Power Lunch - Stocks are little changed as traders await Nvidia earnings 5/28/25

Episode Date: May 28, 2025

Stocks are mixed as investors parse the latest earnings reports and Federal Reserve meeting minutes while awaiting Nvidia’s latest quarterly results. 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.

Well, your money is on hold as everybody in the investing world watches one epic stock. Hello and welcome to Power Lunch. Kelly is back. I'm Brian. That stock, of course, InVIDIA. Their earnings out tonight and how those numbers come in could determine where your money goes, even if you don't invest in Vivida. I like how you said it feels like we're on hold. It almost feels like the hold music is playing and you're like, come on. Let me go already. We're watching the Fed minutes too. I mean, there's some anticipation for that, right? investors will be looking at how the committee views the economy, inflation, and any insight, of course, into their next possible move. Steve Leasman will bring us those headlines as soon as he gets them. All right, so we're going to get to that, but let's kick it off with markets and your money because, as we just noted, hi, Nvidia is going to determine how the market trades in the short term.

But for many of you retirees and longer term investors, there is much more to focus on things like interest rates, the Fed, the Fed minutes and moments, tariffs, trade. And of course, the other T, that is Trump. Let's tie it all together with your first guest who helps oversee his firms four trillion in managed assets. That is Michael O'Rone. He is the chief investment strategist, State Street Global Advisors. Really has one of the biggest jobs in all of investing, Michael.

So we love having you on. We got the Fed Minutes coming out in a moment. I know, listen, Invidia, you're like, that's nice, but we're invested for the long haul. I get it. But there's probably no denying that how Nvidia and other AI-related sites, do could determine the outlook for the entire U.S. stock market, I think.

Ryan, I think you're right. Certainly given the market cap wading of those companies, they have a big impact on earnings and the big impact on direction of the markets. And I think the numbers are going to be just fine. I'm just not sure there'll be enough. So one of the interesting stats is over the last seven decades, the companies who have spent the most money, capital expenditures, even in technology, have actually trained. railed the market on an annualized basis. Only the last decade of companies who have spent the most money on capital expenditures done well within tech. So investors have to ask themselves, will the big spenders be the big winners? And I'm not so sure. I think other tech companies

will likely be the winners going forward. Well, that's, it's random but interesting. I dare I say, Michael, because that has been the trend the last decade, is that the big spenders are the ones that are seen as the forefront of AI, and the market is kind of hinged a little bit on that spending. And if that spending goes down, people do worry about the entire market. So what do you think changed? Why do you think the market has rewarded the big spenders lately, which to your data point, the last 20 years before that, the market did not reward them. What happened? Well, I think the big excitement about the prospects for AI and this there was a view that's big spending was going to have a big return on investment, a big payoff. And I think that the deep seek news way back in January

and reset the clock. And so if we can create an open source large language model with the same effectiveness with the lower energy footprint, if that's possible, then all the spending may be for not. And what will actually happen is the big spenders will create the pathway for everyone else to pick up and create better efficiencies, more interesting product, more interesting use cases. And I think that's what's happened historically. And I think that's what could happen again. Now, Brian, I want to let you know, we still like technology. We're still bullish on AI. It's just we're not sure that the big spenders will be the big winners in the future. we like a broader kind of exposure to the tech beneficiaries.

For all those folks that are spending all that money, we think that other companies will take it and run with it and benefit from it and generate good use cases and good earnings. That's kind of what our guest last hour said as well. Michael, I love that point and how you're thinking about rates, which you think might actually need to be lower. Just sit tight there. On that note, we got some breaking news from the Fed with the minutes being released.

Steve Leasman has the detail. Steve. Thanks very much. Fed officials said current monetary policy. policy was moderately restrictive, allowing the committee take a more cautious approach until the effects of government policies were more clear. The committee said they were well positioned to wait for more clarity on inflation and economic outlooks. The risk for higher inflation and higher unemployment both had risen. Remember, this meeting came before the May 12th relaxation

of those China tariffs. Almost all participants were concerned about more persistent inflation from the tariffs, and also they were concerned about the difficult trade-off if inflation was persistent and you had weaker growth on the issue of weaker growth. The staff saw weaker growth in 2025 and 2026. The Fed said ultimately the effects of changing government policy and impact to the economy were highly uncertain. That word uncertain comes up quite a bit here. Certainly about the economic outlook, almost all participants noted the risk of inflation could prove more persistent, and they assess tariffs on intermediate goods could lead to more persistent inflation. Guys, I think I'll leave it there. I'm just looking through more of these

