Power Lunch - Tech Stocks & Small-Caps Pull Back as Treasury Yields Rise 5/15/26

Episode Date: May 15, 2026

Stocks pare their recent gains following the conclusion of the Beijing summit between President Donald Trump and Chinese President Xi Jinping. Brian Sullivan reports live from Louisiana at the site of an LNG export facility with one-on-one interviews with Energy Secretary Chris Wright and Louisiana Governor Jeff Landry while Kelly Evans breaks down the move in tech stocks and treasury yields back at CNBC Global Headquarters.   Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Stocks are pulling back from record highs after meetings between President Trump and China's leader Xi Jinping. Ended with no clear messaging of what's exactly to come. Welcome to Power Lunch. I'm Kelly Evans. The S&P is under pressure today, but it is still trying for its seventh straight week of gains. The other risk to this rally, rising global bond yields, weighing on investors' appetite for risk. In the U.S., the 10-year yield up 13 basis points to nearly 4.6 percent. That's its highest level in about a year. in Europe, we're seeing some of the highest levels since before the great financial crisis.

One closely watched trader is taking down his risk, and that is coming up. Well, we're here in Calcasieu Pass, Louisiana, Kelly, and we have a big show lined up for you today because we're going to be speaking with both the U.S. Secretary of Energy, Chris Wright, that AI, that LNG, and more, plus the governor of Louisiana will join us, and I ask him directly, is there enough natural gas in his state to meet both the LNG dreams like we've got this venture global ship headed to Asian a couple hours behind us, and also meet the dreams of AI, artificial intelligence, all these companies that are powering the stock market,

they're powered by energy, and we're here to find out that power will exist. And the show's called Power Lunch. Somehow, Kelly, it all fits. It's amazing what we're seeing there behind you, Brian. We're looking at a down tape across the board, so let's pick it up there with the Dowdown 400 points this afternoon, and the sell-off hitting pretty evenly across,

the sectors, although the Russell's underperforming. The only place bucking the trend today is energy, so we'll come back to that. A lot of the biggest laggards are the tech and chip names that have been running ahead, raising the question of whether it's an opportunity to add more to your portfolio, or should investors look to take some profits here and maybe move away from the space? Joining us now is Niles Investment Management founder, Dan Niles. Dan, it's great to see you again. Are we at an important juncture here? Yeah, I mean, I think we are. I mean, you don't know what. what straw is going to break the camels back until you add that straw. And I think today with oil

moving up, and as you rightly pointed out, some of the highest bond yields we've seen in well over in Europe, I guess actually since the great financial crisis in Europe, that seems to be finally breaking the market. So for me, the number one thing I look at every morning when I wake up is where's oil, where are bond yields? How are they reacting to that? Because at a certain, point, as we know, last out of 10 out of the last 12 recessions have been preceded by a big surge in oil prices. And right now, oil is at pretty high levels and staying there. Yeah. Do you think there's a direct connection to rising global bond yields? The inflation moves, as I just mentioned, CBC is reporting the next move that the markets are pricing for is now a rate hike and not a cut.

Is that an important headwin for the tech trade or no? It's a massive problem for the tech trade, because if you think about it really since the end of 2022, there have been two primary drivers of the stock market. Number one, the AI trade with the introduction of Chad GPT at the end of 2022. And then the second one is easy money. Because remember, the Fed went ahead and stopped the fastest rate hikes in history, and then they went through cutting really since then. And so with the appointment of Kevin Warsh coming in, we all know he got appointed because his desire is to cut rates, right? He's looking at things like trimmed mean PCE at 2.4%, which is way lower than where core headline is. And he's seeing AI being deflationary, and so his desire is to move rates lower.

So if you take that away because you've got inflation, this oil price is seeping into inflation. the same time, it's starting to cause some impact on demand. And we heard that from McDonald's, right, when they report it about it starting to affect some of the lower-end consumers. The longer it stays up here, the bigger problem it is. And, you know, oil went down to 84, I think, on April, you know, 17th or so. And now it's, you know, back well over 100. That's up 25%. The stock market has sort of ignored it. But I think this was the last straw potentially. And so that's what I'm very focused on. Hey, Dan, it's Brian Sullivan. I'm actually

down in Louisiana in oil and gas country. So this is right up the alley. Two questions for you. Number one, is the, or how much is the energy market acting as sort of a de facto tightening mechanism on bond yields? Is oil driving bond yields or vice versa?

