Transcripts For CNBC The 20240703

Step in and curb their rise. Hes here with his proposal to lower rates by a full point. The dow has been fluctuating. Up 327 at the highs, up 67 right now. S p is down 15. Nasdaq is down 1 . This despite lower yields across the board. Today, the tenyear down seven basis points from yesterdays close, around 4. 63. As for Bank Earnings this morning, shares all higher on stronger than expected results, but well off the highs. Jp and wells fargo a little more than 3 up. The ceo jimmy diamond noting it was overearning and he expecting that to normalize over time. Pnc, shares are lower by almost 4 after missing on the top line. They beat earnings estimates, but, again, their Loan Loss Provisions came in at half the estimates. By the way, it wasnt just them, the big banks did this, as well. And financials are where we kick it off today. My next guest says hes bullish on the big banks, especially goldman sachs. Also with us, lets bring in frances donald, w. Out with a recession call today. That wont help bank shares. No, but i get asked all the time, do i see a recession or not . Yes, we have two negative quarters of gdp and uptick in unemployment, but i dont think this recession no recession story is going to help investors over the next six months. Even though i do think there will be a recession, for the next month or two, you could have a sanguine environment. Inflation coming down, the fed backing up. Its fun that you can wear both hats. What has been the change for you . I know time when weve been revising up the last quarter gdp, why are you looking ahead and seeing more declines . Its the rates, kelly. History might not repeat this time, but its going to rhyme. We really have trouble throwing out all of the standard economic relationships with rates move thing high, credit contracting at the speed and the magnitude that it is right now. The consumer is out of excess savings. Peoples delinquencies are higher, and a Housing Market that is effectively completely frozen. We cant get the growth to come above zero percent. But the focus needs to be not just on do you have two quarters of negative gdp. Each though there might be some disparity in recession no recession calls, youll find just about everyone has trouble arguing that growth will reaccelerate from this both forward. So whether you want to believe in that mathematical output or not will mean lower growth and it gets the pivot. Charlie, let me bring you in. I know youre not a big fan of macro calls, but whats your take on what will happen here in the next six months or so . We think were getting near the end of this cycle. We think the end of the tunnel is in sight, and we think inflation is heading towards the number, its not going to get there quickly at 2 , we told you that for a long time. The fed was optimistic that it could get there, and that wasnt right. But inflation has come down, getting down to an acceptable level. At this point, with all thats going on in the world, the fed is not going to want to add to trouble. So we do think that the end is in sight. When they signal to the market that they are done raising and the next move will be a cut, that will be perceived as very good news by the market. And we will finally get an end to this headwind that we have had. Charlie, if im not mistaken, suspect there a track record for stocks to underperform when people realize okay, the recession have we ever had the end of a tightening cycle where we didnt have a recession onseting . Were hoping this is going to be that case. I think there is a very good case that if, in the next three months, we get the fed signaling that theyre cutting rates, not because there is a recession, but because we have made enough progress on inflation, because they dont want to add to instability in the world. I think we could get a cut without a recession. That would be a very good environment, particularly for more typical stuff. Frances, anything you would add to that . Well, im in agreement on that. The next couple of months, i would trade the soft landing for sure, but i wouldnt conflate the short term with the longterm with the price shock we have seen. I dont think youll get those rate cuts unlet up employment rises. We think that happens in january and february, enough for the fed to cut by mid year. This doesnt seem like a fed that will cut without the recession. Thats one reason why staying in a recession suspect the most bearish outcome. A stagflation type of environment with no growth, thats worse where you get the fed pivot. Charlie, drill down on the banks for a moment. Its a little disappointing where we are seeing a decline or less than expected buildup in loan loss reserves. It seems imprudent. Yeah, this has changed over the years. The banks used to be able to take big reserves as almost a way to manage earnings. And the regulators have come down hard on that. So now you really have to show trouble before you can actually take reserves. Right now, theyre not seeing trouble. Obviously, outside of the office in some parts of commercial real estate. In