♪ 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 the dow is down

half percent. just off session lows. both microsoft and act ivision are higher. this is on the cloud gaming side of things. i think october is now the deadline for reviewal. the company raised guidance but analysts still think their return to growth will happen slowly. the stock is down only 85% from its november 2020 highs. that includes today's almost 2% drop. >> all right. the tail end of retail strength, more companies reporting signs of weakness from the consumer, along with continued impact from increasing amounts of theft. courtney reagan has the details. it was a mixed bag with retail both results and subsequent stock moves. continued pressure from strength. specifically from theft from organized retail crime. here is what macy's ceo told me in an exclusive interview on

"squawk on the street." >> the bulk of that is the change in organized theft. the organized function of you've got elements that are coming into stores and they're stripping them of big categories and doing it in bulk. >> reporter: similarly, dick's sporting goods said theft is going up and may expect it may get worse. they have taken, quote, a little bigger reserve to account for it. a third of the margin pressure was from shrink. shrink has been a pressure for lowe's for years, unlike macy's and dick's, executives told me today, marvin ellison says slink from theft is flat year over year at lowe's. consumer, there is can'ted pressure back to pre-pandemic levels. student loan forgiveness that is ending soon. consumer pressure is the driver behind macy's conservative forecast. ellison told me the pressure is on the consumer he says is more about consumer confidence and

sentiment. they feel good about personal balance sheets, they're waiting to see what's going to happen in the macro environment. ed stack said he is isn't seeing any deterioration in the dick's sporting goods consumers despite somewhat disappointing results in the quarter, kelly. >> we appreciate it, courtney. we'll see what that means. let's talk tech with nvidia the big report coming tomorrow after the bell. what if companies said so far about turning the possibility of ai into actual revenue? and can anyone match their strength, steve kovach has been looking into this for us. >> it's really all about nvidia. we began this year, kelly, talking all about ai, just tons of hype and promises. but q2 earnings season, investors wanted to see results. honestly most failed to deliver. microsoft is the best example of this. shares were punished after execs said co-pilot the ai tool for office apps like outlook and teams won't generate meaningful sales this fiscal year.

meantime, microsoft said it needs to spend a lot of money over the next year building up the infrastructure for all of these ai projects. all of this coming after investors sent microsoft shares soaring just a week earlier when it announced the pricing for co-pilot at $30 per user per month. the lesson here, it's not enough to just put a price tag on your ai products. investors want to see sales come in soon, but the major payoff may not come for some time. story slightly different at google. hasn't revealed how they'll make money at ai. has made promises that its core search business will benefit. most of the optimism around those earnings, though, were due to the return in digital ad spending. and mixed bag for the rest of the ai names we have been talking about all year. apple ceo tim cook told me a few weeks ago ai plays a role in the company's products but all that is mostly under the hood from those products. amazon touted some customer wins. companies like 3m and hsbc using

aws ai tools but nothing on sales. now nvidia, guys, like you said, poised to be the only real beneficiary from this ai boom at least in the short term when it reports tomorrow. >> so you have to think -- last quarter, they raised their guidance 8 billion to $11 billion to this quarter. well, could it be 12, could it be 15? >> we keep hearing these reports. this country is buying up chips. this organization is buying up nvidia chips. microsoft buying up their capx, that means nvidia. there's no one else. >> it's a question of how high the number really is relative to the whispe steve kovach. earnings remain in focus for investors, our next guest is

expecting no or very slow eps growth for the next couple quarters. let's bring in david bianco here. good to see you again. and i guess nvidia isn't the whole story, is it? >> well, feels like the whole story lately and certainly underlies so much of the excitement in the market for ai. when we hear from nvidia i'm sure they'll paint a bright, long-term outlook and of course investors will not to see how they do near term. there is more to the u.s. equity market than these tech and digital and artificial intelligence tightens. and for most of those other companies, we expect this stall in earnings growth to continue at least for the rest of the year and into early next year, probably the first quarter. but, earnings growth should pick up later next year and we'll probably do 7% earnings growth out of the s&p. however, with where interest rates are, and especially if the

