welcome to "power lunch," everybody. it looks like kelly evans, i'm tyler mathisen, the biggest econ event of the summer, that's the fed summit, annual jackson hole, wyoming, beautiful place. what to expect from chair powell as yields continue to soar. the ten-year at the highest level in 16 years. and as we break down the fed, we're also going to look at the impact they've had on businesses. we'll talk to the ceo of brinker international, big restaurant chain. what is chiles seeing on the inflation front? >> baby back ribs, that's what i always think of. let's get a check on the markets where the s&p is up 18 points. in light of those record highs that tyler mentioned the nasdaq is up 1.25% today. go figure.

the dow is down 95 points, though, so that index remains in the red. check out shares of palo alto, by the way, soaring after its friday night surprise, the worst fears not realized for that stock. tons of people tune in to the conference call. you can hear the ceo a little bit later on today. a 15% bounce, and we're going to talk about this one a lot this week ahead of earnings, nvidia up today as hsbc raised its price target to 780 from 460 currently. that means 70% upside from here. and consumer staples are one of the worst performing groups in the face of higher interest rates today. general mills down almost 3%, it along with kellogg and campbell's soup hitting 52-week lows. >> let's take a look at the ten-year yield hitting the h high highest level since t2007. rarely have rates risen as high, as much, as fast as they have in the past year, 18 months. steve liesman will be out in

jackson hole. steve, will the ten-year yield be the talk of the town or what would be if it's not that? >> maybe yoed ling about yields in the mountain. the rise of the ten-year is a new challenge to the fed and the economic outlook and adds to a considerable list of challenges they face in the coming months. since mid-july, bigger than expected treasury issuance, stronger economic growth, the ten-year yield has risen around 60 basis points at 433 as tyler said. amid this move, though, interestingly, the market's outlook for the year and fed funds rate has not budged a bit. it suggests the majority disease not believe higher long end yields are going to push the fed up or down, although it has reduced the amount of cuts priced in for 2024. a year ago fed powell and jackson hole, inflation was too high and no one should doubt the fed's resolve to bring it down. and on the eve of this summit, powell and the fed can claim

some success. inflation has fallen by 5 percentage points. gdp remains above trend and the unemployment rate low, no recession so far. the fed has to ponder if this rise in the ten-year is more than it wants, endangering its success so far and threatening the recession it has so far avoided or it could decide, as some have, that these yield levels are appropriate in a world with higher growth and higher inflation, tyler. >> it's very interesting. i mean, the fed influences, but no no way controls really the ten-year yield. >> no, it has only that -- well, it's got two tools. it has the quantitative tightening, which is selling bonds. however, those bonds, when they ma mature are only really one-day bonds. they're not ten-year anymore. the fed is not in the ten-year market. that adds some pressure there or in the long end anymore because it's not buying anymore, but then it has the overnight rate that influences things out. it's very hard, tyler, i don't

know if you remember, we did a chart last week, you can't really date these moves or link these moves to things that happened with the fed, especially since i showed you that chart that shows the outlook for the fed has not changed over this rise in the ten-year, so it doesn't seemlingseeml linked to the fed, it's more higher economic growth and concern about supply. in addition, don't forget lousy august liquidity is a big factor. things may get a little bit better when, you know, the big guys with the -- you know -- >> let me ask you one more follow-up if i might quickly, you mentioned something that's very interesting to me, and that is the amount of issuance that has been required of the federal government. that in and of itself, you put more supply -- more supply on the market, you have to pay a higher rate then to attract the buyer, right? is it as simple as that? >> well, yes, i mean, tyler supply is not typically a big factor that has to do with short-term swings. the issue, though, i think, is

that, first of all, the market's been surprised by how much issuance has come down. it's been surprise issuance, not so much the amount of it, though the amount is very large. together with some other things we've talked about, yield curve control in japan coming off, that makes it hard to do what's called a carry trade and really finance the long end here in the united states as well as some issues with china. china has a declining font of dollars with which to reinvest. there's a bunch of stuff going on the demand side, and that's why the supply side issues, at least to the surprises are having this kind of impact. >> steve, thanks very much. have a good, safe trip out there. >> thank you. besides jackson hole, another place that ten-year yield is being watched in chicago, of course. rick santelli joins us now. what's the chatter, rick? >> well, you know, the chatter is is that we're not alone. now, of course you see that chart in front of you going back to 2007 for ten-year rates.

