bryn? >> nvidia, buy it at $105, sell the october $120s at $8. >> this is an options action, bryn. >> it is today. >> thanks for watching, folks. i will see you on "closing bell." i'm scott walker today. "the exchange" starts right now. ♪ ♪ brian, thank you very much. and welcome to "the exchange." i'm kelly evans. here's what's ahead on a very busy hour. ongoing back to the july jobs report, much weaker than expected. a key recession indicator has been triggered and stocks are selling off. we were down almost 1,000 points for dow. about 200 off that level. the s&p down 2.1%, the nasdaq down 2.6%. the russell down 3.4%. the ten-year, yesterday we punched below 4% for the first time since february. we're just above that right now.

big drop, at 420 back on monday. as the narrative on the economy and the fed is shifting dramatically. citi not wasting any time after that number this morning, calling for 1.25 points cut this year with a half point in september. the market is coming around to the half point cut view. who better to talk about this than the economist everyone is talking about, claudia sahm. we'll talk to her in a couple of minutes. the carnage in the semis continues with the etf down 10% on the week now. nvidia down 6%. intel, investors are bailing on the turn around story. 27% drop in the stock. worst day since 1974. you'll hear from the ceo ahead in this hour. apple is managing to hold on to some gains, but look at almost up 3% in this take, that's impressive. still, it has questions about -- or cap ex spending more broadly is dominating the tech earnings cycle this week.

one of the big players in this space, the data bricks ceo will join us to weigh in. before, let's start with the macro that's driving the market action. the july jobs report weaker than expected. here's what we learned, the economy adding just 114,000 jobs in july, much weaker than expected. this is the real problem today, the unemployment rate up to 4.3%. and as mentioned, enough to trigger the sahm rule, when it rises a half point from the cycle low, we're heading into a recession, or should be a trigger for policymakers to think about sending out benefits for instance. but now, is the recession actually the case this time? regardless, could this force the fed to cut by a half point rather than a quarter in september? let's talk about it. as mentioned, claudia sahm is with us. along with steve liesman. diane swank is also here, chief economist. and ernie is director of economics at the yale budget lab and former chief economist at

the white house. and kcnbc's rick santelli. claudia, if i may start with you. give us the latest your thinking on not necessarily the rate cut question but what's going on with the economy, is it a recession? >> we're not in a recession when you look broadly across all the indicators, not just in the labor market, consumers, production, income. we are in a place where things have slowed, so we're not in contraction territory, but we can do better than avoiding a recession. what is very worrisome and today's unemployment report shows the direction of travel, the momentum is not good. we are pointed towards what would be recessionary dynamics. >> you put it best on wednesday when you said the fed should go ahead and cut. if they didn't cut this week, which they did not, you warned they might have to cut more

rapidly in the meetings to come. >> and it's pretty clear. the fed was clear on the direction they're headed in, which is cutting rates. and yet they have cause for being somewhat optimistic is the fed has a big lever still to pull, but they have a lot of interest rate cuts that they could go through, if they need to. they don't need to all at once, but we do have that lever to pull and take some pressure off the economy. this comes in a good place, it just needs pressure taken off. >> diane, you're now thinking they're going to have to quicken up the pace of cuts, right? >> exactly. we are looking at a half percent cut in september, and i think they're probably feeling a little remorse because they did discuss a cut, chair powell admitted at the press conference, in july at the meeting in july. and so, you know, having this number come out triggering the sahm rule, i agree 100% with claudia that we're not in a

recession, we still got momentum, but it is slowing. actually, the third quarter is going to be the weakest quarter out there. the good news is that the bond market is starting to do some to have heavy lifting for the fed and already stimulating the economy by rallying and bringing rates down. what's also important is, i have likened this, people forget how hard soft landings really are. i remember the mid 1990s. it was a lot worse living it than it looks on paper. the path to a soft landing is similar to that, to the path of gold. it is gold medal, it is paved with tears and setbacks and self-doubt, and that's clearly what the fed is feeling today. >> people say we've only ever achieved one. it's tough to do. rick, let me bring you in here. >> well, i would like to talk to claudia about something very important. claudia, the fed has put a lot of credence in the stability and

