great brands gross margins are going higher 3% yield. >> mr. all in. >> marathon petroleum. >> big day for energy, that's for sure dr. j. >> nly, a player in the mortgage space. basically it looks like there's some upside call buy in this one. >> thank you, everybody. "the exchange" is now. thank you very much, scott hi, everybody. i'm kelly evans. today on "the exchange" we are getting you ready for the fed decision which appears just about an hour from now we'll talk taper, yields and most importantly what does it all mean for stocks. we'll hit everything else you need to know for this big afternoon. while the fed debates whether inflation is transitory, general mills says, no, it ain't. the company expects its costs to rise between 7% and 8% next

year and robinhood caving to pressure and changing the way it deals with cryptocurrency. we begin with the markets which are rising pretty nicely here ahead of the fed decision, aren't they? >> those stock trading elements are very much in the green today. whatever you want to think about crypto or risk assets in general, we do know that the investors out there tilting towards the bullish side are trying to make a go at recovering from those lows that we saw in part due to evergrande the dow industrials near session highs, up 400 some points, over 1% gains there the s&p 500 above that 4,400 mark a lot of traders watching that 4435 level that's a level a lot of traders like to watch. the nasdaq, 14,878, up about a percent as well. so a nice move higher but a little ways to go before recovering the losses from monday's steep losses. the 10-year treasury yield always a focus ahead of a fed decision currently 1.31%.

despite everything that's going on, those yields have been holding pretty steady in a fairly tight range even with the evergrande situation in china. maybe that tells you about risk appetite or risk aversion. it doesn't seem to be moving a lot given the fed and what's happening this afternoon as for places that we've seen some real slugging off, check out expedia, booking holdings and american airlines. these stocks have shrugged off all of the evergrande issues travel companies have been up on the week and not felt any pain from that so watch those travel stocks one more to watch today, a massive slide on a relative basis on a mega cap stock we all care about facebook shares off 4% right now. now they're only up about 25% year to date this after the company tells us that they may be underreporting some of the results in its advertising business tied to iphones. why, kelly because anyone with an iphone

knows now apple asks you whether or not you want the apps to track your traffic across applications and it makes it harder for advertisers to advertise if you say no. that's going to be a possible material impact on their results so facebook shares down on that. >> epic is still saying apple is banning it from the app store. at the end of the day we're all accessing this content on our phones. >> not just on our phones. apple has made a part of its core identity over the last several years to say that if you have an iphone product, if you have an apple product, your privacy is one of their top concerns this privacy issue is having a lot of ripple effects across people who use that advertising platform to gain their revenue so this is a huge theme that develops the next several years, especially when it comes to regulation and big tech. >> dom, thank you very much. stocks are rebounding as house democrats also pass a bill to suspend the debt limit through

next year. china's evergrande group said it struck a deal on a bond interest group but could powell and company rain on the rally? joining me is steve whiting, the chief investment strategist at citi global wealth could i dwell on china for a little bit with you. >> sure. >> did they buckle here? how do you read this sequence of events >> well, first off, i would just say that evergrande itself is a domestic chinese issue it's external borrowings are $14 billion. whether or not that's paid probably will be over the near term this is not a systemic level event. what is material is that there's been a severe deterioration in housing finance and real estate and property finance in china. that's going to slow this sector significantly. and so china at this point needs to ease macroeconomic policy to probably meet its minimum growth targets.

>> sure. >> this is a significant hurdle and that's slowing for the rest of the world is material but this could have easily have been blown out of proportion let's even think about this. covid last year had corporate profits in the finance sector down 20%, the second most profitable year since 2006 and that was in the most severe sharp recession in post-war history. and so the idea that this small liability inside an economy that is really not closely connected through financial channels is going to blow up the world is overstated. >> but the big question for investors right now are should they look to these opportunities in china to buy low, if you think stocks are making a comeback, or as many are warning -- how does that fit into asset allocation more broadly. if we lose chinese growth at the margin, what does it mean for everything from commodities that people might be investing in

