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I'm Frank Holland, and you're listening to CNBC's Worldwide Exchange. Our show is live weekdays at 5 a.m. Eastern. Listen in. I have a message directly from the president, and I quote, based on the fact that there's a substantial chance of negotiations that may or may not take place with Iran in the near future, I will make my decision whether or not to go within the next two weeks.
The president putting a time frame on whether diplomacy or military action against Iran will win out. Wall Street remains on edge with Middle East risk adding to a number of near-term headwinds for stocks. You can see here futures, they are lower. And for the fourth time this year, a SpaceX test, it ends in disaster. It is Friday, June the 20th, 2025. And this is Worldwide Exchange on CNBC and streaming on CNBC+.
Good morning and happy Friday. Thanks so much for being here with us. I am Frank Holland. Let's get you ready for the trading day ahead. We begin with the U.S. markets coming off the Juneteenth holiday and a Fed decision on Wednesday where the central bank signaled two rate cuts this year. But Jay Powell said the summary of economic projections, it should be taken with confidence.
grain of salt. Investors are also weighing the possibility of U.S. involvement in the conflict between Israel and Iran, with the White House now saying the president will decide on what action to take over the next two weeks. Taking a look at futures this morning, you can see we're in the red across the board, all three indices down right around a quarter of a percent. The Dow looks like it would open about
125 points lower. We're going to take a look at the S&P 500. Pre-market laggards first. Taking a look, you see right here at the top of the list, CMS Energy. Those shares pulling back 3.5%, followed by some other names here, Darden Restaurants, Vistra, and Freeport, Mac Moran as well. And then the other side of the coin, the S&P 500 gainers, Fair Isaac.
Credit reporting company, also known as FICO right there. You can see those shares are up about 2.5%. Eversource Energy shares, Stanley Black & Decker, Carmex, and Healthcare Operations, LLC, running out your best performers on the S&P in the pre-market. Take a look at oil this week. Oil is higher this week, as you would imagine, on those Middle East concerns. You see WTI week-to-date up over 3.5%. Right now it's up just about three-quarters of 1%. Also looking at defense stocks this week. Now, this is pretty interesting. Take a look at defense stocks.
This is what they're doing in the pre-market right now. You can see they're up. Northrop Grumman up over a half a percent. Lockheed Martin up over a third of a percent. But some other mixed action here. You see Howmatt Aerospace pulling back fractionally and down here. The ITA, that's the Defense and Aerospace ETF, pulling back more than a half a percent.
This morning, we're also looking at currency. We're seeing the dollar move higher this week. It's still negative year to date. You can see week to date it's up about a half a percent, but still down about 8%, 9% week to date. We're going to talk to a currency trader coming up just a bit later in the show. Right now, the dollar pulling back about a quarter of 1%. And take a look at bond yields as well. Bond yields, they pretty much stayed the same since that Fed decision. Remember, on Wednesday, taking a look at the benchmark at 4.39, the two-year 3.94, the long bond settling at 4.9%.
All right. That is your setup now. We want to turn our attention back to the Middle East and a developing story. Israel continuing its airstrikes against Iran, targeting dozens of what are being described as nuclear weapons research facilities. This is President Trump is weighing his next move. NBC's Alice Barr joins us now from Washington with much more on this story. Alice, good morning.
Good morning, Frank. And Israel also says that it intercepted a lot of incoming fire from Iran overnight, that back and forth, highlighting the stakes in this moment as President Trump weighs whether the U.S. will join Israel getting directly involved in the escalating conflict.
Upping the pressure for a diplomatic deal with Iran, President Trump setting a new timeline for his decision on whether the U.S. will strike nuclear targets inside Iran. The White House press secretary quoting the president. Based on the fact that there's a substantial chance of negotiations that may or may not take place with Iran in the near future,
I will make my decision whether or not to go within the next two weeks. European diplomats meeting today with Iranian officials in Geneva. While inside the White House, President Trump is increasingly relying on a small group of advisers.
including his vice president and secretary of state to make his choice that's according to two defense officials and a senior administration official who also say director of national intelligence tulsi gabbard has been sidelined the president recently publicly dismissed her march testimony that the intelligence community did not believe iranian leadership had authorized building a nuclear weapon
I don't care what she said. I think they were very close to having one. The White House asserting Iran has all it needs to make a bomb, and though the process would take time, President Trump is adamant that cannot happen. Iran can't have a nuclear weapon. Too much devastation.
and they'd use it, you know, I believe they'd use it. Only the U.S. has the bunker-busting bombs that could destroy a critical underground Iranian nuclear facility, though a decision to strike could provoke an attack on U.S. military bases in the Middle East and interrupt the global energy supply.
President Trump has maintained he does not want to get into a prolonged conflict while also making clear any targeting of U.S. troops would bring a forceful response. He's seeking to walk a line between his support for Israel and his campaign promises to avoid foreign entanglements, a difficult and potentially presidency-defining moment here. Frank? All right. Alice Barr, live from D.C. Alice, thank you very much.
