my cpa told me i wouldn't qualify for the erc tax refund, so i called innovation refunds. their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your small business qualifies. welcome to "power lunch." i'm tyler mathisen. coming up soaring bond yields and falling stocks, that is the setup for the markets right now. how worried should investors be about those rising rates an the impact on stocks in particular. plus, instacart reportedly planning to go public as soon as next month. arm holdings in the pipeline. will the ipo market finally unfreeze? >> perhaps. let's get a check on the markets if we want to see about unfreeze

pg. we have to see more green on the screen. we have six points but the s&p down 4 and the nasdaq down 40. all three averages are down more than 2% for the week. that's the larger trend here. shares of bloomin' brands are gaining as starboard has built a 9.9% stake in the company. the shares you're seeing popping about 6.5%. they're up 18% over the past year. and the stock you heard about everyone is talking about it, what are they going to say, palo alto networks, they're reporting after the bell, first time in three years an s&p 500 company has done that on a friday. pretty rare. trying to hide bad results? q. showcase good ones? a scheduling conflict? we'll find ute more and get a preview coming up. the other story catching wall street's attention rising bond yields. the 10-year hitting 4.3% this week. highest since last -- actually about the highest in 15 years really. what does it signal about the economy and how should investors

position? jim is president of bianco research and ron is a senior analyst and commentator. he's also chief market strategist at dynasty financial partners. welcome to both of you. jim, i'll start with you, help us make heads, once-in-a-lifetime chance to buy higher yields or no? >> yields are going up because the market is not completely convinced that inflation is behind us. now, it's not worried about 8, 10% zimbabwe inflation, but we might be in a 3 or 4% inflation world and if we are, you could be looking at bond yields settling in closer to 5% than 4%. that's you're seeing with the 10-year yield and 30-year yield. they're starting to drift towards that target. ironically, it might be because the fed has backed off of tightening, that the bond market is starting to get nervous. if the fed is not going to fight the inflation it's going to fight the inflation fight

selling off bonds. that's the big picture that's been driving bonds for most of the last several months they've been moving higher. >> ron, i sense you don't agree here. >> not entirely. i don't disagree fully. i don't think the bond market has ruled out the possibility the economy will avoid recession completely and maybe accelerate than decelerate whether or not inflation goes back up. look at the atlanta fed gdp now cast, 5.8% -- >> they've been high forever. >> and could be 2 to 3% high at 5.8%. you're coming in at 3, 3.8% annualized rates in the third quarter. no one expected that. myself included a couple weeks for sub1%. that's not happening. >> let me get back to jim's point here and that is, that maybe the inflation fight isn't done and that we're not going back to a 2% inflation rate, we're going to 3 or 4 inflation. doesn't that suggest that the fed will have to do more? will have to raise longer? raise more, keep them higher longer? something you said they don't

need to do necessarily. >> if it's a 3% inflation world they don't have to do more because you have 250 basis points of real interest rate built into that, which is relatively restrictive policy, and if we -- it's interesting, tyler, we go back, you know, a decade where we spent 12 years trying to get inflation above 2% and the fed started talking about average inflation rates, if we're at 3% for some period of time, if you x out the pandemic and the immediate response thereafter, you would be where the fed wanted to be having an average inflation rate where it's been historically at 2.5%. i think, you know, i think there's more growth being built in, less recession being built in. inflation i'm not sure about. i still think with the exception of a couple numbers in the next couple months it may be sticky. it's coming down. >> jim, we have to talk about on the short end side of things it's about where the fed, what the fed does with rates, how long they leave them high and start cutting. do you think jackson hole will

