jobs, that means credit delinquencies will not be the problem we thought they would. >> ares? >> i like the secular trends, how well they're positioned for private credit i like this name >> crowd 2, 2.5% >> but still down 26% from its highs. i like it. >> see you at 3:00 ♪ ♪ thank you very much, scott and welcome to "the exchange." i'm kelly evans, and here's what's ahead that september jobs report absolutely crushing expectations july and august were also revised higher so did the fed go wrong by going big on that first rate cut one of our guests says it's a win, at least for now, and she's here to explain. our market guest says this is what a soft landing looks leak, and you should own small caps but only in three sectors restaurants have been challenged by higher wages and a softer

consumer but guggenheim says there's one name doing better than the competition. that's our mist try chart today, down 28% first, let's start with the market reaction to the jobs report dom chu, what are we seeing? >> it a es a lot of green right now. and the positivity has carried forward into this midday trade so far, but not without volatility what i mean by that, we are, yes, at kind of near session highs. floating just below them right now. the dow up 180 points, one half of 1% gain there similar percentage move for the broader s&p 500, which sits at 5733, up 30 points at the highs of the session, we were up just around 47 or so points up still but a modest three points at the lows of the session. it was still positive all day for the s&p. tilting a little bit more towards that positive end of things right now the nasdaq composite, up about 0.8 of 1%, about 18,070 is the last trade there on the nasdaq

composite. so something to keep a close eye on that stronger than expected jobs report led to a sharp move higher in interest rates to. give you perspective, the two-year benchmark note yield, which many use as a proxy for fed policy going forward, sits at 3.91% that's up significantly on the day, but you can see here, this is the day we're talking about right here, this slight move higher at the highs, we were at roughly 5.25% over the last year at the lows, roughly 3.5%. so that kind of tells you wherer right now. yes, a move higher because of the economic growth story, but well off where we were about one year ago and then the airlines, a key focus so far today this is after a "wall street journal" report saying that spirit airlines could be looking at central bankruptcy filing those headlines sending that stock down 27%, off the worst levels of the session. but take a look at these names frontier group, another low-cost carrier, up 17% on that.

could they benefit from distress in spirit airlines and jetblue, remember, they were a merger partner got called off by the courts, said no, anti-trust concern there is they're up 14% could they be a beneficiary in case spirit is in distress, as well airline stocks, either flying high or coming down. back over to you >> such an important development to highlight we'll give it full treatment next hour on "power lunch. the september jobs report blowing way past expectations, with payrolls climbing 100,000 more than expected, and the unemployment rate ticked down to 4.1% one of my next guests says we're experiencing the mother of all soft landings or the fed is questioning that giant rate cut. diane, the mic is yours. >> well, i'm still encouraged that we're in the mother of all

soft landings, because we still had a tick down in the hourly workweek, which held down weekly earnings and i think, you know, we're still in a good place. we have productivity growth, and we're going to get another cpi report next week that's going to be, i think, very good from the fed's perspective. so we have a lot of data to go, but the data has been revised now to the upside. we had a tale of two economies where the economy looked like it was accelerating, and the labor market looked like it was falling apart. that's been wiped away the labor market no longer looks as weak as it was. but there are some soft underbelly in it, and that is what we're pricing there is a lot of stress within this report and for the overall year >> sure, you know i like to get on the soap box saying that's why we need more flexibility in all of these things that developed. but steve, for now, i just wanted to hone in on the market reaction a little bit. so we have seen -- are bonds

the -- massive news in yields, massive. especially on the two-year the treasury volatility is like the new equity volatility. i can't remember who first made the joke about bonds being the new dumb money but the way in which they have no idea what is actually going on is completely different from the 15 years that we have just experienced, was low rate, high rate, now we have no idea. >> they're on the wrong side of this number. >> but we were -- is this the fed rate cut the two-year yield was higher and the ten-year yield was higher, and now we're over 4%. >> i did a story, a show three weeks ago that said the rotation of the reinversion of the curve was likely to happen, a and the two-year dropping, which is kind of what happened although now it's a bit higher they have to recalibrate the recalibration, that's what's going on the deal is this, if you look at the november fed funds futures,

