diana, thank you very much we appreciate it our diana olick. that does it for "the exchange," everybody. don't go anywhere. "power lunch" picks things up righ ♪ ♪ we you in just a bit, kelly. i'm dominic chu in for tyler matheson inflation remains hot, costs are surging for gasoline, groceries and rent we'll talk to an expert who says these high prices will not last, and another who's buying dividend names to ride out the volatility we are watching some of those big names coming up and the ceos of unity and iron source are here the companies merging to create a gaming software powerhouse iron source shares surging and how they plan to compete in a very, very crowded field kelly, i'll send things over to you. >> two power players to be sure,

dom, thanks. >> let's check on the markets. it is down 266 points for the lows as investors have gone from worrying about inflation and rate hikes to worrying about recession and well, rate hikes the nasdaq is up seven points and the nasdaq down four or five those stoeks have been getting a boost with tesla a boost, and nvidia up 1%, 1.5% so here you're seeing the growthy feel across the market let's take a look at copper's intra-day move and it's higher after trading at its lowest level down there since november of 2020, so a huge reversal for copper into today's session, dom. now it's starting to finally level out a bit. >> kelly, that big part of the story is inflation hitting a four-decade high next month likely strengthening the fed's aggressive rate hike path going forward. the consumer-price index rose 1.9% from the same time last

year and that's the largest gain since the end of 1981. gasoline prices up 59.9% energy up overall, 41.6% food is up 10.4% shelter up 5.6%. but will, can these high prices last with me now is david dodson, professor at stanford university maybe, professor, ooirl ask this simply how long will it take before it starts calming down? >> i don't know, next week all you have to do is lock down main street to see the forces driving inflation are waning we also had historic events. we had war in ukraine which is still going on europe's largest natural gas provider has gone to war we had the fed flooding the system with cash and low-interest money and we are opening up our mailboxes to

getting checks and we couldn't buy what we wanted to buy, so think, we had high inflation, but i think what we're seeing is over the last few months a little bit of the pumping of the brakes and i might say something that's controversial and i actually think this high inflation that we've experience side a good thing. >> everybody is calming down a little bit and the forces driving high prices are going away, so no, i don't think any of this will continue -- >> one moment before we continue the beige book just released and let's get over to steve liesman and get the details. what's it saying about the economy this time around >> overall, kelly, the economy is at a modest pace and that's not the whole story. it reported signs of a slowdown. five districts say there's increased risk of recession and that's five of the 12 federal reserve bank districts out there. i believe it was three last time so it seems to be veding a bit

tourism and hospitality, however remained healthy -- were healthy, really standout sectors there in the economy many districts reported continued disruptive supply chain shortages and inflation rose to a moderate pace and the labor market remained tight. there was some easing in the labor shortage out there in some areas, but they were substantial. i don't think i've ever seen this phrase before substantial price increases reported across all districts. pricing power was steady pricing pressure was expected to s subsist and firms were passing through price increases. a cooling economy with still-hot inflation i would say is the takeaway from the beige book with maybe, maybe some improvement, kelly on the labor front, but really not much to

write home about >> so, steve this is interesting here let's bring back david dodson. you just heard steve liesman breaking down the beige book report this is the idea that with these high prices they cannot be sustained because in the end of the day they'll slow down based upon what's happening with the economy. i wonder the expectations component of what steve mentioned is curious to me the expectation -- >> professor, just hold on one second. >> it happened in the past not the future the beige book is indeed saying we're seeing evidence of high prices, but the point is what are we seeing when we walk down main street? we see the prices coming down. the big question is what will happen in the labor markets because if, in fact, you have these forces that are bringing prices down which i think they will, but the labor market continues to fuel higher wages and we can pass through those costs and that's the thing that could be scary and could lead to

a wage price spiral which i don't foresee, but that's possible. >> but what about the expectations, though the inflation expectations is what the fed is trying to fight. what happens if we as consumers and as a nation start to expect higher prices going forward? isn't that a big danger, as well >> absolutely, and that's really the thing that we need to focus on, but fortunately there's data to suggest that most consumers don't expect this inflation to continue and there's been constant polling for decades on what consumers think prices are going to be going forward. you can look at that data and say, okay, clearly consumers don't think this 9% inflation will continue, but there's another question to ask yourself just look at how you and your neighbors are behaving. is anybody rushing out and buying anything today because they think it will be more expensive in october the answer is no you can see consumer behavior and say i'm not going to buy that house today i'm not going to buy that snow