shed light on that? >> it should. that's the big speech of the year where chairman powell or whoever the fed chairman is, kind of gives their long-term outlook. a year ago was the 8 minute speech it's been dubbed there will be pain speech and subsequently there was never any pain. unemployment rate came down, it's stock prices went up. i want to come back to something ron said. i agree part of the equation here is the economy is doing very well and you're seeing on wall street they're throwing in the towel on the soft landing and recession forecasts and upping their forecasts, but that could be fostering to an excess demand or extra demand that is pushing prices higher which is inflation. so the market, i think, is getting more and more worried that we're going to be in a -- if you add real growth plus inflation, a high nominal world and that's what these interests are reflecting. furthermore, if you just take a look at 4 or 5% interest rates

if the economy is accelerating it's a sign these rates are not restrictive and we could go through models and say they should be restrictive, it's not because the economy is accelerating and telling us in real time it's not haurgts. >> the other thing we talked about the fact that economy is less interest rate sensitive because you're sitting on a 3.5% mortgage and not moving, corporations turned out their debt, issued long-term debt at lower yields. refinancing risk except in commercial real estate is not large. the other thing, quantitative tightening has been going on over a year president fed reduced its balance sheet over a trillion dollars. they are not a net purchaser of u.s. treasuries. look across the curve with the fed not being in the game that's going to by definition put pressure on rate. >> because you're taking the biggest byre out of the market. >> yeah. >> i don't think we're out of the words on a couple fronts. look at china, russia, argentina, there are external factors if we have a summer like 1997 or 1998 or fall like 199 or

1998 some of this could reverse it itself quickly. rates would come down. benefits after an event would be down to the united states would get lower rates, fed stop raising and we would have concerns about some sort of global -- not quite systemic but global financial event that changes the outlook a little bit. >> jim, how do you factor china in? >> well, it factors in in a couple ways. second largest owner of treasury securities behind japan. their problems have been accelerating, selling of treasury securities, and i suspect that will continue. until they get a handle on what's going on, i think that you're going to see more repatriation of dollars back to china in the form of yuan and that's a problem. i might throw in japan is also kind of the same thing. their interest rates are going up big in japan on the long end of the curve and largest owner of treasuries after the federal reserve and if they're getting more attractive rates in japan

they will sell u.s. treasuries and keep their money at home. all the big buyers right now have big incentive to be sellers of treasuries. that isn't going to turn around soon. >> although households could pick up the other side of that. >> given yields that you see are attractive to household and institutional investors. the one thing i would say where i would disagree is, if there's an event in china, whether or not china wants to sell, they may not be able to sell u.s. treasuries and everybody returns into the safety of the u.s. dollar and u.s. treasuries if you have a global financial market or economic event, and so, you know, look, japan's 10-year yields are 60 bob pispisani basis points they're not attractive on a global basis. you're not going to see people rushing to buy japanese bonds when you can get 5% here. jim have a great weekend. ron, same to you. could the sudden rise in yields cause another problem for

the sprinkles inregional banks. leslie picker. >> they seem to be having an impact. the jump in yields having an impact on bank capital for regional banks at a time when they really can't afford it. since the end of june the 7-year yield has resulted in a 60 bp basis points hit for banks between 100 and $700 billion in assets according to data from goldman sachs on this very topic. the move in the 7-year amounts to an estimated debt worth $12 billion to capital in the last six weeks and 10% impact to book value of the aggregate group, goldman said. the impact more pronounced for regionals than the largest u.s. banks because they manage their security portfolio differently. higher rates across the board have been impacting the liability side of the balance sheet causing banks to pay out more for deposits or risk customers putting funds in higher areas. they're tightening lending

standards, couple days with higher deposit rates cut into margins and the largest elephant of all in the banking industry is the prospect for additional regulation with looming capital requirements, those that have been proposed much higher than current levels and that's specifically for that $100 billion to $700 billion range. then there's also these loss absorbing rules coming down the pike potentially within the next month or so. all together, this helps explain why the kre down more than 6% week to date. it's been a very difficult week with all these headwinds. tyler. >> you also think it's not just the regional banks. i don't want goldman to take a tally of its own hit to book value but i don't think the big banks would escape some of this even though they have, you know, higher net interest margins and things like that. it's been quiet on that front really, and it's -- i don't know, i guess it's just not as acute a problem as it was a couple months ago. the funding issues still remain.

