steve weiss, what do you have for us >> yesterday, i talked about deere. that would be a seller of it today, i'll talk about facebook or meta in the same vein look, it's the value trap that reminds me of ibm, if you go back into the '90s so they'll continue to spend money. i don't think there's a value there. i would be a seller. >> you see the clock it's over, you're done "the exchange" is now. >> i blame weiss thank you, scott welcome to "the exchange," everybody. i'm melissa lee in today for kelly evans. here's what's ahead. markets unable to build on yesterday's massive cpi turnaround if there's more volatility ahead, how can you play it and chaos continuing in the uk the new prime minister firing her head of the treasury and reversing course on much of her big tax cut plan we'll assess the risk of britain's problems spreading globally plus, retail sales showing inflation is starting to take its toll will rising prices relate to holiday spending playing grinch

for the retailers. the names that should do well, have been in a downturn. we begin today with the markets. today is another roller coaster day on the markets the story really being driven by the move we've seen in the ten-year treasury yield. that's when we hit the lows of the session. for the s&p 500 right now, we're just about 13 points off the low. 36.08 is our level right now down by 1.7% the nasdaq is down 2.2%. for more on all of this, let's get to mike stantoli live at the new york stock exchange. >> we're down a little less than a week seems like not much is going on. obviously, we know that's really not been the case. this week, we did see a plunge to a new beamarket low in the s&p 500. yesterday morning, 3,500, halfway between the march 2020 covid low and the all-time peak. that seemed to be of some kind of significance, and now i think right now what's going is the search for clues as to whether in fact there's anything

consequential about that rebound we got yesterday, we're giving up a good portion of it today. fewer vimg stocks made a new load yesterday and the day before even as the index did that's maybe a thin read and you can point out from mid-june to now on a net basis, the s&p hasn't really given up that much, even though the feds remain hawkish and yields have not been friendly. the bigger question is, are we going to see another one of these patterns where a relief rally, because the u.s. dollar index has managed to come in, is allowed to go for several percent, and you have fed speakers, as we've already heard, really not give an inch on what they feel they need to do in terms of rates in restraining inflation and whatever the damage is going to be to the economy. bank's the bright spot not just because of the numbers today, they've been perking pup that's not a terrible story, but not enough to old on to too tightly, melissa, when we do see so many of the leading indicators of a potential recession coming into line >> mike, thank you

mike, thank you. >> thanks, melissa, from the rally yesterday. >> and just yesterday, we had basically saw up about 5 or 6% in five or six days leading into this number. we got that initial move lower, but we were getting relentless calls from our clients how come the vix is not higher and that led to the market

bounce we saw yesterday. >> once we pierced 3,500, that was the signal to go higher for the markets. in terms of looking ahead, november 4th is what you would say options traders are really looking towards in terms of expi expiration that encompasses a whole lot of volatility-so forth events >> exactly and kind of like i mentioned, a lot of put protection was sold to close, especially yesterday, the near-term stuff in october, and we started to look, where is everybody focusing next? we saw a lot of hedges, a lot of trades go up in the november 4th weekly options why is that? obviously, you have the fmoc and all of a sudden after the cpi number, there's a pricing any chance of 100 basis points it's 15% or so, but that's still going to add some uncertainty. you have 80% of the s&p components by market cap reporting by november 4th and you cap it off with another nfp number on friday that's the clear focus for options trading in the near-term for exposure to macro.

>> any thoughts after we clear those big, big events? >> if you look historically, the last three months of the year are strong, seasonally, particularly when there's a midterm elections, it back tests very well. the only issue, kind of like what mike alluded to just before is, you know, a lot of these back tests don't take into account a fed that dampe ers th mood every time the market rallies a little bit the seasonality really back tests really well. given the sentiment and the light positioning and everywhere else, we could absolutely be due for a pretty good-sized bear market bounce. the major difference is always going to be the fed. >> are there certain sectors that's attracting more options activity in terms of positioning? a financials would be a really interesting one to take a look at going into today's numbers. are there ones where people are

