Power Lunch - Robinhood’s Boldest Crypto Move Yet 6/30/25

Episode Date: June 30, 2025

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

Welcome to Power Lunch alongside Kelly Evans. I'm Dominic Chu. Wall Street as at record highs yet again. The S&P 500 and NASDAQ hitting new highs for the second day in a row as investor optimism picks up some steam here. And the good news for investors, it's not just tech that's rallying. Industrials and financials all hitting respective new record highs as well, Kelly. I think that's important to highlight. Broadening out. Surprising. Absolutely. And all this comes as the president's multi-trillion-dollar. budget bill is moving through the Senate, raising some questions, though, about the long-term impact on debts, deficits, and inflation. Meanwhile, a thaw and trade tensions with a surprise move from Canada to scrap its plan tax on the tech giants, signaling a big shift in tone there and a win for the president, of course. Let's start with the latest from Washington, where the Senate is currently voting on amendments to the budget bill, and this process could go well into the night. Emily Wilkins, Emily, are you hydrated? Do you have snacks? What's the game plan?

We have snacks, we have energy drinks, we've got water. I mean, it's all things that are just the case when you have the voterama, as it is called in the Senate. It began at 9 a.m. this morning, could have begun much earlier, but they decided to start it after everyone got some sleep. It could go all night long into tomorrow as Democrats keep trying to delay the bill. But, you know, it's not just Democrats that are offering amendments here. Republicans plan to offer several as well. And if you were keeping our eye on, one of them from Senator Rick Scott could lead to further cuts. on Medicaid, shifting a lot of the burden to states from the federal government. That's certainly

going to be one to watch. And another that we've learned about would boost clean energy industries, including solar and wind. Now, the most recent version of the Senate bill, the one that dropped over the weekend, it's even more restrictive on wind and solar than previous versions, really speeds up that phase out of tax credits. Plus, it levies attacks for companies that don't untangle their supply chains from China. So there's been a lot of strong backlash to these new cuts and taxes. The Chamber of Commerce Chief Policy Officer Neil Bradley tweeted over the weekend that electricity demand is set to see enormous growth and this tax will increase prices. It should be removed. Elon Musk also weighed in calling the measure truly insane and destructive. He posted on X that the bill gives

handouts to industries of the past while severely damaging industries of the future. Now, The Senate could finish the bill either late tonight, early tomorrow, and the House is already getting ready to push it through that July 4th deadline. So as long as they have the votes, Kelly, we could actually see this meet that deadline. But of course, if even just a couple members decide to dig in their heels and really push for what they want, this might be kicked until later in July. Emily, it's Dom. You read my mind here. Can you take us through some of the broadstroke mechanics about just how much on the razor's edge all of these negotiations,

and the process is, it's only going to take maybe one or two votes on either side to kind of change the dynamic. Now, absolutely, Dom. I mean, for the Senate, they can lose up till three. And they've already lost two on that procedural vote. We saw both Ram Paul and Senator Tom Tillis vote against that. Neither are expected to support final passage. And then, you know, I briefly mentioned that Rick Scott Amendment.

I was actually speaking with one of the big fiscal hawks here in the Senate, Ron Johnson. And I said, could you support this bill? He said, we're going to have to see what happens with that amendment because he wants to see more cuts, less federal spending, more savings. But then again, if you cut Medicaid, then you're going to have senators like, say, Susan Collins, Lisa Murkowski, Jim Justice, others who are going to say, hey, this is way too much of a cut to Medicaid and more than I can support. So very much a balancing act there in the Senate. And you see a very similar one in the House, especially with fiscal hawks that were surprised at the $3.25 trillion cost of this. the Senate bill. All right. Medicaid, of course, the big flashpoint there. Emily Wilkins, live in D.C., thank you very much for that. So the looming deadlines for the tax bill and tariffs,

not concerning markets overall at all. Stocks are off their session highs, but both the NASDAQ and the S&P are on track to close out the month and quarter with record highs. Our next guest says two acronyms, MoMo and FOMO are the best way to describe the current environment. Mo Mo and FOMO. Joining us now for more on MoMo and FOMO is Steve Sosnik, the chief strategist at Interactive Brokers. I'm laughing a little bit because I kind of know, I know

FOMO, I want to know how you reconcile the two of those together. Well, they go perfectly together, Don. First of all, it's great to see you both. Mo Mo Mo Moe being momentum, and it's quite clear that momentum is a huge factor right now. For those who do factor or investing, whatever, momentum is sort of the factor. But just

intuitively, even if you don't break it down, way, it's pretty clear that momentum is what's leading the parade right now. People are believing the trend is your friend, and it certainly has been, and it certainly works over time. But here's the interesting kicker about momentum. If you're strictly investing based on trends, if you're buying because the moving averages are pointing up and because the stock action is pointing up, then you're basically saying, you know what, I can disregard fundamentals for a while. And I think that's kind of what we're getting into here. So that's the Momo part. And the FOMO part is nobody wants to miss this.

