by the system, fall behind how capable is it, how possible is it, to bring a kid back up once they lose this kind of stuff? we have to go. we'll get you back on. it's a hugely important topic. sal chakhan academy >> important topic we'll get sal back on. that does it for "the exchange." "power lunch" begins right now brian, thank you very much fascinating topic and fascinating guy. welcome to "power lunch. along with contessa, i'm tyler mathisen here's what's ahead. big tech versus a recession, apple, microsoft, amazon, google reporting earnings and facing their biggest challenge yet and an economic slowdown on the horizon. we will look at which ones are best positioned for right now and what's ahead plus, gm and ford down 40% this year and both will try to win over skeptical investors

when they report their profits later this week. an auto bull fight straight ahead. >> get your red cape out wall street adding to the rally, the dow touched a six week high intraday, now up 1.1% or 334 points the s&p up almost a percent and the nasdaq up 21 points or 0.2% bouncing back from being down 146 points earlier in the session, the dow led higher by amgen, honeywell and home depot. amgen, the leader up 3%. the dow laggards are nike and disney let's take a look at those nike off a little more than half a percent and the same for walt disney the best performing stocks in the s&p are from three different sectors. you have hca, tractor supply and regions financial there all up about a 5% or so tyler? >> contessa, mega cap tech companies not immune to the market downturn this year in no

way. meta and netflix cut in half this year alone. so how are the world's largest tech companies preparing for a possible recession on top of all of this? julia boorstin covering the social media angle, steve covac on how apple and microsoft are handling a possible slowdown, dei deirdre bosa on amazon an alphabet and casey newton here to discuss it all. julia, let's start with you. you are going to look at a couple social media giants for us. >> that's right, tyler after snap raised red flags about a dramatically slowing ad market, especially into the end of the year, there are growing concerns about meta's earnings which are coming up wednesday afternoon. that stock is down more than 60% this year. those declines prompting brad kearsener, which held over 2 million shares calling on meta to reduce head count expense by 20%, reduce capex by 5 billion,

to limit investment in metaverse reality labs, to no more than 5 billion per year that's about half of what meta is investing right now this comes as bank of america downgrades meta warning that while expectations have already been lowered, more advertiser budget cuts could weigh on sentiment and drive added uncertainty on top of changes to adapt to apple's limits of ad targeting and the company's transition to make money on that real video format. >> how much do we expect meta to follow snap in terms of disappointing results? >> well, that's the question here is that is snap a bellwether the challenges that snap is having and the murky forecast that snap sees, forecasting four, is meta better positioned to navigate some of these challenges are the new ad challenges going to help them provide

alternatives when it comes to targeting and working around apple's operating system changes that have put up these road blocks for them. also, the fact that meta is so massive. is that scale going to prove an advantage. one thing we have to remember is that meta has been talking about these long-term metaverse plans. are we going to hear them sort of getting back to basics and talking focusing more on streamlining and really honing in on the importance of the ad business. >> casey to you, and get your reactions on meta and snap are the social media companies broadly speaking prepared particularly as they're dependent on advertising for what could be a serious recession? i think in the case of snap and meta the answer is no. they have been battered and they're struggling to find alternatives to get them back to the growth investors want to see. with meta in particular i've been waiting for the market and

the big shareholders to catch up to just how difficult a pivot the company is trying to pull off and i think with these earnings we may finally see people starting to understand this is a company that's in trouble. >> casey, we want to talk about the headlines facing the tech companies, microsoft and apple let's turn to steve covax who covers these two what can you tell us >> hey there, contessa yeah apple and microsoft are actually two of the most resistant names we're talking about today to this recession they're still taking steps to keep growth even if that growth is expected to be moderate for apple, that means raising prices just today they raised prices on services like apple tv plus and apple music by a buck or two per month. they raised prices on the app store this month in the eu and other countries where the dollar is the strongest and the iphone 14 is about$100 more expensive in the same markets. the challenges for apple through the end of the year hope iphone

