needed and the wealth management is doing fine. >> you like the financials, too. liz young? >> food and beverages. it's the holiday season, eat, drink and be merry. consumer staples have been a laggard and if you want to play the rotation play, the laggard has been the food, beverage and tobacco section of that sector. >> all righty. thanks, everybody. thanks for watching and i'll see you in a couple of hours' time. "the exchange" is next. thank you, scott and welcome to "the exchange." i'm kelly evans and here's what's ahead. gold hitting all-time highs and bitcoin jumping to a 20-month high while the magnificent seven are underperforming and what does that tell us about this market and who is in the driver's seat of this rally? our guest weighs in on that and where the opportunities are from here. plus mortgage holders are sitting on a record $10.6 trillion in equity, but they aren't tapping it because of high borrowing rates and what does it mean for the overall economy?

it's amazon and walmart's world and we are just living in it as we already know and that's the title of a new morgan stanley note and the analyst joins us for the implications and the retail stocks and that's later on. let's start with the markets and bob pisani to outline the momentum and the trends, bob. what do you see? >> five straight weeks of gains starting out the week on a down note and we are well off the lows and i really see rotation. remember, this has been a big cap tech market through most of the year. guess what's trading down today? tech and its brethren communication and that's mostly tech, as well. so what's been rallying? banks. interest rate-sensitive groups like reits and utilities and deep cyclicals and industrials are doing really well and transports are doing really well and you can see a down day on rotation that turns out to be really healthy and look at the big-cap laggards and

magnificent, salesforce and alphabet. what are they interested in interest rate sensitive things and suddenly we're seeing movement put up the gainers here today. airlines had a terrible year. railroads have had a terrible year. they're rallying and industrials haven't had a great year. not awful, but 3m, and it's doing better and retail stocks, terrible for large parts of the entire year and they're also starting the rally and best buy is an example and these reits and sl green is not far from a 52-week high, some of the other big names that are out there and simon property group not far from the 52-week high. you would have never said reits would have this enormous rally, but they have since interest rates started going down. other markets, gold hitting a historic high. gold was at 1100 and this is quite a move up in the last few days and it's down right now, but it had quite a move. bitcoin over 40,000 and that's

the highest levels we've seen for bitcoin in the last 20 months and where are we in the stock market? the number one and most important thing is the market's overbought, but we're seeing rotation out of cyclical and rate-sensitive sectors and that's a positive development even though the market is down today. the problem here, kelly is we're pricing in goldilocks. we have now priced in lower rates and lower inflation and a modest economic slowdown and higher earnings for 2024. you have to deliver on the promises and the goldie locks is priced into the market. >> remember the gold buying parties back in the day? i wonder if we'll see that. >> i was present on the floor, this is how old i am, in 2004 when the etf started trading, the gld, the first day it started trading there was enormous interest in gold running up into this because everyone thought oh, my gosh, this was a great way to own gold

and you have to own gold bars and once it started trading gld went nowhere for a year and there's been this huge anticipation for bitcoin and now it's 30,000 and now it's 40,000 and all in this anticipation that etf will change the world. i think they priced in that etf. >> that would be a great column and that's a great point. we are actually going to dwell on it. thank you for now, we'll appreciate it and our bob pisani on the floor of the new york stock exchange. one of the next guest says the spike in gold hasn't come out of nowhere and it's come out strong in the u.s. dollar and what's going on in the double rally in bitcoin even as the magnificent seven stocks underperform. let's ask peter boockvar and senior vice president catalina simonetti. welcome to you both. peter, can you explain it? >> so let's rewind. going into 2022 if you told me

that gold would be up over a two-year period with real rates rising by more than 400 basis points and the dollar being strong, i would not have thought that, but it was, and a lot of it had to do with central bank buying that reaccelerated after the eu and the u.s. confiscated half of russia's central bank reserves where a lot of the central banks said, hey, we don't want to be subject to that and what's a better reserve than having gold, and not just having it itself, but storing it yourself. now that you've had the weakening in the dollar and you have the drop in real rates, that is the tailwind that created this for gold to break out in the $2,000 level to the upside. yes, it's down today, but i still expect it to go much higher. >> katrina, i sort of don't believe in coincidences and to see both gold and bitcoin breaking out today, i have to think macro. i have to think fed, liquidity. i don't know, rate cuts, dollar,

