right at the money down side bet. >> and joe >> little bit of a sell off in health care. take advantage of it eli lilly, a stock you can own >> health care down about 1.5% after the bell, we'll see what june has in store for the markets. that does it for me. "the exchange. is now ♪ thank youb, scott. hi, everybody here's what's ahead on "the exchange." massive bal. sheet run offs even jay powell isn't sure of the additional tightening. could itby another hit to housing? mortgage demand dropping to a four-year low. what if rates spike further? and we're looking at pets, video games and data storage

it's a mean-heavy edition of earnings today >> so, kelly, right now we're sitting about near session lows. it's about a 350-point drop for the dow industrials. shortly after the opening bell, it looked like a positive session. we were up 282 points within the first half hour of trading or so and we steadily declined over the course of the trading day. the s&p 500, 4,085 1% losses here and similar percentage losses for the composite index. the nasdaq at 47, 947. remember, it wasn't that long ago we were at the twol 8 handle we're now at 2.95%

the 30-year fixed rate since ts sits around 5.36 a lot of people know i tweet the most popular tickers looked up on our website for the first time, the 30-year fixed rate quote is one of the top ning e things searched on our website. watch those etfs and some of the big names were nato on the commercial side of things, simon property in retail both down about 3 or 4% on the trade. and the stock of the day has to be salesforce. up just about 9% right now $175 one of the biggest contributors, upside positively for the markets. and some of the big etfs that track it igb up about one quarter of 1%, thanks to about 7 or 8% in

salesforce the internet etf is down but has a decent 5 or 6% waiting for salesforce and ctlu is -- and if not for saleforce -- >> you have to tweet that about mortgage rates that have fascinating to see it right on the top with apple and tesla. we'll see you soon investors have had today circled on the calendar for a while now. as june first is the shrinking of the bal ngs sheet the balance sheet will shrink twice as quickly as it did last time around. that episode ended with the reapo crisis in 2019 and this will be the second, and some say more potent tool, the fed is using to tame inflation along side higher interest rates of course. for it's hard to

predict what it will do to markets and the econam fed chair powell himself saying i would stress how important this is in rebalancing the sheet. this is a dafrant financial system it was before the pandemic and now we're about to shrink it in a way we've never attempted befoerb. >> last time there were a bunch of problems that happened. so, one way that somebody in the market described it to me, kelly, was the fire trucks came to the last fire they had and they never left. they left a bunch of facilities in place that might, and i stress might provide a safety valve or shot of water on whatever fire might come up in markets. one is the internal work withings or the plumbing of the financial system that could get gummed up.

the other is the broader economic impact in the financial markets. and both are livings out there for investors. >> so, we're looking at interest rates and one think we know about balance sheet policy is announcement is when all of the things reprice we continue to watch it because as we actually do the job of removing or reducing the balance sheet, we could see more i'm watching financial conditions to see that something between 25 to 50 basis points is the modal outlook. there's no consensus on this some people argue it's much less some it's much more. >> so, ckelly, that could be for the economy but for stock valuation, it could be a lot more >> what else do you think is important to highlight the fact fed officials sound more hawkish than last week. the fact rates are on the rise again.

and it's starting to feel like a bit of a liquidity pole. >> i think all of that is important to highlight the things i'm focussed on are figuring out -- there have been pretty dramatic reports about how much stock valuations have is relied on qt. there's a report from bank of america that said a lot of the excess increase in valuations comes from the fed doing quantitative easing. the idea youvr yovr seen massive fallouts especially in the nasdaq and some of the cyber assets those suggest that qe had a big part in their valuations and the other thing is what president daly just mentioned. i have to watch some of the inner workings to make sure the fed can reduce the balance sheet and not end up with a freezing of liquidity

i have no problem. of course i don't like it. the fed is going to reduce quantitative easing or the balance sheet and do so for economic purposes. what you don't want to see is the financial system gummed up >> quick final comment, nothing about this is on autopilot, right? we've seen this in the past where they want to leave it conditional and open ended but have they given us a target size or dates or anything of that kind? >> not necessarily they wantd to bring it down to a place of where it was before the pandemic but above that and taking account for the fact that the economy has grown naturally and they want us to live in the ample reserves regime. which, whatever that means from the federal reserve, a lot of people are pegging something like 6 or 7 -- 6 to $7 trillion