terms of what is visible, this isnt trouble. The individual borrower is still making payments. We arent seeing mortgage or corporate defaults, so they cant take big reserves, and we dont think big reserves would be justified unless we go into the kind of recession were hoping were not going to have. Youre more bullish, charlie, we talked about goldman. What would you do with the big banks this morning . Cothey enspice you at all, the regionals, or just sticking with the goldman and morgan trade . I think you do have to be selective. There are regional banks that have big holdings with longterm bonds that they are holding in the accounts, and havent flown through the balance sheet, and this is nerveracking to the market. Goldman and a lot of the investment banks mark those positions to mark it much more active. We do have a couple of banks. Northern trust is trading at 11 times earnings. In general, we have to go name by name. You cannot buy regional banks. Absolutely. Frances, as we look at the labor market, which has lost some momentum but not nearly as much as expected. When you look to catalysts for your recession call, is it going to come from the labor market or where else . Because it looks like earnings, Fourth Quarter earnings, thats going to be okay. I wish the recession call was coming from one unique factor. Then we could look at upside and Downside Risk to that one thing. We see a pullback in housing, in capital expenditure. Yes, that consumer is already softening. Look at private credit card activity. Excess savings are down. Gas prices are better, so that takes some heat off of the consumer. Total hours worked are not as strong as they have been before. We expect the labor market to soften. A little bit of everything is going to be enough to get the gdp numbers below zero. Not a major crisis call, just two quarters of negative gdp. Not great, but not the worst possible outcome. We need to separate out these bearish recession calls from what the math tells us. Its not a great situation, but not the worst by any means. Thank you both. Really appreciate it today. Meantime, while the iea has yet to quantify the israelhamas war, the oil market is fraught with uncertainty. Thats proving true as crude pops 5 today after the u. S. Imposed more sanctions on tankers carrying russian crude. Im joined now by dan yergen. Welcome to the program. Thank you, kelly. Its almost like i dont want to ask you. I would love to hear from you what you make of all the developments in the past week and what it means for oil market. We already had a tight oil market to begin with. Whats been hanging over it is the threat of a slower economic growth, downturn, higher Interest Rates. But right now what you have more is more geopolitical risk going into the price of oil. Nothing has happened right now, supplies are stable. And the u. S. Government is saying it has to crack down and actually demonstrate asanctions are actually going to work. You have ukraine and the middle east at the same time. Why is the u. S. Choosing now to crack down on russian oil at a time when we have seen crude high, pushing down consumer sentiment. Its a big risk here to the u. S. , one of the biggest spillover effects. Is it in part because they look at the experience of iran and how much their oil output has increased and kind of figure well, okay, you have to be on this . I think yeah, iranian production is up 500,000 barrels a day and found ways to evade sanctions, including shipping through malaysia. Theres been just this rising discussion about the fact that that price cap worked well when prices were below 60. But where they are now, russia is evading that and making a lot more money again. So remember the price cap had two purposes. Keep the oil flowing, but drive down russian restrict russian revenues at the same time. And the second is not happening. I think we want to say these sanctions are not theoretical, they are going to be applied. And sanctions will make people think twice about trying to evade them. What do you think we should expect for the supply of iranian barrels into the Global Market from here on out . I think at this point, we may well see an effort to tighten u. S. Sanctions. We have seen the Biden Administration holding back on 6 billion. And i think that it really will depend theres still the unanswered question what was irans role in this event, and how much did they directly support it . So i think at this point, oil generally continues to keep flowing, but theres going to be the next few weeks will be very volatile. If we have an escalating violence, it will be more questions about the flow. One thing to be said, you know, were coming up next week to the 15th anniversary of the oil embargo from 1973. The arab exporters in the gulf have no interest in reducing supply for political reasons. Can you explain that for a moment . They could choose to seize this moment, again, depending on what happens with gaza and so forth, to say to respond globally and really exact more pain in developed countries likethe u. S. Well, i think if the difference is in 