>> 1:00, scott. >> jimmy. >> wobbly market at the end of summer, i'm going with the steady eddie here, berkshire hathaway. >> joe t. >> maybe this isn't good. there's still time for you to leave. you've got a couple of seconds. >> i've got fine seconds. >> maybe this isn't good for inflation but valero. seasonality matters. >> i'll see you on the closing bell. have a good weekend. "the exchange" is now. thank you, scott, and welcome to "the exchange." i'm kelly evans, and here's what's ahead this hour. inflation is still too high and further rate hikes are still in play. jay powell's rather hawkish tone causing stocks to reverse course several times today. but it shouldn't give you cause for concern our market guest says. she gives powell's speech an a and says it works well with what she's buying. she joins us ahead with the sectors and the names. plus a 1% down payment on a home. what could possibly go wrong? we'll ask the chief economist at zillow home loans because they are now offering this option to address the affordability

crisis. and from ketchup to hand sanitizers and beauty products, chances are you use a product this company provides packaging for but there's one thing they package that caught our attention in the latest earnings report and may set them up nicely from here. let's see if you can guess what it is. it's not a mystery chart. it's a mystery product today, dom. >> i don't know what it is. that's a great tease, by the way. >> but in the meantime how are the markets? >> the markets are actually positive. but we've seen both sides of the market here today, kelly. if you take a look at what's happening overall, the s&p 500's at 4393. so still below the 4400 mark. but on the day we're up 17 points, roughly one half of 1%. at the highs of the session we were up 40 points. significantly stronger here. we were actually down as much as 20 so far today. the dow industrials up a similar percentage amount, 1/2 of 1%. 176 points. 34,275. the nasdaq composite up about 1/3 of 1%. the laggard if you want to call it that. 13,514.

spot 89. up about 15 points right now. both sides unchanged we've seen so far today but generally a bit more positive, fractionally so. if you take a look at the interest rate complex, that's been the focus today given fed chair jay powell's speech at the jackson hole symposium. maybe more hawkish. some people are interpreting it different ways. no matter what, we have seen upward pressure on yields, downward pressure on prices. the two-year note yield currently up to back above 5. 5.05%. the 10-year note yield 4.24%. it got as high as 4.27, 28-ish at one point today. there's been a lot more focus on that 10-year note yield given all the conversations around what the neutral rate or natural rate of interest should be on a short-term basis, that so-called r-star. a lot of people point toward that ten-year note as maybe a proxy for that kind of level. we're watching that pretty closely there. keep an eye on rates. then interest rate sensitivity. it used to basically be utilities and staples, maybe real estate in there, but we've expanded it because so many more

parts of the market are interest rate sensitive. craft heinz both clinging on to gains right now. meanwhile, banks like jpmorganchase just about flat on the session. nvidia, you might call it interest rate sensitive. hyper growth. sometimes those interest rates play out there. nvidia now down 3 1/2% on the day, which means it's about 10% below its post-earnings high at this point and the ark innovation etf about 1% as well. keep an eye on those various parts of the market. very closely watched with regard to how fed policy's going to shape up. kel, i'll send things back over to you. >> all right, dom, thank you very much. we start with fed chair jerome powell's big speech in jackson hole. he maintained his somewhat hawkish stance saying he's still open to further rate hikes to combat inflation if needed. take a listen. >> although inflation has moved down from its peak, a welcome development, it remains too high. we are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward

our objective. >> let's get some reaction now from gus boucher. he's chief economist at sbc. and yadid abave of bank of america. nick russell of the journal described this as more of a risk management speech. was it hawkish? was it dovish? was it wait and see? what do you think? >> i think he struck a hawkish tone but the content wasn't as hawkish as the way that he said it. he made it clear that the fed is ready to raise rates again if necessary but he didn't say that a rate hike was forthcoming necessarily. so i think he's taking a risk management approach where he's saying we're more likely to raise rates than lower them but he's setting the market up in case they do need to raise rates again. >> going into the speech the futures market was pricing in almost a half percent, or 50-50 chance they raise again in november. is that in your expectation? i think -- sorry, go ahead, adia.

