welcome to "power lunch," alongside kelly evans i'm tyler mathisen. coming up, all across the country, downtowns, office spaces, shopping centers at risk of becoming ground zero for a new economic hazard, the urban doom loop. that is the growing likelihood that a commercial real estate apocalypse could spiral out across the entire country.

plus, it's not just commercial real estate that is in maybe a precarious position. higher rates are creating uncertainty around housing in general, and ron insana says the fed is to blame. he'll explain more in just a moment. >> first, here's a check on the markets which are green even though they're going to be red for the week most likely. all the major averages up about .25%. kroger climbing 4%, and seeing those gains despite sales slumping as disinflation hits faster than expected. and planet labs down 15%, the satellite imagery stock delivering weaker than expected results and worth mentioning, they aren't the only space firm in the headlines as the faa is grounding spacex's star ship rocket and requiring them to take 63 corrective actions. apple also continues to remain a focus of investor attention as it becomes the newest chess piece in u.s./china tensions. higher today, but still down more than 5% this week. >> all right, joining us for the hour to talk markets, apple, and

a heck of a lot more is steve grasso, global and fast money trader. last time i saw you was on "fast money." good to be back together. >> who knee you would have a stott here? >> we have multiple offices around the globe, around the globe. >> you make it look so easy. >> as do you. let's talk about the sort of overall state of the market. september is doing what september often does. it seems a little choppy. the start of the first couple days of this trading week were negative. what do you see from now on out through the end of the year? >> i have been accused of being overly bullish sometimes, but i do pivot. so i pivot when i think there's a reason to pivot. and i still think that we're looking for higher markets going into year end. and when you look at september, people have said about seasonality, am i right? >> correct. >> seasonality happens 2020 september was terrible, 2022 was terrible. but when you look at it on

aggregate, that has skewed the last five years. that's how they figure out seasonality, they take the five years and come up with an average percentage. >> i think septembers were bad before covid. >> they're looking at that outlier of that down 9% september. there were a lot of things going on. the interest rate environment was -- >> if you're long term, you should be cheering a september sell-off if you think it's just a blip. >> someone in my position as a fast money trader and someone who trades on an everyday basis or at least every week basis, trimming and adding different amounts, you want to be proactive on those months, as kelly said, if you can get that, then you want to take it. but the problem is if you're a long term investor and you get those months where they're down and you sell at the lows. that's what most people do. think about this. i think we're making this way too complicated and we analyze the fed, where most people and most traders make life too hard.

are we closer to the end cycle or beginning? the answer is rhetorical. now if you're thinking about if we're closer to the end, what else are we closer to? the actual first cut. what's going to happen with the first cut? and everyone says then there's going to be terrible news. no, there's not. it will be greeted with open arms from the bulls on the street. and i think that's what i'm looking for. i'm looking for large cap tech to rally. >> we had china, we had rates, we had everything hit large cap tech. what have people done with large cap tech? used it as a safety play. so when banks were failing, they ran into technology. when rates were rising, they ran into technology. they like the fortress balance sheets. >> they ran in also when we started see the market price in the price cuts. we're getting closer to the cuts being a reality, now they're selling out of tech. they only want to own energy. almost like they bought the rumor and are now selling the fact. >> i think you're correct, but i think if you add in the china

dynamic, those are risks that people are looking at selling their large cap tech names. i think the bark is always much worse than the bite when it comes to geopolitical worries. usually. most of the time. when you know the old saying, when you're strong act weak and reverse. china seems to be acting very strong. i think they're very weak at this point. i think that tim cook has done a masterful job of being able to be agnostic. he's a u.s. citizen, but he operates inside of china. who else has done that? elon musk. i think at the end of the day, they will figure out ways around it. so what's happened is the negative headline for apple and china has been a contagion episode for the rest of the large cap tech or tech as a whole. i think the market is overcorrecting. >> when you say the information on china and apple, are you talking specifically about this presumed pan on the purchase of

