fourth right increase in a few months you look at auto sales, costs to produce is going down. they have a good recipe for profits. >> we'll watch that s&p closely. 3948, we're above the 200 day. got to keep your eye on yields bottom of your screen there, see you on "closing bell." "the exchange" is now. thank you, scott hi, everybody. i'm kelly evans. here's what's ahead this hour. data delusion. is the fed making decisions based on increasingly inprecise jobs data? one guest says yes we'll look at the potential fallout for the economy and the market europe has a major inflation problem. it's not stopping one of our guests from investing there. and he's been a shark, a jet, and a dolphin

matt higgins joins me in studio to talk about his investments, his new book but first, we have to get to today's markets and the ten-year yield, dominic chu >> it's crazy. what's crazy is the one-year yield. we'll show you that in a second. you'll get north of 5% at this point. to kelly's point if you look at how markets are reacting, interest rates are still driving a big part of the narrative. it's mixed so far. the dow industrials, the real outperformer today, the s&p 500 just 3948. watch that level that's the 200 day average if you go above 3980, bouncing along that trend line, just about flat on the session. being down two points is the highs of the session we were down 23 at the low so tilting towards the higher end, even though we are still

modestly negative. the nasdaq, down about 1/3 of 1% 11,339 the dow industrials, up a half percent. the real outperformer, up 136 points, is because of this chart. it is specifically salesforce, out with blockbuster results last night, giving some traders pause. this has been a really down trend type stock over the last year, still down about 11% but after beating quarterly results, adding to its stock buyback, shares are up about 12%. believe it or not, that's near session lows, up 12% salesforce is a member of the dow. the point contribution right now means that if it were just flat on the session, we would be negative on the dow. that's how much the dow is being driven by salesforce and interest rates, got to mention those. kelly mentioned that ten-year pushing 4.1% but the one-year yield, 5.07%.

so you're getting that for one year, and i'm going to follow this with a two-year note yield. the reason why, i'm going to show you a long-term chart, going all the way back, kelly, to 2007. the last time that we saw yields for the two-year treasury note at 4.92%, you've got to go all the way from here, back to july of 2007. that's how long it's been since the two-year has been this high. at the pandemic lows, it was around ten basis points or 1/10th of 1% back over to you >> i got some firsthand experience with treasury one of my next guests says a downturn won't come until 2024 joining me now is mark avelone and ben simmons. welcome to both of you i appreciate you being here.

ben, let's rewind a little bit and talk about why yields are so high this morning, and that unit labor cost reports, what's going on there >> hi, kelly first of all, thank you very much for having me so what's happening is that the low end of the yield curve -- if you look at the inflation, the expectations are rising, and also about the same as the ten-year yield so as a number like that, labor costs are to the upside. so it's all about inflation today in the ten-year. >> mark, i'll turn to you on that, as well. we get this report, it's a quarterly report, not much of a market mover but the data came in twice as high as expected so people are looking at this, wages with benefits and all the rest of it it was expected to be 1.6% it came in at 3.2% ouch

>> well, it's obviously good for the workers involved but in terms of the economy and what the fed hears from that, that's a different story this unemployment number is still very low we're seeing strong wage growth in certain pockets and i think this is the damper for stocks, that the fed is going to be committed to a 2% inflation number we are so far away from that people are talking about a cut from the fed in six months or next year. that's not going to happen as long as jerome powell has a bull's-eye on inflation and 2% target in a red hot labor market, we are going to have trouble in stock investing >> but you think stocks will end the year higher than they were or january 1 >> yes, because stock also move six months before this economy bottoms. we think the fed will continue to raise through the middle of this year.