really positioning heavily around >> there's been so much high correlation and focusing on the macro. and if i were to highlight maybe pepsi, it seems like people are maybe waiting to see what happens with the earnings and take advantage of the move even if you look over the last two weeks, we're kind of in a little bit of a range where bouncing all around, so maybe investors are looking to take advantage of that range of selling some volatility. if you want to go outside of the united states, we are seeing pretty consistent call buying and bullish flow in china-related stocks and everyone is always looking for a bottom there obviously, that hasn't happened yet. >> i was looking at kweb a lot of those names are sitting at new lows. are you seeing looking at volatility around that

the possibility pivot away as well as the peek's congress conv convening. >> i would describe it as, i don't want to miss the eventual bounce, not really optimism in it being a low the reason i said that, almost exclusively call buying, where you get exposure to the upside without more downside, we're not seeing a lot of put selling. i would take a little bit more of a note of some aggressive put selling. >> that surprises me a little bit, and makes me wonder what kind of market we are trading in. >> it's a high correlation market you might have a wonderful single-stock idea and the treasury yields go above 4%. it's somewhat frustrating to be a single-stock trader in a high

correlation environment. we're hoping as investors, for correlations to start to come in as we focus on earnings season we finally got this cpi number out of the way and i mentioned, we have about two weeks until the fmoc and a lot of earnings to come up if we can get a little bit less correlation and get rewarded for our stock picks instead of things all moving together, that would probably be less frustrating. i will also point out to etf volume as a total percentage of volume that traded yesterday from our measurements was at a five-year high investors are focusing on the sectors and the etfs and not really picking stocks. >> chris, thanks for the insights appreciate it. chris murphy of susquehanna. we've gotten what options are telling us about market direction. our next guest says small caps look particularly attractive right now, especially for long-term investors. let's bring in the co-ceo of essex managements investment this is sort of the playbook if you're in a rising inflation, rising rate, rising dollar environment, small caps

historically have done well. have we seen that sort of play out and which sectors in particular or subsectors within small caps do you like the best for this environment >> we are starting to see that play out, certainly in the third quarter, which was, by all accounts, a very frustrating and very difficult quarter for all areas of the markets, we saw small caps and interestingly even microcaps outperform on a relative basis and small cap growth and microcap growth were two of the only sectors that were actually up a little bit for the quarter. one of the other factors with small caps here is not only are the stocks very travel valued, selling at valuations of ten times or less in aggregate on next year's earnings, and admittedly those earnings might be too high, but that's still a great valuation, we have also seen historically, it's not really rising inflation so much as inflation that is high, leveling out and starting to

come down, which is the scenario that we think we are entering today. so that bodes very well for the outlook for this very neglected sector of the market and if as your previous guest just said we're right and we're going to go into a market that rewards individual stocks as opposed to macro themes, that will be even more tail winds for the small cap sector in terms of specific sectors, we are very, verybullish today on industrials. we believe that we are entering what we're calling a new industrial revolution, driven by the multiple factors of the energy transition, reshoring, all the of the different kinds of shores, the infrastructure rebuild we're seeing in the united states as well as a likely increase in defense spending in the u.s. and industrials are a large part of the benchmark and a large part of the universe in small cap land and provide myriad opportunities for both growth and attractive valuations. >> how do you think, though, you

mentioned the valuations on estimates which might have to come down still. how do you think about how much estimates might have to be -- have to come down and what are sort of your, what's your north star in terms of telling you that it needs to come down by "x" amount are there certain bellwethers you're going to? >> we need to know how deep this recession is going to be or if, in fact, we can manage to just have a bumpy landing, as opposed to an actual recession what we look for, though, as we go into these recessionary or very slow-growth periods is how did the stocks react to the inevitable disappointments and it was a good day yesterday, but you can look at the reaction to applied materials earnings, when stocks start to react positively to bad news, that's a sign that the stocks are more than adequately discounted the way we approach that is we

stress test all of our estimates. we look at past recessionary periods, and try to get a sense of the incremental and detrimental margin and we do this actually both on the up and the down side to get a sense of how much estimates need to fall. with the benchmark selling at something on the order of ten times earnings, if earnings come down 20 %, that's still an attractive valuation >> your picks are alpha tech, arc and sterling infrastructure. coming up, a fired policy minister and a country in chaos. the latest on the uk's crisis and the country's ten-year gilt yield near its highest level since 2008 there is one sector holding up particularly well and it may surprise you we'll tell you what it is and the names that could be well positioned even in the downturn. "the exchange" is back right after this

