good wednesday morning. i'm carl quintanilla with sara eisen on the floor of the new york stock exchange. is october opportunity ahead as we close out a rocky september, will the next month bring back the bulls or is more pain ahead? young-yu ma will way in. >> and low inventory and record prices, can the housing market hold on or is a big downturn ahead? z zillou founder spencer rascoff is here. >> and why david rosenberg says don't get too comfortable with

the idea of a soft landing. >> sticking to his guns. first up, on the markets, the s&p has gone negative. we started out higher, but lost the gains pretty early here in the session. down 0.1% on the nasdaq. the s&p holding up a little bit better. groups like industrials and education services are all up, materials too, but it's utilities, health care, financials, consumer discretionary and staples that are weighing in. it's kind of a mixed picture on the nasdaq, too. because costco and amd are helping on one side, but apple is weak again and amazon is under pressure as well. so is microsoft and tesla. >> got a little dicey here in the last few moments. a few days away from a new month of trading. the question on a lot of investors' mind is whether the low we saw this month will carry deeper into the fall. our next guest says fed's higher for longer messaging will remain difficult for the markets to digest, but he does see reason for optimism on the horizon. joining us this morning, yung-yu

ma. people are starting to assemble a list of reasons to get more constructive, buybacks, positive earnings, seasonality. but how much can really be done until the rate picture moves out of the way? >> well, i think there are a number of headwinds that are still very meaningful. the interest rates, the fed messaging is very difficult still, but hawkish messaging and the potential for another rate increase, and longer-term rates are rising. all of those together present a substantial headwind, at a time when you have student loan payments being resumed. some consumer strength starting to show up in terms of delinquencies and debt. so i think it'sgoing to take a while to work through. and those reasons to be bullish, they may be present, but they're not going to sort of carry the day for a while, so i think it's going to be a longer process. >> what about the argument that you have laid a more fertile groundwork for earnings to impress, given the draw downs so far? >> well, i think -- i think that's okay. but on the flip side, there's a risk of profit margin

compression. i think, yes, we've had a pullback in the indices. there's not as much optimism in terms of the outlook going forward, but i think the risk is also the profit margin ahead. so it's a double-sided coin here. and i think it just takes some time to play out. there are some stabilizing factors. i think that the labor market will continue to be relatively stable going forward, and that will at least stabilize consumer spending and eventually corporations will kick back into gear with corporate spending, as well. but the process is going to be a few quarters. it's not going to be a few months. >> should you stick with energy? because i'm looking at the month-to-date returns, 4% higher. the only sector that's higher for the quarter, up 13%, best-performing sector. is that a good place to be? or do you have to think that oil prices will continue to rise here, even in the face of economic headwinds? >> well, energy is a good diversifier here. we like it as a diversifying in

portfolios. we wouldn't go all in on energy here. but to the extent that we have rising oil prices, geopolitical tensions, supply constraints, we think it's a nice spot in the portfolio that adds stability. and we also like infrastructure and industrials here. we think they're poised to continue to perform well. there's a lot of spending going in u.s. infrastructure. we think there's a very long runway ahead of that. those are the two areas that we think can still remain stable, and even along this process of a soft landing playing out longer. >> even though those are both very cyclical areas, and i know you're worried about the consumer. >> they are cyclical, but, you know, spending is -- that's where the money is flowing. the old adage follow the money flies here. we have a tremendous amount of money going, you have infrastructure, we have rising oil prices, and there's going to be continued spending in that area, as well. just because of -- or continued profits, just because of the price at the pump. so i think those areas will

continue to be stable going forward here. >> you mentioned student loans, and we obviously saw a conference board yesterday, four-month low, a lot of concerns about delinquencies and the credit card, but you still have jobless claims at 201. doesn't have to break before you can call a verdict on the consumer going forward? >> that's right. we think the consumer will remain stable. when you get those initial unemployment claims in the low 200,000s, that speaks to strength underlying the labor market. and at the end of the day, if people have jobs and they feel stable in their jobs, they'll continue to spend. they might pull back a little bit, but it doesn't create an environment where there's a likelihood of downward moment in spending overall. so we think there's stability, but there are strains starting to show. and until some of those strains get worked through, which we think will take a few quarters, it's hard to see a catalyst for a sharp upturn either in the economy or in the market. >> the other interesting twist