headlines. They really amount to the same thing. Some participants saw businesses limit hiring because of the elevated uncertainty. Several members noted downbeat sentiment among manufacturers. A few members commented that retailers were downbeat due to perceived tariff impact. But I guess what we don't know is how much the world has changed since May 12, then the threat of the European tariffs put on, taken off. I think the uncertainty is high, but maybe the immediate danger of tariffs is about, it has abated a bit, guys. All right, Steve, appreciate it. Steve Leesman, not much movement on bond yields in the wake of that report or in the wake of the five-year auction last hour. So Michael O'Roney, we turn back to you. Just as you were saying, you're kind of

seeing the benefits of AI spreading throughout those who are going to now, you know, deploy it. Real quickly before we move on that front, does that make you somewhat more cautious on a name like Nvidia on the margin? I think it does. I think, again, it's a great business compound cash flow at an incredible rate, high growth. It's just prices what you pay, values what you get. So I think there are greater opportunities to buy high growth companies at better prices. So we're happy to hold Nvidia and most of the Mag 7, just not adding to it right now. Understood.

So broaden that out for us. How do you could then connect the dots back to why you think that rates are actually too high right now and maybe should be lower? So I think the Fed is making two big mistakes. The first one is they are suggesting or they think that tariffs are inflationary. They thought that in 2018, and it wasn't the case. So, Kelly, tariffs can't be a tax and inflationary at the same time. That just doesn't make any sense. So it's either a tax that reduces consumption or price increase that is inflationary.

I don't think that those things can exist. I don't believe that tariffs will be as inflationary as the Fed or the market things. The second is that at four and a quarter at four and a half on the target Fed Fund, rate, they're already well above their preferred measure of inflation. So we'll get PCE again on Friday. It's at 2.6% for PCE. They could cut rates three or four times by a quarter, 25 basis points or a quarter percent each time and still, Kelly, be 1% above their preferred measure of inflation. The Fed needs to start cutting rates later in the year. This is a pretty big statement that you're making, Michael, because Kelly and I have been

kind of on the same page. I know she's written about this. We've talked about this. We've talked about this. We've debated with some. History does show that tariffs can be inflationary. People are going back to what the 1870s and McKinley and all this other stuff. I have no idea. The world is a very different place that was way back then. Sounds like you're pretty convinced as I think Kelly and I are. I don't want to speak for Kelly, but I know I've made my view clear that tariffs are probably not, to your point, not inflationary because they're going to kill demand. Right. I think that's the big thing. on growth, and I'm more concerned that growth is likely to slow more than the markets and perhaps the Fed thinks today. Now, I do think that they can course adjust. I think they will make those

adjustments, which is why I'm still pretty bullish on the markets. I think you're going to get more pro-growth Trump policy, improvement on trade. I think the Fed will cut rates. Earnings have come down, but they're still going to be positive. We're at a better valuation standpoint, and I don't believe that the economy will enter recession. That's an attractive. backdrop for risk-taking or risk assets. I'm not saying we're going to get 2023 and 2024 numbers, but that should be enough to sustain the rally a bit further. And I really question whether this idea that tariffs are inflationary, businesses will find a way around it a little bit to kind of not circumvent it, but they'll adjust. And so will consumers.

And I think that that ultimately won't show up in inflation numbers. Even Goldman just last night put out a note saying why they only expect a one-time inflation boost. The problem is they think Core PC goes to 3.6% first. But if they and others are laying out this case and you're among them saying, no, we think the glide path is lower, could this language actually start to change the Fed's thinking? And we hear a shift even without getting bad or negative employment reports and that kind of thing. This is the unbearable burden of waiting and seeing. And I think that the Fed is in a difficult spot.

So I do think that they are going to have to see inflation begin to move closer to their target or the economic data get worse. I'm betting on or banking on this notion that the economic data is likely to get worse before it gets better and that ultimately that'll be the catalyst for the Fed to begin cutting rates later this year. And they might have some catching up to do. So I expect at least three kind of beginning this fall through the end of the year. Positive on equities because of a weaker, you know, weaker potential macro and all the rest of it. Michael, thanks.

Really appreciate it today. Thank you. Michael Errone with State Street. Yeah. And there's a big debate, by the way, about tariffs, inflationary, deflationary. We get it. So we're going to solve this debate the only way we can, of course. That's a Twitter poll.

