Power Lunch - What's Next for Tech & Concern over ESG Investment Funds 6/21/23

Episode Date: June 21, 2023

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Welcome to Power Lunch, everybody. Alongside Kelly Evans, I'm Tyler Matheson. Glad you could join us. Coming up, stocks down for the third straight day. And we didn't even work on Monday. Momentum starting to reverse just a bit. Is this just a normal pause after a strong rally? Or is it perhaps something bigger like Powell's comments today? Plus, that stretch of I-95 that was destroyed in a fire, it's going to reopen the traffic sooner than anyone expected. So how did this project come together so quickly? while other road construction projects, Kelly, seem to be never ending. Very much looking forward to that, Tyler. Let's check on the markets first where the Dow is the outperformer, but everyone's still in the red. Blue chips are down 20. The S&P is down 14. That's a third of a percent.

The NASDAQ trimming its decline somewhat, but still down almost 1%. And as Tyler mentioned, and as you can see here, the steam is really coming out of a lot of the hot trades. The biggest decliner's list full of momentum names like Palantier, C3 AI and Upstart, C3AI, down nearly 10%. today. Still look at the gain so far this year. All of these names have doubled. C3A.I has actually tripled. And zooming out to some bigger names, CNBC now has a way to track all seven of those huge mega-cap names that have been dominating the market. We call it the magnificent seven. It's down one and a half

percent today, but still up more than 80 percent so far this year. Compare that with a three percent gain for the S&P equal weight index. Pretty lopsided tie. All right, Kelly. So is the tech rally finally running out of steam? or is this just a bit of a healthy break for the markets? Let's bring in Mike Bailey, Director of Research, with FBB Capital Partners, along with our own Michael Santoli, CNBC's Senior Markets Commentator. Mike and Mike, welcome. Mike Bailey, let me start with you.

I know you don't like the idea of trying to time the market. I'm not going to ask you to do that. I'm not going to ask you to say that, hey, this tech rally is over. But you do see what you describe as the possibility of some downside volatility this summer. Why? Absolutely. So looking at the tech rally we've seen here to date, pretty impressive. You don't get these types of rallies very often. Question is, what's next? Could we see this rally continue? Are we at a bump in the road here? Or could be at sort of a precipice with some downside? Sort of putting all these pieces together. We do see a bit of volatility coming up.

We do look at market sentiment, sort of investor behavior. The VIX or the Fear Index is really plummeting to us. That is a concern about investment. is getting complacent so that we do have some worries there. A couple other pieces of the puzzle here. So, look, tech stocks, again, had a great rally. There's just way more expensive now. We started the year at 20 times earnings. Now it's 30 times earnings.

That's a tough hill to climb. And I think if you really want to see some more excitement out of these names, you may need another theme. Is it another AI, maybe a twist on AI, or perhaps finally our earnings is going to come through for some of these companies and really drive another leg of growth. So some questions there, but I think in general I would expect more volatility as opposed to less as we start to get through the summer.

Mike Santoli, thoughts, reactions? Yeah, I mean, we certainly had a lot of the factors aligned coming into this week for at least a breather in the leaders of this market, which has been the NASDAQ 100. A short-term trader sentiment gauge was at 93% bullish for the NASDAQ 100 entering the year. It just doesn't get much higher than that. I think the question is exactly what the choreography of such a pullback is going to look like. And today is probably the ideal orderly example of how things. things could play out. The NASDAQ 100 down 1%. The broader market flat. Everything outside of tech

is net positive. JPMorgan tickling a new 52 week high. That stock. So I do think there's a way for it to kind of release some of the pressure. Yes, we've rebuilt the valuations a fair bit. If I look at the NASDAQ 100 forward price earnings ratio, it peaked around 30 back in late 2021. It's back up to something like 27. So, you know, maybe you have an optimistic call on how earnings forecast will go. But that's still looking like it's pretty rich. which, although I don't think this longer term trend, which is just reasserted itself to the positive side, is too early to say that it's ending? And so, Mike Bailey, is your call for people to move to the sidelines?

Are, you know, is fixed income more appealing, small caps? You know, where do you think there's better opportunity? So stay diversified. I think in general, if you've picked Nvidia at the beginning of the year and you've had a great run, make sure you've got to still got a diversified portfolio. If that stock is a big chunk of your holdings, you want to be careful with that. Is it going to keep ripping the rest of the year? Probably not at the same pace.

To really just stay involved. I think the comment at the top was correct. We do want to be fully invested. We prefer to avoid market timing. But just make sure you need to rebalance and look, see what else is out there. There's some great names in tech. Tech earnings are growing. You can look at 2Q earnings estimates.

