by robots, creators of limited edition collectibles from your favorite movies, tv shows, games and music icons, the alliance entertainment agent on the nasdaq. did you know taking xyzal. >> at night relieves allergies while you sleep. so you wake refreshed for a more productive day. get 24 hour continuous relief that does not fade. be wise. all take. >> xyzal at night. and welcome. >> to power lunch. everybody alongside kelly evans. >> i'm. >> brian sullivan. the big money story for you inflation. >> we're telling. >> you stuff. >> you already. >> know but it's. >> costing you more at the. >> grocery store. and today. >> it might. >> it might. >> hurt some of your investments. although the nasdaq is higher now elon musk you might. >> have heard about him. >> he's got a. >> new role in government. tesla shares they're down since trump took office. but we're going to speak. >> with somebody who says that

could be a warning sign for the rest of. >> the market. >> interesting. and as brian mentioned, stocks were lower across the board, but well off the worst levels of the day. the nasdaq, depending on when you look, is either up or down a couple of points. the president saying he spoke with vladimir putin in what he described as the start of a negotiation to end the war in ukraine. that news, and some of the speculation leading up to it, quickly turned us from much bigger losses in the markets this morning to the picture that you're seeing today. a little different story with treasury yields, though, which have been stubbornly high and hanging on to their post. cpi gains the ten year right around 463. >> yeah. >> all right. so we're going to get to all that. >> the markets your. >> money. >> everything in. >> just a minute. but we. >> begin with some breaking. news out of chevron. >> about an hour and a. >> half ago. >> chevron coming out. >> and saying it. >> will lay off 15. >> to. >> 20%. >> of. >> its global. work force. >> that's about. >> 6 to 8000. >> people. >> just. >> sort of. >> based on math. >> chevron got. >> about 40,000. >> employees globally, with

about half. >> of the. >> united states. now. >> chevron had previously announced. 2 to 3 billion in cost cuts. >> it sold. >> assets in alaska. canada and africa. now i'm going to give you some other color based on texts and conversations that i've been having today. chevron recently moved from california to houston. so some of these cuts could be. i'd say they are. but people i've talked to suggest they could be people who don't want to leave california to go to texas. chevron recently sold its california headquarters and moved across the street. also, your old shop, the wall street journal article this weekend about chevron's divorce. that's their term. i'm doing air quotes. if you're on the radio with california, it's not pretty. chevron also growing around the world, opening up a new venture in kazakhstan and a new venture in india, which is hiring for some jobs also. their deal to buy hess oil and gain those guyana assets are in legal limbo. and then there is this, which may be more of interest to you, the cnbc audience, because chevron has underperformed exxonmobil the last couple of

years, it has been suggested to me that some of these moves could be may not be the case, but could be to get ahead of any big hedge fund who may try to come in. remember kelly elliott management just reported big stakes in bp and phillips 66. i'm not reporting they're taking a stake in chevron, but i'm just saying these are big moves. and i should note, exxonmobil has also announced cost cuts going to whack $18 billion over the next. call it six plus years. >> do you think this is just about chevron. >> no. >> so because how do they exxon for instance. >> that's another thing. they've announced 18 billion in cuts through 2030. we're seeing the industry know how to drill, find oil, get oil out of the ground for a lot cheaper. but because chevron's going to move from california to texas, there are some other aspects that are going on here. >> yeah. well, it's interesting

to see the shares down 1.5%. we sometimes see a lift when you start to announce big reductions in expense structure. right. it makes it a little bit easier to achieve those earnings. unless you're concerned that there's a demand problem at the company, a larger issue as you're alluding to, that would kind of be more of a hangover. >> and i want to be very clear that we have seen layoff announcements across a lot of companies and a lot of industries, and i know it's very tough. i don't want to see anybody lose their job, because when you lose your job, particularly if you're of a specific age, the older you are, the harder it can be. i know it's tough for a lot of people. chevron big layoffs coming over the next call it year and a half through the end of 2026. >> these are major cuts. meanwhile, the fed has been saying it's made great progress on inflation. had jerome powell reiterated that in the house today. it comes, though, as the january cpi print was much worse than expected, up half a percent month on month, pushing the annual rate to 3%, dimming hopes for a rate cut this year. but our next guest says not so fast. a lot can happen between now and

even the fed's next meeting in march, and they'll use every minute to decide on that next move. could these layoffs even factor in? let's ask robert kaplan, vice chair of goldman sachs and former dallas fed president. it's good to see you again. and we have seen a steady drumbeat of layoff announcements. and that has some people kind of going too far down the hawkish, you know, road or the hawkish camp here. >> listen, inflation progress. >> has been stalled going sideways. that alone. >> would cause the fed. >> to want to pause. and then you've. got 4 or 5 big structural. >> changes going on in the economy. >> and the government level on fiscal spending, tariffs, labor force approach, regulation. the energy ecosystem is also going to be relooked at and then you've got ai, which is creating a lot of capital investment uncertainty need for more efficiency. so if you're at the

