>> i don't think so, but i think they're being appropriately conservative i think loan loss reserves will represent a drag on their earnings, but that's what a big systemically important financial institution should be doing right now. so i'm confident >> we are hanging on to a big gain, really, after that rebound has been remarkable. we'll see how it all shakes out for the rest of the day. i'll see you in o.t. in a few. "the exchange" begins now. >> and welcome, everybody, to "the exchange. i am brian sullivan. let's be honest, we are going to try, try to figure out what is happening on wall street today, because it has been a bonkers trading session. the good news, the dow is down about 600 points it had been down about the same at the lows of the day, a nearly 1,200-point swing. not to be outdone, the nasdaq rising more than 4% from its low of the days. one of the biggest bounces we have seen in a long time all of this as inflation punches americans in the gut once again. a stunning 8.2% year over year

jump in prices so what does the fed do? well, probably raise rates for a long time, says one of your guests today and if that is not enough, you've got earnings season kicking off. you'll get you ready with a big bank edition of earnings exchange, and if that was not enough for you, an auction of 30-year bonds also happening right now. the little prompter says, walk animation. so walking to the animation. there it is. speaking of bonds, earlier today, the yield on the 30-year crossing 4% for the first time in almost nine years the ten-year and two-year, they've both backed off. we have seen highs that we have not seen in 13 and 14 years respectively we have rick santelli live at the cme. we'll bring us the results as soon as he gets them it is important, because right now in these markets, folks, bonds and rates are what's

moving stocks. these moves because of inflation remains red hot. this is causing investors to keep the fed squarely in focus so let us focus on all of it on the macro front, we've got michael schumacher, not the rice c race car driver. bob pisani is at the new york stock exchange for how this is all playing out. and with a mainstream look, particularly from retail, the ceo of federal realty trust don wood is with us as well. let us begin with bob at the nyc. and i feel like, bob, we've lived like four market days in six hours. >> like four months of market days in six hours. so this is a remarkable rally. i'm going to try to answer the question why are we rallying let's take a look at the s&p 500. and brian's right. i tend to look at the s&p a little bit more, but we've had 140-point swing. we were at the lows for the

year 44.91 at the open, that's 140-point swing. right near the open here, right after the open sectors, it's fairly broad rally. about 1.5 to 2%. energy is leading, but banks are doing well, materials, texts are well, consumer staples, defensive groups lagging a little bit i think the key to understanding why we are rallying is to look at the options market. here you want to look at the vix. immediately, when the news came out of the cpi, people messaged me and said, bob, why is the vix down on this news? shouldn't the vix go up if there's more panic and more concern? and yet you see it's drifting lower. and i think this is the key to understanding why we might be rallying the question is, what is the vix measuring itself put up the screen about why the rally here the vix is pricing in intraday moves for the next 30 days that's literally what it is measuring. on a daily basis, a 33 vix, which is where we have been,

implies the market and options buyers and sellers are anticipating a 2% price move every day. that's what a 33 vix tells us. now, we have had three big events or we're expecting three big events that traders are watching in the next 30 days that's what the vix is looking for, 30 days out the cpi, which we got today, the fed meeting, which is november 2nd, and the elections we got the cpi one of these are already out of the way. we'll have the fed meeting november 2nd everyone is now betting on 75 basis points to a certain extent, we're pretty sure that's going to happen for sure. the elections are a little bit of a wild card my point here is some of the big events, of the three big events, a lot of them are already sort of anticipated on where it's going to be going, now that we've got this particular number out of the way look here at the front month, the volatility index here, where it's looking, 33, we had, initially, right now, but look at the futures index here, for november it's lower at 30.7, 30.18 for december so brian, what's going on here

is already, there's high anticipation of a lot of volatility in the near-term, but traders are already anticipating a little bit slower -- lower vix further out. the point being here, the vix curve is inverted at this point. and i think this goes a little bit of a way towards splang where individuals simply decided to basically cover their positions, now that they already have some important data points. brian? >> i want to get to something else very quickly with you, bob. i'm sure when you gout, you're a highly recognizable global celebrity. i'm sure people are always saying, i love you on tv, but when does the market bottom? it's impossible for anyone to know, but there are some signs, some traditional things that happen, if you want to call it a capitulation or a flush, whatever you've pointed them out many times, i'll quote bob back to bob. here are some of the traditional signs of a washout, and i'm going to ask you if we met four or five of these at any point today. heavy volume, bad market breadth, 10-to-1 down or so,