>> yeah. the yields in and of themselves the 7-year yield that's pri primarily the larger impact for the regionals. they tend to take less duration in the securities portfolio so some of those have rolled off more organically, whereas, you know, the regionals they do tend to have a little bit or they did strategically choose to take more duration so they're seeing more of an impact from that. to your point the larger banks are the ones that will see an outsized impact from the regulation, according to basel 3 a higher capital requirement. >> that points me to sort of the -- if i'm -- say what's the takeaway here, the takeaway to me is this, banks have seen their -- and mid-sized banks may have seen capital dented because of higher interests rates and y be more government regulation boosting capital reserves here. two of those taken together are

not good news for mid sized banks. >> they're not. the higher the capital buffer you need to have and the more, you know, because if you have a dent to capital you need to find another way to raise that capital. >> right. >> that comes from, of course, loan making which is a profitable business for these banks. you don't want to see, you know, your ability to be lending crimped by some of the actions which is what we are seeing right now which is really by design from the fed, but it's the banks that are, you know, kind of the ones in the middle of it. >> thank you very much. leslie picker reporting on the banks. interest rates will be a hot topic next week at the fed's summit out in jackson hole. they know how to pick a nice place. cnbc will be there with live coverage thursday and friday. next week. coming up the not so magnificent 7, the value of alphabet, amazon, microsoft, nvidia, meta, it's down in august. is big tech still the bet for

the market. the wild west in this market with big moves today. the good ross stores up 5%. leading the s&p on a strong beat. the bad deere, down the same amount, 5% drop on earnings, with investors asking has the tractor boom peaked and keysight down on a disappointing outlook wes attting price target cuts llfargo and morgan stanley. stay with "power lunch."

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stock market rally this year is attributed to a handful of technology companies but that party seems to be coming to an be end or at least over the past couple weeks. out of the so-called magnificent seven five stocks are down more than 10% from their annual highs led by tesla. that is now more than 30% and with bond yields reaching multiyear highs and with the higher for longer narrative at play in the interest rate world how should investors position their portfolios from here. joining us is mike santoli and mike bailey, director of research and investment committee chair at fbb capital partners. mr. bailey, let me ask you first, what do you think? is this an enduring slide in the stocks, only two of them are not down more than 10%, amazon and alphabet? but they're close.

>> that's right. it's a tough spot here. so we've had this massive run here the first few months of the year and we did see three of these names outperform significantly and in particular sentiment really blew up. i would kind of take the group down to a smaller group of call it three amigos you have tesla, nvidia and meta, just massive increases in sentiment. it's almost sounds kind of childish but the bigger they are the harder they fall. we've seen a lot of compression back in terms of sentiment falling through those. we've seen a follow on effect. it's the sent driver that can run up and see a reversal. you know, looking in terms of what investors should do these are good companies and if you can pick your spots the one name that jumps out that happens to be, you know, more of a modest correction territory is amazon. compelling growth, interestingly, you can buy amazon for the same multiple as costco. so for us, it's pretty compelling. two retailers out there, i think amazon has the lead in terms of

long-term growth. there are some names you can still own. >> mike santoli, can the market go higher if these guys don't? >> the math becomes tough if they don't participate or especially if they just keep going down. a few observations. one is, you talked about the declines peak to trough from the stocks. the overall s&p is down 5%. so clearly it's not going down dollar for dollar. >> and yet we're talking about correction here. >> yeah. >> some people are and this is not by any stretch a correction. it may be for the stocks going down 10%. >> that's right. it's not broadly speaking in any appreciable way. now i'll say the nasdaq 100, dominated by seven stocks, was 36 percentage point advantage year to date one month ago over the equal weighted s&p 500. now it's 28 percentage points. in other words, it's given back 6 percentage points of out performance it had built up into mid-july to now. has that changed the overall leadership complexion of the market or is it just really that's where more the air was