fed i it's unclear how all these structural. >> changes are going to unfold. >> and i think the wisest thing to do will be to take it one meeting at a time. but but they're they're extremely unlikely to act in march. and i think it will be some extended period. >> of. >> time until things clarify. if you're a ceo of a company, this is also depending on what industry you're in. this is a this is a challenging time because you're also trying to gauge how these different structural decisions are going to unfold. and it's not clear yet, right? >> not least because of the tariff news. how should they be gearing for that? i mean, it seems like a lot of talk and then not much action. but then at the same time, there's this steady drumbeat of tariffs that are actually going into effect. >> yeah, i mean, listen, most ceos, they start with by and large, in every industry, they're excited and optimistic about regulatory relief and maybe more of a cost benefit

analysis on regulation so that that's a sign of encouragement. and there's a hope that we will have a more organically driven, private sector led economy. on the other hand, it's unclear how the doge project will unfold and how much cuts are going to be able to do with the federal government level. it's unclear how far we're going to go with the deportations and whether we're going to have significant, meaningful workforce growth, or might we inadvertently shrink the workforce. and a lot of companies i talked to are very concerned about being able to find workers. then the tariff issue is about supply chains and logistics, and in particular, in particular relating to mexico and canada. if you're going to have a trade dispute with china, you want to have ideally the ability to reshore and use

mexico and canada to some extent for logistics, supply chain arrangements. but those aren't completely clear either. so these people are going a little more slowly, putting one foot in front of the other. but the impact of going more slowly and more deliberately is maybe you're not going to be as aggressive here for a while as you might have been. >> i just wonder, robert, it's brian what the fed can do about things like home insurance rates or auto insurance. you know, we saw owners equivalent rent go up. and i'm thinking, well, if you make it harder to buy a home, people have to live somewhere they're going to rent because they can't afford to buy. so rents might actually go up. i just wonder what the federal reserve can do when it comes to some of these insidious forms of inflation that are not just necessarily tied to a slowing economy. >> so we're we're in one of these rare periods, if you look versus the last 5 or 6 years, i would argue the fed is shifting for a while here off stage.

we're moving to a more whole of government approach to economic policy and fighting inflation. so some of the issues you talked about, the fed can't do a lot. also, i think and i think scott bessent may have said this, i think the administration is more focused on the ten year treasury than the fed funds rate and moves they can make. that might keep this term premium on the back end from inching up, which is affecting the cost of a lot of financial services that you just talked about there. it's affecting rents, it's affecting mortgage rates. and so i think for the time being, i think you'll see the fed kind of move a little bit quietly off to the side, be more muted. try not to be in the middle of the headlines and fiscal policy and other executive actions. the federal government are more center stage, and i think you're going to see again, a more whole

of government approach to dealing with these issues. and we're in the middle of that. but we're in the early stages of the middle of that. >> robert robert kaplan, goldman sachs, always appreciate your valuable insight. weird time, like you said, unique time. but that's what makes it interesting. robert. thank you. >> good to talk to you. >> all right. >> meantime, the monthly report on how the treasury department spends your tax dollars just came out extra relevant in light of doge and all the cost cutting efforts this year. megan costello with the details. >> megan kelly that's right. one big number for you guys today. the u.s. spent $84 billion on interest costs alone on the public debt last month. that's more than 20% increase from the same month a year ago. and it was one of the biggest drivers of higher government spending. so for the fiscal year to date so far, we now have data for the first four months, total government spending revenues and the size of the federal deficit. they're all at record highs. so in other words, we're taking in more money, but we're also spending it faster than ever. so the deficit just continues to

grow. now, besides the interest payments, a few other categories here of higher spending, spending at the department of homeland security, that was up about 43% year to date, mostly due to more disaster aid being spent by fema in the wake of wildfires and hurricanes. defense and military spending also up slightly about 9% so far this year compared to last, and three of the biggest line items in the government's budget medicare, medicaid and social security. those are all still edging higher. those programs simply have more recipients than ever, but also inflation and cost of living adjustments have led to larger payments for them guys. >> so how much of this. megan, i don't want to put you on the spot. i'm sorry. how much do we think has to do with higher interest rates, meaning just higher payments? in other words, just like a credit card, the federal government, if you spend more on interest, you're going to have debts and deficits go up. >> that's a huge part of it. you can see that threaded throughout this report, both in how much they're paying on interest, which continues to be one of the biggest line items every single month and for the year as well.

