that's really positive for 3m in the health care spin, but i don't think the stock will be down this much. >> they're re recovering nicelyd the stock is down this year. >> down 4%, as you said. the dow itself is down 134. we've been watching rates which are at the highest level yet again since '07 and i'll see you on "closing bell." "the exchange" is now. thank you very much, scott. welcome to "the exchange." i'm kelly evans and here's what's ahead this hour. soaring bondyields and the short end where yields are moving back up and the ten-year still at levels that we've seen since 2007. it's certainly capturing our strategist's attention. why this surge in particular has them worried about a stock market correction and it's not just bonds pressuring equities. ready or not, we could be facing another government shutdown. goldman says it's likely to happen in the coming months and what that means for the fed this

fall. plus the cost of dining out is still rising according to the last cpi print and ubs says one company has pricing power to spare. can restaurants pass on potential increases? two diners will dig into all of that, but first, let's get the latest on the markets with dom chu. the nasdaq is green again. >> it is green. wooe talking a marginal move because a lot of folks are watching for what will happen with nvidia tomorrow and that's been the tech theme overall. the growth has been in that technology side of things, to kelly's point here and it is an outperformer with the nasdaq composite at 13,517. it's only 0.1% gain, but it is an outperform or the day when everything else is slightly red. the s&p 500 is at 4391, down eight points and about a 0.2% decline there, we've seen up and down today. at the highs of the session up roughly 19 points and down 15 at the low. so drifting in the middle of that range so far and still on the negative side of things

marginally. the dow industrials, down 160 points or one-half of 1%. some of the retail earnings reports are definitely moving things around and it's about retail earnings season and a very disappointing report from dick's sporting goods. so also a disappointing forecast and they're blaming among ost other things and the lack of growth that we saw in dick's sporting goods. so dick's sporting goods down about 25%. it could be on pace for its worst day ever as a public company and we'll keep an eye on that. macy's report was good and the outlook may be a little more to be desired and they affirm their full-year guidance and the retail is down 3% as a result and net-net, watch that retail space. kelly mentioned rates. the move higher than short term ones and it is slightly lower off cycle highs for the side of things and earlier today, we did hit about 4.36% which would

represent the highest level for the ten-year benchmark treasury going all of the way back to 2007. so as we watch that short term, long term dynamic play out, rates continue to be a part of the story and the dynamics not feeling a pressure with a cycle high in rates that we've seen near-term. medium term, kelly, we've seen a 5% with the nasdaq and we'll see nvidia tomorrow. >> come on over if you will. that ten-year yield is what has my next guest concernedworrying the drop in equities could be a drop in the correction. joining me now is brian reynolds, chief market strategist at reynolds strategy. good to see you again. welcome. >> thank you. >> you've been more sanguine about the market for much of this year. i know we talked about a ceiling as we headed through debt ceiling and then we wrapped that up and it seemed like we are going to go to open waters and is this rate thing that much of

a concern? >> i think it's a significant concern in the short term. i had been on earlier this year saying once the debt ceiling was finished and we would go back in the 4400 area on the s&p and it ended sooner than we thought because the government almost ran out of money sooner than i thought and we still have the move of 4400 and it overshot by a couple of hundred points and now in the last month it's back down in the 4400 area and the big concern is the rise in bond yields and that rise is concerning to me because people optimized when banks started going out of business and depositors started taking money out of banks. the activity in treasury bonds this spring was enormous. the ten-year yield fell down to 330. then the treasury department earlier this month said they would issue a tremendous amount of debt to boost their cash balance because of 2025 debt ceiling, so that was a big shot