blower today and i'm not going to buy at target today because i think prices will be the same or will be coming down. by the way, we haven't talked about the bloating inhavventori and higher interest rates and the only way you will push through the inventory is dropping prices. >> arc invest cathie wood has said that we have commentsary coming out and inflation is running at the fastest pace in 41 years, but what is going to be worse, professor, in your mind is it the inflation we have right now or the threat of deflation going forward? >> i think that what's happened now, what we've seen in the past is the pumping of the brakes, as i've said, which is slowing down the economy. i think the idea that because we've had bad inflation that necessarily implies bad policy or that we're in trouble is wrong. i think what we've had is's cooling down of the economy. if there's deflation that's

happened in the next six months i don't think that will be detrimental to the economy at all. i think what will happen is we'll have a cooling down of the economy. remember, we have been spoiled with zero interest rates and open up your mailbox and there are checks to spend money on we've been a spoiled economy right now. we're moving back into pre-covid days where we have normal interest rates and normal gdp and everything is settling down. that's my view >> let me bring steve liesman back, steve. as we look at markets in reaction to the headlines who just appeared to not rule out the possibility of a full-point rate hike at the meeting what can you tell us >> well, you know, it's on the table, kelly let me look at the percentage here oh, wow. it just jumped so let me give you the tale of the tape it was 3% this morning the probability of 100-basis-point

hike it was 38% at the highest level after the cpi. it is now trading, kelly, at a 54% probability. i guess i've never seen this before that there is a majority or more than 50% probability chance of a 100-basis-point hike what he is resonating in the markets and the beige book with the substantial price increases. the problem in what david is saying is all of that may be true, but there's a pretty severe timing issue which is that what this beige book suggests is that you do have the cooling in the economy and you do have a consumer saying i can't do all of the things i did before and you still have the phrase, david, that says substantial price increases throughout the economy across all districts. i think you probably will end up being right, and the question is do you end up being right before the fed goes full bore, and let me see what the probability is

>> the probability of a 75 these members have moved up, guys 175 basis points more or less priced between now and the september meeting. >> so let's kind of give the last word to you, professor dodson you heard steve and the probabilities are laying out there. what exactly is the fed's next step here if they're already seen by their own beige book some of the evidence that there's an economic slowdown in a number of districts and a growing number of districts. do they have the rates to raise by 57 or hypothetically, a hundred basis points at a clip >> i think they absolutely have a case to raise 75 basis points. they've been saying for a long time that that's what they'll do if they go below, they're shocked by the numbers and they're surprised by the numbers and they have to take more drastic action i don't think that's indicated

here i don't think you need to did that to cool the economy and i think that would be a mistake because you're still saying things are still out of control and i would like to see the fed come back and have control of the economy. what we're doing is working and the forces that were put to play and the interest rates are having the effect that we want so everybody needs to relax and be back to normality which is absolutely going to be the case, one is the labor market, you could have some strange, vent that happens in the european winter >> the qi also becomes what is normality these days thank you very much, david dodson and steve liesman we appreciate it, gentlemen. >> the dow is down 226 points and still lower than we were at the top of the hour and nowhere near inflation lows and inflation is one of the reasons why strategists say this is one of the strangest earnings season in years and it kicks off

basically tomorrow morning analysts have been slow to lower estimates and figure out the impact of rising prices and what's happening with growths. let's get down to bob pisani at the new york stock exchange. bob? >> kelly, we're having a strange earnings season because we're getting a real distortion of some of the earnings picture let me show you. the real issue is the tremendous profits oil companies have been making we're expecting earnings growths of 5.7%. okay, fair enough and much of this is due to the fact that energy companies are gushing profits. if you remove energy from the s&p 500 equation it's actually down earnings estimates are down 3% for the second quarter >> how about some bright spots other than energy which is expected to see a profit increase of 239%, that is not a typo there the other big profit areas, their revenues were higher than anticipated and they're a big winner pharmaceuticals will have good