panic, the vix moving big, big gap moves in stocks. not small ones, but going from 80 to 72 in a trade, and retail fear as measured by policy like american association of individual investors a have we met any of these today, you think? >> we've met all of them here is the problem. all of these technical and sentiment indicators are flashing oversold. here is the problem. we are in such a strange situation with covid, with the fed moving, with the russian invasion of ukraine, these are such extraordinary situations that oversold doesn't necessarily mean a lot think about this, brian. how many oversold rallies have we had this year my heavens, we had one in march, we had one in may, we had one in june i think we've had two in september. and we're getting another one now. all of those times we were in oversold conditions, i came on the air and said, we're oversold, and all of those times, we've moved down to new lows immediately after that. that should tell you something,

that the word "oversold" is true, but in these kinds of situations, you can stay oversold for a very, very long time and this is how you get these traps. you get trapped into people thinking, oh, this has worked in the past i must therefore do it now these circumstances are rather extraordinary, brian >> today has been certainly extraordinary. bob, you're extraordinary. we appreciate it thank you very much. as we mentioned, 30-year bonds up for auction let's find if it was extraordinary. rick santelli is at the cme. how would you grade it, professor? >> you know, i graded it a "c" plus, a charlie plus with a big roger maris asterisk, brian. and i'll tell you why. all the metrics for this auction, let's start at the beginning, 18 billion 30-year bonds, the yield, 3.93 the problem that the one-issue market was trading around 3.195. just like the last two auctions, lower yield means higher price, higher yield means lower price this was lower price than it could have been. all the other metrics, brian,

whether it's bid-to-cover, indirects, directs, dealers taking only 2.1%, all the metrics were really good any of the old-timers out there remember a good walter payton run. a bit messy, but aggressive, that's what this auction was like we didn't see a big response like we did on threes and tens, because they were messy auctions "c" plus, it's kind of sideways. it seems to me that investors were more aggressive than the grade depicts, even though it was messy with regard to pricing. and i think that speaks volumes. listen, you might not believe that cpi is cool by any regards, because it wasn't, especially year over year core. but in the end, the real issue is, how much is priced into the markets already? and that, i think, the market's big opinion is being expressed in the equity sector today brian, back to you >> rick, thank you very much well, that hotter-than-expected

data increasing recession fears. you strip out food and energy to so-called core index, rose 0.6, it's up 6.6% from a year ago that, my friends, the biggest increase in 40 years now, forget the fed pivot, maybe. your next guest says the fed will keep hiking rates and will do so for a long time. joining us now is michael schumacher, head of macro strategies at wells fargo securities michael, welcome back. why do you say that? why do you have that point of view on the fed? >> pretty simple, brian. highest inflation in 40 years. what does the fed focus on core inflation it looks at these numbers just like we do and says, those are not even close to good, nowhere near acceptable. inflation is the ultimate bogeyman for a central banker. you have to put it back in the box. more tingt for a long time >> like until the january meeting of next year i see on the graphic it says september of 2023. is that a typo >> i wouldn't call it a typo, necessarily. but right now, what the market's

been pricing is for the tightening cycle to end some time between march and june of next year. and we think the fed will be at it for a bit longer, so probably raises rates well into the middle of next year. and more importantly, goes on a long, extended pause the market, with i think, has a sort of fantasy that the fed is going to shift pretty quickly from tightening to easing. we just don't buy it we think that chair powell and friends will raise the funds rate, maybe through the middle of next year, possibly a bit longer and say, hey, let's wait, let's see how this inflation thing dies down a little bit and give it some time it's not going to be a quick fix, not a u turn, nowhere near a pivot. >> because it takes as we heard on halftime from professor jeremy siegal, it takes a long time for these fed moves to work their way through the economy. they're not a speedboat, they're a super tanker >> that's right. long time for those legs i would say six months, absolute minute probably more likely, 12 months. you've got to give the system time to absorb the impact. and frankly, the fed's first

