there was a low in june, but a week ago we got a higher low. if it goes up one more percent, we have a higher high. >> kev? >> are you going to short it? >> kev? >> tj max. >> jen? >> small caps. >> weiss? >> leidos. i'll buy it. >> have a good weekend, everyone. "the exchange" is now. ♪ ♪ >> thank you very much, scott. welcome to "the exchange" on this friday. i'm kelly evans. here's what's ahead. get ready for a value renaissance. i don't know, we'll see. our market guest says it is coming really this time. he brings his favorite ways to take advantage of it. we'll discuss and debate. and the big banks front and sent we are earnings today, jpmorgan, wells, citi, topping ex-p expectations. and while there still are concerns about office space, there is one commercial real

estate area, and one name in particular with a supposedly favorable setup for the second half. that analyst is here with the name. before that, let's start with the markets and bob has more on this rotation or not, bob? >> yes. so far, the rotation is working, but it's pretty broad. so good news today. 3-1 advancing to the declining stocks. remember, that's what we want to see, broadening out of the market. what's interesting today is that certain technology stocks are also participating, some, not all of them. the dow is over 46,000 again -- excuse me, 40,000 once again here, a new high. the s&p 500 also a new high. we're up 3% this month on the s&p. that is quite a strong move. remember, july can be very, very iffy, particularly in terms of volatility. the nasdaq, not a new high because of what happened yesterday, but it's up 4% this month, as well. what you want to look at is the

russell 2000, second day in a row outperforming. that makes a lot of people very happy because it gets to that rotation and mean reversion story kelly is referring to. people ask me about small caps like name a few, bob. here's a few ones that are in the higher end of the small-cap category. $4 to $8 billion in market cap. fluor in the construction and engineering space. sprouts farmers, a grocery store. applied industrial sells industrial parts. rambus, that's had a nice run. and the small-cap home building companies like meritage, that's had a nice run. so there's some typical examples of small-cap stocks doing well. dow leaders today, intel and apple. again, there's some tech stocks that are moving. but a nice, broad section of the market working.

home dee pot is up, travelers i up. the laggards, jpmorgan is a laggard. the provisions for credit losses may be up, but overall, this stock has had a huge run going into earnings. it's up 21, 22% this year, outperforming the s&p 500. so bottom line, this is a modest pullback. amazon, maybe no surprise here. but i'm a little disappointed that there's not more of a follow through. nike and mcdomdnald's have been the poster childs for poor performance this year. so here's what matters right now. kelly had the right question, can the rotation continue? that's all that matters here. so remember, this tech rally we've been seeing is based on strong earnings growth from technology. tech earnings outperforms everybody else's earnings. we have told you the rate of change for these tech earnings

growth is slowing. earnings are still going up, but the rate of change is going down. that's a warning sign for people that keep throwing money at nvidia. so can other sectors take up the slack? kelly, this is where i get concerned. mean reversion is very real out there, but just because stuff is cheaper, that's not been a reason to buy it for the last 15 years. value has had a tough time of it. you have to be able to show that the earnings are going up. you might have value doing well, and here, where? consumer stocks, eh. health care outside of weight loss drugs, eh. industrials, eh. so i keep looking where's the juice we're getting from the rest of the market in terms of earnings, and i think that's the big question in the second half of the year. >> bob, you are right to high light names like meritage. what chatter are you hearing about the weekend we're heading into? the republican national convention begins next weekend

after biden's nato press conference last night. what's the buzz in the trading community? >> on politics, people who follow the markets know that the president has far less influence on the stock market than they do. generally, markets like divided government, and i think right now, the market would be fine with any kind of divided government. i don't think the market has priced in a sweep, a republican sweep of the house and the senate, as well as the presidency or a democratic sweep. that would cause some gyrations. but by and large, i have always felt, and the market has indicated that the fact that we have a nation of laws with a court system and basically democratic system with a capitalist economy where the means of production are controlled by private individuals, that's what matters. the legal system we have and the way our government is set up is what really matters.

