Digesting Mag 7 Earnings, Housing Market Check, Jimmie Johnson Interview 7/31/26

(upbeat music) - Markets and your money higher to end the week is some big name tech stocks, make some big gains, welcome to Power Lunch, we have never looked better, Kelly. Welcome everybody, alongside Kelly, I am Brian Four of the Mag Seven reporting this week, Amazon Microsoft investors, they've been rewarded in a big way. Apple and Meta investors, they may have taken a hit. We've got your next move and the stocks that should be on your list. Plus, Power Broker, the 30 year mortgage rate, closing in on its highest level in a year, driving up monthly payments and putting fresh pressure on an already strained housing market. Our buyers about to retreat or can limit an inventory, keep prices elevated. Noble Black of the Corcoran group is coming up. - Plus a big interview that we cannot wait for, seven time NASCAR, champ Jimmy Johnson is here. He's got some big breaking news in the bold face names investing in his race teams. We'll talk with JJ about that and more, he's got to wait. It's coming up. We are going to start with the markets today. The major averages are higher. I mean, and on track to finish the week in the green with all that's been going on, the bigger story is in chips where after Wednesday's sell off the group roared back Thursday as strong hyperscaler earnings sparked a relief rally. And the question now is whether AI Momentum is back or was just a one day bounce. Eric Johnson is Cantor's chief equity and macro strategy. So Eric, you can answer this question for us. What do you make of it? - So we think that Momentum has bottomed and what we saw two days ago was the cleansing. So if you looked at what's happened over the last six months, there has been a massive crowding in that Momentum factor from both institutions and from retail investors. And it's happened globally. We know it's going on with retail in South Korea. We've seen it from both retail and institutions here in the US. And the reasons why they were getting long was for very good fundamental reasons. So now you have a situation where there's been this big de-risking, there's been stopouts, margin calls, brokerage shutdowns, et cetera, that have gone on globally. And it's happened at a time where the fundamental outlook for semis, for the picks and shovels in general is actually continuing to get better. We're actually getting data points at the simultaneously, whether it's the ARR at the frontier models getting better or the ROI we're seeing from the hyperscalers, but the backdrop's getting better and the positioning backdrop has gotten much better after what happened this week. - You know you look at it, top to bottom, Nasdaq 100 Eric. Early June, we hit just over 30,000. A couple days ago we hit 27 and change. Basically it was a 10 or 11% drop, top to bottom in about one to one and a half months. So it was actually a 10% drawdown. That's not insignificant, but is that kind of what we now can expect because it feels like every time this market the last few years has gone down, it's been quick, it's been about five to 10% and then it finds that bottom. - Yeah, so I think that is it, certainly for now. And I think it's because you haven't seen that term negative in the fundamentals. In fact, it is accelerating. So if you look at the hyperscalers, a particular Microsoft and Amazon that reported in the last couple nights, talking about the ROI on the catbex and really explaining it to investors, showing the margin improvement, showing the revenues coming in, the growth being higher than what people expected and really laying out what is the roadmap for when revenue growth is going to exceed catbex growth and the free cash flow is gonna show up. And I think investors in the last 48 hours are really starting to embrace that idea. And when they're embracing that idea, it's being okay with all the catbex that's to come, which has really been what has led this market, led to the economy, led to semi-conductors and so forth. And so I think that has given us a runway for a longer period of time that, and I think as a result, I think we have bottomed in tech. - I find it all the more encouraging this happens when you are seeing a rise in long-term bond yields 'cause you can easily tie the narrative to oils up, bond yields are up, you know, tech stocks are down. And that of course, that's not always a perfect correlation, but especially today, it's not slowing anybody down. The major averages are up half a percent despite all of this. Is there anything significant from what's happened with Worsh this week or, you know, with inflation that you're worried about? - So this move in real yields is definitely concerning. So if what's interesting is that, if you look at inflation break-evans, they're actually close to the lows of the year. So the market is not necessarily concerned about the inflation outlook, but you've seen real yields move sharply higher and that's moving nominal yields. So why are real yields doing what they're doing? It's not always exactly clear. Our view is that, number one, it is the supply of tech debt paper. So not only what has come already, but what the market is expecting, just an increase of that supply. And then I think there's also just this unbedded uncertainty that the market is pricing into rates and then there's some other factors around the BOJ. But yes, that is concerning. But what I would say is if you look at the chart of real yields over the last three years, it's been in