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tv   The Exchange  CNBC  July 27, 2021 1:00pm-2:00pm EDT

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them so, i support it and it's down a little over 2% right now. so, it's a good time to buy. >> thank you joe? >> we have positively mentioned c chipotle and mcdonald's, let's not forget yum brands. >> wendy's stock is up and i think it's ready to sizzle. >> the moral of this story it's tomb to eat thanks, everybody. "the exchange is now." >> yes >> so unfair just saying i was hungry hi, everybody. thank you scott and welcome to "the exchange. here is what's ahead this hour covid is back in focus just as earnings season was about to change the market narrative. the cdc is set to recommend more mask wearing as the delta variant spreads. is this a blip on the economic radar or something more? we'll delve into that. just because you don't own a chinese etf doesn't mean the crackdown won't impact your investment and as the fed's economic model
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flawed is apple's business model all wrong? and is inflation helping or hurting your wages we do start with the markets kristina partsinevelos is here with the numbers >> we're seeing equities across the board. growth stock, particularly tech taking the biggest hit compared to values. the tech heavy nasdaq is headed to the largest one day drop in two months china's regulatory crackdown is bleeding into u.s. tech stocks and could cause investors to rejig their portfolios and while we have a strong start to the earnings season, apple, alphabet, microsoft are just a few examples that are falling ahead of earnings out after the bell they're also among the top five heaviest weighted stocks in the s&p 500. so, that could create pressure on the index and a new narrative popping up in the west of jet fuel shortage, which sucks because i think i have to travel soon. just not enough otomeet increased demand for leisure travel jet blue taking the largest hit
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right now dropping almost 8% lower for the day. and last but not least, bitcoin is coming off yesterday's highs above $40,000 after amazon denied reports today that it would accept a cryptocurrency as payment this year. the coin is still well off those highs that we saw in april, which was near about $64,000, kelly. >> all right thank you very much. this week will re-establish earnings as the main driver of stock prices so old fashioned he has what he calls old world versus the new world when it comes to picks let's welcome back chris do you think that's the case do you think earnings is the driver here? the covid news, we saw the markets wiggle a little bit on some of the reports about the mask stuff earlier today doesn't that threaten the future earnings more than what we're learning about last quarter? >> i think that's possible, kelly. and it's nice to be back with you again. but i do think there's an
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opportunity here for patient investors because lately -- and i mean over the last month or so -- things other than earnings have been driving equity prices, whether it's the delta variant, whether it's falling interest rates. today it's chinese stocks. but all those things can affect earnings, but you need to ask the next question. will they affect your company's earnings and in many cases, the answer is no so, there's opportunities presented. and i think earnings will drive equity prices over the long term, and that's the opportunity. >> maybe you can give an example because it feels to me like everything covid related if you want to call it that affects earnings prices. because either we're going to be in a pandemic light environment or whatever case you want to make about whatever growth is going to look like in the months ahead, this is the main debate right now. stocks are moving big like understand aups and others your exposure depends on what you think is going to happen with the pandemic, right >> that's right. but i think there's a lot of evidence that nobody thought the pandemic ending would be a
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straight line. so, we have a delta variant. we have a population that is partly vaccinated. we're getting there. and so it's easy, i think, to see down the road six months and 12 months that the problems are not going to be covid related so much as they're going to be other economic issues related. and that's what we're trying to keep our eyes on >> all right, so let's -- >> uh-huh, i'm sorry there's one other thing i really want to mention. there's a contradict between the earnings we're seeing and the low interest rates and one of those things is wrong. and i think we'll find out which one over the next six months i think that's a real interesting thing for investors to obsess over >> believe me, we could do the whole show obsessing about what's going on. i'll put that to the side. you do have interesting picks. let's talk about old world versus new world otis elevator just had great earnings what does that tell you? >> they did. when i'm on, kelly, i give you one old stock and one new stock.