by the end of this year, stocks will have a rise just like we saw in january, when we thought the fed was going to cool off, because we had glimpses of cooler inflation. when we see that in the second half, it will be january all over again, and that's why we think once the fed slows down, middle, third quarter of this year, stocks will try to get ahead just like it did in january. >> so you see it going down but having this rebound. stay right there, guys we're just getting news in on mortgage rates you might guess, on the back of story treasury yields, diana has the latest numbers >> the 30-year fixed just crossed over 7%. 7.1% to be exact according to mortgage news daily. look at this roller coaster. rates went over 7% at the end of october, which caused home buyers to pull back dramatically in december, they started coming down again, all the way to 6% by january. that caused a big jump in buyers in january, signing contracts on

existing homes so-called pending home sales, up 8% month to month. but the past four weeks have been rough rates have moved 100 basis points higher since the start of february so if you're buying a $400,000 home with 20% down on a 30-year fixed, your monthly payment is now roughly $230 more than it would have been just a month ago. we've seen mortgage applications from home buyers drop dramatically last week to a 28-year low. so we thought at the start of this year that the housing market was beginning a recovery. it appears that has now stalled, rising fears that inflation is not getting in check, is pushing bond yields higher, and mortgage rates along with them. kelly? >> wow, i can't believe how much we have come full circle what was the high last year on the mortgage rate? >> 7.3% at the end of october. >> so i'm turning back to mark and ben here ben, your reaction to that

>> yeah, it's starting to put pressure on the economy. housing is important for gdp, and if housing starts to slow down, then construction jobs will start to really decline and that could finally bring some cooling to the labor market but this rise in rates may not be over yet. we're going to get cpi in a week or two it all looks like upper pressure on prices. so these kind of rates are here. >> all right mark, final word i want to point out along with your kind of macro stock view, you like the insurance etf you even think tech isn't done yet. >> well, that's right. we do like broad diversification. let's take the insurance sector.

they don't have consumer loans as the fed raises rates, slows the economy, the insurance companies aren't subject to that yet they benefit from these higher rates financials benefit from higher rates. the bank stocks aren't reflecting that, but the insurance stocks are they're not cyclical that's why we were there technology is a tougher story, because it's a company by company basis. but investor also be well served to be in the value trade as well as growth stocks >> a barbell, if you will. we'll leave it there thank you for your time and reactions. it isn't just here that rates are soaring on higher inflation. euro zone inflation was 8.5% today. germany saw more than 9% yesterday. france and spain, 7% and 6%

respectively michael darda on this show warns the european central bank is at risk of making the same mistake of raising rates joining me now, cole i think it's safe to say you have a very different perspective than what we heard from kyle and mike why is that? >> investors got really comfortable with what they had seen over a decade low inflation and the kinds of businesses that have benefited price up so in that era, it was low inflation and low interest rates caused assets to be worth more in reality, what transpired was the more capital intense businesses had low interest costs. so they were able to fund their businesses through debt. now we're in the world, kelly, where asset like businesses are getting killed most days

and the asset intensive businesses actually benefit them as the cost of capital goes up, who can compete in capital intensive industries that's what europe has really left compared to the tech heavy united states. >> would autos be an example of what you are talking about >> yeah. so think about it, you know, there's real cost to building factories, versus if your volkswagen or porsche automobile holdings, they have a lot of assets that we don't think are correctly valued use the spinoff of porsche earlier this year, that company is worth roughly about what volkswagen trades for on the open market. so there's a myriad of assets that aren't exposing to value. for ten years, kelly, people didn't want to touch europe, because no money was made.

one other thing, go back at look at the history of the dollar what happens is when commodities do well, the dollar does poorly. there's also a translation effect that will happen as the dollar weakens >> so people might think you have to look at the energy majors others have said they're more attractive you say maybe not so fast. why? >> yeah. because -- well, real quick. there's a company in seattle where i grew up, and they would teach you how to use less natural gas. he told me, never own a company that teaches you to use less of their product. and that's what the european majors have been doing hey, we're oil and gas businesses, but we want to teach you how to use less of our product that's a foolish

