>> nice move farmer jim >> delta airlines, really all the airlines with the exception of love southwest. the passenger counts at tsa are through the roof ticket prices are high theest mates for these stocks have been going up, and they have gotten no love. >> i will see you later on "closing bell. "the exchange" is now. thank you very much, scott hi and welcome to "the exchange." i'm kelly evans. here is what is ahead this hour. a debt deal within reach wall street getting more optimistic you should see the markets dow is up more than 300 points a two-year agreement is reportedly on the table. we'll look at the actual terms and the trades that could benefit. plus, strike one for the doves? the latest inflation report is hotter than expected could corporate profits be part of the problem it's a hot button debate and call it the week ai got

real nvidia cementing a narrative, but can the tech rally keep going? one guest says yes he's got one part of the sector in particular, and one name that stands out we'll tell you which one first, let's get the scoop over here with dom. >> we're at close to session highs. just to put it in context for you and the viewers out there, we had a big move higher yesterday. but you take technology bullishness and couple it with debt ceiling optimism, and you get a bigger move today than you got with nvidia's driving the action yesterday now, the dow industrials, 310 points to the upside 33,075, 1% gains there even better for the broader based s&p 500, which is now above -- back above 4200 4202 1.25% gains. at the highs of the session, up 55 points, up five points at the lows it's been a positive day so far. the real outperformer, as it was yesterday, with the bullishness

around nvidia, nasdaq up 270 points, 12,970 if you look at one of the parts of the market that is getting a little more attention, we were wrapping up couple weeks worth of retail earnings report. it's been a mixed picture overall today. rh beasts earnings and revenue estimates, but there is the possibility of more markdowns to move inventory ulta beauty, marmgins dragging that stock down. and gap, profit margins are improving, up 11% in trading that's the retail roundup. and we spoke about the nvidia trade yesterday. we're seeing a similar, if not better percentage move, in another chip stock coupled with an ai narrative.

that 's marvell technology. it's the outlook for the rest of the year the revenue growth will be driven by guess what, kelly? artificial intelligence. back over to you >> monster run dom, thank you very much just six days to go before the nation faces a debt default, but negotiators may be closing in to raise the debt ceiling kayla is at the white house. maybe it will be drama free, kayla, i don't know. >> reporter: don't jinx it, kelly. they're getting closer, but one republican said this morning, the leaks are not helping. the issues are thornier, and they're not just trying to hit one number but trying to change the trajectory of spending in this country here's kevin mccarthy describing his take moments ago >> we know it's not easy but we're going to make sure we're not just trying to get an agreement, but trying to get something worthy of the american people that changes the

trajectory so we're going to work just as hard we worked through the night last night. i thought we made progress yesterday and today. i want to be able to solve this problem. >> the time frame for a deal in the overall spending levels remain critical sticking points according to sources who note that nothing is agreed to until everything is agreed to. but some elements coming into focus, the deal is expected to see two-year budget caps on non-defense dischrikrcretionary spending but covid spending and aid programs and new permitting programs are ongoing both ends of pennsylvania avenue are huddled with their respective teams today it's unclear when they could meet to finalize a deal. but sources acknowledging talks could slip into the weekend, although today is still the goal kelly? >> real quickly, because i know you said today is the deadline just remind me, is the time

frame still in tact for congress to rush this through or do it as a normal pace. where are we >> well, it depends on what kevin mccarthy does. he has given 72 hours to read the bill now, he could choose to shorten that time frame. he did so for the limit grow act that republicans passed in april. but that decision is up to him he's made the pledge so far, and it remains to be seen whether he will bend on that. >> kayla, thank you very much. my next guest says there's an 80% of a deal by the june 1 deadline but it will be a full-fledged agreement and not just a short-term extension joining me again is alex phillips, chief economist at goldman sachs. you've been constructive all along here so what's different this time?

