yield at 15. >> jenny? >> pfizer. 5.7% yield. too cheep for its future cash flows. >> and jen? >> health care in general. look at the chart of iyh from mid october to now. we had significantly larger drawdown than the s&p. >> all right, guys, i'll see you on "closing bell." "the exchange" is now. ♪ ♪ thank you, scott. we'll see you there, as well. hi, everybody, i'm tyler mathisen in for kelly evans who is off. here is what is ahead. inflation trending lower, the consumer still going strong. so is a soft landing all but certain? yes, says one of our guests because we're already in one. but whether it will last is less certain. she joins us to make her case. the builders have proven resilient and creative amid a challenging housing backdrop. tri point homes, up 65% this

year. the ceo will join us this hour on how they're attracting buyers and what they're doing and close the sales and what he sees ahead for housing in the new year. morgan stanley just wrapped up its consumer and retail conference. the lead analyst here with that. but we begin with today's markets and dom chu with the numbers. >> we've seen both sides of unchanged right now. we're at least tilting towards the upper end of the range, as you can see, with the s&p 500 up about 0.1 of 1%, 4627, the last trade there. at the highs, up roughly ten points, down 14 at the low. so you can see maybe towards the at least green end of that range. the dow industrials up about one quarter of 1%. 36 36,503. the nasdaq up about 0.2 of 1% overall. one place that's not in positive territory, despite being so earlier in the day, are crude oil prices. u.s. benchmark west texas

intermediate down about 4.25%. it's been sliding for the better part of the last couple of hours. currently $68.30. there continues to be this negative sentiment around possible more supply coming to market in the coming weeks and months, alongside demand. the geopolitical risks we have seen are not factoring as much to prop up the oil prices, so we watch that $70 mark. we're now below that. and that oil trade is perhaps gives some positivity towards some of the airline stocks. they're among the s&p 500's best performers so far today. alaska airlines up 4.25%. american, delta, united airlines, all in the green so far today. better travel demand trends in this holiday season, coupled with some of that rebound trade in energy prices falling short of expectations, leading to some positivity over airline stocks

overall. keep an eye on oil prices and the airline stocks on the heels oh of that. i'll send it back to you. >> dom, thank you very much. just over 24 hours now until the federal reserve's decision on interest rates. the last one of the year, and the latest cnbc fed survey suggests the economy is on its way to a soft landing. steve liesman has the details. hi, steve. >> tyler, we'll see about adding another meeting before the year is out. respondents to the cnbc fed survey for december feeling as confident as they've been in this cycle about the chance of a soft landing and less confident in a coming recession. odds of a soft landing now at 47%, up five points from october, which were 42%. odds of a recession are down eight points to 41% from 49%. that's in the next 12 months. gdp outlook, however, still showing that dip, which had been predicted for 2023, now in 2024. less than it had been, but still

seeing a below 1% year next year, where this year coming in quite a bit stronger than had been forecast. a lot hinging on the outlook for the consumer. diane writes this colorful piece in response to the survey. she says -- >> you can see there the unemployment rate is predicted or forecast to tick up next year quite a bit from the current level. the year-end forecast is at 390, up more than half a point. and december 2025 would come back down. on inflation, about a third forecast the fed will hit the 2% target next year. 37% say it's going to happen in

2025. and 28% say it's going to happen after 2025, or, tyler, never. >> steve, stick around. as we continue our conversation, our next guest says we are already in a soft landing. the question is whether it lasts. joining me now, julia coronado, and joining us also is steve liesman, of course. 2023 has been a soft landing, you say. we are living the dream. >> we're living the dream. it's not a destination, it's an environment, and you can -- you can't argue that low unemployment, healthy job gains, and declining inflation isn't a soft landing. it has been a soft landing. >> but we're still quite a bit away, respect waren't we, of th goal of 2% and is the last mile the hard mile, the drop from 7% a year ago has been pretty precipitous. >> right. we are not of theview that the last mile is the hardest. we see plenty of the seeds in today's report that that process

