CapEx numbers continue to go up. We're seeing the companies that are doing the building of the AI infrastructure layer that are just flat out in terms of demand. And so we look to the fundamentals and the fundamentals look good. So it doesn't sound, Jason, like you're particularly worried about some kind of imminent market bubble. And I'm not saying that's what J.P. Morgan Chase was saying, but their technical team was basically saying there are similarities in the run-up in 2000, and we all know that didn't end well. Do you think these types of companies that we're seeing public now are very different than 26-odd years ago? They are very different. I think there are always some similarities across cycles,

but I think those similarities are pretty weak. When we look at, again, the fundamentals, I guess that's the word of the day, the companies that are issuing a lot of this debt, whether it's Broadcom, whether it's the Big Five companies, Oracle and, you know, Amazon, et cetera, that are building out data centers and this infrastructure layer. Yeah, debt has gone up to be sure. And certainly, you know, they're making big bets here in AI. But I think that's because it's just so dang transformational that the long wave growth of AI over the next several years is a secular growth story. Demand is still far outstripping supply. So we think it's okay. Things look pretty good still. I'm going to do another deep tease,

as Contessa would call it later in the show. We're going to talk, Ben, about how how much debt is coming out around AI. Debt by itself, not a problem. But there was a Wall Street Journal piece the other day where they talked about maybe upwards of $3 trillion and off-balance sheet liabilities, things that we just don't really talk about or can't see that easily.

I'm not saying it's a bad thing, but would you agree that because you've got two private companies, Open AI and Anthropic kind of driving things, a lot of off-balance sheet stuff, it is very easy for the market bears to make a case about being nervous. Yeah, I certainly, Ben. Oh, sorry.

Me first, sorry. No problem. Yeah, I was actually going to say, Brian, like, you know, a lot of this debt is also tied to equity, right? So these companies have actually, you know, let's say that the hypers fund open the eye and entropic, basically in their equity. And that risk of equity tied into the bonds that are being issued,

that's, I think, someone that makes people nervous And you can tell from that CDS market, now it's Broadcom as we blowing out. The other day it was in Nvidia, but they're all doing the same thing. If you could dare to sponsor the equity of companies like Anthropic, and then anything off-balance sheet, there's a bit of a, let's say, sort of a scar from the financial crisis here too, where we had a lot of off-balance-sheet vehicles out there that ultimately became a real problem for the economy. What does this mean in this case, is off-balance sheet, you know, activity that we're seeing playing out,

So I think that's the nerve here to speak. Yeah, Jason, you want to jump in? Yeah, I mean, I would echo what Ben mentioned, but I would also say, we have to come back to demand because these things just can't be flipped on immediately. A lot of this debt and a lot of the off-balance sheet activity, a lot of the financing that Wall Street is bringing to bear on this AI buildout is because the lead times here are multi-year. And so this doesn't have us concerned when we think about matching cash flows and revenue,

as Jensen says, compute equals revenue, and we look at the amount of debt that's being used, it's still very much a self-financed for the most part AI buildout, with some capital efficiency being brought in through favorable debt rates that these companies are getting. Jason, great to talk to you. Thank you for chiming in here. Ben Emmons, nice to see you. Thanks, guys. All right, the center of the economic universe moves to Jackson Hole next week, and that's where Fed Chair Kevin Warsh will take the stage. And what will he say? According to Kalshi, productivity is the most likely buzzword. There's a 74% probability that you will hear that word come out of his mouth,

followed by AI at 70% probability and independence taking 70%. That could get extra attention after this week's surprise treasury intervention. CNBC will be live at Jackson Hole for the Fed Summit next week. Don't miss the action you will want to hang on. What is the Kalshi contract on Rainbow Trout or elk? You know what? didn't look for that specifically, but now that you mention it, let's do that. We should.