strategy i think you saw it put out on twitter. i was just glad to know that shell was i thinking about leaving europe they hate what they do so that just doesn't look attractive compared to the united states and canada what looks attractive in europe is the banks what banks have been doing where they're buying back shares, producing incredible return equity, and that's an american thing. buybacks are more of an american thing. so we're seeing american entrepreneurialism and american capitalism in european banking >> this is hike the least expected -- i had 12 followups for everything you just said but we're out of time. i appreciate you coming in and providing a very different perspective. thank you so much today. >> thank you coming up, on deck to

report and there it is. plus, is the fed flying blind by trying to be so data dependant moody's mark sandy is here with a look at whether powell should douse the data instead of telling investors to trust the process. and here is a look at the market salesforce keeping the dow out of the red the other markets down close to half a percent we're back after this. lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect.

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welcome back it's time now for earnings exchange we've had some huge movers today like snowflake and trouts, salesforce let's get right to the action on three names reporting after the bell we'll start with broadcom. they're an under the radar a.i. play christina has that story and steve grasso has our trade today. welcome to both of you christina, kick it off >> we have three main points the first, will a data center demand continue to stay strong we saw strong commentary from cisco. so that will be a huge driver. the second main point is apple the reason i bring up apple,

yesterday, qualcomm's ceo was on cnbc and he said that apple is going to go ahead with its own chips as of next year, 2024. so what does that mean for broadcom given apple is such a large customer apple contributed roughly 20% of total sales just last year so will that hurt margins going forward? will we get commentary about that relationship? will it end before 2025? if we're talking about relationships, google. google is partner with broadcom. in 2016, they made this ai chip that will be used or has been used in their products so will this continue to flourish and grow so that it too -- broadcom can benefit from the ai commentary that we're hearing in every sickle earnings call the last one is the vm deal. eu regulators are putting out another anti-trust warning so that's a big overhang for the

company. >> great point steve, what would you do with the stock? >> so for me, i'm afraid to say sell it. so i'll say hold it, because as she just reported, everything sort of hinges on vm ware. this is a networking stock that leads in the semiconductor space in that area with a software solution so they need vm ware and also, kelly, this has been a very inquisitive company in the past so they lead in software security, they lead in networking this is something where they sort of need this. what's interesting about the stock, it's above all its moving averages, and right around the level where the vm ware deal was first announced. so this is the barometer level for the name >> we'll leave it there. we'll turn our attention to costco up 5% this year. 20% off its highs.

charlie saying last month he's still a total addict to the stock. we turn to melissa what are you watching? >> the first thing i will be watching is membership pricing and trends costco has said it's not an if but when, when it will raise membership fees. so that's something investors will pay attention to, because it drives the bulk of the revenue. i will be listening for foot traffic patterns coastco has been a big beneficiary. first, pantry loading, then cheaper gas, and now people are going to the stores for bulk sizing and value packs because of inflation we'll hear how that is going the third thing could be a weaker point for costco. that's big ticket items. a lot of people have been pulling back on discretionary. that's something we heard from best buy today it will be interesting to see if costco is seeing that dynamic play out, too. >> great point steve, you're going against charlie. this is a sell for you

>> this is a sell for me i don't like going against charlie. you have different timelines and perspectives this stock has been in a declining trend line since april. so the world has been going against charlie, as well and this is going to be the slowest growth, kelly, in three years. that to me, costco used to be a favorite of mine when they upped their subscriptions, it's like an annuity for the company, but they're trying to figure out prepandemic, during the pandemic, and now post what are people going to buy, how are they going to hoard? i think those hoarding days are somewhat over. just real quick, we look at broadcom, it's above all its moving averages. costco is below all its moving averages >> he's 99, but i guess if you have a long enough time horizon,

but i take your point. nordstrom, up 20% since january 1, after ryan cohen took a stake, but be careful. can anyone turn this around? >> nordstrom may have a rough day tomorrow we heard from the company they had a weaker than expected holiday season that makes up the bulk of the quarter. so we'll be listening for what they expect in a fuel year will it continue to have a lot of markdowns that was its problem in the fourth quarter so i'll listen for that. the other thing is it has a big name, and that's been lagging. during the nine-week period that ended in december, that underperformed its namesake. so can they turn that around it's concerning in light of some of the other names have reported and third, as we mentioned, brian cohen has gotten involved with nordstrom, and he's known