demand holds up even as other consumer tech companies see it falling, especially in the pc market microsoft already cutting jobs in the summer they cut less than 1% of their workforce and just last week, a thousand employees were let go. microsoft challenge in the coming months hoping that i.t. spend among small and medium businesses can hold up and that their azure cloud growth stays steady or increases but that's going to be a lot tougher for them in the foreign exchange environment. guys. >> why do you think that these two companies have held up better than their peers? >> it's a little different apple is unique for a consumer electronic company we seen pc demand tank we heard the warnings throughout the summer when we spoke to apple last quarter they said we can't make enough stuff to really test the demand so they're in this unique position because of those covid shutdowns in china that they weren't able to make enough

products to see if they can do it plus, there's still that perception that higher end consumer is holding up better amid the inflationary head wwin. >> casey, what are the real problems facing apple? what are the problems facing microsoft? >> yeah. well you heard steve mention a couple of them the recession is going to challenge them on, you know, the sort of hardware front and supply chain issues, that sort of thing it's worth saying that microsoft and apple have solved the thing that meta and snap have failed to, which is building big, diversified businesses that let them make money both off of selling the hardware and then selling services and raising the price on the services when they get tight. my perspective these two companies are navigating this well and i do not expect them to be significantly challenged in the next few months. >> how much weight do you give

the chinese communist party meeting that happened, this reconsolidation of power for xi jinping, doubling down on zero covid policy, and what a lot of investors are spooked could mean, a real threat, competitively, to their business in china against state-run enterprises? >> yeah. i think it's definitely the biggest near-term challenge to apple. we see almost every day the biden administration is issuing some new executive order that dictates how and when chips can be manufactured, what americans are and aren't allowed to do and there's a giant clouds of uncertainty there. >> but wait. casey, are you saying that you see the problem coming more from the white house than from china? >> i think -- i think the problem is coming from both places i think that the instability you're seeing, the tensions between the two countries is making it difficult for apple on how dependent it is on china for

its manufacturing even though it has tried to diversify away from it. >> let's move on we'll be right back to you amazon and alphabet now, both exposed to the slowdown in consumer demand that is hitting amazon as e-commerce business and alphabet's ad revenue. deirdre bosa on how they are handling it. >> these two names are in the middle unlike meta and snap they're more resilient and their business models are more diversified. both have large businesses that have held up well this year, offsetting the weak ad market and slowing e-commerce demand in the case of amazon they also have not been as solid as a microsoft or an apple no one hired more than amazon did coming out of the pandemic or spent as much to build up capacity so andy jassy, though, he addressed it earlier than others, and he spent billions of dollars to restore efficiency. key question, does that put them in a better position heading into the holiday shopping season

watch for guidance here on what the company is expecting amazon does give it. alphabet however does not provide gansz, but they may update investors on the 20% better efficiency that pichai laid out that is going to be key. also youtube is going to be key because this is more affected by the apple privacy changes versus search advertising which has seen to hold up better. >> we think of these two companies in lots of ways as consumer facing and many ways they are, but to the extent that they have cloud units and are dependent on the cloud revenue it could give us clues about enterprise software and the state of same. right or wrong >> absolutely. these are -- they have big enterprise cloud businesses. amazon has the number one. it is far, far larger than google cloud it's also profitable google cloud has really been in investment load taking losses to

gain market share, interesting to see how much in terms of losses the company is willing to sustain. cfo tells me every quarter there will be no scaling back in this department we'll see if that is the same. azure is in the middle, much bigger player than google cloud. altogether these three companies will give us clues about the state of enterprise, i.t. spending and if it's sloweren that the street is expecting that could very well be a big downside surprise. >> thanks very much. casey, let me get your reactions to what deirdre said about alphabet and amazon, but more broadly speaking, are tech companies more or less exposed to recession pressures than the average company? >> well, i mean, look, there are benefits to being some of the biggest companies in the world the companies have a lot of cash on their balance sheets and they can ride out a rough couple quarters without too much problems there's a question on where consumer demand will be during