rate hike was back in march. january would be less than a year that's just not enough time for it all to play out >> i guess the most basic question i try to pretend i'm smart and ask these fancy questions. i'm just going to ask you this, what do we do? what do your clients do? >> clients are taking cover. very few clients i've talked to to have added risk i certainly appreciate the celebrity's comments that sentiment's bad, therefore you want to pile into risk, perhaps. but that's not really the way we see it we look at these times as being just about unprecedented certainly in the span of our careers, and also the policy makers, so when you've got crazy high inflation, all sorts of very strong global factors, the smarter move is to take cover. so keep it short if you're buying bonds a lot of people have been doing that recently. don't venture too far out of the yield curve. stay light on credit, and think very carefully pfr hopping into stocks >> so is cash king >> cash is almost king, but now you can actually get yields on

shorter treasuries that look somewhat attractive. so no one is going to get rich buying a two-year treasury, but the yield did top 450 today for the first time in a long time. not going to lose a lot of money, so seems like a pretty good safe harbor to us >> and you get state tax benefits if you buy treasuries directly, you buy a two-year directly from the federal government, not an etf, the interest -- the ewe upon payment, i understand, is actually tax-free on a state level. so you do get a retail more juice than just the 4% >> that's a fair point certainly comparing that to a corporate. you've got to make that adjustment you're right on there. >> i mean, michael, it's great to have you on i can't -- it's hard to believe that we're here talking to, you know, guys like you, and they're like, get cash there's a guy taking a picture of you, by the way get cash or buy two-year bonds and that's the best place to be. these are remarkable times michael schumacher, thank you very much. >> thanks, brian >> so in the meantime, look at

the markets. the dow is up 665. we're shrugging off the hot cpi data, at least for today we had a bigger than 1,200-point swing for the dow today. but is this the all-clear for you? probably not, says your next guest. he sees more volatility ahead. he's going to fade this rally. he is david wagner, equity analyst and portfolio manager at aptus capital advisers why fade it? >> i don't think that the market can make new highs until you have some type of moderation inflation. and more importantly, a large earnings expectation decrease. so far for next year, earnings have only come down by, say, 5%. and historically, when you look at the median downturn in recession, earnings come down 20%. i think that the markets will be very stubborn on allowing a new market regime until earnings fall i would base any material rally into year end. but, you know, brian, it continues to amaze me that people continue to keep calling for some type of fed fit

i guess i have to understand it a little bit, because the fed is always assumed to be the fast-stopping 2018, since covid. but let's look forward inflation is still going to continue to be high. we know that -- investors know that growth is going to be slowing, and they should probably know that qt is one of the biggest major monetary policy shifts of their lifetime. so what can you do here? is cash king so how do you capitalize on this type of environment? what i would say is that the wu-tang klan investment methodology, well, it's wrong. cash does not and will not rule everything around it, guinn that inflation remains stubbornly high, especially what we saw this morning where can you potentially find safety if it's not cash? i think investors need to own volatility as an asset class regarding an asset allocation, i think investors need to look at income strategy as one of the best ways to attack this muted type of environment moving forward. i think the best way to find it is if you have the ability to write calls on individual securities

obviously, you get higher volatility levels there relative to the market or some type of benchmark. and that raises your ceiling by using individual calls it raises your ceiling up higher, because you can then participate more in market rallies, which you definitely saw back in june but at its core, i think we'll continue to see some type of chop in this market. >> you might have coined a new phrase, the wu-tang market i'll brick it back to you, the market has brought the ruckus. this is certainly a ruckus in these markets here when do you see this volatility ending everyone's like, oh, we've got to wait until the fed pivots for the volatility if you see the fed pivot not coming, are we going to be like this for the next few months or quarters >> yeah, i think we're definitely in a muted return environment moving forward i think the market is very simplistic in nature i think on a daily basis, kind of like today, at least at the beginning of today, the market was focusing on cpi. the market is focused on pmis, it's focused on the jolt number.

