red today, still like the stock. >> jenny? >> cisco. 3.5% yield, 12.8 times earnings. >> bank of america. cheap stock, 1.2 times book, earnings are around the corner. >> joe y t.? >> netflix to $750. >> "the exchange" is now. thank you, scott. i'm melissa lee. is the consumer on the cusp of a significant slowdown? our economist says yes. he tells us just how significant. weather could change the rate cut timeline and what it means for investors from here. consumers did spend at this company the last quarter, the stock is up 19% on solid results and the ceo sees another catalyst coming. and shares of linar is falling.

recent sentiment represent a great buying opportunity. we begin with the markets and dom chu has all the numbers. >> very stable and somewhat mixed. the dow is still the laggard and has been over the course of the last few months at this point. we are just about flat on the dow, down nine points on a basis of 38,69. the s&p 500, 548 is. now, remember, the high water mark at this point is 5488. that was the record intraday high we saw just yesterday. seven points below that right now. eight points today. 0.2 of 1%. up 13 points on the range. there is your context around the s&p. the nasdaq just about flat on the session, up four points. one of the places we're watching today is what's going on with the oil market. check out wti crude prices, now steadily above $81 a barrel. you can see up about 1% today.

i put the blue and yellow lines, the 50-day moving average, we are just at about that level right now. we're watching this $80, $81 range closely. we'll see what happens here. that crude trade has been weak here, but a nice rebound over the last couple of weeks. and then the stock of the day is an energy in power but not the oil and gas side. n nextera energy, down 3.5% today. they announced they are going to sell and raise $2 billion in equity units. now, in essence, it's like a convertible bond. there's a bond component that pays interest converting to stock down the line. that diluted factor is driving a lot of the downside there. but melissa, we talked about this before, it's been this ai play, power usage, they need all

that money. those shares down. back over to you. >> dom chu, thank you. new data on the economy including weaker than expected retail sales as we're hearing from half a dozen fed officials today. cnbc's reporter steve liesman has more on these numbers and the narrative. hey, steve. >> hey, melissa. yeah, there is a lot of fed speak, and i'll get to some new stuff in a second. let's talk about the softer than expected may retail sales report and a down april, dragging down the growth estimates for the second quarter. several economists saying under the hood, these retail numbers aren't that soft. take what barclays said after the number -- >> well, let's look at the details. headline, up less than expected.

april revised to minus 0.2 from a flat line. gasoline was the big culprit here. restaurants and bars also down. but the core retail number, that's what needs into gdp. that was up 0.4%. it was revised down for april. motor vehicles up 0.8 and sporting goods up 2.8. we do have some fresh fed speak out with remarks from the fed governor, saying it's likely appropriate to ease policy later this year, and she says policy currenty is sufficiently restrictive. policy has more work to do, so she is in no hurry to reduce rates. she did see more progress toward the 2% inflation goal and optimistic on the outlook for inflation to keep declining. a lot of fed speak, most fed officials recently the better inflation data, but i'm not hearing much change at all in the outlook for monetary policy.

noncommittal is the word that describes all of the fed speak that we have had today. >> that leaves possibilities on the table. our next guestsays the consumer is on the cusp of a significant slowdown. join us is steven stanley. great to have you with us. you're one who is sticking by his forecast in terms of fed rate cuts but the consumer is on the cusp of a slowdown. anything in this report in particular that adds to this thesis? >> certainly the data were weaker. i think in particular, one of the things that steve pointed to, the fact that restaurant receipts were down. that to me is the ultimate discretionary category. and we have seen declines in the last four to six months at restaurants. that is one signal. i think in general, we need to also pay much attention to the consumer spending data at the end of the month. most of the action for the consumer lately has been on the services side. so goods, weakness alone is

probably not enough to really move the needle for the fed. >> yeah. the restaurant line item, steve liesman, stood out to me, as well. especially given the consumer had a little bit of relief from lower gas prices overall, lower fuel prices, yet they still felt the need to pair back on what they are spending out. it was the biggest decline since january. what do you make of that, and you said most economists didn't see much in the retail sales that makes them too concerned. so can you put that into context for us? >> well, i have two thoughts on this, and i wonder if steven would comment. i have been thinking about this very question, melissa. i think there's a rejection -- i was talking about this idea of the $30 two-year and burger bill. i think people are recoiling a little bit at that. no matter what your income level, when you go out to something that used to be $20 and now it's $30, you're like, wait a second, i think i'm going to lay off of that. we may be in the process of some