appleal phones, the use of apple phones by ccp people and government people, right? >> correct. >> how many phones is that? >> well, i think we're talking about 500,000 to 1 million as the story states right now. so 1% to 2% of the phones that are in china that apple -- >> so we're doing a lot of hand wringing and the fact is maybe a 2% -- >> and the market is probably factored in 5 million phones or more. >> although a state owned enterprise, that's probably the biggest share. how do we rally how many people would potentially work there? >> it possibly can be, but what consumers do, they figure out ways around it when they want to get a product in their hands. so either it's two phones or they figure out which one to buy or which one to keep at home. the product is inferior to the apple iphone. and people, consumers don't like

inferior products, no matter where you live, no matter what country you live in. >> we have the good fortune to have you with us all hour long. right now, we'll bring in cnbc contributor ron insana who argues the fed is hammering the housing market in two ways. it's putting pressure on home prices and it's also to blame for the supply of existing homes hovering near historic lows. what historic lows for that matter. senior analyst and commentator ron insana is here with more, he's also a chief market strategist at dynasty financial partners. welcome, ron. good to have you with us. >> we don't say it that way. >> you know, under normal circumstances, you might expect to see rising interest rates act as a suppressant or a restraint on rising home prices. but in many markets, that is certainly not the case.

why this time? >> well, it's interesting. you use the expression doom loop to talk about other aspects of the economy. i think we have something similarly going on in residential real estate. it's counterintuitive because by raising interest rates, the fed is effectively created a post covid residential real estate lockdown. we had so many home buyers lock in, according to red fin, at rates anywhere below 6% to below 3%, 91.8% below 6%. 82.4% below 5%. 23.5% below 3%. people are not selling their homes. so the lack of supply and the rising cost of homes has created this vicious cycle. the only thing that in my estimation that could cure it and this is counterintuitive because it would bring down shelter inflation, if the fed reserve cut interest rates, it would release the supply of homes, maybe moderate the prices

and also allow more transactions to take place. that's not going to happen, as kelly just said, probably for another six months. >> in other words, you have people who are so comfortable, they don't want to move, steve. they're holding on to their homes. the result is restricted supply, and when you have restricted supply and an equal number of buyers, what happens? the price goes up. >> right, and we termed it married to your mortgage. so as ron laid it out perfectly, when you look at what the mortgages are at right now collectively, no one is getting rid of their home. that's why you have seen a bifurcated market. you have seen new home sales and existing home sales. new home sales, the builders can actually buy down those rates. so they can make it more affordable to the home buyer. you're not going to see that with existing. so ron is 100% accurate as he usually is.

you're not going to see these things develop overnight, and yes, the fed could help, but i don't think the fed really wants to make that what they're focused in on. they're focusing on breaking the back of inflation. >> look, they're creating the very inflation that they don't want because they're pushing shelter prices up. they have referenced shelter prices as a big component of consumer prices. so that is a self-defeating process. and what's also really strange about this market is that the spread between ten-year note yields which many mortgages are based, and official mortgage rates is 300 basis points. the average is 150 to 200 basis points historically, so again, there are these anomalies in the market. we s overseas sellers of bonds. the fed is engaging in quantitative tightening, selling bonds effectively as well, and they're not helping the housing market and causing shelter inflation, which they're going to worry about later in the year, and then use as a pretext

to raise rates further. i think they're looking at the wrong source with the wrong solution. they may not think about it that way. i'm sure they don't, but i think that's what's really happening in the marketplace. >> steve, that's an interesting point, ron, that you just made. which is that inadvertently, the fed may be contributing to shelter inflation. >> yeah. >> you know, not intentionally, inadvertently, and then they may use that shelter inflation as justification to raise rates even more. >> yeah, it's the same problem with the labor market, which by the way, is now in the middle of a self-correcting process. we're seeing wage inflation, and i hate to use that word, higher wages moderate. we're seeing places like walmart saying entry level wages are being pushed back down. this was again a supply issue, not a demand issue in a post covid world. i think they have identified two areas that would have ultimately been self-correcting in a post

