soon >> give me a name for a final. i've got to bust it out. >> toast great earnings report. >> amy >> turino? >> jason >> proctor and gamble. >> thanks, everybody see you on "closing bell." "the exchange" is now. ♪ ♪ thank you very much, scott hi, everybody. i'm kelly evans. a big hour ahead on "the exchange," starting with inflation easing you see the china numbers. leisure service spending slowing, and jobless claims hitting their highest level since last october is that the last shoe to drop in a downturn our guest says yes and a hard landing is next. not all commercial real estate is feeling the pain some names could be well positioned even into a recession. we'll speak to the ceo behind one of them. and if disney earnings have showed us anything, it may be

that the streaming wars are over we'll tell you why and what's next and there's one more thing -- >> i see dead economists >> i see dom looking at this with great curiosity stick around all hour to find out what that's about. let's get to the markets first, mr. chu. >> i don't know what to make of the fact that you see "dead economists." is it in your sleep, right now in the newsroom? >> stay tuned. >> i don't know what to do with that let's talk about the markets right now. mixed picture overall. the outperformance in tech, we'll get to that. but the dow down 237 points. 33,293 the last trade. the s&p 500 still above the 4100 level. 4128 down nine points, about one quarter of 1%. for context on the trading range so far today, at the highs of the session, we were still down about five points, 28 points at the lows so kind of in the middle of that

range so far if you want to be optimistic towards the upper end of that range, and the nasdaq composite up about one quarter of 1% one of the big reasons there is that tech outperformance is a lot of at least momentum positively speaking today in alphabet shares and consumer -- not consumer discretionary but communication overall. alphabet shares up 5%, a little more optimism about their ai ambitions, given their presentation yesterday highest level going back to august of last year, so keep an eye on alphabet powering that trade. and then it sounds like a broken record, but we have to talk about the regional banks pac west bank corps in particular, you can see the shares down about 84% over the last year, down 24% today off the session lows this is a stock, a company that came out and issued a quarterly report or a quarterly filing today, saying that during the course of the week leading up to

may 5th, they lost about 9.5% of their deposits, being driven by news reports that they were looking at strategic options for some of their assets pacwest, though, in the course of saying that, said that they have ample liquidity to meet any of their local requirements overall and they have enough cash to run their business nonetheless, investors taking at least a very dim view, down about 24%. to put some dollar numbers on how much market cap has been lost, in the year at the highs, this was a market cap of roughly $3.8 billion at current levels right now, the market cap is closer to $544 million. that's how much market value has been eroded. keep an eye on this trade and all the other banks. >> dom, thank you very much. the struggles in commercial real estate are contributing to those concerns about the regional banks as many office buildings remain empty since the pandemic but my next guest operates

grocery shopping centers and is well positioned to weather any economic slowdown. let's bring in jeff edison, one of the nation's biggest grocery store anchor shopping centers. >> thank you for having me on today. >> how long have you had -- been in this specific niche did you set out to do grosser anchor or did it just ininvolve this way >> we started this business about 30 years ago and over the last 30 years we have been building that portfolio. today, we're one of the largest owners in the company. we're kroger's largest land lord we've been active for a long time and built a great team that is focused on that specific niche. >> is it recession proof or just that they do less bad than everybody else when we have these downturns? >> no retail is recession proof. but as far as resilient and reacted very well to the last two difficult situations we had

in the great financial crisis and the pandemic, you know, we lost less than 0.8% of our occupancy during the entire pandemic, and during the great financial crisis, we lost about 1.8% so we really held together very well and it's because of the necessity based focus of our shoppers >> record high occupancy as of q-1. 97.5%, interesting you face a different head wind right now, which is maybe kroger merges you should be testifying about the impact of this, because you're one of the main people being impacted >> yeah. we're very optimistic about the merger we question whether it's going to happen or not, and the market is saying it may or may not happen but for us, you know, kroger is a great operator, and we think that they would bring additional benefits to the portfolio if the merger were to come through. if it doesn't happen, we have albertson's in our shopping

