welcome back. time for fooi"final trades." josh? >> amazon, still below $200. i don't know why. >> joe? >> ww granger. >> stef? >> target. >> that does it for us. "the exchange" starts right now. ♪ ♪ thank you very much, frank. welcome to "the exchange." i'm kelly evans. here's what's ahead. tech, one of the biggest laggards today after the nasdaq closed at a record high yesterday. nvidia, the worst performer once again, shaving more than 30 points off the nasdaq 100 and on pace for its fourth down day in a row. and one m.i.t. professor is questioning how much ai will increase productivity. he'll jointous discuss. lennar lower on the back of two

downgrades, shares down 12% over the past month. is housing's red hot run nearing an end? and we're getting ready for the fourth of july. party ready that is. we'll talk to the ceo of a pool company as another heatwave settles in across the u.s., and the surprising reason why higher rates are driving up the price of your hamburgers. but first, let's start with grill master dom chu. >> well, listen, they were serving memphis-style barbecue in our courtyard just outside, and i just had some, so hopefully there are no stains on me. we're seeing some movement in the markets but to upside and down side marginally so. the dow right now, just down about 0.2 of 1%, 70 points lower on a basis of 39,099 the last trade there. the s&p 500 is at 5479, up four points, call it 0.1 of 1%. at the highs, we were up roughly

10 points and down 17 at the lows. so there's the trading range. and the nasdaq at 17,931, up 52 points, the outperformer of the day so far. one place that has been outperforming over the near-to-medium term has been the crude market. wti crude is at $83.48, well off the session highs. it's still up 0.1 of 1%. over the course of the past month, we've seen a 15% rise in crude oil prices. the latest action here is being attributed to hurricane beryl in the caribbean, which could have some disruptive effects for fuel in the u.s. also, a possibly broadening conflict in the middle east between israel and hezbollah. all of these narratives putting some -- at least a bullish move in crude prices today. you can see over the medium term, it's up sharply. and speaking of red hot, it hasn't been for the better part

of this year, but tesla shares have seen a dramatic surge since the lows that we saw in april over here. believe it or not, this stock is up roughly 65% just since the lows we saw there, which has added about $277 billion to market cap, roughly the size of adding a coca cola in its entirely. the bullish news today, deliveries better than expected. tesla gaining a lot of market cap, catching a lot of heads and turning them. back over to you. >> huge two-day move. dom, thank you very much. let's head to that ecb forum in portugal, where sarah eisen joins us. hi, sarah. >> reporter: hi, kelly. the biggest takeaway for me is what fed chair powell had to say about the recent progress on inflation. pointing to the pce report we got on friday, which the 2.6%

price appreciation from last year, which has been an improvement than what we're seeing. he noted quite a bit of progress that the fed has made on inflation, but wasn't ready to precommit to september or any timing on interest rate cuts and said he still needs to have more confidence, noting that he was watching the labor market carefully. i found it interesting a number of central bankers engaged on the topic of fiscal policy. now, they weren't going to touch fiscal or politics given all the elections going on and the independence of central banks, however, we did get some warnings about high debt levels from fed powell. listen. >> the united states is running a very large deficit at a time when we're at full employment. it just is -- the level of debt that we have is not unsustainable. the path that we are on is unsustainable. i would have thought that this is something that should be a

top-level issue. you hear this from a lot of elected officials, but it should be a real focus going forward. how do we get back to a sustainable path? you can't run these deficits in good economic times. >> global debt is very high and it's going to start taking a lot of liquidity from the markets. and it's the emerging economies, and the low income countries are feeling that effect already. >> you think the market is misprice thing risk? >> i think the mask was mispricing a little bit of the fact that if you have higher rates for longer, the effect, depending on how much longer you have, the risk is higher than what the market is pricing, yes. >> reporter: pretty explicit from two top central bankers in a way i haven't heard before when it comes to warning about higher debt loads, which have all sorts of implications for future rates, future inflation,