1973, the u. S. Was on its way to being the Worlds Largest importer. Now its the largest producer. It would be very disruptive in the relationship with the United States. Clearly, it will be under pressure as it goes on. But obviously they have already cut back supplies for other reasons. But i dont think that they would have any interest in disrupting a relationship with the United States right now, which is very important to them. Is there anything else the u. S. Can do . Were already going pretty much flat out levels amongst the highest production numbers we have ever seen. We just had the exxon pioneer deal. What other options do we have if we wanted to upset the loss of iranian and russian barrels to the Global Market . I think that the exxon pioneer deal will need more supply because theyre going to apply technology on an even bigger scale to increase recovery. At the end of the day, theres not a lot that can be done. Theres still the Strategic Petroleum reserve, but its depleted right now. The other thing is, kelly, youre pointing to this, gas prices go up in the United States, that becomes a domestic political problem. There arent a lot of good choices here, and number one hope is that with all of the efforts the u. S. Is making and others are making to avoid see thing situation escalate from where it is right now. Any last points or places you could be watching into the weekend, maybe the next couple of week it is we remain at this sort of very tight supply situation globally . Well, i think first of all, people do not want to go into this weekend short. Thats reflected in the price of oil. I think the thing to keep your eye on is what happens to infrastructure. Didnt get much attention, but there was sabotage on the natural gas pipeline between finland and estonia. So probably russian, probably connected to the ukraine war. So one thing to keep your eye on is in addition to what happens in the middle east is this other war thats going on that faded from the front pages. What a headache that would be. Dan, thank you so much for joining us today. Appreciate it. Lets get to the late nest the israelhamas war now. Israel ordering the evacuation of more than a million gazans overnight. The u. N. Warning that will only increase the risk for civilians. Raf sanchez is on the ground in israel. Raf . Reporter hey there. In just the last hour, the Israeli Military announcing it has had boots on the ground inside gaza covertly. Israels military saying small groups of what appear to be special forces were operating on the other side of the gaza fence. They say that they engaged in firefights with Hamas Terrorists inside of gaza, but that this was also a mission designed to find evidence about where these roughly 150 hostages are. We dont know where these israeli commandos were operating. We dont know what kind of evidence they were gathering. But we know that these hostages are just unbelievable valuable bargaining chips in the eyes of hamas. The widespread assumption is they are being kept in the elaborate network of tums underneath gaza city and other locations across gaza tunnels. This smallscale incursion likely a precursor to a much, much larger traditional ground offensive by israeli tanks, artillery, and massed infantry. All eyes are on that midnight deadline four hours from now, which israel has given civilians in the northern half of gaza to evacuate to the southern end of the strip. Now, israel says the northern half of gaza is full of hamas military targets, which they will be striking. But it is home to more than a million civilians, and the United Nations is looking at this forced evacuation in horror, pleading with israel to back down, say thing is simply no way that you can ask a Million People to move at such short notice without incurring a massive humanitarian disaster. Israeli strikes continuing on gaza. There have been more rockets out of gaza into israel today, but at a lower rate. Any record from egypt, which shares a board we are gaza and would seem to be the more sympathetic place to take in palestinians trying to flee from israel. Reporter there is no indication at all that egypt is interested in taking a largescale flow of refugees from gaza. Theres no indication palestinians want to leave gaza into egypt. Thats burn one of the deep, de fears of many palestinians being displaced from their own land. From the egyptian perspective, a big flow of refugees into the sinai, potentially very destabilizing in an area of egypt that has already had a problem with jihadists, insurgents fighting against the Egyptian Military there. Egypts top priority is to try to somehow stabilize the situation, try to stop a largescale flow of palestinians out of gaza. Thats why you are seeing that the rafa crossing, which connects egypt to gaza, is basically closed to all but a very small handful of palestinians with very specific permissions to cross. Raf, thank you so much for your reporting tonight. Coming up, House Republicans lost their first nominee for speaker, but another member is throwing his hat into the ring. Well get the latest and look at the policy implications for aid, a potential shutdown and the deficit. And is it time for t. A. R. P. 2. 