two-year, frankly. the ten-year is at just about 412 and the two-year is pushing towards 460 as joe referenced earlier. the clear distinction here, you can see, obviously, as yields continue to move up, stocks are seemingly challenged in that so i'll see y'all in a few with those earnings "the exchange" is now. hi, i'm brian sullivan in for kelly evans once again here's what's ahead. are you ready for a more than 7% mortgage they're on the way, if not here already. bond yields spiking again. we're going to hear from somebody who says the fed needs to slow down the speed of hikes. let's talk oil it is actually slightly higher, even as the white house keeps selling america's energy reserves are we on a collision course with opec as well? we're going to hear live from the president in moments and trouble on the mississippi. how ultra-low water levels may turn into another supply chain and maybe even energy crisis

there is a lot to do on this very busy wednesday. we are going to get to it all. but first, let us begin, of course, with tehese markets just heard on "halftime," talking about the stock market being down as yields rose once again. it's not quite perfect sink rownicity, but when we see yields pop, stocks almost inevitably go down when yields hold steady or go down, we see stocks go up. not 100% of the time, but that certainly has been the macro trend. right now, we are seeing the nasdaq and tech, we've had a nice rally the last couple of days, noted to nasdaq down 1.1% now, there are winners, of course, out there. there are winners every day, in any market netflix, the big winner right now, leading the s&p and the nasdaq 100, strong subscriber numbers and some decent guidance lifting that stock it is up 13.8% on the dow, travelers and procter & gamble leading the dow on the back of strong earnings dow is down overall, but p&g and travelers are indeed higher. by the way, interest rates does it matter more to any group

than housing the home builders, they're moving lower as rates continue to rice. pulte down 7%. on the flip side of that, the oil services etf, the oih, it is moving higher with all but two components in the green. you've got baker hughes, you've got liberty, halliburton, many others those are the ones that are going to move it the vanek oil services etf, the official name, that is up 3% and your disaster de jure, that is carvana carvana, the car sales company, sinking 15%. that stock is down 93% this year i mean, you're down 93%. there's only a couple of things that can happen. you're going to zero, you stay here forever, or the stock rebounds, not today, we're down 17% to a $15 stock all right. let's talk about yields, because we are now seeing decade-highs, all across the curve

the two-year, 15-year peak ten-year, 14-year high 30-year, 11-year high. but it's not just the actual rates that are the issue it is how fast these rates have gotten to where they are we were just 2.5% on the ten-year about three months ago. and it is not just here in america. it is the same situation in the uk and europe. so what are the second and third derivative effects of this kind of superspike in rates joining us is ken rogoff, former chief economist at the imf and somebody, ken, you and i had long, extensive conversations in 2008 and 2009 about sovereign debt, about greece, about our fed back then. so good to chat with you again, i think. do you see the problems in the uk, maybe italy and i hate to even reference greece again, as solved or could there be more pain to

come >> well, i think what's going on in the uk, we may see in many other pockets of the global economy, which is that people just thought interest rates would not go up this fast and they, you know, sold interest rate risk and took chances that they shouldn't have, a lot like in 2008 when people thought home prices couldn't go down. i think in the case of italy, i would drive distinction where i think it is a problem, but it's really not just the speed, but i believe that at the end of this cycle, whatever it is, it could be three years from now, the interest rate is not going to come down as much as you think i think we're going to be looking at real interest rates and forward-looking interest rates, that looked more like in the early 2000s that we got used to before the pandemic that's very challenging for europe, as long as it's a free

lunch, they can promise an anything >> and i probably have a bias towards the negative, because i lived through 2000, i lived through 2007, '08, '09, watching people throw molotov cocktails into banks in syntagma square in greece so i've seen sort of how these things become political crisis we've had a little bit of stabilization in the last few days, but i worry about the next six to ten months. is it overstating to say, we could have more sovereign issues is that possible >> it's certainly possible in emerge markets the real issue is that the central bank keeps saying, we have to bring inflation back and if we don't, inflation expectations are will go up, and that's terrible. and we'll have a worse

recession. when you think about political, i think having a deep recession now would be very destabilizing around the world and by the way, good luck not having inflation expectations go up in the long run they had 10% inflation reported today, predicting almost 10% next year. are you seriously telling me that's not going to get built into interest rates for a long time >> no, i would not argue with you on that. speaking of bond yields, we've got 20-year bonds. don't talk about 20 year very much let's go to rick and get the results and we'll come back with ken rogoff rick, how's it looking >> the grade is "d" as in dog for this particular auction. we're talking about 20-year bonds, 12 billion of them. and we brought them back in may of 2020 and this is the highest yield since then, 4.395. so a half a percent under, a