10 year yield keeps heading upward, i'm not sure that's enough earnings growth up against these valuations. >> so what you seem to be saying is that the valuations require a level of earnings growth that may not be sufficient to support the prices. so the e's aren't as good as the p's need them to be? >> that's right. i mean, we're way past the point at this stage given the pes at about 20 for the s&p 500 overall. well above 20 when you exclude financials energy. and then these interest rates, the bond market is putting up some of the best opportunities as an alternative to equities that we have seen in a couple of decades at this stage. so, it's -- now at this stage we need more than there not being a recession or earnings not going down. it's time for the s&p to deliver very high single digit earnings growth. i think the tech sector is going to need to deliver 20% earnings

growth next year to support these valuations. >> so the implication of what you say there is, to me, you expect the market to correct equities? >> yeah, we do. we do. we think it will be a tough autumn because we do not expect the fed to talk about cutting interest rates any time soon. and it's really possible another hike comes. but more importantly, the long-term yields 4.3% on the 10 year yield, 2% on 10 year, tips rates long-term real yields, this is the type of interest rate environment that normally comes along with a 16, 17, 18 pe. not 20. so, these interest rates, without a rapid acceleration in earnings growth very soon, are going to make a tough autumn. i think unfortunately the deficit is contributing to the anxiety in the bond market. over the coming year, joul a lot

of politicians talking about probably a higher need for taxes. >> the deficit because deficit requires a lot of new issuance, correct? and if you don't have -- >> that's right. >> the bitters in the market, one bitter being the fed, another bitter being china, another bitter being japan, in the market at the same levels that they have been, the end result is almost definitionally higher interest rates, correct? >> that seems to be the path the market is on. and at this stage we are still at interest rates that are still well below historical norms. so it's hard to know where the assent in long-term yield stops. we think there is very good reason for the ten-year treasury yield to stay about 4.5%. back up a little here. it will require the feds sticking to its guns on its 2% inflation target, no higher. definitely not 3%. and i hope we hear more from

chair powell, from jackson hole about how committed they still are to that 2.0% long-term inflation target. >> i guess the question, i don't think he'll get into a lot of theoretical stuff, david, but he might try to give us a sense of how focussed they are on getting inflation back to 2%. are they going to settle for something higher? if the economy looks like it's weakening, you know that will do a lot to take care of inflationary pressures. maybe to hear him sketch that out a little bit. >> yeah. i think what you'll probably hear, it's not for policy announcements. however, i think we'll hear how their research over decades has made it very clear -- if inflation stays above their target for too long, the bond market doesn't forgive and this doesn't forget that. and you can get an inflation risk premium coming into the bond market, bringing interest rates even higher. so i think the fed knows that there's a lot of danger to

allowing inflation to stay above their target for longer. and this is why i think they will reiterate the importance of that. >> all right. david, thanks for joining us today. it's good to have you again. >> thanks. thank you. >> david bianco. coming up, the oil market could be in for a rude awakening come the fall. ed morris is bearish on the sector. we'll speak with him next. plus the china chess match continues. gina ramon doe will visit next 'lek. wel break it down when "power lunch" returns after this.

welcome back to "power lunch." one of the big swing factors for the economy, certainly for inflation is what happens with the price of oil sitting around $80 a barrel right now. lots of different factors pushing and pulling on it. let's bring in pippa stevens to explain. >> hello, kelly. prices are flat today amidst some thin trading activity. but there are a lot of forces at play here. one thing to watch is iranian oil exports. those are up to 2.2 million barrels per day so far in august. that's up from 1.2 million barrels per day back in january. so that could be offsetting some of the weaker output that we're seeing from saudi arabia. another thing to watch, of course, is hurricane season. so the california refineries did weather hurricane hilary, later downgraded to the tropical storm without any major incident. we had tropical storm harold

which made landfall off the coast of texas, padre island. we have four other tropical storms brewing. franklin is still active and emily and gert have been downgraded. noaa forecasted for above average hurricane season. we are halfway through hurricane season without any major incidents to our infrastructure so far, but we are approaching peak hurricane season. that is certainly something to watch. then finally, european natural gas prices now up more than 60% so far this month on on going fears if this strike happens at the australian lng facilities that will drive prices higher. up another 7.5% today. >> pippa, thank you very much. pippa stevens reporting. oil may be on a tear this quarter, but our next guest says he's bearish now. investors should short crude through 2024 because supply is outstripping demand. joining us now is ed morris. welcome. good to have you with us.