underneath these stocks, we hit august, the overall market was a little bit stretched? we are dealing with at least what the implications are of higher bond yields, but also, a faster economic growth. these aren't the ones to own if you think the economy is reaccelerating. all that is in the mix, but it's difficult for the s&p 500 to perform without them stabilizing or rebounding. >> dan niles, the tech investor tweeted bond market stabilizing, covering half our shorts today, expecting a short-term bounce next week. doubling meta position, buying apple and so forth. mike bailey, how important are stabilizes rates to the next leg of this move here? >> i think it's pretty relevant. look at the overall market correction and the magnificent seven take down, that's coinciding with the rise in rates. rates are definitely critical to the conversation. if you get something unp expected out of jackson hole next week, if rates continue moving north, that could be a challenge for the broader market

in general and some of these big tech companies which are rate sensitive at this point. our guess we're not going to see that significant move up in rates from here. we saw a give back from yesterday. the fed is a black box. we have to wait and see what comes out of jackson hole next week. >> what would you add to that? >> you know, kelly, you are one of my several great adversaries in how rate sensitive growth stocks are. i'll point out that they kind of detached coming into this year. the treasury market versus nasdaq 100, obviously, it matters, but it's not to me the one thing that matters, especially when you're talking about the super profitable large companies like apple and microsoft. >> from observation it feels like it matters minute by minute more than month by month. >> you're right. we're locked into a point where the main swing factor in weather i whether i'm going to take more or less risk in big growth stocks are yields unhinged to the upside. that's why you get that tactical

relationship. if you go over a longer period of time, i looked it at the last few times the nasdaq 100 traded at like 25 times earnings, where we are, and the 10-year yield was anywhere from the current level to 1.5% to 5% and then go back to the late '90s, all the math doesn't work basically. >> it's true. >> all right. mike and mike, mike santoli, mike bailey, thank you very much. get more of mike santoli's market thoughts tonight at 6:00 p.m. on "taking stock." mike and josh brown will discuss the issues facing the markets and says they're going to have fun doing it. >> looks like we were having fun in that moment. >> that is two guys having fun. >> we'll see. >> can you give me -- >> tell me what josh will be wrong about -- >> what you're going to be right about. coming up next on "power lunch," some headwinds for wind turbines. the offshore wind industry is norv gating unchartered waters, inflationary pressures and rising rates pushing up overall costs. details are next.

further ahead, college tuition costs are growing well beyond what many families can afford. it's driving many americans further into debt. he e tas enpor lunch" returns.

welcome back. time for our etf tracker. we look at gold funds despite the rising yields and concerns about china gold is down about 1% this week and the gold etf seeing net outflows of $373 million over the past week. this according to our partners at track insight. gold miner funds from ishares sprott and vaneck down 6% this week. more information available on the fc will shire etf hub if you want to learn more about those. >> pretty much every business industry has been grappling with the impact of inflation but with the off wind industry it's one of several issues as it tries to meet ambitious production targets. pippa stevens joins us with more of the headwinds and i mean it is surprising, like tell us what's going on here? >> yeah. i see what you did there. the offshore wind industry is at a turning point because after years of falling costs, which made it competitive with other

forms of energy, prices are now on the rise so much so that some projects are no longer economically viable. the problem is that increased costs along the supply chain that includes everything from raw materials for turbines to specialized installation, is bumping up against the rising cost of capital as aaron bar told me, it makes projects uncompetitive. developers are trying to renegotiate contracts with some walking away entirely. this creates a big issue over the long term because pinched profits means companies don't necessarily have excess capital to reinvest in supply chains and even if they do, they might not want to jump in, given an uncertain market and delayed timelines. we have these goals for offshore winds but nobody is reinvesting to build the supply chain. >> shares of hawaiian electric, what's going on? >> that's jumping back about 13% after the company said it is not -- the goal is not to restructure, but to endure as a financially strong utility so they said they are seeking

