we're also watching bond yields ticking up a bit at 3.86 right now. that does it for "halftime." "the exchange" begins right now. >> thanks for handing me that stew of numbers. the job market still going relatively strong, keeping the fed firmly on its hawkish path, or so it would seem. stocks lower as a result but is the market maybe overreacting we'll debate and look at how to position your portfolio from here forward and the consumer still going pretty strong. new data out from mastercard the man behind that report will join us with the trends he's seeing and how that factors into what the fed may do. and a special three buys and one bail jobs report edition, including one name gena sanchez will do well no matter the state of the economy she joins us ahead but we begin with today's sour markets and bob pisani at the

new york stock exchange. bob? >> and i wish we had good news, but we don't we're sitting near the lows for the day. still up for the week, but that's coming down slowly. there's the dow jones industrial average. we're up close to 2% for the week, but we've been trending down really since the middle of the week, since mid-wednesday. s&p 500, better, still, but up 1.7% or so for the weekend nasdaq's the weakest of the three here it's up less than 1% for the week it's the market caters, the other market caters that i want to show you. the two-year yield troublesome here it's back near the recent high, 4.3% or so the vix volatility index, 30 -- heading for 32 here. we were almost 35 a week and a half ago, so not in the -- 35 is where you really start noticing people getting panicky evaluated. here's the big thing to look at here crude, $92 we were in the low 80s not long ago. that is a big, big move up today here, and energy stocks, you

think they would be up 3, 4, 5, 6% well, no they're up, maybe some concerns about global growth, but not that much. even big names like hess are actually down on the day as far as sectors, it's very simple to look at this you want to look at risk-on sectors and are that underperforming or overperforming the risk-on sectors are metal stocks like the xme, kathy wood's ark, the transportation stocks, semiconductors when these are risk-on, they're outperforming. today, they're notably underperforming the s&p 500. that means it's a classic risk-off day semiconductor is a big story today. a&d is at a new low and that lower guidance about pc sales. data centers look pretty good to me right now, we are in a situation where inflation is taking a lot longer to come down. the market knows hat, that's why we keep getting these brief

rallies and keep coming back down there's no shift in the hawkish fed tone that we can discern from today's numbers it's not going to make much. the valuation. earnings, are they 220, 240, 200, nobody knows. you have very wide variations in the opinions and tyler, that makes everybody a little bit crazy. and by the way, you would think, my gosh, it's down big today must be heavy volume nope, it's just about average volume, tyler. and what that tells me is that it's not like people are selling like crazy there's just no buying interest at all and some days, that can be just as worse as a lot of sellers that are out there >> a buyer's strike is never a constructive thing, if you want to see prices go higher. bob, thank you very much as the market continues to get spooked by the fed, our next guest says the fed continues to get it wrong he argues that the amount of money supply we've seen from the fed, up 40% since the pandemic,

is really what's to blame for our inflation problem. he also says that once the fed finally takes its foot off the throat of the economy, there's one group of stocks that could do really well for more, let's bring in charles b brabrinskoi. i buy your argument that the fed got it wrong number one, they kept putting money into the economy at a rapid pace number two, they seem to be saying that inflation is where it is, because the economy is strong it isn't and that the labor market is strong and wages are getting out of control t really aren't. what you've got is inflation what really matters is what you do about that, not how you explain the inflation, right, charlie? or wrong >> well, it matters. if you walk into your doctor's office and you have a bad case

of covid, he denies you have covid for two years, then he admits that you have covid and the way i'm going to fix it is by bleeding you by leeches that's what's happening now. the fed was wrong for two years. they not only didn't see inflation, but they made it worse, by pumping $80 to $90 billion of catch into the economy. you had a nice graph showing an increase of 40% and now they think the way to fix this inflation is by messing up the economy. that's a bad answer. >> let's try some cupping, what about that >> the graph up on the screen shows the money supply, but the good news is it has finally started to level out since march, the money supply hasn't gone up at all. we have four or fife months, that means we'll get a slowdown in inflation, but there is a lag. for the rest of the year, we'll have 8% inflation or so, but