pandemic environment, but they have chosen to exacerbate not help. i know this is not conventional wisdom by any stretch of the imagination, but that's the way i'm looking at it, and i thing the fed is causing a greater problem. >> we like unconventional wisdom. ron, thanks very much. we could talk a lot more about this topic and i know we will. and i want to specifically delve into the question of why so many people expect there to be a rate cut next year. and what has to happen for that to happen. we'll get to that in a minute. steve gragrasso, thank you. let's head over to the bond market and rick santelli. rick. >> absolutely. i guess my comment is that was an interesting discussion, but as we say in chicago, the fed has to break a few eggs to make an interest rate omelet. i think we're going to continue to see a lot of areas in the economy that don't move exactly as the fed would like, but it doesn't matter. jay powell's focused and i don't

think anything is going to change that in the here and now. but one thing that has changed is how the markets are acting. the markets were fighting the fed for a good chunk of the interest rate increase cycle. but in the last couple months, it all changed. now, as you look at a two-day of two-year, realize two-year is only up a couple basis points on the day, but nine basis points on the week. you can see there, the way we're coming back, but if you open the chart up to nearly two weeks and put twos and tens on one chard, by the way, tens are up seven on the week, so you can see there's a bit of a distinction there, but preholiday, premonday, rates seemed to be moving down. they seemed to be moving up more aggressively on the two year. the ten-year has led the way. consider this, we have not had one friday weekly close except for the 25th of august at 508 since 2007. many technicians, their favorite chart is a weekly chart. it's very important to monitor that 508 close.

if we start to close above that in twos, you'll see the entire curve move up. you're going to see a sell-off and a steepening. they call that a bear steepening, because ten-year is going to continue to lead the way, but maybe the thing this week has been the dollar. now, the dollar is down a bit on the day, up big on the week, but up big against currencies that aren't a high percentage of the dollar index. here's a year to date of the dollar versus the onshore yuan and the yen. there's a lot of issues in asia, none of them good, and you add in the german economy is sinking, these are all issues we have to contend with because when the globe gets a cold, everybody gets the sniffles. >> rick, i love when rick shakes his finger at me. points of emphasis. thank you, sir. have a great weekend. coming up, retail shrink expanded. new numbers on the impact of growing retail theft, and we'll dig into those next. plus, a rough road ahead for the automakers? just a week out from a likely

uaw strike. what is on the table and what would a strike mean for the industry? and for people like you? "power lunch" will be right back.

. welcome back. shrink and theft were central themes once again during retail earnings over the past couple weeks. some companies are finally putting numbers behind just how much the growing problem is

costing them. c cnbc.com's gabrielle is here with details. steve is also with us. let's start with what do we know in terms of the size and scope of the problem? >> we learned a couple things. 1 thing we have discussed a lot on the show is shrink is a problem, but we don't know how much of a problem. now we're finally starting to get an idea. we saw lowe's in fiscal '22 counted nearly a billion dollars in shrink. that was about $997 million. but that represents just over 1% of sales. and you have the retail industry standard, shrink, every business plans for about 1% to 1.5% of shrink. that's in line with that. >> so you're basically saying having combed through, added things up and despite the scare headlines and companies losing 20% of their value, i think of dollar general or target or was it even home depot, some of these companies lost mega market cap. you're suggesting they're kitsching sinking this and blaming shrink for what might not be an unusual problem? >> if you along at lowe's, their

shrink has increased as a percentage of sales. their revenue has grown over the last ten years between fiscal 2012 and fiscal 2017, it was representing about .5% of sales. and since then, it has jumped up to 1.03% of sales. yes, this is a growing problem for them. but then, you know, some of these other retailers, these are really small numbers. when you're looking at target, you've got $219.5 million, that's just under 1% of sales. they're making a big fuss about it. it's a problem, that's $219 million you could have had in profits, then you look at macy's. you have $11.2 million in shrink. that's about .22% of sales. that's not much. >> you have given us an amazing perspective on this. steve, should i as an investor consider shrink as i look at these retail stocks or is it a nonevent? >> i think to the point that you just made, if these corporations can't figure out how to stop the

shrink, because if they're using it as a method of kitsching sinking it, shouldn't they figure out, don't they look inept? if you say there's a bunch of reasons or a bunch of ways for you to stop the shrink. >> or they say it's a public policy problem. you know, they throw it back to, hey, this is happening, and we have all seen the video footage of the smash and grabs. >> nobody is arresting them. >> why isn't there better security? what's the public policy problem, if you have a corporation, you have to defend your people that are working for your corporation. not a public policy problem. it's you have to enforce the laws as they are within your corporation. >> one thing that i could never figure out about the shrink narrative is just take an abercrombie and fitch, which had amazing results. the most desireerable sought after sector of the market and it did not mention shrink in the latest quarter. wouldn't the company with the most desirable items in the market have a bigger shrink, or

