any time >> large cap value never let a good correction go to waste >> sarat >> i like uber i think this is the play you want for reopening stock has been unfairly punished i think you want to buy it at all levels >> trb >> another all-time high for invitation homes reits on fire. >> "the exchange" starts right now. >> thank you, scott. welcome to "the exchange." i'm jon fortt. stocks are staging a comeback falling from record high levels on concerns about the global economic recovery but they are way off the worst levels of the day. tech still falling, though the big names are lower across the board except amazon peaking into the green but they've all had a good run except one. what's the matter with netflix and for today at least, tech stocks and bobd nd yields are falling together a low of 1.25.

traders saying it could go all the way back to 1 flat we'll talk to someone predicting 25 basis points to the up side let's get to dom chu for the numbers on the sell-off. >> well off the worst levels of the session. it puts some context around how low it got after the opening bell the dow industrials down 212 right now. down 536 at the lows and roughly 112 right after the opening bell that represents the highs of the day. you can see they are still in the middle of a trading range but tilted more toward the better end of things than the lower end. the s&p 500 down 30 points, also recovering quite a bit and the nasdaq just about the same level. look at this two-thirds of a percent declines across each of the major indices. no real relative laggards or leaders so to speak. you mentioned the interest rates. 1.25%, lowest level since mid-february at this point here.

the two-year note yield a hair below 20 or 2.0% can it go lower than the 1.25% for the 10-year and 1.92%. i want to show you the intraday charts check out american airlines. i'm going to use it as a proxy for the reopening trade. travel and leisure look how low it was nearly the session and the white line has moved steadily higher. also devin energy up almost 2% that's the orange line reopening trades have been part of this comeback story at least intraday for you we'll see if that still has legs toward the closing bell later on this afternoon >> dom, thank you. big tech now was staging a comeback with those names outperforming. despite the drop in yields today, the tech sector is losing ground the nasdaq on pace for its worst day in nearly a month. let's get more on the tech trade with josh lipton at the nasdaq

josh >> that's right. the nasdaq is giving up some ground here. as dom rightfully and correctly points out, we're well off our session lows this is after a run, of course, just yesterday the index closing at an all-time high let's talk about some of the big names like amazon. it was in the red. now, though, flipping into the green. remember amazon closing at an all-time high just yesterday investors appearing confident with andy jassy taking the reins as the new ceo apple falling here but that comes after a very strong month for the iphonemaker. bulls point to seasonality with july to september typically a period of outperformance for tim cook's company heading into the new iphone launch in the fall. you have to mention alphabet too with a group of states launching. trip.com, baidu and jd.com jon, back to you

>> josh, you just talked what's happening right now, which is great. let's talk future a little bit catalyst for the rest of the year in tech i was just hearing from the salesforce executive that they are planning dreamforce. we have earnings coming later in the month. and we've got, you know, iphone, windows 11 announcements which of those things, any of those things with your tech reporter have on piquing your interest >> i think apple is a fascinating one. always talk about. i remember the last reported results they far exceeded the street's expectations. i remember looking at the mac results. i did a triple take but what's interesting is how the investors reacted to that. investors thought that's the good news. great print but you can't possibly keep that momentum going. i think talking about catalyst, what's interesting is the way bulls have stepped in. one they'll point to is seasonality. july, september should work for tim cook's company if history is any guide but they'll also look to the iphone 13

the new iphone we expect in the fall and some on the street making the bet that can outperfom what they see as lower expectations that's an attractive setup they'll see if they're right >> looking forward to seeing what they've got in store. josh lipton, thanks. not all tech stocks playing with the same hand even within the faangs, facebook and alphabet what stocks can handle gyrations in the market and swings in yields better? joining me is laura martin you have had a skeptical eye on netflix for a while now. what's the matter with it? >> the problem is it's got real competition now and they have a single pricing tier up at the $15 level. and they have very real competition from discovery plus, disney plus, peacock, all which have $6 tiers which increases their total addressable market and creates a low-cost on ramp into the more expensive service.

