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tv   The Exchange  CNBC  August 26, 2021 1:00pm-2:00pm EDT

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>> all in one night. >> i'm sticking with my short in baba stock goes lower >> jon >> american express. bought it during the show. >> all right thank you guys for making me so comfortable here really appreciate it there you see american express down a little bit. that does it for "halftime." "the exchange" begins right now. thank you very much. we'll see you soon welcome to "the exchange," everyone a lot of news affecting your money today as the fed heats up taper talk and traders pause to watch the unfolding events in afghanistan. that's where we begin. explosions and deaths at the airport in kabul as the u.s. nears its deadline to get out. let's go to sheppard smith for the very latest at this hour >> that deadline very much in question now the latest as we have it in just a moment the headline is at least three united states marines were among those wounded in the explosion at the kabul airport we know from the pentagon there
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were two explosions, one there at the abbey gate, one of the main entrances to the compound and nearby, a thousand meters or so away at the baron hotel between those two is a drainage canal where we've seen video, but are not airing it, of casualties in that canal the scene is a gruesome and horrific one we are led to -- this is the canal where that has happened. this is video from a couple of days ago americans had been warned to get out of this area but still we're told hundreds of afghans were there still trying to get safe passage out of the country when these explosions happened in a coordinated way around 9:45 eastern time here in the united states there were warnings, they are calling this a complex attack with at least one more explosion in that nearby hotel taliban sources are telling nbc news the attack killed at least 13 people, including some children, and sources at a kabul hospital tell nbc news that as
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many as 60 people are at that hospital and injured just 14 hours before this attack happened, during the news last night, the united states embassy in kabul warned americans to leave the airport immediately. at the time, we were told, that there had been a continuous threat stream since saturday of last week of actionable intelligence that isis-k, an offshoot of isis, was planning an attack on american forces around that gate well, now it's happened. whether isis-k is responsible yet, we can't say with any degree of certainty. we are waiting on updates from the pentagon the taliban have now condemned this bombing saying it happened in an area controlled by u.s. forces the truth of the matter is the road that leads up to that gate has concrete walls on either side so if that's exactly where that explosion happened, it would have shot that explosion up and if you remember, there were people on top of those
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walls in the days preceding. we don't have intelligence from this morning but often there were people on top of those walls so that would have had a serious effect on anyone there also a bombing which appears to have been in that drainage canal which was filled with sewage where so many afghans and afghan children were. we know children were among those injured. the united kingdom has issued notice to airlines to avoid flying below 25,000 feet over afghanistan now after these attacks. the german chancellor angela merkel says that they will try to help people seeking to leave afghanistan even after august 31st but everything is really up in the air now. when these explosions happened, the president and his close advisers were in the situation room, we're told, where he remained for much of the morning. we're told he's now in the oval office accepting briefings and trying to chart a way forward. you may remember that the president said, and i'm quoting now, if the united states forces are attacked, there will be a, quote, swift and forceful response we expect to hear something from
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the pentagon here in the upcoming moments all of the events at the white house today have either been delayed or canceled. there was a meeting with the israeli prime minister who is in washington that's been, at minimum, delayed also a covid briefing which has been canceled. we have many questions now about u.s. troops and whether any other americans who were intha area were injured. remember, it's the taliban which now have control and it's the taliban with whom the united states has an agreement for security part of the agreement was, we'll be out of kabul by august the 31st evacuating all americans and all of those afghans who have either special visas or a reason to need to leave by august 31st, if security is guaranteed and if american safety moves forward to that date. all of that is up in the air now. when there's a pentagon briefing we'll bring it to you. when there's something fromtro the white house, we'll have that and a complete wrap up tonight on "the news" on cnbc.
