Of war between inflationary pressures and the deflationary trends in china. And f and meet a company that made it their business to clean up environmental messes the ceo joins us ahead first, lets get the read on all of this with dom chu its red, but its not severe, not as much as yesterday. But still, seeing that slowing momentum ill get into that in a few seconds, kelly but if you look at the overall picture for the dow industrials, off one half of 1 , 153 points for the dow. The s p is at 4473, down 25 points, half of 1 decline there. At one point today, we were up about three points down roughly 38 at the lows. That is the trading range so far today. Again, watch the 4427 level. That represents the moving average of the s p 500 the nasdaq composite off 141 points to the downside 13,743 is the last trade there kelly mentioned some parts of slowing momentum in the market one place we are seeing it is in a red hot sector, that is computer chips, semiconductors right now, we are seeing that play out the worst performing stock on the day in the s p 500 is nvidia, down about 4 . Broadcom down 3. 5 advanced micro down 2. 5 s semiconnecter etf is down 1. 25 . If it closed here, it would close below its 50day average and then energy, as kelly points out, high levels on a relative basis for wti crude. The highest levels at one point going back to november natural gas at one point today, the highest prices going back to march. Some of the Exploration Companies outperforming the energy sector. Watch the energy trade maybe its the return to value who knows . Its going to be a pain if it stays this way my next guest has been warning for months of Higher Oil Prices and he owns several names. Lets bring in stan major. Good to see you again, stan. Welcome back thanks, kelly why do you think oil is finally responding you know, i think its a combination of a couple of things when you look at actions and words, the words were scaring the market, which was work from home, weak economy, evs impacting demand but those and those do factor in the demand. But theyre not Strong Enough to offset the demand, which has grown to which were consuming at an alltime high. So i think some of the strengths youre seeing is on the demand side, very Strong Demand and then on the supply side, discipline from opec and discipline from the United States its weird to me that we are talking about demand at the same time we are talking about deflation in china so is it that oil demand is high, including china, because of china, in spite of china . Explain these conflicting signals we seem to be getting. Sure. So i think its in spite of china. We are seeing dips in diesel demand from trucking even with those factors, were at an alltime high. So i think we have had some headwinds in terms of demand, but were seeing the underlying growth so our belief was we hadnt seen the peaks in demand, populations grow as people become wealthier, they demand more energy, which comes from hydrocarbon i remember that Global Oil Supply and demand is something in the range of like 130 versus 106 Million Barrels. How tight is the market globally sure. Its a little lower than that in terms of supply and demand but we think currently the market is a million to two Million Barrels a day. But the issue is in the short term, we have some excess inventories to be released the difficulty is the long run the World Economy is growing years from now, were going to need more than 100 Million Barrels a day. The issue is supply. Where is that going to come from where we see activity today over the next year, its hard to see any growth, which produces close to 20 of the worlds liquids. A lot of other countries are seeing decline in production theres some offsets to that, but the difficulty is really the long run so we think we got a balanced market in the short run, which is why we see prices in the 80s. Its confusing. As an energy investor, you dont want to invest in companies with declining production when exxon is making a move to get into carbon capture, and when the permian doesnt look as promising as it did, the companies you like, maybe some hidden assets. Marathon oil, youre looking at lng opportunities in west africa can you say oil will be structurally higher, i can just own an energy etf, or is that going to leave you holding the bag, so to speak you know, i dont think so. I think the nice thing is when you own these stocks, theyre generating so much Free Cash Flow even at Lower Oil Prices than where we are today so theyre generating a lot of cash theyre taking that cash and buying back stock, which isnt pricing in current prices. So we use roughly 83. Were using 75. These companies are generating 10 , 20 Free Cash Flow yields, taking that 10 to 20 of the market cap, buying back stock. So you have a lot of financial exposure as well, some of the majors like aig. So when you take a step back and look at i dont know what we would call the market at this moment, is it taking a breather, is it rotation how would you explain to our viewers or investors what you think is happening right now ive been doing this for over 25 years this is one of the most interesting markets. You have some very, very expensive stocks some of the larger type names that are relatively expensive. Whats driven the market this year is the more expen sich stock. Then you have the expensive stocks, you know, we have companies that are Single Digits that are seven to ten times earnings, creating a lot of value for shareholders. So i think there are some major risks in the market. The sovereign debt crisis potentially, overvaluation in very Large Companies but there are parts of the market that are extremely undervalued that were taking advantage of, where you can buy things at low multiple of earnings maybe it will be their turn next to shine. Stan major, appreciate it today. All right, thanks meantime, tenyear notes just went up for auction remember when there was that strong threeyear yesterday. How did we do in the longer run . Rick santelli has the results. Rick yes, very close, it priced nice a minus today. The yield is the best auction, a whisker under 4 , 3. 