>> instacart, uber, cash flow positive company went public when it wasn't supposed to this is where you want to get the second degree. >> jim >> cisco systems cisco is a war horse hang on to it. >> and epam systems, very inexpensive. >> that does it for us "the exchange" starts right now >> thank you very much, dom. welcome to "the exchange." i'm kelly evans. instacart, the shares priced at $30 last night, already the high end of the range they opened up $42 so that's the mark we're watching still a far cry from the nearly $40 billion it was valued at two years ago. we have all angles of this debut covered for you.

leslie has more details for us and diedra has sounds from instacart's ceo. we'll get to that in a moment. first, i want to start with a quick look at the markets. bob is down at the new york stock exchange instacart might be popping from its ipo price, bob, but stocks are going the other way. >> well, it went public at $51, arm, traded up to the 60s on the second day and it's around $54, $55 today so it is certainly weaker. the overall market, take a look at the s&p 500 4423, the low print, not just for the day but for the month. so september is living up to its reputation as being one of the weakst est months of the year if you want to look at some

stuff moving, just take a look at some of the tech names. tech and consumer discretionary names. taiwan semiconductor was a great performer early on, but it was $95 a few weeks ago, now $88 semis are not performing particularly well. salesforce, a dow component, was $225 or so just a week ago look at this, $214 now you see the slow drip down here. so not a lot of support from some of the big tech names but the consumer discretionary issue, home builders were big market lead aersers a couple mo ago. pultegroup was $85 a couple weeks ago, now $76 lowe's has been a terrible performer this week. lowe's is the lowest level we have seen in two to three months and the banks are not doing particularly well. they're not falling apart, but

co-america was $48 a few weeks ago. now you see that $42 there so bottom line, techs, which were the big market leader earlier on, doing too much this month. and other stalwarts like coca cola not particularly strong you can blame higher oil, higher rates, higher dollar there's even talk about student loans will kick in as a factor in some of the pressure that we have seen on consumer discretionary. but certain segments are not acting very well the only stalwart, energy stocks with oil in the $90 range. >> bob, you're absolutely right about arm's $51 ipo price. the open price was $56.10. today in trading, it is trading below $55. i want to mention that it's down another 5% or so anyone who would have gotten in after this opened is now potential under water. a bellwether maybe --

>> on the first day, it was $60. so it was as high as -- the next day it was over $60. but the average trade on the first day was $60. it went public at $51. the average trade was $60. so the average person who bought on the first day is down $5 already. this what we have been talking about all week, these ipos, because of the very, very small float, they pop on the first day, then they have troubles in the days after this was a major problem in 2020, 2021, after these ipos had big moves on the upside. it's one oh of the reasons i like to see lower valuations, to give people a better chance at not having this happen >> bob, thank you very much for that let's go over to leslie at the nasdaq with a look at this open. much better for the company than it could have been, that's for sure >> of course, kelly. speaking of small floats, this came in at under 7% of the total

valuation of the company, so very small by all stretches of the word but when you think about an ipo pop of this size, or really any size, oftentimes critics will say they left money on the table. but a large portion of the offering size was from selling shareholders so it's not a situation where they left a bunch of money on the table, they were just trying to get public. a lot of founders wanted to sell, employees wanted liquidity. so this took place in the course of the last 16 months. ultimately, as the ceo told diedra bosa, they weren't trying to time the market, they just had to get out when they could so here you have a situation where this is a profitable company, one where the top line is growing there are some concerns about the transaction volume, not growing as fast of a clip as many investors would like to see

at this stage in the company's life cycle, and it's a single class of stock and one that came out of gritty discounted regulation so this is a day one debut, up 30%. i think most bankers and investors are pleased with that. >> they will be, although at this point, it's $3, $4 below the open price the day is young still what is maple bear do you know what that is a reference to >> i believe it's a reference to maple is where the founder was from, a nod to canada. and then bear, the state of california, where the company was incorporated so yes, it was initially known as maple bear. >> not that i don't love the weekend, but it needs its own stuffed animal kascharacter.