half of 1% under 3.4, but the problem was, when the market was trading, 4.3 4.37 to be exact higher yield at the auction means a higher price for the government to sell their debt, hence, "d" for dog if you go through the internals, the bid-to-cover was weak. 63.7 indirect, the weakest since february about the only glimmer of hope that kept it from a d-minus was that direct bidders were darned close to 20% that is a solid number and one of the biggest negatives dealers took almost 16.5% of this auction. you don't want dealers to take the auction. you want the auction to be taken by investors and bidders that was the highest amount taken by dealers since january so the first month of the year and if you look at the chart, you can clearly see that rates popped afterward these are the highest rates on

the curve, and sometimes, many would say they're not the most liquid, so the auction isn't quite as important as a 10 or a 30 and that may be true, but no matter how you slice it, brian, this isn't a good auction, and the last several batches of auctions have been anything but stellar. >> that is a troubling number, 16%, sort of forced buying on the primary dealer side. rick santelli, thank you let's go back to professor ken rogoff you just heard that. we saw a day a couple of weeks ago in the uk where there was basically no demand for uk government debt. is it possible we could have days here where there's no buyers for u.s. treasuries >> well, it happened in 1998 when after the russia crisis, the whole treasury market froze up you can have pockets of it but, no, it's not possible however, it is possible buyers may want to have lower bond prices may have higher yield and we'll

continue to head that way for a very long time there's all of this talk of the secular decline in interest rates. i think that's been way overstated i think we had something after the financial crisis that was a temporary for a long time, but it's -- when interest rates are going up now, obviously, the ten-year index, inflation index, treasury is just way up from its floor a while ago, more than 2% up it's not all the fed the reason the fed's having to raise interest rates so much is in part because the market equilibrium and the real interest rates probably moved to something more normal, at least i think that's a very serious possibility. not just now, but for the next ten years. >> ten years >> yes, yes. >> so what's the ---ing write another book, ken. you might have to. i'm sure you are so what's going to be the effect of that then what are things going to look like in a year, two years, and

five years >> you're talking about structural systemic changes in basic and core finance >> i mean, for sure, part of the reason the stock market got so high and housing prices got so high and our prices in bitcoin was that money was free and people are looking for alternatives i'm not saying that the price is going to go through the roof, but when it comes back to something more normal, there are going to be effects and i think our political system is not at all prepared for the end of the free lunch era, at least they thought it was, where if you want to redistribute income, you have to raise taxes and give it to other people instead of just handing it out i think -- i think there'll -- we're at a turning point and i think after the pandemic, we're not going back to this so-called world. i think in interest rates, we're not going back to it

that's my guess. well see somewhat higher interest rates, adjusted for inflation, more like what was normal before the financial crisis >> and i want to be clear to our viewers, a 4.5%, 4.5% yield on the ten-year, historically, is still low, correct i mean, the fact that we're calling that high is sort of ridiculous but it's only because we are off half a percent during the covid sort of initial panic. everyone was in a panic, i get it is the bigger problem, ken, is that we kept rates too low for too long coming into 2021 when pretty much everyone saw that large parts of the economy were recovering nicely, or was there some other policy mistake that is maybe more to blame for what's happening in the bond market >> i mean, i don't think there's

any question that we kept our foot on the gas in both fiscal and monetary policy for too long so did a lot of the rest of the world. but it's not the only thing going on the pandemic indeed made interest rates really low, again. they had actually been starting to rise, the real interest rates rates before but if you look at the average level of the inflation indexed interest rate, say the year is 2003 to 2006, and compare it to 2012 to 2021, it's a 2% less and that's not normal. i've done work with colleagues, looking at really long-term trends in these real interest rates, and there's a lot of movement, but nothing secular. it ends, it comes back the cycles may be long, but it's more cyclical than secular and i think we'll see that again over the next decade it's not the end of the world,