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announced an unexpected fiscal u turn wilfred frost is at 10 downing street with the very latest. zpr great to hear from you again. as you said, a massive political crisis, but all in the first 38 days of a new premiership. and we'd already started to hear of some of the policy u-turns added to that today, the prime minister forced to replace one of her most senior mirngs miniss here is prime minister truss earlier today. >> i want to deliver a low-tax, high-wage, high-growth economy it's what i was elected by my party to do. that mission remains, but it is clear that parts of our mini budget went further and faster than markets were expecting. so the way we are dliring our mission right now has to change. we need to act now to reassure the markets of our fiscal zplip.

>> the policy u-turn part of today, relatively small, delaying a corporate tax cut that she had planned much more significant is her hope that replacing the finance minister will reignite confidence in her government and this country more broadly and the reaction from markets today, at least, not resounding the pound down, gilt yields up, though the bank of england's special operation was expiring today, as you already mentioned. hard to judge today what the prime minister needs to see over the next couple of weeks is those gilt yields start to come down and calm down, and she must hope that then inspires confidence of her own mps, which has been severely tested in recent weeks, melissa. >> you had mentioned how much it would save, wilf it's a drop in the bucket, really particularly with uk pensions because of the shoring up of yields that we've seen of gilt that we've seen today, or if

it's just simply delayed in terms of whether or not the worst is actually passed >> of course, we haven't even seen gilt yields shore up much today. they're a little bit off their peak of recent weeks, but significantly evaluated from when prime minister truss took office 38 days ago clearly the announcement, as you said, relatively small i think the big hope is the replacement of the finance minister who was seen as cavalier by someone in jeremy hunt, who came from the david cameron, george osborn wing of the party, was theresa may's foreign minister, who was seen as more orthodox who will listen to economic experts and consult his cabinet and lay the groundwork for any announcement and telegraph them in advance as we all know, markets hate surprises. the outgoing chancellor's mini budget a few weeks ago certainly took the market by surprise. >> wilf, great to see you. thank you so much. wilfred frost for us at 10 downing street for more on how this is all

playing out in the bond markets, i'm joined by andy bremmer great to have you with us. this seems like a positive first step in terms of trying to right the ship over in the uk. wilf mentioned it has only been 38 days. what an amazing 38 days it has been in your mind, though, has any danger been averted? >> thanks for having me, melissa. no, i don't think any danger has been averted in fact, if you look at how gilts traded, later today, at 6:30 this morning, the 30-year gilt was yielding 422, it went out at 480 that's almost 60 basis points. so i would say that it's a thumbs down. yes, it's good to get the finance minister out of there and maybe things will get a little bit better, but by the bank of england stepping away and this already dramatically happening, i think the bond vigilantes are going the feast on the uk over the next couple of weeks, and you have to remember, two weeks from now, the uk is going to quantitative

tightening i see nothing good coming out of the uk right now >> what's your sense about positioning after we've heard this because we've also got this sort of data point, october 31st is when the new finance minister is going to lay out the medium-term plan we have this sort of window of a few weeks here, in which to trade. how is the positioning, you know, in this period >> pension funds are still over their skis and we don't think they, even though they took a $150 billion loss in the last few weeks on derivative positions, we still don't think that they're back to even. and we think that this crisis is going to continue. it may not start on monday, but i see nothing that will abate this, at this point in time. >> as you look out in terms of the collateral damage, where do you look first you have the citigroup ceo on the conference call today saying that they're watching collateral very closely amid the uk pensions situation i'm not trying to peg citi or point to citi, but this is