>> i kind of like it >> leslie, thank you very much we appreciate it can the company's business model live up to the hype? that's the big question going forward. we turn to my guests sam, kind of a technical question, if you don't mind, but a lot of us were curious with these offerings coming after the company's top price. where do you think the typical employee is, are they still making money on this off herb? would there be a chance they couldn't exercise options? >> sure. it depends on when they joined the founders and the early employees are going to be up massively. people who joined yesterday, not so much. so i think there's no question there will be a wide range, and it's come down to the hiring of what the company looked like over the course of the company's history. usually, a lot of the employees come later, not early.

>> i find it striking. this is not so much a bellwether as a step in the journey what do you mean by that >> there's two ways to look at ipos it's the combination where the price is great, everyone's won, the founders get super rich, the crew gets tipped, everyone wants liquidity, et cetera others are like, look, the price is down, the company needs to be public for a bunch of structural reasons. you know, they're going to get public, but you are seeing a lot of the investors buying up, because not only is this not the end of the journey for them, it has to be a step along the way a lot of employees will be under water. this is hardly a "we won" moment >> dan, what would you add to that you can look at the financials in two ways. one is they grew 4% in the first half which trails door dash and uber eats. but at least the perspective showed that this business can be fundamentally profitable, which

was a question mark. >> so just going quickly to the employees. the shares we talked about this, $38, $39 billion that's true for folks, but they did an internal evaluation last year or earlier this year, which tracks to almost what the valuation is at this moment. so some of those folk as will b okay the bigger picture, this company has proven they can be profitable both on delivery and then also they have a much hihigh er margin advertising business and they have been doing it for several year and expanded it as part of this, there is a private placement with pepsico so clearly that's where they see kind of the acceleration of their business >> and just to build on that point, dan, advertising is a huge number here, like a third of the business.

so that's a business i think that investors can kind of get behind how important is it that the core delivery business also remains in the green >> you need the core delivery business the reason the advertising business matters is because people open up the apps to make their orders and they see concern products that are specials on, et cetera if somebody is not opening the app, the advertising is largely irrelevant >> this is how grocery works in general, right if you have a physical grocery store, there are end caps. but you need the core grocery store to work. >> i'm thinking about the venture capitalist in this deal a couple of years ago at ad 39 billion valuation. how many other instacarts are there out there, sam we have gone from peak valuations to whatever you call this now two years later what is the ripple effect for a lot of venture capitalists in

the industry >> the answer is, there are tons of them out there. you can't think of it as like venture capitalist as a single thing. there are seed investors, like us, thbut everyone is looking aa place where there are a lot of dollars put into bad prices over the past few years on paper, a lot of people who go in late are going to lose a lot of money the question is whether they buy in more in the public markets, lick their wounds and sell, what their strategy is going to be, will be really interesting coming out but there's a whole generation of companies that are good companies. the question is, are they great companies? the question is, in a world where you can just buy f.a.n.g. or ai coming to the top, multitrillion dollar companies that are growing fast, what is the defamand for companies this

range is the question. i know why to buy early. there's a great story around meta or google or amazon with ai why own a stock like this? that's the interesting question. >> dan, i want to leave it with a look forward with what happens here the pricing from the company's point of view is going to encourage other companies to take advantage of this window. >> right and it's funny, i heard leslie talk about it. of course she was trying to time the market there's a reason it happens this week, they wanted to do this a year ago that said, we're in the midst of an ipo revival and i think so this one and arm and birkenstock, they're all in very different sectors and different business models. what happens in the early days of the release of the ipo will

matter it will determine whether other companies jump in. you probably don't want to go after thanksgiving if you can avoid it you have a few weeks to file, and then how they structure the pricing. we saw arm, we saw instacart, we saw clavio all increase their ranges, and then pop, even though arm is back down a bet. it whether be interesting to see how the bankers play this. >> like bidding wars in the housing market, just gets you back up to where the price what. and claifio, it's far more consequential than birkenstock >> and more than instacart, too. a large percentage of those are sas companies. >> i'm thinking about private equity, we're worried about that this week. gentlemen, thank you so much

today. we'll leave it there appreciate your time shares of instacart are trading below that $42 open price today, with a lot of investors wondering about the path forward diedra bosa sat down with the ceo and has some highlights. hi, diedra >> so this is a profitable gig economy company. that is an achievement others have not been able to reach. topline revenue growth, however, is slowing so how can you continue to grow that high margin advertising basis on a slowing base? how does that look going forward? so i asked the ceo how to reaccelerate >> as far as how we rexaelaccele going forward, we are going to do the same that got us here, having unmatched selection,