and you're also seeing it in those cost of living adjustments. everything gets a little bit more expensive. so it's all related. it's all throughout. and i will say guys too, that treasury officials were asked about doge and about whether anything that we see in this budget might be impacted by doge. they really didn't want to get into it, but it is something to watch. this is where we're going to start to see things documented. are we going to see payments start to slow a little bit later this year? we have to wait and see. >> it's interesting that we're up that much year on year. i mean, we're up. you know, the fiscal year to date deficit is $840 billion versus 531 billion a year ago. >> so to get into real money kelly. >> it was 128 billion for the month versus the expectations of less than 100. so megan, that you know, a dollar here, a dollar there. and eventually we were already running some of the biggest nonemergency deficits we've literally ever had. and these numbers tell you we're off to a very, very bad. >> start, megan. i mean, and here here's the issue. right. and please, you're the dc person. correct me if i'm wrong. just like i was saying, kelly, just like a credit card. when your monthly payments go up as a

family, you spend more on interest. the money doesn't go to you, it doesn't go. it just goes to whoever is charging you interest. we are paying more in interest, are we not as a federal government? because rates keep rising and i wonder if you can opine if you'd like megan. but i wonder if this is does the federal reserve, in their quiet moments talk about this? because if rates keep going up, i don't know how much more the taxpayer can withstand. >> this is all related. and i'm glad you brought up the fed because powell spoke about this, and i thought it was a pretty thoughtful answer in his hearing today. he was speaking about the debt. and obviously as rates go up, you're just caught in a hole with the size of the debt. you have to keep paying that that interest. last year we spent $1 trillion in interest alone. we're likely to pass that threshold and spend even more this year as well. and what powell was saying was that this isn't something to be solved overnight. he says it's still sustainable. the amount of debt we have now, but that the path is unsustainable. and two things

he said this requires is some time and some bipartisanship. so this sort of move fast and break things. he was implying that's not the right approach, that you have to sort of address things thoughtfully and slowly and use bipartisanship to address the programs that are really going to need some changes if we're going to change things, things like medicare, social security and defense, that's most of the budget right there. both parties say they don't want to touch them. and so his point was sort of that you have to address things head on and be thoughtful and careful and deliberate about it. if you're ever going to really make a difference. >> here, it's a it's a double barrel of bad news. it's the hot cpi report. spending is way high. and all of that is going to kind of keep keep one will drive the other in this kind of hate to call it a doom loop. we'll see if they can get us out of it. megan appreciate it very much today. megan costello. >> well, on that note, with inflation still red hot, could the fed actually have to raise? oh boy. yeah i know. raise

interest rates. poor old dan greenhouse is going to have to greenhouse is going to have to deal with this next. he's at ameriprise financial, we know our clients are so much more than clients. they're conquerors and champions, parents and caretakers, believers and breadwinners. the goals that matter most to you matter most to us. helping you achieve them is what we do best. with personal financial advice from an advisor you can trust, and goal-based investing in solutions. it's no wonder we have a 4.9 out 5 client satisfaction rating. ameriprise financial. advice worth talking about. we've been a firm in motion for over 75 years, always innovating. today, we are a leader in public and private markets, digital assets and

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>> all right, well today the stock market's confirming what you already knew. prices for many things not just not going down. that's a double negative but maybe going up the consumer price index showing higher prices for things like food, rent, insurance, energy. but hey, if you don't eat, we need a place to live or drive. things are great. but will this hot inflation number mean the fed has to raise interest rates to slow the economy down? here on set is our friend, the handsome dan greenhaus director, matt, very handsome managing director and chief strategist at solus alternative asset management. you're going to tell me that i've been chewing gummies or something. if i say the fed has

to raise rates. >> yeah, we. >> just talked about what higher rates are doing to the federal deficit. >> yeah. well the deficit is a whole other conversation. but with respect to raising rates, i still don't think that should be your base case expectation. i before coming here, i perused a couple of the sell side notes. i think only one mentioned the increased odds of a rate hike this year. i think baumol said it was not inconceivable. >> that. >> was who we. >> talked to. >> that was the bet. >> but not inconceivable. is the new possibility, right? like it's not inconceivable that this they also said the rate cutting cycle is over. >> there's a famous i think it's a chinese proverb. we'll just say it is every rainstorm begins with but a single raindrop. and if that note is the first raindrop, then then sure. >> or the guy from the princess bride. inconceivable. and the other people said, i don't think you're using that word correctly. >> i prefer the princess bride. what i would say is, i think for viewers out there, i again, i still don't think that a rate cut, a rate hike this year should be your base case scenario. clearly, inflation, the disinflation process. as you

discussed with tim seymour in the previous hour, the disinflation process has ceased. the last couple of months you've had above target inflation. 3/10 of a month is called three and a half to 4% annualized inflation. that's completely unacceptable from an investor standpoint, which is the world in which which i and solis lives. what we're really wrestling with is the odds of those increased hikes, the odds of an increased hike. and again, right now, i think your base case should be that they're certainly done for the first half, that that's a given at this point. probably not going to hike this year although anything can happen. but but that those probabilities of a hike are what you want to be paying attention to. the low probability now is what you want to be paying attention. >> i'm and i agree. so tactically, what are some ways to think about this. for instance do you say, well you go back to the max seven because they're the only ones who can handle high inflation, high interest rates, or are there, you know, multiple other ways to think about this? i mean, what does it mean? do investors have to be obsessed with how bad this is? or can they kind of take it in stride and say, well, at

