Power Lunch - S&P 500 declines as Big Tech falls before earnings, investors await trade deals 4/28/25

Episode Date: April 28, 2025

The S&P 500 fell Monday amid a retreat in shares of big tech stocks, ahead of earnings results this week and a lack of progress on trade deal negotiations. We’ll cover all of the angles for you. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Stock's heading a little bit lower ahead of a huge week of earnings. We're going to see if big tech's numbers can help power this market higher. And speaking of power, millions of people in Europe losing power in one of the biggest blackouts in years. This, as the U.S. brings jobs and money as part of a huge nuclear power deal with Poland. We're going to speak with America's energy secretary about all of this right here on power lunch. You see what we did there? I'm very much looking forward to this. Thank you.

He's Brian. I'm Kelly. First, let's get you a check on the markets. As he mentioned, we started in the green today. The Dow is up 300 points. We've tipped lower. That said, we're off session lows. Look, the Dow is almost about to go positive once again, down 65 points, a little bit deeper climb for the S&P down half a percent. The NASDAQ down 0.8. And shares of NVIDIA are a big reason why. Huawei is reportedly developing a new AI chip to compete with NVIDIA. It hasn't arrived yet. It's in the works. It might be more power hungry and so forth. But it's asking, customers to take it on. Invidia shares are down 3.5% as they contemplate this competitive move. And as Brian mentioned, it comes amid a big week for earnings, especially for the Mag 7 with Microsoft, meta, Apple, and Amazon all scheduled to report. And by the way, we've heard from Domino's already. We're going to hear from 180 S&P companies this week. The pizza chain expecting sales to grow this year. They don't expect a material impact from tariffs, but they do say that macro pressure could threaten their outlook. So that would be imported pepperoni. That would be telling. I mean, what would be the impact?

from tariffs on domino. Wouldn't, let me ask you this, mom of soon to be six, wouldn't isn't pizza recessionary? Wouldn't that actually be a beneficiary of a slowdown? Trade down. Defensive. I think, right? You would think.

Yeah, you would. And it's only down at quarter percent today. So there you go. No noid. All right. More in the markets in a moment. But to start this hour, we have to talk about a huge nuclear power deal. Pennsylvania-based Westinghouse and Washington, D.C.

base, Bechtel are going to build three. big nuclear reactors in Poland. The deal generates not only huge amounts of electrical power for our ally, but also about 40,000 jobs right here in the United States. This is the second part of a deal originally begun under President Trump's first term. U.S. Energy Secretary Christopher Wright flew to Warsaw to sign the deal with Poland's president, and the energy secretary joins us to talk about that, oil and gas, and even a massive power outage hitting Europe much of today. We're going to hit on all that, but we began the interview by asking about the impact of jobs from this nuclear power deal. Nuclear deals are large in scale, and they're long in time frame.

This will bind the U.S. and Poland together through the rest of this century. But in the scale of this deal, it's tens of billions of dollars, many tens of thousands of jobs in the United States. You mentioned in Pennsylvania, but the supply chain is spread around many states. tens of thousands of jobs in Poland. And maybe more importantly, it's long-term, affordable, reliable, secure energy for the citizens of Poland. And it likely launches a partnership between the United States and a bunch of supply chain companies in Poland to build other such reactors throughout Central Europe or elsewhere in Europe. You know, we've talked a lot about a nuclear renaissance here. Still kind of waiting for that, to your point? It take a long time.

today there was a massive power outage in Spain and Portugal. Do you feel like there's a growing appetite for more U.S. exported energy, whether that's LNG, or whether that's nuclear power or whatever it is across Europe and the world when they just realize we're going to need a lot of power from all different types of sources? Exactly. It's very sad to see what's happened to Portugal and Spain and so many people there. but, you know, when you hit your wagon to the weather, it's just a risky endeavor. And in the best, and that's in the worst case, but even in the standard operating conditions, it's just driven up the price of energy so much in Europe.

Brian, one of the things I said in my speech today to the Central European nations was to point out that 15 years ago, energy wasn't that much more expensive in Europe than it was in the United States, and our economies were roughly the same size. 25% of global GDP. And if you look at that today, the U.S. has gone up to 28% and Europe has shrunk to 18%. That's a pretty dramatic divergence in 15 years. And I think the biggest driver of that by far is just getting energy wrong. If you choose to have expensive, unreliable energy, you can't have a thriving economy and you reduce the life opportunities for your citizenship. It's a choice, but it's a bad choice.