in this particular cycle is health care, which classic defensive sector, although these weight loss drugs have thrown models all out of whack about what kind of health services we may potentially need generationally in the years ahead. i wonder how you think about that. >> yeah, that's always been an interesting sector, because there's also a risk of regulation and at least a discussion about that in an election year. but it is a sector where there's innovation. and that's very important, right? especially if you throw biotech in there as well, there's a lot of innovation going on there. so, you know, it's idiosyncratic sector. it's difficult to pigeonhole when you should overweight health care, but there's something that there's a lot of interesting innovations and developments going on. >> interesting and not at all what you might expect given the historic playbook. yung-yu, we'll get into q4 one way or another. appreciate the help. good to see you. >> thanks, carl.

one potential roadblock to the markets in october is the potential for a government shutdown. it doesn't appear there's been much progress made. emily wilkins has the latest from washington. emily, is there a path at this point to avoid a shutdown? >> you know, it is not looking good at this point. and mostly because the house and the senate are on completely different pages right now. house speaker kevin mccarthy just told republicans this morning that there was no way that he was going to bring this bipartisan senate bill to the house for a vote. and you saw that bill in the senate go through with stronger bipartisan support yesterday. they just started the process on it. and you just saw senate minority leader mitch mcconnell, the top republican in the senate, come out and endorse that bill as a path forward. so very, very different there. that snenate bill was just introduced yet. it would fund the government until november 17th. it would also include $4.5 billion for ukraine. and again, it's got a lot of that bipartisan support. one thing, though, it doesn't have, is anything on border

security. and that is where the disagreement between house and senate republicans come in. house republicans really want border security. they're very much pushing for it. they think it's a political issue that they can really drive home. listen to what house majority leader steve scalise told reporters this morning. he said that if the house can pass a stopgap bill with that border security, he's confident that the senate and the white house can follow. listen to what he said. >> somebody's got to take reins and say, we're going to address the problems facing this country and house republicans are doing it. and i really do think if we put the skins on the wall, if we pass the bills this week to do that, the senate will follow and the white house will have to follow, because the country is there. >> reporter: now, scalise said if they pass a bill, that is a big "if." at this point, you have a handful of republicans and handful is all that they need, who say that they will not vote to advance any short-term measure. now, of course, the house could probably put the senate bipartisan bill on the floor and

get republicans and democrats to work together. that doesn't seem to be an option that leadership is considering at this point. and with less than four days until a shutdown, it's still not clear how the government gets funded after saturday night. >> one thing that emily, some of the wall street notes are tu talking about is the possibility for double shutdown. so we get a shutdown and it goes for a few weeks and they come up with some sort of deal, they could expire before year end. are people in washington talking about another potential shutdown? or we're not there yet? >> i mean, this is the way that things often tend to go in washington. they continue to set deadlines for themselves to put pressure on themselves to do things. and then those deadlines usually keep getting mutuaoved, getting moved, getting moved. you usually see everyone here right before christmas eve frantically trying to finish their work. so it's absolutely a possibility that that november 17th deadline, they might have to do a very quick turn yararound on .

there are a lot of questions left about how the government actually gets funded in the long-term for the next fiscal year. >> i think they call it kicking the can down the road. emily, thank you. still to come this morning, mortgage demand is shrinking as interest rates hit the highest levels in nearly 23 years. we'll shot with zillow founder spencer rascoff here at post nine and talk about his outlook for the industry. and a number of names downgraded today. we'll break down the calls when "squawk on the street" comes right back. dow is down 58, s&p goes positive again. we'll be right back. ♪ opportunity is using data to create a competitive advantage. ♪ it's raising capital to help companies change the world. ♪ opportunity is making the dream of home ownership a reality. ♪ ...and driving the world forward to a greener energy future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection. at ice, we connect people to opportunity.

