Power Lunch - S&P 500 hits new record as Trump announces Vietnam trade deal 7/2/25

Episode Date: July 2, 2025

The S&P 500 rose on Wednesday, after President Trump announced a U.S.-Vietnam trade deal. However, investor optimism was limited due to a new report showing private payrolls surprisingly decreased in June, raising concern over the state of the economy. We’ll tell you all you need to know. 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 on this, I think it's a Wednesday. It's a Wednesday afternoon, Kelly. That's Kelly Evans. Yeah. I'm Dominic Chu. President Trump's big budget bill is now approaching a key procedural vote in the House as lawmakers are racing against the clock towards advancing this sweeping bill that could reshape government funding and spending priorities for the entire year and arguably years ahead. Yes, it's a critical step towards getting the bill on the president's desk by the July 4th deadline. Let's start right there today. Emily Wilkins is on. Capitol Hill with all the very latest, Emily. What can you tell us? What have we learned so far? Hey, Kelly. Well, things are not looking great at this exact moment. So basically what the House is doing right now is they are doing a vote. This is a three vote series that will ultimately tee up the process that will be needed to then actually pass the Trump megabell. So it's the vote before the vote. And what we're seeing right now is that there is a delay on the House floor at At this point, 16 Republicans have not yet registered to vote. They would need to do so to move forward with this process.

But our understanding is that a lot of these Republicans, they are the fiscal hawks who have again and again said they have an issue and concern with this bill, with the amount of spending. Congressional Budget Office scored this bill just last night, updated number, as adding $3.4 trillion to the deficit over the next 10 years. And in addition to that, there are a number of other members who have concerns about the Medicaid cuts here and what that could mean for their constituents, particularly in some of the rural areas and in some of the more centrist districts. So obviously a lot of arm twisting that's been going on today. Many lawmakers that went to the White House talking with Trump, talking with Speaker Mike Johnson.

It's a very active wit process right now. But at this moment, there does seem to be a holdup. And what we heard from the Freedom Caucus chairman, Andy Harris, is that what they really want to do is make some changes to the bill, send it back to the Senate. Yes, that would mean that they don't hit that. 4th deadline, but to be honest, that was an arbitrary deadline anyway. Lawmakers really have until the end of the month to get this stuff solved. And what we're hearing from House members is that they want more time. Guys? I think that with that in mind, we just wait to see how much more time they could possibly take, right? I mean, that's going to be it, Kelly. And the fact of the matter is that really, and now we're down to 15.

So they do seem to making some progress here in getting some of these Republicans on board. But basically, this is the moment that, that if you have concerns about this bill and you just have a small group of Republicans, they can only lose three, you can really dig in your heels here and make the case to get the things you want. But then again, if any text changes from what the Senate passed,

it means the bill has to go back to the Senate, could potentially change there, go back to the House, and this is what leaders wanted to avoid. They wanted to avoid this ping pong back and forth, but with such narrow margins, if members really decide that they want to make a stand here, they could absolutely force leadership's hand and require more revisions on this bill.

All right, for now, Emily, thanks. Emily Wilkins. We appreciate it very much. Market, again, still kind of in a holding pattern as it tries to figure this one out. The other big story in Washington today, the president announcing we've struck a trade deal with Vietnam that includes a 20% tariff on their imports to the U.S.

And comes a week before that 90-day pause on many of his reciprocal tariffs is set to expire. Amon Javers is at the White House with all the latest. This is probably the biggest news of the day, Amon. Yeah, Kelly. It came by surprise here.

We weren't tracking this one for today. Here are the details as we have them from the president's post earlier today on social media. The U.S. is going to impose a 20% tariff on goods from Vietnam. Now, that's up sharply from an average of 9.4% back in 2023, but it's down from the 46% figure that the president announced and then delayed earlier this year. And the U.S. is going to impose a 40% tariff on transshipments. That's designed to get at companies that are avoiding Chinese tariffs by routing goods through Vietnam. In return, Vietnam is going to put a 0% tariff in place on American imports into that country. Now, the U.S. imports an enormous amount from Vietnam, $39.7 billion worth last year

compared with just $3.2 billion in U.S. exports to that country. Now, no confirmation of any of these details from the government of Vietnam so far, and no joint statement yet from the two countries either. So one other key point here that's not clear, Kelly, is that $20,000? percent figure on top of the existing tariffs or does it replace them? That could be a huge difference for American importers, but the White House does not have an answer to our question to them on that point just yet. Now, I'm told there may be another agreement in the wings, possibly coming before the 4th of July weekend, but it's unclear whether that's going to

happen. We'll keep our eyes out for it. The White House has said it plans on a wave of trade deals before the president's self-imposed July 9th deadline next week, so we'll keep our eyes out for those as well, Kelly. Back over to you. All right. And Amin, again, with Japan, it sounds like that one had originally been a deal that might be among the first to be announced and has now turned much more contentious. I don't know if you're hearing any movement on that front. No movement there. We've seen the back and forth statements and some frustration, but we have not seen, you know, that one settle into place yet. And what I was told was, you know, you might see a possible deal today, tomorrow ahead of the weekend, but it's still not across the first.

