Power Lunch - Stocks drop on Friday as traders are cautious ahead of China trade talks 5/9/25

Episode Date: May 9, 2025

Stocks traded lower Friday as investors await much-anticipated trade talks between U.S. and Chinese officials this weekend.  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 Friday afternoon alongside Kelly Evans. I'm Dominic Chu. And stocks are lower across the board right now. We will likely finish in the red for the week overall if these numbers still hold. It's kind of mixed right now. The down just rolls down about 1 tenth of 1%. The S&P 500 are now drifting very ever so slightly into positive territory, as is the NASDAQ composite. And for the week, again, breaking a two-week winning streak if we finish lower for all three averages. But Kelly, an interesting look here that we've kind of moved off. well off the session lows so far. Indeed. And we have some big moves in individual stocks also with three names gaining 20% or more. You can see them on your screen there. Lifts up 26%. Posted a profit on an increase in riders. Trade desk beat on results and a stronger than expected outlook.

Its shares are up 17%. And insulate, the maker of insulin pumps, beating on earnings and revenue and raising guidance. It's up 20%. All right. Well, let's start with what else, the trade war between the U.S. and China, because today at West Coast ports, the first cargo ships with subject to the 145% tariffs are arriving on our shores, destined for Amazon, Home Depot, tractor supply, and other big retailers. This is all as Treasury Secretary Scott Bessent will meet with his Chinese counterpart in Switzerland. This morning, President Trump's saying on truth social, 80% tariffs on China seems right up to Scott B. So what are the Chinese saying ahead of these big talks in Switzerland? Let's bring in Eunice Yun. She's joining us live from

Beijing with the latest on that side of the Pacific. Eunice. Thanks, Dom. Well, China's signaling, which is aimed at the Chinese public, is to present China as tough. So the Commerce Ministry has said that the U.S. should, quote, meet China halfway, treat China as an equal in discussions. And then also, essentially, if you coerce us, according to the Chinese, the Commerce Ministry, we will walk or what they say, refuse. So on top of that, the Chinese are threatening that they have other ways to hit the U.S. back. The Commerce Ministry today announced a crackdown on rare earth smuggling and saying that this is partly to blame on foreign entities. And then the social media account that's linked to CCTV, which is very closely watched for its commentary on U.S. China trade issues, has been mocking U.S. rare earths, quote, shortages, they say. So China Watchers, as well as many others here, especially in the manufacturing industry, have very little expectation that there's going to be anything really dramatic out of these discussions.

Even Scott B. has said before and hinted that this is really an initial stage and that these longer, more drawn-out discussions would come down the road. Well, in UNICE at the same time, there's been more questions about how Chinese companies are trying to get around U.S. tariffs because they still want to export. A lot of U.S. consumers still want to import. And we're hearing more and more about exemptions and things like that. Yeah, there are exemptions, but there are also some other dubious ways, I would say, that some companies are trying to get their stuff over to the United States. On social media, we've seen a surge of ads that are marketing services to get around the tariffs. One of them is called label washing. So this is when the agent would take your products to a third country like Malaysia and then literally change the label of the cord tree of origin and then pass it on to the United States. Another one is product mixing.

So they're saying that they could mix high value goods with your low value goods. but then just declare the low-value goods. And then the last one I thought was pretty interesting, too, and is an old one. It's called first sale. And that's because a lot of times the tariff is based on the price of the good when it comes out of the factory. So the idea is to set the value and sometimes ridiculously low,

but then make up that cost along the way to the U.S. And a lot of these agents have said and even told us that the chances they say are really low of getting caught at U.S. Customs. All right. Eunice Yuniung, with the most out of the kind of discussion now from the Beijing side of things, thank you very much for that. Now, it's been, of course, a volatile few weeks for the U.S. markets, but a lot of the losses following Trump's tariff announcements have been reversed, erased overall. International stocks are in a similar type situation with the euro stocks 600, slightly up and the Shanghai Composite Index slightly down during the same time frame.

So it's been pretty much a wash. ETFs tracking the global market saw some gains on the positive news around a deal with the United Kingdom, but most are still 10% or more off their recent highs. So what is your next move now? Many claimed American exceptionalism in that trade is now dead. So should you still be looking across the globe or just stay with the U.S. trade? Paul Christopher is the head of global investment strategy at Wells Fargo Investment Institute and also here with us is Brendan Ahern, the CIO of crane shares.