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>> this is a tricky issue because the taliban is condemning the attack. it was reportedly isis-k was responsible for it they are saying it happened in an area controlled by u.s. forces so sort of pointing the finger there will the u.s. and the taliban be able to continue to sort of coordinate on this withdrawal from afghanistan with about five days left to go at this point? and as isis-k as you've been reporting had been diminishing in influence in afghanistan but has this new leader as of last june, a lot of their troops were freed during this chaos out of jail and they're able to recruit based on this sort of blockbuster series of attacks. and yet they are mortal enemies with the taliban because they think the taliban is not hard-line enough what kind of post-withdrawal situation is afghanistan turning into and how is the u.s. supposed to respond if, based on what whey know about the casualties at this point, if some kind of response would seem to be warranted. >> these are very good
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questions. on the first question, how do we coordinate with the taliban, those talks have been ongoing and continuous, according to sources at the white house throughout this process. it's been a very tenuous situation. this idea that the united states would rely on what is, without any question,a terrorist organization to provide security for our troops and our civilians who are trying to get out of there. that promise has been broken the taliban is condemning, but it's certainly in their dna, this sort of thing is. remember, the taliban have been fighting with isis-k in the eastern part of afghanistan for the past three years they are mortal enemies. and the goal of isis-k, according to the united states intelligence, throughout this process, has been to upset this mission. this evacuation mission to cause chaos in the middle of it such that the relationship between the taliban and the united states, such as it is breaks down and this evacuation becomes impossible as i mentioned, the president said we will respond we will respond -- the quote is swiftly and forcefully if united
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states troops are attacked united states troops were just attacked what happens now if the president holds true to his word, we have one situation where -- do they have to bring more people in get forward operating capacity as a result of this? or does the united states continue to evacuate we know that the isis-k and others have been able to recruit 30,000 fighters as a result of just our intention to withdraw where this goes from here is really anybody's guess >> shep, we really appreciate it looking forward to hearing more as the reporting continues to come in on what's going on, on the ground that's shepard smith a lot more tonight in the meantime, every hour covering these events. we turn back to markets. we're also watching the fed's much-awaited jackson hole symposium. many have made their hawkish stance clear bond yields climbing an esther george and james bullard took a less accommodative tone on "squawk box" earlier here's what they had to say.
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>> the guidance that the committee has offered has pointed to watching for progress in how the economy is unfolding. progress toward our objectives for employment and inflation and i think my own view on that is that we have made substantial further progress and that we can begin to talk about backing off of some of that accommodation >> i think we want to get going on taper get the taper finished by the end of the first quarter next year and then we can evaluate what the situation is we'll be able to see at that point whether inflation has moderated and in that case we'll be in great shape. >> why the rush to taper why are markets taking it in stride david zerbos joins me. he's jeffries chief market strategist what's your read on this hawkish rhetoric
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>> i don't think there was much surprising with jim or esther. you had two noted hawks or folks who have been pushing a rather aggressive stance. the market was eagerly awaiting rob caplan comments after what happened last idea because he's been probably one of the most hawkish and steadfast hawk at that for some time he seemed to wave or friday and now walked it back a little bit. i think the market is probably a little confused by rob and maybe we'll get more clarification as time goes on but i imagine, you know, right now the sort of steadfast hawkishness that we had believed was part of the caplan world may not be so steadfast and people are going to feel he's not 100% there just yet given what's happened last friday that's where the market is all three of these presidents really nothing new was said.
