than a week ago. walked it back a bit, but now you'll hear from him directly. stephanie link, and others. "final trades," give me a name, bryn. >> defensive way to play the qqqs. >> rob? >> let's see if we see demand broaden out. >> good stuff. see you at 3:00. ♪ ♪ thank you very much, scott. welcome to "the exchange." i'm kelly evans. here's what's ahead. score one for the quarter point camp. today's cpi number in line with expectations. a bit of a disappointment for doves who wanted that half point rate cut in september. the inflation rate still at its lowest level in three years, well above powell's target, though, while super core is back in inflationary period. we'll dig into what september could bring now and how you should position. no matter what the fed decides,

rate cuts should give rates a boost, not just from a macro perspective but a fundamental one. plus, it's the $36 billion snack deal. elliott's fight with southwest airlines and the big retail earnings tomorrow morning. we'll get the trade. but let's start with dom chu's on todd's market action. >> a bit mixed. the dow is outperforming on the day so far at 39,974. that's good enough for a 209-point gain, up one half of 1%. the s&p 500 sits at 5443, up for a nice nine-point move, about 0.2 of 1% gain there. and we were up roughly 29 points for the s&p at the highs and down roughly 19 at the lows. again, a decent sized move but more modest in nape nature for

s&p 500. and the nasdaq, 45 points off the composite index to 17,141. with regard to the bounce we have seen since the lows a week and a half ago, if you look at these three stocks, nvidia, broadcom and super myrow computer, within the s&p 500, they are three of the top five best performing stocks on a one-week basis. the only stocks that have outperformed these computer chip and related companies are eli lilly and starbucks. that's just how strong of a bounce it's been. so keep an eye on those names. it could be a sign of relative strength right now on the bounce. we'll see if it continues to lead that tech trade higher. if you are looking for that $36 billion that kelly mentioned, it is kellanova, up 7.5%, up 33% over the last year and a half. this is a big brand name for snacks, it will get together with mars, a privately held together. big names like snickers bars and

pedigree dog food, all coming together in a massive yield. so keep an eye on kellanova. we don't know whether or not more consolidate could happen in this space right now. back over to you. >> just so soon after that kind of spin-up or breakup, too. dom, thank you very much. the data giveth and the data taketh away. yesterday's cooler ppi read bumped up expectations for a cut in september by the fed. but today cpi is dashing those hopes. we get retail sales tomorrow and a jobs report between now and september. let's break down the data with steve liesman and wells fargo's michael schumacher, who joins us with david katz. welcome to all of you. steve, just quickly to you. look, the unrounded was like 0.15 or to 0.16. >> a soft point too you can say. >> a squishy one.

>> so what i'll do now is some math, okay? get ready for some high-level math. goldman came out with its core pce forecast. we put the cpi and the ppi together and you come up with a pretty good forecast. they have 0.14. it actually causes the year over year core rate to rise ever so slightly by 0.2. remember i said how we're running on the nation of a hundredth of a point of pce. that soft inflation we had last summer, some of those even lower numbers drop out. it doesn't really begin to have an effect if you keep it at those numbers until june of next year, or not june, but january of next year when you start to drop down the 2.12, ifyou keep at those numbers. so we have some of our paths. but here's some good news, what would happen if that 0.14 comes

to past. i'm just read thing, but i think the program is good, is your three-month annualized core drops from 2.3 to 1.8% so on a three-month basis. it's very volatile, so we like to use the 12-month one. >> what do you think the fed officials who we have heard from are signaling, if anything? >> let me give you a quick idea about the inflation numbers, the way i looked at it today. i didn't want to see too soft inflation, because that might have made me more nervous about weakness in the economy. the bottom is dropping out of prices, demand could be dropping out. they see this, they're like okay, it's softer, it's coming down. it shows me january, february, marsh was an aberration. i think a quarter point cut makes sense as an opener. >> oh, yes, the goods inflation rebounding to some extent while services is weak. how do we interpret that?