durability of the labor market, the strength in the u.s. market. my issue is, maybe the market signals aren't accurate. seasonal adjustments, seasonality, commercial real estate, quantitative easing has masked many of the traditional historic signals. just think about the yield curves, inversions, and what they usually signal and how they may have been distorted by the huk amounts of qe. in order to understand if the fed made a mistake, we need to know if the foundation that most of their policy has been built on was accurate to begin with, because many i've talked to don't believe in the intense, solid aspects of the labor market. just look at some of the stale postings that they for many months kept referring to and maybe inflating job openings. what's your thought on the rear-view mirror and the stability, the foundation before we even think about what we need to move forward to aid what

looks like a very slow momentum issue with regard to the economy? >> so we can't let the perfect be the enemy of the good. in terms of macro forecasting, macro economic policy, investing, this is really hard. we never have all the data we have. we always want that next data release. we always want that better piece of information. and so any decision the fed's going to make, they're going to have to make it under uncertainty. in this cycle, it has absolutely tested. the rules of thumb, the conventional wisdom. i get it. the fed has been in a tough place. they have to pick their heads up and do some forward looking and make some decisions. but you know, we're always going to look back and say they could have done this, that or the other, and i will affirm the point you made that the data picture -- our understanding of what is happening right now is so very challenged. and what that means is, and i'll be the first to say, don't just

rely on one tool. you have to open them up and think hard about where they disagree most. >> i do -- claudia, you can't leave aus a rule that has to be interpreted. any way, ernie, let me ask you if today's report changed your thinking in any way, and the added layer is immigration, making this cycle extra difficult to figure out. >> it did change my view in the sense that, you know, i thought that the economy was at full employment, and i think that this report actually very much confirmed that, prime age labor force participation were quite strong. but this report punctuated the risks to a full employed economy. when you're at full employment, you have nowhere to go but down. certainly, this report showed that. and, you know, i think at the end of the day, context matters.

100,000 jobs a month and 4.3% unemployment is actually a good place to be if the fed were done with its cutting cycle. but the fed hasn't even begun its cutting cycle yet. monetary policy is still out of balance. we want to end up in a place sort of like what we saw with this report. so the fed needs to get to somewhere like this, and they haven't even really started yet. and that's -- those are the sorts of risks that were in need. >> steve, i thought we had a serendipitous chat when we talked about the last time the fed surprised us, and how it was that 75 basis point hike two years ago. it's where my mind went thinking about today's report, and what would it take to not shock the market, they're not going to come out with a cut or anything like that, but do they supersize it? >> i know that it's the dead of

summer, it's very humid out, but i want to explain why the market is way out over its skis when it comes to the federal reserve. >> water skis. >> let me walk through the market is priced. look at the chance of a 50 basis point cut, up to 72% now. that's one. now let's look -- i guess we missed that chart. let's have a look at how much pricing -- that's that one right there. go to the next one, folks, if you don't mind. let's take a look at how much in the way of cuts are built in. through january 2025, five cuts for 124 basis points of rate cuts. eight cuts by june 2026. this is the futures market. it's been wrong before. it has priced in those five cuts previously earlier this year. those went away. there are, i think, five or six more jobless claims reports, kelly. there are several consumer

spending reports. we're talking about an economy that, as of the latest, initial read was running at 2.5% in the third quarter. they're averaging about 2% over the first half of the year. if i know the federal reserve, it is not going to change its opinion on a dime about the economy from a report this morning, which admittedly was weak. however, has a 95% confidence level of plus or minus 100,000. >> exactly. we know that memories fade quickly. look at what happened with the cpi, especially with oil. >> for the record, i thought the fed should have cut in july and should have considered cutting earlier. i don't think it's going to do a panic catchup in this regard. unless you definitively show it that we're headed for recession. >> diane, not only is steve right about that, but i wonder about the market -- >> i'm not right already,

there's a possibility. >> coming from a correct place of analysis, the market is off the lows. what are the signs that clearly point to maybe real breakdown versus month on month noise? well, you know, the hurricane bit, the report said hurricane beryl didn't have a big effect, but we had a record number of people that could not work because of bad weather in texas in the month of july. it was 461,000. we also know many of those workers, we had over a million people that were without electricity, and that also affected businesses. many people went on temporary layoff. the surge in unemployment was in part due to a surge in unemployment among low-wage workers with a high school degree or less. and we also had an influx of

