Power Lunch - S&P 500 drops as traders assess Trump’s auto tariff impact 3/27/25

Episode Date: March 27, 2025

Stocks are heading lower again, as investors weigh the latest tariff-related news from President Trump, including his new tariffs aimed at foreign automakers. 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.

Welcome to Power Lunch and tariff turmoil. The bad news car costs may be going up. Again, the good news, the stock market mostly shrugging it off, at least for now. We'll dive into these potential new car tariffs and what it may mean for you and your money. Plus, the surprising story on just how many stocks have done better than Nvidia and we'll even get some new stock picks just for you. And here's the look at where we stand on stocks right now. Kind of flipping around, mostly down about half a percent, as you can see there. Dow down about 200 points. So a little bit off the session lows, of course, not the green we were seeing mid-morning either. We're seeing a big reaction in particular to these new tariffs among the auto stocks. General Motors, the biggest decliner of the major ones. It's down 7%. Tesla gaining as its cars are mostly made in the U.S. There's an explainer on CNBC.com. If you'd like to learn more about their actual exposure, the part suppliers also heading lower. A lot of these have big exposure in their supply chains to Mexico, Borg-Warner, Magna, AutoLiv, and Lear.

We're seeing some gains, though, in the auto servicers like AutoZone. And the theory people may choose to keep their cars on the road longer, need them fixed up. AutoZone O'Reilly advance. Look, at advance up 7%. It's had a tough run. And some huge gains for the car rental companies, also like Avis and Hertz, Avis up 18%. These are heavily shorted names, so that could be contributing to the size of the move. Because we can't afford a car, so I guess we'll rent one.

It's very bizarre. I guess so. At some point, the cost affects them, too. It affects everybody. Before we dive into that, let's get down to Washington, though. The government's latest projections on the national debt are in. Emily Wilkins for the details. Hey, Kelly, well, yes, the debt held by the public is expected to reach its highest percentage of the GDP ever in just four years in 20209,

and then is expected to continue to rise until it is 156 percent of the GDP, and that's expected 30 years from now in 255. Of course, these reports, this projection from a brand new report, from the Congressional Budget Office just out today. And it says that even though the outlook is a little rosier than what we saw last year, this high projected level of debt held by the public and outside borrowers,

that's going to cause, could cause some potential economic issues for the U.S. It could even potentially cause some national security issues for the U.S. if you think about foreign countries that do hold U.S. debt. And just a quick note here, of course, these numbers, they were projected based on data as far as November of 2024. So we'll be very interested to see when the CBO starts putting out some numbers that includes the data and the things that we've seen the Trump administration do in its second term and what that's going to mean for the debt. Guys. All right.

Emily, Wulkins. Emily, thank you very much. All right, back to the main topic and that, of course, tariffs. Now, tariffs, listen, they can be complicated. It is a complex issue. But maybe the ultimate question around tariffs is actually pretty simple. If we do get a price hike on cars, what are you? going to do? Well, the only way to find out is to ask. And so we did. We did a Twitter poll asking

what happens if prices, which, but let's be honest, are already very high, take another leg higher. Do you buy a different car lower price? Do you hold your nose and pay up with an increased tariff? Or do you simply drive your current car longer? Well, your answer was overwhelming. What is it? Almost 80% of you said, you're just going to drive your old car. longer. Look at that. About 16% said buy a different car and not many of you, about 5% said, I'm going to hold my nose and pay more and buy the newer, more expensive car. So what does an auto dealer? Somebody who actually sells cars for a living, think about everything that's going on? Let's ask one. Tom Maoli is the owner of Celebrity Motor Car Company. He has six

dealerships in the New York and New Jersey area. They sell Fords, BMW, Mercedes, Lexus, and more. so he is exposed to both domestic and international cars and manufacturing. Tom, you're on last call with us a ton. You're always outspoken and honest, we appreciate it. What is your thought right now as a multi-dealer owner? Well, listen, it's challenging. The consumer is the one that's going to take it on the head. These prices are going to get passed onto the consumer.

And listen, as you said, 80% of those people are going to stay in the cars they have rather than buy new cars. But I have to tell you, that's going to cost them more money because the parts are going to go up the same amount percentage-wise. So it's going to cost more to repair these vehicles, tires, brakes, et cetera, and keep these cars on the road. Use cars are going to go out the roof because it's going to be much less expensive to buy a used car than a new car. And ultimately, if you look at what's going on in the stock market, and I think you got it up on the screen now, you've got 7% down in General Motors when it should be skyrocketing because what the president's saying is we're going to drive manufacturing back to the U.S. and have them buy domestic, but that's not the case. The case is that 50% of the parts in domestic vehicles, Ford, Chrysler, GM, come from Mexico,

China, Japan, and Canada. So they're going to have the same issues, and that's why those stocks are down. As a deal, okay, it's a good point, because I was kind of wondering the same, like, shouldn't the domestic companies kind of benefit? As a multi-car dealer dealer, dealer, are you hearing from the car manufacturers? Are they saying, here's what we plan? Or is it just literally motor silence? Because maybe they don't know.