is ongoing and will continue and we will be close to the fed's destination by the end of 2024. >> we have a 30-year bond option to tell you about. rick is tracking that for us. >> reporter: the last 30-year bond auction is what started the entire craze about paying attention to weak auctions. but it wasn't meant to be two in a row, because this 30-year bond auction went quite well. i gave it a b as in boy. the yield, 4.344%. the one issue market, the yield was a smidge higher, closer to 4.35%. so when the issue is lowered, that means the government sold its paper at a higher price, and that's a good thing. so pricing was a good mark, and pretty much the metrics were all or slightly above ten auction average. the one standout in direct bidders, that's the one we pay attention to. it includes form purchasers, and

the foreigners stepped up, 68.5, the best since july of this year. 68% is the ten auction average. we all know that you can have a lot of soft auctions and not necessarily say that treasury supply is doomed in the future. but it always pays to pay close attention to every auction to see the ongoing demand profile, because we know what the amount of debt we have to service, the amount of debt we have to sell that we'll have large auctions for a long time. tyler, back to you. >> rick, thank you very much. steve liesman, let me turn back to you and see if -- what you think of the inflation numbers, as we look at them now. core inflation is still at 4%, and the fed wants it at 2%. >> yeah. first of all, let me just point out a b in rick's class is like an a plus in every other class. as you know, tyler, rick

rejected slide rules when they came along, let alone calculcalc calculators. that's a good auction. i'm seeing yields come down, that has to be helpful for the economy. on the inflation story, i think it was a very neutral report. i did not see the positive bullishness that a lot of people saw, and you know, getting back to rick, he said it this morning that it was a bit of a rore shack test. and i like that. powell is going to point out, tyler, what you just pointed out that the service number is -- he has put that out as the marker. he'll acknowledge that the headline is better, but he's not running an oil company where he's trying to figure out what's happened to oil prices. that's what headline inflation is telling you. i like that food prices came down. i think that will help. there is some disinflation or even deflation on the good side. but powell has focused his policy and outlook of policy on

the service side. there's less improvement there. i think it's coming, but i don't think it's going to be a guessing game, tyler, where we're going to wonder what powell thinks of it. i think what's going to happen is, we'll see the numbers and know that he and other members of the fed board like those numbers enough to cut rates. these were not those numbers. >> you say that the futures market indicate the fed is going to ease aggressively in 2024. do you believe that? >> i think that the market is a bit ahead of the fed, has been. it's gotten quite optimistic in the last month or so about discounting five or even six rate cuts and starting very quickly. and i agree with steve, we are not there yet. jerome powell is not there yet. today's report only confirmed, i think, the higher for longer messaging we're likely to hear. >> i imputed that thought to you. it was an article i was looking at, but your answer is, don't expect aggressive --

>> i think q1 is very early. they have laid out a strategy. that strategy is working. you raise to restrictive territory, you hold there until inflation is sustainably on its way to your target and then you ease back. >> q2 would be the earliest? >> that would be the earliest. wo we could see the data adding up to give the fed the confidence to adjust the nominal rate. >> steve, why would the fed cut rates next year? the survey did show a slowing economy, 0.9% growth. that could be one reason to cut rates, i suppose. >> right. there's a good reason and a bad reason to cut rates. let's hope it's the good reason. the bad reason is if the economy were to roll over into a recession. in which case the fed could cut very quickly. if it's cutting in order to normalize policy, that would be a huge and very, very welcome development. in that case, what it might do is say, hey, inflation has come

down to a place where we feel confident. it's headed to 2%. notice i'm make thing comment that the fed would be cutting before it's at 2%. it wouldn't have to get to 2% to cut rates. but it would say it's heading down to 2%. we feel confident heading down that way. we feel we can ease up on policy. otherwise, we'll become more restr restrictive. remember, tyler, they long-run rate is 2.5% on a nominal basis. so the fed would have quite a long way to go to get to normal policy, and quite a lot of distance between the 2.5 and the 5.58 where it is right now. >> julia, you think we're in that soft landing now. >> uh-huh. >> and we don't get materially softer? in other words, the economy doesn't get materially softer, or do you think it will? >> there are risks on both sides of this. i think the same forces that delivered better than expected

