tv Power Lunch CNBC October 7, 2021 2:00pm-3:00pm EDT
"power lunch" begins right now love that description of five below as cheap fun. that was my nickname in college. welcome to "power lunch," everybody. here's what's ahead. the market rally gaining steam maybe it's expensive fun in the market short-term debt limit deal has been reached avoiding default. but should investors proceed with caution. the firm that predicted the 2008 housing crash has another big call it says the market is overbuilt. forget about slim inventories. an analyst will be here to explain whether it could cause trouble for the housing sector. and a cyber threat a ransomware group has been identified targeting companies that will cost them billions potentially in revenue and one industry in particular seems to be in the cross hairs we have the details.
>> i cannot wait for the housing discussion everybody. in the meantime, a check on the markets. the dow is up 457. 1700 points off the highs. 1,000 off the lows from yesterday. we have a grab bag basically everything broadly participating. materials up almost 2% health care up 1.5%. consumer discretion father splitting the difference as well the yield on the ten-year, actually continues to climb. 1.57% as we watch for the impact across markets for now, you can see stocks are enjoying their rally let's get right to the short-term debt limit deal that has been driving the rally on wall street. the vote expected later today. ylan mui has the latest. >> the good news is that the immediate crisis appears to be averted. the bad news is, the teal delays all the hard decisions about the debt limit until december. this agreement would raise the debt ceiling by $480 billion, which the treasury department project would likely last until
about december 3rd republicans promised they will not block this vote from happening but any one senator could cragg this out into the weekend and not everyone is happy about this deal. gop senators have wanted to force democrats to use the reconciliation process to raise the debt ceiling without under support. senator lindsey graham tweeted this the runs intend to give democrats a pass on using reconciliation to raise the debt limit either now or in the future that would be capitulation of course democrats are still refusing to use that process to solve this problem and any say the extra time will actually allow them finish work on their broader economic agenda guys, now we have got a crush of legislative deadlines at the end of the year. the infrastructure and social spending pack ans, government funding, and now you can add the debt limit to the mix. >> did anything really change other than them agreeing not to -- or to extend the debt limit until december 3rd
did any of the calculus really change tmplg calculus did not change the same roadblocks that existed before that agreement was announced will still exist on december 2nd before you hit that deadline i think the important thing here is that republicans showed that they would blink and that they would help democrats avoid this catastrophic default but democrats also showed that they were willing to vote for a specific number for the debt limit. that's been something the democrats have been avoiding because they felt like it is a politically difficult position to show that you are essentially voting for more debt so that's a compromise on both sides of this that could provide that narrow path way once we get to december 3rd. but right now we are still waiting for this deal to actually happen and for the vote to actually happen in order to each make it to december 3rd to begin with. >> ylan mui, thank you very much. today's rally follows a dramatic few days for the market i don't need to tell you that. over the past week the dow fell below 34,000 and rallied back
only to fall again, then zoom higher our next guest says the volatility isn't over and he expects the roller coaster to take another dip greg branch with veritas financial group. it says in my notes here, exempt thing to worsen over the next few weeks. gosh, i just don't need that why? >> none of us need that, my friend. >> i know. >> when you look at the selloff on monday, every single risk, every single concern, every single head wind that you could attribute that to to will intensify. inflation will rise dramatically higher from here the supply chains are broken into 2022. there is backup at the ports there is backup in the warehouses tlls limited trucking with elevating rates at all of those levels, container prices have gone 400 and 500% last year to europe and the u.s add to that that the labor market isn't seeing the supply