numbers also they'll be up 20% and this is in terms of earnings increases and stocks like merck and pfizer have reflected the better outlook. how about trouble spots that are out there. let's take a look at the big-cap stocks microsoft is fine. they'll be fine, alphabet is okay apple, a modest decline. here are two big problems for the market meta and amazon, simply disastrous quarters and their estimates are way down and their stocks are reflecting that performance. meta is so big that it's a major drag on the communications services sector and amazon is so big that it is a drag on the consumer sector and they've had the worst performance of the year how about another potential weak spot, let me tell you, the road to long is strong here, and look for the financials, and expected to be 20% and this is the weakest sector in terms of profit growth and profit declines here and the big issue

here is higher provisions for loan losses and guys, we're expecting j.p. morgan's jamie dimon to talk about that tomorrow so the big story pretty simple here, dom. everyone is expecting the ceos to adopt a cautious position because of uncertainty on inflation and they're anticipating the analysts will start moving the estimates down. we'll see right now it's still very much a coin toss. back to you. >> you can't go out on a limb if you're a ceo you're being given a lot of cover these days for conservative commentary points bob pisani at the stock exchange thank you very much. we have more on june's hot inflation report coming up later in the show. the nearly 60% rise in gasoline prices in june is putting pressure on president biden to get a deal done with gulf oil producers during his trip. there is another high-level meeting that could have an even bigger impact on the price of oil.

plus, the euro in parity with the u.s. dollar in two decades we'll have the exposure in the trade in today's three-stock lunch. 200 points heading back toward the lows of the session. you can still see well offhe t levels of the opening bell we'll be back after this break only at vanguard, you're more than just an investor you're an owner. that means that your goals are ours too. and vanguard retirement tools and advice can help you get there. that's the value of ownership.

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the president in israel and then he heads to saudi arabia later in the week. it is all part of an effort to curb gasoline price wes oil remaining stubbornly high. there's tons of demand, low inventory and a continuing war for ukraine. bob mcanally is in an equity group and former adviser to george w. bush we were just talking about this during the break, you do have a lot of things in the market moving in a positive way coming off of the inflation trade what happens if the president comes back from saudi arabia and oil prices start to rise again because they're not pleased enough by whatever the result is that they're expecting >> well, the president's pain will go back up. he brushed off today's inflation number saying it hasn't caught up with gasoline prices which they have. gas gasoline prices will only follow crude. we expect we'll have one more rally in crude i think the market was too complacent about recession risks up until a few weeks ago

now it's probably overdoing it and whatever president trump -- biden does in the middle east doesn't matter >> really? >> saudi arabia and uae has less than 2 million of barrels a spare. they said we gave you our concession and we're done in august instead of september. we will keep our spare production capacity dry in case we have a problem next year. i think president biden has that -- >> let me ask you this it still seems like even if we got a recession would it be enough to have a global demand decline by more than that amount you're saying the supply is not as much as the slowing in demand, but is the slowing in demand will be enough to make a difference >> the price will rise to whatever levels needed to slow demand all booms like this end in recession. when it is tapped up and it is upstream, it is downstream and the only way it ends is with a recession and demand

deceleration so whether we've seen enough is not so clear in the united states the consumer is capitulation there's awful demand data with gasoline and diesel, but around the world, not so bad. china coming back. we don't think we have imposed enough pain yet, but this will end with demand being hammered down by higher prices. the question is whether we've done enough damage with the prices or do we have to go higher >>exactly. i think it was around 2012 and 2013 that the libya incident that oil prices were around $ 00 a barrel then and there was no major economic spiral and no price spike and i don't remember having a demand. we could be at a relatively high, boringly, high price for some time or are you saying that we have to get off to a blow-off top we haven't reached yet >> think we have to go higher. what's different now from 2012 or '03 or '08 is product cracks