finish line, so don't count on anything between now and the 4th of July. All right. Amen, appreciate it. Amen, Jabbers at the White House. Let's continue our discussion on tariffs and trade. The president announcing that deal with Vietnam on truth social this morning, and it's only the second country to strike an agreement with the U.S. There's just a week left until that 90-day pause on the tariffs is set to expire.

Joining us now for more on this deal and on progress with negotiations with other countries. Joining just a moment, I should say, Deputy Treasury Secretary, Domwood, Ask him about Vietnam, Japan, maybe if there's anything else in the West. EU. That's the other big one, right? I mean, if we talk about the construct that we have for trade, you talk about the biggest trading partners out there. China is, of course, the biggest one. But if you talk about a little bit of the idea that you have Japan in the wings, you have this deal supposedly with Vietnam, and then Europe is still the big factor as well.

The European trade situation is our biggest trading partner with China. Those two parties are the ones that we have to watch out the most for. And those are where the biggest questions are, right? And where those non-tariff barriers could be that are holding up any kind of a deal. I'd be curious if we can get a quick check of the market action. I mean, we have the S&P, which hit another all-time high today, in part on these headlines, part on kind of rate cut expectations. Dow still down about 62 points. So kind of hovering there around the levels we've seen for the past few hours.

As mentioned, Deputy Treasury Secretary joins us now from the White House, Michael Falkender. It's a pleasure to have you here. Welcome. Great to be with you this afternoon. So with Vietnam, can you tell us about 20? percent now the new level or is it 20 on top of the existing rates? So it brings us to kind of 30-ish and change. So yeah, thanks for having me. We're still putting together the press release that we're going to, the U.S. Trade Representative is going to be putting out that provides all of those details. But what I can say is this is a huge win for the American people, for the American farmer.

The fact that we have opened up the Vietnamese market in ways that we never have before and that we are providing the incentives that manufacturing takes place here in the United States, rather than taking place in China or routing through Vietnam from China. This is a huge win for American industrial base, and it's going to be on top of the wind we're going to have on the one big, beautiful bill that's on the verge of passing the house. Do you know when we might get that statement? Is that kind of an end of the trading day, end of Friday and the weekend, Monday?

We are looking to have that out imminently, probably at the end of the trading day. Okay, excellent. So that would give us kind of that granularity in terms of what export rates are. And again, as mentioned, Vietnam, our exports now would face no tariff. What about with Japan, Deputy Treasury Secretary, what can you tell us on that front? Do you expect there to be some more movement on their end to bring us closer to a deal before that deadline? Yeah, we continue to have conversations with a number of countries. We have already said that a number of other negotiations that are going on, we anticipate making announcements prior to the July 9th time period.

And so those continue to happen between Treasury, Commerce, and, the U.S. trade representatives. Japan is among those that we have had a number of conversations. We continue to make good progress with them and hope to have an announcement shortly on the progress that we have made. Deputy Secretary, it's Dom. This is an entirely new kind of way or paradigm of approaching global trade from the U.S.'s perspective, not multi-lat deals. These are bi-latt deals cut with individual parties. I wonder how much you can look at whatever you're going to announce in terms of a deal with Vietnam, how much of the deal that we are about to hear about is framework-esque or indicative of a template that can be used with other trade deals?

Or is each one so nuanced and specific that it has to cover entirely different things? I think of rice in Japan. I think of cars in Japan, but I think of something completely different when it comes to the EU. I think what you're seeing is that it depends on the negotiations that take place and the willingness of these countries to put things that here to four had been off the table. So in many cases, the issue isn't so much the tariff level itself that these countries are providing negotiations over. It's the non-tariff barriers. And so the fact that we are seeing an opening up of markets and a willingness to address

markets that previously the U.S. manufacturers and U.S. farmers were not able to sell into, that's what's really driving our willingness to then offset that. based upon the tariff rate. Because as you know, we have hugely open markets here in the United States, but if those are not, if we are not seeing reciprocity with these other countries, then the place for us to negotiate on that is the tariff. But if they will bring these non-tariff barriers down, that changes the calculus for us on where our tariff barrier ends up.