of labor replenished in the way that the fed had hoped we looked at the jolts, there was 11 million jobs, but only 8.7 million workers looking for work of even a robust job number tomorrow, 500, 600,000, only puts about a small debt. we are going the see a cpi of 6% this year. pce up 5% this year. that's not priced in so whether it's inflation, whether it is broken supply chains, whether it's even the debt ceiling which we will be revisiting four weeks from now, every concern will intensify. >> why is the market today taking a chill pill and moving higher i mean, is this just a temporary tonic because they reached some agreement on not bringing the hammer down on the debt limit until december >> i think society i think if you look at the yield -- yields tell the story yields are still rising. the yields know that this is put
a temporary reprieve and that all the structural issues that cause us -- that cause folks like me to stay on the sideline as bit here, they still exist, and they will intensify. so, this was a relief rally that we could expect but it is temporary. >> it is really a -- if i amferr saying, this is not a time to buy, this is a time to wait for a better time to buy. >> that's exactly right. where i have to add here, i am looking at sectors that are insulated from some of the concerns, insulated from rising wage cost, that are insulated or can pass on raw material or other types of inflation there are a few sectors that offer that energy offers that they pass everything on to the consumer in the energy industry. i would look at natural gas leifered, integrated, infrastructure there financials the large diversifieds have
shown they don't need a negative net interest margin environment to grow. it will help but we have seen this year they don't need that jp morgan, morgan stanley, they can show growth on the back of their capital markets their trading their advisory businesses >> you are casting a vote on the finergy trade. >> there are stories that i love here, the hyper cloud businesses grew 50% last year amazon was less but it had the biggest installed base when you look at digital advertising, we are in a digital advertising cycle. strong growth at linked in at youtube youtube i think is in a secular tail wind there to gain share. there are stories i love, i believe i will get them cheaper. i believe on the other side of november or late november i will be able to buy those stories at
a discount to where we are today and position myself for the multi-year growth cycle. i wouldn't purchase them today when i am confident i will get them cheaper a few months from now. >> greg grant, appreciate your points of view today, powerful and very large ransomware group has been identified let's get eamon javers here with the details. >> that's right. this is one of the largest and most dangerous groups out there. and what mandiant the cyber security company is telling us today is that they haven't even been named yet they have been very, very active but quiet as opposed to those groups like r evil and dark side, this group is very much under the radar despite the damage they have caused. mandiant is calling them fin 12. here's what we know. it is a largely russian-speaking group according to mandiant's report they are responsible for 20% of
the ransomware attacks mandiant has responded to this year this one group didn't have a name officially before today they target companies with huge annual revenues. the annual average ruch is $6 billion for this attack group in terms of the size of the companies they are going after they earned tens of millions of dollars a month is what mandiant tells me and take a look at the industries they target top of the list here is health care also education, the financial industry, manufacturing and technology so this is a big ransomware group that's going after the biggest of the big in terms of companies around the world and one of the things that really bugs manned yapt researchers about this group, guys is that they target health care so dramatically and during the pandemic this group doubled down on hitting hospitals and health care companies at a time when even other criminal organizations said, you know, there is a pandemic going on, we are not going to attack all of these hospitals because we don't want to endanger human life
this group, mandiant says, did in fact continue to attack hospitals and health care companies and the like right up through the pandemic that gets under the skin of cyber security researchers here. back to you. >> eamon javers reporting. coming up, is the housing margaret on the verge of being overbuilt? the firm that predicted the '08 housing crisis has a new call. we will talk to the analyst behind the report. plus, does a weaker china spell china for other overseas markets? our trading nation team goes global we will reveal their trades. we'll be right back. paola needs a parachute. so, salesforce customer 360 unites your marketing, sales, commerce, service, and it teams around her.