because they like the secular ev growth story, but now do they have to contend with slowing demand from china or not i'm curious how you put together but it feeds into the attractiveness of u.s. equities as part of the puzzle. >> there are a lot of different lenses to look at here the first thing is if china were to slow to 5% growth in line with international monetary fund projections for the next five years, it's still going to be a bigger and bigger share of the world economy. it's going to have a very large influence. if you think about the effect of socialism, it doesn't necessarily mean that china is out of the game of science and technology now, if you think about particular stocks, we have real questions about whether some of them have gotten too cheap, those out of favor with chinese authorities, versus others that have been fine all through this. but the near-term tactical picture is probably that china will change course in terms of

macro policy and growth. its shares have been down more than 30% history suggests it's going to take longer to get back what was lost but that still may be a worthy return for people who want to diversify. but we shouldn't have a tremendous amount of confidence that we know exactly what's next in china and so we're not recommending big concentrated positions for everybody to jump in now, i think that the global picture right now, we can easily get ourselves thrown off by the fact that we're going to have slowing growth we're going to see in fact that even these distortions on inflation, what you just mentioned about next year's prices will be up so much, that's going to take time to resolve but we're in an environment where we've probably seen peak cyclical momentum. these periods of economic growth that are very rammpid, they come down we see share prices fall on these sorts of things. but if we look at core investment, we're going to see

high quality companies that can outcompete the bond market very easily with yields neglible, we'll find that growth is very worthy it's not going to be a 30% return environment like the last 12 months and that would include equities across the board. >> let's rank global asset classes. where do u.s. equities fall in that for you for the next six to 12 months? >> overweight, though i would say that we are up in market cap. we've shifted in dividend growth strategies again, if you were a market leading firm that can grow in income share while yields are down, that's the way we want to play it. things like health care that are mid-cycle investments, they're not the most rapid growing element in the market. plenty of room, again, to have growth stocks and to still have cyclicals and international. but we're really focusing in on sustainable returns, not bounce back from the collapse that we've been through that's why health care is our

single largest overweight global. >> starting to hear that more and more dividend strategies, health care st steve, thank you elsewhere in washington, congress is racing to avoid running out of money and hitting the debt ceiling almost simultaneously ylan mui is here with the very latest ylan >> reporter: the deadline to fund the government is next week the deadline to avoid a catastrophic default is next month. and democrats are tying the two together now, their plan would keep the government running through december the 3rd and suspend the debt ceiling until december 2022 but republicans are against this no gop lawmakers voted for it when it passed the house last night and riepublicans intend to block it to protest democrats' $3.5 trillion social spending plan. >> if washington democrats want to jam through trillions of dollars in reckless spending all

by themselves, they can raise the debt limit all by themselves if they want to do one, they'll need to do the other >> but democrats are digging in too. they say this is a shared responsibility that covers previous spending that both parties agreed to. >> those who vote no will be saying we're okay with default and we're okay with a government shutdown to say do it another way, that doesn't cut it. >> reporter: now, there is no easy way out of this jam today six former treasury secretaries sent a letter to congressional leadership urging them to raise the debt ceiling kelly, they acknowledge that the process has become more contentious and politically fraught, but they say that default could cause serious economic and national security harm back to you. >> which i think everybody would agree upon

but i don't think secretary mnuchin was one of the signees. >> he did speak with senator mcconnell about this problem but did not sign onto this letter. >> that leaves republicans in the position to agree to anything that raises the debt ceiling. so what does their version from the path to here look like >> reporter: they say they can avoid a government shutdown by stripping the debt limit provision out of any short-term funding bill in fact mcconnell introduced a bill today to do just that the second thing, democrats should be able to use it on their own by using the same process they're using to pass that spending bill the process is incredibly complicated and could take a couple of weeks to complete and they would still need republican support to help it get out of committee and get to the floor this is an entirely political exercise but has huge consequences. >> oh, absolutely.

we appreciate it for the latest in today just under an hour until the fed decision at 2:00 p.m. eastern and we have an all-star panel on deck. first, general middle is in the green after posting higher sales in the face of inflation and higher costs we'll dig into the food supply chain and what it could mean for the fed in just a moment. speaking of the supply chain, the white house set to host a meeting on the global chip shortage. they'll be joined by a former intel exec who launched her own company and is working to fix the problem. >> announcer: this is "the exchange" on cnbc.