future growth prospects. powell went a little further than he has in the past say thing should be a top-level issue. it is with some elected officials but should get a lot more attention and play about how to get on a more sustainable debt path. of course, it comes as we're right in the middle of the french election. we are facing a british election this week, and a few months ahead to the u.s. election where we have started to see bonds sell off on this idea that if one party sweeps, either one, there is potentially more damage done to debt and deficits, and that could be a bond negative. >> without spelling it out quite this clearly, it's true that if we see rates lowered by the fed across the board, that's going to be the single biggest thing that would give relief to the debt, because the treasury is paying out these yields every day. >> reporter: it a tess high interest cost that the head of the brazilian central bank was talking about, which makes it

harder and more unsustainable because of the cost of servicing that debt. it's just another reason why we are looking toer that next policy move from the federal reserve. and while the other central bankers on the stage wouldn't say their policies necessarily tied to the fed, that is an implication of having the world's reserve currency and the biggest central bank in the world. so that next move is going to be key, whether it's september or december, whether it's into next year, and it just depends on how the inflation numbers are, and the jobs numbers, too. powell says he's watching it very closely, and the other part of their mandate would push them in the direction of cutting more. that's a lot of relief potentially to the federal government, as well. >> sarah, do you think his comments came off as the comments as someone paving the way for the beginning of rate cuts, maybe as soon as september? >> reporter: it came off as someone who wasn't ready to

signal that rate cuts are coming, say as soon as the july meeting. but yes, i do think that they are moving in that direction. september is not off the table. i asked him about september. he said we're not going to comment on any time frame. so it wasn't an explicit telegraphing of we're cutting rates, but he didn't necessarily argue with it. i would have to think the odds for september to go up, and july doesn't look as ridiculous as it did a few months ago when it was getting priced out. i think he would be more explicit in signaling if july was on the table and we need to see more confidence. but clearly, we're moving in the right direction. he acknowledged the disinflationary trend is back on track. >> sarah, thank you for joining us. my next guest says no matter the fed's outlook and rate cut timeline, whether july or september or december, he says it's a non-story. it's priced in already and the

next catalyst for stocks will be earnings, revisions and guidance. let's bring in my next guest. david, great to see you. yesterday, our guest was saying. this is an earnings and margin expansion rally. is that what you're seeing? >> it is. but it's required a lot of the multiple expansion. you didn't get more unless you exacerbate what becomes a bubble. the earnings themselves, i think, are priced in realistically. i think we'll hit these earnings numbers, but i don't think we'll beat them. if we do, it's very marginal. there is a chance of revisions to the downside. so it's what we refer to as an a asymmetrical risk/reward. >> so you and the other guest would agree that it's all about earnings. it's like stating the obvious, but they would say it's because

earnings are going to continue to grow or to come in strong, and you would say, not so sure about that. is that because of a broader economic slowdown or the valuations are too high? >> it's the latter. if we're talking about 13% earnings growth next year after double digit earnings growth this year, and you had a 25 times trailing multiple, a 21 or 22 times forward multiple, that's priced in. and people keep saying this about the top of the market. oh, well, the earnings are only so much. i hope so, since they're trading at 60 times earnings. that's why they're trading so high. so you don't get to have your cake and eat it too. you can't say returns are going to be 15%, 20% because earnings are good and the multiple is high because earnings are good. it's already priced in. >> so do you think -- you know, even though i take your point on some level whether the fed cuts by 25 basis points at this point, doesn't feel like it's going to move the needle for the

whole economy. but we know it moves the needle for markets. when we see tech stocks levitating, is it a non-event what they do in the months to come? >> it's very obviously a non-event. let me explain the difference between the noise that happens in the market and what i'm saying. there's no question you get enhanced day-to-day volatility, but it resets. right now, we have had zero rate cuts this year. we started off the year expecting six. markets are up 15%. markets are completely shaken off a change in expectation from six cuts down to one or two. from 150 basis points down to 25 or 50. it's already shaken it off. the reason being, the markets know the one thing that does actually matter, that they're done tightening and we're only talking about the when. when are they going to start a downward move? and your first rate cut is never your last. i pray to god they don't get

