state. with clean water becoming a scarce resource water is more valuable than it's been in decades and so are the companies that supply it. >> fascinating thanks that does it for us. but "power lunch" begins right now. welcome to "power lunch. this hour, volatility grips wall street as the market confusion creating new opportunities for investors. our guest has a stock picking strategy including names that might surprise you forging ahead. illumina closes the deal with grail. the ceo is here to explain. a perfect storm. the transportation sector hit. but only a few companies actually have pricing power. find out which ones do as the

inflation nation series continues. kelly? >> all right thank you very much. let's check on the markets the dow down 300 points at session lows and right now down 131 and tilted lower over the past hour or so. the s&p down fractionally. the nasdaq up 22 see if it can hang on to the green. over the past week the major ind indexes are all lower. there's a fast moving selloff into the close yesterday and thought at the opening today what's the cause of the volatility bob? >> hello this is largely about the covid variant and the uncertainty about the growth outlook the fed is part of it but you could see the stocks react to the covid variant. it's the cyclical sector having the biggest problems

energy continues to get clobbered as oil is dropping for a while. see chevron and eog and hess cabot oil and gas hit a 52 week low today. same thing with industrials and materials. another big deep cyclical part of the industrial cyclicals. material stocks have been hit rather notably in the last several days the consumer cyclical group, the travel stocks also on the weak side and all moving in tandem for a global story, a lack of growth story hitting the markets. and defensive sector doing well. consumer staples is back goes back and forth. costco, pepsi, health care is another group.

the leadership sector so far in the month of august. abbott, in particular the pharmaceutical group what i'm happy about and what the bulls are happy about is tech is holding up nvidia good numbers. new high or cisco and adobe. frank, what is going on is the market is repricing risk associated with the covid variant and so far it's tech holding up very well because that's a growth prospect defensive stocks doing well and stuff that are in front of the reopening are the ones having a problem. frank? >> bob pisani at the new york stock exchange the dollar climbing to a nine-month high. let's get to rick santelli tracking the action. what's up, rick? >> if we walk through the week and not including today with good data points the biggest

data point is retail sales must have worse than expected look at the dollar it's been rising since closing down friday. it wasn't data and what happened on monday and tuesday and wednesday? the fed minutes. growing acceptance whether it's delta strain or not we have adaptability here and seems a fall autumn taper many traders expect that's friendly for the greenback. we took out the spike high in july and the august spike high and talking about this slightly above 93 zoom, zoom, zoom back to halloween of last year and see the best levels since first days of november. and i don't suspect that this move is going to slow down much. it is more about looking where the reversals are and somewhat hold 93 for tomorrow's friday

close. high priority. what's going on with 10-year same week to date for 10s. what are they doing going into the fed? moving lower but if you open the chart up to the long view first quarter rates up second quarter drifted third quarter leveling off why? global supply issues limit the upside and where they trand. frank, back to you. >> appreciate it. next guest said the bull market future depends on the stimulus and whether or not it will continue. he looks for stocks with good fundamental. dave trader, thank you for being here. >> glad to be here thank you. >> we know the playing field is changing a bit with the fed saying that tapering could be coming later this year does that change your thesis with stocks with the fundamental story? >> i think there's a big flight

to quality that is imminent, not just on the institutional side but the retail side because whenever your investing strategy is based on momentum or meme stocks there's a vacuum, there's a desperate lack of an understanding of fundamentals because let's face it. nobody would invest in amc or gamestop would have because of fundamentals so it would be strong and severe and see the stocks unloved get a lot of capital. >> i know you pick stocks. disney and walmart drill in on walmart. seems like the idea is priced in to the stock only up 4% year to late. amazon tells us in the earnings people buy less stuff. what are you seeing to drive the stock higher knowing that people want to get out of the house and

even with the delta variant they want to travel more. >> the good thing is you don't talk about fancy marginal sort of things you don't need but it is the staples and a great price and scale and merchandising. walmart remains the best and most successful retailer in the world. the valuation is dirt cheap. trading as if the profits will decline by 30% we don't think that's the case amazon trying to build walmart-like stores is the validation walmart is dominant. i would submit to you it is cheaper to catch up online than brick and mortar so much of the theme around amazon was a capital efficient business so much faster and quicker not in the brick and mortar world where walmart already

