>> josh? >> don't tell anyone, but jpmorgan chase is about a dollar away from an all-time record high. shhh. >> thank you very much. as we mentioned, we are on record high watch. market is pulling back just a bit. down about a half a percent for the dow and s&p. nasdaq down 1%. "the exchange" starts right now. ♪ ♪ thank you very much, frank. welcome to "the exchange." i'm kelly evans, and here's what's ahead. our market guest is so confident in the economy, that she's putting her money to work in an underappreciated small-cap trade. she tells us which ones coming up. consumers are looking for value and retailers are offering it. some are doing so better than others, include thing one our analyst says it's up 27% this year. we'll talk about the name and what sets it apart from the competition ahead. peloton is soaring today after reporting a sales increase

for the first time in nine quarters. we'll dig into that. let's start with today's markets and dom chu has the numbers. >> kelly, right now we have a market that was positive at one point, but is drifting towards session lows right now, but they're not massive. the dow down about one half of 1%. it's roughly 197 points, 40,695 the last trade there. the bigger, broader s&p 500 is at 5585, down 34, 35 points, roughly one half of 1% declines there. just to give you an idea of the trading change so far today, the highs of the session, we were up around 23 points for the s&p. down roughly 39 points a t the low. that is your trading range. down 34 right now, lower end of the range. the nasdaq composite, down about one full percent, 182 downside points, 17,735 is the last trade there. kelly mentioned the pandemic darlings. take a look at these two. back in the day, peloton and

zoom video could do no wrong. these days, it's seemingly they could do nothing correctly. but today, we are seeing some optimism about both of these pandemic darlings. peloton and zoom video with earnings report that came in better than ex-fpected, focus o profitability at peloton versus growth, and zoom giving a more robust forecast. so these stocks are a shell of their former severals from the highs of the pandemic, but they are starting to see some lines of life. we'll see if that continues. those are those two names. and by the way, one other one to watch that we talk about pretty off, it's a mag seven stock. it's meta platforms, down one quarter of 1%, nothing to write home about today. but today it gets a star, because this is a record high intraday for meta platforms, the only megagnificent seven that h

a high. so keep an eye on these. i know you're going to be talking about system of these trades. back over to you. saz lot of people saying it's the one using ai most effectively and monetizing it right away. dom, thanks. investors are looking ahead to jay powell's most important speech of the year at 10:00 a.m. tomorrow in jackson hole. steve liesman is out there to set the stage for us. hi, steve. >> hey, kelly. good afternoon. ahead of that speech tomorrow, patrick harker telling cnbc here that he thinks the fed thinks to not just start cutting in september but to begin a series of methodical cuts. >> it was all inflation, inflation, inflation for a while. now we're starting to see the balance of risk getting more equalized. so we need to take more into account when it comes to the labor market. >> what does that mean, taking more into account? >> it means this september, we need to start a process of

moving rates down. >> he wouldn't say if he's in the 25 or 50 basis point camp, but he did suggest the fed needs to move quickly and get closer to neutral to help the economy the if the data shows it needs it. there's a question of whether it's once again gotten ahead of itself, that is the market. looking for 100% probability of a 25 in september, a 55% of a 50, and 88% probability by 25, which to say the market is priced for 100 basis points of cuts from now to the end of the year. the kansas city fed president w was a bit less dovish. we'll put some more meat on that monetary bone tomorrow ahead of jay powell's 10:00 a.m. eastern speech. and then we have chicago's au austan goolsbee in the afternoon. >> a very different tone than a couple of weeks ago when we got

a bad payroll number and jobless claims ups, and going back to the theme of jackson hole, the whole idea is for central bankers to explore why the massive rate cuts over the past years haven't had a bigger effect on the economy. i think that's going to be quite a pertinent question for discussion. >> yeah, i think you hit the nail on the head there. it's one of the topics of the symposium is monetary policy transmission. so that's going to be something they're looking into. interesting conversation with harker this morning about the effect on housing, and he talked about the idea that if you do into a rate hiking cycle with a housing supply deficit, he suggests you end up making the problem worse, the inflation problem worse. so if the fed reduces rates, you could bring down housing inflation. that's just one of the issues out there. also, the connection of fiscal monetary policy is something that likely will explore.