back to the zero bound. there's no reason to have to do that. even if and when we have another recession, i hope they have learned how hard it is to get off of the zero bound once you go there. but they're not just going to cut 25 or 50 over the next year or so. they'll have to cut another 200 basis points, because other countries are doing it and they can't let the dollar strengthen that much. >> i don't want to call these stocks ho-hum or humdrum, but gilead, general mills, but the last question about the political cycle. anything in the months to come, whether it's around the biden convention or the outcome of the election itself, can investors just look past all of this? should they move to the sidelines how are you thinking about it? >> on a daily basis, i talked to someone who told me they got out of the market entirely because they thought trump was going to do this or obama was going to do

this and they regret it, because thousands of points have gone by. nobody should try to get to the sideline in anticipation of something that, a, they have no idea what's going to happen. and b, they don't know what the market will respond to what does happen. when i tell people that the top performing sector under joe biden has been energy and the worst performing secretary under president trump was energy, they can't believe what i'm saying. my point is that i think trump was a great president for energy and i thinkjoe biden has not been. but the markets respond to different things than who's living in the white house. and so we -- >> that's a great point. >> the senate, the house, the uncertainty about the presidency, so there's a lot of variables between now and november that are really hard for investors to price in. >> and thereafter, as well. david, great talking with you. thank you for your time today. meantime, let's check on shares of paramount, which are higher on reports that

billionaire barry diller is interested in taking over the company. julia, diller has had previous efforts ss to buy paramount. >> barry diller's ice has expressed interest in paramount. and they have received nondisclosure agreements to enable it to review the media giant's assets. paramount shares shot higher on the news, up about 2%. but now just starting to claw back from the decline since june 11 when a deal with skydance fell apart. barry diller had a long history with the studio going back to 1 1971. when he was just 32, he was named head of paramount pictures. then in 1993, when diller -- he entered into a bidding war for

paramount. diller ultimately lost. so why would his iac be interested in paramount? they do own other assets in the media space. and the ceo joey leaven has been opportunistic in a range of industries. the company owns the majority of angie's list as well as a take in mgm resorts. the question now is, how much paramount global is under pressure. we know it's looking for opportunities in its streaming business and is looking to bundle. paramount plus potentially with the likes of max or others in order for paramount plus to better compete. i reached out to all the different media giants involved in this. no comment from paramount global or national asuzements or iac. >> it's what you said about potential partners. what are the options for this platform with streaming, are we

talking about combinations, lateral moves, takeover by a much larger player? you think if there was any real prospect of this happening by a larger player, we would have heard about it by now. >> if you are talking about a major media deal, they're hard to get done, because you have sherry redstone, the controlling shareholder. she would have to be open to breaking up her company or merging with a giant. simply bundling assets, that's a lot easier to do. so the question is whether paramount plus, which is almost sm smaller, it has hard times competing with netflix or disney. could they bundle with max and offer their services together or even to combine those streaming services? i think now in this moment paramount global is going at it alone, they need to figure out other options to make their streamer more competitive. >> fascinating. we'll see what the next twist brings. coming up, amazon hovering

around an all-time high as the ai projects are nearing an inflection point. the stock is maintained as a top pick, but one professor warns that ai, in general, is overhyped and its contribution to the country's gdp will be relatively small. plus, the home builders getting hit with two big downgrades today. is this a sign of more softness to come in the second half? we'll ask a former hud secretary about that. "the exchange" is back after this. >> this is "the exchange" on cnbc.

the moment i met him i knew he was my soulmate. "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection.

therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title. welcome back. ai is responsible for tech's huge run this year, but how impactful will ai turn out to be? its supporters claim increased efficiency, the automation of time-sucking tasks, and detractors warn of job less and societal cataclysms. >> the impact that ai will have on growth, on inflation, on productivity, i think has yet to be determined. i think most people would agree it will have an impact throughout the ladder of jobs in most segments of the economy. in areas where mechanical

developments have not historically affected jobs in particular, and it will require significant amount of training and constant upscaling of people so that they can adjust to artificial intelligence, use it, and not be victims of it. >> well, for wall street, the holy grail of ai is if it boosts productivity and profits. but one economist has tried to quantify that boost and thinks the expectations are way overblown. joining me now to discuss his mindings is m.i.t. professor. it's wonderful to have you both here. professor, i'll let you start. what prompted you to look into this? do you think the claims were overblown? >> yeah, there's no doubt that ai is a really impressive technology and it will impact many things in our lives, from the economy to the way we communicate to the way we entertain ourselves.