A lot of the big tech companies, you're seeing some significant growth faster than the market. I think you want to participate there. But just make sure you've got to go. some other stuff in staples, health care, in case we hit a recession, so you've got some offsets to the big tech growth. One of the great names in tech that you mentioned in our briefing note is Amazon. Tell us why you like it and put it in the context of this federal suit against Amazon with regard to how it markets prime. Absolutely. So certainly a lot of these mega tech names, they're under a lot of scrutiny. So there are names, there are investigations going on

all the time. I'll kind of start out on Amazon just looking at the broader growth drivers. So e-commerce, that's really a big theme for us. They overspent big time. I think they created a UPS on its own in two years. They overspent on that. Now they're just rationalizing that. You're going to see a lot of growth coming and profit growth coming out of e-commerce. Advertising is still growing. I look at cloud computing still growing. So we like the business in general. Stock is trading at a relatively low PE for Amazon. And the stock's actually underperformed the broader market for the last five years. We still see a catch-up trade.

That's sort of a big picture view. Now, let's take a quick look at this FTC. I haven't looked at all the details yet. I'm sure lots more will start to come out. So it's hard to say. Could this be a significant change for the company? Who knows? But at this point, looking at other big investigations,

generally the companies have been able to continue their core business model despite some of these investigations. All right. A pair of mics. Thanks very much. Bailey, Santoli. We appreciate it. Now to some new comments from Atlanta Fed President Rafael Bostick.

Let's bring Steve Leasman in for those details. Hi, Steve. Yeah, Kelly, actually two Fed presidents weighing in with a more dovish outlook on rate hikes after testimony by Fed Chair Jay Powell suggested the Fed may raise interest rates. Two more time. Bostick's saying in an essay that he just released. He's putting himself firmly in the wait and sea camp when it comes to raising interest rates. He said the Fed should let rate hikes work through the economy, see if they bring down inflation before decided. what to do next. Good reason, he said, to expect policy tightening to be more effective

in coming months. The real effects of tightening, quote, are only just beginning to take hold. Chicago Fair President Austin Gulsby, while Powell was speaking, saying he had not decided what to do in July, but that it was reasonable for the Fed to be on a reconnaissance mission now. He agreed with Bostic that the Fed had raised rates a lot and that those rate hikes needed some time to play out in the economy. He indicated he wanted several more months of data before deciding what to do next. All of that seems to contrast at least somewhat with Powell, who suggested strongly that two more rate hikes is a pretty good bet if the economy performs as expected. So something that's divided on the committee we have to watch now, among those sure they want to hike and those who want to wait and see until there's more data before making that call. Guys?

So I guess we kind of know now, don't we, Steve, where the chairman fits in that spectrum of votes that was taken last week about how many more rate hikes were expectable. Yeah, when it comes to those forecasts, that's a very good point, Tyler. We didn't really know he was kind of speaking, kind of like, well, the committee is saying these things. Kind of put himself in that camp among those who think two rate hikes are a pretty good guess, is the exact terms they used, if the economy performs as expected. All right, Steve, thanks very much. It was just a week ago we were to go down in D.C. All right, Fed Chair, Jay Powell, sounding pretty hawkish in his comments to a Senate committee today. So let's get reaction from Chicago, where Rick's and.

Mattelli is talking to traders. Hey, Rick. Hi, Tyler, indeed. And before we get to the traders, I think we should kind of sum up how the markets responded to J. Paul in front of the House Financial Services Committee. Look at a two-day chart of two-year, very sensitive to Fed policy, pretty much sideways, not a huge effect by our chairman as he was answering Q&A. As you look at July Fed Fund Futures, they start on the day that we had CPI the next day. we did not see a rate hike. And you see it's basically been going sideways. So percentages, 70 plus percent that they're going to hike a quarter in July,

but cold of 20 percent, a little less than 20 for September. The dollar index is where all the action was. Look at what happened at 10 o'clock Eastern. It did a swan-acapulco dive right off the charts. Let's go see if we can find Dave Mezzo. Dave, all right. I know you're busy. There's a lot of action here.

But quickly, let's talk about Jay Powell. Okay. I didn't see the percentages change, but what do you think the markets heard when he was talking to any in front of the House Financial Services Committee? I think they heard he was just buying time. He could have raised rates, chose not to, just buying time. It would have probably been a better idea if he did. He put it out there. Oh, yeah, we're probably going to, you know, raise rates in the future that were not done.

This is just a temporary pause. But I don't know why he didn't. You know what? Actually, that's the best answer to a question that everybody's actually. asking. Yeah, I'm a smart guy. Since the 14th. Since the 14th.