so a lot of stuff on the table about how all of this transmits from fed policy into the real economy. >> i think that's a perfect place for our next discussion. steve, thank you very much. we appreciate it. why haven't all these fed rate hikes had a bigger effect on the real economy at this point? let's ask michael darda from roth capital partners. mike, i think this would be a fun thing to reflect on, because we would both admit to the surprise of the resiliency we've seen. maybe it's the fiscal stimulus. we were talking to a guest yesterday, they do tons of water and infrastructure projects. he's got tons of business coming from the "inflation reduction act." jim paulson and others were trying to tally up this gravy train that keeps running, so to speak. i'm just curious for your thoughts on all that. >> hi, kelly. thanks for having me on. no doubt about it, this has been a unique business cycle in many ways. it's surprised many of us, probably most of us, in terms of its resilience.

and i do think it comes down to the fact that, yes, we had record stimulus from the monetary and fiscal side. and we had all these shocks from the pandemic. some of which have been reversing course over the last year plus that helped to give the economy a bit of a supply side boost, whether that's global supply chains or a boost in the labor supply. and fed chair powell has talked about this. so we could just be in an environment where monetary policy still works. and just as everyone has looked at this idea that there is no recession out there as far as the eye can see and the fed is going to get it just right in the timing of their cuts, some folks argue they should. be cutting at all. i still think it's a bit premature to embrace those viewpoints. >> if we waited a couple of months, we would go, well, there's the effect. but let's continue the thought experiment. if you were on stage there at jackson hole and given this

assignment of why don't you think we've had a bigger, stronger, even quicker -- i know maybe you would say by historical standards it's not that unusual. presume this rate hiking cycle was so extreme it would have had a bigger impact and it hasn't, why would you posit that is? >> it's going to be an unsatisfying answer, at least for most of the fmoco fmocers. the neutral interest rate has been much higher this cycle than the prior cycle, characterized by a massive financial crisis and deleveraging, and short-term interest rates went to zero and stayed there. but we have a very slow cycle with low inflation. a lot of people confuse that with easing monetary policy, but it was a very depressed, neutral policy rate. the fed cannot run afoul of the

neutral rate without creating upheaval in the business cycle. the most recent policy here obviously was the fed, with its primacy reseney bias, assuming this cycle was like the last and they fell way behind the curve and we had a two-year inflation overshoot. and they've caught up now, so now i think the risk is, if they are at least in somewhat of a restrictive stance, and we know things are softening. look, the unemployment rate, we can debate whether it's the labor force or weak hiring or some set of forces. but if the unemployment rate is moving up in a sustained way, and that was the case even before the july jobs figures, the economy is growing slower than the growth rate of potential, if it's growing at all. so that's a very different circumstance than where we were when the fed was having to catch up with these 75 basis point rate hikes. this is why it's so difficult. when we really won in the past. go ahead.

>> we've only had one soft landing in the past, they are very difficult. is it possible that the immigration surge, unauthorized workers, plus legal immigration, both of those forces are a key part of the reason why the unemployment rate has been rising? >> i think they're certainly part of the reason. i guess i'm not so relieved by that fact in terms of business cycle risk. i guess it's a unique circumstance, but if you look back at all the recessions since the end of world war ii, about half of them featured a rising participation rate and half of them a falling participation rate. so it doesn't really undermine the key theme, which is that if you're growing slower than the growth rate of potential, the unemployment rate is going to move up. that means there's slack building in the economy, and the neutral interest rate then starts to move lower, even though it's been higher for most of this recovery than most anticipated. that's where you get into this

risk that the fed falls behind the curve and a natural recession unfolds. if we're talking about the s&p, recession or not, when you're up at a 21 2sforward multiple, the outlook is exceptionally weak. if something goes wrong in the business cycle, even more so. so i know there's a lot of optimism out there, and certainly the cycle is surprise to the upside in many ways, but, you know, we could be at a turning point of sorts here. so, you know, i think we need to be a bit sober about where we are and what the risks are. >> indeed. i know you want a half point, i don't think they'll do that. we'll find out what happen it is they don't. go ahead. >> yeah, i just want to make this final point. inflation expectations, forward looking in the bond market, five year tip spread, has fallen 60 basis points since the spring of