this holiday quarter during the pandemic we thought that amazon would see that demand just kind of keep going through the roof and we saw the opposite, right it started to contract as people started to go out and shop again. for me that's the big question mark and i think it will affect google too these companies have done a great job at capturing the intent surge and one reason why their ad businesses haven't. as effective consumer demand goes down they will feel thatted too, too >> -- feel that too. >> thanks to all of you. we appreciate it. a news alert out of washington, eamon javers has the details. >> that's right. over at the department of justice in washington they're holding a press conference announcing a slew of charges against chinese intelligence officials and other chinese officials here in a variety of cases including one new case that we're just learning the details of today that case involves two chinese intelligence agents who, according to the department of justice, tried to penetrate a

u.s. law enforcement agency in order to get information about a prosecution of a company that we are told by a source familiar, huawei, the chinese telecommunications company according to this version of events the two chinese intelligence agents tried to get a u.s. official to flip and give them intel on what prosecutors were thinking in terms of their strategy against huawei, but instead the u.s. official became a double agent in this case and provided fake information to the chinese and sort of lured them into a trap in which the u.s. says they were able to prove that these intelligence agents were up to no good and trying to manipulate the justice department here in the -- the justice process in the united states a fascinating look at chinese espionage in very much real time some of the information in the documents that we're seeing is from last fall this is very much present day activity by chinese intelligence in the united states. >> so did you -- it went by me or you said it, what law

enforcement agency were they trying to infiltrate >> they don't say but in the documents associated with this, the agent, the person who is communicating with the chinese spies indicates he or she is going to be attending meetings involving the prosecutors in the case against huawei. so we can assume this is somebody either department of justice, eastern district of new york, fbi, somebody that chinese intelligence agents thought that they could persuade to give them information about the process, trying to turn an american official instead that american official turned twice, became a double agent, the government says, and was able to provide information back to the united states about the two chinese agents, including one comical detail at one point the chinese agents are asking the person that they think is the american spy to communicate with them with a pay phone on the street because they thought they would be more secure, and he or she says i can't find a pay phone, i don't think they exist in a more

tough for spies. >> makes the business much more complicated. thank you for that. beyond big tech, why boeing, caterpillar and ge could offer investors big clues about the health of the economy when they report this week. gm versus ford, both are down 40% this year both face problems with production, supply chains, rising costs a look at which is better. before the break, amgen and merck hitting 52-week highs in today's session. more "power lunch" in two minutes. as an independent financial advisor, i stand by these promises: i promise to be a careful steward of the things that matter to you most. i promise to bring you advice that fits your values. i promise our relationship will be one of trust and transparency. as a fiduciary, i promise to put your interests first, always. charles schwab is proud to support the independent financial advisors who are passionately dedicated to helping people achieve their financial goals.

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welcome back to "power lunch. now to a pat battle of auto heavy weights. gm and ford report earnings this week so which stock is the better bet? here with the bull case for gm is michael ward, auto analyst at the benchmark company and in the ford camp is garret nelson senior auto analyst at cfra. thank you very much for joining us today all right. i thought that these companies, don't they sort of move in tandem, michael? >> totally in fact, it's not just gm and ford down big this year, virtually every vehicle manufacturer is down 40% this year. >> all right so which would you like to make a bet on, gm or ford

