your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire welcome back to "power lunch" with courtney reagan. i am jon fortt stocks higher once again as big banks kick off earnings season with good enough results can earnings inflation and the fed continue to give the markets what they need to keep moving higher plus, hollywood striking actors joining the writers on the picket line. the strike already threatening the fall season. it comes at a vulnerable time

for the tv and movie industry. we'll look at the potential impact. we begin with key earnings out impacting the dow especially we'll get to united health in a moment, but let's start with the banks. results from jpmorgan, wells fargo and citigroup. leslie picker has the details. hey, leslie. >> hey, jon. beats and raises for all three, at least as it pertains to net interest income. mixed reaction in today's trading. higher for longer rates. a tailwind for all three as they continue to boost their outlooks for net interest income. that's a profitability metric from loan making on a slew of calls this morning, questions from analysts and reporters alike on a lag effect of higher rates on the economy, on loan making, on the ability of businesses and consumers to truly absorb the cost of financing. we just sat down with citi cfo mark mason who said the strength of the firm's business outside of the u.s., outside growth of credit card volume, contributed to that higher nii outlook he's not taking a recession off

the table. >> our base case calls for a mild recession at this point we did have a good cpi print i think the feds are likely going to want to see a couple of more months of that before taking significant actions in a different direction. but when i think about our consumer, i think about the corporate clients, they have very strong balance sheets and they've proven to be quite resilient through all of this. i think if there's ever a chance for a soft landing on this, i think these indicators are certainly suggesting that. >> the other executives who spoke today also indicated they're not quite ready to rule out some kind of future stress quite yet. jpmorgan ceo jamie dimon said loss rates have time to normalize, even during the post-pandemic era. wells fargo cfo said he expects a few more quarter before the turmoil in office within commercial real estate works its way through the system, guys >> really interesting picture of what the banks are, at least telling us at the beginning of

this earnings season leslie, thanks for more on the banks, let's bring in gerard. thanks for joining us. obviously you're covering big names reporting today. citi i want to start with, talking about sort of still waiting for the investment banking business to turn around. we know the deal environment has not been as robust as we've seen in the past. what will it take to change that to turn that around as citi shares move lower here >> thank you, courtney, for having me on i would say what's going to turn it around is the fed getting to its terminal rate on fed funds if the fed reaches that terminal rate come september, the outlook for the fed funds rate is flat for six to nine months and maybe a rate in the second half of next year, that would be very positive for the markets, particularly in the investment banking space. we also need to see that the companies that may need to go public or want to go public, they have to recognize valuations, they are far lower than they were in 2021 at the

height of those valuations once those companies recognize that the valuations are down and we get a steadiness from the fed, that could set the investment banking business up quite nicely for the latter part of this year and into '24. >> if we look at the rest of these businesses, and obviously the banks have so many different silos here, that's the investment banking or commercial side of the business, but what are today's reports telling you about the consumer in relation to spending, credit availability >> it's interesting. the consumer spending numbers, if you look at the jpmorgan data, we're good the credit availability for consumer, whether it's credit card receivers or auto loans, still very strong. consumers, of course, have access to this credit. the only area we really saw today was with wells also with jpmorgan, but jpmorgan has a very small portfolio here, it's the office, commercial real estate that's the area that is starting to show real tdeterioration.

jpmorgan pointed that out. on the consumer side, to your point, the consumer is very resi resilient, similar to what mark mason was saying earlier in the program. >> let's talk about the ways still left to play this. jpm and wells, i think, are above your price targets but you still feel good about them, particularly jpm meanwhile, regionals, some of those you cover, they start reporting next week, far below your price targets but they expect to have news that's not quite positive, right? what's an investor to do >> it's a really good question, jon. when you take a look at it, the margins today for both jpmorgan, wells and citi, net interest margins, came in better than expected granted, they were down slightly in the case of citi, they were actually up. that has been the big headwind for the regional banks because we all expect to see them use

higher cost funding this quarter due to the problems we saw in the first quarter with the failures of signature and silicon valley bank. of course, the first republic failure in may so, i think what we're going to see is that the numbers aren't going to be as bad we will see margin compression but we can be surprised to the upside that it's not as bad as expected for the regional names, to your point, the stocks are steep. the credit follows through that most of these regionals do not have big office, commercial real estate portfolios. their credit picture should also be good. that will give them some resiliency going into next week's numbers >> gerard, as i look at the performance of the financials here today, state street down almost 11% backe of new york mellon is off 6.5% what's going on? i understand those names are in your coverage as well. >> yes, courtney, very observant, they are down a lot i would point out these are different types of banks, as you