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kind of knew where they stood. what we're waiting for is jay tomorrow and a little bit more clarity on the data, frankly that's the most important thing. i don't think you got a lot of new information on hawkishness today. >> if caplan was wavering or if the fed decides to push this back a couple of months, would delta be the reason? >> i think it's part of it i think we were also questioning how quick this recovery was going to be and i think there were a number of people on the committee even in the minute ls that said, hey, we might have to develop a contingency plan for delaying asset purchases for some time. there were certainly doves on the committee. whether that's jay or brainerd, there may be a few others. i think it's -- i think there's a pretty wide strasification on the committee as to how quickly you need to go even rob said today he's not advocating what jim was
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advocating which is being done by the first quarter he was talking about eight months or nine months of tapering so i think the whole thing is much more nebulous at this stage. and a lot of it is the data. frankly, kelly, one thing. we got some pretty weak data so far in august. hard for me to see a big august payroll print on september 3rd, next friday, when we had a fair amount of weak data in the last two or three weeks, whether it's the empire, the philly, the retail sales, the core cpi came back down. obviously the university of michigan data which we talked about last time. >> that payroll number will be the, vent of the next few weeks here do you buy this argument that seems to make the rounds that tapering is not tightening i don't know if they are making explicitly that case but they seem to be in a hurry as saying the taper is not the same as raising interest rates, but to markets take it as they're both tightening the financial
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condition. >> they are both the removal of accommodation. that's a tightening. i don't think there's any question about that. so, yes, it's a tightening, a removal of accommodation this is an accommodative stance. if you take some away, you've removed some of it how the balance sheet interacts. this is the really interesting part how are they going to market the balance sheet because the last time they reduced the balance sheet they used these words autopilot and tried to just push it on the side and that backfired spectacularly in 2018 and they had to kind of deal with the financial market repercussions from removing the balance sheet -- reducing the balance sheet too quickly. and i think autopilot will never be uttered again in public by a federal reserve president or governor or chair or vice chair. i think the process of balance sheet reduction/tapering, if they even do reduce. let's go to taper first. i think it will be a dynamic
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process, not a static process. not something that's announced and left for dead. it's something that will be revisited each meeting and how big it is and how fast it is and how it goes will be debated each time >> let me ask you about just kind of the market outcome you stay long the s&p 500 here we've talked all year about the need to hedge that because of the confidence in policymakers to get this right. we have corporate bond issuance coming a lot of people see this as a daisy chain where they are issuing debt, buying back shares, tons of people participating in this rally. does this market outcome for you still point towards continued gains, continued rally and trust in the fed to read the signals one way or the other and get this timing right from the bull's point of view >> i think so. i don't place a lot of stock in the views that were espoused
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today by jim and ester in terms of guiding the committee i think they are on the hawkish side rob made a little bit of a change whether he's backtracked or not remains debatable, but i think clearly he's not as hawkish as he was based on what happened last friday. so i think you're going to see more tempered response from the central bank going into the end of the year. i think they'll want to watch the data you've got a lot of changes in the make-up of the central bank. randy coral's job is up in october. jay's job is up in february. it's a time for transition it's a time where you could confuse the market i just don't see the reason to get too crazy. as we've talked about before, kelly, we're missing nearly 6 million jobs from where we were in february 2020, and real gdp has been flat for six quarters we haven't grown since q4 of 2019 what's the rush?
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the rush is we believe inflation will run rampantly above where you want it to and the fact is, for a decade, it was running rampantly below where you wanted it to. and we have taken back about five years of those misses we still have decade-long miss that is pretty significant and depending on what that window is on the lookback for the average inflation targeting, they've got some room to play with >> that's your new hat, what's the rush thanks for joining me to talk through all of these scenarios david zervos of jefferies. coming up, we've laid out the fed's taper talk now more strategies on how to play it. also some stocks you may want to avoid in this environment in the months ahead. plus, the back-to-school battle kids under 12 can't be vaccinated states and local districts are trying to figure out how to test them to stay healthy and stay in school we're back in a moment
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>> this is "the exchange" on cnbc what does it take to make it? in the race to succeed, does somebody always have to fail? we've got to start lifting each other up. and give everybody a fair shot. because when that happens, we've all made it. ♪ that building you're trying to sell, be- you should ten-x it.s, - ten-x it? made it. ten-x is the world's largest online commercial real estate exchange. 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.