workers into the -- we had both, but we know that the household survey has shown that employment has stagnated for a year. yet the establishment survey that counts pay check has added 2.5 million paychecks over the last year. that's the largest divergence between these two surveys we have ever seen. we know they're about two years behind on the population data that goes into that household survey. the fed knows that. that's why they've been leaning into other data. we talk about -- we heard rick mention earlier, it's still running at a double digit rate what they use the jolt data by the government, or use indeed hiring lab data. the job posting data. it's above the levels that we saw in february 2020. hiring has slowed. the pace of hiring has slowed, but the layoffs are not surging yet. and we also have something else

going on, productivity growth is picking up. >> yeah. >> that's above the trend of the 2010s. that is one of the elixirs out there. >> even if it's a little bit, we'll take it. >> it's a good number. >> i would take it, and year over year looks better than month over month. but i really do think that the issue moving forward here is going to be more of how accurate were our assumptions that we predicated all this policy on. i continue to look anywhere, and i find that the -- the real question isn't -- i think claudia is the type of economist she is, is well suited to answer this, how durable is debt-driven fiscal stimulus? did the fed overanalyze or underestimate the durability or overestimate the durability of that stimulus? because in my opinion, it might

have lasted longer in the covid runway of every effect we all thought about seemed to take longer, but ultimately isn't that what's going on, that's running out and what's left to replace it isn't leveraged enough in the economy to bring back those growth factors? >> that's for you, claudia. >> oh. so i will have to think more about that one. i do not look at the dynamics of the economy right now and think that government spender prior or current is carrying us along. a very important piece of the recovery and this push we've had up to now is we did get a very strong labor market going. we have a full employment economy and that's paid dividends in the productivity space, as well. so to me, there is a big open question about exactly what role debt is playing in the public

sector. but that's not the piece i would emphasize of where we are at right now. >> yeah, so when you look at measures of fiscal impulse, look the brookings hutchens measure, they tell us it's neutral right now. the biggest uncertainty in the economy is the immigration measure in particular that have already been measuring that diane rightly mentioned, that are so hard to measure, and i think that have been impacting the supply side in a way that maybe affecting the establishment survey but may not be affecting the household survey and had been wreaking havoc in interpreting the data and in setting policy. we really need to keep that in mind. in addition to keeping in mind just the general uncertainty of being at full employment, which is such a rare, you know, event in american economic history. i mean, kelly, you mentioned it.

we really only had one or two soft landings in american economic history. so we need to keep our priors loose, that things may look odd, you know, in realtime when we're here on a day-to-day basis. >> and i remember the mid 2010s, that was a very difficult and murky period, as well. >> i want to talk about next week's news, the story you haven't thought about yet. you don't have a dinner appointment this weekend with anybody who does refinancing on wall street, do you? >> my dinner appointments are all with people under the age of 6. >> if you had a weekend appointment with somebody that does refinancing on wall street is going to cancel on you. the move in rates has been so profound. i had to change all of the sell locations in my spread sheets to measure what the heck is ha happening. are we looking at two cuts? no, now we're looking at three

or four. it is a profound change, and it will provide some stimulus to the economy in terms of -- versus the corporate level and the ability to refinance. we need the fed to provide more stimulus on the consumer end, because it's the fed actually changing rates that perfects credit card balances. but what's going to happen, and what people are going to have to refigure, what is the balance sheet of company x with debt on it look like, if they get an opportunity to refinance, plus, the other thing, i don't know where diana olick is, i think she's on vacation. we got to call diana in. we're talking about a 6.4% mortgage. she said 7% is the benchmark. so there's stimulus coming that way. that's next we can's discussion. >> andy is going to dive in next hour and give us data on that. we'll leave it here.

i feel better after hearing from all of you, and we really appreciate your time. let's get to some breaking news on tiktok's parent company bytedance. emily? >> hey, kelly. the doj has filed a civil lawsuit against tiktok for collecting data on millions of kids, a violation of federal law. this was done of a fefrl from the ftc. the agency accusing tiktok of permitting users under 13 to create accounts where they can message and be messaged by adults. the agency has alleged the video app failed to remove kid's information after their parents asked for it to be deleted. in a statement, the head of the justice department's civil division said that --

