Power Lunch - S&P 500, Nasdaq retreat from records as chip stocks decline 7/22/25

Episode Date: July 22, 2025

The S&P 500 was relatively unchanged on Tuesday, a day after both indexes hit fresh records, as traders weighed the latest earnings reports and new trade developments. 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.

And welcome to Power Lunch on this Tuesday afternoon alongside Kelly Evans. I'm Dominic Chu. In front and center this hour, the markets, earnings, and of course the countdown to the big Fed meeting. U.S. stocks are mixed this afternoon, as you can see, they're pulling back from record highs as investors digest a fresh wave of quarterly earnings results. The S&P 500 and NASDAQ are hovering just below their record highs with the NASDAQ on pace to snap a six-day winning streak. And the focus for investors now turns to the so-called magnificent seven stocks as Alphabet and Tesla get set to report their results. And these are key as they represent some of these stocks that have led the market higher from those April lows that we saw, Kelly. Plus, we're following a big move in the home builders today. Those stocks are surging after a surprise beat with D.R. Horton and Pulte surging on better than expected earnings and some aggressive incentive strategies.

The sector will be closely watching rates as well as the Fed meets next week. And we've seen a little more calmness on that front. But Horton is up 15%. It's taking everybody higher in that entire ecosystem for sure. We're going to start, though, with the markets while stocks sit near their record highs. Our next guest expects a bumpy ride ahead. She did raise her S&P 500 price target to 6,250 from 5730 just last week. But she is striking a more cautious tone here in cites that the second quarter earnings results

have been, quote unquote, her words, fine but not fabulous. So here now to discuss this is Lori Calvesina, the head of U.S. Equity Strategy at RBC Capital Markets here in person, in New Jersey. It's great to have you here, Lori. Thanks for having me. So I know this because we've spoken about this in just about five minutes ago. You've had some sleepless nights because of the earnings reports that you are pouring over. What have you gleaned so far?

It's still early. Yeah, it's still early. But, you know, we tend to read a lot of transcripts on my team. Clients are busy. And so we want to hear what they're hearing. And to be honest, coming into this reporting season, I'd spend a lot of time looking at the off-calendar reporters. And what we knew was that this whole concept that, you know, tariffs aren't going to have an impact just wasn't true. I mean, we had seen some of these smaller companies, you know, sort of really struggle with some of the issues.

And so we were really trying to just sort of prepare for investors for the idea that if you think this is all behind us, we haven't really gotten into it yet. When do you think we will get into it? We've heard some estimates that it's not this quarter, but it could be next quarter, certainly kind of towards the holiday shopping season, and then by the first quarter of next year. You know, it's funny. Our economists put out a report on sort of navigating the tariff framework, and one of the things they pointed out was that different sectors are going to see impacts at different points in time. I would say generally as a house, RBC macro, whether it's me, my economist, my rate strategist,

we've all been anticipating the impacts to really be felt more in the fall than the summer. And if you go back to 2018, the thing that I remember about that first trade war is that we had a lot of optimism in the summer, especially in small cap stocks. We saw them really bit up, positioning went through the roof, and then we got into the fall kind of post-Labor Day conference season, and companies said, you know, this isn't going to be all sunshine and roses, and we're going to have some impacts here. So even if you take that template from 2018, it took a few months for the impacts to really be seen in full. felt and digest it and for companies really to be ready to talk about them. Have you seen anything so far? We haven't had that many companies, but 20% of the S&P will report the results throughout the course of this week. What exactly are the initial tea leaves that you might be seeing that you will look for validation for in the next one to two weeks?

So I would say when I look at the financials, and I think, you know, we got an earful from them last week and I would say everything, you know, in terms of their ability to execute, I came out of the week still feeling really good about that sector. It's a sector we like. But the tone was somewhat guarded. And what I really took away from that was if you go back and look at things like the Duke CFO survey, some of these other C-suite surveys, they haven't inflected positively the same way, say, NFIB has, or the consumer sentiment surveys. And so it did seem like there was just a touch of caution among the corporates that wasn't being reflected in stock prices. So we're really going to be trying to keep an eye on that corporate tone going forward. I would say the other thing, and we saw a company last week in the industrial sector talk about this,

that their customers had all handled tariffs very differently in the second quarter. And so in some cases, you know, they just kind of marched through. They soldiered on. In other cases, they paused activity or demand. And in other cases, they pulled forward demand. And I think this is going to be a very messy quarter, company by company, but really trying to understand those dynamics in different industries. Did we pull forward some of the earnings from, you know, 3Q into 2Q?

