>> carrie? sorry, i started with you first. joe? >> we need to pull up a chart of apple. it is breaking out. >> it is. >> breaking out significantly. it holds the key to the market it's unbelievable the breakout. >> 165, near 4% game. >> jimmy. >> goldman sachs is also breaking out. >> i will see you in a few, "the exchange" is now scott, thank you very much i'm tyler matheson in for kelly today. here is what's ahead on "the exchange." technology leading the gains, we were just talking about apple, as investors digest more fed speak, earnings and economic data, but could the bounce be short-lived? we will take a look at three names in the sector well-positioned to keep some gains going. plus, the china cyber threat how likely is an attack against the u.s. in response to speaker pelosi's taiwan trip one of our guests today says it's very likely and expects such a cyber response to be a

big one. and the details and safe guards he's telling clients to put in place. and we're charging and snacking in the earnings exchange today, the key things to watch on lucid, sun run and, yes, hostess, twinkies and cupcakes and how to position on each stock the icing on the cake today. but we begin with today's markets and bob pa sonny at the new york stock exchange. >> a little bit of a sugar high here we're breaking out, take a look at the major averages right now, not so much the dow but the s&p 500, nasdaq definitely breaking out. remember, we were in a trading range for the s&p for a couple months, 3,600 to 3,900 that seems like a long time ago a few weeks ago we broke out, all of a sudden we were 4,000 to 4,100 we are breaking out of that range, too, haegsd towards 4,200 the highest level for the s&p 500 since early june why is it breaking out because the market wants growth.

they're trying to play in fed pivot, i know the fed officials are apoplectic about this but they are trying to play t big cap tech are breaking out all over the place, apple, microsoft doing well land research $500, that was -- that's up 25% in a month semis are back in a very big way. on top of that and not just quality, quote, unquote, technology, speculative technology is having a field day, cathie wood stock keeps calling up inn ntelia, block, unity all cathie wood stuff up big again today. what don't they want they don't want energy, folks. we had a terrific earnings report from occidental, just terrific, pioneer natural also, crazy dividend, almost 8% for pioneer natural, they sold right into it, right at the open oil collapsing today down 91, midday doesn't help a lot, but a machi marathon, no energy in

these stocks for whquite some time here is what i see, the momentum is definitely with gret, technology, the earnings for the third and fourth quarter are slightly lower but not much. they certainly do not indicate any kind of earnings recession oil is definitely lower, that is a big plus for the bulls who believe it is of course a front for inflation. ism services today the new orders were higher, that's good, prices are still increasing but a much slower rate take a look at the vix, this is why the stock market is ra rallying maybe it's not quite goldilocks but we have a potentially slower economy that doesn't indicate any serious recession, prices are still high but starting to moderate a bit and the vix is skauming down, while not quite the lowest levels we have seen in a while, a couple days ago it was lower but essentially the lowest levels since going back to early april. our next guest is betting on technology but says you have to

be very selective in this environment. joining us now with three names she likes a nancy tangler. nancy, welcome i see that you seem to have your eye on the labor market. we will get a labor report on friday, but your eye was caught by yesterday's decline in jolts, the jobs openings and also last week's increase in jobless claims are you worried about a real serious labor slowdown and hence a recession? >> you know, tyler, good to see you, by the way. >> good to see you. >> i don't think so. i think the fed's objective was to try to destroy available jobs before destroying real jobs. i think we're getting a bit of both we're watching it but we still have 10.7 million job openings in the jolts report yesterday. jobless claims have risen dramatically from 166,000 in

march to 257 last week all of this movement and in the jolts and the jobless are coincident with when the feds started to seriously address inflation through tightening -- quantitative tightening and raising the rates. i think we are far away from a labor crisis or high unemployment rates i don't know if we are in a recession, but it's just technical, it's been so politicized, you know, the first quarter we saw a negative print but it was because we had a surge in imports, they were unable to unload -- if you recall -- offload from the shipship in december so all that stuff came in in the first quarter which hurt target and walmart because their inventories bloated. i think we have to understand why the gdp number has been negative i don't think it's going to be a serious recession. >> is the fed doing what it should have been doing or maybe what it should have been doing late last year, even into the

