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almost over. gm reaching a tentative deal with the uaw after ford and stellantis did as well do these deals set the u.s. auto industry up for success or cripple the companies with long-term costs? >> plus, president biden issues an executive order on artificial intelligence, it covers safety, civil rights, and maybe the biggest threat of all from ai, will it take humans' jobs away we'll discuss the impact this could have with a great panel. >> looking forward to that first, let's get a check on the markets. the dow is leading the way, up 506 points today the s&p, the nasdaq gains are now approaching about 1.2% the laggard has been the russell 2000 mcdonald's reporting results, beating on the top and bottom lines. same store sales up more than 8%, thank you to higher menu prices you can see, of course, that's helping the dow. the shares are up about 2% and a real estate deal to tell you about. realty income buying spirit

realty capital for $9.3 billion. no relate to spirit halloween. they own 2,000 properties, mostly retail stores and warehouses as tyler mentioned, gm reaching a tentative deal with the union to end the six-week strike although general motors shares are only about about a third of a percent, stellantis still positive, ford is negative let's get out to phil lebeau for more details here. hi, phil >> kelly, for the uaw, this has worked out better than many expected it to be like this when they started the negotiations. take a look at what they have won from ford, gm, and s stellantis, roughly speaking the length of the contract, 4 1/2 years, a pay hike of 25%, over 30% with cost of living higher starting worker pay and higher pay for temporary workers who are a big component for the big three, and a boost in retiree benefits for the 150,000 uaw members,

what's next? ratification votes they will be going over the contracts, ford already started that process ford workers started that process last night we'll see that with gm and stellantis over the coming weeks we'll see ratification votes taking place. for the big three, the can now begin gradually resuming production the production they have lost, they'll start to make some of that up through overtime, but this going to take some time before they can make up everything that was lost, and they won't make up everything that was lost during this strike and that's what we're going to see in ford, gm, and stellantis. shares of the automotive suppliers have been beaten down. baird out with a note saying the end of the strike is a moderate positive for the auto suppliers but really little in the auto space is working, whether it's the suppliers, the stock, the dealers facing a different situation so they're in a little better shape >> here tocontinue our conversation on the impacts these deals will have is tom

orion, global auto analyst tom, welcome i guess what investors wonder is whether these settlements are currently baked into the stock prices we're seeing, and how they will affect the stock prices going forward >> yeah, i think we have done some math on this to show that the net impact of the 25% increase in labor costs over 4 1/2 years is acktually only about 100 to 150 basis point impact on profit margins i think they'll be able to adjust it. the bigger issue and probably why these stocks have not been up that much on the news of the deal being struck is the ev slowdown that has been plaguing these stocks all last week and into this week. much bigger story. a much longer term story than this we're going to have a pretty quick snapback i think to this

in terms of production it may not make up the whole loss, as phil was saying, but certainly, i think this is secondary to the bigger story in autos which is the ev slowdown >> let's talk about that why is there an ev slowdown? and is it in part because in the u.s. market especially, there is still a heavy, heavy interest for suvs and heavier vehicles? and that is not an area that so far at least has been really penetrated by the automakers >> yeah, that's one of the key reasons, is the form factor. a lot of folks don't know this, but the biggest driver of battery ranges is not actually the size of the battery, it's the aerodynamics of the car. the reason tesla didn't do an suv or go aggressively into it is one factor. the bigger reason i think is the early adopters, the people who bought the $60,000 and $70,000

teslas are done already. now we're at the main street, the buyers of the evs who aren't as ev friendly, they don't realize charging is actually everywhere they think they need 300 miles of range so it's a lot of education for those buyers to get comfortable with it. lastly, i would say pricing. i think overall auto pricing needs to come down you heard what elon said on his call, an affordability issue, high interest rates. you put all these three things together, i think that's what's causing the slowdown >> that's very interesting explanation, and i buy it completely about the early adopters having gone in at a higher price point and now you have a mass market that you have to exploit and tackle. let's go back to the big three what's your view of those three stocks >> yeah, i think it's going to be a little challenging in the near term. i don't know how long the near term is. you know, you have price mix that's my biggest concern for