it's just more normal. >> to adjust to that normality is normal, but as we try to set up at the beginning of the interview, it's the speed at which this all occurred, right it's driving through the dark in the rain at 100 miles an hour, where your lights off. >> yeah. >> and now you're trying to fix it in 25 feet. okay, so now we're narrowing it on the inflation, which is definitely high and they need to raise interest rates and i'm even saying, you know, there's adjustments beyond comparing to what interest rates were before the pandemic but i think the problem with doing it super fast is that there are long lags. i've been saying this for a long time, the employment effects can be a year, two years out and it's very easy to overshoot so at some point, you need to slow down. you don't stop i'm not saying that, but the sort of continuing with 75 basis

points hikes and 1% hikes, i think, is a risky strategy yes, it's good for your credibility -- >> is it >> i don't know the answer they're trying to restore their credibility. >> if you were jay powell, would you raise rates in november? >> absolutely, they should be raising rates the question is when they kind of start slowing it down and if they need to raise it so vigorously i think the rates need to go to at least five, but when they get to five, it's still not going to be enough. it is not going to be -- we're in for stagflation and that's a point, i think, that they've got to start looking towards and saying, we're going to slow down at that point, and it already might be too late if they raise them too fast >> it might be stagnation ken rogoff, harvard, ken, pleasure to chat with you again. thank you very much.

>> thank you >> speaking of interest rates, we've got a news alert right now with diana olick on mortgage rates and it's a doozy diana? >> brian, the average rate on the 30-year fixed just hit 7.22%. that's a new 20-year high thanks to the route in the bond market. home builder stocks were already taking a hit you see the builder etf down more than the broader market that's just a slew of roughhousing data today. a 25-year low in weekly mortgage applications that came out this morning as well as a wider than expected drop in single-family home construction names like lennar, pulte, and dr horton all down. and home sales are down 25% year over year in september, and new listings also down 22%, as the housing market just as low as down to a crawl. we'll get the realtor data on existing home sales tomorrow morning, and it will likely not

be pretty. and just one more note we will be talking about the impact of rising interest rates on investment and clean energy investment and on real estate coming up in our next hour "power lunch" with legendary investor, vim ladd kosla. punching home sellers and buyers in the gut diana, thank you very much >> all right, also happening, severe drought causing the mississippi river to recede to record low levels, adding more supply chain pain at a critical time remember, as we try to showed you a few months ago when we were live in davenport, the mississippi river carries nearly 92% of our agricultural exports and an estimated 589 million tons of cargo per year the low water levels causing a backup of more than 2,000

barges leading to higher prices to other shipping methods for more on what all this means and where we exactly stand, let's welcome in mike ellis. acbl, if you remember, we were in st. louis with mike on one of his barges a couple of months ago now. i know you're on the ohio, not the mississippi. but the ohio has also suffered how severe are some of the water levels, particularly on the northern parts of these rivers >> hey, brian. thank you for having us today. yes, severe. this is the most severe we've ever seen in our industry in recent history so, we are seeing levels that make it almost impossible to transit through certain areas of the, not only the upper rivers, but the lower mississippi river, where we're really seeing the most difficulty. >> do you have to lighten the barges can barges still get through,

but maybe you put half the oil or half the corn or half the fertilizer on them what's the status of shipping right now? >> it's a combination effect of carrying less barges per tow or per boat instead of carrying 36 barges on a 10,000 horsepower boat, we may cut down to 25 barges. and not only do we have less barges, they're also drafting less, so we have to load them instead of, you know, 1,900 tons, we may be loading them to, you know, 1,300 tons, 1,400 tons, or, you know, from 12.5 feet to 9.5 feet or today, we're going down to 9 feet it's a substantial reduction in the amount of goods we can carry on this river. with the amount of horsepower that we have >> trying to put that number on backlog. i've eyeballed the river, but i'm certainly no barge expert. are we -- are you normally at 0

barges -- put that 2,000 number into perspective >> yeah, typically, when the river system is working efficiently, we have water and we have the conditions that we need to run. our barges are moving. and you know, there'll be lock delays, delays in certain areas, but those delays are just a couple of barges or just a couple of tows so it's insignificant. when you have 2,000 barges in queue to get through the river, that's a significant impact to our supply chain, our industry and as we talked about what fuel does to the cost of transportation, you start cutting your tow sizes in half and cut your drafts down to 8 to 9 feet, and it takes your cost per ton through the roof and so -- not only that, we can't get the goods there, when it's just fuel being high, we can still get the products where we need to get them, they're just more expensive. today, we have a combination

