Power Lunch - Stocks head for winning week on Wall Street ahead of the three-day holiday weekend 5/22/26

Episode Date: May 22, 2026

Markets are trading higher across-the-board as the Dow Jones touched a new intraday all-time high earlier in Friday’s session. Brian Sullivan and Kelly Evans are joined by Former Federal Reserve Governor Randall Kroszner as Kevin Warsh is sworn in as the next Federal Reserve Chairman, and they also speak with celebrity chef Wolfgang Puck on rising beef prices ahead of the Memorial Day federal holiday.   Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Oh, happy almost Memorial Day weekend, and a huge early thank you to those who valiantly gave all for our country with Kelly. I am Brian. We'll call this the Everything Rally. The market's heading for eight straight higher weeks. It is the best market run in more than two years. Big Cap Tech, still the big story. Apple and IBM hitting new highs, but Morgan Stanley, Golden Sacks, Ross stores, Kelly, and even Delta Airlines all hitting new record highs. You know why? Because Ed Bastion was on the show. Plus, Kevin Warsh takes the helm of the Federal Reserve at a country. consequential moment for the markets, with inflation risks re-accelerating, rate cut expectations under pressure, and the central bank's independence in focus. And also coming up this hour, Wolfgang Puck, the celebrity chef who turned fine dining into a global hospitality brand. We'll talk food

inflation, pricing power, and much more. Can't wait for that. All right, but let's kick off the hour and the markets and your money with this. Because if you are invested in the stock market, and we hope you are, and if you're watching or listening, we assume you are, You've had an incredible run. Every major average on pace to not only close higher for the week, but we are now up for eight straight weeks, chips and tech leading the way. So what's new?

But not everything is super rosy. Here's an example. Nearly half the S&P 500 is actually below its 200-day moving average. And Bank of America warning today, the rally might be getting a touch overheated, saying its bull bear indicator hit 8.0. What does that mean? well, that's a level that historically triggers a sell signal for risk assets.

But investors, they don't seem to care. Let's talk about it. And more joining us now on set. Steve Sosnik, chief strategist at Interactive Brokers and Jordan Klein, Mazuho Tech Sector Specialist, Jordan. And Steve, thank you very much for coming on on this Friday. Steve, I'll start with you. You remember that Honey Badger video?

Honey Badger Don't Care. Yep. Just kind of eats and does what he wants. That's kind of... I was still good right now. I was going to say something else. That's kind of how this market feels. It doesn't matter if oil goes to 105.

Doesn't matter if yields go up. The market just feels like it wants to go higher. What's going on? Well, I'll let you coin Honey Badger Market, Brian. But I think this is basically just, it's the everything rally. And one of the things, to me, that's the hallmark of it, is not only the fact that the semis are up 70% in six weeks. That in and of itself is crazy enough.

But it's the fact that what I call the ratchet effect about the peace dividend. And think about today. Markets telling you today they're much more concerned that they're going to miss some sort of peace in the Middle East than they are about the risks of going home long over a three-day weekend. And think about how we've reacted to any positive news, no matter how remote about any sort of development in the Middle East that might bring a resolution to the situation, which we all want. But we go up when it's touted and we do nothing when it doesn't come out. So that's to me the ratchet effect. We just ratchet higher reliably every time there's some positive development. Jordan, the one area that last hour, we heard concerned people are saying it's starting to look a little frothy is not the Mag 7.

It's not the highly profitable tech stuff. It's not even the semis. It's the unprofit, Goldman's unprofitable tech basket. It's a, they have an ETF track. It's up 38%, you know, in recent weeks. So does that tell you? And I don't know, maybe there's quantum or something. I'm not exactly sure what's in that.

But does that tell you that people are pressing this. a little too far. Well, it tells me that there is a lot of FOMO, fear of missing out. And I think that's the marquee kind of takeaway from this year is that people do not want to get left behind. Owning the Mag 7 or the big defensive, high-quality names is not going to get you outperformance. And I think the investors I speak to are nervous about that. Now, that doesn't mean they're going and chasing these unprofitable companies. I think retail, you can't underestimate the impact that retail investors are having in this tape. And, you know, they don't maybe work. worry about the same risk or exposures that other institutional investors would worry about.