a range, we are now at the top end of the range. So it's really gonna be critical around what real yields do from here, but they're likely gonna find some sort of a short-term ceiling because it has been a pretty, pretty sharp move with again, inflation expectations being kept in check. - Let's end it with this. Finish the sentence for us on this Friday as the strategist Eric Johnson. The best place to invest right now is what? - Is in tech and specifically, semis and hyperscalers. I think that correlation turns positive and that they can both work in unison. - There you go. Clear, simple, you can debate it all weekend long. Eric really appreciate it, Eric Johnson. - Thank you. - All right, meantime, Apple down 9%, so on pace for its worst day since the pandemic, company warning component shortages will hit sales. McKenzie-Sagall is bringing it in. McKenzie, so this is interesting. If we're seeing shortages in something, Apple's gonna wanna build those things at some point, so I do wonder, is it a temporary shortage? Like it will be fixed at some point. - I mean, that's a big debate in semis, whether or not this is cyclical, we've certainly seen that trade happen before, but semi names like Micron wanna think that this is enduring and it's lasting, but for Apple right now, it's bad news for them. They're tracking toward their worst day since March of 2020. We were talking about a market wipeout of over half a trillion dollars, with the streets concerned mainly that the three pillars supporting Apple's valuation are all faltering at once. You've got UBS saying that the stock entered earnings at a premium of more than 70% to the S&P 500. Now, Barclays says, Apple's burned through most of its lower cost inventory and may be losing priority for chips as suppliers, favor AI customers. Then Morgan Stanley flagging the services miss and falling margins as undermining two of Apple's biggest profit drivers at once. Guidance on the call, dimmed investor hopes for one more quarter of outsized growth before Apple faces tougher comparisons against last year's 20% iPhone surge, but the bulls say supply constraints merely delay revenue, it doesn't go away altogether. And then the bear say, Apple's entering tougher comparisons with less supplier leverage, slower services, and fewer ways to protect margins. Guys, all right, big again, they're giving back about half of what they've had a year to date. And Tim Cook is about to step down, but look, this is a rounding error. He's the total return, what did it, 2,000% since he took over? 2,400%. Wow, not bad. Going into the print yesterday. One of the greatest, you know, next generation, not next generation, that makes it sound like they were all in the family, but leadership transitions of all time really. Today, notwithstanding, Mackenzie Beggs. You remember the beginning of Tim Cook was rough? Yeah. It wasn't a great start, but boy, he performed. All right, let's bring in an Apple shareholder, Ellen Hayes and his chief market strategist, FL Putnam Investment Management. All right, Ellen, are you selling all your Apple stock because Tim Cook is leaving? I think Apple is a solid hold here going forward. I'm not saying I would go and buy it today, despite the 10% decline, because as your previous guest just pointed out, they face at least three headwinds going forward. Number one, the memory prices have not come down. It looks like there's going to be memory shortages well through calendar 27 and maybe into calendar 28. So that really hurts their gross margin. Number two, there's component shortages generally. And Apple mentioned on the call that they are seeing revenue constrained because of that. So that's going to be a headwind until the component shortages are fixed. And then finally, part of the bull thesis on having a big position in Apple is that you want to see the services grow faster than the devices over time. And services were disappointing. They keep in at 12%. We were looking for a little bit higher than that. And if they can get services going, then that helps the margin mix going forward. But I think we need to wait at least a few quarters before adding to this position. Let me quote a viewer who says, if Apple's going to miss on services, why are we letting trade at 35 times? If that's just as cyclical as other parts of the business, shouldn't they get a lower multiple? I think that's a fair question. I mean, I'm looking at 10 bucks, maybe 11 in a couple of years. or by 2029, 2020, 2030. And so as we look at that, then it's already at 30 times earnings. And what do you want to pay for that? I don't know if services is as cyclical as hardware. I don't think it is. I think it's higher margin. It's less capital intensive. But you still do need to have it happen. And the question, a different way to ask the same question is, what do you want to play for mid-teens growth rate? And can you find other areas of the market where maybe you can find mid-teens a little bit cheaper? Well, here we're going to, Ellen Sitteye. We're going to do a quick RBI random, but interesting, and then come back to you. All right. I'm sure you know this, but a lot of our audience may not. Yesterday, Microsoft's stock rose over 15%. It was Microsoft's best day since 2008. With that gain on top of its already high market cap, Microsoft added $448 billion to its market cap, Kelly Evans. That is the single most gain of any company in global history in one day. We just lived through history. By the way, it briefed surpassed barely Nvidia's