firm when you come to the end of the day. it's an under the radar stock and the $16 billion market cap i leak it here it continues to act well and it's a good quarter. >> i heard you were on your best behavior while i was gone. >> i was an agitator sitting in your seat. >> thank you i appreciate that. >> nmy favorite industrial "the exchange" is now. thank you, scott and welcome to "the exchange." i'm kelly evans. here's what's ahead this hour. a july rate hike will be a huge mistake, that's what our guest is warning today, plus the bond market keeps flashing trouble signs and a massive debt wall is about to hit corporate america according to another expert with us and we'll dive into the details and look at why the market's unimpressed plus a bullish call in one part of the reit sector and mizuho says now is the time to strike the analyst joins us to make his case and more than 100 million

people including dom chu has signed on to the threads although i can't log in on my laptop so what's next it's all about targeted ads, and it is perfect for that he tells us why. first, is it at the domino it is at the domino on the threads and so it kind of carries over from twitter to threads and my intention is to use both, and we'll see if that works and to your point, kelly, i like a desktop ad. >> please. so to kelly's points with the markets overall, we are seeing a market that is relatively calm in trading today so impressed not impressed? it doesn't matter that much and it is tepid for the time being and indicating a consolidation and the movement and the industrials solidly higher up by 1.5% and the s&p hovering around the 4400 mark and the last trade there and it's 0.1%. at the highs of the session we were up 14 points and down nine points at the low of the session and it gives you an idea of the

trading range and the nasdaq is the underperformer and just about flat on the session and the composite index and 13,659 from a sector standpoint, now that we were a few days into the second half of the year. a check on the two best performing sectors in the s&p 500, no surprise it's technology and communication services and the worst performing one, utilities, again, one of those signs that people are moving through the risk aversion trade. less and less so as the summer goes on. that gap has grown quite a bit keeping an eye on technology and communication services versus utilities, when things switch around, we'll watch those sectors closely. interest rates a key part of the story today. we're seeing a bid to government bonds on the u.s. side of things and the yield moving to the down side and 4.86% and the ten-year benchmark right at 4%, and the 2 and the 10 just 86 bases points and to put things in context for you, kelly. over the course of this past

week, we did see that inversion go towards some of the worst levels that we've seen going back to the early 1980s. if you take a look at the longer term chart for the two-year, ten-year spreads and the 110 basis point and 1.9% negative is what we saw over the course of the last few days here and we're hovering around that amount and watch the two-year, ten-year spread, and i'll send things back over to you >> sitting on 4% as it's done on multiple times >> dom, thanks appreciate it. >> the markets broadly see a 90% chance of another fed rate hike in july. san francisco fed president mary daly says the fed shouldn't stop there. in fact, she said a short while ago that several more hikes are needed as the risk of doing too little outweighs the risk of doing too much my next guest disagrees and says the fed needs to stop now. let's bring in barry knapp i didn't realize this was so

dovish is this a reese not thing? >> i've been pushing back on the fed since the silicon valley bank collapse, and you and dom were just talking about the treasury curve, and there's lots of discussion and how long it triggers a recession and the like and we have to step back as dom just intimated, this is an exceptionally deep inversion, right? so there were inversions greater than 1% on a monthly basis in october of '73 right before that giant recession from '73 to '75. there was an inversion of 100 -- almost 200 basis points in december of '79 and then another one in december of '80 we've never had anything even greater than 50 basis points, and i'm measuring it by the ten-year treasury because the two-year treasury hasn't always been around, but that sort of represents bank financing. so this level of inversion is

extreme, and it was followed by very bad outcomes and very deep recessions and in the case of 79 and 80 it set off a chain of events that set off the thrift and the savings and loan industry ultimately collapsing, and at the time that was 80% of mortgage credit supply so, like, we're playing with fire here and when i look through the data, i'm seeing it d deteriorate, and i saw evidence in the labor data last week that the small business employment is deteriorating, as well that's the most opaque, but largest portion of the employment market, and it will be one of those things that just sneaks up on the fed and hits you over the bridge of the nose so to speak. >> i absolutely share your concern, barry