disinflation or deflation. i don't know, steven, how the bean counters figure out when mcdonald's goes to the $5 meal, and i'm not talking about mcdonald's all the time, but some of these other fast food value meals out there, there could be some disinflation to this food number. >> if we can just hang on. we want to get to auction. rick san tetelli is tracking th action. >> everybody calls me a tough grader, and i am. but on this auction, there's no question in my mind, it's one of the few a pluses i've given out. reopened 20-year, the amount 13 billion. the yield, 4.452. the one issued market, it was hovering around 4.48. basically, in the screws by three basis points. that's huge positive. lower yield, higher price.

and if you're the government and you're selling it, those are magic words. some of the metrics are outstanding. give you some context. this is the 50th 20-year since it was brought back in may of 2020. and all of 50 of these auctions, we've never had a lower amount taken by dealers than today. 5.8%, the average is 12%. all the metrics were stellar. indirect bidders, best since july of '22. there was a little light on the bidders, but a very, very solid auction. you can see in the initial drop in yields. it isn't 20-year, it's not the most popular maturity on the curve, and maybe it's not going to have a lasting effect, though it did put the low yield across the longer duration treasuries. but it is something to pay attention to for the following reason, that if investors are that enamored with a 20-year, which is not the -- on the yield

curve favorite, it gives us insight into what their macro view of interest rates is. right now, it seems to be lower. melissa lee, back to you. >> rick, just one minute. the last three auctions i want to say have been decent. and they've all happened since before what was going on in france in terms of political turmoil. do you see that spilling over, a bid for safety, maybe investors are looking to reallocate here. >> yeah, i think you bring up an excellent point. what's going on with france and their deficits, it reminds me in a bit of liz truss in the uk, not similar, but the fiscal situation of countries in the deficits and what they're trying to do about it all is a huge factor. on a relative basis, what you're saying makes sense, that the u.s. right now seems to be a better choice. but i put 1,000 asterisks there,

because if the deficit issues in france going against the eu metrics of what is allowed to be a debt-to-budget or debt-to-gdp level, the united states is running off the rails in that camp. so i would caution too much euphoria, even though i think your comment is spot-on. >> when is the last time you gave any auction an a-plus, rick? >> it's been a while. i would say probably about a year, and you're exactly rite. the 10s and the 30s in the last tranche we had were aggressively solid as. so we've had three longer maturity auctions that have gone off quite well. >> i had a professor like you in college. rick, thank you. back with my guests. steve liesman, where is that $30, two beers and a burger, that sounds cheap with new york city standards. but in terms of steve's comment,

steven slatanley, are we going see prices come down because we have the gravitational pull lower from the lower end in terms of the mcdonald's of the world and even starbucks having a $5 pick and choose menu, fighting with the higher end, which is like the $30 two beers and a burger kind of option. >> yeah, exactly. you know, i heard the richard fed president speak today. he said that what he's hearing in his district is on the good side, it's back to precovid, that firms don't feel like they have a lot of pricing power. but the services firm still seem to be of the view that hey, it doesn't hurt to try. and i think most of the energy around the consumer has been in services, it's been in eating out, it's been in travel and things like that. so if you do see a resistance to price hikes in those areas, that would definitely be a pretty telltale sign that things are on

the inflation side are looking up from the fed's perspective. >> what does the cusp of a serious slowdown look like to you, steven stanley? >> i mean, the big issue for me is the labor market is moderating. that will mean slower income growth. and i think slower income growth translates into slower consumer spending growth. so i don't see a recession for the consumer necessarily, but i see something like 1% real growth in consumer spending in the second half of the year. >> but you're still sticking with two rate cuts for this year? >> that's right. i have the first cut in november, yep. and then two for the year. >> and steve liesman, what are you hearing in terms of the expectations on the labor front from economists, and are they starting to rethink what they've got pencilled in for the rest of the year given what we're seeing in terms of the slowdown, some signs of entrenchment on part of the consumer. >> i'm glad you didn't ask me