All right, turning back to the markets, rising Middle East risk is just one of many of the near-term headwinds for stocks, which have been largely rage-bound since these attacks started last week. Take a look at futures this morning. We mentioned they're in the red across the board, down about a quarter of a percent, each one of the major indices. Wall Street also continues to digest the Fed's latest interest rate decision, a fourth straight, no change. The president says...
is costing the U.S. economy hundreds of billions of dollars. So the president also calling Fed Chair Jay Powell, and this is a quote, truly one of the dumbest and most destructive people in government. Again, this is the president saying that. Joining me now is Brian Nick to talk much more about what's going on in the markets. Brian, good morning. Good to see you. Good morning. Thanks for having me on. So what do you make of this, this two-week time frame that the president has put out here to make his decision when it comes to Iran? How does that impact the markets? Does it impact certain sectors more than others?
Yeah, I think the thing that's been notable at this entire conflict so far is it really hasn't been seen as impacting the overall macro story for the U.S., for the U.S. economy. It's been more focused on the energy commodities and then by extrapolation on the companies that develop energy in the U.S.
think the two-week pause, we've seen these pauses turn into longer pauses when it comes to the tariffs, even when it comes to things like TikTok. So I think the markets are seeing this as a welcome reprieve from the very high tension environment we've been in. We've seen a little bit of a decline in oil prices in some parts of the world. I think you could continue to see a wait and see approach
first by the equity markets and also by the commodity markets. It's been interesting. You haven't seen much of a move in interest rates and the dollar. And that's been true really since this started. The dollar was not seen as a big boost, a big recipient of safe haven assets, and neither has the treasury market. That may be because of everything else going on with the U.S. assets, but it may also be because this conflict just wasn't seen as rising to the level of something that was going to affect the U.S. economic outlook.
You know, to that point, you're talking about the commodity market. So we have seen oil move higher. We just highlighted that a minute ago. But actually, week to date, gold is down, which seems a bit counterintuitive. That seems to be the ultimate safe haven. Why do you think investors have moved away from gold but have put money into the U.S. dollar? We're going to talk about the dollar just a bit later in the show. But I just want to get your take.
Gold price moved up so quickly in the first quarter, and it's really been flattish. It's been choppy, but flattish in the second quarter, which has been interesting given everything that's been going on. US tips, Treasury, inflation-protected securities have had a similar kind of pattern, often very correlated with gold. I think one of the reasons you've seen this handoff-- and it hasn't been a huge rally in the dollar since the conflict started in the Middle East.
To this point, a lot of the risk in 2025 has been oriented around the US itself. And so we've seen money move out of dollars, to your point earlier at the top of the show, and into other currencies, including things like gold. Right now, when it seems like it's more the world's at the riskier place, right? There's things happening outside of the United States. That may be causing people to pull money out of other assets
and move back into dollars. But again, the move just hasn't been huge. Gold's off a little bit, flat quarter to date, but still holding those very, very high levels it achieved from the rally in the first part of the year. You know, Brian, I want to go back to that Fed meeting, and there's so much going on. We're getting to the Fed meeting at this point in the conversation, when normally that's probably where we start.
So the Fed signal potentially two rate cuts later this year, but also Jay Powell saying that he's expecting to see an acceleration of inflation due to tariffs and also slower growth, which is stagflation. You believe if it weren't for the tariffs, the Fed would already be cutting right now. But.
But with the idea that we could potentially see stagflation, how does that impact some of the most tariff and consumer sensitive sectors? I'm thinking discretionary staples and retail. If you look since April the 2nd, interesting enough, discretionary and retail are actually outperforming the market and staples are lower. Generally, I think of staples being able to pass along those price increases and the other two sectors not being able to do that.
Yeah, there's been so much noise and so much chop in the tariff story since the start of this quarter, which really coincided with Liberation Day, that the quarter-to-date numbers, I think, could be misleading in terms of what's actually been going on at various points. So to your point, take
Technology is the best performing sector this quarter. We probably wouldn't have guessed that three months ago or so. The big takeaway from the Fed meeting was the forecast changes were, as you point out, in that stagflationary direction. So the Fed now thinks the GDP growth this year is going to be 1.4%.
That's right on where consensus is. And that's a weak number. And at the same time, they revised up their inflation forecast for both this year and next year. That puts the Fed itself in a very tough position and the markets as well. If you're an equity market investor, you want to see higher growth. You want to see lower inflation. Getting the opposite of both of those things, again, bad for margins. And when you combine it with the rise in the oil price, assuming that that sustains to some extent
and also the tariffs, it creates just a ton of uncertainty about how companies are going to be able to make money in the second half of the year. And remember, underlying all of this is weaker U.S. consumers, weaker U.S. labor market. Not to an alarming degree, but we've been pointing out all year that even without the noise from the tariffs, without the noise from the oil price, you are seeing incrementally weaker U.S. economic data. And that's not a pleasant surprise for equities either. Brian Nick, great to have you here. Brian Nick, New Edge Wealth, head of portfolio strategy. Really appreciate you being here. Thank you.
