Power Lunch - Washington's Big Month Ahead, Global Fixed Income Markets 9/2/25

Episode Date: September 2, 2025

CNBC’s Kelly Evans and Brian Sullivan take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day’s agenda. ���Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Markets in your money kicking off the week with a whimper as big technology leads the way lower. Welcome to Power Lunch, everybody. I am Brian Sullivan. The NASDAQ working on a rare back-to-back loss of more than 1% all this. It's an appeals court rules that Trump's tariffs are illegal. And this, as we enter the worst month of the year for stocks. Other than that, how is the play? Welcome, everybody.

We've got a lot to get to in the markets today. And this sell-off, here's a quick nugget for you. The NASDAQ 100 is trading below its 50-day moving average for the first time since April 30th. I remember all that tariff turmoil in early to mid-April, and the markets kind of came down 20% before rocketing higher. Well, we are back below that 50-day DMA. Let's talk about it, all of it. Here on set with us to kick things off is Citigroup's director of U.S. equity strategy. Drew Pettit, Drew, it's a very good timing to have you on today.

They're all important days, right? They are. I mean, listen, I don't want to make too much 1% down Friday, a little over 1% down today. Markets still up nicely on the year. Nobody's panicking. No markets in turmoil yet, Drew. I know you're disappointed in that. But what are you telling clients about the markets today and what's going on? Look, it's a healthy reset. I think we do have to step back a little bit and remember stocks don't just go up into the right without a pause. In sentiment, I've heard other people talk about, oh, sentiment's beaten up a little bit. No, it's coming off a really high level. So a reset there.

Again, healthy expectations for growth still up and to the right. So, you know, take this opportunity. Is today, again, we're talking about two days. So don't want to make too much of it. But if we had to ascribe a reason, is it markets for too hot, markets for this, is it the tariff ruled illegal headline? Is it something else? What do you think is going on?

I think it's a reaction to rates. So we can stretch this out a little bit. Yeah, tariffs, good for revenue, good for debt. You know, those coming off, you know, you start seeing the 30-year moving higher, 10-year moving higher. Markets were priced for perfection, good growth, lower rates, all good for equity valuations. So it's just a bit of a pause. So I think, again, it's sentiment coming off of really high levels when everything was getting

priced to perfection. So, and again, this tariff ruling from the appeals court Friday, I was hosting fast money, was after the bell, hard to know what to make of it. clearly it will be appealed to the Supreme Court. We don't know which way they're going to go. I'm not asking you to make a legal ruling on where this goes, Drew, don't worry. But if the Supreme Court agrees the tariffs are illegal, in other words, they're gone. There are no tariffs. Will we see continued moves in like the bond market? Probably, but what we might get, and here's the positive, is we'll get better earnings expectations.

So here's the good and the bad. bond market rates higher. Okay, bad for equity valuations, but tariffs going away is better for earnings expectations and margins. We think that wins out in the long run. So if it goes away, fundamental positive, market positive. Yeah, you're talking about, let's say, pharmaceuticals, okay, as a group, and there's been tariffs on big pharma from Europe. China holds a lot of keys to some of the critical elements going to farmers. Either way, pharmaceuticals, biotechs, they are impacted by tariffs, if that risk goes away, I would imagine that group could get a boost. Yeah, I think it definitely is one area that's been in the crosshairs.

But remember, those aren't necessarily IEPA tariffs. That could be Section 232. So kind of more to come on which tariffs could stay and which ones can go. But not a lot of price in to pharma. So any good news or alleviation of bad news could be good for the group. Is there any outside of tariffs, whatever, is there any group or groups right now that still look attractive relative to others or relative to the macro markets.

Yeah, it's funny. AI, AI, AI, always know. Are you saying AI? I think so. I feel like we can't talk about markets without talking about AI. Don't worry, we don't. Oh, yeah.

But the key there is that's a secular trend. But I think outside of AI, there are some really interesting value areas of the market, some of the FinTech names that fall into value. Is that AI? Even outside of the AI names, more of the traditional finance names that are finally delivering more of their products and services via tech platforms. The firms of the world?

I would even say something like a BlackRock, a Capital One. Oh, you're going all the way private equity. Look, you can finally start to see that creep into more and more portfolios, and there's a margin expansion opportunity there. Equifax, again, tied to the mortgage market, but finally getting more of the credit reports and all of that history being delivered electronically, I think there's a lot of opportunity there in financials plus tech. Are there, so BlackRock is obviously, we talked to Larry Fink a couple months ago in Pittsburgh.

