nasdaq having its worst day of the jeer. jason, you are up first. >> lockheed martin. geopolitical contentions will continue to fuel profits. >> weiss? >> cash, two-year t bills. >> that will do it for us. nasdaq down 3%. "the exchange" starts right now. we're going to try to put these puzzle pieces together. frank, thank you very much. welcome to "the exchange." i'm kelly evans. tech is leading the declines today with the nasdaq now down 3% as you can see there. and tesla and google are two of the big reasons why. tesla down 10%, that's weighing on the s&p 500 today. alphabet down 5%. our analyst says catalysts are coming. we'll see if he's right. we'll dig into the implications for a group of stocks that may otherwise may not be on your radar. bitcoin, as a reserve asset?

presidential nominee trump has floated the idea. it's part of a brand new crypto report. the head of digital assets is here to give us a look. new home sales coming in far below expectations as mortgage demand hits a five-month low. builders under pressure as a result. evercore's steven kim sees higher valuations ahead for four names in particular and joins us ahead. first, let's begin with the markets, and dom chu is here to help us make sense of it all. >> we are near session lows right now, so you're seeing the bear in the market sell off. let's take you through the numbers. dow, down three quarters of 1%, or 326 points. 40,031 is the last trade there. the broader, bigger encapsulating, bigger look at the s&p 500, the large-cap look sits at 5457, which is down 97 points, about a 1.75% loss, even

at the highs we were down 47 points in the s&p. down roughly 102 points at the low. so, again, tilting towards the lower end of that trading range so far today. the tech heavier trade very much weighing on that as kelly alluded to. and that means the nasdaq composite index is down roughly 3%. that's good for 535 points to the downside, 17,461 is the last trade. the two names in particular kelly mentioned, alphabet, the part company of google, and tesla. tesla down 10.5% now, $220 a share. alphabet down to maybe 5% or so, $172.50 per share. mixed earnings report for tesla. ev problems still persist. china still may be playing in that discussion. alphabet, it wasn't necessarily the result but more the youtube revenues and other things that helped take down those shares, even though profits and revenues came in better than expected. so watch the mega cap trade. if you want to look at kind of

one stock that isn't as important to the markets because of its market cap weighting, it is still low. lamb weston down 28%, on pace for its worst day ever as a publicly traded company. lamb weston, one of the biggest directors of potatoes, a potato products out there. many big restaurant chains are customers, and they said in earnings report that came in disappointingly that they saw a drop in some restaurant traffic. maybe that's weighing on things. maybe again a look at the consumer, kelly, with lamb weston. are those people dining out and spending less on things like frozen potatoes and french fries? it could be one of those tea leaves. >> down 28%. it's lost half of its value. this needs to be in the news later to explain how great a performer this stock was a couple years ago. dom, thank you very much. thousannow to more on the m

selloff. even the small caps are lower today. jeff killburg is here. jeff, just looking for some off the cuff thoughts. what do you think? >> it's interesting. risk happens fast and the vix popping up to 17.5%, a 20% move higher. we see some profit taking, but i'm not going to ring the alarm. is smh, still up 40% year-to-date. but with a 20% weighting to nvidia, you are seeing profit taking. but it's some of the multimonth lows in nvidia or meta, there's some technical damage going on today with the nasdaq down 3%. look on the qqq chart, kelly, go down to 4 to.26, that's the 200y moving arm that we could see a test. technically, that's what is being pointed at.