having greater options for all kinds of customers, adding the best qualities so that you get the order to your door that you need, and i think that is convenience and what is going to continue to carry our growth and then we have also diversified the business and invested into new growth places, like connected stalls where we are not building technologies not just for on-line delivery, but in store, because 90% of the transactions still happen inside of a grocery store >> part of the reason growth has slowed is we're coming out of the pandemic huge growth rates coming back down to earth, but there is the issue of competition you have door dash, uber, walmart and targets who are also doing their own delivery so this will give more pricing

power when they come to the table and negotiate with an instacart. so while profitability looks good right now, we'll have to see how that shapes up >> my cart still flash crashed this morning, diedra i'm just saying, i have to go back -- it's probably costco i'm sure that j.v. is not the best operating platform in the year >> you and i, we have kids instacart provides a very valuable service to us but i know a lot of folks that don't want to pay the fees so they're doing certain things to serve different income customers. however, this is still an expensive service. >> do you do the 10% delivery bit? >> yeah, i mean, you have to >> i agree it's not a tip, it's part of the cost of doing business

if i didn't have to do it, i would rather not diedra, thank you very much. thanks for bringing that interview to us. don't misan interview with instacart's founder tomorrow on "squawk box. he joins them around 7:30 a.m. eastern. we have shares of pinterest on the move. julia, what's happening? >> shares are popping right now, after the ceo updated the company's fee-to-five-year outlook. saying that the company expects mid to high teens percentage of growth in that three to five-year range. pinterest projected growth in the high single digit range. he said they expect to grow faster than overall market growth he forecasted adjustable margins in the low 30 program range within the three to five-year outlook after the company

forecasted 400 basis points even on margin expansion. he's been talking about the improvement in ability to buy and try out ideas. they have seen a more that be 50% increase in click-throughs the stock was down as much as 3% this morning now it's up about 5.5% so quite a turn around on this news, kelly. >> thanks for bringing that to us still to come, interest rates are rising ahead of the fed's decision on interest rates tomorrow plus, returning to the lowest level since the summer of 2020 is the housing market losing its poe minimum? that's ahead as here is a look at the markets, just off of session

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welcome back to "the exchange." about 24 hours to go until the fed decision tomorrow on interest rates and just as everyone was shifting to the no recession or soft landing camp, the debate about whether we could still be in for a hard landing, and yes, even a recession, is picking up again. steve liesman is here with the results of the latest c nbc fed survey >> kelly, remember that outlook that improved in the last survey in july. optimism while responding to the survey this time, went a little sidways with debate between the recession and soft landing camps. there's a 40% probability of a soft landing, 48% probability of a recession. 84% say there are effects from the lags of mont tear policy

that will hit the economy. 67% saying somewhat significant. lower growth, 88% say that higher unemployment, more consumer defaults, more corporate defaults are among the list of issues coming from the lags economic pessimism has not been the right call the outlook this year has seen consistent upgrades to gdp, which will likely show up in the fed's forecast but in this survey, you can see there they come at the expense of next year, though i will say if we get away with 1% in 2024, that's probably the soft landing. but new factors. we have the uaw strike, surging oil prices, a possible government shutdown. all that has created new uncertainty for fed policy >> steve, stick around our next guest agrees that the fed won't raise rates tomorrow but disagree on what happens after that

let's bring in paul mcculley, chief economist, and tom lee, head of research at funds global paul, go ahead, what do you think happens after this meeting? >> i think the fed rarechair is going to say policy is in a good place tomorrow i don't think he will declare victory. they will leave one last hike in there between now and the end of the year but i think the fed's going to say they're in a good place. policy is restrictive, real rates are meaningfully positive, the yield curve is inverted and tightening in financial positions. so i don't think that chair powell will declare victory tomorrow, but i think that he's going to have a warm and fuzzy viewpoint about the notion that we can achieve a soft landing. >> are you in the soft landing ca camp, paul