>> yeah, so we have them hiking 25 basis points in november and cutting just 75 basis points next year. and markets move toward both of those forecasts. but i actually agree that the comments were fairly balanced. they had both hawkish and dovish elements to them. and so ultimately he presented a rorschach test to investors and that's exactly what you're seeing in market action today. >> one of the areas that he talked about was the labor market. i want to play a little bit of what he said about the tightness of those dynamics and the impact that may have on further hikes. take a listen. >> so far job openings have declined substantially without increasing unemployment. a highly welcome but historically unusual result that appears to reflect large excess demand for labor. in addition, there's evidence that inflation has become more responsive to labor market tightness than was the case in recent decades. these changing dynamics may or may not persist and this uncertainty underscores the need

for agile policy making. >> gus, what does he mean by that, the labor market has bece more responsive to tightness in recent decades. >> strong labor is pushing overall inflax higher as the economy is becoming more services dependent strong wages are likely to show up in inflation, which is what we're seeing, and so therefore the fed may need to push back a little bit harder against that tight labor market in order to get inflation to that 2% objective. >> would that, aditya, be part of an argument for this being a rather hawkish speech? if not so much today maybe in retrospect if they do have to lean harder against the labor market. >> right, i think it's a little bit nuanced because if inflation is more responsive to a tight labor market then hopefully that works the other way around as well. to me essentially what he's saying is that we finally found the steep part of the phillips curve after being on the very flat part of the phillips curve for over a decade. and that cuts both ways.

so hopefully when the labor market does ease up and we're seeing some signs of that, inflation should continue to cool relatively fast. that would be the hope for the fed. >> we also got the university of michigan data this morning, consumer sentiment. i think it was down a little bit. yeah. 69 1/2. in august. but notably inflation expectations are still higher than they used to be. aditya, 3.3% let's call it with a little bit of a rebound in gasoline prices lately. is this a data point you think they'll be concerned about? >> i think the one-year inflation expectations figure was always going to go up with as you said the rebound in gasoline prices. 3% on the 10-year is pretty much fine. it's as you mentioned a little bit towards the high end of the recent range but we haven't really broken outside that range and so for now they're pretty comfortable with that. >> all right. gus, where do we go from here? >> i think we see the fed holding steady. i think you saw president harker and president collins yesterday saying they didn't think further rate hikes would be necessary.

i think we will see a slowing in the labor market. we're likely to get a mild recession starting in early 2024 that will bring inflation back down to 2%. so we see the fed holding steady in the near term and then cutting sometime in the late winter, early spring next year. >> is the message oaryou're getg from them that's your forecast but they don't sound to me they're particularly wedded to any forecast, that they're just kind of waiting like the rest of us to see the data come in, gus. would you say that's right? >> yes, and i think chair powell made that clear. he said we've gotten two good months of news on inflation but we aren't sure that that's going to last and they're going to be looking at the inflation data, they're going to be looking at the labor market, they're going to be looking for those slowings that they're expecting and if they don't see them then they're perfectly willing to raise rates again if that's what it takes. >> and before we go, aditya, can you put some context around these high numbers we're getting for the third quarter from the atlanta fed? and not so much take into whether they're better than anyone else but how strong could third quarter gdp be?

how different might it look by the fourth quarter first sub quarter of next year? >> right. so we're tracking 2.7% for the third quarter. the atlanta fed of course is closer to 6%. there's different elements to these forecasts. but the point is that we started at 2% and very quickly with the early wave of july data we've gone to 2.7. i think we'll probably see a softer consumer in august and september just because the strength in july was so outsized. and that could set you up for a less favorable base effect for the first quarter of next year as well as the fourth quarter of this year. so we have a slowdown in growth to around the 1.5%, 1% mark later this year, but we don't actually have a recession in the forecast either this year or next year. >> all right. i remember talking to gapen about that for sure. we'll let you guys go. gus, what happened? was it your elbow? tennis elbow? >> i broke my shoulder on vacation. >> oh, my gosh. well, thank you for joining us regardless. we wish you a speedy recovery.

>> thanks. >> gus faucher from pnc and aditya bhave. well, she gave powell an a and now she's going to give us the play. and that involves looking for companies that may be struggling right now but are well positioned to outperform their peers long term. let's bring in kim forrest now, founder and cio of boca capital partners. you give him an a, kim. what did you hear this morning that you liked? >> i do. i heard what i've always heard from jay powell, which is we are data driven and we are going to adjust the interest rates according to the data. and that's pretty much what he reiterated during his whole speech. now, i think he also reiterated the data that the rest of us are seeing, and that's retail consumers and investors alike, that the inflation rate has dropped but it's not to the 2% that the fed wants to have and that they're going to continue to evaluate both the labor economy and the regular economy

and take action. like this is what powell wants, is consistent messaging and a predictable outcome. and i think that that is why i gave him an a, because he is giving us the guidelines that they used to make decisions. >> and i ask you about that even though i really should be asking you about your sweet spot here. semis. that's all that matters. the whole game -- do you look at nvidia and think it's practically a value stock because the p/e now -- well, the p/e in february must have been like 4 based on what we know now. >> yes. well, maybe. i don't think anything with three digits is a value stock in the p/e. i'm sorry. i don't generally hold fast to -- i'm more of a relative kind of data person rather than an absolute number. but nvidia is richly valued any way you look at it. but here's the good part. they do -- they are in demand.

