good afternoon, everyone, welcome to power lunch. we begin this hour with a check on the market. stocks have turned lower. the nasdaq is now down 1.5%. oil is down too. not seeing the spike many have expected. the implications of ron's attack on israel.

>> we are seeing ome ains in bank stocks following the results there up 3%. charles schwab is up 2%. which markets are more focused on earnings here? are they focused on the tension in the middle east? joining us now with more from the stock exchange. >> i think the markets are trying to take it all in. it's obvious that the back-and- forth headlines in he middle east are making these headlines get attention because they are giving a decent indication of where e are at the end of the first quarter. really, the factor today is the treasury yield in response to the detailed savings. yield is higher. repricing how much the fed

might be able to ease rates later this year, that is a question. in fact if the data is going to line up for the fed to do that. the issues that the market was trying to wrestle with are now reasserting themselves and this is where we are. a 3.5% pullback. we clearly have a broken momentum situation on the uptrend line. the law was broken, that does not mean that the market is in worse shape. the momentum players are out. we have to see rates settle around at some point before we get more fundamental buyers in there. >> we have a little more competition from fixed income investments. if you can get six or 7% in a

good quality corporate bond, why would you not put your money there? >> that is absolutely happening. the place i would stop in terms of making that argument, somehow it is a zero-sum game and then stocks cannot perform in that environment. yields were at 6% in the mid- 90s. up 25% in five months. a lot of people will look at that and say that 6% does not look that great. it is definitely more of a market where more people have an acid class. i do not see crazy flows coming into equities. i am looking in to see the overextended optimism we saw into the first order really burn off and develop fear. >> mike from the floor of the

new york stock exchange. mike, thank you. these are the only gains we saw in the earlier session. what is the best way to position your portfolio? these dips seem viable. let's look at what is happening right now. we are seeing the s&p off by a percent. as the chief economist, where do you see the threat from the geopolitical situation and the escalating tension between israel and iran? how much of this do you see, as mike was pointing out, as yields and earnings? and other factors? >> when we were discussing it in our investment committee, we were talking about how today's moves are related to the move up in yields. if anything, maybe we are starting off the day with a

little bit of that relief rally that things were not escalating and spreading. the right now the story is about the strong retail sales report and what that means for fed policy and the move up in yields. it is interesting how stocks have once again become strongly sensitive to the movement in yields and why they can move their own way. we are back to the future, back to the old days, where higher yields are because of discounting the future earnings of growth companies. >> does that argument extended to non-growth tech companies as well? >> we really do think so. in an environment where growth seems pretty good, there is not very much scarcity of growth. instead, you are seeing moves with financials today.

they are doing quite well because of those earnings. those are not your growth companies. related through financials. it is a favorable environment for these dips that mike was talking about before. maybe it goes down a total of 5%. that becomes a very viable opportunity. for small-cap, mid-cap on the value side of the spectrum. >> you have a lot of duct tape in your research. you are saying that consumers spending on services is what is holding the economy together. where does the duct tape start to fray? >> using that analogy about why the economy has been doing so well. there are two sources for that. if you think back to last year with the silicon valley bank

failure, stepping in with the fdic to keep things together. for the broader economy, it is consumer led on the services side of thing. that is what is keeping things together. we are likely to see the service sector activity slow a little bit. maybe we got an early indicator of that with retail sales data. with spending at bars and restaurants only up 4% month on month. that was a tame increase. if spending slows, business spending can pick up the baton. we did have an earnings recession in 2022 and 2023. maybe business spending needs to pick up the baton now. >> insurance costs are pushing inflation higher.

that is true for businesses as well. i just talked to a global ceo of a big insurer that said that the issue in the middle east could actually fuel more inflation. shipping costs and supply chains will be impacted even more. how much are you eyeballing inflation and where that goes in terms of investments and what to anticipate? >> that is a very good observation. when we look at history, you can see there is the initial increase in inflation. then there is a rebound. how much of a rebound do we get? we are going through that rebound phase of inflation. very unlikely to revisit the previous peak. with three months in a row of hot numbers, we are writing that wave higher with inflation

likely to go down as the year goes on. we could be at these levels for a few months. that pushes the fed to not consider cutting rates until september, maybe even december at this point. that enters into the calculus that we are going through that rebound. it is three steps forward, two steps back and we will get to the point where it is two steps forward, one steps back. >> you mentioned monetary duct tape. you would think that would mean the feds are cutting rates. it is not. >> right now, it is not. when you think about the extraordinary actions during the failure of the banks. that was a way to deal with that particular issue.