in business, setbacks change everything. so the so get comcast great expe business internetre. and add securityedge. it helps keep your network safe by scanning for threats every 10 minutes. and unlike some cybersecurity options, this helps protect every connected device. yours, your employees' and even your customers'. so you can stay ahead. get started with a great offer and ask
how you can add comcast business securityedge. plus for a limited time, ask how to get a $500 prepaid card when you upgrade. call today. welcome back to "power lunch. i'm dominic chu. we are tracking some of the outperformers in home builder related names and home improvement stocks as well the top gainers range from suppliers to retailers williams sonoma, rh, restoration hardware and home depot. home builders like putty group and lennar are also on the list as well. home builders, home construction, hot parts of the market right now i will send things back over to you. >> that's exactly what we are about to dig into, dom our power house blueprint has looked at different parts of the
home and different ways to build it into your portfolio today a different twist on the housing market many in the industry agree we don't have enough homes on the market the inventory of existing homes for sale in august was down 13% from a year earlier. low inventory is causing builders to keep building and analysts to remain bullish but in a bold call, our next guest says that's all leading to a big problem. with us is dennis mcgill, of gsellman and soerntsz and diana olick our cnbc correspondent dennis i will start with you at a time when everybody is talking about a housing shortage, why do you think we could end up with a glut >> thanks for having me on i appreciate it. i think it is a great question it is one we factored into our macro report as you mentioned cradle to grave, which we published six weeks ago. the number of homes for sale is at historic lows we always social that as being
the litmus test whether we have enough supply or not in july of '05 it was the lowest it ever was. that was misread right now we have interest rates taulg from the pandemic. once you sort through that you are going to be left with core demand, which ties back to demographics that's going to dictate how much supply we need over the next years. right now demand is very strong. as you get past those factors there is a down ward trajectory of population growth and household formation as well that's going to undermine the need forways being built on the other side you have the development community who is optimistic about their being a housing shortage and they are pressing the accelerator harder than we think they should be. >> diana, i would like to have
you react. we have been running the names of some of the companies in the home building area they are all up pretty strongly today. my experience, by observation, is that builders build they love to build and sometimes they overbuild which really dove tails, i suppose, with what dennis is saying here. what are your thoughts -- then let's not forget there are segments within the building community. some are more focused on the lower end, entry-level houses. some are focused on the higher >> yeah. that's exactly the point, tyler, some will benefit. some will not. if you look at where the demand is, it is on the low end of the market that's where the market is really tightest. realtor.com put out a report saying we are short 5.24 million homes because of high demand and low supply so much of that are on low end dr horton and kb homes will benefit who are going to be
building the entry level product that is in demand now and in the formation. those in the middle, taylor morrison, who are building the stepup home, if dennis is right they may be stuck in the oversupply situation toll brothers, the luxury, they are in a small niche, they are an $800,000 house. that's going to be based on forther moving up buyers and people who want a luxury home. if you are asking an real estate agent anyone out there trying to flip a house it is rough out there. when you look forward the builders are not building as much as we would expect them given this shortage. >> dennis, what is happening you think the builders aren't taking into account slower population growth and we are already surpassing demand by 20 to 25% for single-family homes. in which case, when is it going to catch up with the builders? will it flip prices and supplies
for the whole industry >> i would be careful just to ace late it down to builders you have home builders bringing supply, multiple unit landlords bringing supply. all of these pieces are going supply it is going to take time to come to market. it might take 12 or 18 months. so you will have a period of time where the supply is unaffected by the demand but it is going to be coming pretty aggressively. what we point to on the demographics side is all of these analyses that are talking about how short the housing market is for a number of units. it's all based from a supply standpoint, all based on looking at history and saying, this is how many housing starts we have had historically that means we should be building something similar today. but they are not taking into account that demand demographically is on a downward trajectory if you look at household
formation this last decade it is about 24% below warehouse hold formation was in the prior four decades. why are we using history to gauge how much we need going forward from a demand standpoint when we have entirely different demographic circumstances behind that. >> react, diana. what do you think there of dennis's hypothesis, which is that the demographics just arnts going to support the level of building -- aren't going to support the level of building and the supply ultimately that's going to come on market? >> i think the demographics definitely play into that. i don't dispute that what i am interested in, though, is how households are moving around, how demand is changing do people want to live more in larger houses with more people we look at -- this could support dennis's thesis, we are seeing more multigenerational living. s we see more immigrant families coming into the u.s., the immigrant population rises, they tend to live for multi
generationally which means more people in one house, you need less houses. i have always been very nervous about this build to rent play and the number of investors, large scale institutional money going into the rental market that's scooping up these homes then say say what if there suddenly isn't enough rental demand, then they put those homes back on the market then we really do have too many homes. thank you. coming up, this the make it or break it week for crypto. bitcoin is pulling back. institutional investors are eager to see if the asset can truly hold up as a hedge against inflation and market volatility. is it the new gold we will discuss th nt.atex the right moves fast...d we get decision tech. for insights on when to buy and sell. and proactive alerts on market events. that's decision tech. only from fidelity.