I just put it out, Kelly. Perfect. I know it's Twitter. X. Take it for what it's worth, but the poll is now up. Go give your answer, folks. All right, meantime, Vice President J.D. Vance, delivering the keynote address at the Bitcoin 2025 conference earlier today.

This, my friends, the first time a sitting vice president has addressed the industry directly. And he reiterated the Trump administration's support of cryptocurrencies saying they have a champion in the White House. McKenzie Sagalos is at Bitcoin 2025 in Vegas. Some of the headlines. I know you've also got a big panel coming up or you did one already. This is like the place to be in crypto. It certainly is, Brian. And you said it.

Vice President J.D. Vance on stage today. And he didn't unveil any new policy from the main stage here at Bitcoin 2025. But his appearance alone was his statement. He became the first sitting U.S. Vice President to address the global Bitcoin community, doubling down on the Trump administration's promise to make America the world's crypto superpower. We fired Gary Gensler and we're going to fire everybody like him. Under the pretense of consumer protection, they attacked every single effort to democratize our financial markets, and that is over. America.

That fiery rhetoric came as the labor department rolled back, Biden era guidance that discouraged crypto and retirement plans, part of a sweeping regulatory reversal now underway across multiple federal agencies. And it's not just Bitcoin. The administration is pushing stable coins as a pillar of U.S. economic strategy. Let me be emphatic on one other point. In this administration, we do not think that stable coins threaten the integrity of the United States dollar quite the opposite. In fact, we view them as a force multiplier of our economic might.

Meanwhile, private players are rushing in. GameStop disclosed a $500 million Bitcoin position today. And Trump Media is building a $2.5 billion Bitcoin treasury of its own, though both have seen their stock drop since announcing the investment. Guys? And McKenzie, he also seemed to hint or say outright that those who were unfriendly to crypto would lose their jobs like Gary Gensler did. Yeah, that was one of the bold promises that was made. And I will say this, 100 days in, Trump has delivered on every single promise that he made in July of last year when this event was held in Nashville. Chief among them, perhaps, CEO announcing a strategic Bitcoin Reserve. And I sat down with Bo Hines, who's heading up the president's digital asset council.

And he said, hey, look at the fine print of that EO. It says that Treasury and Commerce are tasked with looking at budget-neutral ways to, establish a Bitcoin acquisition strategy. So that's something that isn't forgotten. And I think that that's where a lot of the sentiment is right now. Because the crypto industry spent big last year. Nearly half of all corporate donations came from the crypto industry. They outraised the banks and big oil. And now they want to see some progress. So yes, first 100 days, we saw the promises made last summer delivered. But what's next is what's a Bitcoin acquisition strategy going to look like? Are we going to see more rollback,

more rollbacks of guidance from the SEC, for example, to open the up tokenization of public equities. Right. Or will some of the conflicts of it, you know, the issues around those potential conflicts of interest kind of hold it all up. We'll see. Mackenzie, for now, thanks. Appreciate it. Our McKenzie Sagalos. Speaking of crypto, the Department of Labor rescinded some Biden-era guidance that had cautioned 401k plan advisors to exercise extreme care before making that available as a plan option. Our senior personal finance correspondent Sharon Epperson joins us now. Sharon, does this mean that crypto is coming to your 401ks? Well, it's already available.

in many 401ks or in some of them. But what it means is that they're pulling back completely on guidance that had been offered by Biden's Labor Department back in 2022, saying that it's important to exercise extreme care with cryptocurrencies because of serious concerns about fraud, theft, and loss. Now they're saying, we're pulling that all back. That's not true. We're going to look at what ERISA says that is supposed to, the act that's supposed to protect 401K investors in our retirement savings.

There's nothing in there that says that you shouldn't be in crypto. This is what the Trump administration is saying. And so now that kind of opens the door for those who might have been on the fence about having crypto in their 401K plans of adding that as an option. A couple of questions. So number one, you know, I could see Bitcoin kind of being offered. But if we start to get into some of the alt coins popping up in these plans, are the plans?

