Power Lunch - Stocks Tracking For Gains 3/25/26

Episode Date: March 25, 2026

Memory stocks sit out the market rally. Puck's Matt Belloni joins the show to discuss Disney CEO Josh D'Amaro's eventful first week on the job.  And why did stablecoin stocks fall? Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The future of the Middle East remains unclear with conflicting reports clouding the progress of negotiations and raising some questions about what comes next. Welcome to Power Lunch alongside Dominic Chu. I'm Kelly Evans. Brian will be back tomorrow. Here's a quick look at where we stand this hour. Stocks are off session highs, but still up nicely, Dow's up 342. S&P trying to break a four-week losing streak. Dom, it's up three quarters of 1%. All right. So we agreed across the screen for right now. The volatility, though, in the energy market continues to be front and center for a lot of traders and investors. oil under pressure today, so the roller coaster ride continues. Down nearly 10% this week, despite the pressure. Brent, though, is still above $100 a barrel. The S&P energy sector is hitting a record high again in today's trading, despite the moves down in oil. Bitcoin is holding

steady above the 70,000 mark, as you can see there, even as the Iran war fuels more of that global uncertainty. So as digital gold, finally a safe haven trade, or still just another risk proxy as well, will ask a noted. crypto investor Michael Buchella about that later on, Kelly. All right. Let's start with the latest on the Iran war. Iranian state media reporting that Iran will not accept a ceasefire offer from the United States.

This follows reports that Iran had received the president's 15-point peace plan. And as the war continues, oil giants are sounding the alarm over energy shortages. So what comes next? And is there an end game? Let's get some insight from Michael O'Hanland. He's Foreign Policy Program Director at the Brookings Institute. Good to see you, Michael. And kind of, to repeat a little bit, you know, we talked to Kevin Book last hour who thinks that I guess if I had to sum up his thoughts, he would say, the stock market is right to view this as signs of progress.

But the oil markets still have a problem in terms of some shortages and imbalances. And I don't know if you would agree with his or the market's assessment on the diplomatic front. Hi, Kelly. Well, I'm not sure I do agree that the stock market should recover or, you know, evidence. optimism. I think that we've known for a while President Trump is interested in not having this war affect the global economy or the American economy any more than necessary, even though he sometimes articulated goals about regime change and unconditional surrender that imply a longer operation. And so the fact that he's putting forth a 15-point proposal that basically reiterates what he was

demanding of Iran before the war began is not big news to me and is not necessarily a meaningful step towards an end of the war. So I guess I'd put myself down as a skeptic on whether this is really progress. What would show you that there was maybe something more substantive happening? Well, any kind of favorable response or even any kind of substantive response whatsoever from Iran, which basically is not in a mood to negotiate. You know, as General McChrystal told the New York Times, I think yesterday, if, you know, if we kill somebody's family, probably not going to negotiate the next day. I'm paraphrasing. But the basic point, Iran wants revenge and Iran wants to reestablish deterrence, meaning to remind the world that they can hurt us.

And just because the United States and Israel control most of the skies over Iran, it doesn't mean that we really dominate everything. They've got asymmetric and guerrilla-like capabilities in the Strait of Hormuz that they've already used to great effect, which sort of mimic in a way the way they fight on land with, you know, covert activity and improvised explosive devices and assassinations. And they're going to try to use this kind of warfare and make us pay a price for a while, I believe, so that if and when there is a negotiation, they will have first shown the world not to trifle with Iran in the future.

And they're also going to insist on better terms on at least some of the issues that were included in President Trump's 15-point plan. Again, I don't blame Mr. Trump for doing this, but I don't really see it as progress. Hey, Michael, it's Dom here. One of the countries that has been maybe relatively not as vocal as they could have been during this process in the Iran war has been China. They have made their remarks and their state media has kind of weighed in from time to time here. But we just got news in the last few minutes here that the White House has announced that Trump will meet with President Xi in China, May 13th and 14th. And the reciprocal visit will happen sometime later on down the line.

I wonder if this dynamic at all is something that we have to be watching. whether or not the China situation adds another variable, especially with a face-to-face meeting that's happening, do we expect that that has any kind of influence or timing on when the war hypothetically might start to wind down? Greetings, Dom, well, you know, I think that's a good way to put it. Yes, it does imply that in President Trump's mind, this war will be over by then, I would think. I mean, I obviously don't know that for a fact, but the president presumably wouldn't go to Beijing if he had the end game in Iran still on his mind and still in great flux, because, of course, he chose to postpone this particular previously scheduled trip, given that the war was ongoing. So I think he is assuming that in the course of April, let's say, I don't hold that much hope for this war ending in March, that we can figure out some way.