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microsoft in focus, obviously. scheduled to report results tonight after the close, more than tripling the s&p's return so far this year. china will be a big focus after the country moved to ban some micron products back in may, and this will be the first quarter we get to read that impact. the ceo will join us tomorrow morning in the 9:00 a.m. hour. we'll talk about inventories in the market and china and see

where we're going in the semicycle, which has been so confounding. >> absolutely. zpl ai, too. home sellers having a hard time. the commerce department reporting a nearly 9% drop in new home sales month over month in august. it comes as mortgage rates have ballooned, reaching rates we haven't seen since july of 2001. our next guest says to sit tight and rates aren't going away in some time. joining us now, 75 and sunny cofounder and general party and former zillow ceo and cofounder, spencer rascoff. welcome back to. >> thank you. good to be here. >> good to have you. now with an investor hat, where do you do with some of these housing stocks where you have this bad combo of high mortgage rates and low inventory and weaker sales? zpr h >> rousing is really at a standstill. things are locked up. on the supply side, 90% of mortgage owners have a rate of 5% or low. so on the supply side, people

can't list their home. and on the demand side, we're at a 40-year low on offaffordabili. many people couldn't even afford to re-buy their own home. we'll do 4 million transactions this year, that's down from a peak of 6 million a couple of years ago. we have to wait it out. we have to wait until maybe the fed gives us a gift, at some point in the future, or more likely, this pent-up demand of transactions that are kind of waiting for lower mortgage rates, they will eventually have to come through, because life events do happen. and eventually, we'll also start to seem mortgage re-sets from five, seven, and ten-year a.r.m.s a couple of years ago and they'll reset to higher mortgage rates and at that point, they'll be forced to sell. those are things that will eventually break the logjam, but for now we're kind of stuck. >> what about the inventory problem? how does that get fixed? >> it sort of gets fixed through home builders, but they can't bring on inventory fast enough. it's been a great market for home builders. home builders build a new home and it flies off the shelf and home building stocks are on a tear, but we're missing millions of homes from the housing stock

because new construction didn't happen very much after the financial crisis. i mean, we went from about a million new homes being built a yearly to 200 or 300,000 for a couple of years after the '08 crisis. so there are millions of homes missing from the housing stock and we're feeling the pain from that 15 years later. >> is the a.r.m. component material or is that still a novelty to some degree? >> it's definitely material, but most of these mortgages were created only two to four years ago, so it will be a little while. if you had a 3% mortgage that originated four years ago and three years from resets, all of a sudden your house will be more expensive and you'll probably have to sell and that will create more sell. there's not enough supply and demand can't afford it so everything is stuck. >> i want to talk about 75 and sunny, because you're now a venture capital sist and an incubator, and i think have your own chat bot, right? >> 75 and sunny incubates start-ups. my new company is called hey, libby, like lincoln bio.

a lot of journalists use it. it allows someone who's active on social media to create their own ai. on your twitter, for example, you can go create your own heylibby.ai and that creates your chat bot which appears in your twitter, and people converse with you. what it does for small businesses is it helps qualify leads. so if you're an interior designer that puts your photos out on instagram or you're a math tutor and put out videos on youtube, tutoring math lessons, you get leads through social media. and what heylibbyai does is helps qualify those leads and put them into a contact database. it's trying to solve a problem for small businesses, that gets leads through social media and need it to qualify those leads. but we see lots of different use cases, including journalists. >> it sort of cure rates your own follower base or potential customer base. >> it does. you must get dms all the time through twitter. people pitching you story ideas, wanting to talk to you. if you create your own heylibby.ai, people can train it, and you'll get a text and an email summarizing the conversation and it will go into your contact database and it

allow you to quantify that lead. >> i feel like you're a really good candidate. >> may be. >> i wonder where you think the number of monetizable use cases really inflects up. we've heard it will take longer than you think, and others say, co-pilot goes live november 1. >> what hey libby is trying to do is solve this problem for small business. and i think almost every small business has a social media presence, and they're getting leads through social media. i think it's pretty applicable to a lot of small business owners. a lot of the start-ups i'm seeing in ai, though, are features, not companies. and they're going to be incorporated into the llms, into the large language models themselves. so, for example, just the other day, we saw now that chatgpt can interpret photos, we saw making its way around the internet, examples of how to fix a bicycle by using photos of your bike. so you take a picture, you upload it to chatgpt and it tells you how to fix the bike through a conversation. i've been pitched dozens of handymanai start-ups which are

