semiconductors. this is the year we go from multiple expansion to actual revenue growth for the industry so i'm sticking around with that. >> joseph t.? >> for my cyclical-loving friend at the end of my desk there, citi is the one name that i think is breaking out. >> you've got your eye on that. it seems to be going somewhere. we'll see you on "the closing bell." "the exchange" begins right now. scott, thank you very much. i'm tyler matheson in today for kelly evans. here's what's ahead this hour. stocks hitting a new high and can the rally keep going and we'll look at the catalyst and potential headwinds from here and one group of stocks our market guest is especially bullish on. plus, is this the year we will finally see the ipo market come back big time? our guest says there will be movement and it will be high quality. he'll tell us why and the tech candidates he sees leading the change forward, and three more names on deck to report. we have the action, the story and the trade on lockheed, dr

horton and united airlines, but we begin with today's markets and dom chu with record breaking numbers. >> record breaking for sure for two of the major indices. the dow industrials i'll put a star here because it hit a record intraday high. the s&p 500 also an intraday high and the dow industrials up one-third of 1%. 37,977 and the s&p 500 up 4851. we were at 4868 around the high and 4847 at the low of the session and tilting toward the lower end of the range and generally a positive day so far and the nasdaq composite 15,362 is up one-third of 1% and 50 points to the upside and watching what's happening across the pacific ocean. check out what's happening with the ishares china large-cap fxi. it's down roughly 2.5% today and the reason i put this chart up here is that at one point today

on the intra-day lows you'd have to go all of the way back to october during the financial crisis in 2008 for the lowest levels there. so some folks are wondering when the down side momentum will stop on china, but for right now those shares are still down 2.5% and that has been decidedly to the down side and we'll see if that sticks and the stock of the day is macy's. department store chain and the joint bid out there for $5.8 billion and 21 bucks a share rebuffed by macy's board. they don't know how the finance is going to happen in some substantial way and keep an eye on macy's over the course of the last year still down 21% and tyler, we'll send things back to you. >> thank you very much. see you shortly. not just investors who are feeling optimistic today. business sentiment is also taking a turn upward. steve liesman is here with the latest. steve? >> tyler, good afternoon. there looks to be a rash of optimism breaking out over the

economy and both businesses and consumers, the latest survey from the national association for business economic spots the three-month outlook for sales, profit and capex surging and that is 61% of the 57 responding companies and forecast rising sales over the next three months and that's the highest percentage since the second quarter of 2021. a net 30% improved profit margins and that's above the pre-pandemic level and the best since 2015 and the capex approved by 17 points to about average and fewer businesses expect to charge higher prices. that's a good outcome there. likely driving business sentiment are the same factors that are leading to a more upbeat consumer and higher stock prices and the prospect that recession may have been avoided while the fed could soon be cutting interest rates. on friday the university of michigan reported the biggest one-month surge in consumer sentiment since 2005. now it remains, as you can see there, below the 2019 level, but

it's now rocketed up for two straight months with big gains. there were some areas of concern and the survey and hiring catches were muted while wage growth is expected to be strong. those wilchallenges with busine and consumers and it's a better way to take a challenge. >> you have business looking more upbeat and you have consumers in the michigan sentiment survey looking more upbeat and you have inflation coming down. i wonder to inject politics into this, yet biden administration isn't claiming more credit here or isn't getting more credit for this economy, not that they necessarily deserve it. a lot of it is coincidence. it's not directly tied to policies, but i can well imagine if the tables were turned that a trump administration would not be bashful about claiming credit. >> it's true, but of course, there are differences between the current president accident former president in terms of

their bashfulness or not i guess is one way to put it. there haven't been changes at all in the national polls. most of the polls i've seen recently have been local ones and our cnbc all-america survey just barely picked up the beginning of this optimism in december. it was just a small notch and it's shown up much more strongly in the last couple of months and i'm interested to see if at least people are not giving as much blame to biden as they did before. i do think that it may be a situation where they made up their mind about the president and they went through higher prices and biden was president, whatever the reason either to blame or not, but they'll finger him for it and they may not be able to change their mind about it. >> appreciate it. steve liesman reporting for us on business sentiment. business sentiment maying breaking out now, but the market may be rallying since the fourth quarter led by large-cap technology and our next guest says that is getting crowded and it's time to look at small-cap