But I think it is good news, nonetheless, that Beijing and Washington are prepared to try to put this Iran issue, and the Ukraine issue to one side and still maintain as much of a cooperative, you know, maybe not friendly, but cooperative relationship as they can. And one final point here. We've had a lot of conversations in the last few days about whether or not troops on the ground, boots on the ground, so to speak, would be the right call for the U.S. when it comes to Iran and trying to maybe at least accelerate what's going to happen with this war's outcome. Is there a situation where that is the appropriate response or one that we shouldn't just even pursue at all?

I don't see a strong case for any of the three options that I can personally envision for limited uses of ground force. One would be to seize a Karej Island. One would be to control the coastline near the Strait of Hormuz to prevent further deployment of mines and unmanned underwater vehicles. And the third would be to set up a perimeter defense for special forces to go then try to destroy more of Iran's nuclear program or extract its highly enriched uranium. Those are the three purposes for which I could imagine.

Others have also, of course, talked about these three. A ground invasion of Iran is a quarter million or more U.S. troops. I presume that's not in the cards. But the other three are all conceivable, probably with more than 4,000 to 5,000 troops, probably more like 10 to 30,000. But I don't recommend any of them at this juncture. I hope we can find a way out of this conflict short of that. Michael, thanks. We really appreciate it today. Thanks for your time. Thank you. Michael O'Hanlon. All right. Well, let's now take us all back to the markets. Joining us for the conversation, vis-a-vis that conversation with Michael O'Hanlon is Peter Bukvar, 1.BFG, wealth, CIO, and a CNBC contributor. Also here is Jenny Harrington, Gilman Hill Assets, CEO and portfolio manager as well. Also a CNBC contributor. Peter, we're going to start with you first. What exactly does all of this mean conversationally with regard to what we think oil prices will do? They have been arguably the epicenter of all the market volatility. far?

Well, to me, this is a very binary situation. The war either ends and the straight opens or this continues on and remains essentially closed outside of a few ships going through. There's no in between. What's the status right now? Effectively, we would say effectively still closed, right? You had a Thai ship, I think, that went through the other day. China, of course.

But we're still counting individual ships and individual moments. Yeah, which tells you it's effectively closed. Yeah. I think just taking all the signaling that's going on from the White House and elsewhere, is we reach the point of escalation spiral that if it continues, doesn't end well. And I think the administration realizes that and all of our friends around the world realize.

So if you're not going to change the regime, you have to end this. And I don't know what the terms will look like. Maybe Iran gets some of what they want, but you can't keep bombing them thinking you'll degrade them because they're not degraded enough and they'll just keep getting to us. And again, if you don't change the,

regime, you have to end it, believing also that you've degraded their military capabilities enough. So quick follow on to that. Welcome, Jenny. Into this maelstrom. Not that you were, you were already in it. Oh, I've been in it. Yeah, you've been in it. But Peter, so I think the main question on my mind is, do we resume kind of what the markets were doing going into the Iran war, or do we stick with this? So when I hear you in O'Hanlon and some of the energy people, I think, well, this is going to be an energy trade, watch out for the consumer. I mean, there's sort of like there was not going to think. But then we look at what's happening today, which tells you, no, no, when this conflict recedes, even if they say it hasn't, that you go back to the playbook

of the first eight weeks. Gold is higher. The metals are higher. You know, that's, am I drawing too much of a distinction there? I think on the commodity side, with respect to crude oil, we're not going back to $65 if this ends tomorrow. I think there's enough disruptions and that we're going to take months to play out. But even after, the amount of commodity hoarding that is going to take place around the world. Every country is going to be creating strategic reserves, not just crude oil, of gas, of fertilizer, of copper, of silver, of nickel. Because we thought we learned lessons after COVID about don't get it caught short on supplies.

We're reminded of it again. So I think that the new price of oil post the end of this is going to be more like $80, not $65, with still risk to the upside. Because even if our rant says, okay, we're done, there's still potential threats with the street, because all you need is one rogue person with the drone. So I still like energy stocks. We've been along them before this,

and I understand that they're going to pull back when the war is over, but I still think it's a bull market. Jenny. So I agree with Peter that probably in my mind, and this is a, you know, but like 80 sounds right to me, right? And I kind of think maybe a range of 70 to 90. The one area where I see it a little bit differently than you do is where you said it's binary, right? Either it's open or it's closed.

I would add a third thing to that, which is how long, you know, and how long it stays closed for is super integral right now. But the way I'm trying to manage this and deal with it from a portfolio investment perspective is to look at everything in economics and really think, like, you know, what's the biggest pain trade? And I can only think of two countries that end up better off if we see. stay where we are, and that's Russia and North Korea. Right, like, everybody else loses. And you saw the Philippines out this morning saying, hey, these oil prices are a major problem for us. So, like, yeah, the U.S. probably needs to end it, but China has incentive to end it.