- [narrator] at southern new hampshire university, that's decision tech. we're committed to making college more accessible by making it more affordable. that's why we're keeping our tuition the same for all online and campus programs through the year 2022. - i knew snhu was the place for me when i saw how affordable it was, i ran to my husband with my computer and i said, "look, we can do this." - [narrator] take advantage of some of the lowest online tuition rates in the nation. find your degree at snhu.edu. why is cvs pharmacy® america's choice for vaccinations? because we all got the covid-19 vaccine and flu shot. and i could make the appointments right here. save time, schedule online. no wonder cvs pharmacy® is america's choice for vaccinations. do you have a life insurance policy you no longer need? now you can sell your policy, even a term policy, for an immediate cash payment. we thought we had planned carefully for our retirement. but we quickly realized that we needed a way to supplement our income. if you have one hundred thousand
dollars or more of life insurance you may qualify to sell your policy. don't cancel or let your policy lapse without finding out what it's worth. visit conventrydirect.com to find out if you policy qualifies. or call the number on your screen. coventry direct, redefining insurance. i'm christina part part, and here is yourself cnbc news update britain is ending its strict covid quarantine rules for travelers arriving from 47 countries including india, south africa and mexico. previously they had to stay in a hotel for ten days and pay for it themselves. president biden is heading west he left washington this morning
for a chip to chicago. he will visit a suburban business that has a covid vaccine mandate for employees. the white house says biden's message will be clear, vaccination requirements work. in western kenya, hundreds of children are getting a shot in the arm that could save their lives. it is not the covid vaccine. they are getting inoculated against malaria as part of a pilot program. the vaccine was approved yesterday by the world health organization the next goal is getting it widely distributed in africa, where it is desperately needed the health official says malaria will kill many more people in africa this year, especially children, more so than covid pack to you, kelly. >> i will pick it up, christina. >> oh, tyler. >> thank you very much the market is in rally mode or the rally is in market mode. the dow is up 425. a nearly 1,000-point swing from yesterday's low, and a 1.25% increase the s&p and the nasdaq, they are along for the ride as well
nasdaq up almost 1.5% at 14,708. big day for the semis. you can see names like amd and nvidia rising. tyler thank you very much. it is also a big week for bitcoin, which is trading just below 5,000. institutionate investors are watching closely to see if crypto can prove itself to be a volatility and inflation hedge and many regulatory hurdles have been cleared. >> bitcoin is finally decoupling from high growth tech names. this dynamic is what a lot of bitcoin bulls have been waiting for. it is being described as a hedge against mack owe uncertainly and inflation. bitcoin raise 20g% while most stocks went down it went above $55,000 for the first time since early may as far as drivers, there were fewer negative head leaderships on regulation. we had s.e.c. and fed officials
saying they don't plan on banning the industry there is also new speculation of a boinl etf approval coming sometime in october and a resurgence of more institutional buyers new data shows a higher percentage of bitcoin transactions above $10 million $10 million, that tends to suggest bigger moves from institutional players. this is according to data from glass note and fundstrat there has also been more activity for bitcoin futures on the cme this week. that is a popular des teping afor the more traditional non-crypto native investor crowd. bitcoin is regaining its spot as king of the crypto mark comprising 45% of the global market after slipping to about 41% a fume months ago. market cap is also back above $1 trillion the bitcoin rally is also helping some crypto leveraged stocks this week as well
coinbase on pace to snap a four-week losing street. marathon digital and micro strategy also up double digits >> kate, tell me, what is algoran? what's going on there? >> it has gotten attention this week i jumped 480% this year. it is comparable to ethereum you can build on top of it it's seep as sort of a competing blockchain network that developers use but a good way to think about it, the way it was described to me as sort of similar to the browser wars in the ages of the early internet was it going to be netscape for explorer you are seeing a similar dynamic playing out with the blockchains, so a, car danault, algoran. competition there, but it is absolutely helping the price of some of the smaller cross examinations in this case it helps the price. ahead on punch -- the list
working at recology is more than a job for jesus. it's a family tradition. jesus took over his dad's roue when he retired after 47 year. now he's showing a new generation what recology is all about. as an employee-owned company, recology provides good-paying local jobs for san franciscans. we're proud to have built the city's recycling system from the ground up, helping to make san francisco the greenest big city in america. let's keep making a differene together.