pushing for change he's talked to us specifically about getting the bed, bath, and beyond former ceo off their board and pushing for changes. so i'll be listening to see how nordstrom plans to respond will they listen and make some changes? >> steve, we have had a hold and sell for you what would you do with nordstrom? >> this is a sell also and ryan cohen provided the only goose for the name, and the stock has already given up a lot of that charge that we had so this one is actually between the 50 and 100-day moving average. but ryan cohen is the only tail wind for the name. investors are not so much focused on cost cutting, where ryan is or switching up the board. they're focused on a declining strategy for the business. so that's the real problem let's go back to 2017. they want to take the company private. they couldn't get the finance

for it so if you look at how long this has been in a declining trend line, it's been from march of 2021, kelly. i don't think things are turning around any time soon >> ywill it be a name you want t pick up for ai exposure? or maybe the stock has run too far? >> can you imagine having ai as your stock symbol, kelly, in a world where the buzz word is ai? it's a perfect setup what makes me so bullish about it, is the strategic collaboration agreement with aws and amazon it leaves them to exposure to basically every different sector of the economy, specifically they'll mention defense and other areas. but it really encompasses a through z every different

industry i think you're going to get a better entry point on this one but it is the purest play in ai that you can possibly get. >> full of surprises today steve grasso, thank you so much. melissa, thank you, as well. don't miss today on "closing bell" an interview with tom siebel looking forward to that. coming up, from public service to professional sports, and now private investments, matt higgins is here with his view on the markets, the startup landscape and advice for founders out there and let's glance back at the dow, where we have salesforce keeping the whole index in the green today. multiply it by seven any way, it's keeping the dow up 100 points, while the s&p and the other averages are lower today. you can see about evenly split the worst performer, 3m, down 1.6% back after this. oore. jessica was born to care. she always had your back... like the time she spotted the neighbor kid,

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sam. sophie's not here tonight. so you have a home with no worries. brought to you by adt. welcome back to "the exchange." dow up 176 points at the highs up just about 100, driven by salesforce tesla is lower after a big investor day presentation fell short on specifics that said, the mention by the company that could use 75% less -- is hurting semi conductors wolfspeed is down almost 10%, and that's the driver there. a similar claim is sending metals lower mp materials down more than 12%. meantime, kroger is leading the staples group after beating estimates. the ceo saying customers are

already behaving like they're in a recession, looking to stretch their budgets. companies are given almost a 4% boost. sprouts sharply higher different story for tyson and hormel hormel disappointed a disappointing quarter. and another big downside mover was box, shares are on base for their worst day since 2020, down almost 15% why? weak forecast for the current quarter and full year. and they're just the latest company to put out cautious guidance all of these names have mentioned cautious outlooks for the year, as a factor that's weighed on stocks. bet's get to bertha now. increased demand for the

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hidden, unfinished corridor inside the great pyramid of giza it may have been created to redistribute weight around the entrance that is on my bucket list to go to the pyramids. >> do it now, don't wait get there. bertha, thank you very much. still ahead, the problem with the jobs data my next guest says it's getting less precise should the fed be using it as a gauge or not we'll discuss after this the first time your sales reached 100k was also the first time you hit this note... ( screams in joy) save 20% with the lowest transaction fees and keep more of what you make. with a partner that always puts you first. godaddy. tools and support for every small business first. ♪♪ we all have a purpose in life - a “why.” maybe it's perfecting that special place that you want to keep in the family...