There's all this optimism that, you know, in your 401K, you know, Citigroup and Comcast slash Versa, NBC Universal, we're going to be able to buy shares of some of these private equity firms now in our 401K. I've got to imagine, again, a gigantic lift to that group. It is, and how do you deliver that? It's through better technology, not just for the funds themselves, but for the trading and liquidity ecosystem of something like private equity. Is there anything that you don't like that's not looking good, that the valuation is still too stretched? It's funny, we've been on this all year, cybersecurity. Everyone thinks it is this top line, persistent grower.

Everyone needs it, but we don't see operating leverage there. When we think about growth themes, AI has. it. Even the growth side of FinTech has it. It's operating leverage. To us, we're looking for companies that can grow the bottom line faster than top line. Cybersecurity as a whole doesn't really happen. But if you look at the cyber arc deal getting bought by Palo Alto, you have to say, well, there's some kind of deal put underneath that floor, right? That's fair. But on the other side, you also have headline risk when you have a data leak or a breach somewhere. So again, it's hard to invest. Crowd strike. Yep. What? But it's hard to invest.

as a cybersecurity company and then turn on the operating leverage button. You have to keep investing because new technology means new threats. Your point, I think, is incredibly important because there's a lot of people that have bought into this group of cybersecurity, right? Cyber security, I don't know about you. I get some kind of scam thing weekly now at home, some credit card charge and in authorized. It's become a full-time job. It's annoying AF, as the kids may say.

I'll say this. To your point, if you get a headline about some huge breach, like, we had with Crowdstrike a couple months ago, not picking on them, there'll be others. Stocks fall. And then you got months to come back if companies come back at all, right? I think that's what you're talking about as far as headline risk. Yeah. And again, back to if I'm priced to perfection, if I'm priced for a lot of growth, I want to make

sure that growth drops to the bottom line. That's where other themes, even something like digital leisure. What is digital leisure? Think. Keep it clean, by the way. streaming, your viewers streaming this online now. It's not just linear cable. But even...

CVC Plus, it's a great value, by the way. There you go. Even thinking about gaming online, like a Draft Kings, for example. I think there are a lot more areas where tech is permeating that has operating leverage and a secular trend. That's where we want to buy when we're buying growth. Roblox. Do you have kids?

Yep. It's real money. Real money put into Robux. And this can be a lot of real money. Yeah, and another one of our picks on our thematic 30 recommended list. Is Roblox? Yep. I had no idea.

Yep. I just threw that out there. I may or may not have kids. I know. They're what's atrophying my brain at home. No, it is, but guess what? Maybe some of that money you spend on Roblox could be made up by buying the equity, it sounds like in your thematic 30 make some of that money back, right?

I hope because daycare's not cheap. No, nothing is, by the way. Drew Pettettett, really glad you're here. Some great names, great ideas. Thank you so much. Thanks, I appreciate that. All right. Equity's not the only class moving today.

As we kind of just talked about, the big market story, maybe what's happening around the world in bonds, because they're all shifting at the same time. Don't believe us? Take a look at this. 30-year bonds in England, now at their highest interest rate since 1998.

France, at its highest yield since 2009. And Germany also on the move, Prices down, yields on the 30-year Bund, the highest since July of 2011. Kind of all makes you wonder, what is going on? Let's answer that question with Andy Brenner, head of international fixed income and National Alliance. He puts out must-read market commentary, and he joins us now. Andy, it's great to have you back on the program. It's been too long.

What is happening with global fixed-income markets? Brian, it's a new month, and what you have is a lot of supply coming. You have supply coming all throughout Europe, and you have supply today in the corporate markets. We counted about 25 deals today, probably somewhere around $27, $28 billion, and that all has to be absorbed. Then, of course, as you mentioned with your last guest, you have the tariff issue. You take away the tariff income, and then all of a sudden you wonder, how is the government going to pay off some of this deficit? And that's a little bit of a concern. And then, of course, you have what we've always been, what we've been talking about more recently is, you know, the Fed and will they continue to have their independence and the less independence they have, the more the yield curve is going to steep it.