are much wider you have these $45 per barrel crack or spread between the gasoline, diesel and crude oil normally that's $10 or $15 a barrel so $100 is a bigger crack than if the crack were lower. net-net, we probably need one more rally than the third quarter. you mentioned there were supply disruptions. half of libya has gone out things are not going well with iran refinery runs are increasing this summer and demand again outside of the united states is doing pretty well. so the ingredients are there for one more run-up back to $120 breadth or so with a $145 crack we're in the $100 range for products and that's probably enough and then we go down >> bob, it's dom how much is the russia-ukraine war affecting that demand/supply dynamic and pricing dynamic when it comes to consumers like china

and india. they are big consumers and they're probably buying russian oil right now at a discount. >> yep they certainly are it's been a perception issue, and in a way a head fake when this first started everyone thought we would be down 3 million barrels a day in russia by this summer and that's why crude oil prices were at $130 a barrel, but as we see russia has been very resilient and their product and exports have been quite strong in terms of directly affecting the supply of oil, we've seen some rearranging of flows and a lot more going to russia, india and china and the middle east and re-arranging and not a big hit yet. the real issue is what's coming. the human embargo is serious and they take half of russia's oil, and the bigger issue is what's going on in asia with secretary yellen is she going to try to dampen the prospective loss of 3 million barrels a day.

i think it's to be seen. the real impact of russia fundamentally is still to come >> in the months ahead, bob mcanally, thank you very much. we appreciate it, sir. >> coming up on the show, a multi-player merger. developing unity with iron source in a massive $4 mli.4ilon stock-swap deal. what it means for the video game business that's coming up next. ♪ ♪ connecting to opportunity is just part of the hustle.

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welcome back a multi-player merger in the video game industry. video game software developer unity is unify thing with ironsource in a $4.4 billion deal and despite being a key player in gaming in the metaverse they've been struggling all year down 77% just since january for more let's bring in steve kovac. he has the ceo of unity john richards welcome to you both. kick things off for us. >> thank you for joining us off this merger. unity shares are falling on this news in part due to the announcement and in part due to the lower guidance talk us through what investors are missing today and why you

chose ironsource for this acquisition? >> look, i think combining unity with ironsource creates an incredible opportunity at one level we're going to be able to help developers whether they're digital developers build better products and bringing more data in consumers into the creation process and also bring the creation into the user acquisition process to ensure that they get the right, best quality user acquisition so they can optimize their business and then secondarily aside from that long term vision there are amazing near-term synergies that will come immediately or very closely following the acquisition. one is around thing a network part of this very crisply. it's a business where more data means more performance for

advertisers and more performance for advertisers is good for us which is the rent share business secondly, they bring a mediation tool, a leading mediation tool that's an important parts of a full stack network, and it's a great product. again, we'll bring more data to it, bringing more advantage and lastly, i can get into the supersonic thing supersonic is a tool that we can integrate it into our editor and what that enables is the long tail, the developer looking to build a business and they're creative, but they don't have the resources for user acquisition and the sophistication for it and enabling them to find it successfully my sense is this is one of those deals where it will take a while for people to figure it out. my job is to make sure they're doing the right things in the long term, but in this case, short term and long term we're going to deliver >> yeah. and speaking in the shorter term, john, you did lower your guidance along with this

announcement you said it was macro economic factors and can you be more specific on what you're seeing through the end of the year that would cause you to lower your guidance >> guys like me in situations where we provide a certain amounts of information earlier today in public exposure can't go further, but we have crisp and clean and we'll provide further information at that point. one of the hallmarks of unity and the cfo is total transparency and we wanted to get out there so they could have an inform decision as not to be held back. >> john, it's welly, you mentioned that people need to give you some time to 10 straight what the value of this deal is? why isn't it immediately

apparent is it because you want data to unlock potential as you said a moment ago that you want them to understand or see that line of thinking better? >> look, first up, far be it from me to second guess the market the market was down overall. i don't think it would cause that bad jokes aside, my sense is we were were new sometimes and they moved in unpredictable ways and we're prepared for that. we're convinced that as we bring these two companies together the upside is incredibly clear and we provided the guidance today for being at an $800 million cubic run rate by the end of 2024 that's a big number for any company that's growing as rapidly as we are at this scale. my sense is as people study this and they understand it, they, too, will believe it and if they believe it typically good things happen with stocks, and again, i'm not a day to day stock

picker and i can't tell you when it's going to go up and when it's going to go down. >> yeah. absolutely thanks for coming on today giving us color and clarity around that and what it is happening with the macro we appreciate it a record decline for the budget deficit 30 minutes ago. the govern reported the ink for the last fiscal date from last october to june dropped 1.7 trillion from last year. that's a 77% plunge thanks to higher receipts and lower spending. the biden administration is reporting that refusing to fill a prescription for a drug that could be used to end a pregnancy may be a violation of federal discrimination laws. the department of health and human services says that includes emergency contraceptives and drugs for medication abortions.