>> good to be back with you. >> you just heard pippa's report, one of the things she pointed out interestingly is that iranian exports are up markedly since january, i believe it was 2.1 million barrels from 1.0 something. you say among other things, figure on more of this to come. there will be more supply from what you call the fragile five, including iran, iraq, libya, nigeria and venezuela next year. surplus of supply and demand you don't think will come back as fast. have i summarized your argument pretty well? >> you got it exactly right. the supply side is probably more important than the demand side at the moment, but we can't underestimate what's happening on supply. nonopec supply is rising this year by more than demand. we think nonopec supply is going to rise by a million barrels a day next year in a world where our economics team sees 2% gdp

growth or about a million barrels a day related to oil demand growth. when we have not just nonopec countries, but we have the fragile five. pippa talked about iran. she could have also talked about the others. we have another 2 or 300,000 barrels out of iran by the end of the year. we have iraq, which has a pipeline down geopolitical reasons the three countries involved in that pipeline, two parts of iraq and the one other country, turkey, involved in it have every reason to get the pipeline up because they're getting more money by doing so. that's going to add 450,000 barrels a day to current iraqi exports. the pipeline will carry more oil. so add another 500,000 barrels a day to that, assuming that iraq is not going to be a particularly interested in abiding by their opec cut

pledges. then we have libya, where we haven't had any disruption in a long time. the biggest country externally that's there has announced that the 40 year -- it had in not drilling is over. they're going to start drilling again. government even though they dw divided wants more oil. nigeria, down to 1.1, 1.2 million barrels a day in '21 and 2022 had peace in the delta after the most recent elections. they're not only above 13.5, thy soon could be above 1.7 they had since pre-pandemic. finally the last one of these is venezuela which saw production crashing from 3.6 million barrels per day down to 500,000. that was 500,000 was about a year ago. and then now steadily up to about 850 or more than that.

we think they'll hit a million by the end of the year. yeah, the fragile five alone will have more oil in the market a year from now than we think demand is going to be. >> ed, are we -- so what i was trying to unpack the ie report i think from last month. they made it sound like -- they were already in a deficit, like 103 million barrels of global demand, maybe 101 of supply and saudi is a big part of that deficit. you sketched out a picture where it sounds like plenty of nonsaudi suppliers are able to put plenty of market on the product. i'm trying to figure out how on the one hand, we're drawing down inventories of all kinds, prices could whip around and push to the upside but why you aren't more concerned? >> well, they don't actually have quite a deficit that you think they do. you get a deficit only if you add in a production number for opec countries, which they don't have as part of what they do.

but, what we're really seeing the first six months of the year was a builded inventory, both inventory on land and inventory in the water. and the efforts to pull back on production that started earlier in the year including a big chunk of it for the month of may didn't stop that inventory built from happening. we of course had an inventory draw in the summer. we normally do. the extra million barrels a day or added 400, 500 barrels a day from russia is what caused this deficit. we have peak oil demand in the month of august. unless the world is recovering from a recession. so we think pick oil demand in the month of august is not really showing the big pull on inventory that we thought it was going to. and indeed you know, the amount of supply coming into the market, including from the u.s., which is currentliest mated at

12.7 manager a day, we have at 13.2 at the end of the year, the u.s. will be adding to the supply in the next four to five months. >> all right. i guess that's not quite as desperate a picture and maybe means we can take some price spikes and inflationary pressure off the table. that would be great news, ed. we appreciate you bring toerg side of things. >> i will say what we heard earlier, the hurricane season is here. >> true. >> we can't make this a certainty until we get to october. but thank you. >> great point. ed morris, thank you for joining us today. a call to arms. softbank-owned chip designer arms set to go public, seeking a massive valuation. certainly compared with the sales levels. we'll dig into the company's financials when "power lunch" returns.