And then also, how long do you think higher oil prices can go before the stock market might actually start to crack? Well, maybe you're seeing that today, Brian, because it's interesting, right? As Kelly pointed out, I think in the intro, bond yields today are spiking really hard. And so you kind of don't know until you get there, right? And today might be the sign that you got the 30-year, you know, sitting over 5 percent. You've got the two years

sitting over 4 percent. And that might be, you know, breaking the market right now. So because in the past, when you see oil price spikes, they don't really matter. if they come back down again, and they're short of temporary. But when oil is, you know, sees a surge of 50% that lasts a quarter or two, then you start to have to worry about a recession. And so this is starting to get uncomfortable. Well, and I spoke with Secretary Wright earlier today, live on CNBC. We did another interview as well, which you're going to hear in a few minutes. And I asked them about oil prices, Dan, I know they're up. They're over $100, but they're not at $150, 200. Some people suggesting that by now, two months ago, we would be at 150.

So it's kind of unclear how much there might be a lot more shadow inventory out there than we think. But that said, every time we've seen the stock market go down and yields spike the last two months, guess what? We get a positive tweet or whatever the market reverses. Do you feel like this is just going to be another bounce buying opportunity? Because every decline has been one. Well, I mean, that's the thing, right, Brian? and everybody's waiting for, you know, the back off.

The question becomes, much like the Exxon Mobil CEO said or Saudi Oramco CEO said, you had a lot of inventory sitting on the seats. And so oil prices didn't really move up a lot because those ships hadn't still reached their destinations. And also when you start to shut down some of the production in the Middle East, it takes a lot of the turn that stuff back on.

you get this delayed impact where you're able to deal with higher oil prices because it's not really affecting your delivery of oil. You have the straits shut down now where even the Iranian ships can't make it out because President Trump has shut that mechanism off. Then it starts to become a problem because the last ships that were on the ocean before, you know, the shutdown of the straits began, they've all delivered and now you're going to start to run into the problems. And don't forget the time of year we're in. We're entering the summer driving. season. So oil prices matter a lot more when they seep into gasoline as you're heading into the summer driving season. And so all of this sort of comes together at the same time. What I'm hoping for

is given we've got the midterm elections coming up and we know the history of the incumbent party when gasoline prices of spike, they get absolutely destroyed in the midterms. Every incentive is to get this thing down, but the longer it stays up here, the more damage that's caused the oil infrastructure underneath. And we're showing Intel at 110. I don't want to call it a round-trip. I mean, it's still a lot. Let's be clear. Dan, what are the shorts you have on right now? What are the longs real quickly? Well, I mean, for me right now, I've got more shorts on than I have longs and I'm sitting on cash because I, you know, as I answered those prior questions, I'm more worried about downside. Ultimately, I hope, when this gets sorted out and oil starts

to move down again along with bond yields, then it'll be moving back into picking up some of the semiconductor names in the microprocessor area, which I've written about since late March. So, you know, names like Intel or EMD like a lot more at that point. And looking at things like optical, looking at things like memory, and what rinds out there, which is more the energy-related names that help provide power to the infrastructure. And so that's where I'll be looking for adding exposure.

Perfect place to leave it. Dan, appreciate it. Thanks for making the time. Dan Niles, Niles Investment Management. InVidia is the last of the MAG7. They're going to report results next Wednesday after the market's close. Interesting trading pattern going in there. The stock's down this afternoon, but the shares are still higher by 6% for the week. Katie Stockton told us she thinks we have a confirmed breakout based on where it's closed the last couple of weeks.

And the mega cap name has surpassed the $5.5 trillion mark and set a new record high just a few days ago. For more on how the options market is trading it, let's head out to Chicago, where our options reporter Oliver Renick is standing. by Oliver, what are you tracking? Hey, Kelly, it's a rough day for Nvidia Bulls, not just because the stock is down, but because options traders are watching hundreds of millions of dollars of short-term

profits slip through their fingers. The most popular contract that yesterday's close is on pace to expire worthless. We've got the chart of the 235 strike call expiring today that accounted for more than $100 million of premium

yesterday when it was in the money after that massive run, a 10-day trillion-dollar rally in Nvidia market cap. The line that you see for that contract spiking up yesterday on U.S.-China trade hopes and going to zero today is the options equivalent of having 19 in front of you and then the dealer hits 21. If you're curious what the dealer looks like, there's about 200, 300 of them behind me. But that's the risk if you hold options into big expiry days like today. The good news is today's big monthly options expiry allows for a reshuffling of the deck and traders will get a second chance with earnings next week, where options are bracing for a move of 7%, which is notable compared to Nvidia's median realized move of just

3% the past four quarters, three of which were declines, by the way. So two lessons from today. One, be careful trading politics. And two, no matter what options contract, your trade, they all become zero days eventually, guys. Always be careful trading politics. I think we can take that one to the bank for sure. Oliver appreciated it. Oliver Renick, CNBC's Options Reporter. Let's look at the global bond markets. They are stealing all the thunder today

because this rise in the yield started overseas and then came here to the U.S. Germany's 10-year boomed. There's one to note. It just hit its highest level since 2011. In France, the highest since 2009. In the UK, the 10-year guilt is at levels we haven't seen since 2008.