India has incentive to end it. All of Southeast Asia, Europe, like, even if they're not saying it, everyone's incentivized to end this or to wrap it up as quickly as possible. Yeah. Isn't there a relative case, though? And maybe I'll direct this to you first, Peter, and see what you think, Jay. Isn't there a relative case to be made right now that the U.S. is in a relative position of strength, given its oil-producing profile, right, and how dependent China and other Asian countries are on Middle Eastern oil

and the fact that Russia is currently still engaged in a years-long battle with Ukraine? All of those situations seem to dictate, at least in my mind, as a layperson, that the U.S. is better off right now relative to some of the other major superpowers that are trying to navigate these issues as well? From a supply standpoint, yes, but we're all talking about the same commodity prices. So telling a driver that, okay, I'm sorry, you're going to have to pay $4 a gallon,

but you're better off because the other person across the world may not actually get any gasoline out of the tank. Yes, or out of the pump. You're better off from them, but it's the price aspect that we're swimming in here altogether. So yes, from a volume perspective, but no from a price perspective,

we're all having to deal with these high prices. Yeah. And I think relatively, you know, yeah, the U.S. is better off. But, Kelly, going back to your question of when it winds down, do we go back to kind of like the pre-play? Which is international? And then now it's U.S. And which way is it going to swing?

Right. And so one of the things that I'm just curious about, and there's no answer on this. We'll just need to wait and see, but is, like, is the AI play enabled the way it was before? because if oil is 70 to 90, oh, interesting. Suddenly energy costs,

they're just not as low as they were. And if suddenly the 10 years at, you know, three and a half, sorry, four and a half, you know, suddenly interest rates aren't kind of low. Even show shares of Generac, which to what you're talking about. Remember when he interviewed the CEO and he said they use their generators with these million and a half dollar, and there's hundreds of them on a data farm.

What do we call it, data center? They're diesel powered because you can't get Nat Gas hookups right now for complicated reason that have to do with energy infrastructure. Diesel powered, backup, generators for data centers. And the stock is under pressure today because I think investors are, they're a little nervous about what this is going to mean. Right. And it's so confusing. And then one of the other things that I've been struggling with, and again, certainly no answer yet, but is what if there's a leapfrog? And I think it's so interesting, EVs were dying, right,

five weeks ago, four weeks ago. Suddenly, what if there's a resurgence to EVs? And people are like, oh, who cares? I don't need the $6,000 credit. I just want to need to not worry about $4 oil. What if there's a leapfrog and more solar? You know, what if China and India, start using more solar because they're like, I'm done with these shenanigans. I don't want to take this risk again. So I think there's a lot that's in flux. And I can't imagine that you with your kind of investing discipline would be like, let me hop into solar and some of, you know, those are typically more speculative areas of the market. So it's tricky. But then, you know, and this is getting granular, but I think it's a good example. Like I added chlorox to the portfolio. Couldn't be more

boring. But it's interesting because it has a huge like petrochemical component in their input. And so while I'm saying, I don't know if we're going to end up seven, to 90, I don't know when the straits are going to reopen. What I can say is it's so bad for everybody to have oil at 115 or 180 or whatever it goes to that I'm going to take the bet that somehow collectively we figure this out and oil prices and petrochemical prices do come down. But if that's the case then, you're saying that there's a paradigm shift, right? If we do have now a structural move higher in oil prices because there is now a premium placed on some

of the hoarding aspect, on some of the supply chain aspect. then that means it changes the dynamic for all of those inputs for everything from data centers to fertilizer companies to everything else. So does that mean then that the market has to revalue to some of those constraints that we're going to have with higher input costs, especially for petrochemical? I think Peter knows more about this than I do, so I'm going to kick it off and hopefully you can clean up my mess. But I think the challenge there is it wasn't long ago that we lived with $70 to $90 oil.

You know, we've only been in the sub, you know, sub-65, sub-70 range for a short while. So I don't think it's that biggest stretch. And so I'm not sure if it's, you know, that much of a new paradigm. Maybe it's just a year and a half ago paradigm. So, yeah, I agree. I think $80 we can get used to. Where it becomes complicating is with respect to inflation. If you look at import prices today for February, before this happened, the number came in double what was expected.

