♪ (a lovely day) ♪ ♪ (lovely day) ♪ ♪ (lovely day) ♪ ♪ (lovely day) ♪ a bank that knows your business grows your business. bmo. good tuesday morning welcome to another hour of "squawk on the street. i'm carl quintanilla with sara eisen. today energy prices a major part of the fed's inflation fight. citi's ed morris will join us on why he says $100 oil may be coming. the ceo of chipotle on the state of the labor market, inflation, and whether he sees

consumers getting more cautious. instacart is getting ready to make its debut, pricing at 30, implies under $10 billion valuation. indications for the first trade above $39. we'll bring you that first trade as it happens. topping the tape, market is in wait and see mode ahead of the federal reserve meeting tomorrow s&p is selling off down 0.6 of 1% investors widely expect there to be no change about interest rates but the message about the path forward will be key let's bring in cnbc senior markets commentator, mike santoli. what is expected in terms of the tone and the outlook for rate? >> tone will be to maximize flexibility and react to data as it happens that's the mode they want to stay in. i don't think they'll necessarily try to put 100% chance of a november hike on the table, but have you to be open to it and respond to the numbers. i think that the market movements, the yield move on the

long end as well as what's happening with fuel prices, it complicates the story, but i don't think in the direct way of saying, now they have -- are more likely to tighten i think higher fuel prices more immediately pushes against growth and depletes the ability of consumers to feed inflation elsewhere and discretionary items. the history's clear. 2008, two fed members dissented from the cutting of rates after bair sterns failed nobody looks back and says, that was a great idea we should have raised rates instead of cutting 2011, ecb, same thing. they hiked into an oil spike, although that was a brief turn-around. >> exactly my point is, i think they'll not necessarily just take that on face value and say, this is inflationary not to mention the external factors, the strike, the shutdown, the student loans and energy prices that at least some doves, morgan stanley is a good example, thinks that's additional reasons to stay pat. >> that gets at what the market

is most concerned with right now, which is how long can this expansion stay sturdy? is the economy going to remain resilient? you're seeing the consumer cyclicals and industrials waiver i think that's why the fed is not the worry point number one, at least until it's clear it went too far. >> and, you know, the stronger oil prices, higher bond yields, stronger dollar, and what's happening, it doesn't typically happen, is that oil has been marching higher and the dollar has been marching higher alongside it there's one of my charts of the day today. that's never quite a good sign they usually move in opposite directions i think the last time that happened was, i don't know, around covid times. >> it did happen during covid times. >> when there were concerns around oil. >> i've definitely seen the correlation has loosened up n part because the u.s. is a net exporter of oil. in the old day the petro dollar was we need to buy oil at higher

prices overseas and that hurt the value of the day jpmorgan pointing out it's looser of a connection both of those things act as tightening mechanisms, dollar higher and oil higher are both restraining growth on some level, restraining profitability on some level. also with the yields and oil, if it's all supply driven or at least largely supply driven, too many bonds being sold, not enough oil being bruised because opec is withholding it, that's an economic message, too it's not just demand/pull type story with oil or obviously growth looks better, therefore, yields are going up. >> mike, we'll talk in a little bit. mike santoli starting us off. take a look at what the recent rise in oil might mean for inflation and the fed's decision our next guest says a combination of reasons may push oil over creating downside for

2024 citi's ed morse is with us thanks for the time. you have had elements of a dovish message on crude for much of the year. is that changing wholesale >> we had a quite bullish view we weren't so far off in arguing it was likely to average around $83 a barrel, which is more or less where it has been averaging, although now it's being pulled out higher than that yes, we definitely have a view that supply will outweigh demand sooner rather than later in that sooner we're on the edge of refinery maintenance and that means there will be a lot of oil unsold in the market and filling up inventories in a way we had the summer with the cuts accelerated by saudi arabia and russia making sure that there