what you see is -- now there's a little tiny bit of a trade in the possibility they do nothing. >> wow >> i was, by the way, in the camp of the 25, i want you to know for this reason, i think gradual is a good way, and i like gradual. but i don't think it's a big deal the market has a 3% probability of no cut. then what happened to december, a and what's happened there is they have gone from 50 to 25 again. what does that mean? people look at the longer term chart, and we'll do some math for you. if you look at december, you'll see -- i'm sorry, a year from now, the december 2025 contract, you'll see we're trading at 3.41 we were traiting at 2.87 that's the same thing as backing out 50 basis points of rate cuts i did that math so you did not have to at home. >> that's for next year, so we're pricing in fewer rate

cuts >> and that's fine >> i don't mean to be condescending, are bonding the new dumb money, but we say how is the fed going to come to where the market is? maybe the market has to come to where more the fed is. >> that's what happened here, and that's okay. the fed also very much in the way diana is talking about, recalibrating their open recalibration. some on the fed thought they needed to go further faster. and today thinking we don't have to go quite as far quite as fast and that's okay. there's some criticism of the forward guidance perhaps that's warmed. the fed got itself into a bit of knots in the forward guidance the last time around i think it is more flexible this time but, again, i think it's wrong to see 250,000 as inflationary, and i can explain that in the next round of questions we do. >> or in the next hour if we have to. will you give us the ten-second version? >> if you have the workers to fill the jobs, it's not inflationary

if you see -- as diane pointed out, the workweek went down a little bit, you had a decline in the unemployed, i did say last month, i hate to do the kind of -- here's why i was right, but i said last month we have this pattern diane, tell me if i'm wrong about this we have had this pattern of people entering the workforce, a tick up of the unemployment rate and the next month they find jobs that's been this economy and it appears to be so >> let me layer on that the tough question of how much of that is immigration driven, especially as the numbers are being crunched saying the overall job gains that we have seen are going to foreign-born workers more than native-born ones, which are also making gains, but more of them are -- the flows would suggest to the new immigrants >> well, that's where we have more growth, so that's where more of the gains would go so it's not taking away jobs, it's important to put that out

there. and that's what the brookings evidence suggests from the more updated immigration numbers. so i think that's really important. also, we have seen an increase in participation among foreign born and domestic born, which is great seeing everybody throwing their hat in we also saw a tick down in the unemployment rate for those college educated and less than a high school degree it was those that are in the middle that just moved sideways. i thought that was interesting, as well. i agree with steve we have productivity growth. i'm bullish on productivity growth >> that's what we're not talking about. >> right remember, that was the thing, steve, you and i go back long enough to remember that was what was the experiment in the 1990s, when the fed actually experimented how low could unemployment go? i think we are -- i'm sort of hopeful on this being the mother oh of all soft landings. i do think you're going to get some pushback next week. mickey bowman is one of the first people out of the box to

talk from the fed next week. we have a lot of fed speakers, and she was the one that dissented, wanting for a quarter point move instead of that half percent. >> you can do a four-second response >> i want to talk about this nonsense on the internet about imgrants taking the jobs of native people. the reason why the native population is declining because they're retiring on money that's being paid by immigrants for social security they're not going to receive >> you think we can go on a ten-minute tangent on this >> thank you, both always a pleasure. my next guest says this is what a soft landing looks like and expects the bull market to continue he's finding opportunities in small caps in three sectors. let's ask larry adam about this from raymond james as we pond whatever to do with the russells, because look, floating higher interest rates

were very, very bad for them for three years. if rates are on the up again, does that give you some concern? i know they're not showing much concern about that today >> i think it's important to look at which rates are we looking at when it comes to small-cap stocks, they get 56% of their financing from the short end of the curve, versus only 26% for large-cap companies. as the fed continues to lower interest rates, that will, by definition, help small cap financing. that's one of the catalysts that will unlock the value within the small-cap space. so just -- say that one more time, and explain to me where you don't want exposure then in this new information that we have, and where you think you would still be pretty safe >> back to the financing, right? so 53% of the financing by small-cap companies is done through floating rate debt as the fed is cutting the short-term rates, you think benefit as rates go lower.