to the market and the yields went up and we've gone from a 330 to a 430, at a time when people bought a lot of it at 330 and they're thinking of losses and production calls and that's why this has more to go on the correction side. >> it's interesting. dom, the other thing that caught my attention is the trading action and schwab specifically and the regional banks more broadly and the kre is down almost 3% and schwab is down 5% and cost-cutting and other moves to shore things up over there. but you wonder if this is telling us, the pressure from the banks with rising rates and another piece of this puzzle is still there. >> so to brian's point, what's interesting about this is it's an issuance story also. you talk about issuance for the u.s. government and trying to shore up its cash positions heading into an uncertain time in the fall. schwab, if these reports are true and they are raising cash through a bond issuance are shoring is up their cash positions, as well. you couple that with the shrinking real estate footprint and job cuts that were not

detailed, by the way. they just said they'll target the $400 to $500 million in an uhl nah cost savings. >> pretty hefty. >> it's being conservative. many of these banks, maybe learned a little bit of a lesson earlier this spring and then all of a sudden now with the market behaving the way that it is are feeling like this is a good time to batten down the hatches just a little bit more. so with schwab, this is also a scenario where this is a bank that was caught up in the maelstrom that was the regional bank crisis and it escaped relatively unscathed in that. there are still wounds that they're licking and this is perhaps just a bit of a lesson on how they'll make sure this doesn't happen again. >> there are people going through balance sheets when some of the high-cost debt people have been relying on to get through this crisis is coming due and they'll face rollover issues and that is with corporate america and you're saying, look, let's not forget the retail institutional investors who gobbled up those bonds earlier this year and are

now facing losses. >> they're facing losses, but they've also been sitting on their hands for two years. they haven't done a lot of corporate bond buying and now with higher rates that can detract them. >> government shut down or anything and what would you say is for you expected for stocks for the remainder of this year with the down range and you thought the last 5% was the start of a 10% down move. >> yeah. i think this correction has more to go because of how many people bought some at low yields and are now facing high yields and potentially margin calls and treasury, but the good news is that the issuance is going to stop relatively soon. treasury has indicated they want to boost their reserves by 400 billion between now and the end of december, but most of that will come in september. so i think we're closer to the end of this issuance than we are to the beginning of it. >> and if we were closer to the end of the issuance panic, what

does that mean for stocks, do you think? >> i think that after a correction, i think they go back up because i think companies are going to issue more debt, investors are going to buy more debt and companies will buy back stock especially if we have more of a correction in the next month or so, i think that will make stocks attractive to companies themselves. >> dom? >> what's curious as a market watcher who is kind of going to be reporting on this, one of the things that will fascinate me more than anything else, if that scenario were to happen and we see a different pullback and the re-emergence from that is what the leadership will be. >> and we know the laggards last year and it was tech that got crushed and discretionary that got crushed and maybe intuitively, if there was a rebound like we saw this year, it's those sectors that are leading the way out, but the magnificent seven did a lot of the work, the bulk of it right now and the question becomes whether or not you see any kind of a rotation in leadership and

we're starting to see initial transitionary moves in things like energy, for instance, is that going to emerge again as one of those leadership groups. it's noter inially as important or significant to the broader market narrative, but it could be telling if you start to see value-type sectors start to outperform again versus the same old meta platforms and apple and microsoft and nvidia and ai oriented. >> care to venture a prediction? >> there's another sect tor to look at and that's the companies with the most buybacks starting with the bank crisis in march. >> now they're starting to gain momentum and we start back up after labor day which i think we will, and i think those are the names that will be most likely to outperform. >> that tells you credit markets are open for business and this ain't over yet. >> investors want more yield. >> they might demand more for now, that's for sure. thank you both, we appreciate it and brian reynolds with reynolds

strategy and dom chu. let's get to the latest news out of washington where my next guest is warning that we face a looming government shutdown and it could not only take a bite out of gdp and it can affect what the fed does with rates and let's go to the chief political economist at goldman sachs global investment research. alec good to see you. >> thanks for having me. >> how much are people talking about this? are we at more of a 50% odds of a shutdown? >> i think so. i think it's more likely than not. the problem at this point is it's a little hard to tell when it will happen and they need to pass spending bills by october 1st, but you know, there's a chance that they can do a temporary extension. you look at shutdowns in the past and they haven't all started at the beginning of the fiscal year on october 1st, but i'd say the view in the market is the odds are rising and i think the view is that the odds