if we are going to encounter another issue related to have things blow up between iran and israel, then the federal reserve will decide that they may need to act hrough quantitative easing and an accelerated timeframe for those rate cuts. they will look through the increase in oil prices coming out of that type of situation. >> you are not saying that they are using duct tape right now? >> right now, they are not. they have in the past. this is something that in the past, they have busted it out. >> brian jacobson, thank you, my friend. the conflict is pulling back oil. well above $80 per barrel.

if the situation worsens, could we see oil rise to more than $100 per barrel? what do you say? what is the risk that an escalation would cause oil prices to rise a great deal. if things simmer down a little bit, oil will lose what has been brought into it. >> you can never say number two. if you lose oil in the middle east you will be going up. the market will be looking for israel's response which we are expecting overnight today and tomorrow. a lot of what is going on is

precisely why we have seen prices pullback. overall, the situation is de- escalated, we think that prices are going to hold. they might go back a little bit. physical fundamentals are why we are here today. it is very tight. before prices climb to where we are today. yes, there is geopolitical risk but not a lot. if things get out of control, we can rally quite a bit. >> the specific risk to oil, number one would be if israel decided to directly attack the oil infrastructure of iran. that would be number one. number two would be a blockage of the straits, that narrow area. through which a lot of oil transits. are those the way that oil

would be at risk to a major disruption? >> absolutely. you have hit the nail on the head. if israel were to target any oil infrastructure, absolutely. most of that oil goes to china. of course, if for whatever reason, oil was do not go to china, they would have to find an alternative. that would be an iranian reaction to the escalation. remember, iran has its own oil the other straits. that is something they need to do. we do need to look at the options. of course, with politics it is always about miscalculations. if things were to get out of

hand, they might not care about the straits. >> absent a clear signal from israel that they will not retaliate against iran, that seems to be the big question. there seems to be some indication that there should be a response. is the market getting ahead of itself in watching the price of oil come down and thinking of this as said and done and we can move on? >> that is a very fair question, to your point, yes, so far, israel has taken their time. they have come out to say that there will be a response. we absolutely believe that there will be a response. the responses could be different and the scale will be important to monitor as well. regional leaders are trying to call for the de-escalation. nobody really wants a regional conflict to get out of hand. that is where the market is

thinking rightly or wrongly that this could get prices to stabilize. i don't think there are a lot of downsides. the basis is very strong. yes, that is a very fair question. the market has been blindsided. >> you have referred to it not being your base case. what is the base case quickly? >> we have called for the base case. based on fundamentals. if there was an escalation we would go higher. >> that was quick, that was good. we appreciate it. samsung receiving $3 million. we will speak with the secretary of commerce coming up.

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the u.s. what does it mean for the u.s. and the companies depending on semi conductors? >> this is the third huge announcement in a month. our goal is to go from making 0% of semi conductors in this country to 20% by the end of the decade. with this announcement, i feel confident we will get there and we will create hundreds of thousands of jobs for americans. what we are doing here is millions of square feet of new development. it is unbelievable. it will be twice as big as the signature facility in korea. it will be manufacturing and also packaging and also research and development and they will have a workforce training center right on the

campus. i think they will also have a childcare center right on campus. it is like a little city of manufacturing and around it will come suppliers. the whole ecosystem. research and development, packaging, new manufacturing, job training and all of the upstream suppliers which will make america stronger and more secure. >> was such a massive facility, are you concerned about hiring challenges? this will create 21,000 jobs. >> it is a challenge. under president biden's leadership we have low unemployment rates. samsung is working very closely with my office. part of the grant we gave them, $40 million to build a job training facility and semi conductor job training curriculum, we need to train

folks from local high schools. after this, i am going to a local community college. it is a challenge. it is an exciting challenge, we will meet the challenge. >> in japan we saw plant go from planning to production in two years. what is your response to criticism the speed of which the chips are moving is hurting us globally? >> we are going as fast as we can. it is an unbelievable pace. they have built 4 million square feet from nothing to what you see, in 18 months. it is extraordinary. other companies are doing the same. we are committed to safety of construction workers and of the folks working. and also speed. once you once, the second time gets easier. they are learning that here.