values which will be the leaders from here. joining me is sandy vilari. welcome back, good to have you with us. have we skirted the recession? >> yeah. i think we are going skirt the recession. i kind of see the gdp ending it 7% to the 1.4% and we avoid it completely. i do think that inflation will be a little bit stubborn and so you're not going to see the rate cut as quickly as maybe the street thinks and when you go back to 2022 and you're looking forward to a lot of rate hikes, growth sold off dramatically and in 2023 when rates came down growth had an unbelievable year, and i think that rates are going to be lower, not until the end of the year which will cause large-cap growth which is quite overvalued, by the way, versus a 20-year average, et cetera, to really stall and the action will be more on the smaller cap cyclical value nameses that are

undervalued versus their 20-year average. >> did i hear you say that rates came down in 2023? that's not my recollection. at the end of the year rates backed off a little bit as there was increasing sentiment that the fed was going to cut rates, but the rates for most of 2023 were moving higher. >> when you look at the ten year going from 5% and they sort of rolled over that way and now on the ten-year you're back to a 413 or so, so i think rates will be maybe under 4 as opposed to really taking off from here. kind of an interesting setup. >> where you see the rates coming down. >> right. >> small caps. why small caps? why value and give us some names. >> yeah, i think with a little bit of growth coming and rates

doing what they're going to do, i just think they're mispriced and when i look at things like atlas energy, i think energy will do quite well and they're in the middle of building a 42-mile conveyor belt system and just mining and delivering sand. a very simple high-cash flow business, that's mispriced, and so i think that's the one that's interesting and i think they had trough earnings in 2023, and will certainly look better in '24 and beyond. i think the consumer is a little more resilient and then i look at palomar technology which is the only name that trades at 15 and 16 times earnings and growing quickly that's been left for dead by the rest of wall street as they chase the magnificent seven and that's an opportunity to be in a name like that that's just been unfound and hopefully people find it. >> you say the trade in growth and especially large-cap tech is

crowded right now and you think you'd rather be in small cap or large cap value. i wonder, does that suggest that it's going to be a bad year for large-cap tech and the magnificent seven or just that the smaller caps will outperform them? >> yeah. i think it's going to be more of a stock picker's market. i think a lot of those larger cap, magnificent seven are just going to stall. you can see a little bit of a pullback in the names depending on where rates go, but i think with inflation being more stubborn, you may not see those cuts as quickly as people think making large-cap tech sort of stall out and when people are digging through the rubble and looking for other names i think they'll just govern that small cap is quite reasonably priced and money can be allocated toward the sectors. >> sandy, good to see you, my friend. >> sandy villere and company,

appreciate it. we talked about optimism in the market and it seems that optimism in the ipo market is growing just a bit. bob pisani has more. hi, bob. >> good to see you. ipo watchers hope it will open up the ipo business which endured two daft rouisaft rouse and 2023, and a community-based health care service is scheduled to begin trading at the nasdaq and could raise 900 million and next week amer sports and it owns several well-known international sports brands including wilson sporting goods, atomic and peak performance that could raise 1.7 billion and is scheduled to begin trading february 1 at the nyse. here are positives for the ipo market and they're at new high. that's good news. interest rates are trending lower, good news and there's an, i craze that many hope will flood the market with ai ipos later in the year.

the big negative is a continuing valuation overhang and that's the haircut that many ipos had to take after higher rounds of funding in 2021 or 2022 put premiums on companies that the public investing community was unwilling to support. the report is many companies decided they didn't want to or couldn't afford to go public. a number of companies have filed to go public and some of them confidentially including service titan which provides software for commercial heating and social forum network reddit, and panera bread, seatgeek and shein and cryptocurrency circle. turo also filed public as did payment firm waystar. the list of potential ipo candidates that haven't filed, but they're out there includes strip, klarna, some smaller companies with public brand recognition with liquid death, you know them and they could

dive in as well as kim kardashian's shapewear called skims. and the data management and enterprise platform and gaming focused voice chat service and discord also frequently mentioned is an ipo candidate as wiz which raised $300 million in a series round of financing that valued the company at $10 billion. you see, tyler, there is no shortage of potential companies out there. we'll have to see if it starts opening up. you mentioned a sporting goods company and it will be a big one, though. >> you mentioned a tremendous number there and it's in succession and i can't remember and i'm not 100% sure. at any rate, that does not mean that any of these will necessarily go public. there are some that will, but it may be a small percentage of those you mentioned.

