Transcripts For CNBC The 20240703 : comparemela.com

Speaker, but the gavel is far from guaranteed. How this might play out with just over a month until a potential shutdown. But first, the latest on these markets. Dom chu has the numbers. A lot of fluctuation today. And we just flipped to marginally red on the s p 500 for marginally green on the s p 500. But its been a day of ups and downs. 43. 75 the last week for the broader s p 500. At the highs of the session, the trading range had us up about nine points, down 14 at the low. If we were to tilt positive to close the day, it would be a fiveday winning streak for the s p 500. But a 43. 77, thats the state of play. The dow just 0. 1 of a 1 decline. And the nasdaq, up about one quarter of 1 . 25 points higher, 13,684. One of the elements of todays trade is the continued onslaught being put against the consumer staple stocks. Hormel foods, gave a projection today, down about 10 . The worst performing stock in the s p 500, lamb wesston, down 7 . Keurig dr pepper down. And kip we areallyclark and cl clorox, you are seeing some upside for kimberlyclark on a marginal basis. And just to give you an idea how much the underperformance has been, this is going all the way back yeartodate. That gap has widened. The s p 500 up 14 points, the Consumer Staples etf down 11. And then the stock of the day, well give you a check on birkenstock, yesterdays hot ipo. The price was 46 person share, it opened at 41, and currently at 38 right now. That means from that high down to where we are now, roughly 17 below the ipo price. So keep an eye on that. Well see whether or not theres any stability to that ipo. Not so much in todays trade or yesterdays as well, kell. Back over to you. Dom, thanks. Dom chu. Consumer prices coming in hotter than expected this morning, raising concerns about more fed tightening. The cpi jumped 0. 4 last month, up 3. 7 from a year ago. The core, up 0 p. 3. My next guest says the stickiness of Services Inflation keeps the prospects of another hike alive. Joining me now are my guests. Welcome to both of you. Cathy, ill start with you. I think youre sort of narrowing the street right now. You dont expect another hike but you are watching the services and thinking maybe. Thats right, kelly. We think theyre done and they dont necessarily need to do more. The backup and longterm yields and tightening of financial conditions overall will do some to have work for the federal reserve. You see these core Service Numbers and you look at the super core, which strips out rental inflation, its still quite buoyant and up 0. 6 on the month. And year on year, still relatively elevated. So it doesnt give them quite the confidence to declare yes, were oven our way to 2 . Theres still that stickiness there. The last time i saw fed funds, they were a little under 50 for maybe november, december for another hike. What do you see . I see quite a bit under 50 . I just looked at them and make sure i give you the right quote here. Its one of the things im impressed with today is how little the market repriced in a december rate hike. Youre at 11 for november and at 38, call it 39 for december. I would have thought it would have been higher. Its been higher in the past. Obviously, that could still go higher yet. But the twoyear has been pretty well controlled. Im not sure that im concerned about this report. I was sort of impressed with how the overall core hung in there despite that what was in a rise in rents and the owners equivalent rent. I have the threemonth annualized sorry, im going to doublecheck my numbers here. But i have here the threemonth annualized 2. 5 , kathy ive got 3. 5 or 3. 6 for the threemonth annualized. I think thats okay for the fed to pause here is my bottom line on it. Yeah, i mean, i dont disagree with you. I think it is okay for them to pause, too. I just think that, you know, when i what im looking out is stripping out the rent. Yes, i think there was an anomalous increase, and our model suggests rental inflation should continue to resume a downward trend. But a lot of the reason that core overall was held down is because of core goods prices. When you take out rent, core service is still running quite elevated. So, again, i dont think this tips them and suggests that they have to raise rates. I just think it increases the odds a little bit, and well have to see if the pce data particularly. Let me jump in there. We had a 30year bond auction at the top of the hour. Lets bring in Rick Santelli with more. What happened, rick . Yields going higher, heading in. Which means the price was dropping in as investors were running in to try to catch those knives as they were falling. Believe me, they werent very aggressive. I give this a dminus. The yield, 4. 837. Heres the quicker, i was monitoring the high yield in one issue market. Five minutes before the bidding ended was 4. 80 . Then it moved to 4. 805 and thats where it ended. The yield, 4. 837 was out of bounds to the original range, which mean they had to scale it all the way back to fill in enough orders to take down the auction. Not good. Ill hit the highlights. The biggest highlight was the Dealer Community ended up with 18. 2 of the auction, the most they have taken since 21. You want the dealers to take smaller amounts because you want investors to take bigger amounts. You see the intraday 30s, making new high yields go right in. We broke the pattern of staircasing lower, as yields shot up. If you look at 10, same thing. We have broken the pattern so you can talk about flight to safety. Im not saying it doesnt exist. But we are now seeing other influences that are seen taking precedent in investors minds. Finally, how do i know all of that seems to be true . The dollar index breaking the mold of staircasing lower by shooting up today and breaking the pattern. Kelly, back to you. Look at that dollar index jumping back up towards 107. Kathy, ill turn back to you. The fact that these bond auctions are becoming such an event. Im looking at the dow now, down 129 points, it shows the concern that every time we see rates a little bit higher than where we might be comfortable having them. Yeah, thats right. You know, regardless of whether the fed raises rates one more time or not, its really theyre going to be in no hurry to cut rates. The one thing that the data supports is that its a gradual grind lower and inflation will be bumpy at times. That gives the equity market pause. The discount rate is going higher, and companies are going to have to start to refinance their debt this year. They had a reprieve there for a while. They locked in, and now that debt has to be rolled over, starting next year. So that will be painful. I think im going to go ahead and put myself squarely in the lags are long or longer. Theyre not shorter. You know, even just looking at the journal has a great recap of the federal deficit now that we have closed out the year. The average debt that the rate we are paying on the debt is still below 3 . The lags are going to come through the budget, through Corporate America and to consumers here. So i think theres still a lot to reckon with. I think thats right. I like the way kathy put it. The fed doesnt have to do more here. I think where the fed is, in this zone of letting it ride, you keep hear thing idea of, of, of being patient. I think that being patient is kind of a euphemism for, lets see what kind of destruction we have created here in terms of this incredible surge in rates. All of those things are on their mind. In fact, you and raphael bostic, both of you mentioned corporate debt rollover. Im just wondering if theres some companies that may have to merm merge with other companies in order to stave off bankruptcy. Of course, nobody wants to take on a terrible company, but maybe theres one at the margin that would do better. So you might see that happening overtime. But ultimately, there are cliffs that happen. They are out in a number of years, 24, 25, 26, when you look at the refinancing needs out there. But certainly, theres going to be a chill put on the kind of expansion that would happen at these current rates. Were watching the tenyear as it yields back up to 4. 