we will hit our goal by 20% leading edge capacity made in america by 2030. >> some folks have said they have concerns over red tape, childcare, that is slowing things down. >> that is ridiculous. if you talk to the senior executives of samsung and ask them what they are concerned about, they will say, workforce, exactly what you said. they need workers. that means you need to do investments in job training, worker training and you need to make sure that people have childcare so that women can work. i had the occasion of meeting with a young woman who is the engineering construction manager and will be on the site at 6:00 iny. childcare is something that

matters. it is not a social program, it is smart investments to make sure this is successful. >> you have $16 million left, where will the money go next? >> more investments like this. this was huge and singular, we are on a roll. we have done three of these in the past month. i expect all of the money will be allocated by the end of this year. >> can we expect money for upstream suppliers? >> yes. i have my team on a plan to invest all of the money including for supply chain and research and development by the end of this calendar year. the process is first, the very biggest, like this. next, you will start to see investments in memory chips and suppliers, waivers, chemicals, and one thing that i think is

very exciting, is when a place like samsung makes an investment of this magnitude, suppliers are automatically coming even without our incentive. last year when they made their announcement, 12 suppliers announced they were moving to the united states with no taxpayer incentive. i would say, it is working. >> it is it enough money? you talk with lawmakers about their support in washington for it. >> i have my hands full now. i think the team is doing a fantastic job. this is long term. it is very likely that further investments will be necessary. maybe it is a bit premature to start doing that now. i have spoke to lawmakers. >> thank you so much.

>> thank you very much. be sure to join the summit on may 27th and you will hear from investors on the current market on if it can last and what it needs from advisers and investors. scan the qr code to register. we will be rhtig back. ♪ ♪ ♪ ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ ♪ [thunder rumbles] ♪ ♪ trading at schwab is now powered by ameritrade, giving traders even more ways to sharpen their skills

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welcome back to power lunch. this is the maximum sentence faced in the manslaughter case. the jury found that she loaded a live round into the revolver which later went off. the ship that hit the

bridge in baltimore had electrical issues from a source from the associated press. the issues were known before the ship left port that morning. the fbi has opened a criminal investigation into the disaster. the state department is warning that the u.s. will renew a temporary license that eases sanctions on the oil and gas sector. the renewal will not come until the venezuelan president makes commitments to free up elections in his country this year. geopolitical tensions on the rise. wall street is weighing in on what might happen next. we will ask this four-star general for his take and how colinfct can be avoided.

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welcome back to to power lunch. world leaders calling on israel not to retaliate after a drone attack over the weekend. president biden telling the israeli prime minister that he will not support a counteroffensive. what could be next in the course of this conflict? joining us is a retired four- star army general. general mccaffrey, welcome, good to have you back. one can take solace in the fact that all of the missiles were taking care of by israel and their partners. the fact remains that more than 300 missiles were fired from one country into israel. that is a serious change and

escalation. >> there has been a lot of discussion that it has been slow-moving. they did not intend to cause casualties. that is nonsense. this is a complete change in the way that a shadow war is conducted. there are 150 ballistic missiles. a 12 minute flight time to hit targets in israel. they had to be out in the desert and they were after military targets. the good news, you are right. they will pull together a regional defensive response. this played a huge role as did the saudis.