a judge is rejectsing amber heard's motion to have the $10 million judgment against her set aside or have the trial thrown out altogether her lawyers argue there were several problems including an apparent case of mistaken identity with one of the jurors. heard can still appeal the verdict to virginia's court of appeals. bill gates is donating another $20 billion to his foundation so it can increase its annual spending by 50% to $9 billion by 2026. he tells forbes he expects he and his former wife melinda will be running the foundation together forever back to you guys i guess it's kind of romantic. i don't know. >> you can look at it kind of that way, i guess. >> $20 billion does $20 billion buy you romance? i don't know >> good for the world? i don't know >> leslie picker, thank you very much for that. ahead on the show here, top dollar weighs to trade the strong

dollar bank on earnings see what i did there ahead of key results and what the numbers could tell us about the state of not just the u.s., but the world economy and the means to a divid-end, even amid companies paying out big yields and the punsil wl end soon, kelly. >> "power lunch" will continue right after this >> they will never end >> no. 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

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got a little under 90 minutes left in the trading day so far, and we want to get you caught up on what's happening with the markets it's been a story, stocks, bonds, commodity, you name it and a look at the best dividend plays in the market right now. stocks are mixed at this hour with the nasdaq the only major index in the green the dow is off its session lows. by the way, it was off 466 points off the lows of the sessions consumer discretion and energy are the worst-performing sectors, and you have industrials, communications, services and healthcare among the big laggards now let's move on to the bond market where the yield curve sin verting following the gauge book results from the fed rick santelli is tracking the action and how much more is the bond market materieltelling us e likelihood of a possible recession? >> the bond market isn't tellinging us quite that much,

but the fed funds futures marks are and we'll get to that in a moment it's a long story today and we can tell it all today in four charts look at the intraday of 10-year note yields. at 8:30 eastern it popped and those were hot, hot, hot, cpi numbers and the minute it didn't hold 3% it popped. if you look at the intraday of 30-year bonds what happened there is the 1:00 eastern we had an auction and boy, investors they might have looked at today's inflation data, scratched their head and said i think around 3.5% will be the terminal rate. i like the fact that the bank of canada won 100 and maybe the fed will be bigger because the more they do now the better off the market is going to like it and boy, they really bought the longest maturity on the treasury curve especially foreign interest if we look at the curve as you were just discussing, dom, there are twos to tens and rights now it's minus 22.5. i have to adjust my vocabulary

and it's the flattest close in 22 years it's the most inverted close in 22 years that is huge and the amount that's covered just in the last four sessions is really huge and finally, fed funds futures contracts are making new contract lows and this is december of '22. the most aggressive fed being priced in and i think that really is a good thing to try to get the pain and the band-aid ripped off as soon as possible dom, back to you >> a resetting of expectations given those comments today, rick santelli with the bond report. seeing a slight rebound from yesterday's drop, but still well below the $100 mark. pippa stephens has the numbers pippa? >> dom, while oil has been all over the place today in a volatile session, closing here slightly higher. brent crude approaching that $100 level with wti right around

96.23. we did get the latest read on the market from the international energy agency today which said that, quote, higher prices and a deteriorating economic environment had started to take their toll on demand larger than expected supply from russia is also easing some of the tight market krconditions, u chevron ceo michael worth is warning that it might be short lived and here's when he said on cnbc's evolve global summit. >> i think it's good for the economy that prices have moderated, but i also see the risks remaining skewed toward the upside >> several factors that could push prices higher influcluding demand rebound when it fully reopens and ongoing sanctions as nations move away from russian energy finally, take a look at nat gas on the move again up more than 8%, dom, as higher temperatures boost cooling demand back to you.