7 , kathy what would you add in terms of, you know, yes, were going into an earnings season. I think theres still major questions about 2024. Thats right. Its really going to come down to, i think, a few things. Inflation, number one. And then the fed reaction function and whats happening with reits. But also wage costs. And if companies have somehow found a way to adjust and Profit Margins withstand all of that, thats really good news and definitely applaud that. But if they start to kneefeel t pressure, that could be a little bit more of a, you know, slowdown signals for next year. Yeah. And this morning is a perfect illustration of that. Companies like walgreens, even de delta, they are seeing shares rewarded. Well leave it there. Thank you both. Dow is down 161. We have updates on the Sam Bankmanfried trial. Kate rooney has more. Reporter were at a launch break. The defense team still coming up pretty slow. We have not had any fireworks so far. They are jumping around a little bit after yesterday where they did not land any of the crossexamination and for other key witnesses, its a slow start, kelly. They are jumping around in terms of the timeline here. And there hasnt been a clear line of questioning. So were watching that. But it does not seem that they have landed any of the questions here. A lot of talk about signals. So these executives sent many of their messages, which is the way they communicated, these encrypted apps to auto delete. So the defense hinting that some of these conversations we dont have evidence of, that its caroline ellisons word versus Sam Bankmanfried. We learned about another boyfriend she had. During the crossexamination, she talked about a former employee that she was dating. One notable admission, she said they could have been better leaders, and that Sam Bankmanfried may not have nobody about certain issues with bank accounts. There was a side bar we just learned about yesterday in the court transcript. The prosecution went up to the judge and said that sam bankmanflied was reacting to certain comments, laughing at certain points. The judge said you need to speak to your client about that. It could affect the jury and the witness. The judge basically saying top to your client and tell him to stop reacting. Well bring you updates as we get them. Kate, thank you very much. A saga indeed. Coming up, were on watch for the white houses next move in the israelhamas war. And what that all means for the surging deficit. Well ask one strategist next. A closer look at the health of the consumer. What did we glean from deltas earnings this morning . And the Quality Companies our trader is looking to buy in this environment. And here is a look at markets, which have just tilted towards session lows. The dow down half a percent, similar for the s p. The nasdaq just shy of that. Look at the russell 2,000, down almost 2 today. This is a key benchmark for a lot of Money Managers trying to figure out if there is a weakening signal. Not helping is that tenyear note. The 30year up 15 basis points on the day. That seems to be why the move here has suddenly soured. The exchange is back after this. Together, we built something truly beautiful. It takes years of dedication to get to this milestone. The New York Stock Exchange is a symbol of what america is all about the potential of an american dream. It is day one. A lot of work has happened to lead to this historic moment. The only way you can move a Society Forward is a true expression of freedom. heres why you should switch is a true expression from chrome to duckduckgo. Duckduckgo is a browser you download to your mobile and desktop devices. Unlike chrome, the duckduckgo browser has privacy builtin. It comes with a private alternative to google search, which doesn■t spy on your searches, and it blocks cookies and creepy ads. And theres no catch. Its free. We make money from ads, but they dont follow you around. Join the millions of people taking back their privacy by downloading duckduckgo on mobile and desktop today. Welcome back, everybody. The israelhamas war is entering its sixth day of fighting as the u. S. Secretary of state travels to israel offering americas support to benjamin netanyahu. Ali velshi is there now with more. What can you tell us . Reporter were a few kilometers from the gaza border behind us. Its been a quiet hour or so. Typically what you see is rockets going up from gaza and the iron dome here intercepting them. Every now and then youll hear thuds, which is missiles hitting gaza. The air assault and sea assault on gaza continues. Antony blinken in the region, expressing strong support for israel, but making a few other stops to regional leaders to see how everybody can keep this under control. There is a second message, thats with the ships pulling up, two battle groups are pulling up off the mediterranean, the United Kingdom is sending some, too. Thats not for this fight in gaza. Thats to warn lebanon and syria, the iranians and the russians not to get involved in this fight. Let this play out the way it does. How its going to play out is that there are hundreds of thousands of troops massing on the border behind me, ready to go on, with a ground incursion. One of the problems is that there are between 100 and 150 hostages. Once they go in, the families are worried that the lives of those hostages will be in peril because they may be used as human shields or the resistance to letting them go will increase. So the families are saying, get our people out first, use negotiation if you have to. But the rest of israel is really angry, and really fearful. And they want that ground incursion to start. For the moment, no ground incursion has started, but lots of missiles flying above us. Kelly . Ali, thank you very much. Freez please keep us posted. Its a tricky time for congress to be without a speaker. House republicans voted yesterday to nominate majority leader Steve Scalise to the role, but hes struggled to gather the 217 necessary votes to secure that gavel. Lets bring in the Founding Partner of Capital Alpha partners. James, thank you very much for joining us. Great to be