Let's impact that for just a second because often when we hear things like, well, people, you know, portfolio managers have to sell to make room for IPOs or they have to outperform. Retail doesn't have to do that. They can just buy and hold great stocks and not worry about. So are you saying that there's an element of chase and positioning that's at play here? Or is the retail public driving this market in some of those fraught the areas or are they able to benefit from what the professionals have to do. You know, I've been covering tech a long time, and I usually kind of think that the institutional mutual fund investors drive the retail, but actually right now, I think it's more retail chasing names higher, and it's forcing the institutional mutual fund community that would be

saying, why wouldn't I want to own more Nvidia at 15 times earnings? They're then having to chase sandisk, lumentum, micron, because they can't afford to miss those moves. You know, if I can add here, speaking to someone who sees a lot of retail, flow. There's two things going on. Number one, I think that the FOMO is institutional. It's professional. You can't miss a rally, therefore you have to be in it. And I think some of the options activity we see where there's a strong demand for out of the money calls is actually in some ways fomo insurance from larger. Why? What does that tell you? It tells you they don't want to buy, they don't want to buy semiconductors up 70 percent, but they can't afford to miss the rally. So what do you

do? You buy calls so that you don't underperform. The individual investors have been basically conditioned to accept risk as being, the more risk you take, the better you do. And so, you know, to Kelly, to your point, when I see that happen in these unprofitable stocks, my turn for that is flight to crap. And when you get a flight to crap, you get, you know, FTC, they might not like that. You get sort of that, that frothiness that, that Bank America was alluding to. And, but, you know, right now, again, if the, if the mentality among individual investors is, the more risk I take, the better I do, and it gets rewarded. Why would that behavior change? So, Jordan, I'm going to say something that I want all of our audience to not listen to. So folks,

I apologize in advance, okay, because Jordan just said that retail is driving this market. Maybe that's why the Nokia is the world, the flexronics, the now call flex, some of the stocks that you like, right, they're soaring. I feel like retail investors piling into this. But we also know that retail investors, our beloved audience, we love them. Sometimes they make bad decisions. Sometimes they make bad decisions. Sometimes they buy at the top and sell at the bottom. Talk to us about the stocks you like, and do you worry that the retail investor may be chasing money here? Well, I mean, I always... And I say that would love and affection for all of our great audience. No, no one wants to be highlighting stocks that they think don't have material upside remaining. And I can't predict the broader

market and the factors that are going to impact the market like rates and oil and the economy. But what I do know and what I do for a living is focus on fundamentals, where I think there's a disconnect between the consensus earnings estimates and where I think the fundamentals will take those estimates. And in companies like you mentioned and the ones that I think are not the run-of-the-mill, Nvidia, Broadcom or Taiwan semi, like a flex-tronics, like a Nokia, like an ST micro over in Europe, those are companies where I have high confidence

that the estimates will come in a lot higher than what the street is forecasting. And that's what moves stocks, right? I mean, earnings expectations and the companies that will report and then guide. So that's why everyone's voiding software because they feel like the companies have, they have low confidence and low visibility. Right. But in semis, because you have a trillion in expected CAPEX investment coming in the next 12 months, that's got to go somewhere.

And if you find the companies are going to benefit incrementally from that trillion dollars of investment that these companies are already telling you they're going to spend, you're probably going to do well. Can I add some nuance to this retail? So I love to, and I probably push it too far the other direction, saying that retail is the new smart money. But retail's been buying since the lows all the way back to COVID during tariffs. You can tell me whether they've been doing this during the Iran War. Buying the dip has been rewarded for years and years and years now.

Mem stocks, on the other hand, not so much. So the last thing you want to see is the entire stock market, God forbid, get meme stocked. Because when people start piling in on the expectation that the herd can, create a one-way bet, they're going to ruin all the, you know, the sustainability of the route. Do you see any sign of that happening? Where would you say, if anywhere, see we're seeing kind of meme stock behavior? Well, to a certain extent, I think we're certainly at risk and the term for that that's always been historically used as a blowoff where you just go straight up and eventually it just sort of runs out of steam. But to be fair to the retail investors who,

again, a lot of them are my customers, they've been buying the dips. After Liberation Day, they were the ones buying the dip. And they were right, by the way. And they, to Kelly's point, and she'd be nice, the audience, and I'm not, they, they got it right. Yes, they're. Maybe they are the smart. Yes, they did. And we have the statistics to show that our customers actually beat the market last

year because they did that. And in the Persian Gulf situation, I think everybody was a little more reticent to sell because that experience was fresh in their mind of getting caught wrong footed. Our customers were still buying them. And actually, they do, they've been going to, side it back and forth, but yes, there's still the preponderance of, there's still the basic thought of, you know, viewing dips as buying opportunities. If that's done intelligently, that's smart. That's been, that's worked for thousands of years. If you're doing it reflexively, that's a bit