>> are they -- is it usually similar to the fed funds rate, meaning it's the shortest, almost overnight area of the curve or more on the 2s or 5s or something like that? >> usually within the one-year time horizon you have seen the fed cut once we think the fed cuts two more times this year and four times next year. the other reason why i like small caps is the fact that we do think, we're going to have a soft landing historically, when the fed starts to cut, you see that small caps outperform large caps, and that one year following the first rate cut but if there is a soft landing, you do tend to see small caps outperform even more we're getting more and more confident as the data comes out that we are going to have that soft landing >> so your favorite sectors in general, technology, health care, and industrials, are those your favorite sectors in the small-cap world, as well >> both. the reason is when you look at technology, for example, you see fantastic earnings if you look at the large-cap

space, there's only one sector since july 1st that's seen upward revisions it's been technology and with the cash flow that they continue to generate, what are they doing with that they're doing buybacks, increasing dividends and investing toer the future. as your last guests were talking about, productivity continues to be a big theme in this market. how are you getting that by investing in technology we continue to be optimistic on the technology space >> let me quote jim cramer two hours ago, who tweeted crazy that tech can't maintain its gains. really incredible how poor these semis trade. >> yeah, so i think that there's just a -- we start earnings season next week, technology two weeks after that once again, when you start to see their earnings, and that's one area that beats on the earnings consistently, but when they come out with the guidance, and you saw some yesterday, that it continues to be very strong for the demand of their products so i think that this is turning

out to be a good buying opportunity, and when i look at the fundamentals of what we're expecting from a top line, a bottom line, margins continue to be the healthiest in the tech space. i think that's going to continue to lift that sector longer term. >> people selling, you're buying that sector today. the nasdaq is up 0.8, not exactly in the red right now we didn't call it out explicitly, but you think one of the important drivers of this continued better than expected growth is government fiscal stimulus is there a comeupance at some point? >> if you look at all the bills passed, the "inflation reduction act," the chips act, of all the money allocated to spend, only 20% of that has been spent so far. that means 80% still in the pipeline could be spent, and i think that will continue to support the economy, which will ultimately support earnings, as well >> it looks good for now

i just worry does it make higher rates on the margin, sit borrowing from future growth and prosperity, are we going to have to experience fiscal austerity as a result in a couple more months or years' time? >> well, i think in the near term, that money has been set aside. so it's there to be spent, so i think that continues to be a tailwind one point i would put out there, next week we start to celebrate the second year anniversary of this bull market and with valuations where they are, i would caution people that the third year of a bull market does tend to have more of a muted performance. so i would be a little more cautious going forward >> like the third leg of a relay. larry, thank you so much appreciate your time today >> have a great weekend. coming up, openai is $157 billion valuation may not be topped by another startup soon, but one company doubled its private valuation to $14 billion

after coming in at number 12 on this year's disrupter list deidre bosa joins us next with what kind of growth they're seeing and our mystery chart, a restaurant name to watch, who says it has protected profitability despite a softer consumer after this morning, consumers maybe not so soft. that's coming up on "the exchange." >> this is "the exchange" on cnbc you founded your kayak company because you love the ocean.

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welcome back generative ai startups are starting to reach ever-higher valuations one of the biggest problems they're facing is getting enough data to train their models scale ai says they have the fix. the startup valued at $14 billion, and today's "tech check" deidre bosa spoke with the ceo alexander wang >> so scale ai is an interesting startup, one of the buzziest businesses in generative ai. it helps customers train ai models through data labeling and powered by over 100,000 human experts and contractors that go through a lot of data and mark or text specific parts so ai can learn from them. so ai has a lot of human input in the earliest stages, it was the companies or the research labs building the models that needed scale ai the most the likes of openai, google and

meta but now as companies look to build their own systems off of their own proprietary data, wang sees a major opportunity here's how he put it >> the amount of proprietary data out there compared to the amount of public internet data is staggering. you know, the stat -- you know, you look at jpmorgan chase's internal set, there's over 150 petabytes of proprietary data. so the mega trend that we see is really aiding every single large enterprise and u.s. government utilized all of these incredibly valuable proprietary data to build their own agents >> one petabyte data is

equivalent of streaming about 500,000 million of netflix in hd quality or 500 billion pages of text i heard from another founder that banks and hedge fund have the most proprietary data and looking for ways to use it with generative ai. wang says he's seeing greater adoption of his model, too i asked him what happens if synthetic data is used to train models or if ai applications can do those better than humans. >> at the end of the day, we need to rely on human experts to ensure they're able to produce extremely high quality data to go into these models ai is an industry that is garbage in, garbage out. so if you feed into these models a lot of gobbledygook, it will spit out more of that. so it's important to utilize the most talented human experts around the world to fuel these