Input prices rose X food and fuel 1.3% just in the month. We saw last week, PPI, that was very hot. So now you layer on this. And it just means that interest rates where we thought, okay, the Fed's going to cut when Kevin Warsh takes over, it's unlikely to happen. And if he does cut and the market doesn't deserve a cut, while then long rates are going to go higher. And so I think the interest rate component is a secondary impact from what has gone on that

is not going to fully relieve itself when this war is over. And it almost feels like that's become the new high level. Now that we're not watching the stock market, but doesn't it feel often like these big swings and yields as well and kind of that's where the pressure point maybe. And globally. Guys, thanks. We can keep going. Peter Bukfar, Jenny, thank for the encore appearance.

All right. Well, we wanted to hear from you. So scan the QR code on your screen now to answer today's poll question, which is, will the U.S. enter a recession this year, 2026? We're going to reveal those results at the end of this show. Again, just scan that QR code on your screen and vote here because we'd like to hear from you about whether or not we think the U.S.

will be in a recession kill. And after the break, we'll get into the shaky footing that stable coin stocks have been on over the past 24 hours. Much more detail coming up right after that. Welcome back to Power Lunch. We are showing you right now shares of Circle Internet and Coinbase. And as you can see there, both are getting a slight bid today, but that's after getting crushed yesterday on news that an updated draft of the Clarity Act contained language that would restrict stable coin holders, issuers, holders from earning interest-like yields on their other investments as well. It was actually Circle's worst day ever in its brief time as a public company. So here on set with us is neoclassic capital managing partner and co-founder Michael Buchella,

his firm invests in blockchain technology, Web 3.0, digital asset companies. He's also a board member over a Terra Wolf as well. So you've got a lot of irons in the fire and a lot of perspective that we want to kind of tap into. So thank you for being here with us. Let's talk first of all about the things that did rattle stable coin issuers specifically. And that was this idea that you are no longer going to be able to utilize rewards the same way that interest is accrued in bank accounts. I got to tell you, it's one of the main reasons why many of the people I know got into stable coins to begin with. Yeah.

So I think there's a lack of understanding of the different players in these markets. So Circle sell-off was a function of a high-val stock that sort of trades very frequently in the retail markets. And I think generally Circle should trade it as fundamental value with some discount for regulatory uncertainty. So, you know, the language that came out was more a function of controlling distribution of yield, not actually delivering yield, and actually activity-based yield. So trading or other activities that generate yield is allowable in that language. The language doesn't matter, right? So that's one more draft of the same bill we've redrafted a few times now. So I think ultimately, you know, where does Circle belong to be from a fundamental standpoint?

point, that's for the sell side research analyst to determine. I think whatever they come up with on an EBITDA or an earnings basis, you should trade some haircut to that for the uncertainty around Clarity Act. So, and I, it's like, I kind of want to unpack all of this and just bear with me, because you're here. This is such a unique opportunity. And we can talk about, so stable coin, a lot of the traditional banking system doesn't love stable coin yield just because they think there's going to be deposit flight and people are going to move their money. There's reason that I don't really like it, which I'm hoping you can explain to me, which is, what is it predicated on? Where is that yield coming from? So if this summer,

is correct, is it true that under the potential clarity act, passive yield would be banned, activity-based rewards would be permitted? What is that activity? Meaning, is there some, so I still remember a lot of this from the re-hypification days of 08, which is why it gets my nervous system going. What is the activity here that is generating the yield that you think, is it, does it involve leverage? Is there a lot of, you know, changing hands here behind the scenes? Like, how does it work? It's truly a reward at that point if it's activity-based. Yeah, I mean, so crypto has always kind of function on this idea of network growth and network integration and network development. So network effects is what we all used to say back in 2017.

So anything that where the user or the community is increasing network effects of the underlying asset, they should be rewarded for that. And so I think when it comes down to, you know, you have, I mean, a multitude of different high growth areas of crypto right now between, you know, perpetual dextrating, you have prediction markets, you have a slew of other types of activities that users can participate in for those activities. They're generating network effects. They're generally liquidity. They should be rewarded. So that's kind of the idea on the reward side. I would say, you know, generally speaking, you're right. I mean, the benefit of stable coins is to hold a stable asset that generates yield natively. If that's not the case, you know, there's other benefits to stable coins, right? There's the immediate settlement. How does it generate the yield? So typically a stable coin issuer will take in deposits of some form and issue a stable coin in the back of it. They then take that capital and invest primarily in treasuries. So, you know, one of the largest...

This was partly after the blowups a few years ago because, again, think about... So this one trying to get at, the incentive in the traditional banking system, those incentives went awry. People were investing in more risky paper than they, when there was a, 08 happens, they couldn't meet one for one. I'm talking about money market mutual funds. Yeah, yeah. So my understanding is the regulators, in the past couple of years since everything happened in the crypto space akin to that, they've said you have to be backed basically with treasuries. Is that right? Correct.