nerve-wracking. It's why sort of, Jordan, there's, I have this sort of desire to separate kind of retail buying the mag seven or whatever from, like, take quantum, for instance. What are we supposed, which category does that fall into? Is that people looking for a meme stock play? Yeah, yeah. That's what I worry about. Well, that's a perfect example of like an area that I feel like is more mean-like or it's a retail chase. I talk to only institutional investors, hedge funds, pension funds, mutual funds, they are not buying quantum. If you want quantum, maybe by IBM, okay? Maybe by Google.

But you're not buying these quantum stocks where the U.S. government says we're going to give two billion of chipsact money. They're up 50% in two days. These stocks were up this much back in June of last year. They round-tripped. So that's a perfect example of an area I would not. It's a science project. It's like, it's gambling, not investing. Yeah, but, but you know what? It works when the momentum and the herd is behind it, as long as you're not the last guy, you know, in the room, so to speak, you can make money, but it's like, you've got to be quick. You've got to be a trader. That's not what I try to highlight to people. I love that we actually have, we have literally someone who sees the retail flow and someone who sees the

institutional flow. So now I'm like, well, where else can we, so just, can you build on that? So if it's not, If they're not in quantum, institutional flow is doing what right now? Well, as we've mentioned, they're all going into one area of the market, which doesn't make anyone feel comfortable, but it's semiconductors, hardware, optical memory. That's the big beneficiaries of this massive investment wave that we're seeing. So they are buying a lot of memory. They are buying the compute, which includes AMD and Intel and arm holdings. They are buying optical, which is going to connect all this together.

They're buying the storage companies like Seagate and Western Digital. they're buying power, infrastructure, grid. I think actually the biggest potential risk to this whole buildout is not having enough electricity and power. Boom. Yeah, I mean, it's just... Could have said that before. Yeah, I mean, so whether it's the gas turbines

or bloom energy, which makes fuel cells, or the companies that actually build the data centers and the gas pipelines. Generac, caterpillar. 100%. 100%. And I know we got to go, and I want to apologize to you, but I have to ask this,

if InVIDIA or any of these other companies, one earnings says, to your point, we can't fulfill all of our orders. Does the market fall 10%? Does tech fall 10%? Well, I don't know. I mean, that's not because they screw up just because there isn't those things they need. Let me say this. If they guide below the buy side whisper, which is always $3 billion ahead of the street for revenue for Nvidia, it gets smoked because that would be, you know, they can say it's because we can't get enough power.

that's why Jensen and Collette, the company's management, is doing everything they can to ensure that the supply chain and the capacity and availability is there. So they don't have to get on a conference call one day and say, we are going to guide below the expectation because there's not enough of X, Y, or Z. I was going to ask a quick question. I'll save for the next block when we talk IPO, Steve. So I guess I'll pivot to the following one, which is on the question of what is the retail flow in terms of those big mega-cap stocks? What are they doing right now? The most active and the most bought stock on our platform when I looked at the data this morning was Invidia. Why? It dipped. And the story is a good story. But to me, the biggest risk is that Google and Meta and Microsoft say, you know what, we're spending an awful lot of money.

Maybe this isn't all working out as quickly. That happens. Look out below. The first quarter of their CAPX projections don't meet whatever the street or the whisper is. Yeah. That to me is the existential risk. Yeah, absolutely. All right. We'll leave it there. Jordan, thanks. Really appreciate you coming in.

Jordan Klein. Steve, we'll see you in a little bit later on. Well, there's a reason they call it liquid gold. A massive bid for gas drilling rights is taking place earlier this week in New Mexico. Why it matters for you at the gas pump. We'll explain that coming up. Something big just happened with oil in New Mexico. 74 plots of land suitable for drilling just sold for a record for billion dollars.

came out to $119,500 per acre. Even more incredible than that, those numbers, another $640-acre track, sold for $357,000 per acre. This is New Mexico. This is not the Permian Basin of Texas. And this might tell us something about demand for land and what companies are thinking about oil prices and maybe even the political climate ahead. Neil Dingman is an analyst, an Energy and Power Technologies Group at William Blair. Neil, welcome. Listen, I want to be clear. There may be some politics involved here, one of the frontrunners to become the new governor of New Mexico, former Secretary of the Interior, who worked to limit oil and gas drilling on federal land. So maybe there's some nervousness there. But even with that, what does this tell you, these prices paid for drilling acreage? What does that tell you about demand for oil drilling land and maybe these companies desire to get in there? Good afternoon, Sally. Thanks for having me.