I don't know if they are. I don't know if the alt coins are there. But would they have any sponsors about kind of lawsuits down the road if some of the these coins collapses? Well, certainly there are concerns about that because plan sponsors, employers have to be fiduciaries. They have to put the best interest of the 401k investor ahead of their own. And so in order to do that, they want to make sure that they're offering an investment that is going to work for the plan participants. But there are various ways that they can do that. It doesn't have to be the cryptocurrency outright. It can be an exchange-traded

fund that invests in crypto. They can also do it through a brokerage window that they may have or self-directed options within a 401k, and then for retirement savers who want to do it on their own, they can do it through individual retirement account. Because you got to, it's a slippery slope, I think. It's like you get home, you're like, good news, honey. I put all of our retirement into Kelly Evans coin or Epperson coin, right? Because there's a lot of stuff that comes up and goes down.

Right. So at some point, somebody's going to have to make a decision. Okay, maybe we'll let Bitcoin into some 401Ks. Not ours yet. Hopefully we're getting there. I'm sorry to disappoint you. You know, well, we've missed a run. That's the thing now we're getting in.

Not that I'm counting at home, but somebody's got to make the decision about how far down the line do we go? Well, Fidelity, the largest 401K provider, it does in some plans offer exposure to Bitcoin, no more than 20% or so. But it's important to keep in mind that financial advisors who say, yes, this is great to have an alternative asset class. It's very important to make sure that you can benefit from strong returns. But there's some cons to think about, and that's the high volatility and the high risk associated with crypto. So a lot of the financial advisors that I've spoken with that do have crypto in their clients' plans say no more than 2 to 8 percent. And it really does depend on your time horizon. Morningstar has an analysis out that says if you're going to be in crypto, you need to be in

it at least 10 years to see the fluctuations be able to ride out those fluctuations in the returns and the volatility that's there. Many people who are trading crypto on their own don't see it as a long-term investment. So that's another kind of mind shift that people need to make. If you're going to have it in your 401k, if you're going to opt to have it in that plan, you need to be prepared to hold on to it for at least 10 years or more. That's really interesting. Hotal? Sharon thanks.

Sharon Epperson. For more retirement-saving strategies, you can sign up for Sharon's free Money 101 newsletter at CNBC.com slash Money 101. All right. Coming up, the countdown continues. Invidia soaring 25% in a month. Their numbers tonight could move the entire market. So what is the Nvidia story to watch?

We'll tell you. Thanks. Well, you've probably figured out that it's all about Nvidia tonight, tomorrow, and maybe for days and weeks and months to come. Invidia's earnings and guidance out in about two hours time. Investors, they want to see something good. We know that because Nvidia's been on a tear. It's up 25% in the past month.

that is partly on some easing of tariff tensions. The entire market has gone back up. But you also got new deals from NVIDIA at the UAE in Saudi Arabia. On the bare side of it, you'd say, okay, there's some semiconductor export curbs and rising competition for NVIDIA, which is also reportedly working on a cheaper chip for China to try to bypass some of these export restrictions. Now, despite those headlines, most analysts out there, and there are a lot, remain bullish on NVIDIA, including your next guest who sees 20% more upside from here. Joining us now is Vivek Aria.

He is senior semiconductor analyst at Bank of America Securities. Vivek, what are the main one or two things you're first going to look at tonight? Hi, Brian. Yes, we described their guidance. The technical term we use is messy. And I think it's for two reasons. One is that the quarter that they will guide to, the current July quarter that they are in,

this will face a big chunk of the restrictions on their H-20 product that was destined for China. That's almost a $15 billion sales hit. I think the unknown is how much of that gets reflected in their guidance. We think it could be as high as $7 or $8 billion. That's a lot more than where consensus is in terms of that restriction effect. The second issue is a product transition,

that they are transitioning from the older Hopper generation, which was a lot more boards, they were selling to the newer Blackwell generation, which is in very strong demand right now, but it does mean moving to more racks. So just the ramp cost of going to that new product generation. I think those are the two things that can make this current quarter guidance, you know, as we described it as messy, the good news is that as we get into the second half of the year, the demand environment is exceptionally strong.

I think a lot of the China restrictions impact will be sized and priced by consensus. And number three, the product transition effects that we described, we will be on the other side of it. And, you know, the transition to Blackwell to B200 and B300, I think, will be much smoother than what we have seen so far. Viveka, our last guest, Michael O'Roney and others have suggested that the gains from AI are now moving away from NVIDIA towards the players who are deploying the technology to make their workplaces more efficient and so forth. Doesn't that feel like it's what's happening to you, that the moment for NVIDIA is kind of past? Kelly, I would describe that debate as, you know, half of the debate is that, oh, there is no ROI on this spend. And the other half is, well, we are seeing too much R2, you know, return on this investment. And we are moving away from the infrastructure build.