Okay. After the break. After the break. All right. With so many different numbers floating around about how much oil is or maybe is not going through the Strait of Hormuz, what should you really believe? What's the actual ship traffic? We'll talk about it. Next. All right, welcome back. Let's do a little energy straight talk because there are, let's be honest, conflicting reports about just how much oil is moving or not. moving through the Strait of Hormuz. Companies that track ships show that volume still well below pre-war levels. While the U.S. government says the numbers are actually larger than what some

of these estimates may show, in part because many of these ships simply may not be being counted. We've spoke with that directly with the Energy Secretary and others over the last couple of months. So the data, folks, we understand it can seem conflicting. And the oil markets and global energy investors, they're kind of caught right in the middle. So let's talk about exactly what we do know right now, David Weck is chief economist at Boretexa. They track the movement of oil and gas cargoes around the world in real time. David, two-parter, what is your data showing right now? And is it possible that some ships are sliding through and simply never being counted?

Yeah. So thank you. A good question. So first question, currently we are seeing it depends a lot which time period look at. On the average of the last month, we see 6 to 7 million barrels per day of crude oil going through. There are peaks in our data on a 7-day moving average of up to close to 10 million barrels per day, and the best day we saw was 14 million barrels per day. So it depends really a lot what time period you're looking at.

Is it possible that you can miss a vessel? In the short term, yes, all these vessels are with their signals off, but we have satellite imagery and we have other proof. So, for example, evidently, every vessel goes somewhere. It doesn't disappear. It will discharge somewhere. And the discharge is generally not dark. It can be tracked well.

So at the very latest, we see the oil appearing when it's discharged to the final ports. But we're also observing a lot of ship-to-ship transfers outside the Strait of Humus, which is generally becoming the standard practice for sending oil from the Middle East Gulf to consuming countries. It's via two vessels now instead of one vessels as was the standard. this is really important context and also i might add david why we're glad that you're on the show thank you very much for joining us because ships can effectively turn off their transponders turn off their lights so to speak and and go through eventually they're going to turn them back on insurance law would require that they're they're on they're uninsured when the transponders are off so they want

to turn them on as soon as they can what are your then discharged data points showing you yeah it's basically on a consistent basis, the 6 to 7 million barrels per day of transits, which compares to 14 to 16 million barrels of transits before the war started. But of course, that's not that we also have this pipeline flows out of the Middle East Gulf that have been hiked significantly. I just wanted to ask you, there's a report coming out of Reuters now that tankers are having to wait up to 30 days to load Venezuelan crude because of port problems. Are you seeing that bottleneck? Not really.

There is always a bit of delays, but not one-month delays on a consistent basis. We also think that the bottlenecks in Venezuela are not in the loading and in the export side. We see peaks in exports on a weekly and daily basis that are much higher than the monthly average. Again, the problem here is the upstream infrastructure, pipeline infrastructure, upgrading infrastructure and also NAFTA imports which are required as diluent for this very heavy crude in quite some cases for this very specific Venezuelan oil. I love contest this question of Venezuela because it calls on, you know, we've been so focused on Iran and Hormuz, rightly so, by the way, for the last six months now.

It's hard to believe it's been six months. Venezuela is critical. David, what else you're seeing in like the Black Sea around Russia and Ukraine? What are general oil and ship flows globally telling you and your team right now? Yeah, thanks for that question. I think that's very important. Hormuz has been important. Over the last couple of weeks, the Red Sea area where the Houthis are making troubles, has been also very important.

And then, yes, we're losing a lot of oil out of the Black Sea from Russia and from Kazakhstan. And on a side note, U.S. exports have also been trending lower over the last month. So we see outside this trade of Fomuz a lot of, so to say, much less oil feeding into the market, making us generally bullish. The other story is that China has increased its imports and is in particular increasing refining runs and product exports to a quite steep level right now. China was the balancing factor over the last couple of months, restraining its crude imports massively. But this is over now, it looks like. And again, that is a significant bull factor in the market. You know, it's interesting you bring up China because two of the big state shippers for Middle Eastern oil have been out of Hormuz since July.

What's your sense of movement there? And what would it take to get them back in there? Does there have to be a new memorandum of understanding? Is it a different insurance sort of strategy? Does it have to do with fees? Yeah, another excellent question. This is changing right now. So generally speaking, a lot of things.