Thanks so much. All right. All right. We turn our attention to the ETFs. We're tracking ETF flows that are now over five hundred and thirty one billion dollars year to date, putting us on track for another trillion dollar year. We're also looking at the moves above and below the 30 day moving averages for the popular next funds, the SPY and the triple Q's on this holiday shortened week.
This week, we saw a literal flight to quality. The Invesco S&P 500 quality ETF ticker SPHQ saw the top inflows this week, but has underperformed the market this week as we saw a rise in geopolitical tension and a Fed decision with a summary of economic projections indicating two more rate cuts this year. Other ETFs with top inflows this week, the VUG Vanguard Growth ETF and the IEFA ETF that tracks large and mid-cap companies in the U.S. and in Canada.
All right, we got a lot more to come here on Worldwide Exchange, including a home improvement bidding war, shedding shares of this stock higher, plus a SpaceX explosion. It goes viral, one that Elon Musk is calling just a scratch. And then later, what could be a global supply chain shock, courtesy of the Israel-Iran war. A very busy hour still ahead on Worldwide Exchange with John.
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Upfront payment of $45 for three-month plan equivalent to $15 per month required. New customer offer for first three months only. Speed slow after 35 gigabytes if network's busy. Taxes and fees extra. See mintmobile.com. Welcome back to Worldwide Exchange. Let's get a check on some of this morning's top stories, including the latest on the protest in Los Angeles. Our Silvana Henao is here with that and much more. Silvana, good morning. Hey,
Hey Frank, good Friday morning to you all. That's right, so a federal appeals court is extending an order allowing President Trump to keep using the National Guard to respond to immigration protests in Los Angeles. Now the three judge panels' unanimous decision said while presidents don't have unrestrained power to seize control of a state's guard, the Trump administration had presented enough evidence to show it had a defensible reason for doing so, citing violent acts by protesters.
All right, now to a home improvement bidding war. Home Depot reportedly making an offer for GMS just one day after Brad Jacobs QXO submitted an unsolicited proposal to buy the building product distributor for about $5 billion. That's about 9520 a share in cash.
As of this morning, GMS says it's received Jacobs' offer and is currently evaluating the proposal. We're seeing shares of Home Depot about half a percent lower in the pre-market, but GMS up significantly, about 20 percent in the pre-market. All right, and SpaceX engineers are still investigating an explosion involving the company's Starship rocket, the uncrewed mega rocket, Explosive.
exploding during a static rocket ground test early Wednesday. Now, SpaceX describing the explosion as a, quote, major anomaly while preparing for a test flight later this month. Now, no injuries reported, though. Frank, this is the fourth Starship explosion so far this year. And as you mentioned earlier, Musk calls it just a scratch.
Yeah, I mean, I don't know what else to say. Like, I mean, a rocket explodes. You just put some X in. It's just a scratch. Don't worry. Just a scratch. Silvana, thank you very much. We'll see you just a bit later in the show.
All right, turning back to the markets, the dollar index up about a half a percent this week on pace for its biggest weekly rise in about a month as the conflict between Israel and Iran fuels an appetite for typical safe havens. However, the dollar, it's still lower this year, down this year, well, just about 9%. There's concerns about the impact that tariffs could have on margins, corporate earnings, and overall growth. That just continues to weigh on the greenback. It's down about a third of a percent right now. With that, let's bring in Phil Striebel, Chief Market Strategist at Blue Line Futures. Phil, good morning. Good to see you.
Thanks. Thanks for having me on, Frank. Yeah, dollars being held back by some uncertainty here and frankly, not being down 8 percent. It's just a scratch. So you're saying it's just you're calling it just a scratch like Elon Musk. So it's actually down more than 9 percent. But I want to get to the action this week in particular. So I think a lot of people are saying people are piling into the dollar as a safe haven. But you're saying it's something a bit different. You're saying it's some short covering and just also a bear market bounce.
Yeah, I mean, technically, essentially, it peaked on January 1st at 110 and then February 3rd at 109.75. Since then, it's just been a series of lower highs and lower lows. Simply put, the dollar index is in a bear market. Technically, where would this market need to turn?
around in order to get a neutral trend. Really, it's got to get over about 99.36. We'd probably run into 100. But I anticipate traders would press the downside under the premise that the bounce is just a bounce at a bear market. Since the beginning of the year, it's the political uncertainty, the tariff headlines, and also speculation that US authorities really are quietly favoring a weaker currency. So it's fueling a rotation. And you look at the currency, the composition of foreign exchange reserves
This is put out by the IMF quarterly. The dollar in 2001 made up about 71% of most central banks, foreign central banks' currency reserves. If you bring that back to 2025, it's quietly drifted lower to about 57%, followed by the euro, the yen, and the pound. It's been the world's reserve currency for about 80 years.
So the reason for the rotation, they're taking down this, and that's where selling dollars is taking place, is the US fiscal trajectory is just unsustainable. It's most likely solvable, so default risk is relatively low. And where are these central banks rotating? Well, they're obviously adding gold. They're adding other asset classes. Got it, got it.
It's brought together that way. Let me ask you a quick question, then we got to go. A lot of talk about the big, beautiful bill and some of the implications it has on not only the deficit, but also tax policy here in the U.S. How does that impact the dollar very quickly?