So you've got all these things going. We set on Thursday after all the month end allocations and extensions with 10 years at 420, there was no upside. And now, you know, you hit 430 today. and you're bouncing between 428 and 430, similar with long bonds. You got to 487. You got to 499.6 today. You didn't quite get to that 5%. I think we're going to look at longer.

I think we're going to look at higher long rates. But one thing I will say is when you have the employment number on Friday, that could be a real barn burner one way or the other. If it's a much higher number than expected, you know, we're going to see the CTAs get started. stopped out. We're going to see people get very short. What does that mean? I know what you mean about CTAs getting stuck out for the folks in the back. What did you just say? What does that mean? CTAs are long 10-year futures. They're going to be forced to sell as well as vigilantes will be

coming in. There's just going to be a huge force. Now, that's if it's a good number, meaning a number, 100, 150 with 75 expected right now. And then if you get a terrible number, what it means is the Fed is absolutely going to ease in September, which we think anyway. The question that becomes, do they do 25 or 50? We still think 25. And the yield curve is going to steepen dramatically. So this is an important point. And if I'm hearing you right, Andy, and I love reading your notes, that's why I'm so glad you came on. There's this expectation, and I don't blame people. The Fed cuts rates, borrowing costs go down. I don't think that's always the case. And is there an argument to be made that even if we get the 25 or the 50 basis point cut September 7th,

teeth at the bond market doesn't react. Or maybe the bond market reacts the other way, sells off the price, brings the yield higher because now it's re-worryed about inflation or something else. Is that a possibility? Brian, very good point, because one year ago when the Fed eased 50 basis points, it wasn't too long after that. The tenure backed up 89 basis points. So you had the Fed cutting 50 and the tenure backing up almost 90 basis points. So yeah, that absolutely could happen. And that's going to be a problem.

But you know what? Basant's a very smart guy. He understands this, you know, whether he has to cut back on the long end or something like that if he doesn't like the results. He certainly hasn't added to the long end. We don't think there's going to be an operation twist. But, you know, there was also an article that came out yesterday saying that the president wants to put in some kind of emergency.

procedures to help the housing market. Now, I'm not sure how he's going to do it. I'm not sure he's going to get mortgages, which are around 6-5-66 down to 5-and-a-half, which I think is what you need to clear out things. I'm not sure he's going to technically going to do that without getting the tenure down-and-heeled. You'd have to buy mortgages, right, Andy? I mean, you just have to step in and become another Fannie Mae or Freddie Mac, I guess. I don't know. Well, you know, given that you have Mr. Pulte, both the chairman of Fannie and Freddie, anything could happen, but I still think he's limited as to what he can do. Yeah, I think it's an important point, and it's well said.

And your point about this Friday's job's number is well taken. A really good, good number. Could see those CTAs get stopped out, and we'll see what happens. Andy Brenner of National Alliance, Andy always love having you on. Thank you very much. Brian, great seeing you again. Stay well. All right, you too.

Thank you. All right. We've got a news alert on chat GPT parent OpenAI. McKenzie Sagalos, what's going on? Hey there, Brian. So OpenAI just made one of its biggest purchases. yet, paying $1.1 billion in an all-equity purchase for Statsig, according to a source close to the deal. Now, this is a software startup best known for AB testing and product experimentation with a customer

list that includes Microsoft. Now, the deal stands out in an industry defined lately by aqua hires like meta with scale AI or Google with windsurf, where in practice it's really only the talent changing hands. But this time, OpenAI is buying the entire company, raising. questions about whether rivals will keep using Statsig now that it's in-house. Its founder, Vijay Raji, will become OpenAI's chief technology officer of applications, reporting to Fiji Simo, who he overlapped with at Meta. He'll oversee product engineering for ChatGBT.

Now, at the same time, we are seeing a wider leadership reshuffle across the company, Brian, open AI telling me that the deal and position changes are about building out its enterprise offerings and shipping those products faster. All right, so I've, just while you were talking, I briefly scanned Scott SIG's website, so I'm going to give you my 30-second expert view. So I'm a real pro-back in this. It looks like Statsing is a company, takes a lot of data and then tries to come up with some kind of logical outcome. In other words, it's a thinking machine in some ways. My best guess is maybe Open AIs making this because open-eye is filled with data. It's all they got, billions and billions of data points every day. And the key for, anybody is to just make sense and have some conclusion from all that outcome and all that data. No? I know. That is a strong read of what the company does.