least the economy is holding up? i'm just curious. >> well, don't don't take my word for it. look at the market in terms of taking it in stride. the ten year, as we know, is up 100 basis points or so off the low. the stock market is basically at a high. yeah. it's weighted to the mega-caps. so let's look at the equal weighted index. also pretty close to a high mid caps doing pretty well. so i think the market has taken this back up in rates. as you said in stride, it's fair to say that the mega-caps are largely divorced from the rate conversation because there's a secular investment theme going on here to which they benefit. and that's true for vertiv and a number of other companies. >> do you like verdict? >> you saw the 1:00 show. >> i watched tv. i want to make. >> sure. i mean, i know you guys aren't stock pickers, but like that, that's a kind of. >> well, we are, but. >> well is vertiv in the in the portfolio. >> vertiv is not the type of company that we look at but but but but that said, there's a there's a secular theme here that's likely to benefit those those big a and i names independent of rates. that said, i think it's also important to observe that a quarter of the index is basically down over the

last call it two years, even as the market's making a high. so there's clearly other things going on. >> it's is it wednesday. >> i think so. >> it's i. >> think so it's wednesday okay. let's let's no we want to be happy because you're here. you're handsome. everything's great. so let's focus on the upside to higher rates. that money is being paid out by the federal government to somebody. now let's strip out. >> that has been a big source of spending. >> let's let's strip out foreign countries. but and let's let's focus on us borrowers and savers. there is an upside to these higher rates, which is that mostly i would say, well, your parents, people older than us, but not quite like we're getting that interest if we own american debt. >> or you have high yield checking accounts that i mean, there's a lot of ways. >> there is a positive to the higher rate, is there not? >> brian and i are old enough to remember, not kelly, because. >> that's what i was. delicately threading the needle. >> but brian and i are old enough to remember in 2008, around that time frame when we

were talking about punishing savers by having interest rates so low, we are obviously living through the inverse of that situation. now. the idea, of course, is that interest rates are you have high interest rates to depress consumption and increased the likelihood of savings. but i would also add this is a larger conversation that we had that i sent to stephanie before. two years ago, a number of us were on air speculating that the fed is going to have to go to 6 or 6.5% to really get the type of economic slowdown, excuse me, economic slowdown to really bring inflation back to target within range. the fed said, no, we're not going to do that. they obviously subsequently did not do that. and i think. >> we're. >> dealing with the fallout of it now. >> that was a mistake. they should have. >> gone higher. >> yeah i think at the time there was not a majority view, but a strong minority view that the fed's probably going to have to go to five and a half to 6%. they obviously stopped at the at the bottom end of that. but i think the bigger, more recent issue is whether they should have cut 50 basis points at the end of last year. i think

increasingly and dare i say definitively at this point, that looks like. >> the market told us that right away. >> it's not inconceivable. that was a terrible move. >> maybe the fed has made several not perfect moves in the last couple of years. that very well may be one of them, but but again, i think that all said, the question is what do we as investors do with this information right now? and again, to the extent that the that the odds of a rate hike are not yet going up, which they don't appear to be, then i think it's part of the reason why the market is flat today. at least the nasdaq is dipping its toes in green. and i think you're in an environment here where the economy is so strong. earnings season, as we've all discussed all day long, is going pretty well. and i think that is still your backdrop for picking stocks in this environment. >> it's up 12% last quarter. that is a nice number that will help. >> and luckily all the baby boomers who've been struggling the last 30 or 40 years are going to get even richer. >> don't play into. >> the we're not baby, we're gen x. >> are you begrudging people getting rich, brian? no. >> i support every. but there is a frustration among younger people that the older people

have and we're in the middle. you and i are in the middle. >> you're you. >> can inside i moisturize. >> anyone can go have a high yield checking account. >> by the way. >> how old are you? >> you're 23. okay. young people hating old people is not. >> nobody's saying young people are hating old people. >> no, >> it's. >> nobody's saying that. >> i'm saying is. >> listen, if you're an investor and you're of a certain age, you wrote a 40 year, 30 year bull market. yep. okay. and then you put all your money in bonds because you're older and you don't want to risk it in stocks. and now you're getting five and six and seven and eight and 9% sure, relatively risk free. that's a pretty good economic bargain is it not? >> it is. >> but we're like the same age. >> no, i'm 23. but the problem for younger people is not what you're saying. the problem for younger people is they can't afford a home. they are really nervous. >> i agree. >> with all that. the country, they think climate change is going to kill us all any moment, let alone five years ago. those are the issues that are weighing on younger people, not my relative youth compared to you. >> i don't know how old you are.

we're going to figure this out though. >> we're going to. that's for another. internet tune in viewers. >> or tune out. >> or tune out. >> dan greenhouse. >> they're not tuning in. >> very young and handsome. >> thank you. thank you both. >> always a pleasure. could the sky high cost? we were just talking about housing. what about the high cost of autos? could high priced trucks and suvs lead drivers to trade down to sedans again? oh, yes, we'll discuss that and some other hot water cooler topics. and power lunch break next. >> crypto watch is sponsored by crypto.com. >> and. >> and. >> crypto.com i when emergency strikes, first responders rely on the latest technology. that's why t-mobile created t-priority built for the 5g era. only t-priority dynamically dedicates more capacity for first responders.