That's something we're looking for. And then the last big question is inventories. We know that a lot of inventory has been pulled forward and used as a buffer, and that's why you're not seeing the impacts in inflation in a big way yet. But those are going to run out. Again, we think different companies in different industries probably have different levels of inventory, but we really need clarity from companies on when that runs out. Yeah. And that leaves you on these markets. When you see the open doors and the coals surging and all of that, I mean, how does that tell you?

Well, look, I think that if you think about sort of the meme stock phenomenon, right, if I kind of go back historically, it feels like whenever that's dominating the headlines, it feels like we're kind of hovering around the peak of something. And I've been watching, you know, sort of the EPFR data on institutional flows and retail flows. And we absolutely saw serve on the retail passive side, money coming into the market in May. And then in June, you started to see the institutions chase, but that's slowing down. So it feels to me like underneath the surface, if you look at things like the most, momentum trade. You're starting to see that ease back a bit. It's something our traders have been talking about since July 4th. Really? You're seeing it ease back over the past couple of weeks. Yeah, and if you look at just, I'm not a big factor person, but if you look at different kind of third party gauges of factors,

what you're seeing is that it's kind of softening out. If you just look at like these pure momentum strategies. And we actually did a little study. It's fascinating. If you go back to the beginning of 2014 and just look at daily pricing between some of these factors of momentum trade and S&P, it's like an 85% correlation. But guess what? You tend to get a little bit of a lead that when that momentum factor softens and peaks out, that, you know, anywhere from a few days to a few weeks, the S&P makes a top. And you're seeing that now, though, is what you're saying. And we've been seeing that. My traders have been calling this out since right before the July 4th holiday. Meaning then that all of these kind of, it's almost like they're embers from a dying flame. Yeah. The momentum factor you think has actually been slow.

And we're talking about some of the probably bigger cap type names. Like, I'm thinking like a Palantir or something. Yeah. And I think, you know, there are different strategies for different flavors. of this factor, but it's generally the one I've been focused on is measuring, you know, the stocks that have done best over the past year. And so, you know, kind of if you think about, like, the leaders, right, that kind of just these engines and these stocks that have done great. The AI trade. Right. And they start to slow a little. And they start to fade. That's telling you

there's some fatigue under the surface. And eventually that drags the market down a little bit. So, okay, that's the setup that we're starting to see the initial stages of. And it starts to play out more in earnest after, say, Labor Day weekend, hypothetically. Does that then perhaps provide the pause that refreshes for a fourth quarter rally? You put a target price that's still kind of up there. So it does imply gains ahead, but maybe just not as even as some are anticipating. Yeah, so we came out with 6250, and I'm not going to bore you with all the details. We have five different models, and it's halfway between the median and the average,

and there's a wide range on those models from like 5,500, 5,500 up to 6,500, right? So it's still a market where there's a lot of possibilities in both directions. But if you kind of go down the middle and you look at that $6,250, the other stat I'll give you, Dom, is if you go back and sort of look at prior growth scares since the great financial crisis, when we've had these big drawdowns of 10% or more, and you look at the nine-month recovery, the where we have been recently at the highs is where we should be nine months down the road, not in three, you know, four months time. So we've had this amazingly fast recovery. But, you know, we think things are going to be choppy in both directions. The market move has made sense to us from a sentiment perspective. Clients keep telling me, we don't care about 2025. We just want to look at 2026. We'll see if that's true in a few weeks, if 2025 has more potholes than they expected. But in terms of 2025 fundamentals, we are a bit over our skis. And so that creates the opportunity.

You know, the sentiment is, I don't want to quite say it's frothy, but it's kind of done what it deserves to do. And if we kind of have to fall back to Earth a little bit, maybe 2025's not as good as we thought. And we still have a lot of questions on 2026. That feels like it can open up some air pockets. You know, Kelly, if I, we've had this conversation in the past about the idea that since the great financial crisis, which in and of itself was a V-shaped recovery from the lows, that every subsequent V-shaped recovery has been shallower and quicker, right? And a lot of that may have had to do with the idea that the Fed has now set a precedent for being able to step in relatively quickly and support the markets. I don't want to say Fed put because it's more than that. But how much of this is predicated on the idea that the Fed would step in and cut it?

rates if there were a prolonged 10 to 20 percent drawdown or data that shows the economy going more towards a recession? Look, I think it's definitely part of it. And I do think sort of the Fed calls are a potential source of volatility in both directions, to be honest. You know, at RBC, our rates team had been looking for the first cut in September, and they recently dialed that down to December. And I have ways of sort of, you know, gauging what's priced in the market in terms of cuts.