This is a big rally, and so everybody wants to join the party. But how long is the party going to continue? I know. I was just going to ask. And that is the question, Kelly. I mean, right now, you know, I'm saying sort of Newton's first law of motion applies here. Body in motion will stay in motion until acted upon by an external force. And we have several external forces that can potentially act on this, although the market, the volatility markets, the VIX is telling you nobody really is too concerned.

but you have the expiration of the tariff moratoria. That probably is a non-factor right now because those get rolled ahead. I think the bond market could react a little bit, could get a little freaked out by the voterrama and some of the other stuff going down with the budget deficit. But right now the bond market's in its own sort of quarter-end markup period. And then, of course, we have earnings coming down the pipe. And an earnings season can matter because we do, you know,

ultimately, despite what I just said about, you know, trend following, when earnings come into play, they matter and they always do. And I'm getting, as, you know, as ever, but some conflicting signals on that one, because Brian Reynolds was on just last week, and he was saying, look, I'm following the corporate tax revenue and it tells me we're going to have a bumpy earnings season, maybe not a great one. And we just talked to Ryan Dietrich. He said, I think actually earnings are one of the reasons why that, you know, the stock markets momentum will continue higher.

So I don't know if there's any light. You can shut on that or if we just have to wait and see. It depends how much is factored in, and that's always the big X factor in earnings season. You're getting a bit of a tailwind from the weaker dollar, which actually is in some ways a bit of a problem longer term because it's telling me that money is sort of flowing out of the U.S. because some foreign markets have actually outpaced hours. But that's going to help. That should help multinational earnings, and we're really driven by the multinationals. But on the other hand, you know, if everybody's gotten such a rosy picture in terms of earnings going forward and, basically saying the tariffs won't have an effect or any of these things,

then you could really get tripped up by expectations that outkicked the coverage. I'm thinking, let's say, of Micron a couple weeks ago, where everything looked great, the guidance looked great, and then the stock didn't do anything. True. It actually went down a little bit after a brief rally overnight. Well, I think it's curious as well. If you look at the surprise factor or what we know and what we don't know,

the market as a discounting mechanism has already taken into account everything it knows, right now, and that's where the market is at record highs. What is the baseline for an earning season coming up for the next quarter or two? It certainly doesn't look like it's a recession or anything being priced off at the distance. And if it's not that, is that MoMo trade safe to be in on? Because there's no real catalyst out there that could surprise to the downside, because everything else points to status quo or maybe slightly better. Well, the big danger when you get into the sort of the momentum, the major momentum trades is that you get complacent.

I wouldn't say we're at full complacency, but we're getting into the neighborhood, let's put it that way. And I say that very specifically because the results this quarter have been so bifurcated. It's all been growth. It's all been big cap tech, the NASDAQ outperforming the S&P by a wide margin, that sort of thing. And so I think, you know, it really becomes when you get into the earnings situation, what are they going to say about guidance? I think the numbers are relatively baked in, but can this guidance continue? A lot of companies got to pass last quarter by basically companies saying, I don't know what the guidance is going to be because of tariffs.

Well, they have to answer that question now, because there should at least be some clarity as to what's going on with tariffs. Not maybe full clarity, but I think the market expects some. And that, to me, is going to be the big issue. Yeah, I think we also can go back to what Dom said a moment ago, you know, the financials and industrials. So yes, it's Momo. And yes, we've seen some of the headline names that you look at and you feel a little bit worried that they're breaking out, you know, quite as much.

But when you have Goldman and JP Morgan and meta, you kind of feel like, okay, these are some of the biggest most profitable companies in the country. It's really basically getting very top heavy, and it doesn't really matter depending on your, on your sector. You know, banks in general, you know, XLF is doing well, but XLF is a lot of non-banks in there. It's MasterCard, it's Visa, it's Berkshire Hathaway, but it's Goldman, it's JP, Morgan, you're not talking, we're not thinking about, let's say, the stuff that's in KRE, all the other banks. Right. Look at how much the Russell is lagging. Exactly.

