Power Lunch - S&P 500 falls slightly as benchmark tries to avoid fifth-straight losing week 3/21/25

Episode Date: March 21, 2025

The S&P 500 is slightly lower, as it tries to avoid its fifth straight week of losses caused by trade policy turmoil, recession fears and a rollover in megacap technology shares. 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.

And welcome to Power Lunch alongside Kelly Evans. I am Brian Sullivan. A lot of show on this Friday ahead. The Mag 7 becoming the lag 7 plus Tesla's all hands meeting was Musk Watch TV. And one's man's loss, another man's bargain. We're going to speak with the CEO of Ali's bargain outlet to really get a feel on the mid-level consumer. And we need that. Let's get a check on the market. It's get a feel for that as well. The Dow trying to turn positive. We are well off the lows when we were down more than 500. You can see we're pretty much around the punchline for all three. Boeing is bringing the Dow back to life. The stock popping on reports that President Trump is reportedly a warrant awarding them at Next Gen fighter contract worth billions. Boeing's up five and a half percent on track for its best week since 2023. Lockheed on the other hand, falling nearly 7 percent as a result. FedEx is also a huge laggard after slashing full year

guidance, citing weakness and uncertainty in the industrial economy. That stock down six and a half percent and Nike down 6% after warning on sales. It's having its best day since October 2nd, down around 17% now since the new CEO took over. And quickly read it higher on a bullish note from Needham, but still set to close out at six straight negative week. It's lost half its value since its record close. Also had the home builders hitting 52-week lows, Lanar, a decline in orders. Lanar and Pulte, Brian, are both around those levels. All right. So we've got obviously a lot to do, but let's start right at the top with technology, because you, You may have made a lot of money in the so-called magnificent seven stocks,

but you probably made the money only if you've owned them for a longer time because they have anything been but magnificent lately. In fact, they've been downright lousy. Don't believe us? Look at this. Invidia, now with its fourth negative week in the last five, it's down 19% from its record close in January and really hasn't made almost any money in about nine months.

Microsoft says, yeah, hold my beer. Microsoft is down eight sessions in a row. The longest losing streak since the financial crisis of 2008. One upside, I guess. Microsoft just off its lows from March 10th, but it's been a really tough run. Google just as bad, down six out of the last seven weeks. Tesla, the worst of the bunch, Tesla higher today, but heading for nine straight down weeks. Get this, Tesla's now lost over 750 billion in market value since the highs of December. Tesla, on some level. back to the same price it was in late 2020. Amazon, also not delivering. Heading for its seventh losing week in a row, met up the only one of the bunch that is higher this year, and one lonely bright spot this week has been Apple. It is the only name so far, got two hours to go,

that is going to end the week positive on track to snap its own, Kelly, three-week losing streak. So check this out. Where does the magnificent seven rank in the S&P 500 so far in 2025. Literally ran an Excel, yes, Excel spreadsheet. And it is 503, bizarrely, stocks in the S&P 500. Meta, the best of the bunch, ranks 201st.

Microsoft and Amazon 384 and 417, Nvidia, only the 431st best stock. Google, Apple, also mid-400s. And Kelly Tesla is 502 out of 5301. 503 in the S&P 500 this year. Only Decker's Outdoors, the maker of Ugg's shoes, has done worse than Tesla this year. Hardly magnificent. So it's as bad as it feels for a lot of these shareholders who were in these former high-flying names. For more on the tech pain and the impact on markets overall, let's bring in Jason Pride,

Chief of Investment Strategy at Glenmead and Stephen DeNiclo, portfolio manager at Federated Hermes. Jason, are you going to look at the Mag 7 and try to pick up some of these names? names here or no? I think we need to calm down a little bit on the, on the Magnificent 7. This has been one of the most concentrated markets that we've actually seen in history, Kelly. It's going to go down on the par of level of concentration of what we saw during 99,000, and back in the roaring 20s, decades and decades ago. That level of magnitude of concentration tells you a lot about the future performance. and the fact that the future performance in the market is likely going to come from the areas that were not the source of that concentration, as opposed to the areas that were the source of the

concentration. All right. And so where does that leave you? That leaves you with actually just one to own the other 493, or I guess if you're counting the way Brian was counting a second ago, 496 stocks in the S&P 500 index. You basically want to own diversification now. This is now, because of the period of concentration, this is now an environment that favors diversification. Own the rest, own small cap, own international, actually own bonds, anything and everything that gets somewhat away from the overconcentrated portion in the market, you're going to do better from that on a go-forward basis.