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otis elevator, founded in 1853, it was more recently spun out of united technologies just last year at the beginning of the pandemic it's got terrific technology it is a 19th century company, but these new elevators now are filled with technology but the thing here, it's not surprising when you think about it, they sell the elevators near cost, but the service contracts for 20 or 30 years are like an annuity. it's like the printers and the ink. they're taking shares from european competitors i think they're invigorated like a newly spun out company and they have their own stock. so, we're excited to have been owners of that for a year, and i think there's more to go and i'm going resist elevator analogies like ups and downs and pushing buttons. >> thank you we hate those puns let's move on to taiwan semi, which is at the future of semiconducting we're talking about this next
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hour as well, what america's role is going to be in all of that why is taiwan semi one of your top picks from here? >> it's interesting. if you think like i do that semiconductors are the oil of the 21st century, you can't really do anything without them. and i cut my teeth 30 years ago as a technology analyst covering intel when they invented the pentmanship. they could do all the totally cool things. now that mantle has been taken over by taiwan semiconductor, and i would argue semiconductors are more important now than they were then. the problem with anyone wants to compete is taiwan semiis going to spend $100 billion over the next three years that's more capital spending than any we know of. that's one otis elevator market cap every year for the next three years. if you're apple or amazon, they
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don't even want to build their own chips. so, taiwan semi is doing it for them so, they are the arms dealer to the new world of semiconductors, and we really like them and we think that position is safe. >> i love the analogies and trips down memory lane as well, but the old world and new world and trying to figure out what world we're in we appreciate your time today. thank you. >> sure. thank you. i mentioned earnings as the biggest company in the market, apple has the biggest influence over earnings growth they beat estimates by nearly 42%. stock is nearly all-time highs but underperformed this year alphabet is up 51% microsoft up 28% facebook up 34%. cisco even up 23%. chris sanger is an analyst at kalin. what are you -- what do you make first of all of the stocks sort of quiet period. i don't want to make too much of it, but it's sort of underwhelming move this year
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>> yeah, kelly, thanks for having me. a couple things i would say. last year apple as a stock went phenomenally well. and last year was a good year for growth stocks. and what you saw with a cyclical rotation from growth into cyclicals and value. that's why you saw underperformance in the first six months of the year you started seeing rebound in the stock from early june, i would say. and i think two things happened. one was clearly there was some shift from, you know, your typical cyclicals to maybe a little bit of growth but the other thing was what has been very constant the last few months in the apple supply chain was the iphone numbers have been extremely strong if you look at most of the names, apple, samsung, all oof them saw cuts early in the year. apple has been really strong and i think that kind of helped a rotation back into apple that earlier in the year they're
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looking at cyclical, looking at the pc names like hp and dell and you started seeing gravity back towards growth and some smartphone names and apple stood out. >> we have the reports this week that the company may want to boost iphone production by as much as 20% after last year's 5d supercycle why isn't there more enthusiasm? obviously it's the biggest company in the market? what is the bar this afternoon if we talk about this in the whispered number sense, where do you think expectations are high or low? >> i would say for expectations are for a b on the joint quality. that's already in the stock. most people expect a b for the june quarter numbers kind of what they've done the last few quarters, part of the reason is because i feel like until all the apple stores are open throughout the globe, you know, there's always a little bit of uncertainty in there. so, at this point, i'm expecting a b. and the second thing is compared
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to a year ago the main differences that people who expect a september release back with the usual cadence of the new iphone compared to last year which was really october so, that did shift some of the numbers away from the second half of last year. so, this year is looking like what it should be, a typical iphone release cycle >> got it. >> that would be pretty good >> let me ask you then before we go, so you have an outperform rating, $180 price target. i think people might be interested how you break that down, a 25 times multiple on the core business, the hardware, the iphone, et cetera, the computers. and you give the services business a 45 multiple now, obviously we know why that business is so much more valuable it's a recurring revenue stream. it's priced in future dollars and all the rest of it but is 45 times really justified, you think, for a business that can see a lot of churn and has a ton of competition? >> actually, kelly, i think two
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or three years ago when i launched apple and some of the parts analysis, i remember you asked me the same question i would say there's been a couple things that happened. there's been a relay in the market in general. so, you see the business and recurring revenue businesses the second thing i would say is when it comes to the services for apple, there are a lot of risks, like regulatory risks, et cetera i would say the biggest thing is the iphone install basis they have a loyal base and that helps sustain revenue the question is how much more subs can we get on the new programs but the one thing i would also highlight is people tend to look at services as a single item for apple. i would say it's multiple line items. you have app store, apple pay and so many other different things as long as many other businesses are doing fine. a few of them are not. you would still get the revenue growth on the services side along with the margin side