might know these are our custody banks, our trust banks. these custody banks have enormous pressure on their net interest margins because their customers are not grandma and grandpa in buffalo, new york they're large financial institutions as a result, they have to pass onto those customers all of the fed fund rate increases. their margins have been under incredible pressure. state street gave guidance for the third quarter for net interest income to be down double digits, which is a complete reversal from 12 months ago or even 9 months ago i think that's the reason you're seeing such pressure here is the margin contraction has been severe for state street and bank of new york and expected to continue into the third quarte as well. >> that's why i wonder, you know, we got the kre down like 1.8% right now as jpm is doing well how much bad news is really built into the valuations of the these regionals now? how positive does the news have to be in their earnings for them

to move higher >> it is the $64,000 question. i wouldn't even say positive i would say less negative on the news so, we have companies come in beating on the margin, meaning the net interest margin doesn't contract as much or the loan loss revision isn't as high. jpmorgan loan loss provision today included $1.2 billion associated with the first republic deal. you pull that number out, the revision for loan losses was meaningfully lower, q1 versus q2 that's the strength of the consumer so, net week, if we get better than expected credit numbers and net something margins and net interest income pressure, not as severe as expected, jon, that will help those stocks next week for the regional banks. >> we'll see what we get, gerard thanks for joining us. >> okay. you're welcome thank you. health care also having a major impact on the dow today. namely united health delivering a strong beat. let's get over to bertha coombs

for more bertha >> that's right, jon united health actually seeing its best one-day gain in over two years. they beat on both the top and the bottom line. actually raised the their full-year outlook slightly on the bottom in spite of the fact they continue to see high medical costs. they actually warned about that one month ago today at a goldman sachs conference saying they're seeing pent-up demand for hip and knee procedures particularly within their medicare population if we drill down on the insurance side, it didn't really hurt results there united health revenues overall, up 13% though they did see high medical costs. it was within the range they anticipated at about 83% of premiums they also talked about strong demand for mental health a lot of utilization with that when it comes to people under the age of 65, which created some headwinds on the services

side, on the optum side. optum was up better than expected and optum health is where they have their primary care doctors, outpatient surgical centers they were up 33% they also have contracts with those doctors that try to give a lot of care called value-based care which means they try to hold in costs among that medicare population. that ate income margins. their margins came in a bit lower than expected and down sequentially, which is something people looked at ceo andrew witty said, it's one of those headwinds he'll take in terms of future growth >> i think, you know, if i had the choice on a slightly suppressed margin in q2 or the significant growth we've taken, i'll take the growth all day long i'll take that growth because it's going to underpin years of growth going forward

>> the stocks today getting a boost across the sector, but the sector has been under an awful lot of pressure with a lot of concerns about the end of the public health emergency. you take a look at them year-to-date a lot of them are at or near bear market territory. but very strong day today, thanks to unh. back to you guys. >> the object bliger to mention of ai in earnings calls. can they use it to save money? >> you know, it's one of the things that coo dirk mcmahon talked about he said they should use it to boost efficiency and deal with issues like what's impacting margins on the shortervices side he said we could use it to handle calls when people want to call and find out if their doctor is within network they could do it with generative ai and that would free up people at the call center to actually deal with more complex issues.

of course, there are people on the provider side, doctor side, who worry that they're going to use generative ai to make it easier to deny claims and make it even easier to deny preauthorizations. when you get the 800-pound g gorilla, talking about generative ai, i've seen others on on the other side taking notice, wondering how that's going to impact them. >> it's fascinating. i think there could be good and potentially harm we don't know either side of that. big economic data coming this week. most of the rate hike policy is priced in, but what about the fall plus, further ahead, the hollywood picket sign. actors join writers in a strike against hollywood and big media companies. the last writers' strike changed the industry permanently shows getting canceled or taking a deep dive in quality what can we expect this time around we'll talk about it when we come back