Fair enough. Even small caps, those are the only ones maybe positive on the week. Stephen, what about you? Look, what makes a stock go up in the long term, right? at its most simplest form, it's somebody wants to buy it from you at a higher price. If everybody already owns the same stocks, and these are the most owned companies in the history of history, then who else is left to buy it? And it turns out, after years of analysis, that consumers and the markets don't like

uncertainty. And right now, we are in our own version of March Madness. On another channel right now, there's a lot of basketball games going on. There's a two-seed that is in a close game against a 50s. teen seed. It's crazy right now. But at a minimum, everybody knows the rules of basketball. Right now, nobody knows the rules of the market. We are in our own March Madness without a rulebook. Paraphs, inflation, White House missives, interest rates, even Jay Powell said nobody is confident in a forecast right now. In that environment, if you're FedEx, Nike, Lanar, all these companies

that reported yesterday, what are you going to go on the conference call and say, I feel great? I have high confidence in my own forecasts? No. And so we are self-creating this slowdown. But at a minimum, if you look at small caps on every metric, they are very undervalued versus their history. And this is kind of how the sausage is made. If you fast forward six to 12 months, we are in a lower interest rate environment. We are in a higher confidence environment. And that's typically when small caps can do better. We're in New Jersey. It's not sausage pork roll. And it's definitely not Taylor Hamm. That's a whole other conversation, Stephen. I agree. I agree. You were talking. about what makes stocks go up. Let's go back to that point. Because with all the losses that

we just said, and we're not grave dancing on these names, they've made people very rich. They've made them a lot of money. But if I'm an investor who's made a lot of money in Microsoft and Amazon and Nvidia and others, I'm looking at it one of two ways. Number one, I've made my money. I'm going to go somewhere else and find it. Or these stocks have come down 19, 20 percent from their highs. They're now bargains because I loved them eight months ago. How do you, Stephen, look at it? Look, I believe that there is better relative value as you go down the market cap space. Historically, innovation has been driven by smaller cap companies because they are more nimble.

They could take an idea and run with it faster. That really hasn't been the case for the last few years. But where does it end, Brian? One trillion, two trillion, three trillion, four trillion. At a certain point, a smaller cap company will be able to grow earnings and their stock price. faster than a two, three trillion dollar company. I have some stocks here. Comfort Systems, F-I-X is the ticker. Does anybody know it? I'm not sure. But this stock in the last 10 years is up 1,700 percent. That is a fantastic move. And still today, there are only a few analysts on Wall Street

that even cover this name. There are only 30 million shares outstanding. This is a behemist in the U.S. that nobody knows that is about to benefit from a tremendous. this buildout of data centers, but you've seen some volatility in even these names where fundamentals are fantastic. I just think you have to go to where the puck is going, where investors are not, where the underperformance has been before this crazy year that we've seen so far. And that is going to be small caps, small caps, small caps, though, Jason, have been, I mean, on some metrics, quote, undervalue to hate that term, because I don't know if things are under over or right valued. But small caps have kind of had this valuation for years.

people keep waiting for small and midcaps to take off. And every time they look like they're going to do something, they come back down to earth. Do you think now is finally the time, Jason, for all these things that are not called Amazon and Nvidia to make more money? I think that's exactly the way investors are thinking about this. I think they've done this with multiple different areas of the marketplace

throughout history. We've had these conversations around international stocks. I remember having this discussion around, Japan for a long time. And then, you know, lately Japan has been one of the producers of earnings growth and actual having valuation appreciate over time, still being undervalued today, but gaining ground with investors. Small cap has been out of failure for a long period of time because it was in the heart of the headwinds. It was actually in the heart of the headwind from higher rates, from higher effective unwind of some of the tax cuts that were put in place

by the TCJA Act. And now we're coming into an environment where it's looking like on a relative basis. There's a number of things that could start turning that change. And we're coming off of a wave where there was a lot of strength behind these names that everybody's so endeared with,

which there's been a reason, but when people get endeared with individual items or individual stocks, they can actually get to an overvaluation point where it is very easy to miss those new, much higher expectations and things that have lower expectations have an easier time. I just wonder, people made a lot of money on the Mag 7. Do they go somewhere else or are they waiting to jump back into the same stocks? We don't know. The market will ultimately tell us and find out.