the questions right out of steve, because i'm still catching my breath from that a plus. that's three as for the auctions. i don't think he's losing his edge. he's still tough as nails, but he's using empirical data to figure it out. so i'm just catching my breath on that. what i keep hearing, melissa, to answer your question, is that slowdown that everybody had been expecting for the second half of name your prior year, it's still expected. and i don't know how much credence to give it, right? we were going to have a big slowdown in the jobs report last month. it didn't happen. and so now i see people say thing slowdown is definitely happening. the fed is looking at, i think, a whole bunch of job market metrics, and they are seeing generally a slowdown coming, better balance. they look at the quits, the openings, and they do see something of a slowing

happening. but not really so bad that it will cause them necessarily even a change of policy or even to cut rates immediately because of it. so i think if we settle down to that 125, 150 area, the fed would feel like, okay, this is pretty normal right here. >> we'll leave it there, guys. thank you. our next guest isn't waiting for the fed to cut rates to deploy cash, and he's finding opportunity in thalias in particular. one is ai related. of course. as nvidia is once again the world's most valuable company. let's bring in the chief investment officer, kevin, great to have you with us. >> thank you. >> you have to be invested in nvidia. these days, any money manager worth his salt has to have some exposure. is that right? >> absolutely. nvidia is the poster child for the ai boom, and semiconductors and chips are leading the way. i think most investors now are

trying to find the next nvidia. and that could potentially get them into trouble, as there are so many different investment opportunities that surround the ai ecosystem beyond nvidia. one of those areas is data centers. guess what? nvidia just reported that they experienced a 400% year over year growth in their own data center. data centers are the nervous system of the ai system. they allow these companies to store and process the massive amounts of data necessary for these ai algorithms. a couple names are digital realty. they just announced a $7 billion joint venture with blackstone to build data centers across the world. data centers are where the buck is going, and they also offer attractive yields. hold on for just a minute. >> i'm here to take responsibility. so that's all for now, and thank you.

>> what about these new allegations? >> are your planes safe? >> will you address the family directly? >> are your planes safe, sir? >> what do you have to say to the families here today, sir? >> melissa, short and sweet. we didn't expect much from dave calhoun. he didn't say much, but that he is here in the spirit of honestly and transparency and will answer all the questions by the senate committee. that hearing starts in 45 minutes. other than that, he said nothing else and walked into the waiting room. back to you. >> a big day for dave calhoun. a moment of reckoning according to senator richard blumenthal. thank you, phil. dave calhoun testifying for the first time since that january 5th door blowout. let's get back to nvidia,

because that's probably one of the hardest trades -- i mean, from a disciplined standpoint, kevin, would you say you would want to pair back on nvidia at this point? are you concerned about a digestion period in terms of the ai spin, are you concerned about slowing growth rates for nvidia? anything about the nvidia story that worries you given you the trajectory? >> clearly it's overvalued from a price perspective, but there's no stopping nvidia. they're not satisfied here, and they continue to deploy their own excess cash on their balance sheet for the next generation chips. i often like to talk about sports analogies. people asked me with nvidia in particular, what inning are we in? i think we're still only in batting practice of a double-header. but there's more opportunities than just nvidia. in fact, why not look at taiwan semiconductor, the largest

dedicated chip foundry maker in the world with a 40% market share. or how about industrial companies that service data centers, like vertiv holdings. >> so you mentioned this whole ai ecosystem surrounding nvidia and all the tentacles that surround it. at what point do you need to see the return on investment from companies buying the chips? just the ordinary industrial companies, the insurance companies, when do we start to hear about what they're getting for the spend? because we're going need that in order for the spend to continue. >> we'll need to be patient in that front. what concerns me more is companies not investing in ai, or looking to adopt ai to make themselves more efficient and profitable. but if they are investing and committed to those investments, they will see dividends down the road, but we have to be patient there.

>> all right. and on the consumer front, any worry about the consumer? all of this will feedback into that ai ecosystem, which you so love. >> i am concerned about the consumer. the long-awaited economic slowdown may be coming to fruition. we saw gdp growth slow to 1.3%. that's all important, because the consumer accounts for 70% of our economic growth. if they stop spending and shift to servicing, the economy can only slowing further. but the fed realizes that. we still may get two rate cuts this year, but even if we don't, we should still be 225 basis points lower than the end of 2026. if that holds true, that's a till wind for most stocks and bonds. >> great to see you. coming up, lenar sinking in