i could also show two-year rates and as for one comment steve made, it really isn't about the fed, i think commercial real estate brokers and anybody who has a 2.5% mortgage and doesn't like their house may disagree with that comment. now, think uaw, think u.p.s., think supply and think wages. there's a lot of moving parts here, but the rest of the world is certainly following rates higher, a world really deep in debt. let's look at boons, shall we? they're hovering very close to yields at 2.70, four more basis points, highest yield since 2011. let's look at guilts in the uk, at 4.72, they're toying with the highest yield since 2008. if we look at jgb, steve just mentioned and nothing, maybe more important than a world with no carry trade because we've never experienced such a world in quite a few years, and it's at 65 basis points, toying with the highest yields since 2014.

and then finally, all of that, of course, goes into what's going on in asia and china in particular as they lower rates, the dollar against the wan, nearing the best levels nearing since 2007 we're getting very close. kelly, back to you. very close. rick, thank you. we've set the stage for markets, the ten-year yield at 16-year highs. powell speaking at jackson hole in a couple of days. our next guest says his comments could be the difference maker for markets going forward. jerry cast lee knee joins us now, chief investment officer at castle ark management. >> it's more because people are not positioned, they're so anxious about this speech, they're so worried that he'll give one like he did last year, and at the same time, the underlying economic trends don't seem to match that type of -- that type of discussion. so i think you see a lot of hand holding and a lot of angst on the part of professional

investors right now, and you could see that in the way the stocks are lined up, cyclical stocks have pulled back. all the big growth names are kind of hovering below where their highs were, and there's this anticipation that you will be given instructions on friday afternoon on what to do. >> and so let's kind of unpack this for a little bit. the different sets of instructions that are possible. >> sure, so inflation, if the fed says -- and it's not that bad, of course, fine, we're not going to worry about oil. we can't do anything about that. so, you know, we're going to go on this quiet maybe another couple quarter basis points, that's not a big deal. that gives the investors and the conservative cyclical growth names some reason to breathe easy, and they continue to buy those. on the other hand, if they say, you know, atlanta fed's telling us it's going to be 5% gdp quarter coming up, that's way too hot. looks like the economy is not

even going to see the closest thing to a recession. and we best get into our cyclical names. so you're going to be faced in that case to jump over to some of the names that will benefit from a faster growing economy, and that's what people will be standing there with their fingers on the button. >> let me ask you a question. you cite the gdp numbers or the forecast, some of them are high, whatever, and you say consumer sentiment is near lows. my thought -- my view was that i thought consumer confidence as measured by the conference board is actually pretty strong right now. i'll grant you that if you ask people do they think the economy is in a good place, they'll say it's not. so where is the -- where is that disconnect between strong economic kbrogrowth and what yo describe as consumer sentiment being at a low. >> i probably should have started up. you know, you can pick your own economic indicator right now,

you can ask rick, anybody. you can be bullish from one set. you can be bearish from the other. i could use one of the consumer sentiment indicators to show how concerned like you were describing, but on the other hand, people are spending money. there's no question when you talk to retailers the consumer spending numbers indicate a confidence going forward, and that's why i'm saying we're stuck with this contrast. everyone is sitting on a fence because they can't yet be convinced that we're about to make the next move up or down. so that brings up to the question what do you own, right? our view is when you look at what to own going into this kind of uncertainty, you should own more things with a cyclical tailwind because those haven't been represented by the stocks yet. what's going on with boeing, schlumberger and home depot are forward-looking economic recovery plays, but you're not buying the most beaten down cyclical at the same time.