It's motor silence right now. And I think they're all trying to figure it out. Ultimately, what they're going to have to do is take a percentage of this and against their profits and then pass some of it along to the consumer. Ultimately, the consumer is going to pay. And you know what? Listen, the consumer has not recovered from COVID. We're still dealing with major price increases from the COVID inflation.

And now they're going to get hit with this. Listen, I think President Trump is. He's a friend of mine. He's a brilliant, brilliant man. He knows what he's doing. I think this is a negotiation tactic to get everyone to the table and try and figure something out. But I think he's got to change his tactic on this because this is a big part of our GDP. Automobiles, transportation, is a big part of the GDP in the U.S. United States of America. And I think instead of doing it with a stick, he's got to do it with a carrot. He's got to offer tax incentives, low interest or interest-free loans for manufacturers to come in and build plans.

in the U.S., and they'll do it. The, our analyst last hour, Tom, thinks that a lot of the car companies will have little choice, but to keep going up market. You know, that that's one way to absorb these price hikes and kind of, you know, cater towards a consumer who's going to be able to spend on that more luxury type of car. So maybe in the long run, he said,

that leaves a gap for the Chinese EVs to enter the market built in the U.S. with American workers and kind of feel that really low end of the market gap that's really starting to exist. Well, it sounds right, but, you know, again, That upper market is a very small market. It's, you know, we're talking 2, 4% of the marketplace that can buy luxury goods. And, you know, listen, the president Trump's a smart man. He's already said he's not letting China bring their low-price EVs into the U.S.

And I don't think that's going to happen. But I think he has to rethink the whole tariff thing. And I think he has to do it with a carrot and not a stick. And listen, ultimately this will get solved. But we're in a little bit of turbulence right now. Well, the EV side, as we talked about many times, is a multi-administration story. Let's not forget, Tom, then-President Joe Biden,

put a 100% tariff on imported Chinese EVs because in China, the B-YD, people say it's a great car, but they don't really care about labor costs or conditions. They don't really care where they source the battery materials. So that is a different issue. Let's go back to the issue I was tweeting about, which, and you and I talked about, and I know this is not, I got a lot of dealer friends,

and I know this is not you guys. I want to be very, very clear on that because I hear it, from all my dealer friends, which is car dealer friends, I want to make that clear. I got you. Which is what's happened to car prices? I mean, Kia is selling an $80,000 EV that goes 270 miles. Maybe it'll go to 90,000 and people apparently are buying it. Cadillac's got $180,000 escalate, $180,000.

That's 200 with taxes and all these fees. What the hell is going on with car prices anyway? Well, listen, car prices went crazy during COVID because there was no supply and the demand ratcheted up. And you're going to see the same thing now. Demand is still out there. Demand doesn't change, right? It doesn't matter what the government and what the Fed's doing with interest rates to drive down demand. And I've been saying this for a while and it's a whole other topic.

We're in a cycle where you can only bring the demand down so low. You can't stop transportation. People need vehicles to get to work, to get their children to school. they need cars, they need reliable cars, they need reliable transportation. They're going to spend the money on it. They have no choice. But the question is, will they keep the car, will they repair the car? And ultimately, how far can you squeeze this consumer?

You know, it's been all over the news. You walk into the supermarket, food prices are up 25% from COVID, eggs, bread. You know, how much can the consumer take? And, you know, I think that has to be taken into consideration here. All right. I think you just extend the car loan out, Tom. We're going to see 10 and 11 year new car. You mark my words.

30 year. 30 year. You want mortgage a car. 30 year fix. You're going to mortgage your car. Yeah. Yeah, but the problem is the life cycle of the vehicle does not last that long. You know, when you start getting over 100,000 miles, you know, you're spending way

too much money on repairs to keep these cars on a road. So that is the issue. It's a life cycle. Wait till the insurance costs go up more to cover now the cost of the higher place in the car. Tom, thanks. Really appreciate you joining us today. Great to see you. Tom.