now going to be disrupted by the llms themselves. a lot of these start-ups that were funded over the last 6 to 12 months will have a hard time finding product market fit, because their features will be built into the search engines, google being as the llms become more robust. >> out of the spac game. you're a big proponent of spac. >> i'm a spac sponsor and i can do a little mospostmortem on it you want. the spac product is broken right now. it's broken because the government wanted to break it. that took away one of the key benefits of the spac merger. it's unfortunate because i've been involved in a half a different companies going public the regular way. and i was optimistic that the spac ipo process could fix some of those problems. unfortunately, the way the product sits today, it's irrevocably broken. and there are a lot of good companies, including, i think, the two that merged with my two spacs, that are kind of out there and not trading well,

because they're having a problem doing this. it's a broken product, i don't see it coming back. but hopefully some of the lessons of what it was trying to fix will come into the regular ipo process. we found a couple of good ipos that found price stabilization and orderly ipos over the last week or so. >> we'll have you back on. that's a whole segment on how to fix that. >> spencer rascoff, former zillow ceo. >> meantime with the s&p on pace for the worst monthly performance since december of last year, investors are turning to assets outside of equities and bonds to generate returns. our leslie picker has more on where that money is being put to work. hey, leslie. >> carl, take a look at private credit returns and you'll see why. the strategy somehow managed to eke out gains every year for the last 13 years. the herd, of course, tends to follow returns. so investors are likely to put another $200 billion plus in commitments into private credit

for the fourth year in a row. the debt is typically floating rate, so some are concerned that the longer interest rates stay evaluated, the more stress they'll put on the balance sheet of borrowers. so i sat down with the ceo of one of the largest managers of private credit. he's not too concerned about a major default cycle. >> i would expect default rates to tick up, but not too dangerously high levels. the irony of this moment in time, which is unlike many cycles we've seen before, the stresses are being created by liquidity and high rates, not deteriorating cash flow. but the debt service continues to deteriorate as rates go up and stay higher for longer. yes, if rates stay high for long, you know, through the end of 2024, that debt service will force companies back to the table. >> i asked himif he's seen any deterioration in lending standards, given all of these new entrants in the space, and

he said, not really, while noting he believes the asset class will prove to be quite resilient. arougheti will be part of a private panel at tomorrow's delivering alpha conference, discussing key trends in one of the hottest pockets of finance these days. guys? >> looking forward to it. that private credit boom. everyone's excited about it. leslie, thank you. zpstill to come, turmoil at schwab. shares down 35% this year amid this delayed succession and an integration of td ameritrade. we'll get details on that in just a few moments.

it has, a tough summer for the s&p. down about 3% ifn q3. but energy is definitely leading in terms of individual tickers and sectors. we've talked about this, the performance so far this year. not exactly what we thought of at the beginning, as 2023 began. >> who knew that oil would spike back up to 90, after it had come back down to 70. european market also knowing for the morning, for the month, and the quarter. continuing to worry about inflation and high interest rates. the higher-for-longer theme weighing on german consumer sentiment. market research firm gfk lowering consensus by 50 basis points this morning. all of that pessimism overseas is boosting the dollar even further and prompting ubs to upgrade its view of the u.s. dollar. the bank moving the currency to

neutral from least-preferred, as it has appreciated more than 6% versus a year. kind of late for this game, for this matter. since mid-july. and sees memory risks skewed to the upside from here. and a big part of it is that rate differential and the economic differential we're seeing between europe and the u.s. the u.s. is holding up a lot better right now. >> and that higher dollar having an outsized negative impact on companies with significant international exposure. chips are pretty well represented on that list. qualcomm, intel, along with some more consumer-facing names like apple and mondelez. we've already seen warnings from the likes of disney, bracing for a decline in international visits, thanks to the strong dollar. while nike did warn 4x rates will continue to impact results, we saw this with u.p.s. last quarter, as well. the currency swings, as the catalyst behind the company's $41 million fall in global package and supply chain revenue. and we're going to get a fresh look, maybe, at least through the eyes of nike this week. >> nike reports tomorrow after

the bell. very exposed with more than half the business overseas. usually, investors give companies a pass for blaming currencies, because it's just unavoidable. and no company can figure out how to hedge currencies correctly. so they usually have a pass, unless there's a big upside or downside surprise to the overall numbers that weren't in the models. but overall, yeah, this is not what companies expected either. they came into this year thinking the worst was over. last year was about the strong dollar. and now, here we are again. on the plus side, we can go to europe for better prices again. >> true! >> we're two hours into trading. let's go post-to-post with bob pisani for a look at what's moving. >> we were flat, but we had an attempt to buy the market at the opening and it's basically failed. there's not enough buying interest right now to really sustain a rally. there's very few things that are working. but here's one. energy, chevron's got great month. we're at the highest level since april. it's up 6%. that's a big help to, of course,