okay kccasionally a president c make a difference. aside from a sweep, i don't think the market is terribly concerned. >> especially when we've seen those one-day moves like when president trump was elected. bob, for now, thank you very much. >> remember, president trump had a big influence on the market in terms of tax cuts. that's an example of where the president did make a difference in the stock market. >> for now, bob, thanks. joe biden did face the press for the first time since his disastrous debate with former president trump. he didn't flop, but didn't he convince critics he should stay in the race? emily wilkins has the latest. >> reporter: well, the short answer to your question is no. biden's performance last night just hasn't stopped the bleeding inside of his party since the nato press conference. we have now seen four more congressional democrats who have come out and are publicly urging him to step down. this includes jim heinz, the

stop democrat on the intelligence committee, as well as eric sorensen who faces a tough race in illinois. this brings the total number of lawmakers calling on bide on the withdraw to 18. we don't see an end to the trickle at this point. some members are getting a boost from a group of donors who believe that biden needs to exit the race. i spoke with one of the donors who says that dozens have given or pledged more than 2 million to lawmakers who have encouraged biden to step down and whose race can make or break control of congress next year. the discussions and meanings are continuing, even after most lawmakers have left d.c. for the next week. hakim jefferies met privately with biden last night. he's kept his statements vague. he said in a letter --

>> reporter: of course, kelly, there's been a wide amount of opinions from house democrats that jefferies has met with on what needs to be next step. biden is continuing to meet with lawmakers. he will join the congressional hispanic caucus and the asian-american pacific caucus to chat with members there. but i have lawmakers tell me last night, it's going to take a lot more than one good public appearance to alleviate their concerns with the campaign going forward. kelly? >> i thought it was interesting the way that heinz came out with that statement, sort of indicating perhaps biden should step aside when he's the chair of the national intelligence committee, and this is on the heels oh of a nato press conference, which biden believes is one of his greatest strengths. this is kind of, you know, the area in which he's most comfortable. i think that was on display last night. >> absolutely. that was one of the reasons that i know he said on msnbc last night the way he waited is he

wanted nato to be over. other lawmakers said we don't want to undercut the president while he's meeting with these world leaders. but the fact is, a number of folks who were holding their breath last night as they watched that press conference. democrats understand that not every public appearance that biden does has to be this very critical make or break moment. but unfortunately, that is the point where everyone is now at, and i think that is fuelling a lot of concerns from these democratic members who are saying look, biden's been a great president with a great legacy, but it's time to pass the torch. >> on heinz once again, is he perceived as a vulnerable democrat in his race this fall? >> reporter: for eric sorensen? he's one of the folks perceived as vulnerable, and you've seen several other vulnerable members come out, as well. a couple others have said we're supporting biden. a couple of folks say for house members, some of these

vulnerable ones, they haven't seen a big dip in their poll numbers since the debate. part of the fact is that a lot of these numbers are relatively young, especially when you compare them to someone who is 81 years old, and they have a number of voters who say hey, we like the democratic principles, we like what the ticket stands for. we're happy to vote for the down ballot members because of what folks saw at the debate. >> emily, thank you. emily wilkins. joe biden spending time touting his record and working to reassure everyone he's still the right man for the job. >> i think i'm the most qualified person to run for president. i beat him once, and i'll beat him again. >> that said, donors are reportedly freezing roughly $90 million as long as biden stays in the race. it comes as cnbc.com reporter brian schwartz is reporting that rob conway is taking his

concerns straight to nancy pelosi. brian joins us with more, along with kim wallace. welcome to both of you. brian, just the detail once what you're learning? >> what we are learning here is right after that disastrous debate performance by joe biden, ron conway, who to be very clear, is a major democratic donor in silicon valley. he has been loyal to joe biden for years. he's also been loyal to somebody else, former house speaker nancy pelosi. he brought his concerns about biden's debate performance after what happened directly to her in phone conversations, with the former house speaker. the message was clear, it was that the debate effort could really torpedo joe biden's run against donald trump, which at the end of the day, that's ron conway's biggest concern. he's no fan of trump, and his concern is that if this debate is indicative of anything, it could be the beginning of the end in his view for biden. and so he brought those concerns