what we're hoping is that you get enough visibility that there's going to be a tamping down of the whole inflation fight, and we let the cyclical recovery come. >> so these three names that you mentioned there, schlumberger, boeing, and home depot are ones that you favor in part because they've been in the shadows a little bit? >> exactly. exactly. all of them are down -- >> nvidia? >> not -- that's a separate story. we own nvidia too, and we love that lem oong-term outlook. >> tell me that story, then. what is that story? what is the story on nvidia? >> that story is it keeps chasing down its musclltiple wi really good forward forecasts and the likelihood that at some point you're not going to have enough chips to run for the demand. it doesn't need to be more complicated than that. there's a shortage of things that can process this end scale

type of demand that's coming in that world, and nvidia is literally the only direct play on that. the stock was at 60 times. it's at 35 times because they keep increasing the earnings estimate, which is rare, right? rarely do you get multiples coming down. good to see you, sir. >> you bet. >> china's economic condition remaining extremely fragile, this about a recent stream of weak data, those hoping for a more aggressive policy stance from the country's central bank were left disappointed. we'll explore that next. plus, something special on the menu. we'll speak to the ceo of brinker international about the health of restaurants and the consumer in this economic environment. and then, the inside track on amtrak, the company's president will join us when "power lunchrern" tus. when it comes to getting your flu shot,

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. welcome back to "power lunch," everybody. concerns about china still very much front and center for investors. asia markets lower again today after china's central bank cut its one-year loan prime rate. this was the second time trying to cut this rate in three months, and it comes as the fallout from the country's real estate crisis spreads. let's get some more insight from the managing director and senior policy analyst at long view

capital, he is also a cnbc contributor. deward rick, welcome back, good to have you with us. did china do too little? to use the term sort of too little too late? >> thanks for having me, tyler. look, i think you hit it on the head. i think this is certainly too little too late, but i think it's important here, tyler, for us to take a step back and try and look at what really is going on here. we are witnessing an incredible tension between xi jinping and the leadership's desire to continue to reform this economy, move it away from the borrow and build, export led and infrastructure led growth into something that's more akin to a high-tech sector of development, domestic consumption in a green economy. what's happening, tyler, is the old economy is collapsing around the leadership as they do this. now, i've been extremely pleased to see how much tolerance xi

jinping leadership has for pain, but the question is do chinese citizens, the private sector and most importantly new foreign investors have that same tolerance for pain? and i suspect not. so we're going to have to see if xi jinping pivots to do something in the short-term to buy himself some time in the long-term. >> you raised an interesting point in a note i read in that one of the things that so far has been missing here is any sort of direct fiscal stimulus. in other words, real money that would go to the very chinese people that you say will determine whether this policy works or not. >> yeah, i think that has been missing. i think a lot of people have been looking for sort of a stimulus blast as well as some sport for households. there are people who say, well, that's only a short-term fix. what the economy really needs is to boost confidence, private sector needs to start hiring again so the people can add jobs

as a long-term fix, but tyler, something is going to have to give in the short-term, and i think that that may end up being payments to households so that we can get something going to increase confidence because what we have is a crisis of confidence. so credit is not the issue. there's plenty of credit that's cheap. people don't want it, tyler. >> last hour, dewardric our guest who was in shanghai said there were two things that would make him more bullish, number one if multinationals allowed him to go in. let's start with the multinationals, do you see signs they'll increase their investment? do you think they'll wait for better news from china or try to be a little opportunistic? >> look, i think there are some people who think they can play this market on the investor side. on the multinational side, not everything is bad news. we saw reports from starbucks fr, from apple where they've seen some revenue gains.

this requires you to really be able to pick and choose how you enter this market. no longer can you just expect you enter china, there's great revenue, great growth. you're going to have to be much more methodical about how you engage china these days. particularly in the short-term, kelly. >> right, travel, he's mentioned, is a bright spot. it looks like that's one part of the economy, electric vehicles. so you know, if you wanted to be really selective as an investor, i guess you could try to look for those opportunities. >> that's correct. but look, i think ultimately here investors are going to have to make a choice, and that choice is do we cut losses and run now, or do we stick it out and ride with xi jinping who does have a long-term vision for an economy that's deleveraged, that's less risky. i'm not sure if that pain threshold is something that international investors will be prepared to ride out over the long-term. that's the key question. >> right, right. thank you very much. we appreciate your time today. >> thank you, tyler.

