Power Lunch - The Federal Focus, and Generation Y Bother? 5/5/23

Episode Date: May 5, 2023

Whether it’s the Federal Reserve’s mission to hike rates until inflation is curbed, or the growing likelihood of a total federal shutdown – it might be time to accept the reality that Washington’s shadow is cast over Wall Street…and maybe for good. Former New Orleans Mayor Marc Morial joins us to weigh in.Plus, as rates continue to climb, are millennials losing hope in the housing market? A new report from BofA shows they expect to pay even more for homes down the line, with no end in sight. We’ll speak to the analyst behind the report. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon and welcome to Power Lunch, everybody. Alongside Kelly Evans, I'm Tyler Matheson, and here's what's new at 2. The federal focus, whether it's the Federal Reserve's mission to hike rates until inflation is curbed, or the growing likelihood of a total federal government shutdown, it might be time to accept the reality that Washington's shadow is cast over Wall Street, and it is there to stay. We have former New Orleans mayor Mark Morial, Urban League Chief, to weigh in today. Plus, as rates continue to climb, are some millennials losing hope in the housing market.

A new report from B of A shows they expect to pay even more for homes down the line. But an overly expensive market could have far-reaching consequences. We'll speak to the analysts behind that report. Kelly. Looking forward to that, Tyler. Thank you. Hi, everybody. On the market front, look at the Dow of 460 points.

Nearly that's pretty close to session highs, driven by that previously mentioned jobs report, of course. S&P up to 4129. NASDAQ up more than 2% now, and the banks rebounding today. Check out some of the regional names led higher by PAC West surging 85%. That puts it at almost $6 a share right now. Western Alliance up 50%. It's a $27 equity. Zion's up 18%. It's a 23, making hay out of any signs that could lead to a Fed pause. Some headline movers, Tesla up 5% raising prices on Model S and X in China. You don't see that often from the company that's been cutting prices significantly. Apple, meanwhile, up almost 5%. Now, after after its earnings beat, showing that hardware and hard numbers are still more important than big promises.

Cigna up 7% beat on results thanks to lower costs and higher growth in health insurance. Speaking of which, it's official the World Health Organization declaring an end to the COVID-19 public emergency globally. And by the way, on that note, Pfizer turning red today, Ty. All right, thanks, Kelly. Beside today's jobs report, investors have a lot to digest on the federal level from the interest rate decisions to bank turmoil. well as the debt ceiling risks. President Biden actually speaking just over the last hour or so, applauding the job market, saying there is still work to do and taking a shot at Republicans over the debt ceiling struggle. So let's bring in Mark Morial, former New Orleans mayor,

president and CEO of the National Urban League. Mayor Morial, welcome. Good to have you with us, sir. Good. Thank you. Let's talk jobs first. I mean, you've got the unemployment rate at, what is it, 3.4%. That's a 54-year low. Job growth remains. strong. These are good signs of an economy. Maybe we get away with a soft landing here. I think the promoters of doom and gloom, the promoters of a recession, appear to be wrong. Now, we can't look into our crystal ball and know what three, six, nine months will hold, but the American consumer, the jobs market on an overall basis, as well as the jobs market for African Americans and Latinos remains at historic lows.

And the good part of this is the consistency in job creation time. I like to look at these things over a period of months to see if the growth is consistent or if we have sort of this up and down phenomenon. So that is positive, and it demonstrates that notwithstanding the rises in interest rates, at least the job market remains strongly robust and growing. Do you think that the Fed has this dual mandate, the highest level of employment that is commensurate with price stability? Do you think the Fed will look at these job numbers as it begins to think about the June meeting and say, the job market's still a little too hot.

We need to raise rates even more to get the kind of restraint in employment costs down. I think that it's time for the Fed to pause. its interest rate hikes to create some stability and foreseeability in what interest rates are going to be like for home buyers, for business loans, foreseeability and expectations is important. If someone's going to buy a home or thinking two, three, four months down the line, it's better for them to know, have some sense of what the rates are going to be. So I think we need some stabilization. If the Fed needs to return to interest rate heights, heights, they can, of course, do that.

this point, I do believe that it is important not to see unemployment as the weapon to inflation. And the calibration and the orchestration of interest rates and the jobs market seems to be going just about at the best you can expect in a difficult environment. So that is what I would hope. Are you worried about the health of the banks? I am worried about the idea that the rhetoric and the consistent talk about the need for the ease of regulation, I think is now discredited by what we've seen. I think we need stronger supervision. I think Congress should go back and place the regional banks under a stress test regime, if you will.