and to democracy. but as christine lagarde said, the effects of ai are yet to be determined, but the markets are enthusiastic, understandable because this is a sector that requires a lot of investment, and there are going to be some winners and losers. but also you see many organizations, goldman sachs, the economist magazine coming up with very, very optimistic takes on how quickly and how positively ai is going to transform things. so that prompted me to look into it. of course, there are real gains from ai, but if you think about the current state of technology, it's not going to affect many things that we do. a lot of what we do in the economy involves social interactions that are very com complex. it involves interaction with the real world. ai could transform these things,

as well. f for example, when ai is integrated with robotics, but we're not there. so within the next ten years, the most direct impact will be on pure office jobs. and when you look at the tasks that can be done by ai or augmented by ai, my estimate is less than 5% of the economy. when you put those things together with the productivity improvements that you're going to get from ai, you end up with something that's not trivial, less than 1% increase in gdp per capita within ten years. but i'll take it. it's good but not like revolutionizing everything right away. >> beggers can't be choosers. so i'll take what could be a 0.6% boost over ten years versus nothing. but why do you think this is so significant? >> well, i think it's significant because there's so much hype about ai. we've seen so many ai related

stocks, most notably nvidia going through the roof. i speak back to previous revolutions, such as the internet revolution or the ev revolution. you know, when the internet came out, there was a lot of talk back then how it was going to boost gdp by tremendous amounts, and really change everything. and the internet has had a huge impact on our lives, and perhaps the first company that really benefitted from the internet was cisco systems. they make all the plumbing for the internet. they make all the gadgets everybody needs. that stock went through the roof, just like nvidia is going through the roof. but cisco came back down to the earth, well off its highs. there are competitors -- when you have high profit margins, that's an invitation to competitors. so competitors came in and many of those competitors were actually former cisco employees. so they started their own companies. so today, we don't know who the

competitors for nvidia will be exactly. i'm sure that in a few years, there will be companies that don't exist now that might be started by current nividia employees. >> you got out of the position at 70 or so. it's now retrenched a significant amount from recent highs from around $140. when i look at your findings, is it possible for both to be true, that nvidia could be a couple trillion dollar company and the net economic boost is quite minor, but for those players who need this technology, that they're still happy to pay for it. can both of these things be true? does it have to be a bigger gdp past? 7% according to goldman. does that have to be true for these valuations to hold? >> no, because companies that are investing and taking the

lead in, for example, generative ai or large language models are going to make money out of this, potentially beyond the next few years. there's another issue which we have to sort of worry about. that's why emphasize not to be taken too much by the ai hype. because if we hype it too much, what's going to happen is that a lot of companies are going to rush into investing into generative ai and related tools before they know how to use it. and as a result, they're not going to reap the productivity benefits, but it will be good for nvidia, because they buy more chips and cpus have nvidia. the key for nvidia valuation is what other companies are going to come up with, better gpus, et cetera. so i think there are many possible innovations that are probably around the corner that are going to potentially impact the ai field. we don't know which players are

going to be at the forefront of that. but the most important thing is we have to be realisting about how quickly ai can impact the economy. we did a big sur va o-- survey u.s. businesses. it's not going to imply that everybody is suddenly using ai within the next year or so, so it will be a slow process. >> that was interesting what you said about gpus. i'll give you the last word. >> well, during the internet era, we worried about new economy and old economy stocks and many of the new economy stocks have gone out of business. many of them simply added dot com to their names. and we saw that many of the old economy stocks pivoted and figured out how to use the internet for their benefit and able to increase profits and margins. i suspect the same thing will go on with ai.

one thing that worries me is many companies added dot com to their name. today, it's almost impossible to listen to an earnings call where ai is not mentioned. that tells me that maybe there's too much hype. >> as we see perhaps the shares are starting to correct to adjust to what this new economic reality will be. gentlemen, thank you both. >> thank you. coming up, we're talking pools and pickleball rental ahead of the fourth of july. the ceo of swimply is here. "the exchange" is back after this.