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think of services as not a single business but multiple businesses >> fair enough i'm sure if i asked you about this a few years ago, even if you had not performed that it was probably conservative compared to what the stock has done in the meantime thanks so much we really appreciate your time again today. look forward to what we hear this afternoon coming up, the crane shares, china, internet etf down another 7%, 8% today and it's down 24% since friday as china's corporate crackdown continues. i'll ask former director whether beijing has gotten over confident in its ability to control china's companies and reap the rewards of economic growth is the delta variant derailing or delaying the economy's growth we're back in a moment >> announcer: this is "the
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get started today. welcome back to "the exchange." china's tech crackdown is raising tons of questions not only about the government's agenda here but also the long term risks we're seeing play out. the kf is down more than 8% at the moment and down 24% over the past week.
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alibaba, pin duo duo jd net ease and baidu have lost a combined $184 billion names like pin duo duo down 12%. alibaba down 10% hello nixed plans to go public joining me now is larry lindsey, president and ceo of the lindsey group. he just published a novel called "currency war. larry, it's great to have you. it might be a novel, but it definitely deals with issues confronting china. what do you make of the latest moves by regulators there? >> i think it's an important lesson that what matters to xi jinping, which is a little bit different than what mattered to his predecessors, is control it's control by the communist party. that is first, second and third. and growth is now going to take a backseat >> so, that's -- i mean, if
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growth takes a backseat, we've all been talking about the last 10 or 15 years how china's growth model should be immolated by the world and they're going to be the biggest economy coming out of the pandemic. and they're changing the rules for how you can do this kind of capitalism have they gotten ahead of themselves have they gotten overconfident is it going to work? >> well, the trouble with forecasting is it's tough to do particularly in the future it's their decision. it's xi jinping's decision he has made that decision. you can read any of his speeches at the various party congresses or working groups. he has taken a decidedly different tone he would like to see china emerge as the leading superpower now, official target is 2049, but he's now extended his
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tenure and frankly, that's where he wants to go during his term, if he possibly can. china is number one. >> so, basically china thinks it can be number one even if for the time being they're cracking down on some of their biggest companies out of concerns about data and is this because the s.e.c. here has been pressing chinese companies for more disclosure? it seems like db listing in new york was one catalyst for this latest crackdown >> i think the main purpose of the crackdown is control by beijing. they want to have more insight into what's going on on the various platforms. and it's as simple as that i think that concerns about the s.e.c. and things like that are really quite secondary >> all right let me ask you, larry, since we have you this week and since maybe we don't have another china answer for you to suggest for 25 years, although we'll probably get a sense in the next year or two of how this is about
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to play out, and investors are keenly aware of the market risk. but let me pivot and ask you about the fed. we have the decision tomorrow. you are in the camp where you say, you know, as concerned as you are about inflation, as much as you talk about their models are wrong, you don't necessarily think they're going to start tightening because the uncertainty created by delta you think kind of delays that whole trajectory >> right my job is not to tell you what i think they should do it's to tell you what i think they're going to do. and all political institutions, including the federal reserve, their main objective is going to be survival. that may be a little bit harsh but you have to realize what they have is kind of a loss function what if you're wrong well, there's two ways they can be wrong they can either be too late or too early. and for them, the penalty for being too early, that is
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tightening and having something go wrong in the next six months, is very, very high on the other hand, you know, so what if they delay i mean, it's yes they'll have a little bit more inflation and they'll get to that when they get around to dealing with it. but the cost to them of waiting is much, much lower than the cost to them of moving and turning out to be wrong. >> yeah. let me close by asking you this question you know, in writing this book -- i can't imagine what an undertaking writing a work of fiction like this is, especially with the deals of monetary policy and geopolitics and the rest of it what is the main lesson or message you want readers to come away with. it's called currency war obviously you have concerns about what is going on with the dollar so, what message do you want readers to walk away with? >> well, number one, i said
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china wants to be number one xi jinping wants to be number one. one of the ways that they expect to be number one, say in the next ten years, is going to be to replace the dollar as the world's dominant currency. and once they do that, all kinds of problems happen here, including funding our debt so, that is an objective, and that's one of the objectives we talk about in the book the second is a basic message. money is all about confidence. confidence, confidence, confidence once you lose the confidence, it is very, very hard to regain and if there was any real long-term risk in what the fed is doing is that there may come a magic moment when folks simply lose confidence in their ability to manage monetary policy that is separate from the political needs of the, whoever the incumbents are at the time >> it's fascinating.