directly to pelosi. she heard him out, what we were told. it's another sign of a potential defection of a major player in the democratic party who raises a ton of money for the party and joe biden, keep in mind, after that performance and even following the press conference yesterday. >> does he have a preference on kamala harris or someone else or some kind of process to take his place? >> i sense that he's among a group of people that, you know, wouldn't mind if it was the vice president, maybe. but if he's in this situation where a lot of other donors are, they're just trying to figure out where everything is going to land for joe biden, despite the fact that he has said he's not leaving the race. it goes back to a theme of our reporting for the last two weeks, joe biden has said out loud, he's not going anywhere. donors are not convinced that is true, and that has continued -- that drumbeat has continued for some through last night into today. and that is an issue for biden. if they don't believe he's going to stay in because maybe he's going to change his mind or something like that, the fund

raising could hit a snag, even post press conference and those interviews he's sit to have. >> kim, what is the significance of the fund-raising as the president tries to build momentum if he stays in the race until fall? >> it doesn't matter as much this week or next week. when it really matters is when you make the final push in september and october. the point that brian and others have alluded to, it's not just donors who are concerned about the president's performance in the past six months. it's voters and elected members in the democratic party in all layers, mayors, governors and members of congress. those members of congress are people who have supported the president strongly for years, if not decades. and there are people who are in safe districts, including heinz. the concern is that even wide within the democratic party

among all stake holders still. >> kim, what is your sense for -- i mean, what is the likelihood that biden is not atop the ticket. if that won't happen, how much time will will be to make a change >> we start our observations at the beginning of the segment. the u.s. is fortunate in many ways. one of them is the deep and liquid markets, both financial and credit. and the opportunity for people to take risk and start businesses or make investments without having to worry about anything but that rule book generally. you start there. from that point, it's true, divided government has at different times either worked very well for investors or it was tolerable. the last four years, it's been tolerable, where nothing on the extremes. the hard right or the hard left has been able to come through congress. nothing dire has happened. we obviously didn't default and

there hasn't been a shutdown since 2018. but the items that have passed include bipartisan items such as the industrial policy suite that joe biden introduced after the supply chain shock endorsed by republicans, democrats and independents. all of that points to a policy moderation, that i believe comes from the shock of the pandemic and the very narrow margins we've had in the house and senate for the past ten years or so. >> it's almost as if people wanted boring. they wanted stable, they wanted not much of a move one way or the other. so brian, where does this leave us going into the weekend? >> yeah, i want to be clear about something here. if joe biden loses ron conway, he will lose much of his support in silicon valley. why is that? it's because ron conway has a massive ro massive roll-a-dex of people in

silicon valley. so if, in fact, ron conway or people of that caliber step back and saying they're not going to be with the president, they think he should step down, as this keeps going, biden could lose key pieces of his fund raising operation. keep in mind, the six figure checks that the biden campaign keeps saying they do not need much, that money also goes to the democratic national committee and over a dozen state parties, which help down ballot races. so they do need some of these people to stay in the game. maybe they feel like they will have enough come november, but it's going to be fascinating to see if these people stick with them heading into the convention. >> brian, i have to imagine, these people are pragmatists, realists, they want the money to influence the outcomes. if biden stays in the race, aren't they going to circle the wagons for him and he'll get those dollars, if it matters

more in september and october to kim's point. yes, there's some career risk they might have come out against the president now, but won't they end up lining behind him when the time comes? >> it's possible, but the next few weeks heading into the convention is going to be critical to really try to mend some fences here. and really make sure if you're the biden team if that is 100% certain. look, these guys don't have to do this to be fair. they don't have to raise money for biden. they can tell people in congress with the thought that they would have hurt down ballot races to focus more on that instead. we don't know yet, i can say that right now, biden, when you contrast before the debate, he had so much mega donor support. now that has been chipped away. even at the press conference, some are back with him, others are just not back yet. >> thank you for bringing us that reporting. i came here to talk about the ramifications. we appreciate your time this afternoon. coming up, the banks are under pressure despite beating on the top and bottom lines

today. citi is down 2%. we'll dig into the results with the cfo mark mason next. plus, the analyst joins us with the name ahead. stay with us on "the exchange." >> this is "the exchange" on cnbc. (♪♪) (♪♪)