centers. so we're watching it, and, you know, it's early days, i think >> albertson shares don't look like they are pricing this in. what happened with microsoft and we hear from them all the time there doesn't seem to be a big appetite for this right now. >> you know, the unions came out this week against it there's a lot of conversation. so they have got a long way to go, and we hope they can figure out how to do it, but it's going take -- >> usually there's a main grocery store anchor or a few smaller stores twho sstores who are the retailers? the suburbs seem to be an area of strength right now because of the massive population distribution >> there are a lot of tail winds in our business right now that are not necessarily tail winds for everybody in the real estate business the movement to the southeast,

the ability to buy local, all of those things, those trends, particularly work from home, are pushing people longer in the suburbs, which has been a big benefit for us the new retailers are coming in and are recognizing that some are old names like starbucks and chipotle, but we have a lot of people coming in, trying to bring medicine closer to home. >> i see them popping up everywhere >> and it's eye doctors, dentists, it's a wide range of trying to make it easier for you to get your medical services done >> do you think, you know, your stock is not as if anybody can be recession proof, but will you be buying back shares? and what do you make of, listen, high interest rates and commercial real estate problems are in some ways a head wind for everybody. so what are the next 12 months look like? >> yeah, i think the way we see it, we like our stock, we feel like where it's priced right now, there's a lot of upside in

that but we hlike the fact that we're necessity based, 31% of our income comes from the grocer we have a stable environment we pay a good dividend, so you're getting that ongoing cash flow we believe there's less beta in the stock, but we have a active growth strategy. we give good rent spreads on our -- with our neighbors as we renew leases so we are getting that and then we also have a very active acquisition plan when we did our ipo about two years ago, we set up and we can buy about $1 billion worth of new grocer anchored shopping centers over the next three years without having to go back to the market. we're excited about that opportunity. >> earlier, we had an interview with bill rudin, very new york city centered. you are like the complementary side of that

some of the head winds they are experiencing may be tail winds elsewhere. >> it was great to be with you thanks for your time >> i'll be thinking about you the next time i go to kroger's we have a 30-year bond option rick santelli has the results. >> 21 million 30-year bonds. the yield of this 30-year bond dutch auction, 3.741 where was the one issue markets trading? 3.755. so lower yield, higher price if you're selling, you always want to sell at a higher price so the treasury did quite well a as in apple for this auction if we look at all the metrics, direct bidders, 17.4, otherwise this one would have finished with an a plus kelly, we see yields are down.

we see that inflation on the wholesale level is down. we see initial jobless claim in particular were higher and here we sit, down in yields from 2s out to 30s back to you. >> rick, we appreciate it. markets are under pressure today after that news about the labor market applications for jobless benefits were up by 22,000 to 264,000 last week. it's a 1.5 year high, and it's a sign the last shoe is about to drop for a recession, and a hard landing for the markets. here is with me is the chief investment strategist. >> good to see you >> what a juxtaposition to friday's better than expected jobs report. be today matters more? >> there is literally 30 different data sets we look to corroborate all of the emp employment >> we talked about how claims are going in the wrong direction, but how much time do

we have? it's been the most telegraphed downturn and hard landing, at least since the great recession. is it going to be as bad as that one and how much longer until stocks price more of that in >> yeah, from history, we generally see that the broader markets, the s&p has done well year-to-date mi microcaps have not parts of the market are reflecting the increased risk, so a lot of money is rotating. so it's happening. it doesn't happen at the index level really until people believe, investors believe and see that we're entering the recession. and i think claims need to go higher from where they are here and you can see that later >> obviously, negative payroll print, then forget about it. also worth pointing out that you saw this dispersion after the bank crises, where we really started to see smaller companies underperform what does that tell you? >> it's interesting. a lot of people attributed that