dominates so you see walmart moving into a higher margin and amazon moving into a lower return on capital type of business walmart is priced cheaply. kind of a no-brainer in your opinion. >> i wonder if you would make the same analogy with disney netflix shares didn't go anywhere over the past year. >> no. netflix is still really expensive. this is a mismatch netflix is a featherweight and disney is a heavyweight champion of the world in original content creation and monetizing the content. netflix doesn't stand a chance in the long term heavyweight champion of the world and successful content original netflix is a one-trick pony. one punch. all they do is make money over streaming. disney has theme parks and

merchandise. it is an apples and oranges and the netflix narrative is beginning to unwind. trying to get into video games and a matter of time before that house of cards implodes. >> i think the pe is around 50 >> earnings are depressedwith the acquisition. covid knocked them back a little bit but that's temporary over the long term and cash flows m played by the current stock price i think it's close to 300 bucks taking into consideration content creation >> all right robinhood, you are very bearish on it. >> i don't know if the business can survive. people think it's an upstart and takes all the market share in the brokerage space but it is already priced to be bigger than

schwab right? that's what the current valuation applies and how many competitors they have, it is not just schwab and fidelity but against las vegas. against draftkings right? robinhood is a place for gamblers not investors. looking at the landscape of where gamblers are going and they admit there's less growth in the second half right? vegas is open. football is more fun to bet on than stocks. so yeah. i'm not sure we'll see robinhood not do anything but go down from here and a lot more from here. >> the shares are down almost 10% today. now we have to get the fantasy football picks i guess this is a company, frank, benefiting from crypto activity. given the caution that they project. we appreciate it today thank you. >> thank you. >> we appreciate it.

coming up, commodities crack. oil and copper slumps. are the bears firmly in control? an analyst says yes for now. and the ceo to explain why they took the rare step to disclose a deal despite opposition from the ftc. the stock is down sharply today. heading to break look at the stocks hitting 52-week highs they're holding up the markets back in a moment

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welcome back to "power lunch. a market flash on silicon chip designer and software security firm synopsis that beat expectations in its third quarter and raised the financial targets for the rest of the year the better than expected results triggered a slew of firms to raise the target prices on the stock including analysts at wells fargo and key bank that stock right now up 8.5% trading at record highs on pace for the largest daily percentage gain since april of 2020 kelly, $48 billion big. >> that's huge. meantime oil, copper and steel down big what's behind the momentdown earlier on "tech check" cathie

wood pointed to the delta variant, the fed and the rising dollar making materials less attractive. >> the third source of deflation which is really starting to come through now in a noticeable way started in mid-may when lumber prices broke we are seeing commodity price deflation. we have gone from -- lumber prices have been cut to one third, less than one third of their keep 17.11 to 400 rite now. you have copper down roughly 15%. you show have oil down 15% to 20%. i think the cream of the crop here and the reason this may be happening and may accelerate to the downside is the dollar is going up. >> our next guest cites more reasons declibehind the decline

ed, explain why the chinese situation is wreaking such havoc. >> it's kind of easy when you think about china being the largest commodity importing country in the world they have 50% of the copper that's traded. what happens in that economy will affect all commodity sectors. they also look at the price of things and they take actions to deal with them they like to buy low and not buy when prices are high and started getting oil out of the stockpile in june. and now ordered the independent refiners to not import oil to the degree they had in the past and no license to do so. some is government policy and some in terms of the reaction of the market is fear that the covid spread in china is going to derail the recovery. >> cathie wood pointed to the

crackdown on afterschool education, the heavy handedness they're using in china the flight of capital might be out of china in general and into things like the dollar and bitcoin and only higher dollar means lower prices as well how far are we through this move, do you think >> there's a reversal of the mood and had triggering the move is financial flows and see that on the oil side and copper if you look deep into it. on the oil side which is more transparent the low to short is 20 to 1 at the beginning of june and now fell through the average of the last five years which was about little under 7 to 1 and now obviously very, very short compared to wrhere it's been money is fickle. i think where this is overdone a bit. looking at lumber there's supply