Jason and Stephen, a great discussion, guys. Have a good weekend. Thank you very much. Clearly, Kelly, we need to stop calling them the Mag 7 because they have not been magnificent. Not at all. The Lag 7, I know. Yeah, or just some, bean. I'm going to roll that out. I'm going to roll up beans. Bonds, Europe, Asia, nuclear. There you go. All right, now let's talk about dirt. Really valuable dirt that will power the future. Today, President Trump, signing executive order aimed at immediately increasing American production of what we would call a critical mineral, elements and metals like uranium, copper, cobalt, and more. Trump invoking the Defense Production Act to expand development on federal lands, it is all part of an attempt to cut our reliance. on China and places they have purchased their way into, like the Democratic Republic of Congo. I recently talked about this very issue with Secretary of the Interior, Doug Bergam. People are bullish on America. They see that there's a renaissance that's occurring in our country. We're bringing back manufacturing. We're going to be back in the mining business.

We're going to be back in the manufacturing business. I mean, the enthusiasm here is palpable. Now, Kelly, that news, not helping investors in the mining stocks. The Newmonts, the Glencore, the Freeport MacMorans, the world. They are down. I will say the United States used to be one of, if not the leading producer of most of these minerals. The last cobalt mine in America actually closed last year, and the biggest lithium mine in the world is just outside of Asheville, North Carolina, and currently sits closed. But this is the problem. I mean, I guess you can stick with gold for the long run.

Maybe you could argue the other precious metals. Any of these other commodities, it's a much harder game. And the miners is a doubly hard game to try to get out on top of it. You're ultimately just digging stuff out and hoping. to make money on the stuff you pull out of the dirt. That's it. Yeah, tough business. Still to come on power lunch, Tesla is being vandalized or traded in. The company holding an all hands-on-deck meeting is the pressure getting to Elon Musk. Details when we come back. Sorry about that. We're giving restaurant recommendations just to the commercial break.

That's right. We were. Shares of Tesla, though, are on a rebound today up about 4% and the biggest gainer in the NASDAQ 100. But this is the stock's nine straight negative week. And of course, It's largely due to the headlines around Musk. In the past 24 hours alone, he urged employees in an all-hand meeting to hang on to the stock despite its plunged. Received backlash over reports. He was scheduled to join a briefing on China War plans, which the president denied, and his foray into politics not sitting well with Tesla owners as new data reveals they are trading in their EVs at record levels. For more here on the brand and its future, we have Tim Higgins, a columnist at the Wall Street Journal,

an author of Powerplay, Tesla, Musk, and the Bet of the Century. He's also a CNBC contributor. And as for the stock side, we're joined by Nancy Tangler, the CEO and CIA of Laffer Tangler investments. And are you a current shareholder, Nancy? Welcome. Yes, thanks, Kelly. We are. We added to it last week. You added to it last week. Okay, so let me have Tim kind of paint the picture a little bit here. Are the problems becoming existential? And I guess the question would be more for Tesla, the company, than Musk himself. Yeah, that's, you know, the value of the company is still dramatically higher than any other automaker out there.

still a lot of people out there who believe in this vision that Musk has created, the vision of the future for the car, the vision of the future of the company being in robotics. That's still a huge gamble. But it seems like the brand is having perhaps its bud light moment among Democrats being turned off by some of his antics. And that's kind of the question is, can he can make the bridge to the future while in the interim really turning some customers off to the idea of buying the. the sheet metal of today.

You know, Musk, Tim, was kind of the hero. I mean, to the left in many ways. I mean, he created the first U.S. car company that was all electric. People bought his cars on mask. We always referred to Tesla's when talking about climate change. We need more, more, more. Suddenly now he's the bad guy. I'm not judging him one way or the other, but you referenced Bud Light.

That moment did end, Tim, right? Do you think that Musk and more importantly, Tesla? can come back from this. Does it need to come back from this? You hit this interesting kind of point at the beginning that the brand was so important to a certain group in society. And it's interesting because really what Musk and Tesla succeeded at in those early days was creating a car, creating a brand that was more than just electric, right?