0 . What is the path forward for financials . And here is a look at the markets. The dow hanging on to an 11point game. Tenyear yield, back up towards 4. 64. Back after this. Every day, businesses everywhere are asking is it possible . With comcast business. It is. Is it possible to help keep our Online Platform safe from cyberthreats . Absolutely. Can we provide health care virtually anywhere . We can help with that. Is it possible to use predictive monitoring to address operations issues . We can help with that, too. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Cmon, were right there. Cmon baby. Its the only we need. Go, go, go, go ah touchdown baby touchdown are your neighbors watching the same game . Yeah, my 5g Home Internet delays the game a bit. But you get used to it. Try these. Theyre noise cancelling earmuffs. I stole them from an airport. Its always something with you, man. Great solid greek salad . Exactly dont delay the game with verizon or tmobile 5g Home Internet. Catch it on the xfinity 10g network. Welcome back. Its been ten days since Kevin Mccarthys historic ousting as speaker of the house, and leadership remains up in the air. House republicans voted 11399 to nominate majority leader Steve Scalise to the role. But his run was shortlived. He withdrew from the race last night after failing to get enough support to win a floor vote where he would need 217 votes. So whats next . Emily will kins is on capitol hill with the latest. Emily . Reporter hi, kelly. A lot of fastmoving news here today. House republicans are meeting now, just behind me, to hear from the two candidates who are currently run for speaker. One sounds familiar, jim jordan, still running for speaker. He does think he can get that magical number of 217. But we also had another candidate announce just a little bit ago. Congressman austin scott of georgia. His name doesnt sound familiar because hes not currently in leadership. He doesnt have any major role within the conference. He told us that he did not know when he woke up this morning that he would be throwing his hat into the ring for speaker. He said that the reason hes doing so isnt because he necessarily wants the job. He told me headed into the room that if republicans are going to have the majority, that they need to do the right things the right way, and theyre not doing that right now. Of course, jordan still has a lot of support. Congresswoman nicole chatted with us earlier. She said while it feels like ground hog day around here with all of these nominees, she is optimistic the party can come together as long as members get out of their own way. It took five ballots to elect the last pope, and, you know, were only going to our second ballot. I urge fellow republicans, lets look at the larger picture here. This is not about one individual or just about your petty feelings, either. This is about unite thing conference so we can get back to work. Reporter after the candidate forum, we expect House Republicans to take a vote on the nominees. At that point, well have a better sense of how much support jim jordan has, and if he can get to that 217 number on the house floor. Republicans tell me theyre still considering other alternatives like naming patrick mcremhenry and giving him a temporary power. Kelly, theres a lot going on, and its just unclear at this point when we will see a new speaker. I do wonder if mchenry is going to be the thing. Emily, thank you. Lets ask our next guest, is there a chance republicans cant get a speaker elected ahead of the november shutdown deadline . Our guest says it could take quite some time. Brian gardner is here, chief washington policy strategist at steeple. Good to see you again, brian. I know it changes hour by hour, but can jordan do it . Hes going to win the nomination today, but i am skeptical and am going to remain skeptical until proven otherwise, that he can get to 217. No matter who republicans nominate at this point, there is going to be a core group that will say no on the house floor. You have to get a majority on the floor. Thats the number that matters. And i dont think theyre there yet. So yeah, i think jordans number is going to be fairly impressive coming out of the republican conference. Again, that kcore group, they ae enough to block jordan or somebody else on the floor. So through the weekend without a speaker at least. Yes. Is the blockage now if the candidate is jordan, is it coming from moderate republicans . If it is the moderates, does that serve them . De facto mchenry is the leader . So heres the thing. When you have a group of noes against mccarthy, they were united in their anger against mccarthy. The no group is now morphing and change. And i dont know what their strategic goals are, other than theyre mad, theyre pissed off at their colleagues, and theyre going to get some kind of retaliation against them for putting them through the whole conference through this before. And there are those you alluded