something that everybody is watching in terms of potential fal fallout. >> no question we wrote a couple of citi reports this morning and they were pretty hugly. i wouldn't be surprised to see 30-years go back to 5% i tried looking back as far as i could, and i would see maybe 520, 530 i wou i wouldn't be surprised if they got to 6%. >> wait to 6% on the 30-year gilt andy, great to speak with you, thank you very much. meanwhile, the ten-year yield here at home back above 2% our next guest says these levels are unsustainable. for how to trade it, let's bring in jeff kilburg, a cnbc contributor. jeff, good to see you. >> great to see you, melissa >> are you in the camp that the ten-year yield is actually sort of capped? >> i think it is let's rewind for a second. i appreciate the lens we were just looking through for the

bank of england. the bank of england intervened and bought about $15 billion worth of bonds we bought and currently hold $5.6 trillion worth of treasuries as our $8.8 trillion balance sheet is really in a movement here, think about what transpired in the ten-year note or the two-year note the two-year went from 1.5% to start the year to over 4%. that rubber band was stretched and the yields were compressed and intervened so much by the federal reserve, it was unorthodox, unnatural to see the supersonic move of rates normalizing, that's what's causing all the problem. i go back to where i cut my teeth, and i using the bond leadership look at what we saw happen in michigan to up to over 4% we saw equity get sold off the bond leadership is in context, but when i talk about sustainability, i don't think it's sustainable, and i think the fed once again mis-measured. they thought they would have a lot of buyers lined up

the two-year note is a great way to look at the front end of the curve. it was at 35 basis points, just 52 weeks ago now above 4.5%, melissa. i think the fed really mis-measured they thought they would see buyers on the front end of the curve at 3%, 3.5%, 4%. we did see an institutional buyer come into the markets yesterday and substantially buy the yield at 4.5%. and remember that yields are inversely related to the futures products i don't think it's sustainable for so many reasons, but look at the expense that the fed is enduring on its balance sheet. this was the congressional budget off not jeff kilburg talking about with this. we're talking about the interest on our new cost of interest, over $400 billion, and over the next ten years, that's going to be over $1 trillion. my thesis of it not being sustainable brings the ten-year back down and also brings the curve back down. the fed does have the tools to move that curve. >> in a world in which the ten-year yield is capped, is

that a world in which equities go higher or is this a world in which there is stagflation and severe economic slowdown and the markets do not go higher >> i think this is a wonderful opportunity, last year, i banged the drum how many different times, moving out of growth to value. we talked about the essential names. i've been trading these for a long time. specifically, semiconductors which has been absolutely abused look into nvidia, brad com, even intel, which arguably could be bought by amd. nonetheless, you're seeing an opportunity and a discount in all of these rate-sensitive names. kbrr seeing that uber sensitivity just in the dmix to depiction today, we saw the market move and technology got hit again. i think this is the time between now and the midterm elections to really embrace the fact that there's some great-quality companies in technology, in semiconductors that you've seen

all the bad news priced in, in my opinion >> i've got to ask you as a treasury features guy, is there an opportunity in just trad traa ban. it hits and you're out >> i think the front end of the curve, i think 4.5% is where we will see a cap out you can buy those treasuries which are inversely related. but we also need to see something for them to abate. i would like to see it under 375. and we could see by tepid of the year, the ten-year under 3.5%. that's very counterintuitive as to what the fed wants to do. we don't need the fed pivot. just a fed exhale or a fed pause. that will move rates lower and let equities come back and that is maybe, mel, the midterm, late in the year election rally that a lot of people have talked about historically the last 85 years >> jeff, thanks sprp a good weekend. >> thank you coming up, transports are quietly outperforming the market this month

are they growth at a reasonable price or so-called garp investors have been looking for? and speaking of transports, we're one month into the labor deal struck by railroads and unions, but not everybody is onboard with it. we could take a look at what could derail this agreement. as we head to break, take a look the dow heat map jpmorgan, united health, boeing, verizon, the only stocks in the green. "the exchange" is back right after this 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 - [narrator] if your business kept on employees through the ypandemic,. don't worry i got it! getrefunds.com can qualify you for a payroll tax refund of up to $26,000 per employee, even if you got ppp.