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again, for anyone who wants to go through that thought experiment, they now have this book to do so. congrats, larry. >> and it's painless, hopefully. lots of action and sex and stuff and like that in there to take it down, sugar coat it >> my dad did steal it, my proof copy, and he read it very quickly and enjoyed it >> that's great. >> thanks for your time today. larry lindsey of the lindsey group. coming up, advance auto parts and auto zone have been on a roll this year raymond james is making one of these names his top pick in the space and downgrading the other on valuation concerns. we'll sort out which is the better buy plus underps is on pace for its worse quarter. we're going to hear from the ceo later on in the show 'rban are down more tha8% wee ck in a moment as your brok.
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welcome back, everybody. here's a check on markets. after another ugly session in the chinese and hong kong markets overnight, the u.s. indexes are hanging in there but starting to see more down side pressure so, we are down 266 at the low for the dow. it's about a 2/3% drop s&p is down more than 1% and the nasdaq down more than 1%
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we'll have more in rapid fire. elsewhere in terms of the movers this hour, activision blizzard is down almost 7% after reports that 2,000 current and former employees signed a petition sharply criticizing the company for its handling of a discrimination lawsuit in the state of california. meanwhile, shares of threadup are on pace for their second worse day since going public they're down almost 14% right now, this after they announced a six million share secondary offering they also shared a business update, coming in slightly above estimates. fellow newly public stocks are moving lower today as well, with pretty sizable lines ollie is down 7% figs pretty much the same story. we'll definitely keep tracking these names. facetime and chance meetings aren't the only advantage office workers have over their
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colleagues they could see higher wages. steve joins that to discuss that and tips for employers facing shortages next you can catch the show any time anywhere bliy steningto and following "the exchange" podcast. we're back in a moment okay, imagine this... your mover, rob, he's on the scene and needs a plan with a mobile hotspot. we cut to downtown, your sales rep lisa has to send some files, asap! so basically i can pick the right plan for each employee... yeah i should've just led with that... with at&t business... you can pick the best plan for each employee and only pay for the features they need. ♪ ♪ experience, hyper performance that takes you further. at the lexus golden opportunity sales event. get 0.9% apr financing on the all 2021 lexus hybrid models. experience amazing.