forecast. plus, lazy boy on pace for its best day in several years after beating estimates on the top and bottom line. we'll speak with the ceo about that. and the aggressive real estate strategy. "the exchange" is back after this. >> this is "the exchange" on cnbc. much i couldn't have done it without you. honestly, i don't do a whole lot here. i'm really just here for the at&t internet, it's super-fast so, any pre-launch concerns? what if nobody buys them? that's mean or, what if everybody buys them? oh, i hadn't thought of that that's probably not gonna happen can we handle that kind of traffic? the network can handle it! i downloaded eight hours of true crime stories just during our last video call i'm learning a lot

welcome back to "the exchange." i'm steve liesman with breaking headlines from st. louis fed president. he's the latest fed president to take office just in april. this is his first speech that we've been able to see so far. he says the early signs of continued progress on inflation, and that financial conditions are accommodated for some parts of the economy, restrictive for others. he said it could take quarters to determine the right time or conditions to be in place in order for the fed to cut rates. if progress toward the goal stalls or reverses, the fed should act promptly. but he's optimistic that price stability can be achieved. so maybe a touch on the hawkish side, which would not be unusual for the st. louis fed president

traditionally anyway. but he's now the fourth fed speaker of the day, and really we're no closer to understanding when the federal reserve may cut interest rates. >> i think it's more difficult the more fed speakers we have. thank you, steve. lennar beating the top and bottom lines. but shares under pressure after the home builder's third quarter delivery forecast fell short. our next guest has a $198 price target, saying they offer an attractive buying opportunity. joining us now is john lavallo. great to have you with us, john. >> thanks for having me. >> so the shortfall in delivery forecast doesn't bother you? >> i don't think that's the concern out there. i think volume was really good, and the expectations that will continue. i think lennar has done a nice job of stimulating and keeping demand through the cycle,

through use of incentives and some of their advertising mechanisms. the real concern is the trajectory of gross margin and what's implied from the third to the fourth quarter. i think that investors are kind of, you know, asking questions later when it comes to back cap loaded outlooks. there's also other questions about capital allocation, the land spin that they're talking about that there weren't a tremendous amount of answers there. also, the sale proceeds were under question a bit there, too. so a lot of moving pieces, but i don't think it's on the volume side. >> they were careful to talk about managing expenses, as well as just the total home building cost, john. i'm wondering from your stand point, are costs going to go lower here? what is the biggest driver of cost increase that we saw in terms of the total home building cost, because it was up by $600,

$700 million or so. if it's labor, it's probably not going down. >> interestingly, the builders in general, lennar specifically, has done a nice job managing costs. one of the things at the corner stone of this reality, and construction cost, down 1%, year over year basis. the bigger cost pressure comes in terms of land and development. don't get me wrong, there's also pressures from tightness in labor and if we do see a rise in volume, you'll see pressure on the commodity cost. but in terms of direct cost, they've done a great job of managing those expenses. >> in terms of your bullish thesis for home builders in general, in terms of the rate backdrop? >> it's a tough call. certainly i'm not an economist.

my view is that rates are probably heading down at some point. when that happens, tough to tell, but we have a nice pullback here recently. i think the builders more importantly are positioned to execute regardless of where rates are. we saw them executing at a very high level even when rates were as high as 8%. they have figured out how to keep the demand that's out there, and it is strong demand, moving through the use of these -- >> that's because they're buying down mortgages and providing incentives. if they can keep it going at 8% mortgage rates but that's not great for them. in terms of your forecast and support sales through incentives, how long does that last? >> we're not modeling any sort of relief from interest rates or incentives in our models. if we do get that, that will be sort of icing on the cake. i think the builders have figured out how to take cost out elsewhere so they can use those incentives to keep demand going

and still maintain margins 200 to 300 basis points above precovid levels. >> recently we seen a drop in the 10-year yield, but we haven't seen that usual rally we see in home builders. what do you make of that, are people getting concerned about the overall rate at all, valuations maybe? >> i think the most recent concern is related to inventory. we have seen a pickup across several markets, but context is very important here. there's 1.5 million single family units out in the market today, a full 1.5 standard deviations of 2.4 million units. so inventory is very low. the inventory is more of a normalization towards average levels more than anything else. >> john, thanks. >> thanks, melissa. speaking of building, our next guest just closed, with

properties more than $11 billion in assets. they operate in miami and new york. joining us for more is kevin maloney. great to have you with us. >> thank you for having me. >> the headline about the biggest loan condo residential in history. that sounds amazing. that sounds like it's an industry in great health. what is the case? >> it is. we were able to really box out all the risk. we went to our preferred lendors, and the project is 92% sold out, and we did a very good job in negotiating costs. costs were actually down. so we really have controlled costs, so we were very confident where margins were. we discussed it with probably 20 of our most favorite lenders and created a bidding war and able to close last thursday. >> i would imagine that size in