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welcome back if the fed needs a case study in transitory, look no further than this morning's report from consumer giant general mills the company warning it's facing price increases on many different fronts, the highest costs in at least a decade my next guest says general mills may have an edge if they act early and aggressively on pricing. joining me is david palmer david, welcome. >> thank you good afternoon. >> so is it correct that general mills think its supply costs will be up 7% to 8% next year? >> this is for fiscal '22. so things are getting worse even lately but as you said before, they have been more aggressive on the

pricing side of things and they seem to have proroom on the productivity so they seem to be doing better than the average foot company right now. >> tell us why their supply chain problems and costs are still getting worse. >> a lot of it is labor. there's labor in the food cost, logistics, warehousing it's causing issues with the amount of shift on time that any retailer is getting and so sometimes it's having an impact on the top line. for general mills it's really more about the costs they're making do. they're getting shipments to match the consumption but it's coming with elevated costs as they have saying right now it looks like they have enough pricing that's going into place they had 4%, it's probably on its way to 5% or 6%, but even that might not be enough there's a lot of inflation out there. >> if the cost of labor is making their costs continue to go up into next year, is the fed helping or hurting their cause

or is it completely irrelevant to it? >> a lot of this is the labor shortage that exists companies are becoming more resigned, whether restaurant companies or food companies to this labor issue sticking around so it seems to be that is your root cause and it's causing a lot of, of course, wage inflation and wage expectations is the most permanent type of inflation cause and that seems to be what is happening right now within the food chain. >> very, very interesting. let's turn to how they're dealing with it. even with companies facing what they're facing, they do have options. the way they employ will tell us about the economy. you mentioned productivity, innovation how are they using technology to get around the need for more labor hours? >> certainly e-commerce has been a big channel, growth opportunity for them and for others general mills in particular has a pretty good e-commerce

presence partly because of this pet food business which has been explosive for this growth. one of the big surprises was the pet food business, people are having pets these days with people being at home they're seemingly valuing their pets more. they have redefined with blue buffalo that what pet parents will pay for pet food and they're growing very nicely, 20% growth in that category. and then of course convenience and food service is coming back quickly for them but e-commerce is growing nicely and that seems to be a permanent two-year step up, much like you're seeing happening in the restaurant channel as well. >> final question then you said general mills could still be constructive. they are going to pass some of these costs on how much of those costs should consumers expect to face, and will that protect their profit margins? >> the average food company out there is going to be something like that mid to -- high end of

the mid-single digit type pricing and you're seeing high single digit type basket inflation for the average food company. this is similar to that. it feels like they got 4% done, still ramping into next year a lot of pricing but it's not going to fully make gross margins neutral. it might make gross profit dollars neutral and the top line will be stronger food companies will be okay, but it's certainly a margin contracting environment even for general mills. >> and margin contracting environment just not as bad as people had feared. it's a really fascinating picture that you've painted. thanks for joining us today. >> thanks for having me. speaking of high prices let's take a look at shares of fedex today. it's having its worst day since last march in 2020 fedex shares are down nearly 9% right now. you've heard a lot of companies

complain about higher shipping costs because the labor shortage is making companies like fedex pay more for their new workers and to require overtime. so instead of benefitting from all of this, fedex is struggling those higher labor costs are weighing on their earnings shares are negative on the year by about 11% rival u.p.s. is positive by about 10%. coming up, shares of robinhood are higher after the company announces crypto wallets. what's it mean for rivals like coinbase and the rest of the crypto ecosystem. and we'll speak with a member of the president's national security advisor recommittee on how to address the global chip shortage as we head to break, here's a look at the dow 30 heat map on a pretty strong day across the board for equities we're back in a moment

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welcome back to "the exchange" everybody. just about half an hour to go until the fed decision here's how markets look. off the highs when we were up 500 points but pretty strong with the dow at 381, led by some movers in terms of boeing, i believe, chevron and goldman so reopening plays, energy, financials, that's what's working this hour. s&p is up 1%, nasdaq trailing just a hair in terms of it only being up 0.8 of 1% it's a busy day for ipos look at toast surging 51% after pricing at $40 a share it opened at $65 although it's actually a little below that level so that pricing is based off of the ipo price. but if you bought it at the open, you might be $5 underwater this company is valued around $30 billion.