these companies. it's been up 30%, 35% from 2019 to 2022. i mean, a lot of sectors are seeing crazy inflation, but you're seeing affordability hit some consumers, so i think price mix coming down will be difficult on profitability now, a lot of this is already priced into the stocks it's difficult in a cyclical industry to tell folks to buy auto stocks when numbers are coming down. so i think it could be somewhat challenging. they have to figure out this ev slowdown, a lot of them like ford is heavily invested here. if ev demand doesn't come in, it's going to take more losses so yeah, unfortunately, i think in the near term, it's going to be a kind of a slugfest. price mix probably will come down, and it may keep folks at the sidelines. >> tom, i have been thinking a lot about toyota lately and whether the hybrid approach is being vindigated, if it looks like consumers are actually kind of turning towards that option

as the best way to hedge and kind of get both the range but also the peace of mind of having gasoline supplies in their car i know they have obviously done everything up to this point, and for years it looked like hybrid was going to be the wrong approach and the market was unforgiving about it i wonder if the tide is turning now, and if it is, who else does that favor and what does it peen for the investments? >> now, there's this emergence of hybrid. i think it could be near term, certainly. we look at toyota's profitability, it's done really well by not capitulated and doing evs. maybe it's a smarter approach. wait for everybody else to slug it out and get the cost down, then do evs later. and take a look at stellantis, another example of a company that had underinvested in evs, and in the u.s., it's jeep and ram. they don't have to electrify those. hybrid approach has worked well for toyota

maybe being underinvested in evs is smart take a look at stellantis versus ford and gm, and you'll see a very big contrast there. so you may be on to something, but ultimately, i think these are all near term dynamics some people are playing this thesis, let's wait it out. see the costs come down, and then we'll go all in so i don't really know the answer to that, but we do know, let's not forget, electrification is happening it's just i think we have hit a little bit of a slow patch maybe hybrids could be a near term solution. >> tom, thanks very much we appreciate it so interesting the end of those auto strikes, good news for the chip makers, which supply chips for cars that were held up as production was hampered let's get to kristina partsinevelos for a look at which companies could be breathing a sigh of relief but also it comes at a time, it sounds like, that maybe the industry is at risk of being oversupplied as it is.

>> exactly which is why i was going to flip your question on its head and say that some of these, you know, hardest hit chip names might actually not see a rebound. the reason for that, let's start with the stocks. the smh has been down 8% since the uaw announced its strike in mid-september. will speed down 36%, stm electronics down about 29% analog chip names that are also exposed, down worse, double digits texas instrument hitting a 52-week low today. yet few of these chip makers actually commented on the strike that could be because of the longer car design cycle which would have less of an impact because most of those orders were put in place a long time ago, with analog devices ceo saying on their earnings call, the effect on our business so far has been very de minimis, and xp saying we have experienced this in the past, and didn't really have an impact to your point, the issue is auto demand

texas instrument and intel both said last week, the sector is still resilience, but bears, including your previous guest, point to the frequent price cuts at tesla, due to weaker consumer spending even on semi issued a disappointing q4 outlook this morning, part was because of weak ev demand coming from europe we know auto production or the analysts are saying auto production is expected to grow 8% in 2023, slowing ev penetration does present a risk to a lot of these auto exposed semi-conductor names and could result in a cautious earning call from wolfspeed, and microchip reporting next week. it may not necessarily be that breather you're hoping for >> yeah, on semi is one of the worst stocks in the market today after they sounded like they said, you know, they expected some kind of normalization of the oversupplied market, but then low demand because of high interest rates has extended that timeline >> precisely i should have mentioned that

interest rates do play a big role in all of this. on semi's seo was on our network and really tried to convince the audience that although ev demand has started to slow, specifically more in europe, he believes the entire pie, the portion of market share that can grow from ev is only going to grow in 2024 let's see because i was reading a note from one analyst thinking maybe the second half of 2024, so there could be weakness in the following seven months or so from now so it seems like there's a lot of debate about auto demand at the moment within the chip space. >> thanks very much. kristina partsinevelos appreciate it. up next, the ghost in the market machine, despite strong data and somewhat resilient consumer and better than expected earnings, investors are still selling names they feel are too vulnerable in the event of crash markets are climbing today near session highs the dow up around 500 points right now. 505. ow lchrernon the markets when "perun" tus.