What it tells me is quality, you know, I always, and what I've been telling investors here in Houston, is that quality acres now is elusive as a win for our hometown Astros. You just can't find quality acres out there, and these prices reflect that. You know, Sally, I was lucky, I mean, you look, the last five years, the average in this BLM sale was less than $13,000 an acre.

And as you pointed out, somebody just now five tracks paid, over $300,000 an acre. So it just tells you there's a very finite amount of quality acres out there. There's a race to scoop it up, if you will. And, you know, again, I think besides these BLM and these other lease sales, I think, you know, you not talked about this before. I think that's going to mean a lot more M&A and mergers as well. Could you dangle out in front of us, you know, who you think is very well positioned in this environment? I mean, Kelly, you've seen some guys. You've seen some guys. have just done some tremendous deals. I mean, Diamondback, you know, obviously did a big acquisition last year. We love them. Oventive just bought a big thing in the, in Canada. Of course, you know,

some of the majors have done large acquisitions that you've highlighted on your show, some more recent than others. So fortunately, a lot of the big players have, you know, materially added assets recently. But again, look, Devin just merged with, you know, and just did a large acquisition with Katera. And to Brian's point, even despite doing that, they stepped out and paid a very high record amount for this acreage, which tells me that even though they just added Katera, they still want more good acres. Neil, does this mean that we can all count on there being a rising amount of output from the U.S.? Yes, I think, I mean, And Kelly, not just the U.S., but specifically the Permian Basin, that is the key. You know, I think you, Brian, you know, you've highlighted this very well in recent months and such, that, again, the Permian, and I should say the U.S. is going to have to step up as some of the Middle East is not going to come back, even if we get a resolution, even this weekend.

And the U.S. is going to have to step up and provide that lift and particularly in the Permian Basin. So I think, yes, in the next two years, I wouldn't be surprised to see the Permian Basin grow at least another couple million barrels versus where it is today. Do you see oil prices falling meaningfully anytime soon, Neil? Absolutely, right. You know, solid resolution, yes. I mean, you're going to have some pullback. But I think, again, so you'll have a little bit of stabilization. but it's still going to take, you know, probably not even months, quarters, to bring back a lot of that oil. So, again, I find it probably very unlikely in the next year or two that we even maybe see the 70s again.

So, again, you were talking about high gasoline prices. I'm afraid they might be here to stay for a while because, again, that crack spread is not going away. And, you know, thus, high oil prices are not going away. Really? You think, so we're at 455 nationwide, a lot of people are going to have that front and center in their minds this weekend. I mean, are we going to five? Do we just hang around these levels? We're talking about four. Directionally, where do you see it going?

I think direction at these levels, Kelly, I think somewhere in here. I mean, everybody thinks right after the driving season, you generally get this pullback in prices this time because of what's going on with oil prices. I don't think you get that. So again, you get generally right for the driving season. You get the pullback. In this case, I think you're going to just continue to see high prices go through well in the summer and well into next year.

Yeah, I paid five and a half bucks a gallon in the summer, 22 to drive from New Jersey to Wisconsin. People forget that. Very quickly, Oventive, OVV, and Viper, VNOM, Venom, maybe the best ticker next to Fang out there. Other names you like, they don't get a lot of attention. Why do you like them? Especially Venom. I mean, it's the biggest mineral company out there. So remember the key part about a mineral company, they have no operating cost. So if higher prices and higher volumes, generally when you get that, what comes along with that is higher, higher expenses. Fortunately for Bipa, they don't have to pay any of these costs because they're a mineral company. So I think it's just going to be a home run by having, you know, again, it's subsidiary of Dima Back. They know their parents going to grow.

We know prices are going to stay high. It's very well, you know, out there. And then Oventive, as I mentioned, they just did a very, very strategic Canadian deal. But again, it's just a free cash hole powerhouse. Again, you're talking potentially at oil prices around here, potentially over 20% free cash bill yield, which you can't beat. Neil Dingman, William Blair. Hey, Neil, really appreciate your time.

Thank you very much. Thanks, Sally. Thanks, Sally. All right. By the way, speaking of oil and energy, sign up now for my new weekly Energy Intel's diligence piece delivered straight to your inbox called Power Insider, kind of my hot take on Energy of the Week, an interview with Energy Insider, injury-related stocks, Wall Street loves, much more.