And it's really on the product experimentation side where it proves that utility, which is key here. Because think about what OpenAI has been pushing to do in the last few months with GBT, well, in the last month with GB5. They're going after the enterprise customer, which has really been Anthropics bread and butter catering to that B2B consumer, and what they're looking to do is bring more products to market faster. And so this really helps to expedite that process. And it comes as, I mean, just today, Brian, Anthropic announcing that they closed their Series F, they've tripled their valuation. You've got OpenAI going out to employees just this week at a valuation of half a trillion dollars. So there's a lot of money at stake. Maybe it's just buying the ice cream cone so the other guy that you just mentioned can't have

the ice cream. Either way, another deal, Open AI. spending some of that money. McKenzie Seagalos, appreciate it. Thank you. All right, we are just getting started on a tough day for stocks and your money coming up. The big tariff twist that is confusing investors, but could actually be good news for some big-name companies. Plus, small caps, big gains, why Jeff Kilbert thinks, smaller guys, they can be due for a bounce. Plus, the consumer crunch.

What restaurants are doing now try to win you back. All right, welcome back. We've got a flurry of headlines that you need to know. about right now. After the market closed on Friday, a federal appeals court said that Trump's tariffs are illegal, at least the ones related to national security. This will no doubt go to the Supreme Court for a final ruling. It is possible, maybe not probable, but possible, that all of the tariffs we've been talking about for six plus months are ruled mostly invalid. Also, Congress back at work today following a six-week summer break. And speaking of Congress, the Senate Banking Committee will hold a

hearing tomorrow for confirmation on Stephen Mirren to fill the open seat on the Fed this Thursday, with the full chamber vote likely occurring the following week. Oh, by the way, Trump is also trying to fire another member of the Fed, Lisa Cook, but she is suing and saying that she is not going anywhere. Let's talk about it all with Chris Krueger, TD Cowan managing director, Washington Research Group strategist. And maybe the only man I know that can quote the Grateful Dead and Vladimir Lenin in the same piece because you quoted Lenin who said there are decades where nothing happens

and then there are weeks where decades happens. The latter certainly feels like that's what's happening right now. Absolutely. I mean, you know, 51 weeks ago was the Trump-Harris debate. So, I mean, it's pretty much every week. It's been nonstop for the past year. But when you think about what's coming this month, Brian, you know, it's really monetary policy.

and trade policy. The only thing we've got some certainty on really was from July. We do have some tax certainty with the one beautiful bill being passed into law. But other than that, it's still very much wide open. Yeah, and we can't know what the Supreme Court will do around these tariffs related to emergency acts. So clarify that, right? It's not all the tariffs.

it's the tariffs that are related to what they call IEPA, sort of the Emergency Powers Act. Those are the ones that are at risk. Let's us say for giggles, Chris, that the Supreme Court agrees with the appeals court, because by the way, we don't know what they're going to do. And those tariffs go away. What happens? Uncle Sam's probably going to have to write a very large check.

That's a problem because the bond market vigilantees, have essentially become tariff men and women now. So you're talking about the potential for massive rebates through IEPA. The U.S. has taken in a little less than $100 billion so far. The administration has until October 14th to file an appeal with the Supreme Court. The tariffs will remain in place until then. The Supreme Court may not rule on this until next summer. So a tremendous amount of uncertainty. While that occurs, though, the administration has the 232 statute, has the 301 statute. That's what they've been using for sectoral tariffs and for largely the ex-ventinil China tariffs. So those are not being litigated in this. There are two other statutes that, you know, the administration, if they want to start sort of doing some of the work on this to prepare for a potential Supreme Court striking. down IEPA, they have 122, they have 338, then you can essentially just put those reciprocal tariffs back on. The issue is really twofold, though. One, it's the potential for refunds.