i'm trying to figure out where you and tom would differ, because i think you're both optimistic >> yeah, i don't see a reason for a recession. it doesn't mean you can rule one out because stuff happens. but i don't think the fed wants a recession, and i don't think there is a compelling reason to forecast one it has been, for me, a long-time tail risk, and it remains a tail risk it is not the base case. >> tom >> i mean, i agree i think it's going to be the market's reaction to that message, because from our conversations with clients, they're still quite hawkish because they see sticky inflation, and now with rising oil, they think that's a renewed threat to the inflation story. but i would agree with paul that i think the fed's going to be in a much better place. i think it's not quite a victory lap, but i think it's going to lower the odds oh of a november

hike i think it reduces interest rate volatility, which is good for stocks to me, this is a setup for a rally in equities that might surprise people, just because people have been so anxious about monetary policy. >> let me read you a sort of contrarian take on that, tom, before i bring in steve. bob elliott just tweeteded, what happens if stocks just fall, yields don't and commodity prices rise? 64/40 is an all-in bet can you just address that, tom >> i would say that's a view that a lot of our clients share. i think for the most part, people have been skeptical of the equity markets and expecting a recession since the start of the year i think everything that's happened in the past nine months last reinforced the view that a recession is inevitable. it is disturbing to see interest rates creep up, but i think

there could be an important pivot tomorrow it just depends how the markets react to the fed's statement >> important pivot tomorrow, elaborate on that real quickly >> well, i think we're seeing the ten-year threat on the break to new highs i would say it's very uncomfortable, because it's what bob elliott says, you don't want to see interest rates rise, is this pricing in higher for longer but i think the opposite is possible, that there will be quite a lot of relief tomorrow, when we see the fed shift away from what has been a data dependant view for a long time so many indicators promote to inflation coming >> so you're in the camp of we go back to normal, not a new normal paul, i want to get you to give me an economic point of view, how likely -- listen, when they tell me that the ten-year yield

is up because canadian cpi came in hotter than expected, i'm going, you know what i don't think i would buy that there's something else going on. do you think it's significant that the yields are a little sticky this week >> yeah, i do, and probably for somewhat different reasons than some do. i think fundamentally, from a starting point of an inverted yield kecurve, you need to have constant stream of numbers that reinforce the proposition of a pivot and a cut in the second half of next year. and the fed has 100 basis points of cut for next year so i think from this starting point from the inverted yield curve, you actually have to have continued good news to maintain the curve where it is. if the news indicates that the pivot is going to be delayed or that the easing on the other

side of the pivot is going to be less aggressive, then i think gravity is going to want to push up the longer end of the curve so i don't think it's just idiocyncratic factors, it's the starting part of a curve that is bet on the timing and magnitude of fed easing. >> steve, monday it was japan's fault. today, it's canada's fault i'm just going, i don't know the market seems to be looking for an excuse for higher yields these days >> i think there is a little gravity fog the other way when it comes to yields going up. look, i'll tell you what i worry about, and i don't know that the other two guests focus on it, but there are acts of god. there's rainstorms that come and tropical storms come and those create floods. but there are dams that are poorly maintained, and when they break they create floods

it's the man-made disasters i worry about. things like government shutdowns. not clear to me why the saudis felt this was the moment to raise oil prices and cut back on production i think the uaw strike is something we all need to see resolved as quickly as possible. because the cumulation of those three things create uncertainty for the outlook. i say this, just to finish up, that you can be lucky or you can be good. either way, this is a really good time for the fed to pause there's a bunch of stuff that needs to go into the hopper of the models in terms of their duration and depth when it comes to different challenges for the economy. so i think it's a good idea for the fed to pause here. i think it's a bad idea to fill out these economic protections, because they might be old when the ink is dry >> tom, quick word to you. you think we're going back to

kind of this tech ramping into year end, maybe the opposite of what we saw last year, even as you say yeah, you can pick with energy we don't usually see these move together in tandem and another investor told me he sees technology running into year end can you put a little color to that >> sure. we looked at energy stocks since 1950 they're not really a clean cyclical group it's a commodity sector, and to me, energy stocks can do well. i'm not so sure oil is actually still going to have fuel to go higher from here i think there's both, you know, a technical that i think means oil prices might be sort of peaking around here. but i think the stocks can rally, because there is a structural shortage of oil so if you think of oil as a limited ip industry, they're going to be able to earn royalties off that i think that will expand