but for people like consumers who get sick of ads. so nothing is getting better for netflix and it's not part of the reopening trade because it is not ad driven. and advertising will have a huge year over the next 12 months so we'd rather be in ad driven tech stocks >> i was looking at netflix over periods of time and sure if you compare netflix to apple, over one year or over two, itlooks ugly if you look over five or ten years, right now they are neck and neck so maybe, maybe what if, you know, the stock has just sort of cooled off apple is caught up and now they run more in tandem netflix is still the leader in its category it seems to be similar to apple. apple hasn't really done a lot in advertising though it's got a premium marketplace and a lot of people thought they should have. >> pushing back hard on that what apple's genius is, is that it just takes a 30% toll on every app. it does nothing and earns 30%

forever. doesn't care who the hits are. one year it's this app and the next year my app, they still get pirt 30% they build a tech stack. not true of netflix where they are spending $2 billion every year extra to try to compete, $17 billion this year. barely breaking even and they're trying to compete against the walt disney company and soon discovery warner brothers. they do not have deep enough pockets to compete with viacom they do not have a toll gate where they do nothing and get a fee. apple is a much better business model, in my opinion >> you say 30% from doing nothing on a day we're talking about a bunch of state ags cracking down on google for its app store practices which are similar in the numbers to apple. so you have a buy on apple buy on alphabet, google, hold on facebook, about regulation but, hey, there are regulation concerns potentially across the

board. why more worried on some versus others >> sure. so on alphabet specifically, we would love it if the government would break up alphabet because we think youtube alone is the value is getting buried inside the conglomerate so that is youtube this year will report $35 billion of revenue it should be valued where roku, around that 16 times revenue instead because it's part of alphabet, it's valued at five times. so if it -- if the government said oh, google is too big, too big of a monopoly so we'll force them to spin off youtube it creates 30% upside value for shareholders and i like government regulation in the google ecostystem. i don't like it for facebook >> i ask jassy if they're going to spin off aws. he says, nope. now he's the ceo so his word goes further would it be good for the stock, for investors if they did? >> i really love amazon the most

right now in the sense of hidden value. i think this is like a magician with a lovely assistant. the assistant distracting you from real value is the e-commerce business. everybody thinks it's e-commerce business i don't agree with that. i think there's more value in their media business now they bought mgm and own twitch and amazon prime than there is in the e-commerce business, not to mention what you just brought up, cloud, not to mention they are creating a trojan horse of those alexas which is in-home internet of things management which is going to be incredibly valuable and logistics, like all of those are actually the magic at amazon and, meanwhile, e-commerce just distracts you. so i think amazon is the most undervalued stock because people are -- think it's an e-commerce company and i don't think it is. >> i'm going to push back because it's my thing. it's what i do you talk about the value in breakups we saw that with ebay spinning off paypal, but apple's modus

operandi has been vertical operation. the os, and the chips and the services, too. in the long term for a really smart company, isn't vertical integration good, and couldn't spinouts be bad? >> you know, they could be depends on the synergy i think it's harder -- i think when you spin off advertising driven businesses, it really does like disassemble their monopoly so that would be a good regulatory outcome, i think, for google if you are a regulator. i think when you talk about amazon, they just keep building businesses that are worth more than the e-commerce business that's really hard to regulatorly break up because they're doing it in house. so all of that says it's harder to get regulation. i do think that the regulator maze kick out amazon's own products like amazon basic, but amazon basics are great products at lower prices so it actually hurts consumers if regulators did that

so i think some of these large -- i'm going to call them monopolies are more protected from regulation because breaking them up would actually hurt consumers which no politician wants to do. >> although, congress might make law on this and leave the whole monopoly issue to the side certainly some bills cooking up that way in congress laura martin giving us a lot to chew on with faang thank you. >> my pleasure coming up, we'll have more on rates as the yield on the 10-year treasury falls for a fourth straight day. jpmorgan's hot bond strategist says the ten-year is about 25 basis points too low we'll ask him why, next. and bitcoin is not immune from today's sell-off down more than 5%. now flat over the past month "the exchange" back right after this