thank you, kelly. >> fantastic, we'll see you again soon. a restaurant rout, check out shares of brinker international, positive for the year but down 14% for the past month. why are investors suddenly more cautious arounreauntd stras, we will speak to the ceo and try to get to the bottom of it next. you got this. let's go. gobble gobble. i've seen bigger legs 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. my cpa told me i wouldn't qualify for the erc tax refund,

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. welcome back to "power lunch," shares of brinker international, the name behind chilies, maggiano's, and so much more are down about 8%, mixed reaction to the company's q4 results. the restaurant operator had in-line earnings but saw a decrease in traffic across both its major brands. they reported a boost in same-store sales thanks to higher menu prices. let's bring in brinker international's president, kevin hochman. >> my mom's first job was at chili's if i'm not mistaken, so like to this day, it's kind of like a family tradition. maybe that's true for a lot of people. you guys have been around for some time. >> yeah, over the years there's been hundreds of thousands of folks that we call affectionately chili heads. they love to have a good time and love to serve the guests. >> these brands are reassuring

when you're on the road and you're looking for something familiar. they've kind of become the neighborhood restaurants. it looks like price increases are running out and maybe traffic's drying up a little bit. >> yeah, you know, the industry is facing some traffic softness. what we can do is be focused on two really important things. one is to have leadership value in the industry. so we have a 10.99 three for me meal, bottomless chips and salsa and bottomless drink for 10.9 # 9. that's better than really anything you can get in fast casual or in fast food, and it's just a very, very high quality meal. the second thing that we're focused on is increasing the experience or improving the guest experience. you know, we know if people are going to pull back on trips, they're going to look for restaurants they know they can trust like chili's. if we can continue to elevate the guest experience and our guest scores in the last six months have dramatically increased, whether a guest has a problem has gone way down. those are things that are going

to bode well for us on traffic and long-term success. so far that strategy has worked for us the past six months. we've read well ahead of the industry on sales, and we expect that to continue for a while. >> your comparable sales were up 6.6% even though traffic was down a little bit or flattish. i assume that that increase in sales was due to price increases? >> yeah, it's partially due to price increases, just based on the inflation that the industry has seen over the last 18 months. but the other thing is the guests that are coming, they're buying more things. we have what's called a barbell strategy. so for example, in margaritas, if you shop the value menu, you can get a $3.49 with your value meal, your three for me meal. we have a $6 margarita of the month, which is a premium margarita. we have one this month called a tequila trifecta, which has three different tequilas in it. then if you want our presidente, the best selling margarita in the swier world, that's $9, and

you can even go up to a casa for over $14. whatever money that you have, if you want to join -- or you want to come to casual dining, you can come to chili's and get a great experience. >> so you're giving more opportunities to sort of step people up maybe a little bit in what they spend. you made me thirsty there. but so let me ask you the other side of the question, how much have your costs gone up, either the input costs meaning food, transportation costs, staff costs, pick the time appeared over the past year, past two years, how much higher are they today than they were? >> yeah, so our -- the past just ended in june, really the theme was food inflation as well as wage inflation. this fiscal year that started for us in july, it's really mostly just wage inflation. we expect food inflation to be in the low single-digits, but when you add up the wage inflation and some of the other

costs like utilities that are going up, that's $100 million headwind for our business, and so, you know, we're going to do a little bit of pricing. we're going to try to drive what we call mix or get more premium items in the basket. i think as long as we can protect that value, that value customer with that three for me value meal which is better than anything you see in the industry, i think we're going to be okay. >> it looks like subway is getting closer to a sale to a private equity firm, first time it's changing hands. you guys obviously have a couple of brands, you have chili's, maggiano's, it's just wings, which is kind of a texas-based company. would you ever look -- maybe it's not subway, but would you ever look to add brands to the portfolio, or is the next move spinning them off? it's kind of an odd mix, honestly. >> right now we're focused on our new strategy. it's just about improving the full economics of owning a chili's and owning a imagine ya know's, having leadership value or incredible guest experiences. we need to make sure we do that. if we do that, the guests will