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welcome back to "power lunch. the dow rallying, the s&p and nasdaq just above even on the back half of strong earnings season one thing hanging over the market is the fed. while a rate hike is widely expected, wall street is already focused on what's going to happen in the fall here to discuss is president of

guide stone capital management david, is this market yet factoring in rates staying high? >> oh, absolutely not. the market is now trading above where it was when the fed started raising rates in march of 2022. i think the market, again, is looking at a soft landing, which means lower fed funds rates. so, a lot of optimism around the cpi report this week that's leading people to believe the fed will be lowering rates, maybe by year end. i think that's what the market is factoring in. it's clearly not factoring in a 5% plus fed funds rate for a sustainable period. >> given how strong things seem, relatively speaking, i don't understand the scenario where the fed is cutting rates not hearing that yet what does that mean about the attractiveness of fixed income here versus equities >> well, fixed income is very attractive we've got yields, particularly at the short end of the curve as high as we've seen since 2007.

the other thing we thought would be attractive would be less rate volatility we continue to see a lot of rate volatility, but you're being compensated by that yield. fixed income investors, particularly in higher quality fixed income, because credit spreads are very narrow and subject to widen out, those on higher quality fixed income are in great shape attractive yields like we haven't seen since 2007 and something that's a great place to be today if you're worried about volatility in the equity market >> where else, though, would you be if you are willing to take on a little bit more risk, when you're looking at the equity market, what area and stocks in particular are attractive to you? >> well, we would favor companies that have visible earnings growth. we have seen year-to-date growth outperform value we think that's likely to continue when growth becomes scarce, which we believe it will, investors bid up growth stocks so, companies in the technology and health care space are areas that we feel like will do well

they've got visible earnings growth notwithstanding the run tech's had year to date if you pick companies that have that visible earnings growth, are high quality, i think you can weather the storm well. >> can you give us some names? tech is a fairly broad recommendation >> well, i want to go ahead and go with microsoft, one of the ones that's run the table already this year. you have investment with ai exposure this market reminds me a lot of the late '90s and early 2000s. you had the fed raising rates, valuation at an extreme, a very concentrated market and a new technology, the internet those were the companies that benefitted from that today it's ai. microsoft is one of those companies that's well positioned to benefit from the growth of ai >> david, we're in this position, especially with fixed income, where as you mentioned, it's been more than 15 years since we've seen some of the conditions we have here. we have a whole generation of investors probably in their mid-30s who haven't been working at a time where they have to

think about fixed income in the way they do now. tell me, especially when it comes to tax advantage fixed income, things like munis, beyond just high quality, what sorts of things should people at home be looking into and seeing if they fit? >> you make a great point. a lot of investors have never seen a market like this. they think the fed moves the market and interest rates are always at zero the whole 60/40 is dead. you need fixed income to offset the equity market. municipal bonds are attractive whenever you have yields at this point, municipal bonds are attractive even for taxable investors, i think when you own bonds yielding 5% plus, that are high-quality bonds, it's worth the tax impact of that today the he can quit market, the juice just isn't worth the squeeze. we've got the lowest equity risk premium we've seen since 2007. so, fixed income, people are going to look back and say, you

know what, i wish i had had more fixed income in the second half of 2023 because that was the place to be. i'm looking through your notes, david. do you think there's some mystery that stock valuations are sort of hiding below the surface, that we need to be cautious about looking forward >> well, there's a theory that, well, the market's being driven by the top five or ten stocks. they're the only ones that are pricey the broad market is a reflection of what is expected from the economy and from earnings. lower inflation is a function of lower demand lower demand means earnings and economic growth are both going to be lower. the market's not pricing that in we're trading at almost 21 times today in an environment where earnings growth is basically flat year over year and where the fed is at 5% plus on the fed funds rate with the expectation it's going to go higher. this market is not only fighting

the fed, they're going to deliver the knockout blow to the fed and it doesn't make sense. >> thank you for joining us on this friday to try to measure it all together thank you. >> thank you. as we head to break, we have a mystery chart. this name is hitting nirvana, up nearly 700% this year. what is it we'll tell you but you have to stick around "power lunch" back in two. conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring. purposefully divergent.