But then number two, that's the bigger issue, which is that all of these businesses across the globe will kind of remain in tariff limbo. Let's put the pieces together because it is confusing. By the way, it's confusing. On this side of the camera, I can't imagine how confusing it is for people who don't do this for a living. But what I think you said, Chris, is that these AIPA tariffs, they are bringing in money. We can debate how much it is, but they are bringing in money. The bond market is moving today here and around the world

based on expectations of less money coming in. Bond market may be negatively impacting stocks. So if these tariffs, the illegality of the tariffs is upheld, the bond market may move, and we may end up with higher interest rates. Absolutely. And also, I mean, don't forget last month, S&P kept the U.S., kept our credit rating largely due to the increased tariff revenue, the credit raters saying that that increased tariff revenue would negate any of the negative

fiscal from the $3.4 trillion, one big, beautiful bill. So it's, there are a lot of irons in the fire. And, you know, it's just sort of, you know, it's just one more week. But if the tariffs are rule be legal. Again, we're guessing we have no idea with the Supreme Court, if it's even appealed to the Supreme Court, if they take it, by the way. If they uphold the appeals court ruling, there are probably a lot of companies out there,

like Caterpillars of the World, which warned on Friday about tariffs, that'll be celebrating, right? Like, their portions of the stock market are going to move higher, and portions of the stock and bottom market will move lower based on the ultimate tariff ruling. Fair foul.

In the short term, fair. I think what we would say longer term, though, is that if IEPA is struck down, there are a number of existing statutes where the Congress has passed laws giving the President of the United States tariff power. That's sort of one of the main issues with AEPA is that the word tariff isn't in that law that was passed by the Congress. But when you look at some of the other statutes that are available, we do. see tariffs returning, the real question is this uncertainty and this, the potential for the U.S. to have to refund and potentially hundreds of billions of dollars. Keep in mind, though, the 50% steel aluminum and copper tariffs hold, the 25% global auto tariffs hold. We're expecting lumber tariffs, pharma tariffs, and semi-tariffs any day now.

How are you keeping track of all this, Chris? How do you do that time? Do you sleep? You know, lots of good music. And hopefully my kids are watching right now. They go back to school tomorrow. But hi, Clementine, hi, high Clark. Yep, Clementine and Clark.

Your dad's doing great work. And thank goodness for you and your team, Chris, because I'm only able to understand it because I read your stuff. So it make me sound smarter and I appreciate it. Well, we've got a great team at TD Cowen and Washington Research group and, you know, we listen. We watch every day for you too. So you help us break it down as well. Much love to the entire overworked team. All right. Thank you, Chris. All right. Up next. Why your market navigator thinks bigger is not necessarily better when it comes to investing in the

months ahead. Jeff Kilberg. I'll put that next. All right, as we start what is historically one of, if not the worst months of the year for the stock market, your next guest says, don't panic. It might be time to look for bigger gains and smaller packages. He was right about the April panic over tariffs urging his clients to hold fast and stay long in stocks. Joining us now is Jeff Kilberg, founder and CEO of KKM Financial. Jeff, good to have you back on. We've been waiting for small caps to break out for years. They finally look like they're starting to minus today, of course. What are you seeing? Well, Sully, you're absolutely right. I've been an opponent of owning small caps and midcaps. And remember, Sully, in the Russell 2000, about six or seven hundred of those

names are identified as midcaps, meaning in between $2 billion and $10 billion market cap. But you're absolutely right. On a year to date or one year, going back 10 years, you have seen the small caps, the Russell 2000, the ETF IWM, really be a laggard. But I think for the first time in August, we saw that flip. You saw August up nearly 10% IWM outperformed all the other U.S. major indices, the S&P 500, the NASDAQ 100, as well as. the Dowell Jones. And I think that is due to the fact that Fed Chairman Powell signaled, telegraphed, sends smokes signals, the whole market that we are cutting rates in September, potentially also in October and December. So if you look at three potential rate cuts,

that's going to really greatly benefit. And I think there's more room to run in this small-cap Russell 2000 index ETF. And do we have to just buy the Russell 2000 or could we do the IWM, which is the Russell-2000 ETF or one of, use call options? What are some other strategies we might be able to use, Jeff? I think we take it a step fuller. Absolutely. Look at the IWM right now, the at the money. It's trading about $233 in the IWM. If you go out to a regular expiration meeting September 19th, you can go at $233 strike. You can pay about $470 for that call, meaning I'm going to buy the right to own that. So if it goes above 238 and hits those new all-time highs up at 245, about a 5% move higher, I will participate. However, if I'm wrong on

this. So we see the market repriced in September like it has seasonally, which I don't think it's going to happen. But in the event it does, I'm just out the money I'm buying on that call option $4.70. So I like using the options to define this in the event, I'm wrong. All right, good stuff. And I love the fact that somebody admits, oh my gosh, sometimes we are wrong. And we got to have care. By the way, my Hokies and you're fighting Irish both have the same fate this weekend. My Irish have a week off. They're going to regroup so they get the lads in South Bend working again. It's going to be okay. From your lips to the father's ears in South Bend. Jeff, thank you very much. All right, coming up, why the golden arches

are calling out a code red on the consumer. I call this a tale of two consumers. McDonald's expanding its value meal menu looking to win back budget conscious customers. The move comes, the CEO Chris Kempinski telling us that lower and middle income consumers are struggling, even when it comes to fast food. If your upper income earning over $100,000, things are good. Stock markets are near all-time highs. You're feeling quite confident about things. You're seeing international travel.