I think the answer is somewhere in between. You know, there is still a few more years of infrastructure deployment. that has to be done. If you look across most enterprises, and if you say that on a scale of 1 to 10, where are you in generative AI deployment? I think they are more likely closer to 1 than they are to 10.

The second thing is this new breed of sovereign AI investor. And you mentioned before the investments that the Kingdom of Saudi Arabia, the UAE are doing, they're just getting started on these infrastructure rollout. So I think we have at least two or three more years of infrastructure deployments to be done. But it's great to see. that this is being monetized by customers across a whole range of enterprise verticals.

But I wouldn't say that that is coming at the expense of infrastructure. I still think we have a few more years of very strong infrastructure deployment. I think they're only about a third of the way of infrastructure deployment right now. A third of the way. You know what's been amazing is that Nvidia is where all the attention is, Vivek. I know you cover semiconductors. We did a little search this morning. This year, the best performing semiconductor stock is not Nvidia.

It's not even close. It's KLA. You used to be called KLA-T-A 10-core. Clack, if anybody remembers that. It's soaring this year. They make things that make semiconductors. Why is that stock doing so well this year? Sure, Brian.

No, it's a good observation. What we have seen so far this year is that the outperformers have actually been AI adjacent. So if you look at KLA, if you look at Lamb Research, they make the machines that are used to make a lot of these AI chips. So we are starting to see the benefits more upstream in the supply chain. And if you look at other adjacent names to, you know, the design software names, they have been also very resilient.

So it is true that in the near term, some of the excitement has moved from the data center beneficiaries, such as an Nvidia or a broadcom. But we think this is more cyclical effect. I do think that as we look out in the future, I think the core of the data center beneficiaries are going to be these names, such as an NVIDIA or a Broadcom, but at the same time, to make them successful, you will see the benefits spread out to these adjacencies

in semi-cap equipment and design software tools. You bet on the companies that make the stuff to make this stuff. It's genius. Vivek, Aria, Bank of America's Securities. I'm going to let you have another cup of coffee or whatever, Vivek, because you've got a big night tonight. Thank you. Good luck.

InVity, CEO, Jensen Wong, by the way, will join Jim Kramer for a big interview. Speaking of people who are going to need some coffee, but he doesn't seem to ever need it. Jensen or Jim. Both of them. Both. I don't think decaf. Is more the ticket. Jensen Wong will be on Mad Money at 6 p.m. We look forward to that.

And still had a changing of the tide when it comes to family office investing, where they're putting money right now and which area they're souring on. That's next. Welcome back to Power Lunch. It's not just. universities starting to sour on private equity. Family offices are also pulling back, even as they lean more into stocks. That's according to new data from our Robert Frank. And Robert, this is a massive reversal because for years, sophisticated investors have moved from public to private. Now it sounds like we're starting to see that tide reverse. Yeah, Kelly, it is a total

180 for family offices. They are increasing their allocation to stocks to the highest level in years. Now, these private investment firms are wealthy families. They plan to boost stocks. to 29% of their portfolios, that's up from 26%. Now, American family offices, even more bullish, with stocks at 32%. That according to a new report from UBS. Most people were anticipating some sort of volatility, along with a lot of new technologies and new advancements in the markets as well. And so if they have the opportunity to move quickly, public markets gives them to do that.

At the same time, family offices are also trimming private equity, as you said, Kelly, going from 35% to 27%. That's a big move, and it marks a sweeping reversal for family offices, which had been moving from public to private markets in the past. Now, family offices also staying very close to home. They have 86% of their portfolios in the U.S. That compares to a global average of 53%. UBS saying family offices, they just invest in what they know, that the U.S. markets have basically outperformed the world for the past few years to see all the investments of today's family offices and where those wealthy family offices

are putting their money. You can get the Inside Wealth newsletter at CNBC.com slash inside wealth or scan the QR code, CNBC.com slash inside wealth. Guys? So, you know, I do think this is just one data point as they're lining up. Robert, I'm sure you hear about this all the time. Look, it's not to demonize private equity. It's just that as it's been, become much more saturated and the returns are harder and rates are higher. I find it very interesting that both universities and family offices seem to be rethinking their allocations at the same time. Yeah, and they're related but slightly different reasons. So endowments and universities, they need to raise cash right now because of all the government cuts and the funding cuts. So