growth are still in tact. that is better productivity numbers. the economy, better labor supply. i think these things have legs and can continue into 2024 and keep us in the soft landing environment. on the other hand, there are lags in monetary policy. rates are very high, money is very tight. we can start to see that bite in business investment, in spending on consumer durables, the housing market is still in a deep freeze. that's not a sign of a healthy economy. so there are, i think, risks on both sides of the outlook, but we're reasonably optimistic that we can -- the good news is, the fed has ammo. if we do hit a patch that's much more worrisome, they can cut rates. not even slash them to zero, just cut rates a hundred basis points. if we uninvert the yield curve, that can be a positive tail wind for growth. >> steve, did you want to squeeze in a final thought? >> yeah, when i read julia's

notes, i thought that's a really original thought, thinking that we are -- we keep thinking we're still in this process of getting to the soft landing. the idea that we're in the soft landing changes the way you might think about the future, in that there's another cycle to come here. we keep waiting for the cycle, but maybe it's here -- >> we're in it. >> and julia also underscores my great fear of living through great times and not noticing it. >> steve, great point. great way to end. steve liesman, julia coronado, thank you very much. small caps still trailing the broader market, but they have been having a bit of a moment, outperforming the s&p 500 over the past month. our next guest says, more gains ahead. joining us now with top picks in the index is sandy villorry. good to have you with us. small caps and value have not been players this year. why not, and why now? >> it's really incredible, the

divergence -- you look at the vanguard index up 42%, and then the large cap value names up 3% on the year. there's an amazing spread, and it's time to look at buying small caps and maybe selling some of those sensational seven and taking some profits. >> just because they haven't participated doesn't mean they will start to, does it? >> so when i look forward, and i'm just looking at valuation. valuation means a lot to me and our firm. we look at individual companies, and when you look at the s&p 500, trading at about a 40% premium, to its 20-year historical pe multiple range. what you look at the small caps, it's a 15% discount. so there's value, they're cheap, and if you dig through the rubble and there is some, you know, money can be spread out and you start to look at other sectors, except for these seven

stocks and the s&p 500 that have been controlling all the returns, i think there's going to be a lot of money to be made in 2024. >> let's go pick through some rubble, shall we, and go to some stocks that you do like. one is atlas energy, $2.4 billion market cap, priced at $17.30. and oil field services company. why do you like it? >> today is cheaper with energy coming in. this company just went public. they transport and produce frac sand in a very good area. when they do this, it's a logistics company that has autonomous trucks, and will reduce reduce transportation costs by 90%. when you drive on these very difficult roads in the permian, it will reduce fatalities. so they have a 42-mile conveyer belt, and cap ex is right on track, so i like that. so this is one of the things

that is differentiated from the competition and one we would own for the next three to four years. >> the last two. one is pool corps, biggest supplier of pool related products in the world and palomar technologies. tell us about those two. >> i like pool. they had a great tailwind in covid when everybody was spending money on their backyards and pools. but it's about 2/3 of their sales are just boring repair and maintenance of your pools. so i like that one a lot. and palomar, an insurance technology company, should do quite well, growing quickly and trades at less than 15 times earnings. so a fast-growing company that people left for dead because it's not a sensational seven stock. at some point people will find this one and that multiple will grow. >> i love it when more boring than people think is an attribute. that's wonderful. thank you. appreciate it. coming up, investor day is

under way. the country's largest medicaid provider raising guidance for next year. and the new $4 billion buyback with shares hitting their highest level in nearly a career. and the ceo of tri pointe homes is here, as mortgage rates hold steady at 7%. you will be surprised at who's buying their inventory and what they're paying. "the exchange" is back after this. trading at schwab is now powered by ameritrade, unlocking the power of thinkorswim, the award-winning trading platforms. bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. tailor the platforms to your unique needs with nearly endless customization. and track market trends with up-to-the-minute news and insights. trade brilliantly with schwab.