nearly four times its private valuation, around $8 billion less than a year ago a huge turn-around for a company that also laid off half of its employees last year as revenue fell 80% before rebounding shares of a.k.a. brands are lower in their first day of trading. they can't even price above the ipo price last night this is a fashion company that opened at 9.50 after pricing at 11 that was the low end of the range. shares are slightly up from where it opened today by half a buck. investors are cheering news corp's buyback plan. they're up about 3% right now. shares of stitch fix are also popping after the company reported a surprise fourth quarter profit catch the ceo on "closing bell" today at 4:00 p.m. eastern time. now to rahel solomon for a cnbc news update. >> hi, kelly president biden and french president macron saying better communication would have avoided

problems from the u.s. decision to supply australia with nuclear-powered submarines the two will meet in europe at the end of october and france's ambassador to the u.s. will return to washington next week. in california, a judge has ruled that a classmate of kristin smart must stand trial for her murder she's been missing since 1996. the classmate paul flores was the last person to see her the volcanic eruption we've been talking about has forced evacuations of another thousand people at least 150 homes have been destroyed and crews are now trying to redirect the lava flow to reduce further damage. on the news, experts say the eruption could last for weeks. residents are dealing with this natural disaster the tape timeline, what bond yields are telling us about the

state of inflation and what it all means for markets. we have all of that and more itn pi up in our special fed ediorad fire, right after ediorad fire, right after this ♪ ♪ ♪ ♪ i wonder how the firm's doing without its fearless leader. you sure you want to leave that all behind? yeah. stay restless with the rx. crafted by lexus. experience amazing at your lexus dealer.

welcome back to "the exchange" everybody. we're just minutes away from the latest fed decision, and there's plenty at stake. it's time for a special fed edition of "rapid fire." hear to break down some of the biggest themes to watch, steven raciutto and brian reynolds. it's wonderful to have you guys all on board our first topic is this the taper or just the tease for it fed chair jerome powell signalled the potential for tapering asset purchases at jackson hold but noted the need for improvement in many areas of the recovery, particularly the labor market you'll recall while the unemployment rate dropped to 5.2%, we only added 235,000 jobs it was half a million below estimates. so does this meet the fed's threshold for substantial improvement, brian >> i don't think so. we're close on unemployment to where they were when they started raising rates in 2015, 5.2 now, 5.1 then.

but we know they did too much too soon back there so i think they'll wanting to see it go lower before they start raising rates so i think we're a ways away from a rate hike. >> steve, do you agree >> i think we're a ways away from a rate hike are we a ways away from taper? that's a different story i don't expect one announced in september but i do in november and executed in january. >> what, steve, does that mean for the language that we should expect today, both in the statement and in the press conference i think everybody here is on board with the idea that we don't get the taper announcement today, we get, as we would call it on tv, the tease for it >> yeah. in terms of the post meeting policy statement, i don't think you're going to see much significant change in that policy statement because as brian mentioned, we still have some room to go even if you think of the fed's own long-term target for joblessness, it's 4% they are well above that particular level at this point in time.

so the fed is not going to do anything to signal in any way, shape or form that there's a near term adjustment in terms of interest rates coming. the concern would be whether or not the dots show that more and more members of the committee are believing that they'll be in a position for liftoff in 2023 or if not potentially as early as late 2022. >> and we'll focus on the dots in just a moment first, how do they prepare markets for this to be possibly announced in six weeks more time, or are markets already fully pricing in this outcome? is there any chance of a surprise today, you think? the only way they could surprise i think is if they were hawkish. >> yeah, definitely. i think there is the potential they sound somewhat hawkish. i think it will come mostly in economic projections they could change dots, like steve mentioned. so hawkishness is really in the details, not anything in the language but i think the market is very much prepared for a november

announcement for taper so we're very much on track. and that's exactly what you're going to see you're not going see substantial further progress but they'll probably keep that progress language in the statement to sort of show that they're ready to act soon. >> okay. we're always watching for the adjectives that come out and go in and what that means for the timeline the next topic related one as well is looking for the message from bond yields we've got an obsession on this show with how low they are will they ever go up again the 10-year is hovering around 1.3% respondents of our survey say they expect the yield to be 1.5 at the end of this year and not above 2% until the end of 2022 steve, will the taper unleash a more trading environment for treasuries, or not >> no, it won't. there's two factors at work. one, the taper will allow more supply to remain in the system but by the same token, the