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part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com. welcome back to "power lunch." arm holdings finally had its filing to go public yesterday afternoon. that means releasing financial details and, well, they aren't maybe as exciting as you would think for the most exciting ipo or biggest one in twoyears.

di diedra bosa looking into that. >> this could be the largest ipo of the year. the stakes are high here. for softbank itself, a lot of chatter you said it around the f1 filing is narrowing profitability. if you value the company like a chip company, the one that it is now, i.e. derives most of its revenue from the smart phone market it looks closer to an amd, more in line with the rest of the chip industry. if you think that arm is the next ai play, sure, maybe it gets closer to an nvidia-like multiple but the evidence isn't there right now. and convincing investors of that could be tough. investors might be wise to remember that his recent -- that his -- remember his recent ipo history he and softbank are behind some of the biggest ipo

disappoints. wework in both cases he bid them up too high in the private market for the public markets to value them significantly lower. he may be running the same play book here once again in a private transaction. that is closer to an nvidia-like valuation than it is the broader chip space. >> yeah. when you look at -- people are talking and you said last night on "fast money" i believe it was, valuations somewhere between -- anywhere between 40 and 80 billion. that's a broad number. and their revenues are a little north of 2 billion. so that puts a multiple of sales really, really high. >> yes, that is certainly the case. then you look at all the risk factors as well. i outline the reason this isn't nvidia. this is a company that is very much tied to china.

gets a lot of its revenue from there as well. it doesn't have any control over its unit there either. so that's a risk for investors. but you know, he has always been one to try to get as much value as he can. that hasn't worked recently. he needs this win. he needs this to be priced well to get out there. right now, though, it's look lag dicey. we will see because another side is the anchor investors that could come in. it's rumored that amazon or nvidia could get into this name as it goes public and that could provide a boost of confidence. >> we're looking at nvidia up 1200%. >> that could have been son's investment back in 2017 he invested in nvidia. he sold the stake, made a gain of $3.3 billion, that's a lot. but had he held on, tyler, it would have been worth a heck of a lot more. >> that would have plastered over a lot of errors that he has made over time.

>> it would have plastered over probably wework, uber, giving him more credibility for this one. >> i bet i'll see you later. good to see you. >> thank you. let's get to bertha coombs for the cnbc update. >> here is your cnbc news update. meta under scrutiny from congress. that according to lawmakers who sent a letter late last week to ceo mark zuckerberg asking about how the company monitors product safety. lawmakers say federal regulators have been made thousands of requests to take down those items. meta did not return a request for common. new threads is launching on the web today. a desk stop version, giving

users access on their pcs. in a blog post, the company said that in the coming weeks it will be improved to look more like the mobile app. and lionel messi is driving soccer ticket prices higher for late-season games. according to ticket iq, secondary markets are seeing a 1700% price increase. and for all remaining away games combined. average ticket prices are up more than 1,000% compared to last year. boy, he is really putting u.s. soccer on the map here, tyler. >> he sure is. and he has been playing magnificently. and clearly demonstrating his worth. i don't know whether he's worth 1700% increases. that's good. he's been playing very well. bertha coombs, thank you very much. ahead on "power lunch," home groan. rates continue to climb. people prepare to stay in their

current homes for longer, some improvement names are holding strong. namely masonite. we'll talk to the ceo when we return.