advice from experts which is do course of action in a situation like this, after the "wall street journal" reported this week that they were seeking out restructuring advice. yes. >> by the way, sort of off topic but, you know, hurricane hilary at the same time, what are you hearing in terms of the potential damage? this could hit sunday or monday, sounds like rains will be equal to year's worth of rain to the southwest and why los angeles could be, you know, directly affected. it seems to have come -- when do we have pacific storms? >> this is the dry season. this is once again the indications of dislocations in the, dream and frequency of the types of weather events that threaten our crops, threaten refiners out in california, and so i'm not hearing too much yet. there's focus on what's going on in hawaii right now, but all these mega events ruin infrastructure, lives and it's devastating to see how they're increasing. >> look at hawaiian officials, we saw the resignation of the

fire chief. but when is the last time they dealt with a wellwildfire. when is the last time california dealt with a hurricane, hopefully everyone has a disaster readiness plan for every possibility. >> i think the issue if you want to harden your grid that costs a lot of money so you have to go to a regulator and get the approval to increase your rates and people don't really want to pay higher rates and you are at a difficult situation where you need all of that money to do that, but that examines with consumers feeling pinched and so the regulator, i spoke to up with person who said the regulator as equally to blame here because they play a role. i was talking about -- >> for hawaiian electric in particular. >> governments don't want to should are these, if there's an issue -- >> they don't want the rate payers who are taxpayers who are voters to get angry at them for green lighting a rate increase that may ultimately be absolutely required. thanks.

appreciate it. let's get to leslie picker, she does it all, the banks, anchors, news update. >> i'm going to tell you what's going on around the globe too. here's your news update at this hour. the bureau of alcohol, tobacco, firearms and explosives deployed a team including an electrical engineer to investigate the origins of the maui wildfires as local power company hawaiian electric faces growing scrutiny of its electrical poles and whether they may have triggered the fires. >> u.s. officials say nearly 500,000 ukrainian and russian troops have been killed or wounded since the start of the war. russia's military losses are around 120,000 while ukrainian deaths areestimated at 70,000. russia's military is larger than crane's with three times as many troops but officials warn it's difficult to estimate as moscow undercounts the war dead. and "the new york times" reports former president trump will not participate in next week's debate hosted by fox news

and plans to sit down for an online interview with former fox news host tucker carlson. tyler, i'll send it back to you. >> thank you very much. ahead on "power lunch," the ipo shopping cart is filling up. we've seen the nasdaq and nyse battle it out. a major ipo set to kicofth ll.k f e that one is next. s on a turkey! rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989! anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. i go through a lot of pants. before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com.

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welcome back. instacart reportedly planning a september ipo finally and it could be publicly file as soon as next week an get a glimpse into the financials. a long time coming for the start-up. could it crack open a window for other listings broadly. deirdre bosa has the details. we've been talking about it all year. them and birkin stock. >> i've been talking about this and covering this company for years and years. always this question of will they or won't they. this is a company that has been around for more than a decade and become a household name and it's raised billions of dollars in venture capital. it has taken an unusually long time to come public as kelly said. if we get the ipo filing as soon as next week we will learn how the business model works.

instacart connects customers with personal shoppers who shop and deliver groceries from local stores. it sounds asset light, but other public gig economy companies like uber and doordash proved it's hard to profit from such a model. instacart may have something they don't, and that is an established higher margin advertising business. if you look at who is running the company it's ad execs poached from facebook. one of the highest ranking female facebook execs took out for founder of meta in 2021. before her former amazon ad chief in charge of the company's revenue. uber and dash are just starting to chase this model, but investors like it. will they like instacart's lead in advertising and importantly, will it help separate instacart's financials from other gig economies. we could see competition has only intensified for instacart with retailers like walmart and target vying for a piece of the