down from nine 2.5 to 3 trillion is the number in the market for how much quantitative tightening we have to endure. >> we appreciate it. interest rates are quietly rising again with the 10-year treasury back above 2.9%. my next guest says you just need to follow the fed. and until they signal all clear on inflation, we will likely toil in bear market territory. president of potomac wealth advisors so, you're pretty bearish. >> as long as jurome poehlerful is in charge and he's going to be fighting inflation hard, we think investors need to be a little cautious. >> does that mean stay on the sidelines? changing the way they're invested in the market not a lot of people want to be too cautious with 8% inflation

>> it's a loser, especially for long-term am vesters and we want to look forward. we don't think we should be a dear in the headlights now i want to guy where the puck is going, not where it is now investors will want growth in a low growth world so, we're adding a better valuation. broad base exposure to technology >> you know, there's two narratives the rapid growth cyclicals, materials, industrials you're more in the slow growth technology story give me names in particular you like here. >> sure. and that's difficult to do giveren the surprises we've had, right? netflix, amazon, facebook reported they got crushed 20% in a matter of days invest issers need to be careful.

it's up over 15% from the interday low so, if you look at quality companies, whether autos, ai, they're a leader market share, much better valuation than six months ago reasonable growth rates. that's a name that's held up well today is seeing a a bounce back. >> while you like that name, are you basically saying people should have sector exposure verses stock exposure? or is the mega cap tech names, i should say >> that's exactly right. maybe you have favorites you like but generally speaking the market has proven too unpredictable for the average investor same thing in financials we like regional banks kre is a good way to play

regionals. >> and you think it's fine when we say to waited for the fed to signal all clear on inflation. that's where you see more of a bull run in the market you think it's fine if it starts to get priced in on that point or not clear what day we're getting the signal it's a different era >> you want to start adding now. 6% move in the nasdaq last week tells you that, when the market turns, it's going to turn fast, likely strong and it's going to favor the beaten down names and we believe technology is at the top of the list. that's why we're adding now broad based exposure with a few select names >> you're saying the turn is a ways away? >> today is showing fighting inflation is not over. inflation is not pulling back.

over 8% germany and spain, energy we think it's rocky for several months that gives investors time to at the positions. >> thank you for your ideas today. we appreciate it coming up, mortgage rates off their highs burt mortgage demand is still falling weal with dig into the drop and take a closer look at the affordability crisis hitting the housing market and seventh straight month of losses and pure storage just posted the worst month since the pandemic began. all three report after the bell. we have the action, the story ahead on earnings exchange ♪ ♪ wow, we're crunching tons of polygons here!

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even as mortgage rates have eased somewhat, hovering around 5.4%, applications fell to the lowest level since 2018 and rates were only 5% last time rates were this high was more than a decade ago let's bring in andy walden with black knight great to have you.

what are you seeing in the high-frequency data? >> we all knew early on we were going to see a decline in refinance activity and we know it's down roughly 90%. now we're seeing the expansion of the pullback, which had been holding relatively strong. those are down 40% year over year you're seeing it through the tightened level of affordability and you're seeing purchase volume pull back as well sgh to cashout in the purchase market as with well. >> how much further could that go >> there are a couple of major head winds and one is rising interest rates the lowest form of home affordability since 2006 and only one-third the housing inventory we should. the lack of inventory and

affordability continue to put pressure on the housing market and will carry through the summer months. >> the same factor makes you wonder if that actually keeps the floor below how bad the market could get here. >> it's kind of the saving grace right now, given how tight affordability has gotten it provides a back stop for home prices that may be needed here >> now that people are realizing we may see a significant drop in sales activity what do you do >> across the country, 40% of markets are the least affordability they've ever been. which puts downward pressure on demand and price but again, as you're saying we won't see as strong a rea as the other levrls of inventory