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welcome back to "the exchange." there were 190,000 applications for jobless benefits last week the seventh time claims were below 200-k. what if you can't depend on the data my next guest is finding fault with these numbers, saying the response rate for labor surveys has been falling as of late. welcome to you both. mark, where are the biggest problems >> well, kelly, they're across

the board. the response rates are down across all the surveys that are being done by the government and by private companies if you go back a decade ago, i think these numbers are mostly right, about 2/3 of the businesses that were surveyed by the bureau of labor statistics were responding to the survey on employment, the payroll survey we're now down to less than half of businesses responding and that's in ten years. it tell very sharply during the pandemic i think a lot of companies just obviously given the circumstances stopped reporting. and haven't started reporting again. so the response rates are still very low as continue to decline. these are surveys, and you're trying to survey a population, all the employment out there in the country. the surveys are getting less and less comprehensive, and your ability to gauge what's going on in the economy and job market in particular is impaired

>> revisions could get bigger. they do benchmark these when they get insurance records it's not just the businesses but the population piece of this, as well it could be privacy, cybersecurity, who knows, right? >> yeah, it's a big issue, and something else i know mark is aware of is, at turning points in the economy, there are expectations for the numbers of businesses that are created and those that go away and the government is historically not done a terrific job in modeling that at turning points makes sense when it does during expansions and during contractions that we know of so there could be -- my bigger problem with mark's argument, though, is that i don't see the weakness in the claims data. that would be a place it should show up. i don't believe that data is affected by the response rate issue.

the continuing claims data has been kind of flat. we saw a bit of a surge. had to continue to surge, and the weekly inputs in the numbers, as you said at the top, kelly, being below 200,000 for seven weeks now, that's strong data >> by the way, steve, did we just get some fed speak? >> yes there is a case to be made that we may need to go higher, we being the federal reserve. raphael bostic talking a little bit ago with reporters, saying some inflation has happened, but there's still a long way to go households and companies are still flush with cash. a big issue how much that savings from the pandemic is still around and then he says the fight against inflation is mathematically about halfway there, and just one or two more things here. he says policies only recently entered restrictive space. he expects it to bite in the

spring he thinks it will slow down and the economy comes this spring, thanks to the affects of fed interest rates starting to hit >> so this goes back to the discussion we're having. the fed is data dependant, watching every single data point. one of the places where we're seeing more focus is on job openings, mark we obviously, on these programs talked to the zip recruiter last week when shares were down 25% if you look at indeed.com postings, those openings are falling sharply. is that just a lag effect, or is there a data problem >> well, it could be a data problem there, too you know, i think what a lot of companies are doing, and now i'm speaking to you as a person who runs a business and hires lots of people. but when you have normal turnover, that opens up the job position if you're nervous, cautious about the economy going forward, you say okay, i'm just going to slow walk the hiring and just

not fill those positions quickly. you know, that is going to be very difficult to do, so i'm just going to slow walk things until there's job openings start to rise. so it's not representing strength, it's representing actual weakness in the economy going back to steve's point, steve, you're right, but that's just a window onlayoffs. most of the action and most of the weakening is with regard to hiring it's not only about inprecise data, we just don't have good data to see what's going on. >> i heard private sector anec anecdotes. there is kind of less of a need and a desperation to fill positions. and there's no way to extrapolate. all we know is we have these data points. >> yeah. i mean, when i -- there was an

article the other day in the journal about the zip recruiters and the indeeds. i looked at that data and came to a different conclusion. yeah, they're down from their peaks but still higher than before the pandemic in many cases. if companies are not paying as much but still advertising jobs, maybe they're not quite as eager. but the problem with this economy, the labor market is so out of whack, that even if the jobs data was -- let's say it was 250,000 in january, not 500,000. it's still 2.5 times what it ought to be to have a normal job market right now, i hate to say this, but precision is not exactly what we need we have a problem that is evident in a whole bunch of different -- let's say that the unemployment rate at 3.4% is 0.3 off or 0.4 off