here, kelly. Love your show. Thank you. What is the latest that you are hearing . The latest im hearing is that Speaker Mccarthy met with the Republican House Conference Today and outlined some plans, he outlined a possible strategy for getting Appropriations Bills done. He tried to answer any questions that they had. He said that he wasnt going to make side deals with any of the members, as Kevin Mccarthy did when mccarthy was running for speaker. But i dont think he moved any significant number of members. Hes still got more than a hundred members to go before he can lock up the 217 he needs. So we are expect thing drama to take time. Theres been a subjggestion tha some jewish members might support pat mchenry for interim speaker for a couple of months just to make sure the house is no longer paralyzed and we can move forward on a package of aid for israel and also ukraine and other purposes. So it sounds like people are pulling back, maybe looking at keeping mchenry in this temporary position for some time. But how much authority does he or congress have if this remains the status quo . Hes speaker protem, but the rules are tricky. Hes speaker protem under a special 9 11 era succession rule that says if you are on a list the speaker keeps in his desk drawer, you can be speaker for three legislative days. But its possible for designated speaker for a longer period of time. You can also be voted in as speaker, in which case you have many more powers. So i think its quite possible that the house will choose to vote for mchenry as speaker protem, with a more complete package and authority to handle Appropriations Bills and continuing resolutions and other bills in the usual way. Thats not ideal. It doesnt mean he has enormous leverage to move the republican conference. But it certainly means they would be in a position to move expeditiously on these emergency bills. What would it mean for keeping the government funded past the november 17th deadline and avoiding a shutdown . Im worried about that. Im not hearing anything right now about a strategy for a continuing resolution. I think that whatever shutdown we see on november 17th is likely to be a relatively short one, less than a week or two, because there is a discharge petition ready that would be able to take a senate past the continuing resolution and move it to the house floor, where it would almost certainly pass with a pitchbipartisan vote. So this continuing resolution would essentially be a one and done type of thing, and we would have to find some new way to get to the end of the year. And i dont know how much you or folks down there follow bond yields. This is all kind of new in a way. But look at what happened just the top of this hour. They issued 30year dead. There wasnt as much demand as hoped. This is part of the treasury to fund the deficit. All of this has been much bigger than expected this year, and could persist into 204. So at some point, i do wonder how much pressure the market will put on policymakers, and what that will even accomplish given the dynamics you have described. Kelly, you have identified a already very important point. This is a huge shock to washington. We have gone on for decades where it never mattered how much we spent or how big the deficit was. The United States was always able to finance that. But with the massive expansion of debt we have seen during covid, a line has been crossed. We dont have the debt coverage ratios we used to have. We dont have the financial flexibility. Suddenly, those Credit Ratings from the major agencies may be meaningful. And i think that washington is very well aware that the bond markets are paying attention, and washington is also awash that the shortterm treasury bills are rolling over in large numbers and well have to refinance them at a much higher rate. Exactly. Cant really see a path from here to there, james. Well bring you back as this plays out. Youre my favorite, kelly. Glad to come back. Still to come, negotiations between actors and Consumer Staples<\/a> etf down 11. And then the stock of the day, well give you a check on birkenstock, yesterdays hot ipo. The price was 46 person share, it opened at 41, and currently at 38 right now. That means from that high down to where we are now, roughly 17 below the ipo price. So keep an eye on that. Well see whether or not theres any stability to that ipo. Not so much in todays trade or yesterdays as well, kell. Back over to you. Dom, thanks. Dom chu. Consumer prices coming in hotter than expected this morning, raising concerns about more fed tightening. The cpi jumped 0. 4 last month, up 3. 7 from a year ago. The core, up 0 p. 3. My next guest says the stickiness of Services Inflation<\/a> keeps the prospects of another hike alive. Joining me now are my guests. Welcome to both of you. Cathy, ill start with you. I think youre sort of narrowing the street right now. You dont expect another hike but you are watching the services and thinking maybe. Thats right, kelly. We think theyre done and they dont necessarily need to do more. The backup and longterm yields and tightening of financial conditions overall will do some to have work for the federal reserve. You see these core Service Numbers<\/a> and you look at the super core, which strips out rental inflation, its still quite buoyant and up 0. 6 on the month. And year on year, still relatively elevated. So it doesnt give them quite the confidence to declare yes, were oven our way to 2 . Theres still that stickiness there. The last time i saw fed funds, they were a little under 50 for maybe november, december for another hike. What do you see . I see quite a bit under 50 . I just looked at them and make sure i give you the right quote here. Its one of the things im impressed with today is how little the market repriced in a december rate hike. Youre at 11 for november and at 38, call it 39 for december. I would have thought it would have been higher. Its been higher in the past. Obviously, that could still go higher yet. But the twoyear has been pretty well controlled. Im not sure that im concerned about this report. I was sort of impressed with how the overall core hung in there despite that what was in a rise in rents and the owners equivalent rent. I have the threemonth annualized sorry, im going to doublecheck my numbers here. But i have here the threemonth annualized 2. 5 , kathy ive got 3. 5 or 3. 6 for the threemonth annualized. I think thats okay for the fed to pause here is my bottom line on it. Yeah, i mean, i dont disagree with you. I think it is okay for them to pause, too. I just think that, you know, when i what im looking out is stripping out the rent. Yes, i think there was an anomalous increase, and our model suggests rental inflation should continue to resume a downward trend. But a lot of the reason that core overall was held down is because of core goods prices. When you take out rent, core service is still running quite elevated. So, again, i dont think this tips them and suggests that they have to raise rates. I just think it increases the odds a little bit, and well have to see if the pce data particularly. Let me jump in there. We had a 30year bond auction at the top of the hour. Lets bring in Rick Santelli<\/a> with more. What happened, rick . Yields going higher, heading in. Which means the price was dropping in as investors were running in to try to catch those knives as they were falling. Believe me, they werent very aggressive. I give this a dminus. The yield, 4. 