next year, it will be down a little probably 5 to 6% but it's not going to be helped by the fed trying to crush the economy. >> so is there -- well, so that leads me to my next question is there a precipitation, dr. bra brabrinschoolboy, that doesn't involve leeches and cupping that would get us to where we need to go, that the fed is overlooking, or are they doing fundamentally, using what tools they have what other tools could they use? >> i would just like them to not make things worse. and the good news is, things are getting better indicators are all over the place that things are getting better shipping costs are down. commodity prices have stopped going up wages are up 5%, but that trailed big increases in inflation. so wages are actually a mild depressant of cpi. there are lots of indications that the worst is behind us. we just don't want them to make things worse the people that get hurt the

most by a recession are those in the lower economic stratas of the economy. it's bad policy to try to bring on a recession >> so go a little easier, maybe don't slam the breaks as hard as they have been doing so let's get to some kinds of businesses that you think might profit and do well in the market, given what you see >> we're going to have an inflationary economy for at least another year and in this kind of market, there are certain companies with hard assets that can prosper in an inflationary environment. unfortunately, some of those are oil companies that have hard assets in the ground, fertilizer companies that have potash in the ground, are going to do well and real estate actually can do well, farmland can do well in an inflationary environment so some of these stocks are very cheap. apache is trading at four times earnings mosaic trading at five times earnings and madison square garden, which

i always talk about on your show, as wonderful real estate it's an extremely cheap stock for some complicated reasons they own madison square garden in downtown midtown manhattan and that's a wonderful stock for an inflationary environment. >> charlie, great to see you we appreciate, dr. brabinskoi. the jobs report may reinforce the fed's decision to keep tightening, but so far, rising rates have not put much of a dent at all into consumer spending new data from mastercard shows that while spending in and around the home is slowing on things like furniture and hardware, people do continue to spend on experiences with restaurants and airlines and lodging. all seeing double-digit gains year over year so what does this tell us about the economy? our next guest has a front-row seat to all the numbers. joining us now, brooklyn dyer, chief global economist at mastercard good to see you. it would seem to me that these

numbers suggest that the people who can afford to spend, ie, the more affluent people in the country are spending and spending on experiences. they're spending on airfares, which has gone up a lot. they're spending on hotels they're spending on restaurants. these are discretionary income buys >> yeah, i think that's right. i think we're seeing a really interesting story play out that bifurcates the growth in the economy, where you're seeing this, you know, the interest rate-sensitive sector, is how i would characterize it. really trying to take a bit of a brunt. we're seeing that play out in the housing sector, the auto sector and as consumers are looking back at where they're spending their money, they're trying to balance between spending on the essentials and spending on experiences that they missed out on during the pandemic that really is at the core of where consumers' heads are and

where they're spending today >> i look at particularly airlines, spending there up 56% year over year it's not just that more people are traveling, it's also that more people are paying a hell of a lot more to travel the fares have gone up >> yeah, there's some really interesting stories playing out there. small businesses are getting out there and traveling like they missed out on for quite some time trying to maintain their kpetivitiness. you're seeing volumes of leisure and travel really hold up quite well so beyond the price story, it's really expensive to travel right now. the travel experience is quite challenging, if you go to an airport, you're not finding pilots or the tsa support that you need and that's making travel even more difficult yet, inspite of that, we see travel demand remaining really strong, when we look at the bookings and not just how much people are spending.