are rising. >> one dot that we were talking about with brian reynolds is the treasury is trying to raise funds, it sounds like, in anticipation of a shutdown and that's creating upward pressure yields. >> so i think the shutdown is related to the treasury's financing needs which is that the deficit is very large. the deficit right now is probably running a little bit more than 7 trillion in terms of the current fiscal year and that's a big increase over the prior year and i think it's something particularly along the fitch downgrade recently and something that's gotten a lot of attention among particularly conservative republicans in the house, and so in addition to the controversial political issues you have an underlying disagreement on spending levels which i think is just made worse by the fact that the treasury is running the kind of deficit that they are.

>> how bad is the spending position? when i look at the debt numbers in particular and you sort of know it's going to be an overhang for five or ten years, but maybe we can just japanify our way out of it. if interest rates go back to low levels, maybe there's no problem. if they stay up here, it seems like no matter what, we will face a problem. >> so, you know, interest expense will rise just because even if the fed cuts rates and even if rates normalize versus the historically high levels that we have right now, ultimately interest expense is still going to rise as what the treasury pays catches up with the market rate because, of course, you've got five-iary notes and ten-year notes and 30-year bonds that won't mature for a while and when they do mature they'll mature at a higher rate. so we know that interest expense is going to go up. we're in sort of uncharted territory is the fact that it's

likely to rise beyond probably the historical highs in the late '80s and early '90s and if say you have a 5% rate across the curve, when you have 100% that's gdp ratio, you will have 5% of gdp in interest every year and that, ultimately, i think will force some decision, but it's not going to be an issue in the next couple of years in terms of ability to pay or anything like that. >> no, it's amazing how much a difference if we can get rates back down to 5%. i don't even know if that will do it if we look at the fiscal picture and let me ask you when we talk about the government shutdown is the real question because it's coming but whether it results in austerity. do you think that that's likely, if the whole point is you have one party pushing to fix the budget or what is that outcome going to look like and how much can that affect gdp or deficit levels going forward? >> well, so i think you have the

direct impact of of a shutdown which is not as big as one might imagine. federal spending is worth 25% of gdp, but a part that's funded by the spending bills is about 6.5% of gdp and when they shut down the government they're having some federal employees not come to work, that's about half a percent of gdp in term of what those people are paid. and so the direct impact isn't that great and for a week-long shutdown, maybe 0.2 percentage point assuming it happens in q4 and then it rebounds the following and you add 0.2 in q1. i think the bigger question over the longer run is these sorts of issues whether it's the debt limit and whether it's the

current or upcoming spending debate, whether eventually that will force some kind of broader fiscal consolidation. my take is that it probably won't, at least not in the near-term and we have to look past the presidential election, maybe to the expiration of the tax cuts in 2025. maybe to the end of the decade when you really start to see the entitlement problem before we get something in terms of meaningful change on the fiscal trajectory. >> i can literally talk about this with the debate and i think minds will be very focused on it. the quick last question, we could be heading into a situation that's worse than the 1980s. what's the metric you're looking at for this funding pressure? >> well, i think, the thing to look at at the moment is the fact that interest expense is rising. now, at the same time that the primary deficit, so the actual sort of operating deficit of the federal government is actually

falling a little bit. if we see what you can think of as the operating deficit or the primary deficit, if you start to see that rise, then that essentially compounds the problem of interest expense and i would say while we generally have a pretty sanguine view on the near-term outlook for treasury financing, the trend over the last few months has been surprising to the upside in terms of the actual deficit that the government is running. >> oh, wow. like you say, that's kind of the near-term indicator for how much worse these problems could all get if that doesn't kind of turn around quickly. it's going to be a rocky one, i think, for you guys in your neck of the woods the next couple of months. alec, thank you so much for previewing it for us. we appreciate it. alec philips with goldman sachs joining me today. shares of toll brothers up 52%. will it provide more fuel for the rally or snuff it out. we'll talk about that, plus urban outfitter shares have done