welcome back to "the exchange." centene shares up over 4%. the company raised its 2024 adjusted profit forecast, and authorized an additional $4 billion to the $1.2 billion remaining in its previous stock buyback program. shares are down about 6% this year, as you can see on that chart. for more here, let's go over to the new york stock exchange where bertha stands by with san teen's ceo, sarah bond. >> sarah, thank you for joining us. one of the big issues people have been looking at, you're the nation's largest medicaid insurer, has been states dropping people off of the medicaid rolls now that the pandemic, public emergency has ended. what are you seeing, and what are you seeing with regard to

those people being able to gain coverage on exchanges? >> yeah, this is obviously been a huge focus for us for over a year, as we prepare for the process that is normally kicked off on april 1st. our priority has been working closely with our state partners, because it's a massive ju undertaking for them, and so we are seeing some of those administrative disen rolls, roughly 25% of members who come back onto the rolls because of procedural dropoffs. so we've been trying to help make that process more efficient. and then we have been able to also help members move over into marketplace products to preserve that coverage continuity. so we're seeing that as an industry, we're seeing that from centene's perspective, and we think that is going to drive better health outcomes. >> one of the things you told investors today was that you see yourself as a platform of growth when it comes to government

sponsored health care. you already stand high on the hill when it comes to medicaid, high on the hill when it comes to the exchanges. you have a million members, and you're really trying to climb that hill when it comes to medicare. what are you looking at next year, particularly since you had gotten lower scores from the centers for medicare and medicaid going into 2024? >> so as we said, we believe that the three pillars of medicaid, marketplace, and medicare are core to our platform. they are all three exciting growth opportunities, and our focus in medicare has actually been pivoting to historic focus on serving that low income complex senior population that's consistent with the seocio demographic population that we serve, into serving this more fragile population. >> i notice you, though, you

don't advertise like your larger competitors. >> we're finding the right channels to meet our members. those members also typically purchase through brokers or mail order. there are different ways to reach the dual eligible members. so we've been refining our distribution strategy against that target population. >> and the big switch you're making next year involves your pharmacy benefit contract. you have switched from cvs care mark to cigna. how is that going, and what are you going to gain from that switch? >> we were really happy to be able to take more than $40 billion of pharmacy spend out into the market in a competitive process, obviously chose esi. we've been working on that implementation all year. we had an early go live of one of our states in october that went really smoothly. so we're excited for that big

b bang that we have coming up. our state customers and our federal partners, and also the level of transparency that we know that our customers demand, and seeing through contracts and understanding what the pricing strategies are. that's been an important thing for us because of the role we play in government sponsored health care. and then innovation. so those were part of the criteria, and cvs has been a great partner and we're excited to move forward. >> you know, we have a number of really inknow vative drugs -- innovative drugs coming on, and we saw approval to treat sickle cell disease. more than half the people that are affected bicy sickle cell, they are on medicaid. how are you going to try to help provide access to these patients? >> what i would say in general is my hope is that all of the

stake holders across the industry step up to design ways to make this accessible and affordable, because that's what we should do for things that are curative. we know the life benefit for those members. so we are working really closely with our government partners to figure out what mechanisms there are to, again, make this accessible and affordable. we have best practices from past examples that we can lean on. >> but can you afford that all in one swoop? in 2024, is that priced? >> i don't think it all comes in 2024. if you look at how medicare treats these drugs, there are mechanisms by which you can actually bake those into the rates going forward. but, again, finding the right ways to pool the purchasing power and pool the benefit, because we should be focusing on what is the best thing for those members. >> sarah london, thank you for joining us. >> thank you. >> tyler, back to you. >> thank you both, sarah and bertha. coming up, decision of epic proportions. the anti-trust case against

google in san francisco could lead to massive changes to its play store. we'll discuss what those could be when we return. we'll beig bk. rhtac

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share is only going to be 17% of the rooms. those rooms are owned by small business franchisees, who control their own pricing. so the consumer is not going to be impacted here. the franchisees set their pricing and their pricing strategy. this is not the dollar menu or $5 foot longs. they can set their pricing as they see fit. >> let gee's go to pippa stevenw for an upstate. >> israeli prime minister benjamin netanyahu rejected the idea of palestinian authority rule in gaza. the video on his official government account said he will not allow the palestinian authority to take over once the war is over. this is in contrast with the u.s. position. netanyahu said he appreciates the support from the u.s., but this is where they disagree. a newly declassified u.s. intelligence report said that the war in ukraine has had severe costs for the russian military in both equipment and troops.