private equity is something that you can sell in the secondary markets. The reason that family offices, I think, are at least not putting new money into family offices, is that you can't get it out. There are no exits in private equity right now. There are no IPOs. There's no M&A. So investors aren't getting that money back from private equity and that money used to be recycled and gone back to new funds and new investments. And they're just not getting it out, so they're not putting more money back in. So the universities need liquidity. Family offices have plenty of liquidity, but they want to redirect that money to where they're actually going to get longer term, better term returns. Yeah, no. It makes a lot of sense. And the fact that they're bullish on equities,

at least for, you know, at least for now, but they like the retail investors that we've talked about leaning in at precisely the moment the market was selling off. That's right. And, you know, we'll have to see how the rest of the year plays out. But remember, family offices, they're investing not for their retirements, but for their grandchildren's retirement. So they have very long time horizons. So when they make a move like this, which is, you know, three or four percent. That is a long-term big move that's likely to stay for a while. All right. We all need a grandpa that had a family up. My grandpa had a family gas station. He's pumped gas for people. My great-grandmother worked in a shoe factory, so there was no family

office yet to speak of. We can dream, though. Robert Frank, I dream about being Robert Frank. Robert, thank you very much. All right, coming up, the fascinating story about a retailer that cut its outlook, but has the stock soaring today? Welcome back to Power Lunch. We kicked off the crucial two days of retail earnings this morning with Dix, Macy's, Abercrombie, all reporting before the bell. Strength of results varied across the big three, but Abercrombie is the standout, still up about 14 percent today, but about 50 percent off its year highs from last summer, or last May, really. No surprise, tariffs came up on all three earnings calls, including as part of the reason that Abercrombie and Macy's lowered their full-year earnings guidance. Joining us now for a

better read on retail, kind of a deeper read, a sharper one. Jan Niffin from Jay Rogers Niffin, he is the CEO. Janet, it's great to see you and to have you here. What did we learn today? And where do you think the biggest opportunities are? Or should people just be cautious around this space for the rest of the year? Yeah, I kind of loved it. You know, there were no real surprises. And Macy's and Dick sort of just stayed where they were, no big pop. Abercrombie and Fitch, same kind of release. It was okay. Abercrombie was good as a brand, Hollister was not good as a brand, Hollister was really good as a brand, but all in all, other than the guidance being pretty anemic, nothing really happened except the stock went up 25% on the announcement. So just proving, of course, that if you're down 50% and everybody's short, you don't have to say much to go up 25% initially and settle in it up 14%.

But I don't think we heard anything surprising from these retailers. We all knew tariffs were coming. We all knew they'd have to deal with them. We all know there would be some impact. Either going to raise price a little bit, or they were going to wind up taking some hit on margin. They really don't know which they're going to do yet. They're still figuring that out.

But all in all, it's the same game we've always played. We've always dealt with tariffs and retailing. We've always had quotas. So we've all seen this game before. This is a little broader. But if we really see a 10% tariff everywhere, and about a 30% tariff on China, most people would need to raise prices between 4% and 6% to just stay even.

But they'll do a lot of other things, right? They'll push on the vendor. They'll push the supply chain. They'll push their own expenses. They'll do some substitution. And then they'll pass through whatever's left. And then the customer will tell them if that's okay or not. And if it's not okay, they'll take a little bit of hit to gross margin.

If it is okay, they'll just move right along. None of us know how that's going to work, but we do it every day in retailing, and this will just be playing that game one more time with the consumer. Right. I mean, if you shrug it off and just say it doesn't matter, then it would almost be an argument to buy a lot of these names. But it seems like this is kind of separating the strong from the week. We get a spate of them reporting tomorrow. Gap Stacey Widlow's last hour, she was saying stick with someone who's winning like that. They're not even doing markdowns anymore, which is kind of unheard of in recent years for that brand. So what do you do? Do you just kind of own a bunch of them and hope that we get more average? crombie-like reactions?

Well, I watched my buddy Stacy and I didn't disagree with anything she said. But I will say if you're Walmart, if you're Costco, if you're Home Depot, if you're Dick's sporting goods, if you're T.J. Max and you're the best at what you do in your area of retailing, you gain market share, you basically get better, you take less of a hit, you negotiate better with the vendors, and you win, once again, guess what? They were all already winning. they just continue winning if the world gets harder. And the world's about to get a little bit harder as the tariffs go on. But there's no real drama here.