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welcome back to "the exchange." i'm pippa stevens with your cnbc news update. israel's evacuation orders for palestinians in rafah and khan yunis was the largest in gaza since october. 1.1 million were told to leave in october according to the united nations. monday's order applied to about a third of gaza and initial estimates showed about 25,000 people may be living there

currently. indigenous activist leonard palpere has been denied parole. he made a case based on his age and non-violent record in prison and declining health. but has long maintained his innocence of the killing of two fbi agents in 1975. he won't be eligible for another parole hearing until june 2026. the u.s. will pay mcderma to accelerate a vaccine to treat bird flew in people. kelly, back to you. >> pippa, thank you very much. coming up, america's housing affordability crisis front and center on the street today with two different firms downgrading home builders. what's behind those calls? "the exchange" will explore that after this. amelia, turn off alarm.

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welcome back to "the exchange." shares of dh horton and lennar have been downgraded.

mortgage rates have been hovering around 7% for most of the year, keeping buyers and sellers on the sidelines. but housen inventories have risen for four consecutive months. joining us now to discuss the state of housing and affordability are my two guests. guys, great to have you both here. really appreciate your time. a lot of people are wondering what's going on with the market. andy, can you give us off with the latest stats? >> inventory up 35% year over year. we're seeing the most inventory we've seen nationwide in four years. that's the good news for perspective home buyers. and you're seeing softening of interest rates. so you're seeing a little softer home prices. down to 4.6% annual growth rate, down from a little over 6% a few months ago. so you're starting to see the housing market cool down.

>> talk to me for a second about prices. you mentioned they're starting to soften, but what do you anticipate? >> if you look at what's happening on the ground here, that suggests a third of the growth seasonally adjusted in may, so below average, but still moving in a positive direction at 90% of major markets. there are some exceptions to that, down in florida where you have seen above average growth in inventory, seven of those nine markets are seeing prices down month over month in florida. so there are softer areas of the country where we are seeing prices ease. it's a little more neutral. >> mr. donovan, what would you add to that? >> well, i think those are important trends, but we should step back and remember that we're just coming through the worst housing affordability crisis we've ever seen in this country. we had 18% year over year increase in rents, home prices rising at leveling we've never seen. we are seeing leveling off, but

at a level well beyond what folks can afford. both on the rental and home ownership side. and it's really spurring people across the country to take action, to governors, mayors, people in congress. i think it's really important to recognize this isn't just going to turn around by itself. we have too little housing in this country, and we've got to build more. there's lots of things we could all be doing to bring those prices down on a longer term trend. >> although i listen to andy, maybe we're not going to have to do too much. would you interject and say how much should we expect prices to fall? everyone who bought the last four years is hoping this is permanently higher. are they going to be proven wrong with that? >> there aren't a whole lot of projections for pricing declines at this point. it's more of a neutral number. so no major price declines in

the national level. but some of the more pandemic boom downs have seen prices soften. so there are going to be some markets that come down, but nationally, expect it to go more lateral than down. >> shawn, if we got 15% to 20% price offerings in some markets plus lower mortgage rates, how much would that solve the a affordaf affordability crisis? >> the primary thing driving inflation today is housing prices. so we have to do more on the housing front in order to bring inflation down, and i would say while andy's right, we're seeing some turning, we should recognize that we've been up at a level that we've never seen before in terms of the affordability crisis. joint center for housing studies just put out a report that showing on the homeow ownership side, especially the rental side, we've never seen these levels on affordability. half of renters in the country are paying more than they can

afford for rent today. and so the fundamental issue here, depending on the estimate, and people have different numbers, we're talking about 5 million to 7 million units of shortage around the country, particularly at the low end of the market for lower income homeowners and renters is where the biggest burdens are. so we have to do something about that, and that's in washington but states and cities around the country. >> what might that look like? we have no idea what's going to happen in november at this point. even congress seems like it could be affected one way or the other. so what are the policies that you think could break through all of that or be bipartisan in other words? or are they not? can you give us a template what to expect under a biden house and congress and a trump one? >> one of the things about the affordability crisis we're seeing is it is bringing the parties together. there isn't much that's bipartisan today, but this is one of them. over 30 governors so far this year have talked about housing