chain issues at stake and supply chain issues in the auto industry we had an even on seal manufacturing impacting the price of iron ore and some is pure supply demand fundamentals. oil inventories is going down. we have no idea what opec plus will do when they meet september 1 about not only october exports but september ones they can cut back if they want to they don't like the way financial flows work against them in the marketplace. >> but bottom line you think people should be buying the dips >> absolutely. we are absolutely in favor of buying the dips on the oil and industrial metals. copper, aluminum in problem. there's obvious inventory issues at stake there. >> ed morse, thank you for joining us ahead here on "power lunch,"

a sector that could be considered ground zero for inflation. tight supply of truckers means less deliveries and could lead to higher stock prices for the big players. could climate change be playing a role to disrupt the global supply chain our diana olick breaks down the consequences when "powerun" tus. lch and want to make the right moves fast... get decision tech from fidelity. [ cellphone vibrates ] you'll get proactive alerts for market events before they happen... and insights on every buy and sell decision. with zero-commission online u.s. stock and etf trades. for smarter trading decisions, get decision tech from fidelity.

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welcome back i'm rahal solomon. several office buildings on capitol hill have been evacuated as police investigate an active bomb threat. a north carolina man is in custody according to nbc news. police say he drove a truck on to the sidewalk in front of the library of congress. >> the driver of the truck told the responding officer on the scene that he had a bomb and what appeared the officer said to be a detonator in the man's hand and immediately evacuated the nearby buildings two fully vaccinated u.s. senators are isolating after

testing positive for covid-19. roger wicker got a test after mild symptoms and andgus king felt mildly fever sh and caught the virus despite extensive precautions. the vaccine campaign in the u.s. may have prevented 140,000 deaths and 3 million cases through mid-may. there's a model to estimate what would have happened if no one was vapgted and the economic value of work productivity and spending is estimated between $625 billion and $1.4 trillion kelly? >> thank you very much. here's the check on markets. the dow down 150 cut the session lows in half and sit down with declines and the nasdaq joined negative territory. s&p down 3 time for the power movers.

victoria's secret trading again now down nearly 3% these are both heading in different directions victoria's secret lower. meanwhile bath and body works higher and optimistic about the fall and holiday lineup. finally citi reiterating the sell rating on amc how dare they? they're at 33. the firm says the stock is way overvalued and up about 1,000 percent this year. frank? we have seen it in covid supply change disruptions. experts say that's a drop in the bucket compared to the disruptions caused by climate change diana olick has a report on climate consequences >> reporter: wildfires in the

american west. flooding in europe and drought in south america are all disrupting supplies of everything from lumber to chocolate, veto rice. >> whether you are in the agricultural sector or the forestry sector or the tech sector there is really no particular sector that's immune from climate change. >> reporter: witness how the increase in named storms over the past three years extended the areas of disruption dramatically while this hurricane season is just getting started already there are climate disruptions. lumber canada announced that the western wild fires are significantly impacting the supply chain and our ability to transport product to market. as a result we are implementing short term production curtailments at the canadian saw mills. prolonged drought in brazil caused the price of coffee to nearly double in the last year and sushi rice

two thirds of america's is grown in california having water issues due both to drought and the wild fires workplace disruptions claused by climate change could lead to more than $2 trillion in productivity losses by 20. that experts say is why businesses need to be proactive. >> so that means being really innovative and creative and doing a lot of supply engagement that maybe you haven't done be before. >> reporter: students did a study on mint for colgate and recommended the company engage in risk mitigation beyond its current five-year horizon moving to a 20-year plan. another example, apple has pledged to cut emissions from the supply to net zero by 2030. >> this means they take a hard look at the supply chain partners to find ways to cut the emissions that they generate but in doing so they're also

dramatically lowering the risk to disruptions in the energy supply for example. >> reporter: the top strategies to mitigate risk are called bridging and buffering, that is bridging the gap to make sure communication is strong and then buffering current supplies, having some amount of supplies in reserve as a buffer and suppliers should the main ones fail back to you guys. >> sounds like a real estate angle maybe for warehousing? >> reporter: yeah. it could be another boon for real estate after we saw what happened in e-commerce companies looking for space to store supplies to mitigate the disruptions. some things have a shelf life but you could see demand for warehouses because of climate change. >> great report. eye popping numbers.

warehouses numbers doubling. thank you. check out shares of illum irna they buy grail without ftc or eu 'lproval wel speak to the ceo about that after the break millions of vulnerable americans struggle to get reliable transportation to their medical appointments. that's why i started medhaul. citi launched the impact fund to invest in both women and entrepreneurs of color like me, so i can realize my vision and give everything i've got to my company, and my community. i got you. for the love of people. for the love of community. for the love of progress.