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. welcome back to "the exchange." i'm jon fortt. here's what's happening at this hour on capitol hill, four police officers are the first to give testimony at the hearings into the january 6th insurrection they describe sometimes harrowing moments facing the rioters. >> on that day i participated in the defense of the united states capitol from an armed mob, an armed mob, of thousands determined to get inside because i was among the vastly outnumbered group of law enforcement officers protecting the capitol and the people inside it, i was grabbed, beaten, tased, all while being called a traitor to my country >> quarantine rules are being eased for some essential workers. will not have to self-isolate for ten days if they come in contact with someone who tested positive for covid
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the move is being made to ease labor shortages in key areas instead, these workers will be tested daily and at the olympics, the u.s. women's soft ball team getting shutout by japan in a gold medal game. japan won 2-0 and ended an american rally in the sixth inning with a dramatic double play and on "the news" simone biles explains why she pulled out of the team competition. and we'll have more to get you ready for another evening for olympic competition. that's tonight >> thank you very much the delta variant and the potential for more covid restrictions not slowing consumer confidence yet. the july index just hit the highest level since february of 2020, before the pandemic really hit. and it's closing in on its pre-pandemic records while the survey shows a rosie picture, is this optimism in danger the cdc is expected to endorse the mask policy for vaccinated americans in covid hotspots. could a move like that deaden
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confidence in the economy moving forward. steve, there's also reportedly they're going to recommend that all k-12 students and teachers wear masks i ask all of this because obviously what happens in schools relates to people in the presence of the work force and all it ties back to consumer confidence what does today's news mean for the rebound we've been experiencing >> today's news was pretty consistent with last month so, we had two months in a row which are at very high levels. and as you noted, close to pre-pandemic highs the good news is that it stays very high here, but the bad news is it's starting to plateau, kelly. and then when you get into the data, what you see is geographically where covid is coming back, where you're seeing some resurgence, the cci, the consumer confidence index, went down so, i think there's some risk here that if we get a little rebound, if we scare people, if when the mask mandate comes back
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that you could in fact hit consumer confidence. and that could hit spending and gdp. >> you know, i should ask an economist or someone in washington, d.c. about this, steve, but when the pandemic first hit, we had many rounds of stimulus checks. yes, now you have the child tax credit going on, but what offsets you think this loss of confidence and momentum this time around? >> well, you know, there's a lot of good news in this people are still very bullish. they're telling us they're going to spend like crazy. automobiles intend to spend as high as ever and we know it's been very high to this point housing, both terms of the houses themselves. but also everything around that furniture and appliances and so forth. but they are -- and they are expecting to be -- the stock market to be somewhat -- they're bullish on the stock market. so, they're expecting that growth to continue even in the face of greater than 6% inflation, which is the numbers they gave us so, i think that there is, you
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know, still some optimism here and then you've got this whole government stimulus, whether it's the infrastructure plan or the other forms of stimulus that they're going to put through that could really juice things again for the economy in the fall >> let me switch gears a little bit and ask you about the dynamic. i think we're about to have a big societal and discussion about it if a lot of people are going to come back to the work force postlabor day which was the plan before delta got a lot worse, what's the dynamic going to be like for those showing up again and those who have been there the whole time people are already asking, we've been here the whole time, do we get something for that or for companies, like you said, are they going to pay you more if you are willing to come back into the office or are they going to pay you more because it's the only way to get you back into the office >> those are really important questions. there's a lot of stuff going on here you know, people are eager to come back on one hand, but then there are some people who are staying away from the vaccines
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and are afraid of getting back into the crowd and especially if you come back with the mask mandate. that could spook some people again if the delta variant or lambda variant picks up. you're seeing pressurize at this period of time i think the key here, our advice is flexibility particularly with women. i think women have dropped out of the labor force at a higher rate than men. and a lot of that is tied to taking care of family, children and elder care so, if there's flexibility that people can continue to work remote and also come in, if there's flexibility on hours, if there's flexibility on wages, if there is the ability to go to places that are lower cost and so not higher just in the urban areas but spread your work force around and contribute to the remote dynamic all of those things are things that would work well in terms of finding the right people and keeping everybody calm through this period of time. but i think the voluntary nature of coming back and some element
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of flexibility is really important. >> all right steve, we'll leave it there for now. we really appreciate it. st steve. the ripple effects of china's crackdown muss disparage apple coming up in rapid fire. we're back here in a moment, but let's take a look at the nasdaq on the way out, which is now at fresh session lows, down more than 2% or more than 300 points. mix of headlines from china and maybe the coviisesd su we were just discussing. we're back in a moment ready to? with a hybrid, you don't have to choose. that's why insurers are going hybrid with ibm. with watson on a hybrid cloud they can use ai to help predict client needs and get the data they need to quickly design coverage for each one. businesses that want personalization and speed are going with a smarter hybrid cloud using the technology and expertise of ibm.