was a pull down, an inventory draw we see inventory draw turning in the coming months into what we think is a certain inventory build wherever demand is going in all likelihood. >> what kind of on the downside next year, what might we be looking at >> so, we're looking at demand growth that's going to be significantly lower than what we think has been forecasted. we think there are a lot of people with us that are arguing that between europe, china and the united states, the slowdown of the entry into recession is going to make it clear that global demand growth is going to be in the low 1 million a barrel plus day just as gdp growth is likely to be lower next year than this year as a whole. with that, non-opec production alone can more than satisfy the demand growth. so, we're looking at prices weakening to blow not only $90 but below $80, into the $70

range in 2024, all else equals, and it will make it difficult for opec to bring money -- bring oil back to the market that's going to probably create a little dispute within the opec countries themselves we have five -- what we used to call the fragile five countries. they're all seeing higher production rather than lower we're pretty certain iran will be up between now and the end of the year iraq has a dispute to work out between baghdad and ankora, basically, on the reopening of the kurdish pipeline we think it's in everybody's interest to see money flowing, whether you're in kurdistan or baghdad or in turkey and we think sooner or later, probably by the end of the year, we'll see that 450,000 barrel a day flow going up.

and on top of that, iraq is adding more oil. mexico and venezuela adding more oil. we see -- we see even nigeria potentially producing half a million barrels a day, more on average by the end of the year than they were all last year and the year before. so, we think there's plenty of oil in the market to bring prices down. once we get through this hump. the hump has been created by taking a little too much oil out of the market, for cautionary reasons, at a time when inventories were unexpectedly very low >> ed, i talked to secretary yellen yesterday about this. she said they are closely monitoring the price of oil. we've seen this administration take action before when oil prices got too high. what are the options for them? what's the magic number? >> well, we think we're getting through the magic number it depends on whether we hit 100 and how long it stays above it you know, the administration is

concerned about heating oil prices the they're concerned about gasoline prices. what can they do about it? one thing they can do about it is focus on where the real shortages are. the biggest shortage is in the east coast one, lack of refining capacity, lack of pipeline capacity to bring in products from refining centers of the country and we have this obstacle called the jones act which means you need an american flagged vessel to bring oil from the gulf coast to east coast if they suspend that, that will make life potentially easier they already indicated they're going to halt after this round of filling of the svr is completed. but other than freezing exports, which we think they're not going to do, there's not much else they can do to deal with the situation. other than working on getting that iraqi pipeline up and running.

and see what they've done in encouraging more iranian oil to come into the market. >> it's been a tough market to read, trying to see around the corners for much of the year we'll see if you can help us see around this upcoming one ed morse at citi . turning to one of the hot stock stories, instacart set to start trading today at the nasdaq leslie picker is there what are you seeing in the latest indications >> indications coming in about $40.50 a share or so, that implies a gain of 35% from the $30 ipo price. but we're still about an hour, hour and a half away from the first trade. right now the underwriters of the nasdaq, they're finding that price that matches the highest number of shares, buyers and sellers paired together in order to open the stock. they're currently -- they currently have matched about 1 million shares out of 22 million total. now, technically about 13 million shares are claimed by

the cornerstone investors which is norges bank, d1, tcv and valiant agreed to buy at that price. no money has changed hands quite yet. a higher open would be a reprieve for a company that initially filed confidentially 16 months ago, waited for the right moment as higher interest rates prompted a selloff in technology stocks. it's not the only company grappling with what could have been, though there's a large proportion of vc-backed startups that reached their near-term valuation peaks two or three years ago they're deciding whether to do a down round ipo or stay private a little longer. that's why we've seen such a large drought over the last 18 months in the ipo market on paper, instacart is profitable, it's growing, multiple is coming in at a discount but investors are

weighing intense competition, both from grocers and other platforms like doordash. we'll be here to monitor the action from the nasdaq as the matching continues we're expecting an opening somewhere afternoon, maybe 12:30 or so, but, you know, stay with us and we'll bring you the latest >> leslie, thank you leslie picker this morning another important day for the ipo market we'll hear more from instacart ceo fidji simo. chipotle hope consumers don't buy more groceries and continue to dine out ceo brian niccol is with us next