All those barometers of upper income consumers are doing quite well. What we see with middle and lower-income consumers is actually a different story. It's that consumers under a lot of pressure. In our industry, traffic for lower-income consumers is down double digits. Kate Rogers is our restaurant correspondent. Joining us now from San Francisco. So what exactly is this trying to do, Kate? Hey, Brian, good to see you.

So these are essentially extra value meal offerings from McDonald's. There are going to be eight different combinations of them, and they're rolling out this month. And further offerings will come with chicken nuggets and also breakfast in November. But they will be about 15% lower price than they would be if you bought all of those items, the entree of fries and drink separately. So again, a 15% discount there. And this comes on top of their value platform that they launched last summer. Remember, every fast food company kind of had the value wars going on last summer, a $5 meal offering. And then McDonald's also had a buy one, get one offering late last year. So again, extending the value platform. And as you heard McDonald's CEO Chris Kempchinsky talk about on Squawk Box this morning, it's almost a tale of two economies.

If you are in the upper income cohort, you're doing fine. You're not feeling it. If you are in the lower-income cohort, lower-income consumers, that's where you're really seeing the consumer kind of struggle. They're looking to bring traffic in. And this deal is kind of designed to do just that. And he said they want to make sure that they're reaching people outside of just app offerings as well, making sure that they're kind of blasting the news out there that this will be available at all their stores. And they're going to have a lot of different combinations of offerings so that people can kind of pick and choose what they want.

Do we have any idea of it's going to work, Kate? You know, I think so. You know, this type of deal is kind of designed to do exactly that, right? To kind of get in the ear of the lower income consumer and show them that they can get, you know, a discounted meal here, 15% less than what you would pay if you ordered all three of those things individually. The $5 meal did have success with that. That kind of builds, this rather kind of builds on that platform, Brian. But, you know, it's a really tough market right now, not just for McDonald's, but for all restaurants across the board. And interestingly enough, you can kind of see this in the performance of some of.

of the casual dining names as well. Those sometimes appear to be better value than a McDonald's or a Chipotle or a sweet green because you're actually getting a sit-down experience, right? You're getting a different type of dining opportunity than you are getting at a fast food or a fast casual. We've talked a lot about the fast casual name struggling in this environment as well. And I think that's part of the reason why, just when you're speaking in Washington out. Well, this show, for whatever reason, is called Power Lunch.

It's 2.38 here, a little bit called Snack. Either way, a power snack doesn't have the same ring. Karnay Asada apparently is coming back to Chipoli, but all I hear from the kids is that Chipotle is not cheap anymore, so what are they trying to do? So Karnayasana is coming back for a limited time, September 4th. So this is a hugely popular menu item. It's the fourth time I believe that Chipotle has brought it back.

It's one of the most requested items from the fans to bring this back on the menus. Of course, comes at a time when beef steak is a little bit more expensive for the consumers. So you'll have to see how that kind of plays out. It was another name that had a tough quarter, but did kind of see its traffic trends turn around in July. So it remains to be seen how that plays out for the back half of the year. But again, really popular menu item that a lot of consumers do want. And its CEO, Scott Boatwright, did remind analysts on their earnings call this July, essentially saying, you know, you can get in most parts of the country an entree at Chipotle for about $10 before taxes and fees, which is a pretty good deal. So depending on where you are, that is the price tag.