The idea of the Model S sedan, the really first mainstream vehicle they tried to do, was about being the best car that just happened to be electric. And they carried that through in with the Model 3 and the Model Y, now the world's best selling car, trying to appeal to people who wanted something sexy, wanted something technologically advanced. That it was electric. Yes, was important for some people, but for a lot of buyers was just there. And that is kind of the gamble that Musk makes kind of in the future, that the product that the engineering will will attract people to his car company. Nancy, at the very moment that, you know, you've got, I guess, employees or former shareholders

who are frustrated at how the past couple of years have played out and they're, you know, selling the stock, you're going in on it. Why? Well, Kelly, if you look back historically, the stock since the IPO is up like 15.2,000 percent. But over that, and that's about 41 percent annually, but over that same time period, it's been in a bear market 50% of the time. So this is a CEO and an individual, read his biography, if you haven't followed closely, who courts chaos. And then he just seems to course correct at just the right time.

And so there have been plenty of times when the company's been in much more difficult straits than it is right now. And I think what we're focused on is the megapack electric utility grade battery storage. So this, you know, this allows green energy to continue to throw. it's growing at about 50, 50, 50 percent annually and is expected very shortly to be worth as much as the car business. And then you've got full self-driving. And as Tim points out, the model-wise is the best-selling car in the world.

So I think once we're sort of through this nonsense, I mean, what Musk did, even though the meeting was light on detail, as was the cybercap event I attended, We Robot, he showed up and leadership is about showing up. And I think if investors see him showing up a little bit more frequently, the rest of this will become noise as it often does. Yeah. Tim, is that if this, look, if the stock starts to recover, I guess the story goes away. Right.

Absolutely. And showing up has been the big question, especially as you see him spending so much time in Washington, D.C. Look, Tesla investors know that he's got a lot of things on his plate. They should know, at least. the question is Tesla's at this inflection point. There is some concern about the interim, about the product plan, right? He is talking about robots, lots of robots in the years to come.

But in the interim, it still matters without putting wheels on the street. And there's some concern that the Model Y, even though it's been refreshed, is really kind of relatively old for a lot of people. What do you think he's doing, Tim? He literally wrote a book on Elon Musk. What's his end game here? What does he actually, does he care about Tesla stock? He has to care.

It's a huge part of his wealth. And that wealth he has talked about is important to him because he wants to go to Mars. It's part of his bigger empire of companies. So yes, Tesla is important. It's clear that in the last few years that he has pivoted the idea of Tesla to being a robotics company, whether it's driverless cars, which he thinks has huge potential. He's thought about it for a long time. But also humanoid robots.

that could replace the labor force, that could be your personal servant, that could work in the factories. It's part of a broader vision about the kind of the physical manifestation of what AI, really advanced AI, could mean in the world. So many of these other companies

are working on chats, chat bots and whatnot. He is working on the hard metal part of that problem and kind of laying out his vision for it. The question, however, is his AI ready to do kind of what he is projecting? And that's, I think, the gamble that investors are making. Yeah, and we're going to leave it there, Nancy and Tim. I would say this, not defending Musk at all, but the sad part is that Musk owns a lot of Tesla,

but so do a lot of employees and pension funds. And they're getting hurt, and they had nothing to do with anything that he is doing currently politically. Tim and Nancy, really appreciate it. Thank you very much. All right, still ahead. Eye-popping new numbers on just how much Apple is losing in TV. Welcome back to Power Lodge. A couple of other interesting headlines we're watching today.

Got to start with what's happening at Heathrow. The whole airport closed due to a fire at a nearby substation. It affected more than 1,300 flights. One flight from North Carolina had to turn around almost upon landing and go back to North Carolina. One travel and tourism expert told CNBC that there are very wide implications of the closure, adding that 4,000 tons of cargo moved through the airport every day. This is a major port for that entire region. Officials say it will remain closed until midnight there tonight.

It's the biggest disruption since 2010. The latest we're hearing is still no indication of foul play. Well, now we know how to shut down an airport. I don't know what their backup energy plan was, but it clearly wasn't sufficient. If they have generators, that's great, but where were they? There's a pretty small substation that caught fire. You can knock out one of the world's biggest or the world's biggest and most important airport with a substation fire.

I think now we know the game. Not only that. There are, you know, the subway, the metro system was affected. There are a lot of businesses and homes without power. So this affected not just Heathrow Airport, but a whole swath of London itself. And that's in less London. People fly with their pets? Yeah.