welcome back, everybody. we have a pretty big intraday swing for oil. what a volatile space it has been lately. pippa stevens has more at the cnbc commodity desk. >> oil finishing in the green, reversing early losses it officially saw wti dip 3% oil changed considers after the department of energy clarified it has no current plans to tap the strategic petroleum reserve, a statement that they are
monitoring the global market supply and all tools in the tool box are always under consideration but there is quote no immediate plan to take those actions at this time wti is up to and change. brent is up, too moving over to natural gas where it is a relatively muted move compared to what we have ian been seeing. up a fifth of one% at $5.68. earlier in the session it was down more than 5%. between yesterday's high and today's low the contract has swung 16%. tyler, back to you >> pippa, thank you very much, appreciate it. the cnbc financial adviser 100 ranks the top rated financial advisory firms of 2021 ranking considerations range from compliance records to total accounts and assets under management our next guest is from a top ranked firm that specializes in one of the hottest areas of all
investing, esg joining me now is blaine townsend he chose his own walk on music there. >> yes. >> he is director of esg investing. welcome. >> hello nice to be here. >> first question for esg investing, do you own facebook >> well, i don't think i am supposed to talk about individual companies but i can tell you there is a lot of big companies that you might see in a typical portfolio that we do not own for esg reasons. >> there are a lot of big companies that you do not own for esg reasons. put those words together, folks. you can, as they say, do the math so what makes a company more generically qualify for your esg portfolios and what rules them soout?
what are you looking for what are you looking to avoid? >> that's a really good question honestly, it's a somewhat complex answer i would say this generally, esg is a process it's not a panacea so you have to have a really dedi dedicated, disciplined way of doing this we do it a couple different ways we have our own plow proprietary way of scoring the esg that's loosely looking at a group of factors, up to five to eight factors depending on the asset class we are talking about. where we isolate things that we think will have an material impact on the company. but we also are building portfolios for our wealth management clients, for our family clients, for our institutional clients. and we understand their view of the world. we look at suitability for example, some of these big companies in a storing prime minister framework you might say
okay it is within a range you might expect but we might still exclude that company because we don't think it necessarily aligns with our clients' values. they have to do two things i think you need to have your own disciplined approach to really understand companies. a lot of things could flow into that you are familiar with this kind of range of data that flows into these kind of esg scores but you also have to have a little bit of a world view and you have to understand when your clients really want to see in the portfolio and then put it together to deliver portfolios that can help them balance their financial and their social and environmental they are not trying -- >> so. forgive me for interrupting. >> yes. >> are you among the many believers who say not only can i match the market by investing in environmentally responsible companies or governance companies or whatever, impact companies, i can beat the market i ask that specifically because i know that one of the things
you try and avoid are extraction -- companies that extract fossil fuels and this year, it would be advantageous from a return standpoint to invest in companies that are in the fossil fuel business. do you believe that you can deliver superior returns and stick to your principles >> you know, we have some of the -- [ indiscernible i entered this field in 1990 i have been answering that question for a long, long time for most of the time, it was sort of, are you going the lose money if you do this let's say traditional versus responsible investing. i think we have had a total capitulation in the market that a lot of the things you are looking at, lets' say climate change we absolutely believe we can deliver competitive returns. if we look at the history of
things that might be avoided in a portfolio, whether they are that basket of traditional, you know, the alcohol, tobacco, the guns, controversial weapons, et cetera they have expanded quite a bit or things like oil and gas or maybe big tech, what you will find is, you know, thing are cyclical in the market so there might be times where it hurts you a little bit not to own something. but that tends to smooth out over time. so you really can dial in the risk and return characteristics of a portfolio almost in any asset class and still express an esg value in that portfolio. >> blaine, just a philosophical question about energy which seems so different from a lot of the other areas you just mentioned because in the case of cigarettes or guns, if the investment community it raises the cost of capital, raises the price, that actually kind of achieves the goal it's meant to achieve. but if divestment raises the price of energy it is unfair to people who have to pay a portion of their money on energy and