to people moving into tech and moving out of financials but it's far broader we have seen every one of the 11 sectors, larger companies outperform smaller companies in small caps, so it's more than just people putting money into tech and away from financials, but people putting money into the fundamental attributes that they have strength on, companies that have strength and avoiding areas that are more cyclical and more leveraged it's easy to say it's tech versus financials. but the same times of attributes are working or not working in all parts of the market. so it's bigger than just those two sectors. >> it indicates there's real fallout from tightening bank lending. there's two things when we talk about hard versus soft landing i think you bring two specific things that could help us get a soft landing that maybe we're not seeing right now i was thinking about it with the loan officer survey, and

thinking about with regard to housing. explain how that can tell us how hard this landing might be >> we have a framework called h.o.p.e., housing -- hope on the way up and down, it stands for housing, orders, profit and employment last year we saw housing come off, and now we're seeing profit expectations for the riskier parts of the market come down. and employment data, i think we're in the first inning of seeing that deterioration. so the conditions of every recession since 1960, there's been eight, there's three conditions we have all three of those conditions today >> if the banks come out and reported that they were easing lending standards, you would say we're having a soft landing, but we're not seeing that. >> banks have been tightening standards for over a year.

it's like saying, a couple weeks ago the feds raised rates. they have been raising for a year >> what about housing where some people might say hey, look, prices are better than expected. there's still a lot of demand here what does that tell you? >> at the end of every fed tightening cycle, there's been 12 since 1960, near the end of it, as interest rates peak, mortgage rates, you always see a housing bounce and housing stocks do well that's one of the reasons people think generally when the fed's done, we'll see this soft landing. what determines whether or not we go into a hard landing is not about housing, it's really more about employment and if we see deteriorating employment, what we always see is that housing bounce, which today i would argue it's a bounce, not a bottom, it rolls back over as people lose jobs. >> that's why this jobs claim is so important do we ask you about the debt ceiling?

>> our policy analyst thinks they'll get something done before the x date. it's not something i can frame out with historical analysis with conviction. so we're all speculating on this >> i should mention, because we're having a little bit of a kroger subtheme to the show, you guys always still have places that you can be long amazon, kroger, visa, general mills, there's definitely a grocery and value tilt there >> yeah. attributes for money is always moving towards money is moving into quality areas, defensive areas where there's stability and safety so those types of names rank well in that model and that's where we would continue, and i think investors will continue to pile into as we see the market narrow further. >> absolutely. michael, thank you for your time today. appreciate you coming over

coming up, we're kind of just talking about it. the burr bs are booming. it's a big opportunity for shopping centers more names to know on that next. plus, i got the chance to sit down with my favorite dead economists wait till you hear what they're saying and here's a look at markets. the dow is down 255 points today after being done yesterday nasdaq is positive again as alphabet rallies small caps under pressure, though the ten-year yield under 3.40. back after this. asking the right question can greatly impact your future. - are, are you qualified to do this? - what? - especially when it comes to your finances. - are you a certified financial planner™? - i'm a cfp® professional. - cfp® professionals are committed to acting in your best interest.

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welcome back to "the exchange." the next big thing for retail is the suburbs. according to "the wall street journal," shopping center owners like phillip edison, site centers, they're all hitting new highs when it comes to leasing and occupancy. my next guest says the scope of retailers looking to make the move to the burbs is wide. dana, welcome. >> that you can. >> thank you >> i just spoke to the ceo of phillips, they're 97% occupancy rate where do they go from here

how far down can they even go? >> one of the interesting things is, there's a lack of new shopping center development. so retailers of all types want to be in the outdoor centers let's not forget about hybrid work that's also giving an opportunity to get more footsteps in traffic so whether it's macy's, whether it's the dollar stores, whether it's furniture stores, going outdoors is interest it's the top malls and the outdoor open air centers that are driving traffic. >> is it just been that these open air centers haven't had a fre reshfresh in a while >> it's the movement out of the city center and working remotely if they're home monday, wednesday, friday, if they want to get something to eat, pick up a pair of socks, there you go. it's a destination and time for socialization. >> and some of the med tech places coming in, you have time to fit that into your day. give us some stocks to watch