i would say all of this rally, until you really see a lot of degradation in the earnings profile for fiscal year 2023 and the s&p 500, to really start coming down. i think it's going to be more of a process like watching paint dry instead of like having the rug pulled out underneath it >> i'll ask you the same genius question i asked michael schumacher, what do i do what do we do? i've got to do something put the money in the bank and hide under the mattress? >> you know, i mentioned income strategies the other place to go, i actually don't like small caps right now. i love small caps right now. by saying that, i think it's probably a little bit constrained, especially heading into a possible recession. but i do think that small caps have already started to price in some type of recession i mentioned large cap earnings expectations for next year have come down 5% we've already seen small cap expectations come down 15% so if you actually take current s&p 500 earnings for next year

and decrease them by 25% and you get the median valuation of the s&p 500 over the last 10 years if you had 30% to current epps expectations of the small cap index next year, that gets you to the median valuation. i like small caps in an absolute trade or whether it's fair trade. >> small caps, you like them long-term. listen, they tend to be 100% exposed only to the north american economy they get away from all the stuff that's going in europe, which we don't know where they're going david wagner, i know we're going to say good-bye and see you later. >> we've got a news alert right now on netflix steve cocerak has the details on that >> netflix shares are up about 10%. so let me break this down. this new ad tier from netflix, it's called the basic plan with ads. it's going to be $6.99 a month in the u.s

launches at noon eastern on november 3rd in the u.s. and 11 ore countries, including canada, mexico, the uk, germany, and japan. netflix says commercials on this the new tier will run between 15 and 30 seconds and subscribers will see four to five minutes of commercials per hour ads will also appear before you start a show and during a show but you will not be able to download content to your mobile advice and videos will appear at a lower quality than full hd you'll need to describe to the standard or premium plans to get hd or 4k video, but there is a slight increase in the video quality from the previous basic plan advertisers will also be able to broadly target subscribers by genera that means comedy, drama, horror, and so on. they can also block their ads from running against shows with graphic content or foul language, you get the idea there. netflix says it has nearly sold out of inventory for this launch in a couple of weeks, but it declined to say how much they're charging or how they're sharing

ratings with these advertisers now, as previously announced, microsoft is provided much of the ad tech behind the new tier. shares not moving too much there on microsoft this is the new trend among streamers, though. get subscribers by offering a free or cheap version of their services, supplement it by ads we've seen hulu, nbc's own peacock, hbo max, all ad-supported plans and disney plus, theirs is launching in december this is one of netflix's new answers for getting growth back, brian. and we'll get more info on subscriber growth or lack of that when they report earnings >> steve, appreciate that. netflix. we've got a lot more to do here, folks, on this busy day. on deck, could higher inflation and higher rates actually be a boom for the retail reits? we're going to ask the ceo of one company with properties from coast-to-coast about how he is dealing with rising costs and get his outlook on the consumer and retail >> plus, a handful of banks set to report before the bell tomorrow on officially kicking

off earnings season. we have got your key metrics to watch and the trades ahead "the exchange" rolling on, dow up more than 600 stick around 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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as you know, shoppers are returning to stores. i mean, they already have, and restaurants post-pandemic. and that is good news for some retail reits but rising a rates, inflation, and energy have been putting pressure on the group this year. and if there was any doubt the fed will not continue with aggressive rate hikes, today's hotter than expected cpi numbers crushed it how do you run the cross-currents or navigate them. don woods, ceo of federal realty investment trust with us i know that my friend, jim cramer, has been interviewing you for years and he has called you maybe the best sort of retail reit ceo in america >> brian, he's a very nice man very nice man. >> i live near one of your properties it like many other strip malls that i see in new jersey is 100% full >> it is >> how are you 100% full when in manhattan, walk down 46th street and one out of every three buildings is empty >> those are two very different -- >> or new jersey go to a random strip mall in new jersey a lot of retail vacancies.

>> when you start talking about random this and random that, you're effectively say commodity. commodity rises and falls with whatever is going on in the economy, and we certainly have some head winds ahead of us, along with a bunch of tail winds, which i would love to talk about but location really matters. and the demographics of the people around that location, do they have money to spend are there a lot of them? and importantly, are there barriers to entry? all of those things have to go into the consideration of the real estate -- >> but i heard for years, don, that retail is dead, just buy everything online, fill your house up with cardboard boxes and amazon trucks. >> so, brian, the best thing that happened coming out of covid was the realization from consumers that we're social people and the single-best thing, and it came out, you know, after 2017, '18, '19 of no more retail, no more, you know, bricks and mortar, and it's just not true and so that giant tailwind is --