summer of last year, and am i right in thinking in maybe you see a soft landing for the economy? >> i certainly hope so i think one of the wild cards, tyler, is this inflation reduction act. i find the hubris in that title to be amusiamusing, but the offs that are in that bill don't kick in until 2026, by that i mean the drug pricing portion of it so you're going to get all this spending again and that's what really sparked inflation in the last round, it was the american rescue plan and then you had a fed that sat on their hands for way too long so, yes, i think they're tightening, conditions have gotten a lot tighter, we started adding his risk into our bothers in mid-june, that turned out to be a good call and you're seeing it through the nasdaq. >> i kind of agree with you on the title of that bill, of that law. it's ironic or cheeky or, i don't know, whatever >> all of the above.

>> the word i was thinking of isn't one i would want to use here but at any rate, you seem to like cloud stocks and who cannot like defense stocks in a world that seems to be bristling with malevolence and malice towards one another? >> yeah, well, cloud and cyber have been -- long been our themes and i've talked about that on your air many, many times. those were the names we were adding to in june. the growth is still robust, it's a solution for a short, you know, labor shortage, same with the digitization names semiconductors we've been adding to all of those, we are overweight technology now and then defense, i think raytheon is a great way to play that because you are not just getting defense spending but you're also getting commercial airline spend. passenger miles are at 70% of the pre-pandemic levels so i think we're going to see further acceleration there and then many of the

countries -- the nato countries are actually going to spend more than 2% according to the ceo of raytheon, 2% of their gdp, sorry. so i think that's a great place to hide a portion of your assets and then add to the risk on pull backs, not today. >> microsoft was really dead money for about a decade but it's been anything but and it's -- and it seems to have done a masterful job at diversifying what it does. it's in gaming, it's in the cloud, it's in its basic business services things and so forth. it's got linkedin, which is an extremely potent tool, and you like microsoft a lot >> we do, and i think the cfo amy hood gave us good guidance that the fiscal year 2023 they're going to continue to produce double digit growth. dividend grows 9% annualized and you are not getting much of a deal because the stock has appreciated so much. shout out to microsoft, you can

raise the dividend a lot more in coming years. >> all right. >> i think it's a great holding, it's stock you can own for a lifetime. >> nancy, very nice to see you again. nancy tengler. crude oil slipping 3% right now, opec agreeing to raise production, but by a very small amount we will get to the number in just a minute with brian sullivan who joins us with the latest brian, that increase was barely an increase. >> i mean, you could almost call it a cut in some ways, tyler anybody hoping for a big output increase from opec was certainly disappointed today, to your point, they gave that tiny 100,000 barrel per day increase. put that in context. that is 0.1% of global oil demand, it is just 1/20th of a 2 million barrel per day projected demand jump next year. why didn't they do more? most opec countries likely simply just don't have the excess oil, many are struggling to meet their current quotas and

opec is also worried about what is hay head. remember the full european sanctions on russian oil do not kick in until december 5th got partial sanctions now, full ones kicking in on the 5th opec making a very vague opec-esque type reference to what may happen by saying basically, quote, all right, well, you know, we've got these -- we want to make sure that we've got some oil in case we get some external supply shock or whatever it is that severely limited capacity. so what they're saying there, tyler, is that we don't really know what's going to happen at the end of the year with russia if there is a supply shock, a couple million barrels a day of russian oil simply come off the market, that if there is any spare capacity, opec wants to be able to meet that demand then, not now. 100,000 barrels per day, barely an increase at all. >> they basically want to keep a rainy day fund or so they say because the acute moment may not