maybe i'm misreading the shrink that is more of a problem, maybe it's more the walgreens and dollar trees. >> there's a good reason for that. that's because abercrombie has a high mall exposure. you see less shrink in malls. it is harder to shoplift from a mall. it's easier to get away, and it's really as simple as that. we have all been to a mall before. you have to leave the store, walk through macy's, get to the parking lot. you're going to get caught before that happens. but abercrombie is recently expanding their off-mall presence, opening a lot of stores in new york city. we could possibly hear more about shrink from them soon. >> if you're a nordstrom and you're the entryway to a mall, you can walk in right there in paramus and walk into the men's section and gather suits or shirts or jewelry by the arm full. >> have you heard, we have all heard the number, right? $1,000 worth of shrink,

quote/unquote. if someone is stealing stuff off your shelves and it's less than $1,000, you let them go. >> yeah. >> that's a bad perception, a bad look, because now you're only adding to the violation of it. >> if your choice, and don't know if there's data, but have the companies to want to combat that do the broken window theory and stop it at the source. the cost of labor now, the cost of staffing out those locations must be formidable. >> if you want to stop shrink, you need to properly staff your stores and get your supply chain and inventories in line. it requires an investment. some retailers like the generalist, who the margin on products are so small, they don't have the extra money to protect them. >> why can't they do something where -- they have all got, a lot of these grocery stores -- department stores have those things that you have to disable to get out. what if you had that there, and if you had not paid for it, and you're walking out with the tag

on it, the doors lock? >> it's a cost event for them. and also, how many times have we paid for the goods and we have set it off? or we haven't set it off and go home and you have to youtube how to remove that from your clothes. >> yeah. well, it's an interesting topic, and gabrielle, thank you very much. steve, always good to have you here. >> further ahead, kroger's crunch is good news for consumers, bad news for kroger, as prices that shoppers pay for groceries stabilize for fall. the supermarket operator sales are sagging, but investors don't seem to care. we'll discuss kroger and more in three-stock lunch when it's time for that. you have to wait a little while. it's coming up in a little while. you'll be here for that. work up an appetite.

how's the chicken? the prawns are delicious. oh, i have a shellfish allergy. one prawn. very good. did i say chicken wrong? tired of people not listening to what you want? it's truffle season! ah that's okay... never enough truffles. how much are they? it's a lot. oh okay - i'm good, that - it's like a priceless piece of art. enjoy. or when they sell you what they want? yeah. the more we understand you, the better we can help you. that's what u.s. bank is for. huge relief. yeah... ♪ 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.

welcome back to "power lunch." an active week for energy, especially brent. pippa stevens has the details. >> it was a very big week for energy complex broadly. starting with oil, with brent topping $90 for the first time this year. after saudi arabia extended its 1 million per day production cut through the end of the year with russia also curbing exports. nat gas, though, falling this

week as we enter a seasonally lower demand period. energy stocks following oil higher, gaining 4% this week. refiners, a bright spot with marathon touching a record high today. philips 66 is at a five-year high. a different story for clean energy. the icln, which tracks the space, sank to a three-year low today. higher rates is hitting every part of the ecosystem with each vertical, solar, wind, and hydrogen facing its own problems including supply chain delays and lack of clarity around tax credits. a lot of red there on the clean energy side. >> i'm not going to dwell. i'll save it for the next week on the wind front. thank you very much. >> let's get over to kristina partsinevelos now for the cnbc news update. >> well, ukrainian officials say at least four people in a wave of russian air strikes. a police officer died in one of the strikes which reduced a police administration building

to rubble, and president volodymyr zelenskyy's hometown. more than 50 others were wounded in the attack. switching gears, a cpap manufacturing agreed to a settlement to claims now recalled devices blew pieces of foam into users' mouths and lungs. the sensitive agreement only covers reimbursements to users and vendors and does not address other claims related to injuries from the issue. >> talk about a diamond in the rough, a seve-year-old girl celebrating her birthday found a 2.95 carat diamond while visiting the aptly named crater of diamond state park in arkansas earlier this month. park officials say it's the second largest registered by a park guest this year. there is hope for me, kelly, back over to you. >> and for all of us. thank you. kristina partsinevelos. >> still to come on "power lunch," cities are struggling. whether from companies cutting back on office space, renters moving to the burbs, or crime driving away retailers.

