appreciate you. stephanie? >> dell. it's down 46% from its highs, trades at 13 times earnings, pc recovery, and storage, as well. >> all right, joe snmplt -- snmplt >> meta. it's phenomenal. >> i'll see you on "closing bell," 3:00. "the exchange" is now. ♪ ♪ thank you, scott. welcome to "the exchange." i'm kelly evans. here's what's ahead today. this morning's wholesale inflation report came in light. our economist says it might not be enough to get powell to budge from a quarter point cut, but could cooler reports tomorrow make him more dovish? and stocks are higher and yields much lower after that report. equities have now erased the losses following last monday's global selloff. all three major averages higher today, with the nasdaq up 1.5%. one strategist warns investors not to get too comfortable yet.

he'll tell us when it could happen. and energy prices are slightly lower today after five straight days of gains. this after the iea trimmed its 2025 oil outlook on weak china demand. but for the u.s.' support for israel, could geopolitical tensions keep prices moving higher? but let's begin with the shakeup at starbucks, shares having their best day since the ipo 32 years ago. the second best day on record. all of this after news that the ceo is out, with now former chipotlebrian nickel taking his place. he has an incredible track record. for that reason, chipotle shares, selling off as much as 11%, pairing that to about nine right now on his exit.

tracking for their worst day since the pandemic in march 2020 on big volume, more than 70 million shares changing hands today, four times the 30-day average of around 18 million. and look at why. chipotle shares are up 800% during his tenure. this goes back to march of 2018. it was all right a great stock going into his taking the helm. look at what he's done since, the best performing s&p company from march of 2018 to now. the pales the palestinian side, it's very different story, shares down 22%. he's only been there for about a year, and only outperformed 39 s&p stocks during the 17 months. with all of this in mind, let's review iew how we got here. shares had their worst day since march of 2020 after weak second quarter results, and that surprise decline in same-store sales, prompting the former ceo

howard schultz to write an open letter, urging star bucks to create a getter in-store experience. in july, the "wall street journal" reported elliott management took a significant stake, and the week after that report, when david favor confirmed starboard also took a stake. just yesterday, he reported elliott and starbucks were in settlement talks. that was yesterday's reporting. scott wapner noting that nelson peltz had built a stake but sold it after today's 20% pop. so what happens now? joining us to discuss that, nancy tangler, and greg frankfurt is here, with a hold on the coffee giant. and kate rogers joins us.

welcome to all of you. nancy, i'll start with you and all of your thoughts on these two companies now. >> kelly, we talked about it in the past, investing is like being in a perpetual state of dissatisfaction. soy cheered the move this morning. i mourned the loss at chipotle. chipotle is in our best 12 ideas portfolio. it has been a monster performer for good reason. even the most recent earnings report was outstanding, but the stock is down 30% off the highs plus or minus. so this is going to be fabulous for starbucks. this is a ceo who embraced digitization during covid and turned the corner in chipotle's digital orders. right now, they have about $1 million per store in digital orders. so i think he can do the same at starbucks. i'm just happy that we own it, because it was tempting to sell

it, that's for sure. >> it must have been very tempting. you mentioned some of these things might be easy to fix, but starbucks' problems run deep, that when we were talking about this yesterday, they suggested some of the things that could literally move the needle here would include selling off or spinning off china. china, where they have invested billions, and this was going to be the future, or a franchise model. that tells you how far -- i don't know if you have any thoughts on those versus just trying to fix it operationally, but it's going to take a lot of fixing. >> well, it is, kelly. but do not underestimate the value of the brand. i think that's one of the things that we learned. if you've got a great brand, and let's be honest, starbucks still has brand identity and power. and you've got a strong, savvy ceo, i mean, you and i were on the air years ago when gelsinger