Well, the interesting thing about this deal, there's many interesting things, but the reactor that's being built, it's called an AP 1000s, built by Westinghouse. They're sort of near Pittsburgh area. So very American company, 130 plus years old. These reactors are used in a lot of other countries. There are two operating in Georgia in the United States, which came in, they were slow, they were over budget. So how do we sell the nuclear story to the United States when you got a skeptical public says, well, listen, we built that nuclear plant in Georgia, but it was super expensive and super late. How do we prevent that? from stalling out other projects? Yes, Brian. I mean, that's the growing pains of standing up an industry that's basically been static for decades with very little activity going on in it. So the one upside is Vogel 4, the last of the reactors, was built much faster and less expensive than Vogel 3. So we saw sort of in the U.S. sort of, you know, first of a kind and second of a kind.

I think it's clear that as this supply chain stands up, the speed and cost of these things will improve dramatically. But, you know, not building big reactors for three or four decades, that comes at a cost. That comes at a cost. We talked about that quite a bit here in Poland as well. There'll be three of these reactors built here. I think there'll be a follow-on three that'll follow immediately after them here in Poland, and then probably many more in other places in Europe. So we've simply got to get the nuclear machine in gear again. That'll drive cost down, and that'll make schedule and timing a lot better. But yeah, there is growing pains to restart an industry.

I recently watched the movie War Games for the 80s with my son, and there's a point here. I did not know until recently that you, the Department of Energy, and your team actually help run our nuclear missile stockpile. There is a massive

multi-multivillion dollar modernization program that's going literally into the ground in many cases in the United States. Talk to us about the investment there. Will that be part of the doge or the cost cuts because I don't know about you, Mr. Secretary, but I like my nuclear missile safe and I don't want them particularly launching, you know, at the wrong time.

So talk to us about that investment in, literally in the United States and our nuclear missile safety. Absolutely. On the first day of the Trump administration, you know, my sort of first declarations to the department into the country was we were going to unleash American energy. We were going to stop the pause on LNG on day one. and we were immediately going to dive into this modernization of the United States nuclear stockpile, which is the ultimate guarantor of the sovereignty of our nation.

So, yes, it's critically important. And like nuclear power, we stopped investing in nuclear weapons decades ago at the end of the Cold War. So a lot of our weapons are old. We still have the technology. We still have the people. But we need to modernize our entire stockpile. That sounds scary. Where we manufacture weapons?

We say old nuclear weapons. That makes me nervous. But we're also talking about deficits and debt and cost cuts. How much money are we talking about here to modernize this massively important in many ways part of our military arsenal? It's a lot. Ultimately, it's hundreds of billions of dollars. But it's, you know, it's spread over a couple decades. So it's $10 billion or so per year roughly in this expenditure, but it's critical. No, I should say to everyone today, our nuclear stockpile as it sits there today, is reliable and secure, but it's aging. You know, I couldn't just confidently say that two decades from now. So if you want to replace and update our weapons, we've got to start now and not when they're on the edge. Today they're in fine working order and ready to go, but we've redesigned weapons,

and then we've already built one or two of these brand new weapons that are coming out, and that effort will continue for a couple decades. It also means we've got to update some of our infrastructure. Down in Tennessee, where we separated uranium to build the bomb for Hiroshima, we built that building in 18 months, and it's been running for 80 years. It's old now. It's still working. It's still running. But we need to update the infrastructure in which we design and construct nuclear weapons as well.

But I'll tell you the team at the Department of Energy is busily at work on that effort. It's critical for our country. Okay. I got to ask you, obviously, about oil and gas, your former world at Liberty Energy Services. We're still above 13 million barrels a day, according to the latest EIA date, about 13.1 million, down a couple hundred thousand barrels from our peak. But at 61, 62 bucks per barrel, or maybe we go to the high 50s, we don't know, Secretary, right? Do you think that U.S. oil production will drop and drop meaningfully from here?

I mean, obviously, if prices continue to go down, I think it would. But that's not the guess that I would have for the way things go. Our administration, we don't have any impact on the short-term movement of oil prices or any price for that matter. But we're trying to do everything we can to lower the cost, to produce a barrel of oil or an MCF of gas in the United States. We're doing deregulatory moves. We're bringing some common sense. We're speeding up permitting. We're allowing people to build infrastructure.