effect of the cost increasing significantly and the fact that we can just not move the goods that we feed to power this country, to feed the world, and also to build what we build in the world. we move all of that on these barges out here. >> put it into perspective how close are we or are we already at certain parts of the river, mississippi and/or ohio where you are, being impassable. is there a point at which you say, doesn't matter how light the barge is, could be empty we still can't get through >> right so if you look at from illinois, right south of where we were, brian, in st. louis, all the way to vicksburg, mississippi, we call that the lower mississippi river. and that's where we're having the most difficulties. there's probably between 10 to 20 spots, areas that are critical during that stretch of waterway, 400-mile stretch that are causing us to stop -- right

now it's closed. so we're not passing but we expect to open back up here in the next couple of days. and so those areas are critical. you know, the corps of engineers working with the industry in the u.s. coast guard are out there doing everything we can. we are lobbying for some additional efforts, additional resources and dredges from the core and, you know, the industry and the u.s. corps of engineers and the u.s. coast guard have worked well together. we have to work better together, be more proactive as opposed to being reactive, so that we can pass these spots if we don't, we will continue to shut down this river and 2,000 barges will grow to a lot more >> what we need is a lot of rain hopefully not all at once, because we won't be able to handle it, but we need the water levels to come up. outside of that, mike, i'll leave it here, you referenced sort of man-made fixes, army corps of engineers what can humans do, as far as dredging and how long would that take >> yeah, so, first of all, we've done -- had a lot of

infrastructure dollars committed to this river system so it is the most efficient inland river system in the world. and our government has supported the infrastructure now we have to support the operational budget of the core of engineers to dredge this river to the proper draft, on a proactive basis, not a reactive basis. and in the 1944 flood control act mandated the coast guard keep this river dredged to 12 feet and we're not doing that the money has never been allocated to the corps we lack the resources we need to keep this river system and our country competitive. and if we don't do it, we'll continue to see these type of problems going forward this is going to cripple our country in terms of the supply chain that was already weak. we did not need the inland river system to shut down like it's being shut down. >> that's amazing! we're throwing tens or hundreds of billions of dollars at a lot of other things, not saying it's not justified, and we're not dredging properly the most important waterway in the u.s.

and maybe one in the world mike ellis, american commercial barge lines, mike, next time, i'll be there with you thank you very much. appreciate that. >> thank you, brian! appreciate it. >> very welcome. speaking of being on the river, tomorr tomorrow, i believe it is, jane wells will be on the mississippi. you'll get a bird's eye view from a way that only jane can do it all right, coming up, can today's results help tesla snap its longest weekly losing streak since may? should investors be eyeing ibm amid a corporate spending slowdown and what clues can lam research reveal about the state of semis we'll have the action, the story, and the trade on earnings exchange, next we're waiting on president biden. in minutes, he is expected to speak on his plan to sell more oil from america's emergency stockpile, hoping to bring down gas prices all ahead of the american election. will it work or backfire that's next.

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save hundreds a year on your wireless bill over t-mobile, verizon and at&t. just take the xfinity mobile savings challenge today to see how much you can save. back oil prices are on the rise today, up about two bucks a barrel, despite the white house last night reiterating its plan to sell more oil from america's emergency reserve. the $15 million barrel sale will

kick off december 1st, just days before the full european union sanctions on russia kick in, that's the 5th, and by the way, three days before opec plus meets again in vienna. that's on the 4th. we do expect to hear from president biden in just a few minutes there's the empty podium when he comes out, we will go to the president life joining us, michael bradley, a partner at veriton i want to apologize in advance, because if biden walks out right now, we're going to dump out you know how it works. you're both pros michael, i'll start with you will this spr release work to lower oil prices >> no. you said it earlier, brian this is an extension of the 188 million barrel release you'll have to increase refinery capacity and that's not going to happen over the next 30, 60, 90

days it will take several years that's the biggest issue right now. that's how you bring product prices down. and right now, you have product prices that, you know, are at historic lows. prices at historic lows. spr releases are nice but they're not going to make a major difference we've never used the spr like this >> and this is really not what it was intended for. it was developed out of the '73 oil embargo -- >> frank, i need to go mike, stick around we might get your comments after the president. can you hold >> let's go to president biden speaking at the white house. >> well, good afternoon. we're here because of putin's invasion of ukraine. the price of oil and gas increased dramatically and i acted decisively and thanks in part to those actions, the price of our gas has fallen 30% from the summer highs now