>> wt e things effected by the rate environment being where it is? we're seeing more creative lending, the return of adjustable rate mortgages. what else should we keep our eye out for? >> you touched on one adjustable rate and a rebound this year. different space. and high-end of the market may behave differently and we talk about record levels of equity. and what takes place in 2022 and rates for expensive homes jumble mortgage rates and on home lines of credit, do

you think we're going to see a surge in people trying to tap those sources of equity right now? >> to be clear the cost for the second leans are higher than they have been they're facing their own head winds. but locking interest rates are lower than 30-year conforming rates. you could see a transition away from traditional cash lean out price spaces to keeping a record-low first lean rate you've laukd in and possibly into second rates. >> do you think that's a way to unlock the wealth they have in the housing market at a time of cost pressures or do you think that sets us up for too much debt at the household level when balance sheets have otherwise looked good. >> it's something we want to use sparingly. if you look at the equity being capped, it's held steady and the

mortgage market is not something we want to get over zealous like we did in 2005 and 2006. >> thanks for your time. >> thank you >> coming up, soaring travel demand verses soaring jet fuel prices delta raising the fuel prices. we will hear from the ceo. frrpgs and a legal victory for social media platforms but the battle is far from hoevr. we'll tell you why and what's next alphabet shares higher while meta underperforms we only have five names in the green. the average down 254 points. salesforce helping to hold i om what would otherwise be declines walmart and goldman the biggest losers i like to keep my enemies close. guys, excuse me. i didn't quite get that.

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welcome back to "the exchange" everybody. marxets have taken a low but we're off about 100 points call it 9% decline for all the major averages every sector is in the red except for energy. and financials are the worst performer. and fintech names are underperforming even the legacy play aers. the journal is out with a piece warning of the risks of buy now, pay later. and paypal seeing declines of around 5%. and nxpi are the worst performers

you can see the etf down 3%. and restaurants in the red as well cheesecake, cracker barrel, all falling. these are 2 to 4% drops. and sticking with discretionary spending, norwegian, caribbean, carnival, the biggest laggard. they're all down about 5% today. tyler. thank you very much and here is your cnbc news update at this hour california's first in the nation task force on reparations for african-americans is releasing a report documenting the harm perpetrated by the state it will also recommend steps to address the wrongs, including expanding voter registration and improving black neighborhoods. one of the victims from april's subway shooting that left 10 wounded is filing a lawsuit against the gun maker, glock incorporated aileen stir is accusing the

company of fuelling a public nuisance and endangering public safety the man charged with committing the attack allegedly used a glock handgun in the shooting and since pleaded not guilty to terrorism and weapons charges. the supreme court is putting a hold on counteding mail-in ballots in the senate primary race in pennsylvania, it could effect the outcome of the tight race between david mccormick and the celebrity dr. oz, backed by former president trump tune in to the news with shepherd smith tonight >> see you soon. thank you very much. still ahead, gamestop's turn around plans and can pure storage beat earnings for the sixth quarter in a row but all my employees need something different. oh, we can help with that. okay, imagine this.

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welcome back everybody the first trading day of june. what better time to check in on some of the under the radar

names and meme stocks in particular today let's get to this edition of earnings exchange on these three names. start with chewy the online pet shop is more than 3% down and 50% down year to date analysts predicting a loss per share and beat on revenue. our local pet house lover is here on chewy and joining us the trades is director of options at simpler trading.com. do dom, what are you watching for >> other than at the fact that they get a lot of my money because i have two dogs at home. we're talking about a pandemic darling not escaping the wrath of the down turn that came along with it or market sell is off this year. a lot of whamys hitting chewy shares, which have been down heading into the earnings report this afternoon a stock which has already lost

two-thirds of the value in the last year alone. in february of last year, chewy was $120 stock it's closer to 23 bucks a share today. they're for the loss of 15 a%. roughly $2.4 billion in addition they'll be looking for an indication of how chewy's customer base is ebbing and flowing. how many customers are signing up and leaving the platform? is much like you would see with wireless subscribers and phones. but whether it's online or brick and mortar, supply chain issue is a focus was it able to damper the results or manage around keeping sales relatively impacted. over the last eight quarters, the stock has only had an update in post earnings trading one time out of eight and the average move up or down has been