almost as well, up 46% and we'll preview them both and see what footlocker has with retail, and plus the pricing power play tied to a turnaround with a food inflation and this stock getting an upgrade to bay with the margin headwinds will soon be tailwinds. i don't think anyone is guessing this one today. if you do, tweet me @kellycnbc and we'll reveal it later this hour. as we head to break, the dow's at session lows 2 00 points and the russell 2000, similar decline and the ten-year note, 432. we're back after this. ♪ ♪ >> this is "the exchange" on cnbc.

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♪ ♪ welcome back, and it's time now for earnings exchange. we'll hear from a major home builder, plus a couple of retailers with many divergent fortunes. today the etf is having its worst day since may after shares of dick's are down 24% on the earnings mix and xrt overall is down 3%. let's see what it means for footlocker and urban. here with our trade is gradient portfolio management is marianne

munteen. >> thank you. let's start with foot locker. it was down 40% in may driven by last quarter's earnings. profit margins have been battered by theft or high promotional activity and the company is in the middle of a reset closing 400 locations. marianne, are you picking this one up for a turnaround? this is a trading vehicle and it's not a long-term hold which is what we at gradient are more interested in. i think until the municipalities and the states, they have to reverse course from the recent years, and this is a company that's quite vulnerable to the mass grab and go, but just given the dick's report today and the general lack of interest in apparel, and especially casual type apparel, we just stay away from this name. >> and calling for more vigilance all around, and footlocker shares down 4% in anticipation of these results

and after what we heard from dick's. let's move on to urban, owner of urban outfitters, free people and anthropology, and up since jan 1. not too shabby and how much price increases can the consumer handle and how can it handle the last of the gluts we saw last year, maryanne? would you be a buyer if you think no one is buying apparel these days? >> well, again, it's a quarter that would have easy comparisons, and i think they've been telling people that sales have been accelerating as the quarter progressed, but it's really about the outlook, and i think you're going to have some of the tailwinds turning into headwinds here. they've been doing very well on the special occasion and the vacation type of apparel. so i don't expect the past quarter to be an issue, but with that run-up, i think the shares are fully priced and i would not

be a buyer here. i see what you're saying, the bigger concern would be the athleisure and all trying to get out of the sweat pants and into something more fancy. >> we have. >> it will help urban, perhaps. still not a buyer of the stock. let's leave retail behind. you don't want it and let's see and toll is looking at the negative monthof the year and we're near 24-year highs and builders are trying to look to alleviate prices for buyers. what do you do -- and i'll ask you for toll in particular here and up 52% since jan 1? >> again, it's doubled since its lows in 2022 and it's facing a period when affordability for homes is very low. if you look at the mortgage rate of 7.25% last week and you look at rising prices and we're

facing headwinds here and if you look at the overall macros and we're looking at continuing jobless claims to start going higher versus lower by great amounts in the last three months along with those payments that are going to have to be reinitiated and student loans. it's a pretty big macro headwinds and the company has been augmenting or helping out the buyers on the interest rate side, but i think that's only going to cut into margins, and then if you look at the indexes at the national association of homebuilders you will see that the -- that the new home sellers and the traffic for new homebuyers is 16 to 34. weigh don't own toll in any of our portfolios and we're not about to start right now. >> maybe we'll bring you back for a different week of earnings and see if we can get a few more

names in the mix that you like. maryanne, thank you very much for your time today. >> thank you. >> maryanne munteen with gradient investments. let's shares of nvidia which are also about to report and they're down 3% after soaring for an all-time high and they're coming off an 8.5% yesterday and they'll report after the bell and a new piece in "the wall street journal" with traders collectively placing more than 100 billion in options more than amazon, pmeta, microsoft and netflix, 60% of that amount is tied to call options which are bets that the rally will continue even as the stock is trading at 51 times forward earnings and can nvidia post growth as shockingly impressive as they did last quarter, enough that the bets will pay off? we'll we'll find out tomorrow after the bell. and topping the record high and