>> in the near term gm and i think that's really near term earnings this week i think you're going to see strong earnings from general motors when they release tomorrow n part because there are vehicles they couldn't deliver in the second quarter, which will be delivered in the third quarter. ford will have the same benefit when fourth quarter earnings are released in january. >> okay. what do you think, garret? >> yeah. we prefer ford here for a few reasons, but we like the combination of growth and yield that the stock offers. ford recently raised their dividend by 50% over the summer. the stock is yielding almost 5% here we think ceo jim farley really has the company on the right track and we like the direction that they're taking with their ev strategy as far as phasing in evs and not setting a date in the future they will be all electric which we think is a risk yes strategy. we like the excitement they're building around models like the

f-150 lightening and the bronco has been successful. we prefer ford here. >> and it sounds to me, given those reasons, that this might be a preference even for the mid to long term >> that's right. you know, the stock, both these stocks have been hit hard, as you mentioned, year to date, sentiment is really awful across the auto industry because they're struggling with inflation, ongoing parts shortages, chip shortages, slowing consumer discretionary spending and rising interest rates. the good news is, a lot of these concerns, we feel, are priced in and we can see a light at the end of the tunnel as far as rate increases here in the next three to six months. so we do see much better performance ahead in 2023. >> michael, garret sort of ticked off several of the reasons why automakers, as a group, may be suffering. take that on and tell me why they're suffering. do you agree with garret completely my impression was there are a

lot of buyers that want to buy and maybe there's a supply problem and they can't get the cars that are needed, but my sense is that demand is hanging in there pretty well >> absolutely it is. and i agree with garret on that. unfortunately i've been following the autos about 40 years and seen a lot of that es cycles there are huge differences this time around. we're in a downturn in the auto sector in the north american market unlike previous downturns, in the past, you had this excess inventory you basically had to wind down and that exaggerated the downturn we're in an opposite situation today. you will be building inventory for the next year. when you look at gm and ford specifically they've reduced break-even levels by more than 50% and no need to restructure the balance sheets or the product. as garret was alluding to the ev story for general motors and ford, the biggest growth in evs is going to come on the commercial side and gm and ford, by far, the best positioned companies to capture growth from

the commercial side of the electric vehicle market. >> garret, i'm curious, if gm is more dependent on china and -- than ford is, how do you factor in china into the u.s. automakers moving forward and what's happening there >> sure. gm is more levered to china, roughly 40% of their sales volume is in china, so they're a little more levered to that market, which is why we prefer ford, another reason why we like the stock. more levered to the north american market and their sales have really outperformed the industry in recent quarters. if you look at the third quarter, ford sales volume in the u.s. was up 16%. the rest of the industry was down about 1%. so they're doing very well if you look at their portfolio, and i think really, what's different for both companies this time, as opposed to looking back at 2008 is their balance sheets are in much better shape to weather a downturn that's a really important

characteristic ford is sitting on about $45 billion of total liquidity, which is close to the company's market cap at these levels so it's pretty amazing statistic. garret, we appreciate you joining us michael ward, thanks to you. thank you, gentlemen. >> thanks for having me. >> tomorrow, don't miss a first on cnbc interview with mary barra, gm chair and ceo tomorrow at 7:45 a.m. eastern time on "squawk box. and coming up, a party crasher. china's xi tightening his grip on power heading for an unprecedented third term as supreme leader there, hitting china exposed names in the markets. plus, not only politics abroad in focus. business is a key issue on the ballot here in the u.s americans are angry about the economy and that could help republicans during the midterms. we will discuss all this when "power lunch" continues.

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macau casino stocks plummeting look at las vegas sands down almost 1% on the day and that was an improvement, believe it or not melco resorts that traded here,

down almost 13%. you've got wynn resorts off 5% mgm resorts flirting with turning positive here. remember, mgm relies less heavily on the macau revenue that investors one put it like this to me today. these guys can't catch a break the chinese party meeting this weekend consolidated xi jinping's power and a third term that -- those worries that he will move to give preference to state-owned enterprises to the disadvantage of the especially western businesses could be propelling some of the sell-off that we see fort u.s. casino companies with big business in macao. >> does xi control macao completely >> macao is a special administrative region but like hong kong you can see it beginning to go closely with the party line coming out of beijing, certainly with where it concerns the zero infection policy we've seen and xi jinping just doubled down on that again.