one of the pushbacks that i've heard is this isn't about the banking system or to put it differently, no one's going to cry for the banks, right okay so they were mismanaged and they got into trouble, and what have you. to me, i'm still scarred by the financial crisis, but they say, well, maybe this isn't the financial crisis and so if there needs to be some pain felt by the bank's, the fed's larger fight and the battle was against inflation. what would your response be to that >> i have ptsd around financial crises, as well having been a partner and senior managing director at lehman brothers. i readily admit seeing financial crises at every turn, but listen, the banking system, this isn't about mismanagement and the hedge for the interest rate risk for the fed is cheap deposits as i said before, having the curve inversions last for a month or two is extremely rare they don't hedge interest rate risk and they get cheap deposits

and the curve carries positively and they're able to lend money if we do truly have higher for longer and keep the yield curve inverted for a year or more, the banking system won't be able to supply any credit and therein lies the real problem and it's not just the rate hikes and it's the fact that the fed owns a third of the treasury, mortgage and tips market and it's suppressing long-term rates and it's not allowing the banks to earn their way out of the third of their assets that they own in government securities. >> furthermore, the inflation argument to me is silly at this point. we will be at three on wednesday on the headline. all items inflation and then the core is going to decline between now and the first quarter of 2023 regardless of what happens. it's because of that goofy, lag-impaired shelter measures that will be cutting downward pressure on inflation and the

powell's super core services, that peaked in september of last year we have a zero in that last month. so i don't even understand the discussion about inflation it will go to three and tell stay there for a while and we won't know until the second quarter of this year, and personally, i don't think they do, but i don't think that's important either if it's stable at three, it's more than sufficient >> that's interesting. >> let me leave it as this for those who say, fine, barry or kelly or whoever may have had them pause rate hikes in march and look at the payroll data and can you imagine how strong the economy would be if they weren't pushing policy into more restrictive territory. what do you think about that >> that we're in recession we've had two quarters in a row of negative gdi. income is what matters and it's not the sum total of all of the widgets and services we produce. the net operating surplus of the private sector has been negative

three quarters in a row. government spending and the gdp accounts has been really positive three quarters in a row. 4% to 5% so this, to me, is not a really good mix it's a '70s-like mix and the government gets squeezed and that is great stagflation. so i don't like the setup from a long-tomorrow perspective at all. listen, i do think there's a productivity story out there that's super positive and that's the big offset here, but the fed is really playing with fire. they stop now, we could have a truly happy ending to all of this >> are you on threads, barry >> yeah. i just joined it upon i always use instagram just to look at golf and the skiers doing crazy stuff, but i guess i'll have to use it for business now, too >> and then i have to go find you and i have to find dom and all these people on there, and i don't have the energy, and everyone else wants it

>> what are you? >> napbar. nap b-a-r. >> i thought you were napping from afar. >> welcome back, kell. >> more rate hikes my next guest is also concerned there's a ticking time bomb for corporate america as federal fed tightening coincides with a maturity wall, and heavy borrowing and they'll face the choice of default or refinancing at much higher rates and the chairman and ceo of rapid rating good to see you, welcome >> i'll kind of start this as i do with barry, okay, now i've heard this argument for two or three or six months or what have you. when is the apocalypse coming? >> well, the apocalypse can't come until the debt is maturing

and we have $6.5 million, and most companies have done a successful job of kicking the can down the road and refinancing over the last cup of years when they've been able to and we have a conducive market that has allowed credit companies to raise capital and they've done it, some of it with impunity and it's put the maturity probleming for thor out. so we're really looking at getting into '24 in through '26 when we'll see maturities coming due where the company will have a hard time refinancing or paying off >> it's almost hidden and the analysts look at this very closely where they go, maybe the company was able to refire it, and that's putting the squeeze on the business and you do wonder what that means for operating expenses for the two, three, four, five-year period, whatever it is >> we're still in a period where companies are trying to recover from the covid period, and all

of that extra capital of government funding and financing as well as the ability to borrow has masked the problems of operational degradation for a lot of companies >> we've seen in the financial health ratings, and in particular in a lot of private companies and in private companies that are generally speaking will be floating rate borrowers and they're the ones that have been hit the hardest and everyone needs to pay close attention for the fixed-rate borrowers are doing and what the private companies are that are associate. >> it's a reminder and it's not about what the largest 500 companies in america tell us were t were able to tap the fixed rate finance, last time you were here we spoke about concerns about the supplier market, for instance it sounds like in tech where we've had tech and there were some cracks. >> you're right. no company operating in