999. And the metrics were very solid. Indirect, 72. 2, thats in february and even those statistics belie this trend, just scaling up a bit on many of the metrics if you look at direct bidders at 18. 3 , was the average it just didnt outperform like all the other metrics. Even the dealers, taking less than 10 since february. And if you look at the charts, you can see yields right now, making new low yields the high price of the day so investors agree with the a minus. And a couple of things should jump out, the fact that we had a big july in terms of treasury yields, going aggressively higher that seems to have stopped if you look going back to mid october, we had a high yield close at 4. 25. The fact we didnt trade above it last week, and now were moving lower, under the 3. 85 closure, you heard it from me, i would cement the 4. 25 high yield close as a significant high, whether its the high or not over the next several plus years, that always is an asterisks. Rick, thank you very much rick santelli. Despite that, one spot we see pressure on the market is on the banks. From large and small, they are trading lower today after the moodys downgrade of several banks. The Financial Times highlighting that lone losses for the banks are on the rise, hitting a threeyear rise in the Second Quarter. My next guest thinks more consolidation is needed. Here is the chairman and ceo of steeple financial. Great to have you here welcome. You know, kelly, its great to be here it reminds me of the pandemic the dog days when it would be, you know 20s, 2020 and 2021. With your firm, are employees back in the office pretty much back in the office we learned the new style of people working from home, but generally, were back at work. We have to be. Is it hydride, is it four days is there flexibility fficially, were back five days but we work with people why is it that Financial Firms like yourself, why is it so important to be back in person five days a week, where we see many others that seem comfortable to have three or fewer days like that it is we teach our people our business you dont learn it in school, you learn finance but you dont learn Investment Banking or all the things you need to do. Were a Human Capital business and we train our people at work. So lets turn back there, the Financial Sector down a half percent today. Every time you turn around, theres another headline or headwind, and the capital one in particular, it could weigh on the shares talk about what you think is going on with the economics of the business right now its a lot of bad news. But i think that financials, theyre inexpensive. The cyclicals are inexpensive. A lot of the financials are trading at single digit multiples. The Banking Industry is very well capitalized but there are headwinds. But to me, it was not like moody told me anything that i didnt know deposit costs are rising, deposits are more scarce youll get some commercial real estate losses. These are all in the market. The one thing i will tell you that people need to think about is, july 27, that Capital Increase of 19 to the biggest banks, i think thats a big deal and its going to put a crimp on lending. Talk more about that,what does it mean and for how long a period will that put a crimp on things it starts now in our business, you start phasing in immediately there is no such thing so i kind of believe that most banks are going through their lending book and deciding where the risk adjusted capital is, and frankly, its just going to make it harder for borrowers in general to find credit the fact that financials are cheap, and that they have to hold more capital, and some of the people i talked to are worried that they are going to try to shove all of this paper onto Bank Balance Sheets by requiring higher capital its financial repression in other words. So when i look at it, yeah, theyre trading at low multiples, but is that because the market is sniffing out the new normal for banks might not be one of high rois for the next period of time i think in any capital system, you need a strong, healthy bank and well have that but with the Banking System of today, its the first industry that had to rewrite things, and the economy, today the market, we think it will move sideways why would you invest in the equities today when you can get 5 risk free that basic comment is across almost any business you want to talk about its a free rate that is causing the private sponsors to not take their companies public, because the valuations have to be lower. But you can trace it back to five Percentage Points if i can get 5 for nothing, why take a Company Public for a return that might not be too much higher than that. Or in 2021, money is free so ill pay anything and that has changed its going to take some time to work that through the market we just spoke yesterday with the head of a firm that does a lot of private capital how much is private credit really are there any risks with this activity when they start to have Loan Officers and they dont have customer deposits, so its not quite the same risk. But what is the significance do you think theyre losing shares to the private credit market i dont think theres any question about that. I believe that the federal Banking System has been growing significantly. And i think it does pose some risk you dont have the same capital rules, you dont have the same liquidity. On the other hand, they have been very important participants in this market probably keeping things looking better than they might otherwise. So where are we six or nine months from now . Plenty of people say they think recession is lining up, they see pressure on the consumer just