Asian market participants have been cautious over the last six months, have waited for a solution. I think by now both the exporters in the Middle East Gulf, as well as the importers in Asia, are realizing the solution may not come. And therefore, the practice is changing. I mentioned before the ship-to-ship transfers. So buyers like Chinese buyers in the future will very often buy from outside the Middle East Gulf, not from the loading port. And that will basically take away the risk.

of the transaction from the buyer's side, and this risk will be carried in the future by the producer and the shipping companies. Yeah, but doesn't it, David, we've got to let you go, but doesn't that raise costs then? Because now you're using two ships, not one, ship-to-ship transfers are risky. The insurers, which contests the covers so well,

they're going to be like, yo, you're using two ships? Pay us twice. Yes, but you have to understand the alternative for the producers in the Middle East Gulf is making no money at all. And rather than making zero dollars a barrel, they're happy to make $70 or whatever it is, then discounting all the extra costs.

David Weck of Vortex. A really smart stuff. Appreciate you coming on. David, thank you very much. Just to be clear and on the record, insurers never use the word, yo.

As soon as I did that, I knew you were going to jump in and be like, there's no insurance. It's ever been like, yo. Like, it's not going to happen. It's Friday. I'm not wearing a tie. Let me have some.

Okay. Just give me, let me have a little something. If you want to say plugged in on all things energy, you can scan the QR code that is on the bottom right of your screen, right now for my Power Insider newsletter just came out about an hour ago today and really the focus

why Europe could be headed toward a real energy crisis this winter. Three years, people've been worried about it. They've skated through this year, read the newsletter, see what I wrote, you'll see what I'm talking about. Also, some stocks that I'll say might have as much as 65% upside, the grid on what I'm reading, all kinds of stuff. I don't use the word yo, although I did write of myself. There is no AI. Okay. Yet. Yo, up next. Attention to Walmart shoppers. The company's stock may

currently be in the bargain bin. We'll ask a top-rated retail analyst. If now is the time to shop. Stay tuned. Power Lunch. We'll be right back. It's been a tough week for Walmart. Shares lower again today and now on pace for the worst week since May of 2022. The drop

follows lackluster guidance and a big miss on same store sales. Our next guest just cut his price target, but is sticking with his outperform rating. Is Walmart in the bargain bin? And what are the takeaways now from retail's biggest earnings week? Joining us is Greg Mellick here in studio. He leads broad lines and hardlines research at Evercore ISI. Okay, so if you've reduced your price target, what still makes this a buy in your mind? What matters is that Walmart is still growing traffic and growing share and gaining share amongst multiple income demographics, including

higher end. Where the miss came this quarter, was really on traffic a decal. And I think what we saw it is that some of their middle and lower income consumers, you know, really getting stretched with higher fuel costs and without the benefit of the tax rebates and refunds that they were getting earlier in the year. So I think sequentially that's what happened. But if you look at it over the, even next couple quarters, I think you'll start to see those new businesses and e-commerce momentum kick back in for some Walmart re-accelerated.

Okay, but then Ross, which I consider a discount retailer, says they have 10% comp driven by traffic. So what is it about Walmart in particular versus other value-oriented retail that is giving us a disparity? Well, I mean, my partner Michael Benetti is Oliver Ross, but I would say this, in apparel, there's always a company that's getting it right

and getting the right product in the right places at the right time. So in a broad macro sense, what I would say, is what you've seen with Walmart is after multiple years of steady traffic growth that was approaching sort of 3% every quarter, it just slowed this quarter. And I think that's what happened. The other thing is, if you've gone into a Walmart recently, it just looks different than it did a year ago.

That it looks more like a coals. There's higher end product out and available. And the numbers showed their winning share with upper income customers. But what's happening? If you're winning people who can afford to spend more, is it just that your core audience pulling back can't be made up with a few more people coming in from the high end? I'll answer a different way. When your stock multiple gets to near 40 times, your price to perfection. And what happened is they continue to grab share and unit share with that higher income household.

We think membership plus Walmart plus membership is up to over 20 million households now. So to me, that's what gives that medium term runway. And the reality is what happened this particular quarter is that once people got through their tax refunds and we saw higher costs from energy that put a pinch on their lower-end consumer. The higher-end consumer may be doing well with wealth gains in the stock market. The wealth effect matters more to a higher-income consumer. Maybe they decided this was a summer to spend some more on experiences instead of trying to save a little bit money on Walmart. I think if you're going to rank the best deals of all time, obviously like, Google buying YouTube and Facebook buying Instagram are on the top of that list.