and according to one professor, it has the potential to send these economies into an urban doom loop. we'll ask rick caruso about what he's seeing when we come back. 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. 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 may be known for my legendary football career,

now's the time to see what america's largest 5g network but truth is, i love a bunch of sports. the only trouble is knowing where to find them. that's why i got xfinity. so, i can easily find and watch whatever sport i'm into all in one place without missing a thing. even if it's football, australian football, or football football. in a word—it's fitz-credible. i got to trademark that one. this season, eligible xfinity rewards members can get up to $100 off nfl sunday ticket from youtube. sign up for xfinity rewards now.

. the urban doom loop that is what experts call the cycle of office vacancies causing the downtown downturn and leading to more of a further downturn with commercial real estate prices off more than 16% from their 2022 highs. and companies vacating massive office spaces. experts say cities across the country risk falling into that doom loop. joining us now is one of the experts who coined the phrase, but he also sees the potential for solutions. columbia business school professor of real estate and finance. professor, welcome. good to have you with us. let's have you explain quickly, if you would, what you mean by the urban doom loop. and it's not just commercial real estate or office buildings. it has a metastasizing effect throughout neighborhoods and communities. >> yeah, that's right. the problem does start with the office demand, and we have seen with the advent of remote work

and hybrid work a dramatic reduction in office demand over the past three years that has led to rising vacancy rates and in fact all-time high vacancy rates in the office market right now. and that does put pressure, downward pressure on the valuations of these offices. you mentioned that they're down probably 20%, 30% already. they're likely to fall by more. and that causes downward pressure on property tax revenues. for a lot of cities, office tax revenues and a big chunk of their tax revenues. often as much as 50%. some of that is coming from office, maybe 20%, so maybe 10% of overall tax revenues for cities comes from offices. if they lose about half of their value, tax revenues fall and that creates a huge hole in the budget. >> so the transaction prices of office buildings has declined very markedly, am i correct on that? that's number one. number two, is this a phenomenon that is affecting more the biggest of the big cities, the

washingtons, the l.a.s, the chicagos? or is it more pronounced in, say, what i'll call the medium tier big cities, a milwaukee, a columbus, you know what i'm driving at. >> yeah, this is a national phenomenon. it's arguably an international phenomenon. within the u.s., i think the cities most severely effected are cities in the west, san francisco, seattle, but also medium sized cities, cities like minneapolis, for example. what these smaller cities, the problem that these smaller cities have is often there's not a whole lot of other things the cities have to offer in their downtown areas besides the commercial office district, and when that office district starts to falter, it sort of affects the entire city. places like new york city, at least, sort of have more amenities, more culture, more restaurants. they have other things to offer to their local population and that sort of keeps them attractive even in the wake of some of these rising vacancies. >> we could say that new york is

an outlier or we could say it's a preview of what's to come, maybe the rest of the urban core, and this is the best case scenario, we don't want to see the worst case, but in the best case scenario, people are in the city for other reasons. more residential, more experiential oriented. >> that's right, the work and play. not just the emphasis on the work but also on the play. and i think our cities will have to evolve to be more of that, provide more entertainment value, maybe more tourism. i think that's sort of the city of the future. cities that are less oriented toward work, more towards entertainment. >> what is the picture of the debt that office owners owe to lenders and how soon is that debt coming due, and what is that likely to mean? >> that's a tremendously important question. there is about, by lots of folks' calculations, about $600 billion of office debt that's potentially in trouble. a lot of that debt is sitting on banks' balance sheets. banks have about 60% of

commercial real estate debt on their books. and for some banks this is a material part of their book of business. and so to the extent we see large declined in property values, some of that debt is going to get impaired and have to be written down and it will sort of erode the equity of some of the banks or particularly exposed to commercial debt. so that could potentially be sort of an additional spillover mechanism, another doom loop if you want, where these local banks that are now have less resources to make local business lending, you get local credit crunch and it drags the local economy down further. >> professor, thank you very much. i know we'll have you back again soon to talk about this because this is a really critical problem and so many cities across the country. thank you very much. los angeles, one of the cities seeing office vacancies rise, and one billionaire developer is on the ground there watching the problem. pitching solutions. joining us now is our friend rick caruso, founder and ceocar.