Good news today? I mean, is it grumpy. Let's see. Let's see if our next guest can bring us some. If people hold off on buying new cars due to rising prices, will that leave them with extra money for other items? There's a bright angle. Our next guest has a new note saying the consumer overall is holding up better than expected, despite all these inflationary pressures. Anthony Chacumba joins us from Loop Capital. Anthony, glass half full. Tell us. Yeah, so, I mean, when you look at the broader macroeconomic data, it's actually quite good. I mean, you know, inflation has ticked down last month. The labor market is still incredibly strong. We're still seeing pretty decent wage growth. And it looks like we're seeing some significant green shoots in the housing market.

Existing home sales have been up year over year for the past five months. New home sales were actually up last month as well. Look, consumer confidence is. lagging. That is the one thing that I am looking at. But for the most part, you know, we're seeing a lot of encouraging macroeconomic data. Like what? Well, you know, as I said, I mean, you know, look, I mean, folks are working, folks are making more money year over year. One thing that I, that I've looked at is the fact that inflation has been lower than year-over-year wage growth for almost like two years now. So purchasing power is actually getting better. So we're seeing a lot of

positive data, believe it or not. I think the question on the markets mind, Anthony, would be, okay, but tell me what the story of the next six months is going to be, right? So as good as it has been, as decent as, you know, it's hard to use these words, but however, whatever has been the case is no guarantee of what we're heading into. Oh, you know, past performance is no guarantee of future results, absolutely. You know, but look, look, the one thing, the only thing that I am concerned about, and maybe this is what your question is on, is consumer confidence.

I mean, consumers want to have clarity on these tariffs. And the fact that it changes from day to day, from hour to hour, from tweet to tweet, that's just not great. It also impacts businesses because they just, you know, they want to know what the rules of the road are, and then they can plan accordingly. It's just tough to do that when the tariff situation continues to evolve on an hourly basis. So that is the one thing that I'm concerned about. Look, unlike the last guest, I'm not a personal friend of President.

Trump, you know, I have no way of knowing, you know, where his head is at. But, you know, one thing I think is very, very clear is that, you know, to really calm these markets, we're going to have to have clarity on this whole tariff situation. Is there any, and we're trying to be optimistic, Anthony, there's a lot of bad headlines out there. Is there any point to sort of what Kelly alluded to at the top, which is that we moan and grown about our car payments. I think the average new car loan is like a thousand a month now. It's pretty, it almost is like a mortgage in some areas. If people delay or put off these purchases. Theoretically, they're not going to have that extra cost.

If the economy remains relatively okay, maybe robust, whatever it is, is there an upside to other things if we're not spending money on cars? Oh, absolutely. Absolutely. I mean, look, at the end of the day, consumers have a finite number of dollars to spend, right? And so if they are sort of holding off on buying a new car because of higher, you know, because of these tariffs, these tariffs on, on, imported cars, then that's more money to spend on other things. Maybe that's clothing.

Maybe that's taking a nice vacation. Maybe that's going on eating at a restaurant. Maybe that's, you know, buying a new TV. Yeah, I mean, it's, you know, it's a zero-sum game. Want to mention real quickly, Anthony, a couple. I mean, you like Alta, you like National Vision, Savers Value Village. What is Prague Holdings? Oh, Prague Holdings is a lease to own provider.

So they provide, it's essentially like kind of subprime financing. for, you know, consumer electronics, appliance and furniture purchases. Which, again, would not be the place to go if you thought things were about to weaken. So it's interesting. So you see there's an opportunity there? It's had a tough year so far.

Yeah, so there's clearly an opportunity. I mean, basically, they had a tough year because their guidance for 2025 came in below expectations. There was a bit of a disconnect. They lost one of their large retail partners. But, you know, excluding that one partner, which we sort of knew they lost, you know, they're actually seeing some pretty decent growth, even with, you know, you know, sort of these challenging results in terms of their underlying demand.

They're just figuring out more ways to drive more volume with their existing retail partners. All right. Anthony, appreciate you joining us today. Good to see you. Anthony Chakumba with Loop Capital. All right. So, folks, stocks, believe it or not, with everything else going on, still higher for the week. The S&B and NASDAQ actually tracking for their best week since over. a month ago. So I've been a month, but again, we'll take it. Still, we're a little bit down on technology for the month. There's a lot of stuff going on with the markets. We've got you covered on Power Lunch. We're back right after this. Welcome back to Power Lunch. With

tariffs on the mind of everybody lately, our next guest believes the potential threat could even delay the Fed from cutting rates, even with the hard data showing the economy resilient. Joining us now is Michael, is it Binger? Michael, welcome, President at what'd you say? It is Binger, yes. Great. Binger, welcome. It's great to have you from gradient investments. And I mean, I think this is a moment we all just need to figure out, okay, do we follow and try to figure out the day-to-day news flow? Do we sit back and just kind of trust the market. We'll make it through in the long run. Maybe you can't afford to do that in your business. Yeah, look, you know, I think the market's kind of range bound for the time being. I mean, you know, your previous guests were talking about the economy being still pretty solid and all the data coming in, and I would agree with that. And I think the Fed confirmed that last week that the economy is good.