>> as you point out in this survey, it looks like furniture and furnishings, a modest gain of 1.4%. hardware, 1.7% these would be what you would call housing-sensitive areas, i guess. >> exactly that's an interest rate-sensitive successor, right? the housing and autos, where the fed is trying to raise rates and cool down the economy, they are having an effect on housing, having an effect on those housing-related sectors like furniture and furnishings like we're seeing in that spending pulse data >> now, job growth, i want to switch back away from spending and into jobs. labor participation rate, basically flat, down a little bit. job growth was lower than it has been over the past -- do you expect, given the fact that a lot of companies have either said they're going to cut jobs or reduce their hiring pace or freeze hiring, do you expect that job growth number to go even lower in subsequent months? maybe even roll over

>> you know, on the jobs front, i think when you drive around america, you see a lot of help wanted sounds. you see incentives to be able to -- bonuses to sign up to work at a fish factory in minnesota or whatever it is. these stories really are quite substantial and i think there's an undercurrent here you are seeing a lot of headline publications of people talking about reducing the workforce, but you're still seeing that restaurant demand is really strong, as we see in our data, still needing more workers there. you're still seeing that demand across america, y you're seeing hiring or that willingness to hire remain really resilient that's what's holding up a lot of that number today >> thank you so much thanks for sharing the data with us have a great weekend, sir. >> thank you very much >> you got it. >> coming up, there is no secret that the white house is not happy about opec's production cut. up next, we'll look at washington's response, the geopolitical fallout with crude having its best week since

march. plus, today's jobs data likely won't be enough for the fed to stop hiking rates, so where can investors make money in this market stocks and bonds our trader has you covered with a special jobs report addition of three buys and a bail as we head to break, let's get a quick check on the markets with stocks near session lows they are still, however, as bob pisani pointed out, on track for weekly gains, though those gains have been eroded over the past three days we'll be right back. ♪ ♪ wow, we're crunching tons 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!

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okay, yikes. oh sorry, i wasn't thinking. we don't really use the v word. that's kind of insensitive. we prefer day-adjacent. i'll go man-pire. all right. welcome back to "the exchange," everybody. crude prices are back above $90 a barrel for the first time in about a month. now, that's good news for oil stocks, with names like marathon, apa, halliburton, devon. leading the market this week, up more than 20%, look at those moves in week-to-day numbers exxon, not far behind, up 17% since monday and on pace for its best week ever, on record, all-time! but opec's biggest cut to oil production since the start of the pandemic is drawing the ire of the biden administration. and it could have some big implications for the future. kayla tausche with us from the white house to explain hi, kayla. >> hi, tyler in the wake of that decision,

the white house is retraining its focus on major oil companies, saying they're gouging consumers and profiting from it, but white house allies in congress want more concrete action to retaliate against saudi arabia and force officials they see as pro-saudi to defend their actions. earlier today, ispoke with progressive congressman ro kh khanna, who's been a vocal critic of the opec decision and the administration's response. he says he wants brett mcgurk, head of middle east policy, to testify in congress on why mcgurk pushed for president biden to visit the kingdom which kana says cabinet members objected to. he also wants cabinet members to ban the export of gasoline, telling me that they need to be demanding that the saudis reverse the decision sources tell me the biden administration has for months been weighing a ban own exported refined products, something that officials broached yet again with energy executives just one week ago in a meeting. companies have argued the disruption would cause further increases to prices, but i'm

told a ban remains under consideration. on capitol hill, two specific bills could gain new traction with bipartisan support. one is called nopec. it would remove anti-trust immunity from foreign nations that take part in opec that passed senate committee 17-4, with both parties' support. another bill released by three democrats yesterday would remove 5,000 troops from saudi arabia and the uae and remove defense systems, too, in the wake of the decision that being said, both chambers of commerce are out of session right now. we'll see what the white house can do next. tyler? >> the jones act is central to much of this what is the jones act and is there any talk about of repealing it as a way to increase domestic oil flows? >> well, it's come up in discussions, tyler the jones act places restrictions on which ships can actually dock at certain locations around the country, that have energy products onboard.