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biotech ever with a drug to treat ncp. ochiyo the first to initiate a phase two clinical trial for this disease. lead clinical site is tufts medical center, okiyo pharma's drug, if approved by the fda, would be the first ever for ncp. okiyo pharma symbol okiyo on the nasdaq earning season on cnbc takes you inside the numbers. and when the ceos have a big announcement, they come here first. >> a wild hour of earnings. >> earnings, season, special coverage all this month on cnbc. >> what's the old proverb. they say you can't make an. it's not a proverb. you can't make an omelet without breaking a few eggs. but kelly who can afford eggs. >> if you can even get them. >> yeah. the government reporting today that eggs cost 53% more than they did last year. they're now up 14% in a month. eggs. not the only thing that are rising in price housing. we just talked about it up in many areas. and that cpi data today reporting that car

insurance continues to soar up nearly 12% in just a year. i don't know what the fed can do about that. >> so this is the problem. some of this is still from the effects of inflation. a few years ago, right when we had the price spike in june of 2020, two of 9%, who would have known that? you fast forward a few years and it's high auto insurance prices. you're still paying. it's high health insurance prices. you're still paying because of labor issues. like so much of this goes back to that inflation. and now these recurring problems with all these different areas. it's eggs one day and then it's coffee the next, and then it's chocolate another day. and it that's why some people think, look, we're not saying we're back to the 1970s and inflation is going back to 10%. but it's getting really hard to get it back down to two. >> well eggs bird flu right. you've got coffee drought in brazil okay. cocoa. all the problems that they're having with drought. and in africa housing costs there's not. that's one thing that politicians might be able to solve. but the rest of it respectfully to the current president, the former president,

the next president, i don't know what they can do to fix those types of things. >> few other things. we saw transportation was up 1 or 2% last month. there's all these different categories where those price pressures, you know, the only one that ever goes down is apparel. so the only thing that ever seems to get less expensive is clothing. and when you're already buying it from shein for $5, i mean, that's just so not important versus these essentials that we're talking about. what are you going to do when shelter prices just won't come down meaningfully? you know, it's a problem for investors. it's a problem for americans. it's a political problem too. and it's not just car insurance. preach what? >> preach, preach. >> the cars themselves are getting more expensive. as we know, the average prices for trucks and suvs is already around 50 grand, and they still dominate the market nearly 80% of total auto sales. but at some point, do people trade down? could these high prices lead to a comeback for the good old fashioned sedan? philip bell thinks so. phil, we have a sedan. sedans are awesome. >> you have no go. phil, i.

>> don't know if i have not advocating for. >> the return of the sedan. look, i don't have a fancy coat rack like you guys do. >> and the power. >> lunch lounge, but i. >> do have a couple. >> of charts here. >> that show. >> you just how many americans have said, you know what? i don't want a sedan or i can't afford. i don't want. >> to buy a sedan. >> what i want is an suv or a crossover. this is from 12 years ago to today. the suv and the crossover is now dominating this market. and if you lump in pickup trucks, are we at peak truck demand in the united states? they're at over 80% of the market. even though when. >> you look at their prices. >> look at. >> how they've changed. compared to nine years ago. >> now they're. >> all up. >> anywhere between 40 and. >> 50%. >> or, you know, 35 and 47%, depending on the type of vehicle. but when you look at pickup trucks, the average now, the average transaction price, according to j.d. power, is over 54,000. the average suv and crossover is almost 44,000. and the sedan or the car, whatever

you want to call it, 38,000. roughly speaking, just under 38,000 is what you're looking at. bottom line is this, guys, we see more crossovers and utility vehicles sold because that's what we want as americans. that has been established time and again. they are americans are willing to pay up for sitting a little bit higher, having a little. >> more space. having more utility. >> and the market. >> was essentially abandoned. >> when it comes to cars by the big three, they did that in 2017 to 2020. they're not going back there. aside from the few niche models that they offer, they've largely said to the asian and european automakers have at it, we're really not going to play in that market in terms of mass sedans. but as these prices go higher, you have to wonder how many more people are willing to pay up for an suv or a. >> pickup truck. >> yeah, ours is the subaru. guess that's the only people who are. >> and by the way, it's got a weird noise in the right rear quarter panel. you need to have that checked out. >> did you. >> hear that?