they are ahead of the curve from anybody else with respect to ai and other glamorous areas of the semiconductor market. but we need them. we need productivity. semis give us productivity. and the other thing is ai is not just a passing fancy, it is going to deliver productivity and maybe entertainment. but what it really needs is lots and lots of data. i know that for a fact. i used to be a software engineer in ai, and data is the key to successful math modeling. so i don't know that we can ever have enough storage. so that's why like micron and other developers or makers of manned technology, and i just don't think semis are ever going to go out of fashion ever again. >> a lot more favorability for micron lately. netapp another one you like. 30 times is the multiple for nvidia.

30. okay? can we show coke, tory? put like a coke or a pepsi or a clorox or somebody like that on the screen. i mean, kim, you can get nvidia at 30 times after everything that -- coke's at 23. which would you rather own? >> right. but here's the thing. they are not alone in making new chips. and it's going to be really hard with ai driving this. everybody else in the semi space is going to want to catch up to them. and i don't know that they are that far ahead that they can evade having competition. that's pretty much that. >> fair enough. and as i said, you know it better than anybody else. where else? you might want to buy companies that offer some value but more importantly are going to outperform in the long run. who else fits that description? >> sure. well, back in semi land we really like synopsis. because they help people design

chips. but also we're looking in other sectors. i know. there are other sectors other than technology. but we actually like consumer discretionary because it's really unloved at this point and there are great retailers out there. and we think financials are worth a look because we are at the end or near the very end of the rate hike cycle and we're not in the position where we were last year at this time where we didn't know where that number was going to be, that 10-year number. so we're very close to the end if not at the end, and i think financials deserve a good hard look. but again, you have to really do tons of homework there, not to get caught out by somebody that may have a bad balance sheet or bad assets on their balance sheet. >> right. and most people feel like that's just over their head trying to figure it out. although i notice affirm, it's techie financial but having quite a strong session today. would you go big banks,

regionals, it truly just depends? any criteria in particular you would be screening for? >> well, actually, i really like both companies in the regional area. but again, companies that don't have any or very much exposure to commercial real estate, specifically offices. and then there are good large players that you can take a look at. again, we like morgan stanley is one of those that don't do a whole lot of lending but do have a lot of fees. and we like hometown favorite pnc, again, because they have a whole lot of their revenue generated by fees as opposed to lending. >> we just had gus faucher the last segment. pnc 25% decline year to date. but even morgan stanley's in the red now. maybe a chance to be opportunistic. kim, thank you so much for your time as always. kim forrest joining us from

bokeh capital partners. china from beauty to pharma to food, my next guest's company is uniquely positioned to give insight into all of those areas with products they make. the ceo of aptar group joins me live with where they see strength and where they don't right now. plus as instacart readies its ipos wire looking at how the economics are evolving for the grocery delivery business and whether this move will more fully open the ipo market. as we head to break here's a broad look at the markets which have really made a comeback. dow's up 185 or half a percent and it's actually leading the way today. the russell 2000's up a quarter percent. the 10-year note hovering around 424. we're back after this. 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. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so... ...glad we did this. [kid plays drums] life is for living. let's partner for all of it. i'm so glad we did this. edward jones

welcome back to "the exchange." i mentioned the dow outperforming today and here's a reason why. boeing moving higher up almost 2% right now on reports it's getting ready to restart 737 max deliveries to china after about four years. again, boeing, which had been hit earlier in this week by some delays on the 737 max, now benefiting from some positive news flow as it specifically relates to china orders. shares are up 2%. dow's up 154 now. meantime, joining me now is -- well, let's back up for a second and talk about packaging. it's a part of the industry that you don't hear about that much.

but this is a company we spoke with during the pandemic when they were making packaging for all of those hand sanitizers we were buying. we checked in with them last year and they told us about the labor shortages they were experiencing. and now they're seeing strength in one part of the market in particular that makes sense if you think about it. it's weight loss drugs. that's right. joining me now is the company in the midst of all of it and their ceo steven tanneda, the ceo of aptargroup whose shares are starting to approaching their 2021 highs, by the way. steven, it's great to have you back. welcome. >> thanks for having me back, kelly. great to be here. >> do you guys make some of the packaging for injectable diabetes and weight loss drugs? >> well, we can't talk about any specific customers, but what i can tell you is indeed we supply else to merrick components for three of the g.o.p. drugs that are on the market, and clearly consumers are very excited about it, patients and our customers are very excited about it, securing future supply, investing. we ourselves invest more than