isolation. it operates in an ecosystem of counterparties suppliers, customers, all kinds of other businesses and roughly, 75% of most fortune 500 suppliers are private companies and to put it in perspective how important that sector is, but we're seeing problems in a whole variety of sectors and i would not take it in terms of industry and i would look at sizes of companies in those industries and the mix of public and private, because with 75% of the suppliers being public you have to look upstream and look at the kind dynamics and wooe seeing drugs and pharma and health products as well as technology, and i put technology at sort of last because it's particularly interesting you've got the largest tech companies in the world that have been doing great, really bolstering a bull rally for the course of the year not every day, but for the course of the year, but

underneath that, you've got companies that have been seeing their customers' budgets get contracted and they're getting contracted because customers' budgets are concerned or customers are concerned about general economic conditions and how their own business is going to look over the next six, 12, 18 months and that's starting to flow through >> it sounds you're echoing smaller size firms and they're hiring plans and that kind of thing. >> what happens typically? does this bubble up to the biggest companies at some point or what typically happens throughout the cycle >> you're seeing the squeeze the smaller companies and the medium-sized companies and they're suffering higher interest expense and they're suffering parts inflation and they can't also push those costs through to larger counterparts so you end up downstream with the larger companies continuing to do well and have the wherewithal and the resilience to handle that period of time where everything is bunching up

in the middle and that bunching up in the middle tends to happen with the companies and a lot of the private companies so this will flow through eventually and we've seen a 70%en cress in default rates and bankruptcies this year over last year and i think we'll see more of that right now it's six to one private companies and that will continue, and we will see a significant increase in the fault particularly with the mid-cap ask private companies. >> very quickly, we spoke about carvana and the deteriorating financial profile and this was a $3 stock at the 52-week flow and it's at 30 and there's so much interest and it keeps popping every time they talk about being more cash flow and it was positive the last couple of weeks. the shares are up another 8% today. what does this tell you? >> there are a lot of people looking to make money on momentum today, i think carvana announced that they expected to have

greater sales from ev products well, that's not a surprise. there's more ev out there, and carvana is not a company that will operate its way out of its problems and it has an incredible debt load, but it is in battle currently with apollo and others as its bondholders. it has a failed debt exchange that we talked about last time and it's a company that absolutely needs debt relief like so many other companies do and are going to more and more and what happens on a day-to-day basis from an operational and forecasting perspective, it doesn't matter. >> even royal caribbean. carnival was the poster child during the pandemic and maybe now that the tide has turned, so to speak. >> the financial health rating on carnival and royal caribbean is 36 and 31 they're not strong companies in that sense 40 and below is where most defaults have happened over the last 20 years, but they are, as you say, emblematic of companies that have been able to refinance

and kick the debt can down the road others like right aid and amc and others that have had financial health deterioration, but don't have immediate short term maturity that will trip up and cause a default, but everyone needs to pay attention how they are improving if they improve operationally because when it comes time to have to refinance, it's going to be the critical issue >> it's fascinating because it means more shorts and more momentum traders every time there is a pop and inimportant to get the bigger picture. james gallagher with rapid rating >> coming up, one gaming reit can go up according to mizuho. the key could be a big deal for the bellagio tweet me, or should i say thread me@cnbc. we'll have that call next. diversify, not decouple. that was the message from janet yellen's visit to beijing and some tell us she's living in the

past and what the latest round of disappointing data tell us about the road to recovery the dow is up 170, half a percent today and the s&p is up only five and the russell 2000, nice move, up 1.3% and the 10-year a hair above 4%. we're back after this. ♪ ♪ this is "the exchange" on cnbc ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ ♪ (vo) it's time to switch to verizon. sadie did. and now she has myplan.