The biggest growth, Brian, going forward in U.S. energy, of course, is going to be a natural gas. We'll stay the world's largest oil producer for as long as I can see, but our real energy growth is going to be a natural gas. And the speed at which we can grow that production is the speed at which we can deliver a home for it. So we need more export terminals, and we need to see more industry resured in the United States that are going to take that natural gas and turn it into a much higher value-added product, whether that's artificial intelligence, semiconductors, fertilizers, or steel. But I think the outlook for American energy, oil and gas in the United States is incredibly bright. Is the price right enough, pun intended, I suppose, Mr. Secretary, to refill the strategic petroleum reserve right now? Oh, absolutely. We are refilling the reserve now, and we will continue to refill the reserve the whole time I'm in office.

You know, that was just such an irresponsible action to drain that reserve so quickly for electoral reasons. And in fact, it was drained so fast, it did some damaging to the facilities. And so right now we only can fill two of the four major salt caverns we have. So we're doing repair work on the other two. We're slowly filling the other two. And I'm trying to get some funds through Congress that'll give us a longer-term runway to fill the strategic petroleum reserve at the fastest rate we can. Remember, the U.S. government sold about 180 million barrels of oil from the SPR following Russia's invasion

of Ukraine, it is much slower to refill the reserve than it is to sell from it, in part because of physical limits on how fast oil can go into the pipes versus come out. And of course, any of the problems would just further slow that process. All right,

speaking of cabinet officials, we have another big one tomorrow. Commerce Secretary Howard Ludnick will join us on Power Lunch. That's right around 2 p.m. Eastern time. We'll talk about investments in America, immigration, tariffs, the markets, and a lot more tomorrow on Power Lunch. cabinet, cabinet. It's like a furniture store in here. It's going to be good.

There's so many questions I want to ask about, you know, the behind the scenes, the timing of all of this, the squabbles that may or may not be happening in the White House, the choice of who's going to go and talk to the country versus not. There's a lot of layers, I would say, that people are following along to these. And you're going to be in Phoenix with him? I will be out near the Phoenix area. Thank you. Somewhere out that way. Out west. Out that way. Great. So if you see me in Newark today, it would be nice.

to a care port. He's tall, you can't miss him. And loud. After the break, markets are stuck in the middle with stocks lower after the S&P climbed back to its highest level since Trump's tariff announcement. The index is now exactly halfway between the Feb highs and the April lows. And we'll discuss where it could be headed next. All right, welcome back. Your next guest has one of our favorite windows into stocks. His firm, Modern I.R. looks at what we call market structure. To try to figure out where stocks may be headed or why they are moving the way that they are. market structure not only involves how much buy or sell pressure there is on a stock, but also things like how massive ETFs or derivatives play into how and why markets move like they do.

Tim Kwasht is president and founder of modern IR. It doesn't do a lot of TV, so Tim, we're happy to have you on, and you and I will periodically hit each other on Twitter or text message because we've seen some thousand and two thousand point moves for the Dow lately, And there is a match that lights that fire. But as you and I will talk about, it's the way the market is constructed underneath the hood that will often determine how big and how fast that fire may burn. Is it not?

It's that idea of market structure. That matters. Well, it sure is, Brian, and it's good to see you. Thank you very much for the invitation. Yeah, you know, you and I talk about how this is sort of wonky stuff. And I'm happy to be your, you know, your market structure of wonk. But the reason it's important is because the narrative that investors and public companies, you can't forget they rely on the market too, receive, determines how they perceive the market.

And I think it's important for both constituencies to understand that there are regulations, mechanics, we could call it the plumbing of the market that is underneath the building that we all fixate on, that plays a very large role in how the market behaves. sometimes perception and reality don't match. And I think these are the areas where it would be helpful for public companies and investors to have a better understanding of what is, you know, is there real panic or is there not? And the one thing that we try to show, and there's a reason we do it, let's say we talk about Nvidia. And we'll often try to show that Nvidia is in, you know, 500, whatever ETFs. And we do that because, you know, 800. Thank you. 800. It's just good information,

but more importantly, it matters, I think, Tim, and I think you would agree with this, that when you have a stock that's in 800 ETFs, and then you've got derivatives on the ETFs, and you've got options on the stock, and derivatives on the options on the stock, that if the company announces something relatively even middle-sized, small-ish, that you could see an outsized move in the markets and that equity, because all those things have to adjust at the same time. you have you have characterized it exactly correctly. That's why I get paid the middle bucks, Tim.