180 million in our own capacity for biologic drugs including gop-1 drugs. >> you guys, i think about your business the last couple years and you had to go, you know, go quickly, make tons of hand sanitizer, okay, now pull back on that, okay, now go quickly make tons of supplies for the glp drugs. how does your business respond to all of this? >> we've really been around for almost 80 years, public for 30 years. so we really are -- if you want the intel inside, all your viewers have product at home from spray-on sunscreen to upside down ketchup to high-end fragrances and also unfortunately narcan. it's all about delivering medicine, delivering consumer products to the consumer in the way that makes brands more enjoyable and drugs more available. >> yeah. the upside down ketchup might be the single greatest innovation. makes my family life a little easier. but put that in context for us.

huge demand, for instance, in this weight loss category. where else are things softer now? because we know consumer goods and durable goods more -- well, not that they're durable goods but that this is an area of softness lately. >> yeah. actually, overall demand for our products is very strong. the pharma business, whether it's nasal sprays for allergies or inhalers or sinus rinses. so anything the consumer has learned during the pandemic about keeping the sinus packages clear has really changed the consumer behavior. our beauty business actually very strong because of pickup of travel retail. the one area where we see weakness is in the u.s. food space and personal canned home care. personally that's because patterns have changed out of the pandemic and part of it is our customers and retailers still working down their tremendous covid inventories. >> that's interesting. so in personal care and home sort of things in particular -- and that echoes what we've heard

from other companies in that business. you think you have another year or so to normalize things there? >> we see food starting to normalize. we believe personal care, home care probably will run that course by the end of the year, early next year. thankfully, i don't say it as often, our business is 75% outside of the u.s. and travel retail really, especially between the u.s. and europe, has boomed and driving our beauty business, high-end fragrances, makeup, skin care. and of course pharma is global. and the u.s. patients and u.s. consumers need the pharma products whether the economy's doing well or not. >> that's fascinating. you guys really do have a r really -- and it's not often you say it's a good thing we're 75% outside of the u.s. what about china? any exposure or secondhand exposure that could tell us what's going on with trends there? >> no, china is an important market for us, for some of our

segments like beauty, it's actually the largest beauty market in the world. >> wow. >> and a lot of the sales that we report in europe are really going through global beauty brands like l'oreal or lvmh who then sell their products on to china. clearly their recovery is more muted than people had hoped and expected. but even lower growth on a large base makes a big difference and we have just started up one of our flagship investments in shushz ow, china and we continue to see china as an open market and thankfully we are not in any geopolitically sensitive areas. we're seen as benefiting the chinese patients and consumers. >> yeah, so far makeup is not on the list yet of highly sensitive industries. before i let you go, can you talk just briefly about the labor force? i have to imagine between some of the slowdowns you've cited and everything else that you're

not seeing the same staffing challenges you once had, but is there any sign of wages reversing lower or anything like that? >> no. but clearly the issues we talked about last night have abated. we saw more people joining the labor force. and those plans, particularly in the midwest, are exactly the ones producing the things that are weaker. personal care, home care. this is no longer an issue. and thankfully in the booming areas like pharma we have plenty of capacity. you never want to be out of narcan. >> oh, my gosh, that's for sure. stephan, thanks so much for joining us. it's really good to check in with you. >> great to check up with you, kelly. >> stephan tanneda is the ceo of aptargroup. shares up 150% this year. shares of this company making big moves prompting two big upgrades this week. the name and the reason for those calls ahead. plus zillow home loans making a move that's supposed to make home ownership more affordable, but it's also drawing some comparisons to what happened before the mortgage crisis. those details are coming up.

as we head to break, here's the dow heat map with two to three gainers versus decliners today, led i believe by boeing, whose shares are up 2% on that news we brought you top of the hour. on the flip side of things the financials are weak. american express, goldman, jpmorgan your biggest decliners. we're back after this.

(fan #1) there ya go! that's what i'm talkin' about!

(josh allen) is this your plan to watch the game today? (hero fan) uh, yea. i have to watch my neighbors' nfl sunday ticket. (josh allen) it's not your best plan. but you know what is? myplan from verizon. switch now and they'll give you nfl sunday ticket from youtubetv, on them. (hero fan) this plan is amazing! (josh allen) another amazing plan, backing away from here very slowly. (fan #1) that was josh allen. (fan #2) mmhm. (vo) football season is here. get nfl sunday ticket from youtubetv on us. a $449 value. plus, get a free samsung galaxy z flip5. only on verizon. welcome back, everybody. i'm tyler mathisen with your cnbc news update. former president trump and all 18 co-defendants have met the

