[ laughter ] >> all right, jenny? >> naviat announced that they wouldn't service federal student loans anymore. it was totally misunderstood stocks down 15% since then now you get to buy it at four times earnings with a 3.4% dividend yield >> thank you guys. thanks very much for watching as well "the exchange" begins right now. ♪ thank you very much, scott hi, everybody. i'm kelly evans and here's what's ahead this hour stocks are rallying big time today as dc drama lifts. the dow has surged 1,000 points from yesterday's low but what happens come december when we have to raise the debt limit again? and soaring energy prices are typically thought of as a threat to the economy, but things have changed a little bit. we'll get into the real nitty-gritty details and talk about who will bear the brunt of these price spikes we're going around the world to show you exactly what's

happening with a hot holiday toy that made it all the way around the world. but first let's get you the numbers behind this big rally. >> positive for the week for the people keeping track at home, the nasdaq has been a huge focus for the trade, of course, since the volatility really started and certainly since the fall from record highs right now the dow industrials are up about 506 points. at the session highs up roughly 558. so we're very close to those session highs. the s&p 500 up about 1.5%. 61 handles, 4424 the last trade there. and the nasdaq composite, yes that, epicenter of this volatility trade is 147043 about one and 2/3. we are only about 4% below record high levels for the nasdaq composite so, does this sentiment shift now given the pricing after

we've seen that remains to be seen every one of the sectors behind me is in positive territory. lead up about 2% consumer discretionary up about 1 3/4% the laggards, if you want to call them that, utilities more defensive side of things and real estate, only energy's up about three-quarters of 1% what this is showing us over the last week, pay attention to the trade from mega cap technology and communication services over this one-week-to-date period, it has done pretty well. it's undecently. but the stocks that have really outperformed and bounced the most since the lows are those so-called value cyclical stocks. we're talking industrials, transportation, energy, materials-type names they have done much better than mega cap technologies. so, kelly, some traders and investors are looking to see whether or not that kind of trade, which powered the markets to record highs earlier this year remains that point that could power things again if

things do really kind of start to bounce off these levels, kel. i'll send things back over to you. >> dom, thank you very much. that thousand-point rally attributed to the tenuous debt deals. the vote is expected later today. let's get down to ylan mui for the very latest. ylan >> reporter: we do have a deal now we just need to vote republicans and democrats have agreed to raise the debt ceiling by $480 billion, which the treasury department expects will last through around december the 3rd. now, senate minority leader mitch mcconnell constructed this exit ramp after the two parties spent weeks at loggerheads but mcconnell said the negotiations continued in good faith through the night. >> the majority didn't have a plan to prevent default, so we stepped forward. the pathway our democratic colleagues have accepted will spare the american people any near-term crisis >> democrats have already begun the process of bringing this

bill to the floor. the vote could happen as soon as today if all 100 senators agreed to speed up its passage. it also still needs to clear the house which is in recess before it goes to the president's desk for his signature. but this fight is not over yet, kelly. it's just on pause until december the new deadline for the debt limit is also the same day that funding for the government runs out. so we could be right back where we started in just a couple of weeks. kelly? >> oh, goody, ylan, thank you very much. the dow is now on pats for its highest close in nearly a month. my next guest says that's a good thing, she's finding opportunities and semiconductors we have the chief investment officer at bokeh capital partners kim, welcome back. >> hi. thanks for having me >> i kind of want to zero in on the semiconductors in particular he sees overshipment problems maybe starting in autos and pcs,

micron i know is a little bit different story. but they're well down from their spring highs the semiconductor smh is still pretty close to its all-time highs. what are the macro trends do you see there? and which are the stocks that you think people should be holding? >> sure. so, the future is tech i mean, i hate to keep harping on this. but it is the thing that gives people productivity. and we have falling populations around the world and how are we going to power our way through this well, we're going to have technology take over for missing people we'll just put it that way but that's way in the future for the next three to five years what we're looking at is 5g and its rollout. and, more importantly, it's probably going to spur internet of things. now we've heard about this about companies that want to maybe monitor remote locations, and 5g is going to give them the ability to do that so those two things alone, we