it came up in a meeting this summer with the energy industry asking the administration to repeal it. but in what i'm told was a very tense discussion, the administration asked companies exactly how much would that take off the retail price of gasoline and the estimate in that meeting was just 8 cents a gallon. and when pressed, energy executives did not confirm that they would, in fact, be diverting ships from, say, latin or south america to new york harbor without those commitments and those promises from the industry, the administration this summer ruled out waving the jones act, tyler >> kayla, thanks very much, kayla tausche on a beautiful north lawn in d.c. our next guest, not surprised by opec's production cuts, as no one really should be, but he surprised by the white house' fiery response. he says overreaction in washington could cause unintended commences for the future of u.s. energy security joining us now, james lucier, managing director at capital alpha partners james, welcome, good to haves you with us. >> hello, tyler.

happy friday >> i want to get to the question of longer-term national security issues and so forth. but i would like you to take apart for us the question of gouging. it comes up all the time when prices rise. big oil is gouging retailers are gouging. is that true >> well, not really. i think the white house here is panicked, the white house is overreacting, the white house has a political response that is going to make the political problems much, much worse. now, on your own newscast just a moment ago, you point out that oil prices are up at about $90, or about where they were a month ago. we've seen retail gasoline prices drift down. retail gasoline prices are still much lower than they were during the peak over the summer i don't really think the general public is following what opec does but this language about price gouging, this inflammatory attack on saudi arabia, this attack on the industry, is going

to make it very difficult to pursue rationale policies, going forward. and it could make it much more difficult to avoid things like a product export ban or product export controls that would be disruptive to the marketplace, and would probably increase prices for consumers over the long run >> i take your point that oil prices have gone back up a little bit, to where they were a month ago. and gas prices are lower than they were in the summer. but they also have been moving back up a little bit, right? >> well, they have been. and most analysts have expected this we've expected it for a number of reasons most importantly, because analysts did believe that opec would trim its production targets, really bringing them more in line with actual production and then also, of course, analysts have been expecting the onset of the european embargo on crude, they've been expecting the tremendous spr release to eventually wind down president biden has released more oil from the spr than any

president in history and this has certainly done something to reduce oil prices >> well, he's done that for political reasons, hasn't he i ean, in other words, the voters understand -- the voters see every day when they get in their car and drive what the price of gasoline is and so, i would say that the administration has a strong incentive with the midterms looming to do what they've done, which is to -- whether it's the right policy or not, let oil out of the spr so why would you be surprised then that opec would not want to balance that by cutting its output >> well, that's right. if you use the spr as a weapon, if you are releasing a million barrels a day to manage prices, then, of course, you should expect opec to respond by cutting production to keep the market balanced. that's only tit for tat. and that's basic arithmetic,

too. like woouz, with supply caps coming in, opec sees that as an attempt to change the market balance, to bring prices down. of course, they're going to cut. but the big issue, frankly, is recession. if we have a serious recession inflicted in large part by tightening by the fed and other central banks, then oil demand will collapse and if production is not modified now, if we don't bring production on balance, you'll have a collapse in oil prices, which is also something that might be politically helpful in the short-term, but which is in nobody's interest in the long-term. >> no, it kills jobs and it puts us back in less-good position. let's talk just a little bit about the level of rhetoric, which you think has gotten overheated you use the word panicked. how much of that do you think is real and how much of it do you think is really just rhetoric, in advance of the elections? in other words, that the administration knows it needs to say something, it knows it needs to get out there and sound and

look like it's defending the american consumer, and therefore, it calls saudi arabia a pariah and it goes on and on -- how much of this is real and policy driven and how much of it is political and just rhetoric, gas? >> well, this is consistent rhetoric from the white house. they've always been very, very sensitive to oil prices, even when oil prices were much lower. they have basically done everything they can to push saudi arabia to increase production more. this goes back to the beginning of the administration. but when you get this political, you know, you're not taking appropriate steps to manage the relationship well. call saudi arabia a praia, say that you'll never meet them in person, you know, attack saudi arabia consistently over a period of time, and then on top of that, when you -- >> but then you do go and meet them in person >> that's right. it's very, very inconsistent but it really shows, i think, the weakness of the position