>> i like what you're seeing, jeff, because you know i'm going to ask you the whys. why is nvidia down 5%? was it something that alphabet said on the call about investing in ai? and you're going to look at the charts and tell me in some way it doesn't matter or we'll figure it out later, but right now the price action is the most important thing. >> we've been raising eyebrows for some people. we're seeing the puts pay off, but what's interesting is it's been a culmination of uncertainty, going back to the strength of the consumer. yes, google, i thought they had a good quarter, but that has question marked the whole leadership, that narrow leadership of the top ten stocks in the s&p 500. so i think this is healthy. it feels a little higher volume, so it doesn't feel great today. but i think this is orderly and much needed to see some form or fashion of a revaluation in our

leadership stocks specifically semiconductors and tech. >> do you think everyone would feel better if the russell was up today? mag seven down 7%, the russell is up 2%, we feel great about things. >> that dispersion is still significant. you see the russell outperforming yet still being down. so i get excited about this turn in leadership. i get this excitement due to the fact that we haven't seen a rotation like this in some time. we've seen fits and starts, but i think it is coming. i think you are going to see that reduction. we talked about this many times. nvidia has over 500 different etfs with an ownership in it. so they have to trim and rebalance. that's going to have ramifications. there's consequences. we enjoyed the ride up. i think it's going to be a little higher volume down. i'm looking for the vix to go above 20 before it settles out in august potentially. >> jeff, we'll see you later on in the show. let's go down on two of those

mag seven names selling off after yesterday's disappointing second quarter results. tesla down 10% on that earnings miss, caused by shrinking auto sales margins. and ad revenue came in below expectations for alphabet. joining me now are my next two guests. welcome to you both. george, first to you. why do you think the selloff is picking up some steam today? >> well, i think it had to do with exactly what you referred to, those auto gross margins weren't very good. as a matter of fact, they were down, we were expecting up. we were still trying to work through why that happened, particularly when there was an enormous restructuring charge they took. but our view is that people should be looking forward a little here. we have two massive catalysts over the next several months. one includes robo taxis. great things expected there. we'll see what they talk about on that date in october. and we are expecting, and the

company confirmed, new vehicles that are due to be produced in the first half of 2025. we'll see how long the selloff lasts. we have two very big things happening over the next several months. >> that said, there's the big picture with tesla, and then there's the nitty gritty of how they make money. the company is diversifying from auto but maybe not into profitable areas like robo taxis. >> look, the one thing we were paying very, very close attention to yesterday was the fsd. the more people adopt full self-driving on their traditional tesla vehicles, the higher the gross margins will get. i have to say they've been disapointing so far. we think that just because they didn't get a lot of color around it. in our opinion, either that product has to get a lot better, or they have to cut the price

again. they cut the price from $15,000 to $8,000 for that license. but we did a survey a couple of months ago that implies the real sweet spot for fsd is around $5,000, based on where the product is today. we'll see if it gets better and people are willing to pay more. >> i have to imagine if they take a little on the chin that's good for the company in the long run. as you look at the nasdaq, many of the coverage area companies are in it. what do you make of the downdraft today? >> look, we have written a note, a series of notes called something's got to give. we don't cover nvidia, we don't have an opinion on the stock, but we do cover energy. a lot of the companies that appear to be buying a lot of the h-100s, including tesla,ed e admitted they don't have the energy resources to power them. so either the energy resources being deployed to power nvidia chips have to pick up steam, or there will be a digestion period

of system of these nvidia chips in the marketplace. one has to be really good, or the other one has to go through a digestion period. and with regard to nvidia, the market is starting to pick that up. >> i think that's an interesting point. wouldn't you say that comment is still bullish in the long run? it's not the narrative of people overordered or the ai investment isn't worth it, the fear is, no, maybe it's not worth the money. >> i think that's right, kelly. although, as you can probably tell from the lack of hair on my head, i started my career in 1998, covering technology stocks. and specifically telecom equipment. so i remember very clearly that a lot of people spent a lot of money building out the internet, and they are right. the internet was a very big deal 25, 27 years later. but the problem is that we had to go through this huge