now blink witnessies are on the rise and we're taking corporate america by surprise. here's macy's cfo adrian mitchell on their call this morning. >> we experienced an increased rate of delinquencies within the credit card portfolio across all stages of age balances. the speed at which the increase occurred for us and the broader credit card industriness is our first quarter earnings call was faster than planned. >> so is that just a macy's problem or not? how health set american consumer? we'll ask the ceo of primer qaa aso is out with a new way to meure the middle class and how they're doing. "the exchange" is back after this.

welcome back to "the exchange." new survey shows just how much ground middle-class americans have lost in recent years since the pandemic. it's an angst captured in viral social media videos about soaring rents and richmond north of richmond. nigh next guest says six years of purchasing power was wiped out in 18 months during the pandemic, but now we've been able to claw back almost all of that loss in recent months. joining us to discuss the inaugural household budget is glen evans. good to see you again. >> good to be back with you. >> what prompted you, and it's like the misery index, but almost like on a microlevel. >> it is. we have had good success with our financial security monitor that you and i have discussed before which each quarter gives us insight into the financial attitudes and perception of middle income family, but we felt we needed something that was more precise regarding the

purchasing power to serve them well and give them advice and so long with our economists, consultant, we created the household budget index which measures purchasing power and she was on the math behind the perception and it does tell a very interesting story and it tells that there was some good news as it appears that there was an increase in cost, as we know where inflation is starting to ease a little bit and it's going up, but not as fast and purchasing power is improving because our earned incomes are increasing and at the same time it's been quite a roller coaster ride and they've got a lot of ground to make up. >> this is indexed to the year 2019 for the hundred level. there you can see jan 19 was kind of the starting point. things got a little bit better as pandemic stimulus hit and then they got a lot worse. june 2022 is the month that gasoline prices peaked and the cpi rate peaked and the household budget index fell all of the way down to 85. a loss of years of worth of purchasing power in a few short

months' time. >> that's exactly right, and it has begun to climb back below 100 and several things to keep in mind and it's the monthly measure of purchasing power, so when you get a hundred, it just means you broke even in that month and when you work backward in july and middle income families have been deficit spending which means you have taken money from savings which can hurt your retirement years and they bridge the gap with interest rates very lukikely in the plus range. we have to get well behind a hundred to fill in the hole and the other view we should tack a look at is middle income families were at 119 more than four and a half years ago. their expectation was not to be back at a hundred four and a half years later if you put a trend line on the graph you would probably say the expectations would be at 110%. we have quite a way to go to where we need to be with the

families. >> what does that tell you about the loss of purchasing power. i found the comment from macy's that all of a sudden they're seeing a spike in delinquencies. what do you think is going on here? >> i think it tells us that we have to be careful when things begin to normalize and not to estimate the damage that has to be done and that's what we see as we sit with the families and tray to provide financial guidance for them is they've got a big hole to fill or they've got a lot of debt to pay off. they've got to make progress in the earned income to make up the lost time and there is a gap there of multiple years and this almost lost time particularly to retirement savings. >> i know you guys offer different kinds of life insurance investment products. is there a pitch here that you can do something to help them fill that gap or is it just a stark realization and is that the base that the customer's shape is in. >> the first step is to

acknowledge how significant it is and then we help the families with bugging which is a reprioritization of the budget. giving up something of value today to gain something of greater value tomorrow. so it starts r reprioritizization and save for the future systematically. it's not a one-trick solution. it's something that takes as much or more time to resolve as it took to create the challenge. so it's a systematic long-term process that we use to help guide these families. >> a part in common on this would be, as you said, the biggest -- the most important thing you could make up some ground is through wages and labor market and there have been some good signs in that lately when you look at when you were able to negotiate that kind of thing, and in the next six to 12 months,this is not a good starting point. it's a fragile place for these families to be, and they have to