>> this is "the exchange" on cnbc my retirement plan with voya keeps me moving forward. they guide me with achievable steps that give me confidence. this is my granddaughter...she's cute like her grandpa. voya doesn't just help me get to retirement... ...they're with me all the way through it. voya. be confident to and through retirement. ♪ music ♪ ♪ dream, dream when you're feeling blue ♪ ♪ dream, dream that's the thing to do ♪ ♪ music ♪ when you see value in all directions, you add value in all directions. accenture. let there be change.

[ "me and you" by barry louis polisar ] ♪ me and you just singing on the train ♪ ♪ me and you listening to the rain ♪ ♪ me and you we are the same ♪ ♪ me and you have all the fame we need ♪ ♪ indeed, you and me are we ♪ ♪ me and you singing in the park ♪ ♪ me and you, we're waiting for the dark ♪ welcome back to "the exchange." as we have been discussing, the story of the day, one of them, is yields. they continue to move lower. rick santelli is at the cme with more on the action how low can they go, and what's the driver >> you know, john, i always learned when i was a trader never guess how low something

can go while it's in the process of being guns hot, meaning we're trending lower in yield. higher in price. and it's proactive to step in front of this now is probably not a smart thing to do. but if i could take a step back, i'd say the chances of us getting much closer to 1% still exists look at a 24-hour chart of tens. you can see right around 1.25, a little bit lower was today's intraday low yield and if you open it to a week to date, we are cascading lower as you pointed out in the opening piece. we keep seeing more moves. every day this week we're trading under the previous day's lows which yesterday was 1.29 which we're hovering at, but we've been lower if you open it to february, 10s and 30s, this is a long dated, not only treasury but sovereign issue across the globe you can see we're hovering at lows for 10s and 30.

and bunds overseas, lowest yield since april. this has a lot to do with how the currencies end up relating the difference between our yields and bund yields now is the closest it's been together around 160 basis points, a little over 1.5% difference in five months. and, of course, the closer those get, the less beneficial the activity is for our currency finally, one issue we want to point out while we're talking about the dollar is the dollar is very sensitive to anything regarding the taper. the more or closer a taper comes, the higher the dollar index you go john, back to you. >> rick santelli, thanks for giving us that overview. we'll keep talking about this. the sudden reversal in the bond market has been quick, unexpected by many the rally has been so sudden and ferocious. my next guest says the ten-year treasury yield appears to be around 25 basis points too low, relative to their drivers.

joining us is jay barry, head of usd government bond strategy for jpmorgan okay is this not so fast that's happening here we saw travel, air travel over july 4th weekend up over 2019 and yet we see japan shutting down kind of live spectators for the olympics is this concern that perhaps the economy isn't going to be doing so well with risks like the delta variant out there? >> thanks, jon i think some of it is related to the economy and less so about the delta variant but more about the data flow we've gotten the employment report on friday was perceived to be weaker than the market expected. payroll growth was robust but the unemployment rate ticked higher so to the extent the market has been looking for a decline in the unemployment rate to set the stage for fed tapering, that was disappointing. and the ism services survey was

pretty weak as well, relative to consensus expectations though pretty high so the data flow is whackened and that's been the catalyst for it to move lower we've been saying this for quite some time that investor positioning and rates has been very stretched to the short side we've got our weekly treasury client survey which showed that as of earlier this week, 22% of our clients on a net basis were positioned for higher yields which is a bait of a reduction over the prior week but still high over the last five years and really over the last 15. it's been the accelerant coming from the fundamentals in the data that have taken it to position technicals and gotten us to where we are right now >> what do you think happens from here then, and why? you say that treasury yields now, 25 basis points too low relative to their drivers? >> yeah, so i think there's a mean reversion argument to be made that you can see yields move back to sort of fair value