in their state of the state addresses. while secretary yellen took important steps last week in a speech she gave at the federal home loan banks and a whole range of things to make housing more affordable. one of the most important things to do is expand the low income housing tax credit, to expand the amount of housing available for rent at lower income levels. guess what? there's a lot of support. it passed the house 357-70 earlier this year. and when we take on tax reform next year, that's absolutely critical. but governors and mayors can do their part, too. we saw governors pass sweeping reforms to allow more building of housing. that's everything from changing parking requirements to allowing folks to put an apartment above a garage in their backyard, so

there's lots of things we can do at every level. everybody has a role to play. >> big fights in towns like that. give us a dollar sense of a low income tax credit, how much would it cost on a national basis? >> well, obviously it depends yon how much it's expanded. it would have benefited about 200,000 units of housing around the country, so an important step forward. and what's been shown, it's a very bipartisan way to do it. it uses the tax code. it's a public/private partnership and important part of how we get to this record level of affordability crisis with rental housing right now. we should remember for home openers, that matters, too. you want to save for a down payment? you have to be able to afford your rent. you want your kid to move off your couch? these are connected in this

country and we have to do both. >> gentlemen, thank you both. much more to come. before we head to break, let's take a quick check on crowdstrike after a downgrade from piper sandler. the firm is excited about the company's next act but the ri/raris lskewd ess than favorable. we'll be right back. tony, its gone. no. how am i going to do this? welcome to the mdy mid-cap cup, presented by state street global advisors. today's challenge is to play 9 holes without the middle of your bag. how does that sound? that sounds terrible. ♪♪ ♪♪ ♪♪

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welcome back. the fourth of july is right around the corner, and if you want to swim in a pool or play pickleball, you don't necessarily need that country club membership. swimply allows users to list their own pools and yards for others to rent. how is demand looking and what do the neighbors think? derek, welcome to "the exchange." good to see you again. >> thanks for having me, kelly. >> sounds like you're expanding your recreational offerings, this isn't just pools anymore? >> yeah, you're exactly right.

we have really expanded across all the home amenities, so recreational spaces by the hour. it's not just swimming pools, it's hot tubs, cold plunges, backyards, indoor spaces. home gyms, everything. yeah. there's a huge untapped opportunity for their underutilized home amenity spaces. >> this is hilarious. i could go use someone else's home gym or take a dunk in their ice bath? >> absolutely. you know, we are really about fun and celebration and increasingly health and wellness. and so, those underutilized spaces are a great opportunity for hosts to make the most and generate revenue from those underutilized spaces and for guests to get access to the things that they don't have and build community while it happens. >> how much of this now has to be kind of dealing with local regulators. i know there have been places

that banned swimply. what's the response? it reminds me of airbnb's early growth and a lot of fights it's had whether it should be part of the community or not. >> the thing that's interesting here is we have very much -- we're neighborhood driven. so we're very much by neighbors, more neighbors. 90% of our bookings happen by guests who live within ten miles of the host. and so, it really is about strengthening local communities. the host, guest and community interactions are paramount for us. and wilst we're about fun and celebration, safety is of key importance. so we have strong policies in place to work with local governance, comply with local regulations. we also conduct regular audits and background checks to make sure that both hosts and guests on the platform have having an amazing experience. >> so even if i -- we have a basketball hoop. sounds like i could list that, is that right? >> we actually have a hoops

category on the platform. so you could be putting the court to work. >> i can't wait until the first time my husband goes to use the gym or the hoop and it's like, sorry, no. i booked it out on swimply. how big a deal is 4th of july and holidays like this for the cluster of demand that you see throughout the year? >> we've -- you know, fun and celebration happens all -- across the whole year, but this is a massive weekend for us. we have been seeing 50% week on week growth particularly across new york, new jersey and l.a. so it's going to be an amazing time for fun and celebration. and just to give you context, 2023, we had 1.2 million guests across 9,000 pools. close to 1,500 courts and our tradeable currency is fun and last year there was over 405,000 hours of fun. so really excited for the summer and looking forward to a great