837. Heres the quicker, i was monitoring the high yield in one issue market. Five minutes before the bidding ended was 4. 80 . Then it moved to 4. 805 and thats where it ended. The yield, 4. 837 was out of bounds to the original range, which mean they had to scale it all the way back to fill in enough orders to take down the auction. Not good. Ill hit the highlights. The biggest highlight was the Dealer Community<\/a> ended up with 18. 2 of the auction, the most they have taken since 21. You want the dealers to take smaller amounts because you want investors to take bigger amounts. You see the intraday 30s, making new high yields go right in. We broke the pattern of staircasing lower, as yields shot up. If you look at 10, same thing. We have broken the pattern so you can talk about flight to safety. Im not saying it doesnt exist. But we are now seeing other influences that are seen taking precedent in investors minds. Finally, how do i know all of that seems to be true . The dollar index breaking the mold of staircasing lower by shooting up today and breaking the pattern. Kelly, back to you. Look at that dollar index jumping back up towards 107. Kathy, ill turn back to you. The fact that these bond auctions are becoming such an event. Im looking at the dow now, down 129 points, it shows the concern that every time we see rates a little bit higher than where we might be comfortable having them. Yeah, thats right. You know, regardless of whether the fed raises rates one more time or not, its really theyre going to be in no hurry to cut rates. The one thing that the data supports is that its a gradual grind lower and inflation will be bumpy at times. That gives the equity market pause. The discount rate is going higher, and companies are going to have to start to refinance their debt this year. They had a reprieve there for a while. They locked in, and now that debt has to be rolled over, starting next year. So that will be painful. I think im going to go ahead and put myself squarely in the lags are long or longer. Theyre not shorter. You know, even just looking at the journal has a great recap of the federal deficit now that we have closed out the year. The average debt that the rate we are paying on the debt is still below 3 . The lags are going to come through the budget, through Corporate America<\/a> and to consumers here. So i think theres still a lot to reckon with. I think thats right. I like the way kathy put it. The fed doesnt have to do more here. I think where the fed is, in this zone of letting it ride, you keep hear thing idea of, of, of being patient. I think that being patient is kind of a euphemism for, lets see what kind of destruction we have created here in terms of this incredible surge in rates. All of those things are on their mind. In fact, you and raphael bostic, both of you mentioned corporate debt rollover. Im just wondering if theres some companies that may have to merm merge with other companies in order to stave off bankruptcy. Of course, nobody wants to take on a terrible company, but maybe theres one at the margin that would do better. So you might see that happening overtime. But ultimately, there are cliffs that happen. They are out in a number of years, 24, 25, 26, when you look at the refinancing needs out there. But certainly, theres going to be a chill put on the kind of expansion that would happen at these current rates. Were watching the tenyear as it yields back up to 4. 7 , kathy what would you add in terms of, you know, yes, were going into an earnings season. I think theres still major questions about 2024. Thats right. Its really going to come down to, i think, a few things. Inflation, number one. And then the fed reaction function and whats happening with reits. But also wage costs. And if companies have somehow found a way to adjust and Profit Margins<\/a> withstand all of that, thats really good news and definitely applaud that. But if they start to kneefeel t pressure, that could be a little bit more of a, you know, slowdown signals for next year. Yeah. And this morning is a perfect illustration of that. Companies like walgreens, even de delta, they are seeing shares rewarded. Well leave it there. Thank you both. Dow is down 161. We have updates on the Sam Bankmanfried<\/a> trial. Kate rooney has more. Reporter were at a launch break. The defense team still coming up pretty slow. We have not had any fireworks so far. They are jumping around a little bit after yesterday where they did not land any of the crossexamination and for other key witnesses, its a slow start, kelly. They are jumping around in terms of the timeline here. And there hasnt been a clear line of questioning. So were watching that. But it does not seem that they have landed any of the questions here. A lot of talk about signals. So these executives sent many of their messages, which is the way they communicated, these encrypted apps to auto delete. So the defense hinting that some of these conversations we dont have evidence of, that its caroline ellisons word versus Sam Bankmanfried<\/a>. We learned about another boyfriend she had. During the crossexamination, she talked about a former employee that she was dating. One notable admission, she said they could have been better leaders, and that Sam Bankmanfried<\/a> may not have nobody about certain issues with bank accounts. There was a side bar we just learned about yesterday in the court transcript. The prosecution went up to the judge and said that sam bankmanflied was reacting to certain comments, laughing at certain points. The judge said you need to speak to your client about that. It could affect the jury and the witness. The judge basically saying top to your client and tell him to stop reacting. Well bring you updates as we get them. Kate, thank you very much. A saga indeed. Coming up, were on watch for the white houses next move in the israelhamas war. And what that all means for the surging deficit. Well ask one strategist next. A closer look at the health of the consumer. What did we glean from deltas earnings this morning . And the Quality Companies<\/a> our trader is looking to buy in this environment. And here is a look at markets, which have just tilted towards session lows. The dow down half a percent, similar for the s p. The nasdaq just shy of that. Look at the russell 2,000, down almost 2 today. This is a key benchmark for a lot of Money Managers<\/a> trying to figure out if there is a weakening signal. Not helping is that tenyear note. The 30year up 15 basis points on the day. That seems to be why the move here has suddenly soured. The exchange is back after this. Together, we built something truly beautiful. It takes years of dedication to get to this milestone. The New York Stock Exchange<\/a> is a symbol of what america is all about the potential of an american dream. It is day