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welcome back to "power lunch. stocks higher on the day and week the nasdaq up 4% this week and the highs on the day for the thats dak and s&p 500. highest levels of the year since april of last year, actually let's turn to the bond market and rick santelli, speaking of those high yields from our last segment. rick, take it away >> yes, i'll tell you, it's been a wild week on every level did you pay close attention? import/export prices i did. it was important to do so. year over year import prices, 27-month-high. importing, countries exporting are hurting. prices aren't going up they're going down if you look at year-over-year exports, it tells us exports --

that also tells you that the rest of the world isn't doing as well as the u.s. if you look at week-to-date of 10s, they might have popped on university of michigan sentiment being higher on the one-year and five to ten-year inflation rates, but, wow, is it down significantly on the week. and the dow index at current levels is down almost 2.5% on the week let's go find a trader, david miso >> how you doing, buddy? >> it's been a crazy week. you've seen all the data give me your thoughts? >> my thoughts are cpi, very low. priced in that we're going to have a rate hike, another 0.25%. don't know why there's no reason for it is it because they put it out there? why can't we follow the numbers? just because it was telegraphed a month ago, why do we have to keep going at the beginning they paused way too long and never did anything and now they're doing too much,

too fast. >> those sentiments are echoed by many and i understand your point and i understand the fed's side you're also correct that the fed could do some independent thinking and maybe it's best to break this relationship where they lead the market by the nose all the time. >> and they don't have to telegraph everything. >> they are worried about volatility so we need to understand that as well. >> is that their job to worry about volatility or keep things in line? >> based on the way they were talking, their job was to slay inflation, no matter what, recession doesn't matter once again, i see your point now, let's consider what's been going on with volatility in stocks it certainly seems the way stocks trade this week they think it's done in terms of our central bank. >> i agree it seems like it's done. they don't -- they don't want to rock the boat. don't see much else going on. >> is there any talk in the pit about the doj and the fact that

the bank of japan, real quickly, may change yield curve control >> oh, yeah, that's the last bastion of free money out there. all of a sudden if they start raising, might be a big deal >> dave, it's been great. >> my man. >> jon fortt. >> old school, rick in the bond pit, i love it. let's get over to kate rooney for a cnbc news update. >> here's your cnbc news update at this hour vice president harris is announcing a new $20 billion investment in clean energy projects these projects include installing electric vehicle charge stations, building more energy efficient homes and adding battery backup power for communities. it comes from two grant competitions with the goal of funding low income or disadvantaged communities with concerns about environmental justice. the first vermonter has died as a result of the state's recent storms and historic flooding the man drowned in his home, according to the emergency management agency. this is the second flood-related

death in the northeast this week and more rain is expected in the region. and s iriracha sauce prices are skyrocketing third-party sellers are listing the sauce for up to 150 bucks. the chile pepper supply an issue for several years and the company hasn't given an estimate of when they believe it will get over i'm more of a frank's hot sauce person. >> me, too, kate i'm glad i'm not on the sriracha craze. people are paying astronomical sums on ebay, like bottles going for hundreds of dollars. wild stuff. coming ahead on "power lunch," the next week could be a make it or break it week for the film industry. even if it's a box office

mroeout, now the hollywood strike is putting the entire industry on hold. plus, the retail end of prime day. you would think amazon is leading the charge in gains this week following its big sale, but some other names are actually beating it out we'll discuss all of this when "power lunch" returns. there are currently more than 750,000 unfilled cybersecurity jobs in the u.s. the google cybersecurity certificate was made to fill that gap and help grow the workforce that's keeping us all safe. there are some things that go better... together. burger and fries... soup and salad. thank you! like your workplace benefits and retirement savings. with voya, considering all your financial choices together... can help you make smarter decisions. for a more confident financial future.

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welcome back to "power lunch. we just want to show the nasdaq has turned negative, ever so slightly on the day. down 0.1% but up more than 3% for the week the s&p 500, that lower, too the dow still positive thanks to united health, which is accounting for all of the dow gains. dow jones industrial average higher by 0.4%. it is just a few months after more than 11 neu film and television writers went on strike actors in the screen actors guild have joined the stoppage in the first tandem strike since 1960, effectively grinding all hollywood production to a halt ahead of a crucial box office next week with "boarbie" and