debasement? what? >> absolutely. kelly, gold has been as a safe haven asset class for many years. it has been considered a place where investors generally will go to safety and when we look at everything that's happening in the world, geopolitical risks coupling with the fact that interest rates are done in terms of the hikes and we're already pricing in the interest rate cuts for next year, but at the same time, investors are worried that despite of the cooling inflation, prices are going down. we're going into the election year here in the u.s. and there are concerns about what that is going to bring. so with that, you know, that flight to defensive stocks, it is dividend being stocks and naturally wanting to add an asset class to the portfolios that is going to add the contrarian safety, safe haven type of feel, something that investors are finding extremely

appealing. >> peter, i'm looking at the ten-year tips yield for real rates, right? i see a peek of about 2.5% in late october and sure enough now it's come down to about two. so is the decline in real rates what you think might be supportive of gold and bitcoin or am i making too much of the coincidental nature of these breakout moves? >> well, that certainly gave it its recent lift to the highs, but i think what was amazing about gold was that it traded as well as it did with the headwinds of higher real rates and a stronger dollar. >> right. now you throw in lower real rates and the weakening dollar, this could be the fuel to have gold take off. >> so i guess on that point then, it's a question of a, whether it keeps going, peter, and si want to throw a couple of thing at you. why do we have this deep sort of value. think cyclicals, industrial, transports like bob said also

working and why is all of this a headwind and not a tailwind for things like the mag seven stocks and tech? >> well, filphilosophically, go and bitcoin have a lot of similarities. a finite asset, anticentral bank and it can't be printed and so on. how bitcoin has traded in its existence, it's really traded with the nasdaq and zero rates in qe. now it's going to be seen whether as if it is truly correlated to gold or is it just a risk on asset because the fed is going to cut rates next year. i think that remains to be seen. with respect to the mag seven, yeah, if the fed starts cutting interest rates, that's because the economy is slowing down and even the mag seven, i like to call it the cult seven, they'll still be subject to an economic downturn as well as 93. >> well, so katrina, that brings us to the crux of this which is are the moves today supposed to

signal that soft landing, new rally. it's not just santa claus. maybe it keeps going. don't worry about the downturn or is it the opposite that peter said that we're kind of living on borrowed time? >> the stock market is taking a breather today which is completely expected and understandable, but we should never base our expectations of the market in general on performance on any given month and our expectations generally going into '24 are cautious based on these three points. one is that we're still in the declining earnings environment. two is the interest rates are fully going to remain higher for longer than originally expected and three, the market breadth has been narrowed which is something that we don't typically see in the bull market and we understand that investors don't want to hear this message about staying defensive because the last two years has been daunting on them and they're ready to welcome this next bull

market, but in our view not just yet. we tell them to stay with the sectors like consumer staples like industrials and energy that have sustainable earnings, that have the earnings that will remain growing even if there is an economic slowdown potentially in a recession and sectors like industrials and energy will benefit from the increased government spending which is what we're seeing in this space. so what we tell investors is enjoy higher interest rates, stay defensive for a little while longer. >> yeah. and make sure that you use bonds with higher yields and portfolios. >> you didn't mention it, per se, but i do see healthcare. they scream if you say healthcare after what's happened this year and it has not played out as expected and peter, what then, is this trend that you discern here in the marketplace? is this typical for kind of a late cycle rally where we're in that interim between the last

hike in the first cut? >> i think it's clearly that. who doesn't want to miss a fed is done rally and then you throw in the seasonality of november and december is typically higher and that's the perfect combination. i do think if the fed cuts next year which i think they will, it will be predominantly because of the rise in the unemployment rate rather than the further deceleration in inflation which i think we'll get, but the fed will use the higher unemployment rate for that, and if it continues to rise that means it will continue to decelerate, but i would be very careful of just making investment decisions because the fed is done hiking interest rates because that doesn't mean we're going back to zero. i think those days are over and we're still talkinging about a four and a half fed funs rate and at the same time qt is happening and little an additional form of tightening. >> i know no one wants to see it, but trying to dig in and

unpack what's going on in the market here today. thank you both for that. i appreciate your time. let's switch gears and talk about a stock my next guest says it's a potential pivot. shares are up 25% as clients have been moving cash out of their accounts and into higher yielding products and my next guest says this cash sorting could end and even reverse when the fed starts cutting next year. schwab shares is are already up 10% over the past week. he says maybe they could rally another 20% from here. joining me is patrick mully who covers the online brokers and exchanges at piper sandler. it's great to have you. welcome, kelly. thanks for having me. >> is this one of the names that you think could benefit or are they uniquely positioned? >> i think tribe is uniquely positioned. it's forced them to have high cost, short-term funding and they're paying 5.5% on those