So when you look at the fundamentals as they stand right now, I mean, the economy is good, inflation's under control. Corporate earnings growth is way above averages. So in my opinion, things are good, and we just kind of got to ride out this period of volatility. I mean, it seems like uncertainty is the word of the day now. And, you know, they're still right because the tariffs, they don't even go into effect until next Wednesday. And a lot could change between now and then. Yep.

And then there's maybe the May round of tariffs and so on and so forth. You have a couple of stockbooks, one value, one growth. You like NVIDIA. You like Target. InVIDIA immediately takes my mind to this core we've IPO, which, well, I mean, what is that? Look at Jeffries down 10% today, you know? This was supposed to be the year of dealmaking and all the investment bank stocks ran up big time last year. and it does now feel like we're in a little bit of a holding pattern.

It is, but I don't think we're in one in Nvidia. I mean, when you think about it, Nvidia is still the leader in the AI chip space. And I think the AI chip space and the AI space in general is still very much in its infancy. So if you have an industry in its infancy that's not really affected by tariffs that is going to continue to grow,

and by the way, I think Nvidia laid out a great roadmap of growth at their GTC conference last week, So there's a lot of industry growth. Invita is a clear leader. You know, their blackwell chip is much more robust and efficient than anything the competitors have, including Deep Seek. So I think this is an opportunity. And you know what?

In Nvidia, the argument has always been, it's too expensive. Well, it's not anymore. If you look out to 2026 earnings there, it's 20 times. So it's cheap now, too. You can get an industry leader and an industry that's going to grow for years at a cheap price. Let's talk about another one. And I sat next to the CFO of a major. a retailer, Michael, a couple weeks ago at a CNBC dinner.

And this, the CFO was telling me basically like, look, and listen, we care about tariffs. We mostly just want to know what they are. And the customer can absorb a small percentage. The Wall Street Journal did a study, I think it was two weeks ago, and I'll tweet it out, that they found that all tariffs are not passed on to the consumer. The companies eat some. Others, by the time the consumer gets it, he or she pays a couple of percent more. That seems, I'm not in favor of tariffs, but it seems manageable for a company like a Target.

Well, I would totally agree. I mean, when you look at Target, you know, Target reported their fourth quarter of 2024, and it was a good quarter for Target. It was above consensus. But like a lot of companies, you know, investors sold off the stock because Target was a little conservative with their first quarter 2025 earnings. You know, and who can blame them? I mean, there's uncertainty around tariffs.

You know, there's uncertainty around the consumer weakening potentially. But in our opinion, I don't believe the consumer is dead. I believe the consumer is going to be more selective and more frugal. And this really plays into the hands of retailers like Target and Walmart. And we prefer Target because it has more upside. I believe the margins have more upside in Target that they do at Walmart. And Target stock is at a 10-year low. Valuation is very cheap.

you can get target for about 10, 11 times next year's earnings. I mean, at this point, you know, if you can get this at, you know, below 110, I think you're making yourself a very good buy. All right, Michael, we'll leave it there. Thanks for joining us today. Thank you. Michael Binger with gradient investments. All right, on deck, it is not all bad.

The one thing hitting a new record high as inflation fears rise. All right, welcome back to Power Lunch, everybody. The markets are down. They are in the red. Given the 25% tariff on car that may happen. Again, we don't know. That's the plan. You would have thought maybe the market would be down more.

The Dow's down three-tenths of one percent. Only 117 points. NASDAQ down one quarter of one percent. You never know, Dom Chu. This is the market. Maybe you think about low rates. Think about a change in what fiscal deficits. Maybe the market comes back today.

I don't know. Not that horrible of a day. No, and not so. But what we are seeing right now are some of the, flight to safety trades, right? This idea that with this tariff uncertainty and global economic uncertainty and everything else, gold might be the place. What a segue.