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breaking news now on cnbc. i'm shepard smith at global headquarters this just in we can confirm that a number of u.s. service members were killed in today's complex attack on the kabul airport. quoting from john kirby at the pentagon the number of others are being treated for wounds a number of afghans fell victim
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to this heinous attack he finishes, our thoughts and prayers go out to the loved ones and teammates of all those killed and injured as you might imagine, the situation in kabul has just taken a new and devastating turn american service members have been killed. we don't know how many in a coordinated attack that happened this morning just outside a gate there. the kabul airport. and outside a hotel that's about 1,000 meters away. that coordinated attack left many afghans wounded and killed. nbc news has, from sources inside the taliban, that as many as 13 people are dead and 60 are wounded. now the pentagon confirms u.s. service members among the group killed the president had promised that any attacks on american forces would be met with swift retaliation. we haven't yet heard officially from the pentagon on camera. we're expecting the briefing at some point the president is said to be in the oval office getting briefing ofs from his national security team and members of his cabinet. the entire situation in
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afghanistan is now in flux updates as we get them from the cnbc newsroom. "the exchange" continues now >> shep, thank you devastating news shepard smith reporting. we'll be back in a moment.
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(upbeat music) - [announcer] introducing the grubhub guarantee, our promise to deliver your order on time within the delivery window and for the lowest price compared to other apps, or you'll get back at least $5 in perks. welcome back, everybody. let's get a quick check on the markets which are moving to the down side. the dow dropping 88 points a quarter percent declines every time we saw more news about the devastating attack at the kabul airport in afghanistan have been coming in, there w was --
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welcome back more breaking news on the d.c. response to the explosions in kabul. now reports of u.s. troop deaths eamon javers has the story >> this is the tragic news now from the spokesperson for the pentagon the pentagon spokesperson john kirby put out this tweet saying we can confirm that a number of
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u.s. service members were killed in today's complex attack at the kabul airport. the number of others are being treated for wounds we also know a number of afghans fell victim to this heinous attack we wait for confirmation of the tragic news of the death of u.s. service members defending that security perimeter around the kabul airport. presumably now this will change the security picture dramatically for the united states in afghanistan. the president had suggested that if u.s. troops were attacked, the u.s. military would respond forcefully the challenge now will be figuring out how to respond and who to respond against giving the swirling chaotic situation surrounding the airport. exactly how you use military force here is going to be a question kelly, i've been emailing with a former high-ranking u.s. military official who was in afghanistan who offered me some thoughts about the tactics of what needs to happen here in the
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minutes and hours to come. this former u.s. military official just emailing me within the past couple of minutes to say that it is just a known fact of counterinsurgency and security that when you have a large group like this, in a situation with an extremist group, that can be a target for attackers. so what this official says needs to be done in the coming days and hours, given that you can't completely mitigate the risk in a limited time the u.s. now has available in afghanistan, he says the key is to push the perimeter out. require folks to go through metal detectors and dogs use long serpentine corridors made t-walls to limit the number that a suicide bomber can take out while folks are waiting to get into the metal detectors but this will require a huge amount of effort, resources and equipment. so a former high-ranking u.s. military official here telling me that the best the united states can hope for in the limited amount of time going forward it to limit the risk but
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you're not going to be able to eliminate the risk altogether as we now get this confirmation of u.s. military deaths in kabul. >> absolutely. we really appreciate it. eamon javers bringing us much more information there let's talk more as we turn our attention back to markets. matthew is morgan stanley's head of global macro strategy it's good to have you here the question to ask with the situation like this is a little bit of the black swan question and also a question of the u.s. administration whether its goals are domestic or international, what do you tell clients who are concerned about a destabilized world >> thanks, kelly, for having me on first of all, my condolences to the families who lost loved ones today. i think that when it comes to the administration, ultimately their goal is both domestic and international. and i think ultimately when investors look at the situation, particularly with respect to the bond market, which is my
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specialty, ultimately the main focus is on how the federal reserve is going to change its policies to address some of these uncertainties. i think a destabilized world ultimately, if it ends up tightening financial conditions within the united states and more broadly, would have to adjust its policies in a more dovish fashion it's not clear to me that a sad event such as this is going to, you know, force the fed to change the momentum that it currently has in its monetary policy strategy. >> that remains the biggest question especially setting the tone hearing from the fed chief tomorrow is this a moment where everybody pauses to see what happens versus pursuing a tapering strategy or not. we're not overly connecting the events of afghanistan to the markets today but simply to point out the way that people often think through them so if you are telling people from the bond market's point of view about the taper, do you
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change your forecast what is your forecast at this point? what do you think we'll hear from the fed chief tomorrow? >> well, we have the treasury market underperforming into the end of the year. we think yields will rise. we have the 10-year u.s. treasury yield ending the year at 1.8%. it was there earlier this year we thought that was a bit too soon but now we think the time is right for yields to start making their way higher again the tapering is one of many factors that we think will drive treasury yields higher we also think that the economic data in the u.s. is going to play a key role. of course, that also feeds into the fed's desire to begin tapering its asset purchases and that process will likely get under way later this year, early next year and ultimately end up leading the fed to raise interest rates >> you're not overly excited about whether it happens in the near weeks or far weeks. just the general chain of events as appropriate thanks for joining us.