think, are going to just ramp up the demand for semiconductors even past what we know today >> all right so, that being said for people who are worried that the cycle is turning that we're going to see shortages turn into gluts, is that something you recognize could be a near-term headwind? >> from everything off that i read and see, i think we're a couple years off from that point. plus, we think demand is just going to continue to ramp. some of the demand or the supply issues that we've seen are from covid and, you know, the whole supply chain issues. but i strongly believe some of this would have surprised the manufacturers anyhow if you look at how much computing power is in an average automobile, i don't think that the whole supply chain was taking that into consideration because it was only in luxury vehicles, and now it's in more

affordable cars. and we just see this continuing, not just from demand but from, as cars go to ev away from gas engines. it's only going to drive more semiconductors that's what drives those cars. >> all right so we're showing micron, again, a pick of yours. where else we talked about some of the choppiness lately. what are some of the other stocks you think people should be looking at here >> well, away from semiconductors or in the semiconductor area >> both and, if you want >> well, i think xilinx is really underrated. it is being bought by amd. and we would certainly hold that and own amd kind of through this back door of xilinx. if you have a longer-term time line, look at consumer discretionary. yes, it's ramped up a little bit, but it's well off its highs earlier this year. i'm not naive, i do believe that they are going to have some

supply chain issues. but it may be a good time to look at some names that you want to own and start adding to your portfolio. >> vf corp urban outfitters, why those two? >> yep they both really know their customers well, and they've been doing it for a really long time. fashion is so tough. and that's what we're really talking about here and both of these companies have shown that they know how to pick the fashions people want to wear time and time again. and they do it in a really great way because a lot of their, well, vf corp, of course, they're making the fashions. but a lot of the product that the urban outfitters retailer sells is its in-house brands and they do that well and their margins are a little bit better than other discretionary retailers in the same space. >> all right, kim, it's always good to check in with you. thanks for your time today >> thank you meanwhile, the september jobs report is out tomorrow morning, the first one since the enhanced federal unemployment benefits ended

a recent survey showed job announcements surging to the highest level in 17 years. with a surge in permanent job openings as well at what's typically a seasonable high of year candidate sentiment, which measures how open people are to new roles, that increased for the first time in a new year and recruiters now have a record number of positions to fill. joining me is the ceo of recruiter.com. i'm surprised that candidate sentiment is only increasing for the first time in a year because we have all these stories about high quits rate and yolo so could you unpack that for me? >> yeah. well, first off, kelly, thank you so much for having me again to talk about recruiter index. and, yes, candidate sentiment is up for the first time since november 20. we've been talking about it. it's a candidates market and it still is a candidates market i think the great resignation is really upon us companies are really adjusting we saw hybrid roles jump to near

42% of what the recruiters are working on now that is now past remote work or in-person work only. compensation in terms of a priority is only 31% of the total priorities for a candidate. so we're really seeing candidates now and i think companies and we talked a few months ago about companies adjusting to these candidates and i think they're finally catching up. >> it almost feels to me like that can't be true, like when push comes to shove, evan, will people always take more money? it's amazing to say compensation is only 31% in terms of kind of the most important categories they're evaluating >> yeah, look. i don't want to say anything about millennials, but new experiences are actually getting increasing month over month. work/life balance is increasing month over month there are certain other elements there. and clearly compensation has to be part of it because we're actually seeing salaries increase month over month as well so, i think all these factors, it's not an either/are it's really an and/both.