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filing sales tax returns? ahhhhhh. managing exemption certificates? ahhhhhh. business license guidance? ahhhhhh. does it connect with accounting? ahhhhhh. item classification? ahhhhhh. cross-border sales? ahhhhhh. what about? ahhhhhh. ahhhhhh. do you have those budget markups? thank you. mmhm. [bubbles] 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 to "the exchange." what another day of reversals here let's take a check on the markets right now, firmly in the red across the board the dow had been as high as 390 points at one point in the session. we're now down 310 or by more than 1%. the s&p 500 is just about six

points off of session lows, down by 1.86%, and the nasdaq down by 2.4% or 251 points banks are front and center after kicking off earnings season this summer wells fargo, jpmorgan, citi, all higher than beating estimates on the top and bottom lines morgan stanley having its worst day since june elsewhere, kroger is set to buy rival grocer albertson's, valuing the deal at $25 billion. shareholders would receive a special dividend of $6.35 when the deal closes. regulatory worries are top of mind for investors kroger's and albertson's are two of the largest grocers in the united states, making more than 16% of market share. >> kroger chairman and ceo rodney mcmullen will be on "closing bell" 3:00 p.m. eastern today with much more on this deal let's get to tyler mathisen for

a cnbc news update tyler? >> here's what's happening at this hour. police say the shooter who killed five people in raleigh, north carolina, is a 15-year-old boy. the suspect has been hospitalized in critical condition. he evaded officers for hours before being cornered in a home and arrested on the news with shep smith tonight, for more on the victims and the search for the shooter's motive, that's tonight at 7:00 eastern time the cleveland browns quarterback, deshaun watson facing another lawsuit from the sexual misconduct. the new plaintiff alleges that watson pressured her into sexual activities in december of 2020 during a massage therapy session in his hotel room. and toys "r" us is making a comeback, just in time for the holiday season the iconic toy store opening up in select macy's across the country, giving a new group of young ones the chance to say hi to jeffrey the giraffe

melissa, back to you >> thank you very much, tyler. still ahead with bonds and multi-decade highs, the hunt for yield is on. tim seymore brings us three beaten up names he is buying right now. that is ahead. and throughout hispanic heritage month, we are celebrating our cnbc teammates and contributors, here's javier sad. >> i was born and raised in puerto rico, then i went to college in the midwest it opened my eyes to a world of possibility, to pursue the american dream, yet hurdles exist for many but why is america such an amazing place. hundreds of clultures, the most dynamic economy in the world, and oh, by the way, hispanic success is american success. soon to be $100 million people, trillions in gdp, digital, entrepreneurial, productive. our heritage is part of the american story i'm proud to be puerto rican while being an american.

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welcome back stocks lower after yesterday's huge rally and the dow is the only index still on pace for weekly gain. our next guest says while recession risks already priced in credit and liquidity risks

still loom, he is currently buying names and returning cash to investors joining us now is tim seymore, a "fast money" trader. tim, good to see you again >> of course how are you? >> good, good, since i saw you last night we don't often talk about dividends as being a primary driver it's sort of like a nice kicker. walk us through some of these names. target and walmart, these are ones you've liked for a very long time here >> and it's not about buying stocks for dividend yields and obviously, people are excited to see, you can get 4.5% in a short u.s. treasury companies that have great balance sheets that have over time increased their payout ratios, that have shown that they continues to watch the balance sheet and have debt-to-equity lefvels either around 2 or lower, walmart and target go in there and when we look in terms of the pieces of both of those reports that were negative, i would say it was discretionary, jumping