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we will have much more on the explosions ikan bul with ian bremer right after this break. stay with us which saved investors over $1.5 billion last year. that's decision tech. only from fidelity.
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and that's how sofi is helping millions get their money right. welcome back to "the exchange." i'm joined by ian bremer, president and founder of eurasia group. we last spoke right after the events inafghanistan started t take that tragic twist with the taliban overtaking much of the land there you said the sort of biggest thing at stake was the success of the u.s. withdrawal, including whether there were any american deaths. we unfortunately just learned about the deaths of four marines, according to various news reports what does that mean for u.s. policy now >> it's a big deal these are the first american servicemen to have been killed in afghanistan since february in 2020 clearly those that are seeing the evacuation as a failure on the biden administration, both
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in the united states, his political opponents, but also internationally will be leaning into that. it is obviously harder for the united states to continue evacuations, even up until august 31, given how much the security situation around kabul airport has deteriorated it's also going to be difficult for the biden administration not to engage in some kind of direct military retaliation against terrorist targets on the ground in afghanistan clearly, even though there's no reason to believe the taliban was in any way involved in this, but in order to have this attack, they went through taliban checkpoints and so the level of mistrust between the u.s. and taliban governments is only going to grow the u.s. freezing of the assets is going to be very hard to get that undone. parts of the taliban can effectively govern and control their country. all of this is enormously tragic
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and, of course, the biggest thing is the tens of thousands, perhaps hundreds of thousands of afghans who have -- afghan citizens who have been cleared for evacuation that will not be able to get out, in part because it's too dangerous for them to approach the airport the security can't be guaranteed and in part because the americans are going to be wrapping up these activities in short order. >> so how do these activities continue, ian? i'm not sure what the status is of how many americans -- obviously a huge amount of concern about those who were helping the americans and whether they're all trapped now. if those at the airport are sitting ducks, then isis-k has made it clear they're able to launch these attacks >> i think it's very important that the white house had been warning the americans of imminent attacks being likely. even in the hours before this attack occurred, you had the state department saying all americans should leave immediately from the airport don't make your way there
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because we have credible knowledge of attacks so i mean, what i think the biden administration is going to do is they'll say -- they'll lean on the talking point they've been warning americans they should get out for weeks now. that most of the americans that want to get out are out. and that those that remain are people that have decided for whatever reason they want to remain look, any circumstance, number one, there are going to be americans that no matter what you do are going to choose to stay number two, there are going to be americans in any circumstance that have tried to get out and will fail and we'll hear about that and biden will focus overwhelmingly on the former and i think the question is how much is the latter a story how much do we hear about it we haven't heard directly on the media from a lot of americans in afghanistan saying i want to get out. you have to protect us overwhelmingly it's been afghan nationals. if that narrative starts to shift in a meaningful way after these attacks, biden has another
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very significant problem to accountar. >> what are the implications of the strecngthening of isis-k after these attacks. this is a group the u.n. said was down to 1500 or maybe 2,000 fighters in afghanistan. they had launched some big attacks in kaubl, one that killed a number of school girls earlier this year. they think the taliban isn't hard line enough one said they are 8,000 to 10,000 fighters from all over the region have been pouring in. most associated with the taliban or al qaeda. some groups are overlapping but in many ways are at each other's throats. what are the implications of that, especially the rise of isis-k in the region >> kabul international airport today is the most attractive target for islamic extremist terrorists out there you've got the americans bunkered down.