>> general, does it speak more to the effectiveness of the defense or the incompetence and flaws in the offensive mission. >> i think the patriot missile system effectively gets at. israel is a small country. there is no question in my mind. this will deal a devastating blow. the israelis have demonstrated the region. they are aware that iran is terribly naked to an israeli attack. right now, israel has to sort

out how to maintain deterrence. there will be a major attack on the nation. whether it will stop or progress or not. >> some of the really serious criticism that has been aimed at israel from the white house right now about the war in gaza. how do you see the next 72 hours playing out? >> i hope that the israelis will find a way to let some time pass and respond in a less publicly discernibly manner. it does not look like they will do that. there is a strong feeling that they do not want a major war. hopefully the threat to the north is the same way.

gaza is still a festering sore. the israelis have lost the information war. they have caused catastrophic damage. most of them are out of gaza now. they had 60,000 idf troops in there. they are down to 5000 now. they are actually backing out. who is next, when the fighting stops, where is the peacekeeping force that will be in gaza? >> you mentioned at the beginning, that there has been a change in this war by proxy. just curious, can iran and israel go back to the covert operations that were aimed at each other in ways that can be excused? israel has not claimed responsibility for what happened on april 1st in syria with the general there.

does israel need the united states to keep backing up whatever he does next? how crucial is israel's next move? >> not much. israel cannot lose the support of the united states. there has been a rift between the prime minister and president biden. they cannot ignore the united states. they cannot survive without our backing. that strike that killed 12 officers including 12 generals, in retrospect, they should understand, it was a big mistake. you can kill a general and replace him in 30 minutes. i was a huge provocative move that would not change the shadow of the war.

everyone was astonished at the scale of the response. i would've expected him to go after one israeli embassy. >> the other thing is that they anticipated many of the missiles and drones would be shot down. did you think that there was any calculation that it would be 1% successful? >> i think all of us have been assured that the defenses from israel are the world's best. having said that, it was a triumphant reaction. they cannot live with that possibility. i have dealt with a giant warhead and i did not get

killed and i was oncerned enough to know that they were trying to kill me. that is probably best done by a diplomacy. >> until we all know what that response ill be, that leaves the threat of something catastrophic still out there. it is good to see you. thank you for your time. up next, the not so magnificent seven. each in the red for 2024. we will discuss each of the struggles, when we return.

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welcome back. we started the year with the magnificent seven leaving the

market. a look at why the stock declines and those tech darlings have seen some common ground. >> yes, there are undamental parallels as well. the glaring one, it is china. hurting tesla and apple. for tesla, today's layoffs are in response to that. it suggests that wall street is seeing layoffs as a response to shrinking business instead of a positive push for efficiency. we have new numbers this morning showing that apple's global market share is giving up ground to chinese players. >> it seems like we have lost

her audio. there are you seeing the other technologies are taken ground from apple. we will see if we can get her back. >> it happens sometimes. she is back. she is back. cut the music. let's go back to d. as you were saying. >> i told you the first parallel. let me tell you another. we are talking about apple and tesla. these parallels we have seen, in recent weeks we have gotten news of both of them pushing back major projects. for apple, it is that uv car that they are working on. mosque has denied that it is not going to do the mass-market

card. here is the important thing. both companies have set high expectations going forward. apples chance will come first, june 10th. ai will take center tage there. the tesla event in august when it will talk about the robo taxi. the point is that we do not have the magnificent seven, we have the fantastic five because google is back and tesla and apple, they are out. >> we are eeping name makers in business. >> it is all about the brand. >> this one ties to the marvel universe. i had to think about that. >> how big of a problem is it for apple to be losing ground? what is the catalyst there about turning that tide?

>> turning the tide, a lot of investors and analysts have said that they do not know what apples ai strategy is. in silicon valley there are few people that doubt that apple is working on something. they are working on a strategy that might include edge computing. this is the catalyst that everyone is looking at. the event that apple has teased will be about ai in some way, is not going to be enough. >> thank you so much. speaking of the maifengnict seven, we love one of those stocks. we will reveal the name when power lunch comes back. business. it's not a nine-to-five proposition. it's all day and into the night. it's all the things that keep this world turning.

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. time knew for today's three stock lunch. we asked our trader to give us three names to buy or steer clear of and here with the tratsdss is quint, founder and president of jewel financial. is alphabet up nearly 500% in the ten years, this is one you have on your buy list. tell us why.