continue to come back. we'll grow sales and obviously increase profits. that's what we're focused on right now. quite frankly there's a lot of m&a activity we watch and monitor. we're focused right now on making chili's and maggiano's continue to get better and better. >> what percentage of your stores are company owned, and what percentage are franchised, and is there a difference in the performance of the stores either by revenue or profitability between the two? >> yeah, so 90% of our restaurants we own ourselves, very small amount are franchised. and that's really domestically. overseas we have a small business that is all franchised. we're basically, you know, a restaurant -- >> company-owned. >> -- business that we own ours ourselves, right? i will tell you the franchisees do an amazing job with me, giving me good ideas that they sea i see in their own restaurants that either we don't have to test or we go and test, and they've definitely made everybody's business stronger.

i appreciate them being a part of our system. >> when is chili's going to be mentioned in a country song? why doesn't it engender the emotional response of apple bee's? i'm sure that must keep you up at night. >> chili's has been in pop culture all the time. we were famous for being in "the office." in fact, we brought back our relationship with jenna fischer, most recently with it all starts with a mark campaign. that margarita campaign is working. about half of our discounted margaritas or reduced or discounted margaritas by half, that mix has moved to the premium mag margaritas. we feel really good about our place in pop culture, and we're certain lib using it to help drive the business. >> it all starts with a marg. >> can't go wrong there. >> it could be a tag line everybody where. kevin, thanks so much. we really appreciate it today. >> hey, thanks for having me on the show, and next time i'll bring some marg's for you guys in the studio. >> might give "power lunch" a little extra power.

kevin hochman from brinker, thank you. ahead on "power lunch," the latest on tropical storm hilary that is no longer a tropical storm. it has battered california. it's moving on to nevada, maybe the upper west as well. we'll take a look at the damage and the impact so far. plus, as worsening natural disasters bring more attention to global warning -- warming, more investors are looking to invest in companies aiming to lower emissions. we'll take a look at one such firm that wants to literally suck up the carbon. we'll be right back.

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tropical storm hillary hitting southern california over the weekend, causing massive flooding along with some mudslides and the impact could be felt for months as farmers grapple with that flooding. jane wells joins us live now from a place that doesn't get much rain this time of year. ever. palm springs, hi, jane. >> hi, tyler, yeah, it's time to put the sunblock back on as people try to assess the damage. two days ago this was just a little trickle if not completely dry. palm springs like a rolot of places saw rainfall like they've never seen before. if you look at the video just in the city, about 3 inches fell had a single day in a pralace tt

gets 5 inches maybe in an entire year. there were flash floods watches all across the region, tornado warnings. we were on interstate 8 down near the mexican border, which was closed due to this large boulder tumbling down, but among the many economic concerns are those of farmers in the imperial valley. most of america's winter vegetables are grown here, and they need that soil prepped and ready for plants right now. plus, there's a lot of hay for the global dairy industry. that was already in the ground, had to be harvested asap ahead of the storm. farmers tell me there's not a lot of crop insurance for this stuff. >> so i had all of my guys in, and then i was calling neighbors asking them to help me bail or rake or get wagons in the field to haul hay, anything we could do to help people out. >> could easily get the monsoon anyways this taime of year, so e try to be done by the middle of august. but this year was --