be here right now, it may come in the winter, which is possible, i suppose, right >> yeah, because you've also, remember, got the 160 million barrel strategic petroleum reserve that we've been selling just under a million barrels a day now for a couple of months that is ending as well and it's got to get refilled, all kind of at the same time these russian sanctions are going to kick in okay so here is the thing, why is oil down today we're looking at 91 and change, which by the way oil has been falling almost every day for the last couple of months, gasoline down 50 days in a row, that's good news. so what's going on the oil bears will point to three reasons why oil prices are down, one is recession, two is a projected increase in u.s. oil production and number three is recession. yes, i did that on purpose, tyler, i mentioned it twice because if you are referring to the bear case, recession, slowdown, driving less, whatever it may be, that's your main reason the bulls will say, okay, the

russia sanctions kick in, you have the spr release rolling off and projected 2 million barrel a day increase the last couple of weeks the bears have been winning but let's it be clear, 91, tyler, $4 gas. i'm old enough to remember february when that was expensive. >> yeah, it's not exactly low. what are you hearing as the range for oil prices over the next 6 to 12 months, let's say is the low in the 70s and the high in the 120s what are you hearing in terms of where we may trade >> yeah, do you remember the late great boone pickens, tyler, i'm sure you spoke of him a lot. he would always say, brian, i see the range is 70 to 120 he gave himself all this room both ways so he would be right i love boone, i mean that respectfully i've heard 50 to 150 the ultra bears will say, listen, global economic

slowdown, you know, china keeps locking down, whatever, u.s. rolls over, europe has all their problems, you could go down to 50 if production does not come down the uber bulls out there will say 150 or above because, yeah, we are in a little bit of a downturn now but the spr release ending december 5th, the russia sanctions, a couple million coming off the market as well. i spoke with a guy yesterday actually it takes 4200 wells, new wells a year, to keep production in the texas permian basis flat i want you to think about that 4,200 wells, that is oil flow, that's the name of the company, oil flow data, 4,200 wells, new wells, to keep production flat and if you talk to anybody out there, tyler, texas, or maybe in tyler, texas, they will tell you can't find people, they can't find steel, can't find sand, can't find truck drivers >> you have to have 4,200 new ones because 4,200 old ones go

offline? >> that's basically it i drink your milkshake how many straws are going into n. that milkshake, there will be blood. you think about that, i know you have some guests coming up that can talk about it more elegantly than i. >> hardly. thank you, sir talk soon. >> yes, sir. coming up, u.s.-china tensions rising following speaker pelosi's trip to taiwan. a couldn't verse y'all one should the u.s. be bracing for a cyber attack from china as a result our next guest says yes and it could be a serious one what he sees ahead and what he's telling his clients to do to protect themselves now. plus off-priced retailers up double digits over the past months but wells fargo says they are not immune to the cross-currents we are seeing in the retail sector. a look at what's in store. how about that, in store, with a group, the analysts find the note will be with us. as we head to a break let's take a quick look at the

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u.s.-china tensions rising following house speaker nancy pelosi's controversial trip to taiwan we are live in beijing with the latest hi, eunice >> reporter: tyler, speaker pelosi has departed taiwan but the repercussions of her visit are still unfolding. the speaker pledged u.s. solidarity with taiwan, an island that beijing claims as its own. she was granted a medal of honor from the president who also hosted a luncheon with her with other top business leaders, including the founder of chip foundry tsmc speaker pelosi visited the parliament where she was promoting the u.s. chips act and met with human rights activists. she is now in south korea, but pretty much everyone in the region is waiting to see if there will be further fallout from her visit the chinese military in about 11 hours from now is expected to hold extensive exercises all around taiwan, a taiwan officials have actually said

that this would violate their territorial waters and the concern is that these drills could lead to an accidental escalation taiwan officials are also fearing a potential impact on the global supply chain saying that the pla drills are acting as an air and sea blockade of taiwan now, authorities on the island warn that the live fire drills are happening -- or are expected to happen very close to ports. they say they are also coordinating with aviation authorities around the region, in japan and the philippines, for example, for airline -- for air traffic rerouting and that's because some of the airlines have been reportings that beijing has warned them about staying away from parts of the island that are described as danger zones now, the exercises are scheduled to end on sunday, but it's very unclear if the measures that china is taking will also come