it's down about $1, 15 cents a gallon from its peak during the summer gas prices have fallen every day in the last week gas prices have come down and continue to come down. they're now down 27 cents a gallon in wisconsin this past week, 27 cents in oregon, 16 cents in ohio, 17 cents in indiana, in just the last ten days that's progress. but they're not falling fast enough families are hurting if the price of gas went up at the gas station, we felt it. gas prices hit almost every family in this country and they squeezed their family budgets. when the price of gas goes up, other expenses get cut that's why i've been doing everything in my power to reduce gas prices since putin's invasion of

ukraine caused these prices to spike and rattle international oil markets. excuse me. i focused on how we can protect american families from that spike and give people a little bit of breathing room. today i'm announcing three critical steps that my administration will take to reduce gas prices at the pump. first, the department of energy released another 15 million barrels from the strategic petroleum reserve, extending our previously announced release through the month of december. independent analysis -- excuse me, independent analysts have confirmed that drawdowns from the reserve so far have played a big role in bringing down oil prices so we'll continue the responsible use of that national asset. right now, the strategic petroleum -- the strategic petroleum reserve is more than half full, with about 400 million barrels of oil that's more than enough for any emergency drawdown with my announcement today,

we're going to continue to stabilize markets and decrease the prices at a time when the actions of other countries have caused such volatility and, i've told my team behind me here to be prepared to look further -- look for further releases in the months ahead, if needed we're calling it a ready and release plan this allows us to move quickly to prevent oil price spikes and respond to international events. secondly, we need to responsibly increase american oil production without delaying or deferring our transition to clean energy let me -- let's debunk some myths here my administration has not stopped or slowed u.s. oil production quite the opposite we're producing 12 million barrels of oil per day and by the end of this year, we will be producing 1 million barrels a day more than the day in which i took office

in fact, we're on track for record oil production in 2023. and today, the united states is the largest producer of oil and petroleum products in the world. we export more than we import, and i've still -- and i've heard from oil companies that they're worried that investing in additional oil production today will -- in case of -- in case demand goes down in the future, and they're not going to be able to sell their oil products dependent upon price later well, we have a solution for that today, i'm announcing a plan to refill the strategic petroleum oil reserve in the years ahead at a profit for taxpayers. the united states government is going to purchase oil to refill the strategic petroleum reserve when prices fall to $70 a barrel that means oil companies can novice ramp up production now, with confident that they'll be able to sell their oil to us at

that price in the future $70. refining and refilling the reserving at $70 a barrel is a good price for companies and it's a good price for the taxpayers. and it's critical to our national security. to put it in context, since march, the average price of oil has been more than $90 a barrel. the highest since 2014 by selling from the strategic petroleum reserve at the higher price of $90 earlier this year, and then refilling it in the future at a lower price around $70, we'll actually make money for the taxpayers, lower the price of gas, and help bolster production, all while totally consistent with my commitment to accelerate the transition to clean energy so my message to oil companies is this. you're sitting on record profits. and you're -- and we're giving you more certainty so you can act now to increase

oil production now the third thing i'm doing is calling oil companies to pass the savings on to consumers. consider this. in the second quarter of this year, profits at six of the largest producers of publicly traded oil companies were more than $70 billion that's $70 billion in just one quarter, 90 days $70 billion. so far, american oil companies are using that windfall, the windfall of profits to buy back their own stock, passing that money on to their shareholders, not to consumers in fact, in the first half of the year, those same companies spent $20 billion buying back their own stock, and most importantly, buying back -- buying back the most significant buyback in the last almost a decade that's great if you own a lot of stock in oil company or if you're an executive in an oil company. it puts a lot of money in your

pocket that is how you get paid but, it's not the case for the vast majority of americans, pain at the pump. here's another thing when the cost of oil comes down, we should see the price of the gas station at the pump come down as well that's how it's supposed to work but that's not what's happening. in the past two weeks, the price of oil has fallen $4 a barrel. and thanks in large part to the steps we've taken this year, the price of oil has fallen nearly $40 a barrel since mid-june. that's a 30% drop in the price of a barrel of oil but guess what gas prices haven't fallen that much and it's not right gas prices at the pump should be lower. in fact, if retailers and refiners were earning the average profit they've made over the last 17 years, americans would be paying at least 60