took over and disappointed at intel. the ceo was not up to the task. i think in this case, you have two powerful components that will begin to show improvement, i think pretty quickly. and i think you want to hang onto the stock. yeah, there's a lot of problems, there always are when you get a new ceo in this kind of situation. but he will have the ability and the support of the board to get it done. >> greg, what would make you much more positive about -- listen, i might argue you could upgrade this on nickel coming in, but operationally or in terms of some of the levers i mentioned, any that come to mind that would move the needle here very quickly? >> this shows you how important management is. $25 billion of market cap across these two stocks shifting. it's one of the most astounding things i've seen. we've had a bunch of criticisms

of starbucks. a few of those have been the need to cut store growth. they're growing stores in the u.s. about 4% on a base of 17,000 locations. and also just some operational improvements and marketing improvements. niccol has demonstrated, he spent a very long time at young brands, which is a fantastic company from a marketing perspective. he's demonstrated strength on the operations side of things. the current strategy of starbucks of cutting gma and rationalizing the store growth are going to be very different than when he was at chipotle. we're waiting to see. we want to hear what he has to say, and we're open to see bring it goes. >> why do you think it's different from chipotle? >> because chipotle, he game in when the turn around was a few years baked. he grew revenue 430%. he did a very good job but came in at a time where the turn

around was underway. i think it's much earlier in starbucks' turn around and is going to require perhaps a little bit different of a store rationalization, and we'll see if there is a little bit of a different story. >> should they franchise, greg? >> i think the new store performance in the u.s. and china suggests that they would east very to cut back the growth or franchise. look, they're spending about $6.5 billion of cash flow for operations. they're spending $3 billion on cap ex right now. if they cut the uni growth in the u.s. by 300, 400 stores, you could free up $500 million of capital to go into the digital turn around and go back into the stores and buybacks. that would probably be the right strategy. >> what about on china, how could you describe that portion of the business right now? >> umm, competitively, it's a

real challenge. i'm just pulling the numbers. they just comped down 20% the last two yaurquarters. they were 9,000 stories two years ago, now 20,000 stores today. there is a lot of cormpetition n china. >> why stay there and be up against that? it would take a tremendous amount of capital, wouldn't it? >> i think it makes sense to rationalize that better. their new store productivity has gone to 50%. it does make sense to pair that back. >> so before i continue beating on starbucks and trying to figure out what they should do, speak very quickly, greg, before i let you go to chipotle, whose shareholders are probably going, no. has he made the company bullet

proof? i don't know what you would -- how you would describe it. >> scott is going to be the temporary ceo. i think he has demonstrated a very good job on the operational side. i wouldn't be surprised if they stick with him. >> right. but in the sense of, do you think the business -- it's dangerous to ever ask this, but kind of on auto pilot? >> no, but it's a very solid brand and a very solid growth company. niccol has been impressive, but i don't think he's necessarily critical to the company. the reaction today has been -- just remember two weeks ago, the stock was here at earnings. >> which is funny, because in a way it takes a little bit out of what we're putting on niccol and suggesting -- he really did a lot, we'll talk about that a lot, greg. thank you very much for joining us. nancy, stay with us. as mentioned, brian niccol's

leadership style, melody hobson said how starbucks landed on him as a replacement. >> it happened because our board a couple months ago started to engage in a conversation about the leadership of the company, and i made an overture through someone to brian and he took the call. and we thought we have the opportunity to engage with one of the biggest names in the industry, someone whose track record is just clearly proven. not only through the spectacular results that he's had at chipotle, but before that at pizza hut and taco bell. he knows this industry. we thought he would be the right leader for this moment. >> kate rogers is here. kate, you interviewed niccol a million times. this isn't just about chipotle. when he came there, he was already a star because of what he did at taco bell. >> that's right, kelly. he's had an impressive career and it's been said many times

today, he's well respected and impressive leader within the restaurant sector. he did some interesting things at taco bell, making it more into a cultural moment, introducing breakfast items. you were talking about brand legacies and ceo legacies. if you look at taco bell today, they are a staple among gen-z in particular. that's someone he did at chipotle, things like adding clothing lines, makeup partn partnerships. he knows where younger consumers are. that's something starbucks needs to recapture. he also built out their digital business, and that's something that starbucks also needs to work on with regard to mobile order and day, and he's added new menu items that have done very well, something that starbucks needs to see. i keep hearing something brian has said many times on air, you need to delight the customer, keep the customer happy.