balances and 2% higher than the asset yield and if they want to grow earnings going forward and one of the things they'll have to do is start paying down those short-term funding balances and they can start growing net interest margin and growing earnings. so when we put this note out last week, we sensed that the fed pivot could be coming. if you look back at historical cycles, what we found is that typically, as we approach a rate plateau and the narrative starts shifting with the potential to rate cuts and clients start to sort their cash less and we think that sorting will lead to a greater ability from schwab, and we thought at the very least they'll be able to overcome the short-term hurdles and we thought that would be a tailwind heading into next year. >> i just find it a little strange that you have a name of schwab up 10% with the idea of rate cuts and yet the magnificent seven were down 5%. you think that they should also kind of theoretically or momentumwise benefit from the rate cut.

i don't think you should know about the behavior of financial stocks like schwab. it makes me question the durability of their move especially rate cuts usually signal a slowing economy. >> yeah, so i think like we said, schwab is unique and a lot of the focus has been on this cash sorting issue. if you look back at the summer months the potential for rate hike started to calm down and then the fed hiked in the end of july and we saw a reacceleration of cash sorting trends and the investors have been more cautious waiting and they want to the make sure there's a better outlook and they want to feel a little bit more confident and we won't see rate hikes and the reacceleration of cash sorting trends. >> what's going on with the balance sheet side of things and my understanding is taking cash out is the catalyst that may exist, for instance, rate exposures and how do the losses look at schwab compared to other

financials? >> they have losses, but if we look going forward, we don't see any issue from the balance sheet side for schwab if we don't get any more rate hikes and we think they're in a good position and they say that about a billion dollars of those losses are rolling off as the security portfolio rolls over every month. so going forward, we think that the balance sheet looks good and they should be able to deal with the outlook -- this issue in the short term. >> who else, if you had to say -- i mean, is it the financials? the online brokerages, obviously, but do you think they would broadly benefit from the pattern they're expecting? >> think schwab could broadly benefit. if we get rate cuts we could see an uplift in markets overall. they have almost $8 trillion of assets under management. so i think asset management revenues which are tied to the

aum levels would likely see a tailwind in the scenario and the other large business segment at schwab and what macro economic factors look like next year. i think if we do get rate cuts we could see as stocks go up with the retail engagement and we think rate cuts could drive higher revenues across the business for this name. >> patrick moley. we'll get another read on the financials exclusive interview with broadway an moynihan joins the network at 10:00 a.m. eastern. we all know the story of wework's implosion and what about hybrid workplace. we'll ask the ceo as they host their first investor day. what effect is that drop having on the housing market? we'll check in with andy walden.

here's a check on the broad are market. the dow is down 65 points and the outperformer and the s&p down 3/5% and the nasdaq down 1% and the ten-year at 4.29. we're back after this. ♪ ♪ this is "the exchange" on cnbc. watch how easy it is to put on new hands free skechers slip-ins. i just step in and go. sitting? doesn't matter. i don't even have to touch them. ooo, gangsta. in a hurry? there's not a faster, easier way to put on shoes. they know a 10 when they see it. in the u.s. we see millions of cyber threats each year. that rate is increasing as more and more businesses move to the cloud. - so, the question is... - cyber attack! as cyber criminals expand their toolkit, we must expand as well. we need to rethink... next level moments, need the next level network.

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welcome back to "the exchange." wework's fall from grace is one of the most well known business stories in recent years going from a $50 billion valuation in 2019 to filing for chapter 11 bankruptcy last month, but it's a different story for competitor iwg. the owner of hybrid work spaces like regis and open office. the company is hosting its first american investor day as its shares are down less than 10% this year and my n guest says hybrid work is here to say. joining me is mark dixon, the workplace provider. welcome to you. >> thank you very much for having me. >> why the big transition with your company? you have american vestor day and you'll start reporting in dollars? tell me about that. >> the biggest part of the business is in the united states. it's 60% of our revenue.