That's why you're the host and I'm the guest. But you're exactly right. People don't understand that 90% of market volume is something other than fundamental stock picking. You know, we spent all of our time talking about what is external to the market, which is how businesses perform. When in the market, there is this delicate balance, I call it the one, two, three, rule. Under ordinary circumstances, we are in extraordinary circumstances at present, there is a one, two, three rule that investors should keep in mind. The trackers like SPY, State Streets, ETF that tracks the S&P 500, will have ordinary volatility of about 1%. The underlying statistical basket of equities

moves 2%, and momentum instruments like derivatives move 3%. And there are machines that calibrate that balance and make sure things don't get too far apart. Well, under what, you know, what happened in April, one of those things moved and it destabilized the entire structure. And which was it? Well, I would argue it's, and have to argue, you know, we run quantitative data. It was derivatives. And the reason that that's a big deal is derivatives are 20% of market cap. So, Tim, as we navigate this April that started out with a bang with the Liberation Day announcements, and markets are kind of of settling down now here at the end of the month, what does that tell you about what May might bring? Kelly, nice to see you. Thank you. Well, the way we think about this is there are

patterns. There are patterns in periods where quantitative data analysts, we're not fundamentalists, we're not technicians. And if you look at patterns of market corrections, they have a symmetry to them. Surprisingly, buying and selling, supply and demand, have to equalize before, we recover. If we look at the data now and we compare it to the two correction bear market in 2018, one of each, the pandemic correction and recovery, the snapback, the 22 bear market, 2022, and we look at how those patterns are manifesting now. We're not even into the crescendo. Now, I don't know what's going to happen. Every time somebody tries to prognosticate about the market, they're rendered a fool. But I look at those patterns and say, we have a substantial

period of time to go. And there's a touchpoint even this week that people should think about. On April 30, last day of the trading month of every month, a major basket of index options expires. Then that's going to be coupled with GDP and PCE. Same day. I'm not saying that day will be volatile. But if suddenly the market becomes volatile again, we should think about the fact that we have a long way to go, probably, to get through this pattern. And we're going to have touch points like that. All right. So I don't know if I can ask you where, where do bond yields go next? Where's the dollar going? Are we, is it no longer sell America or is it just a reprieve? Well, again, was it really? You know, we, we, we, of course, we watch these things. I like everybody else who has managed accounts, have exposure. I am, oh, I'm overweight, fixed income, underweight equities. The dollar plays a very significant role in the way that both perform. but there are derivatives associated with both. I mean, was there a route? This is one of the things that we point to. If you look at the fund flows data, the big banks track it, an EPR, a bunch of firms

tracked that S&P Global, we consume data from S&P Global. None of those data sources showed selling. And so the same thing could be true. Somebody sold, Tim. Somebody sold. Stocks go down because there's more selling pressure than buying pressure and vice versa. So it's like your house. If your house goes down 20%, it doesn't go down because people sold houses. It's because people don't buy them. And so if you take a derivative, a derivative is a right but not an obligation. It is a right to future prices, cast doubt on future prices, and the 20% of market cap that ties to them can be cut in half. And then everybody says, well, look at those devalued time decayed options. Let's buy them. And the market goes up 10%. And that can happen with no one's selling. And I read an article in the Wall Street Journal, I think it was, that said hedge funds sold a trillion dollars worth of equities during this period. I don't know. But during that period of time, a trillion dollars was a day's volume, notional value. We trade $6 to $800 billion of stock every day in the U.S. market. So you can, in fact, have very big moves in the market because of derivatives when there is no meaningful underlying buying and selling. I love, we're going to let you go, Tim, but we learned a lot. And that's why I like having you all. because the idea that a trillion, Kelly, I know when it comes to debts and deficits, maybe a trillion's not a lot.

Yeah, well, a trillion here, trillion there, that's real money. Pretty soon it adds up, right? I mean, and that's kind of where we are, and we'll see where things go. And, hey, maybe I'll ask the Commerce Secretary about this tomorrow. Tim Klaus, modern I are. Great stuff. As always. Thank you.