>> i think what's different this time, at least compared to 2011 and some of the other really messy debt limit deadlines, and kayla said this, they're not trying to hit a number there's not a specific number they're trying to hit. they're just trying to get something that looks like they're doing enough to justify raising the debt limit for two years. at least that's the view of some any way. and so, you know, we can kind of see where this is head, and it looks like it's headed basically towards something that, you know, probably would have hand, at least most of it would have happened any way, which is essentially flat-ish spending next year. we'll get a cap probably for another year after that. maybe some other policy change, which are important. but ultimately, you know, from a macro perspective, it doesn't feel like this is that big of a deal i think, you know, as far as the timing goes, you said it, june 1st. it's the deadline.

it's not clear that it is really the deadline, but i also think the odds are pretty good that they basically hit that deadline >> we're showing it here it looks like a hit to the gdp of maybe 0.1 to 0.5, is that for 2024 walk us through how much austerity is included in this agreement compared to the one a decade ago >> right so a decade ago, it would have cut spending, cap spending by an average of 1.1% of gdp over the next ten years this time around, the starting position, so the limit say of the grow act, would have cut spending by about half a percent of gdp over the next ten years in terms of that same spending cap. it looks like, you know, the final deal here might be a tenth of a percent of gdp. so it's pretty small

it doesn't mean it's not worth doing, but it basically, i think, is similar to what we would have gotten, which is flat-ish spending. i will say the one thing i'm a little surprised by, at least based on the media reports, is that the cap is only two years i mean, it's a practical solution, because after a couple of years, we saw even back during the 2011 budget caps, they ended up changing them any way. so i think it's reasonable but with that said, it's a little surprising that we have gone through all of this to basically get something that's probably, you know, that much different than what we have gotten through a normal spending deal >> why isn't there a bigger push for austerity when the gdp has doubled in this country. we absolutely don't see the same kind of broad galvanizing push

for spending cuts, and we should also point out the last time that one came three years after that recession so what do you think explains that difference? and do you think it's this year or further in the future when bigger spending cuts become a bigger political sort of move or tactic >> so, you know, i think if you go back and look at say in the mid '90s when we had a messy debt limit increase, or 2011, same thing you had a couple of things that are very similar so you had a newly republican majority house coming into power with the democratic senate you had an increase in the level of public debt you had at least in the '90s, you had also pretty substantial interest expense so there are a lot of similarities, but the difference, one is that public focus on fiscal issues right now is just really low >> right

>> so if you look back to the previous episodes, you had between 15% and 25% of the public saying that it was their most important political problem to solve right now it's like 3% and then you also look at the situation in 2011 with the debt limit itself so they were trying to raise the debt limit by a specific dollar amount at that point, it was $2.1 trillion so they were trying to come up with the same amount of savings, $2.1 trillion, and that's what they did this time around, they're not raising the debt limit by a dollar amount, they're just going to suspend it for two years. if they do that, then you don't have to hit that specific dollar amount on the other side in terms of budget savings. >> really interesting points i guess just a final observation is, why don't you think there is such interest in austeritisome is it just that we haven't felt the full impact of the crowding out that may still come from higher rates i'm just curious >> i think there will be more of

a focus once you get interest expenses as a share of the economy, up to, you know, 3% to 4%, which is bound to happen as we get to work at the end of this decade. i think there will also be more focus as we start to see projections of things like medicare and social security trust funds going bankrupt, which are projected around the end of this decade in the meantime, i think basically what we have seen is that for the last 20, 30 years, you had all of these warnings about the dangers of budget deficits and the dangers of high debt here we are with around 100% gdp debt ratio, and i think people are sort of feeling like maybe those mornings were a little exaggerated. >> i totally agree >> that's the basic difference between now and where we were before >> all those people that warned over the years, it may yet become a much bigger crisis, but it's like the boy who cried wolf we're in such a worse position

now, but it seems to be much less of a crisis thank you for your time today. >> thanks. so if we do get the two-year deal, how do you play it my next guest brings two names he seems well positioned to get a short-term bounce. let's welcome in andrew slimmen from morgan stanley. good to see you, andrew. let's get right it to. what do you think are the beneficiaries? >> i think the cyclical value names are hit hard i think if you get a debt deal, there is some thought that some of the spending that people worried would go away, are not so a stock very involved in heavy infrastructure spending, you get a debt deal i think that stockbounces back. not to mention they have an analyst meeting next wednesday