They manage a very large China-based ETF. Paul and Brendan, thank you very much for joining us here. I'd like to maybe start with the global picture, Paul, before we drill down a little bit more into the Asian side of things specifically. Is the U.S. versus the rest of the world trade clear to you? And if so, where is the capital going to flow to? Yeah, we think it is still clear. There are some cross currents out there, but they really don't have anything to do with U.S. exceptionalism. One pattern is that there was a lot of overbuying of tech at the end of 24, and that has reversed in the first three months of 2025.

That doesn't have anything to do with tariffs. A second piece of it was that European banks did really, really well in the first part of the year, but now the downgrades are leading the upgrades by, quite a large margin and that outperformance is starting to slide. So we think that, you know, if you're looking for quality here and the, in a world of uncertain policy, we would still stay with the U.S. and we would buy what has good long-term trends and that has good balance sheets. And that starts with IT, information technology, consumer discretion, excuse me, comm services, communication services, and there's a couple of others. But we would stay with the U.S. and a quality focus.

All right. Brendan, I hope it goes without saying for many of our audience out there that diversification has always been one of the strengths of portfolios no matter what. You have to be diversified. It's not like we're just placing bets just on the U.S. or just on Europe or just on China. What exactly then does it look like allocation-wise if people are looking for opportunities in China, a market that has been shunned now by many investors across the Western Hemisphere.

Yeah, definitely, Dom, I think, you know, the U.S. accounts for two-thirds of global equity market capitalization after a 16-year bull market, driven also by a very strong U.S. dollar. And I don't think all of those tailwinds end for U.S. equities. I think simply you're seeing a little bit of a global rebalance taking place. I think outside of the U.S. institutions are starting to rebalance maybe a little bit back into some of these non-U.S. equity markets that have really underperformed over the last 16 years. And we definitely think that Chinese tech companies on a relative and an absolute basis are very inexpensive. And obviously, that's self-serving and highly biased. But we think as we go into

Q1 earning season with Alibaba and others reporting just next week, we think there's potentially a really strong catalyst at hand. Can you talk a little bit more, Brendan, about like where the biggest movers have been on the Chinese stock front in the last few weeks? and where you see the risks to the upside and downside right now? Well, we think a lot of those downside risks, Kelly, are already built into the market for a lot of investors, anything non-U.S., anything China's out of sight, out of mind. And we really think that the one U.S. investor that is very keen on China,

or technical analysts who see that higher highs and higher lows is the uptrend that we're seeing in K-Web and in Chinese equities. So we do think that these growth stocks are where foreign investors will always come back into. and we're starting to see within broader Asia, within the Middle East, Europe. We're starting to see some of those investors from an institutional perspective come back as they maybe take some profits off the table from the U.S., put them back to work in non-U.S. markets, including E.M. and China. Hey, Paul, it's not all about tariffs, but it kind of is a lot about tariffs these days.

So as you look across the global investing spectrum, how much of your analysis and your strategy revolves around trade headlines or deals getting done. We saw the UK this week. Could it be a template going forward? Is it, do investors need to be, I guess, in other words, paying attention to headlines or are there other fundamental ways to look at it so you don't have to scrutinize all the headlines all the time? No, we do think it's important to look at these deals as they come out. A lot of what that market move higher in the last, the previous two weeks was about was the expectation of deals. But we certainly hope that the deals look better than the one with the UK, where you still have a 10% minimum universal tariff. That's the same as everybody gets from Trump.

And then you have these very strange provisions about, well, the first several hundred thousand cars or whatever it is that come into the U.S. are tariff-free. Those are conditions and conditionalities that aren't really consistent with negotiating to remove tariffs. They're negotiating to leave some tariffs still in place. And that's going to be important going forward because, again, we think the tariffs are going to hit the rest of the world ultimately harder than they hit the U.S. You're seeing the U.S. being sold off on tariff concerns, but they're going to have deep implications for Europe and China if those tariffs remain in place. So, Paul, is that enough to make you think that investors should go, okay, I don't need to chase international markets. You know, I think a lot of people go, okay, I wasn't exposed in Jan 1, but I'm going to get some exposure now just to be safe. but sounds like you're sounding a bit of a warning about that.

Yes, I am. And we are. And what we would do about international markets here is to not zero them out. But they've outperformed lately, and we don't think that continues. So we would look for opportunities on pullbacks to diversify a little bit. And as we were talking about just a moment ago, rebalance a little bit. But we would still continue to favor the U.S. All right.