There's pressure on Prime Minister Kier Starmor, of course. And Japan, the country's 10-year yield reached its highest since 1997, and its PPI data, to some extent, could be at the heart of today's global sell-off. And Japan's move is even more remarkable for a market that spent years pinned near zero. You know, AI and LNG have really been the watch sort of initials of the market. The last couple of months, energy, the best performing sector in part because we're selling a lot of shiploads like that Venture Global ship behind us here that's going to Asia over the next couple of months and into the future. And coming up after the break, we're going to chat again

with the Secretary of Energy. We'll talk about LNG, we'll talk about AI, but also ask him, do we really know who's in charge of Iran right now? That exclusive interview. Next. All right, welcome back to Power Electra. We're here in Cameron, Louisiana, because just over my left shoulder is going to be the site of a new LNG export facility. The company's called Cameron. It's private company. They've been developing this for about 10 years, and the groundbreaking was today, and here at the groundbreaking, was the United States Secretary of Energy, Chris Wright. We sat down, not only this morning live on Squawk Box, but also here, about an hour ago, sat down with the Secretary of Energy, and I began by asking him in this portion of the interview, is there enough

U.S. natural gas to meet both our LNG export dreams and our AI power dreams? Truly an amazing abundance. 20 years ago, we were running 1,200 rigs drilling for natural gas, and we were the world's largest importer. Because of the shale revolution, today we're running 120, 90% less rigs. We more than doubled our natural gas production. We're the world's largest exporter. To double our gas exports from where they are today,

maybe you need another 25 drilling rigs. Not a problem at all. Okay, I think the CNBC audience, listen, and they've got their eye on all these LNG stocks, Commonwealth of private company, but it may not be forever. We'll see what happens. But what they've got their eye on is, is there a risk of oversupply in the U.S. as we approve more of these massive facilities?

Do you worry about that? Not too much, because if you look at the last 15, 20 years, the fastest growing energy source in the world is natural gas. The demand for natural gas is insatiable. Right now, it's really limited by the capacity to move it. If you've got pipeline natural gas like we do in the United States, it is that United States is energy superpower. Most people don't. So they get their gas, you know, via shipworn cargoes.

But today, there's twice as much regasification capacity, receiving capacity, as there is export capacity. Yeah. And earlier this morning, we're at Golden Pass, which is a JV between ExxonMobil and Qatar Energy. We know the woes that Qatar Energy's had in the Arabian Gulf because they got hit. They got attacked by Iran. Can you give us an update on where are you? European allies and partners are. Germany's been buying a lot of gas. Greece, Turkey as well. Where do we stand on having enough gas to sell, not only to Europe, but like that ship, to Asia as well?

Yeah, we're continuing to ramp up U.S. natural gas exports. It'll be a record again this year. It was a record last year. We're up to about 20 BCF a day of natural gas that we export, which is roughly double the second and third largest exporters of natural gas. Cutter being one of those two countries. So it is tough to have lost that 10 BCF a day of gas exports right now, but we're adding about two and a half BCF a day of export capacity in the United States just this year. So a quarter that will be filled by growth from U.S. exports today. Now, of course, demand is growing too. Price mechanism right now is going to reduce the growth of LNG this year. But that's a temporary interruption. Traffic will be flowing through the Straits of Hormuz as soon as we can, but certainly

sometime this summer at latest. I was going to say, and I know we talked about it a bit on squawfox really this morning, just to reiterate, any real visibility on when that traffic flow might be, if not fully resumed, majority resumed? So dialogue's going on with Iran. Everyone knows where this is going to end. This is going to end with the Iran nuclear program being dismantled and free flow of traffic through the Straits of Hormuz. That could be a deal with Iran that struck in the next few days and that could happen relatively quickly. If Iran continues, to hold the world economy hostages, the United States military will force the reopening of the Straits of Hormuz, but that's not trivial to do. We've done the early steps on that,

but better is to get a deal and not have to use military force to do that. And then to wrap it up, as I've reported on CBC many times, my sources and intelligence and others have told me that it's not quite clear maybe who's in charge of Iran, that maybe the people were negotiating with some others might have other plans. In your view, Mr. Secretary, is it clear who is sort of quote, in charge of Iran right now? Well, it is a regime under great stress. You know, the nominal leader of Iran has not been seen or spoken. You know, is in hiding since the start of the conflict.