>> those that potentially win, they may be able to stay private longer and avoid this valuation haircut trap. that's what killed a lot of companies last year. they're not willing to take the cuts that the public market is demanding after they had huge valuations in 2021 and 2022 and into 2023. i think that's going to be the big issue. the market is at new highs and lower interest rates and that's a perfect scenario for the market right now and we probably have several hundred potential ipos and some of them are ten years old and reddit filed to go public over two years ago. that's already a middle-aged company by now and there are plenty eager to find a way to get these companies public. >> bob, thank you very much. bob pisani. our next guest expects a second wave of ipos, but he says it's not going to be a huge flood and we may not see the ai start-ups until the 2030s.

duncan davis and you have nuanced and a nuanced view of what we should expect dunkin in 2024 in the ipo market, more of a trickle than a flood or somewhere in between? >> we had a wave and these are the companies you wanted to get into and hold for a long time. if you go back even further to the pc bubble and i don't know if anybody remembers the pc bubble. bob was around for that, it was a crazy time like the dotcom bubble. there was a company called kentucky-fried computers, went public. changed its name. there was a company called mbi that was nothing, but initials and it went public. three years after that thing blew up, microsoft goes public, oracle goes public and i call that second wave companies and these are really high quality companies and they're the companies you want to buy and

hold because they might become the future magnificent seven. >> so where are we now? are we at the point where what's going to come public may not be be a torrent, but it may be a higher quality of company than at other times in the cycle. >> exactly. i think, in fact, this is good. people have a thinking in their has that drop interest rates and they have a lot of good stuff in ipos. no. the higher interest rates, only the top-quality ones should get out and i think this is a good thing and investors look at this as a buy and hold opportunity and not a buy and flip opportunity. >> in tech, what are the names that you think will come out and how do you rate them in terms of quality and investability, not necessarily for the short term, but rather for the long term. >> for our unicorn horse race, so to speak, i think red will be the first one out that will be out february of next month.

if it does well the other social ones like discord will follow. the one i really want to see get out is chime, and it will be the largest market cap at these companies and if it succeeds in getting out, then we have plaid which we've been trying to get out forever and we have stripe and maybe klarna all getting out sort of in a fintech follow-on on. that's the prime list and the others that were mentioned i'm not sure will be mentioned or want to go out in the cycle. >> what holds them back? they've been trying to go out forever. what is the impediment there. the markets just didn't want them. and they say now is the time. >> i think the time is coming. i think the bankers will say, hey, this is a time to go back out again, you guys are such solid companies, very simply, and these are the tech company

it is that are high interest rates and low interest rates, it doesn't matter and they're creating value all by themselves. >> we have this chart up here in 2020, and 2021, what was the surge driving it then? rising markets? >> oh, low interest rates. come on. bubbles are created by crazy low interest rates, and so you get crazy bubbles. >> as interest rates come down you would expect some of these other companies to finally get over the fence? >> quite the opposite. >> i think if interest rates don't come down or maybe come down a tick or so it will still let the animal spirits run for these companies. if interest rates drop too much and we push them back down again and then you get a lot of weak offerings and to put differently, these companies are better off if the herd of unicorns get cold and only the top quality ones still run. >> is the spac craze over? [ laughter ] >> yes. >> yes.