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kind of unwinding the progress it made from 79.75 up to 85 the last couple of weeks. >> wasn't this a cost-cutting story at disney with the iger strategy >> the whole strike about union wages. >> yeah, exactly a lot of spending. markets giving a thumbs down let's turn to the restaurant space. chipotle's latest earnings showing the company is still dealing with food prices the stock is down more than 8% since that report in july. joining us with an update is chipotle ceo brian niccol. welcome back how is that inflationary pressure looking overall in theeconomy and food we start to see it come down >> yeah, good morning. good to be with you guys we've seen kind of the inflationary environment moderate it's still in the mid single digits with labor and food year-to-date we've taken no pricing, so we're actually behind the inflation that you've

seen in restaurants in general as well as at the grocery store. we're always evaluating the puts and calls we need to navigate through. fortunately we've got a great brand with really powerful pricing command. if we need to take pricing at the end of the year, obviously we'll do that. i hope we can get back into a normal cadence of how we used to do this. we do it like once a year in that 2% to 3% range. very predictable i hope we get back to that way of doing business. >> this year it will be more than that? >> we haven't decided yet. based on how we've seen the year go, part of the reason we held off doing any pricing year-to-date, we wanted to see what happened with inflation, both on the labor side and the food side. and it appears to be moderating. i'm optimistic we'll get back into the normal cadence we did historically, the 2% to 3%

range. >> what about the labor environment, what are you seeing there? particularly, how do you plan to manage through the minimum wage hike in california to $20? >> yeah, you know, we've always paid well above minimum wage, the same to be true in california obviously, i think that takes effect in april of 2024. and, you know, accordingly, we'll take a look at the whole business and evaluate how much needs to come through pricing versus how much we can grow through it i'm sure some piece will be handled through pricing. on a national basis, you know, labor appears to be, again, one of those things that's moderated in the mid single digit range, which is something we can plan for and manage the business accordingly. >> brian, a lot of attention has been paid to you on just your ability to get through put, use innovation, technology to ease the whole engineering part of food delivery. are those stories well enough understood are there going to be more interesting ways to make

guacamole in the next couple of years? >> yeah, look, one of the things we put an emphasis on is how can we be more productive in the restaurant and how can we improve that restaurant experience for our team member that ultimately results in a great culinary experience for our customer you touch on a few things. we're looking at things where we can automate prep. we still want to do fresh food every day in the restaurants, which means cutting, coring, mashing avocados but there are ways we can use robotics, automation in a way to do it in a more efficient way we have the autocavodo which cuts, cores and cuts out the fruit and our team member just has to mash the gauc and put in the other ingredients. we're looking for those solutions that become an assistant for our team members to do their jobs with more productivity, more efficiency, more speed kind of the -- we went down this path of asking, what are the assignments that folks would

appreciate our ability to automate or simplify cutting, coring, scooping avocados is one of those things. we've been working against that. we have a lot of fun things happening in the space trying to figure out how we automate our digital make line we're working on some new grills that we can increase the cook times. but all these things ultimately are driven against productivity and making the job easier for our crew so we can do fresh food, real culinary every day in the restaurant. >> i'm looking at a five-year stock chart. it's an amazing growth story, chipotle is, i don't have to tell you that. where does the next leg of growth come from is it international? >> i don't want to walk by all the growth we still have in the u.s. and canada. we're only at 3,300 restaurants. we believe it can be 7,000, 7,000 plus restaurants in the united states and canada yeah, we're excited about the opportunity for chipotle to go outside the u.s. we have company operations in

europe we'll continue to develop the europe market with company operations we just announced a partnership in the middle east, with one of the best operators in that region we'll be opening some restaurants in kuwait and dubai in early 2024. we're really excited about that opportunity. and, you know, as we kind of roll the concept out and talk to consumers around the world, a lot of people like the idea of fresh food, great culinary, clean ingredients and great speed and great value. i'm optimistic there's another story of growth to be had outside the u.s. to complement the great growth story we have going on in the u.s. >> what are you seeing in the u.s. you mentioned value in terms of the consumer health in general where does the $12 to $13 burrito fit in when consumers cut discretionary items when they're feeling more stress? >> we're still a tremendous value because our burrito is