And this is why we need adequate and effective bank supervision. bank regulation in this nation. So we don't face what we've seen over the last few months. But look, give the Fed some credit for responding quickly and finding a new home for these troubled regional banks. But the important thing is, is the need for supervision and regulation. That is right. That prevents this. And it creates confidence in both depositors, investors, investors, and borrowers is so crucial. Let's pivot now to the debt ceiling and your perception of the impact of what would happen if we break through that debt ceiling and fail to pay our obligations. Lots of people say it will be a complete disaster. We don't really know that because we've never really done that.

I believe that, yeah, Ty and Kelly, a default would be devastating. But we need to find a way out of this periodic drama of Congress having to vote, if you will, to increase the debt ceiling. I think the debt ceiling increase ought to be baked in to the budget resolution, meaning when Congress agrees to spend, when Congress agrees on a fiscal plan for the year, that the commensurate increase in the debt ceiling ought to go along with that. And I also think that a clean vote on a debt ceiling is essential to maintaining the confidence of the markets, the confidence of consumers and the confidence of the American people.

We can have a separate debate and discussion about how to alter, how to change, if you will, the budget plan or the appropriations plan. I do not believe it is good fiscal policy to tie the two together, because what we're talking about is raising the debt ceiling for expenses that have already been committed to and incurred. So it's politics to tie them together. It's good fiscal policy to separate them. Yeah, that's a very interesting point in your answer there, the idea that if you're going to appropriate at the level Congress appropriates, you ought to, as a part of that appropriation, make sure that your ability to borrow to fund those appropriations is there.

It's like buying a house today and saying I'll sign the promissory note and the mortgage later on. Yeah. Let me just make the payments with my down payment. And at the end, then I'll agree to the promissory. And both parties, of course, as you well know, Mayor, both parties are guilty of making these appropriations. and spending a lot of money and that requires borrowing, requires a lot of borrowing. We have to leave it there. I think we need some reform in how we do this.

I think that's really maybe at this moment, that's the lesson that will be learned. Mayor Morrell, thank you very much. As always, great to see you, sir. Thank you. You bet. Always. Let's switch over to the bond market now. Rick Santelli, breaking down that jobs report.

How's it going, Rick? Hi, Kelly. Indeed, maybe the most important issue today, in my opinion, is you look at the week to date of 10-year note yields. The fact that, you know, we're up only a couple basis points on the week, even though we are significantly higher on the session. The reason this is important is because last week, on the weekend, we saw First Republican purchase. On Monday when we came in, we shot up over 360. So if one of the reasons stocks are up today is because banks are doing better, Pack West, KBW index, then what's going on with the yields? And if you look at a week-to-date

of boons, they closed down 10-year boons even though the ECB's a bit hawkish and raised rates and finally the dollar index. It isn't quite there, but it's very near one-year lows but to be fair, it's still above 100, which historically is considered pretty rich. Speaking of that,

let's find, Paul? Hi, Rick. All right, I have one question I want to ask you, and that is, what's the most important thing investors that are watching right now that have positions and equities? What should they be most concerned with are paying the most attention to? Should it be inflation? Should it be the Fed? Should it be debt ceiling? Or should it be the slowing economy?

I think right now we've moved past the inflation. Unless something crazy happens next week, really forces the Fed's hand. I think now we're moving to the broader economic indicators you were talking about. Is that one of the reasons you think stocks are doing so well and the VIX is so far down today? I mean, they love the number today. It's kind of quiet in here. VIX smashed, like you said. good news, it might be good news again. Now, how do we play into the bank? You know, Sheila Bear was on CNBC today, said it's not that big of a deal.