cents less per gallon for every gallon they buy. say that again 60 cents for every gallon they buy. that makes a big difference in a family my message to the american energy companies is this you should not be using your profits to buy back stock or for dividends. not now. not while a war is raging. you should be using these record-breaking profits to increase production and refining invest in america, for the american people. bring down the price you charge at the pump, to reflect what you pay for the product. you can still make a significant profit your shareholders will still do very well. and the american people will catch a break they deserve and get a fair price at the pump as well one more thing i want to mention today. our country needs to pass permanent reform, to accelerate the development of clean energy. right now, the process of

getting clean energy projects approved is too cumbersome and too time consuming so i'm asking the congress to pass a permitting bill to speed up the approval of all kinds of energy production wfrom wind to solar to clean hydrogen. because we need to get this moving now, quickly, now if we do this, it would take historic clean energy investments they signed into law and put them into action in fact, one independent analysis has already estimated that the $369 billion we're making in federal investments that will generate just that, will generate $1.7 trillion in total public and private investments in the years ahead you can increase oil and gas production now while still moving full speed ahead to

accelerate our transition to clean energy that way, that way we can lower energy costs for american families, enhance our national security at a very difficult moment let me close with this i know it's been a rough four or five years for the country for a lot of families, things are still tough. the choices made by their countries are affecting the price of gas here at home. that's why i've been acting so aggressively without the steps we've taken over the past several months to ramp up production and lower prices and get relief to consumers, gas prices would be higher than they are today and we'll keep doing everything we can to keep it going. to ensure that our energy independence and security is available and to lower gas prices here at home and to give folks a little bit of breathing room we just have to remember who we are. we're the united states of

america, for god's sake. there's not a single thing we can't do when we put our minds to it. and we can strengthen our energy security now and we can build clean energy economy for the future at the same time. it's totally within our capacity totally within our capacity. gas prices are coming down, we're going to do everything we can to make sure they continue to come down and companies act responsively so it's reflected at the pump. thank you all and may god bless you and paymay god protect our troops >> you speak louder? [ laughter ] >> what is your response to republicans who say you're only doing this to help democrats in the midterms >> where have they been the last fur months that's my response >> is it politically motivated, sir? >> no, it's not. it makes sense i've been doing this for how long now it's not politically motivated at all

it makes sure that i continue to push what i've been pushing on that is making sure that there's enough oil that's being pumped by the companies so that we have the ability to be able to produce enough gas that we need here at home oil we need here at home and at the same time, keep moving in the redaction i'm providing for alternative energy that's what i've been doing. now, the problem is, these guys are asleep i don't know where they've been. and they seem -- you know, the price at the pump should reflect what the price of a barrel of oil costs. and it's not going down consistently >> is there martial law in parts of ukraine what does that say to you, sir, about where his thinking is on the war in ukraine right now >> i think that vladimir putin finds himself in an incredibly

difficult position and what it reflects to me is it seems his only tool available to him is to brutalize individual citizens in ukraine, ukrainian citizens to try to intimidate them into capitulating they're not going to do that thank you. >> sir, do you -- >> sir, do you want to ban the export of u.s. petroleum products >> welcome back. that was president biden talking about the plan to release more, which is the continuation of the previous plan, 15 million barrels, also coming out and calling on american oil companies to use some of their profits to not buy back stock, but to drill more oil as well. also making the connection between why the price of oil has come down, but the price of gasoline has not come down as much you saw special oil adviser standing behind the president.

there's a lot to unpack here our guests are still with us i apologize for cutting you off. i'm trying to figure out where to start in all of this, because with absolute respect for the office of the presidency of the united states, a lot of what we heard was maybe disconnected from the markets where do you want to begin, because the price of oil is only about half the price of a gallon of gas there's a lot of other things that go into it. where do you want to start with this >> it reflects a little bit of their misunderstanding of oil reserves the strategic oil reserve has never been intended to use for political purposes it's used for hurricanes, it's used for cyber attacks and emergency situations it has been going this way since march, and it's really been used for political purposes since march, right we really cleared the ukraine

challenges with the gas prices that went up and then back down quickly early on and since then, this has been all about the price of gas with regular supply and demand-related issues, right so this is political, there's no doubt that it's political. and the mixed signals this administration continues to send on leases, on shutting down the keystone pipeline, on wanting more gas now, again the industry -- their head continues to spin. >> michael, i get a little passionate about it because my dad owned gas station growing up as a kid, during the gas crunch so i know how gasoline stations make money, and one of the things that worried me about the comments was that it was going to make people angry at the local gas station owner, which, by the way, is generally like mom and pop, if not a first generation immigrant to the united states, they own a lot of