treasury's borrowing numbers, even with the biden build back better program being passed, the coupon issues that are already outstanding in terms of the size the treasury already has already borrows more money than the treasury will need in 2022 as we see tapering going on, we'll see reducing issuance of ponds and that will keep the curve on the flatter side. >> we notice the curve has been flattening lately. yesterday i think it was the flattest since early last year that's not great for financials. should we expect more flattening >> more flattening, perhaps not. i feel like the curve is already quite flat, especially if you look at the curve is extraordinarily flat more flattening, perhaps not the other sort of point i would make is the demand economic has been very, very strong so any time we do see a sell-off based

on strong fundamentals, higher inflation, a taper announcement or anything like that, i think you're going to see investors coming in and buying as bonds, you know, sell off you're seeing very, very strong demand from foreign investors, demand from domestic investors, pensions and insurance companies. so that's going to cap the rise in yields, if you will. >> brian, how much of this is because there's so much l liquidity in the system? does it actually reflect the need for the fed to start taking some liquidity away? >> i think it reflects the need to take some liquidity away because we just talked about the supply of treasuries and the demand of them the demand is only going to increase because i've detailed a number of states that are taking in a lot of money from personal taxes, especially capital gains taxes. that money goes into the pensions and the credit market so you have the potential for a lack of supply and increase in demand

there's not enough bonds to go around. >> is there just a mismatch between the investment products that people need and what's out there? >> sure. this whole financial system is completely distorted the biggest global investors are our nation's public pensions they need to make 7% to 7.5% that's where the big distortion comes in >> but that means that you could bullish on the stock market even while acknowledging the system is distorted and does this crazy daisy chain just keep going on and on and on? >> sure. because all that money feeds into corporate stock buybacks and that pushes stock higher we're at the beginning of a great bull market based on this credit cycle. >> but people feeling uncomfortable deep down for reasons as you just articulated. >> as has been the case for 30 years. >> let's talk about the dots plenty of people are focused on this saying that's what will really drive rates, including those interest rates we were just discussing. back in june, 7 out of 18 fed

officials pencilled in hikes beginning 2022 the median showed rates holding until 2023, steven so what is the significance if that median first hike moves into 2022 today? >> this is where the yield curve dynamic becomes important. if you remember, going into the june fomc meeting, the last time we had the dots released, it was hovering around 10 basis points. immediately after the dots and it was released in june, it went to 25 basis points i think with regard to the two 10-year spreads, the big next move will be moving back up to higher levels and flattening the curve from the front end as well as the currency helping to flatten the curve on the long end. >> steve, i know you may differ on this, but if you think it's going to keep flattening because the two-year keeps moving up, that's usually a bearish sign for stocks and growth in the long run

it's still not a welcome development. >> you're 100% correct and this is one of the reasons why i myself have been looking for a correction for some time and still think a correction will happen i believe it's a healthy correction because it shakes out the loose holders, the weak holders in the marketplace, gets that all cleaned out of the system and allows us to start going forward into what we think will happen in 2022, which i think will be another very, very strong year of about 10% return in the equity market for next year having a correction right now is a healthy thing. we think what's going to happen in the curve and the currency market will help trigger or sustain what's happening already in the last couple of weeks until that equity market does a full correction. >> do you think the tapering itself or the dots are more important to the market? >> definitely the interest rate projections and the dots, because the market is now pricing in maybe three or four

hikes priced in by the end of 2024 it's possible when the dots come out in the next few minutes, we could see a hike for 2022, perhaps three for 2023 and another three hikes for 2024 so the market will have to do a lot of catching up that's when i think you see a sell-off as the market starts to quickly price in perhaps the potential for more hikes down the pike the big difference this time as opposed to 2013 when the fed was quite aggressive with its stock was the fact inflation was quite high and the persistence of inflation means that the market is underpricing the risk of hikes over the coming years. let's move on finally and talk more broadly about the recoveryand where we are at this juncture. the dow and s&p are having their best day in two months but the averages are on pace for their worst month since last october where are we in the economic expansion and where do equities go from here brian, i think we got your obvious take on equities and what might be driving that