one. A lot of work has happened to lead to this historic moment. The only way you can move a Society Forward<\/a> is a true expression of freedom. heres why you should switch is a true expression from chrome to duckduckgo. Duckduckgo is a browser you download to your mobile and desktop devices. Unlike chrome, the duckduckgo browser has privacy builtin. It comes with a private alternative to google search, which doesn\u25a0t spy on your searches, and it blocks cookies and creepy ads. And theres no catch. Its free. We make money from ads, but they dont follow you around. Join the millions of people taking back their privacy by downloading duckduckgo on mobile and desktop today. Welcome back, everybody. The israelhamas war is entering its sixth day of fighting as the u. S. Secretary of state travels to israel offering americas support to benjamin netanyahu. Ali velshi is there now with more. What can you tell us . Reporter were a few kilometers from the gaza border behind us. Its been a quiet hour or so. Typically what you see is rockets going up from gaza and the iron dome here intercepting them. Every now and then youll hear thuds, which is missiles hitting gaza. The air assault and sea assault on gaza continues. Antony blinken in the region, expressing strong support for israel, but making a few other stops to regional leaders to see how everybody can keep this under control. There is a second message, thats with the ships pulling up, two battle groups are pulling up off the mediterranean, the United Kingdom<\/a> is sending some, too. Thats not for this fight in gaza. Thats to warn lebanon and syria, the iranians and the russians not to get involved in this fight. Let this play out the way it does. How its going to play out is that there are hundreds of thousands of troops massing on the border behind me, ready to go on, with a ground incursion. One of the problems is that there are between 100 and 150 hostages. Once they go in, the families are worried that the lives of those hostages will be in peril because they may be used as human shields or the resistance to letting them go will increase. So the families are saying, get our people out first, use negotiation if you have to. But the rest of israel is really angry, and really fearful. And they want that ground incursion to start. For the moment, no ground incursion has started, but lots of missiles flying above us. Kelly . Ali, thank you very much. Freez please keep us posted. Its a tricky time for congress to be without a speaker. House republicans voted yesterday to nominate majority leader Steve Scalise<\/a> to the role, but hes struggled to gather the 217 necessary votes to secure that gavel. Lets bring in the Founding Partner<\/a> of Capital Alpha<\/a> partners. James, thank you very much for joining us. Great to be here, kelly. Love your show. Thank you. What is the latest that you are hearing . The latest im hearing is that Speaker Mccarthy<\/a> met with the Republican House<\/a> Conference Today<\/a> and outlined some plans, he outlined a possible strategy for getting Appropriations Bills<\/a> done. He tried to answer any questions that they had. He said that he wasnt going to make side deals with any of the members, as Kevin Mccarthy<\/a> did when mccarthy was running for speaker. But i dont think he moved any significant number of members. Hes still got more than a hundred members to go before he can lock up the 217 he needs. So we are expect thing drama to take time. Theres been a subjggestion tha some jewish members might support pat mchenry for interim speaker for a couple of months just to make sure the house is no longer paralyzed and we can move forward on a package of aid for israel and also ukraine and other purposes. So it sounds like people are pulling back, maybe looking at keeping mchenry in this temporary position for some time. But how much authority does he or congress have if this remains the status quo . Hes speaker protem, but the rules are tricky. Hes speaker protem under a special 9 11 era succession rule that says if you are on a list the speaker keeps in his desk drawer, you can be speaker for three legislative days. But its possible for designated speaker for a longer period of time. You can also be voted in as speaker, in which case you have many more powers. So i think its quite possible that the house will choose to vote for mchenry as speaker protem, with a more complete package and authority to handle Appropriations Bills<\/a> and continuing resolutions and other bills in the usual way. Thats not ideal. It doesnt mean he has enormous leverage to move the republican conference. But it certainly means they would be in a position to move expeditiously on these emergency bills. What would it mean for keeping the government funded past the november 17th deadline and avoiding a shutdown . Im worried about that. Im not hearing anything right now about a strategy for a continuing resolution. I think that whatever shutdown we see on november 17th is likely to be a relatively short one, less than a week or two, because there is a discharge petition ready that would be able to take a senate past the continuing resolution and move it to the house floor, where it would almost certainly pass with a pitchbipartisan vote. So this continuing resolution would essentially be a one and done type of thing, and we would have to find some new way to get to the end of the year. And i dont know how much you or folks down there follow bond yields. This is all kind of new in a way. But look at what happened just the top of this hour. They issued 30year dead. There wasnt as much demand as hoped. This is part of the treasury to fund the deficit. All of this has been much bigger than expected this year, and could persist into 204. So at some point, i do wonder how much pressure the market will put on policymakers, and what that will even accomplish given the dynamics you have described. Kelly, you have identified a already very important point. This is a huge shock to washington. We have gone on for decades where it never mattered how much we spent or how big the deficit was. The United States<\/a> was always able to finance that. But with the massive expansion of debt we have seen during covid, a line has been crossed. We dont have the debt coverage ratios we used to have. We dont have the financial flexibility. Suddenly, those Credit Ratings<\/a> from the major agencies may be meaningful. And i think that washington is very well aware that the bond markets are paying attention, and washington is also awash that the shortterm treasury bills are rolling over in large numbers and well have to refinance them at a much higher rate. Exactly. Cant really see a path from here to there, james. Well bring you back as this plays out. Youre my favorite, kelly. Glad to come back. Still to come, negotiations between actors and Media Studios<\/a> are breaking down. Even as the writers ratified their new contract this week. How the surprising setback will affect the media stocks, thats ahead. Here is a look at that 30year long bond yield at 485 today. We just mentioned they had the highest yield since may of 2007. 