we're still below 4% so it's not like this is the moment of precision of trying to thread the needle on fed policy. fed policy needs to be tighter if its aim is to bring down or create slack in the job market >> mark, last word >> i'm not so sure about that. if job both is 250-k, and that's where i think it is. i think the january number was -- >> mark, the population growth is 100 [ overlapping speakers ] >> it may be 100 when we get all the revisions in, when we benchmark this data through the unemployment insurance record, which is a census of jobs, we'll see these downward revisions and my sort of theory in the case is consist tent with the moderation and wage growth we're observing. that's not cop sis tensistent - >> so mark, you think that the

job data is five times -- [ overlapping speakers ] you went down to a hundred -- you said it's a hundred, not 200. >> i did you can pick months, try to pick a month. but the underlying rate of job growth is a couple hundred k >> okay. probably 250-k to underlying job growth what the data says is we're double what we need, and i'm saying to you, maybe not we get the actual data in it -- >> kelly, this is -- kelly, this is what happens when you pull back the curtain and let mark on television god help us. >> this is what happens at the fed when they sit down they're having the same argument because the data is so imprecise >> mark, i do appreciate what you're saying, because this

needs to be part of the main stream conversation, and not just something that we wonder about at night when we are checking twitter maybe that's just me thank you both i appreciate it. still ahead, we have the details next go. go scientist. go software. go cure. go production. go faster and safer. emerson automation software helps breakthrough medicines get to market at warp speed. go human go. go boldly. emerson. we planned well for retirement, but i wish we had more cash. you think those two have any idea? that they can sell their life insurance policy for cash? so they're basically sitting on a goldmine? i don't think they have a clue. that's crazy!

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welcome back shares of rivian have turned lower, extending their decline to 70% after reporting those mixed quarterly reports and a new safety recall, the second in less than six months they also lost money on every car it sold last year leading to a huge negative cash free throw. d -- cash flow >> let's look at the earnings season as a whole. on the surface, it's about cost cutting efficiency but the quality of those earnings, especially in tech, that could require digging for savvy investors. so look at a couple of today's movers salesforce and snowflake, they're excited, but it will take time on a gap basis

salesforce still up ten cents per share. snowflake, they did like the better unit of economics the company is still racking up $800 million in losses the last 12 months. the payoff may take longer, but that patience could be tested as some of the newest names are hitting unprecedented levels rivian, free cash close for 2022 was a negative $6.4 billion. lucid burned through $3.3 billion last year. netflix's worst number was negative $3.1 billion in 2019. uber was $4.8 billion the same year tess will had more than a decade of free cash flow, now more profitable than any other automaker, but the newer players are going to have to build and

raise the backdrop earnings in cash burn could be improving this season, but losses may be more difficult to spot, as companies put the focus -- there are fines that the fcc is asking companies, including lyft and sleep member, to clarify non-gap measures, and some investors take issue with that free cash flow number >> and what do the companies do in that case, do you think >> in terms of >> well, more just if people are saying we don't really want to look at these numbers the way you want to present them, do they ultimately give up the ghost? >> well, they're punished. i think investors now how to look for it. you look at uber and lyft and doordash, they haven't done particularly well as public companies, becut the market is looking at net losses. free cash flow, uber, yes, they

have increased the free cash flow, so they've been doing better in the market than say lyft but that takes away stock based compensation so unit economics is not a bad one, you just have to know what you're looking at. >> thank you so much, diedra we've got breaking news on amd. scott has the story. what's happening >> breaking news is that, according to sources, daniel loeb has taken a new position in amd. he is known quite substantially as an activist investor. this is said to be a passive it's a new-ish stake, the way that i understand it to be what's interesting, as it relates here, is that they used to be in intel, which they're no longer, by the way

and one of the principle reasons that, you know, things didn't go awry in that is because, you know, amd has taken market share among others, from intel, which was one of loe b's arguments in the intel investment of why he wanted intel to do certain things. intel to do certain things, was to be able to catch up to a company like amd. although this is not an activist position, you know he's been busy lately starting a proxy fight with bath and body works a week or so ago this is interesting given the timing the stock had traded down a bunch, and i'm told that's when they had established their position newish. and again, it is a passive stake but something to keep an eye on, what may be one of the newer positions here from daniel loeb. >> it's probably a sign of confidence instead of a sign of trouble? >> sure. yeah i don't think they're trying to,