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welcome back, everybody. the 10 year yield still sitting at those 16 year highs. let's get out to rick santelli in chicago. hey, rick. >> hi, tyler. today there's a bit of change of the guard on the treasury complex. 2-year note yields which has relinquished the leadership role have taken it back. look at a two-day chart of 2s versus 10s spread. what you'll see is today it moved about a handful of bases points and maybe the fact that jackson hole is at the end of the week may have something to do with it as investors are a bit nervous because they're not sure what the fed is going to say what the fed is going to do or how the fed may view the future regarding the labor market and all the seasonality issues that make all of us scratch our heads at some of the strength that still remains. and if you look at 2-year note yields on the next chart, we are flirting with 5%.

this is a big deal. why? since august of 2007, there have been only two closes in 2-year note yields above 5%. those have both been recently as you see on that chart. 507 is the current high yield close and failure about the beginning of july really started the curve deinverting. so as you look at this, look at 10s which crossed that important level from their fall high yields that 2 year didn't just last week. so, now look at all the ramifications going into jackson hole. you see the lqdtf. it's at the lowest level year of the year. even since last year. why are investors running away from investment grade corporates? let's throw a 10 year chart on top of that since the beginning of july you can see why. it's called credit risk. why? because ten year note yields are

the highest quality at least with the sovereign stamp on them. corporate debt, considering the s&p bank issues going on, a little less interesting to investors. kel kelly, back to you. >> rick, we appreciate it. rates on the 30 year mixed continue to climb. the higher rates impacting sales of existing homes. >> yeah. existing home sales dropped more than expected in july to the slowest july pace since 2010. this count as of closing so contracts likely signed in may and june when mortgage rates went from 6.5 to well over 7%. 1.11 million homes for sale at the end of the july. down close to 15% from a year ago. supply is now at the lowest level in near ly a quarter century. the median price of a home sold

in july was $4,607 mup remember, prices had been weakening at the end of last year, start of this year due to higher rates. but it seems like demand is pushing past that higher rate effect and then pushing prices higher as competition still very strong among those that are in the game with three quarters of homes sold on the market for less than a month. we did see first-time buyers get back in a little bit. 30% of sales up from 27% in june. and that's being reflected in a jump in fha mortgage demand which first time home buyers like. >> indeed. anything to help out on that. could this be an ideal time to embark on home renovations? let's ask our next guest. joining us now is howard heckes,

masonite ceo. welcome. glad to have you. >> thanks, kelly. great to be here. >> i was picking out doors on your website. why are the doors so big these days? i go by new homes and they have these massive front doors that are 10 feet wide. >> aren't they beautiful? >> they are. >> people are changing doors finally. for many, many, many years, hundreds of years maybe, doors haven't involved. we think it's important that doors can and should evolve and style is one of those evolutions. so you're right. 8 foot high doors, wide doors, they're certainly becoming more in trend. and we have a lot of other exciting things that can help solve life and living problems, too. >> here is the really curious thing why this stuff is so fascinating. we already got the boom two years ago. the share price of generack.

this is nothing like it was two years ago, at least in terms of the share performance. what's actual fundamental demand like right now? >> demand is soft. however, it's exactly as we expected it coming into the year. so we expected -- housing is cyclical. we expected a down cycle as everybody did. so we prepared for that. knowing that demand would be soft, we built a play book to protect our margins and continue to invest in strategic growth initiatives for the company. as a result, we're able to deliver i think very solid financial results we reported a couple weeks ago because we expected and prepared for a bit of a soft market. >> your eps was up versus the estimates, though your net sales were down as i read it 3% year over year. how much is or are rising interest rates sort of trickling through and affecting your business to the extent, for example, that people are staying put and maybe not moving into

new homes with new doors or maybe not doing the remodelling project that involves new doors. >> yeah, tyler. you're absolutely right. mortgage rates have an effect on that. i read a statistic recently that said 83% of people that had just bought a new home in the last 12 months or going to sell a home in the next 3 months will embark upon some kind of remodelling project. so when you think about existing home sales being down 16% year over year, that obviously limits the people that are doing those projects. now what's interesting, though, as people have spent more and more time in their homes over the last several years, doors are now becoming a visible thing. in fact, we used to call doors the invisible man of the home. people didn't know what their doors looked like. now they're spending more time there, they realize that solid core doors can provide more privacy or ways to increase security or connectivity. doors have gone from visible to