>> reporter: yeah, the winds out there were crazy. the storm of course is moving north, and it's breaking apart. schools, though, are not in session today in many places and airlines are recovering from canceled flights. oh, yeah, we also had an earthquake yesterday, of course we did. 5.1 north of los angeles. that will wake you up. no relationship to the storm we are told allegedly, just mother nature having a little fun with california, guys. >> i haven't seen wind -- man, that is some serious wind in those clips of the farmers. how bad was the wind? >> well, my ponytail was straight out, if that gives you any idea. that was my wind meter. they were saying maybe gusts up to 85 miles an hour. look, we're used to santa ana winds, and we're used to rains that flood. we're not used to both of them together, especially in august. but that was when, like, i don't know if i've ever been in wind like, that sustained wind like that before. >> and this was, of course, the first tropical storm in how long

or tropical storm warning in how long for southern california? >> well, it's the first warning that's ever been issued for california, but it's been about 80 plus years since we've had one. let's hope it's another 80 plus years, and you know, tyler, i think it's a safe bet you and i won't be around, but the good news is it wasn't nearly as bad as feared, and as far as we know on this side of the border, no loss of life. one person did drown in mexico when the storm first -- when the hurricane at that point came to shore. >> all right, jane, thank you very much. jane wells reporting from palm springs. >> let's get over to seema mody for the cnbc news update. seema. >> the maui county mental health administrator say the wild virus have caused the worst mental health disaster in modern history. they're trying to mobilize mental health clinicians to help the 65 already on the island. the hawaii governor who is also

a physician waiving the state requirement for counselors so they can get there faster. first mcdonald's and starbucks left at the start of the ukraine war, and now domino's is getting out of russia too. the company that owns the fast food franchise writes in russia and several nearby countries announcing it will file for bankruptcy and close all 142 stores there. and adobe co-founder john w warnock has died. the computer scientist and silicon valley veteran died saturday surrounded by his family, in addition to founding adobe, warnock also invented the pdf or portable document format, which revolutionized how documents were shared online. he was 82 years old. kelly. >> wow. invented the pdf, and now to watch that company continue to reinvent itself. >> and now i know what pdf means. >> that too. >> that's a good point. the ocean isn't just a great song by led zeppelin it's also one of our biggest natural resources in the fight against climate change.

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welcome back, in the fight against global warming, removing carbon from the atmosphere is a growing field of business, but it's not just big air vacuums doing the work. new technology is targeting a bigger resource. diana olick joins us. >> how about the ocean, it's already the world's largest carbon sink. it already absorbs excess heat and co2 released from rising greenhouse gas emissions. but new technology is now making it even more efficient, able to trap more carbon faster. >> reporter: the ocean has been likened to the lungs of the planet, generating half of all the oxygen we need and absorbing a quarter of all the carbon dioxide we don't, a natural buffer against the impacts of climate change, it has also fallen victim to it as excess heat and co2 make it more acidic and less able to do its job. now companies like aquatic

captura and a startup called ed carbon are using new technology to restore ocean chemistry and speed up its natural abilities. >> we're anticipating removing upwards of a million tons of co2 per year in the coming five years. >> reporter: here's how it works. ebb sets up modules near ocean water. the sea water flows through the ebb system, which uses an electrochemical process to remove acid. free of acid, it is returned to the ocean much better able to absorb co2 again and store it as by carbon gnat naturally that lowers costs substantially. ebb is selling its carbon removing service to companies like stripe that are looking for offsets to meet their net zero goals. that makes it attractive to investors like prelude ventures. >> right now there are very

large voluntary carbon markets. large corporations willing to pay to remove carbon from the atmosphere to offset emissions in other parts of their business. those markets alone are multibillion dollar market opportunity. >> reporter: in addition to prelude ventures, ebb carbon is backed by evok innovations, congruent ventures and propeller, total backing so far, $25.75 million. >> right now ebb's ceo says his technology costs less than $100 per ton of co2 removed, but as it scales to more and more locations, he expects that cost will drop significantly. kelly. >> let me jump in, if i might. can a company like this really make a difference? >> absolutely. i mean, it just goes to -- it's how big they can get. can they put these modules by every water purification system by the side of the ocean, if they get them in enough places, in enough states and ramp up fast enough, they can actually change the alkalinity of the ocean and allow it to absorb

more carbon. >> interesting. all right, thank you, diana, diana olick reporting. and coming up, rail resurgence, amtrak seeing summer ridership soar past pre-pandemic levels in the northeast as more travelers ride the rails, but could climate change and an aging fleet take a bite out of the business? we'll talk to e esenthpridt of amtrak when "power lunch" returns. [phone: go straight.] but, to navigate the complexities of modern work... [phone: turn left.] ...you need more than technology. you need cdw. [phone: you have arrived.] so we'll implement cloud based microsoft modern work solutions like microsoft 365, teams and azure, so your teams can collaborate with zero trust security anywhere. [phone: destination ahead.] microsoft makes modern work possible. cdw makes it powerful.