roughly 8% and to the point, the options market is pricing in at expectation of a 14% move in the stock. so, more volatile than recent history would suggest. >> and the stock was at 120 at one point and now at 23. >> kelly, you know, this is one of my earnings destruction names for a variety of reasons number one, it's a.com stock, via 2022 used to be up at 120 now around 23. they're still losing money and in this market environment, any company losing money, i mean, they're completely closed when it comes to earnings what i've been doing with these names for the most part, especially because it does have such a high implied move is i've been coming in and sell issing call credits but a few weeks out -- because a couple of of the companies that will surprisingly do well, they

will send off a massive short squeeze. and you do want to be cautious of that. i am bearish on chewy. i think it trades into about the 15/18 range but i don't want to do anything too aggressive because of the high short interest >> fair enough to me, gamestop is still the bell weather mean stock but all the rest of itb, could there be some larger significance here? >> i mean, there could be but it's been a while since we heard this name in the wall street bets type forums and to daniel's point because there is a more pronounced short interest in the stock, it could work its way back to the lexicon that overall trading i guess pool of thoughts people tend to look at. besides the meme stock thing is

whether chewy can be a stand alone company that turns a profit remember, the patience for some of the money-losing propositions goes along with it multiples come down. that's going to be key memes can drive something higher but it is going to be about whether or not the fundamentals can be in a post pandemic world where there's not so much focus. >> and petco we're just showing the charts a 6% decline into the report today. and we will turn our attention to gamestop. the original meme stock down 3% and around 19% year to date. hanging in at 118 to share the company's annual shareholder meeting is taking place tomorrow and investors will vote on important things like stock split. >> hey there,icaly so, nfts are the thing everyone

wants to hear about. we know results may be mixed based on the other video game com companies reporting miss but the gamestop launched thei wallet, which is the first step to the nft marketplace where they sell digital collectibles today and the real challenge is going to be to see, by the end of the month, if they're able to get people and brands on board to get people to participate in the marketplace and it's really bad timing because nft sales are down 92% it's shocking and we already know a lot are losing their value big time as they fall in line with a lot of the crypto currencies this is a bet the company type situation to diversify away from game sales and figurine sales and things like that it's going to be interesting to

see how it plays out in the really bad nft market. >> all right so, daniel, i am sort of impressed gamestop is $100 stock. >> i agree with you, can kelly and i have to say at the very minimum, the gamestop executives, they've innovative i hate to go against retail traders because that's are i got my start but regardless of all the things the executives have tried every quarter, gamestop has fallen post earnings for the past eight quart rbs in a row it's still hanging on. but if you look at where it's at compared to where it used to be, i don't think this stock is ever going to see almost a $500 price point again. the main thing is when you have

retail traders in a stock like this, they want to buy long calls on earnings. and that's usually the absolute worst thing you can do, especially with a high-implied volatility because after the report, the implied volatility is going to be crushd aned and options won't mean anything unless there's a miracle. i look into sell issing premium. and i usually like to sell the call side because it almost always falls on earnings >> you're selling the calls. and illogically going to buy >> yes >> fascinating are there any other read throughs in terms of -- we've talked at lingt about the liquidity that left the market and this is the poster child so, i mean, at some point we're valuing this in fundamentals

does it still hold significance for everybody else, for everybody from the nasdaq to semis to apple >> i do think the meme stocks hold significance because they're a demonstration of the way that retail traders have participated in the market and the way they've been flying out of this market and a lot of people got into this market at point in time where it was rallying at a very unsustainable way and they got into stocks like chewy and gamestop and will probably finally be able to see a low in the market when these kind of stocks stop dropping because that will signify that pretty much everyone who was in here just to gamble has given up and now wore left with people who are actually long-term investors and looking at the facts >> is there anything else in here that gamestop is doing for the retail-base as a result of

it are they trying to still cater to it or trying to move on and build a more durable franchise, to your point about the nft. >> they really have beefed up their ecommerce and things like that people just don't buy games the athey used to. it's all digital downloads so, the idea you're going to go and buy a cartridge or diskbb that's pretty much gone and that's what gamestop would rely on e commerce is a big part of it and translating the idea that, in addition to games, they sell collectibles and games and is things of that nature. it's going to be wild to see if they can pull it off >> thank you very much finally, pure storage is set to report after the bell with shares down 27% year to date they've beaten earnings 18f of the last 20 quarters frank.