to an end. the foreign ministry today seemed to suggest that there were more measures to come when asked about further punishment the spokesperson said china will take all necessary measures to resolutely defend national sovereignty and territorial integrity. we will do what we say ty >> thank you very much, yunis yoon if those exercises are going to go until sunday we are only at wednesday and of course that means there are five more days for things to happen some of them might not be good. all right. on top of all of this, this military brisling, this cacophony of sound and fury from beijing, the taiwanese government saying it was the victim of a denial of service attack ahead of that visit by speaker pelosi and that has got cybersecurity stocks on the move crowdstrike, z scaler, okta all higher over the past week and our next guest warns more attacks are on the way both in

taiwan and here at home. let's bring in our friend david kennedy, the trusted sect ceo and a former marine corps hacker good to see you. what do you make of the supposed hacks or disruptions -- i guess it was a denial of service attack on the president's office in taiwan and various other government minute trees. how big was it how disruptive was it? do fingers point to beijing or to amateur hackers >> yeah, with he see this very commonly with china. china plays very well on the cyber front, they are pure competitors to the united states and our western allies and they are increasingly always enhancing their capabilities last year alone we had some unprecedented hacks come from china, kind of establishing dominance. the distributed now service attack is more on the lesser side of an attack. what it does is it basically barrages the websites with traffic to where it didn't handle it and overloads the servers and then shuts those systems down for the time being at that period of time with the

enhanced amount of drills we're starting to see, you know, towards taiwan, as well as, you know, the distributed now service attacks against the websites themselves, these are more precursors to what, you know, we often fear from china, which is more larger-scale attacks to show the dominance on the cyber field to create either pain here back in the united states with our western allies or with taiwan to start to get political changes that occur here or repercussions that china would say, you know, were warranted based on the pelosi visit to to taiwan we are all actively looking at this, we are all prepared. we know that china is very aggressive, continues to get aggressive, but, you know, again, they are one of the best when it comes to how they play on the cyber field so we are all very concerned about it right now. >> you say that they are the number one country for hacking and stealing intellectual property would you expect that if beijing gets involved in cyber assaults on the united states or on

taiwan or our friends, that they would go after businesses or that they would go to disrupt public services or that they might go to disrupt governmental functions? >> china really doesn't play by the rules when it comes to cyber. the united states we abide by a number of laws, our intelligence agencies are limited to what they can do from an infiltration, collection, intelligence gathering perspective. china is continuously pushing the envelope, they are the largest culprit for intellectual property theft, continue to steal from the united states and basically create products that compete with us for half the cost because they don't have all the r&d out there. when it comes to what china is capable of it's all on the table. i would expect since this was very largely a political nature -- political in in a i tour that they would start targeting more military installations, command and control, look at potentially going after our political system in some way, shape or form we obviously have elections coming up soon so we were very concerned about our election process currently and china playing a major role in that

additionally our critical infrastructure is some of our most vulnerable, our ability for water treatment facilities, nuclear power plants, how we do day to day life and energy production here in the united states, these are typically archaic systems that are very vulnerable in nature there's a lot of folks on the defensive side, you know, always trying to increase, but we're still 15, 20 years away from really having a solid defensible position against these types of attacks, especially with the likes of china. >> quick thought on the salana attack which apparently drained $8 million out of some cyber wallets. what have we learned from that quickly, and do you expect to see these kinds of assaults persist even though the price of cyber isn't as dear as it was six, ten months ago? >> yeah, it's a cryptocurrency platform that allows applications to essentially be developed on top of it all indication right side pointing at there was a severe vulnerability that leaked the

private key which is really what protects the cryptocurrency, protects the transactions, protects the integrity of that data and it looks like hackers figured out a way to do that and impacted over 8,000 bitcoin wallets, which are the most sensitive piece to cryptocurrency this isn't a flaw in bitcoin but a flaw in the platform itself. >> if there are openings the criminals will exploit them. david kennedy, thank you for making a tough subject simple and easy to understand we appreciate it. coming up, the paypal transformation, investors buying the company's drastic plan to turn things around, the details ahead. plus solar stocks have been crushing it on earnings. will sun run continue that streak earit ren heh in earnings is ahd ghhe o"t exchange."