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welcome back to "power lunch. crude lower again. the oil market is closing for the day. let's go to pippa stevens. >> again is right because oil is now down for the sixth straight session, the longest losing streak since february of 2020. essentially crude is hit from all directions the dollar is stronger making oil more expensive concerns about the demand outlook as covid cases rise. u.s. output and data showed a surprise build in gasoline stocks so head winds here. wti at $63.63 for a loss of 2.8% earlier it had been down more than 4% sinking to the lowest level since may.

brent crude at $66.43. we have talked about the rally in the first half of the year but that's stalled back in july wti hit $7 6.98 fast forward to today and it traded as low as $62.41. so that is a 19% decline over just a matter of weeks. >> wow round it up to 20. almost a bear market thank you very much. meantime shares of illumina on pace for a biggest drop in a year the company completing the acquisition of grail the asterisk on it is that they closed it despite a pending legal challenge and anti-trust concerns in europe why move forward with us now is ceo francis desouza. welcome and the back story is so interesting. the company was spun out in

2016 now trying to bring it back in what is going on here? >> yeah. let's start with what we do and grail does we provide the machines to do genomic sequencing we tell you the dna are in there. we fight the pandemic so a lot of news you see about the new variants emerging the sequencing of that virus is a lot done on our machines and cancer diagnosing so we're a leader in providing genomic sequencing solutions we invented the technology that grail uses way back in our labs where we first started to see genomic bio markers in blood for cancer and knew that could be a very big discovery to help improve the sir vooifability for people with cancer so in 2016 we spun the technology out to raise

the $2 billion to do the large clinical studies to develop that test that test came out on to the market earlier in june and it's a blood test, simple blood draw that looks for 50 cancers across all stages in your blood that's a really big step forward in the fight against cancer. 10 million people a year die of cancer and if you catch it early the odds to survive is higher than later so we want to scale access to this test. make it broadly available. help get reimbursement for the test and make it available to the people. >> the stock is around 460 the analyst community seems concerned. reduced the price target to 425 from 510 what are the concerns that u.s. or european officials would have here >> so currently working through

the regulatory review process. there is a review to work on with the european commission there really isn't any obstacle to closing the deal in the u.s we are working with a review in the ftc and not an obstacle to us closing here in the u.s. right now. this is the process with the european commission. so where we are with that process is we expect a decision from the european review process to come in initially expected to come in end of this year and looks like q1 of next year and two processes under way. one is a regulatory review process. phase two where the process comes in in q2 and challenging the jurisdiction of the european commission to look at the deal grail has no business in europe at all and no plans to get into europe in the next few years and challenging the jurisdiction of the european commission to look at the deals

both decisions are expected in q1 and the deal expires january 20th and we closed the acquisition and holding it separate until we get the decisions from the european commission in q1. >> francis, i'm going to touch on the analyst reaction as well called a maverick move this is not a term i associate with bio tech. cases of cancer on the rise in 2021 they do need diagnosis but cue mar said this is the potential for more problems than solutions. just with the nature of grail why not create a partnership why go through the effort with these concerns >> yeah. today the grail test is available and costs about $1,000 for the blood test and a part of the population to take advantage of that test but a lot of the population just can't take advantage of a test costing $1,000 each time and we want to

help grail by distributing it more broadly and working to get reimbursement. we have a team that's been working to get reimbursement for genomic tests over eight years now and the work around the world has gotten reimbursement over 1 billion people for a variety of tests so we want to distribute the test more broadly so make it available around the u.s. and we have products in over 140 countries around the world. so we can make the test available more broadly scale it up more quickly with production labs around the world and work on getting reimbursement. we couldn't just license the technology we need grail to talk advantage of the different parts at illumina and looking at the path forward we wanted to make sure that the deal had a day in court and was reviewed and we got to a