We need to pay attention, but it's nothing like, oh, wait. I don't know that I have confidence that we have seen all the things that are scurrying around when the bank lights go on. Well, I don't think anyone should have that confidence. Today, though, that seems to be a little bit on the back burner. And the uncertainty with the banks kind of give everyone a little, more confidence that this hiking cycle might be over. Oh, that's a good point. If the Fed's done, maybe less pressure on banks. But no matter how you slice it, Monday's going to be interesting to see

how these rates fare. Tyler, Kelly, back to you. Have a good weekend. You too. Thank you both. We really appreciate it. Got some big movers across the market following today's jobs report. Before we get to break, let's get you some key trades for the day. We're going to do that with David Speaker of Guidestone Capital Management here to help us out. David, welcome. We appreciate your time this afternoon. I'm going to run through a couple of big areas here. We just talked about the banks. The regional is having a huge turnaround. Should people be chasing the group? Should they go with the big players? What would you do here? I would go with the Money Center banks. So we like J.P. Morgan here. Clearly, they're one of the

leaders, if not the leader in the space. Largest deposit base in the country just got bigger with the acquisition of First Republic bank, great wolf management business that also got better from the acquisition of First Republic, great diverse revenue sources and a very solid leadership team led by Jamie Diamond, who's been through financial crises before and knows how to weather them. All right, let's move on, David, here to Apple up more than 4% in today's trade. Overall sales falling for the second quarter in a row. But those stronger than anticipated iPhone sales seem to be exciting Wall Street. What do you think of Apple?

Tyler, I think you've got to own Apple. The run its hat is ridiculous, but Apple and iPhones have basically become consumer staples. I think people would rather give up their left arm than give up their iPhone. So if we go into an economic downturn, they're going to continue paying those bills. They're going to be buying new iPhones. And Apple has great cash on the balance sheet. They raise their dividend yield. They raise their buyback.

And you want to own high quality visible earnings growth in an economic slowdown. And that's one of the reasons Apple should be in your portfolio. Yeah, Warren Buffett said much to say. I expect to hear him echo that tomorrow as well, David. Let's turn to Tesla. Shares are more than 4% today, apparently because they raise the prices of premium models. S&X in China, where they've said to face maybe more competition than any other market, BYD, and others. Does this tell you that they have more pricing power and market strength than we previously thought?

Would you be a buyer here? No, we're not a buyer of Tesla. They're pricing strategies. One of the reasons we don't like it, they're clearly sacrificing margins and profit for volume, which is a strategy that we are not a fan of. And we're also a little concerned if Elon Musk has his eye on the ball, clearly with what's going on at Twitter. He's a little bit distracted. And as you said, there's a lot of competition in the EB space.

So that's not a name we'd want to own today. All right. Well, no Tesla for you then. David, thanks so much for joining us and running through all of these names. Good to see you. All righty. Coming up, young homebuyers can't seem to catch a break, even as rates continue to climb. Prices are not really moving, but many are still motivated to buy.

And the ones that do are spending money on renovations. We'll speak to B of A's Liz Suzuki, about the firm's new survey and get some insight into how some real estate names are being impacted by real estate. Retail names are being impacted by real estate. As we head to break, also take a look at shares of lift. They're plunging more than 20% today in a strong market like this. They're down 22% now after last night, slightly larger than expected loss and disappointing guidance. First report since David Risher was named CEO.

The stock has lost half its value in the past year, and it comes as rival Uber has had some earnings strength. Power lunch back after this. Welcome back, everybody. Despite a historically tough housing market, millennials are still fighting to find a home. It's not an easy fight either. According to a new survey from B of A, 61% of millennials will think home prices will rise. 58% think mortgage rates are headed still higher. Some are powering through, a record 58% of millennials are now homeowners as of this year.

And the ones that have managed to find a dream house or any house are now helping fuel the renovation market. Joining us now with Morris Liz Suzuki. She's a senior hardlines retail analyst at Bank of America Securities. It's good to see you, Liz. And, okay, this makes total sense to me, but it sounds like it's still not enough demand to get us back to where we were in the middle of the pandemic when everyone was apparently buying appliances at the same time. Sure.

And thanks so much for having me on, Kelly. This is such a fun report to be able to come on and talk about every year because we've been tracking this millennial generation since 2016 and have seen such a big step up in how this generation has matured and is starting to enter peak home buying and earnings years. So it's important for retailers and home builders and the entire housing value chain to really be thinking about what's happening with this generation. And so as you mentioned, it's a really tough time for affordability, but the demand is still clearly outstripping supply, which is why you still see home prices that are elevated.