And we've seen that dialed down a little bit. And we can actually go back and look at that data and see when you're going to people get more optimistic about cuts, that the market tends to go up, small caps tend to go up, small caps tend to outperform. And when you take some of those cuts away, even if there are still some in there, you tend to see the reverse happen. So, you know, we think as the market sort of figuring out that short term and longer term trajectory of the Fed, maybe it cools things a little bit in the short term as people get a little

bit less optimistic about, say, a September cut. But then when they get past that timing and start focusing on, okay, the Fed is still going to cut next year or maybe in December, that can put a floor under things. So I think it matters. But I'll tell you the other thing, Dom, is, you know, I've been in this business. I realized recently it was my 25th anniversary in equity strategy. I don't know about that. Was that silver gold?

I don't know what it is. It's silver. I think it's silver. Silver. I think it's silver. Silver. But I started doing this, you know, right out of college. And so it's been a long time, I guess, is my point.

And I remember the way we did things and how we would look things up and our access to information. Things were so much slower. It took so much more time to pull stuff together. We used to go into PDFs on the Internet, which was still a little clunky and do, you know, control Fs and financial statements to look up international revenue exposure. Now you can download that in an Excel spreadsheet. But I guess my point is information. It is just so much more accessible, so much more digestible, so much faster.

That was accelerated during COVID. So, you know, our ability, right, to look at alternative data sets, which really, you know, got its renaissance or its birth during COVID. We just process things so much faster as a financial community, and I think that's why the moves to the downside are faster and swifter, and those recoveries are as well. Just imagine when AI happens. Oh, I know. Really happens. Like crash, flash crashes. Boom, flash crash in microseconds. It is the silver anniversary.

Okay. We'll get you like an engraved. What would it be a good gift for a stock forecaster's 25th anniversary? I'm not sure. Maybe a little bull and a bear? I don't know. That's right. That would be, that's obvious.

I was going to ask chat GPT, but Lori, thanks so much. Appreciate it today. Lori Calvesina with RBC. We're also watching Treasury yields as the 10-year is moving lower with investors gearing up for the Fed's rate decision next week. 433. Rick Santelli has more on the bond report. And, Rick, their independence is going to be all the chatter between now and then, I imagine. Yeah, you know, I'm sure it's going to be fodder for all the newspapers and all the websites and all the podcasts.

But I personally think that the market's got a huge life of its own outside of the federal. Reserve and I think the independence issues a side show. I think the real issue is Goldilocks, but the story isn't the three bears, it's the three bulls. And outside of today's slight red in the equity markets, everything looks pretty darn good. And with yields moving lower virtually for the entire week, it's pretty unusual to see that the yields are cross-fertilizing stocks at a time where I would suspect the long end should be doing more to the upside, but don't underestimate the short covering going on over the last several sessions. So you see twos and tens there. They keep dropping. Maybe what's most interesting is this isn't local. It really is

global. Look at the boons on top of a chart with our tens. Matter of fact, the boons and blue, they are leading the way down in terms of yield. And if we look at the stay with Europe, look at the euro currency. It's up for the fifth session in a row. It looks to have the highest close all month and they're getting cross-fertilized by putting out paper in euros. Instead of denominating debt issuance and dollars, the reserve currency of the world, there has been a bigger interest of late, and I'm not sure how long it'll last, in euro-denominated debt, that should continue to put a bid in the euro and probably an offer on the dollar index side. Kelly, Dom, back to you. All right. Thanks very much, Rick Santelli with the bond report there.

We've got lots more here to come on the show. But first, No more what-ifs around tariffs. We're seeing the real impact on companies and will highlight those real impacts coming up next, Kelly. Plus further ahead, look who's back. Growing chatter around the SPAC market, this time with the crypto twist. We'll talk about what's driving the hype when Power Lunch comes right back. Welcome back to Power Lunch. Two key home builders are higher today, sharply so on the back of better than expected earnings reports.