decision and not made by just the deal timing out on december 20th given how many lives could be saved buying grail and accelerate reimbursement in the u.s. by a year over 10,000 american lives could be saved and felt a moral obligation to do what we could to make sure that the deal got heard and got to a decision and the way to do that then is grail and held it separate to still get the decision in q1 and then be able to move forward. >> this is a life saving technology potentially and enpe enpensive. will you reduce the cost of it does that mean that the price decreases are also on the way. >> absolutely something we'll work on. what we do is very actively drive the cost of sequencing down through technology and

innovation when we first launched in 2007 the price of doing a single genome is $150,000 fast forward now 14 years later. we brought the price down from $150,000 to $6,000 a genome. that's what we do. we want to make you gnomics accessible to everyone with innovation to aggressively drive the cost down. we want to drive the costs down from grail from the $1,000 test it is today and work with insurance companies so there's reimbursement in place to be available to everyone and more available geographically across the u.s. and looking at the plans of grail they will offer it in u.s., canada and uk only we know when access is restricted to certain countries and want to broaden that we want to make the test

available across europe and asia and africa and latin america and that saves lives. >> all right we'll have to check back with you to see about the price movements. we appreciate your time. do investors dream of an electric deer? while they're on the hunt to build out the robotics business and what it means. plus musk versus machine tesla ceo warned about the dangers of artificial intelligence and holding an ai day anyway those deilwh "wetas enpor lunch" returns.

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welcome back to "power lunch. i'm seema mo do. agriculture giant deere doubling down on robots and technology acquiring bear flag maker of autonomous tractors. there's investment in big tech, a key focus of earnings tomorrow do you buy, sell or hold the stock? ask the team todd gordon and danielle shay.

todd, john deere continues to outspend on big tech, autonomous, artificial intelligence is that alone a reason to own deere versus the other industrials? >> i think as you said the investment in technology will impact free cash flows from a valuation point of view maybe not right now but also a macro sensitive name and showing an interesting correlation so as commodities have come off here and seeing the move from inflation, disinflation, possibly deflation you see john deere move lower i think we are topping we have a sharp decline heading in the threat of this temper -- this -- i can't say it taper tantrum and dollar is breaking higher from a big range and as cathie wood said probably

a result of china and jay powell will have to relent on the threat to taper. but can't do so immediately because he can't walk that back right away so moving lower for macroreasons fundamental and not 5% before you add it to the portfolio. maybe above $315 18 times next year earnings. right now fair valuation. >> there's a lot to understand as an investor danielle, over to you. deere is an outperformer but trading 10% off the recent high. what do you do with the stock? >> i love john deere bullish the company and especially looking at the last eight quarters six of the last seven quarters john deere traded higher after earnings smashed estimates the past couple quarters and especially on a thursday going into friday trading this in the options

market is prime time what i'm doing is selling put credit spreads just looking for selling the premium today. buying it back tomorrow and ideally pops on earnings and can buy back the spreads for a nice profit >> yeah. does tend to be a big mover on the day of earnings. great stuff. danielle and todd, thank you you can head to our website or follow us on twitter. >> thank you. inflation nation, the trucking industry seeing the influx we'll speak to a top annalyst about that next. now the latest from trading nation.cnbc.com and a word from our sponsor.

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welcome back to prourch. oil closed at three-month lows we look at what's driving shipping costs never more expensive to goods around the world and working out from backlogs and keep up with consumer demand who is best prepared to pass on the costs to their customers? joining me now is davider have mono.here. >> thanks for having me. supply chain is a very broad term what areas right now, in your opinion, supply change, trucking, rails, intermossal, whatever it may be, for example, back-to-school shopping 40% higher, and which has continued pricing power? >> yeah, if you're looking for the underlying driver in all of this, i think it's the global economic getting caught