Thank you. And coming up, pay-to-play. The ultra-wealthy who want access to the White House have a new club for doing so. We have the details next. The White House correspondent. dinner over the weekend looked a little different. The president didn't attend. Many celebrities skipped the event as well, but the big action took place at the exclusive after parties. That's the domain of our wealth editor, Robert Frank, who brings us more about that, Robert,

and what else might be going on with ultra wealthy who want access to the White House? Well, Kelly, one of those after parties was indeed a big deal. That's because the ultra wealthy who want access to the White House now have a new club. It is called Executive Branch. And the new private members club will cost you $500,000 just to join. And by the way, there's already a waiting list. The club is owned by Donald Trump Jr. He, of course, is the president's son, along with his business partners at 1789 Capital. That's Omid Malik and Chris Buzzkirk. The other owners include Alex and Zach Whitkoff. They're the sons of Steve Whitkoff. He's the Middle East envoy and, of course, a longtime friend of the president's founding members already include crypto investors

David Sacks and the Winklevoss brothers. Now I'm told that the club will be located in Georgetown at a building that will open next month. The launch party on Saturday night included a who's who from the Trump cabinet. Secretary of State Marco Rubio was there, along with Attorney General Pam Bondi, SEC Chair Paul Atkins, Dr. Oz, a lot of others.

Now, the $500,000 membership fee would make it the most expensive private club in the country after Mar-Lago. Marla Lago just increased its membership fee to $1 million. And by the way, a long waiting list there as well. Now, to become a member of the executive branch, you're going to need to be personally approved by the owners with a trusted referral. Sources telling me they want to, quote, safe space for people to have private conversations

with members of the Trump administration. Guys, I'm told that some people have already offered a million dollars just to join, but they haven't been vetted yet. So even at a million dollars, they can't get in, at least not yet. But what exactly does this guarantee you access to? Well, it's unclear. Again, they haven't made a formal announcement. I've yet to talk formally with the founders, hope to do that.

But basically, I think the idea is to give people who want to pay mega donors to politics, access to policymakers and members of the White House. I don't know how it's going to be structured, whether there'll be any guarantee, or whether it would be more like the Trump Hotel. in the first administration, where it was simply a gathering place for members of the administration, for prominent Republicans, for lobbyists, for people overseas or in the U.S. that wanted at least access or conversations with those policymakers. You know, this does continue. I will say this, Robert, you know this. This continues what I'll

call the private clubization of the high end. Does it not? Forget about even politics aside. A lot of New York City restaurants, if they're not private clubs, they're semi-private, where, like, If they don't know you, you're not getting a reservation. It's happening in Miami. And I wonder how much it has to do with the phone and Twitter and stuff like that. Because everywhere people go now is like some semi-private or private club. Yeah, no, absolutely. There are dozens of new private clubs that have opened just in New York since the pandemic. I think to your point, one of it is one reason is privacy. The other reason is that it's just impossible or very hard to get a reservation at a good restaurant. So people are paying $10,000, $20,000 a year. for what places like Zizi's, places like Zero Bond, places like Cassachipriani, that are effectively restaurants with perhaps a spa or fitness club that gets you a reservation.

This is very different. I'm sure they'll have a good food and beverage service, but what you're not paying for is the amenities, the big amenity to executive branch is the access to the administration and policy. And that's why this is, and you're right, it's part of that trend of the private members club, but it's different in that what it's offering

is completely different from the other clubs. But so far it's been very successful. We'll see when they open next month what it looks like and who's a member. Robert Frank, thank you very much. Appreciate it. Be great in the Inside Wealth newsletter, by the way. Let's play a game of seven up.

Four of the Mag 7 names on deck to report their earnings tech, the story. Before all the tariff chaos, what can we expect to hear? By the way, speaking of tariffs and investments, big interview tomorrow right here on Power Lunch with Commerce Secretary Howard Ludnik. I'm going to leave now, Kelly.

Go to the airport, catch my flight, go see the Commerce Secretary, and I will see you and the viewers and listeners on the show tomorrow. Godspeed. I think we got you a, what do they call it when the police get a police escort? I wish. I'm going to fly you there.