gain earlier this year, but it's still number one. Good for them. I mean, they had-- best weeks since 1999, Ellen, is this enough of a narrative shift? Have they proved now that they are not going to be left out sitting on the sidelines of this AI race? So far so good. Of course, they are very much buttressed by their very strong position in Azure. And you saw the same thing with AWS on the Amazon side. So regardless of whether or not they have or have access to a top tier front tier model, they certainly are going to be growing on that side as well. And you saw what 43% growth in Azure, which was terrific. I thought it was also really important that Nadella committed to being free-catchable positive this year, because that puts him in pretty rarefied territory among the hyper scalers. So I think that that was a big sigh of relief to the market when looking at Microsoft. >> A great point about the free cashflow. Finally, Ellen, broad thought about the market here. Again, I'm impressed by the resilience today. Yes, we have Amazon jumping. Yes, the Mag 7 is becoming uncorrelated with each other. Our previous guest just said, he thinks you bet on the Mag 7 and the chips at that correlation is going to re-emerge. How are you thinking about this? >> So earning season has been fabulous for the whole S&P, not just tech, but for the whole S&P revenue has been up 13% and earnings have been up over 50. And if you look just at tech, revenue is up 26%. So double the rest of the market and earnings are up over 60. Now, it depends on if you count companies that have 500% earnings growth, et cetera, et cetera, which can skew the numbers. But still, it's been a strong earning season all around, not just in technology. So you look at consumer discretionary, energy, financials, some other areas really doing well. So I do think the strength in earnings is definitely broadening out. And to me, it's great to own the hyperscalers, it's great to own some of the Mag 7. We're selective there. But you can own things outside of that too. And a lot of stocks are at reasonable multiples. >> All right, those numbers are, I think we include them. Look, I think we include them. It's like to be living through where the multiples, the revenue, the earning is just crazy. So Ellen, thanks for the reminder. Good to see you as always. >> You're just a UK-L-E. >> Ellen Hason, FL Putt Number. $448 billion gain in one day. They gained more than most companies by far are worth. >> And still, I'm a nerd to it. I go, yeah, all right, you know, one, that's- >> We have to find a way to get you, are you, do you like NASCAR, your husband loves NASCAR, right? >> I think that. >> So how about this? We're going to get Kelly going on this Friday because coming up, we have an interview with seven time NASCAR champion, Jimmy Johnson. He's got some big news and big names and big money. Coming into his team plus, there will be profit, exon, and Chevron. Reporting to Combine, Winfall over $26 billion in weight, till you hear what may happen next week. [MUSIC] >> Our welcome back bonds and yields and borrowing costs also front and center as three Fed presidents, dissented in Wednesday's Fed decision and they reiterated their calls for rate hikes. Yields are backing up, the tenures at 4.74%. Yields on pace for their highest close since January of 2025, especially on the shorter end of the curve. Rick Santelli, you and I have talked about this. You have said you wouldn't be surprised if we snifter got close to 5%. Again, I mean, my man, we're getting close. [LAUGH] >> Absolutely, you know what? In the old days, we talk about duration trades and I'm going to talk about a duration trade now. But I'm not talking about maturities or treasuries. I'm talking about the calendar, the duration trade I'm referring to is the length of chapter two in the mid east crisis. And it really has dramatically altered confidence. What was confidence in a short conflict in chapter one? Well, in early July that all ended and it really does now have a driving force in interest rates in the longer the clock ticks. The more investors are worried that it's going to metastasize and the federal have to deal with it. Look at a week to date of tens. Right now, they're hovering at just under four and three quarters percent. Last Friday, they closed at 467. Last Thursday, they closed at 469 and that was what you surped the May 19th, how to yield close. We continue to see pressure. Two year yields are still down on the week. They settle last week at 433. So they're down a bit. And I think that's significant. You see that January that sunny you referred to there. That was last time we were at these yields. We'd have to close above 479 to extend this comp a little further back. And if you look at the 210 spread, that was a big issue this week. Literally just bleeped up. And that was one of the reasons that we're seeing the high yield close different on the short end versus the long end. Finally, banking Japan around midnight last night didn't do anything. I thought there were statements in their comments, Rex and rather Dovis. And you see there, that's the dollar yen. The intervention seems to be holding right after they had their announcement last night. We did see a brief retested that 160 level, but it's back down towards that 158 where the intervention level was originally from Thursday. But we do want to point out it's about how long the intervention lasts. They spent about $55 billion to push it down. Brian Kelly, back to you. >> No, Rick, listen, there's