He sounds like he wanted to raise rates. They all voted unanimously not to raise rates. It sounded like they had a little bit of non-raising rate remorse. Yeah, a little bit. Let's just kind of sit, sit back and not do anything for a little bit. See how things digest. And I agree. He's buying time.

So let's play a game here. Let's say we know one year from today, inflation's going to be at 2% the inflation target. Sure. What should the Fed do between now and then? Probably nothing. They shouldn't do anything at all. Probably nothing. I almost feel like we should just stop there and call it a day.

Yeah, because to me, that's the only correct answer. And longer, higher for longer, fits right in with the logic of that. And that's why the markets, we had Larry Lindsay on, there's no better economists in the whole world than Larry Lindsay. And his comment was, is that the markets are kind of like a 15-year-old and adolescent. They're kind of having a good time of it all, but maybe they're going to need to be reprimanded. And the way I look at it, maybe they have it right.

Well, down through time, they always tend to go too much, too fast. They either are too slow to do anything or they go too, too far, too fast. And maybe they just need to calm down and just do nothing for a little bit. David, it's always fun to talk to you. My man. Thank you, buddy. Kelly, Tyler, back to you. Not enough energy there.

Not enough energy there, guys. Thank you, fellas. Great stuff. Coming up, Dropbox dropping in to the AI race. The company announcing a new search technology will speak to the CEO and tech check about that next. Plus, infrastructure has a speed limit in this country. Bills, funding, construction, it all takes a lot of time and money thanks to red tape. Yet the I-95 repair hit seemingly no speed bumps.

We're asking why, what lessons can be learned. And as we had to break a quick power check, on the plus side dollar tree up 4%. The company's target $10 a share in earnings for fiscal 2026. On the negative side, AMD down 4.5% taking a breather alongside other chip names like Nvidia, Intel, and Qualcomm. PowerLog should be right back. Welcome back. Time for today's tech check. Dropbox unveiling two new AI powered products today, including a universal search bar called

Dash that connects major platforms like Google Workspace and Microsoft Outlook. Shares are fractionally lower, though. Here with more, let's get to Deer Jabosa out in San Francisco, joined by Dropbox CEO Drew Houston. Hello to both of you. Hello, Kelly. Thank you. And Drew, thanks so much for being with us here in person at one market. Before I get to the product news, I want to just sort of get a status on the business overall. A few months ago, you made that difficult decision to lay off about 500 employees. You cited slowing growth and the urgency to be at, quote, the forefront of the AI era. How are you doing on both of those fronts?

Yeah, it was a difficult decision, but, you know, like a lot of companies, were responding to the macro environment and then also investing more in the future. So investing in early product development and AI and some of the launches that we're announcing today. And how are you on the growth side? Has that helped yet? Or are you still waiting for that sort of to trickle through? Well, we're launched. These products are just hitting today. So we're really excited about them. We think it's a huge opportunity. Okay, let's talk about them. I want to talk about the more major innovation. It's something called universal personal search. Explain to our audience what that means, why they might need it. Sure. So one of the products we're launching today is Dropbox Dash, which is AI-powered universal search. And the idea behind this is, or it started with this idea, like, why do we live in a world

where it's easy to search all of human knowledge with a Google search than your company's knowledge or even your own stuff? And Dropbox has helped our customers organize your files since the beginning, but so much of work is now in our browsers. And so Dropbox that's where Dropbox Dash comes in. So it's a universal search bar, so you can search your Google Docs and your Airtables and your Slack and Salesforce and everything in between from one place. instead of having to go to lots of different services.

Right. So it's like a work tool to sort through all of that stuff that's coming in through different applications. So others have tried this in the past, and I wonder, why is Dropbox in a better position to pull this off than, say, a Microsoft or Google? Why now? Sure. Well, first is just the magnitude of the problem, right? Our work environments are so much more complicated. We use so many different tools. And we're not, we're rarely in one ecosystem, right? We're using things from Microsoft and Google and all these other SaaS companies. And we've kind of started out as frustrated end users. Like it's impossible to keep my stuff organized.

So a big advantage of Dropbox has is we're platform agnostic. We support every platform just as we have since the beginning. Second, it's a natural evolution of what we do for our customers. So millions of people, millions of businesses already trust Dropbox so their most important information. And so going from files to all of your cloud stuff is a natural evolution. And that trust in privacy piece is really important. And so everybody's excited about AI and what it can do. Everybody's concerned about the negative impacts.

And so in the brave new AI world, it's more important than ever to have a service you can trust. And that's what Dropbox can promote. Right. So in this Brave New AI world, there's a lot of products, not as much monetization. Some analysts have pointed to your pace of monetization, paid users on Dropbox. Do you expect this to be a major profitability lever for you guys? How do you think that's going to impact the monetization of, you know, Dropbox premium? We think this is just a huge unsolved problem, right?