But demand concerns still remain. Our own Diana Oleg is out with all the details on just what that driver is behind the huge optimism and shares for both Pulte and D.R. Horton. Right, that's right. Dom, the home construction ETF, ITB is up over 7% on the day, thanks to earnings beats from, as you said, D.R. Horton and Pulte. Horton beat on EPS and revenue for its Q3 and had higher than expected gross margins. It did lower full year guidance on closings and narrowed revenue guidance. The entry-level builder said they expect sales incentives to increase during the fourth quarter, and they noted getting a boost from the brief's dip in mortgage rates in June. Rates, of course, are now higher again, but not as high as they were in May.

Dera Horton is up 15 and a half percent on pace for its best day since April 2020. Now, Pulte also beat on the top and bottom lines for its Q2 with new orders above estimates. The stock is up over 10 percent on the day, but Pulte's CEO said it is still rough going. Feedback from would-beam buyers indicates a variety of concerns ranging from affordability and the inability to sell an existing home to a slowing economy and the fear of potentially losing their job. And Marshall added that it's difficult to solve those concerns just with a lower price or a higher incentive. Now, just one note, today is Property Play Tuesday. The weekly newsletter is out with some great stories on accidental landlordsers.

And if you would believe, body heat in the office. If you haven't already signed up, please do. Go to that QR code. A little behind the scenes. Of course, Diana, you know this here at headquarters in New Jersey. Everyone complains about how cold it is in our newsroom. So maybe the body heat maybe means something. This will help.

This will help. One quick follow up for you here. How important would it be for interest rates to go lower hypothetically? Would it indeed unlock the housing market? And would it do so in a way that doesn't cause extreme amounts of inflation on the whole? prices front. Well, it probably would on the inflation side. Look, if you saw lower interest rates, and we have seen dips in the last couple of years, you do see buyers rushing in because there is so much pent-up demand from would-be buyers sitting on the sidelines who don't want to have a rate

near 7%. It could unlock some more sellers as well and get more inventory on the market. But as you said, because there is so much pent-up demand, you get lower rates, you get more to six and a half percent or closer to six. Everyone rushes in and you know what that does to prices. All right, Don Olik there with the state of play on housing and property play Tuesday. Thank you very much for that. Meanwhile, we've got a market flash year on a regional bank, Cenovis Financial. Kate Rogers has the details. Hi, Dom. That's right.

Take a look at those shares up just under 7%. This is on a Bloomberg headline that says that Sinovus, that regional bank in the southeast, is weighing options right now, including a potential merger. Bloomberg is reporting, citing people familiar, saying that the bank is working with a financial advisor, and recently held merger talks with at least one rival, according to the people who asked to not be identified, because the details are not yet public. Once again, this is a Bloomberg report.

It also says that these deliberations are ongoing about a potential merger. There's no certainty, though, that Cinovis will decide to pursue this transaction. So we will keep an eye on shares and the story and bring you any updates as we get them, guys. Back over to you. We love a little merger talk. Things are heating up out there. Kate, thanks. Meantime, ever since April, we've talked a lot about the possible impact on

companies from tariffs, but now we're starting to see that become reality as we move through earnings season, starting with GM, whose core profits fell 31% as the tariffs added a bit, a little over a billion dollars in costs. Shares of GM are down more than 6% on that today, and it's not just them either. Deutsche Bank out with a new note asking who is fronting the tariff bill, and according to their data, it's Americans, U.S. importers, not foreign exporters, spent a running debate here on the program, eating most of the costs. But that said, while that would seem to put a lot of negative pressure on U.S. companies, it's not all negative. Amazon may actually be benefiting to a degree from tariffs. Another Deutsche

note points out the e-retailer is picking up market share from those Chinese rivals, Xi'an and Timo. Amazon up 9% in a month, Dom, as those have now, their de minimis loophole is gone. Yeah, it's gone. Right. And so the drop shipping outlets now don't have that same advantage. You can't just buy the cheap goods, wait for them to get here. Now it's going to cost more. And by the way, I noticed it on eBay as well because a lot of those sellers actually have a sales presence or a virtual storefront on these marketplace sites. And many of those have closed up shop. Some of those same sellers are no longer there. So it's certainly having an impact. You're such an eBay guy. I know, but here's the thing. You're the only eBay guy I know.

I still like eBay. You know what it is? I'm a former trader. And we always like to look for levels, right? So you check Amazon, you check eBay, you check all these places, you get a market level. Then you kind of like... Every time we talk about this, I think I need to go back and check it out more. There you go. All right. Up next, the Buffett Buffer. Berkshire Hathaway is underperforming the markets following Warren Buffett's plan to exit that role.