>> now, this is not the first time that tiktok's data collection has put them in hot water. the predecessor was sued in 2019. since then, tiktok has been subject to a court order to take specific measures to comply with the law. the doj says they are seeking civil penalties and relief. kelly? >> emily, add that to a busy day. the major averages down 2% across the board. the small cap rally is on hold. my next guest does not think we're destined for a hard landing, just a bumpy one. great to see you, steve. you know, look, if this is a rotation, should. the small caps being doing better? >> hi, kelly, first of all, great to see you. the problem is here, there's two issues at work. number one, i don't think the

rotation -- i look at the rotation more as growth to value as opposed to big cap to small cap. there's some structural impediments in the way of the small caps. while lower rates are potentially very helpful to them, these are the most economically sensitive companies, and many of the companies in the russell 2,000 don't make money. so it doesn't mean it will make it easier to raise money or become profitable. so i remain very cautious on the russell 2,000. i think that was a bit of a breakout through 2100, looking like maybe it's a false breakout as we retest that. we'll have to see. but the value stocks are doing better. >> sure, if it's a false breakout, what does that tell you, where would you be in the market, especially now with what rates are doing? >> right now, you can't go too wrong with value stocks, dividend stocks, with the rates coming down. if you're getting a nice, solid dividend from a company, very importantly from a company that

has the cash flows to support dividends, if you're going to be invested in the market, that's a safer place to be. because right now, you know, you want it to be recession proof, because the bond market, they're screaming at us to tell us that they think we're looking at a recession. you don't see two-year yields go down 65 basis points without an economic message to take away from it. that's really what we're seeing the last few days. so another problem is, when you can't price risk-free assets, two-year treasuries are among the risk-free assets, it's hard to price them like stocks. so this bodes more of a defensive posture until we can see if this is a temporary storm or bumpy landing or a harder landing. >> it feels like a return to the risk on, risk off framework, where the last couple of years, every time we had bond yields going up during the inflationary

period, that would be a head wind. now stocks and bonds rise together, i mean bond yields that is. >> yes. part of it is we can't discount the effect of the kerry trade, having a big effect on risk off right now. it was profitable for all sorts of leveraged investors to borrow. it's a really cheap currency, the yen, to borrow in. but it's moved from 162 to 146. you saw the way the nikkei plunged, and that's a lot of investors who borrowed yen. a lot of investors have also borrowed yen to buy mag stocks. there's been a correlation between the yen the last few weeks and the nasdaq 100. the only exception being that real head fake rally we had on wednesday. we're right back to that relationship now. so that's why the risk off comes from. it's very much related to the

kerry trade and a lot of risk managers saying we have to lighten up. >> i like what you're saying, because we often see these at the end of a market era. if this is the end of the inflationary era and it's blowing up, that's unfortunate for people in those positions but could be type for the rest of us. if the fed cuts here enough that the market feels calmer about the business cycle and the data holds in okay, i don't see why this wouldn't be an opportunity for things, i don't know valuation wise, but philosophically speaking, they didn't make any money for the last three years because of high interest rates. if those rates are coming down, it would seem logical that there's a fundamental reason that they could start to do better. >> the small caps, some of it is because of high interest rates, some is because of availability of capital, some just the fact that, you know, these are among -- these don't have the pricing power or the market power that a lot of your larger

cap companies do. one of the reasons people love to invest in the big cap tech stocks is because they have tremendous pricing and market power. it's the flipside for the smaller side stocks. that's why i think we're seeing a lot of the movement out of the momentum type of names and out of growth into value. i've been trying to use the term rowtation, because these big tech stocks, there's been a movement into value stocks, which have severely outperformed in the last couple of weeks. >> that's where you would stay? >> for now, yes, until we resolve where we're going. i think it's peru temrudent to d see because of the dividends and because they have their own sort of earnings power, as well. at least in staples and other defensive names. >> steve, appreciate the breakdown. thank you. >> thanks, kelly. still to come, intel is having its worst day in 50 years

after a disastrous second quarter report. we'll hear from the ceo next, and by far it's the worst name in the nasdaq 100, where more than 70% of that index is now more than 10% off the recent highs. amazon and some chip names are along the biggest laggards, amazon down almost 10%. we'll check with the ceo of databricks about their potential path towards an ipo. here's another look at the market selloff. the nasdaq is in correction territory. the s&p's worst day in two years, and the russell is tracking for its back-to-back losses of more than 3% since may of 2020. "the exchange" is back after this. >> this is "the exchange" on cnbc. okay, team! oh, thank you so much i couldn't have done it without you. honestly, i don't do a whole lot here. i'm really just here for the at&t internet, it's super-fast so, any pre-launch concerns?