Well, the problem is, is that the Federal Reserve doesn't know what's going to happen. So they're looking at these different spending measures and things like that. And they've got to hold higher rates for longer because of the fact we've got this geopolitical uncertainty of the tariffs. So you're going to see it held back by that uncertainty until we get clarity on this big, beautiful bill.
Middle East conflict and also tariffs, then the dollar index can resume its rally. All right, Phil Streep is in the level to watch on the DXY. I believe you said 99.30. So we're going to continue to watch that. Great to see you, Phil. Thank you very much. Thanks. All right. Still on deck here at Worldwide Exchange. CNBC investigates the AI data center arms race and whether states they're giving away too much to big tech. We'll be right back after this.
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Because on WhatsApp, your personal messages are yours. No one else can see or hear them. Not even us. WhatsApp. Message privately. And welcome back to Worldwide Exchange. The mad rush to build data centers has sparked a massive boom in tax breaks with lawmakers across the country giving billions of dollars in sales tax exemptions to attract big tech. While there's no question the tax incentives, they are lowering business. There is a debate over whether it's actually a fair trade. Pippa Stevens joins us now with more.
Good morning, Frank. Well, in the past five years, just 16 states have handed over almost $6 billion in data center tax breaks, arguing the incentives create jobs and spark economic growth. But not everyone is convinced.
Should states hand multi-billion dollar tax breaks to the largest tech companies in America? They attract investments that wouldn't otherwise have come there. The answer depends on who you ask. Does big tech deserve these subsidies?
I don't think they do. Here's how it works. A big tech company agrees to build a data center in a specific state promising economic growth, jobs and revenue. In exchange, that state says it will not charge sales tax on equipment like computers, wires and air conditioning units.
A CNBC analysis found 42 states give a full or partial sales tax exemption to data centers or have no state sales tax. And only 16 of the 37 states with data center tax breaks have reported or estimated the total amount they've granted.
Only Illinois, Missouri, Nevada and Washington break down the data by recipient. For instance, CNBC found that one Microsoft data center in Illinois received more than $38 million in tax breaks but created just 20 permanent jobs. Microsoft declined to comment on the project.
Greg Leroy, the executive director of Good Jobs First, a research group on economic development, says the tax breaks benefit big tech's shareholders. The truth is these are warehouses full of computers, right? Using a lot of land, sucking up a lot of electricity, generating very few permanent jobs.
That's not how Steve DelBianco sees it. He's lobbied for data center tax breaks on behalf of big tech. Many of these big tech companies are worth more than a trillion dollars. Why are they being offered these generous subsidies? It's going to generate tremendous income during construction. It builds an entire ecosystem of contractors that know how to build and maintain and operate data centers.
Virginia, often called the data center capital of the world, took a closer look at the data center sales tax exemption, finding it provided a, quote, moderate economic benefit. That said, the state only recoups about 48 cents for every dollar it foregoes in sales tax.
Additionally, while data centers create thousands of jobs, most are temporary construction positions, not permanent. Of the big tech companies we contacted, Microsoft, Google, Amazon and Meta said they follow all disclosure requirements on incentives and work with the local community around their data centers. Apple, Oracle and OpenAI did not respond to repeated requests for comment. Frank?
Pippa Stevens, thank you very much. Great reporting as always. Good to see you. As we had a break, speaking of data centers, watching Asia listed shares of SoftBank. Bloomberg reporting its founder and CEO, Masa-san, is looking to team up with Taiwan Semi to create a trillion dollar industrial complex in Arizona to build both robots and AI. According to this report, SoftBank has already spoken with federal and state officials to discuss tax breaks, including Commerce Secretary Howard Ludnick. We're back right after this.
I have a message directly from the president and I quote, "Based on the fact that there's a substantial chance of negotiations that may or may not take place with Iran in the near future, I will make my decision whether or not to go within the next two weeks."
That was White House Press Secretary Caroline Levitt speaking with reporters yesterday on President Trump's next move in the conflict between Israel and Iran. The president meeting with his National Security Council again this morning as Israel continues its aerial attacks. Welcome back to Worldwide Exchange. I'm Frank Holland. Coming up this half an hour, we're going to dig into two critical risk factors facing the region and why they matter for the markets and for your money. We're going to talk with FreightWave CEO Craig Fuller and Tenable CEO Steve Vince. Two very interesting conversations you don't want to miss.
And now we're going to take a look at the U.S. markets coming off the Juneteenth holiday and a Fed decision on Wednesday where the central bank signaled two rate cuts this year. But Jay Powell then went on to say the summary of economic projections, it should be taken with a grain of salt. Investors are also weighing the possibility of U.S. involvement in the conflict between Israel and Iran.
Again, the president saying he's going to take the next two weeks to consider what action to take next. Take a look at the action in the pre-market this morning. These are futures. You can see they're off their lows of earlier. The Dow looks like it would open about 90 points lower. The indices down fractionally across the board right now. Take a look at the Nasdaq 100 pre-market laggards first. Take a look at those.