So is there a trade deal with China? And what can you tell us about their exports of rare earth magnets, which appeared to still remain at low levels last month? Right. So there continue to be negotiations between the Treasury Secretary, the Commerce Secretary, and USTR to put more details into the framework that was reached in the combination of the conversations in Geneva and in the UK. So that work continues when it comes to magnets.

We're again seeing that some progress has been made, but we are calling upon China to accelerate access to those rare earths and magnets as they agreed upon in those negotiations. Now, when it comes to time frame, we've been talking very much about this span before this 90 days kind of expires. Can we expect other extensions? Is it your intention to keep extending these if deals do not get done? I wonder what the look ahead to the second half of this year is as we enter the initial stages of this 2H in 2025. So I would expect that we have a number of deals that are announced next week. And then after that, I would think what the discussions that we have been having with the White House is that there will be some level of tariffs that are imposed if countries have not come back to us with trade deals that facilitate us moving along with the negotiations.

And so we're very appreciative of those countries that have brought forward deals to us or recommendations and proposals. but for those for which negotiations have not really gone forward, I would anticipate next week an announcement of what their tariff rate would be. And can you comment on the level of interest rates? I think the Treasury Secretary made a comment yesterday about how we've used them as kind of one standard deviation too high. All the while today we see a little bit more upward moves on the tens than the 30s. I don't know if you pay attention to what's going on in the UK, but they're really spiking on the long end over there.

Is that in response to the budget bill? And what would you say to investors about all of that? You know, if anything, if I look at what the tenure and the 30-year yield have done so far this year, it's a reflection of the fact that as we implement the administration's economic program, again, dealing with these historic trade imbalances, addressing the deregulatory agenda that we have, and most importantly, the fact that we're about to get this one big, beautiful bill to the president's desk and provide certainty on so many of these dimensions to the American people,

I think you have seen Treasury yields come down this year, and we continue to see strong reactions to the auctions that we are doing. The Treasury markets continue to function very well, and we would like to see rates continue to come down, and as we further demonstrate fiscal discipline, I think you'll continue to see an improvement in the interest rate environment here in the United States. And just so I make sure I heard you, right, did I hear you say there are several trade announcements to come in the days ahead?

We're anticipating continuing to make announcements all the way up until the July 9th timeframe. Can you give us a like first initial of the country kind of thing? One of the lessons that I learned very on in this job is that I don't get ahead of my boss or the president. And so until the deal has announced, we're just going to say that we have got a number in the works and we're very proud of the progress we have been making. All right. We will, we will all now parse what a number might mean. Seriously, we appreciate you joining us this afternoon. It's a pleasure. Thanks for having me. Deputy Treasury Secretary Michael Falkender. What do you think, Dom?

What letter of the country? Go through one by one. Or block of countries, maybe. Could it be India? Could it be the EU? Could it be, yeah. We'll talk more about this. We'll get the latest on the budget bill with Representative Mike Lawler coming up here on Power Lunch in just a moment. Stay with us.

Back in two. Welcome back to Power Lunch. As Kelly alluded to, Treasury yields are rising as investors digest weaker data for the jobs market and weigh the impact of President Trump's tax and spending package working its way through Congress. and now the next key report will be tomorrow's big granddaddy of them all, the big jobs number. Our Rick Santelli has the bond report with all of those factors at play and the big non-barm payrolls tomorrow, Rick. Yes, Dom, what an interesting day. And for a variety of reasons, as you pointed out, big, beautiful bill.

You know, yesterday briefly a tenure traded round 418. You can see how it's jumped today. Interest rates may have their best behind us, terms of low rates, at least with the holiday short and week, and I'll tell you why. Look at a two-year yield and knowing at 815, ADP, small business job loss, starting to make some traders a bit nervous. So look what happened. Deals dropped precipitously.

And you look at the way they move back up. We have not traded above that high established before the ADP number. That's key. Two years reflecting the most information regarding the Fed. Now, let's look at the tenure. The tenure just keeps moving higher. So what's going on here? Look at that 210 spread.