that spells trouble for these casinos. don't forget they're in the middle of concession renewal, that is, they're applying for their licenses to come up again and i think there's concern on the part of efforts about whether the power to consolidate could spell challenges and hurdles for the u.s. companies. >> are there chinese soes that could do what las vegas sands down to operate >> they are. they operate competitively in macao. but there was a surprise bidder in an asian company, not chinese, that operates theme parks and the like and they came in and resorts in the united states, came in with a surprise bid to give competitive challenge to these other companies that hold the license. >> fascinating stuff brian sullivan standing by with a cnbc news update. >> all right thank you very much. here's what's happening at this

hour in myanmar, an ethnic group says as many as 80 died in an air strike by the country's own military the attack hit a political event of the ethnic minority before southeast asian ministers will hold a meeting to discuss increasing violence. rishi sunak will become british prime minister, set to meet king charles before speaking outside 10 downing street. a belgium town celebrating a use for big pumpkins racers are paddling hollowed jumbo gourds around a pond 65 times of four people participated in the pumpkin regatta. organizers said the event started as a way to put big pumpkins grown for competition to good use. only in belgium. >> this is a good use of the big gourds. >> heard of stuffed pumpkins

but -- >> heard of smashing pumpkins but that's a band. >> pretty cool >> i would love to take you on in one of those. >> we would stink. >> i would ahead on "power lunch," beyond tech it's a huge week for earnings, while most are hyper focused on tech there are key investor stocks on deck that could have implications for the market a look ahead with stephanie link next as we head to a break check out avis budget group. jpmorgan upgrading the car rental agency to overweight, the stock down 14% and up over 15% this month it takes a village to support society and businesses have a responsibility to support that village. ♪ ♪ i am peter akwaboah, chief operating officer for technology, operations and firm resilience.

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all right. 90 minutes left in the trading day and get you caught up on the markets because it's a good time to do that we have stocks, bonds, we've got commodities, we've got all kinds of things and look ahead into a huge week in earnings and let's begin with the new author bob pisani at the nyse on today's rally. the book is titled "shut up and keep talking" suspisn't it

>> yes, it is. >> that's what you hear. some version of shut up and keep talking in your air waiting to go on like right now the important thing about today, thanks for the plug, appreciate that, we are in a bit of an uptrend for the s&p 500 up 6% from the recent low, two-year lows a couple weeks ago, watch 3790 because that was the old recent high october 4th. if you get above that you get a series of higher highs and the technicians like it when that happens. it's defensive today energy has been a leadership group. we've seen health care strong today. we've got a bunch of highs in health care, in fact, lily and merck, humana, cardinal health at 52-week highs that's nice to see nice moves in consumer staple stocks so kraft is up, coke, pepsi, colgate nicely today. this is sort of a defensive rally but we'll take it. still helps the advanced decline

line overall the big names report this week, apple, microsoft, alphabet, all reporting this week. meta got a bofa downgrade today but remember, these companies have all had their earnings system reduced for the third quarter already and the case of meta about 30%, in fact, from the start of the quarter, 40% in the case of amazon, so there have already been very, very significant earnings reductions in these names and that may help cushion any kind of disappointment we have coming forward. tyler, back to you. >> thank you very much. let's move to the bond market where we saw a reversal in yields which are up again rick santelli tracking the action and explain it all, rick. >> yes there's a lot of volatility, that's for sure, tyler and if you look at a three-day of two year, i picked three day, thursday the 20th they made their high yield close for the cycle at 4.61% at 4.5% we could see we're 11 basis points below that level