and you mentioned before we're really seeing a soaring demand for recruiters, just companies now, they need both more candidates, they need more tools to find more candidates, and then more recruiters to work those candidates and i think if we think about it at a macro level, it's much, much easier to interview for a job now. so, you're going to see candidates look around for the job that's going to give the best experience, the best work/life balance, whether it's a hybrid role and compensation, and since it's easier to interview because we're using all this digital technology, you need more candidates in your pipeline in order to find those candidates and i think that's really causing a serious surge in the demand for recruiters. >> so as we think about, you know, tomorrow's numbers and what that might look like, one of the narratives has been that, you know, companies want to hire more than they can, and that's been putting the brakes on hiring, to some extent is that true

kim last segment was talking about how technology's going to replace people in some areas like trucking you feel like that has to be true if they literally cannot get enough people to move stuff around the country, at some point autonomous is going to have to step in or some other way of filling that gap what does it look like for you in terms of the ability to fill these roles ultimately it's great that there's a lot of candidates, it's great that there's a lot of openings, but at the end of the day are positions getting filled >> great question. we always say that the number that we report on or the number that's going to be reported on tomorrow are the net new jobs. we actually saw a surge, we've been tracking this for three months now of the roles, are they new roles or backfill roles. last month it was up from 40% the prior month, now it's 50%. 50% of the roles that the recruiters are working on are actually backfill instead of new. clients are not hiring fast enough to account for this churn. and that's why we really think this great resignation is really upon us.

>> that's very, very interesting. and i think you would agree from your point of view positive for hiring trends in the next couple months >> absolutely. and, again, it's positive for hiring trends, but we're seeing backfill really taking a bigger role than new jobs so really keeping up with those roles that the companies need to handle, not just to expand but to really backfill the overall roles themselves >> absolutely. thanks, evan, so much for the granularity. coming up, a spike in crude, a surge in nat gas and gasoline itself cost nearly 50% more than it did a year ago. but we'll look at why all these increases may not spill disaster for the economy and where they do hit really hard plus, we have global team coverage of the broken supply chain, starting with factories in china to the ships, trucks and trains here. we'll show you every step of the way. >> this is "the exchange" on cnbc

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welcome back, everybody. keeping a close eye on wti crude. they're near a seven-year high around $78 a barrel. it's up 1% today and the surge in global energy prices is having ripple effects through the u.s. economy still, not to the extent that many people may think. steve liesman is here to explain. steve? >> hey, kelly. good afternoon the surge in energy prices will hurt low-income americans and

zap money from other spending and it's going to drive inflation higher when inflation's already a problem. with so much u.s. energy production, this price hike is going to hit the economy in a very different way from other ones nancy lazar writes, soaring energy prices are no longer blanket bad news for the u.s. economy. gdp and all prices now have a tiny positive correlation. u.s. oil production is off its high of 13 million barrels a day. that's part of the reason for higher prices. but it's still 11.5 million and production is up in the last week as prices rise domestic producers should increase production and capital spending. that will boost growth americans now spend about 3% of their disposable income on energy a lot of them think it's 50% but it's not it was 8.5 in the mid-'70s nearly 5% for much of this century. they hurt poor people the most much more than wealthy people. michael england of action economics writes, this isn't

good news for households it'll hurt spending on other goods, it affects christmas sales and department store sales at the margin. we now have an energy economy the size of saudi arabia inside the u.s. larger prices bring higher offsets >> thank you very much, steve liesman with some of the details there. my maximum guest says the spike in natural gas makes shares an attractive opportunity joining me is the chief investment officer and portfolio manager of hennessy gas utility fund ryan, it's great to have you so, explain to me why utilities are financially benefitting from these prices >> sure. well, thanks for having me i appreciate it. i think one of the first things to remember, and steve touched on this is that the price of the commodity, the price of natural gas, the price of producing electricity is a pass-through to customers ultimately and so these utilities through

the regulatory process, they're there to deliver energy to the customer they take a fee, they're toll-takers for moving that energy to the customer, but ultimately the cost itself is passed onto the customer so, we think that on a year-to-year basis it's really weather that mostly drives the spike in demand for these companies. this year we've had a 17% warmer than normal year so far from electricity generation for a lot of electric utilities. they've been producing a lot more electricity to keep our ac running. and we think that, you know, this spike in natural gas prices is going to hurt this winter but this is a very resilient industry and in the past when we've had these types of movements, we've also seen production come back online as well >> exactly you have holdings on the