So there has, right, up until recently there was no real regulation around what they can and should invest in. And so there was always speculation throughout 2017, 18, 19, up until that bill passed of what are these balance sheets doing? There was, you know, great speculation about, you know, are these balance sheets investing? in, you know, commercial paper for Chinese real estate developers. That was a big story back in the day. Now it's primarily, and you could see, you could see it's very sort of transparent. You could see the amount of the balance. But I guess my point is if that's the way that it is now, why?

Then what was this other cherry that the industry wanted? If you could only basically invest in treasuries and pass that along, then what is that these stocks are reacting to? Was there some other prize out there that was going to generate higher rewards? No, I think it was just a function of how that would, you know, for them, that's a customer acquisition, right? So the ability to distribute that yield is what gets you more excited about owning USC. Another big stable corn provider who's going, potentially undergoing an audit from a big four accounting firm, Tether, they've always kept the yield. And that's been a great business model for them.

They've had record profits year on year. And, you know, it's an enormously accreted business from an EBITDA standpoint. Circle, if not required to distribute the yield, it could be a net benefit for them, realistically. By the way, there are certain fund companies out there who are already putting together products that meet the compliance standards of holding only a certain type of treasury, short-term, money market instruments that then can be invested into by companies, hypothetically, like a circle or a tether or somebody else like that. So that solves that problem, right?

Now, if that's the case, there's also a case to be made that if you do pass those things along, almost in full, maybe with a little bit of a haircut, that that still deserves to be had in terms of income by the ultimate holder of these stable coins. How exactly should Congress and lawmakers react to that argument? So, well, so I guess the market will eventually move where there's market demands. So I think the idea of centralized stable coin issuers, there's another group of decentralized table coin issuers, and they're substantial, right? It's, you know, Sky, USDC, for example, is a $13 billion balance sheet.

They're investing in tokenized treasuries, right? They have a governance asset that determines where the dollars are allocated, and they're allocated to different pools. those pools then invest in different assets. So you've seen them invest in treasuries. You're starting to see them invest in certain areas of private credit. And I guess I say certain areas because it is the highest level of the risk stack, right? These are, our industry, I think, is not getting enough credit for the professionalism that has entered it in the last, call it, 12 to 24 months.

And so I think you are going to see if there is an inability to distribute yield to centralize stable coin issuers, you'll see people repositioned to decentralized stable coins. Listen, Mike Buccella, I don't know if I feel less confused or more confused after all this. I'm just trying to understand if crypto is using kind of legal and regulatory arbitrage to deliver yields in a way that are not allowed in the traditional financial system or if there's some new game that they're playing that, you know. I mean, well, we're trying to get to a point where there's a legal framework that they potentially could arbitrage.

Yeah. But I would say if you think about depositing your money with any of the major banks, you know, they're then lending out that capital and they're taking their net interest margin. That net interest margin is distributed to the network in crypto. And so it's a better version of the banking system, in my opinion. Can we have one more question because we have you here and we don't want to waste it? Prediction markets. They are all the rage.

We know that you are very into them right now and you kind of understand the workings. I wonder if you could give us a little bit of perspective on just where you think the evolution of these prediction markets will go and just how much more commercialization is going to play into it full well. Well, and we also here at CNBC have a commercial relationship with Kalshi. We are a minority investor in the company. I wonder how all that's playing out ecosystem-wise. Yes. So, yeah, I mean, I would say I've been investing in professionally in crypto markets a long time.

Auger was one of the first prediction markets. We were, you know, my old firm, we were an investor in Blockratai C round, which is a polymarket. So we were an investor in their first round. And we've always sort of looked forward into what this could be. And obviously the election was the big catalyst for growth in that area. And then we sort of fade in volumes. And now we're back up to $10 billion a month for both Kalsh, M. Polymarket. Do I think that – I think all retail and high-val casinos are taking some liquidity away from the long-tail of crypto assets.

So whether it's zero-day options on Robin Hood or, you know, crude and silver. Precious metals contracts on hyper-liquid or prediction markets. All of these things, you know, there's only – if there's a finite limit or limited. level of liquidity, and retail consumers just look for volatility. So I would say prediction markets will continue to scale. I think the biggest, there's two major things to impact the market coming that are happening right now. Regulation in the U.S., which right now you've got CLA going up against every state government that exists and has some form of sports gambling. You want to keep that within the state, and everyone has their fiefdom to protect. So that's going to be a major

issue or major potential headwind or tailwind for the industry, depending on that selves itself. Hyperliquid, which is one of the major perp-dexes that's doing about $5 billion a day of volume, which is massive, is about to initiate a proposal where they'll upgrade their tech stack for prediction markets. And so that's another potentially tens of billions of dollars that'll come into prediction markets. And yeah, I mean, just yesterday they traded about $3 billion on crude alone. So it's meaningful. You think we're going in a recession this year? Yes or no? No.