continues and effectively, it's really pushing through and helping us and other -- >> but a lot of it depends -- i've got to imagine, depends on -- if you're in warren, ohio, and warren, you know, i race cars there, it's a great town, but it's economically depressed, versus annapolis, maryland, or summit, new jersey, wherever it is, you've got to be in the right spots. >> and it's hard for investors when investors think, them to paint a big broad brush as to the companies they're looking at, the industries in, bottom line, real estate slis local a lot of tough news. you said you had tailwinds give us the sully side up. good news. >> sure, sure, sure. by the way, we've been around since 1962 we have raised our dividend every year since 1967. that's 55 years. there wasn't another reit in america that can say that. you know how you that? by the way, to think about interest rates in the '70s, think about wars, think about

covid, all of which -- >> there were some opec fights in the '70s, high gas prices, right? >> crazy >> the embargo so how are yes -- >> how are we able to raise those dividends throughout all of that, including covid real estate is a local business, man. and when it comes down to setting up the right balance sheet, we're the port in the storm here, at least that's the way i would like to ask your viewers to consider us in fact, consider all of the shopping center reits that way but i think that we're a little bit better i just do. >> so you can get through these higher rates >> there's no question we can. the balance sheet has to be strong you can't now say, oh, my gosh, we're going to head into some tough times and now we should do something with the balance sheet. too late you have been set up all the way. this is a electric business. i would love for you to think of it as a port in the storm at these times going forward. >> if you made it through 1976 to 1980, you can probably make it through now >> let me give you something else effectively, there's been no building of retail stuff very

much at all in the last decade, decade and a half. that's really important, because supply still matters, the supply/demand still matters. those characteristics look really good right now. >> love having you on set. >> appreciate it >> see you in person, social matters. >> i care, you care, we all care >> thank you very much >> coming up, speaking of in person, delta airlines reporting record revenue, but it is still working to restore capacity to the pre-pandemic levels. phil lebeau will join us with what they will see not just next week, but next year. stick around careful now. nice! you got it. and thanks to voya, i'm confident about my future. oh dad, the twins are now... ...vegan. i know, i got 'em some of those plant burgers. nice! nice! yeah. voya provides guidance for the right investments and helps me be prepared for unexpected events. they make me feel like i've got it all under control. because i do. ok, that was awesome. voya.

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when we say, this has been one of the most bonkers days of the year for the stock market. i say that, because the dow is at 800-point highs right now we're up 800 points, nearly 3% the nasdaq is up 2%. here's the thing if you're in hawaii or something, guam, and you're just waking up, you're like, oh, what a good day no no, we were down 600 points on the dow at one point. we have had a 14 hukz point swing from the lows to the highs on the dow in, what, a 6% swing, 5 or 6% swing over the nasdaq. you tell me, loyal viewer, when the last time that kind of swing has happened i would love to know a couple of movers to tell you about. david faber confirming via sources that kroger is in talks to buy rival albertson's grocery store deal in an all-cash deal that comes through tomorrow. factoring in today's move, albertson's, $15 billion company, roughly half the market cap of kroger, sk. any deal with inflation this hot, we thinks the ftc may have

something to say about anti-trust issues. we'll find out let's get a cnbc news update and go to tyler mathisen >> albertson's got a lot of chains all around the country. that's an interesting one. here's your news update at this hour what could be the last hearing by the january 6th panel is now underway the committee chair promises new evidence, but also a review of previous testimony on former president trump's state of mind in the run-up to january 6th republican representative liz cheney says trump knew he had lost the election and had a, quote, premeditated plan to claim election fraud before he knew the election results were out. and that without holding trump accountable for his actions, another january 6th could happen on the news tonight with shep smith, all the highlights from that hearing and the analysis of the new evidence unveiled today such as it is. that is tonight at 7:00 eastern time meantime, new york's

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let's step out of the macro markets for a second and get down with a little earnings exchange today, we're taking a look at big banks. a bundle of biggies reporting tomorrow, kicking off a very important third quarter of earnings we've got the story, action and trade on jpmorgan, morgan stanley, and wells fargo first up is jpmorgan shares down nearly 33% macro head winds continue to plague financials and ceo jamie

dimon telling cnbc this week he sees america heading into recession in the next six to nine months. leslie picker with the story and "fast money" trader and cnbc contributor tim seymore has the trade. leslie, kick it off for us >> brian, you thought you were going to be able to escape the macro with this conversation, but unfortunately, with the banks, macro is in focus you mentioned jpmorgan and jamie dimon's comments with regard to the recession. well, some analysts are wondering whether his comments on a recession earlier this week, does that take a negative catalyst off the table for tomorrow so investors can focus a bit more on what they're seeing on the fundamental side among that, credit quality is paur paramount. any deterioration would show the fed's decrease in rising rates as well as a potential slowdown could be actually trickling down to balance sheets. and similarly, capital levels. they had a reserve billed last