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if you're 55 and up, t-mobile has plans built just for you. switch now and get 2 unlimited lines and 2 free smartphones. and now get netflix on us. it's all included with 2 lines for only $70 bucks! only at t-mobile. all right, everybody, welcome back and let's catch you up on a few stories that should be on your radar right now. in this rapid fire joining me to break down the headlines we welcome bob pisani, seema mody, and michael yoshikami. we are definitely going to start
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with the china stocks today where it is a sea of red across the board as panic selling sets in people like kathy wood are dumping positions. more than 40% off their highs, the downdraft is starting to bleed into tangential etf around the market it's not just about if you own china ets. it has a 20% weighting to china. top 10 holdings down more than 10% this month and 7% this week. how wide ranging is this crackdown? meekal yoshikami, we are bladder you are here for this discussion today. what is your advice to investors? >> be very, very careful about what's happening in china. my contacts in china, corporate contacts in places like where alibaba was founded are all freaking out right now because the government has really decided to flex their muscles. when the government decides to do that, it has a chilling effect
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look what happened with tesla earlier this year where they literally were called by regulators to report why tesla was having quality problems according to the regulators. i would be very, very cautious on china stocks right now. this is not over it's just starting >> and bob, you have been tracing the development between the u.s. and china in terms of this battle that's going on between stock listings and data transparency so, the s.e.c. here has been pushing forward saying we want more transparency about who owns these chinese stocks and china is responding say, we don't want our companies listing overseas and following their rules instead of hours >> yeah, i think this is -- that is an issue. but i think what is going on with the chinese communist party is really the big overriding issue. they want more control over their companies and they want to know what their companies are doing. i think there's a broader concern that the investing community has, which is that international investing in general is in trouble. you know, china has
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underperformed the u.s. for a decade, and not even china but even europe, even japan, even korea, the u.s. has been the place to be for more than a decade if you're an international investor, international fund manager, you're constantly defending yourself about why you're investing overseas and why your clients should be investing overseas we're taught we should have 25% of our investments overseas and 10% in china and we have the etfs that allow global allocations. i think now the issue is is china risk so high that maybe we should rethink that whole waiting and segment china out of the west of the global investments in general, which are already not doing very well. >> i just can't imagine that this is what the chinese wanted when they've been very effective at sort of entangling themselves in the international systems financially or otherwise and exercising their weight that way. but seema, you have an interesting twist on how investors may be responding. >> at a time we don't know the
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extent of the regulatory review out of china, worth noting the amount of money going into the other emerging market nations, for example, india has now raised about $10 billion in fundraising for start ups. that's double the amount versus the same time a year ago and even if you look at equity market performance, you see a wide divergence over the last three months, props a look at how investors are repositioning themselves, trying to re-evaluate the risk around the regulatory review. and if you want that growth story, do you look elsewhere >> sri to give your thoughts on the point bob just made. if the net result of this is china being removed from major international indices, why would that be something that's in the interest of the chinese leadership >> well, the chinese leadership is all about control that's really what it comes down here, kelly. and i think they're willing to take an economic hit if they can have more control. look what they did with one of their most famous actresses, which probably many people have not heard of
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but she was really accused of really tax evasion and what happened to her she basically disappeared for a year, kelly. so, i think that at this point, china's all about control. i want to comment quickly -- i know you got limited time, but i want to talk about what bob said about international investing. here's the thing that investors need to be aware of. if you buy u.s. companies, are you buying u.s. companies, or are you buying u.s. companies that maybe also have some exposure outside the united states like apple? if you buy apple, is it only u.s. absolutely not so, if you're buying apple and international, maybe you have more international than you really need because you're already getting international if you're buying apple alone. >> if investors are really rethinking exposure, it would be a complete sea change in what has dominated even u.s. large cap stocks or tech stocks over the past decade. so, it's a really important point. i think we need to keep in mind apple's earnings tonight and the direction this goes. let's mention what elon musk had
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said about apple he tooks shots at them last night. listen >> our goal is to support the advent of sustainable energy it is not to create a garden and use that to bludgeon our competitors, which is sometimes used by some companies, apple. >> seema, elon musk basically trying to differentiate his business model entirely for tesla, opening up the supercharger that worked from apple's approach to the iphone >> elon musk certainly not holding back interesting to see how he did go after apple multiple times and in regards to the comment about the walled garden, throwing shade to the app directors that have been in the legal showdown with apple. it's part of musk's dna, to go after the under dog, whether it's the reddit trader and now the app developers trying to level the playing field with apple. >> do you want to talk tesla or