>> yes. >> wait, how did you hear that? >> because you drove by me and it was making on the cars that i've raced cars for 30 years. >> phil, trying to figure out this noise. what is. >> that all help you after the show? >> it's like a nine year old car. this we hang on to it. you try to get a new car these days and you're paying as you just saw with those prices, 30 to 40. >> yeah. and i know i'm an old man yelling at the clouds. phil, i get it. but, you know, you showed that average transaction price and i'm looking at suvs that are i'm not looking at them. they exist $100,000 for a jeep grand wagoneer or an infiniti qx80. who's paying that? correct? correct. >> a lot of people. the market for vehicles over 80,000 has had strong growth over the last four years. there's plenty of demand out there for that. and look, the reason that the automakers are emphasizing suvs and crossovers isn't because you can charge, on average, $6,000 more than a sedan. your profit margins are better. that's why the big three said, what are we doing selling a ford taurus when we could be selling a bronco?

it's just it's if you are in the. c-suite in detroit, you're doing it because it's more profitable and the demand is there. >> my grandfather loved his suv. it was much easier for him to get in and out if he had a bright orange ford expedition or escape or something. so i do think you're right, philip. that's part of it. >> your grandfather drove an orange car. he did orange. >> it was like burnt orange. yep, he rocked it. >> sedan. lebeau. appreciate it as always. phil. thank you. phil lebeau advocating for the return of the sedan. i'm kidding. on deck. our shoppers in china dumping american brands. they may be. and it might have an impact on your money. we'll connect the dots next. >> in the world of investing, a beast lurks between the numbers. some watch from the safety of the sidelines, but others saddle up and ride that one ton rowdy

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>> welcome back to power lunch. i'm contessa brewer with your cnbc news update. 13 canadian premiers are in washington today to meet with u.s. senators and members of congress to discuss president trump's plan to impose a 25% tariff on all imported canadian goods. last week, the

president agreed to delay the implementation by one month to allow negotiations on a border deal to take place. a federal appeals court upheld r kelly's racketeering and sex trafficking convictions today, along with his 30 year prison sentence. the grammy winning singer was convicted in 2021 on multiple charges for using his fame to sexually abuse girls and young women. r kelly's legal team says it will push for supreme court to hear the appeal, and google says it will use machine learning to estimate the age of its users. the tech giant says it will apply protections and adjust settings for users it detects are younger than 18, to try to provide more age appropriate experiences. users who are incorrectly labeled as minors will be able to verify their age with a selfie, a credit card, or government id, so i guess that rules out on my part. you know, googling skippity toilet or sigma anything. of what? toilet? like you're not listening enough to your kid, brian. that's what

this means. if you don't know what skippity toilet is, you just don't know you're not in the know. don't worry, google is not going to flag you as being underage. >> skippity i have no idea. contessa is going to have to enlighten all of us. >> what's a skippity toilet? >> i mean, we could go there, but it would then take the rest of the show. >> okay. >> maybe tomorrow. contessa. >> well, he's got a car problem. your toilet. skippity. what the hell is. >> going on? we're learning a lot this hour. and while trade tensions heat up between the us and china, the chinese consumers are also under a lot of pressure. and u.s. companies trying to do business there, like elf beauty and estee lauder, are feeling the hit down double digits over the past month. it's not just beauty companies. many other companies with a big presence in china like nike, apple and tesla are seeing some weakness in their stocks lately. here to tell us what's really going on is shawn ryan. he's founder and managing director of china market research group, and he is based in shanghai. it's good to see you, shawn. and for years now, we've heard sometimes this backlash where the chinese are trying themselves or trying

because they're told to, to buy more domestic goods. is that is that what you see here? >> well. >> happy chinese new year, kelly. it's great to see you. >> i'm wearing red to. >> get rid of the evil spirits in a traditional chinese custom. and there have been a. >> lot of. >> tough times for china economically. you saw during the chinese new year period, which just ends today. >> new year's bonuses. >> were quite low. a lot of companies that we interviewed were only giving one month as an annual bonus versus two and a half months last year. so the economy and consumer confidence is continuing to decline. and what does that mean? the d word deflation. so while you and brian were talking about rising housing prices, rising insurance prices and eggs in the united states, here we're facing deflation. so chinese consumers are cutting back. they are buying chinese brands right now, not because they're being told to by the government, but because they're patriotic, just like the canadians are buying canadian to offset the trump tariffs. and also because chinese brands. are cheaper and

just better right now. so i use a xiaomi phone because it's about 30% cheaper than apple. i think it's almost as good. maybe it's as good as an apple. so investors need to be buying brands that are chinese to rise the patriotism trend, and also because they're just good value. think luckin coffee rather than starbucks. >> this is okay shawn. shawn. well, first off, this this is why we have you on. this is exactly what we want to talk about. and it's i know it's like three in the morning there. so thank you very much for either waking up or staying up. what you just said is critical. and we kind of touched on it yesterday. how and this is not about beauty or cosmetics. it's about cars. it's about general motors, apple, boeing, ford, whatever it may be, how much pressure even sort of subconscious pressure is there when we see sort of this trade war fight between china and the us. go on to say to your point, we're going to buy china made products. how much do you think chinese consumers feel that

indirect pressure? >> that's a great question, brian. it's huge pressure because we've been dealing with the trade war for seven full years. so the sword of damocles has been hanging over the chinese economy. that's why real estate prices have dropped about 30%. unemployment for chinese youth is around 16%. the number of marriages in 2024 dropped about 20%. nobody wants to have babies. everybody's scared of the us-china geopolitics. now with biden, it was constant tariffs, constant sanctions, constant export controls. there is actually a feeling of green shoots in the last two weeks, brian, because the chinese tend to prefer trump over biden and prefer him over harris, they feel that trump is transactional in nature and they might be able to make a deal. let's go to the last segment you and kelly just had. auto prices are 43,000 for suvs in the united states, 38,000 for sedans. you know what byd, a chinese ev maker, just