You see Take-Two Interact, the video game maker, pulling back about 1.25%. Xcel Energy, AppLove, and Dexcom and PDD running out your worst performers on the NASDAQ 100. Then the other side of the coin, the NASDAQ 100 gainers. Gilead Sciences, those shares up more than 1%, followed by Tesla. Shares up also 1% higher. Diamondback Energy, Strategy, and Mondelez running out your best performers on the NASDAQ in the pre-market.
Also taking a look at oil this morning. Oil higher this week, again, on those Middle East concerns. You can see right here, WTI, it's up more than 1% right now. Week to date, it's up more than 4%. We've seen upside moves in the oil market. But a lot of people have said, actually, it's not as high as you may think, considering the general economic or, excuse me, geopolitical situation going on and the possibility of U.S. involvement in the Israel-Iran conflict this morning.
Also looking at some other parts of the market, including tech. Taking a look at tech this morning. Different parts of the tech landscape, if you will. You see the ARK Innovation ETF up more than 8% week to date. You see in the MAC7 ETF just up about a half a percent week to date. The cloud computing ETF pulling back about a third of a percent. And down here, software down about three quarters of 1%. This one's interesting.
Cybersecurity represented by the CIBR ETF up over half a percent. Again, we're going to talk to the CEO of Tenable coming up about cybersecurity right now and how the Israel-Iran conflict could be impacting the threat landscape. Taking a look at some of these same ETFs in the pre-market right now, you can see the ARK Innovation ETF, again, it's higher, up over three quarters of one percent. The cybersecurity ETF pulling back fractionally.
The software ETF pulling back just about a half a percent down here. Cloud computing pulling back more than 1%. Also looking at gold this week. We were just talking about gold and the move to safe havens. Right now you're seeing gold pull back just about 1% in the pre-market. Week-to-date, gold actually down, down about 2.3% of 1%. And also looking at the Treasury market this morning. Yields holding steady after that rate decision on Wednesday.
The benchmark right now at 4.39. Again, the Fed signaling two rate cuts later this year. But again, Jay Powell saying take that with a grain of salt.
All right. That's your setup now. We're going to turn to the cybersecurity sectors. We're just talking about U.S. companies. They're being warned to brace for potential cyber attacks from Iran as the conflict with Israel. It continues to escalate. Two leading cybersecurity groups, the I.T. Sharing and Analysis Center and the Food and Agriculture Information Sharing Center, issuing a joint statement over the past week calling on businesses in all sectors.
to take immediate action to boost their defenses. Earlier today on CNBC, the U.S. ambassador to NATO echoed those concerns. The first shot of World War III is going to be a cyber attack. It's not going to be tanks in Poland. And so we need to think about how we harden our societies, how we harden our infrastructure.
Joining me now is Steve Vince, co-CEO and CFO at Tenable, a cybersecurity company with more than 44,000 customers, including two-thirds of the Fortune 500. Steve, good morning. Thank you for rejoining us.
Thank you, Frank. Good to be here. All right. So I want to kind of get your take on what we heard from the ambassador to NATO about the idea that if this threat, excuse me, this conflict escalates, that cyber attacks, that might be one of the first areas that we're going to see some type of action between the nations and between this region. What are you seeing so far, at least in the last week or so, when it comes to cyber attacks related to the Israel-Iran conflict?
Sure. Well, first, it's important to note that cyber has become integral to modern military operations. It's also an important domain of conflict, cyberspace, alongside air, land, and sea. And we often see military forces, even today, launch major cyber offensives to weaken communications, to attack critical infrastructure.
as a means to advance military and create military advantage. Israel and Iran, they're home to some of the world's most sophisticated and skilled cyber hackers. And so clearly we're likely to see more cyber attacks in instance. Actually, we are. Some have been reported. Others have not. You know, not just in the Middle East, too.
But we're likely to see more cyber attacks and incidents outside of the Middle East, possibly in the U.S., really depending on our involvement. And I think Iran is painfully aware of this, the likelihood of attacks. We just read this morning it was reported that they're proactively imposing a nationwide blackout on the Internet and telecommunication systems.
Stakes could not be higher. Cyber attacks are not just about stealing credit card data anymore. Cyber can be a very disruptive force, unfortunately. I want to go back to something you said. You said Iran is one of the, I guess, the leading areas of cyber where cyber bad actors can be found, essentially. That sounds like what you're saying. I wasn't aware of that. I mean, what kind of bad actors do we generally get from Iran? Are these people that...
invade the databases of U.S. companies and hold it hostage? I mean, what kind of action could we potentially see from Iranians?