the dow jones industrial average. exxon, very quietly, has been terrific this month. exxon is up close to 7%. 118. we are very close to a 52-week high on exxon. these are the only two stocks -- really the only sector energy that's actually been working. the newhigh list is getting a little bigger. it's littered with a lot of consumer names, a lot of real estate investment trusts, and a lot of utilities, as well here. so here's one of them. dominion energy. there's a whole bunch of them that are essentially sitting right near 52-week lows, not far from 52-week lows. eversource, nexterra, a whole bunch of them are sitting at 52-week lows there in that space. let me just show you camden property, the reits, i keep telling you about all of these reits at 52-week lows. crown castle, i've been telling you, a big wireless infrastructure company. just a whole bunch of those reits sitting at 52-week lows.

here's something that's very interesting. not many banks there. citigroup, today, $40.50, but no, this has a 52-week low on an intra-day basis. it's not a closing low, but that's a 52-week low. that's the first big bank i've seen that's hit a new low on an intraday basis. that could be the start of a particular trend. finally, what else do i want to show you here? oh, remember what we've been talking about, ipos. k kenvue got everyone excited, this johnson and johnson spin-off priced in may at $22. there it is, 20.27. it broke the allow of its issuance propriice a while ago. and insta cart is also below its initial cart. that was a few days ago. that was $30. it's now below that. you want to keep an eye on this kind of thing. this has got everyone excited. this wasn't just a tech company, this was a company that was a well-known consumer products

company, stable revenue situation, now at a new low. guys, back to you. >> bob, we'll talk in a little bit. bob pisani this morning. coming up after the break, we'll get to a trio of retail downgrades, including macy's, talk about rising gas prices putting pressure on the consumer sector. plus, we are watching target. management saying it will close nine stores due to violence and theft. we should note that target has nearly 2,000 stores in the united states. shares are up a little bit today, but they have been lower of late. lowest since may of 2020. we'll be right back.

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watching costco today, reporting an earnings beat despite sales remaining a bit soft. groceries led -- helped much better than big-ticket items that consumers held back on, as we've been hearing from some of the other retailers. for more on the quarter, tune into "mad money," because the company's ceo will be joining jim at 6:00 p.m. eastern.

>> good comments about inflation and christmas eve and holidays coming up. >> and on gas prices. the ceo asked if that's having a big impact on consumer spending, and he said not a whole heck of a lot. >> and discounting driving some units, which is interesting, too. we'll see if that turns. let's get a news update in the meantime with our silvana t henao. >> consulting firm mckenzie agreed to pay millions of dollars to settle lawsuits. the settlements with hundreds of local school districts still needs approval from a judge. they accuse mckenzie of helping opioid manufacturers design deceptive marketing materials that boosted sales of the dangerous drugs. the money is on top of $641 million mckinsey already paid to resolve claims by states' attorney generals general. hyundai and kia are recalling more than 3.4 million cars and suvs because theirs

engines could catch fire. the recalls cover models between 2010 and 2019. there's an issue about leak that could start a fire when the vehicles are parked or being driven. the owners of the affected models are being asked to park outdoors and away from their homes and other buildings until repairs are done. and astronaut frank rubio returned to earth this morning after being in space just over a year. during his extended stay at the iss, rubio broke the record for the longest u.s. space flight. >> he was there for 371 days. >> wow. amazing. we think we have it hard at work here. silvana, thank. let's get to retail and what seems to be more red flags in the space. gordon has ket noting that september foot traffic falling substantially thanks to mounting headwinds for the consumer like rising gas prices, warm weather, the resumption of student loan prices.

that leading them to downgrade a few names. the oanalyst behind that call joins us this morning. >> good morning. >> we've listened to the consumers with the consumer over and over again. it sounds like it's already beginning to manifest itself a bit in traffic. >> yeah, i think traffic is pretty much the most important barometer for a retailer right now. and what's interesting, during the summer, we saw a real nice improvement from june and into july and even into august. we were surprised to see when we updated our data yesterday, we've seen a big decline in september, close to 5% on a four-year geo-spac basis. we've given back all of those gains, which leaves us a little bit more concerned going into the holiday season. >> what's the multiple on "m." is it under 4? how cheap could this get? >> it's cheap, but a big part of their business is from real estate and the earnings have certainly been choppy. it's a cheap stock. we don't think it's got a lot of upside in the near-term.