And that just goes back to a quality issue, though, doesn't it? Because high interest rates seem to be separating the mega caps who can kind of roll with that with the Russell's and those smaller banks who, I don't know if they're just kind of still struggling. Well, also in the smaller banks versus the bigger ones, you're getting the regulatory reform. And that tends to help the bigger banks more than the smaller banks, although it should lift all boats. It's supposed to be the other way around. It's supposed to be the other way around, but the market's interpreting it as helping the big guys more. And also, you know, the commercial real estate aspects and stuff like that, it's easier just to sort of say, you know what, I'm going

to stick my money in Goldman and JP Morgan. It's easier to stick my money in meta and Microsoft, even if people are not necessarily doing it in Apple and Alphabet and now lately Tesla. So even there, you're getting a bit of bifurcation. No, it's true. The Mag 7 has actually lagged, I think, the S&P this year, which is interesting. Steve, thanks. Always a pleasure. Steve Suck, thanks for joining us. The trillions and new spending being debated in Washington could dramatically widen the deficit, and that has investors watching yields closely, but yields are sinking today. Even as we're talking about the long-term fiscal sustainability of the U.S. government, maybe Rick Santelli, who is back now, can explain. Hi, Rick. Hi, you know, whether it's the month end, quarter end,

half-year end effects, or just in general, as the last guest, Steve pointed out, and so appropriately, sometimes markets don't trade on fundamentals. And on the interest rate side, there has been a global propensity for lower rates. But everything you said is true, Kelly. This administration's budget, if it passed in the current form, certainly doesn't seem like it's in any serious way addressing the deficit, although in any serious way it also isn't the main driving force at the moment. Now, if we look at twos and tens on one chart, you can see interest rates move down. It started primarily with the short end, and then all of a sudden the long end caught up. The curve's actually flattening. If you look at twos and tens, they're both on pace for the

lowest yield close since the very first day of May. And there's other issues going on. You know, it's always a race between our rates and various rates around the globe to see who can bring in capital. Well, if you look at our tenure yield versus the European or the German 10-year yield, that difference right now is around 163 basis points. That's the closest it's been since early April. We need to monitor that. And finally, everybody's talking about how weak the dollar is. Weakest since Feb of 22. Our last guest said, good for multinationals, and he's right. But look at the euro currency. The euro currency right now is the strongest it's been against the dollar all the way back to September of 21. And they're an export economy. We're a

consumption economy. They're going to have a tougher time with a stronger currency than we're going to have with a weaker one. Kelly, back to you. And you have the German stock market up 20% this year, Rick, none of it makes sense. None of it makes sense because it really doesn't have to do with current fundamentals. The European equity markets due to COVID and a variety of issues was just underpriced. All right, Rick, thank you. And welcome back, Rick Santelli. As we had to break, check out shares of Robin Hood soaring to new highs today, one of the best performers in the market this year. Just spoke with CEO of Led Tenev last hour. We'll tell you what he had to say about Bitcoin next. And here's what's on the menu for the rest of the show, including

Wall Street's inner circle, where analysts stand on the recent IPO, plus loosening the regulatory grip on banks as we were just discussing and clean energy getting dragged through the dirt by the budget bill. We're back with more after this. Welcome back to Power Lunch. Shares of Robin Hood are soaring to a new all-time high today coming off its or about to close its best quarter ever. This after unveiling some new products overseas that will allow customers in the EU to trade more than 200 U.S. stocks and ETFs. The shares are up nearly 12% now. I spoke with CEO Vlad Tenev about those advantages earlier. Take a lesson. I believe it will make it easier to invest in American companies if you're outside the world. It will also bring the markets into 24-7 and fully

on-chain and get all the benefits that crypto technology levies on these. traditional asset. Crypto as infrastructure. CNBC.com's McKenzie Seagallos is in Ken, Kun. I never know exactly how to say it, McKenzie, with more on these big announcements that the whole market is really excited about.

It's good to see you. Hey, it's good to see you, Kelly, and they certainly are. Because Robin had just made what may be its most ambitious crypto push yet. And for the first time, it's offering tokenized shares with Open AI and SpaceX, two of the most in-demand private companies in the world to users across Europe. This is a landmark move because neither company is publicly listed and access to their equity

has typically been limited to insiders and ultra wealthy investors. Now, this rollout is part of a broader expansion here in Europe. Robin Hood is extending access to over 200 tokenized U.S. stocks and ETFs with 24-5 trading and dividend support. Now, back in the U.S., the company, just launched crypto staking, a feature that had been blocked by the SEC, giving American users a new way to earn yield directly in the app. It is a clear attempt to leapfrog the traditional brokerage stack, especially in markets where crypto is live, but stock trading is not.