digestion period, and that was the dot com bubble burt. i'm not saying one is the same as the other, but digestion can prove very difficult when stocks are at the multiple they are at today. >> that's such an apt point. journal, we'll let you go. thank you. >> thank you. for more on tech, let's dig in a little bit more with alphabet. the shares are down nearly 5%. for more, mark douglas is here, the ceo of mountain. mark, what jumps out to you? welcome. >> well, i think there's a big misconception about youtube in particular, which is that it's somehow connective tv. it's not. the connect tv is long form content, major networks, major shows. youtube is short-form content, podcasts, user generated content, and advertisers are not

as interested. so i think every single quarter, youtube in particular is just shy of maybe they'll hit, maybe they'll miss. so it's not unexpected. that's going to continue to be the case. probably forever. >> so what do you make of the other declines? we have seen the social media driven names, what are your conclusions from what alphabet has told us? >> yeah. well, that is entirely different. so i think you cannot read what youtube's performance is like, you know, something like a precursor to downward pressure. i just think advertisers are not huge fans of youtube. obviously, there's big guardians, but it has none of the qualities big advertisers want. they want long-form shows where people are dieing to watch, and youtube is kind of throwaway content for the most part. and a lot of the ad dollars on youtube, they go to the podcasters who embed ads in

their podcasts, and that money doesn't go to youtube. so i think there's nothing to read into. any drop in the stock is -- i'll probably be buying today. >> let me separate this today. you're not say thing is a bearish development for google, but you're saying we shouldn't think of youtube as this amazing destination for ads. i find that almost shocking, because it's the biggest streamer now. this is where all of us, myself included, spend so much time. there's not more power in that? i pay for the ad-free version, so -- >> yeah. so if you were not paying for the ad-free version, this is what would happen. every time a video starts, you would be hovering over your mouse to skip it. meaning every time a commercial starts, you don't get that on peacock, you know, like your parent company. you don't get that anywhere else. it's just a totally different experience. people can't ignore the eyeballs, but they don't love the ad experience. users don't love it, and the

advertisers don't love it either. >> final question, because you're quite a savvy stock picker as you alluded to with your alphabet comment. when you see the nasdaq selling off like today and big tech doing what it's doing, what do you think? >> i think it's a buying opportunity. i think google's results overall were actually pretty good. youtube is a weird property for them, and i personally -- i know people worry about the market being overpriced. it's not like i'm a professional stock picker, but i think it's a real buying opportunity. i think 2025 is going to be a fabulous year for everyone. >> i hope you're right. market, thank you as always for making the time. mark douglas with mountain. ad revenue isn't the only big story out of alphabet're results. barkley is highlighting the tech giant's 91% increase in capital spending, saying that alphabet's focus on technical infrastructure spend could be a positive catalyst for a basket

of cloud cap ex stockstocks. again, we're watching these stocks closely. five-year notes up for auction. how is that helping or hurting the mood? rick santelli has the results. >> this was a very strange auction again. let's go to the beginning, 70 billion of five-year notes hit the auction block. i gave it a grade of c. but what's fascinating, if you look at the bid-to-cover, all the internals, they were all very good. it was the pricing that was an issue. it tailed by a basis point, meaning higher yield, lower price. so the yield was 4.121 was the yield at the auction. but the one issued was trading around 4.11%. if it wasn't for pricing, if it priced exactly with the one

issued was, this might have been an a-minus auction. it tells me that the metrics was good, but there was no intensity in terms of bidding. there's a little bit of nervousness out there. if you look at the twos to tens spread today, it's narrowed rather significantly. it's hovering right under minus 16 basis points. should it close here, it will basically be the narrowest, the least inverted since october. but if it's one more basis point less negative, meaning if it closes under minus 15, it will be basically the flattest it's been in two years. why should that make a difference? the longer the maturities, the less horsepower gets on the bid side. so we're getting bids because of what the fed is most likely going to do at some point. probably not july meeting, but september meeting. but the longer maturities definitely just don't seem to be playing along. if you look at a 20-year and