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citi group beat on the top and bottom lines this quarter thanks to a rebound in trading activity. but credit card losses increased in the second quarter. joining us to discuss these results the fco mark mason with leslie picker. welcome to both of you. leslie? >> kelly, thank you so much. mark, thank you for doing this today. >> thank you. great to see you. >> good to see you, too. i want to start with citi's transformation. we're about two years in, and it's been met with a lot of street enthusiasm, as well as some skeptics. you reiterated your medium term targets of 10% to 12% within the next few years, but today's report suggests the bank is still about half of those levels. so i'm curious you see the key drivers to fill that gap? >> i'm glad you asked about the transformation. j jane and i describe it as our number one priority. we're focussed on transformation

and driving performance. that speaks to the pathway of returns of 12%. the quarter, we generated $21.4 billion. i highlight that because the 4% revenue growth is the same level of growth that we're forecasting for that medium term period. quarter two is another proof point of our ability to do that. that comes from each of these businesses that we have, these five interconnected businesses. so our uspb business had a strong growth quarter at 6%, good momentum in the cards port portfolio. our investing banking had growth of 38%. our services business, which we just showcased at investor day had 3% growth and strong fee revenue growth underneath that. and our wealth business general rated 2% revenue growth starting to see the investment fee revenue in that business. so these five businesses are generating strong growth, and

markets, of course, generated 6% revenue growth in the quarter, a combination of strong equity markets growth, and strong spread products growth. so where does the return come from? topline performance, continued expense discipline, and we would expect to see expenses come down to the 51 to $53 billion range in the medium term and good capital management. we ended the quarter with 13.6%, it's the combination of those levers and executing on this transformation that gets us to the higher returns. >> let's talk about expenses. citi was in the news this week. there was the fine by the fed and the occ to the tune of $136 million. it's not just about the cost there, but the scrutiny from the occ that has some on the street a little concerned. on the call, you said that you take regulator feedback seriously and will use all resources necessary to address

them. what does the future look like from here in terms of your conversations with regulators? >> first thing again, in the transformation underlies the consent orders that we got back in 2020. those were largely around risk management, compliance, controls, and data governance. the orders we got a couple of days ago speak to progress we need to make, specifically around data governance regarding regulatory reporting. we've been investing in that area, increasingly so sense the beginning of the year. we foreshadowed this was an area we were behind in. we've increased our investment inside of the guidance i gave for the full year. what's ahead of us? continued investments in people and technology, and relooking at the execution and the processes we have in place in order to strengthen the data governance around the entire organization. >> mark, it's kelly here. le leslie, thank you so much.

just a macro condition, but i'm curious, do you think you guys are provisioned for an economic slowdown and do you worry one is coming with the way the labor markets are acting? >> i believe we're well positioned for any type of scenario. we have over $22 billion of reserves against our loans that have been booked. that's 2.8% of our funded loan ratio that we've established already. as you know, when we look at the prospect for losses and we run all types of stress scenarios, we look at upside, downside, and base scenarios. we assume unemployment rate in our base at 5% and unemployment towards the downside scenario of 6.8%. so we feel very good about our reserve levels. we have seen increases in losses on the consumer side. the corporate losses have been minimal, as we have a very high quality corporate loan book.

and the consumer losses have been the normalization that we were expecting across that portfolio. >> normalization, the credit card losses increased to 3.82%, up 17 basis points quarter over quarter. you mentioned on the media call that delinquencies are bending a bit during the end of q2. can you give us some more color with regard to what you're seeing to the health of the consumer? i see that tick up, and it looks like things could be a little more concerning, but the picture appears to be a little more complex than that. >> a couple things. we have a branded card book and a retail services partner card portfolio. and i highlight that because we're seeing an interesting dichotomy, if you will, depending on the nature of the consumer. so we are seeing spending levels increase on the higher end consumer, the higher fico score consumer. we're seeing the lower fico score consumer reduce payment

rates and increase borrowing. so you have to think about these portfolios over a multiyear period. i highlight that, because there are multiple vintages that are now maturing, and the losses are normalizing at the same time. remember, during covid, we saw abnormally low losses. those are starting to mature, along with the new acquisitions that we have put on since then. so you have a compounding effect playing through the quarter. importantly, as we look at delinquencies, and pretty much all the delinquency buckets toward the end of the second quarter, have shown it cresting, if you will. so we're watching that carefully to see how it plays out in quarter three, and watching the impact of inflation and interest rates on these consumers. >> interesting. yeah, it feeds into that same narrative about the bifurcation and american consumer. >> that's right. >> mark mason, thank you very much for joining us on your earnings day. >> thank you, leslie. >> kelly, back to you. >> super interesting point. thank you very much.