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to go, but this current period, especially the last three months, has been pretty stark paradox between very, very weak economically cyclical stocks and a very strong here and now economy based on the data. look at the consumer discretionary group as an equal weighted index as well as transports over the last three months down close to 20% each that, remember, was a 4.9% gdp quarter that we recently had reported so, the question here is, does the market have it right or have we overshot in the short term? that equal weighted consumer discretionary etf is traded at 12.5 times forward earnings. those could come down if the economy hits a speed pump, and everything is hinging on the rapid move up in bond yields the market implicitly is saying the economy can't easily handle it, earnings next year are too high based on what yields have done that to me is the debate at this point, especially when you consider earnings forecasts over the next 12 months are up.

over the past three months by a few percent as the s&p 500 has fallen 10% >> indeed. mike, thank you. as stocks are jumping today, people are selling bonds, sending yields higher. let's get out to rick santelli in chicago for more. rick >> reporter: yes, yields are higher and stocks are dramatically higher. imagine that and when we look at that outside session we had a week ago, this proved to be highly accurate, if you look at the 23rd, the 23rd had an outside session, and since then, by the way, that's the only close above 5%. since then, the range has been 20 basis points. 499 to 479 why do i pay so much attention to that? because there's so much excitement in things like the tlt and all the issues and all the brokerages and all the institutional investors saying that's it, the high yield is in. and we're seeing big inflows as many look at these juicy yields and say wow, i want to get

involved and all that may be true but you can't read that much into the market. is it a top? well, until we close either below 4.75 or above 5%, this is no man's land. if you consider the fact mike was pointing out 4.9% gdp in the last quarter and nobody is expecting the fed to raise rates. what i hear is, the fed doesn't believe their own numbers or their own models because with the price gdp index moving up and nearly 5% gdp, they should tighten if they believe the numbers. finally, we have the bank of japan meeting tonight. the dollar yen, well, the dollar is down a bit today, after a very rare close above 1.50 last thursday does this mean yield curve control is going to be under review we can only hope so. back to you. >> all right, rick, thank you. that has been a big part of what's going on in global bond

land a fed decision, jobs data, more tech earnings stocks are rallying today but our next guest says investors are building in caution. he's picking stocks that allow some margin for error in case a recession emerges quicker than expected let's bring in mike bailey, director of research it's good to see you, mike by the way, just curious, what do you think accounts for the very positive tone today >> i think we're getting a bit of a break last week, it was sort of markets were getting hit left and right by bad news. you had google out there, meta was mixed. today, things are okay mcdonald's, earnings were pretty good doesn't have a lot to do with tech companies but absent bad news from big tech, and it's a brand-new week, tech is trading at a nice discount maybe folks are getting more excited about it and putting their money where their mouth is >> do you think that's prudent of them? >> it depends. for us in terms of do you want to buy the dip, buy some of the

big tech stocks after they took a hit, depends on where you're coming from. now is a good time, take a look. stocks in general are trading cheaper than they have over the past ten years that's pretty compelling that's a good time to take a look the other angle is, maybe now is the time to buy the dip and add to quality so maybe there's something you have been hanging on to, anchoring to for a while maybe it's a loser, get out of it try something new. a lot of quality companies out there trading as a discount. pepsi, mcdonald's, companies like that. exceeding investor expectations and trading at a discount. that builds in some cushion in case we hit a recession. a good time to add to some of those quality names. >> you mentioned pepsi and mcdonald's in the last week or so, there have been some people who have been talking about how the weight loss drugs may sort of curb the appetite for those companies and for those stocks are you a subscriber to that train of thought >> i completely disagree certainly, we have heard the haters out there i was a health care analyst for a long time so i'm familiar with

some of these drugs. there's a lot of questions, how many people are going to take these drugs? at this point, even if the bullish wall street estimates are correct, you're maybe talking about 5% of the u.s. population a lot of those folks don't go to mcdonald's, they don't drink pepsi products there's a lot of fear built in people are selling now, they're going to come back laeltder and figure out, wait, these companies are still here, still growing. we would push back and see that a little differently >> i know we have results coming out from apple and nvidia later in the cycle here. let's talk specifically about apple which is a company you own. what do you think? >> good company. i think of the mega cap techs, this is one where we are seeing a slower growth period compared to some of the others. a good company, it is kind of transforming into almost a consumer company nice recurring sales on the services side. you're paying for that it's a good company, got a very nice growing dividend.