It just bounced back and steepen. And what's going on here is simple. A possible weakening labor market, which is going against what we learned in jolts and several other points like initial jobless claims, that would definitely make a difference to the Fed. It would hasten the Fed's easing campaign. But it might not keep long rates lower because of inflationary expectations and uncertainty in the Fed. future. And finally, Fed Fund futures gravitated towards the upside. When they rally, Dom, that means more easing. But look at the D's contract. Yes, at 815 Eastern, it reflected what the

two-year did. But now it's almost come back to unchanged. And that's the point. In front of the jobs number tomorrow, investors just aren't sure if today's report is giving us a clue about tomorrow or it's just a one-off. Back to you. All right, Rick Santelli with the bond report there. Thank you very much for that. Now our next guest actually coined the phrase bond vigilantes back in the day. He's closely watching yields for sure, also the jobs picture and, of course, the Federal Reserve. Let's bring in the aforementioned pioneer of the bond vigilante term Ed Yardini, the president of Yardini research. Ed, this is an environment where it's surfacing again, that term, bond vigilantes.

But they don't seem to be nearly as effective of vigilanteism as the original. bond vigilantes that helped you coin the phrase. Correct. Correct. Well, you know, they were most active in the 1980s, and then in the 1990s, inflation came down, and the administration back then, the Clinton administration, recognized the power of the bond market, and they actually maintained fiscal discipline. This time around, the concern is, of course, that deficits remain huge, that the outlook is not getting any better, that Trump's bill.

certainly not going to reduce the deficit, then we'll probably increase deficits and the debt. I think that's kind of most of the projections. And even if it's just as neutral, it still means we're on a fiscally irresponsible course. But Trump and his Treasury Secretary have basically put out there that they're considering financing a lot of the debt in the Treasury bill market, and they'll then wait until they can replace Powell was somebody more to their liking, which might be Bessent for all we know. And then the new Fed chair will lower interest rates, and then they'll refinance everything in the long end. So that's kind of the game that's being played right now.

I mean, it's a game. If it is a game, there is one side that's predictably the winner. There's a reason why they say don't fight the Fed. Ed, how much of the current environment right now of this vigilanteism or lack thereof or ineffectiveness of it is because there is, because there is a new operating structure in the markets where the Fed is way more active and has way more firepower than any of the bond vigilantes could ever hope to combat. Sure. Well, I think not only that, but the Treasury is playing the Fed's game, right? They may do yield curve control, which means issuing more in the bill market, less than the long end,

keeping the long end down until they get a Fed chair that's more to their liking. But Rick Santelli had it absolutely right. We had a very similar environment in the late last year where the Fed lowered the Fed funds rate by 100 basis points. And at the time, I said I didn't understand why they were doing it. The economy seemed resilient to me. And it proved to be resilient. And you know what happened?

The bond yield actually went up by 100 basis points. So I think we may be looking at that kind of scenario now, or as Rick suggested, if the Fed were to lower interest rates or if the Treasury were to play this game with issuing more bills, the bond market might be very concerned that we aren't out of the woods when it comes to a tariff-related inflation. And imagine that the Treasury does its thing or the Fed somehow decides to lower interest rates because the employment number is weak tomorrow, put it all together and the bond market might react badly, in which case we'll be talking about the bond vigilante some more. Yeah, I've joked at. I wish that they would trial balloon it and float the idea of a rate cut just to see if the long end goes up or not. And then float the idea of, you know, a hike or a hold and see what happens.

I mean, on some level, the market's there to tell us. It's a great idea. You know? Like, why wait till you do it to do it for real? Do you think that we can guess from the market behavior lately? And this week, a number of different people have said they think it's a positioning or pushing the Fed to cut. Week dollar, falling interest rates. I mean, are those hallmarks of a market that actually thinks rate cuts would be more appropriate here?

Yeah, I think a week dollar certainly suggests that the foreign exchange market is expecting to see interest. interest rates coming down. But you know, this economy has frustrated all these forecasts of multiple rate cuts by the Fed for the past three years. Over the past three years, the market has frequently thought that we were going to get a lot of rate cuts from the Fed once the Fed stopped raising rates. And we didn't because the economy proved resilient. The economy did not have a recession in the face of very tightening, the tightening of monetary policy. So far, it doesn't look like the economy is going to have a recession from tariffs. And now that there might be a little less concern about tariffs and the stock markets

are a record high, the consumer could come back and surprise us once again with the strong economy and any talk of a rate cut just would not make sense and would be, as rick's that would be boost inflationary expectations. Ed, I'm going to go out on a limb here. Based upon the commentary you just gave, it sounds like you're constructive and even bullish on the macro environment for the stock market. If that's the case, what's your prediction for the stock market and what leads us to the next leg higher? Well, I'm using $6,500 by year end. I have to admit, I started out the year with an even more optimistic outlook of $7,000.