valuable. despite fewer projects, doors are becoming more interesting projects for homeowners. >> one notices when you walk into a home -- i'm not knocking this at all, but a good solid door really makes a great impression and whether these are interior doors or exterior doors, you can tell the difference. you can tell the difference in quality. obviously there's some buyers, i'm sure, who want a lower enor lower price product and that's fine. >> sure. >> but the quality door with the solid core that when you shut it, man, it makes that sound. it feels good. it feels better. >> i agree with you tyler. it's not just the feel, it's sound. and when you're trying to work at home and be on a zoom call and your kids or your dog or your pets are on the other side of the door, that sound dampening is also important. doors are starting to serve a

more important purpose in homes and we're there to help drive that. >> that sound dampening is very helpful these days. howard, thanks. appreciate it. howard heckes of masonite. >> ticker door. >> ticker door. >> that's right. >> you know, deirdre did this story on arm holders. ticker arm who was the genius who thought -- >> came up behind that one. >> that is thinking. commerce secretary gina raimondo meeting with senior chinese officials and u.s. business leaders for high-level discussions. could this be the beginning of a thawing of relations between beijing and washington? we had a couple high crarof stes. seety ta was over there a couple months ago. we'll discuss.

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investment strategist. andy, welcome. how important is this visit? what are the expectations? who is she going to see? >> i think the visit is important as a continuation of the recalibration of the biden administration's approach toward china which really began in april when janet yellen gave a speech about u.s./china relations and continued with secretary of state blinken's visit and yellen's visit and now raman doe. overall there's been improvement in communication and an effort on the part of the biden administration to try and reassure china that while the u.s. still has significant security concerns it's not try to contain or slow down china's growth. >> are the chinese hearing that message? >> well, my impression from my trip to china in may is they're hearing it, but they're not necessarily believing it because they're getting a lot of mixed messages. >> that's the interesting

thought to me. that's why i asked. are they hearing it? are they believing it because on the one hand we seem to be stroking them in terms of commercial relations. though we have not lifted tariffs and some would argue that biden has been tougher than trump was on china. and then on the other hand, while we seem to be stroking them on the business side, we seem to be using the stick not the carrot on the security side. >> yeah. personally i think that the approach to that, the u.s. government is taking right now, is misguided. i think that china does not seek a confrontational relationship. it is certainly taking steps that are not consistent with the way the rest of us view the world, but i think if you look back over the last several

decades, providing incentives as well as guardrails to china led to a tremendous improvement in their behavior abroad and behavior at home and that benefitted most americans. so, i hope that the biden administration's recalibration will continue back to a more constructive path. >> we had a guest on yesterday on "fast money" who made the case that the chinese economy is facing so many head winds right now. perhaps most notably the unemployment rate among young people. that xi jinping's internal tactic may be to try and distract the internal population. look at my right hand here. it is the fist. we have a crisis in the south china sea. we're going to be aggressive with taiwan to distract the population. we have a national security issue here with china and taiwan to distract the population from

the economic head winds that are at play domestically. does that make any sense to you? >> no. i understand the attractiveness of that theory. it's great tv, but i don't think it works on several levels. first of all, i don't think the chinese economy is in that bad shape. clearly the economy is weak. clearly the chinese equity markets have been weak for an extended period of time, but we hear too much use of the words like crisis. think about it this way, in the second quarter, inflation adjusted real income growth was up 8% after 4% increase in the first quarter. in the first seven months of this year, spending on services is up 20%. my friends in china tell me it's really difficult to travel on vacation this summer because everything is booked. so, parts of it are slow. parts of it are okay. one of the things we have to remember is that we've been over covid now for a couple of years, but china only started getting

over covid since january. so it will take a little bit of time but the economy is not in a crisis right now. >> that's very interesting. i mean, final question and quick answer if you wouldn't mind. do you believe the economic numbers that china publishes? people would -- a lot of countries would love to have 8% growth in a quarter. most would. >> yeah. that was real income growth. sure. i don't take at face value any of the statistics coming out of china. but we have lots of ways of looking at at them. for example, we have no reason to believe they're manipulating data on movie box offices or rail companies. we can talk to companies that i did when i was in china many may. i talk to friends who say they can't get a train ticket because everything is booked. we can look at data coming from american companies there that are showing us in certain parts of the economy is doing well. >> it's interesting. >> to the decimal point, no.

are the trends apparent there -- >> that's interesting doing your reporting by walking around and asking people you know. >> for sure. >> that's a great way to do it. thank you very much. we appreciate it, andy. andy rothman. >> thanks. meanwhile, shares of lowe's are higher despite mixed second quarter results higher despite s today. spring projects are helping offset weakening home improvement demand overall. those shares and some other movers are coming up and we'll trade them right after this.