gas stations across the united states, a great way to start a small business talk to us about how the pricing mechanism actually works as much as you know. >> brian, you know i've talked to you many, many times and i've asked you, what is the value of crude oil? and the value of crude oil is zero the value of crude oil is the refined products that come from it and so, that's the issue so we do not have enough capacity right now and that's why prices are high that's why inventories are low and so you can jigger all you want with the spr, produce more oil, but it boils down, do you have the capacity to produce that product that's why there is a disconnect between oil coming down $40 and the prices not coming down as much it's just that simple. >> and the futures market. what we show our viewers on cnbc, that price chart of oil that we show them, that has become slightly disconnected from the physical market, right, mike if i wanted to give you a barrel of oil, the price i see on the screen may not be the price i

sell it to you at. in part because of the sale of the spr, disrupting parts of the futures market, correct? >> that's right, that's right. you know, one of the other things that is interesting to me, brian, too, is the president talked about, you know, u.s. producers needing to do their nationalistic duties and basically start producing more i would basically tell you that, you know, u.s. producers and oil majors are not an extension of the u.s. government. yes, they want to basically produce as much as they possibly can, but guess what? they are run by their shareholders and some of their biggest shareholders are the most biggest esg proponents out there. and those guys are not telling them to produce more they're telling them to maximize profit, give the capital back to them and so the biden administration really wants something done, they should approach those largest shareholders, because right now they do not want them to drill and they definitely are not going to want them to drill at $70 oil. >> frank, do you agree with that the president says, we are not -- let's -- i'm going to try to quote the president directly. let's debunk some myths.

we are not discouraging production of oil. >> you know, since the beginning of this administration, they've sent mixed signals on that sometimes they're for drilling, sometimes they're not for drilling and you know, they've played around with lease sales and done all kinds of different things, so, you know, they've really sent mixed signals on that all along. secondly, we forget that these companies lost billions and billionses or dollars since 20 2020 that has to come into play when you're talking about what shareholders are doing >> some of these companies are saying, i'm not saying they've been told to wind down, but they're winding down huge parts of their fossil fuel industry. in the united states, we've been told, years ago, a couple of years ago, we need to phase out fossil fuels if i ran an oil company and i believed that we need to phase out fossil fuels, why would i

reinvest money into a project, mike i'm just going to eventually give all the money back to shareholders and shut the company down in 20 years i'm not exaggerating but now we're saying, use the money to make new projects, but why would you make a new project, which, by the way, will take 10 to 15 years to pay out, if you don't think that you may be around in 10 to 15 years. that's, i guess, i think, what i hear, it's not brian sullivan's opinion, mike. this is what i hear from guys like you, the ceos of these oil companies, oil investors is that accurate why make the investment if yo think you're going to be wound down anyway? >> that's a great point. we'll take anything positive away from this nmews conference that just happened is biden said, we need to start lowering, speeding up permitting that's a great thing, but you can't do it just for the renewables industry and the solar industry, you have to

extend that to the oil and gas industry unless you do that, we're not going to get away from this problem. that's what i did not here and that's what i would have loved to heard >> and he's going to run into a larger problem with his activist base, brian. they don't want that permitting reform and that's what we saw earlier this year when joe manchin kind of formed this deal you had lots of progressives including bernie sanders in the senate and others in the house, they want no part of permitting reform, even if it means getting more renewables online and from building renewables projects, solar projects in california, wind projects off the coasts, wind projects in the mid-atlantic, you know, we've had people fighting those projects for years and years so permitting reform is essential. and it has to happen and it has to happen across the board. >> we've got to go -- we had to go five minutes ago, but this permitting thing, people viewed it as a victory against fossil fuels, it could severely damage solar, wind, and other projects, which need assurances that they can get infrastructure and lines built. otherwise, they won't fund it. frank, michael bradley, a good

discussion i think a lot more to be had thank you very much. appreciate it. by the way, the price of oil on the rise right after that as well listen, a difficult job, trying to thread the needle, saying we need more oil, but we also need more renewables. we're back right after this. let's have some fun. alright. [announcer] marc benioff [announcer] and bret taylor! you excited to be here? this is going to be huge. [michael] i want my daughter to have a livable world. [marquita] i just try to keep a [marquita] growth mindset. and the sky's the limit.