But at this point, I'll settle for $6,500. I basically remain bullish during this entire correction, but I have lowered my expectations for your end, but I think we'd all be pretty happy with $6,500 by the end of the year. And that would be based on the economy, may continue to grow and maybe grow faster in the second half of the year, assuming that the tariff issues become increasingly something in the background rather than the foreground. And I think that inflation could perk up a little bit here, but I think we're going to be surprised how well it stays moderate. And I think the bond yields should be around where it is now for four and a half plus minus 25 basis points.

So the world looks pretty good to me right now. I don't see why the Fed needs to lower interest rates. And I don't think they will, not at the July meeting. And then we can all focus on the September meeting. All right. The macro picture seems rosy for Ed Yardetti. Thank you very much. It's always good to see you. We'll see you again soon, sir. Thank you. Up next, check out our mystery chart, which briefly topped the $100 per share milestone. It's having its best week since April. I think it might be the best performing name in the S&P this year. And insiders are buying up shares, the big reveal coming up in Market Navigator. All right, welcome back. The big banks are getting much of the spotlight these days for good reason, deservedly so. But a lot of attention. is also falling on a financial services company, a fintech name, whose stock has been soaring and

breaking records. That mystery chart, the company, is Robin Hood Markets. And my next guest says there are some valid reasons to be bullish on that stock, despite the fact that it hit a record high again today. So joining us now is David Miller, the co-founder and chief investment officer at Catalyst Funds. David, this Robin Hood trade is not under the radar. It's now like, I think it's an $85, $90 billion market cap company, which makes it worth more than many of the most well-known banks on Main Street in America. But why is Robin Hood now a story that has even more upside, in your opinion? Well, so there's several reasons that I'm excited about Robin Hood right now. So in my Catalyst Insider Buying Fund, where we focus on companies that have heavy insider

buying by their top executives, we saw $1.9 million purchase by Christopher Payne, director at Robin Hood. So that's pretty interesting. You look at why the stock's rallying today. I think that's primarily on rumors associated with an index edition. You look at what happened over the past week with some events that they had in Europe and the tokenization of stocks on some of the new markets that they're expanding to globally. They've added UK markets. They're adding Spain.

They probably will be adding Germany. And in some of those countries, they don't have no fee trading in Germany like they have here. So there's a lot of room for continued expansion, huge subscription growth on their gold platform. So a lot of reasons to be excited about Robin Hood right now. This is, it's not been that long. I mean, it has been in some people's mind, but not really that long since it had so many problems, right? With regard to trading issues around meme stocks and everything else, with regard to the branding of Robin Hood and just what it hopes to aspire to be, can it take on the likes of some of the biggest financial firms out there? on the current trajectory that it's on,

and what are the biggest stumbling blocks for it? Absolutely. You look at the past year, the company has grown revenue roughly 60%. They did over 300 million in earnings, on over 900 million in revenue in the last quarter. They're taking on global expansion right now, and it's just becoming clear that it is the potential

for a real super app. They have a combination of fee-free trading, so there's no explicit commissions on their trading. They're offering 3% on credit cards, which is pretty tough to compete with for traditional credit card companies where they're not getting brokerage business with it. And they have that real ability to cross-sell

by becoming a bit like a SOFI as well on the loan side. So I think there's real potential for this to be the biggest super app when it comes to finance five, 10 years from now. All right, David, thank you very much for sharing your thoughts on Robin Hood out there. We appreciate it. We'll see you again soon. Sir Kelly, I'll send things back over to you.

Maybe next time for inclusion in the S&P 500. Before the break, a quick power check on Centine, health insurance, pulling full-year guidance, says health care costs come in way higher than expected, and the shares are down almost 40 percent. More power lunch next. All right, welcome back. What you're seeing, their shares, Microsoft, they're down about one-half of one percent. News came out this morning that they're laying off roughly 9,000 employees.