There you go. Lock it. We're going to log it. Maybe 27. Peter and Jenny said yes for the record. We'll come back to that a little later on. Mike, thanks for all the time. Thank you.

Appreciate it. Mike Pucelo with Neal Classic Capital. All right, so we are staying on top of the crypto story with a big voice in the space. That strategy co-founder and chairman Michael Saylor will join us for an exclusive interview tomorrow right here on Power Lunch, must watch TV. So keep it here tomorrow, 2 p.m. Eastern Time. All right, yields are backing off a touch today. We'll tell you why after this short break. All right, welcome back to benchmark U.S. 10-year note yield, trading below the fourth.

4.4% level, but the headline in the Treasury markets right now is another week auction. We saw softer demand for five-year note yields. Rick Santelli joins us now with the grade. I saw what you said. It wasn't very good. Take us through the grade and why. Well, yesterday's two-year was a D. Today's five-year was a D-plus. And it's not like over the years we haven't had negative auctions. We've had quite a few. Everyone's paying attention to these auctions for a reason. And that is, of course, this is a conflict that is steeped in politics. The coverage of oil is steeped in politics. And the notion that we're never going back to normal oil prices is taking a toll. If you look at twos and fives on one chart there,

you can see how the short maturities are acting. And at one Eastern, their yields popped on the negative auction results. If you look at twos and tens for one week, well, on Monday, we hit what many still think may be the high watermark in terms of yields. Because why? I'll tell you why. Because treasury yields are following oil, but investors are following the linkage of the news of oil and how it's going to just directly translate into inflation. And that's why these auctions aren't going very well.

And if you look at the 210 spread, you can see that we're flattening. Today we had a bull flattening. Yields are all down and we're flattening. Yesterday, we had a bare flattening. Yields were all up and we're flattening. Flatted since July. The moral of the story is that do you follow investors and their fear of inflation based on oil now? Or do you follow the markets that are following oil prices?

And my suggestion would be follow the prices of oil and how they're affecting treasuries. Kelly and Dom, back to you. Great point. Rick, thank you. Rick's hand, Kelly. Let's get to McKenzie Segalos now for the CNBC News Update. Hi, McKenzie. Hey, Kelly.

The Pentagon said today it has made a deal to help put the U.S. on a wartime footing, saying it has framework agreements with B.A. systems, Lockheed Martin, and Honeywell to boost munitions production. The goal, according to the Defense Department, is to replenish weapons stocks that have been drawn down by war with Iran and other recent military operations. The U.S. Postal Service is reportedly imposing an 8% fuel surcharge on packages in order to cover the rising cost of fuel. That's according to the Wall Street Journal, which reports it's the first time the USPS has ever imposed such a fee. The charge will only apply to packages, not mail. And a Lord of the Rings superfan is writing the next installment in the movie series. Director Peter Jackson today introduced noted Tolkien enthusiast and late night host Stephen Colbert as the latest screenwriter.

Colbert and his son are working to adapt several chapters from The Fellowship of the Ring to be a sequel to the movie trilogy. Colbert said the cancellation of his late night show allowed him to finally dive in to writing a script. Dom, sending it back to you. All right, Mackenzie Scalos, thank you very much for the news update there. Coming up on the show, what do Fortnite, The Bachelorette and Open AI have in common? They've caused problems for new Disney CEO, Josh Tomorrow. Hollywood insider Matt Bellany joins us on the other side of this break. Keep it right here.

It's been a tough week for Disney's new CEO, Josh DeMorrow. Just months after a high-profile billion dollar. partnership announcement, we get news that OpenAI is shutting down SORA, its AI video platform. Meantime, Epic Games, another major Disney investment, cutting a thousand jobs as engagement for its video game Fortnite Falls. And if that wasn't enough, ABC pulled the latest season of The Bachelorette amid those domestic abuse allegations involving its star. So what does it all mean for Disney's strategy from here and for his leadership? Let's bring in Matt Bellany, the founding partner of Puck, and host of the town podcast. Matt, it's good to see you. And look,

he's a parks guy. Sounds like the parks business is where they're going to. So I don't know if this all actually tells you about what a mess. You know, he was inheriting to some extent. Yeah, I think each of these three scandals or problems are different and distinct. The Bachelorette thing is getting all the headlines. But for the larger Disney business, it's a small hit. It's not something substantive for tomorrow.