I wish. Oh, my gosh. That'd be great. Get on Robert Frank's private jet. Thanks, Brian. We'll be back after this. Welcome back to Power Lunch. Let's talk some big tech for a second because four of the Mag 7,

meta, Microsoft, Amazon, and Apple, report this week. And Alphabet's solid results last Thursday, it's reassuring to some investors that these big bets on AI are paying off. But for the year, all Mag 7 names are still down. And tariffs, trade tensions and recession fears, of course, loom large. Here to discuss what he's watching as earnings roll in. Dan Ives is Global Head of Tech Research at Wedbush. It's good to see you. Great to be here. So where do we focus our attention now with Alphabet, kind of, what is the messenger signal there? Yeah, look, I think that when it comes to advertising, I think we're going to see a rebound. That's something I think we're going to see when it comes to meta.

And overall, it speaks, I think, a theme for the week when it comes to, you know, advertising, cloud, and AI. I mean, really, the key focus is what does spending look like is cap-beck holding up? We believe it is. I mean, I think big tech this week is going to be more of a confidence booster rather than putting gasoline on the fire in terms of the fears. I think that's the important thing we're going to see from big tech. The Alphabet was just sort of a little preview what we're going to see this week. We spoke to an investor last hour who said he's still cautious on big tech and basically still thinks that, you know, there's a soft patch coming in the economy and that he's kind of hiding out in some of the insurance names and a little bit more of those steady eddy spaces. So what would your response to that?

I mean, I would have said, if I go back a few weeks ago, like you don't know where this is all going. I get tired from all of our survey work and everything we've seen in the field, like AI spend holding up like rocket Gibraltar like. when it comes to the cloud in terms of overall spend, I think it's one, there's parts where it's actually accelerating. Look, uncertainty's there. And that's definitely going to create in terms of guidance, huge sort of gold posts that they give. But big tech, even though tariffs,

it's not stopping the AI revolution. Well, I thought it was notable over the weekend. We was talk about how people kind of gathering their thoughts over the weekend. And Michael Darta, who's kind of a macro strategist and economist, but he'll make tactical market calls. And he said, he's experienced what I've experienced, which is AI has gotten so much better over the past year. Like I would talk about I now use it all the time. In the past, it was more just kind of a goofy tool.

It just wasn't as good. And he said, I'm changing my investment thesis from bearish on tech to bullish on tech and on the AI pieces of it. Literally as a result, he's like, I now see how this is going to bear free. Yeah, and I think like what he's talking about is what enterprise they're seeing. And that's why, you know, we've talked about in our survey work, like they can't all of a sudden just halt profit. Because then you're at the back of the line. I think when it comes to Microsoft, when it comes to Amazon, especially on the AWS piece, when it comes to what we're going to see in terms of meta from an advertising perspective,

it's all about this AI revolution. And even though tariffs have created massive uncertainty, we'll see that when it comes to Apple, in terms of, you know, from a production perspective, software, that's a safety blanket. Hyper-scale, or the spending is going to be there. And I think that's really going to be a big theme this week for big tech. And we lump them all together, but to your point, there's a couple of the more ad-driven names and Google's kind of search ad results, especially in light of AI, we're reassuring on that front. So you're putting meta maybe in that category.

Then we have Apple, like I said, more of a tariff story. We have Microsoft, which is a little bit of like, where are they in the AI? So we lump them all together, but there's a lot of different narratives. Yeah, I think you have to almost separate it out. The big thing you're trying to get from Microsoft and the Della is what does Cloud Spend look like? Is there any slowdown? And I think that's one. You get a check in terms of what I believe is.

going to actually be pretty strong Azure numbers in terms of what they're seeing in terms of demand, no change to capbacks. When it comes to meta, you're just trying to get more and more of that theme that we saw with Alphabet in terms of digital advertising and it's showing a rebound. I'm not saying there can be some uncertainty, but that's very important in terms of the broader view

that we see across the board. Amazon, I think you'll see a piece that from an AWS perspective. And then look, when it comes to Apple and Cook on Thursday night, like I think strong numbers, but they're really in the eye of the category five storm when it comes of tariffs. They're not going to give guidance, and it comes down to what is that, and we'll see

with Brian's interview, if there's any sort of thing there from Lutnik, but like 22-32 tariffs, what does that ultimately look like right now, you know, playing a game blindfolded darts in terms of Cook and Cupertino. We still love the name because you just navigate this next three months. All right. We'll see, Dan, thanks. A little bit of the playbook here for what will be a very busy week, Dan Ives. Let's get to Leslie Picker now for the CNBC News Update. Leslie. Hey, Kelly, Iran said today it finally put out a fire at a southern port that exploded on Saturday, killing at least 70 people. The shipping port, which is Iran's largest and most important, reportedly took in a chemical component needed for the solid fuel for ballistic missiles. Authorities have denied those claims, but have not offered a cause for the blast.