so much we could get into. But what I would sort of restate this as in the debate over our rising yields, Worship's fault, Japan's fault, you're saying oil, it could be oil's fault. So you think there's a lot of culprits to this story, not just him? >> I don't think there is a lot of culprits. I don't know how worse could be involved in this whatsoever in my opinion. I think the way the markets acted doesn't really point to worse. I think the two year would be more aggressive if it did. I think it's pretty simple. After chapter one, we got the 10 year all the way back down to 437. It zoomed up to four and three quarters pretty darn fast. There's much less optimism about a short conflict now. And investors globally, they're definitely pushing the debt and deficit and conflict issues. Those are the driving forces in my opinion. >> All right, Rick, thank you, Rick Santelli. Coming up, big tech, not the only story we're following, hardly. Big oil as well, Rick just talked about it, the flip side of what's happening to yields is that they're pumping out the profits. What's feeling the surge? How long will it continue? We'll dive in next. [MUSIC] All right, let's talk energy earnings because the numbers are big and they may get even bigger. First up, Exxon Mobile. Earnings came in at $3.52 a share up from just $1.16 last quarter revenue. Soaring in with $115 billion up from $83 billion. Similar story for Chevron, EPS, 606 on 67 billion in sales, up from earnings of $1.41, three months ago revenue of $47.5 billion. Higher oil prices due to the Iran war, one big reason for the pop. Speaking of Iran, Exxon Mobile CEO, Darren Woods, on seeing you see earlier today and aside from earnings, he also talked about the importance of the straight-of-horimose. And he said it has to open up. >> That resource in the region has to get to market. The straight has to open up. It is the main artery of supply for the world that powers economic growth everywhere. So eventually those barrels are going to have to flow. >> Now ship traffic, at least measured by ships that we know are going through the straight, is still very far below where it was a few months ago. That is very important to global markets. Looking ahead to next week, more big oil earnings, some numbers to watch, results of Conoco Phillips. Marathon. Phillips 66 along with oxy-trans ocean and more of these numbers expected to be huge. Listen to this. Conoco Phillips. >> I'm coming in at 288 per share, that would be up 52% from last year. But companies with big refining divisions are going to be the real winners. Marathon petroleum earnings, scene jumping 732%, Phillips 66 earnings per share, scene popping Kelly over 1400% in just three months. >> Yeah, I mean, and this is where when we talk about earnings season, it's not just the chips. It's also the refiners because of what's been happening. Shortage of product, high oil prices, that's also a big squeeze. >> And those numbers out all next week, I won't have them because I'm off. >> Oh, come on. - You'll have 'em. - I'm doing refining earnings. - Oh, you know you can't wait. All right, speaking of high energy, having energy for you, are you interested? In anything and everything energy, be sure to sign up for my weekly power insider newsletter, big take on the big energy stories that week, some of Wall Street's favorite energy stocks, picks for you, exclusive interviews and more, to sign if you can hit that QR code on the screen right now. We just make it so easy. - Except that it's not on the screen. - It's not on the screen. Imagine if there was a QR code on the screen, you should hit that. - We have next-by-celebrities, champions and top investors are racing to invest in Jimmy Johnson's NASCAR team, the seven-time NASCAR champ joins us after the break. - All right, some big news in the world of motorsports. Jimmy Johnson's legacy motor club race team announcing a huge new lineup of investors. Don't believe us? They include baseball star Bryce Harper, Christopher Kelly Slater, business guru Jen Rubio, as well as Andy Roddick, Darius Rucker, Enbore and also Guy Fieri. So let's take this interview to race town with the man himself legacy motor club majority owner, seven-time NASCAR series champ could have been eight, maybe nine, and apparently former England resident, Jimmy Johnson also, like myself, a native San Diego. Jimmy, it's a real pleasure to get you on. Thank you very much for joining us. Taking legacy up a notch, two to three cars, why these investors, why now, what are you trying to do? - A few agendas here are concepts in how we can scale and grow our organization. And first and foremost, competition is king, that's our North Star. But is the series continues to evolve all the interests that's in the sport of NASCAR in motorsports in North America? I just have a vision of, if you look at stick and ball sports and the brand awareness, the brand value of the team in addition to the stars that play on the team or drive your race cars, there's an opportunity there. And so to bring in these strategic owners that one are friends, first and foremost, and two are builders, creators, champions, all in their own rights with the tremendous legacies. There's just a great play here for us to expand and to try to modernize in a way and have this parallel path to what other stick and ball sports are doing. - Now listen, we're obviously bits of homework here because we work for Versa, Versa televised is a bunch of upcoming NASCAR races. I want to be full