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all right. let's go to the data bank and make a deposit, shall we u.s. markets right now the dow industrials up about 136, the high was 4 -- excuse me, 1.36%, up 439 points, s&p 500 up 1.35% and the nasdaq the big winner as tech powers ahead, apple a standout performer today up 318 is the nasdaq. let's see what bertha coombs thinks of it. >> looking pretty green over there. hi, tyler. here is what's happening at this hour ron and the u.s. and the eu are all sending representatives to vienna for a nuclear pact discussions. a u.s. official said the administration's expectations are in check, but it stillwell comes the european union's effort to revive those

discussions. nbc news reporting in the last hour that rudy giuliani will probably not face charges after a two-year investigation by federal prosecutors in new york they were looking at whether his efforts several years ago to have the u.s. ambassador to ukraine removed from her post required him to register as a foreign agent. and president biden's doctor says he is still testing positive in his rebound covid case with an occasional cough, but feels well and is fever-free the white house just released a photo of the president at his desk this morning. speaking on the phone with his national security team and for the first time since the pandemic began a big fireworks festival returned to central japan, but organizers are still worried about covid infections and in an effort to control the crowd size, spectators actually had to pay for their seats. so i guess that's like fireworks behind the pay wall. >> exactly that's pretty spectacular there.

bertha, thank you so much. coming up, we are going to take a look at lucid, sun run and hostess, they all report after the bell today but only one of them is expected to turn a profit here is a hint, it's the sweetest name on -- that's a give -- that's a lay up. and the only one in the green this year. we will give you the action, the story and the trade for all three of them in the earnings exchange ahead your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

welcome back, everybody. it's time now for the earnings exchange where we give you the action, the story and the trade on three names set to report results after the bell today first up is lucid, which i am sometimes, but sometimes not the ev maker is down nearly 50% this year, lowered full year production estimates from 20,000 down to around 14,000, back in q1 amid supply chain struggles and the street is eager for any update on that phil lebeau has the story here danielle shea director of options at simpler trading will join us with our trades today. phil, take it away, lucid seems a little cloudy.

>> well, this he need to show progress, tyler, there is no doubt about that, especially after bringing down their guidance for full year deliveries in the first quarter. do they change it? it's 12 to 14,000, that in part depends on whether or not the production rate can continue to increase so that they can support delivering 12,000 to 14,000 vehicles this year. what's going on with the cash burn are they able to bring it down finally, what's the reservation and the backlog level? it was at 30,000, approximately, at the end of q1, so any details we get in terms of showing that they not only have stabilized production, but are also able to ramp up deliveries and there's still that demand out there, that will go a long ways to determining what happens with the stock, regardless of what the numbers are. i mean, with a company like this, if it's off dramatically, maybe the stock moves, but i think it's really the guidance that will determine what happens with shares of lucid. >> all right phil, thanks very much let's turn to danielle for her take on it i look at this company, i look at the price for its vehicles,