quarter. will it be similar size this quarter, given what he said about a potential recession? could we see that reserve build go up, as they prepare for, you know, some potentially lower credit quality >> tim, you know, i know this is overly simplistic, but talking about nims, net interest margin, i thought higher rates were supposed to be good for big banks. >> well, they're better for banks and i think if you look at net interest income, this is a growing tail wind and i think it continues to be. i think we underestimate this. and if you look at the earnings power of the money in our banks, it's as good as it has been. i think we're being held back by the danks around reserves. and credit quality and concerns that that continues to be get worse. so, i actually think the moneys in our banks on a relative basis to not only where they trade historically cheap to five and ten-year averages, you have this earnings power that i think is offset from loss of mortgage income into the net interest income so i'm actually bullish there,

but i think that it's the credit concerns that are what are holding these banks back and credit concerns we haven't heard about yet. >> let's move on to another bank morgan stanley now, morgan stanley has actually been outperforming jpmorgan up recently, more than 5% of the last three months. epps has beaten estimates at 17 of the past 20 quarters. so will morgan stanley, which is far less consumer facing be able to stand out amid tough conditions, leslie they don't have a bank you're going to on the quarter. they don't have chase. it's a different company >> different company, but they still have correspondence about the banking company. about 17% relative to other large banks, which is closer to 10% at universal banks trading also going to be in focus this quarter as volatility has hit both equities and fixed income currencies and

commodities. the question, though, because equities has been a bit more muted, will they be able to overcompensate on the fixed side of things if equities and revenue comes in a bit lower than expected. and then there's, of course, the wealth management business, which represents now about half of morgan stanley's business and operations how do those volatile markets, on, you know, both the equity side and the fixed income side impact that business, their ability to have aum fees and to grow net inflows from here >> tim, what's the trading story on morgan stanley? >> bell, leslie's highlighting the difference in the business mixes of these companies and we're going to talk about wells fargo in a second. they all three look differently and i think we're going to highlight those differences, but i think the wealth management growth, 5 to 6% annualized, i think in the near-term continues, despite some of the market headwinds and if you're a trader, that's the dynamic here m

morgan stanley has remained defensive because of the wealth asset management businesses. there will be volatility there, but it's why it trades at a premium, which i think is an attractive level to own it so yao underperformed going into -- for the entire group into this earnings season. morgan stanley's outperformed. but i think this is a place where you're kboipg to see the emphasis on this higher multiple business be shining through tomorrow >> now let's change gears. tim tipd it off. wells fargo, the stock has been down 13% this year, but leslie, believe it or not, that actually makes it pretty much the best performer of the big banks this is a very different company. i mean, they don't have trading as much. this is like a mortgage company with real banking and some other stuff. what is the big story, macro story to watch on wells fargo? >> yeah, they're actually shrinking their mortgage business, but they are most rate sensitive. so the big thing to watch

tomorrow will be their nii guidance, you mentioned nim, net interest income is a similar story. better than many of its wall street-oriented peers, but do they still see room for further growth in nii. related to that is the outlook for deposit flows. there have been, you know, some indications that deposits could be declining, higher rates, and of pandemic stimulus, partly to blame for that but does that mean they have to increase their costs in order to do more loan making. and lastly, because of their loan making, what's the potential for capital distribution look like morgan stanley in a note saying that it does have significant capacity, as volatility settles down, which differentiates wells fargo from its peers, which is why you do see it not underperforming the s&p this year >> i think i would have to go back to like, i don't know

how many years ago, tim, were anybody on wall street called wells fargo the best position of anything i mean, they've been dragged through congress more times in the last decade for problems >> well, that's why it trades at a massive discount to jpmorgan wells fargo is about 1.2 times price-to-tangible book jpmorgan, probably 1.6, 1.7. and look, this valuation trade and again this -- call it a corporate governance recovery story, which continues and there's significant costs attached to the regulator's requirements but their ability to generate 15, 16% return on tangible equity is the story that's had this be a massive, not a small, but a massive outperformer and i think it still can be. i think all the moneys in our banks are concerned on some of the falloff and credit concerns as we talked about but i think wells fargo, at least has more opportunity on relative valuation here. and i think that's part of what works right now. >> i guess, leslie, we'll find