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welcome back. shares of pinterest rising today on some bullish analyst commentary. let's bring in julia boorstin for more. what's the catalyst? >> pinterest shares are now up about 3.5% on the heels of two bullish analyst notes that came out yesterday. ubs is upgrading to buy on what they call evidence improving advertiser return for brands. saying that the pinterest partnership will be bigger than they had originally expected. wells fargo with an overweight rating on the stock writing they see 340 million in revenues annually from the amazon ads partnership, and that that amazon deal will be more favorable to pinterest than everybody expected. they're also noting not just the upside potential of this particular deal with amazon but the potential for this taype of

alliance to set the stage for future partnerships. tyler, over to you. >> thank you very much, julia. this summer travelers have faced a lot of headaches with the numerous delays and cancellations resulting from severe weather. but one mode of transportation seeing a bump in ridership is the rails. amtrak says on the northeast corridor, summer ridership has consistently surpassed pre-pandemic levels. overall ridership is nearing pre-pandemic levels. there are still challenges for the rails to navigate from rising delays to an aging fleet. and roger harris joins us now. he's the president of amtrak. roger, welcome, good to have you with us. the good news is that ridership is up substantially this summer. i guess the less good news is slower delays. >> to a certain extent that's true, tyler. certainly weather plays a part of it for us as well as it does for the airlines, heat is a definite problem. >> why is heat a problem for trains? >> well, infrastructure has a problem with expanding and contracting with the temperature

and the environment, and so again depending on how hot it gets during the day can make different parts of the infrastructure expand too much. >> so you can't go as fast? >> yes, so typically we have to go a little bit slower to be safer, and that's why we do get delays during summer period. >> i'm sorry i interrupt you a little bit there, but fwd, continue your thought. >> yeah, so ridership is up about 10% this summer. we're benefitting from some of the air traffic delays and also just a return of customer interest in travel. also, there's a renewed interest in rail, i think, and we have some great new equipment coming in the pipeline that will meet the needs of these passengers. we have 73 arrow train sets on order. we just announced an additional ten options today that we triggered, and we have a whole new fleet in the pipe. >> tell me about these new

ascellos, how different are they going to be from the old ones? >> they're all new actually. they are a little bit faster on the top end, but they are far more energy efficient, and they are bigger as well, so they'll carry about 25% more people per train. >> i don't mean to sound selfish because i'm glad i'm glad they' efficient and carry more people. anything whiz-bang, flashy, upgraded food cart, stuff like that? >> yes, a much, much nicer food car, faster wi-fi, a lot of new customer amenities. >> cart service throughout. listen that boston, let's say, to d.c., how much of that is amtrak's total revenue? >> it's about 50% of our total pre-covid revenue. >> wow. >> and it's about one-third of our passenger traffic. >> what do you do with the rest of the network, which moves much more slowly? one of our producers is on the train all the time, back and

forth. ryan has plenty of first-hand observation, those trains are more delayed, the quality isn't as good. obviously they're not as profitable lines. talk to me about the economics and where you see those going over the next three to five years. >> there's a lot of good news all over the country. our long-distance network are trains which are typically overnight trains, we have a whole fleet replacement program going on. we're working on new trains for those. funding for those was covered through the infrastructure act, and a lot of the shorter distance trains in the national network are also getting new equipment and we're expanding service, also, through the iija. >> let's talk about infrastructure. you mentioned it a moment ago. that would be tracks, rail, rail beds, tunnels, bridges, stations, i assume. what is the outlook there? how much money is stavailable t