citi's coming off a fresh 52-week high on wednesday, joining bank of america, morgan stanley and goldman in notching high water marks. goldman touched an all-time high yesterday. it's up about a half percent as we speak. but the good news for banks is already priced in. joining me is carter worth. anything from citi change your mind there, carter? >> well, it's not what i do, but it was a compelling interview. what a thoughtful and appropriate conversation. i mean, just what you said, let's take jpmorgan, which made a high on wednesday. perchance on wednesday, we exited a march trade, so in declines. book anything you've got. no longer want to be long, overweight banks. at this point, look at jpmorgan today. not a very convincing, record profits, banking fees through the roof. okay, what's next? my hunch here is you pull back. there is a distation with that

and what's going on in small banks. regional banks are acting very well. i think there's one opportunity in a catchup trade in one of those beleaguered names versus these very loved and large ly overthought names such as jpmorgan. >> could you recommend the kre versus kbe trades? >> that works. i don't remember the ticker, but you -- it's a good pair. there's a kbwb, that's the etf for bkx. >> we know how to find these things. so let me broaden this out. do you think this rally overall is broadening out or breaking down? >> well, so, peak was in march. you can look at various number of indicators. and now having stalled, you're

getting a bit of outperformance on small cap, as well as the equal weight s&p. yet what's so curious, one knows this, let's take the russell 2,000, which is acting so well this week. right now, there's 1982 names in the russell 2,000, and they combined, add up to about -- i think it's $3 trillion or thereabouts. think about it. you know, that's one big stock. it's 3.1, in fact. so can that sponge of so many names take over some of the selling going on in the larger gap? yes. but is the market really in a position to have meaningful gains as we look out three to six months? many say yes. or is it something otherwise? the real message is what's going on in rates and the price of equities will reflect that.

>> nice call on tesla, though. at least in the short term. >> oh, well, yeah, so there was a -- last wednesday, i guess, it was at 2:30 we were saying this thing is off. to be fair, it is higher, $240 whatever it is, we just had it on the screen. it's way overdone. you're talking almost a double over the past several weeks. what was hated just four, five, six weeks ago is now loved. the nature of something that is extreme when it's hated, take the road less traveled. now that it's loved again, fade the move. >> we'll give you three months or so and see how great a call it was. carter, thank you very much for joining us today. catch tyler on "fast money" tonight. coming up, despite concerns, there's an opportunity emerging in the commercial real estate space. that analyst joins with us a shopping center name he's

bullish on. and bank of america sees two cyclical rallies ahead. we'lte y wrehe"t exchange" returns.

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exchange." i'm tyler mathisen with your cnbc news update. alec baldwin's manslaughter trial is on hold as the judge considers the defense's request to dismiss the case. the jury was sent home for the day after a hearing on the issue raised more questions and called for more testimony. in a motion, the defense says the prosecution hid ammunition evidence from them that could be related to the "rust" onset shooting of the film's cinematographer, helena hutchens. former first lady melania trump will attend next week's republican national convention in milwaukee, according to cnn. but it's unclear how long she will be there or if she plans to address the delegates. the former first lady has been notably absent from donald trump's campaign so far. they were last seen together in public back in march when the couple cast ballots in the florida primary. and franchiseors can't

charge franchisees junk fees not previously disclosed and limits them from using nondisparagement clauses to keep them from filing complaints with the kegovernmen. so there. kelly, back to you. >> thank you very much. wholesale prices came in hotter than expected, but the market doesn't seem to mind. will the fed also have a similar reaction and shake it off? we'll discuss that, when "the exchange" returns. 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." all three averages are higher today, but it's the dow's turn to hit a record, finally. back above 40,000, and above 40,200 now, as the 40-k mark was the first time since may. and the jpmorgan's earnings release, the ceo was notably cautious, warning -- >> but one of my next guests