Paul, Christopher and Brennan Ahern on the Global Trade. Thank you, boy, with permission. Have a great weekend, gentlemen. All right, after the break here, Kelly. Bitcoin, as you mentioned earlier, Don, blowing past 100,000. We're above 103 now. Like we were just hearing, is this a return of the American exceptionalism trade? Is it just a trade bounce back, or are we seeing the beginning of a massive crypto rally? We'll try to find out next.

Heck of a bit short. CryptoWatch is sponsored by Crypto.com. Crypto.com is America's premier crypto platform. All right, welcome back to power lunch. Shares of upscale salad chain, sweet green are anything but in today's trade. The company reported quarterly results. The shares are down almost 19%. The results quarterly were generally seen as in line with various estimates.

But as often the case, the forecast was the disappointing part. It lowered its full year outlook for key metrics around operating income, something called EBITDA, also its full year revenue forecast, and it was the first time since the company went public back in 2021 that it saw a drop in growth at established restaurant locations. We know it as comparable store sales. That was mostly driven by a drop in customer traffic, which was offset in part by higher prices charged. I found this story interesting.

I found this story interesting because this is the higher end consumer. If you've ever shopped at a sweet green, we're talking about a salad that's roughly in that $14 to $16, $17.17 range. Or up depending. It's not an inexpensive salad. I mean, you probably get the fancy add-ons and the salmon and everything else. I've been known to. But this is, I found it curious because the commentary during the earnings conference call

indicates that there could be a little bit of impact on even those middle-to-higher income consumers on buying high-end salads. And that's fine. And I hear that. And maybe that is absolutely the case. But a company this young shouldn't be seeing negative comps, I think, for any reason. If you say, why are the shares down the way there? Do you say their comps declined here?

For the first time, for the first time since the company went public back in 2021. Don't like that. I know that you've spoken with Jonathan Neiman in the past, the CEO of the company, so this might be a great time to talk to them more about. And look, they're doubling down on this strategy where they're trying to bring kind of cost out of the restaurants, use more automation. The product quality is phenomenal. So definitely one to watch.

Is it situational or is it company specific? Don banks. Bitcoin, meanwhile, crossing back above the $103,000, mark. today to hit its highest level since late January. It's up 6% this week, and it's up 25% over the past month. How much from the lows did you find? 35 since the beginning of April. 35% from the lows, and once again, a tell for the broader markets. So are we approaching a technical level where some of the other key cryptos begin to also kind of participate more in this run-up? Let's bring in Michael Busella. He's a managing partner and co-founder at Neoclassic

Capital. Mike, best strategies for the novice. Forget it. For the experience. For the experience. investor for anyone who's wondering what you do with crypto here? Sure. Best strategies. That's a tough one. I would say keep it simple. I feel like I say this every time I'm on the program, but you know, dollar cost average compound over time. You don't want to call a cycle. This is an exciting time. I think there's a lot happening in the Bitcoin ecosystem between the plethora of public companies. So you saw Tether and Cantor and SoftBank announced 21 Capital, BTC Inc also announced a new public Bitcoin holding company, the number of Solanavis strategy companies that are in the public markets now.

So I think keep it simple, buy yourself some Bitcoin, buy yourself some ETH and Tier 1 Alt, like Solana, Avax, and then buy out a long tail of crypto assets. And I think I'm going to stop. I'll pause there. Why do you think Bitcoin has been so strong and continues to be kind of a leading indicator for what's going on with risk, even while some of the riskier parts of crypto themselves don't enjoy the same kind of upside? Bitcoin has always been a leading indicator of where risk assets.

assets will go. So this is generally a positive skewed market of Bitcoin. I think specifically to Bitcoin, what's happening is where is the buying coming from? And so again, you have these publicly listed entities that are consistent buyers of Bitcoin. You have one of the most profitable companies in the world, Tether, that continues to use profits to buy Bitcoin. Tether is what the insurance business was for asset management. It's becoming one of the largest balance sheets out there. You have states, so New Hampshire, Arizona, potentially Oregon, who are now adopting digital asset holding frameworks that are going into law. You have sovereign states. I was in Dubai last week. The UAE, alongside many other nations, are buying Bitcoin as a reserve asset. So you have demand

coming from there, and then where do you see supply consolidating? Very similar to gold, I was going to say, where we see kind of this huge institutional and kind of central bank buying that's been a big part of the story. Does that keep going, though? Or does that run out at some point. Digital and physical gold have worked quite well. So I think, you know, the Swiss are doing well. Between the frank and gold, that's been a good trade for everybody and Bitcoin all around. So I think that trade should continue. I mean, it's all momentum oriented. So as long as there's more adoption, more establishment of these reserves, the other side of it is the supply. So you're seeing, you know, investment banks like Cantor Fitzgerald. You're seeing Coinbase