to, kelly. Those centrists that dont want jim jordan as speaker of the house, who dontwant to have to go into a Reelection Campaign with jordan. Hes very popular with conservatives, but hes very polarizing to others. So you have a bunch of different influences and factors that are driving the noes, and their motivations are different. How much gets done if mchenry is given some power to pass bills, for instance, visavie israel, does that make november 17th a relevant deadline still in i think there is a mailin consensus, even among those who didnt like the continuing resolution the last time. That continuing resolution is going to be necessary. There is no way, no practical way that congress is going to finish the unfinished spending bill. So they will have to have another shortterm spending bill and maybe looking at a longer term omnibus at year end. This is what they rebelled against with mccarthy. There is another cr coming in the short term. A mchenry dead temporary leadership could do a resolution on israel. But thats about it. Its to keep the lights on and would have to be done in a very bipartisan, consensus driven fashion. Again, another irony of the whole thing, because the conservatives who booted Kevin Mccarthy were upset any time mccarthy worked with the democrats. Debt ceiling, other things. What they have now done is construct a new leadership that is totally dependent on working with the democrats. So the Strategic Thinking here is kind of lacking. And now its almost emwhether m emblematic to have the sands of the senate in the democrats. Brian, thank ou. Brian gardner of steeple. Still ahead, the fcc has until midnight tonight to decide if they want to keep fighting against a bitcoin etf. We have the details and what it means for investors. Next on the exchange, with the dow down 57 points. Stay witus. H together, we built something truly beautiful. It takes years of dedication to get to this milestone. The New York Stock Exchange is a symbol of what america is all about the potential of an american dream. It is day one. A lot of work has happened to lead to this historic moment. The only way you can move a Society Forward is a true expression of freedom. this is american infrastructure, a prime target for cyberattacks. But the same aipowered security that protects all of google also defends these services for everyone who lives here. Im so glad we did this. Im so glad we did this. Im so glad we did this. Life is for living. Lets partner for all of it. Im so glad we did this. Edward jones meet gold bond daily healing. A powerhouse lotion that moisturizes, heals, and smooths dry skin. With 7 moisturizers 3 vitamins. And. New gold bond healing sensitive. Clinically shown to heal moisturize dry, sensitive skin. Gold bond. when the day that lies ahead of me seems impossible to face a lovely day lovely day lovely day lovely day a bank that knows your business grows your business. Bmo. [narrator] this house is a generac house and youre just the person to keep it running because a proud homeowner has a protective instinct and frankly, the brains to know the grid is gonna let you down sometimes. Thats why when the rest of the block is lighting candles and looking for flashlights, youre ready to rock and roll. Its not just a generator. Its a power move. Request a free quote today. Welcome back. Bitcoin on pace for its worst week in two months, though still up 60 since january 1. The s. E. C. Is now debating whether to keep fighting against a bitcoin etf. Bob has more details. Bob . Hello, kelly. It is crunchtime for the s. E. C. The s. E. C. Has until midnight tonight to decide if it wants to appeal the d. C. Circuit courts ruling that the s. E. C. Was wrong to reject an application from gray skill investments to create a spot bitcoin etf. The court ruled the s. E. C. Allowed a futures bitcoin to trade already. That a spot and futures bitcoin were the same products. They were life products. So the court said you approved one, you have to approve the other one. So the s. E. C. Is in a pickle. They are allowed to request a rehearing on this, but the federal rules of appellate procedure states that the s. E. C. Would have to convince the court that they have overlooked something or misapprehended the facts in the case. Thats a high bar. Given the ruling against the s. E. C. Was unanimous, its tough to imagine the s. E. C. Can come up with some new and novel reasons to turn gray skill down that hasnt been heard by the court before. So its a problem. Should they decide not to appeal, then there they will likely be forced to convert the bitcoin eft. And its possible they will approve all the other bitcoin applications, as well. There are eight other applicants in line. So well be talking with cathie wood on monday, talking about the new company she just bought into in europe. Shell give us her opinion on this bitcoin etf. But one thing i would note here is bitcoin has been sideways for several months, including the futures. Its interesting that word that this is likely going to be approved now on the s. E. C. Is not really moving bitcoin