We just published this week. There's your title, an AI trade, that involved energy and infrastructure that has doubled your money. Doubled your money. Sign up head to CNBC.com slash Power Insider, hit that QR code

that we're going to show you right now or not. There it is. Hit that QR code, Kelly. I know you're interested. I already have it, so I know the answer. Thank you. Coming up, we're very likely to see three massive IPOs this year

between SpaceX, OpenAI, and Anthropic. Is that a reason to be cautious or a vote of confidence in this bull market? Stay with us. All right, here on Power Lunch, we love history. So here's kind of a history-related RBI for you on this Friday. All these megatech IPOs that are likely coming this year, combined with all the weighting of the current crop of companies,

will push AI-related stocks to half the entire market cap of the American stock market, according to Bank of America. Why is that significant? Because the last time the stock market was so concentrated into one industry was the railroads. Back in the 1880s, Kelly, even before I was alive, there were so many railroads that were riding investor enthusiasm that it all but took over the stock market. By the way, in the late 1880s, nearly 150,000 miles of railroad tracks were laid in America. So are these mega IPOs a reason to be cautious or just a tailwind and an AI-fueled bull-mars?

market for years to come. Let's bring back Steve Sazek of interactive brokers. Pardon the history lesson. That was Bank of America's data. I wish it was mine. It was amazing. Do you mean, do you worry that we're so concentrated into one industry, or is that a good thing? Historically, that doesn't end all that well. That's kind of the problem. That was kind of our point. Yeah, which when you think of the railroad, the railroads got overheated and the market, you know, the market then sank. There was a panic. There was a panic in the 1890s. A radio was the big, was one of the big drivers in the, in the late 20s. RCA was the, was the glamour stock then. Well, what happened in 1929? You know, computers in the nifty 50 era, internet. We can go on and on.

But, and so great technological improvements, which let me not, let me stipulate that this is very important. The market gets ahead of itself on a lot of these things. So was it, was it, what's the analogy to laying too many miles of railroad track to laying too many, you know, meters of bandwidth, in 1999 to maybe building out too many data centers in this era. So you, history doesn't repeat, but boy, it's rhyming. It feels like this is how it's supposed to work in a weird way. Like you get, nobody knows who the winners are going to be. So you have to bet on a bunch of different horses.

You kind of have to overbuild because you don't know when the moment's going to turn. Like, it's the very chasing that kind of dictates the cycle. So I don't see how there's any way this doesn't end with some kind of blow off. And now we have a Federal Reserve that everyone can, count on kind of coming to the rescue to some degree for the stock market or economy if it, if it were a really bad one. Two things to unpack. You know, the first part is it's like the Wayne Gretzky thing.

You miss on all the goals, you know, all the shots you don't take. But on the other hand, let's think back to the internet area. I don't remember all the various railroads in the 1880s, but, you know, are we connecting on AOL or CompuServe and searching on Yahoo and, you know, using our compact computers? these technology has a way of moving and also the you know so that's number one and then in terms of like the you know the idea of basically trying to get trying to get your mind around what's going on is this is this the way it works yeah to some extent it is because because you have to you have to be doing this but it but it also means that in this gold rush so to speak not everybody not everybody hits it

yeah no your timing is a lot those who are in early you have a little bit more cushion there those who get in late less so i think a lot of people wonder should they get out? And I think that's what it comes down to. But, you know, what do you do? You get out. You could have said this way, you know, our guests the other day said, Tim, said, you know, the stock market on on average makes a new high every 12 days, right? We're always, it's always at the top, basically. Is it a fool's errand to try to time the top or move to the sidelines, even if you see worrisome data points? It's very hard to fight a tape like this. You know, that's one of the things I tell people, you know, like, oh, should I short this? Well, you know, do you want to get in front of one of those 1880 steam, steam locomotive?

it's probably not. But here's a couple things to think about. If you put money in an S&P 500 mutual fund right now, even before all these changes, you're about 30 to 40 percent exposed to AI whether you like it or not. So that's part of it. So I think the most important thing that people can be doing right now is reassessing your portfolio. Presumably, where you have a certain sector that is so outperformed, you're probably very heavily invested in that. Just do the math. If you put it all, You know, if you spread out all your bets three years ago. Maybe trim a little bit and add other stuff then? Yeah.