finish your thought. >> the spac companies were highly competitive and they collapsed and nobody wants to touch us back. >> dunk an, appreciate your time. duncan davidson, bullpen capital. coming up, chip stocks have had a big year and our next guest sees the gains because of one catalyst in particular and the price target on several stocks and he's here with some names next. plus top auto analyst adam jonas says each day brings more signs that global ev demand is slowing. hertz selling a third of its ev fleet is one example of that. the stock is down 17% over the past month, but if you think that's an opportunity to get in, our guest says don't do it. she'll tell us why ahead when "the exchange" returns after this. >> ts "e hiisthexchange" on cnbc.

welcome back to "the exchange." everybody. shares of nvidia up 7% after the massive run last year. it's more than tripled in value from 2023, by the way. jensen huang was dancing on his recent trip to china. the u.s.-china tech tensions. he reportedly met with nvidia staffers and unclear if he met with government official, but he's a good dancer, nonetheless. while washington is expected to

tighten its grip on ships to china, generative ai could fuel another rally and nvidia, one of the top picks which will report fourth quarter earnings later this week. let's bring in sweeney pajuri at raymond james. good to have you with us. >> so you think that the ai-led rise in a lot of chip stocks has legs, is going to endure this year. how much growth is it going to deliver? >> yeah. thanks, tyler. first of all, if you look at the semi cycle, i think we started this rally some time in october of '22. it's outperformed the s&p by about 45 points and if you put that into con particular, typical semicycles last roughly about two years and you get

anywhere from 20 to 50% outperformance and this year we're in the 15th month of the rally and so far the sector has had 25% outperformance normal times we're in the rally and because of ai, we are still continuing to recommend the sector and recommend the stocks in the sector, and our view is that ai roughly accounted for 9% of the industry revenue last year and we expect it to grow about 100% this year, last year it grew about 200% this year and ai revenue grew 100% and for the next two years we do expect ai to account for 7%, 8% of the industry growth and this is an industry growth that grows in mid-single digits and ai health has the high single type of growth and overall we expect the semiindustry to grow at a double-digit pace because of ai for the next two years. >> so that is an encouraging

outlook for the companies that are, posed to ai and there are a lot of them and we'll get to them in just a moment. am i understanding correctly that there's an even longer term play that may give the ai sector as it matures even greater growth deeper into this decade and the next decade? >> again, this is something new that we haven't had this kind of of a catalyst in a long time. maybe it can go back to the late-'90s in terms of the internet buildout, but as i said, right now most of the benefits of ai are going to nvidia, as you mentioned. i expect that to broaden out in the next few years and i expect to see broadcom or amd and memory, for example, micron will be a play on this going forward and even some of the network connectivity chips and companies like marvel and broadcom will benefit. any supplier that do data center to benefit from ai and on top of

that there's a lot of talk of ai and people are talking about ai pcs and ai smartphones and it's a very, very early days and it's difficult to put a number on the duration of this catalyst, but i think it will be big. >> as you look, people can't get enough of nvidia, and i see you have a $700 price target on that stock. >> yeah. >> wow. >> look, valuation wise, it is not that expensive even though the stock has had a massive run and the estimates have gone up even more. this is a stock that used to trade at 40 times at forward estimates and right now it's 30 times and i think there's some concern that things can slow down a bit. we don't see that in the short term and things could take a pause for a quarter or two and we don't want to get too worried about it because it's a long-term, massive trend that if through's a pause in the next one or two orders we would view that as an opportunity.

so at 700 we're still talking about forward members. >> it's gone up $100 a share easily in the last three months, i guess, something like that. let's talk about a company that has been among the unloved in recent years and that would be intel. you have an outperform on that and i don't know whether that's a tepid endorsement or relatively, it's a pretty enthusiastic endorsement. >> i think we've been positive on intel since last year. the stock did quite well last year and you're right. it's now a consensus call, and it doesn't get much love and our view on intel is as long as they execute on the road map which they seem to be going and yes, pcs are coming back a bit and we do expect the several business to come back a bit this year and at the end of the day what matters for that stock is the technology road map and they think that they can regain the lead in manufacturing from tsm which they used to have two