that's something howard schultz believes in and tried to instill in all leaders before and after him. that's something i think brian niccol can do at starbucks. we'll see if he can pull it off. >> it's really brilliant, because chipotle is a company, that's fresh, healthy, in that same lane starbucks used to be in. a lot of people weren't happy with the way this current ceo was using all the apps to drive traffic and sales. my question to you, i don't know if you would agree with all that, but how does he deal with howard schultz who have said --f of what has been going on. but nancy, how does he deal with

a personality like schultz? >> well, that's a really great question, kelly. i hope that howard schultz at least takes a look over his shoulder at disney and how well that worked out for bob iger. i think these legacy ceos just need to let go. we thought that howard schultz was one of those that would do that. maybe it was so disappointing to him that he felt he had to step in, but brian niccol has the track record that will at least command respect in the space. that's where the former ceo did not. we talked to some insiders who said he did not understand restaurant retailing and the culture of the company. i don't think brian niccol is going to make that mistake. if he puts results on the board quickly, i think that will solve kind of the angst that we have heard coming out of howard schultz. let's hope. >> gabe, what would you add to that?

>> certainly, and also howard schulz is no longer in a leadership position with the company. he didn't like this decision, i imagine we would have heard about it. but he trained the ceo for six months and this didn't work out. i agree with what was said about brian niccol's track and respect in the industry. star bucks is a premium brand that also needs to maintain its competitive nature in this environment with consumers. if you are going to discount, it has doneto be done in the right. so can he do it at starbucks remains to be seen. >> look at the numbers sweetgreen is putting up. it's not even that expensive, but people feel like they're getting value. i don't know if starbucks has run its course culturally. do they need better coffee?

or do you just say brian niccols will figure it out? >> i do believe there is a morale problem at the company. i went this morning, and service was horrible. you know, very sort of not upbeat environment. and i think that has happened more and more around the company. he did a good job in building morale in the company, partially why the stock split happened so that employees could have access to the shares. so i think he has the formula, and, yeah, we are along for the ride, but not indefinitely. we'll see what he says. we'll see what he does in a couple of quarters and will give us a sense if he can pull this off. >> it's going to be a fun ride. this is the biggest possible

challenge. he could just say, people love me, i'm going off in the sunset. to take this on really says about the confidence that he has, and we'll see if he can pull it off. thank you both. coming up, stocks are generally moving higher as the first of two major inflation reports come in lighter than expected. the nasdaq up 2.25% right now. we'll look at what it means for the fed's final meeting before the election. and the atlanta fed president raphael bostic is about to speak on the economy. and rising tensions in the middle east have gold prices on pace to settle at a new record high, and crude oil coming off a fifth straight day of gains. we'll break down the action ahead. "the exchange" is back after this. >> this is "the exchange" on cnbc.

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career, correct? >> i'm very frugal. i'm from the warren buffett school of spending, which means we buy folgers every morning in my household. so you can put me on the cheap side of that equation. >> i had a feeling, but i didn't want to assume. what does all of this mean as for what is going on and playing out in the economy right now? i mean the ppi and falling yields and people are excited -- any way, what are your thoughts? >> one, we had a scare last week when people thought that jobs number meant we were in a prerecessionary environment. we think there's pent up demand, so we think we're going to have that soft landing with that cut in september. there is the danger that the fed

doesn't cut rates. but if we get what we expect, which is the start of a rate cut that will be positive. the other thaing that's possibl is the shape. the ten-year is not that crazy at its current levels, in the high 3s. what is crazy is a short-term rate above 5. so we'll get short-term rates coming down, a reversion to a normal k al yield curve, helpin broad market. >> the only thing in the back of my mind is that old nugget how you want to -- by the time the curve disinverts, the recession has already started. but i look around, i agree with you. cathy, i'll ask you, i mean, are we in recession? >> hey, kelly. no, we're not currently in recession. the consumer, labor market, even gdp growth are all strong enough to keep us well into positive territory for now.