that much, and a lot of people are wondering why. A year ago, this would have been big, big news and would have moved it a lot. But as of now, i dont see a lot of tremendous enthusiasm, although this would open up a new class of investors. Kelly . Bob, thank you for bringing that to us. Lets get to Tyler Mathisen now for a cnbc news update. Tyler . Thank you very much. The first u. S. Organized charter flight departed israel for europe today. The government is helping americans who are looking to leave the country. An airline official told reuters the flight departed from tel aviv for athens. A white house spokesperson john kirby said more flights are planned over the next few days. Republicans are meeting again today to nominate a new candidate for speaker after Steve Scalise withdrew his name. Representative austin scott from georgia has jumped into the race, along with judiciary chairman jim jordan. It is unlikely a speaker vote will be called on the floor today, as the republicans are still divided. But Democratic Leaders have asked members to stay in washington in case a vote takes place this weekend. The u. S. Supreme court extended its temporary pause on the Biden Administrations ability to encourage social Media Companies to remove information from their platforms, including content about elections and covid19. Fridays decision maintained a ruling imposed by lower courts that Justice Alito issued the ruling, pending the administrations appeal to the supreme court. Kelly, back to you. See you soon, tyler. Coming up, as rates rise and paper losses grow for the financials, one veteran banker says its time to take a page out of the 2008 playbook. He joins me next to make his case. This thing, its making me get an ice bath again. What do you mean . 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The surging yields all year long have resulted in big losses for Banks Holding treasuries on their balance sheets. As of the second quarter, even before the latest runup, unrealized losses on securities were nearly 560 billion. Bank of america took over 100 billion hit on its bond portfolio last quarter. As this continues, some are baying we need to think about what a government Relief Program would look like. That includes my next guest, calling for t. A. R. P. 2. 0. Lets bring in paul graham, with aaron klein from the brookings institution. Welcome to you both. Paul, go ahead and right now its kind of calm out there in bank land. But what do you foresee . Well, kelly, i see that because these unrealized losses are on the banks balance sheet, they are constricted in terms of their ability to lend. They need to take steps to reduce expenses, and theyre challenged on liquidity. Theyre borrowing from the fed, the federal home loan banks at high rates. And they need to have some relief there. All right. So aaron, let me bring you in for some context. I know youre not a big fan of this argument, but make the case why we would be heading to the point where Something Like this is being discussed. Are these unrealized losses going to become very material over the next couple of years or can banks eas earn their way ou them . I commend paul for publishing a provocative piece, and hes right a lot of bankers made a lot of bad choices by buying in a low Interest Rate environment and a lot of them are using this as a back doorway to get some money and some liquidity. The biggest borrowers were svb and first republic. But other banks, jpmorgan, citibank, they have all reported positive earnings. So what you have is some banks made bad bets and they should suffer the consequences, or as paul said, bail out the people that made mistakes and reward the people that did well. When you make a mistake, i dont think you should ask uncle sam to bail you out. The banks took the bait, if i can quote the former Kansas City Fed president. They are innocencentivized to b these. But paul, let me turn to you. Some say that the banks had a bailout, because the fed is accepting a lot of this stuff at par. In the past, it would be forcing a discount. So respect they already being given a bit of a bailout here . Well, kelly, if you look at what the banks are paying on this debt that theyre taking out to meet their liquidity needs, you know, deposits flowing out of the bank for a variety of reasons, their need to continue to fund loans. Against what theyre earning on those assets, theres probably a 300 basis point difference between there. So theyre essentially losing money by borrowing from the fed in order to maintain liquidity. And in looking at sort of what the banks did in terms of their investments, this is not a shortterm problem. If you look at the maturities of some of these available for sale securities, theyre extending out ten years or longer. And to aarons point, this really isnt a wall street problem. This is a wall street and main street problem. Theres a large number of smaller, midsized banks that are in this situation. They have fewer options than the larger banks in terms of how to work their way out of it. Aaron, the other dirty little secret of this