30-year bond today, they're virtually either unchanged or as in the case of the 30-year, a higher yield where the rest of the curb under with the fulcrum around the ten-year, those yields are much lower, twos, threes, fives. so what the investors are really telling us is that the slowing in the economy isn't having the same desired effect on all maturities, so the intensity and the bidding was a bit moderated. i fully suspect that tomorrow's seven-year will showcase that dynamic in a greater fashion. >> so steve, what did you think, it should have been a b or an a? he thinks your c is unfair, rick. it tailed. >> well, that's good. tell him to start grading. we can have stereo grading for somebody -- steve, did you watch the one-issued market the last 15 minutes? >> true. rick, thank you. we'll pick it up next bloc. coming up, the home builders

retreating from record highs as buyers are staying on the sidelines until they see lower mortgage rates. so what's the next catalyst? we'll ask the street's number one housing analyst ahead. and here's another check on the market selloff. you can see the west performer, the nasdaq down 500 points. small caps, outperformer, still down half a percent. back after this. >> this is "the exchange" on cnbc. this is our future, ma. godaddy airo. creates a logo, website, even social posts... in minutes! -how? -a.i. (impressed) ay i like it! who wants to come see the future?! get your business online in minutes with godaddy airo

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get the fastest connection to paris with xfinity. welcome back to "the exchange." with vice president harris now the de facto democratic nominee, the party is doubling down on efforts to retake the house with a focus on down ballot races. emily wilkins joins us from washington with all the details. emily? >> reporter: hey, kelly. well, look, right now the presidency is up in the air. the senate is going to be a bit of a reach for democrats, and so a lot of folks who i'm talking with, democratic strategists, lawmakers, they're saying there is a renewed focus on making sure democrats take the house in november and have that chamber for the next year. with harris now at the top of the ticket, democrats are seeing a good-sized bump. we have talked a lot about the fun raiser, but the campaign had

its best day of fund raising this cycle, raking in almost $1 million. that's of course, just that campaign arm. if you look at the individual democratic challengers who are going up against republicans, they have outraised those republicans by an average of $400,000 in the most competitive races across the country. chair of the democratic campaign arm told me yesterday the democrats will be focused on a number of policy and issue ideas. that, of course, includes taxes. you remember that 2017 tax law. a number of provisions will be expiring in 2025, making taxes a guaranteed battle on the hill. >> emily, we'll check back in with you shortly. reporting on a very busy time on capitol hill. wall street and main street are wondering which economic policies harris would champion if president. steve liesman is here.

welcome back, by the way. >> thank you. >> a lot has been going on. you've been digging into her record, and we should welcome in ron, the chairman and ceo of steeple financial. great to have you here, as well. steve, just kick us off here. >> just totie in what emily was doing, what kamala harris might or might not be able to do depends on what kind of congress she gets. meanwhile, kamala harris, the democratic front runner, launching her campaign yesterday in milwaukee. drawing from themes from both the biden administration and her more liberal past as a senator. >> building up the middle class will be a defining goal of my presidency. because here's the thing we all hear, when our middle class is strong, america is strong. >> so that's straight biden

talk, but she called for affordable health care, affordable child care and paid family leave. with only a modest economic record, it's left few foot prints in the sand. supporters and critics are using the past to spin the economic future of a harris presidency. supporters say this -- >> critics say --

>> she did oppose fed chair powell's nomination to the job. we don't know her reasons but she joined a group of senators who said at the time they wanted a fed chair more willing to judge bank lending based on climate change effects, a sign she could be more progressive than biden. you're laughing. >> i'm looking at ron, whose stock hit an all-time high today. banking revenue is a big driver of stocks. so i could put you on the spot and ask you who you think the better candidate is, or -- >> you can put me on the spot. i'm not going to answer it. look, when you look at policy, congress is important, because neither one of them can get it through without at least some majority in congress. but what i would say, both policies are inflationary. both of them. >> both administrations. >> both administrations are inflationary. and the concern that i have is