Could it be dead? Could be dead, but probably not. Okay. We don't know for sure. So, yes, there is confusion. There is fraction among the regime. All of this, of course, could ultimately lead to a change in regime in Iran, which would be just enormously beneficial for the region, for the United States, and, of course,

for the 90 million plus Iranians. But we didn't go in with a specific agenda to change the government of Iran. That's up to the Iranian people. We went in to reduce Iran's ability to wreak havoc on global energy markets on the Middle East economy and ultimately threaten the U.S.

and our allies in Europe and Asia with nuclear weapons. So on the oil supply side, when this is over, and there will be a day when it's over, between Iran, between Venezuela, and the investment that's now going into Venezuela and maybe even the UAE leaving OPEC, because I think they believe they can go well above where they are now, maybe four, or even five million barrels per day. Is it possible that in a couple of years we see the world producing a couple million barrels per day

more of oil than we are right now? Oh, absolutely. Absolutely. But the world has an abundant amount of oil reserves and just a little smarter policy from the U.S. government and engaging with our allies abroad instead of shaming them and ignoring them, there's enormous route to grow oil production in the world. And of course, if we want the other 7 billion people to live like the lucky one billion like you and I live, we need a lot more oil, we need a lot more natural gas,

but the resources are there, the people's there, the capital's there. Yeah, and Kelly, I think that's a huge issue for the oil market right now. I know oil's up today, $105 a barrel, but I wonder how much the oil market is looking past these headlines. They're looking at maybe in Iran that produces more, not less. A Venezuela that produces more, not less. They're looking at maybe other countries like the UAE, which by the way, this morning announced it's going to develop a second pipeline across its peninsula and bypass the Strait of Hormuz that looking out six months a year, two years, five years, whatever, that there is more oil than less. And I wonder if that's holding the price of oil relatively

in check. What you just said is so important. The UAE building a pipeline, Brian, yes, this is going to take a little bit of time, but that's how markets respond. Ultimately, Iran's leverage over the straight and the straight significance is going to decline if other allies and other countries find other ways of getting the product out. To that point, isn't Venture Global building a new facility right where you are? Yes, they are. And in fact, these projects, like the UA pipeline, which they hope to be up and running next year, these are multi-year projects, okay? Commonwealth, to my left, I think I called a Cameron, I'm in Cameron. It's called Commonwealth LNG is over that way. But over the way, but over the year,

that way is what they call CP2. Calcasu Pass 2 from Venture Global. In fact, that ship behind us here, which is owned by Gas Log, publicly traded company, by the way, partly owned by the Onassis family. That ship is headed to Asia. Venture Global is going to increase its output

dramatically when what they call CP2, which is right over there, you've got to trust me on this. And by the way, Kelly, there are thousands of construction jobs. These are not like 50 construction workers for a couple of months. These are thousands of jobs over multiple years.

It's one of the conversations that we're going to have in the next block. We're going to be welcoming in another guest, and that is the governor of Louisiana. We'll talk about the economy, jobs, LNG, AI, and more markets down a bit, yields up, oils up, Power Lunch, backup, right after this short break. All right, welcome back to Power Lunch.

Part of our special coverage here in Louisiana. We had a chance to sit down with Governor Jeff Landry, and I began by asking him about the economic impact of all the construction, whether it's Commonwealth or Venture Global or others, the economic impact of LNG and this energy boom in his state. Oh, it's unbelievable. This project now takes Louisiana over the $100 billion mark after 28 months. So from the time I became governor to today, we have $100 billion of new investment in this state.

And a lot of it are these LNG projects. These are just great projects. You know, they say, if there was going to be sort of a nayser, they'd say, well, do you have the manpower? Do we have the skilled workers that can build this? Do we have the electrical power to make this work? Because the irony of LNG facilities is they take a lot of electrical power. Does Louisiana have the people and the power to get this done? Absolutely.

The great thing about Louisiana is we may be 25th in population, but with 13th in electrical production. We've also, we've always had a big delta. between the amount of people we need to service electricity and businesses. So we've got generational power right here, and we're building more generational power as we speak. You know, it's not just LNG. Obviously, that ship behind us there. That is a venture global ship.