154,000 for the air grand, 107,000 for the next one, they had better be good because that is a premium priced automobile that's a niche within a niche, danielle what do you think of this stock? >> you know, tyler, i completely agree with you i'm a huge tesla fan, first of all, but i don't like the stock at all what i can tell you about the fundamentals is it doesn't look good, it's been trading on the lows, however, what i have to say about this stock is that it's one of the most heavily shorted stocks in the market and the problem is that this earnings season we're seeing a trend in which companies will report slightly better than feared and rally so when i'm looking at lucid, i don't like the company, i don't like it to the long side on a fund amount amountel perspective, but look at the chart. right now we're up against some previous highs, we have already rallied going into earnings. the stock has about 22% high short interest and it has an incredibly high cost to borrow

around 14% so what that means is that if we end up getting a large move on earnings due to any kind of surprise i would say $4, $5 move to the upside this could really set off a massive short squeeze. >> all right so when you started out there it was like i really don't like this stock one of the fish in your tank just went belly-up on that alone. all right. danielle, let's move on to the next one which is sun run, the solar sector has been on a tear but no love for sun run, those shares down about 13% this year compared with the 5% gain for the invesco solar etf, short interest in the stock, here we go again, danielle, sits here 15%. kristina partsinevelos has the story. >> tyler, shares of sun run have popped since the announcement of the democrats' inflation reduction act. we saw it a few weeks ago, it includes the most ambitious climate spending package in u.s. history, $370 million, but when we are talking about sun run

there's three major points i want to focus on, the sustaining customer growth segment, so can this happen, guggenheim noticed slower web traffic on residential solar developer websites, maybe that's a sign that weakness is coming, there could be nervousness about the outlook for new customers. there are some positives, sun run does have an installation backlog, about one to two quarters or so and then it also recently announce add partnership with ford so that should help the second issue is supply chain problems is this going to start to ease because sun run deals with so many suppliers, there's also been a battery supply bottleneck, we will be checking to see what higher material costs, too, will mean for margins. and then lastly this is not an impact on earnings but more of a conversation that will probably come up short seller muddy waters claiming sun run is deceptive and close to bankruptcy and sun run responded saying, hey, no, we stand by our financial statements that's not true there you have the estimates. >> let's move to danielle and get your take on t you are long

and bullish on this stock in the long run, you think it's close possibly also to a short squeeze. >> yes, you know, and i feel the same way about the stock as i feel about lucid, you know, looking at the chart pattern obviously we've been in a bad down trend, the fundamentals are kind of a mess, product is very expensive, however, when you look at the chart on this ticker we are right up against april highs and with a market maker expected move of $3 that would break us up through the highs and the stock has about 15% high short interest i actually favor in phase, if you look at in phase they just made a new all time high the irony of inflation you would think that it would cause people to shy away from expensive products like solar panels, but what they're actually seeing is we're seeing a rise in adoption to solar panels due to the high cost of energy prices. so i'm actually not going to buy this one pre earnings but if it

does gap up and move more than about $3, $4, i'm going to look for the post e momentum move for a short squeeze. >> let's go to our final name, who is did he say, does it have the mostess? outpacing the broader averages up 11%, has beaten estimates for two years in a row as it continues to grow it's product line and seemingly avoid any major hits from inflation. kristina, what do you think? any company that has a ticker symbol twink is pretty good, right? >> i don't know about that, but maybe you like twinkies, i don't, but overall inflation, you brought that up, that could actually help consumer products like this because people are buying more of their food and making food at home. so this would benefit consumer staple companies including hostess. there's three major food trends we are starting to see, the first one is that consumers are trading down so they're going for the cheaper products what does that mean for hostess?

because some of the products are a little bit more expensive than other brands private label is growing and if private label is growing that means that pinkie -- people aren't going to be buying those twinkies and then the last one, a concerning factor across the board as supply chain issues start to ease, you have inventory levels that have been high soo they will be putting out promotions so what does that mean for hoe did he say' gross margeness going forward. we are expecting eps of 22 cents a share. >> she is not big on twinkies. >> but i like may west, i think it's only available in canada, it's a chocolate puck. >> that sounds pretty good danielle, what do you think of hostess? >> i like the company, i think the fundamentals are strong, i like the overall trend, they've been doing a fantastic job increasing their margins and increasing growth. you have younger folks coming in, eating a lot of snacks and they've also completed an acquisition that enabled them to expand their product line.