can't easilysubstitute away. is there any discussion about whether you agree that that's a problem or would have any sort of philosophical solution to it. >> i think that what we are in right now is an incredibly d disruptive period of time. you are talking about transition and i don't think you can approach these types of portfolios thinking that fossil fuels are not going to be around for a while. so there is two different issues are fossil fuels going to be in play as both part of the investment strategy, but also a solution as you transition from fossil fuels and do you have the tools to deliver portfolios to clients where there is alignment you have some clients where climate change may be the issue
of the times for them. as they look to invest in renewables or alternatives to fossil fuels, they also want to divert their capital from oil and gas now. you have the ability to deliver that for that client. >> let me conclude with -- give me a quick answer on this. i know that you are largely employee owned and largely female led what advantage does that give you as you do your work? >> we are a values based company, full stop we are over 50 years old to still be independent and employee owned after 50 years you have to have a commitment to that kinds of value. i think that our wealth management clients when they sit across the desk from them, they see a little bit of themselves in us. they see a company that holds these values, that believes in these values, that are with them for the long term. >> blaine, thank you very much, congratulations on your inclusion on the fa 100, cnbc's list of distinguished financial
advisory companies -- you can see the firms on this year's fa investors list and join them at the adviser summit. >> can we just say slash at this point. is anybody confused if we say back slash. >> backsplash, shopping for backsplash is one of the least favorite things in my life. >> tyler, that's one of the most fun things ever. >> how can you say this? >> jill, call me. >> it is right up there with fabric swatches. >> that's the best -- the most pun thing you can literally do in your spare ime. after the break, as the u.s. slowly marches towards marijuana legalization, the canadian recreation market is growing larger tillray's ceo weighs in on that. >> subway tiles. that'sheeson >> i love subway tiles
you founded your kayak company because you love the ocean- not spreadsheets. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire i just became eligible for medicare and, can i say? it's so overwhelming. a, b, c, d - all the different plans and all those stacks of mail? i didn't know where to start. then i called humana, and they helped make everything simpler. i talked to a real live agent who treated me like a real live person. she was kind, patient, and she took the time to get to know me and answer all my questions. she told me that an all-in-one humana medicare advantage plan includes coverage for hospital stays, doctor visits and prescription drugs. most plans include dental and vision. but first, the agent i talked to, laid out all of my options. i learned that original
medicare covers the basics, like emergency care and doctor visits. it also has a deductible, and after that i typically have to pay 20% of my medical bills. then we talked about medicare supplement plans that you can add to original medicare coverage. they help pay your medicare deductibles and co-insurance. but they often have higher monthly premiums and no prescription drug coverage. but i needed coverage for my prescriptions, and that's when she told me about humana's all-in-one medicare advantage prescription drug plans. not only do i get all this coverage that includes prescription drugs, but humana has a huge network of doctors and hospitals. i can get telehealth coverage, a silver sneakers membership, and i stay covered in emergencies when i travel. whether we're visiting the grandkids or going on vacation. a humana medicare advantage plan can give me all that for as low as a $0 monthly plan premium. humana went above and beyond to
get to know me, so i can find the medicare advantage plan that is right for me. and that might be the biggest benefit of all. so give humana a call, or visit their website. talk to someone who will take the time to help you, and get your free decision guide. humana, a more human way to healthcare. paola needs a parachute. so, salesforce customer 360 unites your marketing, sales, commerce, service, and it teams around her. so they can deliver a great experience from anywhere. ♪ (whistle) ♪ welcome back to bunch.