less than 10 bucks across the country. and, you know -- >> in new york it's like $13 speaking from experience. >> i'm sure there are markets where it is a little more. in general it's still less than $10. relative in just about every market, we are about 20% to 30% cheaper than the competitor that provides the same quality of food, the caliber of food, and the convenience at which we do it we've got a strong value proposition. your question about what are we seeing with consumers. we continue to see really good foot traffic i think we shared this in second quarter results. we have traffic growth we continue to see that traffic growth i think that's something that's really important i think the best health of a brand is to have traffic growth complimented with some pricing if we need to do pricing i feel really good about how our value proposition is playing out and how our operations are executing so consumers feel like they're getting a great

experience for what they're paying >> finally, would you argue -- some argue mcdonald's, especially the breakfast day part, is a proxy for employment? you generally don't stop and get mcdonald's breakfast unless you have somewhere to go in the morning. would you argue the same about chipotle if that's true, are you worried about what consensus says about unemployment next year, next summer, let's say? >> when i've gone back and looked at the data on what happens when there's been a slowdown, chipotle has been one of those fortunate companies we were one of the last ones impacted and the first ones to recover. and i think that will be true if we do end up having a slowdown and unemployment weakens but one thing that we continue to see is every income cohort, you know, sub $100,000, sub $75,000, north of $150,000 income, continues to talk about a great value proposition from

chipotle we know if we stay focused on great culinary, great speed, and protect our value proposition, you know, i think we'll weather whatever comes our way and based on what happened in the past and what will happen in the future. >> appreciate the update really good to talk to you thank you. >> great to be with you guys thank you. >> brian niccol, ceo of chipotle. starbucks making a record investment in china. td cowen is not buying that story today. they downgrade the name. we'll talk to the analyst behind that call in a moment. >> on the flip side, the street giving a vote of confidence to royal caribbean, cvs and dell all upgraded for details you can head to cnbc.com we're back in two minutes.

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couple hours into trading. still hovering near session lows let's go post to post with bob pisani. >> september is living up to its reputation of being a lousy month for the markets. two sectors that are looking very poor in the last week or so, technology stocks and consumer discretionary taiwan semi, one of the big semis that trade down here this was $95 not long ago. now at $88 all watching that arm ipo. the arm priced at $51 on the nasdaq, went to $69. this morning $54 to $55. still up, but definitely off the

highs. salesforce, one of the big names in the dow just $225 a week ago now $213 ibm also a leader in the dow, down in the last week. both of these big tech names have been weighing on the dow jones industrial average then the consumer discretionary group. remember housing was such a big leader in the middle part of the year pulte has been looking rather poor in the last few weeks down 7%. it was $85, $86 less than a month ago. now $76. most home builders are coming down there are supply issues. demand is high for new homes mortgages are an issue some retailers have been acting poorly lowe'shas been terrible this week the lowest level, $215 in the last three months. so, a lot of the consumer discretionary retail stocks are not acting particularly well people are talking about the

return of the consumer loans that are out there and, particularly, the student loan repayment situation. banks are not horrible but not having much energy there's comerica, down 12% it was $48, now $42. not awful but not showing any movement the only thing showing energy is oil. advanced decline line in september living up to that reputation, definitely on the negative side. back to you, carl. >> we'll see what happens in a couple of weeks, bob pisani. let's get a news update with a look at the latest on the uaw strike with bertha coombs. >> there's a new deadline in the united autoworkers strike as it enters the fifth day the union is now threatening to expand the strike to more gm, ford and stellantis plants if the two sides don't make, quote, serious progress in negotiations by noon this friday.

the union is demanding, in part, a minimum of 36% pay hike. that's down from 40% as it currently conducts targeted strikes of 12,700 workers at three plants the pressure from the uaw to move negotiations forward comes as former vice president mike pence placed blame on the biden administration's electric vehicle push >> i guarantee you that one of the reasons -- one of the things that's driving that strike is bidenomics and green vehicle and autoworkers know it. in canada, autoworkers at ford put strike plans on pause for at least 24 hours. the extension of their contract will keep 5,000 people on the job at three separate plants in the country as the two sides work towards an agreement. back over to you, sara >> bertha, thank you.