production and utility side. on the -- with a name leek shneer, tell me how long you think prices are going to stay up here. what happens for people who might be looking at a shneer with prices around $6? are we going to see prices back in the $4 range? >> one thing to remember, cheniere ships around the world. right now natural gas is around. over in asia and also in europe they've hit close to 40 almost so, that is the spread that's really driving all this is that the rest of the world wants our natural gas. besides ida taking things down for a little bit, we are absolutely at peak capacity right now moving natural gas out of the country this is all very good for

cheniere it's just creating a whole lot of cash for the company right now. they've been waiting for a long time for this, and i think that it's probably going to go on for quite some time for them >> because you think natural gas is complementary to renewable features and cop 26 is going to highlight china trying to reduce its usage of coal. but can they stay this high? look at what happened yesterday when russia said it would start to put more supply back online >> they'll probably come back down and one of the things that we recognize here, this is a short-term disruption in many ways for various reasons but, you know, the rest of the world has -- not the rest of the world, but many parts of europe has absolutely gone to natural gas as the transition fuel from a pure fossil fuel-type energy economy to someday a much more 70%, 80% or higher renewable

type energy complex. and so right now i think we're in a little bit of a bind where a lot of countries have moved too fast too far, and everyone wants natural gas. china is worried about blackouts this winter. they want to keep production up. they need energy they're going to keep buying no matter what the price, i think, for quite some time until they can really fill up some of their energy reserves. >> so last question for investors who have been burned by the past decade of low natural gas prices and that being true maybe with oil as well tell them why you think maybe this time will be different, or is it going to be different for the u.s. is it only that sort of gap between what the rest of the world has to pay that is creating the investment opportunities? and, again, you mentioned cheniere you also like kendra morgan. you like atmos and duke. >> that's really why focus more is the prices of natural gas will come and go i think that this is -- i think that we'll come back down here

from where we are. i don't think this is going to stay up at $6 for the next two or three years because production will come back online but i think it's the utilities, it's the descristribution compa and companies that really work on volumes it's the electric utilities that we're in a situation where i think that we're in the beginning innings of having to expand our grid immensely over the next 30 years. so, all those together mean that it's gross for the industry, gross for utilities. and our long-term growth rates are probably pretty low in what we think these companies can do. >> very interesting after i think maybe a decade plus of not increasing electricity demand, maybe a 25% total need if we all start driving evs. ryan, thanks for your time we really appreciate breaking down some of the ways investors should play this coming up, warren buffet's right-hand man is doubling down on a bet in china. we'll tell you the name and how

much he's buying plus, we'll show you every piece of the broken global supply chain, to the chinese factory floor to the logistics nightmare that every company is facing to keep their shelves stocked. stay with us t fully autonomous vehicle is almost at the finish line today we're going to fine tune the dynamic braking system whoo, what a ride! i invested in invesco qqq a fund that invests in the innovators of the nasdaq 100 like you you don't have to be a deep learning engineer to help make the world a smarter place does this come in blue? become an agent of innovation with invesco qqq

welcome back to "the exchange," everybody dow's up 504 points, just about 50 points off session highs. about a 1 1/2% gain. let's check on the sectors here are some of the -- i'm sorry, let's stay with the sectors for a moment the materials are in the lead, consumer discretionary up there

as well. pretty much everything behind me is up more than 1% now let's talk about some of the movers a diverse group at the top of the s&p today. we've got freeport, penn national, ford, and pvh. it's a similar picture with dow. united health, the industrial dow, walgreens and cisco and the chinese tech stocks are leading the nasdaq we'll have more on the drivers behind this move in just a moment but look at where china etf is bouncing 7% today. what's not working pinnacle west sliding to a new 52-week low after a double downgrade to sell at guggenheim. the analyst there furiously says regulators are dropping the ball phoenix really interesting story, smiledirect down 4%