noon deadline today to surrender to authorities in fulton county, georgia. all but one were released on bond after being booked. one of the defendants spent the night in jail because he didn't negotiate his bond agreement ahead of time. bet he regrets that. or she. heineken announced it's selling its business in russia for just one euro. the company is selling to the russian manufacturer arnest group and will lose around $325 million. the dutch brewer announced its plan to withdraw from the company last year after moscow invaded ukraine, but heineken was slow to exit. the company said it was trying to look after local employees. and starbucks confirms it's looking at scanless pay, which is a contactless check-out method. it can identify a starbucks app user's current location when they're in the drive-thru lane. the experience is currently being tested with employees. kelly, back to you. >> scanless pay that can i.d. you in the drive-thru. >> cash is going away.

>> i've never paid with cash more because they charge you 3% everywhere if you want to use a credit card. i don't know. little bit of both. see you soon, tyler. thanks. coming up, home ownership getting increasingly more unaffordable with home prices high and the rate on the 30-year fixed mortgage firmly above 7%. but zillow home loans says there's a solution and it's raising some eyebrows. we have those details next. >> announcer: and now cnbc trend tracker. from big cities, to small towns,

and on main streets across the us, you'll find pnc bank. helping businesses both large and small, communities and the people who live and work there grow and thrive. we're proud to call these places home too. they're where we put down roots, and where together, we work to help move everyone's financial goals forward. pnc bank. when it comes to getting your flu shot, cvs is pretty... flex. wanna schedule one online while prepping dinner? gravy. avoid the wait by scheduling for you... ...or the whole crew. or if you prefer to just pop in? do you. and if you wanna even tack on a covid-19 vaccine to your flu shot, feel free! and speaking of free? our flu shots are... well... free. really? yes, really. healthier is getting a flu shot on your schedule. cvs. healthier happens together. i did have hearing aids from another company...

i was just frustrated... i almost gave up. with miracle ear it's all about service. they're personable... they're friendly. i'm very happy with them. we provide you with a free lifetime of aftercare. meaning free checkups, cleanings, and adjustments. i see someone new... someone happy... it's really made a difference. call miracle ear at 1-800-miracle and schedule your free, no obligation hearing evaluation today.

welcome back to "the exchange." if you've been one of the unfortunate ones in the hunt for a new home this year, you know just how bad the affordability

crisis has become. as of last month the median home price in america is over $406,000 and mortgage rates are at multidecade highs with the 30-year currently at 7.37%. that is making both down payments and monthly mortgage payments increasingly unaffordable. and now zillow has a solution to that. launching a new program with just a 1% down payment option but for buyers to qualify they must have a credit score of at least 620, a steady income, and a low debt to income ratio. for more here let's wring in zello home loans senior economist orfe divongui. welcome. >> thanks for having me. >> as an economist in particular make the case for this program. >> look, zillow home loans has been operating since about 2018 and this new product is a 2% grant to prospective buyers in arizona. essentially a borrower can put up to 3% down and zillow home

loans will give them an additional 2%. it's really for people that are -- a small number of buyers who might be well qualified with high enough credit scores and who may already be paying the monthly payment and rent but lack access to a down payment. >> so doesn't fha already offer 3% down payments, i believe? so could people qualify for that program? but do you think there's still a big difference between people who can afford a 3% down payment and the 1% that you guys are now offering through your subsidies? >> look, with rents increasing so much during the pandemic, look, the typical rent has gone up 30% during the pandemic. so rent increasing so much basically normally it takes longer to save up for a down payment. but you know, you have well-qualified creditworthy renters out there who may already be paying more on a monthly mortgage -- or rent than the monthly payment would be on that mortgage. without benefiting from the upside, right?

the home -- the upside of homeownership. zillow really wants to help with that. >> correct me if i'm mistaken. one of the reasons why we have things like the 20% traditional down payment is to make sure homeowners have enough skin in the game, they don't just walk away from the house and kind of put it back on the bank or the lender. so it's really meant to protect you. are you concerned if people have a 1% down payment and then find they can't make that mortgage payment, for instance, they're just going to walk away and it's going to become your problem or i guess whoever owns the loan at that point. >> look, 40% of first-time home buyers use gifts to purchase their home. historically many first-time home buyers have recoursed to family funds, those with parents who own their homes or were able to extract home equity from their home are more likely to own. this is part of why the racial gap in home ownership is so wide. zillow wants to be part of the solution. you know, essentially, you still have a strong labor market. the unemployment rate is 3.5% right now. home values are still rising.