getting closer to instacart's first trade after pricing at the top end of the range. indications now suggest opening $41 through $50. remember, it priced at30 much more from the ceo coming up. and as cnbc celebrates hispanic heritage, we're sharing stories of influential hispanic business leaders like this one from mscio henry fernandez >> i first came to the united states in the mid-'70s, i felt very strongly that to succeed in this country, i needed to think like i belong in the country that everyone else one way or another was an immigrant or descendent of an immigrant and i was no different than that you're part of the fabric of society and success. that attitude, that mindset, is what helped me succeed despite any odds in any part of the career that i had.

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starbucks continues to bet on china for next leg of growth even as the geopolitical tensions with the u.s. remain high kate rogers has new details for us good morning. >> starbucks announcing the opening of china coffee ip ovation park located an hour from shanghai. it's a global first for the company and largest investment in a manufacturing and distribution center outside of the u.s. at $220 million it's also the company's most energy efficient and sustainable center globally. the innovation park includes an immersive experience center that will soon be opening to the public as well as striction network that's 90% automated the center is to support the company's goal to reach 9,000 locations in china by 2025 in a letter to partner the ceo said, quote, today we have over 6,50 stores across china and counting and yet the average

person in china drinks around 12 cups of coffee a year compared to 200 in japan or 380 in u.s., presenting a clear runway for a growing coffee drinking culture in one of the largest consumer markets. this comes as they auns no a new co-ceo structure in china. molly lue being promoted toco ceo of china october 2nd will lead alongside belinda wong and zheng will be joining the board as howard schultz steps down zhang, senior adviser to the alibaba group. the stock underperformed this year, down 4% year to date back over to you. >> kate rogers. despite that opening, starbucks received a downgrade from the desk of td cowen. andrew charles is here at post 9 to talk more about the note. it's good to have you. thanks for coming in

you used the word albatross. >> yes >> why that definitive with the challenges in china? >> good morning. it's i think more of a call on the multiple that china has dominated the investor narrative. reminds us of circa 2005 when china reached 90% of operating profits. so, i think we're seeing the same thing here with china with starbucks that for here on out for the foreseeable future wul see this dominate the investor narrative. here we are looking at a very competitive set in china, that's indicated to be using aggressive discounts by competitors for the next two-plus years. combined with a macro back drop that's dicey we see better opportunities elsewhere and choose to step sideways. >> you take your china comps for next year and '25, roughly, in half >> yeah. we're below consensus. i think the numbers are stretched. the call isn't around eps.

we think it will be driven by share buyback, but really that multiple is going to be hindered as the china narrative is challenged by competitors to the macro. >> i want to understand your price target because you downgraded it but took it to $107, which is still where we are right now but lower than $117 are you playing catch-up with the price action it's already been pretty weak? >> the message we're trying to send is shares are in a holding pattern. we see the upside but i think the multiple will be restrained. this is one where -- typically traded in 23 to 25 times range fell back at the three, five and ten-year averages. that seems to be the right ceiling when we think about the interest rate environment today and the last three years, big focus on the u.s. recovery, which has been successful, but now more of a focus on china as we go forward. >> can u.s. come to the rescue >> i think u.s. business will do fine we like the playable with iced, with through-put, digital enha

h enhancements >> if you're going to choose a problem to be addressed in china, is it about the macro or some of the discounting and aggression of local rivals >> we'll be talking about macro for the next decade or so. i think it's about the competition we're more focused on that's what we're looking to be better addressed. >> do you think that's been the weight on the stock so far this year >> i think that's a piece of it. it's something that is becoming increasingly more understood by investors. i do think this is going to be a bigger narrative i think of coty, investors seem familiar with. this company started in october of 2022. it's 5,000 locations something we're monitoring going forward. >> the flip side is starbucks, this is something nike says, is not a strategic industry it's not like semiconductors

it doesn't stand in the way of geopolitical tensions. this is an economy trying to stimulate its way to growth. those are both upsides >> i understand the point. i would say that with longer term focus on china, i think the challenge is the fact that, yes, there's still low consumption today, but i think as people are forming habits, you know, this is something that obviously we know in the u.s., this top of the first growth in china, i think having low priced competitors that will be stealing share for the next two years, most likely given the big discounts, it will disadvantage starbucks looking ahead. >> not the only business where that dynamic is showing itself thanks for coming in. as investors await tomorrow's federal reserve meeting, we'll get into what the credit market tells us about where stocks are potentially headed from here that's next. meantime markets continue to struggle a bit this morning. dow down 238 just slightly off session lows with down names being led lower