>> hi there, kelly on a serious note, almost every analyst has a buy rating they provide storage on premise and they announced a partnership with meta last quarter and there's a question about currency this is a company deeply impacted by rising interest rates. and as it rises, the company goes down. one thing a lot of people haven't been paying attention to is the rising dollar and now salesforce and the week before flagged as a real head wind so, the question is how is it going to impact a company like pure storage

they get about 28% of the revenue overseas, outside the united states. that revenue base has been growing. for it's grown 23% year over year. so, the real question is are there customers still spending are they seeing the same trends as last quarter? >> and you say this could be a buy candidate for you, right >> i think you're going to be surprised because i don't think i've liked much to the upside over the course of the entire year i think they've done really well in earnings. generally when i'm looking for something i want to buy on earnings, especially given the ongoing circumstances in the economy, i like the look at something that has done really well the past four quarters, especially, we've seen moves to the upside between 15 and 8% that's a a positive sign we're currently sitting a few

dollars above the key area i would like to get in at the $20 price point and given the expected move on earnings, i think it's reasonable that if it is soft, it falls to support and it can give investors buying opportunity. i would actually argue it's doing relatively well. >> well, i'm if wing to leave it there before you change your mind $24 is around where are pure storage is right now daniel, a huge thank you frank colin covering pure storage off the worst month since the pandemic and the index down more than 15%. american down around 5%. and some are eking out gains like delta up a couple percent and united same story. ceo at dtael weighing in on jet fuel prices and consumers.

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cancelled more than 500 flights over the holiday weekend now jetblue near record highs. staffing shortages phil >> actually, from a airline perspective, in terms of revenue, earningsb, with it's going to be a pretty solid summer that's the guidance delta released earlier today and like all of its competitors, they're seeing an increase in demand that's why revenue, for the second quarter, will restored to 2019 and then you have strong demand in pricing we've talked about this for some time

we're seeing the average domestic air fare move closer to where it was last year and that's close to an all-time high we asked during the halftime report does he expect this pricing to continue? and here's what he had to say. >> i think the demand picture and outlook will continue to be quite strong we're seeing that in new markets as we open international borders and there's no sign of consumer pullback customers are prioritizing air travel they're moving into services >> they are prioritizing travel. and for are the airlines, we talked about the staffing issues, a couple of other issues one being capacity they have lower capacity than they did prepandemic and the cost per seat mile up 20 to 22% in the second quarter

and it's all because of jet fuel not entirely but a big chunk of it is because of jet fuel. they're raising their guidance to an increase of 40 cents per gallon up to a range of 360 to 370 per kbalen huge increase compared to what they used to expect. and they're all in the same boat and that's why if you take a look at the airlines stock, they're all down in sympathy with delta today basically, they're trading lower and that's not a surprise, given the fact we're not going to see costs come down anytime soon >> and people are seeing the fares go up. they're either pouncing or saying maybe i won't do it this year and social media stocks down despite a win yesterday. nching s of polygons here!

what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq - [audience] investomania! - welcome back! - brad, it's your investment (audience shouting) - i'll take meme stocks! invest! (buzzer) (audience groans) - [host] ouch! your investment, julie - i'm gonna do some research first - well played, julie well played - we can do research?

- [narrator] investing is not a game always do your research before making an investment decision learn more at investor.gov before you invest, investor.gov

welcome back it's a big win for the tech

world. julia. >> well, kelly, i would say it's a temporary victory for social media platforms. the supreme court temporarily blocked a controversial and sweeping texas law that would prohibit online platforms from e viewpoint of the content we've gotten no comment from the tech industry themselves and they're working to block the law. they argued that hb20 would compel platforms to disemanate all sorts of objectionable viewpoints such as russia's propaganda saying it was justified and neo-nazi or kkkscreeds denying or supporting the holocaust and encouraging children to engage in risky behavior like eating disorder. justice alito suggested concerns about bias in moderation and he

wrote about the, quote, power of dominant social media corporations to shape public discussions and here's why the battle is far from over. the supreme court voted on an injunction blocking the law from taking effect while federal courts decide whether it can be enforced and that means the supreme court could rule on the constitutionality of the law itself in the future and, kelly, that's now what analysts of this situation are expecting will eventually happen. >> does it change anything today in terms of section 230 or how we understand the law to work? >> this is not about section 230. this is about a separate law we've had companies like facebook push for clarification around section 230 and there's this whole debate about how you do section 230 reform and mark zuckerberg says he wants to be regulated, but in a way that makes sense for facebook this is a law that could be really dangerous for the social