is mortgage delinquency rates are near an all-time low. and the credit scores of new home buyers are at the highest level they've ever been. so you know, to emphasize the risk to the financial system i think is somewhat of a fool's errand. i think that the economy is strong, mortgage rates are increasing because the consumer -- consumer finances are sitill so strong and this i a program that would help a small number of buyers. it's not for everyone. it's for those who are already able to afford the monthly payment but just don't have enough saved up for a down payment. >> yeah, i have to imagine you remember well the 2007 crisis. you know, back then there was a similar move to make sure housing was affordable enough and accessible enough for everybody and then it backfired. how do we make sure this doesn't backfire this time around? >> yeah, look, it's a tough affordability situation. but you look at demand in the

housing market demand still exceeds supply. and homeowners are sitting comfortably here. in the past decade the typical homeowner acquired 40 times more in net worth than the typical renter. and you have a lot of renters who are out there who are already paying more in their rent than the monthly payment would be. so let me give you a concrete exa example. take the typical rent in phoenix, for example. it's almost $2,000. a borrower putting 3% down, getting a 2% grant from zillow home loans today, at today's interest rates would be paying roughly $1900, saving about $100 a month, with the opportunity to build housing wealth. this is really a small step in the right direction. it's one of the solutions, you know, for a small number of people in arizona today that may already be -- you know, that are well qualified, creditworthy and may already be paying a lot more than they would pay under this program. >> why arizona to test this

program? and by what criteria will it then be rolled out to more parts of the country? >> look, there's a lot of very smart people at zillow home loans that are working on this. but as an economist i can tell you that for those paying higher rents that have not been able to save up enough for a down payment, this is an opportunity to get on the home ownership ladder and build home equity. it's really, really tough out there for renters. and unfortunately, many are already paying the price but just not benefiting from the upside of home ownership. >> orphe, it is the talk of the town and we're so glad you could join us today to explain and defend it. thank you so much for your time. >> pleasure to be on air. >> orphe divonungui. instacart has filed to go public in the next week. what the i'mo could look like and the new sign of hope for grocery delivery companies is next. before we go to break let's also do some show and tell where we show you ai chart and tell the story pf shares of payment

processor shifts 4 are down almost 4% in august prompting two upgrades this week. morgan stanley today raising its target to equal weight saying valuations are more attractive now. raymond james moving it to outperform with a $74 price target earlier this week, partly on valuation but also noting that shift 4's wins since last year have come from less macro dependent verticals. and ceo jared isaacman told us he's still seeing strength in the consumer when he joined us to discuss the company's earnings beat earlier this month. >> our hotel and travel business going very strong. stadiums going strong. ticketing going strong. restaurants there's definitely a little moderation there. it's not the euphoria of 2021 when everybody was reopening and things were going out of control. but people were ill instgog out and eat and drink. it's obviously still contributing very well to our volume growth. ic notion of what america is all about. ( ♪♪ ) this is our task. this is our mission. we have a clear focus, and we have the ability to be agile and innovate.

it takes years of dedication to get us to this milestone. it is all because of you. never doubt that a small group of thoughtful, committed citizens can change the world. it is the only thing that ever has. ( ♪♪ ) to be a woman leader, it's not so easy. but it's easy if the passion and the love is coming from your heart. the new york stock exchange is the symbol of what america is all about. the potential of capitalism, the potential of the american dream. the only way you can move a society forward is a true expression of freedom. ( ♪♪ ) ( sfx: stock exchange bell ringing ) businesses need 5g solutions today. that's why they choose t-mobile for business. mlb partners with t-mobile to not only enhance the fan experience, but to advance how the game is played. aaa relies on t-mobile's network to stay connected nationwide, so they can help get their members back on the road.

and we're helping pano ai innovate, to stop the spread of wildfires. now's the time to see what america's largest 5g network can do for your business. ♪i'm hearing different ways for me to screen for colon cancer.♪ ♪it's time to use my voice,♪ ♪i've got a choice, more than one answer.♪ ♪i sat down with my doc.♪ we had a talk. ♪knew just what to say.♪ ♪i asked for cologuard and did it my way.♪ cologuard is a one-of-a kind way to screen for colon cancer that's effective and non-invasive. it's for people 45 plus at average risk, not high risk. false positive and negative results may occur. ask your provider for cologuard. ♪i did it my way!♪ ♪

♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ ♪

another little sign of life for the tech ipo space as we stay on the lookout for instacart's filing today. joining me to discuss axios's dan primack and our very own deirdre bosa. welcome to both of you. deirdre, we want to talk instacart but any significance on this klaviyo filing? >> i think there is. because this is a company that was going public. it's a software company. it helps marketers. it would be an impressive one. it would probably go public at or around or even above its last private market valuation, about $9.5 billion. for a software company it looks good. revenue growth rate of 6%. narrowing losses. but this is 2023. and we've seen a lot of the darlings of that ipo class of 2021 trade well below their peaks. this will be a good question for instacart as well. where's the valuation going to land here? instacart in its last private round was valued at $39 billion. it has internally marked it down to about $13 billion.