>> thank you very much pippa stephens for the energy report dividend payouts hit a record last quarter with companies paying out millions of dollars, but not all dividend payers are created equal. which ones are buys and which are selling? let's bring in frank labella from franklin templeton solutions. mike, which ones which ones are the best dividend payers and where would you go in this environment >> it is just another indication that the fed will continue being aggressive and that includes the risk of a policy error so the type of dividend payer you want to go into is those in the economy that are going to be able to withstand more of a slow economic slowdown. things like beverages and pepsico, health care, johnson & johnson, utilities and american electric power these are areas of the market that have higher than expected dividends and 20% higher than the s&p 500. they're in more stable industries and so the idea that they're going to be less

impacted by any slowdown and most importantly, their volatility profile is extremely low. so all of the big drawdowns we've had this year, these types of characteristics have held up significantly better than the market as a whole? >> how about the energy trade? we know the dividend payouts have had an equity capital market of things and the stock prices are on the rise and are those dividends still safe do you like them and do you want to put money in the energy dividend payers? >> we went into this year with almost no exposure within the stocks with the dividend portfolio and the reason for that is because of the poor earnings profile and that has changed dramatically and energy as a sector looks much more sustainable as it relates to those underlying components and the idea here is people think the only is the sector there's broad sector alignment that you can get in the dividend impact that is not solely reliant on the price of oil.

>> mike labella, franklin templeton and thank you very much for those dividend plays. we appreciate it. >> thanks for having me. coming up, it's like having a crystal ball nomura changed its jump in july. markets after those remarks now just following along we'll speak to the economist behind this call right after this break bubbles

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welcome back to "power lunch," everybody. a big fed call by nomura the firm expects the fed to hike rates by a full point, 100 basis point, at its next meeting in two weeks. this call came after the inflation data this week and before rafael bostic left that possibility in remarks this afternoon that left the markets to price in the chance of a full-point hike for the first time as steve liesman reported at the top of the hour markets interestingly, recovering the dow is only down 69 points and let's bring in robert, nomura's senior u.s. economist good to see you. even though the cpi is higher

than expected the numbers look better over the last number of weeks and so why do you think the fed would increase the rates right now? >> powell told us at the june meeting when he was asked about a hundred basis points, you know, they'll be watching the data and they will react appropriately. we think this morning's report underscored just very broad inflationary pressures across the economy. i think for us what we paid the most attention to was rent inflation in particular which was correlated with these trend inflation measures those picked up even more than we expected and we had a pretty aggressive rent inflation forecast for a while with inflation expectations market-implied measures have come off, but i think if you look at consumer inflation expectation, they have arguably gotten much worse and the distribution of inflation expectations particularly for the long term has flattened out quite a bit. i think the fed is paying more attention to that and they're becoming more concerned about

how well anchored they are and that adds a new dimension to the fed's reaction function and you add that together it's not hard for them to go to a hundred basis points in july after hiking to 175 basis points in june >> is the expectations component the main reason why? because we spoke to stanford professor at the beginning of the show, how much of that expectation or this notion that consumers of the public will be kind of anchored to a higher general level of inflation and that's dangerous for the economy. how much of that is factoring into the backward-looking data like the cpi and ppi and still going ahead with a hundred basis point rise this coming two weeks? >> it is backward looking, but to be completely frank i don't think the fed has much confidence in their forecast ability for inflation given how uncertain everything is. that is, they'll be reacting to data by data, month by month as things come in they'll determine appropriate policy i do think the consumer

inflation expectation story is complicated. we know that consumes are respond to higher gas prices and higher food prices and maybe those things will come off and right now the risk that the fed faces is the inflation is the cyclical story right now it's about rent and overheating labor markets becomes a much more structural story and consumers start to expect 8% inflation for the next five to ten years and they start to negotiate wages and firms start to raise prices based on the wages they have and that's the risk that the fed is staring at right now and it's justifying stepping up the rate increases >> when you said that europe is hamstrung right now and obviously the bank of canada hiked by a full point, but it would help if europe could be more hawkish to get at the global demand supply imbalance can you comment quickly on how much of the heavy lifting you have to do and how our inflation