for us, if we had to make one or two decisions we might buy something else we might buy an amazon or google here, but apple is a good company. put it away. something to own for the long term, but i think we would rather at this point tactically add to some of the others. >> that's a very honest answer i have to say, tonally, one that sort of surprised me you don't hear -- you usually hear people say about apple, it's a great company, not a good company. >> you know, there's certainly debate out there on wall street. an excellent track record. for us, growth is pretty critical, and exceeding investor expectations they have done a great job historically maybe they're in between the product cycles at the moment a good company longer term but if you want to buy something right now, what business is growing, exceeding expectations and growing. google is more compelling. you want to make sure you're diversified. >> thank you very much appreciate your candor today thank you. further ahead, following the

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welcome back to "power lunch," everybody. oil falling 3% today, even as fighting intensifies in the gaza strip. pippa stevens joining us with more >> today's drop is a continuation of what we have been seeing. so traders don't want to go into any weekend with so much uncertainty on the short side, so we keep seeing prices rally on friday, and then come monday when the conflict has not escalated, then traders start to back out of those positions. we also did get data out of germany today, showing their economy shrank in the third quarter. they're the largest economy in the eurozone so that has implications for oil demand. then we have the federal reserve this week, this meeting this week as well

a lot of unknowns in the market right here although all that said, the world bank was the latest to warn today about what an escalation in the conflict could mean for oil >> what kind of escalation would be -- would send oil prices higher i assume it would be the involvement of iran, something in the straits of hormuz, in the gulf >> those are the regions to watch if the middle east beyond israel and the gaza strip, and so the world bank said that in their kind of worst case scenario between 6 million and 8 million barrels of day of production is taken off line and that would cause prices to jump 75% to over $150 they are the latest to say that, however, that remains a far out possibility, and their base case is brent average is $81 next year as opec unwinds its production cuts. these are far out possibilities, but i think that people are warning you can't just ignore what might potentially happen. >> quickly, has the market forgotten about ukraine and russia >> that's a very good question

because that has more of a direct impact, but it seems like the market is very frenetic. now that this is front and center and that region is a larger producer, particularly now that russia has been sidelined a little bit, i think that this region is seen as if something happens here, the consequences could be that much more significant you cannot ignore russia and ukraine. that's very much in play >> and there, i guess you would say the market is saying it is what it is, and it has been that way for some time now. it's not the new new >> exactly and oil spiked above $130 when they first happened. so you get some time to see what the longer term impacts are. let's get to contessa brewer now for a cnbc news update >> a federal judge in texas issued a temporary restraining order blocking homeland security from removing razor wire along the border that was installed by governor greg abbott's administration the biden administration argues the wire is a humanitarian and

safety risk. next hearing in the case is scheduled for november 7th the department of education is penalizing student loan servicer for failing to send timely billing statements to 2.5 million borrowers this month that's when loan payments resumed after a three-year pause. now, the feds are withholding more than $7 million to the servicers and demanding forbearance until this issue is resolved >> and kim kardashian is getting into business with the nba the league announced today her company skims will become the official underwear partner of the nba, the wnba, and usa basketball skims launched its first men's line last week the company was recently valued at $4 billion. basketball players are real people, too. tyler. >> i just don't know what to say. but that's a good one. yeah okay, contessa thanks ahead on "power lunch," the

white house unveiling an aggressive ai executive order. we'll discuss how they plan to handle the technological marvel and what it could mean for the big tech firms involved. "power lunch" will be right back ♪ ♪ every day, businesses everywhere are asking: is it possible? with comcast business... it is. is it possible to help keep our online platform safe from cyberthreats? absolutely. can we provide health care virtually anywhere? we can help with that. is it possible to use predictive monitoring to address operations issues? we can help with that, too. with the advanced connectivity and intelligence of global secure networking from comcast business. it's not just possible. it's happening.