years ago or a few years ago. and i think that opens up a lot of things for intel, first, the share losses and servers and then it opens up the foundry opportunity which is a significant opportunity and then it also opens up the ai opportunity and as long as they're executing and we'll continue to support that stock. >> let's talk a little bit and quick thought as you would on china and how export controls and the chip business in china and import controls, as well made the headwinds in this sector? >> you know, there are a lot of restrictions already in place and nvidia will see some impact and the good thing is that the demand in other regions are still so strong. the impact is minimal in the short term and longer term there will be some impact and also nvidia is implementing work arounds and they implement some work arounds. if that happens, that will be the upside to our model and even without china we feel good about

nvidia's numbers and that applies to other ai suppliers, as well and the only difference is nvidia has had significant exposure to china roughly about 25% and the other companies are barely shipping ai products and the impact is not as significant and even with the china restrictions we feel good about nvidia's numbers after the next 12 to 24 months. srini, thank you. delta reported rising costs and those shares down 11% since then. so will united follow suit before the bell out with earnings tomorrow? we'll preview those results and sticking with airlines, the faa expanding its inspection recommendations for certain boeing aircraft. the details and the travel impact ahead. "the exchange" will be right back. ♪ ♪ every day, businesses everywhere are asking: is it possible?

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oh no, a rash. maybe it'll go away. awww, how am i going to find a doctor i'll actually like? is that a qr code? dr. stafford makes you feel at ease. thanks rash! you've got more options than you know. book now. welcome back to "the exchange," everybody. markets right now are higher and the dow industrials off 61 and that's off of the positive of 245 or so and s&p off 0.2% for

the nasdaq. gilead having its worst day since december after disappointing results from a cancer drug study. the stock was at a 52-week high as recently as friday. not today. down 10%. solar edge having its best day in a month on plans to cut 16% of its workforce, best day for the stock and not so much for the workforce in a restructuring. the stock is down 23% in the past month. other solar and clean energy stocks are higher as well as solaredge. and sentinelone, after btig upgraded it to buy after rising attack volumes. palo alto and crowdstrike both at record closes today, as well and crowdstrike ceo george kurtz will join jim cramer on "mad money" tonight at 6:00 p.m., you knew that. that's 6:00 p.m. eastern on cnbc. let's go to bertha coombs for a news update. cameroon began the world's first malaria vaccine program

for children today. the central african nation hopes to vaccinate 250,000 children over the next two years with one of the two approved vaccines. while the vksaccines are only 3 effective, they will dramatically reduce severe infections and hospitalizations. thousands of faculty members throughout the california state university system walked off the job earlier today demanding higher compensation. the proposed five-day strike affects students across campuses making it the largest university strike in history. police in roseville, california, arrested a woman for allegedly stealing $2500 worth of stanley travel cups. she allegedly walked out of a store with a cart full of the quenchers and took off. cops responded -- they displayed some of them on the hood of a

cruiser saying, quote, stanley quenchers are all the rage, we strongly advise against turning to crime to fulfill your hydration habits or perhaps resale. the suspect was arrested for grand theft or tyler, i suppose grand theft water. >> grand theft water or grand theft auto, bertha, thank you very much. coming up, near-term options in united with a 7% move in either direction. that's not very helpful, is it? it can go 7% higher, is it? we'll talk about that as well as lockheed and has missed on earnings four times in the past 20 quarters and those shares gaining 12% and one firm says rate cuts may already be priced in for d.r. horton. we'll have reaction and the story in earnings exchange next.

♪ ♪ welcome back to "the exchange," everybody. >> earnings season ramping up at the last week's big bank results and today we have the action, the stoer and the trade on united airlines and lockheed martin and d.r. horton.

joining us for this earnings exchange jeff kill burn, kkm ceo and let's talk united reporting after the bell and had a bit of a rough go lately and the share down 30% in the past six months and certainly not being helped by those max 9 groundings. 79 united aircraft set to be grounded until friday and susquehanna with the capacity as routes settle down. you excel into earnings here, jeff? >> i would. if you wanted to find options you can. i owned delta which is not doing as well, but you think about the impact of the max 9s. united airlines which is called the friendly skies is not so friendly right now because nearly 100,000 of the plane fleet, so you wouldn't think it would be that impactful, but nearly 10% is being grounded right now. there's so much ambiguity and they look for more tests and more reasons.