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>> welcome back. the office space has been hit hard by the impact of rising rates, tightening credit and pandemic work trends and if you look past the office, my next guest sees opportunities rates, especially in gaming, housing and retail joining me is the senior retail analyst at mizuho. great to see you again welcome. >> good afternoon. thanks for having me >> this is an area where we have to tell everyone it's not just about office i thought i saw a deceleration in some of the vegas numbers lately >> stepping back for a minute, the reit sector here, it's been a choppy year. the shipping macro and recession risk and the counter access to capital all on the list of concerns and the stock is up 5% year to date lagging the s&p by

1,000 interest rates and there is certain sectors like single-family rental data centers that are almost 20% while office is down over 10%. so i think the valuation for this sector is relative to long term averages and the private market value, but it's important to be selective. there are better quality assets and the balance sheet, specially in the higher rates for longer backdrop so gaming is one of the sectors we like with the single-family rental and happy to get in on those now. >> and on gaming and is it vici, v-i-c-i, there is a bellagio angle here tell me about it >> we like the gaming sector and vici specifically and it is the top pick and the highest quality gaming among lfds and it acquired the mgm casino and the structural benefit and the cpi linked contractall bumps and the

tourism in vegas and gaming revenues are growing and vegas was packed the last several times and the amazing how many folks are there and there's alignment with the local government and vici is trading at the discount leading reits, but with a far better growth portfolio. we like the structural security and the growth and the relative value and things that certainly with the potential transaction including the bellagio, and it was announced that it popped up in the news article next week and it will add to the sector leading the portfolio in terms of the dominance on the strip and quality. >> apparently plblackstone will have part of the strip >> this has been an area that is right last couple of years, whether we talk about bank ceos, they've been positive. lately i'm hearing more caution on the multifamily side and oversupply and stalling rent growth what is it here? is it airc

and why do you want to be in this area right now? >> absolutely. in residential, let's talk about two sub sectors briefly, one is the apartment side and you're right. apartment investment realty corp, they own a broad, national, diversified portfolio. they have some exposure to sunbelt and more broad, regional exposure which gives them some offset with the growing supply, which will be a key them in the sunbelt over the next year the landlords in residential have had decent pricing power, but we're getting to the end of the summer and this is the time of year where rent growth starts to take hold some talk about affordability and the rent has been going up for several years, but when you step across the spectrum and think about housing and the sub-sector single family rental, the affordability is really stretched and home mortgages is now well above 6% and there's millennial, undersupply of housing and this is

single-family rental landlords like americans with the large mega-cap reit and they have pricing power and external growth opportunities and really, a better growth story here over the next year and not facing the same supply. >> going back to vici's $34 price target and it's been a couple of dollars shy of that and the $40 price target on the $70 price target and these are somewhat conservative and why is that, relative to where the companies are currently trading? >> i think there's a lot of uncertainty out there. there are concerns about a slowing macro. concerns about the consumer. some tenants, access to capital has been selective here and that's important to discern with the sub sectors of real estate and it's facing a lengthy set of challenges and the access to capital is far more challenging and the demand is the question mark and the hybrid work from home will be a headwind for the

next few years and not all real estate is office and the headlines are interesting in office land and with the names that i just outlined along with adc, a name that focuses on high-quality single-tenant leases like walgreen's, walmart, publix can also be net winners in the current macro portfolio can play offense and defense, and so i think picking names like that in that backdrop and selectivity is something we empathize and they're net winners. >> haendel, thanks for your time today. >> thank you coming up, 100 million users in less than five days and that makes threads the largest online platform in history and is it a flash in the pan we'll ask one ad exec with meta shares hitting a new 52-week high >> annual prime day, the cloud

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welcome back to "the exchange." this is the 16th year now that cnbc has ranked the top states for business, and the race is closer than ever scott cohen is incohn is in an undisclosed location we start collecting data around february there's a whole process that goes into had. it's a study, it's not an opinion survey it's hard data, and a lot of people work on that. with that in mind, we're not going to tell you the top state

for business we have the diabolical hints and we have another one right now. old school old school, that is your next top states hit we'll have another one next hour in power lunch the top states for business revealed and you can see where your state ranks tomorrow morning on "squawk box." read more about our study at topstates.cnbc.com >> can we talk about that this hour or are you saving that? >> i'm saving that because we don't want to narrow it down at all, but you will find all of that and the reasons why on the website, as well, for why some states do great and some states -- you have to have bottom states. >> oh, we will get the bottom. i'm looking forward to it. it looks beautiful, wherever you are. our scott cohn, to contessa brewer for a cnbc news update. president biden touched down in lithuania on the eve of this high-profile nato summit the big question, will ukrainian