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welcome back, everybody. the white house rolling out a sweeping executive order today aiming to monitor and regulate the risks of artificial intelligence while also har harnessing its potential this marking the latest effort to address the rapidly evolving technology that has sparked concern among world leaders. here to discuss is editor in chief at the verge, and an economic policy analyst at the american enterprise institute. they're both cnbc contradibutor, and eamon javers is going to give us the latest from d.c. what did this executive order say? >> well, tyler, it's kind of a kitchen sink executive order from the biden administration today.

they're addressing a whole host of things and bringing in all sorts of elements of national power here, so to speak. they're using the defense production act here in order to compel companies that are engaging in large scale ai to share with them their safety testing results. that is they'll have to come to the u.s. government and tell them how these things are testing. they're also going to invoke some standards and rule making procedures they're also concerned about things like discrimination in ai and trying to make sure that there are federal guidelines around making sure discrimination is not built into ai accidentally, so to speak it's a whole range of things here and at the same time, trying not to sort of squash innovation, and the development of this new technology even as they're trying to channel some of the safety and negative consequences of it. >> all right, what do you think of what the administration has proposed here? how sweeping is it, how effective might it be? >> it is very sweeping it is pretty much a grab bag of

things that in particularly industry has been asking for i think when you talk about effectiveness, we have a pretty dysfunctional congress, the implication of various executive authorities to make some of this go but the place it's going to be the most effective is in letting the companies run. they have been asking for regulations here because they want to focus their competitive efforts in a dramatically expanding space. you know if you're going to make an algorithm for landlords to screen potential tenants on a website, now there's rules of the road, and the companies know inside which boundaries they can compete. microsoft, adobe, google, they have been asking for regulations like this. i think this is going to give some stability to the market we'll see another wave of competition. >> so, let me turn to -- let me ask you one more question before i move on. this idea of somehow watermarking ai generated content. is this doable >> i don't -- i haven't seen anything that says it is doable

yet. last month, at the code conference which cnbc helped us out with, the ceo of getty images said look, the problem is not marking the good stuff the problem is finding the needle in the hay stack, and the hay stack keeps getting bigger with all of the ai generated content in our feeds you have to develop technology to consistently mark the content in a way regular people understand what they're looking at and everyone agrees to use and then convince a bunch of people to care i would put it up against mark zuckerberg in the last meta earnings call saying i see a future where our products have a much ai as anything else that's the future of these networks whether or not a little bit of watermarking can stem that tide remains to be seen culturally wide open, no idea if that can happen. >> i'm also curious about this angle here on international, where it says developing standards for working on ai with foreign partners, for instance, i think some of the options

would be disclosure if a major other nation comes and says we want to do a big sort of -- we want to run your large language models, what kind of international disclosure is appropriate and why? >> well, one, i'm concerned that some of the countries that might potentially be involved, who are competitors, perhaps military rivals, may not be utterly forthcoming. i'm very concerned that these kinds of disclosure rules will rapidly become both internationally and domestically mandatory rules not just to mandate disclosure but mandate how these things are tested. listen, we have been talking here about how -- this is like a gift to business they're going to be so happy the people who may not be happy are businesses, companies, start-ups that don't exist yet and now will have to compete with perhaps a highly regulated paperwork intensive, costly regulatory scheme that just a

few weeks ago it seems like was voluntary. now there's mandates now there might be more mandates on the kinds of testing. i think what we're seeing here, certainly a wholesale change in how america regulates digital technology markets, when our previous way, which is a light regulatory approach, gave america a lead in digital technology, and all of the big important technology companies, i'm not sure doing something else is a great idea >> i assume that the biden administration wouldn't see it that way they would say that they're just doing what they see as responsible and not using too heavy a hand here. >> look, their argument is you can't have wild west here in terms of ai because there are safety concerns you have to think about with ai getting potentially out of control ai involved in bioscience, ai involved in national security. and so you do need some rules of the road and to jimmy's point, yeah, that creates increased cost increased friction for start-ups

and smaller companies in particular if you ask the biden administration, they would say this is something that we just have to do with this new emerging technology. we have to give some rules of the road here in order to prevent all these negative consequences from being built into the ai industry from the beginning. >> all right, for now, thanks. >> like seven terminator movies, nobody ever said i wish we had a light touch. >> the concerns are science fictional at this point. >> to be clear, you think we need the regulatory framework to prevent the terminator ending, and james, you think if we get the regulatory framework, that ushers in apocalypse now >> no, here's what i think, that this entire effort is based on one kind of like regret that social media isn't more heavily regulated. or they're science fictional these are science fictional concerns influenced by culture, the idea of ai convincing us great killer pandemics and now we're going to this embryonic