Yeah, and just a point of clarification there, what I'm really referring to is home to some of the most skilled cyber hackers and workers. And cyber can be used as both offensive and defensive measures. From an offensive perspective, obviously used as a means to create an advantage whenever there is conflict. It's a part of military operations, as I mentioned before.
attacking critical communication systems, attacking infrastructure. - Understood, so most skilled cyber professionals, or some of them, are coming out of Iran. So what does that mean when it comes to the threat exposure here in the US, specifically for US companies? - Well, I think companies need to be extra vigilant during this time.
there's clear corollaries. Whenever there's military conflict, even economic uncertainty, we see higher incidence of threats. We see more cyber attacks. And again, some are reported, some are not. And I think it's really important for companies to understand the risk,
understand it proactively, understand what the susceptible next step is. I don't mean to interrupt you, but let's get a little bit more specific. I mean, some of your customers that people would know, Verizon, American Eagle Outfitters, and also Emerson Electric, what are you doing for them and what are you advising them to do? You're in the exposure management space. So it is kind of proactive cybersecurity, as you were mentioning. It's offense in addition to defense. So what are you telling these customers to do?
Well, you know, at Tenable, we really focused on exposure management, as you mentioned, which is this pre-breach preventative security. And that's a little different from detect and respond type technologies and approaches. Enterprises today continue to modernize and deploy technology at a very rapid rate.
And that has expanded the attack surface. And from a security perspective, we now have multiple tools, multiple vendors, multiple data sets, which is a big challenge for organizations to understand their risk holistically. And Tenable, our exposure management platform, pieces all that data together from things that we secure and assess as well as from third party providers. So customers can understand the risk holistically.
And also, Steve, we're almost out of time, but I want to ask, what is the risk? What is the risk from these Iranian professionals? Essentially, I mean, Israel's our ally, so I'm assuming you're not talking about any threat from Israel. But when we're talking about these potential attacks from Iran, what would the attacks look like?
Well, I think it can be a wide range of attacks. It could be crippled communication systems. It could be a denial of service. It could be a way to infiltrate systems, to exfiltrate data. I mean, the goal here is to create upheaval, to create...
uncertainty, to create disruptions. And again, it's not just part of military. You're seeing attacks really at the civilian level, attacks on municipal water supplies and attacks in manufacturing facilities. So yes, there's certainly offensive cyber attacks can have a military component to create advantage there on the battlefield. But we're seeing attacks at the civilian level to cripple our systems and disrupt our way of life.
All right. Steve Vence, co-CEO of Tenable. Great to see you. Thank you for joining us, especially with that insight on some of the threat landscape right now. Have a great day. Thank you. All right. Coming up here on Worldwide Exchange, bracing for a heat wave and watching the stocks that could ride the thermometer to new highs. We're back right after this. Stay with us.
Welcome back to Worldwide Exchange. Today is the first day of summer and the season is set to make a dramatic entrance in the U.S. this week. A heat dome, a large area of high pressure that traps heat and humidity, is expected to bring extreme temperatures to at least 40 states over the next week and potentially puts a strain on the nation's electric grids. Let's talk more about utilities and some of the top stocks in the sector. Anthony Crowdell is the senior analyst for U.S. Energy and Electric Utilities at Mizuho. Good morning. Good to see you.
Hey, good morning, Frank. All right. So is a heat wave necessarily good for utilities? Does that increase profits? Does it increase revenue? What does it do? A little of everything. It's definitely really good for utilities because we're spending at record levels. Just to give you some numbers here. Five years ago, I think the sector. So if I just use electric gas and water utilities, we're spending about 150 billion a year in capex.
And in 2026, we're going to be up over 50 percent, spending close to $250 billion. So all this infrastructure upgrades, all of this capex, we want to show the regulators, we want to show the customers that it's worth it and the grids never look better and stronger. So the heat wave is good that we're able to show off a little that we're ready for. Profits and everything else, it varies by state. Strangely, some states, you know, if you think of like Exelon, Tigger, EXC,
In Illinois, they're decoupled, meaning they don't make any additional money when it's very hot. They don't lose or don't make as much when it's cold. Think about it. It's set up there for efficiency. So we love the heat waves. We love that they test the grid. And we love to show regulators that all this capital spending is worthwhile. All right.
All right. Is there you just mentioned Exelon. Sounds like it's one of your top picks. Are there some utilities that benefit more from the heat wave as opposed to others? So you're saying that one, they don't make more money if it's hot or cold. What about the ones that make more money when it's hot? Because we're about to go through a sustained heat wave.
Yeah, you know, there are utilities that you do make more when it's hot, but just clearly it's beneficial. You do have a little offset where if you think about very hot weather, extreme weather, you do have companies rolling trucks and a little higher maintenance. So, yes, like we think of you to like WEC located in Wisconsin.
i think the heat dome is really focused on the mid-atlantic and uh the great lakes state so you think of wec wisconsin they're going to make more money with this heat it's clearly beneficial to them it does come with a little oh and have a little higher maintenance expense because they want to maintain uh this high uh system uh reliability so we're happy to see that all right so two two of them that benefit from the heat wave uh excellent in wec um i want to talk more about just
more the longer term and second half story when it comes to utilities. Our colleague Pippa Stevens did a great story looking at data centers and some of the deals they're getting from states. Data centers are obviously big power users overall. We're looking at the second half of the year with the outlook when it comes to utilities, with also the thought, at least in the back of the mind, that we might get two rate cuts this year.