models >> so really strong topline growth an open question, kelly, are the margins, do they look like software margin it is you're using human contractors, is that going to be lower? but he just said that if his arr, annual recurring revenue just hit a billion dollars ahead of the timeline. >> are you hearing the sense that we're going to have an ipo? it's pretty quiet in terms of openings >> right and the chipmaker that recently filed, may prove to be the exception. we're getting close to the election, and many of the other founders and generative ai companies i talked to are not -- i did ask alexander wang what he was thinking he said he has an eye on the public markets, but remember too, sarah frye said don't expect an ipo from openai any time soon. maybe some of the smaller companies, but there's so much funding in the space, kelly, there's a lot of reason for them

to build in private. >> yeah, absolutely. deidre for now, thanks deidre bosa. coming up, we're continuing to track the historic destruction caused by hurricane helene from eight days ago we'll have the storm's impact on two key industries, next and before we go, check out the home builders, under some pressure today as the ten-year yield jumped back towards 4%, and the 30-year mortgage rate has surged to over 6.5% today. that's got the builders index down about 2%. down about 2%. more after a break off alarm. amelia, weather. 70 degrees and sunny today. amelia, unlock the door. i'm afraid i can't do that, jen. why not? did you forget something? ♪ (suspenseful music) ♪ my protein shake. the future isn't scary. not investing in it is. you're so dramatic amelia.

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so, the question is - cyber attack. as cyber criminals expand their toolkit, we must expand as well. we need to rethink... next level moments, need the next level network. the only network with built in security controls. chip? at&t business. welcome back to "the exchange." i'm pippa stevens with your cnbc news update. the supreme court agreed today to step into a fight over plans to restore nuclear waste in texas, and new mexico, the court will review a ruling that found a nuclear regulatory commission overstepped its authority when it a license to a private company to store spent nuclear fuel at a west texas dump for 40 years. the decision will affect the plans for a similar facility in

new mexico social media platform x has paid some of the fines ordered by brazil's supreme court and will file a new request to resume services in the country x was shut down there in august after it did not comply with the court's orders over a hate speech moderation. at least 215 people have died and hundreds are still unaccounted for as a result of hurricane helene and communities struggle to recover there the storm's widespread damage. the white house says fema has provided over 45 million in direct assistance to those affected, including over 17 million to those in north carolina kelly? >> incredible. hundreds of deaths now and could be hundreds more as they continue to recover everyone pippa, thank you as those efforts continue across the southeast part of the united states, we have team coverage tracking the impact of hurricane helene across different sectors of the economy. megan is looking at the challenges facing the chainmakers after that small but significant mining town got hit

with two feet of rain. and diana is digging into the uninsured losses, with a look at some new technology with helping homeowners get a better look at the climate risks they face. meggen >> so we introduced you to the town of sprus pine, which produces the entire global supply of high purity quartz it's crucial for chip making, but the companies that are operating the mine there is are projecting some optimism now after last woke's storm. the logistical challenges they face are still huge. so the larger of the two mine operators is out with a new statement today saying they see only minor damage to their facilities and the other company says their damage is in ancillary units and they believe they can avoid supply disruptions, in part because they have some inventory in norway. but neither company, kelly, is able to provide any timing estimate as to when they can start mining, refining or shipping

and that poses a big supply risk for the chipmakers that are dependant on them. the biggest hit is to the town's infrastructure, which the companies use to get chemicals in and get their products back out. utilities are still down now more than a week after the storm. 167 roads are closed in this area, including the road where quartz corps is based because a bridge is washed out according to the department of transportation railroads are flooded or torn up, and they tracked the quartz supply train, they say it could be less than a month before the mines themselves are operational. but it's looking like more than a month, they say, before the logistical issues are worked out. >> i was thinking, even if they have those facilities in norway, could they get them in with the port strike? at least that issue is at bay, as well. megan, thank you insured losses for helene are estimated at over $6 billion, but the uninsured losses are far higher because the vast majority of homes, especially in north