president volodymyr zelenskyy show up? he was invited, but has not confirmed his attendance there's questions whether to allow ukraine to join the alliance bidened it would be premature for ukraine to begin the membership process during a war. an inmate is still on the run from escaping from a prison in pennsylvania authorities think they're right on michael charles burham's trail. they think stockpiles they found in the woods is associated with him. he was in prison on arson and burglary charges and a suspect in a homicide investigation. >> for the first time, switzerland is expected to import more cheese than it exports this year. ahead of the country's dairy association says cheese prices just aren't covering cost of milk right now which has meant cheese makers aren't making cheese as it stands to reason >> so prickly about it, too, until it comes from somewhere. this is american cheese if you want it or wherever it's coming

from >> it could be a boost for wisconsin. >> exactly true wisconsin cheese. contessa, thank you very much. >> coming up, china producer prices seeing their steepest decline since 2015 consumer prices are not much better, but may next guest says don't expect any major stimulus from the goverenhenmt re a.i.'s david scissors joins me next i did have hearing aids from another company... i was just frustrated... i almost gave up. with miracle ear it's all about service. they're personable... they're friendly. i'm very happy with them. we provide you with a free lifetime of aftercare. meaning free checkups, cleanings, and adjustments. i see someone new... someone happy... it's really made a difference. call miracle ear at 1-800-miracle and schedule your free,

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welcome back to "the exchange." janet yellen is on her way back to the u.s. after a high-stakes visit with china she had a constructive visit overseas ultimately setting the stage for continued dialogue between china and the u.s. yellen focused on diversifying rather than decoupling the two economies saying the world is big enough for both to thrive, but as the u.s. continues to throw it around, china continues to disappoint. producer price fell at its fastest pace and consumer prices was flat with worries of deflation persisting and the call is growing louder my next guest says we shouldn't expect anything too big. senior fellow with the american enterprise institute derek, it's good to see you again and this is an important market call. a lot are pinning their hopes on stimulus, if nothing else. >> i think to get stimulus from xi jinping's government after ten years when we haven't seen any large stimulus, you need kind of a disaster, and an export collapse and the gdp will

be out later this week the consumer prices are not great and producer prices are dropping because china has too much capacity and the world economy is weakening the consumer prices are a bigger problem, but if you look at china's stimulus options and hasn't worked and you can't be aggressive the monetary side, if you create a bunch of construction jobs that's not what people want and you don't solve the youth unemployment problem. >> what do you do? >> we're showing it 1.25 against the dollar it has weakened considerably, so because the growth and inflation and for everyone else in the world right now hinges on what happens here, what do you think's going to happen? what can policymakers do or is it just a waiting game or could it get worse >> i don't think it will get worse in the short term. a lot of this disappointment is

people had a lot of expectations coming out of covid and they haven't been assessive from a conservative gdp target, and they may not think it is much of of i problem and chinese property marx, china has to on something and that, mud willing thank you is the most hookly outcome. all that the tone china seems to be tack next meeting and the next actiona is to stop the goods ban and tariffs. they want us to do ullah of those things while at the same time escalating the tit for tat and maybe you remember the names better than i do i need my periodic table out who makes the next move here do you expect the u.s. to kind

of ease off a little bit >> it's want going to be china that makes the next move i think secretary yellen is probably going come back to washington and say, oh, you know, i did some good work here and now we need to follow up with a conciliatory gesture. we have the opportunity. we can change our export control rules that we applied in october can those are interim rules on semiconductors and we can modify them and loosen them up some and there are people in the business community here advocating for that so i think if there's going to be a move it will be on the american side, of course, people were talking this way and then we had the u.s. move is guaranteed and it's the only possibility. >> you ever gotten in a balloo incident is this a routine -- i still feel like i don't have a convincing explanation of the timing and the purpose and the whole thing. >> i certainly cannot be definitive about that because i don't have a definitive explanation either