15 basis point increase throughout the day now, putting pressure on stocks, which have turned lower. The dow down almost 200 points at the lows. Half percent declines across the board. Here is a quick look at the map. Energy and technology are the only two sectors in the green. A third of those names down 20 or more omfr the recent highs. More on the exchange right after this. Is it possible . With comcast business. It is. Is it possible to help keep our Online Platform<\/a> safe from cyberthreats . Absolutely. Can we provide health care virtually anywhere . We can help with that. Is it possible to use predictive monitoring to address operations issues . We can help with that, too. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Fresh, warm hot dogs when im not selling hot dogs, i invest in a fund that advances innovations like robotics. Fresh, warm hot dogs, straight out of my torso one for you, one for you. Oh, youre a messy one. Cool, right . So cool. Anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. Hot dogs fresh, warm hot dogs before investing carefully read and consider Fund Investment<\/a> objectives, risks, charges, expenses and more in prospectus at invesco. Com. Welcome back to the exchange. Im Contessa Brewer<\/a> with your cnbc news update. The u. S. And qatar have agreed to stop iran from accessing a 6 billion account for humanitarian aid. The Treasury Department<\/a> briefed House Democrats<\/a> about it today. According to three sources for nbc news, when asked, secretary Antony Blinken<\/a> said of the funds, we retain the right to freeze them. Joe biden has been facing mounting pressure on the hill to stop the iran Money Transfer<\/a> amid scrutiny of irans links to hamas. The white house is negotiating with israel and egypt to arrange safe passage for americans to leave gaza. According to a senior u. S. Official who says there are between 500 and 600 palestinianamericans living there. New jersey democratic senator Robert Menendez<\/a> is facing more charges in a superseding indictment. Hes accused of accepting bribes on behalf of a Foreign Government<\/a> and acting as a foreign agent. Menendez allegedly provided Sensitive Information<\/a> to egypt and took other secret steps to aid its government. He pled not guilty to corruption charges last month, kelly. Indeed. Contessa, thank you very much. Contessa brewer. Coming up, credit card spending sank 12 last week, and september came in as the weakest month of the year. What does it say about the health of the consumeer . Thats next. Dow is down 228. There are some things that go better. Together. Burger and fries. Soup and salad. Like your Workplace Benefits<\/a> and retirement savings. With voya, considering all your financial choices together can help you make smarter decisions. Voya. Well planned. Well invested. Well protected. Circulon with scratchdefense. Built from three layers of nonstick to withstand over 350,000 metal utensil scrapes in laboratory testing. 130 times longerlasting than the competition. Get Free Shipping<\/a> at circulon. Com welcome back to the exchange. Were getting multiple reads on the consumer front tooth. Delta, dominos, walgreens all without with earnings. Shares of delta down 2 after they revised down. Dominos, they see a turn around in urs comp sales, and walgreens gaining 6 . Target also slightly higher after an upgrade to buy. Theyre bullish on improving traffic and some new products. Lets take a deeper dive, starting with phil lebeau. And kim forest joins with us her trades today. Shes sticking with names that create consumer delight over and over again. And with less than three months to go until christmas, courtney reagan, well see what we can glean from Holiday Hiring<\/a> trends. Phil, what did we learn today . Well, kelly, what we learned is that delta is still very optimistic about where they are seeing the consumer as we head towards the end of the year. Lets talk first about this narrowing of the guidance in terms of fullyear earnings expectations and free cash flow. Delta did narrow its expectation after increasing it. Now expected to earn between 6 and 6. 25 per year. So a little bit of a narrowing there. 2 billion for the full year, was expecting to bring in 3 billion. The reason for the changes, higher jet fuel cost, theyll really see that in the fourth quarter. In terms of bookings, delta likes what they are seeing in terms of domestic and international travel. There is still robust demand there. Corporate travel bookings are increasing. So we asked ed bastion, do you see the consumer slowing down at all . Heres what he told us. In the industry, we do see it in certain parts of our industry, on the lower fare side of the business. But were a very different carrier. We have premium, continuing to drive the strength of the business. We have international. And if you take a look at shares of delta, keep in mind that the other story that we asked him about that is not getting a lot of attention today is the changes that have been made to the sky miles, frequent flyer program. They announced these changes to make it more restrictive, kelly. That was three, four weeks ago. Immediate backlash, and he said okay, well make changes. Well tweak it again. He said were not quite ready. Well hear about that over the weeks to come. Because we have you, i have to ask about this surprise expansion. The uaw doing this midweek at this kentucky ford plant. What is the significance . This is the uaw keeping the automakers guessing about when there may be strikes and where. And in this case, this is a gut punch to ford, because this is a huge and extremely profitable plant for ford. The kentucky truck plant is where they build the super duty fseries tracks, the f250 to 550. Those are huge profit drivers with the expedition and lincoln navigator. The companys 8700 workers at this plant walked off the job last night. This plant is responsible for just under 20 of fords u. S. Production. And in terms of overall strikes by the uaw now in the United States<\/a>, there are 33,000 big three uaw members who are on strike. All of these plants, by the way, as you take a look at this, up to 44 plants, most are parts and Distribution Centers<\/a> for stellantis and general motors. But there are six plants in there, including three that are operated by ford. The Ripple Effect<\/a> of this, as you look at shares of ford, stellantis, and gm, we have seen more than 5,000 workers at other facilities that are not on strike, that the automakers have had to lay off, because either stampings arent needed, parts arent needed. The work is not happening because certain plants are on strike. I suspect we will see those layoffs increase over the next couple of weeks. Phil, thank you. Airlines, autos, phil lebeau. Lets dig in on the consumer and how to trade this challenged retail space. My next guest says this retailer has more room to run. Joining me now is kim forest. Welcome to you. Go ahead and reveal the name and maybe this will be a bellwether of how to play the consumer right now. Sure. This is always for the longer term investor. But we believe that a company like Urban Outfitters<\/a> knows what theyre doing, because they have