You see mortgage rates that are high. And as those mortgage rates start to come down, we expect to see a bit of increase in housing turnover in the second half of the year. And so some of these millennials that have been on the sidelines or have just been anxious to get into the housing market will have that opportunity as we get into the later half of this year. It feels like there's a bit of a lockup in the housing market right now. Interest rates are high, which means that there's a powerful disincentive for a homeowner to sell and trade their 3% mortgage for a 7% mortgage. So I think a lot of people are staying put. That's why there's so little supply on the market in many places. They're staying put

and maybe they're spending on renovations. Are you seeing that in the in the in the in the in the in the in the in the in the of the lows of a home depot of a floor and decor for example? Absolutely. In fact, that lock in effect is really powerful especially when you think about the amount of home equity that has been built up over these last few years and so the 95% of homeowners who aren't going to move in any given year have a lot of to tap into in order to make their home meet their needs if they can't move into a new home. So we've seen a lot of big renovation projects that are continuing to happen. The backlog of professional repairs that have yet to be released is very much still a tailwind. And then we heard from yesterday from floor and decor.

They did talk about how some homeowners are sort of downshifting into smaller projects. So they may be doing a powder room flooring project instead of a master bathroom. And like some of those renovations that would normally come with, housing turnover as in preparing your home for sale or doing renovations after you've purchased. Those are going to be on the sidelines for a while until we get that pickup and turnover. So in the meantime, you know, homeowners are still doing projects. They're just descaling a little bit or doing some of the smaller ones. Home Depot is down 8% year-to-date, Liz.

Some of the others, like you mentioned, Floor and Decor, is up, you know, 33%. Would you be, I mean, not to put it the way a trader would, would you be a buyer of Home Depot here? I mean, can they overcome what's been in this kind of post-pandemic slump? Yes. I mean, I think Home Depot and Lowe's both look very inexpensive right now as stocks. They're trading well below their pre-COVID long-term averages in terms of valuation. And the outlook really is not so dire when you think about all of these homeowners that still have this home equity I talked about that are tapping into it and still making renovations. So the home improvement cycle is significantly less volatile than that of home building and other elements of housing. So in terms of the housing value chain, we think that home improvement is generally fairly stable

and that this year is going to be flattish in terms of demand, which is coming off of very high levels. So for a retailer like a Home Depot or Lowe's, which also has a very strong long-term outlook, and we still have this favorable supply and demand dynamic for housing. We think that those are great stocks to own right now. All right, Liz, thank you very much. Liz Suzuki, we appreciate your time today. Thank you. All righty.

Still to come. The AI wheel. keeps on turning. Proud Mary, keeps on burning away. Sam Altman telling Squawk Box earlier today that Open AI welcomes regulation, saying their mission is to build these advanced systems and deploy them into society with maximum benefit.

Apple telling CNBC that AI is huge, but it's important to monitor. We'll discuss more about that growing area in today's working lunch. Artificial intelligence is reshaping the software landscape as Chegg's stock got slammed this week after earnings on an AI-driven sales slowdown and Microsoft got a boost on AI hopes. Today, John Ford brings us up close with a CEO whose legacy might get cemented

in the way this AI era turns out. Yeah, Tyler, that's right. Our viewers are familiar with Satya Nadella, heard the name. He's been Microsoft CEO for nine years, gets credit for two broad feats on the product side, remaking Microsoft as a diversified cloud leader on the culture side, rebuilding a leadership team with a balance of aggression and empathy. Nadella got a lesson on that balance early as a high school cricket player.

Nadella was a bowler, like a pitcher in baseball, and in one game, he was foundering. The opposing batsmen seemed to have him figured out what Nadella's teenage team captain did next, pulling him from the game, he told me, delivered a big lesson. I mean, it's an amazing thing when I think about what, and I've talked to that, gentleman subsequently. But it is fascinating that he did that. And the fact that I was putting up ordinary trash, he replaced me, brought himself on, he himself was a pretty good bowler, he got the breakthrough, but then he gave the ball back to me and I went on to actually do very well in that particular game and had a pretty decent season. But the reason why he did

is because he didn't want to break my confidence. He has a school, high school captain, who is thinking about his team and the composition of the team, the confidence of his players, how they can last out of season. And I said, wow, that's something that one can learn from as a leader. Microsoft right now is a little like that with AI.

Nadella's senior leadership team is made up of veterans of the emerging cloud era of 15 years ago. Even though Microsoft missed the mobile wave, losing out to Apple's iOS and Google's Android, got back into the game with cloud. Now Nadella wants Microsoft to build on its cloud success.

and open up an early lead in artificial intelligence. So I feel it's kind of like that. It's 2007-2008 cloud. But the one good thing here is the business model side of this, because it builds on the cloud. So one of the foundational things about AI, who knows how it'll all reshape all software categories. You know, this is one of those things time will tell.