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welcome back to "the exchange." take another look at intel, down 27%. it is the worst day in 50 years, but it was already down 40% this year, going into today's trading. this all came after a weak second quarter result last night. they announced a $10 billion cost savings program that includes thousands of layoffs. john forbes spoke with the ceo. gelsinger said this is what we need to do, this is necessary. but this is from bad to worse with intel. >> on the stock price, this $20

level, that's around -- that's around where the stock has been at the lowest s est levels, inc where it was on an upswing in 1997. so not good. but there are also job cuts happening here, significant, 15% plus. i asked him, well, if you're cutting that much, there has to be entire things that you stop doing, i imagine. what exactly is going to be cut. here's what he said. >> as we have done this clean sheet analysis, we have seen quite a number of areas where i'll just say we're not nimble efficient company. as we look at it through this clean sheet lens, we looked at every area, our gna, sales and mark marketing, operational performance, as we look at the design teams, we haven't been fully leveraging industry best practices and eda and design

practices. so each one of these has targets to be cut. we're also doing portfolio analysis. we're not changing any of those, a foundry, our client networking data business, but we're looking at the portfolio of things and saying which ones are getting good financial return and which don't have a good a market or financial opportunity in the future. so there's adjustments within the portfolio. but a foundry with products in those three areas, that's the business of intel for the future. every other aspect, and we're taking steps to get us there. >> so that might raise questions, what about the chips act, what about all this money they're taking in, are they still working on that? yes, they are. >> who wouldn't, i guess, if that were available. as with intel, this is how it always goes, as goes their gross margins, so goes the stock. talk a little bit about that.

we always knew that the beauty of the business model for semis was once you do the original creation of chips, each marginal chip that you produce has almost like 100% profit margins. but it sounds like intel's are coming way down from where they might have been five or ten years ago. >> that's what you have to do when you build all this manufacturing and fill it. you don't get the benefit of a filled mac try on a new node, like a new level of technology that you can then just profit off of. i also asked him about the prospects for the turn around. is it still on? here's what he said about that. >> the next generation products are all on or ahead of schedule, from what we said before. it's because of the product and process that we're ready to launch into this next phase aggressively. we believe we can do so successfully. leadership process and product, with leadership financial performance. >> so the demand slowdown he said has led them to have to make these cuts and pursue that

financial performance more quickly than they might have wanted to before. but he said they were set up to do this koinlind of tightening way because the turn around had been executing more or less according to plan. but that's certainly not what investors are focused on today. >> again, we have been following this story for four years, if not longer. that's when you go back and start talking about the company missing on earnings, gelsinger trying and trying. strategically, i'm not sure how many options there are left for a company who -- the stock is also its currency, and the lower that goes, the fewer options they're going to have. is tz question, is do you want intel or not? the beauty of intel was you got manufacturing and design inside the same company. originally -- and inside the country. three years ago, people were saying forget about this manufacturing stuff. asia is doing that great. just focus on design.

that argument isn't so strong today when we see the demand for ai chips and we see the national security implications of semiconductor chips with taiwan. if you want manufacturing, intel is the only company set up to do it at scale in that way domestically. but they're behind design wise because of mistakes they made, not pursue thing ai strategy. amd, especially nvidia, are way ahead. if you want to fix both, i mean, you can certainly criticize the execution. maybe they spent too much too quickly on the manufacturing plant, but you still end up here with the design issue which still needs to be fixed. that's something they needed to be working on years ago. >> and i think the valuation reflects that. we need them domestically speaking but the market is unimpressed. john, thanks. we're continuing to track

this market selloff. the nasdaq is now down 5% in the last two sessions. but it's not all bad out there. here are some of the names hitting new all-time highs today. t-mobile, colgate, coca cola, and motorola. congratulations to them. business. it's not a nine-to-five proposition. it's all day and into the night. it's all the things that keep this world turning. it's the go-tos that keep us going. the places we cheer. trust. hang out. and check in. they all choose the advanced network solutions and round the clock partnership from comcast business. powering more businesses than anyone. powering possibilities. while i am a paid actor, and this is not a real company, there is no way to fake how upwork can help your business. upwork is half the cost of our old recruiter

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♪ ♪ welcome back to "the exchange," everybody. good afternoon. i'm tyler mathisen with your cnbc news update. kamala harris has crossed the delegate threshold needed to secure the presidential nomination. that is after the virtual roll call got underway today. it's not official, though. online voting continues until monday. nasa management has been discussing this week whether to bring back its astronauts who have been in space for almost 60 days on boeing's starliner capsule or with spacex's crew

dragon spacecraft. sources tell cnbc the agency is concerned the root cause of the starliner's thruster failure has yet to be identified. boeing says it remains confident that the starliner can return the astronauts safely. and warner brothers discovery announced it's bo boomerang service will shut down in september. it will be folded into max. warner brothers flag ship streaming platform. a lot going on there, kelly. >> tyler, thank you very much. coming up, session risk is weighing on wall street today, but it's cap ex spending that has the stocks really nervous. we'll speak to the databricks choe. that's when "the exchange" returns. regular person. some people say, "why should i take prevagen? i don't have a problem with my memory." memory loss is, is not something that occurs overnight.