out tomorrow if all's wells fargo. don't laugh at that. it's terrible. guys, thank you. appreciate it. still ahead, delta airlines sounding really upbeat about not only the current quarter but the future of travel as well phil lebeau sat down with the future of avtrel shares soaring we'll dig into the story stick around le. and you'll get our best deal. nice, but i can't accept it. unless every business gets the best deal. on every iphone. uh, actually... we already do that. the plumber with the ascot! big bjorn, little bjorn, too! the caterer who really cares. every business should get the deal! we make a good team. every business gets at&t's best deals on every iphone. including up to $800 off iphone 14 pro. (♪ ♪)

1,308. that's the exact point swing that we have had on the dow today. we were down just almost 600 points right after the open. the red-hot inflation numbers scaring everybody. must have been some alg orhythmi

buy. it's one of the biggest point swings, i'm going guess -- if i'm wrong, i'll buy everybody something -- one of the ten biggest point swings that we have seen ever just throwing that out there shares of delta airlines higher today the carrier returning earnings in line with estimates, but also issued an upbeat forecast for the current quarter and beyond phil lebeau spoke with the ceo at bastian earlier today and phil, i was honestly shocked at his optimism >> you can tell how optimistic ed bastian is. take a look at their guidance for the fourth quarter we knew that they would have a strong report for the third quarter with the summer, in line with expectations. fourth quarter, more than what analysts were expecting. a buck to $1.25. the street was expecting 79 cents heading into this morning. the revenue in the fourth quarter, that's higher, 5 to 9% than most analysts previously were expecting operating margin of 9 to 11% you don't need me at atlanta hartsfield international to tell you that this is a time where

everybody wants to travel. the planes are full, there's no doubt that they are going to be seeing this for a while. cash flow positive for 2032, remarkable considering how they started the year the goal, being fully -- having capacity fully restored by next summer and the cost side of the equation, that's what a lot of people have been focused on. yeah, it was 22.5% up compared to the same quarter in 2019 for the third quarter. but, as you take a look at fuel, and remember, their costs are excluding fuel, ed bastian believes, we're bringing down costs, that will continue in the fourth quarter, and he's optimistic even with the prospect of the economy sliding into a recession that delta will grow >> i feel good about the cost profile in terms of how we're going into it. a recession in the airline business generally helps reduce fuel prices, which is good our consumers are strong business needs to get back on the road with our customers. >> and corporate travel is

improving, as you take a look at shares of delta, ed bastian says they are seeing a steady increase in the number of corporate travel bookings, and this is usually the time of year that you see corporate travel making up for leisure. but because there's so much pent-up demand, you see as much leisure as usual and keep in mind that we will hear from american and united next week. i wouldn't be surprised if we see strong revenue numbers for them from the third quarter. and let's talk about the outlook. that's really the focus for the airlines does it continue beyond the holidays we know the holidays will be busy what do we seat in the first quarter? >> well, i'll let you know what i see tomorrow when i'm at newark airport, my second home do the eyeball test. 800 people in line, because for so reason they still don't have precheck phil lebeau, appreciate it thank you very much. >> you bet >> look at the crowds behind him. it's 1:00, 2:00 in the afternoon and the airport's packed who are these people coming up, market staging a major turnaround, but the nasdaq still down 32% this year alone and when you pull out from its

record high, it will even get worse. we'll talk more about this with paul meeks, coming up. about 10 more times! (laughs) no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - [narrator] yieldstreet: private market investing.

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what a day for the stock market the nasdaq is up 2%. doesn't seem like much, but we were down 3% at the start of the trading session. carry the one, that's a 5% turnaround, at least right now down more than 30% still so far this year. even with today's gains. let's talk more about it, maybe get some stock picks paul meeks joining us. here's the thing about math. if you're down 30% or so, you need like 45%, 47 percent to get back to flat lining to where the highs were last year, right, because the law of smaller numbers. today's nice does it feel like a bottom to you? >> no, it doesn't. you really can't get aggressive on tech or any stock that matters unless you're not perfectly confident, but at least more confident than we possibly could be now that the last downward revision from the streets for any particular quarter's revenue and earnings per share is in or are we really