What would we be adding that? What you'd be adding is what you want to be looking for here, I think the Holy Grail on this market, and it's not easy to find, and I can't give you individual names because that's just not my purview. You want to be looking for value stocks that have been growing earnings. And there are some out there. And the problem is there are certain value stocks that are value stocks that aren't growing, or, you know, like I look at a Walmart, which got Savage yesterday.

That came into earnings the other day with the same P.E. is Nvidia. Okay, is there a reason why one was very susceptible where the other one wasn't? So that's not even to pick on Walmart, but it's to say, you know, the invidia, you have to wonder who's left to buy Nvidia, right? I mean, you know, they blew out their numbers and what? It was, you know, sort of crickets because the bar was set so high and it's been so owned. So I think what you want to be looking for is I think it's a pivot to value, but you have to make sure that those value stocks are at least making their money or making their dividends. All right. I still, I mean, I'm not going to put it in your, but I still think about Caterpillars quarter, right? This is a stock that's not necessarily, you know, the froth. It's an equipment maker, but it's earning it was up 10% its earnings were. But you need a, but you need a bulldozer to build to build the data center. So it's also part of the train.

Exactly, too. Converted those engines. Yeah. And you need, purring over Caterpillar lately. And you have. And with copper at an all time high who's mining the copper. Exactly. They can play all aspects of Southern Copper and Freeport Macmore. Yeah, well, who's, they're buying. But, you know, and by the way, a lot of those gold miners went bankrupt, but you didn't go bankrupt, the company's selling them the shovels. Exactly. The actual miners, some of them made fortune, some got destroyed, but the shovel companies and the pickax companies probably did okay. That's who we're looking for now.

And that's one to grow on. Thank you so much. Steve Saznick of Interactive Brokers. Let's get to Julia Borsden now for the CNBC News Update. Julia? Kelly, President Trump is praising Tulsi Gabbard on Truth Social and talking about her replacement after she resigned earlier this afternoon as Director of National Intelligence. Gabbard said she's leaving her post to support her husband,

who's suffering from a rare form of bone cancer. President Trump says Gabbard did an incredible job and that her principal deputy, Aaron Lucas, will now serve as acting director. According to the Director General of the World Health Organization today, the Ebola outbreak in Congo is, quote, spreading rapidly and now poses a, quote, very high risk at the national level. He says there are now almost 750 suspected cases in 177 suspected deaths

and that the risk still remains high for regional spread, but low for global spread. Just as the Memorial Day weekend Travel Crunch hits, LaGuardia Airport in New York announcing that the runway shut down Wednesday because of a sinkhole won't be open until tomorrow morning. Engineering crews are performing additional inspections today. According to Flight Aware, there are more than 400 delay. flight so far today, but only six cancellations. Brian, back over to you. Unbelievable timing. Julia Borson, thank you very much. All right, Kevin Warsh was officially sworn in as Federal Reserve Chair earlier today.

Coming up, we're going to speak to somebody who knows him better than most. Randall Crowe's former Federal Reserve Governor who served with Warsh on the Federal Reserve Board is next. It's going to be an insightful conversation. It's happening right after it. Kevin Warsh was sworn in as the new chairman of the Federal. Reserve just a short while ago, putting him in charge of a central bank that must now navigate rising inflation. Randall Krasner is a former Federal Reserve governor and an economics professor at the University of Chicago. Randy, it's good to see you again. Did you work with Warsh when he was

on the Fed? I did. We went through our confirmation hearing together. Wow. Okay. So you have worked with him through the confirmation hearing. So that was through the 2008 period. And maybe you can speak to. I've heard a lot of different takes on what he wanted to do during that time. Critics say he would have hiked or not eased as much and caused a bigger economic problem. Proponents say that he acted kind of admirably to keep the financial system going because he understood the challenges that were potentially we were looking into at that moment. Can you unpack that for us? So think back to before the crisis happened. Oil prices were skyrocketing. They were $150 a barrel. So, higher nominal levels than they even are now or in the recent shocks. So there was a lot of apparent inflation pressure, but we were also very concerned about what might happen to the financial system. We realized how fragile it was. So it was one of these challenges where you have data that say that inflation is high, but you're worried about what's coming next. And so I think both of us

we're concerned about the inflation part, but certainly once we saw the extent of the crisis, we both worked very hard to make sure that we just had a great recession rather than a great depression. What do you think he thinks about the inflation situation now? Well, obviously, he would prefer to have much lower inflation situation coming into this. It's a little bit like what I was just talking about because he's got a challenge that inflation is higher than anyone would like. Now, the difference, is that rather than seeing a crisis coming, he sees a boom with tech,