pie. however wall street responds will be significant fort ipo window. arm could be filing as soon as next week and it's expected to be the largest this year. it it could all be happening, kelly and tyler, after a long freeze, a long pause. we'll see, though. the nasdaq hasn't exactly been off to the races over the last few weeks. it's interesting timing if we get these. >> how does the advertising piece fit into the puzzle here? why is it a cash generator for stain cart? >> we don't know for sure, but let's take amazon's advertising business. you could imagine a similar model. search for things and companies can pay to have their product listed higher. that's how it works on instacart. milk pays to have its product higher on the search page. so we think it's high margin if you look at amazon. this business grew so quickly out of nowhere, but we do not know. we don't know what margins look like, but we know and i've been

covering this company for a long time, that they've been ahead of this and building out this business as well as an enterpr enterprise business for grocery retailers that don't want to run their own sites. that is something different we've seen from uber and doordash we know how their model works. a lot of money, lot of the losses come from, you know, their marketing and how they pay their drivers and what they charge their customers. >> let me ask you this, the management you referred to the person who came in from facebook was an advertising related individual who replaced the founder. was she brought in in part to take this company public? i assume she must have been? >> yes. the short answer, i don't know that they would say that so specifically, but it got to a point where the founder of the company, ceo for a long time, he said he saw the opportunity, i remember interviewing the two of them together when this change happened, she's the person to lead the next leg of this

journey and, you know, they've always said that they were going to go public. it wasn't, you know, important for them to do so at any particular moment. they would go when they are ready. i should also mention their cfo comes from goldman sachs. he spent a long time bringing companies public so they do have the people in place. whether the markets and investors are willing to accept this company for how much. >> that's very interesting. that's an it interesting piece there as well. deirdre, thank you as always. back to school blues. price of higher education rising to levels more than most average families can afford. that's not exactly news, but we'll reveal the latest college board figures and ways you might be able to cover some of these costs when we return. i will be listening very carefully.

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you probably know this already paying for college is becoming more and more of a challenge for many families as tuition and room and board climbs north of $50,000 on average for private schools and much higher for many. sharon epperson here to discuss. i am all ears. i am on receive. >> well, tyler, the average

sticker price for college has been rising, but most families don't pay the full price. tuition fees, room and board, averaged around $23,000 at a four-year in state public university for the 2022-23 school year according to the college board. going out of state costs almost double that amount, more than $40,000 on average. and a private college averaged over auto $53,000 that doesn't include books, transportation, and other expenses. at some private universities, the total cost of college is now more than $80,000 a year. yet a new report from sally mae finds the amount of money that families spent on college costs last year was about $28,000, up 11% from the year before. families took out loans and borrowed money to coverage about 21% of the costs, about 29% of college costs were covered by scholarships and grants and meanwhile, parents and students income and savings covered about

half. tapping 529 college savings plans, leveraging private scholarships and appeal for more financial aid if you need it are some ways that can help families pay for the rises costs in college. >> why are the costs rising? you cited a number that said that average family is paying 11% more year from year just in one year. now inflation is 5%. 4%. whatever it is. why is that? >> i think in some cases, what the financial aid experts are telling me is that colleges are not having as great an endowment. they're not having as much money coming in, and so that is something that is impacting them -- >> because the markets have hurt them or donorship is not picked up? >> i think it's a combination of both and going elsewhere to find people who can full pay and that's why we're seeing a rise in international students in a lot of universities. they need students who are going to be able to pay the full sticker price, but most american

families don't have to. i think the idea of paying out of pocket from your savings and such is something that people say that they don't want to do but they're not doing things that are tax advantage ways to save. we talk about 529 plans a lot and only 30% of families use 529 plans to pay for college. less than $8,000 onnage. not a lot of money going into these vehicles to help people put that money away. many families say they just don't have it to -- >> final quick question. maybe many colleges are space constrained, but couldn't they help their finances if they expanded their admissions? in other words, let more kids in, particularly in the case of a state school and out of state admity who is going to pay a higher price, double the instate. >> you're right. i think there's a lot of focus on the high, high cost of private colleges and