I think that the Open AI and the Epic instances in particular are problematic. the reason why they are laying off a thousand workers is because they're saying that Fortnite is not growing like they thought it would be. And that is key to Disney because Disney has invested $1.5 billion and has spent two years creating a world in Fortnite. If that's going down, then Disney has to worry about whether Fortnite is the place that they should be placing their big bet in this space. And the open eye thing, the open AI thing,

thing is like SORA was a big announcement. Now, they hadn't papered the deal yet. We're going to invest a billion dollars. It just is like, what is the Disney narrative on artificial intelligence? We don't know now. And if you're him, you know, I don't know if we've heard specifically his, I'm sure he was pitching a whole strategic vision for this company. And again, the financials have shifted. The park's business is much more. Remember when it was all yes, ESPN was like 40% of operating margin or something if you go back 10 or 20 years. And so what should we expect from someone who might be taking the business in a very different direction? Well, DeMorrow has talked about using the relationship with Epic Games and using the

interactivity that they're learning about to create a hub on Disney Plus for the Disney fan, potentially gaming, shopping, consuming content, socializing, having a relationship with the parks. it is sort of the digital component of the parks business and that interactivity element that he is bringing to the CEO job. So they need to figure that out. That seems to be the big priority for him. And if Fortnite is not going to be as much of a presence there, they have to figure out what is going to be a presence. Now, they say it's keeping on track and that they are still building this. And it's not like Fortnite is going away. It's just something that they need to really keep an eye. on because they need a narrative. What is going to power this company over the next 10 to 20

years besides raising prices at the parks? The stock market, the market really needs to know the answer to that question. Yeah, well, raising prices at the parks, I'm like, oh, I guess it makes sense, but they're all already so high. I was just there. I know how high they are. Dom's still recovering from his trip down to Disney. Matt, thanks. Appreciate it for now. We'll see what note he strikes as this continues, Matt Bellany. Coming up, tech stocks have slid this year, but our next guest has a few names. He says, not to forget about market navigator. We'll get into that after this.

All right, welcome back to Power Lunch. Time for your Market Navigator. The tech sector is out of volatile few weeks, but our next guest thinks the rotation out of technology is overdone and that the sector is going to bounce back once the Iran war is actually resolved. So joining us now for the case is Jay Hatfield, the CEO and CIO of Infrastructure Capital Advisors. he's watching one stock in particular that's already having a stronger month. And Jay, you believe it's poised to so or more again. So what is it about the tech trade that's got you optimistic?

And what stock are you looking particularly at? Tom, and it's great to be back. The last time we were on, we recommended two value stocks, which significantly outperformed the S&P. But we now, our models show that that rotation is overdone. And really, tech stocks have become value stocks. So we're very focused on Marvell. It's an $85 billion company.

It recently announced fantastic earnings, fantastic guide. So now it's trading at a peg ratio of about a half. So in other words, 18 times, but growing at about 36%. So it really is almost like a value stock. Investors are starting to figure out. They also have an optics business, which is growing really fast optics applied to data centers. So that's a holding in our large-cap income fund, one of our largest. That's really our best idea.

Very underappreciated, great-growing tech stock trading at really almost ridiculously low multiple. Yeah, it's also up about 20% already on a month-to-day basis. So people are starting to catch on a little bit to this more. But broadly speaking, why do you think that tech trade is something that we're going to gravitate more back towards after everything with the Middle East gets resolved? Well, because really the rotation was driven by Fed rate cuts now. Fed rate cuts are potentially off the table for a while. So we think we'll rotate back to tech. And these undervalued situations will do the best.

All right. Jay Hatfield, Infrastructure Capital. Thank you so much. We'll see you again soon. Kelly, I'll send things back over to you. All right, Dom, thanks. Meantime, the memory stocks, they have been massive outperformers over the past year, but they're not joining the rally today.

We'll tell you why they are sitting this one out next. Welcome back and take a look at chairs of arm holdings, which are up 18% today. After the company said it's newly released in-house chip, we talked about it yesterday, would generate $15 billion in revenue by 2031. Let's bring in Christina parts of nevillus to break this down. So again, Christina, you brought us this news yesterday. Today there's a dollar figure attached to it. And it comes on a day that's kind of a tough session for this, you know, the space.