good to see you. let's talk about the vacancy rates in your, let's call them commercial properties. i note that back in 2016, you had basically 100% occupancy what's the occupancy like today? >> hi, tyler. we're fully occupied. we're still running a very strong portfolio, but we're in the retail side of the business and we're in outdoor centers, as you know, outdoor properties, and they remain strong and our growth continues at a double digit pace. so that's also a question which we have talked about in the past of how the consumer is doing and the consumer spending. when you take a look at what the professor was talking about, downtown office, which i'm not in the office business, they're running at over 20% vacancy right now. and that is a significant problem, but i also want to say, i think there's a solution to those problems in these downtown corridors. >> what is it?

>> well, listen, first of all, it has to start with the cities, the counties have to be good partners. it's very difficult to fill up office space when you have homeless problem at the base of the buildings, when you have a crime problem in a lot of these downtowns. when they're not clean. so what you see happening in los angeles, there's a shift from the downtown corridor to other areas of los angeles where the office product is actually doing pretty well. the downtown product is really struggling. and the real impact that happens with that, in addition to the building owners losing their buildings or the banks taking them back, and the banks don't want them, by the way, is all of the small businesses that are dependent on that daytime population get impacted, and 90% of the economy in los angeles and most cities around the united states are based on small businesses, and we need to protect those. clean the cities, solve the homeless problem, create a better environment for people to

come to work. it's pretty simple stuff, but the government needs to be a good partner with these building owners. >> rick, what about just to circle back to our kind of discussion/debate about shrink and retail theft, you have a lot of these outdoor shopping locations. how much of a challenge is that for you or for your tenants? >> well, i think it's a challenge for everybody now. listen, on our properties, we have a zero tolerance in terms of thievery and we have a lot of security. we have a lot of systems on the property from a security standpoint. the grove alone has over 300 cameras. all our properties are highly monitored because we want a safe environment. that's our number one priority. we want to make it safe and happy for the consumer, the mom, the children, the family to come and enjoy the day. so we spend a lot of time and money on that. but small businesses, streets that don't have sort of this whole ecosystem that we have, really can't afford that so they're dependent on local government. but shrinkage is a huge problem for retailers.

the numbers you posted earlier are massive. >> what is the -- you make a really good point, i was talking to a friend who is the head of a mid-sized regional bank in seattle. they just opened a brand-new beautiful downtown headquarters, and they find that they are impacted very, very distinctly by homeless people, by drug use, right on their doorstep or in their lobby from time to time. it has marred what would otherwise be a very celebratory sort of environment. what is the impediment in cities to doing the kind of repair, clean-up work that you say needs to be done? are the obstacles political? are the obstacles about policing? what are they? >> i think the obstacles are political. i think the obstacles, we have elected officials that don't have the courage or maybe they don't have the wherewithal or

equipment to make some smart decisions. they're not complicated decisions, tyler. clean the streets. get the homeless in sustainable housing. make the place safe. police it. you know, these are basic things that the government needs to do, and they're not doing it in major cities around the united states. so when you're a ceo or owner of a business, your priority is to keep your employees safe and your guests safe. you're not going to locate your office headquarters where you're putting your employees at risk. that's why these downtowns are suffering. certainly, work rules have changed. on and on. there's a new normal. there's no doubt, with the professor was talking about with the debt, no doubt. but i really believe that you can get buildings filled back up, some of them maybe not because they're antiquated. filled back up, if you create the right environment inside of them and around them, like we do

on our properties. >> you sound like a guy who ought to run for mayor, rick. >> i tried, tyler. >> i know you did. i know you did. rick caruso, always good to see you. thank you for your candor and foresight. >> great seeing both of you. thanks. >> you can't try once in politics. >> you have to keep going. >> have to go 10, 20 times. >> coming up, stalled out. negotiations between the big 3 automakers and the union are at a standstill with a potential strike just a week away. a lot of auto stocks are green today. we'll get the latest details from the bargaining table and what it means if you're looking to buy a c sn.aroo "power lunch" will be right back. (sfx: stone wheel crafting) ♪