this year. that means even if the fed does 50 in september, they will not fully offset that. does the fed really want the real policy rate on a forward looking basis moving higher at a time when unemployment is moving up and the labor market is losing steam? >> we'll see if we can get that question to them, at least some of the officials we'll hear from. mike, thank you. appreciate your time. good to see you. stocks are lower as investors brace for powell's speech in the morning. while there's uncertainty around the size of the september cut, my next guest has enough faith that she's putting her money to work on small caps. let's bring in julie beale. i don't know if you heard that discussion, but i think he's persuasive, but you see things differently. >> no, i do agree. i think there are enough concerns in the economy for everyone to be a little

concerned. part of it is valuation, which is about forward expectations, and they seem quite high to me. that's not true in small cap, and i think there are opportunities to find good, quality names in small cap. you have to be very selective, because they can be more cyclical and economically sensitive. it just is a function of finding businesses that are really resilient and durable. software is a great place for that, because the earnings tend to be more recurring. >> you have aspen technologies, cya, and others. software, though, is the place where you want to still be looking? >> i think for investors who feel like they missed out on some of the ai boom, software is an interesting place. right now we're in the infrastructure buildout of ai. but there are early atopdopters with the software developers. this is a place where they are leveraging that technology to

make themselves more efficient, to make their product road map happen faster. a lot of these businesses have been using ai for decades. aspen is a great example of that, where they used a vanced process optimization software to make all kinds of oil and gas refineries more efficient. so that's the type of names that we like. >> love that. you say people aren't talking enough about the canadian rail strike. we've been trying to highlight that lately. tell us how you play it. >> i think what's kind of interesting is we've already seen ashen to offset some of the -- any snafus we're seeing on the canadian rail strike. so we have seen major volumes increasing on the west coast ports. that could be an opportunity for the ltl transport companies to -- a way to play that. i think both of these companies have been under a lot of pressure, and this could be an opportunity to see some improvement in their

fundamentals. >> do you do anything with the election right now, or do you wait, watch, ponder? >> i think we wait, we watch, we ponder. i think with more and more than even on the top of the ticket is everything happening below, because we're in such a fiscal precarious situation with the deficit. what amazes me is that we continue to hear absolutely nothing about that, right? it sort of feels like when you hear both candidates, this is like a high school election where they're offering no school on fridays. it's that kind of situation, right? but they're not dealing with the reality of where we are with this fiscal deficit, which is more concurrent with what you would see of unemployment at 7%, not 4%, so the cushion that we have in the economy is pretty thin if there are any kind of economic disruptions. >> i agree. but dave told us yesterday, japan's gdp is 250%, so we don't have to be too concerned. any way, we'll pick that conversation up with him next time. julie, thank you. appreciate it.

meanwhile, home sales in july broke a four-month losing streak as mortgage rates dropped. so good news, diana, but everyone is buzzing about these changes and how you buy and sell a home. do tell. >> reporter: yeah, kelly, rising supply is finally drawing buyers back in. existing home sales in july rose 1.3% from june for the first monthly gain since february of this year. sales still down 2.5% year over year. and still at the levels not seen since mid 1990s. but supply is picking up. almost 1% for the month, up nearly 20% year over year. the trouble is, the vast majority of that supply is on the higher end of the market. that's why sales of million dollar plus homes are up 26% from a year ago. sales of homes priced between $100 and $250,000 are down 1%. home prices still gaining, up 4.2% annually. that gain is slightly bigger than it was in june. these numbers are all based on

closings, so contracts signed in may or june, when the 30-year fixed rate mortgage was still over 7%. today, it is 6.48%, according to mortgage news daily, up a tiny bit on the day but down over ten basis points since last week. one monote, buyers in may and je faced higher rates. 27% of sales in july was all cash, compared to just 19% back prepandemic in jowuly of 2019. >> so i walk into a home now, or i'm looking on line, can i contact the seller's agent directly? do i need to sign with buyer's agent just to go see it? >> no, if you want a buyer's agent, the only change is if you decide to use a buyer's agent, you must sign with that buyer's agent, and in most basis, you would have to pay that agent a commission, or make a deal with the seller, who would pay that commission. if you walk into an open house or make an offer by yourself,

you certainly can. >> it's so -- people are now going, wait a minute, this is very different. i can't wait to see more on how it plays out in the real world, talking with realtors and others who are nervous about all these changes. diana, thanks. we appreciate it. coming up, you just heard julie making a case for it, tjx raising full-year guidance, and bank of america sees a 10% rally to go. and the final day of the dnc is underway. but wall street is already turning its attention to harris' agenda. her views on anti-trust enforcement and a proposal to double the long-term capital gains tax. we'll explore that ahead on "the exchange." >> this is "the exchange" on cnbc. this summer, there's no better time to experience the latest mercedes-benz has to offer. make your dreams come true.