And behind it all, Robin Hood has quietly started building its own blockchain. This is Robin Hood's first real swing at building the financial rails themselves and not just listing assets. And that is a huge shift. Those shares currently up more than 130% year-to-date, guys. All right, Mac, the other thing about this now, we have to talk a little bit about just quickly, the way that the stable coin market plays into this entire discussion now, because staking is one thing, but the yield slash rewards you get in stable coins are also going to be a big part of the story going forward. So how exactly do you feel the regulators are going to tackle this issue in the coming months and quarters?

It's a fascinating piece of this because right now the Genius Act, which just passed the Senate, actually bars these stablecoin issuers from providing yield to holders of these tokens. Now, the way that certain platforms get around this is Coinbase says, hey, you can earn a four and a half percent reward on your USDC. So there's this reward infrastructure that's being built around them. But so far, in the U.S., people who hold these tokens haven't been able to earn interest on them. And so instead, companies like Tether are minting billions of dollars in profit every year because they were getting the benefit of treasury rates being as high as they were for as long as they

were. And so that's why you've seen that company, which is currently based in El Salvador, suddenly becoming a global venture fund, investing in everything from Brazilian dairy farms to AI and neuroscience companies. All right. An interesting development there. I'm sure one that's going to be paid attention to a lot by the regulatory framework. Mack, thank you very much.

We'll see you soon. All right, let's zero in on a recent IPO in that crypto space, of course, and that's on the move today as well, and that's stable coin issuer circle, getting a bunch of initiations by Wall Street analysts with mostly bullish ratings, but a range of a range, but a range of a range of a range of a range and an underperform or sell rating on concerns about the company. J.P. Morgan is at the lowest end of the target range with a price target of just $80 and an underperform or sell rating on concerns about the company's elevated valuation. Circles IPO, you recall, priced at $31 a share in the first major public debut by a stable coin issuer. It is now trading at around $185 per share up more than 500 percent since its IPO price. That makes it the biggest crypto listing since Coinbase debuted four years ago. This is an interesting development because, as Mac points out, this could very well be the future of replacing traditional banking.

Yeah. But the regulatory framework is going to be key because all it's going to take is one enforcement agency to come in and say, uh-uh, you can't do this or you have to do it a different way. And then it becomes maybe all bets are off. And watch Robin Hood, as Vlad explained, they're really trying to push U.S. regulators to make the system more open to tokenization that Europe already allows. If it does, then you could really see a wave more of innovation as crypto becomes that infrastructure layer and not just something associated with things like Bitcoin. But I could also see such a big deal about those stories about major retailers looking to issue their own stable coins. Because the way that it's seamless right now for a lot of people who have wallets, if it were to be that transaction free or transparent, And you could do it without a bank even.

That could change the game a lot. All right. A power check on Oracle. Stiefel on Cloud 9 upgrading the stock to a buy up 30% in a month. Is the growth sustainable and what's driving it? We'll talk about that next. Welcome back to Power Lunch. Oracle shares surging again today after filing an 8K this morning with some positive commentary from CEO Saffircats around its cloud demand.

The company also getting an upgrade on Wall Street, Steele Financial, saying that it is finally. Finally, crying uncle, as the cloud demand appears sustainable and upgrading the stock to a buy rating with a $250 target price. Now, if you look at Oracle versus each of the Mag 7 names on a year-to-date basis, you can see it is outperforming every single one of them. So joining us now is the analyst behind that upgrade call, Steve Fult, managing director, Brad Reback. Brad, the shares, as I talk about it right now, have hit a record high in trading today. Oracle has, I want to call it a stealth behemoth, but people have paid attention. It's a mega-cap name that is hitting record highs, outperforming Mag 7. This is a call that maybe is a little late, so why do it now and what do you see ahead for Oracle?