the report assessed that about 315,000 russian troops have been killed or wounded. that's nearly 90% of the preinvasion ground force of 360,000. more than 2200 tanks and 1/3 of its armored vehicles have also been destroyed. delta passengers were stranded overnight on a remote military base in canada after the plane made an emergency landing. the 270 passengers switched planes in goose bay and waited hours to take off again. delta told nbc it apologized to customers for the inconvenience, and will compensate the passengers. tyler, back to you. >> when a pilot says we need to put down and make an emergency landing, i say you do what you need to do. i'll wait it out. >> you and me both. coming up, it's been a tough year for housing, but not necessarily for tri pointe homes. shares up 65% this year. the ceo will tell us how they're

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welcome back to "the exchange," everybody. the home construction etf climbing more than 50% this year, as builders reap the benefits of low existing home sales amid high mortgage rates. luxury focused tri pointe homes among them. shares up 65% on the year. while the homes don't come cheap, averaging a little more than $700,000 per delivery, tri pointe is seeing increased demand from younger buyers with 2/3 of its customers being millennials or gen-z. and incentives could be what is helping to get those cohorts into homes. joining us is doug pbauer, ceo f tri pointe. what are you seeing specifically with respect to how rising or high interest rates are affecting the price of transactions, down a little,

stable, where? >> thanks, tyler. you know, the impact of higher rates, whether rates are going up or down and right now, the average 30-year fixed mortgage is about 7%. we have the new home builders have a distinct advantage really over the resale market with plenty of leverage to pull. we can offer permanent, temporary buydowns, a majority of our buyers actually do a permanent rate buydown. as a matter of fact, as you look at our fourth quarter deliveries from our mortgage affiliate this year, 86% of our buyers are locked in at 6.6%. we also can use forward commitments, which is a fancy term of having some mortgage funds available at a nice rate. we actually have a forward at 5.99% for 90 days. so these are the tools that the

home builders use in today's environment. and frankly, i saw the cpi print. i'm not an economist, but i think rates will stay where they are for the foreseeable future, and that's a good thing for tri pointe and the new home builders. >> a forward commitment is not a term i'm familiar with, so i might ask you to explain what that is. is it a 90-day loan? >> it's basically securing mortgage funds for homes that would close in the next 90 days, and i can provide you with -- on a conventional loan of a fixed rate of 5.99%. so it's another financing tool, tyler, that we use in the new home building industry to attract and get buyers into homes. by the way, our home buyers typically put down 19%. their annual incomes are about $187,000, so we deal with a very

strong buyer profile here at tri pointe. >> i can see certainly why the home builders such as your company have an advantage over the previously occupied homes, because those folks may have mortgage rates at 3%, 4%, they don't want to sell, they're locked in, like me. excuse me. and so the new home is really a great option. but i want to come back to my initial question -- are the prices you're able to get today the same as, higher than, a little bit lower than the prices you were commanding an identical home a year ago? >> they're generally a little bit higher. any fwhere from 1%, 2%, 3%. so the prices have trended up because of the fact you're making. there's this locked in effect in the resale market, and as a

result, the new home builders are -- have typically about a 10% market share right now, we're enjoying 30% market share of all home sales. so that locked in effect reduces supply and when you reduce supply and demand is there, pricing will hold steadier and gently go up. interest rates where they are, are going to keep pricing kind of where it is. we reported incentives of about 3.8% at the end of the third quarter. and so that's kind of a little bit of a governor as far as pricing into the future, as far as where rates go. rates affect payment and pricing, it doesn't affect demand. so mortgage rates go up to 8%, then we'll have to make those adjustments. >> i think there's been a mythology, perhaps urban legend that gen-z and millennials could

be coming into the market slowly, but you're selling 2/3 of your houses to them. i assume they're moving into houses the same reasons the baby boomers before them did. >> you're right on, tyler. as a matter of fact, the gen-z are buying homes at a younger age than the millennials. there is an old wives tale, and there's probably some truth to it, that the millennials were staying in the parents -- i have millennials in our basement. they're coming out and buying homes. 52% of the millennials own homes. gen-z, 30% of the 25-year-olds own homes. so that demographic is a huge demand component for the future of housing as we look forward for the next five to ten years. >> those of us baby boomers who may be, may be selling houses over the next five years, we're