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welcome back. starting this week, walmart plus members will get a 24% discount on all individual orders at burger king, it's the latest example how retailers are attracting customers looking for value. my next guest says there's one name that's able to capture those dollars, tjx, on pace for its best in two years, and my next guest is confident there's more ahead. a buy on the stock, a price target of $113.

it's like costco, why talk about tjx? they just keep winning. i don't know what there is to say. >> you know, it's been a remarkable quarter. i think what stands out is consistency. they put up a 5% comp, it's really going to be a standout in this environment, where the consumer is showing some signs of challenges. one of the most exciting parts of the story is the focus on the younger consumer. this week, our b of a institute put out a report called trading down is the new dressing up, to show that the millennial and gen-z generations are spending more money in their value channel than cohorts before them. this bodes well for the off-price sector over the coming decade and gives an opportunity to gain lion's share and a long lifetime value. >> you cover a lot of these

names. are there any that are -- you see at least 10% upside for tjx. probably more than the gen-z crowd that will have no problem of moving from one shopper to the next. any names that are less appreciated but executing just as well? >> you know, you look at burlington, smaller than tj, and they've had a slower recovery from the pandemic from a margin perspective. so we're looking for burlington to grow its earnings over the next several years, which is industry leading and should result in a very strong stock price from here. so that's one i will really pay attention to. it's not as steady as tj, but we

see a lot of margin recovery from 6% to 9%. >> final question, the news this week is worth dwelling on. walmart launching a burger king value option. chick-fil-a is launching a streaming service. so what in the world is going on? are these lifestyle brands more so than just retailers? how is the internet plus apps unleashing the next wave of retail in order to stay competitive and keep an audience? >> i think this younger generation, they live online. so any brands tie up any collaborations you can do, have been very well received. it's a good way to generate brand buzz and brand traffic. what we have seen with tj, for example, the off prices, they don't have a huge e-commerce business but they have been big on social media for things like back-to-school and back-to-college. that's been an important way for them to reach out to shoppers. >> that's clever that they hopscotched over the internet

and e-commerce and said we'll just use social media to keep people coming in. it's worked out get well for them. lorain, thank you for your time. coming up, it's a silicon valley showdown. big tech and a number of bcs versus california lawmakers. what iidnsers are saying about a controversial bill to regulate ai is next.

welcome back to "the exchange." i'm bertha coombs. the arkansas supreme court has ruled supporters of an abortion amendment did notmeet the signature remarks, blocking the maesher from the ballot. currently, eight states will vote on the issue on election day. venezuela's supreme court has backed president maduro's claim that he won the election. they said the voting tallies published online but showed he lost. the court was filled with maduro loyalists. and former president donald trump teased a trump organization crypto currency

platform called the defiant ones to his 7.5 million followers on truth social today. this postmarks the first time trump has used his personal platform to promote the yet activated digital bank. it comes on the heels oh of a series of moves trump has taken to align himself with the crypto currency community, even though he previously called it a scam against the dollar back in 2021. kelly? >> that was then, this is now. it's election season. bertha, thanks. a major voice in ai today weighing in on the debate over how the technology should be regulated and who should be -- or whom should be the ones doing it. openai the latest to oppose a new california bill that would add safety precautions. deidre bosa has the latest. deidre? >> hey, kelly. so this all feels a little deja vu all over again. tech companies say they want regulation, but they don't want actual enforcement.

social media, another good example. we still don't have overarching regulatory framework today. the california ai bill aims to ensure systems are developed safety and make sure there's a kill switch that would turn off models if they go rogue. but there's enforcement that is part of this bill, including giving the state attorney general power to sue if developers aren't compliant. it would require them to hire third party auditors to assess safety practices and give protections to whistleblowers. openai opposing the bill last night, says that national security issues, they should be regulated at the federal level and argues that a california bill could slow progress and cause companies to leave the state. now, in response, senator weiner, who is spearheading this bill, he agrees that yeah, ideally congress would handle this. but he says that they have shown a lack of action. not the first time we've heard that also. notably, not opposing the bill is microsoft, one of the largest players of generative ai.