upgrade that infrastructure? i assume some of it came in the infrastructure bill that was passed a year or so ago. >> exactly, there was $22 billion of which came directly to amtrak, $44 billion is administered by the federal railroad administration, largely to amtrak in cooperation with state and local partners. and so our challenge is really to put in place the programs and processes necessary to invest this money wisely in infrastructure projects. and this year alone, we're increasing our capital spend by a billion dollars. >> what are your highest priorities in terms of those spending projects? >> well, in the northeast corridor there are five big projects, there are two big tunnel projects, one in baltimore, one in new york, and three big bridges as well that will account for the vast majority of spending. >> roger, the tickets can be

upwards of $500 one way, depending on when you book them and availability. if you're going to be able to fit 25% more people, does that mean fares will be going down, or at least not going up as much? >> certainly on the less popular trains you will see the potential for lower prices, as we seek to get more overall utilization out of the trains, because that really is where the sweet spot is for the business, is getting the most utilization out of the assets that we have. >> if you travel around the world, you know that other countries have faster trains, by a lot. not by a little, but by a lot. why do we not have that? >> we have a lot of old infrastructure, so if you go to many countries like spain or china, places like that. they have a lot of newly built train infrastructure, tracks, bridges, tunnels, et cetera. and it's much easier to run

consistently at higher speeds in those environments. so what we're trying to do over time is invest money in the critical parts of our infrastructure to bring the average overall speed up, as well as looking at new opportunities. >> will we ever get to the speeds that the chinese trains, the french trains have? >> in places where we have new infrastructure, we will. and the question is, where is that investment made and how long will it take to make that investment come to life. >> very interesting. and i assume that you would target, for those super fast trains, you would target where the people are, right, and that would be the northeast corridor? >> absolutely. there are many other very promising markets around the country. if you look at the dallas to houston market, that's a place where very large population centers and they're only a few

hundred miles apart. >> interesting. roger, thank you for your time today. we appreciate it. >> thank you. >> kelly and i have been on those trains quite a bit. >> many a times. dallas to houston, that was interesting. so many stories to get to. we wl ilsee how many we can fit in right after this break. stay with us.

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taking toll. severe delinquencies on auto loans are at their highest since 2006. job market is holding up, but people wonder what's going to happen when the market starts to weaken. >> the auto costs more, the payments are higher. we mentioned in the news update in the last hour that there's only one new car now that sells for less than $20,000, a mitsubishi model, and they're discontinuing that one. >> exactly. >> so the floor keeps pushing them higher. let's talk about goldman sachs, it estimates the manufacturing sector could add up to 250,000 jobs in the next few years thanks to investments in the inflation reduction act, as well as the chips act. manufacturing is coming back a little. >> we're trying to figure out why interest rates are higher and the stimulus still is a huge reason why.

the third tank third way highlights how middle income families, she thinks, americans are getting squeezed by medical debt. an estimated 23.5% of those earnings between $50,000 and $100,000 a year report having unpaid medical bills. about 1% more than lower income earners, and of course nearly double those at higher income levels. >> medical debt is one of the key contributors to personal bankruptcies. >> it used to be student loans as well. >> less so today. but obviously a serious issue for many families. netflix finally closing the doors on dvds for good but offering physical disc subscribers one last hurrah. users will receive ten discs from their queue before it ends the service. you want the disc of course you can get the disc. not for long. they won't be able to keep the movies. the company still requires customers to mail those discs back. why would they do that? >> at this point you can go on

the facebook page and people are giving away dvds. i'm thinking about getting a dvd player so i don't have to pay $50 a month for disney+. i think that's the best deal in town. you can't auto roll to the next one. >> all right, folks, thanks for watching "power lunch." >> dow is down 36 points. "closing bell" starts right now. i'm carl quintanilla in for sc scott. tech is doing the heavy lifting, nasdaq the big winner. tesla, moderna, nvidia all powering higher, despite bond yields, as kelly and tyler said, hitting some 15-year highs yet again, as investors await key earnings from nvidia, and of course the fed chair's speech at jackson hole on friday, which brings us to our talk of the tape and who will win this market tug of war, the bulls o