A White House official confirming today that Philadelphia Eagles quarterback Jalen Hertz will not be visiting the White House during the Team Super Bowl celebration this afternoon. Hurt's the Super Bowl MVP declined last week to answer whether he would be there. The White House says the team members who can't attend had scheduling conflicts. And the Washington commanders in District of Columbia announcing the details today of a project to build a new stadium in the nation's capital and bring the team back to D.C. from Maryland. It will be on the site of the old RFK Stadium and is expected to open in 2030. The commanders are contributing $2.7 billion to the development. while D.C. will chip in $1.1 billion over the next eight years.

Kelly, I'll send it back to you. Always money for a new stadium. A lot of money. Leslie, thanks. See you later. Coming up a cruel summer for America's power grid, how global warming could be forcing a need for improved technology and what that could look like after this. Welcome back to Power Lunch.

Summer isn't that far away. It's finally starting to feel like it. Of course, that will then mean excessive heat and excessive demand. on the nation's power grids. Some recent failures highlighting the need for alternative technologies to support the grid. Diana Oleg is here with details in her continuing series on climate startups.

Diana? Well, Kelly, in a warming world with increasingly extreme weather events, homeowners have been looking more and more to backup batteries. But those only last so long, and really much of the problems now lie not in the backup,

but in the actual grids providing that power. Enter the virtual power plant. This power doesn't sell home batteries. backup batteries like Tesla or Enphase. It's a battery-based energy company. The Austin, Texas startup installs its batteries on homes and then sells energy both to homeowners and to the grid. We maintain ownership of the battery, we own and operate it. We handle all the maintenance. And in doing so, it can manipulate how that battery is used, specifically accessing cheaper power and passing that savings on to the consumer. We charge the battery right from the grid

when demand is low. So think midnight to 4 in the morning when people are sleeping and there's not a lot of electricity being used, that's what we're charging the battery. And then when power demand is the highest in the evenings, in the summer or in the mornings in the winter, we discharge the battery to support the grid.

In other words, they sell power to the grid. So for an upfront fee of $595 and then about $19 a month, homeowners get access to reliable power provided by base, which claims its prices are 10 to 15% less than traditional electric companies. Base is now serving one of the nation's largest home builders,

Lanar, which is also an investor. In roughly 20 Lanar outage-prone communities in Texas, base installs batteries during the construction process. This allows Lanar to market itself as a differentiator. It's much broader than, are we going to make money on money? It's are we going to be able to improve the overall stature of the home building business as it seeks to address the markets that are stressed and having problems. Utilities and electricity is a part of that.

In addition to Lanar, BASE is backed by Thrive Capital, Valor Equity Partners, Lightspeed Venture Partners, Andresen Horowitz, and Addition. Total funding so far, $268 million. And BASE recently announced its first utility partnership in a new region near San Antonio. They're hoping to expand outside of Texas soon. The batteries, though, are made in China, and as Dell says, they will see an impact on that from tariffs. Back to you. It still goes back to the question of, is solar kind of an important thing to have in order to pull this off successfully?

And what are those economics now look like? Well, interestingly, Kelly, only about half of base's customer base have solar. You don't need to have solar for this. Of course, it's going to help you. And if you do have solar, you can then sell that solar power back to base. and you can get money for that. But again, that's not necessary in this business model where base is really providing the power,

charging you up and then discharging when you don't need that energy. All right, Diana, thanks for now. We appreciate it, Diana Oleg. Still ahead, we'll hear from a logistics expert who says the president's mission to reshape the global supply chain is next to impossible. Details after that.

Welcome back. The remaking of, or at least the plans to remake the global supply chain are already underway on the Trump tariff front. We saw a report last week that Apple will be shifting iPhone assembly to India for U.S. phones. But our next guest insists that will be the exception and not the rule, saying most companies don't have the balance sheet to pull off that. So what do they do? Joining us now is David Warwick. He was formerly Microsoft's head of global supply chain and is now executive vice president at Overhaul, which is a risk management firm for supply chain.