it's our fastest growth market and we're growing at about 50% here in the u.s., and i think the change to hybrid working is happening much more quickly in the united states than in any of the other countries we operate in. >> that's interesting because we know the united states is different. a lot of other countries are more back to the office and here everyone's still at home. why is that? >> there's a narrative of back to the office and so on. people are back in offices, they're just not back in cbds where the growth is in the united states and we operate in 120 countries around the world and very often, that is in the suburbs and that is in rural locations and the places where people were commuting from with today's workplace. the majority of our opening is 90% or actually not in cbds and

they're in rural and suburban locations and the good news is people do want to use offices. they just want to use them in different places. >> that's very interesting. cbds being central business districts and it's the rise of the suburb story given the population migration. you said you're growing 50% in the u.s. can you tell us more about that because that seems extroerd ni extraordinarily high. >> on the one hand we've got american corporations that are changing rapidly in today's economy. they are looking to save costs and with hybrid work and you save about 50% of your costs, number one. number two, it's a saving that will make your workers, your team happy because you're allowed to work in a more flexible way and if you're interested in the environment and many companies are, it's

very good for esg. we are carbon neutral as a company and that's iwg, and we can pass that on to our customers. so on the one hand, high demand for corporates, large and small. on the other hand, american investors and property, owners of property are also very focused now on providing hybrid work space as part of their offer. so we're expanding with them to create a platform across the u.s. and we have unprecedented demand from investors also to sort of come on to our platform. >> yeah. and that's what's been the growth here. >> my understanding is wework signed a lot of pricey leases and bankruptcy would help them get out and it might not solve the issue of them being more urban and suburban because even in town, i live in the suburbs and we had a serendipity work

space that became your third base and even out here in what should be a strong market based on the fundamentals you described it sounds like there is a reset going with hybrid work space more broadly. >> look, let me address that. this is not an easy business. this is highly operationally intensive business. you need to be good at it, and you need to operate very well and very efficiently and some companies don't do that, so in this space, and i've been in this space all 34 years, and i started off with a single center every year from every one of those we become more efficient. so in order to be successful you have to operate well, so the demand is well from both sides of the equation and you have to be able to operate the business at scale and not everyone can do that. >> i guess my final question is how do you have sharp enough

elbows to fend off competitors and the upstarts like revamped wework that seems to be like there are low barriers to entry and people need hybrid workspace and why does that have to come from regis? >> somewhat true. we're doing to scale and we have over 4,000 buildings in this -- it's a totally different operation to someone starting out with a single operation in the suburbs. we are selling the platform in its entirety to corporates across the u.s. and across the world. it's the scale benefit that differentiates us. >> interesting. so they have access to multiple locations? >> correct. absolutely. and we're selling to corporates that might use this in hundreds of locations with hearts across the world and also nationally. companies also want efficiently and they want to do it with 50

supplies and they want a single platform and people can flow between and they can be efficient supporting their people and gaining more productivity from workers. >> that's fascinating. by the way, did you ever think about taking the i.p., and i don't know, if it went bankrupt maybe they can take on the ticker. >> we've been doing this business, but look, overall we're very focused on building our own company and we do so in a low risk way and not a risky company in terms of how we grow the business and we'd rather go slower, but win the race. >> the tortoise approach. mark dixon, thank you very much for joining us. we appreciate it. >> thank you very much. >> from iwg. coming up, it's climate change conference in dubai. we'll hear from a top amazon exec on that later in the show, even as one high profile esg advocate hedge fund manager

jeffrey evan closes his sustainable investing firm. plus a mile-high merger between alaskan and hawaiian and why it will get past the doj and why alaskan don't seem too thrilled about that and the shares are up on that news. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ the first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

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and no downtime. the results are absolutely fabulous. see why so many people, including doctors, are choosing gentlecure. call today or go to gentlecure.com. welcome back to the exchange. the dow is down 80 right now. the s&p is down 32 and the nasdaq is still down more than 1% and the russell 2000s are in the green today leading the way up .75%. spotify shares up 8% after the company announced it's laying off 17% of its workforce or

about 1500 employees. it's their third round of job cuts this year. spotify invested too much in 2020 and 2021, and has to right size its cost for a new economic reality. the shares are up 146% since jan 1. meantime a new report reveals that open ai agreed to buy $51 million of ai chips from a start-up backed by sam altman. joining us now to discuss -- >> i snuck into your shot. >> our tech correspondent steve kovac. is there controversy about this or conflict of interest? >> yes. that is a controversy here and this is a start-up and an ai chip startup that this all came out from a cfius investigation that had saudi backers and kind of, divest from the company and way, long story short and under ceo sam altman signed a letter of intent to sign $51 million of