chinese surveillance of the u.s., we started paying attention to it with the balloon and the idea of a base in cuba there's surveillance of the u.s. and there is u.s. surveillance of china >> it is ungear why they decided to see what happened that time it riz some eyebrows as if someone wanted relations to be for there. you don't think spy balloons -- >> i was a little surprised. >> no. you know, i'm sorry. i don't mean to make this too personal and i wouldn't be surprised if the chinese listened to the next phone call you made or the next money phone call i made. i don't think we should be surprised by the balloon, and watching us from china

the balloon sort of wandering out in the open was new and much more suspicious. >> i suppose because as we talk about whether or not the u.s. should relax export controls you wonder do we still have our hands around the level of surveillance or, you know, that's going on right now. does more reporting need to be done or more of a approximately s policy reaction or the supply chain is to some extent disentangled and figuring out what they're doing and what we're doing back to them feels like whether we should take the foot off the gas a little bit or press ahead with the restrictions that we've been imposing >> i agree with that i bought export controls in the beginning for a reason chinese surveillance is entabled by u.s. technology and it may be partly enabled by the investment and the treasury department hasn't reporta we've had our hand at what thine

china is the the decision should justify the e port control is, andy think it does require more monitoring from the press and from the congress ask so on, just even if your a china dove the unclear is if spsh someone is paying air president'sed and they're more surprised and unhappy that the surveillance was made easier with the u.s. help >> we have no information one way or the other terec scissors with aei. coming up, amazon shares in the lead-up to the annual prime day and it used to be a big day and still moving the needle on re retail sales, but are those fading we'll ask next

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amazon prime day or days kick off tomorrow. likely to generate about $5 billion of revenue according to j.p. morgan. some are also warning the annual sales might not be the driver it once was for the stock especially as amazon web services grows here to dig in to that -- here to dig into that for us is deirdre bosa with tech check hi, deirdre. >> hi. the 5 billion number, that is an estimate that wall street thinks amazon will make here, but amazon doesn't publish those numbers and we don't know how big of a boost in the sense that investors just start buying amazon stock for the e-commerce business anymore, because as you mentioned it is growing faster and it makes more money as well as advertising which is a relatively newer business for the company. the margins are just so much better and it's making profit where the margins are just so much thinner in the e-commerce business so prime day, yeah, it's

interesting, but we shouldn't be surprised, the chart that we're looking at right now and the dow ended the day lower on the last four years and it is also expected to come down from much higher levels and 30% in 2020. >> do you think in the past there was a sense of investors that the more people buy stuff and the more prime generates and now they look at and see red and go, no, that's another return that's going to happen >> exactly that part of the business just doesn't look that great. >> you're right. exactly. it's lower margin and the prime ecosystem, that is so powerful and if you think that's reached close to saturation rate and you think how much the company has had to spend to grow that logistics network. it's interesting that when andy jassy was speaking last week on our air that they've become so much more efficient and that could be an interesting surprise

and it's the ai proposition and most of that will be seen in aws and it's cloud business and it has e-commerce. >> i don't know which is the worst business, streaming or internet retail, but there are also a lot of other retailers, a target, for instance, who copied the concept. so the consumer is not dumb. they know that amazon has to make it more compelling for the consumer and the less interested investors are. >> think about it, too there are other platforms that aren't even american we talked about teamu that offered such basement bargain prices and that's an everyday prime day. they spent so much money to capture the american consumer that they've taken the gleam off of prime day, also >> do you think teamu is the old remodel of go steal the whole market and raise prices or is it more of an h&m where it will be cheap and high turnover and that kind of thing. >> that's a good question because they're manufacturing and they're getting a lot of the

products where the kcosts are much lower and i don't know how else the promotions makes sense, kelly. they're basically handing out money. so maybe that's the strategy, but they've also got better margins because searching made in china and there are some sort of loopholes in terms of tariffs and a little bit of all of it and it's providing a pretty compelling thesis for the american consumer at the moment. >> when everyone said it would be the end of the globalization and the end of chinese, and this one thing, it's all of the opposite stuff and it's the biggest thing ever >> tick-tock coming to the e-commerce market,too. >> exactly that's a great point that's a great point and one area to watch. thank you very much. our deirdre bosa still ahead, while the cage match with mark zuckerberg and elon musk has yet to be scheduled and it is definitely d at ah meta's rise of threadses anwhdvertising on the