Gas log is the company. That's going to Asia. But you're also supplying data centers. You've got some big data center projects. I think meta, Facebook has a big project that's coming in here. Do you have enough gas to accomplish both the AI dreams and the LNG dreams? Absolutely. Look, I remember when I was a young man and they were talking about, we were at peak oil, peak gas,

and in a short span of 15 to 20 years, we've gone from peak to it's not even noon in the day that time for oil and gas. And we do. And the important thing about what we're doing is going back to the electrical generational part is that we're making sure that as we build out this additional generational power, okay, electrical generation, that we're not placing it on the backs of the consumers. That's something that we've seen has happened in some other states as well. A lot of political blowback on that governor. But it's not happening in Louisiana.

We've cut the best deals with those people who need the power by saying, look, if you need that power, you have to invest in it. We took the president's proclamation and we put it into action. So these big tech companies, and we know some are already here. I'm sure your phone is ringing. Feel free to share with us any names government you might like to. You're saying to them, you can come to Louisiana, but I want to be clear, you have got to cover your own cost. the people cannot pay higher electricity rates for your data center. Well, yes, and let me tell you something.

The first group that we worked with was Mark Zuckerberg and META. And I want you to know that Mark and META did the, we cut the most responsible deal for both META, so for his investors and for people and consumers in Louisiana. And I got to give a big shout out to it. For our audience, for both people that live in the state and the other 49, what do they need to know about that deal? So what that deal does is, is META is going to pay.

up front for the generational power. They're going to put up the money for the grid resiliency and the extra generation that's needed in Louisiana. What that is going to equate to is over a $650 million savings to Louisiana. It's here in Louisiana. So like I said, we've got Venture Global behind us. They're operational here. They're building out CP2 over here, which is Calcashoe Pass 2.

Cameron, you just broke ground on today. What is the other money that goes in and around building out something like? that and that. How much more investment does the state require, not just for the facility, but the power lines and the facilities, the hotels, the restaurants, everything? Well, the great use about that is that when projects like this happen, all of those other businesses that feed into these particular projects rise. And so we see Louisiana's businesses having great opportunities, opportunities that they've never had before. Look, to just give you the scale of it, if Louisiana was a country, we'd be number one in the world.

in LNG exports. So when they say America's number one, America is only number one, Louisiana's number one. Louisiana's number one. 66%. My friends in Corpus Christi does. Texas,

I hate to hear their feet. I got to be careful. I was there. I'm going back later today. You're bigger than Texas. We are. Once in fall, Louisiana has finally gotten bigger than Texas.

Yeah, I got to be careful, Kelly, because we're driving back to Texas. So, you know, I like them both. I got to be very careful. A couple things you can't see right off camera here in the ship channels. Dolphins everywhere, by the, way. It's just amazing.

I was joking around with the governor. Yet there's, I'm not kidding. There's a lot of people fishing for red fish and trout, speckled trout. Then you got these dolphins here as well. And the other cool thing, I knew you'd like this because you love education. The guy that founded Commonwealth, which is the groundbreaking. You can't see a trout over here. He's from England.

He's not some Louisiana or Texas oil dude. His name is Bendell. He went to Oxford. He's British. Came to the United States. He helps run Kimmeridge, the big investment firm. So we had a pretty big big. British contingency here at Commonwealth.

For more, we interview him, by the way. Check out the Power Insider, Energy Weekly Intelligence piece. You know, I don't like to call it a newsletter. There's a QR code on your screen. We interview Bendell for that as well. Speaking of Texas, I'm going to leave now and drive back there. It's funny you mention education because Louisiana is the only state in the nation, Brian, that has surpassed 2019 levels in both reading and math.

Biggest growth. It's, you know, hats off to them. They're doing something right. Or maybe some would say they had a long ways to go. I'm not going to say it. They've surpassed it. And look what they're doing now. Brian, we really appreciate it.

But that's a very, I should have, great RBI. Should have brought that up. I should have brought that up. I apologize. It's not really our, you know. Go to Texas. This was awesome. Great stuff.

Safe travels. We'll see you next week. Brian Sullivan. Thank you. I want to go fishing now. As he mentioned, I should get Steve on that. Still ahead, the chips are selling off with both the socks and the SMH semi-ETFs down

about 3%. Is this healthy profit taking or is it the start of a broad correction. We're asking Carson Group's Ryan Dietrich next. The markets are selling off this afternoon. The Russell small caps are down more than 2% on rising interest rates. Tech stocks also taking it on the chin with some of the biggest losses. Names like Micron, Strategy and Intel down 5%. Arm holdings down 8. Meanwhile, the SMH and the SOX semi-ETFs are down 3% after posting solid gains, amazing gains really up to this point. Is the simple profit taking or a sign of further pullbacks ahead? Let's ask

Ryan Dietrich, the chief market strategist at Carson Group and a CNBC contributor. All right, Ryan, feels like who wants to be a millionaire or something. What's going to happen next? Well, thanks, Kelly, for having me back. And TGIF, everybody. And hopefully, I know solely had to leave us. Hopefully, you had some good food down there in Louisiana. You know, let's put some context around this.