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welcome back to "the exchange." cnbc's mag seven index is down more than 3% right now. cap ex spending remains a cloud hanging over the earnings, as investors worry about the massive price tags to build out ai infrastructure. my next guest is one of the big

players in the space and with a $43 billion valuation as a private company, it's on the street's ipo watch. joining me now is the co-founder and ceo of databricks. ali, great to have you here. welcome. >> thank you so much. >> do you want to share any thoughts on the land scape and the market selloff we're seeing, what's running through your brain? >> yeah, i think what's happening is two things, right. on the one hand it's the macro economy, which has been going -- it's been sort of turbulent over a long period of time and has now come to an end where we see it on the job market and people are seeing it in inflation and the ten-year coming down. on the other hand, you have ai. people are very excited. they know it's going to absolutely change the whole world, and that huge investments have been done by the hyperscalers in ai. but for us as a company, we have been investing in ai for ten years and we see steady growth of revenue and customers getting value out of it, but it's been a huge deployment of capital.

so people are going to say is this the right way or not? so that's the big question. but i think ai is going to continue providing value. the question is, does it justify the massive amounts we saw just this the last year? and what's going to happen especially if demand comes down? >> yeah. so, again, to clarify for my benefit, are you a competitor to the big clouds like an amazon and a google and that koinldz of thing, or do you run on their infrastructure? >> yeah, great question. we run on a couple of their infrastructures. we don't have to deploy massive amounts of capital to data centers. we leverage what they already have, so we're much closer to the customers. so they can get value out of that ai using us. >> so would you be on par with the likes of okay, a salesforce, that's more of a sort of customer acquisition model. it feels to me like you guys are trying to help companies use and

optimize and understand and interact with their data and use ai to do so. >> yeah. like for instance, they use ai on the data to optimize battery consumption. or jetblue uses us to communicate with generative ai with their customers. so these are use cases for enterprises so that they can deliver data and gen ai to customers. so we see when it's been successful, it's accruing to our customers, but we don't have to deploy billions and billions in data centers. we just leverage. >> your biggest investment then is basically your people and the alpha algo algorithms. all of this explains why you're such a valuable private company. i don't know if you saw yesterday, saying the ipo market is back open.

we've been on an unfriendly 48-hour period from the nasdaq's point of view. but it does feel like we've had a series of pretty successful ipos this year. is that something you're watching thinking okay, i'm getting pressure from employees to take this public, or would you prefer to stay out of the limelight, do a little m&a and see where we are in a couple of years? >> yeah, look, we're not too focused on trying to nail the timing. we justq1 was one of our strongest quarters ever, growing 60% year over year. a run rate of $2.4 billion. so we're not seeing a lot of these headwinds that we see in the global markets. when the timing is right, we will go public. so it's something we're going to do. frankly, you don't need to go out exactly when the market is at the top.

when the company is ready, we'll go out and hopefully continue to grow the company and bring value to the customers. >> we've been seeing the market focus on the cost of ai and so forth. the other question mark is on the demand and productivity that may come from it. and there have been questions about co-pilot and whether that's worth the money for a lot of corporations right now. from where you sit and from your experience, where is the biggest bang for the buck when it comes to deploying ai in the work space? >> yeah, i mean, the use case, we've been doing this for ten years. they keep getting more and more successful. but when it was released in november of 2022, the market has gone crazy. and there's really inflated expectations, and in some sense, every company on the planet was saying we have to build lots of ai use cases. i think many projects were started that maybe shouldn't have been started. now i think it's a little bit back to being more rational, see bring do we have special data?