i think that they're well-suited to deal with the current inflationary environment f they do happen to be a little bit soft on earnings, especially because they have already rallied going into the report, i would love to pick up this stock around $20, $21 and i think it can actually make a new all time high i'm targeting about $26, $27 a share so pretty decent upside on this one. >> all right thanks a lot, danielle we appreciate it kristina, thank you as well. we've still got more big earnings on deck including elf beauty the ceo will join us tomorrow at 1:00 p.m. eastern to break down his company's q1 results up next, the ism services index posting a supplies jump in july -- i was waiting for this the ism index suggesting economic expansion despite the macro headwinds, but if you ask mom and pop shops they're singing a very different tune.

the latest results of cnbc's small business survey and what it could mean for the midterm elections after this quick break. more ex-change after this.

all right. welcome back, everybody. the results are in from the latest cnbc small business survey and main street not feeling great as inflation runs hot and growth contracts kate rodgers joins you with some numbers. >> tyler, good to see you. sentiment is continuing to slip on main street our cnbc survey monkey small business confidence index fell to an overall store of 42 for q3, a new low in the several years we've been doing the survey and also below the previous record low of 43 set during the first quarter of the biden administration nearly every component in the index worsened this quarter, only a third of owners say that business conditions are good, nearly the same amount expect that their revenues will decrease in the next year.

now, the big reason for the decline in optimism this quarter is inflation concerns. 43% say it's the biggest threat to their business, that's a new high for this year 77% say they expect inflation to continue to rise supply chain and labor woes do continue to weigh on main street but nowhere near as much as inflation. the pandemic has taken a back seat in terms of impact to business about that recession, most small business owners think we're already in it. our poll finds 57% of owners say we are now in a recession, 14% saying we will be by the time the year wraps up. mess simple amongst small business owners exceeds the pessimism in the general population we surveyed where under half think that the economy is already in a recession. interesting that small business owners are feeling worse than the general public when it comes to the topic of recession. >> kate, you kind of answered this you said that inflation has knocked out labor worries as the number one concern of small business owners, but what are we seeing on the small business labor front?

>> yeah, it's such an interesting picture here so a third say that hiring is still a problem, 45% say wages are rising this is kind of consistent with what we've been hearing from the national federation of independent business in their poll that hiring is still an issue, wages are on the way up, but if you look out at plans for future hiring, those are starting to slow because small business owners either believe we are already in a recession or that's coming down the line, so they need workers now, they are not sure they will need them in the next six months or 12 months ahead. >> kate, thank you very much kate rodgers reporting from the city by the bay. still ahead, despite all the recession chatter, which we just did a little bit right there, inflation concerns, yes, check that box, and cuts to earnings estimates. the retail sector is up more than 11% over the past month and it is the off price names that are pulling ahead, perhaps due in part to those inflation concerns, tjx, burlington, ross stores all up this week, we will talk to an analyst about the

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wells fargo warns there could be some pain ahead for the group in the short term, prompting the firm to lower forecasts for a number of these very familiar stocks joining us now the analyst behind that wall, managing director of wells fargo. ike, welcome you've sort of cut across the board borshow. welcome. you've cut across the names with burlington, ross stores, tj maxx among them cutting estimates and so forth why? >> tyler, so keep in mind, the numbers of the cut, price targets didn't get cut we are actually warming up to the prices we are warming up to ross and tj i think that it's more about understanding where we are in the cycle for our space and what's going on with the price the highest level of what's going on for the last 18 months to two years and it's been very hard for these guys to run their model with inventory

people didn't need the off-price channel and now that's changing all of the checks and we know inventory and space, and i think it starts to be a clearing event even though q2 might be weak >> for the people who are considering buying these stocks or who own them because many people like them, as you seem to, what does your call really mean earnings are going to go down in the near-term, but you like the stocks in the longer term. am i understanding you correctly? >> yeah. i think the setup is improving and so why is that the numbers are going down and why would that not be bad for the stock? it's because the inventory dynamics, and you're not going to see in the numbers right now. if they're getting really good buys with great buying margins and packing away