that we talk and you talk about the change in inflation, the change in the rate of inflation, but people that i talk to on the street talk about the level of inflation. individuals and consumers and average americans say, you know, that cost of my groceries are up 25% to 30%. and when you say inflation is coming down, think they that inflation is coming down. no, it's not, it's just going up slower. we have to be careful to make sure inflation is curtailed. it's the most insidious tax that i know. >> the only thing that works is an economic slowdown. you don't want to compound inflation with saying you no longer have a job. >> you asked me what is worse, the potential for a recession or the potential to reinflate inflation, i would argue that the bigger risk is reinflating

inflation. >> so you would be fine -- >> i don't want a recession. >> you're talking against your own interests. >> of course i am. >> many people in the banking industry would love to see the fed lower rates, but you're saying listen, you're concerned that if they do that, inflation could become a longer term problem. >> i want rates to be cut to ignite economic activity. i'm not talking my own book. at the beginning of the year, i was the person that said two rate cuts in january, when everyone else was saying seven. i understand that steve just said it's 100% certain for september. they're not making any vote in, because it would be 99.99, because i don't think they should have a rate cut in september. >> i look at lamb weston and what's going on with consumers, we're seeing price cuts coming. we've been in -- used car prices are tanking. if not for ai and other things

going on, and education, health care, but there are signs that disinflation is picking up steam. >> i think housing is one of the big costs. >> i wonder if housing prices will come down if they cut rates. all the people i talk to that can't afford to buy a house, if rates come down, they might put their house on the market. >> try to buy a house today. >> you can't. >> maybe people would put their homes on the market thinking -- i just wonder. steve, what do you think? >> i think it's a great conversation. kelly, you and i have for months and months have puzzled over what would happen if the fed cut rates to the housing market. i don't think they have an answer. i don't think the answer is with the fed when it comes to the housing market. i think the answer might be with the fiscal authority, maybe with congress, maybe someplace else.

but we have to somehow get ahead here and somehow, i think incentivize greater home building to get the supply back up so you can get to a market situation where the effect of the interest rate can have a normal effect. >> a 3% mortgage rate would go a long way. >> 3%? you're living in the past, kelly. >> what i would like to do -- >> that's why no one wants to put their house on the market. >> i think you want to try to restore, and i don't know what's wrong with the mortgage market. i'm looking here again. the classic spread between the ten-year and the 30-year mortgage. that has become -- it could be a qt thing, i'm not sure what the answer is. but the ten-year now is 4.25. if you put a 1.5 on it, it should be a 6% mortgage. and that would be expensive.

6.25% would be better, but better than the 6.80 we have now, and then we would see how the market would respond. but one quick point, there's an interesting commentary from bill dudley who is saying maybe it's time to cut in july. i've been on board for that for the following reason. i compared the federal reserve to a christmas retailer. you have to order in the summer for what you want in christmas. the way people want the fed to act is like a retailer in november to order what they want on the shelves in december. it's too late by then. you must play to some extent a forecast. >> but you know what? i exactly agree with that, except i'm going to take the other side. what you don't want -- i want christmas, but i don't want to order inflation. because you can argue that will just preorder inflation, and i'll go -- you guys are arguing what a rate cut could do to housing. housing prices will go up.

when i'm wrong, call me back. >> you're rarely wrong. quit final comment on the markets -- >> hold on. what happens to housing affordability? >> that's a good question, okay? that's a fair question. but housing affordability is the highest ever. i understand. housing prices will go up. >> do you ultimately welcome this as a good thing? >> absolutely. >> not the russell is up today. >> no, but what you're seeing is a rotation. the big tech stocks are going to come down. we'll still go by a 10% direction in the market. the mag seven is what drove the market up. they'll rerotate into utilities, other sectors. that is healthy for the market. so a correction can be healthy. >> all right. you're not in the slowdown camp. rop, ron, thanks for your time today. >> we did have record stock