"oppenheimer" and mi 7 let's bring in robert thompson, film and media professor at syracuse, university welcome, guys. robert, is all of this really due to an oversupply of content? bob iger was on our air how they made too much in marvel, made too much in lucas film is that driving down what content creators, the actors, the writers are worth to the studios? >> i mean, it's part of a really, really complicated equation and one that i see no in the immediate future way of actually sorting all out. we keep citing 1960, the last time the writers and actors were all on strike. back in 1960 we were dealing with the issue of how are we going to pay people when films play on television

that was the new medium. that was pretty simple we're now moving into a period where all of the entire industry, the actors, writers, everybody else has been working with, is changing on such fundamental levels from the means of distribution to the number of episodes to all of this kind of thing that all of that is going to have to be kind of built from the ground up. certainly, the idea of all this spending to compete to get as many subscribers as possible in the streaming wars in its early years has certainly messed up some of the math but there is an awful lot to be sorted out here, more than i think in any other negotiations that people in these industries have done in the industry's history. and i don't see any sign, certainly in the writers in almost 75 days don't look to be making any progress. this is a huge job.

>> brent, why do you think this is cataclysmic for the industry? do you agree with robert that this -- the timing of this is potentially also very troublesome? >> well, i think robert's absolutely right i think that's part of the reason this is cataclysmic, on pop liptic, whatever descriptor you want to pick these companies are not doing as well as they once did. their bet on streaming has not padz off to the extent they thought it would and has required enormous amounts of capital. it has required them to take on an enormous amount of debt and i think they do not have the financial wherewithal to be as generous as maybe the actors and the writers would like them to be so, they are not as strong as they were just a few years ago and as robert alluded to, the issues here are really bizzen ti businessen tine. how do you reimagine a model and

fairly compensated for their work in an entertainment ecosystem that looks completely different than it did nearly a decade ago >> didn't hollywood, the powers that be, the media companies create this problem by flooding the zone with content and by spending tons of money on it if they were to just pull back and make less, then maybe you wouldn't end up with this issue? i was just reading in "the new yorker," the "orange is the new black" actors, their residuals are terrible and i can't help but think instead of watching reruns, now the industry is pumping out something new every week, much of it of questionable quality. >> you made five points there, all of which go into this complicated sort of mess money used to be made -- you would make a show, it would be a hit, it would go into syndication and a few people

would make wheelbarrows full of cash i used to think when i was a young student of the media -- of film and television that these big executives, these hollywood moguls, these people whose biographies i would read really knew what they were doing. i no longer have that confidence anymore. i think in a lot of ways they barrelled into this new technology in many ways with one thing in mind -- we've got to settle this new territory. we have to get as many streaming subscribers as we can as quickly as we can until the frontier is cleared and we'll worry about the consequences of that later well, the consequences have, of course, come you're right about one of the ways you keep getting more and more material and you don't have to watch old episodes of "i love lucy" anymore like we used to. so, all of that stuff goes into this and it gets even further there's so much inventory that

in many ways some of these streamers can wait this out. i could watch stuff on netflix until the day i die and never watch anything that i'd already seen before. there's this weird sense that if this strike goes on for a long time, netflix, prime, the rest of these, they can become the equivalent of tvland or turner classic movies, just showing all this stuff they've already got >> you know, brent, before we wrap up this segment, we have to talk about ai's role in all of this i do find this very fascinating. the national executive director and chief negotiator for s.a.g. basically says that what the alliance of motion picture and television producers are offering is a joke he says, look, they say the performers should be scanned, get paid for one day's pay their company should own, scan their image and likeness and use it for the rest of eternity with no compensation. if you think that's ground breaking

it appears they're very far apart on artificial intelligence and where they should come to a compromise. >> yes and the studios say that's not exactly what they were proposing, but chances are it was not terribly generous. i think it goes to a central issue here, which is nobody really saw ai as being a big problem when they were going into these negotiations, but it is a huge problem and animating force for both the writers and actors the writers believe they may be replaced byai when it comes to doing a polish on a script or even writing a script. it's frightening to me that this is going to be decided by studio chiefs who i'm not sure know much at all about artificial intelligence and what rules of the road should be when it comes to governing this new technology. >> do any of us really know about ai and what it can do? i think this conversation will continue thank you for joining us