The plane from... Imagine if you were in the sky coming from North Carolina. You're about to land. I don't know quite how close they were. And you're told we could hear the pilot saying, we have to turn around and go home. There's no electricity. He said there's lights at the runway, but there's no electricity in the airport. We have to turn around and go back on.

I would say, number two, one, two things. number, it could be a pirate, we don't know. Number two, how much fuel do we have? Right, right. That would be my next question. All right, we're also watching. This is an unbelievable new report on Apple TV Plus. That is Apple streaming TV service.

The information, which is the paid website, says that Apple TV Plus is losing more than $1 billion per year. Apple spending about $5.4 billion on content annually. It's actually down a little bit from previous years. And also, according to the information. They've got 45 million subscribers, which is a lot, Kelly, but to lose one billion a year, it makes you wonder how much more they're going to raise rates. Yeah, but is it worth it to them?

So, in other words, as this report went out, a lot of people are speaking up and saying they have some of my favorite shows right now. This is one of that one and the other. Slow horses. Exactly. If it's keeping people into the Apple ecosystem, if they see value in it, perhaps losing a billion dollars isn't the end of the world, or maybe it is. We'd have to know more about how it fits into the game plan.

We have severance behind us. There are some great shows. Great shows on Peacock, too, by the way, which is a fantastic service. I would just say at some point, folks, we're going to realize that maybe the cable bundle was not the worst thing in the world. It's ironic, isn't it? Because costs are getting up to the point where you're basically just bundling everything back together. And trying to find what you want to watch as well. Yeah, I know. Not easy. You've got to bring it back. Use your voice. Try to find the shows that you love. Coming up, we'll speak to the CEO of this mystery stock that's up 10% in the past month and bucking industry trends with a rose.

the outlook for the consumer. Your guesses, we're back after this. Welcome back to Power Launch. I'm Pippa Stevens with your CNBC News Update. A court hearing is getting underway right now over the Trump administration's use of the Alien Enemies Act to deport alleged Venezuelan gang members. The judge who temporarily blocked the federal government from invoking the 1798 law will decide whether to extend that ban. He will also way in on whether the government defied his previous order over allegedly deporting some migrants after he issued it. Lyft is entering the increasingly competitive robotaxy market. The ride hailing company said today it will bring self-driving cars to the streets of Atlanta this summer.

The rollout will be in partnership with autonomous vehicle company May Mobility using Toyota-Sienna minibands. And NASA's Parker's solar probe will attempt another close pass of the sun this weekend. The spacecraft made its first record-breaking trip back in December, coming within 3.8 million miles. Saturday's fly-by will happen out of the probe's communication range, so we won't know the approach, how the approach went until Tuesday afternoon. You know, Brian, that still sounds pretty far away to me, but I guess it's all relative. It's hot, though.

I'm told the sun is very warm, and if you get too close, like, you melt. It's just what I'm told. Tip of Stevens, thank you very much. All right, let's get now to the conclusion. consumer and the economy. See if the consumer is still hot. Your next guest is the CEO of discount retailer Ollie's bargain outlet. He's got a really unique read into things like tariffs, the consumer and business. Here we're showing you some of his comments on all three of those topics with the company's earnings call earlier this week. The fact of the matter is this,

while tariffs are a headwind for many retailers and consumers, the uncertainty they create might actually help Ollie's, both with consumers looking for discounted deals, and more businesses having to sell off inventory, which Ollie's will happily buy at the right price. Joining us now exclusively in his first TV interview as CEO is Eric Van der Valk. Eric, well, congrats on the new gig. I hope Harrisburg is treating you well. I was actually at a CFO dinner last night sitting next to a CFO of a major retailer. We talked about the consumer.

How does Ali's read the American shopper right now? Sure. Sure. Thanks, Brian. I have to start by saying I'm a huge fan of the show. You had Stefan, the CEO of Lamborghini on yesterday. And today you have the CEO of Deep Discounter Ollie's on. I mean, that is quite the treasure. Well, you roll up in your Lambo to Ali's in Columbus, Ohio. So it just works out. Maybe the trade-down effect, right? So I think I'm the trade-down guest of the week, so I'll take that as an honor. But in terms of the state of the consumer, the consumer is under pressure. And a consumer under pressure, more consumers living paycheck to paycheck. What we're seeing at our business is that our consumer is much more attracted to the strength of our deals to our discounted product.