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lumber, michael? you get one or the other >> let's talk tesla, that's a little more -- we can talk lumber sure >> let's close this out with lumber because i do want people to know. this has been the bellwether for the market this year we saw it spike dramatically in the spring it has collapsed from it's highs. bank of america is upgrading wire houser. met with a proportionately large and panic driven recovery. lumber futures are down 60%. so, michael, i would be curious because this kind of underpins everybody's investment themes now, in what your take is on lumber and inflation generally here >> well, generally speaking i am a believer that you're probably going to see transitory inflation and see head winds when tax increases come, but this is a lesson in behavioral finance, kelly, more than anything else.
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a year ago, what was absolutely not going to do well, any travel company, any company that had anything to do with retail then all of a sudden the world says, wait, wait, wait, wait, it's calming down. maybe those are going to be good stocks lumber, oh, my goodness, everybody is going to stay in their house. there's going to be a huge shortage and all of a sudden maybe there's not such a shortage after all. you want to buy when people are selling. and as the market continues to sell off lumber, other commodities and frankly sells off other assets because they're out of favor, that's where you want to look to pick up. >> maybe with the exception of chinese stocks based on how the earlier discussion went. >> not yet, not yet. >> bob, we'll give you the last word here on the wire houser call we move through the earnings season >> i used to be in the real estate business. my father was a home builder in the '70s and the '80s. in the '60s, i grew up carrying
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warehouser lumber. they're a lumber company they grow trees and they make wood products out of that specifically for new homes and the remodeling business. this is a classic cyclical industry it's very, very capital intensive. requires a lot of equipment to keep it running. and it's cyclical because it's very dependent on demand and very dependent on pricing power. now, recently you saw back in the news because lumber went through the roof and went all the way back down again. you saw a little move up on warehouser last year on exactly that idea. but now we're in that back end of that cyclical phase for warehouser there is evidence now that the new home market may be cooling off a little bit maybe because demand was too high and prices got too high but this is a classic cyclical businesses but the question is are you comfortable investing in cyclical businesses. i'm very nostalgic to
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warehouser, having to haul around all that wood in the 1970s left me with a permanent scar on my back, but it's a great company. >> i was going to say in closing if you look at the case of the shiller home number, the price is up 17% and keeps accelerating seema mody, bob pisani, mike yoshikami. we want to look at the nasdaq where we're close to session lows and some of the chinese names are taking a big toll on the activity pin duo duo is down about 12%. is down and activision is down about 7%. they have a separate issue going on with their employees. but we do have video game exposure to china, which is the point michael yoshikami was making that a lot of typical names do have exposure to china even if they're not typical china etf stock trades we're a little over 24 hours
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away from the fed's interest rate decision tomorrow economists are also paying close attention to what's going on with the covid delta variant we're going to dig into the potential growth hit right after this s and 2 free smartphones. and now get netflix on us. it's all included with 2 lines for only $70 bucks! only at t-mobile. ♪
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welcome back the cdc is set to reverse its indoor mask policy to recommend them for fully vaccinated people in covid hot spots as the delta variant continues to spread. how concerned should we be about the economic recovery? steve liesman joins me with the results of the latest fed survey as well as the latest fed decision steve? >> yeah, the delta variant has definitely become a factor in forecasting the economy. right now respondents to our fed survey believe the exact will be limited. we asked about five areas. nearly 80% of the 34 respondents do not see another round of lockdowns coming 52% don't think there's going to be widespread mask mandates. that was asked before the cdc acted. 30% did see them coming. 55% do not believe it will delay the economic rebound compared to 39% who do 64% think it's going to delay the return of workers to their
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offices. another impact, while 40% thought the pandemic was over in the june survey, 60% now say it ain't over yet thomas costerg says the virus is going to persist and indeed we will have to live with it. it's going to be more of a microeconomic rather than a macroeconomic problem going forward, he says the average respondent did push ahead by one quarter, to the first quarter of 2022, their estimate of when the economy will be fully recovered. here's the gdp outlook growth overall a little affected gdp growing 6.7% this year, that's a big number. perhaps because of the delta variant, a little change also seen in fed policy despite high inflation forecasts with a november taper announcement, that's what people think, and a january enactment. the first rate hike, kelly, don't hold your breath, not until october 2022.