We're going to dive deeper into that story for the market navigator coming up next. All right. Welcome back to Power Lunch. We're going to give you a quick check on the markets right now, which are fairly mixed, but mutedly so. The S&P is just about flat 6305. The down dust rolls up one quarter. of 1% to 44,400 change in the NASDAQ composite down one half of 1% to 20,890.

Now, Berkshire Hathaway shares have been underperforming the S&P since Warren Buffett announced his plans to exit his role of the company. Now, if the company's B shares and July in the red, that would be their longest streak of monthly losses in three years. And Buffett himself has even tempered expectations for the stock going forward because of the share. sheer amount of cash that Berkshire is actually working with, having to toil around. But our next guest says his view on the stock is very simple. Just buy it. And he's here to tell us why. Joining us now is Carter Braxton, Worth, founder and CEO of Worth charting. Carter, this is a pattern thing that's developing among the charts for Berkshire Hathaway's shares that you feel good

about. Why do you feel so good about Berkshire's shares right now? Well, a lot of things going on, but great to see you, Dom. The first thing is, of course, this weakness, the current sell-off, the non-participation in the market rally is not unique to Berkshire. Insurance stocks in general are under pressure, progressive, AIG, Chubb, Affleck. And so if you'd look at the S&P 500 insurance group, just a fraction off the April low where the market's up 30%. But this chart on the screen really tells a tale, and it speaks to Warren Buffett. it's timing. This is a ratio chart. Berkshire's relative performance to the S&P. And of course, his all-time high in performance was on the low in 2009 because his stock was going down less

than everyone else. And you see that antitiveness in the financial crisis spike. It took 25 years to get back to that level on a relative basis. And he literally announced his own pending retirement at the end of this year in May of this year. And that was a new all-time high for relative performance. But let's look at something more immediate to hear a now chart of Berkshire. And so if we were simply to look at Berkshire's ascent over the past three years, you have had, count them actually, nine distinct selloffs of 8 to 15%. The average is about 11.5. The current selloff is 13, and we think it's just a normal dip, correction, drawdown, sell-off, drop, decline, whatever nomenclature one prefers. It's a countertrend and an ongoing uptrend. And the third chart might

depict that very well-defined uptrend. That's the same chart just with well-defined lines, mathematically parallel lines. We're at the bottom of this well-defined channel. The channel begins from the bare market low of 2022. At that point, of course, the S&P was down 27%. The NASDAQ was down 37. and Berkshire stock down as well. But this is what Garp looks like to my eye, buy into the weakness, my thinking. All right. So we're seeing the chart that we're on the screen right now, and it shows just kind of the bottom part of that channel. So as we talk about whether or not you put this trade on, you obviously have maybe a fairly tight stop on this trade in order to see it bounce. But what exactly, what's the risk management around that trade if you're going to be long?

Well, I mean, the thing about stop losses, they're very personal. Some like them why, I don't want to get stopped out. So take 10 or 12. Some are tight, you know, 3, 4%. I like 7. It works for me. I cut half and then go from there. But obviously, the first message is there's nothing wrong with being wrong, only staying wrong.

At some point, if it is wrong, one has to take measures. All right. Carter Worth with the trade there on Brookshire Hathaway shares. Thank you very much. We'll see you soon, sir. You bet. All right. Kelly, back over to you.

Answering a viewer question, no less. So there you go. Still to come, it's market deja vu, feels a bit. like 2021 all over again with crypto rallying, the meme stop stocks soaring, I should say. And now SPAC interest may be reigniting. So are we once again hitting the height of speculation? And if so, what comes next? Are we heading SPAC to the future? You can see it here on this chart from Renaissance Capital. The number of SPACs that have listed this year is already well past the numbers from the last few years and looks unpaced to be the most since the SPAC craze of 2021. Now remember,

these are listing totals, not the number of SPACs to actually announce mergers or deals, but a new feature of the surge in SPACs that was not the case four years ago is the rise of crypto treasury companies. Many of the recent announcements for companies planning to go public via SPAC have been these so-called crypto treasury firms as they're scrambling to capitalize on investor demand for crypto. Joining us now is Accelerate Financial Technology CEO Julian Clemichco, his firm runs a fund that tracks the SPAC market and invests, in more than 500. You are a brave man, Julia.