i think they've done a really good job running those business inventories. really well controlled. it's the best house on a bad lock in the department store group, i don't think it's got a lot of upside, especially if discretionary is weak in the coming months. >> what is? i don't know if you just heard, we were talking about costco and how the cfo said not a big change as a result of the higher gas prices. what is the sensitivity. i'm looking right now at oil prices. they're up another 3.6% this morning. wti is about to hit $94 a barrel. so they're moving. >> there's a lot of variables about that influence to consumers. gas prices tend to be somewhat correlated, not as correlated as you would think, but certainly more correlated at the lower income level. we downgraded burrell this morning. and that was part of the call there. you can see that pressure for the dollar stores, the offprice names. in a costco, they're really more of the exception than the norm. a really great print last night. they report monthly comps every four yweeks.

they do a really tremendous job on value and on price. >> we mentioned your call on burlington earlier this morning. we'll watch that and tractor supply, too, as we talk more and more about the holiday in the coming weeks. good to see you, thanks. >> good seeing you. thank you. programming note, tomorrow, don't miss the highlights from my conversation with ray dalio. he's getting a lifetime achievement award tonight. i'll talk to him. he'll weigh in on the fed's next move, the outlook for the economy, share some sound with you tomorrow right here at 11:00 a.m. coming up after the break, new reporting about turmoil at zw scabwi t sckow35hw, thheto dn this year. stay with us. wer e*trade's awarg trading app makes trading easier. with its customizable options chain, easy-to-use tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. e*trade from morgan stanley.

shopify announcing a new partnership today to expand the ecosystem for its sellers, heightening the ecommerce competition for amazon. that's the focus of today's tech check with deirdre bosa. busy week in the space, "d".

>> it certainly is. and shopify is expanding its ecosystem, just a day after the ftc took aim at amazon for running an illegal monopoly. this underscores the idea that amazon is facing more competition than it ever has from upstarts like shopify, but also from established, well-capitalized retail players like walmart. shopify is the latest deal. this is an investment in wholesale platform, fair. neither company disclosed the size or stake or value of the deal, but it will see fair adopt shopify technology for its customers, further entrenching shopify as this alternative to amazon. it follows a string of partnerships between shopify and start-ups that work with sellers. the list includes newly public klaviyo, affirm, stripe, flexport, some of the darlings of silicon valley. they get access to shopify's more than 2 million merchants, shopify gets more services on its platform, gets to expand and also gets equity, which pays off in the case of klaviyo. now, i sat down with faire ceo max rhode and asked him why

partner with shopify and not amazon. >> the most popular filter on our website is "not sold on amazon." and really, the retailers that we serve, the reason that they're so successful is because they've had -- they've figured out how to compete in a world where they don't have the lowest prices, they don't have the largest assortments, they compete really on the uniqueness of their inventory and on the fact that when you walk into one of those shops, you'll see something that you've never seen before and you'll have an experience that is memorable and will make you come back. and we're really in the business of supporting our retailers to create those experiences for you as a consumer. >> when lina khan wrote her now-famous love review article on amazon's anti-trust paradox, shopify was worth about $10 billion. it so serves mostly small and medium-sized businesses, helped them on their back-end ecommerce needs. but today shopify has a market cap of more than $65 billion, and it is creating an ecosystem of its own, that includes funding to merchants, payments,

marketing and ad tools. still, they could actually use shopify as evidence of how hard it is to compete against amazon. amazon has built up a shopify rival. it's called "buy with prime," and amazon has successfully built out a massive logistics network, where shopify spent years building out its own network, only to off-load it this year to flexport. so it's had its fair share of chal challenges. on "squawk" this morning, lina khan argued that amazon uses its rivals. but this deal between shopify and faire, many of the other deals that shopify has signed over the years, that complicates that argument somewhat. and that's what the regulators and the judge on this case will have to sort through. >> deirdre, what is faire. what's a b-to-b retail marketplace? and how big is it? >> it's basically -- it's basically a wholesaler, right? so merchants shop at it to get sort of a bunch of products that they can then sell to consumers. it's more of a b-to-b, whereas