>> i think i interpret that looking for deflation coming from china soon, so i'm not that worried about it. and the scope for services to come down i think will rotate around a zero to a little bit of goods inflation. >> let's bring in the guys that have to turn this theory into practice. michael, where are bond yields heading, is 3.5 the next stop on the ten-year? >> not sure we'll get there any time soon. yields have had the big move down, so perhaps they go a little lower when the fed unveils that cut in september, but for the end of the year, something like 3.50 or 3.80s makes sense on the ten-year. a little lower but not a ton. >> what would make you -- we'll talk about housing, we'll talk about real estate, all the sectors who are -- look, even home depot yesterday people were saying traded in the green not because of the results, but on this expectation of rate cuts

kind of buoying demand in the future and the stock. michael, where would you be in this market broadly speaking right now? >> right now, it's still all about monetary policy. if you look at what's driving markets, it is expectations for the fed. outside the u.s., whatever it might be, people are fixated on the central banks. so i would look at positions that are very tightly linked to monetary policy. from our perspective, for instance, you want to be long bonds. yes, most reviewers probably want to have a few more bonds than normal in their accounts. would i buy a lot more here? probably not. so we think it's going to be a fairly slow process in terms of driving down yields, but not as scary as it was a couple weeks ago. >> and david, would you talk about how you see the market and what kinds of stocks you want to be in with this big question about which way kind of the macro goes in the back of everyone's mind? >> so we think the economy is doing okay. we don't see us going into a recession right now, and we do

see the fed starting to lower rates in september. businesses are doing well, inflation is coming down, rates are going to be going lower, but it's not going to be one and done. the fed will lower rates for sometime. that's a good environment for the market. the general sense is you want to be buying on the dips this year. you saw a selloff of 6% to 15% in the last month. stocks have already started to rebound. there will be more dips. get ready buying the dips. we thought technology would slow down. some of that has pulled back and some has pulled back to a level we would be buying again. qualcomm is down about 30% from its highs. that's a real good play here. microsoft has pulled back. so there are places to buy in technology, and we think there are many other places in the broader market to buy, as well. >> you love financials, wells fargo, those kinds of names. so you think this is the good

kind of yield curve disinversion and beyond yield declines? >> from 5% to 3%, good for financials. if you went from 3% to 0%, that would be bad. we don't think that's happening. we talkinged about financials a lot. this has been one of the best performing groups in the market, up over 40%, and it's outpaced some areas of technology. we still think there's more in the tank. >> kelly, i just want to ask both guests one question, which is, is the stock market whistling past the graveyard, or is the bond market heading prematurity for the bunker? by that i mean this -- if you look at the january 2025 fed funds contract, 125 built into january. go further out 2, 200 basis pois built in. so i'm putting words in the minds of the market, but do you

see the fed cutting 200 basis points in the absence of a recession? and if that's what the bond market is looking at, is the stock market ignoring what the bond market is afraid of? >> michael, you first. >> sure. happy to do it. when you think about, steve, that cycle since the '80s, the average fed move in the first 12 months in a cycle is 260 basis points. so yes, today is priced for 200. could that happen? sure. yields are still very high. fed funds now is 530 and change. inflation, if you look at the more short-term measures, below 2%. real yield is above 3, way too high. so the fed could come in and cut 200 basis points, even if the world is not falling apart. i would say if you look at the very distant pricing contracts, they'll tell you the fed stops around 3. that sounds too high. so plenty of room for the fed to

go. >> steve, i take your point. the mid cycle adjustment is usually much shallower -- >> i think we have to look at a median on that 260. does that include for example in 2008 great financial crisis. so it's an interesting point. what he's saying is that scenario could happen with the economy being okay scenario here. >> david, if you want to address the same question of how deep the cuts could go and why. >> we don't know if the cuts are going to be that deep, maybe 1.5%. when the fed is lowering rates and earnings are there, it's a good environment for stocks. so we think the stock market has it right. we would not be buying long bonds at this point. >> i don't want to insult michael because he comes from the bonds, but people say they're not smarter than the rest of us. they're not the brady kids.