But I'm much more optimistic in terms of my both our capability to lead from day one, versus having to do that catch-up, which we've done too, in some cases. In that conversation a couple months ago, Nadella was mapping out multiple lines of attack in Microsoft's AI strategy, including the infrastructure play with Azure, the search share play with Bing. Now we see the knowledge worker and developer profit margin

and revenue growth plays with Office 365 co-pilot and GitHub co-pilot since then. And now we're going to hear more from a big competitor next week at Google's I.O. developer event, guys. What do we know about his view of the dangers of AI? Microsoft has a team working on that. It was part of that presentation when they initially rolled out OpenAI, chat GPT tools along with Bing, all of the ways that they had sort of pressure tested trying to get Open AI to deliver bad information to do dangerous things and were sort of mitigating as part of the process. So they are very aware. I mean, the pressure's on Google for that event next week, wouldn't you say. There's so many people who have said, well, they kind of stumbled out of the gate.

I'm thinking of Brad Gerson, among others, and they kind of need to come out. It's okay for them not to be the first mover, but they have to really come out in a big way. And I don't know if you've heard any scuttlebut about whether we're really going to get anything that dazzling next week. Oh, I mean, we'll get a lot from Google next week. The pressure's on them, but already the bar has been set kind of low by that initial screw up. And, hey, Microsoft Bing is not perfect. But Google just really didn't work through the kinks in that presentation ahead of time and probably wishes they did, certainly wishes they did at this point. You know, it's ironic we were talking to Deirdre last week, and she had been comparing Google with Microsoft or with Open AI, we put it that way. And she

asked it, had arm holdings ever been public? And Open AI gave the wrong result. And Google gave the right one. So, you know, we remember when they stumbled during that presentation where their AI appeared not to give the right answer, but you do wonder if they can show to the market, We actually, now that everyone's gotten over the dazzle effect, if we actually are the more reliable source of information, I feel like that would have, that would go far. The reliability, though, is a moving target. Part of what both Google, Microsoft, others are fighting for now is the attention of developers to build on top of their AI infrastructure and to then in the process be training their AI algorithms. Whoever's learning fastest and getting the most developer buy-in is going to get better faster. Real quickly, I know we have to go, but for that leaked Google document where they said, you know, open source is going to,

be the real winner, not Microsoft or Google. What do you think Sanadela would say to that? I think he would say he's looking to make Google dance. That's what he said, a couple of ones. And a lot of people dancing right now. Chegg's dancing. Yes. And Microsoft's trying to run. We'll see.

The race is just getting started. Absolutely. That story about getting pulled as the cricket bowler would have given a pretty good college essay. Yeah. All right. John Forth, thanks, man. Let's go to Sima Modi now for a CNBC News Update. Seema.

Hey, Tyler, here's the news update at this hour. Let's start in Florida where Republicans have increased a budget for the Office of Election Crimes and Security. The office championed by Governor Ron DeSantis was created as part of the state's ongoing election integrity efforts. Democrats have criticized the office, most notably in August when it arrested 20 people on charges of being ineligible to vote after they cast ballots in the 2020 election. The Food and Drug Administration will review the first ever request to make a birth control pill available without a professional. prescription next week. If the request is approved, the medication, French drug maker HRA Pharma's OPEL will become the first contraceptive pill to be moved on to store shelves. The FDA raised several concerns in an initial review today. And King Charles met with Commonwealth

leaders at the headquarters of the Commonwealth Secretariat today. According to a statement, he also met with the leaders individually to discuss issues, including the empowerment of young people. This comes ahead of the King's coronation tomorrow. Kelly and Taylor, will you guys be getting up early to watch it? FEMA, is that an NBC? I am totally getting up early. I'm not sure I'm going to get up, but you give me the highlights.

What is it? Five? I think it's like 6. 7 a.m. Maybe I'll do 7. Is it going to be over by 7? I don't think so. I think it's a full day, a lot of pomp and a lot of excitement. I'm not getting up early. Never mind. Seema, thank you very much. Seema Modi. Ahead on Power Lunch, we've got more of today's market action with markets higher for the first

time in five days. Plus, We'll also talk about a new economic reality, a crisis of confidence in banks, fears of a looming recession, a lack of public trust in policymakers, and maybe even companies to do what's right. We'll ask the bestselling author of Rich Dad, Poor Dad, How to Navigate the Termole and Opportunities. We're back right after this. Welcome back to Power Lunch. A new Gallup poll found that nearly 50% of Americans are worried about the safety of their money in banks. Levels not seen since the 208 financial crisis.