So, yeah, it's never looked better. So, you know, I started this when I had hair maybe 20, 25 years ago. And the outlook for utilities has never looked better. As you said, Frank, this data set of thematic finally give us load growth. We had, you know, I think since 2010, 2011, we had flat to declining load growth. All of a sudden, now you throw data centers in there. And on the national average, we're probably growing 2% to 3%. And there's some pockets we're growing high single digit, maybe even a little north of
single digits. So the data set of thematic is great. So that's fueling this low growth. That's fueling all this investment, as we always keep talking about. Rate-based drives earnings growth. And so the more they can invest in infrastructure, the more they can. We love all of that. So that's the really nice thing. Now, you mentioned also rate cuts. As much as I want to push to you that we are growing earnings more than we ever have, probably average earnings growth is somewhere around 7%. If you think of the S&P 500, I think over the last 20, 30 years,
It's growing earnings slightly less than 7%, you know, but whatever. We're in line to S&P earnings growth, but yet we traded an 18% discount and we pay a much better dividend or a much better yield. You throw in here two rate cuts, Frank, and it's going to supercharge this sector with this dynamic that we have behind us. So we're really happy about utilities, the data centers and potential rate cuts. All right, Anthony, two things. Number one, going ball works for you. So just keep it going, man. It's a good look for you.
Number two, with all this in mind, are utilities still a defensive sector? Is it still defensive with the fact that tech, which seems to be the ultimate growth sector, is really dependent on it? And we have some other structural tailwinds like hotter weather and just more use overall.
You know, Frank, all of them might love to bang the table and say we're no longer this bond proxy or we're no longer as defensive. But I think at the end of the day, we are. We're still viewed as this. Although we have, again, better earnings growth, we have this data set of thematic, all these things, I think we're still viewed as a defensive sector. I think all of us in the, if we use the term utility mafia, okay with it. You know, when you saw like earlier this year in January where everyone's concerned about deep seek,
our sector thrived, valuations thrived, and we really ran up. So as much as we don't want to say we're in bond proxy, we still are. So we'll take it. We'll be fine with it. Everything's great about it. But our earnings growth, I don't know why more people don't invest in this sector, given we're trading at such a discount, and we're given this much earnings growth and paying a much better yield. We've never been as attractive as we are today.
Anthony Crowdell, we got to leave the conversation there. Great to see you. Thank you very much. Your top pick in the space. Excellent. All right. Coming up here at Worldwide Exchange, all that glitters should be your portfolio. According to my next guest, the bull case for gold shares when we return. Take a look at the GLD ETF, though, pulling back about a quarter of a percent right now.
Welcome back to Worldwide Exchange. As we close in on the 6 a.m. hour, there's a few big stories that we're following this morning. CNBC has learned that earlier this year, Meta tried to buy an AI startup launched by OpenAI co-founder. By an OpenAI co-founder, that offer was turned down, as well as Meta's attempts to hire that co-founder. The company will now hire the startup's CEO, Daniel Gross, as well as former GitHub CEO, Nat Friedman.
A potential setback for a Google appeal as an advisor to the EU's top court agreed with antitrust regulators that a nearly $5 billion on a nearly $5 billion fine from 2018, the EU said Google uses Android operating system to block its rivals.
Separately, the EU reportedly wants more information about Elon Musk and X and about changes to the company's corporate structure following XAI's $33 billion deal to buy the social media platform. SoftBank founder Masa-san reportedly looking to team up with Taiwan Semi to create a trillion-dollar industrial complex in Arizona to build robots and AI. According to the report, SoftBank's already spoken with federal and state officials to discuss tax breaks.
Also, according to these reports, SoftBank spoken with Commerce Secretary Howard Lutnick. China's exports of rare earth magnets cratered in May, falling 74 percent from a year ago. Those exports to the U.S. were nearly shut down completely, down 93 percent. The rare earths are at the center of the trade dispute between the U.S. and China.
And the L.A. Lakers are being sold for, get this, about $10 billion. The Buss family will sell its majority stake to minority owner Mark Walter. The Buss family will keep about 15% of this storied franchise that just recently got lucid donches, by the way. Just got lucid for like almost nothing. That's just an opinion.
Also, SpaceX engineers are still investigating an explosion involving the company's Starship rocket, the unscrewed, uncrewed mega rocket exploding during a static rocket ground test early on Wednesday. SpaceX describing the explosion as, quote, a major anomaly while preparing for the test flight later this month. No injuries reported, though the Starship, this is the fourth Starship explosion so far this year. Elon Musk posted on X, this is a quote from him, just a scratch, just a scratch.
All right, taking a look at U.S. stock futures right now. As you can see, they're in the red across the board, in the red all morning long, but off the lows of earlier. Right now, it looks like the Dow would open about 80 points lower. We'll see you right after this break. Stay with us.
Worldwide Exchange. One more quick check on U.S. stock futures, as we mentioned in the red across the board, but well off their lows of earlier now. Looks like the Dow would open about 55 points lower. Let's get set for the day ahead and bring in Barbara Duran, chief investment officer and senior portfolio manager at BDA Capital Partners. Barbara, good morning. Thanks for joining Worldwide Exchange. Morning. Pleased to be here. So what do you make of the action we're seeing in the futures? I mean, we were down earlier, not down big, down about a quarter of a percent, but we continue to kind of just move higher throughout the morning without any news or any real reason.