that you can think can benefit here >> you want to watch the off pricers to get the benefit of a trade down, but also their value offering i think there's other names that are of interest, too when you think about the changes that are happening in the department store space, macy's is flexing, becoming more modern than what they had in the past and look at the cosmetics, and you think about where they can go in conversation with this retail real estate venue you're looking at them being able to go small and also that will be of interest. and cosmetics are showing strength >> continued that's one area of post pandemic you might have looked for a reset, but there's that underlying sort of longer term strength there it's probably too early to break out the recession playbook, but what is priced into a lot of these stocks what magnitude of a downturn orb any downturn, or are they hoping like we heard in the commentary that maybe the consumer is going

to be soft >> we're hearing from almost everybody that beginning the middle of march through april and it seems like into may, the consumer softened. demand and the consumer has softened essentials like the grocery outlet is where the action is. in terms of what's priced into the names, i'm concerned about the hockey stick guidance for the back half of the year, because if it doesn't come to fruition, you'll have a reset. second quarter guidance for the most part is with conservatism, because you're in the second quarter already. but watch out for the third and fourth quarter i think while inventory levels are lean, i'm more cautious on what the level of consumer demand is going to be, given the uncertainties with the macro >> so finally then, do you think that the core kind of urban center is going to continue to underperform or is the labor market gets weaker, will that

pull people back in and help that should do better than the suburbs, or do you think the trends will be here to stay? >> the trend will continue to be overwhelming but don't count urban and cities out. because we'll get some tourism the return of tourism, marly from overseas visitors, is going to be a benefit. and the other thing you're seeing with urban, while people may not be going to work, they're going out to restaurants and shows and social occasions >> is there a stock that you like in that kind of broad category as a result of that >> when i think of the urban areas and who benefits, you look at tapestry today. that will be a beneficiary for them i think about others lvmh if you haven't been to the new tiffany, it's certainly something to see there's a ton of tourists that go there >> dana, appreciate your time today. encyclopedia of retail knowledge. coming up, if the streams wars are over, who won we'll talk to alex sherman about

that in the wake of disney's results last night shares down 8% today and netflix is higher. and what were some of the most legendary economists say about what the fed should be doing right now? maybe they're no longer with us, but with the help of ai, we get an idea and we'll speak to the company behind the technology that made this happen. "the exchange" is back after this ai-powered investment firm with billion-dollar views. a cutting-edge data-security enterprise. yes, with a slide. a perfect location for the world's first one-hour delivery. an inspiration for the next workout cult. and enough space for a pecan-based nutrition bar empire. it could happen. because there's space for any dream on loopnet. the most popular place to find a space.

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proposed new carbon pollution standards to restrict greenhouse gas emissions released by power plants today under the proposal, nearly all u.s. coal and large gas plants would have to reduce 90% of their carbon emissions by 2038 or be forced to retire if enforced the standards would further joe biden's climate agenda a new report released monitoring conflict induced internal displacement found more natural disasters left a record 71.1 million people internally displaced in 2022. that includes nearly 6 million who were forced to move inside ukraine because of russia's invasion the new number marked a 20% increase from just the previous year, 2021 and peloton shares plunging after the company is recalling more than 2 million exercise bikes over safety concerns the consumer products safety commission says seats on certain models can break unexpectedly

and pose an injury concern in 2021, the company was forced to recall some of its treadmills following the death of a young child that was pulled under one of the machines. >> careful on that bike tie. >> i will. coming up, the art market barometer. we'll break down the softness showing up in the numbers and looking at the pieces under pressure to perform at auction, after th is what if you could make analyzing a big bank's data... no big deal? go on... well, what if you partner with ibm and red hat, use a hybrid cloud solution to connect data across multiple systems globally, then analyze all that data with watson. okay, but this needs to meet our... security standards? yup. compliance standards? mm-hmm. so they get the insights they need... yup. in real time... check. . ..to make quick decisions? check. aaaand check. that's the hybrid cloud solution ibm and a global bank created. what will you create? ibm. let's create. at t-mobile, your business will save over $1000. what are you going to do with it? i could use a new sign.