and others that are now running large-scale Bitcoin lending platforms. And so when Bitcoin, becomes financeable, Bitcoin becomes a liquid asset you can hold. So basically not liquid in terms of trading, but you post your Bitcoin as collateral and you can borrow dollars and then go out and buy more Bitcoin and buy other assets. That sink supply. It's, you know, it creates a supply sink that didn't have really didn't have that type of size previously. And so that alongside the stablecoin adoption is off the charts. So the banking system of crypto, the on-chain banking world is coming together between stable coins, on-chain treasuries, tokenized assets, on-chain finance. That is the foundation for our banking system. And so we already have dollars in banks in the

traditional fiat world, and that allows us to go build applications, build stores. We now have that foundation in crypto. And we're on the cusp of the on-chain banking system. Hey, Michael, it's Dom here. It's easy to have that allocative thesis behind Bitcoin because there are so many institutionalized ways to get into it. I want to know if, if there is a trade, a catch-up trade with the rest of the market, as you point out with ETH, possibly Solana, possibly Cardano, Ripple, and all these other ones out there, how quickly or does it materialize as quickly as the Bitcoin rally has? So, yeah, I mean, Bitcoin is the easiest one to recommend.

It's the gateway drug for everything else that's in the crypto ecosystem. That's sort of afterward you say, listen, look at the tier ones. And then you say, here's something else to look at, but do it at your own risk. Right. So I think the, again, what's helping Ethereum, Solana, Sue, Avalanche, a lot of these other alternative assets is the fact that more money is flooding into the top of the stack and then trickles down. Once you open up your Coinbase or Crypto.com application and you start buying one asset, you know, you start buying your second and third and fourth. And then you start understanding what the technology means. So right now, for example, Ethereum had a massive rally and people speculate it was the Pectra upgrade, which is a technological upgrade in the protocol. It's not really that known to the rest of the world. But really, what it was is it's more familiar with this program is it was a flow of funds. It was an underweight asset. So if you think about owning an index and people underweight a particular stock in an index, Ethereum was very underowned.

And sentiment was at an all-time low. And so once you saw this trigger into ETH, that created momentum in people getting right sides on the index trade in Ethereum. I'm still stuck on the like proof of concept versus proof of work. What was a proof of, proof of stake? Proof of ownership. What's the stake? Proof of stake. I mean, there's a lot of consensus mechanisms.

Proof of stake is the most common. Proof of work. Really, it's just Bitcoin and a few other assets that are still proof of work. Mike Buccella, I'm glad you are all over it. Thanks for joining us today. We appreciate it. Thank you. And a very happy Mother's Day to you, Nancy, my mother and every other mother out there. Yes, to all of yours and all the moms too. We really appreciate it. Take care. All right. As we head out to break, don't miss the next fast money live event on Thursday, June 5th at the NASDAQ Market Site in Times Square. it's your chance to meet Melissa Lee and the fast money traders face-to-face, up close and personal, investing advice, plus a special cocktail mixer too. Share some drinks with the traders.

Scan the QR code on your screen or head over to CNBC Events.com slash fast money. For more info there. We'll be right back after this. Welcome back to Power Lunch for a very special moment as we celebrate the career of Bob Pisani. He is stepping away from his everyday role on the floor of the exchange and will become a contributor to CNBC Pro. So we thought this was a very fitting time for a look back. Bob, this is your very first appearance on The Beastave Report. Welcome from all of us to you.

Thank you. It's a pleasure to be working with you. I trust you're not going to let me get too serious about all this. 1993 could be called the year of the first-time buyer. How about your very own bomb shelter? Ziegler's home is for sale for $5 million plus change, much to the chagrita of his dog. Jay, are you depressed that you might be leaving here? You know, when I first came down here in March of 96, Maria had been here seven or eight months. She was red hot down here, and I said, I want to cover the stock market.

Indeed, a historic day down here. A few bumps for IPOs out there. I would call it a double-edged market today. Look, look what's going public tonight. It made it. Crispy Cream went public. Yes. Let me just get a little closer to the post.

The president has stopped right around the corner. We're getting a lot of buybacks announced. Overall, we're closing right at the highs for the day. We're inside post nine here. A lot of big stocks are right here, and you're on the inside looking out. We have a what appears to be a very serious. Is that the World Trade Tower? Yeah.