over time and in our forecast for the balance of the year we see rates moving higher to back to where they were and finishing the year closer to 195 we need a catalyst for right now. i don't think that positions are fully cleaned up and it's likely we'll need to see more in order to fully get back to neutral beyond that we need a fundamental catalyst we talked about the unemployment numbers. the fed's flexible average targeting rate is focused on 2% inflation for a period of time it's contingent upon being at maximum employment we need to see the unemployment rate resume its descent. we need to see where we go on fiscal the infrastructure package is being debated right now. but it's been stalled for the last couple of months. and we need a better sense that congress is finding a way to pass an infrastructure bill later this year in order to be a catalyst as yield bess begin tos from where they are now. >> whenever we talk about yields i have one eye on stocks because

we were seeing such a reaction in equities to movements in the 10-year, just not too long ago but maybe the idea is to have more of a look at the fed as well what's the impact of this on the likelihood of an early taper >> so i think the market move themselves should not impact the timeline and the taper in our minds at jpmorgan, in order to see that substantial further progress that gets us to tapering it's going to be the labor markets tightening further. we expect a december tapering announcement to be implemented at the beginning of next year and the fed will be done with asset purchases by late summer 2022 i don't think it would derail the fed. what would is if we dont make that substantial further improvement. >> keep talking about the labor market and the overall economy and that makes me wonder about

the impact of the stimulus on jobs and people getting back to the workplace. how much of that do you see impacting where we see yields going? >> so i think a piece of what we're seeing in this imbalance between labor supply and labor demand is certainly coming from the extended unemployment benefits which are set to expire at the beginning of september. that should help free up some more labor supply. but it's also hessitance over covid itself we have the unemployment rate moving another percentage point lower between now and the end of the year if we're right with that, that's what's built into our forecast and why we see yields actually moving higher from where they are right now but we need to see that from the official data before we can, i think as i said before, resume that trend that began earlier this year. >> i guess after labor day we'll see how labor plays. jay berry, thank you >> thanks, jon coming up -- is it still

game on for the meme stocks? we'll look at some of the reddit favorites bucking the trend during this broader market sell-off plus, how is the esg trade holding up during today's sell-off we'll dig in to the solar ev and alt energy names on the move "the exchange" back right after this

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markets continue to be in the red but they've cut their losses just about in half the dow was down 536 points at the low. the nasdaq down 2% you can see it's rebounded quite a bit. all 11 s&p sectors are in the red right now. among the biggest laggards are industrials and financials the regional banks particularly under trouble. m & t bank, pnc and keycorp lower. transports under pressure. railroads moving lower after the white house says the president will issue an executive order targeting rail competition and shares of chewy, pet food, in the red after initiated coverage with a hold rating saying out of stock issues and higher wage investments would be near-term headwinds for that stock. it's down 10% this year after a stellar 2020 when it jumped 200% now to rahel solomon for a cnbc news update. >> here's what's happening at this hour. the fda approving new

instructions for prescribing a controversial and expensive alzheimer's drug that could limit its use the biogen drug is appropriate for patients with early or mild alzheimer's and not all stages of the disease as was said when the drug was first approved. get ready for more bad weather this year. researchers at colorado state university have raised the number of named storms they expect this hurricane season to 20 from17. and on the news tonight, another heat wave taking aim at the west coast california towns running out of water. we'll get a live report on how residents are getting by that's tonight at 7:00 and in nebraska, ted turner is donating an $80,000 acre ranch to a nonprofit agriculture research institute and he says he'll keep paying taxes on the land turner is the largest land owner in the state and officials had worried his expected land donations would slash tax revenues back to you. >> rahel, thank you. coming up, we're continuing

to watch the rebound in some areas of the market. check out this stock like an action movie amc hit a low below $39 a share right out of the gate this morning. trading at almost 49 now airlines rebounding. they've been falling on concerns about the delta variant and how that might slow the travel recovery we'll check on those stocks. stay with us “cracked windshield” take 1. ♪ you say ♪ ♪ i got a crack in my windshield... ♪ uh - uh, lisa, maybe less heartbroken? geico lets you file a claim online, over the phone or with their app. ♪ that makes me wanna say... ♪ ♪ stay... ♪ (sniffles) are...are you crying? uhh, there's pollen... geico. great service without all the drama. this isn't just a walk up the stairs. when you have an irregular heartbeat, it's more.