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? ♪ (sirens) [due at target in 5!] copy that. make a hard left down the alley. network's got you covered. [please confirm requesting back-up.] -changing route. -go. roadblock ahead. ...back up, back up... reverse! reverse! next level moments, we're 30 seconds out. need the next level network. [north corridor, hurry!] -coming through! -or 3, let's go. the network more businesses choose. transplant received. at&t business.

welcome back. we're one week out from a possible uaw strike. that could eventually cause a major strop in the supply of vehicles. just a couple years after we already had one during covid and as they try to transition to the ev world. let's bring in phil lebeau for the details. >> hey, kelly. let's start first off by talking about new data regarding used auto prices and the reason we're showing you this is because i get a lot of questions from people saying if you don't have the big three cranking out as many vehicles what's going to happen with pricing on used

vehicles which spiked late last year, early this year. here's the latest data. 7.7% decline compared to last year. more importantly, a 0.2% increase compared to july. they're stabilizing. a more normal used auto market. average retail price down 0.4% that is good news that we're not seeing the continuation of what we saw earlier this year. so you are seeing a more normal used market. take a quick look at the auto dealers, some of them, and the implication is they will continue to do well, whether there's a strike or not because there's enough demand for new and used vehicles. with regard to the uaw and the big three, we're not at a point where we're now at a point where we're getting proposals, counterproposals. and the wage gap, whether you call wage and one-time lump sum pay, uaw at 40%, compare that with where gm, ford, and

stellantis are. this is generally where they are. stellantis is all wage, gm and ford is a combination of wage, one-time lump sum payments and this is going to continue over the next week. there will be proposals and counterproposals. we'll see how much ability there is for both sides to close that gap between % and the low teens, which is where the big three are right now. don't expect a lot of movement in these auto stocks until we see some kind of a resolution, and again, guys, we're not trying to be hyperbolic but almost everybody we talked to in the auto industry says they do expect some form of strike on friday, whether it's one automaker, more than one, a targeted strike at a plant, or an entire automaker. that is the expectation in the industry. >> those numbers of proposed wage and benefit increases are over multiple years or one year? >> over four years. so the uaw is saying, you give us 40% over the next four years, and theirs is strictly about wage. gm and ford are saying we're

going to give you 9% and 10% wage increase and two lump sum payments over the next four years that bring it up to 16% and 15%. stulanlts today was 14%, strictly on wages. >> that's $6,000 one time inflation payment, that's included in the 14% kind of math, phil? i didn't realize that. >> i don't think that those are included. those one-time -- there's a lot of lump sum payments here. you have got signing bonuses, especially at gm and ford. and you also have lump sum inflation bonuses. so that there's some protection here of $5,000, $6,000. it depends on the automaker. so those are in there as well. >> okay. phil, thank you. we appreciate it. steve, i wanted to kind of get into it, because people look at that and say why offer 14% when someone else is offering 40%, but these lump sum payments in some cases are quite large. these automakers are going to be on the hook for higher costs.

>> this is in the face of them losing billions trying to ramp up on ev production. phil brought on the show last night a great adam jonas stat that said that everything we're talking about is only 4% of the big three's global revenue. so we're not talking about a -- when you look at these numbers, as you said, they look tremendous. but in relationship to the revenues, they're not that large. the problem is there's been nothing but headwinds for the big three. >> interesting. always good to have that perspective of how much money are we really talking about here in comparison with total revenues or profits. >> all right, steve, thank you very much. >> and folks, we have more power coming to you next.

i was told my small business wouldn't qualify for an erc tax refund. you should get a second opinion from innovation refunds at no upfront cost. sometimes you need a second opinion. [coughs] good to go. yeah, i think i'll get a second opinion.