particularly with AI, that he feels gives a little bit more room to run for the Fed to either pause or actually reduce rates in the current environment. I think he'll be gentle in doing that, one, because he won't have the votes around the table,

and Kevin is very much someone who will sort of drive a consensus rather than be the outlierie who really try to convince his colleague, second, he's a long-run strategic thinker. He thinks very much about the long-run strategy for the Fed. He thinks about his legacy. And so certainly he is not going to be someone who is going to say, oh, well, this is just a one-off. We can cut interest rates down to 1% and not worry. That's not how he's going to approach things. He's going to worry about inflation expectations. He's going to worry about the impact on the economy. And then I think he's going to try to provide the foundation for potentially moving rates down that this is more of a one-off rather than something extended, but I don't think he's going to do that at the first meeting. We spoke with Larry Lindsay last hour who said he thinks this is the first time since Eccles that a sitting chair would then join the following chair on the board. In other words, Powell will still be

there on the board or at the Fed. Does that make the situation complicated or awkward? Because Larry suggested they might actually end up as allies on a number of issues. I think Larry's right on this. So both of them care deeply about the institution. And that's something that is, I think, kind of part of the Fed brethren that we love the institution. We think it's incredibly important and want to make sure it executes on its mission as well as possible. And so, and, you know, even though you might think, well, gee, Kevin has said some very tough things about Jay, Kevin is going to be very charming. He's not, he's going to sit down with Jay and treat him like, you know, his closest buddy.

And I think they do agree on a number of things. Now, you could always have some differences in nuance. You can always have some differences in approach. But Kevin knows that to make a convincing argument, it has to be based on some sort of analytic foundation. And Jay certainly has been a great promoter of that approach to things, and I think they'll be able to work together quite easily. Also, Jay has said very explicitly, he's going to keep a low profile.

He's not going to be going around saying, well, I was the former chair, and I don't agree what this guy is doing. It's a shame that we have someone here like this. Not at all. It's completely opposite of that. Right. It might be more entertaining, frankly, for us to watch.

But I think I agree with you. It seems a little unlikely. Randy, thanks for making the time. Appreciate it today. Of course. Randall Krasner, former Federal Reserve Governor, Econ professor at the U of Chicago. All right.

So speaking of bonds and interest rates, but a pretty volatile week for the bond market. I mean, rates spiked earlier this week. Remember that? I missed Monday. 10-year yield hitting 4.7% settling down a little bits at 4-55, so it came down a touch. The 30-year was above 5% earlier this week. That was the first time that has happened since 2007.

By the way, bond yield spiking, not just here, UK, parts of Europe, Japan, and more. Wow. Coming up, beef prices are on the rise. Speaking of spiking and consumer confidence, well, that's going the other way, getting lower and lower. Up next, we're joined by someone with. the clear line of sight into both, celebrity chef and restaurateur, Wolfgang Puck, joins us after the break. All right, it is Friday before the Memorial Day weekend, so let's have a little fun, right?

Markets hurt record highs, but let's talk about food and dining out and experiences and bring back in one of our favorite power players. That is Wolfgang Puck. He is a chef, restaurateur, entrepreneur, and celebrity with restaurants in major cities all over the world. welcoming back in. He's remote this time. He did not bring beef on set. Those states were still It's too expensive to do that now. No, we're still talking. But what's the, okay, let's talk about that, Kelly. Up 14% from a year ago. I, but they're, okay, so Wolf King Park. So help us solve a problem. Kelly and I were talking about it in the break. Consumer sentiment, the official data, is the worst it's ever been.

I know your higher end. I get that, respect that. I see crowds everywhere I go, even, even in the middle level. As a guy who sees it every day, not just in your restaurants, but at consumer products, what is your take on the American consumer? Well, I think the American consumer is in love with red meat with steaks. I think everywhere there are steak restaurants, there are hamburger chains, you name it.

Red meat is still king in America. You know, you seldom see a steakhouse go out of business. The great thing this year against last year is that actually certain beef prices went down, like in the upscale in like what we use prime beef, for example, a tenderloin went down at least 25%. A strip loin stayed the same. Export ribs, the rip shops went down 7 to 10%. So a lot of piece prices actually went down.