terms of betting the loans and getting costs down, size is key. >> there's no question. so there's certainly economy to scale, but this building was a long project. it's a 100 story building, the tallest building south of manhattan. it's a waldorf hotel with 360 residential units. it was a complex program. we built the foundation to de-risk the deal. we took 40% deposits. so the lender is not going to be funding any of the loan until the building is topped off. >> talk to us about the markets where you see strength. they seem like the market where is new yorkers are fleeing to or companies looking for other places other than the major metropolitan cities, to start headquarters. >> so we're in half a dozen markets. we're still here in new york where we are building multifamily. not in the condo space, but in the multispace we are in denver. that is a very strong market.

we'll be launching a waldorf residence in cherry creek in the next six months. we're in nashville. we like that market. we're in the atlanta market. we're in six or seven, but from the west coast, tampa, st. pete, sarasota up to ft. lauderdale and down in miami. the florida market is still very strong. >> in terms of how you're insulated, if there is fallout in commercial real estate in general, how do the chips fall? there's got to be some pressure in terms of, i don't know, the cost to secure money, even though it seems like you're in a good position with good relationships with major lenders, but everything affects every transaction. >> you had a major shift -- we're in the safest sector, residential and housing is the safest of all. but if you had a major shift in the residential markets, lenders

would shut down and run for the hills. that's really what happened in 2007 in relation to the housing market. but that said, most of the projects we started building, most of them are already sold through the job. so we are -- the income side of our balance sheet is really fixed. it's about us controlling cost and schedule. >> at what stage are you in the building process mostly sold? >> before we break ground. >> before you break ground? >> yes, yes. you can take a $700 million loan out, because you have sold $1 billion in real estate and taken $500 million in deposits. so unlikely you'll suffer defaults. >> interesting. in terms of the impact, for instance, if you see, you know, blocks in new york and midtown manhattan that have, you know, d-class office properties that remain vacant, how does that impact your ability to sell a

high-end luxury product? >> new york is having its issues, but the commercial market, we have looked at most of those buildings. we have looked at 90% of the office buildings for convergence. we have an office that's 20,000, 40,000 square feet, you end up taking 100 feet off of each side of the building to create a double loaded corridor or a rectangular shape. by the time you factor that in, you're better off with land value. so you're not winning anything by taking down structural steel and reconform the building. >> sounds like it will be a painful shakeout in the market. kevin, thank you. activist investor jonathan litt has been sounding the alarm

on reits with high office space exposure. coming up, it's part tennis, part racquetball. it's called padel. and it's got the backing of plenty of investors and celebrities, including daddy yankee. he'll in ujos what got him into the sport. "the exchange" is back after this.

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welcome back to "the exchange." nvidia now the world's most valuable company, but what about some of those smaller tech players also seeing big gains? dom chu joins us with a look at some of the under the radar winners. >> ones we don't often talk about, because we are so focused on the magnificent seven trade, the most mega cap names. an interesting point here, over the last couple of days we have been talking about the idea that this technology spdr ticker xlk is underperforming the s&p, because it is underweight. nvidia on a relative basis, that's all going to change, but it's up 20%. technology, the best performing sector in the s&p. we talk about nvidia. now, as melissa points out, the

most valuable company in the world. year-to-date up 173%. that still blows away just about everybody out of the water. but these names are sub-$100 billion market cap companies, names you may or may not have heard of. super micro, a new member to the s&p 500, up 170%. first solar, 75% gain. storage technology, up 50%. netapp, up 42%. and amphenol, they make all the cables and fiberoptics that go to data centers, and even high energy, high heat power type situations. so melissa, just a handful of the names that are not nvidia that are still part of that bigger tech outperformance story. >> imagine a world outside of nvidia. dom, thank you. dom chu. now over to tyler mathisen for a cnbc news update. >> thank you very much.

russian president vladamir putin vowed today to support north korea against u.s. sanctions. north korean sate media published the reporters ahead of his meeting with kim jong-un. the putin trip is the first to the nation in 24 years. it comes amid u.s. accusations that north korea supplied ballisticweapons to russia for its use in its war against ukraine. stellantis will recall 1.2 million vehicles over a software issue that can disable rear view cameras. they will fix the problem through an online software update. team usa will walk with the world's athletes for the paris olympics in blue blazers and blue jeans from ralph lauren. for the closing ceremony, they will wear white moto style jeans. i hope i pronounced that, with