Exactly. That was a great segue. I like that. It's like we do this for a living, right? Anyway, gold is hitting another record high amid all of the continued uncertainty. But one of these traders out there believes that now is the time to get ahead of a companion silver trade for all the same reasons that gold is surging to records. Joining us now to show us how to do it is Mike Coe, the chief strategist with open interest

Pro. No surprise. I think earlier I saw today, gold prices for futures, front month contract, 3102 and change. 310220. Somebody's already reading them for gold prices right now. It's basically what it comes down to. Or silver. Highhouse silver. Her lives. The poor lives trade. Right. So Mike, let's talk about silver and why you think that it's a better trade relative to what we're already seeing for the record highs in gold. Yeah, I mean, one of the things, obviously, we have record highs in gold. You know, we are not seeing record highs yet in silver, but it certainly has been doing exceptionally well this week. And, you know, we had some recent local highs up, you know, a couple of bucks from where we are right now. And of course, the all-time highs are

substantially higher. And my thinking is that silver could do a little bit of a catch-up here and break above the highs of the last 12 months. And so, you know, my thinking is to try to take advantage of something that we call skew. And that is the tendency in some commodities for out-of-the-money call options to trade at a higher implied volatility than the at the money ones do. And what that permits is the ability to make a bet to the upside that gives you probably better risk reward than doing something similar in equities would provide. So for example, I was looking out about one month to the April 25th weekly expiration, so that's four weeks from this coming Friday, and looking at the 31-33 call spread.

So that $2-dollar-wide call spread would cost about $50. So that gives the buyer of that call spread a payoff of three to one if it should reach that higher $33 strike price, which would be up 10%. Now, that would be a big move for the metal. But, you know, this is a trade that would appreciate even on a smaller incremental move in the intervening period. So the pricing dynamic is what's interesting here, right? Because what you're saying is that that $33 call, right, that one there has relatively more value than you would expect it would. So you're going to buy the $31 call, which gives you the upside exposure to anything above $31. And then in essence, sell away anything above $33 to cheapen the value of this entire spread.

So you're playing for that $2 range minus the 50 cents you're saying it costs. Why do you think, why not just be that much more bullish and just buy the call outright? Or do you think it is because of this pricing dynamic right now? Well, one is the pricing dynamic. So if you were looking at a similar distance call spread on, say, the S&P, you would expect to pay probably something like 40% of the distance between the strikes. So something like 80 cents instead of the 50 that is costing you here. The other thing I would quickly point out is that the increase in price that we've seen in silver recently has been pretty orderly. And so what that means is that the realized volatility hasn't been that high.

It's about 15%. And these options are priced at about 20. So because of that premium, that's the reason I'm looking for that offset. If at the money, 31 strike call is a little bit cheaper, I probably would be inclined to just buy it outright. And if we start to see the volatility of silver creep up, which it could if we start to really get a rally going here, then just buying upside calls is probably the right play. All right. Mike Cohen, the trade on silver as opposed to gold. Thank you very much. We'll see you soon, Mike. Thanks. All right. So this is an interesting call because it is about whether or not that $33 option.

It's very specific because there's a pricing mismatch that happens versus what it has. historically happens to make that $33 call option worth more than you would think it would be. So it makes that whole option structure cheaper to actually put on. And that's the reason why it's an interesting trade. What he said. There you go. Silver. Hi, it was silver.

Coming up, the flow of cash for startups has slowed to a drip, but we'll speak to an industry insider about what could be next right after this. Welcome back to Power Lunch. I'm Julia Borsden with your CNBC News Update. the president announced moments ago that he pulled the nomination of Representative Elise Stefaniq to be the U.S. ambassador to the United Nations. The news comes amid ongoing concerns about Republicans' razor-thin majority in the House. President Trump said on truth social, it is, quote, essential that we maintain every seat in Congress

and said he looks forward to Stefanik joining his administration in the future. The Justice Department is reportedly considering merging the Drug Enforcement Agency and Bureau of Alcohol, Tobacco, Firearms, and explosives or ATF. According to a memo seen by Reuters, the move would combine the DEA and ATF into one agency in a bid to make their operations more efficient. It comes as the Trump administration pushes

to streamline the federal government. And Secretary of State Marco Rubio defended the decision to detain a Turkish student studying at Tufts University in Boston. He said Washington would not provide visas for people who participate in, quote, vandalizing universities, harassing students, and taking over buildings. But he did not provide evidence of her involvement. Brian, back over to you. All right, Julia Borsden. Julie, thank you very much. All right, back to business now. There will be a lot