been around a long time. They have been improving themselves over and over again, and then adding more brands and more slices of the pie. But what they really do is regardless of if you are an urban outfitter shopper or a home buyer, they delight you. When you walk into their stores or look at their online presence, you discover things you didnt even know you needed, and you buy them. Thats what im looking for in companies is that they can have a Product Management<\/a> or in this case a merchandising formula where they can over and over again regardless of when times are changing or tastes are changing, that they either keep up with it or theyre ahead of those changes and they have the product that people want and buy it. Thats a perfect segue to talk about cola cola, which is one of the other names here, im a little surprised. Listen, im one of the believers in this whole glp phenomenon. Maybe theyre less exposed, but it looks like sugary drinks are one of the places people cut back the most. So between that and consumer trends, why stick with this stock . Sure, they are more than carbonated beverages and super sweet carbonated beverages. Theyre a global retailer that modifies their product for each country theyre in, so they know they can dlielight those customers. But theyre expanding into coffee and alcoholic beverages. If you had looked at coca cola ten years ago, you would have bet they would have never have done that. But they are delighting shareholders at the same time by applying their knowhow of how to bring products to market, that people want to buy over and over again. And theyre doing it in adjacent areas, not just carbonated beverages. All right, all right. Down 17 yeartodate. The last name brings us back into the more tradition alter to traditional territory. Is amg a consumer play or as we look to bolster strategies, just a Place Investors<\/a> should be looking . You should always be looking in sell us and tech, because those are the items that actually Bring Technology<\/a> to east effort a company or a person. All technology is delivered on a semiconductor, just that easy. I was including amd in this group, because they too have the customer delight, although its a different customer. Its the designer of a data center or maybe its the designer of a pc regardless. This Company Knows<\/a> how to make a product that its customers want. And thats really why i picked amd. And they have changed from kind of being a second tier pc provider or even i think they were one of the first ones that did graphic chips, as well. And they have really upped their game, and it shows that they can do it over and over again. Lisa sue really is a rock star there. And they are often second fiddle to netflix in the broad discourse, but you make the case for sticking with this name. Having a nice year already. Kim, well leave it there. Thank you for your time there. Lets look ahead to the key Holiday Season<\/a> for retailers with amazon looking to hire the most workers of any company in more than a decade. Its not the only one on the hunt either, but there are some major challenges. Courtney reagan joins us with the details. So it can be a tricky holiday for a number of reasons. Store employees are asked to helpful fill online orders and given the higher theft and Violence Associated<\/a> with that. Thousands of Seasonal Workers<\/a> are being hired, but many arent looking for as mr. As they were last year. The total number is expected to fall to 410,000, versus 680,000 just last year, this is according to estimates from Challenger Gray<\/a> in christmas. Target is looking to hire 100,000. U. P. S. Is hiring less than half of last year. Macys, 38,000, 3,000 less than last year. Dicks sporting goods, about the same. Amazon looking for 250,000 Seasonal Workers<\/a>. Thats 100,000 more than last year. Total unemployment is 3 p. 8 , b there are 4. 1 million americans that are parttime. Still, its unclear if retailers can find the workers they need that are willing to deal with much more than they have in the past, without a lot of extra compensation sweeteners that i have seen in past Holiday Season<\/a>s with higher wages or additional Gift Certificates<\/a> or bonus opportunities. Im not seeing a lot of that in the hiring announcements. Great point. Indicative of how the labor market has cooled. Courtney, thank you. Still to come, the actors are nowhere near a deal, as negotiations between sagaftra and the Hollywood Studios<\/a> were suspended. We have the details, next. Before we go, lets take a look across the markets. All 11 sectors of the s p are in the red. Energy and tech giving up earlier gains, as the dow dives 260 points and yields climb still throughout the hour. The 30year now at 4. 876. Back in a moment. sfx stone wheel crafting the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . This is Spring Semester<\/a> at fairfieldsuisun unified. They switched to google tools for education because theres never been a reported Ransomware Attack<\/a> on a chromebook. Now theyre focused on learning knowing that their data is secure. theres challenges, and i love overcoming challenges. When better money habits\u00ae content first started coming out, it expanded what i could do for Special Olympics<\/a> athletes with developmental needs. Thousands of bank of america employees like scott spend countless hours volunteering to teach people how to reach their financial goals. It felt good. It felt like i could take on the whole world. Icy hot. Ice works fast. Heat makes it last. Feel the power of contrast therapy. So you can rise from pain. Icy hot. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home<\/a> james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Welcome back to the exchange. Talks breaking down between hollywood actors and the studios last night after the writers just sealed their own deal. Julia borsen has the latest as the actors strike enters its fourth month. Thats right, kelly. Negotiations collapsed last night. Information, netflix coceo said in an interview while netflix agrees with giving success based bonuses on streaming, he says what sag demanded was a bridge too far. Now, the association that netflix is part of, saying the ampdp saying sag is demanding a viewership bonus that would cost more than 800 million per year, which they say would create an untenable economic burden. Q the actors guild saying they overstated the cost of the prose pollal by 60 , adding now, actors are returning to the picket lines today as hollywoods labor issues have cost the economy more than 5 billion according to an estimate. This news of putting pressure on warners brothers, discovery and paramount in particular, warn herb brothers down 3 , paramount down 3 . Cinemark and imax shares are lower amid concerns of an ongoing strike, delaying film releases. Another surprising twist in a year thats been full of them. Julia, thank you. Coming up, the xlf ticking lower as rates rise. Also, want to draw your attention to the s p 600 smallcap index. Bank of americas Michael Harden<\/a> flagging 1100 last weekend as a key level saying if we break below it, he considers that the credit crunch recession trade. 