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welcome back the markets selling off today but way off the lows the major averages on pace still for their worst day in nearly three weeks. partly a reflection of how well they've been doing let's drill down now on some sectors driving the market's move lower cnbc team coverage christine is covering the meme trade. pipa stevens and phil lebeau covering the airlines. christina, let's start with you. the meme trade recovering midway but it's been a rough month as people get queasy perhaps about risk >> excellent point, right? you are wondering who is still playing the meme game companies like amc, gamestock, blackberry

are today moving counter to the market so we've often seen this kind of trend or stocks climbing the meme stocks climbing when we buy the dip kind of market especially when crypto also tracks lower keep in mind, too, there is l lower trading volume so swings are a little more likely and then you possibly throw in short selling covering as well and that could push the prices higher but for week to date, that's when you start to tell a different story. here are some of the biggest meme losers. clover health, meta materials. amc climbing lower but uptick today really helped others that aren't so hot as well fubo tv, gamestop, tillray, tesla. big picture, though, these stocks are still winners amc stock is up more than 2,000% year to date gamestop up more than 900% year

to date and many online retailers don't plan to sell or as they say #apes not leaving so often these meme stocks like amc track more technical factors like options volume and short selling interest it may also be why many of these retail traders are still waiting for the, quote, moass, the mother of all short squeezes >> i wonder at this point what's moving these stocks and how much of it really is this retail investor traffic in forurms like wall street bets and how much the pros have gotten into these trades and are pushing things one way or another is your sense just from the culture of the chatter within these reddit forums that at least these retail traders believe that they have their hand on the steering wheel and they're in some control of this or no? >> oh, of course they do, which is why so many of these hash

tags are trending right now including stock market on twitter. so overall, they are commenting on the fact that the percentage of the float right now is still heavily shorted for a lot of these stocks amc, for example, 17%. gme, the percentage of that by about -- well above 16% as well. people betting the stock will fall to answer your question really quickly, what could be happening? short sellers covering their position, pushing some of these stocks higher. the fact that people are taking advantage of the buy the dip market and putting their money into retail because they hit some certain levels. you have crypto falling so often meme stocks go in the opposite direction of crypto. so there's many factors, none that i can say specifically but these are some of the trends we're seeing and they feel like they're very strong and still have their hands on the steering well to answer the question. >> yeah, well, people have a way of guesting surprised. so we'll see thanks meanwhile, airlines off the lows

of the day still negative for the week and nearly all of them down more than 10% in the past month this despite more and more passengers taking to the skies phil lebeau joins us from chicago with the latest. phil >> jon, the bilg question, the summer surge does it continue past labor day? or is this one of these things where you say this sas good as it's going to get for the rest of the year. we've seen the airline stocks move lower and analysts asking, what could we expect post-labor day? morgan stanley out with a note saying, what is the summer surge going to turn into more corporate bookings in the fall the passenger levels right now, just to put this in perspective, we're down anywhere between 15% and 25%, depending on the day of the week but 13 of the last 26 days, it has topped 2 million passengers. and a couple of days last weekend it was better than it was in 2019. so we are seeing the steady continuing improvement in

passenger traffic, especially domestically take a look at a few of the airlines stocks. most specifically alaska, j jetblue and spirit the other thing to keep in mind, we have earnings and financial reports. those will be coming up starting next week. and the big focus will be q3 booking trends that's what everyone is going to be looking at. >> help us understand the profitability and the business model behind just these bookings as well. business travel would tend to be profitable i'm not sure how many of the different airlines -- >> it's the most profitable. >> i'm not sure how many of the different airlines are discounting now to get that traffic versus it's luxury vacation travel is coming back is that revenge spending >> it's leisure travel right now. and leisure travel generally speaking will not be as profitable as corporate travel you want corporate travel if you're an airline. that's what they need to come back post labor day. having said that, they're not discounting the tickets for the