so i think the stock, tech nec technickly, ty, it doesn't seem like the story is over and they're taking the heat this week and united, i have to stay away. >> the story is unfavorable and let's talk about one you do like and that's lockheed martin reporting after the bell tomorrow ask shares up 3% over the past year and rising global geo-po geo-political tensions, and specifically on lockheed's f-35 air raft and j.p. morgan sees the growth strategy and aggressive share repurchases and you are a buyer here, sir. >> i am a buyer. i've owned lockheed martin. i think when you talk about the election year that you are in either side, and i think you'll talk about the geopolitical tengs that continue to be out on the horizon and this is a name that will continue to participate and a competitor,

northrop grumman, it changes to a discount. and the p-e ratio of 17 and versus north of 19 and if you're not an owner, i think this makes sense and it's a boring day, when you own the blue chip tangible names and it makes sense going forward. >> let's go to d.r. horton and the home builder up 66% in the past year and the sea port downgrading it saying future fed cuts may have been priced in during the run-up and it is watching input cost deflation which could be slower than expected. you lean positive on this one or is it one to watch because of its past gains? >> i disagree with that note. i think there's more room to run here. i think housing, there is a supply issue and d.r. horton, this is the biggest builder. they'll put 82,000 homes out there and yes, they hit a monstrosity year when they were up 72% and if you're a

shareholder at all-time highs and you're so excited about what's going to happen for the rest going up to the super bowl, so where, i think d.r. horton can go is higher. i think the wind in the sails for this could be lower interest rates and that's a tailwind and not a headwind and i do think it's priced in. i know it doesn't feel good buying something up 72% the year before and if you had the opportunity on a pullback there i think you would buy the leading home builder. >> the buffalo, kansas city game, its an amazing game. who do you like this weekend with chicago and baltimore? >> at the end of the -- >> neither is notre dame. >> it will be a great matchup and i think kumar jackson has the ability to take them to the next level. either way, yof a i don't have dog in the hunt, guy and i'm not rooting for jason kelce, but you never know. >> jeff kilburn, kkm financial. coming up, the faa rec

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welcome back. the faa recommending inspections for more boeing aircraft. phil lebeau is on the newsline with that story. phil, this is beyond those 900 max planes. those are the 737 max 9s that are grounded. this safety alert is not for a max model. this safety alert that was issued last night by the faa is for 737-900extended range models and essentially what they're saying is look, we want the airlines that have these planes to do visual inspecs of the mid-section door plugs and that's because of the grounding

of the max 9s. here's an important distinctions and of the 737-900ers, these aircraft remain in service. they are not grounded so why has the safety alert been posted? some of the airlines that have these 737s and by the way, these have been flying for a number of years. very -- a lot of service with these planes. some of the airlines were doing some checks of the door plugs once the max 9 as you came up and they came up with what the faa report says were findings with the door plugses and you need to do visual inspecs of these -- there are 504 of these that are in service around the world and the bulk of them flown by delta, united and alaska airlines. if you look at shares of boeing, keep in mind the max 9 has been grounded basically two weeks now and we still see the pressure that's on the shares right now and these inspections of the

737-900er will be done relatively quickly and the aircraft remain in service. don't forget tomorrow morning, or after the bell today we'll get united results as well as guidance for 2024 and we'll be talking with ceo scott kirby tomorrow morning about that guidance and yes, how about the max 9 because they do have 79 of those max 9 models that are currently grounded. tyler? >> the inspection -- the inspection recommendation, does that apply solely to u.s. carriers or does it apply globally? >> it's globally. the faa -- they are the office of record, if but will. so if you were a foreign carrier, when the faa says we recommend that this be done because boeing is a u.s. corporation. >> right. >> the foreign entities will do it, as well. and these are door plugs. is that rear exit that i'm looking at -- >> that's the mid-exit. where your larger -- and remember the 900er is the larger