says he's seeing signs of deflation across the board and believes rate cuts are already too late. let's dig into that with paul donovan and jared woodard. paul, i'll start with you. i do think jamie dimon is right about the long-term inflationary forces, would you concede that, as well? >> well, i think jamie is, at least on this occasion, wrong, as he has been on one or two occasions in the past. essentially, when we look at the longer term, a country has the inflation rate that it wants. you choose the inflation you want, you set the policy, you get the rate you want. but there's a lot of deflation forces coming through. aging populations are generally disinflationary. that's one worse. technological advance, increasing productivity, another force for disinflation.

localization of production opposed to deglobalization is a potentially deflationary force. united states, nearly every sector has deflation in the u.s. >> why did you see localization could be deflationary. >> that's when local companies continue to produce closer to the customer base. in doing so, you cut out an enormous amount of waste and other costs. think about it, the ultimate form of localization, you know, nobody buys a compact disc anymore. you download on one of these things. you stream. and the cost of entertainment and the cost of music has come crashing down as a result of us doing a lot less trade in the entertainment sector. >> interesting, though i'm not sure it applies to the economy

more broadly. one more quick point, when people see the deflation word right now, get opposed to it, and i understand. they say you can't bring out deflation until we've restrenched the price hikes we have been through. so we're talking about a different thing. are we ever going back to prices from covid or talking about prices relative to their most inflationary covid peak? >> so, it's a mixture. if we look at consumer durable goods, consumer durable goods have been collapsing in price. they're down over 5% from the peak. they're roughly late to 2021 levels and they probably will get back to precovid levels. but other prices, people will adjust. so the thing is, if let's say you remember the snicker's bar used to call $2 and now it's $3, you think $3 is an unfair price, and you keep thinking that, you know it should be $2, but after a year and a half, you go

through a mental reset. and then you stop thinking $3 is the fair price. so some prices people will just mentally adjust. for other products like durable goods, you'll see the prices going back to precovid levels. >> when the postage stamp goes to 73 cents, i'm done. start the insurrection. jared, let me turn to you on that. you were talking about whether this value rotation was for real or not. i don't know if you heard our last guess, but is this the beginning of a final, long-awaited outperformance period what we could see for value? >> yeah, kelly. look, it's been a really rough couple of decades for value investors. are there any left? if there are, there's hope in the future for some of the reasons that you and paul have been talking about. the past two decades, the average rate of inflation across

g7 countries is about 2%. if you look over the past hundred years, though, the average was more like 5% inflation around the world. i think it's very significant that this period of incredibly underperformance of value investing versus buying growth stocks coincides with this period of maximum deflation from rapid new technology. very optimal demographics around the world, rapid globalization, very public debt levels. very disinflationary forces that are rapidly reversing course. paul could be right about a short-term deflationary outlook, but we think we're in the middle of a shift from that 2% world to the 5% world over the past 100 years. and from a macro perspective, if you model that out, it's bullish for -- >> so you're kind of in the jamie dimon camp? >> look, when you've got -- we

could talk about the supply side, shipping costs are up 300% since last year. that doesn't feed through to ppi released today. on the government side, we're running a 7% deficit to gdp. the kind of thing you only see in history in the middleof a massive war or massive recession. we've got record low unemployment and running massive deficits, and i haven't heard an analyst yet tell you that we're going to see much lower deficits after the election. so there's a lot of forces right now. we haven't seen for the past two decades that look inflationary or stagflationary. >> you're saying it's banks, energy, staples, utilities and some other parts of the world, emerging market asia. gentlemen, thank you both for your time. two opposing views on inflation. coming up, all 11 s&p

sectors are now positive for the year, with real estate just managing to eke out a gain. one analyst sees bright spots in the consumer space. we'll get the names to buy, next. you founded your kayak company because you love the ocean- not spreadsheets. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

welcome back. the street, making a lot of noise on spotify this week. morgan stanley's ben swinberg naming it a top pick and made his bull case on tuesday, saying he sees a long runway ahead for user growth. >> in addition to the beginning of this free pricing cycle as the market leader, they've launched an audio books business, bigger even than podcasting in sort of drive thing business to higher profitability levels. the music business is a good business for them, but most of the economics go to the supply side, the music labels, the artists. as they build out additional verticals, it creates additional profit pools that i don't think