kellogg and live nation as well. now to kristina partsinevelos for our cnbc update. >> here is what is happening at this hour. at least 17 people have been injured in today's earthquake centered near tokyo. at least one is seriously hurt video from the top of a high-rise building shows a shaky view of the tokyo skyline. train and subway service was halted one commuter train partially derail when did it made an emergency stop officials say there is no major damage or risk of a tsunami. in alabama, the death toll from flash flooding has risen to four, all occurred when water swept away vehicles, as much as 13 inches of rain fell in parts of the state ibm says all u.s. employees must get vaccinated by december 8th or be suspended without pay. the company says it will consider medical and religious exemptions and san francisco says it will ease mask wearing

kelly, there are the updates for you. i'll send it back to you in the studio >> kristina, thank you very much still ahead, retailers have been warning consumers to start their holiday shopping early this year as the global supply chain is still backed up up next, we're going around the world to track one hot holiday toy's long journey from china to the store shelf in new england stay with us commercial real estate exchange. you see it. you want it. you ten-x it. it's that fast. if i could, i'd ten-x everything. like... uh... these salads. or these sandwiches... ten-x does the same thing, but with buildings. sweet. oh no, he wasn't... oh, actually... that looks pretty good. see it. want it. ten-x it. yum!

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on "closing bell," the road ahead for tesla. what a top analyst will be watching for and elon musk's message to shareholders. today 3:00 p.m. eastern, watch or listen live on the cnbc app ♪ welcome back, everybody. supply chain issues have been plaguing retailers large and small since the pandemic began today we're tracing one toy's journey from manufacturer to consumer its basic fund's iconic carebear we've got four reporters thousands of miles apart covering her trip. we have eunice in shanghai jane wells is at the port of los angeles. i think she's literally in a boat right now where a record number of cargo shops are backed up and we'll finish in the massachusetts toy store with courtney reagan who will tell us just how much of the journey's cost will be passed along to shoppers eunice, kick us off. >> reporter: thanks, kelly

well, before our carebear heads to the u.s., it stops here at the shanghai port. they are manufactured at a factory in the central chinese city, a stronger yuan, rising wages mean that the costs to make the bear is up 25% since january. the carebears sit in boxes for another one to two months at the factory compared to zero waiting time before the pandemic and then once the factory gets the green light that there's space for care bears on a container vessel, they are transported here to the shanghai port but even here they face several challenges beijing has a strict protocol of covid. even one case of covid can trigger a 14-day shutdown at a dock so ships here are waiting on average three to four days truckers are lining up at some of the big warehouses for up to 40 hours makes life very difficult for these workers. it raises costs for all the

manufacturers. in fact, once the carebear leaves a factory, it could take another 20 days or so before it reaches a u.s. port like l.a kelly? >> so, eunice, you would say that the problem is both with how quickly it can be made that's taking a lot longer and then even how quickly once it is made it can leave and get exported from china? >> yeah, absolutely. a lot of the -- most of the waiting time, though, is waiting for one of those ships to be able to loosen up space so that they could getthose carebears onto those vessels heading to the united states. >> all right, eunice, thank you so much. so, again, eunice is in shanghai with the bears' early -- with its birth story there. when it leaves china it has to get through the port of los angeles. and that's where we find our jane wells today jane >> reporter: hey, kelly. that ship right behind me only has walmart containers on it that shows you how some of these big companies are chartering their own ships.