first attack the debt crisis which would go back to the credit card discussion you were just mentioning. the first thing families have to do is work very hard to pay off that debt, particularly with an unfriendly interest rates so that they get back to even and start building that success from there. >> glenn, thank you so much for doing this here on the show with us and bringing this to our audience. appreciate it. >> always great to be with you. >> glenn williams, ceo of primerica with the housing index. over to tyler matheson with the cnbc news update. >> thank you so much. today is the last day teamsters can vote to ratify or reject the tentative deal with ups. results are expected to be released after 3:00 p.m. today. if a strike were to happen it could up end the holiday shipping and raise shipping costs across the board. both sides did hammer out a deal back in july which would increase pay in benefits for more than 300,000 wokkers. the fda approved a vaccine for pregnant people to protect their babies from the

respiratory virus rsv. the single-dose virus shot allows mothers to protect antibodies to their babies protecting them for the first six months and the company will meet in october and it should be available to the wider public shortly thereafter, and the nba is fining philadelphia 76ers guard, james harden $100,000 for his public trade demands. the fine follows the league investigation that found harden made comments in an interview about not performing services under his contract unless he's traded to another team. he has, to put it mildly, kelly, been very vocal about his distaste about the general manager of the 76ers. >> we shouldn't enjoy following this drama as much as we do, tyler. i feel complicit. i'll see you shortly, tyler. >> here's your last chance to guess the mystery chart. the big bet its pricing power can survive a soft landing for

services inflation and potentially see 50% upside to 'lshes. wel reveal it next. wel reveal it next. the dow is down 165.♪ got the ku want and what you need ♪ ♪ something new something sweet ♪ ♪ moving to a different beat ♪ ♪ okay now (what?) ♪ ♪ can i get a (get a) drumroll? (what?) ♪ ♪ can i get a drumroll drumroll? (what?) ♪ ♪ can i get a can i get a drumroll please (oohh) ♪ ♪ that's nice (yahh) ♪ ( ♪ ♪ ) ♪ ya, can i get a drumroll, can i get a drum- ♪ ♪ that's nice ♪

welcome back. ara mark was the mystery chart and congrats to those who guessed it. it is getting a boost frommon upgrade from ubs. it sees the profit margin growing two full points despite the food service inflation cost and now might be the perfect time to buy the stock after the recent pullback, but does their optimism also mean restaurants could soon be passing along higher costs? joining me now, the analysts behind the call josh chan. good to have you here. let me ask you what prompted you to make this upgrade today. >> good afternoon. thanks for having me. >> it is based on three drivers. one, we see that they're much higher than they were pre-pandemic and they're pulling back than last year and number two, aramark has been chasing inflation with pricing over much of the last two years and we think this is the quarter when pricing finally catches up to inflation and number three, the

stock has pulled back over 15% over the last month and so we think that bears an opportunity for the opportunity for investors versus the $43 price target. what does aramark do? are those clients going to be in a position to pay two points more than they did this year or last year in this environment with inflation overall moderating and restaurant task? that's what we talked to brinker about yesterday. >> they run food and beverage operations in places like colleges and universities health care systems and stadiums and they ultimately price with the consumer and they're still trying to catch up on the cumulative inflation over the last two years and so we're seeing some of the pricing pass through now and some of these are also more economically resilient when we think about colleges and university and health care. we think they have the ability to realize the pricing even as

inflation tapers off. >> true. >> it seems strange that the same company would do two end of the food quality spectrum that we've all experienced. are they the only one who stands out as being in a potentially beneficial position? do you see headwinds and i can't imagine they have a lot of direct competitors? >> they have to have some direct competitors and we see companies within the state that could benefit from moderating inflation and one example would be cintas. they rent uniforms to companies and obviously uniforms use a lot of cotton and cotton prices have moderated and cintas has been thinking about moderating inflation, as well. >> we talk about it as being a headwind. any time you see the nominal sales growth slow and a headwind for the s&p 500, but you think you have some companies that could benefit. >> that's right. companies that provide the

services where those could actually benefit from a deflationary or moderating inflation environment. >> issue jo, thanks so much for phoning in, for your time today. for all of it. we appreciate it. >> josh then joining us from ubs. still to come, banks getting hit with another downgrade and this time with s&p following in moody's footsteps and valley national, coamerica and keycorp. they still have confidence in those banks according to the latest survey. ren osfiin nmo othe ndgsext. stay with us.