summertime if you try to book a flight right now for the middle of august, you're going to be looking at the airfare and saying, where are the great deals? they're just not there and they don't have to be there because there's so much demand in the market. >> is there a sense or maybe even just a hypothesis that if people are traveling for pleasure and they have a decent experience it's not the end of the world they'll be more likely to say, i'll travel for business, too? >> i think so. and look, that's just based on talking with people and also when i talk with people about corporate travel, this whole idea that, well, people are going to stay at home and they'll not do corporate travel. is there some of that? yes. increasingly, i'm hearing from friends in various different industries who are saying, i am getting back out on the road maybe not as much as in 2019 but i'm starting to travel again. and i think we'll see more of that in the fall >> anecdotally, phil, i know that i'm getting more sources, more companies saying, hey, i look forward to sitting down with you in person if that's an important

relationship you're inclined to sit down with them i'm a journalist if you're in sales, you'll chase that money >> absolutely right. it's been a brutal week, meanwhile, for clean energy. that continues the etf that tracks that sector, pbw pacing for its seventh straight negative session. pippa stevens is following that for us >> another down day for clean energy amid a risk-off tone in the broader market although the stocks are well off their worst levels of the session. invesco held clean energy ticker down 1% after declining about 5% still on pace for its worst week since may, down 4% the fund tracks all parts of the clean tech ecosystem weakness across the board from electric vehicles to hydrogen to wind and solar stocks, no exception, also taking a hit the invesco solar etf down 2%.

sunrun and manon armstrong among those dipping. on a day like today when we're seeing investors take risk off the table and buy treasuries, this group will take a hit the majority of clean tech is still small caps which are also getting hit across the board the russell 2000 declining 2.5% this yeek compared to the s&p's roughly 1% dip concerns around the infrastructure bill and what that ultimately looks like also weighing on clean tech, jon. back to you. >> yeah, you mentioned the infrastructure bill. i also wonder about if there are other things that analysts point to as potential catalysts one way or the other for these stocks, whether it's home building on the solar side or other things is there a particular chatter that you're hearing about what might influence the direction from here the rest of the year >> the infrastructure bill top of mind. if the market hates one thing it's uncertainty we don't know what that bill is going to look like and these projects are multiyear in the

making we need clarity around that for solar and wind companies to decide to invest once again and ramp up their production other concerns are stretched valuations these stocks are down this year. but if you look over the past year, the invesco solar etf, pwb up about 100%. some up over 200%. there were concerns they had gotten a little stretched and then a bpullback here was healthy. investors expect these names to continue going up. they point to the runway growth, the transition to a cleaner energy economy and the top down administration from biden prioritizing climate policy going forward. >> like the meme stock folks who expect things to continue going up you know, we will see certainly government as you mentioned having a big influence there pippa. thank you. stocks have been cruising along quitenicely making new highs seemingly every day, until now. so if today's selling ushers in a new period of volatility, who

knows. what changes could you be making and should you be making to your portfolio? and we want to show you shares of amazon which just hit an all-time high after reversing sharp declines now up 15% this year a new ceo this week. "the exchange" is back after this

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chief investment officer and mark smith, portfolio manager at wells fargo advisers welcome. mark, we were just talking about volatility in clean energy, but perhaps there's stability in just energy itself >> yeah, jon, i think you're right. the reason for that is valuations energy really hasn't had the kind of run-up we've seen from many other sectors coming out of the pandemic so there's a lot of opportunity because of that. and so as people start to go back to work, after labor day, i'm getting clients at all the major firms saying that their bosses are telling them they've got to be back in september. if that's the case, traffic will pick up. travel will pick up and energy should do well as a result of that so because the valuations coming out of the pandemic and the demand issue, i think it's a good place to be and i also think that the material sector could do pretty