[manish] you are capable [manish] of anything. [manish] the only limitation is [manish] in your mind. ooh, i hope you all are getting this.

welcome back it is time for earnings exchange we have the action, the story an the trade on tesla ironic because we talked about gas prices ibm and lamm research. tesla shares down 29%. the ev maker faces difficult on demand, missed on deliveries, 14,000 fewer than expected an this guy elon musk surrounding his pending twitter deal bring in phil lebeau with the story and matt joins us with the trade. fu . >> what people will be focused on when numbers come out not just the tom and bottom line but the numbers within the number. automotive gross margins 28.5% is the consensus is it there or higher than that? that could give a boost to the stock. what's going on with the giga factory production overall, specifically shanghai, the big enchilada and then texas and

berlin also ramping up production and that also feeds into the discussion about demand and what they're seeing, not only in the fourth quarter but potentially beyond that. i don't think they will give us guidance next year, but i think whatever commentary elon musk has about the market strength overall will get a lot of attention. he almost always says the same thing, great demand for the tesla vehicles we need something more tangible than great demand >> we'll see $6 a gallon gas in california they will have great demand. matt, what's the trade on tesla, if not the most important stock in the world given always the options activity tied to it? >> there's no he question the stock has been beaten up lately and, you know, you were talking about demand one of the things i think a lot of people will be asking about what's the demand in china stories about the demand starting to shrink there whether elon musk answers that question or not will be

interesting. on a technical basis, the stock is getting oversold and we call it a descending triangle pattern. it's just above 200. if this news is not good enough to get the stock to bounce labor here and we break below 200 it's going down to the $170 level that i think tony sag notty was talking about this week. if we get any kind of good news, i mean there's a lot of shorts in this game and put buyers. this bounces, it's going to bounce like a rocket ship. i think with the demand issue heading into a recession on longer term basis we are going to eventually fall below $200 before we see the bottom of this one. >> how high are the expectations going into tonight don't say great demand. >> look, i think they're high, but at the same point, brian, everybody knows that they're going to have strong numbers for the third quarter. probably near record profit.

probably record profits. you've got the pricing and you, obviously, have the production that is there. the real question becomes, how much can you look into the future and say, i'm pretty confident that we're going to see x, y, z in terms of production and where the giga factories are. >> all right finally, let's talk about lamm research the names continue to struggle, slowing demand, macro headwinds, shares not spared down big this year kristina partsinevelos what can you tell us here >> let's start with the fact that lamm makes equipment and faces two hurdles ahead of earnings you have memory weakness which is across the board, memory chipmaker micron cutting expenditures by 50% in the latest earnings report for 2023 and chipmaker tsmc announcing a 10% cut for capex so that means less money spent on machines that builds the chips hitting lamm's revenues. the second hurdle the exports restrictions to china. lamm has higher than industry

exposure to the memory market and sells chips to ymtc. a week ago lamm said it stopped supplying that company and stopped supplying the equipment needed to make the super high artificial intelligence chips to china. however, lam can sell equipment to other corporations based in china like samsung, tsmc, for the next year without a license. that's when we could see the impact from a year from now if they don't get the license these rules could mean a $400 million hit to revenue what will lam say after the bell today? >> what do you want to hear and what do you need to hear >> i mean, we want to hear something about their margins. their margins have been holding up well. if they can continue to do that it might help the stock. one of the things we have to realize, the last decade the stock has only been this cheap one other time trading below ten times forward

earnings just before the fed pivoted in 2018, the stock is getting oversold how much bad news could you possibly get in the whole sector a lot of bad news is out there and we could get a short-term bounce any kind of good news. >> thank you very much folks, thank you all very much folks, thank you all very much "power lunch" starts right nowdr family connected. with a heavy duty commercial grade engine and no refueling, even when the power goes out, life rocks on. right now get a free 10-year extended warranty and up to $750 off. and i'm going to tell you about exciting medicare advantage plans that can provide broad coverage and still may save you money on

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rese . good afternoon welcome to "power lunch. i'm tyler mathisen along with contessa brewer. here's what's ahead. tesla expected to report near record profits but with disappoint deliveringries and rising borrowing costs we're taking positions ahead of one of the reports this season. a venture capital player with us to discuss the industry, deal making and the approximately 70 billion that vcs put into clean energy sta