of scrutiny on CoreWeave's IPO tomorrow, with some hoping that it could kickstart a wave of IPOs this year. Comes after a really tough stretch for the market the past couple of years following the 2021 COVID craze. But your next guest is not very optimistic, warning that the doge cuts the federal funding for research and universities could risk a collapse of the American innovation pipeline and risk our future in the global economy, not small things. Joining us now is Oliver Libby. He is a managing partner at H.L. Ventures. Oliver, these are concerning comments. Why do you think federal job cuts could jeopardize American ingenuity? Well, look, I'm a long-term optimist. I think optimism has been the theme of the day. I want to

stay with that, but I think it's imperative. You know, the innovation economy is one of America's crown jewels, if not one of the most important parts of the economy. And it's the font of a cross-sector partnership that's historic, right? There's always been this enormous collaboration between the government, universities, innovation funding, VCs. And I think it's really important for us to keep that flywheel going. You mentioned the core we've IPO too. We need two things to be true. We need the pipeline of innovation to be strong, and we need to be able to sell startups. And both of those things are more concerning than they are usual. And I think it's time to sign on the alarm bell about one of the most important segments of our economy.

We don't know the full effect of the cuts yet. We hear a lot of scary headlines, cutting this, cutting that. I have a friend of mine who's a professor at a big, big research university, and there were some cuts. And I said, are you okay? He said, I'm okay, because I'm in a different department. So we don't know what's going to happen. What would be, I guess, Oliver, your best and your worst case scenarios for whence kind of the dust settles? Yeah, look, I think that the best case scenario is everyone loves more government efficiency. I'm a big friend to that, and I think it's really important for us to spend money in the right places, but it's important to note what venture capital, which is what I do for a living,

does and what it doesn't do. We help commercialize companies. We do make bets early on, and we try and bring those companies through this ladder of series of funding and get them eventually to an exit, which again is the really important thing we need going right now. But we don't do fundamental research. We don't fund that. That's always been a partnership with universities, with the government, the Department of Defense, and other really important entities. And we need that to keep going. So look, in the best case scenario, that continues and some of these freezes unfreeze, and we get that flywheel going. But again,

this is a big partnership. It's not something government can do alone, but it's certainly not something venture capital can do alone either. And entrepreneurs need all of that to be working to build quality products and businesses. On a more granular level, Oliver, do you have an opinion about the core we've IPO tomorrow? Well, look, first of all, I'm certainly, I'm an early stage VC investor, so I won't try and guess as to the quality of an IPO. But what I'll tell you about this is ultimately the entire innovation ecosystem is about building companies so that people will buy them, right?

The partnership between venture capitalists and entrepreneurs is ultimately about building companies that someone will buy. It might be an IPO, and that would be great. It might be a financial buyer like private equity. It might be a strategic buyer like a chip company being sold to Intel. Well, one way or the other, what we're doing here is building companies that eventually someone buys, and that's how we recycle capital into the system and invest it again in these early stage companies. And that pipeline, you know, as Brian mentioned, has been broken of late.

And so I'm delighted to see a few exits. But one of the things I've noted is there's a lot of concentration, right? That Corbiv IPO is huge. The Whiz exit is huge. But if you look beyond a couple of big things, there's really not a lot of activity. We're at a 20-year low in M&A. And so what we really need to have happen is that those sorts of IPOs, whatever happens, you know, with that, galvanizes the reopening of that flywheel. If we can sell companies, then the innovation economy is strong.

Right. And I think that brings it back to the decline in shares of Jeffries today. It's down about 8 percent. Now it was 10 percent earlier. That was on guidance. And this was a stock in many of the investment banking stocks were up 60, 70 percent last year. Jeffries is now down 30% year to date because if there's no M&A, then that kind of, again, limits the field of options for a company going public, ultimately.

Look, I think that's exactly right. And by the way, venture capital is both a really strong part of our economy, but also very fragile, right? So speaking as a mid-sized venture firm, right, we require the partnership of the earliest stage of innovation and then some of those innovation pipelines we just talked about. But we require the later stage funds to be buying into our companies and eventually they need to be able to sell those companies. And what's going on right now is a traffic jam.