most importers have originally for a while been baking in an extra four weeks a reporter last night said weeks? think months he was originally paying $2,400 for a container. that's now up to 7,000 and, look, the people here at the ports say these ships have to be out here for ten days before they can get an appointment to be unloaded if you look at the port they can't unload these containers until they have trucks to remove the hundreds of thousands of containers there but there aren't enough truckers, there aren't enough chassis. and the warehouses are full. >> i've had one company call me about finding a warehouse in china and not shipping, you know, almost a hundred containers out and instead storing them in china and waiting through this season. everybody's looking for some kind of a solution >> and i want to show you this full screen from marine traffic,

those green squares are container ships that are here right now. and i should also add, kelly, the coast guard is continuing to investigate whether maybe an anchor was involved in the big oil spill we had here. back to you. >> i was wondering because we keep seeing all of these -- okay, if an anchor was dragged along, is that because there's more ships out there than normal so it was interesting, eunice said the real problem in china is getting it exported on a ship and now you're telling me the real problem with getting it imported on a ship is the shortage of truckers, right? >> yeah. you broke up a little bit. yeah, the problem here is as the port of l.a. director says, it's like ten lanes of freeway going into five. it's upstream, if you will it's the warehouses, they're full and, in fact, you'll hear frank talk about a lot of stuff isn't even going inland because they won't take it anymore. >> right it's like each stage is being held up by problems at the next stage. still extraordinary, jane, to have you out there on a boat really bringing that to us

firsthand. we really appreciate it. so half of the carebears that do get to come into l.a. destined for the east coast are then shipped by rail to the midwest where a transfer station puts them on a trip for the final leg of their trip. frank has a look at the backlogs there. frank? >> reporter: hey there, kelly. the top lanes for shipping containers have seen their rates more than double since 2019. a busy day here at this shipping yard in suburban chicago all of the rails use the chicago area as a key transfer point for containers that are heading east of the mississippi take a look. this is drone footage that really illustrates how these transfer points have turned into de facto storage facilities because of a shortage of workers and equipment and even a shortage of truck drivers. csx is investing in additional storage to try to break up the

logjam >> in a terminal like this is neither designed for nor has the physical capacity really to serve as a long-term storage facility during times of high volume >> the result? they have declined very sharply largely because retailers and other shippers turn to trucks as they race to get their goods into stores during the holiday season trucking rates are 91% higher than they were back in 2019, often making the trip more expensive and taking it longer to get things like carebears onto store shelves >> wow so, i guess, frank, the thing to understand here is that there is a trucking problem, and it seems to me that demand for these goods just snapped back before the supply chain was able to deal with it or is it that the volume itself is higher than they've ever had to deal with before? >> well, it's a multifaceted problem. but here in these kind of container yards, one of the

biggest things is the lack of chassis the truckers use to ship these containers away. there's a shortage of those due to a number of factors including the trade war and also u.s. makers trying to ramp back up. but either way you cut it, there's a shortage people are also holding onto them longer. before the use time for a chasi was about three days now it's more than a week. the ones that are out there are getting held longer and longer because of delays at ports and delays at transfer points like this >> a shortage of chassis, oh, my gosh thank you, frank we so much appreciate it all right. so now that carebear has finally arrived at her destination, a toy store in massachusetts, courtney reagan is telling us just how much customers can expect to pay for her trip even if they can buy one. >> so when you put all of this together, basically it's taking twice as long to get a product like this carebear from the factory in china to this

learning express store in bedford, massachusetts and it's costing the toymaker basic fund about 620% more than it did prepandemic to make that journey. which means that up to a quarter of the care bear's cost is just transportation alone >> we're adding a freight surcharge at the end of the invoice. and the retailer will have to determine whether they incorporate that into their selling price of the goods and raise the price a little bit or they absorb that >> i mean, this is just a very difficult problem, of course, as you can understand this toy store is selling the care bears for $16.99. they say that they have enough inventory for now. >> we've been very fortunate that our vendor partners have not increased their prices substantially. so we've been able to maintain our existing prices pretty well