these chips, but altman has invested in that company and he put in a million dollars into that company and it's a bad look. >> why did they need the chips? >> the same reason we hear everyone making their own chips from microsoft on down because the chips were really expensive and everyone is being looking for alternatives and just a couple of weeks ago we had microsoft announcing their own ai chips and these are all really expensive and to do what open ai does costs a fofrp are fortune in this hardware. let me try to in other words, play how he might defend himself. we need chips, this company had chips. what's problem? >> exactly. on top of that there were reports before the drama around his ouster and so forth, there were reports that he was raising money to basically build this hardware inhouse or maybe through arth start-up so there was a lot of kind of talk. this was something they were thinking about for a long time

and we should also make clear that isn't -- we don't know for sure and we should also say that a letter of intent doesn't mean they'll do it. in fact, most of the time it doesn't happen. we just know they're interested. >> do we know if they had other options in the marketplace and fa they were going it pay a fair market price. >> i can understand if people felt like we have to get a better deal at ourselves. >> it's not just open ai and they're looking at rabblizing costs and figuring out other ways to make cheaper to do and i will point back to all these reports that we got leading up to that firing that he was out there talking to people, talking about raising money for this hardware to make it cheaper. it is really expensive. on the other hand, keep in mind open ai's benefit, their partnership with microsoft gives them the ability to use microsoft's software and cloud

structure. microsoft isn't paying cash or full cash for their stake in open ai. they're also paying in the cloud credits that lets open ai operate, not for free, but use these real expensive cloud products. >> absolutely. quick, final question then, do we expect that sam will have to answer to this potential investment or what other questions do you think will be put to him now as this drama makes it past the critical moments. it was 2019 and open ai is a very different company than it was now and they're working on chatgpt and for a time we didn't know what it was and altman is very interested in software with the ai boom and some of the chips. there does some to be a hard wear lay for open ai down the road and it might want be this start-up that's untested and unproven. >> steve, thank you.

steve kovac reporting. we are only two days away from cnbc's work summit which is the promise and peril of ai. you can hear from experts on how it will transform the future of work. to register scan the qr code or visit cnbc events.com. over to tyler matheson for a cnbc news update. >> i'll be there for that event. thank you very much. we hope everyone will join us. russian president vladimir putin will travel to the united arab emirates this week. a russian news outlet reported the expected visit. all three are part of the opec oil producer group. it comes after the group agreed to cut voluntary output. the meeting will take place as the uae hosts the cop28 climate summit in dubai. opening arguments started in the criminal trial of marvel actor jonathan majors and majors arrested in march and charged with assaulting his former girlfriend during an argument. the six-person jury is expected to hear from majors and his accuser and major could face up

to a year in jail if convicted and the babe ruth card a million there are, it was the first time a rookie card had been on sale and it's the most expensive ruth item of all time. the babe still selling, kelly. >> still one of the best books i ever read was the 1927 one. i can't remember the title. bill bryson, maybe? yeah. google it. homeowners sitting on $10 trillion, but it's too costly to use it and at the same team the home cop structure and are new etfs up about 25%% in six weeks and he's eliminating the rest of his position and lat's share the chart and shares lack of worth about $2 billion and it's the secondary line merger following

jetblue's deal to buy spirit, but will it get past federal regulators and here's what ben told "squawk on the street" this morning. >> on the merits of this deal, simply, it is pro-consumer and pro-competitive. when you combine both these networks we'll have about 1400 flights a day. only 12 out of those 1400 flights is where we have the overlap and then you have an expanded domestic lat form and an e panded platrm ffoor our citizens on the west coast and our residents in hawaii.

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welcome back to "the exchange." are u.s. homeowners sitting on a gold mine? according to a new report from ice mortgage technology, mortgage holders withdrew less than half a percent of their total tapable equity at the beginning of q3 which was half the average decade and that's $54 billion over the past 18 months in missing withdrawals that might have otherwise stimulated the broader economy according to my next guest. for that we are joined by andy