say told bay area media that it hasn't taken a spogs, which is interesting, because there's many other mega caps that are against this bill. and also, kelly, remember, there was joe biden's executive order, and openai, for example, is p supportive of that. but those are voluntary agreements in ai safety. >> there's a lot of different ways to regulate ai, from where it pulls content to how its output appears and what people then do with it. so it feels like there's going to be a number of different regulatory efforts. >> there are so many areas with any new technology that need to be sort of ironed out. and the argument is that government moves slowly. these tech companies move very, very quickly. so will lawmakers get a chance to regulate them? that's what this bill is aiming to do. but there is no shortage of opposition, so a lot more to get through. but the fears of what we saw with social media, with the

regulation or the attempt to regulate comes too late. >> i'm not sure i understand that whole line of reasoning. apple could do more to give us an ios option that says put it in kid mode. meanwhile, as we talk about the -- >> yeah. >> the original sin at the heart of the ai models is scraping content offer the internet and offering it up, content it didn't have the rights to access. so on this news that cnbc has, perplexity is going to start running ads in the fourth quarter. as these become more and more large businesses, i think they're going to have to answer that original question, and then figure out others like openai, as well. how they're going to monetize it. >> absolutely. that is the key question. that's something we're covering this week, is how do these business models make sense? there's very few companies that are making money. perplexity is making a small

amount of annual revenue. there's many struggling to find that business model, so it works in the same ecosystem. how do you regulate and put safety at the forefront if you are trying to create a business model and montization. these are all questions in the new industry emerging. >> a bolot at the same time. kamala harris is closing out the dnc tonight as her campaign considers doubling the long-term capital gains tax. that's next. this is our future, ma. godaddy airo. creates a logo, website, even social posts... in minutes! -how? -a.i. (impressed) ay i like it!

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welcome back to "the exchange." today is the last day of the dnc, and kamala harris is poised to accept the nomination in a primetime speech. americans have already had a peek into her economic agenda with the release of her platform last week, but tonight offers more clues about her vision for the country. let's dig further into the policies with eamon jabbers. robert frank has more on her tax proposal. and joining us also is andy and

dan. welcome to all of you. >> hey there, kelly. there's been speculation on wall street that a president harris would take a lighter touch on anti-trust enforcement than joe biden did. but there's not a lot of evidence that is actually true. last week, harris released an economic plan that specifically pledges to increase competition and hinting at stronger anti-trust enforcement in food and pharmaceuticals. so in this new economic agenda, the harris campaign says she would direct her administration to crack down on unfair mergers and acquisitions that give big food corporations the power to jack up prices and undermine the competition that allows all businesses to thrive. and the plan promised to increase competition and demand transparency in the health care industry, starting by cracking down on pharmaceutical companies

who block competition. part of the reason that some speculate harris would take a softer touch is the influence of her brother-in-law, tony west, who spoke here last night and is the chief legal officer of uber and former general counsel of pepsi. but i talked to some progressive activists who said they're happy with the economic team around harris, who they see as likely to continue this biden trust on anti-trust, given the personalities and the brain trusts who are around her. so not a whole lot of evidence here, kelly, that harris necessarily would be softer on anti-trust than biden has been, even though there are a lot of people who seem to have that idea. >> interesting about tony. what did he say? an interesting person to have speak, and i did not know the family connection. >> yeah, and a former doj official, who i interviewed back in his doj days in washington. his speech was much more from the heart about his sister-in-law, about his marriage to his wife, sort of touting kamala harris as a

leader, as a person not a lot of specifics. this isn't the venue for specifics on economic policy. this is a lot about vibes, feeling. they're going to be the joyful campaign into the fall. this suspect where they're going to line up their bullet points. when you talk to people behind the scenes, you don't get a sense that there's a major shift in terms of anti-trust for the democrats. >> let's turn to capital gains with robert frank. probably the most eye catching proposals. >> she proposed two changes to the capital gains tax. the first would more than double the top rate of those making more than a million dollars a year from 20% to 44.6%. you heard that right. that would be the highest rate in u.s. history. so the total would be 55.5% on that gain in new york. in california, just under 58%. she's calling for a 25% tax on unrealized gains for those with