i would go back to another point, which is that the obama administration had real pros handling their energy policy people like jason wardorf, who absolutely understands the markets. likewise, the bush administration had great people, too. it doesn't seem that there is anybody in this white house that really understands and tracks the market dynamics, which is why we've seen so many discussions of product embargoes, questions about domestic stockpiles, questions about the jones act. this is all pretty basically stuff. but it doesn't seem like there's a single person in the white house, like jason wardorf or my good friend, bob mcnally, who really understands the markets well enough to address these problems >> we luckily here from bob quite a bit on cnbc, as i'm sure you're aware james, thank a fascinating conversation and i enjoyed it a lot >> thank you >> hope you did. thank you. have a great weekend coming up, used car prices starting to ease up just a bit, but that doesn't mean it's full speed ahead for buyers or

investors. up next, we'll tell you where the strength is and whether higher rates will drive demand down and here's a look at the dow heat map with microsoft, intel, and walgreens, the worst performers there chevron and merck are the only two in the green right now and that's another round of tech job cuts check out shares of spotify, falling in today's sell-off, but taking a leg lower on a report that it is canceling 11 original podcasts and will be laying off some of its studio staff "the exchange" is back after this ♪♪ ♪♪ ♪♪ be ready for any market with a liquid etf. get in and out with dia.

i was having relationship issues with my old bank. it was just take, take, take. so i moved to sofi checking and savings. get 2.50% interest, and earn up to $300 when you set up direct deposit. sofi. get your money right. welcome back to "the exchange," for a somewhat messy friday in the markets.

the dow's low was negative 612 points, right now down 549 down about 2%. s&p 200 almost 2.5%. every sector except for energy in the red technology dragged lower by weakness in the chip names, following amd's revenue warning. we'll have more on that in just a little bit meantime, krrk vs on pace for its worst day since the start of the pandemic, on a double dose of news. first, the centers for medicare and medicaid services downgrading one of cvs' etna medicare advantage plans that translates into fewer bonus payments to the company from cvs. and a 7 to 8% hit. that is not inconsequential. also, a report today that cvs is in exclusive talks to acquire the primary health care chain, cano health. we reached out to both parties

neither one would comment on that remember, last month cvs said it would buy signify health for about $8 billion and with today's news, shares are set to close their worst week since march of 2020 today, down more than 11%. let's go to bertha coombs for a news update. hi, bertha >> hi, tyler here's what's happening at this hour president biden signing an executive order to implement a european union united states data network framework that adopts privacy safeguards if deal addresses the concerns of the eu's top court after it threw out two previous packs due to concerns about u.s. surveillance one of america's largest hospital chains, common spirit health, is being cut with a suspected ran someware attack. the potential security issue is delaying surgeries and holding up patient care after certain systems had to be taken offline. several hospitals in tennessee,

texas, and washington are being affected for more details on the attacks and what remediation efforts are being taken, tune into the news tonight at 7:00 p.m. eastern and the spacex capsule carrying four crew members arriving at the international space station. the linkup is occurring 260 miles above the atlantic ocean, just off the west coast of africa this marks the first time in 20 years that a russian cosmonaut launched from nasa's kennedy space center i guess space is one of those areas where for now, at least, tyler, there's still cooperation. >> still a little cooperation. it must be a somewhat awkward capsule, if i could say so >> i would think, although on an individual basis, probably not hopefully they don't get into a political discussion >> bertha, thanks very much. up next, we'll get actionable on today's jobs report

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welcome back, everybody. it's another volatile friday, as investors digest hotter than expected jobs data and try to anticipate the fed's next move our next guest says whatever that move may be, after today's numbers, it won't be the much-hoped for pivot joining us now, cnbc contributor gena sanchez, chief market strategist at lito advisers and has three buys and one name to bail on if the fed continues to tighten. gena, always good to see you >> thank you >> what did you make of the jobs report >> well, i think everybody interpreted the jobs report the same, which is that good news is bad news it means that the fed has a clear path to continue tightening i personally don't think that the jobs report something that can be read at the top you have to dig into the numbers and there is a labor shortage. i think the fed could be making a big mistake, but they haven't call me for my opinion