shopify is b-to-c, amazon is b-to-c, goes straight to the consumer. it was valued at nearly $12 billion. they didn't disclose what the valuation was. but we know, and i've talked about it endlessly about how start-ups haven't really taken their medicine and seen those down routes to see them in line with the public market. faire could be a case of that. but again, you know, i point to that example. shopify was worth $10 billion, it was a public company a few years ago, it was then about $100 billion during the pandemic, $65 billion. this is a company that has been able to grow, scale, get a lot of consumers on its platform, even though amazon is dominant in the space. >> it's up again today on the deal, presumably and up huge for the year. thank you, deirdre. deirdre bosa. economist david rosenberg coming up after the break. why he says recession hasn't been aidvoed, it's just been

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now you can stream all your games like it's nothing. yes! [ cheers ] yeah! woho! running up and down that field looks tough. it's a pitch. get way more into what you're into when you stream on the xfinity 10g network. it has been a tough year at charles schwab, shares down 35% since january. underperforming the broader bank index. kate rooney is here with some new reporting on internal troubles at the brokerage firm. kate, after getting a lot of attention for external issues. >> that's right, carl. so five current and former schwab employees tell me the firm is trapped in what they describe as a cycle of uncertainty. unclear succession plans and problems with integrating td ameritrade is what they say is overwhelming some employees and contributing to low morale. two of those sources tell me

schwab ceo walt bettinger was set to step down this year, and then silicon valley bank collapsed delaying those plans. he was seen internally as the heir apparent. the delay is causing anxiety and uncertainty for executives across the board. the 35% drop in that stock year to date does add to the problems. schwab announced layoffs two months ago. some worry more might be coming, causing angst for td ameritrade executives who joined schwab through the acquisition in 2019. before the regional banking crisis, schwab was feeling the heat of customers reacting to higher rates. clients have been moving cash from lower paying bank accounts into higher yielding options, putting pressure on earnings. employees tell me the crisis distracted from integrating td accounts. the $26 billion deal was announced four years ago, and now td accounts are just being moved over in waves. the latest was over labor day when $1.3 trillion assets were

moved. this comes with the usual cultural clashes, guys. employees describe the td team as used to moving faster. they're primarily based in chicago, and they're focused more on active trading while schwab's culture is more like a bank moving slower with more bureaucracy. schwab called the td integration a tremendous success telling me, quote, we are pleased with the progress of the td ameritrade conversion and grateful for the focus of our employees on our clients and their commitment to ensuring a smooth transition. our approach has been deliberate. they say thoughtful and strategic and has proceeded carefully since the acquisition announcement. no comment, though, on the ceo transition. analysts at william blair pointing out schwab trades at 13.5 times forward earnings compared to 20 times the historical average. it says now is a good time to play the potential rebound as the risk/reward dynamic has shifted. back to you guys. >> kate, walt bettinger has joined us a few times during the

crisis and then also in some of the latest earnings reports, and he actually last earnings was saying the business has turned around, they're seeing cash flow, lower profitability for them because of the higher rates has started to reverse and there were green shoots. the timing is pretty interesting. >> the cash sorting conversation was a big part of this, and that actually ticked up in august. as rates have gone higher, that has contributed to clients again looking for some of the higher yielding products. that hit the stock about a week ago, there was news that cash shorting had ticked up again. analysts i'm talking to say there is optimism on the risk/reward side, but they are still nervous about rates and what that means for schwab going forward. it's still a show-me story. you can see that reflected in the stock. a lot of uncertainty around the name. >> thank you, kate. kate rooney. let's close out with the fed and the impact of its most recent rate hike.