There's also mounting frustration with lawmakers handling. of the bank crisis, the prospect of big banks getting even bigger, and still high inflation, despite the Fed continuing to tighten the screws. Some might call it a vicious cycle. Is our system financially, a financial system currently broken? Let's ask Robert Kiyosaki, the author of the best-selling personal finance book, Rich Dad, Poor Dad. Robert, welcome. Good to have you with us. Do you see the banking system as broken? Are you worried about the safety of your deposits? I would be, yes. This year is paper. I don't trust it. And so, but but not trusting the paper value of paper money is a separate matter from whether the banks are stable and solvent, right?

That's correct, but the whole system is in trouble. My biggest concern is that inflation is now systemic. And when, you know, when Powell said it's, but transitory, that was a lie. When Biden took the Keystone XL pipeline offline, oil went from $30 a barrel to $120 a barrel. That was inflation, not the printing of money. And so this thing here became less valuable. And that's my concern. So, you know, I think inflation is, I went last night and bought milk. It was $7.59 a gallon. Did you go to Kings again? I did not go to Kings. I went to, where was I?

Stop and shop last night. So at any rate, these are high prices, and they are systemic. I take your point there. Is the Fed doing what it can, in your view, or is there a different way to combat inflation? Well, I always say it's not what the Fed's going to do, is what are you going to do? And so I always talk about the 4Gs that I've been investing in for most of my life. The first G is gold. You know, this is gold, and then this is silver here.

And I stay away from the SLVs or the GLDs. I want no counterparty of risk. I want the real stiff. The other thing I'm investing is ground. I own apartment houses. I'm glad I'm not in office buildings or commercial real estate. And then gasoline. You know, gasoline, you know, the green is hate the thing, but that's how we fly our planes

and stuff like this. And then the last one is food. I invest in cattle and food. So I just stay in things that as inflation goes up, gold goes up, real estate goes up, gasoline goes up, and food goes up. So I invest with the inflation, not against it. Robert, let me ask you about something when you mentioned, you know, owning housing, and this has come up with a lot of people as well.

So you have investors wanting to own housing for the, you know, appreciation value. You have others who say, you know, I'm kind of sick of, you know, the way this drives up rents or reduces the supply of homes that I could buy, for instance. You know, we look at the trend where this past week it seems like the big banks are going to get bigger despite everything the administration really hopes happens here. You know, can you just talk about whether these trends, when you say it comes back to us and what we're doing, but are some of the things that you or that the others are doing making it worse for the guy who's just trying to get ahead?

Well, I'm a big advocate for financial. education. So in the 1970s, when I got out of the Marine Corps, my rich dad had me take two things. I had to learn how to sell because sales equals income. And then I had to learn how to invest in real estate because real estate is debt. So most people say, you know, live debt free. I had to learn to use debt as money. And as you guys know, in 71, Nixon took the dollar off the gold standard and the U.S. dollar became debt. So I do almost everything. opposite of what the pundits say, I'm not debt-free. I use debt as money to acquire real estate, and that minimizes my taxes. That's what I do. Do you own equities?

I own equities of companies I've taken public. I've taken two companies public, one off the Vancouver Stock Exchange via an IPO, and the second on New York Stock Exchange, the summer, via an IPO. But beyond that, no equity. Beyond that, you don't own equities. or equity mutual funds or ETFs? I don't trust anything that can be printed. I like the hard stuff. Things. Things. I'm a commodity guy. Robert, what would your advice be to somebody

who might be 30 years old right now just paid or is trying to pay an eye-watering some to get into this house? Maybe doesn't, you know, and they just, they feel the pinched. Now it looks like the labor market could be turning. You know, what do you do? Well, real estate depends upon jobs, as you know.

So I'm a little bit concerned about the number of layoffs coming in the tech industry. So I'd be very careful about jobs. I live in Phoenix, Arizona. That's why Taiwan semiconductors moved here. So our job market is really strong. So the first thing I said at young people is I would take a real estate investment course. That don't cost very much. Even now with real estate prices where they are, you think that's still the right thing to do?