multiples. so energy works, even as technology works technology works because it solves from an inflation problem. so i see a lot of reasons for energy to be working >> industrials too could ease financial condition it is we get that gentlemen, thank you all appreciate it today. gives us a setup into this decision tomorrow, we're heading down to washington and we will pick it up at 1:00 p.m. eastern right here on "the exchange. still to come, the autoworker's strike, it could broaden friday if an agreement isn't reached by then. the latest, plus the effect on stocks we'll get you the details. as here's a look at the dow heat map. disney is the worst performer, down more than 3% after announcing players to double its investment in parks and cruises

to about $60 billion that is a little off session lows right now "the exchange" is back after this and discover the equilibrium that works for you. at national, you're in control. skip the counter, choose any car in the aisle... and manage your rental right from the app. so you can mix work... with leisure. or leisure... with work. giving you the control to find the perfect balance. go national. go like a pro.

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♪ (when the day that) ♪ ♪ (lies ahead of me) ♪ ♪ ( seems impossible to face) ♪ ♪ (a lovely day) ♪ ♪ (lovely day) ♪ ♪ (lovely day) ♪ ♪ (lovely day) ♪ a bank that knows your business grows your business. bmo. welcome book "the exchange," everybody. i'm tyler mathisen here is your cnbc news update. ukrainian officials say nine people were killed across ukraine in a s russian attacks. a drone strike on a western city set industrial warehouses and humanitarian aid supplies ablaze, killing one. a regional governor said six more were killed by a bomb in northeast ukraine. local officials say the final two victims died from shelling in a southern city india expelled a senior

canadian diplomat and is accusing the country of interfering in internal affairs. the two countries have been at odds after canada accused the indian government of being involved in the killing of a sikh activist there. justin trudeau said that canada is investigating the incident. ftx is suing sam bankman-freed's parents. it claims they misappropriated funds. the couple say the lawsuit was an attempt to undermine the jury process just days before the fraud trial begins kelly, back to you >> thank you very much coming up, housing starts are at historic lows and mortgage rates are rising. what is the real story with real at'sexte th nt.

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welcome back to "the exchange." u.s. housing starts just fell to their lowest level since 2020 last month, driven by a sharp decline in multifamily construction, while single family rose 2% year on year. despite the talk about an apartment glut looming, my next gift predicted the drop in may and expects sirngle family to remaining resilient. joe, welcome, good to see you.

>> thank you very much, kelly. thanks for having me back. what is is going on with multifamily and apartments i guess we're not really talking about apartments, because there's two to six tenant dwellings, that kind of thing? >> that's right. it means anything over one unit. that can be two units as a duplex, four, up to a very large apartment building but what's going on here, as you might predict with loan rates, meaning the low cost of capital for developers, before you saw inflation and very strong demand, and limited supply, it was a fgood time to be building multifamily two years ago, even last year. but when you look at what's happening, the inflation we saw in building materials, it was our view that you would see a normalization in multifamily back to typical levels we were running anywhere from 50% to 60% above your long-term averages in multifamily. >> what does it mean -- i know you're not this kind of analyst,

but what does it mean for rents? home prices are leveling off, so do you think that calls this into question? >> i think across the housing land scape, we're in a very undersupplied situation. if that was the case on the multifamily rental side, and that's what was driving rents higher, it continues to be the case looking forward as starts come in. what's important to reconsile here is that starts are just one part of the equation there's around a million units under construction yet to be delivered. so we're looking at the starts today as something that will be delivered a year or two from now. so we still expect to see completion rates be verily strong in multifamily area, as units under construction number comes down, similar to what we saw on a tight erwin doe -- tighter window that we saw over the last year.