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your shipping manager left to “find themself.” leaving you lost. 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 "the exchange." small business confidence. we don't like this. it's back to the lows of last year amid deteriorating business conditions. this is according to the latest cnbc survey monkey data and one of the biggest concerns is access to capital. let's get out to kate rogers,

hi, kate. >> small business survey for q3 did show a dip in levels of optimism among small business owner and challenges among funding. overall there's been a decline in those confident in the u.s. banking system. fewer owners say it's easy to access the capital they need to run their businesses at 48%, versus 53% last quarter. this is something they noted during the regional banking and interesting that it is coming up now witness again for owners. the drop also concentrated among those who bank at larger institutions according to our survey. over half of owners are banking with larger banks and two-thirds say they're with community or regional banks and the ones that are with the smaller banks it is easier to access under capital and they're a challenge this quarter and larger bank kupt% have had a 10% drop quarter on quarter and a much larger drop than the 5% we saw for the smaller banks. the data show sentiment falling to 42 out of a score of 100 and

the all-time low level we saw exactly one year ago. there was a dip in the share owners that say that current business conditions are good and 38% now, and 15% said conditions were bad and 46% called cons middling. how much of that is tied to the financing situation that we're seeing here remains to be seen. over to you. >> that's interesting. you would have thought it was harder for them to get capital if they were under pressure from the markets and no, it's the opposite and the bigger banks when they're having a hard time, is that right? >> yeah. that's right, kelly. there was a ten percentage point drop quarter on quarter in terms of how much harder it was to get capital in the smaller dip on community banks of under 5%. quarter on quarter, one other interesting thing. the nfib had their own survey and not as much concern there with regard to access to capital, but more owners are saying it is getting so expensive to borrow and the interest rates are continuing to

go up and whether or not they want to take out money because they are concerned about the economy and maybe they don't want to invest and whatever the situation may be. their concern there was the expensive capital which is interesting. it's too bad and she's gone to the bye side and this is one of the things she pointed out six months ago that it's all going to come down to how small business does and they were with the excess job growth and this is why we should all care so much and it was the excess job growth during the pandemic and if they start to unwind now that will be a problem. >> that was one of the other things that we saw in terms of the overall confidence score. fewer owners saying they expected their head count to increase for the back half of the year. i think it went from 28% last quarter to 25% this quarter and not a huge drop-off, but it does, you know, kind of forecast some potential pessimism or concern about where things are headed about whether they're wanting to grow or expand and they're able to find the workers and it's a double-sided issue.

>> it's a warning sign to keep an eye on. kate, thank you very much. kate rogers reporting. >> still to come, researchers estimate the inflation reduction act could generate nearly a million jobs per year for the next decade or 10 million in total, but the ceo of one company is taking his own steps to shore up his workforce. as we go to break, take a look at the sector heat map with financials for all of the reasons that you've been hearing about, some downgrade problems, charles schwab cutting jobs and so forg. utilities, real estate communications services are in thgrn e eeas long term rates moderate. we'll be back after this.