universities, and not looking at there are so many colleges and universities that even now, as students are coming to campus, may be trying to raise their enrollment. their enrollment is not where they want it to be. families can be very proactive negotiating what they want and need financially for their child to go to school. if you're looking at a certain group of select elite colleges that may not happen. >> sharon, thank you. >> sure. >> more reassured, less reassured. >> about the same. yeah. >> talk about a false start. gina sanchez and the duo are getting dragged down by their top pick this year which was paypal. does she want a do over or standing by the ckpi? we'll asked gina right after the break. together. hey! like your workplace benefits... and retirement savings. with voya, considering all your financial choices together... can help you be better prepared

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welcome back. let's get to kristina partsinevelos for a market flash on palo alto networks which reports results after the bell today. what some are calling an odd move. >> the company announced their friday afternoon earnings date on august 2nd and the stock has dropped about 18% on speculation that the company could be hiding something bad since attention

tends to dissipate on friday summer afternoons, but not with our cnbc viewers. there are other factors that could play a role in the recent stock drop. palo alto was added to the s&p 500 on june 20th replacing dish. it jumped 7% that day. possibly coming down from that. secondly, microsoft announced in july it would expand its cyber security offerings which won't affect this current quarter for palo alto but do have longer term ramifications. lastly, competitor fortnet's earnings were weak and guided lower on customer billings a key metric for the cyber security firms that could be setting the tone for palo alto. but maybe all of this negativity is over blown. palo alto's press release they did say they would provide full year or fiscal year 2024 guidance and update medium term goals through 2026 and maybe being considerate to analysts giving them time to upgrade their models and great publicity. >> all right. thanks. time for to you three stock

lunch. here with our trades is gina sanchez, market strategist at litto advisors and cnbc contributor. let's start with palo alto, picking up on the report. would you step in front of this much ballyhooed earnings report? >> you know, she really hit the nail in all the really big issues for palo alto networks. this is one that litto advisors owns in their strategies and held for a long time and the fly in the ointment is that it is more overpriced than other stocks. this is -- but it is a leader in its space and microsoft has definitely shown some massive growth on their side and they have a distribution network that you don't want to mess with, so i think that that's going to be something for the future that palo alto networks will have to contend with. they're contending with, you know, competition from fortnite and crowd strike and there are other competitive landscape, but they do still remain the leader. they are expected to slow. that is expected. so i think that the secular play

here is still there. cyber security is not going away. if anything it is getting -- the demand is going up and will probably continue to go up as we build out more cloud based apps and infrastructure. you know, i think it it will just moderate at some point and so what really has to start to find find a space is the valuation. and that's the fly in the ointment. but it's still a strong long-term play. >> we'll see if they can climb that wall. palo alto ceo will sit down with jim cramer on monday. we're looking forward to it. let's go to deere. the stock is down 5% today on questions over how long the farm boom can last. what's the trade on deere here, gina? >> deere, another one that we own. this is one that definitely has, you know, some challenges into 2024. it has been riding off of sort of the loosening of the, you

know, supply chain crunch. they were able to fulfill more orders and that has shown up with strong growth. 2024 is going to be a tougher year for them. i think this is a shorter term play right now. you do have -- there is some caution in the long run. >> all right. let's move on, then. ross stores jumping thursdays night after the bell showing that off-price retailers, tjx, ross, they're looking pretty good right now. would you still buy it after this pop? >> so, i think that this is still a play right now because i think the slowdown is going to continue. we talked about tjx last week and i liked this one as much as i liked tjx and they're about valued the same. i think that is reasonable right now. and i think that the demand for low-priced goods is going to remain as we continue to just soften. but we are still seeing consumption. i think it's a good play. >> let's turn our attention to some of the stock draft picks.