out at you whether it was auto, whether it was hardware, whether it was appliances and electronics walmart is a food retailer you don't think of it as a dip play i think of it as a company that plays out 20% every year it's outperformed target, and i think target's metrics that i just talked about are even more impressive and have been growing their dividend over the last few years. as you get into the consumer staples company, kimberly clark. i think we also saw some relief in that cpi number towards some of that goods inflation. and again, kimberly clark's a company that's got north of 60% payout ratio, pays a nice dividend yield trades more or less in line with the market is down substantially over the last six months. these consumer staples trades at

one time were big outperformers, very expensive i don't think that's the case right now, and i think you'll see rotation back there. >> 20 times for kimberly clark, so it is at a premium. that's the issue with a lot of these consumer staples companies. people are paying up, and they're suffering from price increases and doing it gladly for their huggies and kleenex and all of that. >> what else are you going to ewe? >> we do use huggies, but that's -- relative to itself, is it expensive 20 times -- a premium to the market seems like a lot. >> i don't -- not during this period and again, we're still in a deceleration mode, and i think we're at a place where actually these types of companies always trade expensive to the market in this environment and i would say relative to where some of these stocks were six to nine months ago, i think this entire consumer staples space trades cheap

and it should be trading at a premium to the market when you have companies that again, the trade down but the consumer staples component. which is where the retail component is focused you should be building that list of the bulletproof stuff that you want to pick your spots. it might have been in though low 80s numbers that we saw last week i don't think there's a problem buying it, but as we said at the top of the show, what concerns me is not recession having been priced in. what concerns me are the next phases of some type of a credit crises, but the liquidity crisis i want to speak at night and make allocations towards companies like the ones i mentioned that i know are well positioned here. >> if you think and are worried about the next stage when we're in a official recession, why would you want to go with something like an applied materials, which is one of your quote/unquote bulletproof stocks i understand it's for the long

run. if that is the period of time that we're in for potentially after a recession or, you know, coincidesing with a recession, that consult seem like a good set-up for something so cyclical >> applied materials is obviously the infrastructure and the bricks and mortar around the semiconductor sector and i think the secular trends around what we're going to be doing in this country in the capex and the investment in that sector, that's all we talk about, it seems like, these days i would also argue, if i looked at taiwan semi's numbers yesterday, and they were, obviously, it was a big day up for everybody. that was a real fundamental bottom up. we got a chance to hear a company cutting back on capex, warned clearly about where the inventory cycle is for semis i think you're supposed to be buying some of these stocks six to nine months before we see that term. that's what investors should be finding in this moment so, look, i can't handcap the credit crises at this point, and what that might lead to

liquidity. i want to find companies that are well positioned to battle through that and again, the -- i think where we are with regards to certain cycles, semiconductors, especially the ones that are not in hpc and places where i think, but more the brick and mortar in the semispace, we're working through inventories right now. >> tim, thank you. i'll see you tonight on "fast money" at 5:00 tim seymore. coming up, it's been a month since the railroad strike was avoided, thanks to an 11th hour deal brokered by the white house. a check on where they stand and what's at stake, next. at fidelity, your dedicated advisor will work with you on a comprehensive wealth plan across your full financial picture. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect. ♪ ♪ designed to help you keep more of what you earn. connecting to opportunity is just part of the hustle.

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being derailed kayla tausche joins us now >> labor leaders brokered that deal of averting a shutdown that each of the 12 unions involved must get a majority of its workers to aprove the deal to make it final. so far, six have voted to ratify it a seventh union representing about 11,000 workers rejected it, citing the lack of paid leave in the proposal, which agreed to give job security for unpaid time off to get medical care but that rejection may embolden the unions woez workers are still on the fence in the next month, five more unions will bring the deal to a vote, including the two largest representing about half of rail workers on november 17th that vote is just two days before the end of a skaul cooling off period, what would allow groups that have rejected the deal to strike after that date even one union refusing to work could create glitches in the system during the holiday shipping crush labor representatives could negotiate another extension with the industry as they try to get new deals in place