the market fully appreciates yet, so we are meaningly above consensus for next year. >> redburn downgraded spot to sell the very next day, saying growth expectations are simply too high. and just today, wolfe initiated coverage, with rating and a $390 price target. they say the company's venture into audio books and podcasts should drive higher margins and create price hike opportunities. spotify shares are down nearly 4% this week, but up 62% so far this year. we'll see if they can keep the tempo going. still coming up, never mind concerns about crediting or a spending slowdown, one analyst is bullish on shopping, and this name in particular. we'll reveal it and dig into the upside next.

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with absorbine pro, pain won't hold you back from your passions. it's the only solution with two max-strength anesthetics to deliver the strongest numbing pain relief available. so, do your thing like a pro, pain-free. absorbine pro. welcome back. strong market day. a lot of talk about the dow being above 40,000 and record high, but in fact, favorite talking point, check out the index that takes reinvested dividends into account, currently nearing, 99,883.

in real dollar terms, this is how well you've done over time when it punches above 100k. we'll bring that to you. despite persistent credit concerns in commercial real estate, emerging cracks in the consumer and major store closures this year, our next guest says shopping centers have room to run. upgrading regency to utperform and upping price target from $67 to $61. i don't know, leaning into the consumer. some people say it's time to lean out. what do you think? >> first, thanks for having me. to be clear, not all retail is created equal. with above average incomes, den density, a great balance sheet. watching the consumer, have similar concerns, but their portfolio has below average exposure so segments that have been a bit lower under pressure,

movie theaters, walgreens. this is trading at discount to long average so we think there's an opportunity for rerate and growth ramp into next year. >> we hear about some shopping centers anchored by grocery stores, a couple of reits with a bit more of that bias. this one is -- you tell me, but they have some concerns over their tenant mix, joanne, red lobster, walgreens, it's perceived to be less good quality, slightly discretionary or both. assauge those concerns. >> they have less exposure to the names you outlined. as we think about the consumer, retail sales have been flat, we think about just the overall back drop of a slowing, there will be more store disclosures but i think the segments these

landlords are exposed to, when you think about the locations, the demographicsdemographics, a tenancy, publix is a major tenant of regency. it's important to distinguish and keep those factories in mind. >> absolutely. that does seem to be a place where consumers, even if they're pulling back, have more propensity to spend. this is interesting because it comes in contrast to your note about fading the apartment reits. that might have grabbed a lot of people's attention. what do you think is going on in the apartment and multifamily space, downward pressure on rents? >> sure. where we are in mid to late summer, there's a seasonality of the apartment business. there tends to be a little selloff, a weakness in the back half of the year as we get to the tail end of the peak leasing season, which typically lasts between march, april, through august. and so the sector where the apartments do better, hope trade into the spring, but as rents

level out, we fade into the back half of the year starkly has been some seasonality. as we get past those months, i think there is some concern about that. i do think there are some names here which can still outperform over the next year, including cpt, sun belt focus name where there is a lot of supply but we're now lapping peak supply. the stock's really cheap. by this time next year we'll be talking about improving rents. >> that's interesting. some krlt intuitive takes on controversial parts of this space. appreciate today. thanks for your time. >> thank you. >> on shopping center and apartment rates. some opportunity there. we'll see. that does it for "the exchange." tyler is getting ready for "power lunch." ts eath se m on the oerid ofhibrk. see that? that's like the gap in my health insurance. gap in your health insurance? yeah, it didn't cover everything when i got hurt. good thing i had aflac. (aflac duck) hmmm the cash i got from aflac helped pay for medical expenses,

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good afternoon, i'm tyler mathisen. stocks are rising today. the dow crossing 40,000 again and reaching an all-time high. gains for the s&p 500 and the nasdaq also moving up after yesterday. those gains, by the way, kel. >> pushing those indices into gains for the week. the nasdaq now higher 11 of the last 12 weeks. dating back to april. but that comes despite losses for microsoft and amazon, believe it or not. >> while those mega caps decline, small caps had a great week.

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