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welcome back. it's time for today's three stock lunch, kind of a tapase dig, a taste of each trade. michael farr of hightower advisers. great to see you, michael. let's start with lowe's, higher today after better than expected second quarter results. what's the trade here? >> i'm long lowe's, i've owned it for a long time, i'm happy i've owned it for a long time. i liked the earnings report today, i think management is doing a good job, 15 times earnings, growing earnings at 12%, kelly. they've been growing online and

they've reduced expenses and reduced what they call shrink, the shoplifting. they're managing that better with rfid, gadgets inside the power tools that won't work if you steal them. i like this stock. >> let's move to co-america. s&p global cutting its rating on the firm. what's the trade here? >> i'm a seller, tyler. look, all of these smaller banks, and this comes as a smaller bank, have a very difficult operating environment, basically, you know, lending money, borrowing money, taking in deposits. it's very expensive. they've got risk of deposit flight. the bigger banks at least have multiple lines of revenues. i think they'll be safer. it's a very hard place to make money and i just think that even though it's cheap, i don't see it going up. i think the best case is it's dead money for a while. i'm staying away. sell it. >> we've got to ask you about

tesla. do you remember tesla? they were up almost 8% this week, gaining some ground after being down 11% last week on price cuts in china. is nvidia the new tesla? what do you do with the stock here, michael. >>? look, i sell it. i'm a fundamental old-fashioned guy. i want to see real numbers. this stock is up 88% this year. it's 66 times earnings. the market cap is $740 billion. ford has a market cap of $47 billion, gm has a market cap of $48 billion. that's $95 billion for ford/mgm versus $740 billion for this. i understand you believe in elon musk as a magician, but that's not the way you invest money, based on the numbers without magic this one is a sell. so pat yourself on the back, take your profits. go out and have a nice dinner. this is a lot of long-term investment based on the numbers unless something magical occurs,

i can't invest my clients' money on magic. >> take your tesla to dinner. >> yes, take your tesla to dinner. >> all right, michael farr, good to see you, man. >> nice to see you guys. still ahead, airbnb hosts and guests are scrambling as new york city begins a new crackdown, short-term rental regulations could eliminate huge blocks of listings for visitors. we'll discuss that next. so i cad 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. your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

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we only have 90 second left in the show and a bunch more stories we need you to know about. thousands of new york city airbnb listings are being removed in response to a looming citywide crackdown. starting september 5th, hosts of short-term rentals will need to start registering with the city so that they are legally able to provide stays, and they must meet specific requirements, including not renting entire apartments and in some cases being home during the guests' stays. airbnb has called it a de facto ban on short-term rentals while city officials say the changes are needed to combat new york's affordable housing crisis. it is a curious way at that, if the owner can't rent out an entire apartment, has to be there? >> i think it's a terrible idea. we'll have to see if there's enough backlash. but they're going far down this road. new data shows, speaking of

new york, nearly a trillion in business has left the city since the start of the pandemic. that's according to bloomberg, about 160 firms have moved their headquarters out of wall street since 2019, taking nearly a trillion in assets under management with them. it's been a rough day for the dow, all in the red. thanks for watching "power lunch." >> "closing bell" starts right now. welcome to "closing bell" here at the new york stock exchange. we begin with unsettled stocks, an uncertain market. here is your scorecard with 60 minutes to go in regulation. nasdaq barely holding on. falling stocks. stop me if you've heard this before, but it is again the story today, the ten-year reaching its highest level since '07 and stocks sinking into the red again. the nasdaq coming off its best day since july, but volatile