well because you can't find anything to build a home i just purchased a home. i'm on a nine-month waiting list for simple materials to complete my projects. so you are seeing that supply and demand is happening on both those sectors and that's where the upside is for investors. >> mark's pointing to people coming back to work. and if that's happening, david, that's got to be good for commercial real estate, right? is that why you like simon property group >> well, we've liked it for quite some time because we believe that it had the free cash flow that was going to support this really, really attractive dividend. and if all the bad things happened, even worse than expected, they have this asset base there was really great brick and mortar assets that have way less leverage than back around the time of the financial crisis so we like simon property as a cash flow generator. i'll add to mark's point on energy i think that you have great free cash flows now because you've had much better capital discipline from some of the producers, particularly chevron,

exxon. they've been able to turn the nobs down on their cap ex. they protected their dividend through 2020 now it's a really good path ahead for those big energy companies. >> david, it sounds like you would say that the recovery trade is not really front and center anymore is it back more to a look at fundamentals and, you know, where the bargains are perhaps when you look at the strength of an underlying business versus where it's trading >> yeah, i think that's a good way to say it. the way we put it to clients is this we believe that the recovery trade was priced in months and months ago there's still room for recovery to outperform expectations but for the most part, the easy money is gone. it's been gone for some time right now you're in a position where people worry about inflation, deflation you're talking about low rates are hurting markets today. a few months ago we said higher rates are hurting markets. we want to be agnostic about that we focus on free cash flow, dividend growth because then

it's, yeah, fundamentals but also better companies with better operating leverage. so that free cash flow benefits us whether we're withdrawer from our portfolio or we're accumulating by reinvesting dividends. >> one of the things we've seen headlines wise over the last few days is, you know, some changes in china, particularly when it comes to where companies can list, what the rules are going to be. the story ahead of didi's ipo had been, hey, bet on the strength of the chinese middle class and the growth of that but now it's unclear, isn't it, the degree to which u.s. investors, investors outside of china have access to make that bet. >> yeah, it's very unclear i do think that chairman xi is starting to rein in on a lot of the excesses happening in the ipo market and -- but i do think there's a lot of opportunity because of that you are seeing that many of these stocks in china have gone

down precipitously over the last few months during this change, but if it really is just -- having some oversight and things are going to go right back to normal china is 1.3, 1.4 billion people, lots of companies there that have gone public in the last few years that will do very well with that type of population and the growth that's been happening just from that. so i do think that even though you're seeing some down turn in the chinese stocks now, there's potentially a huge opportunity if this is just a blip and things go back to business as usual. >> is this more of an issue of who gets to make money at that come public moment and china wanting to bring that inhouse and maybe even perhaps impose, you know, do some arm twisting around the government's own access to data going forward in these companies? and then, you know, once the company is traded, it is pretty stable or is there a fundamental schchange in the value of, the companies

in the chinese market based on what's happening here? >> let's say it's the first thing you said, china wanting to control the entry into public markets. what's the limiting principle there? this is the problem in doing business with the communist party. the free enterprise principles cannot be assumed to be operating. it may be practicing mastically that they allow it to go but you can't take it for granted. that has to be into the risk premium. maybe that ends up undervaluing some of the companies and we've all seen the returns that people have made with aalibaba and tencent. i think this didi thing is a big deal you have to have priced in that you cannot trust a sovereign authority that regulates the issuer that has a lot of effect on how we treat it here in the new york stock exchange >> now but, mark, i got to separate what we believe is sort of morally and ethically right in a system and what the financial impacts are.