in the trough quarter? and even though the numbers will look particularly grisly, as we go through the earnings reporting season, i don't know if this is the bottom, and so with that, i can't step in with much confidence. >> yeah, it sounds like you and a lot of others. today, you have bib doing this a long time, today smells like a machine, like an algorithmic trade. these aren't humans doing this today. >> yeah, you take a look at the marquee tech name overnight, applied materials. pretty nasty guidance again, not really any signs they can't turn around and disappoint us to the same magnitude next quarter. taiwan semi-conductor the last couple days taking a pretty big for them 10% swipe at their semi-conductor capital equipment spend for next year. particularly, the semi-conductor companies are in real peril and they could get worse, and the problem is that the semi-conductor industry is such a big part of the tech sector that it drives the tech sector

we know the tech sector is such a big part of the s&p 500 that it drives the overall index. yes, i still have a lot of cash in portfolios and in my tech portfolios which i'm known to invest in, i still think that there's a chance that we could go lower, so i have a lot of cash and i'm playing as defensively as i can when i actually pick individual tech securities >> there are stocks that are higher this year hard to believe, harmonic, hlit video systems up from $9.30 to $13. why do you like them >> this is my best pick, a communications equipment company, so i don't know if it's a pure play tech sector candidate, but here's a company, revenue soaring, earnings per share soaring. big eps beats wherever they report nice change in their product mix for higher profit margins going forward. the stock might be too small for some the stock is up 15% this year. as you said in the beginning,

the nasdaq is down over 30%. so this is, i think, a relative safe haven in the tech storm >> we like it. harmonic, we don't have time to get into your other pick, atom technology az, and paul meeks, always appreciate you being on. thank you so much. >> coming up, the semis are on pace to break a four-day losing streak kristina partsinevelos with what is happening to chips next ♪♪ eh. ♪♪ it's not time to escape. it's time to engage. it's time to plant more trees. hoo! ♪♪ time to build more trust. time to make more space for all of us. so while the others look to the metaverse and mars,

let's stay here and restore ours. yeah, it's time to blaze our trail. 'cause the new frontier? it ain't rocket science. ♪♪ it's right here. ♪♪ - oh, the stock market is doing that fun thing again. news from the future: you're going to live through that about 10 more times! (laughs) no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - [narrator] yieldstreet: private market investing. ♪ ♪ 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! become an agent of innovation with invesco qqq

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they vet investments that don't ride the stock market rollercoaster. - [narrator] yieldstreet: private market investing. welcome back let's talk chips semi-conductors, not john and paunch, because the chips have been down. they have been down big. is there any sign of a turn? let's get a check. kristina partsinevelos with that story. >> nice 1977 reference let's talk about the foundry to the world is finally sounding cautious despite posting the best profit in the last two years. taiwan semi-conductor shares are jumping now, up 5%, but the company, look at that, 5% still. the company projects the

semi-conductor industry will contract in 2023 and plans to cut capital expenditures by 10%. it makes sense when you think about tsmc's customers like amd and video qualcomm that have guided lower trending higher today, for example, nvidia, almost 4% higher all of these companies, they are posting a rebound, 2% or higher, but the rebound is despite the new export restrictions aimed to stop china from building advanced chips this is something that's hurt the sector over the last while, but they dont seem that worried. they said the effect was, quote, limited and manageable silicon design firm synopsis echoing tsmc saying the rules won't impact revenue they said this earlier this morning and reaffirmed their guidance other chip makers are sounding the alarm. you have equipment maker applied materials who cut its forecast blaming the new china export rules. they say sales will take a $400

million hit in q4. invideo warned of the same $400 million impact, and kla and lam research have started to pull employees from chinese chip hubs so clearly these exports rules a downturn for the sector. >> also, important, i reviewed the tape you said shift >> let's hope we have viewers who watch every day and know what your joke is about. >> "power lunch" starts right now. >> brian, thank you very much. welcome, everybody, to "power lunch" on a wild day in the stock market i'm tyler mathisen joined by my friend frank holland, a massive, massive turnaround on wall street. we haven't seen this kind of action in months very rare kind of day. stocks falling hard on hotter than expected cpi numbers. that didn't last a turnaround, sharp, steep, this hour we're going to look at what's driving it, as you see that massive turnaroun