Now, while that cut is less than 4% of its global workforce, you have to put it in context with the other cuts it's made over the course of the past year, including the 6,000 that was announced back in May. And then when you compare it to the other tech layoffs this year, it is the largest workforce reduction yet. Our Steve Kovac is here to discuss more on just what it means for one of the top three biggest companies in America and maybe the world at this point. And I'll give you even more.

contacts here. So 15,000-ish so far layoffs this year at Microsoft. That's not even their biggest layoff. The biggest layoff was 18,000 back in 2014 or 15 when they basically got rid of the Nokia acquisition and let go all of those employees. So that was kind of a special thing. But it's approaching that level of, and what Microsoft tells us is this isn't targeted at one specific group or one specific type of employee. It's not performance-based. This is mostly targeting or in a large part targeting middle managers, something we've heard so much from the big tech companies over the last couple years, making things more efficient and so forth. One thing not mentioned at least so far is artificial intelligence and the role that plays in there. Now, we've heard something like, you know,

people are going to be asked to use more technology and make themselves more efficient that way. But as far as artificial intelligence, I don't even think it's good enough to replace middle managers yet, but we have heard from Microsoft up to 30% of the code written at Microsoft is being written by artificial intelligence. And as far as some divisions we're hearing that are getting hit, gaming is a big one. There's a lot of chatter going on right now. Some big games or projects have been canceled. Xbox has not exactly been a huge gross story after they made that big Activision acquisition a couple years ago. That's interesting. By the way, it's true. I mean, that's what a lot of AI purists will call AI, right? If you can say that,

AI is writing code. Yes. That is the true kind of curious way of defining artificial intelligence. And I totally, we're hearing this, right? We're hearing that it's harder for these entry-level computer science engineers and so forth to get the jobs because so much of that work now is being done by artificial intelligence. And, you know, it's the more advanced stuff that is where the jobs are. Then, of course, you have what meta is doing and spending just gobs of money on these top AI talent.

Speaking of meta, maybe last year or the year before, it'll... It's all kind of a blurry. The year of efficiency. This is that. I'm sorry, did Microsoft lag in that regard? In other words, did it? No, they had huge layoffs too that year. That's what I thought.

10,000 people in 2023, that same year, Zuckerberg was talking about the year of efficiency. There were all those Amazon layoffs. Apple was the only one that didn't have significant layoffs that we were reporting on stuff. So Microsoft was part of that. Microsoft was part of it. And again, this year. And it's a little bit out on its own. I would say, I mean, are you hearing?

about other mass layoffs at tech companies. No, but here's something that stuck out to me. A couple of days ago, we heard from Mark Beniof, right, the CEO of Salesforce saying, he said something like 30% of the work at Microsoft is being done by artificial intelligence. I'm skeptical of that because if that was true, we would be seeing incredible margin increases, or we'd be hearing about layoffs just like this. Why are you paying people to do nothing then if AI is doing so much of that work? Or revenue would be skyrocketing.

Revenue would be skyrocketing. So maybe AI is helping. 30% of the work or there's some kind of fudgy things going on there. And then we have what Andy Jassia. I was just going to say, we haven't even talked about Andy Jassy. And that was reiterated that. That was a moment. And this is, now we're hearing CEOs say the quiet part out loud. It was kind of taboo a couple years ago to say, AI is going to take jobs. IBM CEO got a little bit of hot water. I remember a couple years ago saying that. And now it's kind of the cool thing to say. Okay. So then how much of this, from your journalistic standpoint and talking to your

source, how much of this can evolve into a so-called kitchen sink? moment. Or if you are a mega-cap technology CEO, you have the cover because some of your peers have already done it in saying that, guess what, be prepared that in the coming three, five, 10 years, a significant portion of our workforce will be replaced by robots and AI. Yeah, and even if it's not true, they at least have that cover, like you said, right? They at least can say AI is coming, you know, we're preparing for it while meantime, we're just kind of costs and trimming the fat after so much hiring during the pandemic. There's still some, you know, offshoots of that happening right now.

So, yeah, it could be an excuse. The robotic thing, though, so far off. I mean, yes, there are, you know, Philibault has been in factories where you have robots building cars and things like that. But when it comes, like, what people are talking about, these humanoid robots, that's, we're so far off from that. I haven't seen anything. But it is interesting. The sentiment I keep hearing out kind of in the tech world, whether it's Seattle or Silicon Valley, California, is this malaise for tech workers. So you look at a company like Microsoft, again, presumably the best of times, look at the market.

I can't look at the price, but all the employees have this angst, this adjita. They're working tons as it is right now. They've been through a huge round of layoffs a few years ago, now a huge round again. And so it's just this odd situation where maybe AI is playing a role, but there's clearly something more broadly going on here with these companies performing well, but a lot of workers in the industry just feeling a little stress. And they're going to continue to spend, too, Microsoft. So Microsoft has still said, you know, this enormous amount of money.