so when we see those financials, does that even justify a $13 billion valuation in this environment? that's key for these ipos and anything that's in the pipeline that's going to be looking really closely at how investors receive these financials. >> and dan, anything else you'd add? >> no, i think she got it right. i will say with klaviyo one thing that's interesting unlike instacart i think you have a lot of other companies in the pipeline who are going to look at klaviyo and think we look like them. obviously slightly different end users et cetera. but instacart is a little more of a stand alone. you don't have a huge number of logistics delivery companies waiting. instacart's the buzzier name but i think klaviyo may have a little more tailwind behind it. >> finally one that gets dan to say we're getting back toroom noal -- what is normal? we've gone from a crazy boom to a winter in tech. tell me about the economics behind instacart. are they improving? >> this is an interesting question. i'm dying to know. i want to dig into this s-1 and look at these financials.

here's what we have heard. what we think we know is this isn't your typical gig economy company. we know the markets don't really like that. uber and jordache are trading below their ipo prices. investors are asking are these good sustainable businesses. the unit economics are improving but these companies are still losing money. instacart may be different in that it may be profitable and it has what we think is a substantial advertising business where the margins are a lot better. the company would probably like us to think of that as sort of its aws. the way aws is the profit engine for amazon. it pays for all of their money-losing businesses like its core, e-commerce. we know that grocery delivery is not a great business in terms of profitability. advertising is. so that dynamic is going to be really, really important here. and expectations are that it's going to make it look better than an uber or josh r door das. >> their average order size, their basket, if you will, is

bigger. even if you do a takeout for two or even four people your grocery bill is probably bigger. and i think most of instacart will say most of its orders are they call it large basket. i think they say that's over $75. and my understanding at least is that the economics for them, the bigger the basket that better that comes in profitability. so that's at least what they're probably going to argue is their big difference against some of their peers. >> deirdre? >> i would totally agree with that. and that's why uber and door dash are moving into the grocery delivery business, because they want to get those bigger baskets, they want those better unit xlikz. b economics. but we're talking about uber and doordash. we need to look out for walmart and target who are grocery behemoths that are doing their own grocery delivery as well. a few years ago instacart was the big name in this game, the big name in grocery delivery but that's not the case anymore. there has been so much more competition that has likely been eating away at its margins and certainly its dominance by some

extremely well-capitalized players like a walmart. >> i would love to know, dan, i'm sure they don't disclose this gran later but how much of the business is costco. because previous to instacart you couldn't shop at costco without a membership card but now you can. and even as a costco member myself their delivery service which is a little cheaper is still powered by instacart. that feels like an important part of the sustainable demand for it. >> i don't know obviously what they're going to break out in the s-1 in terms of customers but they're not the only ones. if you for example go to publix.com or we gmans.com to d a delivery order that's powered by instacart. there's the end user stuff you can open up their app and order from various stores but also if you go to a lot of stores directly instacart's still making money off of that on the back end. >> and deirdre, last word to you. it felt like a week ago we were saying arm, shmarm, wshere's instacart and now here we are and here it comes and i guess that means game on for the fall.

>> i think it's going to be important for the next few weeks as we see arm and instacart list. let me end by just pointing to a part of the listings market that is not doing very well, and that is spacs. this is a venture backed company that was pushed out against the odds and essentially crashed 90% yesterday. i don't know we are certain these are going to go off well. so there's that to bring into it. but it will be important. these are obviously different businesses in different industries. but all of it taken together, it's caution. i don't know that it's a slam dunk. >> no, that's true. and better.com is in the worst possible part of the economy right now, in the mortgage business. >> why did they go out? >> we had the ceo on "squawk box" yesterday. i think it was just if the windows cracked open enough they're going to walk through it. i guess dan the quick final comment on all of that would be yep, it's a bad taste in

everyone's mouth from spacs. as bob pisani said maybe we need to price things a little conservatively to make sure we don't have some high-profile blowups out the door here. >> i think that's door. one thing that's notable about instacart, they've been wanting to go public for two years now, and they don't have a cash crunch unlike how better might have. instacart didn't need the in instacard didn't need the money. bankers, they're feed generated optimists. bankers tell them the moment markets are finally ready for new issues. >> thank you both. enjoyed it. dan and deirdre. still ahead, office real estate remains under pressure creating major headaches for landlords and investors. but could the loss of revenue also threaten local economies with a default on their debts? we will explore that, next. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq,