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♪ welcome to "the exchange." the transition to clean energy has impacted industries from autos to oil and even now garbage or waste. public services is the second largest provider of waste disposal in the united states and it's been transforming from simple trash collection to full blown suite of environmental services. last year alone they managed 8 million tons of recyclables. and recovered plastics and avoided usage of 11 million

homes. let's bring in john vanderark on the 25th anniversary of the company's listing. on top of all those accolades, i have deutsche saying you're a safe haven. what's the flaw? >> we're pretty strong business. i mean, we have always had a really high floor given we're not recession proof but we recession resilient. then increasingly we're a place where you can see growth. we have grown in a new way in terms of sustainable energy products. forward integrating into plastics. we have that same high floor and we found new ways to grow. >> real quickly for those of us who feel bad every time we throw out the bgarbage, how much of that is being turned into energy? 1% being reclaimed, number much higher than that. >> no, much higher. we have 200 active landfills

today. and we have 60 projects already. and we have another 67 in the pipeline. and so, obviously when you measure that based on volume, it's more than half of those sites by volume has one of those projects. we'll get to more than 75% coverage here over the next five years, which is great. taking something that would be thrown away forever and using that to power the communities around them. it's great for the economy. and it's great for sustainability as well. >> will you get some subsidies or tax benefits from the ira? or if anything, will that make it harder for you guys to compete because it advantages other sources of clean energy? >> no. the projects stand on their own. we will have some ira benefit associated with that. but these are stand alone projects. we'll apply for the incentives along with others. but those aren't dislocating the market. >> do you guys consume a lot of energy? >> we certainly do, in terms of our vehicles. we have 18,000 trucks. fifth largest vocational fleet in the united states. today about 20% of those trucks run on compressed natural gas.

the rest are on diesel. we're moving aggressively to electrify our fleet. we think we'll be the first player in the vocational place at scale goes electrical. >> it all sounds rather investment heavy, but again your shares are trading just off their all time high and the stock chart just looks incredible. let me ask you about what you're doing to find talent to hire and retain people. it sounds like one of the recent moves you had to make is to even drop degree requirements. what is it like these days? is it getting any easier to fill spots? labor market getting any less challenging? >> we're down about 450 bases points in turnover. we kind of peaked in the mid 20s. we're down just over 20%. we like to get that down another 100 to 150 bases points. but longer term, i see a world where we've really gutted vocational education in the united states. and we need more skill workers. and so we are growing our own.

we back ward integrated into driver education and technician education. degree requirements -- education has been important for me and many others, but it's not the only path. so we like to find people who are skilled through alternative routes, whether that's career advancement through vocational jobs or even the military is a great background. we think that's just an advantage for us to attract more talent. >> turnover is improving. we know the labor market is starting to get back towards normal. what are wage pressures like? >> pressures are starting to modulate. we saw that over the last 18 months, wages going up and turnover rising. we have seen that come around. we will anniversary that in the second half. we think we'll have more normalized level of inflation going into next year. >> i look at your background. you have been at the company eight year before becoming ceo a couple years ago. pretty decent pedigree. what are your own personal goals before you turn it over and look for the next opportunity? >> really in my ten years we

have gone from being a garbage company to a waste and recycling company and now environmental services and sustainability company. my goal is to challenge every ton that goes into a landfill and think could we do something different with that. could we take it, reclaim, it, repurpose it, reuse it. i think people will see us as a resource and sustainability company. i would love that to be the legacy for my tenure. >> jon, thank you for joining me. how many people are down there to ring the bell with you? >> we have our top 30 people. they're excited to celebrate our 25 years. >> wonderful. thank you for joining us this afternoon ahead of that. >> jon vander ark ceo of the republic services. that does it for "the exchange" today. use the qr code or head over to cnbc.com/newsletters. we have ed morris and he is bearish on crude prices.

tyler is getting ready. i'll join him on the other side of this break.

♪ welcome to "power lunch," everybody. retail reports still rolling in. tech reports telling us the impact from ai and more. so our corporate profits and the economy strong enough to send stocks higher or not? plus, the impact of soaring mortgage rates on the housing market. fewer people move out of their homes. they don't want to give up those mortgage rates that start with a 2 or a 3, kelly. >> they certainly do not, tyler. thanks. a quick check on the markets where we're red across the board now as the nasdaq has given up its earlier gains. s&p down 14 and th