industry, put it in the loving embrace of america's administrative state i don't think there's enough focus on harnessing the technology >> if you look at the embryonic industry, it's billions of dollars worth of research and development over decades to get to a point where you had a gpt, this is not new technology this is stuff that has been building for a long time it's the people who are building - >> given where it could go, it's embryonic. >> they're the ones saying we need this. they're the ones saying this could end the world. >> it's established and the incumbents are saying we need this that's a very old story. >> they're saying here's an executive order based on the defense production act this is the lightest of light touch. the next president could wipe this away with a pen >> now heavier >> i understand you want to live

in capitalism, we should figure out how to tell people if they're looking at real images or ai generated ones, which by the way, i don't know if that's possible it's not a lot, and it's the industry that has asked for these rules so they can compete without being worried about being undercut >> i'm not impressed by industry asking to be regulated you are very impressed by that i'm not. >> i'm impressed by a tiny bit >> washington offices to work and shape that regulation to our advantage. it's an old story. may never have heard of it >> gentlemen, we will continue this good conversation. we thank you and relatively quiet eamon javers thank you, as well coming up, shipping supply chains are still recovering from the impact of the pandemic but droughts and record low water levels could insure the industry never fully recovers. sk wn ow lchs in today's rising ris,he"perun" comes right back

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some time getting to you by ship, and the supply chain disruptions we saw post pandemic may pale in comparison to the disruptions we could continue to see because of climate change. diana olick explains ipher continuing series on the rising risks. in the panama canal this past summer, severe drought caused authorities to reduce the daily number of ships traveling through. that resulted in severe backups that hit supply chains at the end of september, they did it again a similar reduction in 2019 cost global shipping as much as $370 million. that same year, record low water levels in the mississippi river disrupted transportation of agricultural goods costing about a billion dollars in losses. all of this is not lost on the world's second largest container ship company

>> we firmly believe that climate change forces a great threat to the industry and the consumer overall we're seeing disruptions happening all the time >> about 90% of traded goods are carried over water and maritime trade volume is expected to triple by 2050 as demand increases. this as shipping is at increasing risk from tropical storms, inland flooding, sea level rise, drought, and extreme heat >> actually imagine that if the port has an impact, we're unable to unload the cargo here, there's a downstream impact to the supply chain and also upstream it's all connected >> the impacts of climate change on ports alone from damage to disruption could cost the shipping industry up to $10 billion annually by 2050, and up to $25 billion by 2100 of all the transportation sectors, shipping is one of the most vulnerable to the effects of climate change. whether it's out at sea, in canals and rivers, or even

coming here into port. but shipping is also one of the slowest to cut carbon emissions. in september, maersk unveiled its first container ship powers by green ethanol 24 more are coming, but the fuel is both expensive and scarce >> the technology, you could say it's ready it's there but it's a major shift that is needed and it will take a lot of time >> a global technology and energy company building engines for the marine industry. >> even if we have engines ready for new fuels, the fuel needs to be produced. it needs to be significant investments made, and it needs to be green fuels. it means it needs to be produced by green energy. >> shipping accounts for roughly 3% of global greenhouse gas emissions, but it took until this past july for the international industry to finally agree to a net zero goal by 2050.

>> it's actually a big step compared to where countries wanted to go five years ago. but even with this big step, it's not the goal that has been set will not bring us to the paris agreement, not bring us to the 1.5 degrees. you can rightfully say it's a step in the right direction, but it's not enough. >> in the meantime, damage control is the main focus, as we speak, the u.s. army corps of engineers is using a dredge shift to push out silt in the mississippi river near vicksburg. extremely low water levels are causing ships to run aground, and they told local media the low water level could cause a major financial impact back to you guys >> thanks very much. we'll see you in washington on weesy. technical support is next.