But more importantly, they're more attracted to our essentials business or our consumers. suitable businesses, like food, cereal, power drinks, coffee, also laundry detergent, cleaning chemicals. So we're definitely seeing strength in those businesses, which is indication of where the consumer is, and it's also a good traffic driver for us. That said, Eric, a lot of those categories are things that you have to replenish. I'm curious about some of the categories that are a little bit more. were durable, but where you might get inventory from other retailers. There was a huge surge in people ordering stuff preteriors. We've seen that in the GDP numbers and elsewhere. I guess they

either have to sell that or it ends up at Ali's. Yes, it's very good point, Kelly. The more challenged a category is, the more discretionary it is, the more likely we can buy it in the close-out market. Excess inventory is created by cancel orders, by less demand, and we have access to it, and we could buy it at great prices and then pass along those great prices to our consumer. And we can make what would be a discretionary product much more appealing and much more budget-friendly to a consumer that's constrained. Can you give some examples of the kinds of inventory you might be taking now, what you might expect for the rest of the year? Or have you ever been in it? I mean, again, I know you're just taking over a CEO, but has Ali's ever been in a position like this before?

Allies has been in a position like this, you would say, on a pretty consistent basis for the 42 years we've been a business, because this is our business, this is our only business, this is what we do. We're very good at it. As we continue to grow, we have more buying power and we're more a destination for this product. So, you know, we're really getting better and better at buying closed outs and excess inventory. In this moment, in the closeout business, it can kind of be anything random and anything. given day. So I'm going to put out there that we did do a very significant deal in skateboards that's coming soon. So that's relatively discretionary, you would think, right?

We did a deal in camping here not too long ago that was fairly significant. So camping was very relevant through the pandemic until it wasn't. And there was a lot of access inventory out there in camping gear. We were able to buy it in a moment where it's not so relevant to consumer at a price to pass along amazing savings to the customers. Guess what? At the right price, it's relevant and customers are interested. Well, there is a major, you know, kick flipping a skateboard is called an Ali. So there is that. You've also the big lots bankruptcy, which you don't root for the demise of anybody, but I think that was, my guess is that was a huge benefit to Ali's because the competitor in buying up merchandise is now out of the way. Talk about that.

And do you see the consumer at all slowing down? Sure. Yeah, Big Lots. We want everybody to be successful. We just want to be a little bit more successful. But in the case of Big Lots, you said it right. They were a purchaser, at least some close-out merchandise. It's also a very large share wallet within Ali's customers. So the customer is very, very similar. The geographic overlap is very high. The category overlap is very high. So there are a lot of abandoned customers out there from Big Lots for some other retailers that have gone. out of business over the past year that we are going to, you know, go after and we're going to track them to the brand. There's also abandoned real estate. There's abandoned inventories we talked about, but related to store closures that we could pick up on the closeout market. So it really is, everything's kind of lining up really well to accelerate our growth. And we found that no matter where we open stores, no matter what state we open stores in, that it's just a very relevant business model and it resonates with the consumer. And we like to say that savings never, savings never go

out of style and that people love bargains no matter where they are. We were just showing a comparison between Ali's and Five below, in part because Five was in the headlines yesterday. They actually, the stock was doing decently after their results, but a lot of questions remain about the impact of tariffs there and where the product is source and so forth. I mean, can you kind of say that you're insulated from tariffs then in that sense, Eric? I would say to an extent. We have concerns about what this may mean to the consumer long-term, maybe back half of the year. I think the moment-to-moment change in policies made it very difficult for retailers and for suppliers, for vendors and manufacturers to plan their businesses

properly. So the way we look at it, we mostly purchased goods domestically. The way we look at tariff impact is more of an opportunity because as retailers and suppliers figure out where they need to be, and this is like considering whether retail prices, there'll be some inflation and some adjustments that go on. A lot of times they'll adjust order quantities, and that makes excess inventory available. We saw this back at 18 and 19 when tariffs were moving up and excess inventory was created. We think we have a pretty good chance back after the year to be able to buy this excess inventory, close out inventory, and provide tremendous value to our consumers. So then net net, it's a benefit or it's a break-even for the company.

Eric, Van der Valk of Ali's bargain outlet. Eric, we really appreciate your time. And thank you for the nice comments about the show, by the way. Monday, who knows what we'll talk about? Flying cars, pork roll, you never know. I love it, Brian. Thank you. Thanks, Kelly.