And unlike with FileSync and Share where there's a bunch of different, or there's a bunch of different competitors in the world of Universal Search and AI-powered Universal Search, there's really no one solving this problem. And that's why, but it's something that we all experienced, right? How many times have we been like, I know there's a doc there. I was looking at it an hour ago, but I can't remember if someone sent it to me by Slack or email or whatever. So this is a universe, there's a billion knowledge workers with this problem, and I know

no one who has it solved until now. I know we were talking earlier about analyst notes. I really need this to sort through all of those that I get every morning. Yeah, we all do. Last question on the state of San Francisco. So Dropbox early on in the pandemic, you guys got rid of your headquarters. Since then, a lot of companies have actually been leaving San Francisco. There was Westfield giving up its mall recently.

That news. We've got the highest vacancy rate of any large American city. You're still here. A lot of folks working on AI are still here or they're coming back. Why? Why San Francisco? Well, San Francisco has been a great home for us. since the beginning and it's still home to a lot of the innovation and a lot of it, when

you think about all the great things happening in AI, a lot of them are still happening within a couple miles of where we're sitting right now. And I think it speaks to, you know, when we think about internet companies, we talk about network effects and just all the benefits of when you have great companies, great talent, great schools, all in one place, that's not changing. But for sure, I mean, San Francisco, like a lot of cities, has its challenges and these humanitarian crises, and I think everyone wants it to be better. Well, I'm glad you're able to come visit us in person at one market.

Drew, thanks so much for being with us. Thanks for having me. Drew Housden, CEO of Dropbox. Tyler, I'll hand it back over to you. All right, Deirdre, thank you very much, and thanks to our guest as well. Up next, an ESG-O-P fight. Anyone with a 401K needs their retirement fund to grow as large as possible. Republicans say ESG interferes with that goal.

We'll explain how they are targeting it next. Plus details on how worsening weather patterns could threaten to drive up already high prices for soft commodities. Power lunch will be right back. Welcome back, everybody. Republicans ramping up their anti-ESG push with a measure that would prohibit 401Ks from investing in funds related to that investment philosophy. Tricky. Here with more is Emily Wilkins from Washington. Hi, Emily. Hello. Well, Republicans are continuing to attack ESG. funds raising concerns that investors could be unknowingly making less money if they are invested

in environmental, social, and government priorities. Congressman Andy Barr rolled out legislation today to curb the use of ESG investing in retirement funds, and his bill would also ensure that retail investors know when their funds are in ESG and what that could be costing them. I spoke with Congressman Barr in an exclusive interview. He said that many Americans might be blindsided. Environmental social and governance investing has become a cancer and a fraud within our capital markets, steering retail investors sometimes unwittingly into a lower performing, less diversified, and higher fee of funds. Barr and other lawmakers are concerned that few Americans know how ESG really impacts their portfolio. A recent Gallup poll showed that 40% of Americans are not familiar with ESG investing, while only left,

percent were. That's roughly the same as a similar poll done two years ago. The legislation wouldn't ban investments in ESG, but it would require advisors to show investors the difference in fees and profits between an ESG focused investment and a similar index fund. And it would also require retirement funds to focus only on maximizing profits. You can expect to hear a lot more on ESGs from House Republicans who plan to focus on the issue in July with hearings and a plan package of bills addressing the investments. And for more on this story, you can check out CNBC.com. A cancer and a fraud.

That is a strong. Them's fighting words, Emily. I mean, it seems like a very tricky needle to thread here to decide what is an ESG fund. There are different gradations of it. Some do better than the indexes. Some do worse. Yeah. When you do look at various reports out there on ESG funding and how it stacks up, you do find a variety of results.

You find that sometimes ESG funds do better. Sometimes they do worse. Sometimes they do about the same. I think what Republicans are really trying to do here are make sure that investors are simply cognizant where their funds are going and what that could mean. Like Congressman Barr said, this does not prevent anyone from investing in ESG funds. They still have the freedom to do that. It's simply trying to get the investors a little bit more information on exactly what they're getting into. I mean, it's interesting. It goes back to the idea. If the goal of the bill or whatever the push is, is to make sure that you get maximum profits, then you're walking down a path probably to requiring retirement funds to invest solely in index funds, which have the lowest fees and generally outperform actively managed funds.

That's just my little editorial. Emily, welcome. Good to have you with us. Thank you very much. You bet. Investing in commodities often requires a degree in meteorology. Weather has a huge impact, especially on food prices. That's why Pippa Stevens is closely watching. I was going to say he's a meteorologist.