And I heard you talking about it a while ago. I don't think the tariffs are inflationary. You know, we don't get inflation when we have value-ed-ed-taxes. We don't get inflation when we have a sales tax. I don't think we'll get inflation from a tariff tax. But we will get some dislocation. And the winners will win. Will we get more jobs?

I mean, I don't think. think we're going to start making socks in America again. Even Trump doesn't believe we're going to do that. But he really would like to see the precious things come back, precious things like defense, like tech, like health care. And does he really care if progress is getting made in China or Indonesia or Vietnam, wherever? No, he even said that yesterday, I believe. But we will see 10% tariffs everywhere.

so you'll still pay a little more for the prom dress or somebody will make a little less on it or somebody in the supply. But it's not going to go, but you know I come from a consumer products household, Jan, you know that. 4 to 6%, while not nothing, doesn't sound like it's going to break anybody. I'm not advocating for tariffs or against them,

but 4 to 6% is not a doubling. No. I believe in the law of supply and demand just like you do, and I believe we will see a little bit of pushback as prices go up like we always do. But I don't think there's anything dramatic happening here. And I keep trying to tell people, hey, we deal with changes in price all the time. We're always pushing the envelope to try to get cost down and get a little more gross margin

out of our business or at least sustain what we've got. That's all that's going to happen here unless these tariffs turn out to be a heck of a lot different than 30% on China and 10% every place else. Now, we could get something going on in the economy that's a problem. If we see unemployment go up, 4.2 to 6, we'll see a big slowdown. But that's going to be caused by something else, not by the tariff. Jan Rogers Niffin, I have a feeling that thing might be AI. I believe the CEO of Anthropics said as much today, but hey, let's talk about a 4% tax increase on socks. Jan Rogers Niffin of J. Rogers Niffin worldwide. Jan, thank you. Thank you.

All right now, let's get over to Katessa Brewers. You've got a CNBC news update. Contessa. Hi there, Brian. President Trump says he told Israeli Prime Minister Benjamin Netanyahu to hold off on a strike on Iran's main nuclear facilities so that the U.S. could have more time to negotiate a nuclear deal. The New York Times reports Israel was considering a strike to upend a potential deal, which reportedly could allow Tehran to keep its nuclear enrichment facilities. That's a red line for Israel. But Netanyahu just dismissed that whole report as fake.

news. The president said today, the U.S. and Iran are close to a solution. Russia is proposing a new round of peace talks with Ukraine. Foreign Minister Sergei Lavrovs today suggested that they should hold negotiations June 2nd with a view to achieving what he called a sustainable settlement. Kiev did not immediately comment on that proposal. And in the Oval Office this afternoon, Attorney General Pam Bondi swore in former Fox News host and longtime Trump ally, Geneed Piro as the interim U.S. attorney for D.C. The president picked Piro for the job earlier this month after his previous nominee, Ed Martin, failed to garner enough support in the Senate. So there you had both Janine Piro and Pam Bondi, who, of course, knew each other

from Fox News, both of them well regarded on the cable news circuits, and now in government. Contessa Brewer, also well regarded on the cable news circuit. Thank you, Brian. You're very welcome. Still ahead. Another tailwind for oil. Oil's actually having a pretty good month, but it's only at $62. What does that mean for oil and gas? We'll talk more about it coming up. Crypto Watch is sponsored by crypto.com. Welcome back. It's time for today's three-stock lunch, where we hit three different stocks that are moving and ask our guest how investors should be trading them. And our guest today is David Kudla. He's the founder and CEO at Mainstay Capital Management.

David, it's great to see you again. Let's start with Palantir. which is higher today on news that Fannie is launching a partnership with them to detect and prevent mortgage fraud, an issue that FHA Secretary has been very hot on. The stock is up about 1% today, but hugely volatile, big gainer this year. What would you do with it? We still think Pallantor is a buy. Probably a buy on the dips. As you said, Kelly, it has been extremely volatile, but that most of that volatility has been in one direction.

We originally bought this stock back in June of 23 at $15, and it's trading out. in the mid-123, 124, 125. But we saw, you know, after the first quarter earnings report, sold off 15%, kind of a buy-the- or buy the rumors, sell the news. It's back up to, in the mid-120s. We think it has further run. This is where they are leveraging AI very well. They're winning in a space with AI on counterterrorism and what they're doing for governments,

and they're increasing their commercial contracts in the private sector. So we think this stock has a lot further to run, even though it's rich and valued. All right. Next up, David, we've got Constellation Energy. Some of our viewers might remember that we spoke with the CEO last week, who is at the White House. It follows President Trump's executive order, hoping to ramp domestic nuclear energy production. David, that stock is up nearly 40 percent in the past month. Are you still a buyer?