Bob Bassani has been there all day and has just returned from the streets of Lower Manhattan. What can you tell us, Bob? Well, I was, Tyler, on the site of the South Tower. What was the South Tower of the World Trade Center? Just getting the markets open is a victory. Secretary of Boston, Bob Bassani, from CNBC. Is there going to be an orderly liquidation from Lehman?

We don't know. If we settle there, folks, that will be the worst day since 9-11. We're down 200, went down 400 very quickly, and then down 800, nearly 1,000 in a heartbeat. I have never seen the streets so bearish. The Santa Claus rally is happening. Good job, Bob. We're driving along the deepest part of the mine right now.

Thanks to the world, Gold Council on State Street, you are able to buy gold just like it's a stock. Alan, tell us what's going on. What's happening down here? This is going to be the post for Visa here. Biggest IPO, U.S. IPO in history. Squitter opens at $45 and $10. BTIG Charity, trying to raise $6 million for 300 charities.

Here he is. Shaquille O'Neal and Shaquilla. You must be getting taller every year. AirPods are a runaway success, and we're making it just as fast as we can. I've been wandering around like a homeless person trying to get one. Okay, guys, another 20 minutes. We're taking deli orders. Mr. Maa Pastrami.

You go and explain that. Oh, I'm supposed to. Doesn't get any better than this. Let's get the news from Bob Pisani with all those wonderful posters behind it. We did two billion shares in the first hour. Thank you, Bob, hereafter known as Hollywood, Bob Pisani. The crypto-ETF world is exploding. The simplest answer may be, don't underestimate the power of a meme stock.

We are now almost 400 points higher. I dye my hair gray now. Those of you are wondering about that to make me look more. or distinguish. Bob, I cannot imagine my 30 years how much they would have been diminished. Have you not been my colleague for all this time? You are so beloved by so many here, probably number one in everybody's list.

Aw. My heavens. That was Kelly Lynn, who put that together. And what a remarkable job. One of the most talented producers out there, by the way. But look at Bob, deflecting the praise. Even in this moment where we're all trying to say, Bob, it's been wonderful working with you. All of those moments down at the stock exchange and to be reminded of how you brought some humor and levity to the situations, which, let's not forget, we're opening IPOs. It's nine, the president's down there. I mean, you had so much that you were

right in the middle of. Front row seat. Yeah, what was beautiful about it was that CNBC came along at just the right moment, that perfect confluence when all of a sudden people could trade at home in the 1990s. People couldn't do that before. People had the option now of the internet. The Netscape browser went public in August 1995. That put it on the map. Suddenly we had, had a shiny object everybody wanted. So you could trade at home. You had a shiny object in the internet and you had CNBC. Those three things created an explosion of trading in the mid-90s. And when I got to the NYC in 1997, by heavens, it was something to behold. 4,000 people on the floor screaming their heads off. You know, Bob's talking about this explosion of trading.

There was a story back in the day about how that explosion of trading ground to an absolute halt because of what you just mentioned, the internet. And you were doing a story back in the day that was very racy and controversial. But please, take us through what that was. I think it was 1996. And they asked me to do a story on internet porn. And I said, oh, how are we going to do this? And they said, we'll figure it out.

But be careful. So I went up to Boston, and this was very primitive. They had a, they had a, fellow had bought a house, rented a house, and there were rooms in it. And people called in and said, do this, do that. There was actually no pornography, actually. It was just people being racy on TV. So I went and did a stand-up in front of somebody who was doing something for somebody. And again, it wasn't porn.

It was just, you know, do this or do that. And we aired the stand-up. And the floor stopped trading to watch these racy pictures of people behind me. And later on, CNBC's management cited this as an example of how power. we had become. Look, and we were able to show that the volume actually dipped on the floor, because at that time, about 4,000 people, about 80% of the volume was done right on the floor of the New York Stock Exchange. So all of these people gathered around the monitors that we had down there to watch, and that sort of helped make us at that time.

He had the only fan story before Only Fans was a thing. That tells you the sign of the time. So what about now? I mean, like we said, you're going to be working with CNBC Pro. So much has changed in this landscape that you're describing over the last 30 years. I'll tell you what it's about. Linear television, it's got to be more than that these days. Not just all the people watching us on TV, but it's about building community now.

And that's what pro is about. It's about building out conferences. It's about specialized writing, really specialized writing on pro. My trader talk is on pro. I hope people who haven't been reading your columns, Bob, they are fabulous. They're so good. They're missing out. They have stats.