fight is situated relative to the rest of the world? >> i do think the u.s. inflation situation is unique just in terms of how broad these pressures are. we are really concerned about nominal wage growth and service inflation in the u.s it's no longer a story of supply chain imbalances and it's becoming a structural issue that requires a stronger response for the fed. for europe, the economists tend to think it's related to food and energy specifically, so you can imagine that policy tightening required might be less compared to what the fed needs to do. maybe they don't have to hold rates at a restricted level, but we ultimately think because of how entrenched inflation is and the cpi report is a great example of that and it will require a disproportionately larger response from the fed with the u.s. >> there you are with the bold call, thanks for joining us on such short notice. robert dent is nomura's senior

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welcome back time for today's three stock lunch. we are trading some consumer staple stocks that are most exposed to the dollar moves. let's bring in cnbc contributor, managing director of bk asset management it's always great to see you and get your thoughts. you have a global view let's start with danone. i know them for europe not a lot of exposure for the stock. buy or sell? >> buy because in this kind of situation you basically want to be long companies that source their product in euros and sell in dollars, which is the classic case of danone it has a very large north american presence. trying to expand and improve its operations here. to me it's a sleeper stock, but i think it should benefit from positive exposure and has a very nice, attractive trade at this point in my opinion. >> all right nice and clear take on that one.

what about diageo, boris >> i love diageo it's another one of those companies that has sourcing in pounds and euros because it owns guinness, johnnie walker, great brands and obviously 55% of sales are in a north american segment. spirits continue to grow and that will be a very strong stock. really not just for now but for the long haul. but in the meantime really get a nice bump from positive exposure in my opinion. >> premium spirits has been a trend that might continue after the pandemic as well so the last one here is a consumer staples name many of us know in the u.s., it's mondelez. what do we think >> it's the problem in reverse a lot of the sourcing is in dollars but 40% of their sales are to europe and 30% to latin america and middle east and north africa those will be troubled regions

in my opinion. the consumer is in far worse shape than the labor markets there are much worse, and they're starting to see a decline because these are all discretionary goods. you're not just going to buy chocolate if your last dollar goes to spending real food mondelez will surprise to the down side. this is one i would step away from, trading at the lower end of its range and could break the lows as a result of negative fx exposure >> boris schlossberg, thank you very much. we'll see you soon >> thanks a lot. coming up next on the show, looking to the etf market for signs that inflation may be rolling over and take a look at the netflix shares right now moving higher following news that the company has chosen microsoft as its partner for its new ad-supported subscription plan. those netflix and microsoft shares on the move keep it here

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- common percy! - yeah let's go! on a trip. book with priceline. you save more, so you can “woooo” more. - wooo. - wooo. wooooo!!!!! woohooooo!!!! w-o-o-o-o-o... yeah, feel the savings. priceline. every trip is a big deal. we started off the show talking about the inflation narrative going on, the hottest cpi in 41 years and maybe what the expectations are going forward not just for consumers but investors. we thought we'd do it through the lens of etfs because investors arguably and traders have been pricing in a lower for

several weeks if not months. three charts first of all the spdr gold etf look at the peak in the february and may levels you see this roll over effect with gold prices, a traditional inflation hedge. another hedge has been real estate now interest rates play a part of that discussion as well the interest rate environment, the vanguard real estate etf tracks that real estate market and even since then, since arguably december we've seen a roll over of some of those prices as well, a real asset and one last one, kelly, before i let you take a look at what woo he see overall is the invesco agriculture etf, measures the soft commodities, wheat, corn, grains and, again, april/may, that roll over effect there. the markets expect that had inflationary narrative roll over

>> saying she doesn't expect a full point hike because expectations have rolled over as well we're back to 2.25 >> just to think about the idea the markets are pricing in real time is something kind of. >> useful. >> and wondrous to behold. >> we will leave it on that note dom, thanks for being here "closing bell" with sara eisen starts right now >> another red-hot inflation sending stocks on a wild ride with the dow trading nearly 500-point range. the most important hour of trading starts now take a look at where we stand in the market s&p positive a few u-turns we've seen it's consumer discretionary stocks leading the charge. bath and body works the winners there.