Yeah, we just bought that stock at the end of March. and on basically the news of what's happening with nuclear energy, 70% of their energy production is nuclear. And with the executive orders that were signed on Friday, your network covered it, did the interview of the CEO Dominguez. And clearly they are a winner going forward. Those executive orders are to help with deregulation in the nuclear industry. Where it's redundant, where it can be streamlined, it takes almost 10 years to build a nuclear plant right now. And the idea here with the energy demands for AI data centers is to let nuclear grow and provide the energy that American needs. All right.

So then that brings us to Salesforce, which is training fractionally lower today ahead of their report after the bell tonight. What would you do with this one, David? This one, we have a hold on it. We've actually held Salesforce for quite a long time, done pretty good over a holding period. But, you know, we're not as excited about Salesforce at this point, about 7% year-year growth. Still the leader, you know, still a leader in its space. But, you know, as AI is disrupting every industry, it's doing that in CRM and Workflow Software as well.

We have, you know, the wars between Microsoft co-pilot and Salesforce agent force, who's going to win, the battle back, battle of words back and forth. But it's really about integrating AI into what they do. and who's going to do that the best. So that's really the race that's on, and what we're looking for in the earnings report this afternoon is what kind of guidance we see on AI and their future developments. All right, David, thanks for joining us today.

Appreciate it. David Kudlow with Mainstay Capital Management. And don't miss Salesforce CEO Mark Benioff on Mad Money with Jim Kramer tonight at 6 p.m. Eastern for an exclusive post-earnings interview. And remember, you can recap every three-stock lunch. Just scan that QR code that's on your screen. head over to CnBC.com for more. Power lunch. We'll be right back.

All right, let's talk oil and energy because while gasoline prices, hopefully near you have been coming down lately, the price of oil is quietly ticked a little bit higher. It is early, but crude actually having a decent month, in fact, best month a year so far, as trade tensions ease. Some energy stocks, by the way, have moved higher for like the last couple weeks. You got Marathon Petroleum, EQT, APA, Valero, and more, all up double digits so far this month. we're going to talk more about oil. We've got a couple of OPEC meetings coming up.

Oh, and a big potential Alaska gas project and pipeline. We're going to talk about all of that, one of our favorite people, Halie McRoff of RBC. Looking forward to that. Are we going to take a look at the SpaceX video or we don't have time? Maybe we'll do that after the break if we go now. Oh, that was a tease. Indeed.

Coming up after the break, a SpaceX video. We're back right after this. Welcome back. Before we go, here's a little. look at the video of the latest SpaceX spacecraft launch last night. Remember after back-to-back explosion, SpaceX had launched this mega rocket starship on Tuesday evening. It did make it into orbit, but fell short of the main objective when the spacecraft tumbled out of control and broke apart, Brian. I have a feeling Morgan Brennan. We'll be talking about this in the 4 p.m. hour, as she should. It's still a hell of an accomplishment, by the way. A relanding. People like, oh, it broke up.

Like, yeah, it's really hard. Space is hard. And it's the, big one headed for Mars, right? So he will continue to try to, you know, like we said, we'll leave it to Morgan to fill in the space details, what exactly is happening here. But I do give him credit. And a lot of investors do so much money in this privately held company still. And other Elon Musk news, he also told CBS over the weekend, and this is starting to get more and more attention making the rounds, told him how he's disappointed by the president's budget bill, calling it a massive spending bill that increases the deficit and undermines the work that the Doge team is doing.

Well, that matter to the Musk caters? I don't know. I don't know if it matters. People with the bumper stickers and their Tesla. I bought this before Elon went crazy. Do you think he's pivoting back towards a little bit of the mainstream? It probably is. They tried to cut, they cut some programs and costs in D.C. You and I are both from Virginia.

We've seen the growth. But people are like, don't do it. Congress realizes the risk, and they backed off. Right. But it almost sounds like he's saying I still would like to go further. I would like to have the work actually be done. And he's having a hard time getting there. The president responded to that today, too,

saying like they had to do what they had to do. It's the government. Yeah. That's thing. It's never going to happen. Thanks for watching. Closing bills starts now.