You have insight. You're ahead of the story, always on the right story. I hope that we'll see much more. Well, that's what it's about. As I mentioned, pro, and we're doing conferences as well. CNBC's going to be doing more conferences. So this word community becomes very, very important. It's not just people who are just watching TV,

but how can we build a community of long-term investors who want to say? And that's my passion. That's what I care about. People cynically say that the stock market is like a casino. And I say the stock market is the opposite of a casino if you are a long-term investor. You are a winner in the long-term. And that, we need somebody who's a cranky, batty uncle to sit around and say, all right, enough folks of this nonsense. Let's just show you how to really make long-term, build long-term wealth.

With the end of the, you know, Berkshire era in many ways as well, I think that is, that is really needed now more than ever. Yeah. We, Warren's voice, two or three people resonate in my head constantly. Warren Buffett and his eternal wisdom. Jack Bogle, the founder of Vanguard, probably the single most influential man I ever had. The week I got this stock correspondent job in 97, I called Jack Bogle that day. And he said to me, Mr. Pursani, I very much like your television station, but I would like to see more long-term investing on there.

And I don't hear enough of that. Now, are you going to help me with that? And I said, yes, I'll be happy to. And it changed my life. The third person, of course, would be Art Cash and my mentor. when I got down on the floor, 4,000 people, and not a lot of them wanted to talk to me. And he was one of the few that stood up and said, you can talk to this guy. He was trustworthy.

Jimmy McGuire, who was Warren Buffett's specialist, was the second one, and it changed my life. Suddenly, I had friends on the floor, and at that time, those people had orders. So if you could see what they were doing and they trusted you, it changed my reporting because of people like Art Cashin. You've really been in a front row seat to history. So, Bob, congratulations. Thank you very much. And remember, I'm not going away. Nope.

This is not retirement. This is just him doing something different. Don't say that word. We're not saying it. We're not saying it. Thank you very much for a great career. Coming up on the show, we've heard a lot of concerns around the consumer, but with a major holiday weekend around the corner, what should we expect to see on the spending

front for the big summer season? We'll get some unique insights coming up next. Plus, as we head out to break, we talk a lot about the impact terrorists are having on big corporations, but small and medium-sized businesses are also being squeezed. In our series, tariff factor, we look at how they're navigating the fallout from rising cost to supply chain delays. A very large part of our business comes directly from South America and Ecuador. So the tariffs of 10% immediately impacted our business the day that they went live. There are some prices that we've had to adjust up, but we've done our absolute best to make sure that we do not have to raise prices.

Colombia and Ecuador produce some of the best flowers in the world because of their climate, because of their soil. The United States has a wonderful flower farm business, but it just isn't as big as we would need it to be for the size of our business and quite frankly for the size of Mother's Day coming up. Mother's Day is our biggest holiday of the year. But unlike other categories, we have to deliver on a specific day. And so there is a lot of hard work in preparation. Cut to tariffs. That adds significant amounts of work on our team to do what we can to try and find cost savings. So right now, as we go into Mother's Day, we're laser-focused on operational execution, making sure that we can continue to provide the product that we want to at the price to our customers that they expect from us.

Welcome back. Expedious years are getting hit hard today after missing revenue estimates and giving cautionary guidance around inbound U.S. travel. Summer travel demand will be a key read. into the health of the consumer and the economy. Our next guest says the early read is showing that Americans are opting to stay closer to home, which may be an opportunity for his company. It's called Resort Pass. Now, Resort Pass allows customers to get day passes to hotel amenities, like the pool, the beach, spas without actually staying the night at these hotels.

We have CEO Michael Wolf of Resort Pass here on set with us to, break down what all of this means about the economy and the consumer. So thank you very much for being here with us on this Friday. Let's start with a bigger broad question and then we'll drill down. Your company, is it seeing signs of consumer weakness? Well, it's seeing strength, and I think that is because of the consumer weakness. So we're seeing that there's a lot less people, 20 plus percent less coming in from Canada, a lot of less European tourists coming in as well. And so we saw the guidance of all the major hotels and the RevPAR really guiding flat to even down. As a reflection, I think that they really think occupancy can't go anywhere, and so rates aren't going up.