i'm dominic chu. we have a market flash on squares of square. up 4.5%. helped along by analysts at jefferies who upgraded the stock to a buy rating. they also raised their target price to $300. it was $265 with accelerating disruption in the payment and fintech space, those analysts there at jefferies argue square is a proven innovator and will be a key beneficiary as merchants shift from traditional pos systems to those with more services our own jim cramer also calling square one of his favorite neobanking favorites along with paypal, affirm and up spartan. if you want more of jim's insights, read all about his trades in his new newsletter, the cnbc investing club. sign up by heading over to cnbc.com/investingclub or just point your phone at the qr code on the screen. check out shares of tillray. it is up today, up this year still down 80% from the high it
spiked to in february. tillray reporting a quarterly loss and a revenue miss. frank holiday anderson spoke with the c-- frank holland had more. >> they had earnings that showed gains in two key parts of its business when you look at the results, the profit, an 8 cent loss as you mentioned. look at its gains in recreational cannabis, up 77% year over year medical cannabis, those sales up by 9%. the company gets about 3/4 of its revenues from recreational cannabis but the ceo says building the medical business and lobbying the canadian government for looser regulation around cannabis will be a key part for growing the business this fiscal year. >> there is a big movement on to grow our medical business. you know, the margins are higher in medical the opportunities in medical are tremendous what we ultimately have to do is
get the canadian government to put it on their prescription, and approve medical, that you are able to get through your prescription plans >> the mg ty up today, but still negative for the year. had a strong start to the start of the year. enthusiasm over the possibility of u.s. legalization obviously, that process is still going on simon says he is eyeing some of his competitors for a potential m & a bus their stocks are down. >> canadian producers, i get sales, i get ebitda, and i get savings. u.s. producers, i just get an option like i don't get any benefit on my top line or my bottom line from med men today >> the u.s. market is forecast to grow to $30 billion in 2022 the canadian market, just about $5 billion obviously the u.s. market continues to be the holy grail,
the ultimate goal, whatever you want to call it for the canadian cannabis producers but simon and other canadian producers have all said for now they are focusing on the canadian market and trying to develop packaged goods with cannabis that they can hope to bring to the u.s. market later. >> the consumer packaged goods would be the likes of what, beverages? edibles? what >> you know, all types of things beverages is one logical think drinkable cannabis simon talked a lot about having san business infused goods on the shelves of walmart or a target cookies, bread, all types of things, tyler. i don't think there is a limit to what people who want to use cannabis would put it in i think companies are trying to figure out what is that product that will make cannabis cross over to the mainstream >> very interesting. poses interesting questions about regulation and protecting children from exposure to those products anyhow, frank holland, thanks.
up next, going global. china's woes spreading to the emerging markets the i share's brazilian etf down 20% from its highs the trading team will discuss this next. and stre ngthen client confidence in you. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. paola needs a parachute.