>> so what is going on in the single family side it feels like we had this massive boom the last couple of years. i'm at a loss of words to describe where we are in the cycle now, because it just feels fr frozen what do you think is going on here >> absolutely. i spent some time thinking about what to call the stikle. i ended up calling it a mid life crisis you had builders continuing to deliver homes out of the backlog, so units under completion continued to rise and completions themselves were very stable throughout 2022, even well into 2023, you know we continue to see strength in demand, on the demand side for single family.

housing is very ne-- there is people that need homes, need places to live so the household formation side demand is going to be about how much we can supply and how much we can meet that demand. that's what is going to be important for really the clearing price of houses that's why you haven't seen very large house price declines predicted by many people >> i have to get your answer on this, even though we're tight on time your thoughts on the broad cycle are so interesting yesterday, our guest told us he would never bet against stewart miller he's bullish on lenar. you have a sell on them. why is that? >> my sell is not a bet against stewart miller we have a framework. we cover nine different

builders what we wanted to set out to do was not take a big view that all builders are going to be doing well or be impacted by higher rates. we have a longer term framework that doesn't necessarily look at the quarter-to-quarter gyrations. really looks at their ability to deliver home building operating profits in an efficient manner relative to their capital. so on that basis, we like builders like dr horton, and others those are the top picks for reasons that come down to we just think they have the best returns on inventory prospects >> all right, joe, i love it thank you for joining us today >> thanks, kelly still to come, a net tail wind that's how one analyst described the uaw strong this is our mystery chart. i don't think anyone will guess this one still up more than 50% over the

past year. we will tell you who this is right after this don't go anywhere.

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welcome book "the exchange." here's a look at instacart, which opened at $42. as you can see below that is trading below that level right now. $38 and change still priced at $30, so above the ipo price but not the open price. dollar tree and dollar general are falling to new 52-week lows for a second day in a row. dollar tree is at the lowest level in nearly two years. dollar general is down to march 2019 levels. make of that what you will still ahead, automaker shares are still higher, despite a strike we'll hear from the coo from stellantis about their efforts to resolve it, next.

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welcome back to the exchange. the autoworker strike is on its fifth day. price executives are pushing hard for a contract. speaking with the kind tree ceo. we knew about the 18 closures before. why is this taking on new

significance? maybe it was always going to be a big hurdle. they have the final assembly plan that they are ushing. that is not the case with general motors or with ford. a couple more days and we will be one week into the strike. this brings up the question, how much production has gm lost? according to the auto consulting firm, one weeks worth of reduction in the three plants that are on strike right now. 15% of the weekly production from the top three in the u.s. just the u.s. production. in terms of whether or not we see a resolution of the strike, friday's the key. the new deadline set by the uaw. they will see serious profits. if they see that in

negotiations, they might avoid calling for more strike locations. here is the state of negotiations. >> in the coming days we will sit at the table and work through things. we will all have faith in that common ground and i hope we can do that by friday. >> by the way, ford and general motors. very careful to say that there is conversation going on. is the white house involved more extensively? the white house is talking with the automakers. it is not a big group of discussions. it is an interesting position, kelly. we are in touch with everybody. we want to see this resolved.

>> we can do it by zoom for the time me being. thank you very much. automaker shares have been secure since things kicked off. doubling 5% since the strike last friday. both can benefit from a prolonged uaw strike. welcome, how do you think they benefit? >> thanks for having me, kelly. we cover the auto manufacturers that sell digital solutions to the local dealers. we are focused and interested in how the strike will affect local dealers. the prevailing narrative around the strike is that it will

slow. it is a long strike. i will convert consumer demand for new vehicles. that makes sense, it is a lot. it is supply and demand. over the last 25 years, the data is not conclusive. not from used vehicle prices. from the last strikes prior to this one. generally speaking, used prices are generally going to go down, if they are stable or positive, that is good for these companies. >> there are implications if it is higher used-car prices. there are examples of this from the pandemic.

>> exactly, if this is a prolonged strike, hard to have a crystal ball. if it expands two more members of the uaw. we can have a similar set up. they were not selling the amount of cars that they would like. dealership proper debility was at an all-time high. prices are high in demand is still high. consumer demand for vehicles has been relatively resilient. upward pressure on used prices. that goes good for dealerships. that can be the echo for the dealerships. >> another economic headwind. we covered car vona, do they sell used cars or not? it is 880% this year.

how are people going to figure out how to benefit were not from this? >> another analyst here that will cover the technology side of automotive for us. from my perspective they are trading on a number of different things including supply and demand. >> you will not get in hot water for making that kind of -- real quickly, if we go past a certain number of weeks, what you think of the whole space? >> not on these technology companies that we cover. unless we see the eterioration in underlying consumer demand. if that remains healthy and we do not see an absolute shutdown in supply, it goes good for what we will cover in the next 12 to 18 months.

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