we'll see. gentlemen, for now, appreciate it. thank you. mentioned the housing angle on this. homeowners are racing to refinance if they were unlucky enough to get the high rates in the past year. diana, what do we know? >> kelly, it took a few weeks for homeowners to jump on the new lower rates but they did last week. applications to refinance a home loan surged 35% compared with the previous week. and they were up a whopping 118% compared with the same week a year ago. that's the strongest week since may of 2022 when rates were actually much lower than they are right now. so this gain came even though the average rate on the 30-year fixed fell to 6.54%. while rates dropped just one basis point last week, they were down 33 basis points in the past four weeks and down 62 basis points from the sameweek a year

ago. so applications for a mortgage to buy a home, though, rose 3% for the week and still 8% lower than the same week a year ago. there is this feeling among some buyers, according to agents i spoke with, that mortgage rates are going to fallower, so buyers are waiting because it's such a huge purchase. rates started this week flat and stayed that way today as the cpi came in along expectations and didn't move the markets or bonds so much. >> another angle is people who -- we talked about this huge amount of equity in people's homes with what prices have done, and a lot of people maybe not even buying with their mortgage, but tapping it has been very, very expensive. maybe that's getting cheaper now. >> we do have a record amount of home equity. home prices have not eased up at all, and they're still much higher than a year ago. i would say helocks have bumped up but a small amount. more people are saying i'll take

this out because i'll tap into that home equity, but nothing like previous decades. >> imagine if rate dwos go down 3%. if that became another source of spending -- another source of fuel for consumer spending. >> i don't think we'll see 3%. maybe a solid 6%. some people talked about the 5% range. we'll level off around 6% and that could be it for a while. >> diana, thank you very much. speaking of refinancing, texas based frost bank is seeing a wave of demand, especially from arm borrowers, adjustable rate mortgage holders. that's tomorrow at 1:00 p.m. on "the exchange." coming up, rate cuts are theoretically around the corner, and morgan stanley says years after underperformance, reits are among the major beneficiaries. we'll look at the individual

spots expected to see the biggest gains. plus, the biggest deal of the year. mars buying kellanova for $36 billion. we'll tell you what the ceos are saying about regulatory concerns and we'll go et the packaged goods trade ahead. don't go anywhere. >> this is "the exchange" on a whole lot here. i'm really just here for the at&t internet, it's super-fast so, any pre-launch concerns? what if nobody buys them? that's mean or, what if everybody buys them? oh, i hadn't thought of that that's probably not gonna happen can we handle that kind of traffic? the network can handle it! i downloaded eight hours of true crime stories just during our last video call i'm learning a lot

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welcome back to "the exchange." real estate is hitting a two-year high, though it's lagged the broader market in terms of performance this year. with the fed expected to start cutting next month, reits will benefit and in more ways than one says my next guest. welcome to you. >> thank you. >> you know, i always feel like people are a little late, when we go, yes, the fed's going to cut, but is the move already made? >> i don't think so. if you look at the performance of real estate securities, really over the past five years, there's been almost a 10% annual underperformance of reits versus the broader market. >> that's a lot. >> but if you look at the prior 15 years, reits actually were very competitive with the market and outperformed by about 50 basis points. >> they were small back then. >> they've been growing as a sector over time. but i think there's sort of

regr negative resensy bias against reits. but the rate cuts are coming, and there's historical precedent to show that reits do outperform the broader market one year following a rate cut. >> okay. so does it -- i know on some levels it matter it is we go into recession. rent payments and everything gets thrown into whack. so is this predicated on -- >> i think there are a necessity based nature of demand for real estate. so you see a lot of sectors in the real estate world that tend to be more recession resilient or recession resistant than one may think. of course, there's going to be some sectors that obviously will experience weaker growth. but what i have really focused

on, even starting at the beginning of the year, were those sectors that were really -- had fundamental underpinnings of demand that were more secular in nature opposed to -- >> health care i would imagine. >> exactly. so aging demographics are a trend that's really benefiting health care. you see ai and technology really benefitting the data center sector. you see the housing affordability really benefiting rental housing in the u.s. >> single family homes to rent. >> exactly. >> we're showing you some of your top picks. those have those characteristics? >> no. what i'm most excited about today are the reits that are going to directly benefit from the rate cuts that we're seeing. and so when i think about who is going to benefit the most from rate cuts, it's really those companies that are going to experience a better weighted average cost of capital, and