What don't you do? Unfortunately, I'm not a meteorologist, but I will do my best here. And so basically what we've seen is that soft commodities like sugar, robust of coffee and cocoa are all hovering around multi-year highs. And now the arrival of El Niño could rock these markets even more. prices have been rising for several months in anticipation of the coming weather shift, as well as some supply disruptions. Coco futures are around their highest in more than seven years, while sugar and robust of coffee are at levels last seen more than a decade ago. At the simplest, El Niño is when trade winds weaken and warm weather is pushed east toward the west coast of the Americas. It can have significant impacts on global weather, including heavy rainfall or droughts, or it can be almost a non-event.

And that's where the challenge comes in. It is very difficult to predict. But for sugar, for example, the fear is that El Nino will impact the two major producers, bringing flooding to Brazil and lower rainfall to India. And this, of course, comes as food inflation has been a major sticking point and a burden for, you know, really around the world. Just as eggs go down, my other two staples, sugar and coffee go up. This is not good. Exactly.

Well, but robuster is the cheaper and kind of the lower quality. Well, so I'm a robust. You're a robust woman. The instant coffee, the more premium one is not rising quite as much. So you should be in the clear. I really want to drill down on why you're a robust person, but I will really ask it. I mean, and just kind of a comment about Europe where they're inflation in the UK again, much worse food prices are a big piece of that.

And we see corn and wheat and those kinds of things. Is that Ukraine? Is that weather? Do we know? It's hard to disentangle, it seems. Yeah, I mean, it all comes back to weather, and that is the driving force for the majority of these crops. But with Ukraine specifically, that deal is up for discussion once again on July.

17th. And of course, they are the breadbasket and a major exporter of wheat. And so far, they've been able to keep doing that after the UN and Turkey brokered that deal. But that could start to shift in July with Putin already signaling that he may renege on that. So that could be another wild card with a lot of wild cards already here. We ever grow coffee beans here? Is not warm enough yet? I don't think there's much coffee. We haven't had a sugar. I don't think there's much coffee grown in the U.S. If any, I don't know. Give it 20 years. Let's get to Pippa. Thank you. Let's get to Contessa Brewer for the CNBC News Update. Contessa? Well, Kelly, 12 and a half years in prison, that's the sentence just handed down for the January 6th rioter convicted of driving a stun gun into the neck of a D.C. police officer.

Daniel D.J. Rodriguez pled guilty to charges against him in February, including inflicting bodily injury on officers using a deadly or dangerous weapon. Authorities say Rodriguez attacked Officer Michael Phenone in the Capitol's lower west tunnel and then later bragged about. in a chat group on the telegram platform. Miami police are investigating Dolphins' wide receiver Tyreek Hill for an alleged assault and battery Sunday. But they're being tight-lipped about any other details involved there. The dolphins, though, released a statement saying they're aware of the situation. Congressional leaders are planning to unveil today the official design for a new stamp

honoring the late civil rights leader and congressman John Lewis. The preliminary stamp design released last December features a 2013 photograph of the congressman. Lewis, of course, died in 2020. He championed in his life peaceful protests and was sometimes called the conscience of Congress. Kelly. I love stamps. Yeah, and that looked like a very nice, handsome portrait of the congressman. Indeed. Contessa, thanks.

Sure. Ahead on Power Lunge, much of America's infrastructure needs updating, replacing, or at least repair. The problem, it costs a lot of money, and it's. It takes way too long, except this time, in the case of I-95, how are they able to fix the overpass collapse so quickly? Plus, the war of words continues between the U.S. and China. After a seemingly successful meeting between Blinket and Xi, Biden calling China's leader a dictator. The latest on those comments and the fallout when Power Lunch returns. Welcome back to Power Lunch, everybody. Intel, the worst performer on the Dow today.

Let's get to Christina Parsonabalus at the NASDAQ to explain what's driving Intel low. Well, although Intel announced it would sell 20% of its Austrian chip-making business to bank capital this morning, the stock really reacted negatively to its annual foundry meeting hosted literally just a few hours ago. You could see after 12 p.m., that's when the stock really started to fall. The meeting, though, focused on its internal foundry model. So this is a segment of the company that would have its own profit and loss statement, and pretty much like an arm's length relationship with the device business. So that means Intel's foundry business would not only charge third-party customers to make their chips,

but also treat Intel as a customer, all in an attempt to become the second biggest foundry in the world, of course, after TSMC. Today, though, Intel said they will sign up their first foundry customer by this year, but we didn't get any names. Investors not loving that as well as the time it'll take Intel to ramp up utilization rates, cut costs, and sign up new customers. So it's a step in the right direction, but it seems to not be happening fast enough for all these investors.