Absolutely no question that we're not early, but we think there's plenty left in front of us. And really what got us over the hump here is the cap-x spending over the last couple of quarters had meaningfully accelerated. And our concern was that they weren't going to be able to keep pace with the likes of the other hyperscalors. But with $9 billion of spend in the last quarter, with CAP-X expected to be up 4x this year from two years ago, it's very clear their spending and that their backlog should convert into accelerating revenue growth here in the coming quarters well on their way to getting to 20% revenue growth in next fiscal year. Brad, this is a name in Oracle that has its hands, its fingerprints,

and a number of big themes with regard to technology, be it cloud infrastructure, be it even artificial intelligence, and just about everything around it and in between. What in your mind is going to be the biggest driver of that Oracle company-wide performance over the course of the next, say, four to eight quarters? It's definitely the cloud, and that's a combination of, as you just mentioned, cloud infrastructure, which is existing customers moving their Oracle databases to the cloud, be it Oracle's cloud or Oracle running inside of hyperscalar clouds,

and then increasingly AI. And then beyond that, they have a really significant level of SaaS apps that continue to grow at 20%. So when you bring it all together, Oracle's Cloud, which is, you're approaching more, which is more than the majority of the revenue right now is growing 40% year over year, this year expected, and should continue to sustain that pace going forward. Now, when it comes to those hyperscalers, we talk about Oracle, maybe not rightfully so, but kind of a tier maybe even below the names of like alphabet or meta platforms or Amazon.

market caps aside, what exactly is Oracle going to have to do from a management perspective to be able to realize some of those stories that take it into that level of being mentioned in the same breadth as the Mag 7 stocks out there? Yeah, look, I think they've already taken those early steps with the increased spending that they're putting into their physical infrastructure. And then beyond that, I think there's real opportunity, as I mentioned before, to get what's the largest database in the world on-prem, transition, to the cloud, and that's just beginning, and we expect that to continue for years to come.

So that core moving coupled with a really significant growing AI footprint, as you mentioned at the beginning, you know, a $30 billion commitment that's likely to begin generating revenue in fiscal 28 really show that Oracle's more than holding its own with the hyperscalors. And Brad, before we let you go, one final question for you. the competitive dynamic. This is obviously a very cutthroat business that they're in, all of the lines of business. In your mind, where is Oracle's biggest threat going to come from? Look, I think to your point, the traditional hyperscalers have significant more financial resources than Oracle. That being said, Oracle's still massive. And Oracle, I think, has a

price advantage, how they've architected their cloud. It's a newer cloud, so it's based on newer technologies, networking is a big advantage. So I think they can more than hold their own on a pricing front. All right. Brad Reback at Steeful Financial, upgrading Oracle to a buy. Thank you very much. We'll see you soon, sir. Thanks. And coming up, Tesla's Elon Musk, sounding off against the big, beautiful bill, clean energy stocks are getting hit, although mildly, well, maybe a little bit more in the case of array. The latest version of the bill takes a different approach to renewable energy. We have those details next. Welcome back, and you can see some of the clean energy stocks selling off amid the Senate's latest iteration of the big, beautiful bill.

Takes a bit more punitive approach to renewable energy. It's creating a mess for those stocks, creating some political pushback as well. Pippa Stevens here to explain because I believe this was part of why Senator Tillis was also opposed. I know there was Medicaid issues as well, but anyway, so what's the latest? Yeah, so there's been so many twist and turns here, but essentially there are two big changes that have major implications for clean energy in this version of the bill. The first is that in order for future wind and solar projects to qualify for the investment tax credit, they need to be placed in service by the end of 2027. Now, that is a change from the prior version of the bill, which said projects just had to begin construction by 2027 to get the credits.

Now, the new language is a really tight timeline given how long it takes to hook up new generation to the grid. Now, the second big change is a new tax on projects that use components from China, which is a major supplier of clean energy. equipment. Now, very few U.S. solar panels actually come from China, thanks to prior tariffs, but the country still controls a lot of the upstream production, things like wafers and ingots. Now, the latest text is more positive for residential solar, which is why you see Sun Run there up more than 10%. But the overall impact, should this version become law, could be a large slowdown for the industry, with American clean power forecasting $450 billion of lost clean energy capital investment. So Musk, it was true. Now it's hard to tell if he's just angry about

everything that happened or because now he's really on the bandwagon of we need a lot more power. We've talked about this a lot on the show. We do need more power totally. We need a lot more power by not passing, or this bill would now threaten that. And we're going to have these power shortage of all the rest of it. So just can we give those comments some context? Yeah, exactly. So what he basically said was that why are you taxing the, you know, the industries of the future? And this is very much a forward-looking thing. In order to be a competitor with Gen A.I., of course, the race is heating up with China. You need all that power to power these projects.