throughout the store but the supply chain issues are very real. we are seeing that it's taking weeks to months to get product into the store so we encourage you to buy now if you see something, a gift that you want to give to someone this christmas >> so, while the care bear is expected to be one of those hot items for christmas, and it is here, there are items that are also supposed to be hot items featured in fact in this toy store's christmas catalog. and they haven't arrived yet things like some of those lol dolls that have been popular for some time. >> and i have one of the care bears here when you said $16.99, my jaw almost dropped how doesn't this cost $100 what did it cost 50 cents to make when the shipping goes from 2,000 to 7,000 a vessel and everyone in my neighborhood is talking about how they can't furniture they ordered, until

three, six months from now it's a real problem out there. >> yeah. so this care bear retails for $16.99 here. the price is going to vary and be a little bit less expensive at a bigger retailer like a target or an amazon, a walmart they have economies of scale they have other levers they can pull and like jay foreman the ceo of basic fun said we add a freight surcharge. the retailer then has to decide what they're going to do with the price. so far learning express has been able to figure it out setting the price at $16.99. and they feel comfortable holding that price for now but if things get worse, if the material costs go up more, if that transportation cost goes up even more, there's no guarantee that these price hikes -- it's just a sticker they could peel it off and they could charge a higher price. it's also interesting, kelly, that the size of a toy or of an item in general is also going to play a big factor in it because you can squeeze an awful lot of these care bears into a

container. but if it's a big item like patio furniture, you're kind of limited with space to get that into a container >> you guys did such a great job. we appreciate it thank you, everybody, illustrating the journey for just this one holiday toy. the upside of having no furniture, there is plenty of room around the house for the kids to play shares of this chinese tech giant are popping. but they're still down more than 45% over the past year we will reveal the name and whether you should follow his trade, coming up after this. s industrial grade software, forged from decades of industrial experience and insights. meet honeywell forge. analytical software that connects assets and people to deliver a cybersecure record of your entire operation. so that everyone, in your boardroom and beyond, speaks the same language. honeywell forge. industrial grade software.

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♪♪ into strategies for the road ahead. ♪♪ ♪♪ welcome back to "the exchange," everybody let's get a quick check on markets. about 50 points off the session high for the dow you can see all 30 components there. we are led higher by the dow itself unh with about a 3% gain as well this is all on the back of congress announcing a deal on the debt ceiling extension you're talking about a thousand-point rally from the lows yesterday quick check of oil as we go out.

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welcome back, everybody. charlie munger's daily journal nearly doubling down on a china bet scooping up some shares on the dip. kristina partsinevelos is here with the name and the details. >> baba, ain't the black sheep today with shares rising well above 9% this is warren buffet's business partner in crime charlie munger. he's also the chairman of "the daily journal" that operates its portfolio business that's why we care the latest s.e.c. filing shows they increased by 83% last quarter. shares though of baba have tumbled about 32% year to day due to regulatory threats in china. while others rushed for the exit, munger doubled down in baba with at least $40 million earlier this year which isn't really the norm as he normally invests in american companies. so does that mean that chinese market is on sale? many institutional investors just can't agree we heard from a lot of them last week jp morgan asset and weather

management ceo was saying you need to think about rebalancing to areas that have gone on sale. china has gone on sale and then you juxtapose that versus social capital founder and ceo. on china it's a place that i read about and not invest in and then place i will read about and not invest in. black rock urging investors to increase exposure by three times. george soros is saying the opposite whether it is increased risk an tight or president biden's announcement he is going to meet with the chinese president late they are year. chinese stocks are on a rise billy billy, by due, dee dee up over 4% right now. even goldman sachs is betting big on the chinese ev firm neosaying it could gain 66%. many on wall street right now argue that despite regulatory

risks and slow growth, china is too big to ignore and its stocks are too undervalued to pass up. >> listen, we talked to people on both sides this debate almost every day. the interesting thing about munger and alibaba is he has time and again expressed his admiration for sort of the autocratic way china runs its economy, often while often expressing his chagrin at how we run ours i think people understand with their b.y.d. investments and others that he may have a -- the stomach kind of long term for -- >> yeah. >> he thinks with a 30-year timer. >> we talk about the stocks popping over the last sessions but break is 50% off of its 52-week high >> k web. >> k web i know alibaba is having its best seay day since june 2017. but this authoritarian regime