a net worth of more than $100 million. so if you would pay the taxes on any stock gains, even if you never sold that stock, they would not be valued every year, but taxed at the latest valuation, plus some kind of annual increase. the tax payments are spread over five years. so if you had a big gain one year, a loss the next, that loss would simply be credited against the remaining tax. now, some estimates show this raising about $500 billion in revenue over ten years. but kelly, we know the wealthy would find a lot of ways around it. so unclear whether that revenue would hold, if indeed it past congress. >> robert, we appreciate it. let's talk more about this, what it could mean for the economy, and markets. andy blocker is xwlglobal head partiers, and dan, let me just start with you. what are you hearing in terms of how this would work and hit silicon valley or startup culture, and anything else that

people think would be impactful. >> yeah, for starters, this is referred to as the harris economic plan, it's the biden economic plan. all the details were all in the white house's fiscal '24 and '25 budgets. neither of which they fought hard for in congress. i understand the trump tax cuts are going to expire in a year or so, so things change. but harris hasn't come out with anything new on capital gains, they just said we agree what the white house proposed previously. silicon valley has gotten freaked out about this tax, which you can understand. a lot of them own a good deal of stock in private companies. one thing to note, though, in addition to the $100 million in wealth, which is where this kicks in, you have to be over 80% liquid for it to kick in. in other words, if you are worth $100 million but almost all of that is because of your startup stock, you would not apply for this, at least immediately. there's some deferrals that kick in. >> andy, a lot of people

suggested could this apply to home equity, if your house has gone up in value? but homes are often excluded. to dan's point about the slippery slope, once you tax unrealized capital gains, but does that pave the way for that to go more main stream in future years? >> i think you're on to something there, kelly. these are very aggressive policies. there's a discussion about can you really tax unrealized gains, when you can and can't. you definitely have to have that 80% liquidity requirement, because you can't have people selling property to pay taxes. so it will have to be dealt with on the details. >> dan, there's some confusion about this, in some part of the data. -- media. so it's treated as, so and so has this many billions of dollars. do we start making a disting

shun between unrealized and realized gains? i don't know. i think it's all playing into this idea of how much sort of liquid money or cash people really have. >> it does, and then you have the secondary piece where people can take out loans what does that mean? that's debt, so is that an asset as far as the irs is concerned? these are proposals that have been around for over two years. they haven't gotten anywhere from a democratic white house. i think what i'm hoping for and kind of mentioned is we're not going to get any specific economic policies tonight from kamala harris. that's not what this speech is for. but do we get anything new that comes out in the next week or two, which differs her economic policy and tax policy from the current white house outside of the proice gouging stuff and being tough on mergers? >> andy, i'm curious about what's going to happen with this expected to expire tax cut

package that trump had passed. i thought they were going to find a way of restoring those deductions, which would amount to savings for wealthy individuals as well under her administration. >> senator schumer, the new york/new jersey delegation and a lot of the state where is this is impactful will be pushing hard to make sure we have those tax breaks. but it costs a lot of money. if you were going to extend all the tax cuts for the trump tax cuts, it would be about $4.5 trillion. so that's a lot of money. trump would try to do that, or most of it. vice president kamala harris, her thing is, anyone making over $400,000, she doesn't want to extend those tax cuts. corporations, she said 28%. at the end of the day, it's too early to tell. you're going to have to have full control of congress, the house, senate and presidency to enact your plan. so we're waiting to see how this

election goes out. but the process and the makeup of the entire -- has a big impact of what can and can't happen. >> these are all wish lists as they always have been. but these are where the rubber hits the road depending on how big the gains are for either party. guys, we'll leave it there. we appreciate it. check out shares of the health care services provider, popping on a report it's keeroring a sale after receiving taov interests. we're back in a moment. ♪ music ♪ ♪ unnecessary action hero! ♪ ♪ unnecessary. ♪ was that necessary? no. neither is missing your daughter's competition to do payroll. with paycom, employees do their own payroll so you don't have to miss your daughter's big day. time to shine. get paycom and make the unnecessary unnecessary.