Guys? And never fast enough. Thank you very much, Christina. Speaking of fast enough, traffic over Interstate 95 is expected to resume this weekend. Less than two weeks after that tanker fire and structural collapse, it forced a shutdown of northeast Pennsylvania. Pennsylvania Governor Josh Shapiro said crews have worked around the clock to speed up a rebuild that was initially expected to take months. Last week, Pennsylvania senators Casey and Federman, along with Congressman Boyle, announced $3 million on emergency funding for a temporary fix. Here now with more on how it got done so quickly, Representative Brennan.

Brandon Boyle, the Democrat from Pennsylvania. He represents the district where the collapse took place. Congressman, welcome. Great to be with you. I mean, tell me to the, with the most granularity possible. Like, literally, how did this happen? Yeah, so it's amazing to think back that we're only a couple weeks from that early Saturday morning crash to where we are now. We're literally as early as this weekend. we could be reopening three of the four lanes in each direction, three north and three south, which is about 75% of what we did have. It's been an all-hands-on-deck type of operation. We've literally had workers there 24-7, which obviously is expensive when you're paying for that sort of overtime. But the reality is 160,000 vehicles a day typically take this stretch of I-95. We're talking about the most densely populated metro or megapolis in the country when you include New York and New Jersey just a little ways away.

So given the urgency of this, we put everything into it to make sure this would happen and reopen, at least mostly reopen, as soon as possible. What is going in right now? Will that be the permanent structure, or is that a placeholder while more permanent work is done? Yeah, so let me explain. Essentially, there are two rebuilds going on. First, what is enabling this to get the roadway back online so quickly is a material called foamed glass aggregate. That is what is being filled in. And so what was an overpass on I-95 has essentially now become a wall that is paved over and you're able to have highway lanes there. The permanent structure will be built. around that, so right to the east and right to the west, the permanent structure, once that is complete on the outside, the foam glass aggregate will be drained out, and then the inside permanent lanes will be constructed. It's a little easier to describe if I'm able to, you know, show you kind of a map, yeah, I get it. But it's fascinating. Is the Army Corps of Engineers

involved here? Army Corps involved at all? No, not the Army Corps. Corps of Engineers, we've had, I feel like almost everyone involved, but Army Corps of Engineers tend to be more used when you're talking about nautical projects, so they weren't involved in this. I'm surprised when they say $3 million was approved in emergency relief. I mean, $3 million seems like a very small amount for the scale of this project. How useful is federal funding here? How useful, like you said, this is an expensive project. So did money need to come into support it? You know, are those bills going to last long after this is quickly completed? Because of the emergency declaration that was signed and announced by the White House,

100% of the bills are paid for the first 90 days, and then 90% thereafter. This will certainly cost more than $3 million. That was just kind of the opening hours or days of the project. But, you know, early that Sunday morning when this happened, my first call was to the White House. And President Biden called me back shortly after that. He specifically said and personally said to me, this to him was the single most important infrastructure project in the nation, getting 95 back up to the condition that it will be in this weekend in which it's operable again. So really just a great team effort from the White House to all of us locally. What can we learn from? And just to share some of the details, you know, $25 to $30 million is the estimate. You know, you had good weather,

which helped among other factors and kind of working quickly, was red tape cleared? And is the message here that when something really important needs to get done, it can get done very quickly and, wow, that's so amazing for America? Or is the message that, you know, there needs to be some lessons learned from this and applied to making sure that other areas that need repair are able to do that more quickly? So I think there are a couple lessons you can draw. First is keep in mind that whenever there's an accident such as this, red tape is already clear. That's part of federal legislation that has actually existed for quite some time.

The second thing, though, is for those who believe that government can't do things or that we are somehow inevitably doomed to long delays and nothing getting done, we were able to prove that that's nonsense, that when we roll up our sleeves and all work together, we're able to meet an important task. So I hope that with this being really the remarkable success that it is, I hope we are now then able to be able to. to apply it to future projects. Certainly when we talk about permanent constructions, as opposed to reconstructions, we need to have streamlined permitting process, other reforms as well. But what it shows is when we put our minds to it, we can get things done quickly. Nice lesson. Yeah, it is. From your lips to a lot of engineers' ears, right? Yeah. Congressman, thanks for all your effort on that and for explaining it to us. We appreciate it. Thank you. Representative Brendan Boyd.

Pennsylvania. All righty, coming up, U.S. and China tensions reigniting after what seemed like some progress over the past weekend. We've got those details next. And as we head to a break, June is Pride Month, and CNBC celebrates all month long sharing stories of corporate leaders. Here is Stephen Tristan Young, Posh Mark's CMO. For me, as an LGBTQIA who recently went through a surrogacy process, I'm very thankful that me and my partner now have two twins. I was shocked at the number of people who, We felt uncomfortable asking me questions about the process. And for me, I welcome the opportunity to share with them about the struggles, the costs, the emotional journey that we went through as partners and how we got there.