walden, vice president of research. we love following your journey, by the way, from home to ice to the whole thing. welcome. it's good to see you again. >> good to see you. >> what i ponder when i think about this is if when the economy weakens and rates fall can homeowners start to tap this more vigorously? >> i absolutely think that's a possibility and there are a couple of ways we do it. we've seen 30-year rates start to ease over the last month or so and the home equity lines of credit and as the fed starts to ease late next year you could see it become more affordable to utilize that equity. >> how expensive is it now? >> they're typically quite up there in terms of the borrowing rates. >> if you look at the database, it says the average rate in september was 9.3%. >> wow. >> and it went up three percentage points from the same time last year and the highest since we started collecting the data and it's become

considerably more expensive and prime tied to the fed funds rate and as the fed put pressure on the broader economy and it's certainly putting pressure on the interest rate, as well. >> these were used by a lot of people to finance renovation and sometimes vacations and sometimes college educations. i guess if they needed to it would still be there to tap, but it just would be quite pricey. >> absolutely. it's still available, right? if you look at the amount of equity that folks have. we saw a pullback as prices corrected late last year. 10.5 trillion of equity out there and it can be borrowed while still keeping a 20% cushion in their home and the equity is there and how much are you willing to pay 9% on it and are you willing to pay to utilize that equity? >> one more quick question on this, do you think people are thinking of the servicers and the providers and people in the home lending space. do you think they would try to get more creative to bring those

rates down and stimulate more activity or would it not be worth it for them? >> when you look at the locked prime interest rate spread which is how they're being with equity lending and there was a point where you get a hilock as this is uncertainty about the broader economy and as the dynamics have shifted you have seen the spreads widen and they're not being as aggressive as they were last year and in the pre-pandemic era either. we haven't seen that yet in terms of aggression and getting creative and certainly could and depending on what we see on the economic and broader risks on the market. >> andy, we appreciate your time. >> you bet. >> thank you. >> andy walden with ice. >> still ahead, climate change is still big business and that means plenty of companies are positioning for a slice of it. our diana olick is live at cop28 over in dubai.

diana? >> that's right, kelly. billions of dollars have already been pledged here, but trillions more are at stake. we'll tell you what kind of climate opportunities amazon is looking at coming up next on "the exchange."

welcome back to "the exchange." the united nations climate summit cop 28 under way in dubai with governments making sizeable commitments over the weekend and as esg investing has started to flame out with more funds dropping than adding eog criteria. corporate leaders are making the trip to make deals. senior climate correspondent diana olick joins us now from dubai. diana? >> kelly, in the first four days of the cop leadership here says governments, businesses, leaders and philanthropists have pledged $57 billion across the climate agenda. all that creates opportunities for big business and that's why

top executives are here. i spoke with microsoft's chief sustainability officer about her top ask for this cop. >> we want more renewable energy available to us because we know if we're going to electrify fleet and with all that's coming and demands on the grids, we need policymakers to understand that we want more renewables, but we want to move quicker. these are great conversations to have because there's a lot of pressure on us to move faster. >> more than 110 nations have agreed to triple renewable energy capacity and hurst is looking for government dollars to level the playing field and bring bring down the cost for technologies like they did for wind and solar. >> we need hydrogen, and battery storage to get there and i think deploying capital in the very strategic ways to make the moonshot activity also happen or to make things come to cost

parity, that is really, really important right now with some of those technologies. >> as for some of the start-up, amazon is investing in through its climate pledge fund, hurst says she's most excited about electric aviation as well as agricultural commodities such as taking ag waste and turning it into biodegradeable plastics. >> i'm just curious, getting to be there in the middle of all the action and we talked about in dubai, they're obviously a big oil producer and they're trying to do a big economic transformation, as well, a la saudi arabia. >> and we saw a major announcement on methane emissions which a lot of people here said were surprising that they want to cut emissions to near zero by 2030 and that was over the weekend. when i talk to ceos they keep telling me there seems to be a sense of urgency at this cop than when the u.s. re-entered the paris agreement and that's the horrible year we've just

had, the fires, the flooding, the smoke. i don't have to tell you how bad it's been, but over here they're really seeing that urgency in their negotiations and in their talks and in the money. >> interesting. diana, thank you very much. we appreciate it. diana olick. my next guest says it's an amazon and walmart world and we're just living in it. these two have expanded market share and the dow is almost at session highs. stay with us. and now trend tracker. ♪ ♪ ♪

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a few years ago, i came to saona, they told me there's no electricity on the island. we always thought that whatever we did here would be an emblem of what small communities can achieve. trying to give a better life to people that don't have the means to do it. si mi papá estuviera vivo, sé que él tuviera orgulloso también de vivir de esta viviendo una vida como la que estamos viviendo ahora. es electricidad aquí es salud. first time i connected with kim, she told me that her husband had passed. and that he took care of all of the internet connected devices in the home. i told her, “i'm here to take care of you.”