a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay. ( ♪♪ ) ( sfx: people cheering ) ( sfx: stock exchange bell ringing ) ( ♪♪ ) ( ♪♪ ) ( sfx: people celebrating ) ( ♪♪ ) ( sfx: people celebrating ) ( sfx: stock exchange bell ringing )

welcome back. here on "the exchange" exploring concerns over office real estate with everyone from high-profile develop toers private equity investors to the reit analysts. what about balance sheets of states and the cities where hard-hit buildings are located and their municipal bond holders? the next guest says to be an

impact on munies down the line. joining me, jennifer, borrowing a quote, not in the boom loop phase yet. are we? >> correct. just published a paper on this earlier in the week and really have delved deeply into this topic. for no other reason, in the bay area and see it every day in san francisco, but came down to three conclusions about what the impact is going to be on these issuers and on their bonds. so first, this is very regional. meaning that for every city we're concerned about there's another city that's thriving. the benefit having a strong research staff, we can go through and find those communities that are actually doing quite well, and are not suffering from these problems. when you think about direct impact, the real way that happens is through the payment of property taxes. which are distributed to cities, to school districts, those types things. so the property taxes are based

on the assessed value of the community. when you dig deeper and use san francisco as an example, you can see the tax base is massive. office real estate specifically, commercial real estate more broadly, just a fraction of the property taxes that are collected every year in san francisco. it's the residential real estate that drives property taxes. we think that if there is any kind of contraction, it's something the city of sfrns can manage from direct impact. >> basically single digits for someone as hard-hit at san francisco. anywhere males lower property taxes percentage surprisingly high office? more suburban? anywhere else actually that's a little more concerning? >> what's actually interesting about it. so diverse. the, the way it comes out is really very unique. it can be the way your government is set up. property taxes, a revenue source, for instance. the state doesn't collect property taxes.

impacts some of the state's around education but states don't eastern capture property taxes and in some cases diverse revenue stream. might receive property taxes, maybe local income taxes. sales taxes. excise taxes. sometimes a very diverse revenue screen actually making impact of property taxes in general smaller. you have to dig in deep and understand how this municipal bond issuer is faring in terms of revenue diversity. >> right. any muni bonds out there? talking a lot about how treasuries on the short end, long end, yields like you can never get, but it's not that tax efficient. munies, they're you know, a little more tax efficient, maybe tax adjusted yields a little more. so is there anybody maybe seen sell-off over these concerns? do you think kearns are overblown and munies might be a good investment? >> two ways i'll answer that question. number one a bit of a time lag in terms of when these impacts -- hearing about sales

happening. large buildings, but in terms of impact on revenues, a delay there. basically how municipality collect property taxes. sometimes rules as to how that's all kind of phased in. we think there's a bit of a delay. ever an impact probably not right now. still a lot of leases that you know we're not seeing come to fruition until expiration, until '25, '26, '27, that sort of thing. back to muni markets specifically. a great time to be in munies. we say it every time, however, now you're paid to be in mixed income. a great time to get in, and even as we approach maybe some of these challenges and in some communities, munies still have a higher credit quality compared to our corporate market partners, and also default rates are far less. a low-risk profile, add in

after-tax benefits, absolute yields, it's a great time to be in the muni market. >> maybe you made the case. come back and bring you back to talk about hawaii in particular and challenges that market is facing. idiosyncratic. that's for joining us and your context. appreciate it. jennifer johnston with fidelity. does it with "the exchange." next on "power lunch," disney reportedly in talks with yet another streaming partner for espn. details. tyler's getting ready. i'll joihionheth se n m t oerid of this break.

(fan #1) there ya go! that's what i'm talkin' about! (josh allen) is this your plan to watch the game today? (hero fan) uh, yea. i have to watch my neighbors' nfl sunday ticket. (josh allen) it's not your best plan. but you know what is? myplan from verizon. switch now and they'll give you nfl sunday ticket from youtubetv, on them. (hero fan) this plan is amazing! (josh allen) another amazing plan, backing away from here very slowly. (fan #1) that was josh allen. (fan #2) mmhm. (vo) football season is here. get nfl sunday ticket from youtubetv on us.

a $449 value. plus, get a free samsung galaxy z flip5. only on verizon. from big cities, to small towns, and on main streets across the us, you'll find pnc bank. helping businesses both large and small, communities and the people who live and work there grow and thrive. we're proud to call these places home too. they're where we put down roots, and where together, we work to help move everyone's financial goals forward. pnc bank. welcome, everybody, to the broadcasting clinic we call "power lunch." along side kelly evans i'm tyler mathisen. inflation too high said powe