and the short maturities having greater distances between the cycle highs because, of course, that we have different reporters for major wall street publication that continues to point nous the direction that the fed may be looking to wind things from a more aggressive to less aggressive stance as we move towards next year three-day of 10s, high yield on the 21st, 4.23%. we're hovering right there right now. bunds closed at 2.32%, high yield close was friday at 242. maybe the most aggressive of all, considering all the politics and a new prime minister starting tomorrow, the 10-year gilt in the uk now this chart starts on the 12th so about two weeks. their high yield close was 4.5%. we're 78 basis points below that they closed today at 3.72% we're all talking about china whether it's their closures,

whether it's their big hoopla they have, once again for a third record five-year term for xi, but maybe the biggest news their currency, despite all of that, is still hovering at the lowest level versus the greenback since january of 2008. tyler, back to you >> fascinating rick santelli, thank you very much. energy market closing for the day and seeing big moves in natural gas. pippa stevens coming it for us. >> we saw a big intraday swing for natural gas. earlier it fell to 4.75 since march 21st for the contract subsequently catching a bid up 4.8%, right around $5.20 some of the support is thanks to traders thinking the selling was over done after natural gas posted a ninth straight losing week since 1991. demand will jump as the heating season kicks off so far we've seen more mild temperatures turning to oil which is modestly

lower, although energy stocks are in the green, did want to point out shares of exxon hitting an all-time high ahead of the company's earnings reporting on friday. conco phillips hitting records while slb known as schlumberger trading around a four-year high. >> thank you very much with the third of the s&p 500 reporting this week, that's why we have such focus on this week, we are looking beyond big tech to industrials and what results from boeing and caterpillar, ge may tell us about the health of the economy. here with a look ahead stephanie link, chief investment strategist at high tower advisors, also a cnbc contributor. welcome back let's pivot away we spent time talking about technology here. take us into the big companies, industrial companies and what you expect to hear from the likes of them? >> yeah. i mean it's going to be very interesting. the technology stocks are

getting all the attention but these are very big companies we're going to learn about the macro, learn a lot about currency, about pricing and margins and sustainability all three companies you mentioned, so let's start with caterpillar. caterpillar they have accelerated pricing throughout the quarter and their input costs are coming down. that will be positive for their margins. last quarter it was just disappointment on the margin side this quarter, it should do a little bit better. we know from friends season that they saw strong deliveries and actually accelerated in the summertime and, of course, they do have very easy comparison on price mix going forward. i think it's going to be a good report the backlog is going to be the big question and the trajectory because it's strong right now but if the economy slows where do they see that going and they have to convince us $12 a share in earnings pour can be achieved mid-cycle. >> move on to boeing second on your list, this is a company that has faced many, many challenges over the past five years.

>> it has. i own this one so it's been painful. i think we're close, tyler the stock is down 30%. expectations are washed out. we know demand for new aircraft in the industry was up 600 net new orders due to international travel and business travel recovering we know after market global flights up 11% sequentially and up 14% on a year-over-year basis. those two points bode well for bogey. now you get to the nitty gritty, 737 max, can they get deliveries to 50 a month and margin 25% i think eventually they can. not right away but they have to talk about that. 787 can they get back to seven a month. i think they can not until 2026. we have time it helps free cash flow and that's what the stock trades tomorrow is 1 billion in free cash flow. i don't think we're going to get

a ton of information on the conference call because they have an investor day on november 1st around the corner. i think that's going to be a catalyst going forward. >> how important is free cash flow in what you're expecting from general electric? >> yeah. >> it is the most important thing for boeing and for ge. right. the industrial free cash flow for ge should come in from break even to 200 million. they have a guidance of 4.5 to 5.5 billion for the full year an i think they will come at the low end, contessa, given the macro, but i want to hear them reiterate they can get to $7 billion in cash flow by 2024 i think the stock can rally being down 21% they have a wonderful aviation business that's the gem that's going to be up double digits, right, because of better than expected aftermarkets as well as supply chain and then health care the supply chain if they can get that fixed that's an excellent business too. offset by power and renewables

which is a mess and they're going see a loss they have a restructuring under way in the renewables business so we have to be patient on that. >> all right stephanie link, good of you to join us, thank you. >> thank you. coming up, business on the ballots with the midterm elections just about two weeks ago. americans may be more likely than ever to vote with their wallets in mind. chinese tech stocks deep in the reds as worries rise over xi jinping's power grab we'll trade those names in today's three stock lunch. a programming note, goldman sachs' coo john walldrop sitting down with leslie picker tomorrow u n'wa tmiss that. we'll be right back.