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welcome back to "the exchange." disney shares falling sharply after earnings down almost 9%. same story that's troubled the country, blowout parks performance, mired by streaming losses and weak subscriber numbers. and it's not just disney subscriber growth is stall ag cross the board, as we heard from paramount and warner brothers so my next guest says the era of streaming wars is over welcome to you both. alex, i'll just start with you if the streaming wars are over, who won, netflix >> i guess netflix, yeah netflix sort of won before the streaming wars even started.

i would say disney is second disney put together a very powerful disney plus service it has 157 million subscribers and then you can kind of list the winners/losers from there. warner brothers, discovery has their max service, almost 100 million subscribers, so they would be in the middle peacock and paramount plus toward the end amazon and apple are almost in another category, because a, we don't really know how many subscribers, so it's hard to throw them in there. but b, they're not really in this for the same reasons. they have other enormous businesses they're kind of participating almost as a hobby. so that's sort of how i break it down >> what's interesting to look at disney's results, they were expected to add about 400,000 u.s. subscribers, instead a loss of 300,000 they did the price hike. this is all part of their strategy but how big do they need to get,

including buying hulu, to have what is necessary to say we are a winner up there with netflix, and it's going to be worth the investment and generate decent shareholder returns? >> yeah, as alex said, that's u.s. growth. so international is the other growth at this point revenue will go up, you raise prices, revenue will go up in the u.s. but the interesting thing that iger said is they're re-evaluating their international plan, where they spent too much in markets where they can't make the money back their q1 revenue for the quarter was $93 million, total it was 59 cents for arpu you're spending for original programming and markets. so iger hasn't announced what he's going to do, but pulling that spending back is job one. then the question is, well, you have to be global, so what is your foot print going to be?

warner brothers and paramount have taken this tact of we're going to make wholesale deals. so we'll see if disney does that >> let me just throw this out there, alex. what if bob iger says streaming takes a lot of money, it's not worth it netflix has a great product. let's just license to them, we'll make a boat load of money and we won't worry about the losses is that a pipe dream in >> it would have to be a mix of the two. i think the ship has left the dock, if that's the right metaphor again, there's 160 million plus disney subscribers hulu and espn plus exists. there needs to be a transition from traditional cable to something, and streaming is the something. >> could youtube tv be that something? you almost wonder if they move to this model where we're not going to offer you cable

product. and youtube becomes the new bundle they can deal with the drama >> sure. but the new version of youtube tv will be a bundle of streaming services so the streaming service would still exist but packaged differently with other streaming services and maybe that's the next leg of growth for streaming. even still, you look at disney's share prices down 9% the story that i wrote on cnbc.com is media may need something else i'm not sure -- >> you said video games. as you mentioned, we know comcast looked at combining nbc universal with electronic arts i don't understand what the offerings is >> it's a new growth narrative look at all these subscribers we're going to get and for a little while they got a bump, at least with disney. if you are going to expand out to video games, you have a new reason to get investors excited.

investors are looking at these stocks saying why am i excited why am i investing here? so the only reason media companies are giving to investors, we'll make streaming profitable but that is not a growth strategy, that's a raising price and cutting cost strategy. >> and are the video game stocks all that attractive? they're very cyclical and hit driven video game eyeballs are great, but is this really a good business to double down and get into >> yeah, if you think tv and movies are expensive, try making a video game you can make a lot more money, but warner brothers with a big quarter, but if you miss, that's a big miss you know, getting into that game is a very capital investment game netflix is playing in this game, but even they haven't set a long-term strategy all the games they have aren't

even in the netflix app. you have to be a subscriber to play them. but it's a capital intensive business that, at times, who wants to spend more capital? right now, they're all cutting costs. gaming is a tough one to wrap my head around for studios. >> alex, quick last word >> i think it would have to be done through acquisition rather than organically i think the jury is still out on that, but activision may become available if the microsoft deal falls through. several other companies are out there. it is possible as the media thinks about what do i have to do here? because i think the industry has to do something that at least this thing is a something to consider >> comcast, do they jettison nbc? if we combine these streaming properties, let the connectivity companies be connective --

>> i think that will also happen it will probably be dual pronged approach i think both can happen. >> gentlemen, thanks still ahead, they say the super high-end luxury market is often thought to be recession proof, but the art auctions are artting that to the test next ye we have the details, next. an ic. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.