carolina, didn't have flood insurance. the brand new risk technology may be able to change that going forward. diana? >> well, kelly, most homeowners in north carolina do not have flood insurance, because they're not in fema designated flood zones, which if you have a government backed mortgage, requires it. just 4% of north carolina homes are in fema flood zones. but climate risk from first street, which incorporated the effects of climate change into its property risk scores, shows 12% of those homes at flood risk first street just launched a suite of climate risk data for every for-sale property listed on zillow. take this houston home you see climate risk for flood, fire, wind, air, and heat. you click on the flood risk and see the percentage risk rise in 15 and then 30 years, as climate change increases the severity of rainfall over time this listing says flood insurance is critical, even though this property is not in a

fema designated flood zone you can click through the first street site, which will estimate insurance costs. >> a lot of people think that they are safe from flood, if there's not a fema flood zone. that's decided not true. heavy rainfall can affect many people across the country, and there's no indication from the fema flood zone designation that is a risk for you. at first street, we created these new flood maps that do bring that into account. >> 80% of buyers now consider climate risk when purchasing a home according to a survey by zillow very important going forward >> flood is still subsidized, i believe on our policy it says something like you're going to have to pay x percent more on this over a certain number of years, and i'm not sure if we're unique in that >> yeah, i mean, it's going to depend house to house, but when you have to pay more in flood

insurance and for certain homes if that cost is very high, that's going to be factored into the value of the home and make that value less because you have that additional cost, subsidized or not >> that's a great point, especially now in many of these areas. coming up, your last chance to guess our mystery chart the restaurant name that guggenheim says is doing better than the competition when it comes to managing higher wages and a softer consumer. we'll reveal the name, next.

welcome back to "the exchange." dock workers along the east and gulf coast agreeing to a deal last night for a 62% increase in wages, concluding for now a three-day strike we'll see what happens january 15th it echoes similar demands from boeing union groups and autoworkers when it comes to pay. my next guest says the labor market isn't very soft and wage inflation isn't dead joining me now is president and ceo of the lindsey group i am going to give you a victory lap. you were right, i was wrong, especially last year when i

thought things were looking harrowing. and here we are, and it seems to be clear sailing, larry. what are the implications for the market and the fed >> well, you have to remember also that this morning's wage numbers didn't include the revisions that we just got so the increase in wages is actually about 1.6% higher than what was reported. so it's 6.0. you know, that's way, way off anything that would come close to the 2% inflation target >> go ahead. >> yeah, well, and you not only have -- what was interesting, i thought, about this is the head of the union said it on your show, i believe, we want 61.5% and they got exactly 61.5%,

which shows that he has enormous bargaining power and credibility. and as you noted, there are similar problems going on at boeing and at the various auto companies. so, unions have it this their heads that basically 8.5% pay hikes are quite gettable management caved to that amount. but the other companies are talking about 6.5% to 7% is what the offer is so you've got to have wage increases under 4% if you want to get to 2% inflation and we are just nowhere close. >> so, if we're nowhere -- we're in the neighborhood of 2% in the very, very short term, probably below that if you go a three-month running average, but i want to really ask this much bigger question, is this the soft landing or the no landing

does the fed actually need to do anymore rate cuts at this point? and what does this mean for the stock market >> umm, well, first of all, it almost certainly means further steepening of the yield curve. we saw a lot of that today i think the fed has to think very carefully about its next rate cut, because, you know, since the last one, we've seen the ten-year rise something like 25 bips. so if you're cutting rates on the short end and you see the response on the long end going the other way, then you're probably doing something wrong so my suspicion is that they're probably going to have to pass at the next meeting. >> pass entirely >> pass entirely i mean, probably -- >> what's going to have to happen if they keep cutting, what are the risks

>> well, they're validating those inflation expectations that the unions and management seem to have in their heads about inflation going forward. remember, this is -- what we're talking about are the next five and six years, depending on particular negotiations. so these folks aren't worried about this month or quarter's inflation print. what they're saying is that inflation will be enough going forward the next five to six years to validate this level of wage hike. you know, it's fine for the unions to demand it, but for the companies to give something like that means they've got to expect that they're going to be able to collect it on the top end in order to lose it in terms of wages. >> we are two years into this bull market and many -- our earlier market guest says the third year is a little bit tougher. but, you know, i know you're not an investment person per se,