welcome back to "power lunch" why take a look at shares of knee owe surging 7% today with an upgrade from neutral trading at 36 why bullish on the chinese ev makers for the et-7 launched the model at the start of the year. the stock still down about 25% this year. let's stick with the china trade and for more on that we head to seema mody for trading nation. >> hey china no longer the worst performing emerging market look at the brazil etf down 11%. now one of the largest investors
in the country telling me they're not taking advantage of the pullback and not recommending clients to add to the position how should you trade this? let's bring in the team. matt mallie, boris she losberg what do you think is behind the significant move lower >> as tempting to bargain brazil right now there's way too many problems both from the economic front in the sense that china may be slowing down and the biggest trading, export partner for them and the political situation is a powder keg over there. bars with the consequences for investors of the regime that's the problem. investors worry the rule of law there is weakening seriously and until the political situation
calms down it's a step away at this point i would side step brazil right now. >> it is not just brazil, right? looking at korea, china, japan are investors in genre thinking if they want exposure to the global markets >> i think they are. china's been involved in a derisking deleveraging policy. started with alibaba and spread to of course the tech area and evergrande more recently when a highly levered economy starts to delever that will slow down and seeing that in places in that part of the world. see the kospi in south korea down 12% broken behind the trend line back to may 2020 and made a kiloer low below 3,000 the nikkei of japan broken below the trend line for 2020. not made a lower low at 2700 but
it is close and the point is stock markets tend to move six months in front of the economy so they seem to be telling us that things are slowing down and china is a main culprit and we worry that may spread. >>the china tech rebounding today. thank you for joining me today you can follow us on twitter back to you. >> thank you. global food prices decade high and high energy costs are adding to the problem we'll explore that, next >> and now the latest from trading nation.cnbc.com and a word from our sponsor.
you can close with more certainty. and twice as fast. if i could, i'd ten-x everything. like a coffee run... or fedora shopping. talk to your broker. ten-x does the same thing, - but with buildings. - so no more waiting. sfx: ding! see how easy...? don't just sell it. ten-x it. paola needs a parachute. so, salesforce customer 360 unites your marketing, sales, commerce, service, and it teams around her. so they can deliver a great experience from anywhere. ♪ (whistle) ♪
if you're 55 and up, t-mobile has plans built just for you whether you need a single line or lines for family members, you'll get great value on america's most reliable 5g network. like 2 lines of unlimited for just $27.50 a line. that's our everyday price. plus, our plans always come with unlimited talk, text and data included. so, switch to t-mobile and get 2 lines of unlimited for only $27.50 a line. that's half the price of verizon or at&t. only at t-mobile. the leader in 5g. the price of food is more expensive. the reasons are familiar and dom chu has the details. >> stop me if you heard this
before supply con ststraints everybody knows that inflation is real right now. the latest report from the u.n. food and agriculture organization the fao reinforces that narrative of upward pricing pressures. they track commodities in five main categories. cereal, oils, dairies, meats and su sugar. that average of that index is 30 highest since 2011 and nearly 33% increase in the 5 commodities baskets over the same time last year. so the reasons are clear but wort reiterating tighter supply constraints and robust demand for goods. you see the expanded coverage today of global supply chains and toys are one thing food is completely different much more important because people need to eat to survive. if constraints do ease it is
quite possible to see significant easing of those prices because commodities really are volatile given bad weather, harvest yield, labor. if those conditions revert back to more normal levels there could be relief soon and why they call them volatile. >> are the supply issues mostly apply to food items that we import >> there's a component there for that if you look at vegetable oils, we know that palm oil prices have been surging over the course of years because of so much demand. >> ma nnila >> yes not just transportation related but very much the input cost itself and the availability to harvest it has gone away in some cast. >> don't sleep on the strikes.
we had a four-week streak and now kellogg. >> i went to the store before i leave you and looking for triscuit crackers and the guys said we haven't had ship s. >> with a little cat food on it. >> pate? >> cheddar cheese. i'll stick with that. >> thank you, dom. >> you got it. >> thank you for watchinging "power lunch." "closing bell" starts right now. >> hello and welcome to "closing bell." i'm sara eisen at new york stock exchange easing some anxieties for investors the major averages are surging but off the best levels heading into the final hour of trade. >> i'm wilfred frost have a look at the action today. congress coming to a deal on the debt ceiling pushing back fears on a default until december nearly every s&p sector positive led by materials and