And so they're looking at additional places where they can drive revenue. And that's where things like ancillary revenue and the day pass comes in. How exactly then, I understand the value proposition. You offer for a fee access to, say, some hotels pool, their bar facilities, maybe access to the beach in a lounge chair. But why do hotels want to partner with you? And what does that say about how they view the economy? Yeah, I think it's really just the rise of the day guests in hospitality. The hotels are so smart when it comes to revenue management and yield management of the room product. They've never applied those same lessons to the rest of the surfaces of the hotel, and that's kind of where we come in. And what's great about it is I think the hotels look at the airline industry with a lot of jealousy with a lot of jealousy. Airways have been incredibly smarter over the last decade of really driving revenue through every square inch of the airplane, through seat fees and luggage, etc. Hotels have never done as great of a job with that. And so now they realize, hey, there's a lot more money they can make and there's a lot of excess capacity throughout their many layers, things like pools, cabana, spa, even their rooms for the day.

Now, Kelly, what's interesting to me is we're talking about all the way. I'm looking at this. I'm like, wow, really? The crazy part about this is, I want to hear where he thinks the demand is going to be this summer. We're going to approach a very consumer-centric summer travel season. Are you seeing any early indications about where people are gravitating towards and what they're gravitating to in terms of those amenities? For sure. I think it's local. And I think that is like the key word for this summer is local, local, local. People are just doing less long-haul travel. We are seeing that in our numbers. We actually both have local use case and a traveler use case. The local is, again, someone who lives in New York and visiting a local hotel a few blocks

down the street from them. But we also have people who are traveling. And those are people who are maybe staying at an Airbnb? What do they want to compliment that Airbnb with? Hotel amenities for a day of their trip. Or are they one of the three million people checking out of an Airbnb every day? And where do they go? Instead of sitting at the airport all day, they now have a bonus day of their And what we're seeing in our numbers is that that local customer is growing particularly strong this year. And I think that's a reflection of the overall macro. So you can get like a pool chair at one of these New York City hotels for, you know, $70 for some of the. But this now changes fundamentally the way I think about, well, if you're experiencing this sort of luxury hotel and yet, I don't want to say anybody can show up and kind of be using the pool or the chairs or whatever during the day, does that change the experience?

I don't think so. I think it actually complimented. And the reason being is that most luxury hotels today, you might go visit as a local, the restaurant, the bar. And I don't think when you're there as a traveler, you're necessarily thinking, oh, is the person next to me at the restaurant staying in room 312 or do they live down the block? In fact, I would say that having the local kind of integrate into the hospitality space is really accretive. You get to kind of experience a property and a more local experience rather than just as a visitor. It's fascinating. I think the one thing I want to kind of focus a little bit more on before we let you go here. I'm curious. As you talk about the evolution of your customer base and consumers and your partners, partner hotels, what's the path forward and what kind of economic environment would you and your company thrive in? I think we thrive in both environments. So the company's been growing quite rapidly. We've quadrupled the business in the last two and a half years. We work with over 2,000 hotels and are adding 100 hotels to the platform every single month. I think ultimately the hotels realize there's an incredible incremental revenue stream that's available to them. And why wouldn't they take that? And unlike, again, the aviation space, the customers are so excited about this experience. This is a creative, not just to the hotels, but people are having this experience that they never thought was possible. 95% of the hotels we work with have never offered day access before.

And ultimately, we're giving people this feeling of rest and recharge. And if I leave kind of our viewers today with one thing, it's really that, which is people love vacation. The average American takes one vacation a year. How do we kind of increase that? How do we create these experiences on a more ongoing basis? And that's what we do at resort. out of Newark. Or pay as much. Yeah. Michael, thanks. Really fascinating.

Appreciate you joining us to talk about it. Thank you. Michael Wolf of Resort Pass. Let's get to Bertha Kuhm's now for the CNBC News Update. Hi, Bertha. Hi, Kelly. A judge has ordered the release today of a Turkish grad student from Tufts University who has been in detention for six weeks. Immigration officers took Ramallah Osh Turk into custody in March near her. home in Massachusetts. The judge today released her pending a final decision on her claim that

she was illegally detained. The government took her away her student visa in response to an op-ed that she authored in the tough student newspaper about Israel's war with Hamas. A judge is hearing arguments right now on whether to recuse Los Angeles County's prosecutor from the Menendez brothers resentencing vid. Eric and Lyle Menendez have been fighting to reduce their life without the possibility of parole sentences for the high-profile murders of their parents back in 1989. The brothers accused the prosecutor and his team of bias. And the Women's World Cup will soon be one week longer. FIFA announcing today the tournament will grow from 32 teams to 48 starting with the 2031 World Cup.