But as you said, for some people, that feels expensive right now. Well, especially given the price of cattle, we've talked about it multiple times, Kate. Cattle futures are at record high prices. The price of steak is at record highs. Is now the time to bring back carneasada because steak is really, really, really expensive. It is expensive. And you did also hear from Chipotle executives this previous quarter that you did see some trade down to chicken entrees, for example, from a business. beef. So we'll see if that winds up happening, but again, that's a really popular menu item that

people did request and do want to see. So it's likely that that would drive foot traffic. We've seen it in the past. But also, McDonald's CEO said this morning that chicken platform essentially growing twice as quickly as its beef platforms, which is great news for them because it's so much more expensive right now, as you mentioned, with those cattle prices. So definitely something we're keeping an eye on. It's a good to call it a platform. Well, it's for dinner tonight. Well, honey, I thought we'd have the chicken platform. You know what I'm talking about. They're sweet of offerings.

I know. They use corporate speak. But, you know, you want it. You can rebrand it, Brian. Yeah, you want it to, don't say platform. We're having the steak platform for dinner. You know, I don't know. Just say we're going to have delicious, delicious chicken for dinner tonight. Kate Rogers.

There you go. There you go. Thank you very much. All right, let's get out of Courtney Reagan for a C&BC News update. Hi, Brian. Republican Senator Joni Ernst announced today she will not seek re-election next year, ending months of speculation about her future in Congress. Ernst was first elected in Iowa in 2014. She will join North Carolina Senator Tom Tillis in retiring as Senate Republicans work to maintain their majority in the chamber.

Tens of thousands of Israeli reservists reported for duty today as Israel plans to carry out a takeover of Gaza City. Israel announced the call up last month. Prime Minister Benjamin Netanyahu has faced widespread criticism over the offensive. He says Gaza City is Hamas's last major refuge. But some reservists are refusing to serve again and are accusing Netanyahu of prolonging. the war for political purposes. And one of the most successful video game franchises of all time is coming to the big screen Paramount announced today. It struck a deal with Microsoft-owned Activision to develop, produce, and distribute a live action feature film based on Call of Duty. Just the latest announcement from Paramount following its merger with Skydance in early August. Brian, I feel like this is less family-friendly than, say, the Mario movies? Back over to you.

Yes, one would say so, but, you know, it's got built-in brand. recognition, probably an automatic hit. Courtney Reagan, thank you very much. I still prefer the go-karts and throwing green turtle shells, but what do I know? All right, still ahead. The obscure corner of the market trying to earn your hard-earned investing dollars. CryptoWatch is sponsored by crypto.com. Crypto.com is America's premier crypto platform. It is a big day here at CNBC because we've got the launch of a smart new insight for you. called Inside Altz, as in alternative investments, which has seen assets under management more

than doubled in 10 years. The newsletter is part of Robert Frank's Inside Wealth, and he's launching it with financial reporter Leslie Picker. Robert here now with more. Congratulations to you and Leslie on this. What are we getting with Inside Altz? So look, CNBC, our goal has always been to help the investor on all ends of the spectrum, stocks, bonds, and now increasingly these alternatives. So 10 years ago, there's about $7 trillion invested in alts. Now it's about 18 to 20 trillion. Going to be 29 trillion by 2030. So this is a fast-growing space. Our job is to help people understand private equity, private credit, venture capital, hedge funds, infrastructure, real estate, all those other things that aren't stocks or bonds. Yeah, but they're

bigger than the stock market now. Collectively. All together, they're getting there. But this is where a lot of people, don't tell anybody, but this is where a lot of people are making A lot of money. A lot of people are like you, look at KKR, Blackstone, Apollo. Apollo CEO Mark Rohn, who I interviewed for the launch, talked a lot about what individual investors are going to be looking at now that there's just a wider array of investments available to them. Let's take a listen to what he said about the choices that investors will now have with more alternatives. We used to have three flavors of ice cream, vanilla and chocolate, stocks and bonds, and a little bit of strawberry alternatives. We're about to move to Baskin-Robbins. Gradations of each of these things.

And we're moving to a place where investors are being asked to consider something new. Trust, alignment. This is going to take a long time to have a shift. Good news. It's been happening. We're watching it take place in institutions. We're watching it take place in family office. I believe it's going to take place in individual investors.