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you have no ability to maintain security outside of the airport gates itself and you have an environment in afghanistan that's basically a power vacuum so absolutely, i mean, even if you didn't have intelligence on the ground, you would think this would be a very dangerous time, and it's hard to imagine that what we saw today is the end that in other words, yes, other suicide attacks almost certainly are -- we're going to see more of them. it makes me worry a lot more about the 20th anniversary of 9/11 both in afghanistan itself as well as internationally. this is going to be a big problem for the biden administration and for american nationals abroad in areas where terrorists are in operation. i'm sure you'll end up seeing significant warnings coming from the state department for americans in such countries over the coming couple ofweeks. but that's very different from saying that isis-k and other
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such terrorist organizations suddenly have gotten much stronger and pose a credible threat to the american homeland. >> right >> i don't think that's the case at all this is -- the collapse of afghanistan and the taking over of the taliban is a much more credible security threat to countries in the region and more broadly to the turks, the europeans than it is to the united states. here in the united states, the principal terrorist threat domestically is white supremacy. it's not islamic extremism >> i guess a different way to ask the question would be, if these groups are busy fighting each other for control and power in afghanistan, would that be a distraction from launching attacks against the west or would attacks against the west be one way in which they are jockeying for internal influence and power? >> again, with the united states right now, leaving in disarray, after 20 years of fighting, having failed in the broader mission of creating stability
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and standing up something that looks more representative and democratic in afghanistan, there's a power vacuum, and the americans are there. they are in the airport on the ground right now and yet outside of that airport is a very permissive environment. right now the spokesperson for the taliban has publicly posted, well, the suicide bomber, that occurred in territory the americans were in patrol over. what they didn't say is actually that was right after they went through taliban checkpoints. so it is clearly this is an enormously permissive environment for those that want to target americans and gain the prestige and the ability to gain followers and the rest that comes with that. it wouldn't surprise me if there's more than one organization that takes credit for these attacks today for precisely that reason. again, i think in the run up to august 31st and the run up to the 20th anniversary of september 11th, i think there's
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a lot more of this >> ian, thank you for joining us ian bremer we'll keep following this story and the market impact. "the exchange" is back after a short break. s, 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.