counting on those millennials. >> we are. >> we're counting on them! >> yep. >> one other question, are you -- you mentioned mortgage rate buy downs. do you sometimes get into the business of helping with closing costs, is that another way that you can tip the transaction from almost getting done to getting done? >> sure. we'll use a number of things, closing costs, providing some options at no costs or some incentives on that. the one thing that i would like to make a point with you, tyler, you know, we talk about rates and there's this whole trade, you mentioned our stock up this year. you know, the home builders have typically traded down when rates go up, and when rates go down, the stocks go up. the one important thing that i think doug and steven mentioned this last week, and i think it's an important point for the

industry, is that tri pointe and our new home builders have continued to deliver results, despite higher or lower rates, pandemics, because we structurally changed. our balance sheets are leaner, our leverage is leaner. as a matter of fact, we're generating positive cash flow and growing the top line and the bottom line, and actually putting -- giving back the cash to our stockholders in the form of stock repurchases and dividends. at tri pointe, our book value for share has gone up 15% since 2015 annually. so that's a pretty good trade and pretty good performance. so this rate trade and how the builders are perceived in this rate environment, i think we've put that myth to bed a little bit. >> doug, thank you so much for your time today. and continued good luck. doug auer, tri pointe, appreciate it. >> thanks, tyler. shares of publicly traded

game makers are higher today after epic gains scored a major anti-trust victory against google. that's next. and as we head to break, here's a look at some of the stocks hitting new all-time highs today. booking holdings, chipotle, marriott international, and costco. "the ehae"s ckft is.cng iba aer

welcome back, everybody. epic games, the company behind ft. night, scoring a victory against google. julia has the details of the decision, as well as the broader implications. >> though google and epics battle suspect over, google says it will challenge the ruling. but this verdict points to big potential changes for app makers. google could be forced to change its play store themes, which would be up to 30% of revenues, enabling developers to pay lower

fees or avoid paying them entirely. it could be forced to allow these apps to offer competing app stores, which they would control and profit from entirely. the judge will decide the remedies to google's anti-competitive practices in mid january. wells fargo saying it sees -- >> wells saying that this should be a positive for meta, because it's been looking to have its users download apps and transact through its ecosystem for a while. key bank knows that spotify, match, and bmbl have agreed to side deals that offer them more favorable deals. so not to read too much implications for those names, but depending on the judge's decision, they could end up paying even less. and the smaller apps that have not been able to negotiate, those are the ones that could

really benefit from not having to pay as much to google. tyler? >> let me see if i understand this correctly. fundamentally, the two main places that people access apps are on the google play store or the apple app store, right? >> yes. and google and apple act as sort of gate keepers. if you download an app from them, you then also have to pay a fee, not just -- or if you're the app creator, you would have to give a percentage of your revenue, and effectively pay a fee to that gatekeeper. >> so what are the barriers to entry for those apps to do exactly what i believe it was that you described, and that is set up their own platform or their own distribution vehicle or store to sell their app or others? >> well, right now, it's against the rules. that's what this lawsuit has been about, between epic and google and also epic and apple.

that's why epic, maker of the very popular game fortnight. it does. make sense for every app to have its own app store, but there are a lot of apps that would really benefit from that, and if you're a gamemaker and you want to sell add-ones or tools for people playing your games, you would like to have your own store within your app and not have to pay any fees to a google or apple. >> julia, thank you very much. coming up, from autozone to u ulta, retailers not to confident. but morgan stanley's economist says this name should be a standout next year. we'll reveal that name when "the exchange" returns.

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oh, you guys. i know you like wrestling, so we got you some vip tickets. you have made an impact. so have you. for you guys to be out here doing something like this, it restores a lot of faith in humanity. last time we saw our next guest, he told us it's amazon and walmart's world, and we are just living in it.