So does lamb a little bit? And the reason really is, even though in feedlots, there are less cattle now than ever. But we have a lot of imports also, you know, from Argentina, from Brazil and countries like that, there's a lot of meat coming in. And I think the president just changed the import quota on Argentinian beef. I just read it somewhere. So I think there is more beef now here. Even we produce less beef in America and we export less oil.

So I think we are lucky in a way to have a little bit of a break in beef prices because we were talking about steaks over $100. Now at a restaurant, for example, you can get a great state for $60, $70, for maybe a nice filet mignon for $80. So I think that's really a good price. Now, where we were before, a year ago, by around $100. Okay. So $100 is scorching, $80. guess is better. Egg prices are down. It's interesting you say that we're making some changes, Wolfgang, to bring beef prices down more broadly. We were talking to Bobby Flea a couple days ago

here on the program as well. And we're still kind of talking about this restaurant recession, right? Labor costs are up, rents up, everything's up. Your $80 steak, you might make a $5 margin on, I don't know. Is the restaurant recession over, or is it still going on? I believe it's still going on. We'll see this summer in places like California. They are tourists, big part of our business here, you know, in the summer especially, a lot of our customers go on vacation all over the world. So we'll see the summer how many tourists we're going to get in LA. How are the hotel is going to do also? But I think we are ready. For example, I had the chicken on the menu, a whole small chicken, we call it a pussam, which is like a baby chicken,

for $70. Now I'm buying an even better quality and I roast a chicken half of one. I roasted bone in, so it stays juicy and everything. And we have it on the menu at Cut for $36. So I'm very aware that people are really struck. The prices, they look at menus and everything, and you can see people are shopping around because there are so many stakeholders in America, in every city. I know here in Beverly Hills next to cut,

all of a sudden we have three new steakhouses. Nobody opened a French restaurant. everybody open a steakhouse. Why? Why is that? Why is that? Well, it seems like when American, the public here wants to go out, have a great meal, steakhouses is always on the top of the list.

And I think, yes, there is people who like French food, Italian food. I think second now is Japanese food. Japanese food is very expensive, too, because fish, the highest quality is expensive. And if you eat it raw, it has great quality. But on the menu, it doesn't look expensive because you'll get everything in small plates. So then you end up paying $150 for a great Japanese meal, which is normal now in a good steakhouse too. So it's not so much of a difference anymore. Are we at every time I want to order delivery home.

And Kelly, I don't know how this is. You got to. Oh, there's so much. You also have a much larger family. You have eight or six children. So we don't. This topic has divided the country. Has it divided your home?

Look, I enjoy my delivery here and there. I could never rely 100% on it. But a lot of younger people who are, they do. They're just, it's just them in the house. But they don't get it. And my point is, Wolfgang, they don't seem to be bothered. Delivery keeps going up. They don't seem to be bothered by the cost.

And I'm almost always ready to hit go on a delivery. and then I look at the price and I get cheap. Are we at peak delivery in America, or is it going to continue to only go up and people are going to only eat in their home out of restaurant more? I really think people want to have convenience. They want to watch a movie at home. They want to eat at home.

And I think it's nice if you have a family, but you pay with a credit card, and it's very expensive if you order for a good restaurant. If you order fast food, obviously it's different. But I really believe in my children, Alexander and Ollie, but they really love a home-cooked steak. When we bring a steak from cut and warm it up, it's not the same.

So if you know a great butcher or a great store, you know, like whole foods or whatever it is where they have good steaks, maybe if you learn how to cook a steak the right way and eat it just with a little olive oil, a little butter, a little fresh. on top, you're going to say, wow, this is really good. And making a baked potato or a Caesar salad is easy. So I think people should get back together and cook at home a little more instead of just having takeout. But since the pandemic, takeout has taken off like crazy,

home that they have taken off like crazy. And I think people may be slowing down a little bit, but convenience is on top of the family business now. Yeah. Wolf King, Puck, love it. having you on the program. Love your views. Really appreciate it. Have a great long holiday weekend Wolf King Park. Thank you very much. We're back. Thank you. Thank you. I'm going first.

All right, Memorial Day on Monday. Don't forget what it's about. One of the big thanks to all the veterans and families of veterans out there. Yeah, and everyone who's traveling, safe travels. You know, we know what gas prices are doing and all the rest of it. But hey, at least the stock market's giving us a nice mood here into the weekend. I like what our earlier guest, Steve Sosnik, said no one wants to miss good news on the geopolitical front. Thanks for watching.