all these walls gotta go! ah ah ah! i'd love a second opinion. no. i'm going to get a second opinion. with innovation refunds, there's no upfront cost to find out. so why not check like i did for my small business? take the first step to see if your small business qualifies for the erc.

welcome back, everybody. yes, it's time, it's time for three-stock lunch. first on our menu today are shares of kroger which is up 4.5% after news they're paying a billion dollars to settle opioid claims and selling over 400 stores. their second quarter results were mixed. a beat on earnings but at the same time a miss on sales. we turn to steve for our trades.

can't quite figure out why the pop in kroger today? >> nor can anyone. i think it's a relief. when you see a settlement, there's a lot of algorithms that read the tape. once you see a settlement, they'll say, okay, it's clear to be buying the stock. i always talk about the three-day rule. major event, you want to see how the market absorbs it on day three. i haven't always adhered to it myself, but for this one, this would be a sell for me. think about the three things that you just raised on that intro. none of them are positive, other than a conclusion to that settlement. >> fair enough. we have snowflake up more than 3% saying it has best in class growth rates set to benefit from increasing demand in a.i. applications. what do you think of snowflake? >> this is going to be a sell

again. if you look at what they had said, they said that their product revenue growth, they ratcheted down from 44 or 45%. i think a crm could do what they do very easily. they have a partnership with amazon. i'm not sure what that partnership is. i've seen it written up as a frenemy partnership. if i have to rack my brain and figure out that partnership is, i can't buy into it. lastly, consumption versus subscription. not a very good tail wind if you have a business strategy. i would rather get that reoccurring income constantly without thinking about it, don't give your customers the chance to say, maybe i don't want to pay it. >> instacart, what's happening with its contracts. that brings us -- it's funny because these are three sells for you even though you're

probably one of the more bullish guests that we've had on. and gilead, they got an upgrade. the price target was raised -- >> i am underappreciated and undersold. >> i'm feeling like it, man. i'm feeling like gilead. >> if you look at the performance, yes, it is oversold. it is underappreciated. and you can look -- for one month, down 5%, three months down, 3%, for the year it's down 11%. does it have an obesity drug? that's the way you have to look at these drugs now. does it rhyme with ozempic, if it doesn't, it seems like you can't buy these names. i think biotech is going to have a rebirth and you're going to see micro biotech start to get

gobbled up. you need to have a -- i'll give you a bonus for the three-stock lunch. i think amgen, they are in trials with an obesity drug. they have not been respected for that as of yet. that could be the one that you want to bet ongoing forward. >> getting a little love today, up nearly 2%. >> and just had that settlement with the government, with amgen horizon, they're allowed to move forward. a barometer on whether the fcc is stepping back. we have a little time left. we're going to have steve power through on the other side of the break.

people are excited about what ai will do for them. we're excited about what ai will do for business. introducing watsonx a platform designed to multiply output by tailoring ai to your needs. when you watsonx your business, you can build ai to help coders code faster, customer service respond quicker, and hr handle repetitive tasks in less time. let's create ai that transforms business with watsonx. ibm. let's create.

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. welcome back. as we hit closing time on "power lunch," we got a couple of your stock bails. but people want to know about your apple position. >> i think it's overdone. as most people in the market know, the market overcorrects and undercorrects. in this one, they overcorrected. i think this was sort of an easy thing. this is not a big macro theme for me. but i believe when china barks this loud, you really want to buy that news, you don't want to sell it. >> what's your biggest position. >> ethereum gray scale trust. i like the tail wind of the etfs coming out.

and eii expect it to do a lot better in the future. >> what about coinbase? >> that's a no touch for me. for me, it's too -- i have to understand something and really get my arms around it -- >> you would pick ether over coinbase? >> we got to leave it there. thanks for joining us on "power lunch." thanks for wearing that cowboys' hat, man. really? really? welcome back to "closing bell." i'm scott walker here at the new york stock exchange. this make or break hour begins with a tough week for apple and nvidia's recent pain will move over to other cap stocks. here's your scorecard. the major averages including the nasdaq, well, they were up modestly for most of the day. it's evaporating. nasdaq has gon