high-quality-branded product that will get unleashed in the next six to nine months has nothing to do with q2 earnings and you have to get past these things with bath and bodyworks, bbwi from a couple of weeks ago and what happened? the stock was down 10% and then it closed up and now it's up 25% more high-quality names and you'd have to buy some of these names early so you can't sit on your hands too long otherwise you sit out on opportunities to own the assets within the discretion >> once again, if we get numbers today that aren't what we might have been expecting here, if it comes down a little bit. don't freak out. don't run to sell your shares. if anything, maybe add >> i have to be careful because i have a buy on burlington. >> right >> the q2 numbers in and of themselves should not be scary, although there's an execution misstep and getting one of them

is getting a category wrong and there's a management change and something that we're not thinking through right now absent that, and we're talking about a week, q2 and the guide will be to lower our numbers and i don't know that as thesis changing >> so let me ask a freshman-level question. do the inventory issues that are afflicting some of the bigger stores like target and walmart and others, do they help these little guys? >> over time, yeah it will lead to more closeout buys and closeout buys are higher margin buys because they're liquidations and they'll get a better margin than they would a product that's made for them on top of that, you know and we know the issues that are going over with apparel and said that we are in the space right now, but it's not just that there's a lot of product over in

china right now and the supply chain bottlenecks are behind us and that's a buy for these guys and the key here is you're not going to see the benefit of those buys coming through until they sell them until early next year and it's not about q2 you will look forward. >> i am going to go home this afternoon and tell my wife that come january there will be good stuff in her favorite store homegoods. i want to know what she says. >> i'll be there with her waiting in the car while she goes on. ike borechow of wells fargo. thank you. >> buybacks and investor shares popping on paypal's deep transformation plan and the details after this quick break and a check on the markets with the dow up more now than 400 points we are rallying this afternoon we'll be right back. this thing, it's making me get an ice bath again.

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a race to the finish welcome back to "the exchange. paypal reporting better than expected earnings and it's the company's deep transformation plan and an activist investor that's pushing shares higher today. kate rooney joins us with that story. hi, kate. >> hi, tyler this is the transformation paypal investors have been waiting for. it's cutting costs and buying back $15 million in tocstock an major shareholder, paypal is in the process of deep transformation of the business to regain momentum paypal hired a new cfo, blake jorgenson and it had been a hang ore pick for paypal's stock. executives also outlined a cost savings program that's expected to save $900 million this year with another $1.3 billion in savings next year and margin expansion set for 2023

paypal's ceo gave some examples of what they're already doing to save some money. for one, they're pulling back on hiring and scrapping plans to launch a stock trading platform. sources had told me last year that paypal was looking to take on robinhood with the trading app that is no longer on the road map it's reallocating those resources to its court check out business then the elliott management. paypal confirming the $2 billion stake and the managing partner with the paypal's release highlighting the initiative that it says will drive that growth and value. investors i've been talking to say the elliott backing really gives this turnaround plan some teeth and it adds pressure to deliver many in the investor community had lot of and a bit of trust in the paypal team after it shifted in prior quarters tyler, you can see the excitement in paypal shares up more than 9% after what has been a tough year for that stock. >> in a phrase or two, what went wrong at paypal?

what did they miss >> overspending, that's been one of the big things and over ambitious targets. they had set the goalpost too high as some might describe it and just lack of focus it seems like things like stock trading where the investor community said we really want to focus core checkout and that's the bread and butter and the revenue driver here and it may have taken that pressure to drive that, but it seems to be the investor community here. >> kate, thanks very much. that does it for "the exchange." i'll join courtney reagan for "power lunch" which starts right now. ♪ ♪ and welcome, everybody, to "power lunch." i'm tyler matheson did you miss me there? did you miss me for that 12 seconds? here's what's ahead this hour. stocks are higher today right near session highs at this moment even as fed officials continue