But I think Walmart buyingJet.com a number of years ago also needs to be on that list because what gave them is expertise in e-commerce, that delivery. And it's not just delivery, is it, Greg? Walmart is building out a data business, which, and I had a wife at 35-year, you know, 30-year consumer products executive. So we talked about this around the kitchen table. they're building out a data business that's very similar to Amazon's. Are they not? They are. And advertising continues to run up north of 30%. And they've now rolled a lot of 3P marketplace business that was up over 40%. What is 3P? I'm sorry. What is that? Marketplace, like an Amazon marketplace business where they don't own the inventory, but they have third-party inventory that you can

buy on Walmart.com. So what they're doing is basically looking at the playbook of Amazon 10 years ago, and we think that there's $6 billion advertising business. Remember, I mean, Amazon is now north of 70. Yeah. So there's a lot of runway there. So is this the Amazonification? Is that a word contest?

Can I use that? I say, yo, I do make a port. It's what I do is now. The Amazonification of Walmart, but I say that as a compliment. I think that's right. I think Walmart looked at Amazon over the last decade,

and basically as they were building and looking at their strengths, is how to go after a multi-channel e-commerce world. They built things like advertising, like marketplace. And that is what- They bought voodoo, right? They have like a TV data business. Yeah, so they've done a lot of things to sort of connect the pieces that we think will allow them to take their margins,

not in the next quarter, but over the next few years, from the current 5.3% up near to 6. And it's basically that flowing through. Greg, it's a pleasure to have you. Thank you. Have a great weekend. Great to be here. All right, let's get on out of Frank Holland with a CNBC News Update. Hey, good afternoon, Brian.

The Supreme Court is letting the Trump administration continue construction on the White House ballroom, at least for now. The high course decision comes on the same day a judge's order halting the project was set to go into effect. The Trump administration says the $400 million project is imperative for national security. A federal judge has ruled that the former CEO of Abercrombian Fitch is competent to stand trial. Mike Jeffries is accused of running an international sex trafficking. ring during his time as the company's leader. Jeffries has claimed that he is suffering from severe dementia and is unfit to stand trial. And the CDC has issued a food safety alert after at least 55 people across 15 states have become sick and a salmonella and e-coli outbreak linked to

alfalfa sprouts. Local health officials are warning consumers in those states to avoid sprouts sold under the Calco and Everything Sprouts brands. And they say they're working with the CDC and the FDA to identify the source and the scope of the contamination. Brian, back over to you. Was lettuce? Now it's sprouts. I knew you were going to say something. Listen, Brussels sprouts are safe, Brian, so you still have to eat your vegetables. Well, they're from Belgium. That's why. Frank, I just made that up also. Frank Collins, thank you very much. All right, coming up next is all the AI spending, creating a debt market bubble. Goldman Sachs has some data you got to hear and you will. It is your Friday RBI. It's the, it's the TV. It's the TV.

version of eating your vegetables safely. It is a good day for an RBI because Goldman Sachs is out with a new note on how much AI is taking over the debt market. The Goldman Sachs team notes that this year, the market for investment grade non-financial market bonds sold to private investors, they call it private placement, has swelled the $270 billion. If it sounds like a lot, it is because it's already more than all of last year and heading to a new record.

And listen to this. Just two years ago, just. 3% of all that debt was sold privately to investors that was artificial intelligence. This year, AI-related debt is up to 42% of all debt sold. And not only is more debt being sold, but the size of each sale is also growing. Two years ago, the average debt sale to an investor, just over $1 billion. Today, $1.5 billion. And get this, Goldman Sachs notes, that are the 20 biggest investment-grade bond deals, meaning no junk bonds, all 20, all of them. That's 100% Contessa, or AI-related. So we know there's a lot of numbers there, but the takeaways are clear. One, the debt market around