are not going to give away -- they want market principles to stay there but control is getting tighter and tighter and tighter. we don't know what that's going to mean for the companies across the board. >> the risk appetite >> exactly a lot of people are doing that. >> absolutely. he's probably the most high-profile person who could plant that stake in the ground kristina partsinevelos. up next, morgan stanley is bullish on five below despite supply chain issues. jim cramer also likes it calling it a great growth name that's poised to bounce back in his cnbc investing club newsletter if you want more of jim's advice, join the cnbc investing club with jim cramer, and you can point your phone at the qr ckn mon e re ba ia ment

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inflation and supply chain concerns have been weighing on shares of five bloechl you can see them down nearly 20% over the past month after reporting a revenue miss today up 6%. why? morgan stanley sees this dip as a buying tune upgrading the stock to overweight saying the shares are cheap and inflation fears are overblown. now five is having its best day in month let's bring in the analyst behind this call siemian, how much upside do you see? >> we see 25, 30% upside our price target is $230 strangely enough, that's the same price target we had a month and a half ago when we stepped away and downgraded to equal weight growth at a discount it hand a good compounded growth story over time. i think all the fears around supply chain and inventory infected the stock price. >> interesting to look at dollar tree and five below with the

fixed selling price. did dollar tree do away with the $1 cap or not. >> beginning to. they have a dollar tree plus format that gets away with that. it hasn't hit the stores yet, we will see how long it takes but this environment called for the need to break that buck. >> investors love the pack they are trying to break the buck now i had like we are talking about money funds but we don't know if consume letters agree. what is five below's trategy >> they sell fun at pretty low price points remember when we used to go to the mall, to the novelty gift shops. they had gadgets, some at low or high price points. i never walked away buying something. five below, everything is below $5 they have broken their $5 threshold for higher quality or

aspirational items but the mentality is whenever you buy something at that price, you fell like you would have paid $10 or $15. it's the same value proposition now when you are buying something at $5 or $10 they have broke through the barrier. i think as long as you deliver to the customer every time they will keep coming back to you. >> i think we got an inflatable kids' pool for $5 at the store i was in the grocery store, the kings which then went bankrupt, anyway, two weeks later they were selling it for $20. somehow, they found a way to do this, simeon but can they keep to this low price strategy as everything has been going up? can they keep product on the shelves? >> on the price side we think they can it is about constant value engineering. i would say thankfully they

found way to break through the $5 barrier during inflation they may have to break through other barriers. now it is delivering value in the 5 to $10 range as far as inventory, this was our surprise from -- we had a meeting with the company yesterday. i think investors are putting smaller size retailers into a bucket of won't be able to manage costs won't be able to deliver inventory. five delivered a good and benine inventory picture. they have been planning for this for a while. they are buying forward. they are connected with their merchants and they have good visibility we were skeptical, too, a couple months ago, i think they shored those fears up and that was the basis for our call, i think they are going to have inventory on the shelves. >> i know where i am going if i need something for christmas in a pinch. simeon thank you for coming on today. >> thanks for having me. >> that does it for "the exchange," everybody

thanks for tuning in "power lunch" begins right now love that description of five below as cheap fun. that was my nickname in college. welcome to "power lunch," everybody. here's what's ahead. the market rally gaining steam maybe it's expensive fun in the market short-term debt limit deal has been reached avoiding default. but should investors proceed with caution. the firm that predicted the 2008 housing crash has another big call it says the market is overbuilt. forget about slim inventories. an analyst will be here to explain whether it could cause trouble for the housing sector. and a cyber threat a ransomware group has been identified targeting companies that will cost them billions potentially in revenue and one industry in particular seems to be in the cross hairs we hav