>> let's get your opinion on a couple of stocks, starting with costco down more than 1% today, but still trying to eke out a gain for the week. you say it benefits from nearly all angles went inflation surges >> yeah. this is where you go when you want to buy things at a relatively cheaper price because costco sells cheap stuff. and most importantly, cheap gas, or at least, cheaper gas and the great thing about costco is they manage to benefit from inflation going up, because they still do increase their prices they just keep them just below the competition, making them the go-to buy. so they capture that demand as people's wallets get crimped >> let's move on to lowe's we just had a guest on who said that some of the housing spending or housing-related spending seems to be coming off the boil lowe's down more than 1% today, positive for the week. you say, even as that home improvement boom does slow, folks will always need to buy something from lowe's. >> absolutely.

i mean, i think this is one of those -- lowe's is actually, you know, done -- not terribly, which is in this market, is okay but you know, the fact of the matter is, what we're looking for is companies that have strong demand, that will continue that demand, where the demand will continue to be persistent, despite the economic environment, and where the balance sheet is clean and they have good margins. lowe's is something that we think continues to be -- you're not going to not fix things in your house so even though we've come off of a big sort of home improvement boom, that doesn't mean that people are going to stop dealing with home breaks >> let's move on to what you call a defensive buy, and that is abbvie. that's the mystery chart we showed before the break. the shares are lower today, but remain on pace for their best week since june and drug makers are always a solid buy, regardless of the macro environment. >> that's absolutely right i think the one thing that you

have to -- you know, maybe the one fly in the ointment for some drug makers is whether or not they'll get some pushback on pricing, but we see abbvie as more, because of the particular drugs they have, as more or less insulated from that. and people keep buying their drugs throughout economic cycles and we have just seen this as just being a stellar defensive names and they are sitting on a pile of cash, they're paying a huge dividend, and cash matters when you have potential stagflation, which is what i think we're going toward with the fed route. >> the opposite of stellar would be your choice to bail on, that is amc entertainment you say it's just bad. bad cash flow, bad outlook, bad performance, and there are critics of some of the financial engineering capital infrastructure things that they have been doing. >> yeah, like i said just a minute ago, if cash is king in stagflation, the lack of cash is a killer, and that's what's killing amd. they have very little cash and

cash quichbls, there's no free cash flow. the expectations for earnings are for a, you know, almost negative 13 to 14% decline and, you know, and they're balance sheet has a ton of debt on it. these are just terrible. it's a terrible, a terrible set-up for owning a stock when you think that -- and quite frankly, nobody is going to the moves anymore, and that's the bigger problem why would you own this when people's wallets are crimped >> there have been a couple of good movies this year, but not too many that get people out of their couch and going to the theaters amc entertainment, your bail this week. gena, great to see you thank you. >> thank you, tyler. >> you got it. still ahead, chip stocks getting crushed today. the semiconductor etf down about 5% check out its two worst performers, amd falling more than 10%, now at the lowest level since july of 2020, marvel is off by about 9%

we'll get into what's driving the drop, next "the exchange" is back in two. rvel good luck. td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation. do you think the market is overreacting? how'd you know that? the company profile tool, in thinkorswim®. yes, i love you!! please ignore that. td ameritrade. award-winning customer service that has your back.

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welcome back, everybody. chip stocks getting hit today. still on pace to eke out a gain for the week, thanks to monday and tuesday's rally. remember that? steve cocerak joins us now >> it all comes from those warnings we got last night sending shares of names like nvidia, intel, intel, micron down with them and consumer tech giants also in the red today. samsung warnings are especially dire, since they brown chips and components for pcs, phones on top of their own consumer electronics business these noum announcements were reminding me of microsoft's alerts from the summer they saw pc demand deteriorate back in june