announced yesterday a new car at 9,000 usd that has autonomous driving as good as tesla. how amazing. if these chinese evs could come into the united states, that would solve the american inflation problem. >> well, yeah, but they have they have 100% tariffs, and it would decimate an industry that would basically declared as too much of that importance. sean quigley, we had larry lindsay on the other day, and we were talking a little bit about this. he gave us the following quote as it relates to apple and starbucks. he said, if you're a company in china, you're a hostage to kind of the geopolitical situation that you're talking about. what do you advise these american multinationals, the beauty, whoever it is, what do you advise them to do? >> you are hostage in many ways. and that's why i wrote the book the split, because they're still great opportunities for american brands. companies like coca, companies like lululemon are booming in china. we're expecting a 25 to 30% increase year over year in 2025. for hoka

shoes, you need to keep investing in marketing. you need to open up more sales outlets and you need to go premium. so the reason why some of these brands, like estee lauder, has gotten hit hard is because they didn't keep investing in sales points in the china market because they were held hostage. they're worried about the geopolitical tension. a lot of american companies are getting shot in the foot by the trump regime because they're not willing to expand in china because they're scared. if you keep investing here, >> you'll do well. >> all right, sean, appreciate it. we'll leave it there for now. sean ryan with china market research group. >> for meantime. yeah. borrowing costs on the rise again. the ten year yield back above 4.6. we're going to head out to rick santelli in chicago to figure santelli in chicago to figure out what the heck is g at&t has a new guarantee. because most things in business are not guaranteed. like a distraction-free work environment. -yeah,i'll circle back around. -get those steps in, kevin. your coworkers keeping things confidential.

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prior to all these benchmark revisions that we had today, that would have been the highest because we look for 0.5 would have been april of 23. but benchmark revisions push that 0.5 back to february of 23. now the next charts twos, tens and 30s on one chart each maturity jumped about ten basis points when 830 hit. and we saw that hotter than expected data. now, if we consider that the long dated the year over year definitely seems to be holding at 3% plus, that's an issue. and even though it may be a surprise to some and even some on the fed, it certainly seems as though traders have been pointing towards the stagnation in progress come down a lot, but we're not making progress recently and many suspect that will stick. which leads to the next argument that we might not get any more cuts in 2025. you know, trump, putin phone call occurred right around noon eastern. and as you look at that

chart, two thirds to the right side, you see that drop where it traded quickly below yesterday in early session, that was all that phone call. and finally the week today the euro versus the dollar. the euro is the beneficiary of that dollar weakness. and remember stay tuned because power lunch will return after a short break. >> the bond report is brought to >> the bond report is brought to you by pimco, a 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. it's the go-tos that keep us going. the places we cheer. trust. hang out. and check in. they all choose the advanced network solutions and round the clock partnership from comcast business. powering more businesses than anyone. powering possibilities.

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to that type of spending, then maybe the hyperscalers will start dialing back their hardware investme to do you fire

consignors get $100 extra. terms apply. >> welcome back. california insurers and maybe their customers going to be hit with a big bill relating to the la area wildfires. contessa brewer on the story from the beginning. what's new? >> okay, so california's fair plan has now been given the go ahead to charge private insurers $1 billion to help cover the shortfalls in the premiums that it collected. the state insurer of last resort works on a cash in, cash out basis, and it's just exhausted its reserves. the number of properties the fair plan covers in california has just soared, as private insurers work to lower their exposure in the state, in large part because you have the state insurance

department that would not permit the carriers to charge enough to cover the risk. and so now you have state farm farmers, allstate travelers, chubb, and lots of other companies that were working actively to lower their risk, to lower their exposure in california. and they're going to end up paying for the losses anyway when they weren't even collecting the premiums. but that is permitted by state law. and then they can turn around and pass on half of that to consumers. insurers have been declaring their early estimates on wildfire losses, but they're using an asterisk excluding what they're going to have to pay for in terms of the fair plan. that assessment gets divvied up according to market share and with reliable estimates of insured losses coming in anywhere from 40 billion to $50 billion, which, by the way, would make it like the second worst natural catastrophe in history in the first quarter. i think this really could be just the beginning of the assessments on insurers from the fair plan. but think about it, the smaller insurers that said, we can't

face the risk that we're going to have 300 millions of dollars to pay for the fair plan, so we're going to be out. if you were operating in california in the last two years, you're on the hook for paying this. even if you left or even if you drew down your. yeah, it goes to what if you. >> weren't there when this happened? you could still. >> get absolutely interesting. >> 2019 rule change. we and we did a little mini documentary. >> and what's what's more is that like ceo evan greenberg from chubb got on the earnings call. and he said, look, when you have an insurer of last resort that keeps these prices on insurance artificially low, it's not the market price. it doesn't accurately reflect the risk. what it does is it encourages state and local governments not to do mitigation the way they should. they don't enforce the building standards or the defensible space, and it encourages risky behavior from property owners who are getting into riskier areas than they can afford. >> i think that's. >> a long way to go in this