Being able to answer those questions really felt like I was creating a bridge for people to feel comfortable to understand more about the struggle that we go through. Welcome back, everybody. After what seemed like a positive visit between Secretary of State Blinken and the Chinese President Xi, China now lashing out at the U.S. once again after President Biden called the country's leader a dictator. Amid Javr's here to discuss. Hi, Amin. This is a fascinating moment because the president was speaking before a group of fundraisers, right? So these are donors. He's comfortable. And in those settings, I've been in those rooms where presidents get to meet the wealthy and hobd-on with him. There's no camera in front of them. You know, there's a press pool. there, but they're off to the side behind the curtain. And it kind of gives this feeling of intimacy where presidents can sometimes say a little bit more than they might have wanted to say. Think of Mitt Romney a few years back in the middle of the campaign. Exactly. So that could have been what happened here. And you see an immediate reaction from the Chinese side saying,

hey, wait a second. That's uncalled for. But the president clearly expressing what he really thinks behind the scenes. And there's been a sea change in Washington, D.C. in terms of the approach to China. Going back 20 years, the approach was engage, let's do trade, let's have a positive economic relationship. Now, though, a lot of officials that I've been talking to are sort of reevaluating that whole approach. Was that the right call for the global economy and for American democracy? We happen to have a documentary tonight looking at Chinese espionage against American companies. I've got an excerpt for you to play right now because I want you to see some of these officials expressing in their own words how they've sort of re-evaluated that relationship.

Take a look. Today, the world we live in, the world we've all benefited from, was a world framed by an American-led order. Now, if they are dominant in these fields in the 21st century, the entire world will be responding to Chinese standards, which is leverage in and of itself over geopolitics, over decisions that policymakers can make, over society. The old notion of 20 years ago what national security was,

of who's got the most planes, tanks, ships, and guns is no longer the case. Who has the most advanced wireless communications? Who controls overhead satellites? Who is going to make the most advances in synthetic biology or controls next generation energy? That is all within the gambit now of national security. So that's Senator Mark Warner there. He's the chairman of the Senate Intelligence Committee and Senator Marco Rubio, the ranking member. Our documentary premiering tonight at 10 p.m.

You'll hear more from them in the documentary. They wanted to do that interview together. We talked to them for a long time about setting that interview up. Both of those guys wanted to send a message by sitting shoulder to shoulder in that room with me to say, hey, this is a bipartisan issue. It's one of the few areas. The alignment between the parties is not perfect on anything and certainly not on China. But there is generally a more of a shoulder-to-shoulder feeling on the approach to China these days. You absolutely see that.

And this reevaluation, Mark Warner, in another segment of the documentary, told me, you know, he was on the wrong side of this argument, he feels. 20 years ago. He felt like if we do business with China, then, you know, we'll make them more like us. There'll be a middle class. There'll be a culture of entrepreneurship. There'll be freedom of speech. Democracy will bloom. He says, now I realize that was the wrong approach. And a lot of officials, U.S. intelligence officials say they are concerned that we thought doing business with China would make them more like us. And what it's doing is making us maybe a little bit more like them in terms of freedom of speech issues and other things. So some real concerns in Washington, around this relationship.

And you can see that the president's giving voice to that and in the reaction on the Republican side to the president's comments today, you see a lot of, you know, tentative reactions to it. Normally, you know, it's just, you know, ping pong the other guy's statement down. You're not seeing that as much today on that bite. Interesting.

And we'll be watching tonight, 10 o'clock. Absolutely. Thank you. Got the plug in. Thank you. Good. You got it. Still to come, Peloton.

Down 7% today, and it's off the lows on a downgrade over at Wolf. They're saying the path to sustain growth and profitability remains unclear. We'll trade that name in three stock lunch after this. Welcome back in time for today's three stock lunch. Our first menu item is FedEx reporting some mixed results in earnings beat, but revenue missed. The stock is down about 2%. To trade it, Quinn Taitro is president and CIO of Jewel Financial Quinn. It's good to see you. And we'll start with this kind of key barometer. Wouldn't you say with FedEx? What would you do with the stock?

Yeah, we like FedEx here. It's just not all that exciting. So it's not, you know, a high momentum trade by any by any stretch. But, you know, it's not that surprising that FedEx is this kind of a COVID overhang. So the last few quarters have certainly been lackluster. I mean, they just had a boom during that time period. And so now they're kind of settling in. They're trading 12 times forward earnings. Those earnings are set to rebound next year. Have a really healthy balance sheet, healthy dividend. So I like the stock. I think we're a buyer here on this pullback, especially. But it's just not all that exciting in this tape. Let's talk about the motorhome maker Winnebago.