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welcome back we're one day away from the federal reserve's latest decision on interest rates while most are expecting the fed to pause at this meeting, we are seeing the yield move higher ten-year yield the highest since 2007 joining us here at post nine is the head of liquid credit of hps investment partners. welcome back good to see you. >> thanks, sara. >> what are your expectations about not the fed action because we expect them to pause but what the signal will be. >> they'll watch all the data and they keep saying they'll watch all the data the fed has been very restrictive and the economy has hung in there. we agree with you they're likely to pause and stay paused for a while. i'm not sure rates will come in dramatically

i think the market is pricing in a lot of rate cuts we're not of the view that will happen. >> do you think that is partly why we're seeing yields march higher into this meeting with the market already expecting a pause? >> i think you're seeing yields march higher because there's a lot of actual supply that will come into the market, about a third of treasuries outstanding will reprice over the course of the next year. and the buyer shifted a lot, too. i think there's a lot of supply coming out which is probably impacting some of that. >> i asked janet yellen, treasury secretary yesterday, about whether she's seeing concern in the bond market with all this issuance, they'll have to raise a lot of debt to pay for all of these pieces of legislation, the infrastructure act, inflation reduction act >> i'm not really seeing concerns in the bond market about issuance obviously, the fed has tightened

monetary policy, and that's pushed rates up. but there are pay fors in the legislation that funded all of these programs and so i'm not really concerned about the impact they'll have. certainly greater deficit reduction is possible. >> do you think the market is getting concerned, investors are getting concerned? >> i don't think the market is getting that concerned yet i think the market's a bit peculiar right now because there's risk to inflation. there's risk to inflation with cpi. there's risk to inflation because of wages, because of oil, because of housing. i think there's risk on the technical side because of repricings you might see a lagged effect in the economy at large because if you end up with somewhat higher inflation than what the fed is hoping for, that will impact margins. it will impact investment cycles

and will impact cash flows because we might be in this environment where we're living at this higher for longer scenario. >> and yet you don't see default cycles kicking off here? >> defaults are slowly creeping up quietly the high-yield market, 3%, the loan market around 4.5%. most estimates are for the loan market to continue to increase some estimates are as high as 6% to 6.5% for next year. i think this is so contingent on where we see inflation settling out. there's been a lot of reports that at 3% number, we can live with this. at a 4% number, defaults increase to 10%. at a 5% number, if you go sort of out a little bit, people are really concerned you could get to 15% high-yield defaults then. >> right now what is the credit market signaling as it relates to recession or any other broader stress >> the credit market has been benign as has the equity market. the equity market has been on

fire the high-yield market has been on fire. the loan market has been on fire there's been a lot of optimism that's been priced in. i think a lot of that optimism is related to, there's been an improvement in cpi fed funds are settling where they are there hasn't been -- or normalization credit stress the banking crisis and really strong technicals if you flip the page, we'll likely see over the next, you know, several months exactly the opposite of those things, which is are we worried about inflation being higher than people expect? the technical picture could be uglier treasury bond market is repricing. 40% investment yield is repricing, so i think you'll see that happening that's sort of the inverse on the technicals we'll see where cpi lands and that will impact margins and profitability and cash flows and potentially slower growth. >> it sounds like your year-end ten-year target is higher than -- rather than lower? >> yes. >> whereabouts >> gosh. you know, i think the -- i think

the ten-year is going to stay in and around where we are. whether that's 4.25 or 4.50%, i think you'll see it stay there. >> bigergest opportunity in your world? >> credit is a good opportunity generally compared to equity we would veer to credit. within credit, i think there's two broad buckets. the private credit world is very, very attractive right now, very attractive. and we're seeing a lot of opportunities there. and there's been an increased share take from the syndicated market so those yields are pretty darned high and the size of those businesses are bigger and then with regard to the liquid market and the high-yield world, the yield in those markets is 8% to 10% so there's some cushion if you're wrong that's a pretty good place to start defensively buying credit. >> hps has been a big beneficiary. thank you very much for joining us