story. >> there's so much this is what we'll stay on it. >> all right. well, we're going to wrap it up with this. let's talk tesla stock may be higher today, but it's had a rough few months now about 30% down from its recent high. and maybe you don't care about tesla or the stock but your next guest says tesla. the stock could have an impact on the broader markets. find out why matt maley is saying that chief market strategist at miller tabak, founder of the maley report. i read the report this morning and i've said tesla is one of, if not the most important stocks in the world because of this. how does tesla potentially impact the macro market? >> well, brian, i mean, the. >> whole thing is that, you know. >> we've had. >> this situation where we had this, you know, the a musk mystique or a musk premium. >> that we've had for tesla. >> for a. >> long time. >> but of course it went to astronomical levels, you know, right. >> after the election. >> because of his. >> relationship with with president trump. >> and the. >> stock doubled. the problem is it got ridiculously. >> over overbought. and really the fundamentals aren't getting a whole lot better. i mean, robotaxi i mean that was.

delayed coming out. and that was when he was, you know, really. >> focusing on on tesla now with them not focusing on. >> tesla, are these. >> lower priced vehicles going to come. >> out. as quickly? >> optimus robot. >> is that going to do as well. >> and so the stock is starting. >> to come down at a fairly significant way. >> and i. >> worry that the same. >> thing is going to happen. >> with with. >> the ai situation. >> i mean, we've been. >> waiting for. >> two years. >> for this. >> earnings to broaden. >> out and. >> from from the ai. >> phenomenon and. >> now with, with deep tech and others. we're having, you know, like. you guys had the dean of valuation on recently from nyu saying that, you know, ai is the. profitability of. >> the ai market is not going to. >> be as strong as it was. but here's why. so the market's going to have to come down in response to that. but i want to get out of that and talk just about the stock itself. i'll tell you why, matt, because and i've mentioned this on the air. tesla you can go out and buy the stock. sell the stock i get it. but there's a lot of stuff that goes on that are retail. viewers do not understand delta one

strategies. synthetic etfs, synthetic options. from what i understand, tesla is so much a part of the guts of the stock market because there's so many shares out. there's billions and billions of tesla stock shares outstanding. and it's such a part of all these things that we don't talk about because they don't impact our retail viewer. that also may be why tesla matters more than just the price. no or yes. oh, absolutely. because we get these zero, you know, zero data expiration for these options. and they call it positive gamma. >> well the. >> gamma you know whenever. >> the market. >> gets knocked down they talk about algos and hedge funds. >> and short sellers. >> and stuff. >> well you know something. they help. >> the market. >> go up just. >> like they help tesla go up. and so when the. >> stock. went down, it. >> got the. >> whole thing got exacerbated. >> on the way down. and the. >> exact same. >> thing can. >> happen in the in the overall stock market. >> what's better for tesla investors, matt, for musk to stay kind of in his current position at the white house or.

no. >> no, i mean, for. >> tesla investors, no. >> i mean, is that going to be better for. >> the country? >> that can certainly be argued. and it's. it's a full time job. we know that he's been able to do 4 or 5 jobs at a time. when we start doing what he's doing right now with doge, that takes an incredibly huge amount of time. he's living there, for crying out loud. i think that makes it tough for a tesla shareholders on a, on a, at least on an intermediate term basis. >> now, as you mentioned, the shares are down since trump took office. they're still up from his election. but i think plenty would say, look, it can't hurt to be that close to the seat of power. the earlier concern was that he was going to have too much influence over competitors. >> yeah. and but. >> the fundamental the backdrop is still what. >> it is. >> ev demand is down. >> and it's not just down in china. >> it's down all over the world. and their margins are getting hit. they're cutting prices. i mean, i hate to say it, but in the last 3 or 4 months, as even as the stock was doubling in price, the. fundamental backdrop for. >> tesla was kept getting worse. >> and so this kind of euphoria

was a little overdone. i don't know who could have seen the ev struggles happening. and i'm being sarcastic. matt maley, mark miller tabak, thank you very much. >> thank you. >> and folks, thank you for watching or listening to power lunch. >> and thank you for fixing my car. >> it's an idea. >> closing bell starts right now. >> cal, thanks. welcome to closing bell. scott wapner live from post nine here at the new york stock exchange. this make or break hour begins with this resilient market, which is mostly looking past today's hotter than expected inflation report, even as some suggest, the risks for the fed and for this rally are only increasing. we will discuss with our experts in just a bit, including the former dallas fed president richard fisher. in the meantime. take a look at the scorecard here with 60 to go in regulation. we're mostly rebounding from that early morning cpi sell off. in fact the nasdaq is now positive and the others are well off the lows too. it's tech that is helping as you see. meta wow on track for its 18th straight day of