AI just keeps getting bigger. Two, AI debt massively in demand from big investors like maybe your life insurance company or pension fund. That is, dare I say, random, but interesting. Sima Modi joining us now. Seema, I know you've got a hit on some other stuff, but you've been tracking in this debt market for a while now for us. We're doing a great job. What do you make of those numbers? So I think it's incredible, Brian, to see the size of these debt deals that you just illustrated right there. But I think more important to watch is the pricing of these deals. I think back to that Meta BlackRock, $14 billion data center, that priced at 7%, Brian,

which is what I learned from sources that tracked that deal. That was higher than previous debt deals that meta had. So that just tells you fixed income investors want more reward. Does that change over time will be the big? question. See me, I know you have results as well from CNBC's tech executive survey here that yes what do you have? So Contessa, CNBC posted several questions to tech leaders and top of mind is defending against AI attacks. Nearly 75% of executives we surveyed say AI has made their organizations more vulnerable and more than half say AI is accelerating risk faster than they can keep up. Their primary

concerns, fishing attacks, data breaches, and perhaps the most interesting, the pivot to open source models. Remember, these models are seen as more cost-effective than the frontier labs and provide the benefit of keeping the data in-house, yet executives say this will create more need to manage those specific workflows. The issue is that the industry, while desperate to embrace AI, is still figuring out how to defend against rogue agents like the one from OpenAI that broke into Hugging Face. Paula Alto Network's CEO, Nekheyeh, Arora has been sounding the alarm on how the current workflow involving human oversight plus manual patches won't work in that his perspective is the only answer is fighting AI with

AI. Now, RBC Capital analyst Matt Hedberg does see Paula Alto networks and Crowdstrike as best positioned to capitalize on the growing need for cyber tools, adding that cloud flare will win on inference and Octa on protecting one's identity. The market is already convinced that the urgency to address cyber attacks will lead to bigger profits for the sector. next week from CrowdStrike will tell the street whether it's 65% run this year is justified. Taking a step back, it's worth noting security concerns are not slowing down AI adoption.

In fact, executive sharing that the biggest benefits they're seeing is more productive employees and faster software development. You know, it's interesting because just yesterday on CNBC, I was talking a little bit about the insurance implications where the language of cyber insurance may not meet what the actual intrusion is, I mean, if there's no threat actor, there's no human behind in malicious intent, does your policies still apply? But in these cases where the executives seem are thinking AI is my biggest concern, it's my biggest vulnerability, you would think that step number one is making sure risk managers are back in touch with their insurers and their brokers and taking a fine-toothed

comb through that language to make sure cyber policies will apply in the event of an AI-sponsored intrusion. Absolutely. The answer may just be two-fold, Contessa. One is understanding what their insurance policy is, but also the cyber tools that they can use from the current incumbents to fend off any attacks that, from what they say, is going to become a bigger concern over time. Seema, great to talk to you. Thank you for bringing us that. Coming up, more exclusive content with the single best city for the stock market so far this year and handicapping the market risks ahead of the midterm elections. Stay tuned. Power Lunch. Back right after this. As our country celebrates its 250th anniversary,

CNBC spotlights the leaders, driving business and the nation forward. The one word I would use to describe 250 years of America is relentless. American entrepreneurs have always taken risk on some of the biggest problems, starting from railroads to highways to internet, and that's what makes the country so competitive. My name is Ritu Narayan. and I'm founder and CEO of Zoom. We are at Zoom transforming the iconic American school bus system.

We work directly with school districts and we basically overhaul their entire system right from the fleets to hiring and training drivers to using our AI-based technology. America is the only country, I believe, where I could have started Zoom and brought to this kind of a scale where investors are willing,

to bet on a first-generation immigrant. I come from India and coming from outside, I was very surprised of how welcoming and how easy it was to integrate. On one hand, there are lots of difficulties that you face as immigrants, but as a system, it was very easy to adapt and integrate. I would say America has a deep risk-taking capability and willingness to bet on the technology and dream with the entrepreneur and that has allowed my company to flourish, and that can only happen in this country.

Today is a really special day, and it's not just because you're here, Contessa, but by the way, but by, so today is a day that I'm not sure we've seen this year. Everything is up. Now, normally, you'll get, the S&P will be up or stocks will be up, but then yields will be down and oil will be down. Not today. The S&P 500 is up, Bitcoin is up, Treasury yields are up, crude oil is up, NASDAQ is up. What else? I mean, we just went through the whole list. Go to CNBC.com.