♪ ♪ ready for the big show? buckle up. ♪ ♪ i'm not gonna lie to you... that was awesome! welcome back to "the exchange." the art market boomed over the past couple of years, but 2023 is looking a little more muted good barometer here. >> very good barometer, big test for this market in a tough time. more than $2 billion worth of art scheduled to hit the auction block over the next week but the cracks are starting to form at the top of this market sales are down 24% over the last year, with half the number of works selling for $1 million or now. the fall sales had half dozen

works that sold for $100 million last year. this week, nothing is estimated at over $50 million. the auction house is hoping that overseas buyers may pick up some of the slack from the financial worries they're seeing in the u.s. >> we saw a real acceleration of growth in asian participation in our london april auction, which we were really excited to see, and understood to be a direct result of the relaxing of restrictions in asia >> now, the star of the week is this picture called "the nile. it last sold in 2005 for $5 million, now estimated at $45 million. they also have a prize picasso, a 1932 portrait of his golden muse estimated at $40 million and southerby's will be selling

a rare landscape painted in 1901, expected to sell for over $45 million. and you want to talk about rare, this henry russo, the last time a russo painting came to action was over 30 years ago. so big question of just how much this could fetch >> are tastes changing and buyers changing? a couple of years ago, with all the younger generation in here for the first time, it was getting very post modern feel. how is that loss of wealth now kind of moving through the art market >> it's more driven by what's coming up for sale and what's available. so if you look at the big ticket items, picasso, russo, it's clint, it's the blue chip names that everybody, no matter how old or young a collector, they want it. because as an investment, these paintings, many of which are coming out of collections, have proven their self-over time. straight out of a young, living artist's studio is going straight for sale.

but these blue chip names are always going to be in big demand >> robert, thank you still ahead, the fed's historic pace of rate hikes got us thinking, what would the great economists of the 20th century say the fed should do next thanks to character.ai, we were able to ask them you'll hear from three dead economists and the man behind their creation, next

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welcome back to "the exchange." the fed has hiked rates with unprecedented speed over the past 15 months, and the bank crises has sparked debate whether the fed should pause if only we knew what some of the greatest economic minds would think share powell would do now. thanks to ai, now we can know. take a look. all right, you're up do you think the fed should be cutting rates?

>> all right, you're next. do you think the fed should be cutting interest rates >> okay, milton, where do you think the inflation rate will be by december of this year

>> okay, last question let's get everybody in the group now. what do you all like to do for fun? >> i enjoy hiking and cycling. >> reading an i ing and learnint economics. >> no, please, talk amongst yourselves >> all right so how did they do in terms of their veracity we ran their ai answers past one living economist and here is how he graded them hayek gets an "a." and he gave kayne an a different story for milton peter gave that answer a d because ai didn't answer the question

so let's dig further into the company behind this tech c c character.ai launched last month, and just yesterday at the google conference, a partnership was announced to help make the chat bots even more accurate conference, the google cloud ceo announced a partnership to help make its chatbots even more sophisticated and accurate ce c ee welcome to everybody i generally i don't know how did you make these characters. >> they're just trained on a bunch of publicly available data enough information out there that picked up the patterns. >> he gave some great answers about why his fed should stop. you didn't have to really feed them like a specific body of work if i wanted to make these

really, really good and kind of add their books and other published documents that might not be a part of that general grab of the internet, would i be able to do that to train them better >> not yet we definitely want you to be able to do that in the future. so you do a great re-creation of your grandmother or a economist. you can enter an example conversation. >> what's the main purpose behind this technology >> the technology is -- basically it just tries to guess what might come next in some text and the beautiful part is, they're building cases, you know, you can just talk to it,