737. it has the capacity to carry more passengers because you have more passengers, you have to have some way to allow for an exit if there is an emergency and that's what the mid-exit door plug is there for. it's covered up, but the whole idea here is on these larger aircraft when you have that capacity you have to allow that to be a possibility. >> is it an emergency exit or not? you say it's covered up. >> it's not an emergency exit per se, but it is there because you have that capacity that it's this much greater with that many more passengers. >> thank you very much. phil lebeau reporting on the 737. coming up, hertz becoming a battleground stock over its approach to electric vehicles. morgan stanley's adam jonas is bullish while jefferies is taking a more cautious approach. we will hear from the analyst who wnaddogred the stock about what has got her concerned. that's next. let's check it out. says here it gets plenty of light.

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welcome back, everybody. i want to draw your attention to spirit airlines. the company appeals its merger with jetblue. shares are still firmly in

negative territory since the merger was blocked last week by federal trade official, but they have been pairing the losses since then after spirit announced an upbeat 4th quarter. 2024 has not been a good year for electric vehicles with car rental companies phasing them out and automakers slashing production. morgan stanley analyst, adam jonas, said that each day brings increasing signs of global ev demand and this could get worse with another truck presidency and the end of tax credits for them. our next graft downgraded them and said that they were not going to go away overnight despise despite what hertz has done. i love it when an analyst put the stake in the ground. you have cut the estimates by 40% next year to 500 million. lower than the consensus by

more than $300 billion. what is wrong with hertz? >> absolutely. and thank you for having me. what we are seeing right now the first is that these values, particularly ev's, have increased. but also broadly across the board. that is having pressure on stocks but mostly hurts. the second issue is unique to hertz and they are seeing higher damages and repairs related to them. these are higher damages than repair plans for internal combustion vehicles. this is creating a lack of visibility and when these issues will subside over time. we did cut our estimates to about 500 million, we don't

even have a lot of visibility in these cut numbers.>> is hertz -- what they are doing, is about a third of the ev fleet is what they're getting rid of? >> exactly. they announced about two weeks ago that they were rebalancing the portfolio and going where they would sell 20,000 of the current 60,000 vehicles, which are ev's in the u.s. i think this is the move given the headwinds we've seen but to your point they are only cutting a third of them. it was about 10% of their fleet, but a year ago hertz was targeting that evs would make up -- >> they were pushing it hard. do you think they will get out of it and will other rental

companies -- will they follow suit, to the extent they are in the ev world and will hertz get completely out of it? >> so hertz is at the forefront of ev adoption. they started their foray into it with the partnership announced in 2021. the other companies have not followed suit to the same magnitude of which hertz has. i would expect to see that hertz will be the one with the lions share of the impact in selling them and pausing the strategy, given what we are seeing today. and what we are seeing is a couple of factors. the original adoption that they expected from evs has not panned out the way they thought. and they've not seen the penetration and demand from customers, all of which is coming into play we aren't seeing the adoption that they wanted. and the other side is you see

higher repair costs. it is a different vehicle to drive.>> you have your base cases which is 8 dollars per shot. best is $12. and downside is 3 dollars per share. i wonder why they are having not just higher repair costs but collision costs. is that because people are not familiar with driving them and they're distracted by the touchscreen? you have a hunch?>> i don't know if you've ever driven the tesla. i was surprised by how little you had to press down on the gas pedal and you don't touch the brakes at all. i think the amount of torque is different and more sensitive. and i think you see, particularly in the rental fleet , not in the rideshare, but consumer rental fleet, they see

a higher degree of accidents. accidents are one thing, but the majority of the fleet is teslas. so tesla does not have necessarily the repair infrastructure. so you are also facing higher repair costs dealing with parts as well as actual labor. >> very interesting. i did drive a tesla, and they jump. they are fast and they get moving pretty quickly. thanks, good to see you. and that, pretty much does it the exchange. coming up, if you're looking for an entry point in the home improvement stocks, oppenheimer says, not so fast. and analyst -- i see her right over there. she's getting ready. it says i will join him on the

other side. that's not true. that's probably written for me. we will be right back.

good afternoon. the rally is rolling along. more record highs, including the dow, 38,000 for the first time. what needs to happen