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a angry, especially about the direction of the economy the poll shows half of americans, exactly 50%, believe the economy is going to get worse. that is a record high for the survey that financial anxiety appears to be erode something of the momentum the democrats had enjoyed at the end of the summer republicans and democrats are running neck and neck in the poll, 46 for 47% for which party voters want to control congress but we're seeing the democrats are losing ground among core groups like black voters and women, especially white college educated women president biden's approval rating on the economy is just 38%, significantly lower than this overall rating of 45% what do voters want to see a whopping 84% said they would get behind someone who supports lowering health care costs and prescription drug prices 67% want to see washington fight inflation by cutting government spending only 55% would support a

candidate ta wants to combat rising prices by increasing taxes on corporations. it's translating into record engagement voting is up in places like that georgia. >> wait a minute, i have a question here. if voters want lower prescription prices, the democrats did that >> right so the question is around messaging, right the inflation reduction act is a lot of different things, climate, prescription drug prices, also taxing on corporations how do democrats talk about that and top democratic leaders, including nancy pelosi, have acknowledged the democrats need a sharper message on the economy. they need to convey to voters that hey, this is something that we did and there's more to come. >> i couldn't agree with both you have more on this. i think, as i observe and what do i know, but that messaging on the democratic side has been abysmal. they have not come up with any message about what they're doing

to fight inflation at all that i'm aware of. >> nancy pelosi was on "face the nation" yesterday and said, it's not about inflation, it's about rising prices. it's about the high cost of things. >> is that a difference? >> that's what -- that's the splitting hairs she said she went on to point out if you're looking at prescription drug prices, must have seen the poll, to say we've taken action on that and taken action to try to address the fuel prices, but it was - >> elon, feels like there's a messaging deficit here on the economy and they've got three weeks. >> yeah. one thing -- yeah. two weeks really. >> two weeks. >> one thing that came through in the poll, democrats and republicans have different ideas of what the problem in the country is democrats think that america needs to be protected, protected from rolling back rights on roe v. wade or lbgtq rights or election integrity or democracy itself

republicans think america needs to be saved from rampant inflation, crime at the border, illegal immigration, right they have the differing views of the problems that confronts america and we'll just have to see which one voters pick come november. >> interesting way to phrase it being protected versus safe. very interesting thank you. still to come, is china becoming uninvestable. we'll trade some of the most exposed names in three stock lunch. the future deliver? (music) progress... (music) ...innovation... (music) ...discovery? or simply stability... ...security... ...protection? you shouldn't have to choose. (music) gold. your strategic advantage. (music) visit goldhub.com. we're told that success is all

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okay it's time now for three stock lunch, and it's a time where we get nice and calm. we have a couple beverages we focus on china. let's talk about tesla shares. they're lower after cutting prices for evs in that country, that country being china alibaba shares are down along with other tech stocks after president xi bolstered his political power, and starbucks is getting attention because of its exposure to the world's second largest economy it opened its 6000th store in the country last month how about that let's trade these names with boris schlosberg with bk asset management why don't we start with tesla,

boris. >> sure, tesla in my opinion is a pass right now a hard pass. we all saw the news today that cutting prices 9% is never a good thing it's more interesting basically that the whole chinese market is much more discerning than the u.s. market. consumers there are much more price conscious. to me this isn't a function of softening demand but perhaps greater choices for the chinese populous there to me that's all headwinds tesla is a hard pass from every angle. you don't have to worry about the twitter sub story. just on the issues alone and the slowdown in china, it makes me very vulnerable to be long that stock. >> i'm going to look pr for what elon musk tweet for boris schlossberg. >> i try never to mention him in my tweets. >> i totally get that. let's change the subject then,