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welcome back to "the exchange." dow is down 68 points. it's well off the lows it was down more than 100 this morning. a quick look at the 10-year yield. does show yields sliding toward the lows of the session off their morning highs. we have these two risk classes kind of going in different directions let's bring in michael to discuss this and degas is with us as well it's great to have you both here degas, let me start with you thoughts on the 10-year on markets today. i don't want to overly tie this price action to what's going on in afghanistan that's a majorly difficult global issue where we have to just wait and see how it will be resolved, what the biden administration is likely to say. in the meantime that leaves us looking to jackson hole and the events and likelihood to hear from powell in the morning >> yes, kelly. first of all, my prayers are with our servicemen and women and their families
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what we're seeing is that with the overall market, we're seeing the bumpiness and the market may have pulled back, given the news of what happened in afghanistan. and so -- but if you notice, the market is actually up a little bit from the market lows today so that means that the unfortunate -- the terrible thing that happened in afghanistan is not having a significant impact on our markets. so we're seeing that this is still going to be a bumpy market we've had a bumpy several weeks here and so this is just a continuation of that volatility. >> there's this push and pull between stay at home and reopening stocks we've all been looking at that i also that dave zervos made an interesting point about the importance of the jobs report. september 3rd we get the august number maybe that's the best way to tell whether the demand side of the economy is losing momentum or not >> it's going to be all about jobs and then the jobs report is going to impact what the federal
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reserve is doing the news coming out of jackson hole i'm sure will be continuing about reducing the tapering or reducing the buybacks and tapering out some of the intervention the fed has had in the market so i think it all comes down to inflation. what the fed is going to do and the jobs are a key factor in that >> let me use a couple of the names to illustrate this push and pull you have zoom, the big classic stay-at-home trade getting a big upgrade. $400 price target. williams-sonoma has amazing earnings bringing back its stay-at-home play there but ulta also strong earnings beat so and this has been happening for the last few weeks where it's not a clear sort of sell the pandemic winners, buy the reopening trade. it seems as if they're both working. >> right the reason they are both working, if you go out to a store, to a sporting event, to a
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restaurant, those venues are still packed with individuals. consumers are still spending so the delta variant may impact travel and leisure, but when you look at restaurants, retail, such as ulta, you are seeing people within the stores and so there may be a slight pullback due to the delta variant but we don't feel this is going to stop we definitely don't see that we're going to close down the economy parks gain so that's what we're seeing. we're seeing zoom is going to continue because there's still a need for video conferencing. but we're also seeing williams-sonoma that's being driven by millennials and they are going to pottery barn to buy housewares so everything is still working >> and those housewares are more expensive than ever, michael and we have a lot of focus on prices whether inflation will be persistently rising or not how much worse are the supply chain issues going to get now that delta has been spreading
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again? and what that means for corporate profit margins >> yeah, all those are very good questions. i think, though, kelly, there is still lots of money in the economy. consumers are, believe it or not, despite some of the sentiment readings, i think consumers are optimistic that when we have a third vaccine dose, booster shot, that you're not going to see the economy closing down even what's happening in hawaii. the governor is trying to convince people not to come to hawaii but has not completely shut down the economy. and so i think that consumers are more optimistic that we're not going back to where we were a year ago it's going to be ugly until we have children's vaccines probably but there's still some optimism and that's why spending is still occurring >> maybe first to you michael and then degas what would your top picks be, stocks, sectors, for individuals, investors, even as we're about to move through major events with the taper and everything else going on >> you bet on the consumer
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it's not a fluke you have companies that are going to have really a strong continuing footprint these are going to be companies like apple, certainly. consumer stock even though people think it's a technology stock. amazon is going to continue to thrive costco will continue to costco thrive every person needs to make a judgment what's best for them. you want to bet on the consumer economical and selective in what they spend their money on, but they're going to spend their money. >> degas >> i agree with that want to look at home depot, even the beauty care, that's fully focused on their online operations so anything that has the consumer as the driver is where you want to put your investments in now >> degas, would you be waiting for pullbacks? that's a classic question when you talk about names like home depot or others. are these stocks that there may be a taper tantrum plenty of people have come on