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>> we had goldman bring down their forecast this week we wondering if others will follow suit, especially with some of the mask mandates and just the concern about covid and the way that people might react to anything, from kids being in school the whole daisy chain. >> i think that's possible goldman was a little more optimistic than the street so they did bring them down to where we are in our rapid update, which as you know is a very sort of changing thing every time we get numbers that affect the economic data, we plug it into the rapid update. goldman brought theirs down to where the average was for the street the interesting thing about goldman is they believe it was 2022 they believe the office sector or service sector will still lag because they see people or a substantial part of the workforce still working from home and that could become a permanent fixture of the economy and that means the service sector will not come back the way it was before. >> steve, thank you very, very much
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steve liesman there. shares of u.p.s. are falling today, on pace for their worst day since october. their volumes weren't as inspired rsf ceget more from the o heelabout all of this, next. ial. here's andy listening to my goals and making plans. this is us talking tax-smart investing, managing risk, and all the ways schwab can help me invest. this is andy reminding me how i can keep my investing costs low and that there's no fee to work with him. here's me learning about schwab's satisfaction guarantee. accountability, i like it. so, yeah. andy and i made a good plan. find your own andy at schwab. a modern approach to wealth management. that building you're trying to sell,
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welcome back shares of u.p.s. are sinking today despite an earnings beat on the top and bottom lines. but the ceo warning with a slowdown in the back half as the economy reopens and people return to shopping in person versus online. she spoke to cnbc in an exclusive interview about these results. >> u.p.s. on pace for its worst pace in nine months. record-free cash flow and gains in its high margin business. average revenue per piece increased by 15% overall in the u.s. it rose by 13% also significant margin expansion year over year u.s. revenues missed estimates u.s. volumes down by 4%. the ceo speaking exclusive reto jim cramer tonight said
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investors really shouldn't be surprised by the numbers >> e-commerce sales are booming, but the rate of growth is not the same as it was last year when everyone was sheltering in place. and in fact if you look at our performance in the second quarter, our average daily volume was down slightly in the united states. we predicted that. in the past we chased all volume, regardless of whether or not we made money on that volume today we're leaning into the part of the small package market that really values our end-to-end network we're leaning into small and medium-sized businesses. >> and that higher margin business increased to 27% of the business this year from 22% a year ago according to deutsche bank, margin guidance, u.p.s. guided for 9% the second half of the year it was 11% in q2 coming up on "mad money" tonight
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she talks about the possibility of share buybacks, the better, not bigger strategy and much more, kelly. >> we like to call this sound bite from the future, frank. you'll hear that and a whole lot more on "mad money" tonight. frank holland, thank you very much really appreciate it today that does it for "the exchange" today. "power lunch" starts right now. >> we have a power hour ahead. a tough day for nasdaq, but all that could change this afternoon, because we've got heavyweights, apple, alphabet and microsoft set to report their earnings how you should be positioned, and how the next few hours could determine the direction of the market. the next front in the battle, the u.s./china battle, that is rare earth metals and elements there is a race to secure critical supplies of these m minerals and we are live at the only american operating mine where the department of defense is playing offense. ou


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