The NASDAQ 100 just had a 27% rally in 28 days, right? Wow. We know the S&P, unless we really sell off in the next hour and a half, is going to be up seven weeks in a row. we're going to say this is simply profit taking, and I get it. You guys had a great discussion before I joined about higher oil, global yields breaking out. Those are concerns, no question about it, but then just let's look at today's manufacturing data. I know it was regional, but some of the strongest manufacturing data we've seen in a while.

New orders really sort. So this economy is still solid. I think it's just due for maybe a little pause after a really good historic seven-week rally. And I like what you say here that average, you know, we always talk about averages. I'm sure you've been part of financial planning exercises, funding 529. I say, you know, the average return for the market is, you know, 7 or 8 percent. But you say, we never have an average year. What do we usually have?

Big up years, big down years? That's right. So I get to work with financial advisors and clients every day. So we take these big picture look. Kelly, the last 76 years, that's back to 1950. The S&P's up like 9.5% on average. That's pretty good. But here's the thing.

Only four times the last 76 years has the S&P gain between. between 8 and 10%. So average is not so average. So where are we trading right now? We're like eight and a half percent, you know, so we're right in that range. So I guess the question is, will we really be flat the next seven months. I don't think most people expect that. So then the next question is we'll be up or down a lot. We think it's probably higher. And one more level to that, the average up year is up 19 percent. Now, the average down year, it's down 14 percent. So again, bigger swings are normal, but I still, worst off the miss. We come into this year said we could gain 15 percent this year. We haven't changed. We didn't change that back in late

March and a lot of people did. We still think mid-teens is likely when all said and done. I mean, you have to stop and take a breath. We've gone from crossing 7,000 for the first time on April 15th to nearly 7,500 about a month later. It's a huge run. Also, you point out May, while it's seasonally, usually quite weak, we've had seven new all-time highs most since 2017. Wasn't there a year a couple of years back that the S&P was exactly unchanged for the year? Well, let's see, I guess 2011 was the one that was exactly unchanged on the whole year. But you think about those seven new highs, that is, that's a lot. I mean, without saying we don't know, that's a lot. But only three years in history have we seen May have seven or more

all-time highs. They were 20, 1995, they were 2013 and 2017. Just for the listeners, the rest of the year. So the final seven months were up every time, at least double digits, 13 percent on average. I know it's fun with numbers, but one more fun one here. It's very rare, Kelly, to see the market peak right now, right? In May and June, we've only had two ultimate peaks in those two months. only twice. So it's kind of rare. So maybe we pull back a little bit after this rally. But I don't think this ball market's done. We think we're still going to have a surprise summer rally. I'll borrow a technician language. I think Katie Stockton said we could see a consolidation phase. I mean, everybody would expect a consolidation phase after what's just happened. That's more positive than the flip side, which could be a much more of a stronger, more severe pullback.

I'm not one to argue with Katie. I mean, I would agree there. And of course, words are going to come from. I mean, technology. We kind of started the conversation there. High momentum. We've had a really good year investing in high momentum ETFs. We're actually pulling a little bit away there, going back just kind of in the broader market ETFs. It doesn't mean we're bearish, but again, you have to look at how stretch that rubber band is. But markets say they passed the baton around.

And listen, tech took the baton. I wouldn't be shocked at all. Tech pulled back a little bit and maybe something beaten up like kind of industrials lately or financial specifically because the economy is still better than people think. We're sticking with those cyclical themes. Maybe tech's just due for a little breather. Finally. And I'm glad you pointed out the stronger manufacturing data.

This is not just about the tech trade. So stronger manufacturing data, we've had better jobs data. I know you're amongst those who think that maybe the labor market outperforms. But again, is that good news, bad news? I hate to put it that way. You know, that's what's enabled rising bond yields. That's what's now got the market pricing in a Fed hike instead of a cut. That's a tough question there for Friday afternoon.

I'll just put it like this. The higher yields haven't really slowed down this bull market yet. I know today we're seeing that. We came into this year talking about ride the wave, the AI wave, the earnings wave, lots of different waves that are out there. And the reality is this is still a stillable market. It's still solid. There's still more positive negatives, Kelly. And we just think maybe after a little break, we're still going to continue to have upside this year.