therefore be able to invest in properties at a higher spread. >> absolutely. >> and get better appreciation and directly influence that cash flow growth for these companies. so i'm looking at net lease companies, these are long-term, 20-year leases that have a very stable internal core, but the kicker to growth comes from that external, that acquisition. and so if you look at agree, if you look at care trust, these are net lease companies that operate within retail, gaming, and health care, that are going to really experience that improved acquisition spread. and therefore, be able to really have a better cash flow growth as a direct result of rate cuts. >> you were surprised when i said reits make my head hurt. so what you're describing also is one reason why these

stocks -- i don't want to say they're dangerous, but they have a lot of these leverage aspects that you have to get things going in the right direction to be -- is there anything that you described that can happen and all of a sudden make this trade, which seems like a sure thing, a little bit less so? >> well, we also have valuation support for real estate securities. if you look at where they're trading today, there are about four to five turns cheap on a multiple versus the broader market. if you look at all the individual gig sectors, only energy sector stocks are more divergent from the more historical spread than where reits stand today. but that would apply 30% upside relative to the s&p for reits. >> reits is such a broad category. is there any place you would caution people kind of to steer

clear? >> i do think you're going to see some weakness in the overall office market that will persist on a go-forward basis. but what i would warn people is sort of painting the entire office sector with one broad brush. there are going to be specific submarkets that are going to continue to perform very well. if you look at the overall vacancy rate in new york city, it's upwards of 25%. but there are specific markets that have rising rental rates and vacancy that is coming down. so you have like the park avenue submarket, the grand central submarket that really is very, very competitive. and assets in those submarkets are increasing in value. >> although i don't know if we showed some of the most common names, i don't know if any in particular come to mind, but any you like neighborhood by neighborhood? >> it's difficult to really go

specific -- >> that granular, but it's not just that they're going to underperform or outperform, there's probably a mix. >> and one needs to look at the underlying growth profile, the balance sheet and how levered these companies are. one thing that does give me -- make me more optimistic is the fact that you have seen a lot of companies over even the past several days, be able to issue ten-year money at around five. >> which is good for them. >> very good for them. >> much better than what we saw. laurel, thanks. really appreciate it. coming up, alphabet on pace for a sixth straight week of losses, the longest losing streak ever. it's now down 17% from its all-time list. and the doj is considering a breakup of google. we'll have those details next.

welcome back to "the exchange," everybody. i'm tyler mathisen. cnbc news update at this hour. donald trump cast his ballot in palm beach in the florida primary as part of the early voting window before he heads to north carolina later today for a

campaign rally. trump has repeatedly questioned the reliability of mail-in ballots dating back to the 2020 election. instagram failed to act on 93% of abusive comments aimed at female politicians. out of the 1,000 examples flagged to the app, for most likely violating rules according to a report for the center of countering digital hate. meta said it will review the comments and remove anything that violates the rules but added that not all offensive comments are violations of those rules. the federal government is expected to announce water cuts soon that could affect about 40 million residents who rely on the colorado river. plans from the interior department include how the basin will share water from the diminishing river after 2026 when the current guidelines expire. colorado supplies water to seven western states and irrigates millions of acres of farmland.

back to you, kelly. >> tyler, thank you very much. tyler mathisen. let's turn to tech now where the department of justice is considering breaking up google after winning an anti-trust case just last week. a hearing is set in september. deidre bosa is here on the risks to google and investors in today's tech check. i'm curious with this timeline how the appeals process and so forth would affect anything that might happen here. >> that will be a key part of it, which is why we shouldn't take the idea of the breakup of something less than that. google is going to appeal this, and that could take years in the making. as we saw with microsoft in the late '90s and early 2000s, even if you don't get a breakup, it can divert resources, talent, money, capital towards fighting these anti-trust battles and making a company miss out on innovation. so that's a worry for google. but the idea of a breakup has been raised that the doj is