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we are awaiting instacart's first trade after pricing at the top of the range at 30 last night. indication is now 42 our deirdre bosa sat down exclusively with the company company ceo for today's "tech check. instacart prides itself as an enabler and says competing with them would not help them in any way, but what happens when the retailers themselves decide

to develop their own tech in house or delivery networks walmart is the country's largest and it's doing exactly that. i asked what keeps them on the flat form. have a listen >> we deliver in incremental customers. large grocers wouldn't be in the marketplace if that was the case they get to grow faster than the average in the industry. and the second thing is that because of the scale we have, we have better economics, better efficiency for delivery and we can pass on some of those efficiencies to those grocers. that's why scale matters so much in the business and why you're seeing a lot of new entrants lose money like we did at the beginning. 100 million orders to get to positive economics and fundamentally we are not at the

scale where we have managed to create really big efficiencies, and that makes us very competitive to help grocers grow their business and more affordable to customers. >> i want to talk about advertising because that helped instacart to become profitable in the gig economy space why wouldn't grocers want this when they see how it's helped your business? >> well, the good news is we built our entire technology stack and are allowing grocers to benefit from it by turning that on. so if you look at sprouts.com, lots of other retailers, they are now benefiting from all the technologies we built and they're able to create a new profit so they get to benefit from that as well.

>> what she is saying they are offering the smaller retailers advantages including advertising but technology advantages they may not invest in themselves and that is key because platforms have not proved to be profitable businesses in the way advertising is and what has set up instacart from others >> is the growth slowdown they've seen, the revenue slowdown, because of competition or a covid giveback? what's driving it? >> probably a little bit of both they had huge growth rates but it is competition. when you look at a doordash moving into grocery delivery, they have restaurants as well. there's more competition, you know that well, sara

we talk the walmarts and the margins will get smaller on the grocery delivery side and as we see consolidation in the industry instacart used to have these exclusive relationships and that's changing. >> i would imagine food inflation has something to do with that as well. as far as the lockup expiration, dee, can you walk us through some of the calendar on that >> what some people say is the real ipo will happen in six months because the float here is so small and indications are it will see a big pop on the opening. remember as well a trademark of some of the ipos we're seeing in the early round is they have these cornerstone investors to support the price and sort of build up some hype among the retail investors an even smaller amount will be

available for retail investors i think the average over the last decade between 16% to 29%, the average float for most companies that go public instacart is more around 8%. and when you think of the cornerstone investors, the norwegian sovereign wealth fund, pepsico leaves little for the retail investor. in six months that is when the venture capitalists will be able to sell their shares the business model dictates that they should have to return money to their limited partners. not all of them will do that you could see and are likely to see a big chunk, and that's when you may see the price really shake out and what the company is worth >> almost the ipo echo which we'll watch a few months from now. dee, it will be interesting to watch, deirdre bosa. don't miss an exclusive with founder tomorrow at 7:30 a.m. on "squawk. we're also watching for another ipo tomorrow, that will

go public at the new york stock exchange as these companies continue to test the waters. and so far so good looking at the first day pop. arm is down today. >> by the way, only ibm and chevron are the only dow components that are green at the moment disney by far the biggest laggard. to the "the half" with dom chu thank you, carl and sara welcome to "the halftime report." front and center this hour, a double test for the market as we await the first trades on that big instacart ipo and countdown to another critical fed rate decision our investment committee is standing by to help navigate you through all of it. joining us for the hour are josh brown, kari firestone, jim lebenthal and sarat sethi. here is where we stand, just about near session lows, the dow down 250-some points the s&p off by about 29 points and the nasdaq