disclosure on that, but I'm a long time racer, race fan. I love watching NASCAR. I love what's happening. I love the San Diego road course. I love some of the, I love SVGs success. It's not just about going left Jimmy, as you well know, is this a bet on the future of NASCAR and media rights in particular? - It's certainly a bet on NASCAR. It's different than a bet though. I mean, I firmly believe that we have the most exciting and compelling racing on the planet. We have stars within. There's so many elements to our sport that make us unique and different. There's so much attention on it. Yes, there's a meteorite still out there in the future. Michael Jordan's in the sport. He won the lawsuit against NASCAR for permanency of our charter. So now we actually have franchises. And a lot of my vision here is around franchise mentality and how we can scale and create a profitable business at the end of the day. - Jimmy, do you think he's driven some positive change that was needed in the organization? - Yeah, Michael's presence has really risen all ships in the harbor. And now post-subtlement where we sit in the alignment with the league, we're on new ground here. And we literally have franchises. And in our franchise, our core product, winning races, being a league team within the NASCAR space is our top priority. Now how we get there and how we create the capital to reinvest in our team and all of our assets, I'm just going about it a different way. I don't have an auto-empower or a previous business that I can lean on for that capital infusion when needed. And so I need to create a business model and when you look across sports and entertainment, this is quite common. - I think you do know something about racing, like anything with an engine, I'm told Jimmy. And you know what I look out, this year we've seen a lot of success with 2311 racing. And it's not Penske, it's not gonna ask, "Hey, there's this Rick Hendrick, I don't know if you heard about that guy." What we've seen this year is that these other teams can race, they can win, they can challenge maybe for and win a title. You confident you can do the same thing? - We are, you know our pathway is a little different than what 2311 has, you know the road that they are on. We're trying to build everything internally ourselves and set ourselves up for, you know, a long, long tenure not saying that Michael isn't thinking that way. But we're developing a lot of our own technology and processes in house where 2311 has an alliance with Joe Gibbs Racing. And so it's been a little slower, an ascent for us, but one that we've chosen and one where we want to own all of our IP. - Jimmy, we often like to ask celebrities, especially people outside of our normal realm, this the following question when they come through. So I hope you don't mind. What looking back on everything that's happened to us over your career, what do you think has been your biggest money mistake? - It's funny, a lot of other people will often say buying a sports car. (laughing) But I don't know if you're already in the racing industry, maybe the, you know, maybe that looks a little different. - No, that's helpful for me because after I own it, I'm able to put a little markup on it. But I would just say some early start up stuff, you know, we all see these things popped and you want to find that unicorn. So some early bets that, you know, I would take back. - Yeah, understood. Again, you're not, you're not the only one far from it. - Well, how often, Jimmy, how often, listen, you're one of the richest athletes in the world, not just in racing. How often do you get pitched? Like every day, every week. - Oh, it's non-stop. - Yeah. - And it's a great situation to have. But yeah, without a doubt, there's certainly a lot of opportunity. - Okay, so next year, very exciting. By the way, Daytona 500, you get your former number back for one off race, I think it's gonna be amazing. You got John Hurney, you got Eric Jones, you got this Jimmy Johnson guy. You ready to announce like a third full-time driver for Legacy Motor Club right here on CNBC? I mean, we're aversive partner. - Coming soon, coming very soon. So I try. - I try. - Appreciate the opportunity and the offer. It's very kind. But yes, we'll, we're expanding to a third program next year and very excited for that. - I'm curious, Jimmy, how long a career can race car drivers really expect to have? I mean, we all, we know what LeBron's doing in basketball now is unfathomable. Tom Brady, Aaron Rogers, people at the top of their careers. But I've always thought race car drivers supposed to be a young man's game and you guys are, you know, constantly improving that wrong. - Yeah, sports sciences helping us all extend, you know, extended these advanced years, so they say, but I truly feel like in motor sports experience really does carry you and can extend that runway. We don't take the physical shots as often as, say, a football player or someone like that. So we tend to, you know, see guys in the other 50s, mid 50s and still winning races and championships. - Let's have a little fun. It's Friday. We got the news out, Jimmy. I love these track editions that I mentioned. I like, I'm just a road course guy. So I like a little bit more of that. What would be one track you would love to see NASCAR add to the calendar? Whether it's oval road course, international, whatever. - It's almost done. - It's almost done. - I think it's a huge opportunity. - Oh, that would be incredible. Absolutely. Yeah, I wasn't