'24. >> the heat wave has already led to record-breaking bookings across all markets, new york, new jersey and l.a. great to check in with you, derek. thank you for your time with us today. we appreciate it. >> thank you for having me. enjoy the summer. >> you too. and of course, no cookout is official without food on the grill, but that will cost you. prices are at a record high, according to a new report. with meat putting the biggest dent in the budget. two pounds of ground beef climbed 11% from last year. pork chops, who is cooking pork chops up 8%. chicken breast prices are down 4%. my next guest says hamburger buyers may soon get relief as we reach the beef cycle bottom. who else but peter galbo. this is like an annual tradition. it's great to see you. >> hey, kelly, thank you for having me on. >> we would be remiss with 48 hours to go without checking in on the beef cycle. >> so kelly, you know, it's great that you bring that up, right. we're in year ten of the beef

cycle. this is our fifth year in a down. the conditions seem to be in place that we should start to be seeing some improvement in the cattle herd. that report you mentioned we're at the lowest levels of cattle in something like 50 years. so look, i think from where we were last year, we're in beater position. but, we're still not quite at the bottom where our ranchers are looking to start expanding their herds. >> you think basically we're at the end of this. what does that mean for prices. ground beef is up 11%, 12.77 for two pounds. where do we expect prices to go from here, down? >> it's probably in the short-term get a little relief, kelly. we're probably looking at least another year, again, once you go through that expansionary phase it takes time before we see the benefits of that. we're looking at probably, you know, at least another year of high beef prices. now, when i was talking to you last summer about this, we were calling it the summer of pork. this is probably the summer of chicken. as you mentioned, chicken prices

are down relative to where they were. and that seems to be the best deal for consumers, at least at this point. >> this is why i love your reports because i learn things like the female cattle indicator. can you please explain what's going on here. >> sure. so, the ranchers if they going to expand the herd, right, they have to retain the female and essentially not send them, you know, for slaughter. look, to go through that process, though, they have to be confident that there's going to be light at the end of the tunnel on the other end and that actually going through that expansion and the process it t takes, about a two-year long process, it will be worth it on the other end. >> to back up for a second, after some of the record price hikes we have seen for the sector, where are we? are we anything we can call disinflation or deflation or cooling inflation yet? >> yeah. i think we're getting there. when you had my colleague on last week, we were talking about salty snacks. that's a report we co-authored together. i think, look, the promotional

levels that these companies are trying to put in at this point, it just doesn't seem to be really moving the needle yet. it's really going to be a pretty big question mark as we get through some of the earnings here over the next couple weeks and particularly as some of these companies comment on how july 4th has gone. we have had a pretty encouraging start to grilling season. these snack companies it's still a big question mark. >> they have been able to -- sounds to maintain or keep increasing prices. i do wonder about some of the meat categories. what would you say that chicken -- even though it's a correction from a very high price, could that be heading towards something that we used to consider normal? >> i think so. at least, you know, chicken breast prices seem to be where the retailers are looking to offer some deals in order to drive traffic. again, you know, if they're using meat, as a profit source and beef prices are so high to them, it's harder for them to offer deals. that's why we think it's probably more in chicken this summer. and again f you're going to be

grilling chicken and having your last guest on, i was wondering if you can rent a grill you probably kneed spices and thing to flavor up that chicken. we're encouraged by mccormick as well. >> i'll connect you with derek. maybe outdoor kitchens need to be offered on the swimply app. thanks for your time, peter. happy 4th. >> thanks, kelly. want to quickly mention the markets with the dow at session highs back in positive territory for the day. there you can see its gains of about 59 points. gains for the s&p, nasdaq as well. n rtis"it for "the exchange. jofot in for tyler. i'll join him on the other side of this break. stay with us. his isn't the way home. that's right james, it isn't. car, where are we going? we're here. (♪♪) surprise!!! the future isn't scary. not investing in it is.

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e♪ welcome to "power lunch." alongside kelly evans, i am jon fortt. fed chair jay powell laying out the case for the fed's fight against inflation. a lot of progress made but still more to do. what does that meep for stocks ahead of this month's fed meeting. plus, walmart and other stores are increasingly using digital price tags. making it easier to change and some say raise prices. discuss the reaction from inflation weary consumers. first a check on the markets near session highs. the dow up 44 points after being in the red much of the day so far. the s&p up 18 now to 54.93. the nasdaq up two thirds of a percent on top of yesterday's record close. the big mover today is