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kandi technologies. welcome back to "the exchange." dow was up 136 at the highs but down 228 now as we see red across the board. half percent decline for the blue chips, about 0.8% for the s&p. 1.3% for the nasdaq. we're seeing some pressure on the chip names nvidia and so forth.

check out advanced auto parts taking a hit after missing on the top and bottom klelines, do 16%. of course, aap has been a name under pressure. gold, which is selling off for a second straight day, pulling back from tuesday's record high, around 2517 an ounce. coming up, peloton shares are surging, up 35% to $4 and change. they're still more than 45% off the year highs. our analyst is over there with his gorgeous young son and said the company isn't out of the woods yet. what would it take to make peloton an exciting again? that's next on "the exchange." growing your business is easy once you know the moves. with godaddy websites plus marketing, you can quickly create a website, and ai will customize it for you. get your business out there

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welcome back. shares of zoom video have surged up. they raised full year's guidance while another pandemic darling turned dog, we should say. peloton is surging after its quarter results showed a turnaround plan. it still has a way to go. joining me is senior retail analyst at bmo capital markets.

welcome to you. is this a turnaround story or a last gasp of hope? >> it doesn't look like a last gasp of hope. great to see you. >> welcome. >> it needs to be profitability, not revenues. we're getting a glimpse of that before we even know who the ceo is going to be. where every conversation about is strategy and elections and macro and all these externalities, peleton is someone who can actually take their destiny into their own h hands. >> how so? >> if i that can look at their business and say we can do less, they have 3 million subscribers who pay per month to get on a machine, that's a great business. >> is there anything they have to scope doing? >> that's a great question.

will they be able to change or do something new? here they have to stop generating money. it's an acknowledgement the business can be better than it currently is and not chasing its growth. as long as think do that, take that gross profit dollar they're generating and they don't chase with marketing and they pull back. >> i was going to ask. the biggest expense or the biggest they should turn off is their marketing spend? >> my team did work on this where they looked at their r & d. they're spending 11% of their sales. if they cut that in half, they would still be in industry leading. if they brought the market to 10%, they'll stid be industry leaning. corporate, they would be the same. >> would corporate have to take a salary cut . >> they have a beautiful

headquarters in hudson yards. if we reflect on the business where it started and where it erupted? they started believing they were going go dramatically larger and they built accordingly. >> sure. >> recognize where they are right now, and it's still a massive win. every one that this original team pitched this company to, if they could say at inception to right now and delete what's in between, it's a massive success. >> do they face a risk of attrition of that customer base? >> absolutely. so what i would love to say to you is not only do we have a good downside and we have time on our side, we don't have time on our side. every day, humans are lazy. i hate to say it. we have a heavy churn. they need to protect the current customer. >> it's always the next thing. people want variety. it's hard to do the same routine over and over again. >> i believe that. i think you're definitely right. i think peloton has license to move around and find the next thing, but they need to bear hug

that brand loyalist, somebody paying $44 a month in their own home, make sure they don't leave. >> what's doable? or if they follow your plan, what's the price? >> i like that question. mid-6s. if they follow the path, $8 to $12. >> okay. >> there's an opportunity. if they don't, it bleeds. it's a melting ice cube, to your point, if we lose those existing subscribers. >> now that we've gotten that out of the way, what is going on with retail more broadly? the consumer is choiceful. they want value. you see partnerships like walmart and burger king or chick-fil-a and streaming. what does that tell us? >> companies are trying to find something exciting. that's the peloton side. you have fitbit, walmart. >> true. >> i think what's so important, it's very easy when it comes to

consumers, high income, low income, good, bad, a lot of rhetoric. we're not done with this. unfortunately there's plenty of earnings into labor day. it's not kind. neither high nor there. massive divergence. people think luxury just toppled because lvmh said they had a bad quarter. pr pr prada said they're doing great. winners are winning. laggards are losing. >> it's reassuring. you mentioned your research team. i appreciate you bringing one of them with us today so we could properly acknowledge them for the help they give. micah, do you want to come over and tell us about your latest retail model for peloton? >> the backbone of the team. >> thank you for joining us. chge hat's it for your the exan. i will see you next on the

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if you could only see what just happened right now offset. welcome to "power lunch." alongside kelly evans, i'm dominic chu. coming up on the show, we've got one side of the capex coin. many experts