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welcome back to "power lunch.

welcome. good to have you in the house. the first name is marathon petroleum. it's up 25% to date. are you a buyer? >> i am. i think what we're trying to do is blend earnings momentum with price momentum marathon has been the best of the sector here's a stock coming off a new cycle high that's an indication -- wouldn't say it's the most tactical where you have to buy it ahead of the tape, but if there happens to be a sell-off, i think it would mark a good opportunity. >> okay. >> specifically looking at the prior breakout above the highs from earlier this year very often former resistance becomes support a little bit higher than that i didn't dry it cleanly.

around 137 if you get a sell-off at 137, marathon becomes tactical. >> the purple line is a 200-day moving average would you stay on the sidelines otherwise? what if it's a good quarter? >> you haven to there for it here's a stock on our large cap buy list since august of 2021. i'm not trying to time the ebbs and flows. i want to ride it and stick with my winners mpc is a winner. >> auto parts maker upgraded by jpmorgan, auto sector in general has had trouble lately what's your take on this one >> a great example not all earnings momentum is created equally. one without good price momentum. the sign occurred in the summer. what was happening in the summer you had a strong market rally, s&p at new cycle highs active wasn't able to get it active was weak, below where it peaked earlier in the year and you see what happens when the market tide comes in, the weak

get weaker that's exactly what happened with active. through this market sell-off it breaks trend and at a point where it's at its june low, if it can't hold there not much to point to until you get to the 2022 low. >> this might be more if there's a positive reaction -- how positive a reaction could make you a buyer? any point if the stock jumps 20% or something or just a watch out kind of name >> so i'm a fan of buy relative strength, sell relative weakness with that said if you were to move back above the 200-day average, that would be an incremental trading positive if i was short the stock i would be thinking that as far as a level to derail my cautious view. >> the last stock is one you picked, cme group. what does this chart, both the earnings momentum and the price momentum tell you? >> i wanted to bring this one back i was on last time talking to a cnbc screener, this came up. why we liked it so much, it was

coming out of a reversal pattern, and it had consolidated sideways and we were making the case it was going to break to the upside you have a tactical pullback it has come back into the breakout level there's a 50-day average right there. there is a broader theme as well capital markets you wouldn't know it given the weakness in banks, actually ranks as the top industry in our momentum ranks. >> wow based on what debt issuance or future activity >> there's security exchange working within the cboe, morning star, data providers, whatever the theme is, the charts are telling the story. it's not just one or two names when across the board there's action there cme group is also rated outperform by oppenheimer. for all these reasons we like this reversal in trend see the 200-day average and buy the pullback in anticipation of higher prices. >> terry duffy must be happy

appreciate you coming in today more "power lunch" next as the dow is up nearly 550 points. we'll be right back with more on the markets anotrsd he to tied you over ♪ is it possible to fall in love with your home...

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step into your comfort zone with olukai. welcome back with the dow soaring at near session highs up 532 points, up 1.6%, it's the outperformer, the s&p, and nasdaq are up 1.2 throw up the chart of the

russell 2000 the divergence between the dow and russell in particular is catching a lot of attention today. the russell has been near recent lows and the index has behaved so poorly, that even if you were looking for some kind of bounce, maybe by this afternoon, 0.6% gets you a little bit more excited. 10-year yield for its part is below 4.90 seems to be supportive heading into the fed meeting this week. >> had a couple things in one of the earlier segments where we showed i believe it was the consumer discretionary and transports and they have been trending downward and sell at relative discounts to the market that's an interesting sort of dow theory thing to look at. i suppose one of the things that also came up earlier today the idea in pippa's segment that oil reacted better today because nothing bad really happened over the weekend. and maybe this rally in market is reflecting in part that things, you know, are not as bad

as feared. >> probably want to see it broad ounce a little bit and last, and not be a one-day snapback. a lot of big events this week. the jobs report friday, the treasuries refunding announcement getting attention how big is that? maybe the supply announcement isn't going to be as big as some fear i tried to write a newsletter about that. >> apple earnings in the week. >> the event tonight at 8:00 p.m. going to be a big one. >> thanks for watching "power lunch." >> "closing bell" starts right now. welcome to "closing bell." i'm scott wapner live from president biden. t -- post nine. the critical week gets rolling the next several days deciding where your money goes whether a late year rally is in the cards. fed, apple, jobs, all in focus, more than that too your scorecard with 60 minutes to go in regulation looks like that decent bounce for almost everything but the small caps today. the nasdaq getting a boost from its players like microsoft