If there's no exits, public, private, or otherwise, and there really are very, very few, then everybody's got to mine their garden and focus inwards. And so one of the things I would note here is there's been talk and focus on some of the bright spots. But the problem with the bright spots are, and some of our biggest sources of data like Pitchbook, don't capture a lot of the damage that's been going on

in the economy, in the startup economy, right? If you look at the way that people report venture capital rounds, the publicly reported ones are the priced, equity financings. But that has been pretty rare of late. You've had, you know, bridge and convertible notes. You've had recapitalizations. Those are often kind of a shadow economy going on in the background. And those financings are worrisome because they also make it less likely that those companies can eventually be sold. Indeed, Oliver, thanks for joining us today. Appreciate your time. Thanks for having. Oliver Libby. Treasury yields are taking higher as Wall Street digests the impact

of auto tariffs. There's the tenure around 436. What is the 30? Keep an eye on that. And by the way, with the Elista fan. We'll talk about all of it with Rick Santelli right after the break. Welcome back to Power Lunch. A lot of attention on the impact of tariffs on the markets today. Although the Dell is well off its lows and only down 95 points this hour. The S&P, the NASDAQ, are fractionally lower. We also get more key info tomorrow on the consumer and on the inflation side of things. We get the PCE data along with personal income and spending and the latest read on sentiment from the University of Michigan. Let's get out to Rick Santelli for more on today's action in the bond market. And Rick, more and more.

focus on the long end and what all the machinations on Capitol Hill might be telling us about where we're going with the deficit. Yeah, I'll tell you what, though, Kelly, if you put everybody in a room and you only had screens for treasury yields, you'd be hard pressed to think that there was anything wild going on. Sure, short maturities like twos, threes and fives have lower yields. Sevens, tens, 20s, 30s have higher yields, curves steepening a bit. But before we get to that, this morning, we had initial jobless claims. And Kelly, one of the big stories continues to be, how much is the labor market slowing? How much weaker is the labor market? Now, remember, in April of 2020, we had 6,137,000 initial claims. So I can't show that, because if I show that,

what will happen is the scaling will blow up. You'll see the straight line up to over six million, and both sides will be flat. So what I did is I chopped eight months out of the middle of COVID. So the first chart you're looking at there is from 2000 to about five months before COVID hit. And what I want you to notice is the very left side is post the tech wreck. Right in the middle is the credit crisis. You see what happens to claims. Now let's go to the next chart. This is five months after COVID hits. Now, do you see anything dire going on there? Basically for the last three years, it's flatlining right above 200,000. Now, we do this every week, But I don't know that anyone could really truly absorb the notion that if you're telling me that the labor market's slowing, where's it showing up here?

And if it isn't, is it an accuracy thing? Are states reporting and miscalculating? But just by going by that, to me, looks like all the issue of the labor market slowly deteriorating and are well overblown. Now, back to the original hypothesis. Look at a two-year and a 10-year from the third week in February. You can see exactly what's going on. The tens are on pace for the highest yield close since the 24th of February. The twos, they're not.

And that's going to continue to be an issue because the flight to safety of a nervous equity market is showing up in short-dated treasury yields. But it's not showing up in a big way. The market seems much more comfortable with uncertainty than many of the people that describe the markets. Brian, back to you. Fascinating and passionate take, as always. Rick Santelli, thank you. All right.

stocks that have outperformed the king in video and where some of those stocks may go from here. Welcome back to Power Lunch. I'm Simam Modi. We want to point your attention to shares of app love in the mobile gaming software company under pressure after Muddy Waters unveiled a new short position in the stock. Muddy Waters detailing what they say is code evidence that app is collecting and structuring user IDs from its key platform partners, which appears to be a major violation. of the platform's terms of service. Therefore, they think the company's app could be deplatformed watching shares down about 12% and it does follow reports from Fuzzy Panda and Culper Research

in late February coming out with their own respective short positions, casting doubt around App Loven's AI-powered Axon advertising software. The company in recent weeks has come out defending the company's business, their growth trajectory. You'll see shares down. About 11% will let you.

you know we hear from the company. Back to you guys. All right. Definitely a trader favorite stock. Yeah, gained 700% last year, Brian. I was going to say, still, it's still up massively, but down today on that muddy waters report, just a name, certainly to watch. All right, Seema, thank you very much. Folks, did you know that more than 200 companies in the S&P 500 have made you more money than Invidia the last six months? With all the attention on Invidia, that fact does not get much attention, but it should. because there have been better money makers for your hard-earned cash. Let's talk about three of them.

G-squared, private wealth, CIO, Victoria Green, also a CBC contributor. Victoria, I know it's amazing to think about, but true. One of those names, by the way, Walmart, doing better than Nvidia. Big name, obviously. What's your take on WMT? I love this stock, and it's already taken a little bit of a beating on the consumer slowdown and tariffs and everything pulled back from the 105 to this 85 level. But I see this consolidating here and pushing back up.

I see this stock back at 100 easily. And if anybody is going to weather tariffs, it's going to be Walmart. Their supply chains are massive and they have so much scale. They're going to be able to adapt. And the consumers are going to look for value and they're going to go to Walmart. They're already picking up more and more of the upper income share. And so I look at the stock and I say it's a great place to hide out, already kind of taking its flicks, you know, come down in valuation from its highs.