going to ask the judge to consider. and the street has a few different ways of looking at this. unlocking value is a phrase that's become popular in recent years, as these mega caps collect more business units, especially cloud computing and advertising. the idea that if you split it up, that could unlock value. jefferies saying that the market is assigning no value to google's cloud and hardware businesses. in the long-term, breaking up google would have really important implications for the ai race. where integration of the ecosystem is critical. that was really on display at google's event yesterday in mountain view when they talked about the tech stock and integration and the idea that ai can be used on one side of the business and help other parts of the business. so if you split off the chrome or hardware business, that is going to hurt that overall ai

proposition. >> at the same time, people are looking to the apple fallout here where a fifth of their services revenue comes from this $10 billion annual payment from google, which seems like one of the first places that regulators might say, you know, that has to go away. >> yep. and i think it was interesting when that ruling first came out in favor of the doj. you saw apple get hit harder than google, because the threat of that payment going away. from the people i talk to, there's some skepticism that apple will get paid somehow, that microsoft could spend billions there. some of the anti-trust regulators, previous and current, are saying that stopping those payments wouldn't fix the problem. you need to do something that's going to amount to more than just a slap on the wrist like breaking up google. so it feels like the market is shifting, and maybe why you see alphabet shares massively

underperforming today. this idea that this is likely going to hurt google most because the government wants to see real remedies here. >> deidre, thanks for that. deidre bosa. coming up, google might be in the sights of the doj, but snack maker mars isn't worried. here's what the ceo told "money movers" about dealing with regulators. >> if you think about it, we had a chocolate factory. we had a chewing gum factory, you can't do anything else than chewing gum. so it's complementary here, and we're not too concerned about any concerns in this area. to duckduckgo on all your devie

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looks to outside analysts to get a second opinion. nate likes what he sees... same page? -[ dog barks ] and he places the trade... before anyone hears him talking to himself. [ dog whines ] buy u.s. stocks and etfs for as little as $1, with no commissions. talk about easier investing. welcome back to "the exchange." a lot of corporate stories and consumer themes today. we have all the headlines and some trades, as well. kellanova, shares up 8% after mars agreed to buy it for nearly $36 billion, including debt.

it's one of the largest deals the industry has ever seen. peter galvo is here to discuss. peter, welcome back, with tim seymour who joins with us his trades today. peter, why this deal for this sum at this moment in time? what's really going on here? >> yeah, thanks, kelly, for having me on. look, i think for mars, it's truly the culmination of their efforts to become a much larger snacking company. again, this is a large, private company that's looking to expand outside of the confectionary or chocolate landscape. so one, you're going to get that scale and expansion into those small format stores, your convenience stores where having that scale is important. now you have candy at the front of the store and you pripgles throughout. for mars, they have a sizable

business in europe. this will provide some scale there. pringles' largest market is in europe versus the u.s. but giving them that ex-pocher into the international markets. and third, the most fun for the consumer, you're going to get those fun innovations now with the salty and sweet. what we have seen out of hershey in the last year with chocolate covered popcorn, now mars will have that opportunity with the kellanova brands. >> peter, so is the industry overall growing or contracting, and do you think this now requires an arms race among the rest of the big companies? >> yeah, it's something we've been talking about for quite sometime. so the growth rates in packaged food have been weak. that's been going on for the past 18 months. particularly on the volume side as the price increases that these companies have took really waned, as that organic sales growth number has been weak, i

think these companies have started to look what we call these self-help initiatives to expand volumes. we saw that today with mars and kellanova. >> so you would say this is a growth play? >> i think so. and kellanova, again, when they split out the north american cereal business, it was to unlock the value in these crown-jewel assets, which pringles and cheese-its are known brands and now they get folded into the snickers brands of the world. >> i know this is serious business, but i can't help but chuckle about it. tim, how are you trading it? >> pringles as the crown jewel, absolutely. i think if you think about this space, though, he outlined the dynamic. these are companies not growing a lot, and the tailwind from covid and inflation is something that i thought was almost generational for some of these