That company is on the radar posting disappointing results. A revenue of $901 million. Estimate was $977. And compared to last year, that number was $1.5 billion for the same period. Are Americans losing their wanderlust or was Winnebago benefiting from the pandemic? What? They're not losing that wonderlust for sure. Ironically, even though Winnebago, you'd probably think I would say this isn't an exciting story.

This is an exciting story for us, and we don't think that these earnings or that this miss last too long. I mean, the reaction is muted in the stock today. It's certainly not down as much as one would expect with those numbers. But this is a stock and a company that for the industry has an impeccable balance sheet. $200 million in cash. And really we think that, you know, this is just kind of a little bit, as well as FedEx, a little bit of overhang, you know, from that COVID, everybody buying these vehicles and so forth.

But we think this is a great company. And as a trader, it's presenting great risk reward if you wanted to trade this stock with a stop about 54. We like this pullback here. At 63 right now, that brings us, drum roll, please, to Peloton. Nearly a 10% moved down earlier on a little off the lows. Wolf Research downgrading at Quint saying path to the same growth and profitability remains unclear. I think the stocks below about $8 at last check. Would you pick it up here?

No, absolutely not. And I really feel bad for this company. I mean, it just seems like every time they turn around, they're getting hit with something. And it seemed like, you know, the recall, I believe they had a few months ago, you know, was kind of like the last blow. This is a company, though, when you analyze the fundamentals, I mean, they have a very, very difficult road ahead, a tremendous amount of debt, just an awful balance sheet, and they're losing money. So it becomes a really difficult prospect to get behind. You may look at this and go, oh, this stock's cheap here at $7,

but fundamentally, we would not say this is cheap at all, and I think traders need to stay away until there's a real turn in the business and the business model and it flows through the financials. This is a no touch for us. You ever ride the bike? Actually, I don't. I have enjoyed cycling a time or two. I can honestly say, but I've never been on a Peloton myself. So what you're saying is that this is going to be like a hit and hills ride here for Peloton. There's going to be a lot of hills and a lot of hits if this company's able to. I mean, I hope they I hope they turn it around. It would be a great story to turn this around.

But I just, again, it was a darling of COVID, and now you just don't touch it. No, it's an ugly duckling now. And Domicon sue in our stock draft, I think, picked it. And I thought maybe he had a shot there. Turns out it was a really long. That's why I do what I don't pick stuff. Maybe if someone buys it. You should be there in their ad campaigns, by the way.

Talk about turning the stock around. Yeah. The FTC is suing Amazon and other key stories. You should know about. They're not suing the stories, but we have them in closing time next. Welcome back. Just two minutes left in the show, and we've got stories to rip through. Oh, we're going to use this time, wise. Let's get right to it. It will start with Bitcoin hit $30,000 today for the first time since April. Hopes for a spot Bitcoin ETF from Black Rock among the reasons giving it a boost. Stox in the crypto universe also seeing some nice gains today. How much is it up for the year? I'd love to know that. I don't know if it is up for the year. If it was 30.

No, it probably is. 81%. Yeah, I thought it was like in the 17. Right on the nose of the magnificent neighbors. How are you like that? Well, it's back. All right. The FTC suing Amazon saying it used manipulative tactics to enroll users in Prime.

In the statement, FTC chair, Lena Kahn, says Amazon tricked and trapped people into recurring subscriptions, which could only be canceled by what the FTC described as a four-page, six-click, 15-odon. cancellation process. Amazon responded to the lawsuit saying the claims are false and the company was in talks with the commission staff to provide context about its prime service. I use it a lot. Yeah. I've never tried to cancel it. I don't think I will. I did cancel it for a little while. It didn't seem that hard. This was internally noticed Project Iliant and the stock barely moved lower on the news. Be it what it may. One thing fueling the tech rally this year has actually been layoffs generally seen as helpful for companies in the short term buzzword is efficiency.

but add that to work from home, and we're seeing a lot of empty office space in and around Silicon Valley in particular. Vacancy rates above 20% in Menlo Park and Mountain View, according to Co-Star. Google and Meta have closed locations. All right. Well, you'd have to figure on that. Yeah. And finally, Novo Nordisk suing clinics. It says they're selling fake versions of its weight loss drugs, Ozempic and Wagovi.

The company says the clinics and spas are selling compounded versions of the drug. How dare they? Well, and, I mean, there's shortage. Everyone's trying to get their hands. hands on them. So they're going even for this kind of off market stuff to get me away. I'm going to be away for a few days. I'll miss you. So sad. I'll be back. Enjoy. Soon to be back. Thanks for watching Power One. Closing bell starts right now.