sometimes, you know, authoritarianism is very good for profitability and growth i hate to say it so what should investors do here when it comes to china, and maybe even reflect if you have thoughts on this, on what investors do with regulatory risk and legal risk around big tech in the u.s. very different, not saying the two things are equivalent, but in both cases it's government flexing to impose their will, perhaps, on companies. >> jon, you said it. risk, risk, risk a lot of risk going on in china right now. and so if you are a long-term investor, there could be a lot of reward there. but in the short term, you definitely have to be aware that the communist party of china can do things our government cannot. there's risk inherently involved in investing in any of those companies. and that part of the world so if you are a long-term investor and believe in the story these companies can't help but make money in that environment because of what they are providing with the service

they are providing, people are going to go back and start hailing cabs they'll use their apps and do whatever they need to do to get a package to their door. we have already crossed that bridge we're not going back chairman xi is eventually going to catch up and once that happens, i think there could be opportunity. how long that's going to take, god only knows >> and where do you want to put your money, how much do yo >> how much do you want to align that with your values. investors have to think about that thank you, mark smith and david benson now let's get a check on materials at this hour while most sectors are creating well off their lows, materials still down more than 1% today. that's an extension of recent weakness we've seen particularly among names that are exposed to volatility in commodity prices of the 11 sectors, materials is the furthest from its recent record down 8% from its may 17th all-time high. and today names across the board are selling off including the metals and mining stocks like

freeport and players like eastman, linde, sherwin williams also in the red. now coming up amazon's profits, handbags and janet yellen all those things converging in italy. next on "the exchange. it's another day. and anything could happen. it could be the day you welcome 1,200 guests and all their devices. or it could be the day there's a cyberthreat. get ready for it all with an advanced network

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a rally for big tech hit a speedbump today. amazon excluded. but a much bigger potential threat lies ahead. a new set of taxes in europe ylan mui with more on the delicate dance treasury secretary janet yellen will have to do at the g20 meeting >> reporter: treasury secretary janet yellen will be pushing her counterparts in italy this week to rewrite the rules for taxing big tech eight european countries implemented digital services taxes including france, great britain and italy. others are working on their own proposals with the eu expected to release one later on this month. the u.s. has not been happy about this and has responded with both carrots and sticks first, tariffs america has threatened to slap

25% tariffs on iconic goods like italian handbags and british bath salts those are currently on hold while the second part of this process plays out. building support for a global minimum tax of 15% already the oecd has gotten onboard with this. the g7 is behind it as well. now yellen will work to convince the g20 to agree right now only alphabet and microsoft have an effective tax rate that's more than 15%. amazon, apple, facebook, netflix pay less than that so it's possible that a global minimum tax could wind up hurting their bottom line. jon, facebook at least has said it would rather pay more in exchange for clear rules and certainty. back to you. >> yeah, that makes sense. certainty is so lacking, premium for these companies not just when it comes to taxes but when it comes to regulation and legal issues what's the interest of the u.s. here in fighting so hard for big

tech is it a sense that europe is looking to take more than others from these companies specifically because they're from the u.s.? >> yes, that's exactly right, jon. if anyone is going to tax these companies, it's going to be us they don't want europe to takes that tax revenue from them and they feel this is sort of unfair and that american companies are being singled out here amongst a broader landscape of large multinationals and so what yellen is pushing for is for all of these big companies, whether they're in tech or other lines of business to be looked at with the same set of rules, not just singling out the facebooks of the world. >> no one else will discipline my kid i'll take care of that at home i wonder how much the pandemic and economic recovery factors into this as well when you're talking about italian handbags and what italy has been going through. >> reporter: so part of the argument yellen is making for that second part of the process, the global minimum tax, this is needed to raise revenue to pay

for things like the pandemic when they come up. companies need -- countries need revenue right now in order to deal with these crises and to invest in some of the communities that have been left behind in the uneven recovery that we're seeing across the global stage >> ylan mui, thank you that will do it for "the exchange." "power lunch" with more on the markets including today's crypto collapse

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welcome to power lunch i'm bill griffith along with my pal. >> it's great to be back tyler mathison and kelly evans are off today. stocks are off their lows. from semis to financials, crypto treasuries, what's this market saying about what's happening next >> reopening risk. live nation, the ultimate recovery play. the ceo tells us with the rise of the delta variant could mean for his business and bucking the trend, money wi