Ten years in the sixes in the late 90s. Who knows, maybe history will rhyme. That would be quite something. Ryan, really appreciated. Thanks. We didn't have his high debt levels then either. Ryan Dietrich from the Carson Group. Let's get to McKenzie Seagalos now for the CNBC News Update. Hi, Mac.

Hey, Kelly. The Senate Judiciary Committee Chairman is inviting the CEOs of Meta, Alphabet, TikTok, and Snap to testify about children's online safety. No word yet on whether CEOs have accepted the invitation. It comes as two committee members, Marsha Blackburn and Richard Blumenthal, are pushing for legislation requiring those companies to take more responsibility for their platform's effect on children and teens. A Manhattan judge declared a mistrial. afternoon in the case against former Hollywood mogul Harvey Weinstein. That decision coming after the jury said it was deadlocked on a verdict. It's the second trial in which a jury has been unable to reach consensus on the allegation. Weinstein was being retried on charges that he raped hairstylist, an actor, Jessica Mann, in a Manhattan hotel room in 2013. His lawyers insist the encounter

was consensual. And finally, the Justice Department announced plans today for a summer surge of law enforcement into the nation's capital ahead of the country's 250th and anniversary celebration. Authorities are requesting 1,500 additional National Guard troops in D.C. bringing the total to 5,000. Kelly, sending it back to you. All right, thank you very much. Still ahead, Jerome Powell's term as Fed Chair, officially coming to an end today. We're breaking down his legacy, the highs, the lows, the hikes, and the cuts after the break. Today marks the end of Jerome Powell's term as Fed Chair. And while the transition to Kevin Warsh is not a yet the soon-to-be leadership change at the Fed comes amid heightened concerned about Fed independence from the president.

We have an all-star panel here now to take a look at Powell's legacy and discuss what's next for the Fed under Warsh. Dennis Lockhart is former Atlanta Fed president. David Wessel is Senior Fellow in Economic Studies at Brookings. It's great to have you both here. David, with a little bit of your journalist's cap on, what would your column read like recapping his tenure? Well, first of all, you know, his tenure's not over yet.

Kevin Warsh hasn't been sworn in, my understanding that Jay Powell will be the chairman for the next few days. But my, I think, look, his major accomplishment is that he defended the independence of the Fed when it was under unprecedented assault. And that has cloud, that has overwhelmed his biggest failure, which was to, he moved too slowly on inflation. And we had 8% inflation during the worst of the, of the COVID period. But he will go down in history as the guy who defended the Fed from an unprecedented. and then to salt. And so if I, Dennis, if I were writing the headline, that sounds like defended independence, you know, you know, missed the mark on inflation. I'm not that good of a headline writer.

Do you largely agree? Yes, I do. I think David's got it correct. I am sympathetic to the economic record, perhaps a little more than the way David stated it. Yes, they missed the inflation surge after COVID. and we're too slow to respond. But overall, for the last years, we've had a pretty decent, resilient economy. Arguably half the mandate, the employment side has been largely achieved. We've been around full employment or something that could be considered full employment for quite some time. And the one

disappointment is that they have not gotten to the 2% inflation target. David, if I were going to press the point a little bit, and I'm tempted to, I would say, well, defending the Fed's independence, is that kind of easy? You know, is it kind of easy to say, you know, I will not bow to pressure from the president when maybe he perhaps doesn't feel any real pressure, while at the same time their real job was to make sure inflation didn't happen and that score he was asleep at the switch. No, I don't think they were asleep at the switch. I think they misread the economy. And when they realized they had misread it, they reacted very swiftly, much faster than anybody thought. And they got inflation down without a recession.

So I associate myself with Dennis's remarks. I don't see how you can say it is easy when you're in the gun sites of Donald Trump. When he's trying to fire one of the governors and he started a criminal investigation against you, it took great stamina and courage to be unflinching there. I don't think we appreciate what it's like. I mean, for us, it's kind of entertaining, right? You know, oh, there's a cartoon of Trump put something on social media with the Fed chair falling into a dumpster.

For Jay Powell, it's like having the president of the United States put a bullseye on you. Like, you have to worry about security. You have to worry about can you really convince the markets that the Fed is going to hold the line against the president who is just unrelenting. So I don't think it was easy at all. And in an era when we know people, I mean, your security, you can't take for granted. So Dennis, kind of similar question.