I love prices because when prices come in, prices low. for example, after 2008, I borrowed $300 million to buy some of the best real estate in the world. But in 2020, real estate prices have pretty much doubled from 08, don't you think? I think they're coming down also, but I would take classes on real estate before you do it. The reason is real estate is not liquid. See, our stock is liquid. If I buy Apple and I don't like it, I can sell it that night. I buy a house or something. I'm stuck with it for a while. So I highly recommend more illiquid, the investment, the more you have to be competent and study and have good teachers.

How do you separate the good real estate classes from the scams? And there are a lot of them. If you can answer that question. Yeah. I always look for that people, I get into fights on YouTube with some of these real estate guys who are promoting what I consider very risky investment strategies, especially in real estate. I'll say it again. Real estate is illiquid. This is as liquid as it gets.

Stocks are liquid so you can get in and out. But the moment you go into real estate or you start a business, you're e-liquid. And so the more eliquid, the assets you're investing in, the smarter you've got to be. Those are words to live by. Robert Kiyosaki, a pleasure today. Thank you so much for your time. Thank you. We really appreciate it.

Steel ahead, a pretty tasty investment. Dairy Queen is one of the best. Warren Buffett's most famous businesses will speak to the CEO live from Omaha about consumer trends and more ahead of the shareholders meeting tomorrow. And as we had to break, CNBC is celebrating Asian-American Pacific Islander Heritage throughout May, sharing stories of business leaders in their community. Here's Deborah Liu, Ancestry president and CEO. I grew up in a small town in South Carolina, one of the very few Asians in the state, and I grew up going to football games and eating hot dogs and going to state fairs. And I love that.

And yet at home, I learned a different language. We ate different foods and marrying those things together, being able to share that with others. That's such an important part of what it means to be an Asian American. And I'm so proud of that. But that's also why I'm part of ancestry when I joined this company to help people discover,

craft, and connect around their family history because we all bring the experiences that we have, our cultures, our history, and make this country as rich as it is because we can bring it all together. All right, welcome back everybody. Energy was a big mover this week. oil prices higher by 4% today, but down 7% for the week.

Energy stocks down 5% this week. According to our partners at Track Insight, Energy ETFs saw outflows of more than 436 million. More information available on the FT Wilshire ETF Hub. We will be right back. Welcome back, everybody, with markets vaulting to session highs. The Dow is now up more than 600 points. We've had some commentary from the Fed. Let's bring in Steve Leasman with the details, Steve.

Kelly, thanks. St. Louis Fed President Jim Biller, one of the more hawkish members of the Federal Reserve, says, we're now in the zone. The Fed is now in the zone of being restrictive at five in an eighth. The midpoint, he said, would be 5.38. So we're closer to where we need to be. He said, and now he is ready to be data dependent. He said, the Fed is not behind the curve anymore. And it looks like we're coming to the end of the tightening process. But don't get too excited here because he also says it's not yet clear that inflation is on a day. downward path. Goes on to say the decline in inflation that he's seen so far is tenuous. And the decline of interest rates we've seen, a result of concern over the regional bank crisis is also an unwitting easing with the suggestion that the Fed may have to lean against that. He says the credit tightening story and the impact on the economy is actually swamped by the decline of interest rates. We have a strong labor market, he said, on reaction to the job story this morning, saying consumption will be strong. And so we have plenty of room to fight inflation now. I'd say he could be convinced, Kelly, but still sounds like he's got a tightening bias to me.

And I guess that doesn't explain the market's reaction then, Steve, but something has us, maybe it's just the weekend, making it to the weekend. One of the Hawks has staked out a still hawkish position, but it is definitely somewhat less hawkish than he was before. All right. Thank you. Steve, we appreciate it very much. Let's check our stock draft standing, shall we? Let's do that. To the wall, please. One week out from the 2023 stock draft, our friend Tom Bergeron is in first place, WBD, Tyler, helping him. Gaines and Warner Brothers discovery. Yeah, he went out on a limb there, and right now the limb is supporting him.

It is. He also chose gold. Second place, D.K. Metlaf, third, Tori Dunlop. And we know our friend, who was it that had Peloton after that face playing yesterday? Warren Buffett Dekh. And Damakan Sue. Yes. He had, he had Peloton.

All right, thanks for watching Power Lunch, everybody. You deserve a great weekend. Get a Dairy Queen. Closing bell starts right now.