Take care. Appreciate it. Treasury yields ticking a little higher today as uncertainty remains. We'll dive into the bond market more fully with Rick Santelli right after this. Welcome back, the 10-year ticking a little higher today as uncertainty around the economy and inflation and tariffs remains. The NASDAQ is now positive. Let's head out to Rick Santelli for more on the bond market. Rick? Hi, Kelly, indeed.

I know that everybody, of course, likes to dig in uncertainty. That's why it's such a big deal in the markets. But even though there's so much talk about the unknown, the markets seem to be getting more and more comfortable with it. As Kelly, you just pointed out, green in the NASDAQ, the numbers for many of the equity markets have improved with regard to trying to digest uncertainty and the unknown. And to some extent, uncertainty's always been in the markets. It's just that we have so many things that are uncertain that historically haven't been in that column very often. Now, if we look at what's going on today on a 24-hour basis, let's put twos and tens together because it really is a

spread going on here. You see that two-year yields as they sit at 3.95, roughly now is down two on the session, down seven on the week. But you could see there that 10-year yields have moved a bit higher. So even though they're down six basis points on the week, if you look at tens along with sevens, 20s and 30s, they're all a bit higher on the session now. They've reversed a bit. And that really goes a long way. If you look at the spread, you can really see it. Now, here's three days, starting on Fed Day of the 210 spread. You see the activity on the far left. That was the volatility of Chairman Powell.

But all in all, the steepening really augurs against that the diminishing of the roll-off on the balance sheet is the main driving force here. I can't imagine that would be a steepening event. Now, if you look at the dollar index, it also pushed back on the Fed in a way. There's a week, week today the dollar index. And it's been crawling higher. As a matter of fact, it's higher on the session. It's higher on the week. So we want to pay very close attention to that.

Between the dollar index and the tenure, you can get a pretty good idea what the driving force in the market is. And next week, we have the Fed's inflation indicators. And I really do not believe that the Fed is not worried about inflation anymore. I think it might take a back seat sometimes, but I think of the grand scheme of things, it's always something they need to protect. Because once they let go of that inflation worry bead, things can get out of control. Brian, back to you and have a good week. You too, Rick. Thank you very much. All right, FedEx, Cleveland Cliffs, Nike, all those stocks. You may own them down today on concerns over things like the tariffs, the economy, and the consumer. Do any of

these names present you with a buying opportunity? FedEx, Cleveland Cliffs, and Nike. We'll talk about it. Coming up. Welcome back. Let's do some three stock lunch, shall we? We're going to hit three different names today that are firmly in the red, but ask our trader what investors should do with them. Are they a buy? them. James Demert is here to answer this. He's the CIO at Main Street Research, rocking the double goatee and hairdo today. James, it's great to have you. Okay, let's start with FedEx, a really rough session for the stock, down about 6.5% after the company slashed its full year guidance. They're talking about uncertainty, weakness in the U.S. industrial economy. Is this a chance to pick it up?

Hi, Kelly. I don't think it is. We still think it's a sell, gosh, through time in a road that they've cut profit outlook. and reported revenue and earnings that missed expectations, even at 14 times earnings, I don't think this is a healthy choice for lunch. And if I were to sort of say, I want to stay in the industrial space, I would buy Hitachi,

more diversified, certainly a Japanese name, lots of great reasons to have a Hitachi for lunch as opposed to a FedEx. Just terrible numbers, even down 30%. I just don't think it's a buy. It's amazing to watch what's happened with FedEx and UPS and Hitachi, there it is, up almost 30% in the year.

All right. Next up is another industrial name, Cleveland Cliffs. It is a steel producer. It is lower after the Minneapolis Star Tribune, you go Star Trip, reported that Cleveland Cliffs would temporarily idle two factories because automakers have cut their orders all amid tariff uncertainty. What's your take on CLF? Yeah, Brian, Cleveland Cliffs has been another disastrous stock.