They're spending on CAPX. Their fiscal year just ended a couple days ago at the end of June. They're going to spend $80 billion up through then. We're going to hear what they're going to spend now. They said it's going to grow that CAPEX, but it's not going to grow up the same rate it did in the prior fiscal year. So, yes, they're laying people off, but they're also still spending enormous amounts of cash of these data centers, building them out, buying Nvidia. There's also a report out today from the information saying they're kind of going to take a step back on developing their own AI chips, at least slow down the progress. It's hard. It's hard. Look what AMD.

And expensive. No one else can pull it off. But they're trying to not be. Right, they're trying to not be so reliable on it. Exactly, but they have to. And Microsoft is likely the biggest NVIDIA customer. So, and that's, yeah, it's going to continue. For now, thanks. Appreciate it.

Thanks, guys. I see it back. All right, let's get out to our Pippa Stevens, who's got this CNBC news update. Good afternoon, Pippa. Hey, Dom, Brian Coburger, the suspect and the brutal fatal stabbings of four college students in Idaho in 2022 admitted his guilt today in court as part of a plea deal to avoid the death penalty. Koeberger changed his plea to guilty on four, first-degree murder counts and one count of burglary felony.

He will be sentenced to a fixed life sentence on the four counts of homicide. By taking the plea, Coburger waived his right to appeal. Meanwhile, Sean Diddy Combs' defense team is asking a judge to allow the rat mogul to be released on a $1 million bail to his Miami home after a jury acquitted him on sex trafficking and racketeering charges. The panel found him guilty of less serious prostitution charges, which each carry a maximum 10-year sentence. The bail hearing is set for 5 p.m. Eastern. And to potential headache for Euro-trippers this week as France is asking airlines to reduce flights to airports across the

country on Friday because of a nationwide strike by air traffic controllers. That includes a requested 40% reduction into Paris airports. Dom, even more travel headaches. Just what we need. More travel headaches, Pippa Stevens. Thank you very much for that. Ship stocks could be a big beneficiary if the big, beautiful bill makes it through the Senate and the House. We have more on that when power lunch returns after this break. Welcome back. If the budget bill does make its way through the House, chipmakers could end up with much larger tax credit. Sounds familiar. Aren't we here two years ago? Christina Partsenevillis is here to discuss. And the stocks not getting a huge boost on this.

Because it's not, it hasn't passed yet. It has to go through the House. And that's July 4th, if I remember correctly. So it would go from a 25% tax credit to, a potential 35% tax credit for those companies that are willing to, you know, advance their manufacturing capabilities on U.S. soil. So the obvious ones would be Intel, Micron, Taiwan, semi, names that we've heard about and spoken about. The problem is a lot of these companies will make promises to follow through and hopefully get those tax cuts.

And then you see one to two years from now. There tends to be so many delays. Not to say it, but Micron, there's a big sign in upstate New York where the sign is just still sitting there, right? I know all about it grew up in that region. It's all the talk. daily updates on whether anything's happening or not. Really, the people's entire livelihoods are often at stake from a lot of these projects.

Yeah, which is why there's been some delays because of the environmental impact, specifically in other states. But it's just, here's an opportunity where the Trump has been very vocal against the Chips Act back in 2020. And the, what is it, 30, like the tax cuts, all of the government aid. And then here you go. Here's another opportunity for more tax cuts for these companies who have yet to actually follow through on their problems. Some of them. Well, the other big part about.

this is, I mean, the whole idea is to bring chip manufacturing back to America. Right. So wouldn't you want to do everything you can to get manufacturing back to here? And that's why it's great so far. TSM, I think it was under President Trump's first term where they really announced that they were going to expand manufacturing and Intel with their Ohio plant. And these companies have problems. Samsung.

So it's working to a certain extent. It's just a matter of the timeline finding the workers, the qualified workers, because Because DSMC is an excellent example. They had to fly in Taiwanese workers because Americans were not up to par in terms of how to operate the more advanced lithography equipment from, let's say, ASML. Well, we also got news today, right, on the Intel front, speaking of making stuff and foundry operations and everything else. Can you take us through what exactly is happening with Intel and why it's foundry operations, its manufacturing capabilities are back in focus today? That's because it's a Reuters report saying specifically the most advanced technology that they offer, a manufacturing capability called 18A.