but i would agree that if the fed doesn't start to get going on the rate cuts and more rather than less, then, you know, we would have less confidence in the soft landing that. is our baseline view, but i would say we have a softer soft landing profile right now. i would say that there's not a lot of -- where i would disagree with charlie, there's not a lot of pent up demand. consumers went on a strong spending spree for the last couple of years, and the tailwinds of pandemic savings and relying more on credit, that's drying up and the savings have dried up. so i think now you have to see consumer spending in line with income, and if the labor market continues to slow, that will put a crunch on consumer spending. >> if it doesn't continue to slow, then stocks are going to take off because they're going to say as long as there's enough labor income to sustain consuming spending, this will

keep going. >> well, yeah. if the labor market remains strong, and again, that is our baseline this that we skirt by recession. but it's depending on the fed easing the policy restrictiveness they have in place right now. if you look at their own estimates, even as of february, they were 100 basis points too tight on the fed funds rate. since then, inflation has receded more and the unemployment rate has gone up. so the market is expecting 125 basis points, that just gets you back to neutral. so i think the fed will start with 25, but i would feel better if they went more aggressive. >> charlie, i want to go back to smuckers. one of the things that is so different this time is ordinarily, the consumer is

getting more choicy, but post pandemic, they all took so price, so is part of the inwind going to be topline, maybe eps pressure? we do think that smuckers could face those challenges. >> yeah, you have to compare what you think is going to happen to what the market thinks is going to happen. smuckers was a very stable consumer staple company. so it used to trade at 17 times earnings. right now it's 12 or 13 times earnings. it's a very attractive stock at current levels. in the place in the market where people go when they get a little tighter. they buy more peanut butter and jelly sandwiches. they drink folgers -- >> no one is drinking fol gers instead of starbucks.

do you think that's a possibility? >> we're hear thing from our portfolio companies, that people are moving down a little bit and being a little more cost sensitive. one of the places is by buying groceries in the store rather than at retail. >> all right. speaking of valuation, the fact that mow huhawk is still at 20 s this year. and api, we know energy stocks in their own little world. it's remarkable. we'll leave it there and check back in soon. thank you both for your time. take a quick break and coming up, the keynote for alphabet's made my google hardware event is underway. we expect to get more details how to integrate the chat bot its performance. that's next. car, this isn't the way home. that's right james, it isn't. car, where are we going?

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deidre bosa has the headlines in today's "tech check." what do they have up their sleeve? >> it is all about ai, google live is a new conversational chat bot that connects to other apps and services on your device that kind of looks and feels like openai's chatgbt 4.0. google's head of devices said the biggest question people have about ai, what can ai do for me? gemini, he says, is the key to it all. apple unveiled its ai strategy, it's practical, straightforward, and like apple, google is overhauling the entire operating system, putting gemini at the center, and putting these models on device slimedown models. unlike what we saw at google's event earlier this year, the demos today are live. they're glitchy, but they did show a personal assistant capable of more complex tasks like creating calendar events

based on an email, also in line with things we have seen ai do. google has become a key differentiator in the ai race. people want to be sure if they're sharing more data than ever, it's being handled response ibly responsibly. google live will be available to advanced subscribers right now. apple intelligence, that won't be able to use until as late as next spring or maybe this october. another difference, google ai will be available on hundreds of phone models. apple intelligence will only be available to certain iphone 15 users and those willing to upgrade to the 16 model. the keynote still going on inside. right after he gets off the stage, rick is coming right here. we'll chat about all of these announcements and what they mean

to google's ai strategy. >> so my understanding on apple's ai was that part of their ability to do so involved check technology in the phone. so i'm curious when it says that google can roll these out now, it sounds like they're software based, and i assume less impressive if there's no other update that needs to happen other that if your device can pull a few new tricks. >> software is how users interact, but hardware is key. apple has the chip that has hehelp ed in this ai race. google has chips that makes these slimmed down models veil and right on devices. a new way to do ai, it's part of that privacy proposition that both of these companies are touting. but hapapple has a reg up.