prices. let me end on that. >> you're benefitting from that rotation today. there are some stocks doing well in a tough session. and bitcoin by the way, higher by more than a percent today after the former president appears to have changed his tune on the digital currency this election cycle. in 2019, he saiid -- >> again, this was the president in a tweet from 2019. fast forward to last month. while campaigning for president once again, he's presented himself as a champion of bitcoin after posting this on truth social -- >> this saturday, trump is scheduled to speak at the bitcoin 2024 conference in nashville where rumors are swirling he'll announce plans to

make bitcoin a strategic reserve asset. dom? >> those are all factors as to where we saw a bounce for bitcoin, off this medium term level. just around the mid 50,000s mark. once we hit that level, it's been a 20% move to upside just over the course of the last two to three weeks, how fierce it's been. and we went from a low of around 54,000 just about the beginning of this month, up to 66,000 where we are right now. if you look at some of the other moves, ethereum, we've seen a nice bit up here over the past three weeks. down on the day, but still above 3400 at this point. that's a small victory. with regard to system of the stocks in the ecosystem that track crypto currency. coinbase, marathon digital, a bitcoin miner, has not seen as

much action. concerns about mining costs. and microstrategy, which owns bitcoin in its balance sheet, has seen a nice move higher. so keep an eye on those company stocks. back over to you. >> dom, thank you very much. my next guest, bullish on bitcoin and makes the case for how it could reach nearly $3 million a coin by 2050. here we me on "the exchange" is matthew siegel. great to have you here. >> hey, kelly. >> tell me everything, what do you got? >> well, as we look at the world right now, we see enormous economic imbalances, rising distrust of existing institutions, and continued deglobalization. but of our physical supply chains and also of our digital infrastructure. we think that many of these distortions stem from the same underlying reason, and that is a

massive misallocation of capital since the global can financial crisis. as g7 governments have abused the printing press, spending borrowed money on impossible goals, like net zero, some of these foreign wars, and mass surrounds. as a measure of how much they've spent, we estimate in this report that g7 governments are going to be spending 30% of tax revenues on interest expenses. 30% of tax revenues on interest expenses. >> it's bigger than defense. >> this is 30%, right? >> let me ask you this -- >> an increasing number of our trading counterparties are saying, no more. they have done this math, too. they object to the use of funds. and it's our take that bitcoin, as the first global decentralized, immutable senatorship resistant, fixed

supply digital asset, which is tied to energy production, is the ultimate hedge on this rising fiscal recklessness. >> one thing that's so interesting to me, i think bitcoin has proven its own, that it rivals in many ways gold. that it is a decent store value. it tends to hold purchasing power against the dollar. i think everybody universally would acknowledge that it's novel, it may have some downsides to usage, but nothing else, it's held its value. here's where i don't track, how do you get from wherever we are, 68,000 a coin today to $3 million by 2050? what is the average annual rate of return that you foresee? because gold has, you know, it's done well over the past 20 years, but i think we're now talking about its rate of return picking up quite substantially. >> you would be surprised. our medium term price target for bitcoin is $325,000 by 2030. that's a 32% compound annual

growth rate. to get to the $2.9 million by 2050, that's only a 16% annual growth rate. >> you think 32% is a bit aggressive for thor in term, though? >> when we have seen past cycles and what tends to happen after some of these presidential elections, and with some of the policy changes that we expect potentially in the new administration, that could cat rise significant growth. but in this report, we are assuming a bit of a zero to one moment, that by 2050, 10% of international trade is denominated in bitcoin. 5% of domestic trade, and that central banks initiate a position in bitcoin at a roughly 2% weight. central banks have a 22% weight in gold, so this is not a huge lift. we don't think that these -- >> this is the argument bill miller made, if you get anything approaching gold, it's quite

bullish. what is the fundamental argument for a bitcoin national reserve, whatever the term may be, even as someone who understands why people use bitcoin, who is the idea of a u.s. national reserve of it? what does that achieve other than incentivizing mining here and so forth? >> well, that's a good reason. if we don't do it, our trading counterparties will. thatbitcoin production is reliant on low cost energy, and it is in the nation's interest to be energy dominant. so there are a number of countries that have a significant source of energy that they can use -- >> we want to get to that 21 million first. there's how many left, two to three million left, so we want the u.s. to mine as many possible to capture the economic benefit? >> correct. trump can do this easily on saturday in nashville, by announcing he'll instruct the attorney general to not sell the