And, you know, declining sales, a recent, miss on top and bottom when they reported last month. Even at 13 times earnings, we'd be a seller. The stock's down 57% from its high, a healthier choice for lunch. If I want to stay in that space, and I think it's a good space, that material space is Linde. Go over to Europe. It's a UK-based. They used to own Praxair. You may recall Praxair. They make all kinds of gases, nitrogen, stuff that we need to weld. We think there's a lot of story in that with the potential reconstruction of Ukraine. So again, UK-based Linde would be an alternative. That's where we'd go, but not Cleveland Cliffs. All right. So we're 0 for two. That brings us to Nike. Different space entirely.

The athletic apparel maker, down 5 percent, had that awful, well, someone say awful earnings report. It warned that sales will fall in the current quarter. Are you buying Nike on this turnaround and on this additional dip? Yeah, Kelly, interesting, right? 9% decline in revenue on those numbers across all areas. So it's not just a China. problem anymore. We would be a seller. I hate to say it. A stock's down 61% from its high. And again, you know, it's this a large company. It's hard to turn. And they've got this modern competition from companies like Hoka. We'd be a seller. And again, a healthier choice for lunch. I'd go to booking. Again, I'd go overseas, booking based in Amsterdam. They have a moat around

that business. No pun intended with the Amsterdam water connection there. But, you know, that business has got very high profit margins. Booking is what I would do as opposed to Nike here. Is it just a coincidence? You're looking abroad for opportunities here? Any kind of comment on the market more broadly? Look, we've had this sell-off. We've had a few different guests coming on, Andrew Slimman, Tom Lee, saying they think that we've put in a bottom. What do you think? Well, you know, we think we have put in a bottom in the U.S. market, but we think the valuations in Europe are just too appealing to ignore. And we've always been a global manager. So if you look at PE ratios relative to growth overseas, they're a lot more appealing. So we have a lot of U.S.

positioning. We think this market has bought them. We agree with Tom and some of the other more optimistic views. But we also see a lot of opportunities in Europe over, not just over the next year. We think there's a new cycle outside the U.S. and we want to make sure our clients are taking advantage of it. All right. James, appreciate it today. Always good to see it. James Demert, Main Street Research. Could be the E and Bean. The new investing acronym. That was Europe, right?

Yes. Bonds, Europe, Asia, nuclear. I just made it up. Bonds, Asia, and nuclear. I put zero thought into it. Remember, you can recap every free stock lunch any time you want. Scan that QR code now or head over to CNBC.com, which is on the internet. We're back right after this.

Really a mixed trade on the markets today and kind of this week. If we look at it right now, you look at the markets, Dow's. down a touch, NASDAX up a touch, doesn't tell the story at the top of the show, Kelly. We walk through what we used to call or still kind of call the Magnificent Seven, and there woes, they've made people a lot of money. A lot of you have hopefully gotten very rich off these names. But we're going to recap what we showed at the top of the show if you missed it, which is that the best performer of these names, which is meta, is I think 238th out of 503 stocks,

201st. This is a great, great staff. Yeah, I ran a sprint. spreadsheet today with these numbers. Microsoft is only the 384th best performing stock this year, Amazon 417, and Tesla is the 502nd. There's 503 stocks. Google has two shares and there's a couple others. 502 second, whatever you want to call it. 500 second best performing stock in the S&P 500. Yeah, so we're hearing the drumbeat pick up. By the way, for a week-to-date stats, I don't know if we have this one ready, but the Russell is in the green. We'll see how we close today. We're up about

half a percent since Monday. That breaks a four week losing stretch. And obviously this rotation that everyone's been asking, if you go out of the Mag 7, where do you go? Small caps have typically been a place that people refer to. You can see it there. Week to date, we're even seeing some positive numbers now for the S&P and the Dow. The S&P is trying to avoid it being a fifth straight down week. So the way that we close today is going to matter. And it's going to maybe tell you something about whether that rotation is underway. Yeah, we talked about Europe. As I wrote back in late 2003 about Europe. Europe is a dumpster

fire. We know that the economies are struggling, not all of it, but some of the mainstream, Germany in particular, energy costs, very high, de-industrialization. But that is one reason why rates there are about half what they are here, and this monster stimulus program that Germany just announced, which is

about $2 to $3 trillion in U.S. dollars. Germany rearming? Not sure that's the best market peg, but does tend to be good for equities. I hate saying that. By the way, Boeing is one reason helping the Dow will get back of a lift today, if that made sense. I'm hosting Fast Money 5 p.m., so I'll see our viewers in a couple hours. You'll know all about how we close.

Thanks for watching, Power Lunch, everybody.