Maybe it's the VC models. Like if one of them works out, the losses on the rest of them are fine, right? That's exactly it. And we're back in a bit of a SPAC boom here, similar to what we saw in 2020 and 2021. And the way that a SPAC works is it's an interesting vehicle because you're allowed to redeem for the cash value,

which is typically $10 and change. Plus, you get the upside if they announce an attractive merger candidate, of which many have this year specifically, as you mentioned, in the crypto treasury company space, which is really proliferating, not just in the U.S. markets, but globally as well. I was going back to see, what was kind of like the best spec ever? Maybe it was Verte. Was Vertevist spec? Well, before closing, the Lucid Motors deal traded up pretty significantly. And if you want to look at one currently, the Oclo spec, well, it's a D-SPAC now. That closed last spring. It's traded from $10 to $60. And that one's been super successful as well.

As for the current lot of SPACs, I'd say CEP Cantor Equity Partners, which recently announced a merger with 21 capital. That traded from $10 to as high as $50, now around $30. And that's been the most successful. of the current era. I remember some research. It was from, oh, who was it? Maybe Sembolist was doing some work on the IPO boom and found that it was just horrendously

unprofitable for investors. It was mostly because of SPAC. So a few of them have managed to do quite well. A lot of them, as you know, better than anyone, it's struggled. And now this time around, they're back, but with a crypto treasury twist to it. So I would just love to hear what you think would be the case for either, you know, dabbling and getting exposure, finding the diamonds in the rough, like some of the names that we mentioned, you know, what would you tell investors?

Yeah, so you've got to be aware of the risk dynamics because typically the businesses going public via a blank check company are more speculative in nature. We're not talking about S&P 500 like companies, but earlier stage companies. So they'll follow more of a venture capital type distribution where you'll have a handful big winners and perhaps quite a few losers. So I think a diversified approach is more appropriate in this area of the market. All right. So the chart that we're showing up there right now just shows the SPAC listings this year. Renaissance is one of those capital.

The Renaissance capital is one of those companies that tracks these listings and these kind of offerings and registration forms. Their data shows that we've seen 74 SPAC pricings on a year-to-day basis, and that was four times that of this point. last year in this time frame. Does it say anything about what that would mean for the capital raising markets overall? Is there any view or feeling like the SPAC boom is something that folks maybe want to pay attention to as a cautionary tale? I think it's certainly worthwhile paying attention to now. It's all relative because if we go back to 2021, an aggregate dollar, the SPAC IPO market in that year, they raised $163 billion. If we look at this year, it's $13 billion year to date.

So still down kind of 80% on an annualized basis, but up fairly significantly over the past couple of years. So I think it's more measured in terms of the current SPAC bull market. It's nothing bonkers like it was in 2020 and 2021. However, I think it's great to see new capital formation. and it's something a trend that investors should pay attention to. All right, Julian, appreciate it. Julie Climachcoe joining us today from Accelerate.

We've got some headlines out of D.C. meantime with President Trump reportedly meeting with Jeff Bezos last week. Amon Javers has the story. Amen. Hey, Kelly, that's right. File this one in your sort of annals of interesting presidential meetings. CNBC has learned that, according to two sources familiar, Jeff Bezos met with President Trump here at the White House last. week. Don't have a date on this meeting. Don't have a lot of topics that the two men discussed, but we are told that they did meet for over an hour here at the White House in the wake of Bezos's wedding in Venice, as you'll recall at the end of June. Bezos was here in Washington. It was sort of unnoticed by the media and a lot of folks here in town at the time, but

clear that the two men would have had a lot to talk about given global trade, media, all the sorts of things that Bezos is involved with around the world and reporting back to President Trump in terms of all of that. No particular details, though, Kelly, on the topic of the conversation, just that it was over an hour-long session here at the White House between the two men. All right. Amon Javriss with the latest out on Amazon, Jeff Bezos and the White House. Thank you very much for that. Let's now get over to Bertha Coombs for a CNBC news update. Bertha. Dom, a panel of judges voted against the continued appointment of Trump ally Alina Haba as New Jersey's top federal prosecutor.

They instead replaced her with Desiree Lee Grace, who is Haba's first assistant. President Trump appointed Haba, his former personal attorney and spokesperson, as the acting U.S. attorney for the District of New Jersey in March. He formally nominated her to serve a four-year term at the beginning of the month. The nomination is still waiting for a vote in the Senate Judiciary Committee. Russia's lower house passed a new law today that would tighten censorship in the country. It opens Russia's up to a first-time fine of $5,000 or about $65. If they search for or knowingly read extremist content online,

the list of eligible extremist material is more than 500 pages long. And Ozzy Osbourne, the front man of Black Sabbath and reality TV star of MTV's The Osbournes has died, according to a statement from his family. The British heavy metal hall of fame musician had Parkinson's disease and suffered from other health problems in recent years. He had just returned to the stage earlier this month with Black Sabbath, bandmates for a farewell show. He was 76 years old. our best to his family. All right. Thank you very much there for the news update there,

Bertha Coombs for you. Coming up some eye-popping details with regard to Open AI out with some pretty revealing statistics about chat GBT and its usage, including who exactly is using it and for what purposes. We'll get a live report and update coming up next.