10 million in bitcoin that has been seized. >> is harris appearing? >> there's news on the table that she would not be appearing. >> i see. so many people talk about this. they don't want it to be a partisan issue, so she has an opportunity to maybe change that. we'll leave it there for now. thank you for bringing it to us. to julia now for a cnbc news update. julia? >> more details are emerging from the attempted assassination from former president trump, as the fbi director testified on capitol hill. among the new revelations, that the shooter flew a drone roughly 200 yards from the stage in the hours leading up to the attempt and live streamed the footage. prior to the attempt, wray testified his laptop included a google search for how far away was oswald from kennedy. thousands of residents across the western u.s. and canada are evacuating because of wildfires.

in oregon, this fire remains zero percent contained and burned more than 230,000 acres since last week. and in canada, about 25,000 people were ordered to evacuate from jasper national park in alberta as multiple wildfires raged across the park. and disney is back on top of the box office. pxar's "inside out 2" is the highest grossing animated movie of all time, surpassing "frozen 2" for the crown. it was also the highest grossing movie so far this year. back over to you. >> quite impressive. thank you very much. coming up, the home builders are broadly lower the rest of the market, but still not far off record highs. wall street's top home building analyst will join us with his view on these stoc. ckft ts.ks (♪♪) what took you so long? i'm sorry, there was a long line at the thai place.

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welcome back. newest home sales fell to a new low in june, as affordability scares off buyers. despite a rally in the space, builders are under pressure today. meantime, the june inventory of new homes was at the highest level since 2008. but one of the top housing

analysts says the concerns are overblown. good time to check in with steven kim. great to have you back. welcome. >> thank you very much. thanks for having me. >> i've been asking the same question i asked you a year ago, and you were right then. i'm going to ask the same question now, can the rally keep going and how? >> well, i think first of all you have to start with analyzing the housing market, and then you secondly look at how the home building stocks are valued. frankly, i see opportunity to sort of shed light on -- in both areas. i think when it relates to the housing market itself, there's been a lot of, i think, confusion around what is the reason why home prices have actually held in and actually moved up significantly since the pandemic, and a lot of people think that -- and i heard a little bit of this on your prior segment, maybe it's because people don't want to move.

i think that really is a misrepresentation. what's been happening is that after the gsc in 2008, we went through a 15-year period where we did not build off houses. that left its mark, we just do not have enough homes in this country. and that is the reason why. even when you have various demands, you have not seen prices for homes come down, because you don't have enough houses. when you have a scarcity of something, it really inoculates you against some of the demand pressures that we have seen. >> i was just going to say on that, you're exactly right. there's no doubt that the fundamental thing that's happened is all the millennials left cities and wanted to buy a home. there's more millennials, not a lot of new housing supply. i just mean at the margin. at the margin, don't you think it would help if rates came down? i hear people say all the time, maybe they didn't buy the best house a couple of years ago and

would love to do something but i can't take out a mortgage right now. >> one of the biggest areas of confusion, i think, is that people conflate a home for sale with a vacancy. so if you see people decide they want to move and list their house, there will be more houses on the market for sale. but will there be more vacancies? no. you have somebody live thing already and they are looking to buy something else. >> maybe an apartment. there's more multifamily. that's where i do see the boomer at that age demographic leaving a home and going into something smaller. i do notice that creating some opportunities. >> yeah, i definitely think the builders have adjusted to the inaffo inaffordability, which is a real problem, so they're building smaller houses, to be more efficient with the space, doing more attached products and things of that nature.