we have nvidia, that was the first pick by charlotte flare. it's put her in first place. the stock is up more than 50% since the droaft. what do you think of nvidia? nvidia was high on our list. we were the number ten pick. by the time it got to us, nvidia was long gone. everybody has loved this stock. it got this second boom with the generative a.i. craze which also actually spurred real demand. so, you know, i think that this is -- this stock has a secular story that's not going away. but it has definitely gotten ahead of itself. the multiple here could be at risk. but sometimes expensive stocks stay expensive for a very long time. so you have to, you know -- if you're riding this stock, keep riding it. >> so that brings us to paypal. are you going to keep riding it?

it was your first pick down about 18% -- >> that was our second pick. >> oh, oh, second pick. thank you for clarifying. this was the -- you know, the left -- you wanted nvidia -- >> the 20th. >> what would you do with it now? >> well, to be fair, the reason that we chose -- we chose google at our first pick. that was really a story about continuing ad demand and, you know, strong play with high multiple stocks while still having that defensive story. paypal was about getting a cheap entry into e-commerce. if you look at paypal, they had 13% growth last year which is about their long-run average. they're expected to turn in 19% growth and that's with margins that are continuing to get hit because they're having more and more flow on venmo which is a lower margin business and i think a lot of folks are punishing them for that. but their forward earnings are 11 times.

for 19% growth. and i think that is -- i still think that by the time we get to the end of the year, right, by the time we head into the super bowl which is when this time horizon ends, we will possibly have seen another rate hike. we will be at the end of rate h hikes and we won't see any kind of meaningful rate cuts by that point. the high valuation stocks are going to be vulnerable and this is one that's going to continue deliver despite apple pay, you know, competition and despite margins. they're still going to turn in 18 to 19% profit growth 11 times. believe me, they're going to be investors that are going to sit up and take notice. >> all right. thank you very much. have a great weekend. appreciate it. >> there are so many stories we would like to get to, but so little time left. wl wer roweilpothugh as many as we can in closing time when we come right back. >> announcer: catch the market zone today and every weekday.

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drier season in california. think of california getting wet sort of november, february, whatever. but this would be a very much an anomaly. >> i don't in my memory think of a pacific hurricane. >> no, no. >> los angeles could -- this is i think sunday into monday. >> hawaii has had some of the southern, the mexican coast. >> i don't know how we define this zone. be well prepared. i don't know what that means or looks like. you know, here's the warning, if it's going to be bad, here it comes. >> the only time congestion is considered positive, the latest global traffic scorecardfound that what city -- wait for it. what city has the worst traffic congestion in the united states? chicago has the worse. but analysts say that's a good thing. sure. because it signals economic activity. boston number twofold by new york. miami, los angeles, and

washington, d.c. pay po they point out that only a couple of cities have come back above where they were a couple of years ago. chicago and miami. >> you have to remember,if population grows, traffic gets worse every year, especially when the millennials did the exodus to the suburbs. you have to build more road capacity to not make it worse all the time. the congestion in new york city, we need to do a whole series on that. >> that's going to be interesting. first we heard about beyonce causing inflation over in sweden. now ozempic is causing rate cuts in denmark. the company behind the drug is taking in so many u.s. dollars, it's raising the value of its money forcing it to now have to cut rates. >> one drug is making that much difference. >> i love it.

it's amazing. these little butterfly effects. >> there was one in "the times" this morning, they understand the drug is very popular, they don't really understand why it works. >> it's creepy, and yet people are talking about it saving them hundreds of dollars on their food bills. the enthusiasm is unfoundless. >> thanks for watching po"power lunch." >> the closi"closing bell" star right now. welcome back to closing bell kw . we begin with the market's lost momentum. when it might return and the stock that holds the key to everything some say. here's your scorecard with 60 minutes to go. the major averages are staring at their third straight week of declines. the dow is posting its worst week since march. reached some key technical levels as well. more broadly, the s&p 500 dragged by discretionary and communication services