And also, when you look at other forms of generation, we just, it cannot come online fast enough. Think about nuclear. That's 2030 and beyond. There's not really an appetite despite President Trump's comments to extend the life of coal assets. Maybe a few years extension, but certainly not bringing on any new coal. And then when it comes to gas turbines, because of equipment shortages, you can't get one before 2030. Wow. And so the reality, yeah, and so the reality is that right now, because there's only about three suppliers globally and everyone wants new gas turbines.

So the reality is that at this very moment, by far the fastest generation to come online is solar plus storage. And so if you are trying to compete in things like AI, which I think is what Elon Musk was referring to, why are you taxing the industries of the future? Also, what's really... Now, let me ask a question, because this is fascinating. If we said, okay, well, solar is the only real option right now, then why do we even need to subsidize it? I mean, these companies have plenty deep pockets and solar companies are probably not on the best of times. Can't they come to some meeting of the minds? So that is one thing that's been put forward.

People say, given that the LCOE has come down so much, why not just get rid of the subsidies and show, exactly, show they can compete on its own. I think the issue with that is that it's been ingrained now in its current form since 2005. And so it's been baked into projects looking forward. And if your entire cost profile is changing, I mean, we're talking 30% is the base ITC plus some adorn. credits from the IRA. And so if now you're trying to get your pipeline under control, looking out, you know, multiple years into the future, your cost profile has changed. I think it'd be a win-win for the industry. They can get charged whatever they want. When there's then charge whatever you want and make these companies pay. But that's the thing is that the only

thing worse than some of these policies is what people say is the uncertainty, even when it comes to tariffs. That's another thing. Okay. So with all of that in mind, there has to be in the industry standpoint or the analysts that cover the industry standpoint about what an optimal outcome would be in a bill that ultimately gets signed by the president if one comes to fruition. What then does that look like? What balance of tax credits, certain, you know, things, projects starting versus just, you know, being, you know, in service and everything else. What gets these companies in the best situation they can, given what we know the administration stance is on these types of renewable energy companies? I think probably that new

excise tax on components from China, that's really prohibitive. So getting rid of that would definitely be beneficial. And then I think just clarity on looking at the step down of the timeline of the credits. I mean, the industry would hope for, you know, something in 2030 and beyond, which at this point does not look likely. But I think it's just getting clarity so that things can get back on track. Right now, all these projects are being sidelined simply because developers don't know their costs. And so until this is clarified, until the tariffs are clarified, we're going to see projects canceled because you can't get financing if you have no idea what your inputs are going to be. I do hear that from a lot of people in the, and I like to play devil's advocate, but I do hear

they're very concerned. They just need to plan. They need to be able to plan, whatever the outcome is. They need out of plan. PIPA thanks. Pippa Stevens. All right, let's get over to Contessa Brewer for a CNBC news update. Good afternoon, Contessa. Hi there, Dom. The Trump administration sued the city of Los Angeles today over its sanctuary city ordinance. The Justice Department lawsuit accuses L.A. of impairing the Fed's ability to apprehend and detain migrants as required by federal law. L.A. City Council formally passed the ordinance last November, which prohibits the use of city resources and personnel for immigration enforcement. Prosecutors in Colorado say an 82-year-old woman injured in a Molotov cocktail attack in Boulder earlier this month has now died.

They say they're adding two first-degree murder counts against Muhammad Sabri Solomon as a result. According to authorities, he attacked a group demonstrating on Boulder's Pearl Street Mall calling for the release of they were the demonstration was calling for the release of the Israeli hostages. And just hours into deliberations, the jury in the sex trafficking trial of Sean Diddy Combs sent a note to the judge today saying they're concerned one of their peers can't follow the judge's instructions. The judge said he's going to send a note in response, asking them to continue deliberations with his directives in mind. Jurors were only handed the case this morning following seven weeks of testimony. So that's a short period of time for all of this note passing back and forth. Dom? All right, Contessa Brewer with the latest news update there.

Thank you very much. Coming up on the show, bank stocks getting a big boost over the past month, and it's not just because they passed their annual stress tests. We're going to dive into what's really been driving those gains when power lunch returns after this break. All right, welcome back. Bank stocks are having a strong run over the past month. More and more signs are pointing to a possibly looser regulatory grip for those financial companies. Our own Leslie Picker is here to figure out what exactly and makes sense of what exactly is going on. And if we are going to see those looser regulatory frameworks for America's biggest and not biggest banks.