So I think it's a great place to kind of hide out and have a little bit of quality in your portfolio. So Walmart's outperformed. So has Altria. That's another one where you've seen, you know, would have done better the past run. They have some positives in it, smokeless and ESIGBs. You would buy it here now as well. I do. Absolutely. It's got a 70% yield. It's growing out about 4% a year. It's got fantastic. It's PE's like a gopour of like 10%. And so I like this stock. It's pushing in so much more than just cigarettes. But look at its brands. It's Marlboro. It's Copenhagen. It's skull. You've got smokeless tobacco. You've got the flavored tobacco. You've got the pouches. It's so much more. And now it's expanding into energy drinks. It wants to be everything to help stimulate you, calm you, relax you.

And so it's continuing to expand. And this stock to me has a lot more upside. It's a great chart to look at. I think 6570 absolutely in its future. Yeah. And the drinks, I think that's one of the transformative stories, not getting nearly as much attention. The third name, another stock,

and we're focusing on bigger ones that have beaten in video lately. That has been in Netflix. It's been on a tear the last six months. It's got 302 million subscribers now. Truly an amazing run for Netflix, but nearing a thousand bucks a share. It's a $1,500 stock. Hands down, look, ad pricing.

They've done the impossible. They've grown their subscribers for base, they've grown their subscriber base, and they raise prices, and they're getting these new ad tiers, and you look around and say, who's doing it better, and they've got Happy Gilmore coming down the pipeline.

They've got a great content slate. So if you're looking for original content, they've got it. And they're pricing tiers from $7.99 to $20. Even if you're beginning to have to reduce your budget, you're going to keep Netflix in there because they're so good at pricing. Ads are underappreciated for revenue drive. They're absolutely taking all of the market share from linear TV. And to me, hands down, winning the streaming war. And I want to own this stock for the next five years.

I don't think we've had an Adam Sandler slash Happy Gilmore II stock recommendation on this show ever. Victoria Green. Thank you very much. And folks, remember, you can recap every three-stock lunch. Anytime you want, scan that QR code, which never works. My phone doesn't scan any QR code. I have no idea. Maybe it's dirty.

What is this in iPhone 6? No, it's a 15, 12. It's newish. Should be easy. I have no idea. Anyway, I'm not. I'm old. Go to cbc.com.

Welcome back. Today is opening day for Major League Baseball season. and the big issue facing the league this year, a new media rights deal. Who better than Alex Sherman to talk to us about the CNBC's media and sports reporter? Well, I mean, the last that I heard, there were some, that ESPN had offered some money,

but they know, so where are we? Yeah, that's really the news, the immediate news, the this year news, is that ESPN opted out of its deal. It actually does go through this season, but starting next year, ESPN and Major League Baseball will no longer be partners, barring some sort of late reconciliation, which I hear is probably not in the works. So there will be a new media partner that may very well pay Major League Baseball a lot less money

to broadcast the games in 2026, 27, and 2028. It's at the end of that 2028 season. That is the big tipping point for Major League Baseball, because that's when all of its media rights deals come do, including the local rights. And the big plan for Major League Baseball is to say, sell local rights in a different way to potentially offer a national package of local rights. And maybe you're able to sell that to a streamer like an Apple or an Amazon.

A lot of maybes here. A lot of maybe. Well, we don't know. Maybe the Mets will make the play out. Maybe the Mets will win the World Series. We know the Mets aren't going to win anything. So here's what we know. And Major League Baseball is going to fall into one of these two categories.

What we know is that the NFL and the NBA had enormous rights increases on their most recent deals. 2x, almost 3x in the case of the NBA. They were getting paid. The NBA guys, that deal was a $77 billion deal over 11 years. The NFL's deal was, you know, close to $100 billion over the 10 years or so.

We also know that in Europe, the most marquee sports, soccer, those rights have been flat to down. Yes. So Major League Baseball is going to go in one of two directions here. That's what we don't know. The commissioner certainly hopes that it's

the NBA and the NFL route that Major League Baseball goes. 60-year-old average viewer. 60-year-old average viewer. As you wrote your fine newsletter this morning. Old this of the highest-paid players. Yeah. All right, you got a new show launching this weekend. Congrats.

Thank you. Please tune in 3 o'clock on Saturday. CNBC Sport on the record, a compilation of interviews. The NBA Commissioner Adam Silver will appear in the first episode. Thank you. And thank you for watching Power Lunch. Closing bell starts right now.