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welcome back to "the exchange." shares of la-z-boy up about 17% on pace for their best day since 2017 on stronger than expected earnings, and first quarter outlook. while managed warned of head winds they remained optimistic that impending rate cuts could turn things around. joining us now is the ceo of la-z-boy. me linda, great to have you with us. >> thanks for having me. >> i thought it was interesting that you outperformed the broader furniture industry by 900 basis points, and part of that, according to you and the management team, is having the physical bricks and mortar stores. how has that helped, a customer walks in, not necessarily intending to purchase, but sealing that sale.

>> sure. we've been around for 97 years, and our foundation is on manufacturing. and to this day, we offer a high quality furniture, manufactured primarily in north america. and that enables us to do that on a timely basis and offer customization, which we know the consumer likes to have their choice. as we think about leveraging that historical foundation in manufacturing, we have expanded particularly in recent years on owning our own stores, as well. there are about 355 stores in our overall la-z-boy furniture gallery network, and we own half of them, the rest are independently owned. and we're looking for that traffic brand experience all the way end-to-end. it gives us data about the consumer so that we can continue to get better. but it also ensures that our comfortable grand experience really goes from product to their shopping experience to everything that they're doing

with us. what's been really successful for us in the last couple of years when furniture has been in a bit of a furniture recession, is to be able to continue to speak to our consumer about the strength of our brand, remind them of the quality that they can trust. but really bring absolute strong, in-store execution to them, give them a comfortable experience when they are in store, with the right product and the right messaging to get them in, in the first place. >> how have prices been, what has the trend been and have you seen consumer pushback on that front? >> you know, our consumer is generally an upper, middle income consumer. and so it's important that we continue to deliver high quality at a reasonable price. we had to sharpen some price points for opening price points for consumers to give them the chance to get into that la-z-boy furniture that they want to be

part of. but overall, pricing has held really well. the industry and history, had been a bit reticent to price. over the pandemic period, prices went up as much as 30%, 40%. for us, that was about 30%, and a good 2/3 of that has really held. really still on input costs that are lightning but still a challenge. >> do you think you've seen the highest, the worst in terms of input cost? >> after the last couple of years, i never say never, but yes, after some of the absolute industry highs that we have had on so many inputs, it feels like things are. >> i'm just curious from a ceo perspective, it must be a rare occasion, this hasn't happened since 2017, to see your stock go up by this much. what is sort of your reaction to that stock reaction to the

results that you delivered? >> sure, first of all, i would say our industry overall, it's known that it's been challenged for a while. and a lot of what we've been trying to do is make sure that people understand that we are out executing both in our longer term strategy to drive our own retail and to drive a truly consumer centered experience. and, you know, and help people understand our business and the expansion of both manufacturing and the retail side of things. so overall, the industry has been challenged, and sometimes we will tend to sort of get caught up in some of that. but it's good to see some of the hard work and just outstanding results of the team get recognized a bit in the marketplace. you know, again, we do stand out for both our long history, but also the fact that we play in the retail side, which is a real strategic pivot from us, enabled by our strong balance sheet as you mentioned in a teaser a few moments ago. we've been able to do some

retail expansion enabled by our balance sheet. our goal is not to be in real estate long-term, but to ensure that we can get stores open. we're at 355 today. we want to be at 400, and we know we have the places for those, and we want to continue to increase the ones that we are company owned, as well, so that we can ensure our consumer is getting an outstanding experience wherever they want to shop. maybe in store, but it all starts online. consumers start online with their research, so we are investing in that messaging and that experience as well. >> looking ahead, in addition to buying back some of those retail store locations you don't own and expanding into more galleries, what is the biggest catalyst? if the fed cuts rates two, three times and you're saying we're going to sell a lot more sofas. what is it? >> yes, that's exactly right. the industry overall is at its best when people are moving homes. and so historical lows in both new housing starts and then

overall turn in the market is definitely holding back our industry, and has been for the last couple of years. what we're doing is really doing the best in the down market to strengthen our company to disproportionately benefit when we do begin to get those tail winds. in the shorter term, you're taking share. but all the fundamentals are there for -- there is a pent up desire for folks to move to get into new homes, a little bit of easing of interest rates and a little bit of a tail wind from housing will make a big difference for the overall industry, and we're positioning to disproportionately benefit from that. >> melinda, thank you. coming up, forget pickleball. padel is the new racket sport in town. there's an estimated 90,000 players in the united states, and florida is about to get a nk. more, thanks to daddy yaee he joins us next. "the exchange" will be right back.