media platforms because it would prevent them from doing what they're doing now and if there's harm done to say young people to children then that could, you know, further put these companies in hot water >> all right julia, thank you our julia boorstin for more, let's check if with neli patel could this replace the section 230 framework we have at the moment >> i don't think it would replace the 230 framework. i think it would sit right next to it because it's a state law you're looking at what can platforms take down? what can they block? how can they explain themselves and that amount of transparency is a big deal and regulators and lawmakers at every level, state, local, want that kind of transparency what this really is, though, is setting up a long fight about the future of the first amendment which gets lost in the conversation we're talking about what speech the government can directly

regulate and between texas and florida there's a lot of government speech regulation on the table right now which i have always believed is bad and now there's more fervor because the platforms is so big for when the government writes more and maybe we should have more competition and let the people decide. >> that's yet twhy the twitter is so interesting because elon musk could potentially take that platform in a different direction. >> this platform will have looser moderation and stricter moderation and be easier for children, and they're all primarily driven by advertising. so advertisers want to be an extremely brand-safe environments and predictable environments which will lead you to moderation and just from a business perspective, there's an imperative moderation that cuts from some of the speech concerns and i do not, however, think the

solution is the government writing speech regulations i think the solution is a market competition both in business model and in moderation enforcement. >> do you think that section 230, not to use it as too much of a bye word, but allows platforms to regulate however they want to regulate. do you think that will continue to be the law of the land? >> donald trump and presiden biden had the exact same stance on 230 it should be overturned. neither candidate would explain how they would enforce it and how it would operate and fundamentally talking about 230 or replacing it is a cudgel it get more to moderate in either political party's favor. >> yes. >> because the parties themselves know, you take it away, you're effectively shutting down facebook, twitter and youtube. >> everyone is unhappy with it

for a different reason and it allows platforms to do as they want nilay, we'll leave it there. nilay patel on the texas decision up next, a key bullish market signal is back to lelsotve n seen since 2020 lows what it means in the search for a market bottom next opportunity is using data to create a competitive advantage. ♪ ♪ it's raising capital that helps companies change the world. it's making complicated financial concepts seem simple. opportunity is making the dream of home ownership a reality... ♪ ♪ ...writing new rules and redefining the game... ...and driving the world forward to a greener energy future. (applause)

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you still get nightmares? all the time. what matters... is what we do now. insider buying ramped up in may hitting the highest level in two years and robert frank is here with what it could signal for stocks robert >> insiders sold a record $170 billion worth of stock, but the tide may have turned in may. they actually bought $1 billion in stock and nearly 1300 insiders were buyers and that was the highest number since march 2020 the number of buyer and sellers now roughly one to one normally, there are four times as many sellers as buyers.

analysts at j.p. morgan saying, quote, corporate insiders are holding a non-consensus view across all sectors and are actively buying the dip. a lot of the buying has been in tech and telecoms. coinbase co-founder director frederick ersom bought $77 million of coinbase stock and that's up 7% from the may lows daniel eck bought $50 million of his own stock and shopify getting a vote of confidence from its own ceo who bought $10 million worth of that stock. best buy chairman amer ity us richard schulze buying bbb stock up 20% from its may lows on the buying basis, it is half the loss of 2020, but insiders tend to be a good signal of where the market is near the top

and near the bottom and they called it back in march 2020, and we'll see here >> everyone who was upset they missed the sales last year, here's your chance to buy if you want to follow them now. thanks, robert frank. with the firm sinking thoday that's ahead on "power lunch" which begins right now ♪ ♪ and kelly, we'll see you in just a moment. meanwhile, welcome, everybody, to "power lunch. i'm tyler matheson here's what's ahead, an economic hurricane. that's what jamie dimon says that's ahead and investors should brace themselves. his two big concerns is the fed and the ukraine war. plus short energy, it is a bold, bold call on this year's best performing sector so far we've got the technician behind the report with us this hour lots to discuss, busy hour ahead upon kelly