every person are advancing their own applications, so this is just a part of computing. >> steve, obviously we're looking at the partnerships and how they'll deploy this technology and thinking about microsoft teams, whether his character can answer some questions about who gets a day off today? >> yeah, what we're seeing here today, kelly, one of many startups working on technology like this, what we're all seeing that partnership with google and this is how google and microsoft are going to mike money. it's a cloud play for these companies. i'm curious, why you chose google over microsoft? you're one of many startups looking to make a cloud deal, what should they be looking for in order to get the most bank for their buck, this is not cheap to do. >> well, yeah, i guess you just have to evaluate the bang and the buck, but, yeah, google is terrific like, you know,

infrastructure is kind of grown up in tandem with all the great research that's come out of there, you know, we're very much know the technology stack and pretty great for the purpose so we're really looking forward to working with google, of course, you know, microsoft's doing great as well. >> here's what google cloud ceo had to say about monetizing some of his strategy. take a listen. >> when we look at a.i. we always say it's going to be driven by adoption of capability, if you look at google workspace, we introduced a.i. in 2015 and it's the reason that so many people use it today and we'll continue to introduce features and capabilities into these products and we're very confident as customers start

using it they'll start buying it >> deirdre, what would you add >> well, first of all, kelly, i'd say to you that was amazing. so nerdy, so well done chef's kiss, it was just good. that has to be acknowledged. a very good point. i question the monetiization of this thing as well they say this partly evidence of a bubble in a.i. no revenue to speak of yet how do you avoid the fate of another app that kind of cameo, lot of fun, became viral, no one really used it more than once. how do plan to get people hooked on it? >> i mean -- we're noticing that like our users and now it's getting close to 2 million daily active users, someone who sends

one message today is active two hours on that day. that shocked me. i can't think of what i would be doing for two hours, but like, that's the point, like we don't know what the applications are, there seems to be a huge number of people finding a huge amount of value in it and we get great testimonials saying this has improved their lives so obviously something great is happening here. >> is there going to be an issue, where, they say can't represent their thoughts that way? >> they haven't yet. >> that's going to be a huge concern. i could build one for any living person and say, this is what they have to say. >> yeah, that's true you can also do a satire of any living person as people do, but we're very clear on our site, on every page, everything the

character says is made up, so our users say that this is in fact fiction. >> while we're using it in this one way, when you asked what you wanted to disrupt this most the technology, you said, i want to disrupt alcohol and drugs. explain that. >> i mean, what we're seeing is, like, we didn't plan this, but a lot of people are using this for emotional support, like there are billions of people out there who have no one to talk to and like, okay, discovered, this is something that you can talk to it any hour of the day about anything and, you know, people turn to all kinds of self-destructive behaviors for emotional support, so it's wonderful that this is a surprise use of the technology that once it's out there if people have this better alternative. >> psychologically harmful -- a

quick last word. >> i tried it out myself it's a lot of fun. i just wonder how it monetizes how it becomes more than a gim gimmick. >> you know, our mission is to first and foremost is to be full stack and take this directly to the consumer you needed the developer the tell you what you needed to do previously it's going to democratize technology and empower the individual our mission, bring your own personalized to everyone on earth. >> you know, companies would come out, startups raise a ton of cash, this company we're talking about right now character a.i., very much feels like the 2010 app store where you gain a lot of users and kind

of figure out the montization later. sometimes that works and doesn't. >> who did you talk to when you tried it out >> i talked to elon musk and he was very elon musky. he basically inabsolutelied me. >> we'll leave it there. thank you very much for letting us experiment with this. >> thank you, kelly. next on "power lunch," the tillman fertitta joins us. (cecily) you're looking pleased with yourself. (seth) well, not to brag, but i just switched my whole family to verizon. (cecily) oh, it's america's most reliable 5g network. (seth) and it's only $35 a line. (neighbor) i got that deal too. (seth) oh hey, bragging buddies! (neighbor) my man! (cecily) this i don't need. (seth) you should give me a call! (vo) visit your verizon store and save big

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