Well, I think the direction of the market has been higher. We've seen a V-shaped recovery since the lows of April. And I think you've seen pretty good, solid economic data. We just had the Fed policy meeting and announcements on Wednesday, and there was no change as expected, but they did lower their GDP forecast and they did raise their inflation forecast, which is the second time this year.
So I think that right now we're on hold. You know, we're waiting to see what happens in terms of the tariff flow through because I think there's a big expectation that there's been a lot of pull through forward buying that's going to be worked off and we should start to see it in the numbers. But at this moment, the investors are expecting that there will be some impact, but it's pretty much been discounted in the market. We've recovered a lot since the April 2nd announcements that appear to be just intolerably high.
So your word of the day is patience. And so, you know, the Fed's obviously trying to stay patient. They're trying to figure out the impact of tariffs. The president's very unhappy about it. What do you think about the market? Is the market just being patient, hoping for those rate cuts? You think the market's a bit rattled by the idea that the rate cuts, while they signal for two, even Jay Powell said take it with a grain of salt, and it doesn't seem to be a clear path. No.
No, I agree. I think I use the word patience because it's not only about the Fed because they are waiting to see. They've been very clear. Look, we don't know the balance of risk, how it's going to change if it changes in terms of jobs versus inflation. And so you're waiting. And I think right here with the market has had, as I mentioned, this big V-shaped recovery where 22 plus times earnings, that's historically pretty high. And so there's not a lot of upside. We don't have any immediate catalysts. Yes, the tax package is going on right now, but a lot of that is just extension of tax cuts.
And right now, the Iran-Israeli conflict seems to be contained. It seems regional. Even if we do decide to move, it's probably not going to have a major impact. So I think the market will just be chopping about here. You could see people are looking for the laggards, where to go, any pullbacks and great names people would be buying. But, you know, there's not a lot of upside action, I think, in the near term. But then again, not a lot of downside until we get more data and we have to see where the risks are. Is there a risk to the upside or the downside?
I want to get to your pick because we're almost out of time. It's the GLD. So we were just hitting this earlier. Gold's actually down this week. But year to date, look at the GLD. It's up big. It's up over 26 percent, but been a bit range bound over like the last week or so, even though we've seen a lot of geopolitical tensions. I'm going to put it like that. Are you surprised by that? And do you think it's still a buyer or do you think it might actually have just kind of hit its its level of resistance when it comes to gold, at least for this period?
Yeah, well, Frank, that is the right question. I think in the near term, it's probably had a bit of a run. Like anything that's had a big run, it should pull back. But I think there's been some real structural changes in gold. And right now, gold is reacting in classic fashion to fears about the economy, geopolitical concerns.
inflation, et cetera. But I think there's a structural change has been central banks really buying more gold. In fact, one of your previous guests, when he was talking about the dollar, talked about since 01, the shift in foreign currency reserves out of the dollar from 71% of holdings to 57%. And where is it going? It's going into gold. And that was really given a big upshift in 22 when Russia invaded Ukraine and their 300 billion in their foreign reserves were frozen.
right? And so a lot of other central banks said, hey, wait a minute, this could be us next time. So you've seen emerging markets, central banks increase their buying by five times
times every year. And so that trend is going to continue. And you will have moments right now where it's up because of the uncertainty. It'll come back. But I think there's a longer term trend. And I think, you know, you could have gold as a core holding in your portfolio because of these changes. Plus, you have competition from the GLD, from the ETFs going after and buying the same gold.
One last quick question. We've got to get out of here. Cybersecurity, what's your take on it? We were just talking to a cybersecurity CEO just a bit ago, just talking about the sophistication of Iranian cybersecurity professionals, some incidents involving the U.S. and other nations and hacking when it comes to Iran in recent years. And you look at the chart here since, quote unquote, Liberation Day, the CIBR cybersecurity ETF up double digits, well outpacing the S&P. What's your view on cyber right now?
Well, I think your previous guest is spot on. The need will only increase. And this, you know, current environment highlights. And I think he's right about modern warfare, where it's going to happen, where we should be concerned. And so I think that's also that's a secular theme in the portfolio. Names like CrowdStrike or Palo Alto. And there's a whole host of other names. But right now, those are the leaders and they should be court holdings in your portfolio because of that. These threats will only get more sophisticated and more intense.
Barbara Duran, we've got to leave the conversation there. Great to see your pick for us today, the GLD. Have a great weekend. You too. As we had a break, two can't-miss interviews coming up today. First at 8.30 a.m. Eastern, it's a CNBC exclusive with Fed Governor Christopher Waller. Then coming up at 4 p.m., don't miss San Francisco Fed President Mary Daly on the OT. Once again, that's a CNBC exclusive. One more look at the futures. We mentioned all morning long in the red across the board, but well off the lows. Dow looks like it would open 40 points lower.
You've been listening to CNBC's Worldwide Exchange. You can always catch us live weekdays at 5 a.m. Eastern.
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