especially emanating from credit markets. what do you think that tells us about the fundamental health of the economy and are you looking for any contributions on the fiscal side? >> coming out of a pandemic, usually the economy picks up and that goes back 700 years so i'm looking for above average growth compared to the last 11 years. if you look at the stock versus credit it's at historic levels the earnings levels on stock is so cheap compared to the yield on junk bonds. some people say that's comparing an expensive asset to another expensive asset. we had the same setup in 2014. people were saying the same things, junk bond yields are too low. they lows 200 basis points in the next nine months we could see that very easily and still have a terrific bull market if we just repeat what happened after we got to this valuation level, stocks would be above 9,000 by 2029. i know that's a big move, but that's what we just did the last seven years. even if we only do half of that,

7,000, that's still a move that most institutional investors are not prepared for. >> fascinating steven, what would you say to that >> well, let me go back a little bit here where are we in the cycle? in the early stages of expansion. what happens in the early stages of expansion cash flows become much more sustainable and predictable, which is good for credit, number one. number two, we see delinquency rates decline, which is good for credit so it continues to argue that the grab-free yield will go on because that continues to go on, that will help lead to a good equity market going forward. the question is how strong will that equity market be. the answer is it's hard to tell what's going to happen on the three to four-year basis but we know 2021 will be a very good year and 2022 will be an excellent year as well the percentages of 10% type growth in 2022 is still a very excellent performance forric wilts going forward against what you're doing in bond yields.

>> you're on the spoil sport side because if everyone is talking about high stock valuations, then the 2-year should be above 10% except it just refuses. >> actually. we actually lowered our forecast we 10-years get to 1.70 and that's because of the dynamics on the demand side as far as bonds, it's not just a u.s. story, it's a global bond story. as long as bund yields remain low, you'll see this constant form of demand because treasuries continue to look attractive for foreign investors. >> all right so we'll get the tease for the taper, maybe the dots coming forward, flattening the yield curve a little bit but still a good setup in the long run i hope that's an accurate synopsis of what we've just heard. thank you all for your time, it's great to have you still ahead, volkswagen's truck unit is the latest automaker to warn about tight supply thanks to the ongoing

chip shortage. we'll speak with the former president of intel about how to solve it next. it's hispanic heritage month. all month long we're spotlighting cnbc contributors, business leaders and our own employees. here's oscar munoz former united airlines ceo the way to build latino leaders, you have to specifically focus on the recruitment of the talent and then the professional development. and then while inside the company, making them feel like they have value and they have equal access to the top. that just takes a lot of effort and work and focus and the senior most leaders in the corporation make sure they give people a chance.

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the smh etf positive now, this comes as the white house plans for a meeting tomorrow with industry leaders in an attempt to address the chip shortages that have hampered other industries. what do these companies actually need to get these all-important chips out the door let's ask an industry leader joining me is renee james. renee, it's great to have you. i know you're really focused on solving this issue what do you think the focus will be at this confab tomorrow, and we've been talking about this issue for a year now we have, you know, some people who come on and say -- they point the finger at companies saying they should have had this figured out by now and everyone is blaming each other and pointing the finger and now the u.s. government wants to spend a bunch of money to solve it but what do you think needs to be done >> thank you for having me on, kelly. you know, i think we had a perfect storm in semi conductors all morning we've been talking

about shortages from labor and shipping issues. it's hitting every industry, so it's not unique to semis what is unique to semiconductors is unprecedented demand. as many of your guests, as you pointed out, i went back and watched every segment on this topic that's been on cnbc for a long time. and we had an unprecedented demand and through the pandemic i think we -- the industry as a whole thought that perhaps demand would taper, it didn't taper. it's not cyclical, it's sustained demand that's great news for semis. unfortunately to lay in more capacity takes 18 to 24 months so we're into it in some sectors, depending on the kind of semiconductor we're talking about. things are beginning to ease towards the end of the year. in high performance like what we build at ampere, these large high performance chips, it's going to be another 18 months probably of tight tightening and it's up and down the supply