whole affair is that the government needs banks to hold treasuries. So whatever its going to do here, its got to find a buyer for more Treasury Bonds than its ever had to find a buyer for at a time when the central bank has stepped back. If not banks, then who . Well, look, Interest Rates have to be set by the market and deficits have consequences. Its not just treasuries. A lot was Mortgage Backed securities, fed by the Federal Reserve, were buying Mortgage Securities in the name of covid relief for a very long time after it was necessary. A lot of these problems, you know, involved the Federal Reserve and their regulatory failures at svb and other places who were loaded up on Mortgage Backed securities than on securities. But for pauls point, the bankers are great at playing possum, oh, were in trouble, the economy will suffer unless you bail us out. But dont touch our bonuses, dont reduce our dividends, all in pauls proposal, just help us out. And you know, im sorry, but were not going to get you out of this, you made the mistake, figure out your own way. Paul, quick last word. If nothing is done, and what do you think the ultimate problem could become here if we fast forward the clock . Well, i think we can see some banks going under. And whether its, you know, one large bank or, you know, a number of smaller banks, you know, we could see them go under and lending is going to be restricted. And its just going to if we go into a recession, you know, the banks ability to lend helps us get out of that. Absolutely. Gentlemen, well leave it there. With this controversial idea for our audience to ponder. Paul, thanks for joining us, and aaron thank you as always. Coming up, sam altman revealing open ais revenue to staff. Well bring you the eye popping numbers. Can you guess what theyre earning . And how is the technology revealing ancient secrets . And check out dollar general, popping on the announcement that the former ceo is coming back. He will retake the help. Shares up a little less than 2 . Well be right back. Based on y, whatever they may be. All that planning has paid off. Looks like you can make this work. We can make this work. And the feeling of confidence that comes from our advice . I can make this work. That seems to be universal. I can make this work. I can make this work. No wonder more than 9 out of 10 clients are likely to recommend us. Because advice worth listening to is advice worth talking about. Ameriprise financial. swords clashing had enough . No. Arthritis. Here. 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The startup behind chatgbt, including new numbers, showing massive sales growth. Diedra, what are we learning . So kelly, this is reported by the information, but what it tells us is that open ai sort of the darling of the generative ai space koptcontinues to grow andw and put the numbers behind that growth at a potential valuation up to 90 billion. So the late zest that its on track to achieve revenue this year of 1. 3 billion. Let me put this in context. Last year, revenue was 28 million. So thats a growth of more than 4500 . Its just explosive. We havent seen this from a Software Company or anyone in a very long time which explains a lot of the excitement behind it. The question, though, kelly, in a conversation im having here in the bay area is what is the actual application . Businesses are jumping on this generative ai train, but what do we see for companies for a Company Worth 90 billion and even the Public Companies getting a boost, there has to be more to it than chat bots. So there was an article that discussed how google product employees are questioning the utility of its own chat bot and the resources that are going into generative ai. One thing that i keep hearing is we may not know exactly the use cases yet. Theres a story you were looking at that could be an interesting use case for generative ai. So on the surface, it seems kind of fun, but it has real implications, that is the ancient scroll, right . Exactly. This is a big breakthrough. Yes. What do you call people who love the color purple . I loved this for the first time today. Paparolojist. Theres this pride that you can decode ancient texts, and in this case, researchers used generative ai to independently uncover the greek word for purple a. I. To uncover the word purple on a scroll. Its a competition, but this does have implications. The idea that a. I. Can help us understand texts from the past is something that could have realworld implications. Exactly. It represents one of many, i think, new lines of it. Deirdre, thank you very much. Appreciate it today. Mortgage rates touching their highest levels since 2000 last week, and the spread in medical deng. T ganls and the tenyear is wini David Stevens thinks its time for the government intervene. Details next. Every day, businesses everywhere are asking is it possible . With comcast business. It is. Is it possible to help keep our Online Platform safe from cyberthreats . Absolutely. Can we provide health care virtually anywhere . We can help with that. Is it possible to use predictive monitoring to address operations issues . We can help with that, too. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. In the u. S. We see millions of Cyber Threats each year. That rate is increasing as more and more businesses move to the cloud. So, the question is. Cyber attack as cyber criminals expand their toolkit, we must expand as well. We need to rethink. Next level moments, need the next level network. [speaker continues in the background] the network with 24 7 builtin security. Chip . At t business. Home builders are taking a beating, at least they were yesterday. The etf for the home construction, the itb hitting a fourmonth low. Among the Top Performing builders. It all comes as rates on the 30year fixed rose to a 23year high, and thats prompting some home buyers to back off. In other words, compared with two years ago when rates were down to 3 , the average monthly mortgage payment at current rates is around 960 more for a 400,000 home. Should the government step in to address this fooaffordability crisis . Lets bring in david stephens. Great to have you here. Youve got a proposal that i think is going to be the first of many of how to lower Mortgage Rates. What would yours do . It started off as a proposal from people like me. In the last couple of days weve seen a joint trade letter from the Mortgage Bankers association the National Association of home builders, realtors, and then today the independent community Bankers Association joined in with the Community Home lenders. Seems like everybodys talking about the same concern, which is this what credited hyperinflation were three basic items. One was the cares act passed in 2020 which brought almost 20 trillion of stimulus in the economy. The second was the largest quantitative easing in the history of the economy, which drove interests down to the low 2 range for mortgages. And third were supply chain issues. This hyperinflation is the result of an unexpected kind of overcorrection to the covid pandemic, which just brought too much stimulus into the economy, and now were all paying the price with the Federal Reserve completely changing gears, creating a vacuum where they once were the largest buyer of Mortgage Backed securities to not buying any, and that has resulted in a supply and demand imbalance, and thats whats driven rates up to nearly 8 today. And whats unique about todays market is that the spread between mortgages and the tenyear treasury, which is what we normally look at to shadow and view where Mortgage Rates should be, is much wider than it traditionally is. Its about 100 basis points wide. The proposal is simple. The mba home builder letter says the fed should at minimum state its done with quantitative tightening, and that it should make it clear that its over and not just that theyre going to keep looking forward at new economic changes. The second proposal suggests that we should do something further, that in past economic cycles, weve seen gscs, freddy mac or fanny mae, they would buy up excess supply during times like this or the fed. But just pick up the slack, not go back to quantitative easing. Let me just jump in for a second. Whether or not the fed can do more is a question that relates back to the economy and also to whether people are going to now blame them for partly causing this problem in the first place by buying so much. So that leaves franny and freddy. Wouldnt we have to change their structure . Theyre in conservatorship, this raises the question of being able to take them out of it. Having these discussions i feel like im in 2006 all over again. It is complicated. The excess is only 2 billion a day. Which sound like a lot to the average listener. Think about the fed brought 1. 7 trillion between 2020 and 2022, 2 billion a day to take out the excess capacity would be incredibly impactful to rates in the short run. Not to where they were, but back to 100 basis points lower than they are today. Let me ask a silly question as well. How many people are buying a home right now compared with the past . Is this really a crisis . Well, its really a crisis because weve also had a shortage of supply, which drove home prices up, and we have one of the largest demographic waves of millennials all coming into their early 30s that the nation has ever seen, so the supply and demand problem is critical. And its not affecting wealthy americans. They may not want to pay a percent, but they can pay cash. They can afford it. Exactly. Firsttime home buyers dreams are being dashed here. Thats the challenge. Well said. As i said, i think this is the beginning of whats to come. This is the space to watch. Dave, we hope we can have you back. Appreciate it. That does it for the exchange. Tylers getting ready r fo another busy hour of power lunch. Ill join him on the other side of this break. With gold bond. You can age on your own terms. Retinol overnight means. The smoothing benefits of retinol. Are now for your whole body. Plus, fastworking crepe corrector diminishes wrinkled skin in just two days. Gold bond. Champion your skin. Welcome to president