thinking that grand, but yes, without question, I think Spa would be an incredible circuit for our cars and the size of them and how tight those corners are. Some of the F1 tracks are so fast and flowy that, you know, maybe cars don't perform as they should, but Silverstone would be off the charts. - You'd have to lift, do you think it O'Rouche at Spa? You think it's a serious question? - Oh, in a cup car, absolutely. Yeah. I was there in a historic GT40 not long ago. And TV does not do that corner justice. It is steeper. The elevation climb is more significant and the corners are a lot sharper than they look on TV. - Which I came and imagined having never been there, but watching it in every form of racing. Jimmy Johnson Legacy Motor Club, really exciting announcement. Some big name investors look forward to seeing you at the track and hopefully on USA Sports and Versa. Jimmy, thank you. Thank you. I appreciate it. - Oh, best of luck. - It was fun. Let's get over to our economics writer, Matt Peterson, with more on FedChair Kevin Warsh, and the markets response to what happened on Wednesday. Hi, Matt. - Hey there. So I think everybody saw how bad that press conference went for Kevin Warsh on Wednesday. The markets really hated it. So I went back and took a really close look at what he said. And in particular, I paid a lot of attention to what he said in his prepared remarks. The little bit he read out at the top of the press conference. And I came away with the impression that Kevin Warsh is probably a lot more hawkish than people who heard that press conference think. - What changed then, Matt? What did you hear on a second or third listen, right? The press conference, everything else. What did you hear that makes you think that? That maybe there is a more, there's a hawk hiding inside this falcons costume? What word do you use? Well, I'll leave the burden to you, but what I heard is sort of a short-term and long-term model, right? He's got kind of two things going on here. One is that he's looking at the inflation data and he says right up top, you know, we got this CPI print. It was pretty soft. You know, inflation actually fell in June for the first time in a while. And he said, actually, we really don't put very much stock in that. That's what he came out there and planned to say. Then what he came out there and said in response to reporter's questions was stuff like, you know, he cast doubt on PCE. You know, whether the Fed was really going to stick to this long-term PCE target that it's always had. He said something that really confused a lot of people there. But again, go back and look at what he said in these pre-written planned remarks and he says very clearly, you know, we don't have a soft 2% inflation target. We just have a 2% inflation target period. So I think the market missed part of his message here. All right. We'll see if they, you know, maybe they, if he's more hawkish, maybe rates will fall and we can all look past this and not have to get so worried. And Matt, thanks very much. Appreciate it. Matt Peterson. And over to Seema Modi now for the CNBC News Update. Seema. Kelly, here's what we're watching at this hour. California Governor Gavin Newsom is reportedly concerned about the states. Anti-trust lawsuit to block the Paramount Skydance acquisition of Warner Brothers Discovery. The Wall Street Journal reports that he's concerned that employment would suffer in the state if the deal is blocked and has encouraged state attorney general Bob Robbonta to find a resolution outside the courts. In other news, cyclospora outbreak is depressing produce sales and forcing some farmers to destroy crops, even though they haven't been linked to the outbreak. According to the Wall Street Journal, California lettuce growers have plowed under about 300,000 pounds of romaine lettuce this week because they haven't been able to find buyers. This has about a 30 day growing cycle and a drifting SpaceX rocket on a collision course with the moon. It comes from the launch of a pair of lunar landers more than a year ago. Now the rocket's upper stage is expected to hit Wednesday and send a plume of dust in rubble that scientists will be able to observe. It's believed to be the only second rocket to hit the moon. A Chinese rocket hit the far side of the moon guys back in 2022. Up next, check out housing with power broker Noble Black as the 30 year mortgage rate since the year is highest level in a year or back after the break. Welcome back. We have a lot going on in the housing market. K-Shiller data from May earlier this week continuing to show some home prices lagging inflation by a decent margin as the 30 year mortgage rate is about its highest level in a year. Of course here in New York have Mayor Mom Donney's Pied of Tehratex that's coming. Let's talk about all of it with the Corcoran Group real estate broker Noble Black. Noble it's good to see you. Thanks for having me. I hear from agents the market is softening but in New Jersey what that means is instead of what they say. Instead of 12 offers you get 6 or maybe instead of 6 you get 3 or something. Another part of the country it is worse though. It's significantly shifted to a buyer's market. Totally. Yeah, I mean like Las Vegas I was looking the difference between Vegas and Chicago and New York it's huge. I think like 12%. Basically, right? Yeah, it depends on where you are in the country. New York has started this off in at the high end but overall we're still doing very well. Surprisingly so frankly. If