You know, there is this bill that's now being proposed. It's called the Price Stability Act. And basically what it wants is to strike the maximum employment part of the Fed's mandate and say that they would only be responsible for stable prices. They've got a couple of Republican sponsors and co-sponsors. Could something like that, Dennis, come to pass where some might say, look, why is it the Fed's job to worry about employment in this country? What they can and should and must, and this is what Warsh has said,

time and again, inflation is their responsibility. Well, given the politics of it, I don't think it's going to happen, but it's not implausible. That would align the U.S. Central Bank with other central banks around the world that have single mandates, which is price stability. And it's a matter that Congress can change if they wish. So, and when I was there, we discussed from time to time, Congress's wishes. to perhaps revise the dual mandate, but it is very difficult politics to make that happen.

David, what would you think about going to a single mandate on price stability? And this is an interesting time to ask the question, because inflation is obviously above target, and yet I would be sympathetic to the idea that if you tighten in response to an oil price of supply shock, you could make the economy a lot worse. Right. Well, just because you have a single mandate doesn't mean you can't,

look through one-time price shocks like energy or tariffs. Look, I think Dennis makes a good point that politically, it's much easier for the Fed to get public support for what it's doing when it has a dual mandate. And secondly, even the central banks that have single mandates, they are sensitive to what happens to GDP growth and employment. So it's not clear to me that in most cases it would make a big difference. Where would make a difference is when it's really finely balanced.

Like, for now, it's not that hard for the Fed. We're at full employment so they can worry about inflation. But if the labor department's, if the labor market started to fall apart and inflation remained virulent, then they'll have to make a call. And that's where the dual mandate and how much you wage, part of the mandate really makes a difference. Turning now then, David, to Kevin Warsh at the moment precisely that he is taking over, about to take over and what have you.

I mean, we now have the market expected. a hike and not a cut. We have global bond yields doing what they're doing, you know, not alarming maybe by historical standards, but certainly on the rise. And so what does Powell's legacy leave for Warsh to either clean up or build off of? Well, I think Kevin Warsh's problem is Donald Trump. He's not going to be able to talk the FMC into cutting interest rates now. Donald Trump wants lower interest rates. So Kevin Warsh is going to have to figure out how does he deal with the president who we know is very impatient. And the concern is that the president Trump will be pressuring Fed chair Warsh to fire some of the Reserve Bank presidents in order to remove obstacles for cutting

rates. And I think that would be really destabilizing. I think Kevin's other problem is that he spent 15 years telling all the people who he's now going to supervise that their idiots have been screwing up. And so he's going to come into a place where I believe the Fed staff and other policymakers really want the Fed to succeed. They want the chairman. to be a success, but he doesn't come in with a lot of goodwill, given all the things he's been saying about him, about them when they're on the outside. Dennis, the final word? Kevin Warsh has the mother of all tricky navigation challenges in the coming weeks and months. On one side, he's got the president. David has mentioned that, of course. On the other side,

he's got an increasingly hawkish committee. The well-noted nine words that, that Powell used in his last press conference that the committee, the core of the committee or the central tendency of the committee had moved to neutral, tells you that the committee is of basically cut or hike mind. And that's going to be a difficult committee to convince to cut interest rates.

Fantastic. Thank you both. Really appreciate it. A lot to ponder over the weekend and into this new era for the Fed. Dennis and David Banks. Coming up, President Trump wrapping up his two-day visit to China as the two superpowers navigate a pivotal moment for trade, tech, and geopolitics. We asked you for your biggest takeaway from the meeting.

Stay tuned for those results. It's time to reveal those results from our power poll today. We asked you for your takeaways from the Trump-She summit. The broad result is somewhat unsure because, look, more than half said the outcome remain status quo, but 26% said tensions are set to ease following the summit, while nearly as many said tensions are actually on the rise. Make of that what you will. More power lunch back after a quick break with the Dow down 450 points. Stay with us. How much would you pay to have lunch with Warren Buffett and that Steph Curry guy? Someone just paid $9 million for this opportunity. The winning

bid came in during an auction benefiting the Glyde Foundation. It's unclear who the winning bidder is. they often let us know. But the private lunch is set for next month in Buffett's hometown of Omaha, Nebraska. Meantime, Delta Air CEO Ed Bastion, will join us live on Power Lunch on Monday. Looking forward to that. We'll check in on summer travel, jet fuel prices, and a whole lot more Monday at 2 p.m. And a quick final check on the markets with the Dow's down 456 points. And the 10-year Treasury is threatening 4.6 percent.

4-595 with a 13 basis point rise just today. We'll see how stocks handle that in. the close. Closing bell starts right now.