you know, sink the trees over there and get amd to do anything not certainly in the likes of maybe what they wanted to do as it pertains to intel or some of the other activist positions they have. they obviously must like the job that dr. lisa su is doing as the ceo. look, loeb's a pretty active guy. just in general the way they trade in and out of stuff occasionally but this is just interesting to follow because it is one of the newer ones >> certainly scott thank you so much for bringing that to us. still ahead, if you ever use residence zi to score a table, then you have venture capitalist matt higgins to thank. he'll join us next for businesses of all sizes, there are a lot of choices when it comes to your internet and technology needs. when you choose comcast business internet,

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welcome back just a few weeks ago, venture capitalist, tom -- warned us of a mass extinction event for start ups. crunch base reporting startup investment in the fourth quarter fell 53% last year my next guest said the community is paralyzed as economic uncertainty persists joining me is matt higgins, cofounder and ceo of rse

ventures and author of "burn the boats. >> thanks for having me. >> i think "burn the boats" might resonate right now >> burn the boats, not with you in it though >> no. for people, we're going through one of these very, very difficult processes, especially for startups what do you tell them? >> i tell them, plan i hear all this talk about a soft landing i don't know what a soft landing is when you're out there, it doesn't feel very soft the way you survive is to anticipate and make the changes now. i'm meeting with all my different ceos on the consumer front saying let's get ahead of it >> what does that look like? we mentioned the buzzy brands. when you talk to companies like that -- i don't know if you're still involved -- but how do you get ahead? what does that mean? are you talking about pulling back on staff? are you talking about layoffs? pull back on investment or lean into tech? >> it all depends. a lot is keeping your pattern drive. when you're talking about businesses that are heavy brick and mortar, do you think there's going to be a massive correction

on the real estate side. >> what do you mean correction >> if consumer spending dries up, 70% of gdp, then you'll have landlords who will be more desperate for tenants. so, don't commit to these leases now. keep your pattern dry. be patient keep your overhead constrained don't overly invest in growth. most of my message is just wait. >> would you say the same thing on wages i mean -- >> yeah, inevitably unemployment is going to have to tick up for inflation to come down >> yeah. >> so, eventually wage pressure will ease up i am seeing some easing up on commodities. actually i was on with the phone with ceo of magnolia bakery, one of our companies, saying they're seeing egg and butter ease up. there's been some relief on consumer prices. the most important part is to anticipate what you want to do a year from now. >> you know sports probably better than anybody. they were definitely recession

proof 15 years ago, sports valuations continued to rise, rights packages, all the rest of it are they going to be recession proof this time around >> they are going to be. >> how is that possible? >> i want to agree with you. it's just the way it is. you know why when you go through downturns, in the '30s, it was movies right now it will be affordable indulgences like starbucks same thing will be true of sports we need indulgences when things get dark, and i think it is going to be a dark period in america for 18 months. >> now you convinced me. where else would you look at things a little differently than what you're hearing conventionally said right now? >> i think there's going to be a wave of consolidation in the direct to consumer space the consumer is moving from the want to have to the need to have a lot of these great direct to consumer businesses -- i teach the subject at harvard business school a lot of them are in the need to have category. they're going to be unable to

raise subsequent rounds. >> like the original warby parker >> yeah. -- raised a ton of money during the pandemic based on cheap customer acquisition everybody was home now they're being told, no, we'll only invest to you if you have a path to verticality it's not possible to pivot that quickly, so there's going to be a lot of consolidation >> fascinating thanks for your time >> "burn the boats." yes. that is does it for "the exchange." next on "power lunch," we're going to talk to dom chu ts eaheth se on t oerid ofhibrk.

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