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welcome back to "power lunch. i'm kristina partsinevelos at the nasdaq let's talk about nvidia shares because they're seeing a little bit of volatility today. they started over 3% higher after truce boosted its price target by 16% to $545. the analysts saying their industry contacts in the electronics business are increasing their demand for data centers, which bodes well for nvidia you can see right now shares have dropped and are about negative 0.5, half a percent lower because options contracts in nvidia right now are triple today what they've been in the last ten days. that contract volume shows investors using derivatives to chase money and usually results in more stock volatility in the future a little uneasiness right there. that's why the stockhas sold off throughout the day. >> interesting thank you. obviously a stock we watch closely. a big week for retail. ibuy up 9% this week

amazon up 4% affirm, carvana up 20% peloton up 8% for the week what does this say about the strength of the consumer or are these different technical moves? for more on the consumer and where to invest in retail, let's bring in analyst we were talking about fed policy, where we are in the interest rate environment, what the banks were telling us about consumer spending and credit let's start big picture. what is your assessment of the current u.s. consumer right now as we're heading into the all-important back half of the year with back-to-school spending and, of course, the holiday? >> the u.s. consumer is in a really good place right now. i mean, let's sort of go through it the unemployment rate continues to be very, very low at 3.6% we also see about 4.5% wage growth for the first time in a long time, wage growth is actually higher than inflation.

so, consumers' purchasing power is getting better. the housing market has clearly bottomed you saw the university of michigan consumer confidence number this morning, that was certainly better than expected and have significant improvement from june. the u.s. consumer is in a great place heading to the back half of this year. >> i hear what you're saying, but if that plays through, why then is discount retail the way to be if consumers are stronger than maybe some think they are, why is discount where you want to put your money? >> i think that even though the consumer's in a great position, they don't necessarily feel like they're in a great position. even consumer confidence that i mentioned, even though it's improving, it's still low relative to historical levels. that consumer, they're almost waiting for that other shoe to drop while they might be spending, they're being a bit more judicious in terms of where they are spending we are seeing some trade down from say, for example, supermarkets, drugstores,

convenient stores into the dollar stores. think dollar general, dollar tree, probably walmart and target benefiting from that phenomenon as well. >> anthony, here's my concern if i'm looking to take the other side, which i always am on just about everything wages are staying high, which is good if you're looking at consumers being able to spend. but prices are also staying high on all kinds of things on housing, which we're going to talk about in a bit, on -- on goods. they may not be rising so much, but they're staying high isn't that creating pressure on the overall economy and continuing pressure on a consumer whose savings have depleted >> so, i think we have to always think about the trend, right if we were having this conversation literally a year ago, inflation was at 9.1% the latest reading was 3%. it's really come down pretty significantly and we're getting pretty close to spending distance of the fed's preferred 1%, 2%

in addition to that, like i mentioned earlier, wage growth is actually faster than inflation. so, purchasing power is improving. i'm not saying that what you're saying is incorrect, but i am saying i always try to think about the trends like why was wayne gretzky so good at hockey, not because he was looking for where the puck was, but where it's going. >> what are your top buy suggestions for investors right now in the retail space? >> yeah, so one of the things that i was looking at recently is the fact that even though the economy is getting better, it's discounted these retail stocks i'm looking specifically at retailers that are trading at pretty significant discounts for example, there's national vision, the value optical retailer stock has had a nice move recently but well below the 52-week high dollar general is in that same camp as i said, we'll benefit from the trade down

williams-sonoma, a stock, unfortunately, that everybody loves to hate. they're in that same camp. those are three companies that i'm keyed in right now >> interesting stuff thank you so much for joining us we'll see how this plays out following amazon's big prime week. today's three stock lunch getting close to home. we'll explain when "power lunch" returns. ♪ ♪ 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? ♪ ♪ across the globe, industries are transforming and businesses need to navigate

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it is time for today's three stock lunch. first up, lennar getting an upgrade from raymond james along with pulte and kb homes. the symptom is up 45% year-to-date, about 2% today here with our trades today is david wagner, portfolio manager at capital advisors. what's your take >> i've loved home builders for a very long time i've been overweight there for about the last 15 months, and i think that momentum can continue because it feels like a lot of the positive news coming out fundamentally and macro, you know, is just keep flowing in. just look at the recent data on