the department of labor has not responded to a requester for comment on its outreach and what the administration is doing now to protect the deal. melissa? >> kayla, we know that one has voted it down. what happens with the others, if they vote in favor of it does it still gets ratified? what constitutes passage of this >> essentially, each union has the opportunity to go back and negotiate its own terms. and if a union has rejected it, my understanding is that that union could trstrike after the cooling off period on november 19th there could be some other unions, even unions that have approved the deal that say, if those workers aren't coming, that's going to make my job a headache, so maybe we shouldn't show up for that day or for however long that lasts, either. there could be a cascading effect depending on the state of the deal and the state of the negotiations certainly, the leaders of the union that rejected the deal are

working to try to shore up sport and reach some sort of agreement with its workers, but there's still a lot of uncertainty about what exactly will happen come mid-november >> kayla, thank you. kayla tausche. coming up, spending was flat in september as inflation takes a toll on customers, but the best way to play a retail slowdown may not be the menas you expect where one analyst is seeing strength, next the new iphone 14 pro is amazing. the camera is incredible. and you'll get our best deal. nice, but i can't accept it. unless every business gets the best deal. on every iphone.

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welcome back to "the exchange." retail sales were flat in september as inflation hit consumer spending, but our next guest says that you can find refuge from a weakening consumer in the high end. joining us now is oliver chen, managing director at keown great to have you with us. >> melissa, great being here >> there's always been a thought that wealthier investors are less, you know, impacted by economic headwinds, et cetera. they've got more cash, all of that at the same time, we are in an environment where everybody is facing sort of the same big macro questions, rising rates certainly are sort of a different wrench in the picture. so why do you think the high end is going to hold up? >> melissa, you're right there's been a parade of promotions and inventories are very high, but what we're really

seeing is a consumer going out again and very high-quality brands, such as louis vuitton, such as canada goose and tapestry and handbags, they are achieving price increases. note that a lot of americans are traveling abroad the europe, that's also benefitting the spending, and fashion categories with great brand equity, it's still working. at the same time, melissa, we really like value ideas, too such as grocery outlet, as well as costco. those will be great names to own in this difficult environment. and don't forget about really investing in your face and skin care and health and wellness the pick there is ulta >> for lvmh, we can walk through, you mentioned americans traveling abroad, and and you're going to fill up on some louis vuitton bags that's sort of a one off a pull forward of demand how sustainable is that? and how big was that in the

latest results >> yeah, mid-to-high single digit in terms of price increases. and they've been getting this very consistently. the other part of luxury goods is really being fashion relevant and merging magic and logic. and louis vuitton is one of the best brand builders and that and interjecting it. handbag is an important category, important specially as the consumer goes out again. louis vuitton is the second biggest market cap company in europe and very diversified. about 20% of the business is sephora. it's a global butte concept. if anyone shopped at sephora is magical and lots of fun >> how is luxury fared in past recessions one could argue we're maybe not a recession at this point or at the early stages of a recession and haven't fully felt the impact of the fed's rate hikes yet, and i'm wondering what sort of the path of the stocks have been in the past

>> yeah. the luxury companies are much better prepared coming out of 2008 in terms of managing variable expenses. also, we're somewhat selective in terms of liking brands that are appealing to generation z and millen nalls not all luxuries are great ideas in our opinion those are key things to watch and managing these, penses have been better and healthier. what we are watching cautiously optimistically is housing, the valuation of real estate, also consumer sentiment, which has been waning. that's something to pay attention to analytically speaking, there used to be a tight correlation of luxury goods to the s&p that's not true any more luxury goods have been doing well the past year as the consumer goes out again and consumer is going out, should be a thesis for the next year in our view >> during the pandemic, nobody was buying handbags because you didn't need to go anywhere you didn't want to carry anything around. you like oliver, but you cover walmart and target and wanted

your take on how the early deal days, the early black friday, whatever you want to call it, specials online right now, how that is doing? >> it's certainly a lot of pressure the amazon prime day in terms of happening again, exerts a lot of pressure on the whole industry we are bullish on target, 13 times versus walmart's 20 times and we think they built a business model for the long term they flushed out a lot of inventory. what you're seeing at target is a lot of newness and a great place for seasonal events such as halloween, buying your candy there and what they achieved with that and merchandising and curbside pick-up we have out perform ratings on both stocks. target executes in discretionary, a balanced assortment walmart has a very impressive grocery business, about 56% of total. that adds stability. both of these companies are competing very well in terms of discounts and offering value to