alibaba. what do you think? >> this is a really interesting stock. it's just been a falling knife all the way down, and of course we all saw the autocratic thee a theatrics over the weekend on the other hand, you have to simply ask yourself, even, you know, the strongest of autocrats realize that profit comes from capitalism if you really want to destroy one of the greatest brands in the world and strangle it completely, i don't think so the story with baba now that it's so cheap as far as valuation comes, any tiny incremental positive, a loosening of covid policies, a lesser oversight from the regime as long as they stay in business and not get involved in any political posturing, all of that will give it enough breathing room for it to pop 25 to 50% it's highly speculative. i do think it has a chance because of its gross under valuation and a chance of slight positive headwinds, tailwinds to make it go higher. >> let's move on to starbucks, opening 6000th store there it wasn't long ago they were

closing stores in china. >> they were closing stores because of covid, i think, but ultimately the bet in starbucks is interesting it's a long-term bet here's a super interesting statistic. in urban -- no, average chinese consumer drinks nine cups of coffee per day how much do you think an urban chinese consumer drinks. 300 cups of coffee per day that's the starbucks opportunity. they see an immense total adjustable market. >> that cannot be right, boris the average chinese person drinks 300 cups of coffee a day? >> no, the average chinese person drinks nine cups, but the people when o'live in urban areas in china, who work in coastal cities who work a 24/7 global kind of a day, they consume almost 300 cups per year. >> a year, a year. not a day. >> did i say day, i'm sorry. >> you said a day. my kidneys were just throbbing

over the possibility of that. >> i must have been talking about me when i was talking about 300 cups of coffee a day sorry about that i meant the year you get the idea, there's this enormous total addressable market they want to go 50% more boxes than they already have they have 9,000 by 2/26. and the bet in starbucks is a long-term et so to me if you want to establish a position here, the stock is weak. i'd rather sell the puts, get myself positioned around 75, 70s in a trade, but if you believe that the chinese market is going to continue to grow and the chinese consumer is inevitably going to become addicted to caffeine like the rest of us, that is a tremendous opportunity. >> i was like what are they doing the other 65 days of the year then? how do they get by >> i would have such a headache if i didn't have my coffee so somewhere between nine cups and 300 cups is what we're talking about. boris, thank you my man. >> my pleasure. >> we appreciate it. >> up next, the impact of the

pandemic and the nation's classrm,uroo o nation's report card next. at adp, we understand business today looks nothing like it did yesterday. while it's more unpredictable, its possibilities are endless. from paying your people from anywhere to supporting your talent everywhere, we use data driven insights to design hr solutions and services to help businesses of all size work smarter today. so, they can have more success tomorrow. ♪ one thing leads to another ♪

big story we're watching, test scores in america, the largest education department analysis since the pandemic shows sweeping declines in reading and math across most demographics math scores for eighth graders fell in nearly every state, 26% proficient down from 34% in 2019 reading proficiency, 31%

for fourth graders 36% proficient in math the real question is how do we fix it how do we turn it around because these numbers are big implications for business in the united states. >> they absolutely do. they correspond, obviously, with the pandemic, and i don't think we fixed that deficit yet in any way. thanks for watching, "power lunch," everybody. >> and "closing bell" starts right now. stocks are jumping on wall street following the best week for the major averages since june we are at session highs. this is the make or break hour for your money welcome to "closing bell," i'm mike santoli in for sara eisen here's are things stand in the market mentioned that the highs for the day, the s&p 500 up almost 1.4%. it was hovering around that 1% for much of the day. the dow up just about 500 points the nasdaq lagging slightly. parking lot of that is a weekday for tesla, and the russell 2000 also trailing behind it's mostl