larry, but i'm trying to think through the implications of the moment we find ourselves in, for a stock market that has done incredibly well over the past couple of years, as many would say is fairly or fully or maybe overvalued and with bond yields now back on the up >> well, again, we're now toying with 4% on the ten-year. the market talked itself into the ten-year, say call it 3.5, and likely headed lower. they thought which were going to have a fed projected a 3.75% feds fund rate by the end of next year. that ain't going to happen we'll be lucky if it's only 4.25%. so if that causes downward stagflation in the present discounted lull of future earnings or whatever model you use, and that would mean

significantly lower stock prices >> i want to quickly ask you as well about the developments in china, which has been a big defl deflationary impulse globally. sam drungenmiller was a little more cautious of any prosperity under xi jinping where do you fall in terms of your advice here >> well, to link the two stories, one of the reasons we've seen a decline in these prices, and also commodity prices, which is driving our good inflation numbers in the short run, is because of china you know, chinese deflation has hit here now, if you look carefully at xi jinping's package, as well as his rhetoric, the intent is to boost the shanghai composite this is, you know, it is their

state lottery. you know, they want confidence in that lottery. and that's basically what the package is will it boost the chinese economy? i doubt it, because you don't get a big enough wealth effect out of the stock market to really prop up consumption in china. if it actually went into the housing market, maybe. but it's probably not going to go into the housing market unless consumers also, you know, get more confidence, as well >> yeah. >> and you've got to remember, there is something on an order of six times as much chinese household money sitting in a bank account, drawing interest, as there is in the stock market. well, that mean it is you cut rates, you're really cutting income of chinese households so i am very, very suspicious that this will actually feed through into sustained economic

growth that doesn't mean you shouldn't buy the market they're lemdlending money to companies to buy back their shares this is a rigged casino. if you expect that to persist beyond, you know, 30% gain or something like that, you know, then you're starting to play with fire. we've got most of that gain already. >> i think it's an important link between what's happening there, here, and what it could mean in a cautionary way for the stock market larry, appreciate your time. >> my pleasure, kelly. and our next guest says labor and the consumer will continue to pressure the restaurant industry. still, there's one name that's been able to navigate that well, and it's first watch restaurant group. our mystery chart. congratulations to tabitha turner for guessing it the shares are still down 28% so far this year, and having a hard week because of exposure to the southeastern u.s. and the damage from hurricane helene. while our next guest lowered his

price target today, he says it's a buy. gregory frankfurt is here from guggenheim gregory, why have the shares done so poorly >> i think the restaurants have been pressured from a topline basis. you have seen the traffic go from modestly negative to mid single digits negative they are growing stores extremely quickly, but in an uncertain environment for the consumer, we're seeing challenging topline performance across the board in our space. and generally have downside to numbers for 2025 in the back half of this year. >> jordan and d-trader 7 also guessed it why more to the point should people buy this dip for first watch, and who else do you think could end up generating some nice returns >> you should run limited time offers for a fast food chain

i think when we look at this space, there are only a handful of companies where we have material upside to earnings. texas road house is one of them. wingstop is one of them. we just raised numbers this morning. dutch bros is one of them. they are underpricing their peer sits in the categories the work we did on withinstop, you just search where can i get a chicken wing in the dallas market you find those 25 locations. wingstop is underpricing them by 13, 14%. texas road house is underpricing outback, long horn by 15% to 20%. so i think when you're offering the consumer really good and attractive value, you're one of the only restaurants generating positive traffic in this environment. that's where we expect numbers to continue to be. >> but to make it clear, basically as someone says,

they're investing in margin or donating margin, these are restaurants who are underpricing relative to their competition and benefiting as a result but are they donating margin in the short term or are they able to run more efficiently? >> the way to get real equity value in the space is if you're texas road house is a good example. each seat in the road house house about 3.1 diners every night. in an outback or long horn, that's 1.7, 1.8. so they underprice their peers, but they make up for it in volume, so the cash flow dollars are better than their peers on lower price points that. is a difficult position to disrupt. i think domino's and wingstop is in a similar position. >> all right so some ideas there for what could be a protracted period of stickiness on the cost side, as we learned from the data this morning. greg, thank you for your time. >> thank you