the consumer, which is really more important than ever, given the reality of inflation and gas and anxiety at the low end. >> what's your sense as to how much of the inventory they've worked through do they still have a lot of it >> target was very aggressive and quick. so what what we're seeing in stores now, we were there last week, a lot of freshness and relevance in terms of what customers want now also food and essentials and the back-to-school categories, well stocked at target, we're encouraged with what we're seeing oliver, thank you. >> thank you. still ahead, investors on the hunt for garp might want to check out this freight stock, trading at 8 times forward p/e we'll review what it is and get the other names that could offer growth and value nt.ex the exchange is back in two. look at the size of that- gaaaaaaaaaaaap!!! is that a goat?! you talkin' about me? gaaaaaaaaaaaap!!! i think this goat is saying “gap.” must be talking about the expenses health insurance

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want get to one more thing transport names outflaerng q4. check out xpo, our mystery chart, lower but up 9% this month. frank holland joins us with why transports could be the "garp" stocks. >> hey there this might be hard to believe but old dominion freight lines, one of the top performing in the nasdaq 100 this quarter, shares up almost 6% as trucking and logistic players continue to outperform the broader market and the mega cap etf of the nasdaq 100 and triple qs transports are not growth stocks, they're not, more and more they're looking like growth at a reasonable price that so many investors are looking for since the second quarter, a lot of talk about a possible freight recession and falling freight rates and last month the dire morning from the fedex ceo that rates were plummeting. we'll get more insight as some of the biggest names in transport all report their earnings in their first two

fiscal quarters, revenue and eps growth that's out pacing the triple qs. if these stocks can maintain this level of growth they would be growth at a reasonable price by definition. all trading at a lower forward p/e than triple qs that traded 19 times jb hunt reports next week. old dominion might be a tick above that that's the growth people are looking for. are the volumes still there. >> there are kinds of transports even within trucking so i'm wondering in terms of the valuations, i notice some had higher valuations than others. there is a common theme among the lower versus the higher one, the lower have more assets and the other ones are asset light >>, for example, ch robinson had a higher valuation, an asset light business other businesses it depends if you're a truck load, a company says i'm going to fill up the truck or less than truckload, where a couple companies say let me put this in there, that in there. companies less than truckload have a higher valuation, it's

more of a cyclical business that can have spikes when it comes to rates and things like that. >> they can actually raise rates when they have to? good thing. >> yeah. you have people say i want to get a load on there, can't find a full truck, put this on your truck and a lot of times that's what companies need to do to adjust to business disruptions >> how is the labor shortage impacting these companies? >> there's still a trucker shortage we had a highs transport company on and said there's about 100,000 truckers needed in the u.s. to fill the spots over the next five years that's going to dwroe to 200,000. >> 100,000 right now. >> give or take. >> truckers could command a high salary. >> he had to raise pay several times this year and also incentivize and on top of that, may not think about this, it might sound more white collar, i had to make the work situation better, add amenities and talk to them. >> in the cabs >> not only in the cabs but the work conditions. you want to make sure the

drivers get home more often. they want to go home at night. >> thanks. >> frank collins that does it for "the exchange." i will be back at 5:00 double dose of chart of the game, think gaming and a land far away tune in 5:00 p.m. eastern. mean time "power lunch" starts right now. thank you, melissa see you live at 5:00 welcome to "power lunch" with contessa brewer i am tyler mathisen october living up to its reputation, stocks fall after yesterday's historic rebound with volatility gone wild. a market veteran will tell us why he is betting on big gains over the next year and the stocks that will lead the way. deep freeze, the once hot l.a. housing market, turning a little bit chilly. buyers and sellers at odds deals coming to a halt we'll talk to a realtor on the front line