a couple of anecdotal headlines, the hardship withdrawals of 401 ks. How are you planning what do you think the economy will look like in six, nine months we have a million clients, i do talk on the consumer side a fair amount. You know whats going on people have to remember, this economy was flush, 5 trillion was put into this economy in 2021 everything was liquid. Things were flush with deposits. People had savings that they never had. All of that is just now coming down, people dont have the savings that they had. So what do i think i dont think theres a real recession on the equation, other than one thing your previous guest said, 115 oil is what im worried about. What does that mean to markets not just supply and demand, lets remember, russias got a little vote in supply of oil in the world. So i look forward, i believe that the markets and the consumers and everyone will adjust to a new rate environment. The thing that has to change, this isnt one of them everyone who thinks the rate also go back to near zero is mistaken you dont think so . No way. Good or bad what has to happen is we cant have a yield curve where the sixmonth is at 5. 50 and the tenyear is at 4 thats not good for capital formation. That will sort itself out. But were not going back to zero Interest Rates the new floor inflation is 3 . Its hard for them to get below that add 115 potential oil, and thats the thing i would be concerned with overall, the Banking System is very healthy, despite what you are hearing, very well capitalized. I think relatively cheap but we havent been through the cycle yet. If we slow down in the next couple of quarters, whatever it is, do you still think there is a shoe to drop here . I think the market has discounted a lot of that in. The banks, everyone was worried there wouldnt be a bank around after june the banks rallied 20 last month. Were getting a little bit of a pullback here. I think the market has discounted a lot of this you see it in the valuation. It is one of the cheap sectors industrials and financials are relatively inexpensive in this market if there is a pickup and consolidation like you are saying, that there will be will you be involved in that . Always. Thank you so much for joining us onset today thank you for having me good to see you, kelly still ahead, shares offed a vamsed auto parts have never recovered since late may the stock is down more than 50 this year. But valvoline is up almost 9 . They just reported earnings and announced the retirement of their ceo. Hell join us just ahead also, the big business behind cleaning up the environment. When governments need someone to step in after a major derailment or chemical issue, montros answers the call well speak with that companys ceo. And the dow is down 72, but not quite green like it was. Nasdaq down three quarters of a percent. Tenyear note back below 4 . The exchange is back after this welcome back to the exchange. Environmental disasters seem to be constantly in the headlines, with chemicals in the water supply or toxic lead cables in the ground and fixing these problems have become a big business for Companies Like montrose. They had a hand cleaning up the Train Derailment in ohio, and shares are jumping 10 today after reporting better than expected Second Quarter earnings joining me now is ceo b. J. Great to have you here welcome. Great to see you, kelly so, you know, not to give a history lesson, but this could not have been as big abusiness in the past as it seems to be now. Its taken on a lot more prominence and something thats mattered for a long time we all want clean air, clean water, clean soil. And thats something at montrose we have been focused on for a long time. But as these various disasters and regulations unfold, the opportunity set for us, and the prom naninencef the environment has increased. This could be tens of billions to clean up the lead cables i dont know if that will be a contract, but is that the kind of thing you guys get involved with more broadly, yeah. Montrose is an environmental pure play. So we have about 3500 employees around the world colleagues of ours serving the private sector trying to tackle some of these environmental challenges so thats the type of work we do on the assessment regulatory and testing side and treatment and solution side. So its a fantastic opportunity. Whats the mix of government customers and private sector ones we are primarily private sector the government, in australia, in Northern Europe and state governments are a slightly larger part of the portfolio that we serve. The u. S. Federal government is still a small piece of our client base. Government customers are often seen as the Gold Standard because theyre so steady and those funds flow for a very long time as we see, theres more corporate issues, as well. I live in a town that has a bad water problem. Its an older town they had a lot of industry back in the day can you give me some hope about the potential for cleaning up the water for where i live and a lot of different people live and are facing these challenges . Yeah, its something that we have been very focused on for a long time. We are fortunate in that we have proven we have technology that can remove these forever chemicals from water very effectively. And in a way thats quite sustainable. We have been doing this now for years, and doing it very successfully were excited about the opportunity to talk about things like that in forums like this. So we can serve more of these communities and get clean water back to them that would be great theres always some controversy. In your case, the critics say because your clients are often the company that there is an interest or are you down playing this so that employers dont face as much exposure would be the line of argument how does that process work of putting a dollar figure on a cleanup figure on Something Like the East Palestine der