Keep it right here. CryptoWatch is sponsored by Crypto.com. Crypto.com is America's premier crypto platform. Welcome back to Power Lunch. Less than three years since the launch of ChatGPT, AI has already reshaping industries, businesses in our daily lives. But how big is its impact on the economy and how can it actually be best used to boost productivity and innovation in our economy? Those are among the topics being addressed by OpenAI's Sam Altman at a conference in Washington, D.C. today. Our senior finance and banking reporter, Leslie Picker, joins us now with some of the highlights of that big conversation.

and just the impact we are seeing from AI on the economy. Leslie. Hey, Dom. Yeah, Open AI CEO, Sam Altman, speaking at the Fed's Capitol Conference here in D.C. today. In a conversation with Fed Vice Chair of Supervision, Michelle Bowman, Altman spoke about how AI makes it easier for criminals to impersonate individuals and then move large amounts of money that isn't theirs. AI has fully defeated most of the ways that people authenticate. currently other than like passwords, but all of these like fancy, you know, take a selfie and wave or do your voice or whatever.

I am very nervous that we have an impending, a significant impending fraud crisis because of this. Boman said partnering with Altman on the issue would be a, quote, beneficial thing to engage in. Alongside his appearance, OpenAI releasing a report about what chat GPT has meant for productivity in the U.S. economy, The company says users send more than 2.5 billion messages to their platform per day globally, 330 million of which is in the U.S. The top use cases for chat GPT, the report says 20% of these messages are for learning and upskilling. 18% are using it for writing and communication. 7% are programming or vibe coding. OpenAI says among its top enterprise customers, 20% are in charge.

finance and insurance, 9% are in manufacturing, and 6% are in educational services. The report also showed the states with the biggest quarter-over-quarter user growth, number one, Virginia, just down the street here in Washington, followed by Nebraska and Nevada, guys. You know what's funny about this? So, Leslie, I was speaking to a former banker who is now an adjunct professor teaching finance. And he said that it is revolutionized the way that they teach finance financial statement analysis, because now you can basically ask chat GPT to go over 10 years worth of quarterly reports and just ask it to tell you what the, you know,

takeaway. Yes, what the takeaway was. And you can even ask it to do things like, hey, use the DuPont system and find, you know, what kind of metrics we're using for this particular company in these industries. So is it going to be in finance? And is that the reason why the Fed is the forum for this kind of a discussion right now focusing on AI? Yeah, it's really fascinating, Dom. And one of the anecdotes that Altman shared in this fireside was basically his, I guess, his grandfather was very into math.

And when the calculator was invented, you know, he was concerned that it would kind of do away with kids learning about math at that time. Obviously, kids still learn about math and school. And so he kind of used that as an analogy of, you know, what does AI mean for the future, for people, whether it's for working purposes or for learning purposes. And he feels like it'll make people more productive over time. And it won't do away with education altogether. It will just kind of shift the way people are learning about things. So in terms of what it means for the finance industry as a whole, when I talk to bank CEOs and bank executives, the way that they currently see, at least the biggest efficiency gains for, from this technology are among its engineering staff, that vibe coding dynamic content,

being able to produce research and slide decks for clients a lot faster than they were able to do before, as well as just some of the compliance and operation side of things in order, because they have tens of thousands of people doing that in order to extract efficiencies there. So I don't know if it quite yet has replaced spreadsheets in the way that we think about,

but perhaps, in a year or two, that will be a huge use case as well. All right. Leslie Picker with the latest out of AI in Washington, D.C. Thank you very much for that. And coming up, does this mystery stock have the right energy to keep outperforming the rest of the year? We'll ask our three-stock lunch trader next. It's that time for three-stock lunch. Let's hit three different names making some headlines today and ask our trader how the viewer should be investing.