So you must be busy lately, David. Welcome. Thank you so much for inviting me on. Yeah, these are interesting times for supply chain. across the globe, as we try to figure out what exactly, where will the tariffs actually land? And then what do we do to address this impasse as well? Because we learned a lot of lessons through COVID. We learned a lot about decentralizing supply chains. We learned a lot about having to overcome these big challenges.

But it feels like we're back in the same place again. And now we have to address that. It's so bizarre that we had this COVID experience, which many said was a glimpse of how we need to kind of be more thoughtful about the global supply chain. And now we have this five years later where I don't know if people got complacent or if they're, you know, maybe they didn't. Maybe what we're learning is that a lot of supply chains really have shifted away from China over the years, but not entirely. I mean, supply chains are a little bit fragile. You know, as we've built them up over the, you know, the decades, they have introduced this element of fragility. And what does that mean?

It means that, you know, in a just-in-time world, when any part of the supply chain doesn't deliver at that just-in-time level, then the rest of the supply chain, supply chain tends to break down accordingly. So you see bottlenecks, you see backlogs. So we learned some things, but we also, to your point, we became a little bit complacent and we became very busy. So as trade started to turn around again after the early days of the pandemic, we became very busy. And as a supply chain practitioner, you're very focused on what do you have to achieve today as opposed to what does that look like in three years time. So where are we now? We hear reports that, you know, inbound shipping volumes from China are way down, that that will impact the economy almost to a recessionary point because of ensuing layoffs and freight and retail

and so forth. Are those concerns, you think, apt, or legitimate, overblown? Is there any sign that activity could rebound now that we at least know what, you know, some of the data points are? It's super challenging, and it's super challenging because, you know, supply chains have some element of longevity. So just because if tariffs were to be completely renounced tomorrow, the damage has already been done to a certain extent over the last six or eight weeks. And what does that mean? It means, you know, already this morning, you know, I've read numerous reports about the port of Long Beach, which is substantial for imports coming into the US, it's going to be down something like 33% in May. The port of Seattle, the port of Tacoma. There's a lot of pictures this morning in the

morning press, showing again empty births. So what happens is there's a knock-on effect. If you think about manufacturing for holiday season for Christmas, those orders would typically be placed into Chinese manufacturing companies around about this time of the year. And so if those orders are not being placed because people are a little bit wary of tariffs, what does that mean? Well, it creates yet another bottleneck. So even if the tariffs are to be renounced or even if they're pulled back, those orders are already late now to be placed. And so that creates yet another bottleneck in the supply chain. So what we see is knock on effects that will happen throughout the rest of this year. And it will be a challenge for supply chain practitioners to overcome those. We heard from Valley Bank CEO on

Friday who said, you know, for a lot of his customers, which aren't the big international firms, he thought that the risk, the economic risk was overblown. He said he hadn't seen a pull back in loan demand. They were still moving ahead with projects. Some of the moving ahead with project that would benefit from American reshoring. So we're just trying to feel. figure out, you know, how much gloom and doom is coming on the supply chain front or not? It's always going to be some level of balance. So I think that, you know, what I'm seeing over the last couple of weeks is a lot of companies are becoming very creative in terms of their supply chains. They're thinking about, okay, you know, what do I have to do? Do I have to

be a little bit more ruthless in terms of product definition, in terms of the range of products that I'm actually offering? And where does my core supply chain sit? I've spent some time. decentralizing, can I double down on some of those more tariff-friendly countries going through this year? So supply chain is always a balance. It's 24-7. We never stop moving products around the globe. And so what supply chain practitioners have to be is they have to be a little bit futuristic and they have to start solving problems that are right in front of them now. So are we going to see some disruptions? Absolutely. Are we going to see some price increases? And are we going to see some, you know, again, some challenges in terms of moving global trade. Yes, we are,

but supply chains are built a little bit to deal with these problems. And so we're going to see hopefully some creativity and some innovation happening through technology, at least in the next six months. Yeah, but I take your point, and others have made that it's going to be a month or two, maybe three before we really start to see the impact here. We're just starting to get a glimpse of it now. David, thanks. Hope to check back in soon. Thank you so much. David Warwick of Overhaul. And if you ever miss an episode of Power Lunch, no problem. Just check out our audio-only versions on the Power Lunch podcast. You can follow us and download it on any platform you use. And we'll be right back.