companies, they have pulled back. but you're in a dynamic with great balance sheets and slow growth, could there be more m&a? that's where the speculation is. people that have a strategic fit, and pepsi has gone out of their way to say that deal is not happening. if you look at the valuation, it's about 15 times ev, kind of in line, slight premium. to shareholders, you look at the chart, it was a massive premium. but it's really only about a 10% to where the stock was trading at its peak in '22, '23. i think consumer staples will get cheaper and more interesting in the world that a lot of investors have been expecting for the economy and market. now is not that time, but it's a fascinating deal, and these companies, sweet and salty, they make sense. >> and we haven't talked about the regulatory aspect, where in

a -- in an ftc eager to stop deals from happening. they stopped a handbag deal. so i still think the timing is interesting. let's move on from that and talk airlines, speaking of regulation. activists are moving in as elliott manager readies for a proxy fight at southwest. shares are down about a per fe cent. let's talk about the demise of the discounters, phil. >> right. we'll talk about that in a little bit. if you look at shares of frontier and spirit, it's clear investors are saying something's got to change. but let's start with southwest airlines. late yesterday, elliott investment management group put pressure on southwest by saying you know what? we're going to go for a proxy fight and a big one. they want ten new southwest directors. they have an 8.2% stake in southwest. 11% when you add in derivatives. when they get over 10%, that

will be the threshold to push for a shareholder meeting. they don't think southwest is moving fast enough. southwest says we are changing the business. we have new measures taking effect over the next 15 months. premium seat also be added in 2025. they will be adding assigned seats, red eye flights and southwest says that's just the start. but elliott says that's not good enough, and in fact, elliott wants new management at southwest. we talked with bob jordan about this, they're in the sights of elliott, which believe both should be fired. bob jordan says we're not going anywhere. we made changes at this airline and will continue to make changes. elliott points to this, and i want to show you this chart, kelly. this is southwest versus delta airlines since the day that bob jordan became ceo. down 43%. you may look at this and say delta hasn't done a whole better. it is doing better than

southwest, clearly. but it's not like the stock is positive over the last year and a half, two years. that doesn't matter. elliott says this is massive underperformance relative to competitors. with regard to the low-cost carriers, take a look at frontier and spirit. we're showing you these two stocks because they are close, kelly, to all-time lows right now. different situations, spirit is a situation with debt and liquidity issues. frontier is more a case of they've got to do something to generate greater revenue. both are trying to pivot towards more premium offerings. investors have said when it comes to the discount story, i'm just not there right now. that's why you see these as two of the worst performing airline stocks over the last several years. >> phil, thank you. tim, turning to this question about, they can't consolidate, how do you trade

the airlines? >> well, airlines are just that, they're really some of the greatest subsector trading stocks in the market. i would argue that you often should be dancing by the door after a big run. we have seen that. if you look at delta, which is best in breed, i'm long delta, it's down 30% off of the highs from six weeks ago. i think not only was the crowdstrike fiasco something that's forced the analyst company to downgrade, that's not the reason, though. typically, people are concerned about macro around travel. they've been concerned about capacity in the airline sector. airlines traditionally, when times are good, is when they go bad. i think that's the dynamic here. i think delta, again, best in breed is very attractive here. i think that the crowdstrike issue is going to be noisy from a pr and slightly in a short-term balance sheet. i think it's interesting. the elliott position on southwest is fascinating.

i think it's a case where southwest announced major initiatives to utilize the full fleet. independent of what elliott wants to do to the board, which is not going to be elliott employees but industry people. not a bad thing, but the kind of thing that suspect bad from stock prices. >> you want more in other words? >> yeah, and i think there is more. and as bill outlined, they're alone out there in their segment of the airline industry. >> let's get a quick trade. walmart reports before the bell, but we get ali baba and tapestry. the bar is high. so what do you do with these names? >> yeah, so walmart, where else are you going to go? we know the sales mix is 70/30

groceries to general merchandise. but that multiple is high. are you paying 26 to 30 times? i think you are. i'm hoping as someone who doesn't own it but a long-term holder that i can get it a little cheaper. ali baba, the bar is very low. it's less than about china macro than what they're going to do in terms of telling the story of asset spinoffs. they have about 40% of the market cap in cash. i think there's a case where their international business is growing 40%. this is a frustrating one, but a choppy trade from the january lows, but sit higher, and that is also a chart that's not terrible. >> sticking with the lower bar. we'll see if walmart can clear the higher one. tim, thank you very much. it's not just retail on deck, we get cisco after the bell today. the ceo chuck robbins will discuss those results tomorrow. still to come, starbucks

shares down another 4%. they're getting back 4% today. chipotle is down fractionally as the street digest what's next for the stream. c details after this.