you're looking at the suburbs and the northeast it's still very very strong. Is that because we're finally catching up to the impact of high mortgage rates? It was crazy. Normally I mean classical theory. If the cost of buying something goes up the price should go down or but that never happened because of what happened with COVID. It was just a swell of people into the burbs. Work from everything happened. Is it now catching up? It is slowly catching up and I think that is like we're slowly acclimating to the rates. I think there's also like there's a huge amount of demand that just all went at one time, right? So like that's slowly working through. We're getting back more towards what's normal in terms of people exiting the city moving to the suburbs. It just there was a lot of that demand that all of a sudden got compressed and it took a while to work it out. Yeah, and I think I'm guessing you're at the high end. Noble black cork or you're at the high end. We do everything though. I know but just you so I'm betting that if somebody's buying a $13 million or condo in New York City they are not using a mortgage. They're not. No, they're going to if they're not going to pay cash they're going to borrow money against other assets they have. Right. So they get a pledged asset loan or something like that. Yeah, even when rates were lower I think the market in general in New York for all of the market was like 50% cash that's gone up as high as 80% the last few years. So here's where I think we've got a problem. And I went to law school I don't practice but some of my law school friends went to Brooklyn Law School. They are now practicing attorneys in the city. Some of them are in real estate. And here's the take. Tell me yes or no. The Pieda Thierry tax while ostensibly targeted to $5 million homes and number one is going to capture a lot of people that aren't rich that may have an asset that grandma left them in 1979. So it's more than $505 million and they rent it out. I don't know what's going to happen to them but also our rents for the middle class going to soar because what I'm hearing is people aren't buying they're going to rent more which means more demand already high rents are going to go up even more which means trickle down effect which means the unintended consequence of this is likely going to be to squeeze higher rents out of the middle class and maybe even not the middle class. Yes or no yes unqualified yes absolutely it will. There's so many unintended consequences of this there's so much mess around this. There's so many questions surrounding this it's going to be amazing for attorneys, for accountants, for appraisers but it's going to be terrible for renters it's going to be terrible for the average homeowner it's not going to raise that much money at all and the mess that it's creating is absolutely terrible. There's so many unanswered questions right now. Was it today literally published names of people with addresses? Yes yes yes I friends that are on the list because I imagine a doxed people's home addresses some people by the way they're not rich. It's just the level of even if you what it's it's the level of detail that now is public are there I mean New York is a highly desirable market but I have to mention there's some people who are now going to have to scramble to go to some extremes to. So to be fair the information that they published and that they highlighted was already publicly available. Oh of course but not in one Excel dot great. So that's crazy too. Do you know what's crazy? You can find people's name and address on property tax records. What are these local websites thinking? Well it's crazy but it's hard but that's a one off like this this was a spreadsheet you could sort by street. Absolutely. And to your point what's been so harmful about this is the messaging. The actual numbers that they passed or you know people going to for this they may not be happy about it but that alone is not going to make them sell or make them not look for something but it's the messaging it's the vilification of the people that are at this level that the clients that we've had that have backed up are saying look I just don't feel welcome or I don't feel safe I don't feel like I'm wanted here. There's not an effort to make people partners of the city it's really vilified. Is there any market impact that you think this will really have or. Yeah the high end of the market has started softening the last few weeks. Now look we're in the summer there's always a bit of a seasonal slowdown. We're below what is traditionally the seasonal slowdown we're below the 10 year average for the high end above 25 million. If you're looking at the like five to 10 five to 15 that's not showing up yet but we'll see. But what again not to be a little what I worry about and by the way I think you're right I think the New York City Department of Finance I know it's not going to be popular with any say I feel sorry for them. The workload they're going to have now for the next 10 years because every one of these people that's getting hit with this is going to fight it right particularly if there's somebody who is gifted a home grandma bought it in a place nobody wanted to live 40 years ago. Now it's worth 10 million good for them they're renting it out suddenly now they're on this list they're considered rich they make 150,000 a year but this asset is their retirement. The renters who live there are their retirement maybe they live out of state so now it's a