Yeah, for the biggest ones, it seems like it seems like there's a lot. a clear kind of capital freedom sentiment that's really percolating through this world. You take the stress tests, which we saw on Friday, for example. Now, that was a very easy test. That was the easiest test we have seen in years. And actually, that was designed by the prior vice chair of supervision because we've heard a lot about Michelle Bowman. The test was easy?

The test was super easy. How can they give one? Then what is the point of giving an easy stress test? Shouldn't they just throw all sorts of crazy situations out there? That is the question is, is it too easy? of a test, that it doesn't necessarily test for the potential systemic risks out there. The Fed has come out and said potentially the solution to this is to average two years of results together. So you kind of every other year you have a hard test, then you have an easy test,

then you have a hard test, and you have a hard test. We don't get to do that in school. I would love to be like, yeah, one year give me an easy test. They might change the construct for it. You never know. I think if it is like being graded on a curve, which got me through business school. It was this concept of like, yeah, average us up. so that we're, you know, we can all kind of pass here. That's kind of the same thing that we're seeing here. And it's something that the banks have been advocating for because they've seen so much volatility

that it makes it harder for them to plan their capital levels. How much of this story, though, is driven by the fact that over the course of the last 10 to 15 years worth of operating under various regimes of regulatory frameworks, that they are just that much better capitalized and able to withstand just a bit of. about any seismic event that happens within the sector and bounce back relatively well. That's a big part of it. And also, you have to keep in mind that over the course of the last year, the banks have done really well just from a fundamental standpoint, from an interest income standpoint, from a revenue standpoint. They were in a very strong position going into the tests,

which would showcase this being an easier test, you know, in terms of the result there. And then to your point, Dom, they've really been hoarding capital for a while now in anticipation of Basel, which either is going to be reformed or thrown down entirely. So they're in a really good position as it pertains to capital, and you've gotten these kind of layered regulations ever since the end of the financial crisis, and a lot of them under this new administration are getting peeled back one at a time. We also saw last week the supplementary leverage ratio as being in focus in terms of another. Which is helpful. You look at yields this week, and here we are at multi-month lows.

It's going to help that they can maybe be buyers of Treasury. on the margin there. But that reducing the supplemental leverage ratio, all these little steps, does that the easier, are we creating problems down the road? Or is the takeaway that the stringent regulations post-financial crisis literally went too far? So there are a lot of questions being raised this morning about the test itself. Number one, trading losses were really low. At Goldman Sacks, which is a huge powerhouse trading apparatus, there were virtually zero trading losses in this test. So a lot of analysts are like, well, are we missing something? Was that just auspicious timing from when the shock happened?

If we actually tested for a different day, would client positioning suggest that there would be more losses? Additionally, there were very low losses relative to previous tests in things like credit cards, in things like commercial real estate, which we've been talking about time and time again here. CNI loans, commercial industrial loans, those were a little bit higher. Those losses were higher. I believe they were the highest going back to 2009 in terms of the stress tests. But the other two, people are saying are we underestimating the risks relative to CRA and relative to credit card exposure? So those are big questions that are being asked this morning.

It's interesting vis-a-vis the fact that we just had Silicon Valley Bank. We're not that far removed from all of that. And the signature bank kind of failures and everything else that you might have a basis for testing for that kind of thing. Well, interestingly, there's been a huge divergence in the performance of regional's versions. versus big banks. And a lot of that has to do with this capital regulation being loosened, whereas the regionals don't benefit that much from that because most of them were not included in the stress test. These were just the 22 largest banks. So that's another thing to keep in mind. The regionals move much more on the macro than on some of this regulatory stuff that we're talking about.

All right. Leslie, thanks. Thank you. Principal teacher, Leslie. There you go. Thinking about school still. Grated on a curve. Still ahead, the WNBA expanding to a record 18 franchises as interest in the league grows to all-time highs. We'll tell you which cities these new expansion teams are heading to. That's next. The WNBA announcing three new teams in the next five years. Alex Sherman is here with the details.

A sign of its success, right? Definitely. There was a ton of enthusiasm in the room today. So the three new cities are Detroit, Cleveland, and Philadelphia. This is actually a return for Detroit and Cleveland. They did have WNBA teams that lost them. and now they're coming back, brand new team for Philadelphia. And the ownership groups are all existing NBA franchises.