>> samsung phones are phones that would be part of this, or are these google manufactured phones only? >> that is one of the key differences. you're only going to be able to get apple intelligence on apple devices. google has an an void operating system, which has a more than 70% market share amongst smartphones and lots of other devices that run on android operating systems. so it does have a really wide scope here, and the answer is, yes. i don't know if all of these teachers, many of them will run on sam saunsung phones. >> deidre, thanks for bringing that to us. let's get over to tyler mathisen for the news update. >> kelly, thank you very much. russia could order another draft as soon as the end of this year. russian sources telling bloomberg the military isn't getting enough new soldiers to keep face with its losses on the front lines. quite an admission there.

this despite the bonus hikes that vladamir putin issued to avoid another draft. ukraine's incursion into russia last week meant little resistance. united auto workers union is filing a federal labor charge against donald trump and tesla's ceo elon musk over what they see as an attempt to threaten and intimidate workers. musk and trump spoke about firing striking workers on x last night. the union reiterates that under federal law, workers cannot be fired for going on strike and threats to do so are illegal. voters in missouri will decide in november whether to amend the state constitution guaranteeing abortion rights. election officials today said the abortion rights initiative received more than enough signatures to qualify for the ballot. this would reverse the state's near total ban on abortions.

kelly, back to you. >> tyler, thanks. coming up, crude oil crossing $80 a barrel before turning lower. after the break, we'll speak with fred kemp and helena croft dd et rising tensions in the mileasand the fallout for commodities. "the exchange" is back after this.

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welcome back. wti, crude and natural gas are coming off their fifth straight positive day, even as chinese demand goes away. but could ramping tensions in the middle east as iran and hezbollah are promising retaliation against israel and ukraine's surprise russian pressure. joining me now are my two guests. welcome to you both. really appreciate your time. a lot to cover. fred, where would you focus our attention right now in terms of maybe where the oil market is concerned at least? >> well, look, first of all,

we've been talking this whole year about this being 2024 the year of the greatest geopolitical challenges, maybe of the last couple of decades, if not our lifetime, with mwar n the middle east and europe and tensions with china. so the overall geopolitical tensions are always going to have impact on energy. you now have western reporters having gone into russia. this was the first invasion of russian territory since world war ii. ukrainians have now taken 390 square miles in russia. photographs from border postings show they had a pretty easy way in. it's humiliating for russia. helena can talk more about this than i can, but the gas supply where they crossed is where the gas has been coming in. 15% of europe's gas still comes through that node. but it hasn't been disrupted in 2 1/2 years of war.

there's no reason to think it would be now. but the actions much closer to that position than ever before. >> helena, are we right to think russia, the conflict escalates and nat gas premium, but there doesn't seem to be much of a premium built into either one here. >> as we are two years into the russia-ukraine war, we have that conflict raging in the middle east, yet pretty minimal supply disruptions. the oil market has largely -- there's more concern about chinese demand and recession concerns. now we are closely watching whether this latest diplomatic push by the biden administration into the middle east will avert a broader conflict as we brace for iranian and hezbollah retaliation for the israeli strikes in lebanon a few weeks ago. so we're still watching the

geopolitical situation closely with oil and gas market participants that are having to weigh out some of the economic data versus the supply risk data. >> fred, the relatively low geopolitical risk premium across the commodities complexes comes at a time when we get headlines answer howrussia has trained its navy for war game scenarios that would target deep inside of europe. so as we think about the potential responses, it only seems escalatory. >> i mean, that's the danger. you had phil, a very smart diplomat, say thing's a 20% to 30% chance of world war in the next couple of years. that's still not 70%, 80%. i don't like those odds, and you have iran looking at assassination on its territory of a hamas lead ear couple of weeks ago at the same time the