Gold, thank you. Gold, thank you. Gold is up. Go to CNBC.com. And at the top, you can look at all the little live trades we've got. Everything is higher. Yeah, it sure is. What a weird day. I got to switch to decaf, but I will just say that this is an unbelievable day.

No, I like you on caffeine. All right. Before you know, it, August will be over. Midterms are around the corner. Democrats are favored to take control of the House. Here you're looking at Calci odds. Republicans have 15% probability of keeping the House. Democrats have an 85% probability of taking the House in November.

The Senate is also in play, though. The probabilities are much closer. What could a shift in Washington mean for corporate America and your money? Let's bring in an expert who tracks this intersection of politics, policy, and markets. Stephen Myro is the founder of Beacon Policy. advisors, when you're looking at those probabilities on Kalshi, let's just assume the crowd wisdom is right, and this is the way it's going to go. Stephen, what do you think that investors should take away from that? Yeah, thanks for having me. So I think the most interesting thing

from us at Beacon Policy Advisors talking to our institutional investment clients that they didn't fully appreciate is how oversight is likely to work once the Democrats presumably take control of at least one chamber. While the Democrats are going to take the traditional approach of going after the administration directly, they know that from the first term that the Trump administration is going to successfully slow them down, office gate, use court measures to delay the process. So there's a second track that the Democrats are pursuing, which is going through the private sector, bringing in various CEOs from large companies to try to target the administration. They're not necessarily looking at going after the companies themselves, but it will be a

naming and shaming process to try to land a hit on Trump and those around them. Okay, so we're talking about subpoenas. document requests against companies and financial firms. And it's not hypothetical because you already have Democrats probing the $620 million Volcan Elements loan and the billions in government awards that are involved with companies tied to Trump or Trump's family. So if you are looking at some of these companies, which publicly traded ones, which sectors do you think investors should actually be putting a dividend?

into the stock price right now because of ties to the Trump administration or the potential for investigation? No, that's the exact question to ask. And from our analysis, we're looking at a Venn diagram. You're looking at companies on one hand that have some close relationship to the administration or people around Trump or, you know, they sought to inoculate themselves by contributing to, say, the inaugural fund. or the ballroom fund.

But at the same time, you're also looking at companies that voters have a visceral reaction to. So if you look at that Venn diagram, we're thinking Big Pharma, we're thinking some in the financial services space, particularly banks, but also you're seeing in the FinTech space now. You look at someone like Don Jr., who sits on the advisory boards of both polymarketer,

Polymarket and Kalshi, you could see prediction markets getting pulled into play. In the tradable stocks, like I said, Big Pharma, they're going to be pulling in the CEOs of Novor Nardis, Eli, Lilly, companies like that that signed those drug pricing deals with the administration, but the administration hasn't released any of the details around those deals. And it's going to put the CEOs in the tough position between the Democrats pulling them in and the administration not wanting them to release that information. If the Democrats take the House or the Senate or both, right, we either have a Democratic House, Democratic Senate, Democratic Congress, or the Republican President, what do the next two years

look like? Is it just nothing's getting done? Zero, zilch? What happens? Let's be honest, Brian. What really got done this year? That's fair point. President Trump hasn't had much of a legislative agenda.

All he cared about was the one big beautiful Bill Act, which got done. He doesn't really have the temperament or the patience to deal with Congress. He believes in executive power. And I'll tell you, the day after the election, the story that everyone will write in the media is that if the Democrats have a big night, it's going to be this is a reflection of President Trump. It's a hit on him by the voters. He's going to counter that and say, no, it's a rejection of Congress. Republican, it's voter fraud because they never passed the SAVE Act. But what he's going to want to do, it's like the tariffs. We told clients multiple times over and over that the Supreme Court

knocked down the initial tariffs, he will put them back on under other authorities. The market, there are a lot of people in the market who wanted to believe that it would be an excuse for him not to put those back on. The last thing you do is tell President Trump he can't do something that he doesn't like or that he's no longer. irrelevant. He will go out of his way with executive actions to demonstrate that. And if the Democrats are in control of Congress, you're increasing the risk of another impeachment probably. I mean, Stephen, basically you're saying even for people who are hoping for divided government that they may get what they want, but they're not going to get it.