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welcome back. e-commerce is bigger than ever, but the gains are still mostly going to two very familiar players. a census bureau report says q3 online sales grew 7th from this year to account for more than 15% of total sales on a seasonal adjusted basis. the biggest beneficiaries, walmart and amazon. my next guest writes amazon takes 50 crepts for every dollar of e-commerce growth we see, and walmart is posting the strongest momentum in online share. joining me now is simeon gutman. it's great to see you, welcome. >> thanks, kelly, thanks for having me. >> i think in some ways the question is who gets to join the behemoths. for a while target was in that sentence, but i notice they're not in your report, at least in the headline. >> look, last quarter target's same store sales shrank 5%. so they're trading sales for margin right now. that's a little more tricky game

given how much share walmart and amazon are taking. amazon and walmart have membership programs. so how much longer can that persist? we're not sure. at some point, other companies are going to want to join in. >> you're saying target is protecting its margins and giving up market share of this fast-growing space. do you think that's what investors want? >> for now it's okay. we're buying time until the consumer spending environment gets better. at some point you need top line growth. in 2024 you're going to have to see them turn the corner. you'll see probably some restocking of inventory and maybe getting a little more aggressive. it could be time of the consumer getting better by the second part of the year, but the anti dote, or the formula, needs to be top line growth. >> who else has a shot at joining amazon and walmart. to my mind costco, for instance, pops up as a contender. >> they're doing phenomenal, their traffic, sales haven't

slowed in the face of this assent. they're part of the game. something to watch is the new ceo. costco's holding their own, they're just not growing fast enough within this. i think we're going to see their posture change online. all the more reason for everyone to get more competitive online. >> you think that's an essential part of a successful formula? >> quintessential, i can't emphasize that enough. that's the backbone here. for walmart in particular that's bringing a different customer that's shopping the store. their core customer, they're more or less maxed out with that core customer shopping the store. for costco it's widening. they have limited skews, so going online, pushing a marketplace. they do the next marketplace, that's how you broaden up the tam or demographic. >> tell me about that, i am one of these people who finds i need a little more selection. >> well, among these costco

addicts, i guess maybe there's two of us, but they do have a curated marketplace. it's called next. it's selective. you can see there's a handful of products they're dapling in, and their iconic brands, products, they are great merchants, create #3g,000 skews in stores is no easy feat. they're doing that online in a careful, targeted way. that's the key, it's got to be careful and targeted. >> let's me move on. you're actually positive on target, bj's dollar tree, been a tough year, ulta, negative on best by dick's, and wayfair. would you say that that's part of the e-commerce landscape we're describing or are those situations more idiosyncratic? >> i'll do a shameless plug. every company you mentioned is attending our conference. our ratings are a little bit mixed on equal weight and overweight there. some of it's been category.

the theme is reversion. we've seen reversion happen in, let's say, consumer electronics, home furnishing. big ticket durable spending overshoped during the covid period, and now we're reverting. that game or that dynamic hasn't slowed down. we could see it level out, especially into 2025, but i think the leveling out process probably finishing out in '24. >> do you think that helps the dollar stores? >> it could. it's a good point. the theme for '24, first of all, is spending probably slows. if you take the middle and lower income cohorts who primarily frequent the dollar stores, we think that cohort actually stays relatively stable. it's the high end that probably slows. from a rate of change perspective, the dollar stores have less to deal with. we lack the snap head wind that happens in the first part of the year. >> feel free to rejoin us with the highlights. we'll plug you in again with the

conference coming up. that does it for the exchange. next on power lunch, what's driving that move next. tyler is getting ready. i'll join him on the other side brk.his ea

only at vanguard you're more than just an investor you're an owner. that means your priorities are ours too. our retirement tools and advice can help you leave a legacy for the ones you love. that's the value of ownership. good morning, afternoon, everybody, and welcome to power lunch. alongside kelly evans, i'm tyler mathisen. glad you could join us for a monday. stocks heading lower. the nasdaq, in particular, getting hit hard, down more than 1%. so is this just a normal pullback in the midst of a larger round or a sign that markets maybe have come too far too fast, kelly. >> on that note, what does the rise in gold and bitcoin say about what's happening here. gold hitting a new all-tim