So even if you don't understand any, because chips can get really complicated, think of it as each generation of iPhones. And 18A, they're planning on no longer offering this manufacturing process to external customers at the moment. And some would say,

oh, that's really bad news because here's Intel, you know, the turnaround plan that has yet to be seen and here's another hurdle. However, Liputan, the new CEO, is going to be focusing

on an even more advanced one, which is the 14A. And he believes that that will bring them up to par with the TSM. But you can see the stock's reaction, which is coming off the earlier lows that it was originally down about 5%. Is that the market is just maybe perhaps

investors fed up of the back and forth, the turnaround plan that is taking much longer than anticipated these hurdles and think the Foundry business lost $13 billion last year. If they decide that they're going to no longer allow 18A for external customers, that is a big loss of a write-down. You cut off another market.

Precisely. But it's not the end. You have the bulls I've seen online saying there's 18AP, which is very specific. one that could still be available and 14A could be even greater and really allow them to catch up to TSMC. But it's again, it's a wait-and-see approach. That's interesting that he's going with the moonshot approach here.

Well, he's been cutting costs like crazy too. Yeah. Christina, thanks. Appreciate it. Thank you. Christina Parts Nevelis. Still ahead, a major internet infrastructure player dealing a major blow to AI learning. We'll bring you the details next. CryptoWatch is sponsored by crypto.com. is America's premier crypto platform.

Welcome back. Internet firm Cloudflare will start blocking AI crawlers. Those are crawlers who kind of go to get all the content off of the web, use it to feed their chatbots. It's now going to block them from accessing content without website owner's permission or compensation by default. This is a move that could significantly impact AI developers' ability to train their models. Starting every Tuesday, every new web domain that signs up with Cloudflare will be asked if they want to allow AI. crawlers, effectively giving them the ability to prevent bots from scraping data from their websites. Dom.

This is interesting for sure. And here's the thing. From a, you know, if I'm defending the creators of content point of view, yes, obviously, sound move. But as an AI user myself. And as one who wants the progress of AI to be moving forward, albeit at a regulated pace, I don't know how much of this is going to be a speed bump. I think it can still give me a black bean recipe, you know, without needing the later.

and greatest, but when we're talking about, you know, up-to-date news, the kind of stuff that people will literally start to replace Google and other things with AI. If it can't have that up-to-date, then it is going to affect quality. Here's what I would say as a parting thought. If we are moving at the pace that we are towards the world eventually of agentic AI, right, where we have these kind of agent digital beings representing you and I and they talk to each other and do things on our behalf, I'm actually happy. that there is a precedent or some kind of an initial construct for being able to firewall certain types of things so that you cannot have rampant just access to everything in the AI. Looks positive for publishers, you know, positive for all content creators. We want to make sure that they're going to get compensated, which ultimately could be a great business model if we get to that point, but still a big move, space to watch. All right, well, coming up here, a ripple effect as well, yet another crypto-related company is filing for, guess what? A national bank charter.

And as we head out to break, be sure to follow and download the Power Lunch podcast, catch audio-only versions of the show. Anytime you want it, Power Lunch and audio format. We'll be right back. All right, welcome back to Power Lunch. Before we go, we have more news for you on the crypto front. Ripple has now applied for a national banking license joining the rush of cryptocurrency companies seeking to kind of cross that divide into mainstream finance and banking. You may recall Circle, which had a blockbuster public debut, Also this past week applied for a national bank charter.

Circle issues the second largest stable coin out there, U.S. Dollar Coin, USDC, with a market cap of $62 billion, but Ripple was arguably the pioneer or one of the pioneers of the stable coin concept. So this is a trend now. If you want to transact more in stable coins, you get a bank charter, you can have a little bit more transparent or try, get more transparency into the holdings that back up the stable that you issue. Caitlin Long talked about this last hour a little bit.

So basically, yes, the administration is pro-crypto, but the Federal Reserve is not yet. And that's who has to grant these bank charters. So there's a big hang up there to see if they will allow more banks to be granted these charters, more of these crypto banks, and see if that piece of the stable coin moved. Sure. Between the Fed and the Office of the Comptroller of the currency, you basically have companies now at the forefront of stable coins who are asking for regulation is what it comes down. Because it's all becoming more mainstream.

It's all becoming more infrastructure. So, but it is going to be the Fed to watch on that front to see if they have a big change in philosophy or not. All right. Well, we know the House is still neck deep in their negotiations. Representative Mike Lawlett was supposed to be with us, but he was neck deep in negotiations on the House. So we'll see what happens here. Thanks for watching Power Lunch, guys. Yes, the doubt tried to turn positive.

Closing bell starts right now.