well, he's heard from more than a dozen retailers since then. despite broad inventory, normalization and improvement in margins, retailers of all stripes are still striking a cautious tone heading into next year. but one stood out among the pack. five below, that was the mystery chart we teased just a moment ago. joining us with his take aways from the morgan stanley global consumer and retail conferences analyst simien gutman. you still like amazon and walmart? still just the big gorillas in this marketplace? >> yeah. the message on that last week was that in an e-commerce world, there's two behemoths takes most of the share. that leaves crumbs for everybody else. that's the e-commerce side of it. i follow walmart and they steam be the big winner in that regard. if e-commerce continues to take share at the expense of brick and mortar, then, yeah, that's where the top line seems to be growing. five below is a little different

story. by the way, thanks for the dozen companies we had 17 of our retailers there. five below is a little different because they seem to be in their own lane. they're controlling their own des destiny. five below has creative merchandising that drives market into their stores and should be able to grow closer to their mid to high teens eps growth. >> yeah. i want to get a little more on five below in just a moment, but i don't want to leave amazon and walmart. in that e-commerce space, isn't walmart a somewhat distant second to amazon? >> they are. mathematically amazon probably has 30, 40% of e-commerce market share. walmart is probably 6. walmart still has a bigger overall share of u.s. consumer spending. now amazon is doing that all online. walmart is not too shabby.

look, walmart is many years behind in that regard. that's what they're catching up on. at first they went at it with a first -- a 1p approach. and that proved to be maybe too narrow of a focus. and now they've expanded to third party. they have forward positioned inventory. they put a seller summit in september. so they put a big emphasis in adding the marketplace. and i'm not sure amazon feels their footsteps but i think they can be heard now. >> it seems that an undercurrent of the 17 companies is that they're expecting consumers to become a little more cautious, though five below constructive on holiday and momentum. stable positive margin outlook. new format stores. shrink recovery expected to take more than a year. input costs, deplace, that's a pretty good sign from five below. are they the outliar here? >> yeah. just to get to your first point on the consumer sounding cautious. a year ago the tone was probably more optimistic and that proved

to be too aggressive, too optimistic. as we look now, the company are capitulating the realities of this tough backdrop. negative, many companies kcompig negative. that was the tentativeness. five below stands out because they sell value. they sell discounted product across multiple product categories. right? they're an al amalgamation of discounter. their same store sales are up. they are almost insulated from all the noise that's happening outside. and so, if you're looking across the space which demand looks pretty tough and what you called out earlier, margins look to be one of the only bright spots, this has the full working for itself in 2024. >> quick final thought. i think there are two stocks i heard mentioned on cnbc this

past year. one is nvidia. the other is ulta beauty. where are you? >> we like the company structurally. tactically earnings per share look like it's -- they're growing but they're cresting. this is a business that was late to recover. beauty is a category was late to recover coming out of covid. they have done nicely. valuation is garby. we don't see the rate of change interesting enough into '24. >> you created a word, garpy, well done. i like it. how about a couple big box stores like a lowe's, like a best buy, like a dick's? >> i would say patience. i would say don't force it. dick's structurally undervalued. we think they keep a lot of the top line and margin that they got during the covid period. they are proving the market wrong in that regard. they are doing that so far. but still under priced. lowe's home improvement, i would

say be patient. the worst of home improvable are the next six months, fourth quarter and the first quarter. the market wants to discount a change of the interest rate cycle, it's probably a little too soon. >> simien, thank you for your time today. >> thank you for having me. >> appreciate it. okay, folks. the hour goes by very fast. that does it for "the exchange." regional banks were leaders in digital banking. now the firm is concerned they will fall behind in the ai age. an analyst will tell us the names most at worst. and morgan brennan is getting ready. i can't speak. i will join her on the other side of this quick break. we look forward to that. see you then. stay with us. ♪

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welcome to "power lunch," everybody. alongside morgan brennan, welcome, morgan. i'm tyler mathison. coming up, we're 24 hours away from the fed's decision on interest rates. no change in rates expected. but with another tame inflation reading this morning, or relatively so, when ratescould start to come down. plus, ai is transforming everything, including banking. we'll talk to an analyst who is looking at the regional banks and breaking them into ai leaders and laggards. names you need to know coming up. but first a check on the markets with the major averages trading today at multi-year highs. highest level for the dow, s&p and nasdaq since 2022. led by financials, materials and healthcare sectors for the s&p. the maker of fortnite doing a victory dance this morning. epic games winning a lawsuit against google which could have broad ramifications for the app store model, major legal decision there. more on that coming up. shares of oracle are sharply loweaf