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welcome back. here's a quick look at mafrkets. the s&p up to 5447, but the nasdaq is lower as there is pressure on google that we discussed earlier. and the russell 2,000s underperforming again. coming up, today's data on cpi shows health care prices still climbing. we'll discuss what it will take to cool them off. to cool them off. that's next. it's super-fast

so, any pre-launch concerns? what if nobody buys them? that's mean or, what if everybody buys them? oh, i hadn't thought of that that's probably not gonna happen can we handle that kind of traffic? the network can handle it! i downloaded eight hours of true crime stories just during our last video call i'm learning a lot

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what's new since the last time we chattered? >> first, it's catching on. i think a lot of folks are trying the tried-and-true methods of cutting costs, offshoring, et cetera, we've kind of dried that up. people need technology to perform. so far, so good. >> there's two main aspects, the actual cost of delivers hospital services, for instance, and then the inpocket versus out-of-pocket costs. >> we are focusing largely on the kinds of costs that consumers really can't get at, the hard costs that are kind of baked into the cake of the

billing insurance-related costs, the contracting between insurer and provider, the things their opaque to me, but affect us. >> how big are these costs? is there a range or a percentage or way of thinking about what that kind of hidden tax, if you want to call it that, might be? >> about $500 billion today, $200 billion is just processing claims. you go to the doctor, you get your prescription, or they want you to get an x-ray, and then all of the stuff that happens between you actually getting that care, the doctor getting paid, a bill kind of reaching an insurer, and your treatment, $200 billion. >> wow. they come after you with guys sitting in front of your car, right? because this is a gravy train. >> i don't think they're embarrassed about it, but when you think of the average

healthcare consumer, the average deductible for an american is $5,000. >> it's crazy. >> we're already price sensitive on that side, but what is hard for most folks -- my wife and i recently got a baby. if you get a bill for a procedure 30 days after, it could be $20,000, who has $20,000 free cash? >> and you're often a brand-new person trying to figure this out. there's so little information. >> it's a great point on the information. i think the situation we have now in the healthcare industry isn't that one side is trying to gain another, but one after 60, 80 years, we've built of this opaque veil of sort of costs and codes to try to get through it. the reality is providers really don't know when they sign you up for care what they'll get billed. the insurers really don't,

either. both sides are scrambling for transparency. we think the horizon for ai is data sets that aren't meant to be put together. there's a lot of doubt about how productivity can be delivered just by the massive costs of these models. from where you sit, how are you using ai that you think is fundamentally transformative, really worth the investment andic pay off and help us -- >> i would say bringing just data sets together, very tangibly for diagnosis codes, procedure coats, pricing data and contracts, putting them all together and, one, make decisions, but two, take stock of all of the granular changes that happening along the way that in real time you can get an answer. it has less to do with llms, and

brings disparate information together. llms are a component, for sure, but they're not a silver bullet. >> what is the next piece? >> bringing llms into kind of this process to where, one, you can process the data behind the scenes, but actually get an answer. >> exactly. i hope it, who. if we get that, just imagine. at least for us it would be lovely. >> there's not a lot of opportunities to lower costs out there. >> mike, desjanon, thank you. joe has been on capitol hill fighting for transparency and no joke. he's going to be here tomorrow to discusses his advocacy efforts, and new products. >> i would love that. >> i would love that. >> we'll see you

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indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire welcome to "power lunch." i'm tyler mathisen. coming up, money and politics. could the department of justice really break up google? what happened to all that chips act money that was promised to companies? two years later, none has spent. what's next for chipotle. the stock is falling again today. is the company