chain. it's not one piece so you asked a great question. what are we going to do tomorrow we're going to talk about what we're going to do for the long-term health of u.s. semi conductors, which is very important. i'm really pleased to that administration has been able to pass in the senate a bipartisan approach with the chips act. i'm looking forward to that appropriation. tomorrow what we're going to talk about is the improved data collection and transparency required to understand what the real root cause issues are and what we put in place >> let me ask -- i mean i wonder, renee, are we making too much of a pandemic do we need to have a complete -- is theanswer to what happened that we had a global pandemic, an unprecedented situation to deal with and everyone is scrambling to catch up is it that simple or did that reveal other flaws that we have an opportunity now to fix? >> i think both. i think this demand signal might

have been read incorrectly in 2019 and '20, and in addition to that it uncovered the fragility of the supply chain for semiconductors worldwide and the decline in u.s. manufactured semis, which, as you know, is not just a supply chain issue, it's also a national security issue for us so, you know, one of the things that companies like mine, a small company, a startup only four years old, however, i've been in this business over 30 years, we know that there's some systemic long-term things that we need to go after to build the health of u.s. semi conductors and that is what the commerce department is focused on, talking with all of us about tomorrow and working on over the next five years. this is not a short-term thing, it's something we have to get after as a national agenda. >> final question then what does financial support, which i presume this is from the u.s. government, do to change what would be the private sector scrambling to do this on its own?

>> i think that in order to do this properly, it's going to take a lot of private sector work, more so than any government assistance. what i think government assistance does is makes it a national priority, helps to shape the agenda of where we put monies, and in key places for r & d and smaller companies and even for some of the, you know, specialized areas of manufacturing can really assist in getting money moving in the right direction. so i think the agenda of how this money gets spent is quite important. i think that it's going to end up being a public/private partnership to get the magnitude of spending that need be done, but it's important it's important because now we're having the right conversation and it's cross industry conversation, it's not just any one company. >> we appreciate you giving us a preview of it and the stakes as well it's great to have you here today. >> thank you thanks for having be. >> renee james with ampere. up next, watch how robin

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good afternoon, everybody. and welcome to plurge, i'm tyler mathisen along today with kelly evans. we are just a few minutes away, as you can see, from the release of the fed's statement the central bank's taper typeline is of course the key focus today. before we get to our panel of experts let's look through the

markets right now so you will have a benchmark for what happens and what the market reaction is over the next hour or so as we get the message from the fed. the industrials up 350 points. s&p up 40, and the nasdaq composite with a nice move of .75%. it is time to bring in david kelly of jp morgan, liz young of sofi, and john bellos, portfolio manager at western asset liz, let me begin with you what do you expect to see or hear >> hi, tyler what i expect to see and hear today is four things so, first and foremost, i think chairman powell is going to stay vague about the timing because he wants to allow himself the flexibility to climb this wall of worry as eget through fall. i think the second thing we are going to hear is almost an exhaustive effort to decouple tapering from rate hikes that message is going to continue to be fed to us through everything that they say because what they don't want to happen is the expectation that as soon as

tapering is over, that rate hikes are going to occur immediately afterwards i think they are going to continue to push that is not the case i also think we are going to see a movement in some of the projection force inflation i think in 2022, that projection likely goes up a little bit, which i'm not sure that the market is going to love that it could suggest that rate hikes are going the need to happen earlier. and then, lastly, in tandem with that, i think we do see some dots move on the dot plot that would pull rate hikes forward in time so not necessarily that we will see more, but that they move forward in time. and i think the market might have to adjust to get there. >> maybe not more, but maybe sooner david kelly, give me 15 seconds, and then the same to you, john bellos please, keep it quick. >> i agree with everything liz says the one thing i would add i think they will down grade their gdp forecast and it will sound more balanced. ultimately, they are playing for time they don't want to announce

anything until there is more out of washington on fiscal policy. >> john bellos. >> gdp forecasts are coming down, we are in a slow patch i think the fed needs to not overdo it with their tapering and their hawkishness. >> we will wait and see as we watch and hear from steve liesman in just a few seconds on what the fed will be. >> a great way to break the linkage to break the link between rates and taper would be to move the dots out steve? >> rates were unchanged in the statement here, but the fed said that if economic progress continues, reducing asset purchases may soon be warranted. i will give you the impact language on that in just a second the sectors affected by the pandemic, the federal reserve said, have improved in recent months but the rise of covid cases have slowed the recovery david kelly was right, the