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welcome back shares of meta up about 3% since the launch of threads last week. keep thinking it's a clothe lg retailer the service is taking off, adding more than 1,007 million subscribers in five days let's bring in julia boorstin with the tally the most interesting part is the drop in twitter engagement at the same time. >> yes threads hit the 100 million mark so quickly because of the ease of signing up for instagram's 2 billion users. mark zuckerberg posting on threads. that's mostly organic demand and we haven't even turned on many promotions yet instagram saying of the speed of the ramp, quote, it's insane, i can't make sense of it now this launch does make threads the fastest growing app in history topping chatgpt

and it's the most down loaded free app in the u.s. both in the app story and the google play store. threads' success does seem to have a regulanegative impact on twitter. a screen shot of twitter traffic shared on sunday by cloud ceo matthew prince showed what he described as twitter traffic tanking. and data analytics company reports that twitter's web traffic declined 5% in the first two full days threads was available and down 11% from the same two days the last year. kelly, back over to you. >> i didn't realize it was the ceo of cloud it's interesting he was trolling i don't know if he puts out user numbers but it's a move to go after them like that >> it's a pretty dramatic move from twitter

and what's interesting we don't have a lot of data about what's happening right now. because it's no longer a public campaign it's what we hear from elon musk. and to see the impact i said indicateds that some twitter users were getting frustrated with the twitter experience or the tweet limits that elon musk put on the platform recently >> let's bring in mark douglas who thinks that threads' text format could be lucrative for advertisers as well. glad you could join us today what do you think is going on here is it twitter self-inflicted problems coming home to roost at the same time that a knew rival is launching and does the rival have real staying power? >> yeah. i think in terms of, you know, the reported drop in users or not so much users but engagement, that does kind of coincide with the limits that twitter put in place

so we don't know for sure that's because of threads the most interesting thing right now it's gaining users remind everyone, it's plus and i don't remember -- >> what was the chat one clubhouse, right >> yeah. clubhouse came, was huge during the pandemic and literally the moment everyone went back outside it kind of disappeared so these things can happen and it's still early i know when i go through my threads feed, it's only blue check marks posting. nobody that i follow on instagram who's now on threads has actually made a post yet. >> you wouldn't know so i'm on it too >> yeah. >> but their algorithm -- maybe you can explain it, what is the al algo algorithm? >> it's kind of a crap shoot. >> that's one of the complaints about threads. this is the first iteration, they're clear on that, they are

going to be implementing many changes and making additions one thing people are complaining about you can't do direct messages like on twitter and have control on the ranking of how you see your threads i might want to see threads posts from people who i follow right now you don't have the option of doing that you don't have the option of seeing threads chronologically based on the time they're posted these are things we'll see if threads gives users that optionality. and also weather people use it in a different way and different use cases in how they use twitter. >> i was most surprised when i got on, you couldn't do video in a simple way it was like pushing text on you. and you have an explanation for that, what do you think the text thing is about >> right essentially as an ad platform, and that's a ways out. meta doesn't need more ad space. what they need is data and text data is better than video data and photos. if you go on threads in the

future and say, hey, i'm thinking of traveling to the maldives, you can imagine what ads you'll get those ads likely won't appear on threads, they'll appear on instagram. you may never see ads on threads but the data they're collecting is more valuable than what meta doesn't need, the ad space to sell. >> to me it seems uninknewive to take a step back away from richer formats to text and i say that as a text lover but perhaps i'll be successful thank you both for your time today. mark douglas and julia boorstin. that does it for us on the exchange today you can sign up for my news letter in one easy step. coming up next on "power lunch," looking at the most oversold stocks in the s&p to see if they're fshlaing a buy

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welcome to "power lunch" alongside kelly evans i'm jon fortt. coming up the nasdaq is about flat right now could be the fourth down day in a row or could break the negative streak. can tech stocks continue the rally as the fed is slowing the economy as a result. plus janet yellen wraps up her china trip with nothing productive is the prospects of more talks enough reason to be optimistic >> let's get a check on the markets where the dow is up 182, half a percent today, but the s&p up 5 and the nasdaq is down 4%