wrong wrong-footed. >> out of initial, the ways of covid. that led a lot of manufacturers to pull back on production capacity it took away a bunch of manufacturing capacity, transfer capacity, and then as consumers kept buying, we just ended up in a situation where there wasn't enough capacity for goods around the world. you think about international markets, the closer of passengers airline networks, combined with just a huge amount of demand for goods, has driven air freight rates to high levels ocean freight rates, again, it's about trying to fin containers through, and that's just forcing rates to go up and up and up using your bigger retailers are paying for that, but you definitely have a lot of upward pressure across the chain. as far as who will being pass this there to their customers

transport industries are in a guilt position i think broadly speaking, transport carriers will be able to push through the higher costs. the best position would probably be the railroads just they have a more limited amount of cost pressure to go, compared to the higher freight rates. >> very interesting. railroads with better pricing power. generally people go to the rails because they're cheaper, but with trucking, 80% of supply chain spend globally for companies just trying to get things to where they have to go. i spoke to the ceo of knight swift, he doesn't see the rates going down anytime soon, maybe not even under the spread of 2022 why don't trucking companies have more pricing power, and why haven't investors piled into those? >> i think the truckers will be able to push rates through, right? they ultimately have the power of just hanging up the found if

a customer doesn't, in for a can't they're in a very good spot i think investors have a heart time capitalizing that, because at the end of the day, if rates go up, more capacity comes in, you're going to see the other side of that pricing environment pretty quickly in some of the truckers i would say that the better well-capitalized company like knight, are in a good position with respect to where rates ar going, because they will not be dealing with the same challenges and being ability to quickly balance out bigger network i think bigger companies will be in a much better position. >> we're almost out of time. really quick, dow transports trading down today, a lot of our transports trading down. why are they ever trading down we know there's piled-up demand. very quickly, why would you not bet on transports right near >> more bullish than bearish,

but we're in a weird time in the summer months. i think you have a situation where traditional -- i looking at -- too good to be attend into next year, so there's a reluctance about buying in at a peak rate level. >> i think you do have the market trying to figure out and discount when we'll get on the other side of this rate environment, and not want to be sitting nin a position where you -- it's going to say hard for them to hold this great environment. >> david, from bernstein, thank you. we appreciate your insight. >> all right thanks for having me despite not being a fan of a.i., elon musk is planning an a.i. day at tesla. we'll have the details when "power lunch" returns.

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you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today. a.i. more recently, he said all the organizations developing advanced a.i. should regulated may because of hi harsh words, they're hosting an a.i. day. phil lebeau is hoar to explain. >> artificial intelligence has

long been a big part of what elon musk has used to help grow tesla, and the technology that drives the tesla vehicles. what can we expect today a couple areas of primary focus, autopilot, they've been using artificial intelligence to refine it. remember, there is no full self-driving technology yet. they're still level 2 autonomous vehicle technology, but they've been improving it. this is a camera-based system, all of that's fed into refinement of the software that goes into the system they're also using artificial intelligence to improve the manufacturing process. there's a lot of robots this a manufacturing facilities, and that is not by design. they've been using the robots to help refine the process to be more efficient that efficiency is a big part of

tesla's success. for elon musk, yes, he has warned about artificial intelligence going unchecked that doesn't mean he believes there should be no use of artificial intelligence. tonight, when they have their present ache what the analysts are expecting is to say this is how we're using it, this is where we're going with it, and this is why we believe we're a leader incorporated a.i., it will be interesting to see what they have to say. guys >> it's frank holland may be a skeptic. cathie wood is not someone like tesla, his evaluation is predicated on that. >> phil, you're more requested to answer this, but a car that fully all ton muss seems more like ill more likely i think last quarter cars on a digital network. fully a.i., is that even

possible in the next decade? >> yes, but it's not something you'll see in the next year. if you hear him make a grand promise, remember, he also promised a million robo-taxes by 2020 >> thank you both. >> always a pleasure. thank you for watching "power lunch." "closing bell" starts right now. >> thank up, kelly and frank welcome to "closing bell." i'm sara eisen here at the new york stock exchange. seesaw day here on wall street the nasdaq is the relative outperformer while small tex take an leg lower. and let's get to what is driving the action today goldman sachs slashing the gdp target for the third quarter earnings remain in focus wit