hezbollah commander was killed in lebanon. iran's got to respond, but iran's been fighting a shadow war that has been paying off. it doesn't really want to go into direct conflict with israel. but what you're pointing to, kelly, you have tension in the middle east with iran, tension with putin and potentially having to do something to answer this incursion of the territory. so the risk has gone up. it's interesting, the risk in the markets have not. but whoever gets elected president of the united states in november, the biggest thing they're going to be facing are these multiple risks in multiple places with a closer coalition and access of authoritarians working together, china, russia, north korea, iran, than we've seen since the early years of the cold war and the years before world war ii. both of those situations were settled by number one, the u.s. coming into world war ii in 1941, and then in 1962, a cuban

missile crisis almost brought us to nuclear blows with the soviet union. so what we have to remember is these situations will not settle themselves, and they'll either get escalatory or deescalatory but aren't going to stay where they are. >> our national defenses are stretched, budgets are stretched. the literal mechanics of it are stretched. so on and so forth. but you wonder if the best defense right now are strong energy policies. i don't know what you would want to call it, strong energy production where we would expect 20%, 30% jumps in these key commodities, they remain low is. that because the u.s. is such amentiful supplier? >> you have had strong u.s. production, and certainly before the u.s. shale boom, we were much more concerned about middle east supply disruption risks. that's been one of the strategic

benefits of u.s. production for the white house. but, again, they can't take anything for grant it on the energy side with iran potentially responding against israel. certainly, they would be concerned about a scenario like in 2019 where you saw iran targeting key energy infrastructure. so either scenario where iran is deeply involved, they can't take their eye off of other risks in the middle east. we have libya's largest oil field has shut down because of tensions there. so the white house is really stretched at this point diplomatically as they try to put out multiple fires in the middle east and europe. >> and then i read in "the wall street journal," gaining ground in iraq and syria and it's like, you know, this is not the '90s, that's for sure. thank you both for your time.

still to come, shares of peloton are popping on the announcement it has a partnership with google's fitbit. still down 90% since going public five years ago. wel get a check on the other big movers after a quick break.

tech is back and the leadership once again today. the nasdaq up 2%, although we do have the small caps positive at 1%, the s&p up 1.3. the dow still a laggard. as wall street restrains its focus on the economy. while inflation continues to show signs of cooling, there's another risk lurking on the horizon. we'll tell you what is itand how to protect your portfolio, next. with the power of ai... ...with a perfect name, a great logo, and a beautiful website. just start with a domain, a few clicks, and you're in business. make now the future at godaddy.com/airo

they started as dreamers. but today, they're stars. follow every moment of team usa on the network that brings you legendary speed and reliability: xfinity mobile. with xfinity mobile, you'll have the most powerful mobile wifi network with you on the go with exclusive access to speeds up to a gig in millions of locations nationwide. and right now, xfinity internet customers can buy one unlimited line and get one free for a year. get the fastest connection to paris with xfinity. ♪ welcome back. atlanta fed president rafael bostic is speaking right now. we turn to steve liesman for those headlines. hi, steve. >> hey, kelly. rafael bostic speaking in atlanta saying, quote, i think we will get there. that means there being towards rate cuts f the economy evolves as he suspects it will be. we should have rate cuts by the

end of the year. he wasn't pressed whether that would be in september. he said actually what he really said is i think you will all be smiling to the audience of assembled professional financial professionals by the end of the year. he said, he has more confidence inflation is on the road back to 2% and he does want to see, quote a little more data before cutting interest rates. policy right now, he calls restrictive and one reason for rate cuts is -- once rate cuts are achieved, he says we should get rates back to normal. the past three or four months he points out inflation returned back to the prior trajectory before it started to tick up in the beginning of the year. he does say it would be really bad for the fed to cut rates turn around and raise them. just a couple other quick headlines, kelly, before we came on air. he said, a recession is not in my outlook. still enough momentum that you can see a slowing in the jobs market, but not necessarily recessionary outcomes. >> does he sound hawkish to you,