that is all very sensible. people are buying what they need. gone are the days when you buy what you like, you buy what you need. millennials have delayed forming households, having kids, even getting married and buying houses. today's first-time buyers are older than first-time buyers in the past, which means they have more income, they have better credit histories, and they have more urgency. so they are less likely to be scared away by inaffordability issues if they can have the monthly payment. they're really going to buy, because they have delayed for so long. >> i want to highlight what you would recommend here. you have a great report from march. but the large-cap home builders, do you think they're on the road to higher valuations, even with the rally that we have seen, you can argue cheap and heading 50% higher from here, quickly? >> i think over the next few years, you'll see a revaluation

to at least 50% higher valuations, and i believe earnings will be higher, as well. so it could do better than that. i would have people look at what happened to the largest stock in our sector last week, i can't remember what day it is anymore, but after earnings, they -- it rose 10%. that was last week. and that was after cpi had already come in very benine and pushed the stocks up. where did dr horton move up so much on that day? because they bgave pieces of guidance, cash flow and people looking at these, hey, these are different kind of companies, that was music to the ears. that's why dr horton was up 10% in a day after you had already had the group move because of the benign cpi. >> steven kim, thank you for your time today. great to hear your take. cash flow, buybacks, a different era for the builders. "the exchange" is back after this.

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>> welcome back. another rough day for the luxury stocks after carrying second quarter disappointed. robert frank has more. is this gucci, robert? >> it was, and it was a bad day for kering and other luxury stocks. kering reported a larger than expected drop in sales. gucci which accounts for two-thirds of those profits saw sales down 20%. their other brands which includes st. laurent, balance yaga and alexander mcqueen also saw declines. they expect operating income to fall 30% in the back half and this global luxury slowdown and the decline in china is now hitting almost every high-end retailer. lvmh yesterday posting growth of just 1% in the quarter with watches and jewelry down 4% on the call. lvmh's cfo said chinese shoppers

are buying luxury goods in japan and that's because the weak yen has created massive discounts there for lux ury goods, but tht has come at the expense of profit and margin and the aspirational consumer has pulled back and lvmh cfo also saying there is a, quote, severe drop in champagne sales which he said are, quote, linked with celebration and happiness. so the champagne index showing a big happiness deficit right now in the world, kelly, hermes reports tomorrow. we'll see that is the very high end of the high end and we'll see if they do any better. >> or they're drinking non-alcoholic beer and certainly not buying gucci, but we'll talk about that another time. thank you. ford has only missed in the top line twice in the past 20 quarters and we're talking earnings exchange and not tesla, next.

welcome back. we've got some names on deck to report. we heard from tesla last night. tonight we hear from ford which is pulling back from the 52-week highs especially commentary on demand and inventory concerns. the company already grappling with the ev softness pivoting a plant initially set for evs to produce super duty trucks and

jeff kilburg is back. what do you do with this name? >> i pressent a buy opportunity at ford. it has lagged at gm, but if you look at the value ford is offering and it's been cut in half in the last three years and it has the opportunity to revisit $15 short term and we'll be focussed to hear what they say about the ev vertical because they're losing $100,000 per electric vehicle, but i do think they have higher profit margins in their pro-truck business and if they can focus more on the pro-truck business that can lead into the 52-week high. >> any interest to you? >> southwest maybe has a trade. american has been a dog all year and i don't want to fly that stock. >> tough week for the airlines, too, even delta. jeff, thanks. appreciate your time. jeff kbu, ilrgand i'll see you for "power lunch" on the other side of this break. don't go anywhere.

your shipping manager left to “find themself.” leaving you lost. 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 to "power lunch" on this wednesday afternoon, alongside kelly evans, i'm dominic chu. we want to get straight to the market action. big earnings misses are sending stocks lower and markedly so as you can see there. we are talking specifically the technology space. the nasdaq is down nearly 3%, a loss of 500+ points at one point. by the way