Change will increase the total number of matches from 64 to 104. The game, it's the same move that the men's World Cup has made. It'll start for the men in 2026. More soccer all around. Kelly, oh boy, birth of eggs. Treasury yields are holding steady as Wall Street monitors global trade negotiations.

We will go to Rick Santelli for a bond report right after this. Welcome back to power lunch as you're seeing there. The bond market is in focus as the 10-year yield is nearly unchanged for the day, but well off the lows from the previous kind of week or so with the Fed meeting, the yield on the 10 years at 4.37%. Let's get out to Chicago and Rick Sintelli with the latest for the bond report. Rick. Yes, thank you, Dom. You know, maybe it's best to look at two-year and S&P on an intraday chart. After the lows were established, they're right about in the middle of the chart, the two years kind of outrun the stock market. That pretty much sums up today. We're looking at equities, kind of getting a little lazy in front of what may be news regarding

China and tariffs over the weekend, and that same jitteriness is pushing yields up a bit, even though, Dom, you're right, we're hovering very close to unchanged. Let's look at the week to date on twos and tens together. You can see, as we sit now, twos and tens are down just a bit on the day and they're only up a little bit on the week. And if you look at the dollar index, very similar. It's up a little bit on the week, down a bit on the day, two sessions in a row closing above that psychological level of 100. And if you look at that April 21 low, which was a three-year low, we're up 2% from that level. Kelly, back to you. Have a good weekend. Thank you, Rick. You too, Rick Santelli. So how should you trade this mystery stock

that's up nearly 30% this week? We will reveal it. three-stock lunch next. Welcome back. Before we go, it's time for today's three-stock lunch, where we hit three different names, why they matter to you and what you should do with them. Will McGoff is our trader. He's director of investments at prime capital financial. Will, it's great to see you. Let's start with Palantir, which is cooled off this week after those Q1 results, but it's up 50% this year and trades at 500 times trailing earnings and is in the top 10 U.S. tech firms and market cap. Are you a buyer?

Hey, Kelly, thanks for having you on again. As you just mentioned, Palantir is extremely rich from a PE standpoint, so much so that our analysts in Oberlin Park and some of our portfolio managers, there's a lot of disagreement as to what to do here. But the fundamentals are an amazing story. They've two and a half times revenue and doubled op margin over the last couple years. They want 30% of revenue growth over the next year. Outside of the technical setup here, I think you've got to ride this thing from $250 billion to the next trillion dollar company. knowing volatility is going to be there, I would be an owner and buy it here. All right. Next up, Will, is Lyft on pace for its best day since February of 24 after announcing a new $750 million share buyback plan. What do you do with the stock that's up 30% this week? That's our mystery chart, by the way. Yeah, I was about to say, I'm pretty sure this is the mystery chart. So we actually like Uber a little bit better here. Lyft essentially is riding their coattels, $7 billion market cap for Lyft versus $172 billion for Uber. Uber's crushing them on pretty much every comp you could see. But you just kind of hit the nail on the head with their free cash flow and their buyback.

At the rate they're running, they could essentially buy the company back and take them private themselves in seven or eight years. So it's an interesting thing. I think it's probably an acquisition target. I wouldn't be buying it with fresh money, but if you hold it, I would hold on to it for now. So why will make this quick? Why would you be selling Expedia? It's already down after those disappointing results. Yeah.

So Expedia is just an ancient technology, in our opinion. It's being replaced by, you know, new technology. It's straightened crosshairs there. Two-thirds of business comes from the U.S. We've got waning sentiment, trade wars. People aren't traveling as much. If anything, the positive here is summertime and maybe discount travel. It's up 40% year-over-year unbelievably.

So I would take advantage of that and sell it here. All right. Well, thank you. We really appreciate it today. And remember, you can recap every three-stock lunch. Anytime you want, just scan that QR code on your screen or head to CNBC.com for more. Can I say something? Yes, please.

He's not going to like this, but I just want to thank our longtime producer, Paul Eamon. Yes. He says, rap. I'm not. You can't make me. We're not rapping. Paul is moving to a new assignment Monday. He's been on the show for years.

We've all had the pleasure of working with him. He's done the stock draft and so much more. So Paul, seriously, a big thank you. And congratulations on your new gig. Good luck. Break a leg, Paul. We love you. And good luck in your next show here.

And by the way, I'm going to take a couple seconds. Kelly, happy Mother's Day this weekend. For my wife, Megan, as well, happy Mother's Day. Yes. Thanks very much for watching Power Lunch. Mine too. Closing bell starts right now.