remember, we saw so much pull forward demand the first few years of the pandemic. pc sale surge, apple was setting mac sales records every quarter for two years straight that's coming to a screeching halt bank of america analysts highlighting that in a note this morning, as we watched chip names plummet, saying, quote, the pc market has been week, but continues to surprise the companies themselves by blowing their guides to the downside they called out nvidia, intel, amd and mic ron as the culprits there. that's the story here, tyler a disconnect between the falling demand signals we got months ago versus the story some of the chip companies were telling. >> we have a chiron on here, amd leads s&p 500 lower. if you were to go in and look at the universe of stocks you just talked about, is amd one of

those most exposed to sales. >> amd was also talking about inventory problems they didn't specifically say we have too much inventory, but you can read between the lines and guess that and that immediately made me think of sony and playstation. you know playstation five, which is a huge gadget for sony and a huge sales driver, they've been out of stock for two years straight and with amd having the inventory to thoepz chips and those devices, that could be good for sony going into the holiday season for our video game sales >> steve, thank you very much. still ahead, check out this mystery chart. despite strong demand and tight supply, this used car name is still down nearly 52% this year. we'll get a check on the state of the market and what the prices for used cars can remain th'sasat re.is at next. wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna.

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welcome back, everybody. a new report showing used car prices are actually starting to cool off a bit they're not quite back to pre-pandemic levels just yet, but that could soon change phil lebeau joins us now with the numbers. hi, phil >> hey, tyler.

this is the drop people have been waiting for new data from manheim auto auctions, they track the used car market and the pricing of the market it shows that when you look at the prices of used cars on a wholesale level from august to september, they were down 3% it's the first year over year drop since may of 2020 year-to-date, wholesale prices down 13% i say wholesale, because you have to understand how this works. dealers are buying used vehicles from other dealers at auto auctions, often online, but there are still a few that are happening in person. and what they're noticing is that the market is shifting a bit. new buyers are still making up a portion of the demand that they usually see in the used market the average used vehicle loan, it was up 8% last month to a little more than 31,000. if you take a look at those auto dealer stocks, that are primarily focused on the used market, we're talking about carmax and carvana, they're at 52-week lows, as is lithia it gets about 42% of its sales

in the used market and take a look at shares of the other auto dealership stocks, they're all down today not as much as those that are focused more on the used car market we expected this we knew this was going to happen at some point and we're starting to see that market cool off. >> phil, thanks very much. our next guest says there could be some short-term volatility ahead in the auto sector, but he's bullish overall, as we head into 2023. let's bring in john murphy, senior autos analyst at b of a securities sales on some of the big used car dealers like carmax at a 52-week low, it was the mystery chart we just teased what has got you so bearish and i ask whether the destruction of automobiles in florida is going to change the calculus at all? >> well, tyler, thanks for having me. i think there's some really intriguing things going on in

the auto industry in its shortage of supply both on the new vehicle side and that's resulted in shortages of supply on the used vehicle side that's a phenomenon that's likely to continue into '23 and '24 and '25, unless we see a very, very significant pickup in new vehicle sales, which is the feeder stock for the used videocassette market so what w seeing right now is trough level new vehicle sales for roughly three years almost we'll have a little bit of a recovery next year, at least that's what we're expecting but only a small recovery. the supply on the used vehicle side is going to stay relatively thin if you don't have a lot of supply to sell, and you're a company like carmax and carvana that only sells used vehicles, your market is small the velocity in the turn in the market is relatively low and then you have all the new vehicle franchise dealers that are having a hard time on the new vehicle side because they don't have a lot of volume to sell, focusing on more unused

vehicles all the trade-ins, they're holding on to. they're not dropping into the secondary market not getting to you or available in the market. these pure used vehicle retailers we think are in a tough spot for now in the near term and potentially the next couple of years. there's awhole idea they are growth companies that are going to do more and more online if that growth is stunted by market dynamics, people are going to get frustrated. >> it's interesting. i would have thought that if you have a paucity of supply for the used car dealers that that would be kind of good for them because they would be able to raise the prices but you're taking me down to the second and third and fourth levels where the business takes place, and you say it's really a problem because they can't get the supply to sell there aren't enough new cars being made and bought to then feed the supply of the used car market >> you got to think about it