>> yeah thanks for having me. it's great to be back. the long awaited pullback might be upon us finally and there's stocks people need to be putting on their list. google should be at the top. this is a stock trading 20 times forward the earnings expected to grow 20%. we don't think the ai story is baked in here. the news to bring gemini on the iphone is huge and alleviates the concern regarding the search function in iphone. the stock is breaking out to all-time highs catching up with the magnificent seven and blue sky territory from here. this pullback in the market in this stock this is a buy in our opinion. >> okay. next up disney, the stock is up nearly 30% this year after bottoming out at 60% off all-time high last year. you say this one you also like and would buy.

why? >> hi, contessa. disney is our turnaround play, despite the run up off the lows, it's still got a long way to go towards highs but this is a value play trading 20 times forward and this year those earnings are set to grow 25%. they have $7 billion in cash, decent balance sheet, 0.4 debt to equity. we like the investment in epic games and fortnite and think the parks, the rebound in the parks, have staying power and the win here, the proxy win, against the activist peltz shows a lot of focus on the side of the board and shareholders and think they've righted the ship. this is a name we like. great american company getting a pullback here in this recent tape is another buy in our wheelhouse. >> let's move on to salesforce which you say stay away from. stock on the decline after reports the company is in talks

to acquire informatka. >> i'm going to say i've been notoriously wrong on salesforce, so, you know, this is a tough one because i continue to say it's a sell and the stocking it continues to go higher. i have not been a fan. the stock is trading 25 times forward earnings. those earnings are set to grow at 19% this year and decline to 14% next year. it's a rich stock. i've still been stung since the slack acquisition a couple years ago, the real rich premium they paid for this, and the infor matca acquisition doesn't excite me. the acquisition strategy on the part of the company is yet to be determined if that's going to be successful or not. a huge run off the lows and if you've been in this name i would take this opportunity, despite today's weakness, still be a seller of this name. >> look at that down 7% on the day.

quint, thank you for your perspective. hear us on our podcast, download and listen to "power lunch" on your favorite streaming service. we'll be right back.

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welcome back to "power lunch," everybody. the wnba draft is tonight, and you know who is guaranteed to be the number one pick, all but, caitlin clark, the draft pick goes to the indiana fever next door to iowa. clark bringing a lot of interest to the wnba. i don't think it is next door. i think it's illinois in between. coming up thursday we'll talk to wnba commissioner cathie engleberg from our cnbc change makers event in new york city and she will appear with drew barrymore and others to learn more, get out your phones, scan the qr code or visit cnbcevents.com/change makers to see ta lineup and more.

>> and gm resorts suing the federal trade commission over the massive cyber intrusion that disrupted business at the casino last fall across the company. mgm argues the ftc is violating its right to due process and specifically that chair lina khan should recuse herself. she reportedly was caught up in the meltdown when trying to check in, in las vegas, and mgm argues she's a potential plaintiff and a potential witness and mgm says it's defending itself in 15 consumer class action suits it previously estimated the total economic dj from that intrusion about $100 million, though, the company expects much of that to be covered by insurance. the ftc has gotten back to cnbc and says it doesn't have a comment on it and i have reached out to mgm for comment as well. this is a big deal. >> what a strange tangled web we weave. happen to be there checking in. >> did not take kindly according to published reports about being

asked to write down her credit card number in the moment because the systems were down and they were trying to head off this real threat. >> amazing. good to be with you. >> thank you. nice to be here. >> good to have you with us. >> the dow down 226 points right now. thanks for watching "power lunch." >> "closing bell" begins right now. welcome to "closing bell." i'm scott wapner live from post nine at the new york stock exchange. the make or break hour begins with the tension between rates and stocks and what happens to the rally if yields keep rising even for the alleged right reasons the strong economy. we'll ask our experts over this final stretch including pimco's erin brown who reveals her playbook in a few moments. take a look at the scorecard with 60 minutes to go in regulation. a battle much of this day as elevated yields capped the market once again a stronger than expected retail sales report. the dollar catchin