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the air, but every pullback we see a rush of buying activity. the market gets 20% away from you again. >> what we would recommend to our clients is buy a good name and hold it. the pullbacks we're seeing now, they're not going to make a difference a year from today so that's what you really want to focus on. focus on the valuation, the companies that are profitable and companies that have earnings -- expected earnings to grow that's what you want to focus on this market. and don't really get caught up in the day-to-day movement of the markets. >> michael >> yeah, kelly, i wanted to make a comment when you say a pullback, people often say a pullback, which is the s&p and the dow. s&p and dow are populated by 10 or 15 names that really drive the so-called market when you look at a 10% or 15% drawdown there are individual names, for example, individual sectors, for example, that are down 10% you don't have to wait for the
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s&p to go down >> on that note, michael, we're about to talk to brandon ahern of crane shares. would you be buying china yet given this big turnaround this past week? >> no, i would not be buying china yet. they're not done i i talk to people in china every day. believe me, there's more going on in china than theunited states knows right now that even impacts the chinese population, so i would be very, very cautious on china right now until they get done really cleaning house >> we'll have to bring you back and maybe expand that thought a little bit thank you both this afternoon. michael yoshikami and degan wright, what a day we appreciate it th'll have much more on e markets and overseas investing, as i hinted, coming up
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finding out what it's worth. visit to find out if you policy qualifies. or call the number on your screen. coventry direct, redefining insurance. welcome back to "the exchange." it's been a wild ride for shares of the chinese internet stocks following a crackdown by the country's government the drop so steep it prompted investors to go bottom fishing
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and look at the rebounds we've seen didi shares soaring 20%. up almost 23% over the past week. tencent up joining us to discuss is the cio of crane shares. brendan, welcome i don't know if you heard michael yoshikami's warning, but he thinks there's a lot more 20 come in terms of china's crackdown. what's your response to that and your read of the situation there? >> well, we have a singular focus on china so on a daily basis we're focused on providing investors what's happening there i can't comment on the past speaker, but this morning one would have noticed a company called why-why is taking itself public it has as much cash as the market cap of the company. so to the executives are saying if investors aren't going to buy us, we're going to take our company private, and i'm sure will relist itself in hong kong. we're seeing a number of green
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shoots around clarity and transparency on regulation most importantly the data security law, critical information and infrastructure regulation will go into effect on september 1st, kelly. that means there's a finish line i think that's been a key problem is the uncertainty around regulation. >> talk to me about kweb which is now the kind of hallmark banner, if you want to call it that how do you decide who is in, who is out, for how long >> well, we are -- it is a passive etf, so it is market cap weighted we were very hands-on in the construction of the index over eight years ago. to get very specific exposure to chinese companies that generate revenue online, and lo and behold, eight years later it's the largest china etf here in the united states. i certainly am a huge believer in kweb and i think this real
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uncertainty has weighed on the price action but we're starting to see a bottoming process >> bottoming process we're showing year-to-date performance, still down big, 12% down on jd and 12% didi. will there be any shuffling of the names in chinese e-commerce but any shuffling based on what chinese regulators have told you or the public about its further efforts to regulate data, privacy and so forth, or any increasingly active efforts to get ahead of potential further moves that could negatively affect these shares? >> well our index provider did not include didi due to that company having gone public very clearly when it shouldn't have so didi is not part of kweb. i think something we've informed the index provider about the holding foreign companies accountable act as a fiduciary we have a responsibility to protect our clients' assets. and if we see a strict
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enforcement of the hfcaa we will push for a conversion out of the u.s. names into the hong kong names, kelly that's very easy to do you simply tell your custodian at the end of the day and you wake up tomorrow and you own the hong kong share classes. at the same time it's very important investors recognize on friday china's s.e.c. said please to the u.s. regulators we want to solve this issue very publicly outreach. on monday the state council, a very important body, also reiterated that call that the u.s. and china regulators work together to solve this long-running pcob audit issue. it very much sounds like china wants to solve theish be you we certainly hope u.s. regulators are engaging them to solve the issue, put it to bed and not put $2 trillion at risk. >> very interesting, the extent to which hong kong becomes a way
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to play this for the near term for some companies brendan, thanks for your time. brendan ahern is the cio of kraneshares. "power lunch" begins right now don't go anywhere. and welcome, everybody, to "power lunch." i'm tyler mathison we have a lot to get to including the big jackson hole meeting that's a virtual meeting, a conference of the fed governors and central bankers. but we want to begin with the latest breaking news out of afghanistan as a bombing, a fatal bombing, rocks the airport in kabul shep smith has the latest developments for us. hi, shep >> hi, tyler two bombings happened around 9:45 a.m. eastern time in kabul, one at a gate that leads to the airport and another at a nearby hotel about 1,000 meters apart there are a number of dead in the nearby drainage ditch and the pentagon confirms a number of united states troops were killed we hav


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