the resale inventory the number of new listings entering the resell market continues to surprise to the downside i think it was down like 21% year over year just last week alone. i think the existing home inventory environment is going to remain challenged given the fact that 60% of the outstanding mortgages in the u.s. have a rate lower than 4%, and that's relative to current rates of about 7%, so with existing homeowners hesitant to give up their cheap mortgages, home builders have started taking market share away from that resale market and for lennar, the stock we're talking about, they were the original engineer of that mortgage rate buydown, which has now become industry standard, almost creating a competitive moat around an industry that was once considered to be commoditized. home builders are not the deep cyclical companies that a lot of investors recognize them in. you've mentioned they've grown a lot year-to-date, but there's still a lot of upside here, but more so coming from a valuation rerating that's well deserved. >> that's very interesting it seems like the only way on

these is up when you look at the trend of where lennar has gone over the last year next up, shares of company pool are down after leslie's cut its fiscal year sales and earnings outlook, warning of abnormal weather and a more price conscious consumer it's interesting it's hot outside, i would like to be in pool, but are you bullish on the stock >> i'd love to be in a pool too right now, and i am long, strong this stock, but in leslie report definitely catches my attention, not just because of them citing weak foot traffic and slowing same-store sales but just look compared relative to pools last quarter. their last quarter was horrible, and investors in pool, they're not accustomed to back-to-back poor quarters. their management team has a long, strong history of great execution, and not only that, being very conservative on their guys, and last quarter's miss basically implied it wasn't all weather baked into a guidance. the potential for another poor

quarter for pool on this leslie read is getting more attention from investors right now long-term, i'm long the stock. i think it has a lot of structural benefits. as about 60% of the company's revenue is reoccurring of the services side, which will insulate it some if there's some type of downturn in the market, plus it trades at like a two standard deviation discount relative to its ten-year historical average, so i'm long here last but not least, carvana shares parked in the driveway today, down 3% but skyrocketing more than 600% this year, down roughly 3% today. jpmorgan says the stock could fall more than 70. david, is it time to reverse on carvana? >> yeah, you know, i think it hasn't been as much of a short squeeze as many people originally thought i think if i was to short the stock, i would be very careful here i feel like a lot of the good news is priced into the stock, especially as the company has

been losing market share basically, for this story to change, they have to persuade investors that they are once again a growth stock and not just a turnaround story. that does not fancy my interest, john >> david wagner, thank you well, let's cap off the week with some other stories that we're watching closing time is coming up next power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. e*trade from morgan stanley. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. e*trade from morgan stanley.

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we only have a little more than two minutes left in the show, a bunch more stories you need to know eli lilly is acquiring a privately held obesity drug maker for up to $1.93 billion. the deal is eli lilly's latest attempt to capitalize on the weight loss industry rush which began last year after novonortis's popular injections boomed in popularity that ozempic craze does not seem to be going away i can imagine if you're a drug maker of any kind, you're looking to see what might be available in this industry >> all of these words are hard to say, because some of them aren't real words, but munjaro versantis has -- why don't they name these things like hurricanes chris, right >> john. >> yeah. we could do that >> yeah. we could we could

ahead of the much anticipated "barbie" movie next week, mattel climbing 4% just this week, now up 20% for the year, but is this a strign of strength for mattel ip, or is this specific to barbie? i think it's a stealth move. there's a lot going on in hollywood right now with the strike, but this movie still set to come out. there's a lot of buzz. >> but what's the next barbie move if this is successful, do you do "barbie 2"? there a tv show? i don't know if they have the plan that's what it's going to take for this to become like marvel, like lucasfilm >> this is a play on the barbie players of yore like me and i think the next move is, how do you capitalize on the current generation of potential or current barbie players and maybe an unforeseen return to office hiccup now, some employees haven't worked outside their home in months or even years those who joined the workforce during covid, they've never been to the office at all, leading to some issues about dress code,

proper office behavior to address these concerns, more than 60% of companies are giving or plan to give their employees etiquette classes by next year let's hope it's not those online things where you have to watch a video. >> who's actually going to pay attention? if you really need etiquette classes, we need you to pay attention. >> that's going to do it for "power lunch." "closing bell" starts right now. >> i'm mike santoli in for scott wapner this make or break hour begins with the summer rally showing some fatigue as investors take profits on strong early earnings reports and as bond yields bounce just a bit. sebasien page calls himself a reluctant bear we'll begin with our talk of the tape has the market's recent run fully priced in the now popular soft landing story let's ask cameron dawson o