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welcome back to "the exchange." pickleball you already know, so time to meet padel. played on enclosed court usually in doubles. just like squash, the walls are part of the game play. right now there are more than 30 million amateur padel players globally. it's just catching on here in the u.s. with about 90,000 players. our next guests are looking to grow that number. let's bring in one of the investors in padel in the u.s., singer/rapper daddy yankee. daddy yankee, i want to start off with you. how long have you been playing padel? what got you interested in investing? >> number one, because it's very relaxing. i have fun playing. it's easy to play with your friends and family. and i really love the sport. >> why do you think -- you're investing in it. you own a professional padel

team. so what makes you think it's going to make you some money? >> it's a fastest growing sport in the world, number one. i believe it will be the biggest sport in the u.s. because it's easy to play and everybody can play the sport. >> gabriel, i want to goto you because, you know, despite what people may think, this may be new, completely new to people, including me, but actually padel was first started in 1969 in mexico, spread around the world and just coming here to the united states. so what attracted you to it? why do you think this is going to be the next big thing? when pickleball seems to capture everybody's imagination when it comes to a tennis alternative? >> so, padel, as you mentioned, it was invented in mexico. i'm a proud mexican. i got involved in padel because my two kids were part of the u.s. national team. and i wanted to really contribute to the team from within, from the u.s. padel association. and as such, our mission is to

grow the sport in america. we're doing an incredible job. there's over 70 clubs already, but it seems that one is popping up every single week. more players are getting engaged. and now with the professional padel league, there's a professional outlet for all of those. critically important, it's on route to be an olympic sport in the next two olympics, which makes it a very appealing sport for the young generations to start learning. >> yeah. and i would imagine it seems a lot more approachable, just like pickleball. seems a lot more approachable, daddy yankee, than tennis, which has the white outfits, typically. you have to book a court. you know, it's a lot more sort of formal play in tennis. but for padel and pickleball, it seems like it's easier to get going, pick it up yourself, learn. >> 100%.

it's easy to play and very relaxing for the stress we face everyday. i come to the court frequently and it helps me out a lot to focus on other things. like i say to everybody, i invite everybody to play the sport because you're going to have a great time. >> yeah. i'm sure it brings a lot more sponsor, new sponsors to the game potentially, gabriel? >> yes. today we have wide array of sponsors ranging from the padel centric brands to real estate brands, car brands, financial institutions, luxury brands. so everybody is getting into padel worldwide. in america, the united states is the next outlet to really grow the sport internationally. >> i was on the target site the other day and i saw that they were carrying a whole line of pickleball clothing. daddy yankee. that sort of begs the question, are you looking to sort of brand

extend? you can do a celebrity promotion? >> i'm wearing right now which is a great clothing line, sport clothing line. i love it. it has a great quality and padel will be here for a while. >> sure sounds like it. thanks, guys. thank you for educating everybody on this newest sport. gabriel and daddy yankee. >> thank you. >> thank you. by the way, mark your calendar for cnbc's second annual game plan summit for september 10th in los angeles, bringing together leaders and visionaries from the sports and entertainment industries. to learn more and register, scan the qr code on your screen or go to cnbcseventh.com. that does it for "the exchange." i'll join tyler for "power lunch" on the other side of this quick break.

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from pep in their step to shine in their coats, when people switch their dog's food to the farmer's dog, the effects can seem like magic. but there's no magic involved. (dog bark) it's just smarter, healthier pet food. it's amazing what real food can do. ♪ welcome, everybody, to "power lunch." for, what is it, wednesday. is it wednesday? >> no, it's tuesday. >> it's tuesday. i'm getting ahead of myself. melissa lee is here. welcome, melissa. good to have you with us. i'm tyler mathisen. the boeing ceo testifying before congress with many expecting the airline executive to face a thrashing from lawmakers. more on that in a moment. plus, doing it elfing right. bullish on elf beauty despite signs of an overall weaker consumer. that's further ahead. and first, a