where does my company have some secret sauce that we can leverage to get ahead of the competition? so there are lots of use cases. in customer service, we're seeing more and more automation there. if you want generative ai to sit through massive amounts of ftc filings and glean signal from that, of course, machine learning is -- it continues to be very important for predicting revenue, predicting loss, minimizing risks. so there's massive use cases that are increasing. i just think maybe it's a little overhyped in 2023 and maybe expectations kind ahead of us a little bit. >> interesting what you said about sifting through s.e.c. filings and getting through those signals. ali, thank you for your time today. appreciate it. >> thank you, kelly. coming up, this stock closed up 6% amid head's selloff. we have the name and what's behind the move higher. tweet me if you think you can

guess the name of the mystery chart. but as we head to break, here's the banks. pressure on this trade in particular, including a mown gain of morgan -- downgrade of morgan stanley. 6% declines from stanley and wells rgfao down 6.5% today. back after this. do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate

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welcome back to "the exchange." markets are kind of heading back toward session lows, frankly, as we move through the hour. we're down 838. the russell 2000 remains the weakest. the dow is on track to snap its four-week win streak. the russell is the biggest laggards since month, and the worst two-day slide since june

of 2022, a check of the all-important yields, two-year is all the way down to 390, the ten-year is 381, and it briefly went below 3.89 this morning. now, that's helping push mortgage rates to the lower level since april of 2023, 6.4% for the 30-year, and oil is still on track for its fourth straight negative week, but keep an eye, of course, on the price action with the middle east skirmish -- and elsewhere, the vix is spiking to the highest level since last march, it's at 26 right now, went almost as high as 30 today. dunn & brad street is up, as it's reported that, and then there's another name, upscale fitness company lifetime up 7%, driven by higher membership dues and more spending in the gym. that was our mystery chart.

not just this week, it's up 60% this year as they have expanded their geographic footprints. rejoining is the ceo, barra, how are things going? >> it's going great. we are blessed. everything is moving exactly the way we like it. >> whatever happened with student local repavements. we talked about that. we never thought that would be a factor for our business. >> that's remarkable. we all look to the big-level data, and we thought people to cut off gym memberships, or is that a last-year story and things are different now. >> i think my response is actually over a long time thinking about this. there is macro movement, but it could be 2%, 3%, 5%, and then there are all things the company

can do within their control, and that could have 50 march, 20%. there's more tangible moves a company can make within their control than i think they are outside forces. we really decided to rae invent the business during the covid period, and really focus on repositioning the company to exactly the high end of the market, delivers the best programs, the best bundling of services, focusing on customer even more than when we started the company, which was the initial thought process. we doubled down, tripled down on that, and it's literally outside factor are not in play. we have more clubs with wait lists. members love the probably, they're embracing it. team members are happy and thrilled. they're the difference the

reason the company is so great. i am blessed. we are not seeing any of the impact. of course, i can see the stock market. i understand there's pressure on everyone, but we're doing great. >> i think it's interesting this was a strategic shift. very, very different that a planet fitness, which has the completely different model. it's often child care driven. they love going themselves, but love the child care option. i'm curious if you think about churn, people may belong for two, three, four, five years, maybe i don't have the family need anymore? >> it's interesting. we are seeing the lowest churn in the history of the company right now, and the only trends we're seeing for that to improve. the reason for that is, during the covid, we lost -- and we sign up new members, they are the most fragile for about a year. once the memberships stay for one year longer, and then they

stay for much longer than that. so we anticipate, we forecast the attrition rate, the churn rate will actually continue to go down for a company for the foreseeable future. >> i need one about eight minutes away. you think you can do that? how much more expansion, really? >> we have an amazing pipeline. we really balanced our growth to making sure the company becomes free cash flowed positive. now we're in a position we can pay for absolutely all of our growth from internally generated cash, so now we're gradually expediting the acceleration of our growth pipeline. our pipeline is full. we pick on it as we can. >> people should be reminded are coming into faces that were left vacant. bahram, we appreciate it. congratulations on a good

quarter. that's it for "the exchange." tyler is getting really for "power lunch." i'll seeou y on the other side of this break. citi custom cash® card automatically adjusts to earn me more cash back in my top eligible category... suddenly life's feeling a little more automatic. like doors opening wherever i go... [sound of airplane overhead] even the ground is moving for me! y'all seeing this? wild! and i don't even have to activate anything. oooooohhh... automatic sashimi! earn cash back that automatically adjusts to how you spend with the citi custom cash® card. [mind blown explosion noise]

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♪♪ the enemy is always adapting... deepfake: hey handsome. ♪♪ [inner monologue] ...always iterating. ♪♪ good afternoon, everybody. welcome to "power lunch." alongside kellie evans, i'm titile tile