The focus will be on big tech earnings. that could maybe make or break this rally, especially after that MoMo discussion with Lori off the top. Alphabet is up first, which is good because it's also been the one that's probably the most high flying lately. Reports after the bell tomorrow, and the shares are on pace for the 10th straight day of gains. That would be the longest rally on record last happened in December 2010. Joining us for more is Keith Gengel. He's senior portfolio manager at Gradient. Keith, Alphabet, you pick it up here?

Yeah, we like it a lot here. It's been a lagger. You mentioned last month's been pretty strong up, you know, 8, 9%, almost on 10 days of positive earnings are positive growth. But if you look back, year today, it's just barely positive. S&P 500's up about 7%. So it's been a laggard. If you look at valuation, you know, it's the cheapest of the Meg 7. It's cheaper than the overall market. The overall market's trading at about 23 times 4P multiple. Google's trading, you know, Alphabet's trading at 2019 times. If you look at the Meg 7, they're 28 times. So their growth rate is much faster. than the overall market. So we, this is a name we like here, especially on the sell-off earlier in the year. Now again, like you mentioned recently, stock started to catch up.

All right. Let's go to another mega-cap name, and that's reporting results. It's going to be Amazon reporting soon. The world's biggest online retailer web services company could have taken a hit from President Trump's tariff wars in this, but is Amazon a buy in your mind? I think Amazon has a strong buy here. You mentioned it earlier. They're supposed to be a net negative with the tariffs, but they could actually be a slight positive with all these tariffs and what's going on with China and other players in there. So we like this name a lot. It's trading at a 31 times forward P multiple.

It's the cheapest it's been in a decade. Half of their business is AWS business, which is flying. It's going to also do about 17% growth. The other half of more people worried about it's the retail side of things. But again, I think the retail is actually consumers relatively strong. We saw retail numbers last month. You know, they were better than expected. People are still working.

When the U.S. consumers is working, they have money in their pocket. They love to spend, and Amazon's a place they'll go to. All right. So then that brings us to our under the radar AI player, mystery stock from moments ago. Quanta Services, a major player in building and maintaining electric power grids. It's up 25% year-to-date. Would you recommend it here?

Yeah, this is still another name that's a buy. If you look back earlier in spring, it got hit because people worried about tariffs and what the global impact would be. But they're a player on AI. They're kind of like the backdoor way of playing it. AI consumes so much electricity, and these guys are the leader in energy production and kind of transmission. So this is a player we like. It's not a cheap stock trading at 33 times forward, but we think they're in the right place, right time, because this AI build is still spending.

All right. All of that said, Keith, we're about to enter possibly the most fascinating moment of this earning season. So appreciate your thoughts. Keith Gengel with gradient investments. And remember, you can recap every three stock lunch. Anytime you want, just scan that QR code on your screen right now or head to CnBC.com. All right, still to come, a sign of the Times. Another newspaper giant reportedly planning a public trading debut. We're going to explain that story coming up next. Before we go, speaking of unprofitable companies and signs of froth in the end, I don't know. I don't know the financials. The Los Angeles Times said on Monday that they'll be taking the newspaper public in the next year. Patrick Sunshong bought the paper in 2018 for about

$500 million, but again, they have struggled, like all legacy media, to make it profitable. And a history of deep losses could cloud its appeal unless they issue a stable coin. Dr. Sunshong also said that taking the company public would democratize it and allow the public to take ownership, kind of like the Green Bay Packers, although he did not detail exactly how that would work. And of the two major newspapers that are currently public, there's News Corp, which owns the Wall Street Journal by former employer. And New York Post, it's up 18 percent in the past year, and it actually had a record

high last week. New York Times down about 2% over the past year, Dom. All right. So I'm going to kind of dovetail off that because you mentioned New York Times. I thought it was curious vis-a-vis the LA Times. This story today, how does this podcast star? We're talking about Joe Budden, if you don't know who he is. How does he make $20 million a year as a podcaster?

Joe Budden, former rapper. He's got this podcast. And he's got an ecosystem of around 70,000 subscribers. They're pay subscription fees for different kinds of access, anywhere from like five to 50 bucks. But if you look at the subscriber revenue, the podcast generated revenue and everything else, he could be on pace for a $20 million year. New media versus old media. Yeah.

Say no more. He has a free podcast, but then he sells extras and early access. You know, we have podcasts here at CNBC, Kelly. CNBC.com slash pro talks. You should go check it out. Yes, you should. All right. Thanks for watching Power Lunch, guys.

And closing bell starts right now. Now, dows up 160 points as we're back towards session highs. We'll see you tomorrow.