lot of money they're going to have to sell if they can't afford the tax. Well what they may do is just rent it and require that whoever's renting it be a New York City resident right but they're going to have to change. But if they can't have to change. Fair enough maybe I'm wrong but what if the owner lives in New Jersey the hasn't been lived in the Bronx as long as the tenant lived and paid taxes in New York City but they're not then they're they're absolved that the owner would be but the owner's responsibility then to ensure that so if the tenant you know kind of like works them over on that lies to them then they have to go after that tenant. One other illustration of just how complicated this is the determination if it was a pita terror night goes back to January 5th. So if this past year if you closed on an apartment in February or March this year and the past owner was using it as a pita terror as of January 5th guess who gets the tax bill it goes with the property not with the owner. So even if you bought it you're using as a primary resident if the person you bought it from on January 5th was a pita terror you now get this tax. It's so poorly thought I'm going to make a prediction and there's no way to prove that I'll be wrong so it's a great prediction but I think the cost of administering this tax like the well tax in Europe that got scrapped by most countries is going to be greater than whatever revenue they bring in. They're going to spend more money trying to enforce the tax because everybody's going to fight it that can and years and years and years and years accountants IRS to your point. And it's servers whatever I think the cost of administering this tax will be higher than any amount of money they bring in and the net effect of the people who really need the money will be zero. I've been saying that from the very beginning to in order to back down. I think you're exactly spot on because by best estimates they were saying 500 billion. The controller saying it's more like 300 billion. That's assuming that there's no knock on effects that there's no unintended consequences right. And to deliver and administer this there's a huge cost to that and again that's to say nothing of the dissuasion that they're putting out there like you know we don't want wealthy people or the wealthy people are vilified. It's so misguided for the city. Noble thanks. Appreciate it. I'm happy to be here crazy time noble black of the park and group. All right, after the break is the AI cooling boom losing a little steam. We'll get a power check on a big player. It's called vertive. It's up today, but down double digits this week that and more. Welcome back despite vertive racing, full year guidance Wednesday. Its shares are still on pace for their worst week since April. They had a big drop that day. Our next guest is buying it. Says this is an opportunity. Adam Phillips is director of portfolio strategy at EP. Well, Adam, I'm a lot of people they watch the stock absolutely rocket and you think now is a chance to get in it a little bit lower. Just me again, not a mine. Unfortunately, let's see if I can do it. If we had a hold on if we had a mine on the show, he initiated vertive would be good for people on the radio serious one to all. He reduces software exposure. He's been underweight information technology and he has Netflix, Abby and well tower to talk about. In any case, we'll bring on him back obviously as soon as we can get that sorted. I stop you know what I I stand by my call for a mine. I really think that would be an interesting segment, right? I wouldn't be again, wouldn't be good for people listening on serious XM channel 112. We love very much. Are you radio listeners stuck in traffic on the way to the shore? By the way, vertive is up today about 7%. So it's already rebounding from that decline quick programming note before we go. Take a knife, keep an eye. She said on shares of strategy under pressure after missing on both earnings and revenue. Obviously, it's formally micro strategy. They were hit by billions and unrealized Bitcoin losses, although the shares are only down a little less than 3% today and tune in Monday for our exclusive interview with CEO Fong Lee. We will check back in with him. Bitcoin is also slightly on the red. I will tune in from rural, the rural upper Midwest. Let's check out some of this week's biggest movers by the way. No shocker Microsoft, one of the biggest movers as we told you, the biggest single market cap game day in the history of the world. Garmin cognizant, Chipotle all doing well as well. And in fact, if somebody says tonight, Kelly, what's the best performing S&B stock this month? You're going to say cognizant. That's it. 42% Accenture, Workday and PayPal are also ending the month at 30% higher or more. By the way, if you do go to party and somebody asks you that, leave that party. It'll probably be my kid, but it might be a mine. That's the kind of house we have. Big tech dominated this week, but there are still plenty of earnings to come. And lots of companies next week, including AMD, Disney, Warner Brothers and SpaceX will notably join the lineup. They report on Tuesday for the first time since going public in June. July's been a rough month for the stock out of 22 trading days this month. Stock's going positive for five that is SpaceX, but we're wishing you all a great weekend. Happy weekend, healthy weekend, a profitable trading. Thanks for watching Power Lunch, everybody. Closing bell starts right now.