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yeah, look at that. -honestly. someone get a helmet on this guy. xfinity internet customers, ask how to get a free 5g phone and a second unlimited line free for a year. switch today! welcome back markets are reprising future rate cuts after the surprisingly strong jobs report which may spell trouble for stocks according to larry from the last segment. my next guest is repositioning in tech, trimming in positions in nvidia and putting money to work in the left behind names like palo alto with that kind of tease in mind let's talk to jeff, kkm financial founder and ceo and cnbc contributor welcome. >> thank you. >> let's just start quickly with your reaction to the jobs report and the market what does that have you thinking >> i have to focus on the 10-year note i cut my teeth in the futures notes.

i think short-term we will see equity comes up for air. 4%, those are important yields we went down 375 all the anticipation of another 50 basis point rate cut being baked in that short-term is a headwind. on top of the other headwinds something going on in 30 days i forget about too. >> the election. >> yes. >> on the 10-year in particular, there's always kind of the two different reasons that it goes it can go up for bad reasons like inflation or deficit concerns, up for good reasons and maybe today was one of those. >> you're not wrong. i don't think it went up for any other inflationary scare reasons. we see the strong economy. it's bifurcated in some sectors. the yield higher is going to catch some people off guard, and i see rate sensitive names, high flying beta names where i have the technology names going into a pause. >> you talked about your concerns with nvidia and the shares have not done lately as jim was saying earlier not very impressed by the trading behavior but they've kind of

held in there. >> they have. >> do you own any of it? >> i own all i own facebook and meta. i can call it facebook. >> you had that since the ipo? >> since 2012. that's what's important, and i want to talk about is managing positions you see meta at an all-time high at 591 you have to realize what's been the last hundred dollars it was trading 495 we have new glasses and supposed to not use this anymore and we're using glasses. i'm not buying into that where i think the $40 billion capex expenditure i want something more tangible. trim meta, trim nvidia and look at ibm i know it's boring but that's a cloud, $200 billion don't want to call it small cap but compared to nvidia you see value there. the cloud is producing they spend about $7 billion in all the 15 companies they bought at ibm but $2 billion in profits and paolo you have to measure the ai theme hand in hand with cyber security palo alto i know has been a laggard when you look at a chart

of the high screaming beta names you see palo alto have upside capabilities >> zuckerberg became the second richest. >> he did. not throwing shade on the hoodie. >> you wonder if it's the thing of having fewer things that work really well and kind of sitting on them? >> it is but also transition. i want to see i think a lot of older people i hit 50, so here i am and i don't consider it old but the facebook users i know and instagram is a piece my teenagers utilize, important to understand, will they transition into revenue and have the ability to take all that capital expenditure and make it happen very different story like ibm. it's a small scale, one tenth the size, but right here, right now you have to trim and take that profit because you will got broke taking profits >> you worry the market could be in for a tougher slog the next year now >> i think we've had concern and had the conversation the top leadership, top ten stocks in the s&p 500 they got a little elevated away from the historical average down to 21%,

still about 35%. i think there's a little concern. more anxiety not just going into november 5th but subsequent to that if we don't have clarity you could see volatility the vix at 20 more opportunity for volatility to cloud decisions here in the short term. >> i was going to check on that today. is it a level there's still lingering concern? >> it is volatility sometimes you know when you see that acute move, like in the early part of august the vix fly up so it's hard to price and measure that with the global macro headwinds with earnings season coming up if you have a high flyer profit taker take it down equal weight it and consider it going into the fourth quarter. >> is this a picture of stronger economy weaker stock market for the near term? >> stronger economy and some of the big names, high flyers will see profits. meta, nvidia, i think stay stagnant or come down a little. >> thanks for your time. we appreciate it jeff killburg. that's it for "the exchange. "power lunch" is up next i'll see you on the other side

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so i enrolled in umgc. i would not be the person that i am today had it not been for the partnership with umgc. when we started feeding bogie the farmer's dog, he lost so much weight. pre-portioned packs makes it really easy to keep him lean and healthy. in the morning, he flies up the stairs and hops up on my bed. in the past, he would not have been able to do any of those things. this is me welcome to "power lunch. alongside brian sullivan i'm kelly evans. welcome. workers are a force to be reckoned with. the port strikers reaching a temporary verdict but the strike highlighting the heightened tensions within america's workforce. they got what they were looking for in round one but this ain't over yet they kicked it down the road about thre