22 points above that right now. Were back in a moment. Upbeat music upbeat music the citi custom cash\u00ae card automatically adjusts to earn you more cash back in your top eligible spend category. Hi. You dont have to keep tabs on rotating categories. This is the only rotating i care about. Or activate anything to earn. Your cash back automatically adjusts for you. Can i get a cucumber water . Earn 5 cash back that automatically adjusts to your top eligible spend category, up to 500 spent each billing cycle with the citi custom cash\u00ae card. I love it. Welcome back to the exchange. Big banks and superregionals like pnc start reporting before the bell tomorrow. Lets get the numbers to watch and the trades. Were joined by chris kri sanity, chief equity strategist. Great to have you back, chris. Lets dive in. Lets start with pnc. Regional banks remain a worry spot for the market. Investors are watching divisions, Balance Sheet<\/a> impacted higher rates, maybe if they have an efficiency plan to keep Expense Growth<\/a> in plan, as some analysts speculate. Chris, are you optimistic . What would you do with the stock here . Its good to be with you. Hi. Theres two things im looking for in these banks. One is Net Interest Income<\/a> and how theyre handling it. And everybody is looking at that. And the other is credit issues, which nobody is looking at. So, lets look at pnc first. First, Net Interest Income<\/a> should be on the weak side, but theyve already telegraphed that. And i think its only going to be off 2 to 3 . A number like that would be well received by the street. So, were pretty confident there that it should be a clean report. On the credit side, were going to be looking, as its saying, as you mentioned, the superregional. Were going to be looking at the commercial real estate book. Were not too afraid, but were going to be listening for that on the call. Its setting up for a nice pnc report tomorrow. I like it. Down 23 year to date. The action today is not helping sentiment into these results. The march crisis practically a blip for them. Up over 40 from the market bottom a year ago. The bank is best positioned for higher for longer. They have strength for buy backs. I have to imagine you would be at least holding this one. Yeah. We like this one. But of course youre saying all those good things, but tell us something we dont know. The problem with jpmorgan is that theyre the Market Leader<\/a> and expectations get set real high. Back to my two factors, the Net Interest Income<\/a> there should be quite strong. They have so many levers at jpmorgan to pull to keep depositors there, even if they dont offer them the absolutely top rates. So, were, kind of, confident on Net Interest Income<\/a>. The interesting thing about jpmorgan, even if you dont own the stock, you should listen to the call because they touch on so many parts of the macroeconomy. They have one of the largest credit card books, real estate. Were thinking things are still benign there but were listening for the commentary for next year. Still, im happy owning the stock in front of the report. Things look pretty good right now. Im getting people saying theyre looking forward to hearing from jamie diamond. Maybe he can calm jitters after the treasury auctions. That brings us to wells fargo. They clawed back march losses, been in decline since july though. Theyre in the midst of a reset. Focusing on wealth management, capital markets, credit cards, but Net Interest Income<\/a> could continue to decline while expenses grow. Thats not the picture investors are looking for at the moment. Thats right. This is of the three, this is the one im, kind of, most afraid of for tomorrows report. I wouldnt if i had a choice. So, its one of the better performing banks since a year ago, even though its been struggling in the last month or two. The bad news coming into earnings is that expectations are pretty high, that theyve managed their Net Interest Income<\/a> probably better than a lot of the other banks, and theyve been rewarded for that. The problem is looking towards 2024, i think its going to be a much more difficult job to do. So, i think that the earnings will be okay, but im a little afraid of the commentary looking forward for wells fargo. So, for that, i would take a little step back. Also their west coast exposure is obviously large, and i really want to hear about their loan book and whether there are starting to be the slightest hint of problems there. Well be listening carefully for the commentary on the call. Elsewhere, the home builders, i so wanted to get you on a week or two ago when you first said, maybe im bailing on this trade. They just look worse and worse. I didnt even check since 1 00 p. M. When yields really started to pop. Theyre down 5 this morning. Are you out of them now . What do you think is going on here . Were out of almost all of them. We still own one home builder that we really like and we probably will carry it through. Kelly, what were talking about here is an industry that the demographics are just horrific. Not enough folks own homes really for the last 15 years. Kids have been staying with their parents and theyre finally leaving the nest, theyre finally buying starter homes. Its a good place to be. Having said that, thats okay at 6. 5 Mortgage Rates<\/a>. But when you Start Talking<\/a> about 8 or god forbid even 9 Mortgage Rates<\/a>, thats a problem. And so weve done awfully well, as you know in the stocks. Wet liked them a year ago when Mortgage Rates<\/a> started to go up. I think its time to take profits and discretion is the better part of valor and live to fight another day. Absolutely. Wanted to make sure we mentioned that on a day they are down more than 4 as those rate concerns intensify. Chris, thanks for your time. Its good to see you again. Mai capital management. That does it for us. Coming up on power lunch, our fun week continues and we are talking fixed income. Dom is getting ready. Hes in for tyler. Ill join him on the other side of this break. Its raising capital to help companies change the world. Opportunity is making the dream of Home Ownership<\/a> a reality. And driving the world forward to a Greener Energy<\/a> future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection. At ice, we connect people to opportunity. You founded your Kayak Company<\/a> because you love the ocean not spreadsheets. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire welcome to power lunch, along side kelly evans, im dominic chu. The latest report showing no slowdown in inflation from the previous months and higher than expectations. So, will that change the feds plan . And how is the feds higher for longer approach going to affect the bank stocks, as they start reporting those results tomorrow morning . Plus, a top donor lashes out at the university of pennsylvania over perceived","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia904609.us.archive.org\/27\/items\/CNBC_20231012_170000_The_Exchange\/CNBC_20231012_170000_The_Exchange.thumbs\/CNBC_20231012_170000_The_Exchange_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240703T12:35:10+00:00"}