like a company like a carmax being a spread business, right they focus on a gross to $2,200 per vehicle. if pricing is coming down and volume is coming up. they're buying at the market and selling with the gross, they do a lot of volume at that gross margin but if volumes are, i mean, if the supply is low and pricing is high, consumer has a hard time buying high-priced vehicles, and you're making roughly the same spread your absolute profits are lower. it's kind of counter intuitive a used car retailer, you want to see cars down low, and volume up high as long as you're turning in inventory quickly, and making that spread, your business is in good shape it's not right now. >> talk to me a pllittle bit abt what hurricane ian may have done to change the dynamic. carmax is big in that area what's going to happen there, there's so many cars i remember last fall, tropical

storm or hurricane ida, i think is what it was called, including mine, i lost a car in it to flooding and you just could not get replacement automobiles. >> so florida market is about 6% of the total united states it's the third largest market by sales and registrations. it appears that the storm from a vehicle standpoint probably wasn't as damaging as other large storms manheim is estimating the vehicles lost are 30 to 70,000 units. 50,000 units in the middle in the grand scheme of things, it will help because those vehicles will need to be replaced but it's not going to be a massive driver of catch up demand if you will. >> it's not a game changer that's interesting thank you so much, i appreciate it, john john fmurphy. shares of fedex taking a hit

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welcome back to "the exchange," a couple of minutes to go here i want to get to one more thing before we go and that's the state of freight, transports widely reviewed as a recession indicator. they go down, so does the economy. they are handily outperforming the s&p at the start of the fourth quarter. is this trend going to hold? frank holland has been following the story. >> the company plans to warn about lower holiday peak volumes on october 21st. ups shares hit harder, falling 3 1/2%

i've been in contact with fedex. they have been updating contractors that operate the residential ecommerce focus ground network to help them adjust staffing. in september, the ceo issued a very dire warning about softening freight volumes globally, and warned about a coming recession in a statement fedex said in part, weakening macroeconomic conditions are causing volume softness we are collaborating and making adjustments as necessary i spoke with the ceo of rso, he says the freight slow down has two sides. >> if you think about the market loosening up a little bit, and the load-to-truck ratio falling, that allows you to expand your margin typically you pull down your transportation costs faster than what your customer rates fall. >> very different story than we're hearing from fedex >> dow trance transport outperforming the s&p. up 10% week to date. >> that's a counter intuitive

signal there you wouldn't expect those to go up heading into an economic slow down, and if, for example, the holiday shopping season is weaker than many people think or it's been recently >> yeah, you know, absolutely, is the market showing confidence, those names that i mentioned are tied to consumer spending and expedited shipping, the two things you would think we wouldn't need if everybody has all of their inventory and there's going to be a consumer slow down during the holiday peak >> let's leave it there. thanks very much frank holland reporting on the transports for us. let's give you a quick check of where the dow stands, pressing in on the session lows, off about 603 points, i think 614 was the session low, so that's a 2% decline there, but that's nothing compared to what we're seeing with the nasdaq it is off 3 2/3% that does it, folks, for "the exchange," i'll join my friend contessa brewer for "power

lunch" which starts right now. >> hello, tyler, hello, everybody, welcome to "power lunch," stocks falling after the jobs report, 263,000 jobs added, it was fewer than expected but the unemployment rate and participation rate fell with the labor market remaining tight here, will the fed fight back harder against inflation. and oil back above $90 a barrel, doesn't help, opec cut production target to keep prices high the u.s. needs to fight back, and his take coming up tyler. >> contessa, i'm tyler mathisen, we're seeing markets fall after the jobs report, fears that the fed won't be able to take its foot off its brake that's sending stocks lower. remember that, it seems like such a long time ago the s&p 500 still, however, up nearly 2% for the week even with