steve? >> you know, rafael has been cautious is what i would say. i don't know about hawkish, but he has been very cautious. i think it's very important to emphasize that notion that they don't want to start cutting and have to reverse and go back the other way again. so, i think rafael is a guy who would be on board to cut rates if this pretty compelling evidence that rate cuts should happen. he does call policy restrictive. he had been hawkish and i think he might be in the process of becoming let's say more neutral. >> steve, thank you, as always. we appreciate it, steve leesman bringing us those bostic headlines. markets relatively unchanged, 3.85 on the 10-year. we have seen two unwinds of the extremely crowded tech trade of rate. the unraveling of the yen carry trade after the bank of japan announced the surprise rate hike. markets shaking that off. third unwind could be in the works major retailers report this week. let's bring in constitutional

equity strategist at raymond james. i don't think of the consumer as a top, top level kind of markets concerned, tavis. if walmart reports a miss, is it game over? >> yeah. i don't think they will. but the consumer is pulling the weight of a lot of the economy right now. and so, you know, we've made it so far through the rate-hiking cycle. inflation has clearly come down. steve mentioned before, likely to see rates get lower. the key thing now is, spending going to hold in there as they lower rates? or has the fed been too tight for too long? and we're probably going to get that answer in the next four or five months. and, august -- these reports are pretty important, especially the realtime data as it relates to rates coming down last few weeks. we have seen realtime data at some of the home improvement

retailers pick up and mortgage applications pick up. that's a pretty good indication. >> we saw home depot's results they expect comps to be lower but the stock is hanging in there. certainly better than feared. walmart, target, these are more bell weathers maybe for the consumer spending broadly speaking, but even if there's trouble right now, i think people are really going to be looking to the labor market for confirmation of they're slowing or not. it would be expected as excess savings and all that runs out. it can still keep going as long as we see hiring? >> yeah. i think the net of it is we're at a pretty optimal economy. we're at full employment or something very close to it. the fed has completed its rate-hiking cycle. starting to ease. things don't get materially better from here. i think a soft landing is things can stay this good for longer. and sometimes that lasts a couple months and sometimes that can last a few years. but, it's not surprising when we

get markets, when we're full employment like this, to get really choppy as we have been in the last month or two, because investors will always believe there's a potential recession around the corner when ever we're at full employment. >> small cap, earnings growth is broadening out, it won't be like the past 12 months, small kaps, value stocks those areas can benefit. you sound to me muche cautious about stocks overall. >> i'm in for a true soft landing. small caps will do fine from here. but we have come a long way since october of last year. so i think october of last year really didn't matter, you know, just throw a dart as long as we weren't having a steep recession, pretty much everything was going to go up. including small caps. now i think it's a little more nuanced. we're not really piratesing in much of a recession scenario out there. so if we do happen to slip into a recession, we have seen this market overreact.

eight different ways over the last two years. but probably overreact over a recession, too. so i think when ever you're in a full employment economy, it warrants some caution. not that things will get worse from here, but they can't get much better. >> do you buy gold? do you buy bonds? >> generally you need -- >> munis? >> generally in these markets what tends to outperform is the more defensive sector. so a lot of the areas that we have seen finally start to outperform over the last month or so real estate, stables, healthcare, utilities, the things that nobody really likes to own, but generally -- the. >> the bond-like plays. >> yeah, yeah. >> what the math says outperforms late in the economic cycle. >> thank you. we appreciate it. i hope you're not right about this week. we'll see what walmart says. tyler is getting ready for "power lunch," and i will join him on the other side of this break. seyothe.e u er d: hey, sweethear.

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[inner monologue] in this gig... you get comfortable being uncomfortable. ♪♪ the enemy is always adapting... deepfake: hey handsome. ♪♪ [inner monologue] ...always iterating. ♪♪ ♪ t. good afternoon, everyone. welcome to "power lunch." alongside kelly evans, i'm tyler mathisen. we have a big show, including new jersey governor, phil murphy. right now stocks are higher across the board as the producer price index inflation measure there came in a little lighter than expected. signs of slowing inflation, that's good news. and we will get the