Well, the problem with divided government is you get gridlock. But when we have a lot of issues in the country, it's hard to address them. And you're not. You're seeing that right now, right? You talked about right before I came on all the assets going up. But while you have some of your prior guests today were talking about the equities riding high based on AI investments, you also have bond yields hitting highs because of the way, frankly, Scott Bessent and others in administration are acting. But you have to be, I mean, in the last 20 years, Congress has become less important because more presidents on both sides, Obama, Trump, Biden, Trump, they're using executive orders, then get challenged in the courts.

They're using the courts as the new Congress, right? Are they not, Stephen? Congress itself has been so slow to move that they're almost being the end around now. And it's not just Trump. Biden did it. Obama did it. Absolutely. And to be honest, if you go back and look, not since George H.W. Bush has a president started

his term without unified control of Congress. And so what you've seen from Clinton on is either with a super majority in the Senate or a, the use of reconciliation. And the problem is they're going to lose the ability to use reconciliation if the Democrats take control of part of Congress. Stephen, thank you so much for joining us and sharing your perspective. Appreciate that. Thanks. What is the number one city for the stock market this year? You don't know, but I do.

And I'm going to tell you right after this. stock market, Houston. Look at Energy Capital. Phillips 66, Oxy EOG, Conoco, Philpilp, Sheneer. They're all soaring. Average return this year, 40% gain. On the flip side, Contessa, the worst metro area in city for the stock market. Silicon Valley, melting down all the losses in software, really taking a toll, negative return, 15%. We're seeing new data that shows New York City has actually unseated San Francisco as the top market. for tech talent. It's already trickling into the real estate market. Diana Oleg is looking at that in this week's property play. Hi, Diana. Hey, Contessa, that's right. And I'm sure you don't have to,

I don't have to tell you what's driving it. AI, right? For the first time, New York's office market is home to the most tech workers, according to a new report from CBRE. It found New York City is now home to roughly 394,000 tech talent jobs, edging out the San Francisco Bay Area's 376,000 jobs. Now, this is the first time New York has taken the lead in the 13 years, CBRE has done this analysis. Even though AI jobs are flooding into the Bay Area, companies have cut in other areas of the tech workforce. Now, meanwhile, New York and especially the finance sector have been adding AI tech jobs at a fast clip. And for both the U.S. and Canada, AI tech roles grew by 45% in the past year, with San Francisco and New York, each adding more than 20,000 AI-specific jobs since

mid-2025, again, according to CVRE. Interesting, though, by market, 37% of AI jobs in the U.S. are in the San Francisco Bay Area, New York, Seattle, and Washington, while New York, New York, leads in overall tech talent, San Francisco still leads in AI specifically. Now, of course, office leasing is rising in those markets where AI workers are most in demand. In San Francisco, AI companies made up 58% of all leasing in the first half of this year and have accounted for 30% of leasing activity totaling about 10 million square feet since 2023. For much more on this, go to the CNBC Property Play Newsletter. dot com forward slash property play back to you guys diana thank you so much and we have more power lunch right

after this all right stock of the week here i'm looking at coinbase up eight percent uh and having its best week since june 2025 tied to of course bitcoin's amazing performance bitcoin's up to 77 000 through 37 dollars up six percent today and by the way i want to end with this because you know here at cnbc we want to foster the younger viewer right we we want to make sure that everybody feels included in this. So there's our youngest viewer. His name is Cam, and this picture was sent to me. It's a future Warren Buffett. The kid's favorite show, apparently is Power Lunch. His favorite anchors me. That kid is obviously a genius and is going to become a billionaire. Look at the screen grab. Look at your face. I wish we could zoom in on your face. You don't need to look at it. It's a poorly

time picture. And you have like a thumbs up. But look at the kid's waving at me. That kid is destined for greatness. A genius with good taste. If he says so himself. Thanks for watching Power Lunch. everybody. Closing bell starts right now.