I was going to say even those talents. I mean, those are strong NBA cities. They are, very strong basketball cities. And so I got a chance to speak with WMBA Commissioner Kathy Engelbert. You just spoke with Leslie Picker about stress testing the banks. Right. Basically, there was a stress test for the cities involved here. Take a listen to what Kathy told me about why these three cities.

We look at a lot of different factors. The demographic, the psychographic, current W. Fandon, corporate partners, like Fortune 500 and Russell 1,000 companies based there. Arena, practice facility, player experience. I mean, there's literally like a Rubik's cube of 25 different criteria we looked at. But one of the most important thing is a long-term committed ownership group, and we found that in spades in these three cities. You know, eight other cities bid on franchises, and so it was interesting that these three, one of the people, that spoke today was Arnd Tellem, the old sports agent, who now works for the Detroit Pistons and soon the Detroit WNBA franchise. And he made a big deal saying it was a big win for the

Big Ten over the SEC here because these were all sort of, you know, Rust Belt, Northern cities that were chosen over some hotter places that maybe seems he talks about where all the tech money's going into Miami and Austin and Nashville. They all bid too. But the WNBA decided to go with these kind of tried and true basketball cities that, again, already have NBA franchises in place. I was going to say, but how much of this is because of that, right? Because when you go to these centers,

you were talking about, by the way, and this is not just for the WNBA, but you can talk about Major League Soccer, the National Women's Soccer League, you can talk about professional lacrosse, all of these kind of new owners, all have owners that have stakes in other units, even within the same geography.

So it's almost become like you have cartels around certain geographies, that now control either outright franchises or positions in all of these other ones. And that ecosystem effect is what's driving the expansion. So a couple things to that point. Number one, you know, the NBA is also involved with this as they own a piece of the WNBA. And so familiarity with the owners there with Adam Silver, the NBA commissioner, I think, goes a long way. Brian Roberts, the Comcast CEO, was in the audience today.

NBC is now going to have broad, you have the media rights for both the NBA. and the WNBA. I spoke with Candace Parker, the old WNBA star a few weeks ago, and she just wrote a book, and basically there's a whole chapter to her book where she argues that ownership in terms of the actual individual owner

is by far the most important thing in terms of growing the brand. And she says it doesn't matter who the wealthiest owner is, but you need to be committed to making sure that the player experience is top-notch and also to make sure that you're marketing the team heavily. This is so true. How many of us have suffered

under teams with bad ownership and they never changed. And they spend all this money on draft picks. I'm sure I have no way you're talking about. And some of these people are extremely wealthy but it doesn't necessarily mean that you're going to spend on the team

or the fan experience. I'd love to read her book and her take on that. I mean, especially if there's any way of pointing and maybe does the WMBA ever have a hand of these organizations in that vetting process? Absolutely. I have a huge hand in it. So I think that was a big part of this. It's not just the highest bidder.

It's not just the highest bidder. That's right. Exactly. They have a very strong hand. both the NBA and the WNBA. All right, Alex Sherman with the big expansion. Thank you very much. All right.

Still to come on the show, Jeffries says, you need to buy this mystery stock right now. We're going to reveal what that chart is next. And as we head to break, be sure to follow and download the Power Lunch podcast. Catch audio-only versions of the show anytime you want it. It's available now. Wherever you get your podcasts, we'll be right back after this. All right, a little over a minute left.

Before we go, we want to show you the mystery chart. It was Disney, upgraded to buy over at, Jeffreys, the analyst there, highlights four reasons for the upgrade, limited risks of theme park slowdown, strengthen cruise ships, director-consumer margin expansion, and a slate of new film releases, including Zootopia 2, Avatar 3, plus the launch of ESPN's streaming service, those shares hitting a 52-week high today.

The Disney story fascinates me because of the competitive dynamic, not just in theme parks, but just media in general, where people are spending. I wonder if we can show the theater stocks. Yes, sure. It's actually a decent box office weekend. F1. This changes the whole trajectory of what had been a really bad year.

I mean, almost apocalyptic. Suddenly now they're finding a winning formula and getting people back to theaters. And not just that. The other thing, too, is going to be when Superman gets released. The new superhero franchise for the DC universe, whether or not that does well with James Gun at the helm, that's going to be a huge tell as well. I'm not so much for AMC, which is still struggling. You know, has a lot of debt, a lot of its own issues.

But at least it's a start. People are back to the theater. We want to be entertained. And speaking of, thanks for watching Power Lunch. Closing bell starts right now.