And that's exactly why that dollar figure was the reason the stock turned around. Actually, when we were on set, it was up maybe 1% yesterday. Then it actually fell one and a half. And now look at this. You're seeing it up double digits, primarily because the company is guiding to roughly $15 billion in revenue by 2031. That is a huge increase just over the next little while

when it only makes a total of roughly $4.9 billion. Wow. So they're betting big on not only the CPU business. So they launched a new CPU yesterday. They said that META was their new lead customer, open AIs on board, too. They had 50 partners, et cetera. But really the market is reacting to this bullish cost.

commentary. The problem is that they are building in a market right now when there's supply constraints everywhere. And if we could bring up Intel and AMD, excellent examples. The NICA, they put out a report saying that Intel and AMD would have to increase prices by almost 15% today because of the 15.15. Yeah, 15.15 because of the CPU constraints. And we know that CPUs are increasingly being used for AI inference in large language models. So the second, you know, when you spit out your query and stuff like that. And that's where Intel and AMD would come in. And now you're seeing Arm enter the space. Alibaba yesterday also announced a CPU as well. So the space is getting incredibly crowded. The thing with Arm, though, is how are they going to

get that capacity at TSMC when just yesterday to Broadcom's executive? You're nodding, but Broadcom's executive also warned that TSM may not have infinite supply now going forward. Is it the CPU the thing that used to sit on my desk? Or am I, like, all of the, it's amazing. So it orchestrates. So the reason why it's relevant in AI inference is that agents will be talking to each other. So CPUs are known for orchestrating, whereas the GPU would do, is primarily used for, not primarily, but a big portion of it was training, making their model a lot smarter, whereas the CPU will connect it all until you go here and there. I'm simplifying it. I know there's a lot of smart people they're saying that's really dumbed down, but it's the orchestrator. Yeah.

It's the conductor in this whole process. But I think it's also interesting right now that, again, that Arm is choosing to do this in a crowded field with limited capacity, at least the visibility that we have right now for future capacity and then doing it on an in-house basis as opposed to just doing what they've always done and then conceiving it and then saying, hey, if you want to use it, you pay us the money. Yeah, but they have 35 years of experience. Their blueprint, the architecture for their chips are in absolutely everything. So to your point, the bullish argument will be, well, they know everything already. The negative point is that could potentially cannibalize

all the customers that they provide these blueprints for. What's going on with the rest of the space? Is Micron trading lower today still? Yeah, so this is primarily today specifically about a Google research post about a turboquant. So this is a technology. Yeah, I know. We were making fun. We were insulting one of our colleagues upstairs saying he's a turboquant because we sounded like an insult. But no, what it is is it compresses KV Cash.

So it compresses your memory and would make it more efficient for you to use, meaning potentially you wouldn't need to use as much memory, which is why it impacted the high bandwidth memory stocks. The problem is this Google research actually came out last year. don't know if it's going to be, you know, possible to scale in all of these large language models. However, Google is using it said in the post in Gemini at the moment. But there's just a few things to keep in mind that maybe any type of headline these days, like any, like, negative positive, you saw Intel AMD up just because of this one NICA thing. But can you imagine, here comes Google, which, like, rewind the clock to a year ago or something, you know, before the latest,

greatest version of Gemini comes out. Chatchip T owned the space. Gemini comes along, along with Anthroping and take, if Google now does the same thing to the memory, and Google uses its TPU, so that's an, now if they do the same thing on the memory space, that would be epic. Granted, this is only a 3% selloff for stocks that are up like 800%. 300 plus, yeah, exactly, from micron in specific. To your point then, I think what's important to distinguish is that Google makes that infrastructure and why this is so meaningful is because any company that makes their own

GPUs, TPUs, whatever you want to call all of the chips in-house, If they can find an algorithm to make that memory more efficient, why would they need to go and get an external provider? Mm-hmm. Mm-hmm. Yeah. All right. A lot of headlines there. Christina Parks and Lovel us.

Thank you very much for bringing in all of those to us here. All right. We got much more power lunch coming up after the break, so keep it right here. Time now to reveal the results of today's power poll, which was, will the U.S. enter a recession in 2026? 47% said yes. 53% said no, Dom, I don't know if we call that a coin toss. Yeah.

That's close. And you say it or should I say it? it. You say it. So we asked our fine panelists who were on the A block with us, Peter Bukvar and Jenny Harrington, and I said to them as they were leaving, by the way, what do you guys think about that? And they both said. Yes.

Recession this year is what they're both there takes for. Michael Buccella, Neoclassic said, no, not this year. And Jenny said, but don't worry, it might just be a flesh wound. I said, I'm still worried about that. So keep that in mind. All right, so now could a new Tesla be in the works? Elon Musk dropping a big tease

today. After a user on X suggested to make a minivan version of a cyber truck, Elon Musk responded something way cooler than a minivan is coming. He shared no details or timeline, but it did get a lot of attention online. And Kelly, as somebody who drives a minivan, I'm looking to you, because it could be cooler than that. We've talked about this. We both want the minivan, but he has said it's going to be something more like a mobile living room, like cooler than a minivan, like a party bus in Vegas style. You're not driving. All right. Thank you very much for watching Power Lunch, everyone. Closing bell starts right now.