our next guest maintains his bearish outlook, forecasting a recession ahead with more shocks on the way stemming from rates, oil prices, the breakout on the dollar. david rosenberg, i wanted to talk to you. i was curious if you were maintaining the bearish recession call as it has just not materialized. >> it hasn't materialized, dot, dot, dot, yet. i'm confident to hear from toronto. if it doesn't snow in december then we'll just call off winter. there are lags that we all know, long and variable policy lags, and the reality is that when you look historically from the time of the first rate hike by the fed to the time the recession starts, it's typically two years. so i think that maybe the people that were jumping the gun calling for recession this year

were just basically a little too impatient t. reminds me of the recession calls in 2007. that was a very long, soft landing. but it the recession started december of '07. so i think we just have to basically acknowledge that this year the economy did better than expected for two reasons, sarah. we had the lingering impact of the stimulus and a consumer credit card boom. with fiscal tail winds moving to head winds, how they will be responding. the fourth quarter will be a litmus call, absolutely. >> i'm not sure if the fiscal test reverses. i know what you mean on the consumer side and the excess savings coming down, but we're also ramping up on infrastructure spending and the chips act and inflation reduction act, and some folks -- one of the prevailing views here is all of that money is going to

come in next year and offset a potential recession. >> no, i don't think that will happen. i think when you're taking a look at the fiscal deficit, the gp ratio, the big stimulus is this year. the incremental impact on growth was this year, not next year. i don't know why you would be comparing industrial subsidies in the business, which is a relatively small gdp, to the impact of the consumer sector, which is 70% of gdp. you can't compare the two. the key is not how the chips act or all these other industrial subsidies will influence the business cycle. the key will be what happens to the consumer now that these fiscal training wheels are off. we just don't know, sara, how is the consumer going to respond not just to the impact of energy

prices. i don't look at this as something permanent, but the lack impact of the rate hikes, i think, are being underestimated by the fed, by most of the people you interview from wall street. and i think that the shift from fiscal tail winds to head winds for the consumer, which is 70% of gdp, sara, what you're focusing on in the business sector, is a small share of gdp. it's a small contribution. i think the overwhelming impact is the pullback we'll see in the consumer sector over the course of the next several months. >> that said, david, we're still having conversations about real hourly wages inflecting positive, disposable income on the rise. the share of disposable income that goes to gasoline is really kind of moderate. we had rich bernstein on yesterday talking about the re-acceleration in macro data. i wonder what kind of debate you and he would be having if you were back in your old chairs? >> the acceleration, we had

housing starts for the month of august down 11%. we got new home sales, yesterday down 9%. existing home sales were down and inflation just in terms of retail sales were down. actually, in august real disposable income was down. so i'm not getting a sign of economic re-acceleration unless your only metric is the atlanta fed's now cast model. everything elseis showing the economy is actually trudging along somewhere close to a 2% annual rate, but don't forget we've been breathing fumes of the fiscal stimulus all year long. that's coming to an end right now. so i don't know where the re-acceleration is coming from unless you believe interest rates don't matter, that policy lags don't -- >> the jobs market has remained tight and solid and wages have grown. >> well, sara, hold on.

you have to take a look at the changes that occur at the margin. is the unemployment rate going down or going up? it's gone from 3.5 to 3.8. unemployment is going up. you're getting the participation rate is going up. more people are coming into the labor force, sara. why is that? they have to get off the couch and start looking for a job now that the fiscal stimulus has run its course. so people are going to be competing for the jobs out there. no, i'm sorry. i know we have the headline wage settlement in some of the union sector, but wage trends will be decelerating in the next year not accelerating because we'll get more slack in the labor market. and so i think that's going to bump against -- the other thing i would look at, look where the savings rate is. 3.5%. how is that possible? before covid it was 8% to 9%. people have spent most of those savings. so i think it's going to be a struggle for the consumer sector. i wouldn't rely on some strong labor market going forward. >> all right, david.

we have to leave it there. we're out of time on the show. you make a compelling case. david rosenberg, thank you very much. good to talk to you. and there is -- it's a good debate on wall street, hard and soft landing. >> as for today's take, degrading. ten years close to cycle highs. vix close to 19. dollar the highest since november. we'll watch it this afternoon into micron. to the judge. carl, thanks very much. welcome to "the halftime report." i'm scott wapner. front and center this hour, the road ahead for stocks, which are now on pace for their worst month of the year. the investment committee mapping up their strategies for the month ahead. joining me for the hour today everybody here at post 9, joe terranova, jenny harrington, jason snipe, and jim lebenthal. let's check the markets, see what we're doing today. we're red across the board as you can see. the dow down 136, the s&p a quarter of a percent, the nasdaq is weaker. there's the ten-year note yield, 4.58. so, joe, we're headed for the worst month of the year, as i said, bu