So, Brian, as he mentioned, this is a world that started with institutions. then it went to the ultra-wealthy and family offices, and now it's moving down to retail investors who will now have to wonder whether it's worth the higher fees, the lack of transparency, the illiquidity, and certainly in recent years, relative poor performance compared to the public stock market. Sit tight for just one second,

because we're going to go from inside wealth to inside the White House, which is also kind of inside wealth. President Trump is set to speak really sort of, well, he is speaking right now, That is a shot inside the White House. He's expected to make an announcement renaming the Department of Defense,

potentially the Department of War. But with Trump, he could talk about Federal Reserve Governor Lisa Cook. He could talk about Jerome Powell. He could talk about interest rates. You could talk about tariffs. We don't know. So if he makes any comments that you,

as a CNBC viewer or listener, want to hear, we will bring you those headlines. President Trump speaking right now at the White House. So that said, Robert Frank, how do we get Inside Altz? So you can sign up, CNBC.com slash InsideAlts. I think we have a full-screen promo that we can show you. It's got a QR code. There we go.

CNBC.com slash Inside Alt, so we're sign up there with that QR code. This is going to be a newsletter, but we're also going to do, along with Leslie Picker, regular articles, video interviews, really the people, the companies, and the products behind this growing boom in alternative investments. So CNBC is now broadening our lens in what we cover with investing. And, you know, no disrespect to what we do here because this is, but it is nice, I would imagine, to have that extra time. I just, I love, I wish I had more time. You know, to be able to sit down a guy like Mark Rhone and just talk for longer than four minutes.

And also speaking of more time, the key to alternatives is a longer time horizon for investors. So if you're a younger investor or a wealthier investor, that's, That's right now where the sweet spot is for alternative investments. Again, if you don't need that daily liquidity that the stock market offers and you want a little less volatility, be able to sleep better at night for the next 20, 30 years, that's where Alts is going to become more important. We'd all like to sleep better for the next 20 or 30 years, but just not all at once. Exactly. Robert Frank, Inside Wealth, InsideWalth with Leslie Picker.

Thank you. All right. Up next, forget about leveling the playing field, why all the new money pouring in maybe ruining college. sports. Like that? The new RBI animation. All right, the good news. College football came back over the weekend. The bad news, it's clear that the big money rush is going to change college sports in a big way.

If you're not familiar with what's going on, this year is really the first year that colleges can directly pay players. Kind of now just like the pros. And of course, it's very good for many players and their families as they finally get some coin from making schools rich off of their sports. But it's also now causing players to constantly change teams to get more money. Maybe they move schools every year and also staying in school longer. The South Carolina team that, by the way, took my Hokies to the Woodshed on Sunday, has two running backs who are 24 and 25 years old. Villanova has a punter who is 33.

And since you can now make a pretty good living playing college sports, you get paid, basically. Why not stay in school as long as you can? I mean, I would. but that maybe doesn't mean it's good for college football in general, for the schools that can't afford to pay their players millions. So we asked you on X. We asked this question. With the big new money system in place and frequent college transfers,

college football is now better, same, worse, or ruined. Well, y'all spoke pretty loudly. Look at the results. Nearly 80% of you said college football is going to be worse or even ruined by the new system. Alumni and fans have to ask if you're Virginia Tech or Rutgers or any number of other schools, how are you going to compete in this new era without dramatically increasing student fees or tuition because you've got to raise that money to pay the team? It's a good question.

Let's see how it plays out, but it's a new era for college sports. So, right, still ahead, why the Oracle of Omaha is not too pleased with one of his biggest investments. As we had to break, be sure to download the Power Lunch podcast, catch audio-only versions of the show anytime, anywhere. All right, before we go, want to highlight one of the most read stories on CNBC.com today. Cheese and ketchup, apparently they had their day, but now it's over. Craft Hines splitting back up. It breaks up the marriage pushed by their largest shareholder, a man named Warren Buffett. Becky Quick spoke with Buffett today, telling her that he is disappointed in the

halftime split, that the merger didn't turn out to be a brilliant idea, but he does not think taking the company apart will fix its problems. Now, Buffett is by far the largest shareholder. He owns 27% of the company. And to be fair, the deal did not work out. Shares down more than 60% over the past 10 years. So when the deal is done, the split will have one of the companies focused on sauces and meals, the other one on foods like hot dogs and cheese. So it won't go back to Kraft and I won't go back to Heinz. They're going to kind of do a mix of one into one, a mix of another in another, and the hope that the two, one plus one, equals two and a half.

To read that story and many more just like it, of course, go to CNBC.com as well. Final check of the markets. See how we are. We got two hours left, or one hour left rather, in your trading. day closing bell. It's going to be a big 3 p.m. Eastern time hour. We are down across the board. Just over 1% of the NASDAQ. See tomorrow.