so that's the type of stock that i think is interesting cra today, building material, rocks, which, again, is -- will benefit from a dealt deal. and then they have a catalyst, which is an irish company that is relisting in the u.s. this fall and the differential between u.s. aggregate companies valuation and irish is huge. so there's upside to that, as well >> i want to move on to your semi names, but are these names that directly benefit from something related to the debt deal, or just removing that overhang is the catalyst >> removing the overhang, i think a lot of cyclical stocks have been hit hard on the debt deal, i noticed that -- and you know this, too -- every day that it looks like we might get a debt deal, the breadth widens for the market, and that's when these stocks participate

so there is no doubt there are businesses that are strong, assuming we get a debt deal. >> got it. let's move on to some of the names you think might be wins in the longer run and -- i hate using words like expensive or cheap, i want you to do that -- but you say they're cheap and they trade below 20 times. so without further ado, over to you. >> well, you know, on the one hand i hear people say i like nvidia at a very high multiple then i hear them say, i'm worried about china invading taiwan guess who makes nvidia's ai data chips? largely taiwan semi conductor. so they're bound together. so i think, you know, you can't like nvidia if you don't like taiwan semi. if you are worried about a potential invasion, i don't think you can like nvidia at this juncture. so taiwan semi is in a very good

spot it is down still significantly from where it traded two years ago. and i think that's, you know, a very good play and then i think that semi conductor equipment, applied materials is another name. again, down from where it was two years ago. there will be other chip companies in the ai race, and i think you want exposure to that. so i think this is the semiconductor area that is simply a cheap way -- cheaper way to play the explosion in ai. >> sure. the valuations are still so reasonable, it's almost shocking when people say it, and i have seen the comments, this is a we are -- this is a bear market and the market is resembling the market peak in 2000, do you agree? >> sure. so, look, first of all, i would

request whenever anyone says the breadth is poor, always ask them, does that always lead to a market going down, or are you only remembering 2000? because the data suggests that actually narrow breadth sometimes leads to the market to go down, but sometimes it leads to the market going up but we remember 2000, so we anchor to that data. z so i just think that eventually all this cash is going to have to find its way back into the market i think it's going to happen this fall, and people will be searching for names that haven't participated so i expect the breadth will widen, not lead to a bear market >> i remember your bullishness a couple of months ago thank you so much. coming up, we'll hit nvidia.

it's in the green today, building on yesterday's 24% gains. will this week go down as the one when ai became real to the market or will the bubble start glowing? but first, we'll revisit the debate, what is driving inflation? is it corporate profits or just supply and demand? our next guests are pulling off the gloves dow is up 283.

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welcome back to "the exchange." this morning's pce inflation coming in higher than expected is that strike one for the doves ahead of next month's fed meeting? let's get to steve liesman with a closer look. steve? >> doesn't bother you, kelly, that we got the birds playing baseball here? i guess i'm responsible for that, somewhat at least. >> we got one of three key economic reports, and it was a whiff for the doves, or a swing and a miss, if you will. inflation coming in higher than expected, backing up the concern to several fed officials who recently expressed concern that inflation is not falling fast enough no matter how you slice it, the inflatdex for consumer

spending was up and remains far above the 2% target. headline, 4.36%, up 17 bips. all of that and the core pce ex-housing, which is the one howl is looking at a lot, up 0.9% they made clear that the fed is not yet where it needs to be when it comes to a peak funds rate >> i would like to get to a point in the funds rate where i feel that whatever the next move is, whenever that is, it's about equally weighted between an up move and down move given the data that we have had so far, i don't think we're at that level yet >> what's more, durable goods and consumer spending, the economy accelerated from the

first quarter, boosting the gdp forecast for the quarter what's left before that june meeting? you have the payroll report june 2. cp ireport june 13th so that two more tries at the plate there. then the unknowns, the debt ceiling outcome and bank lending stresses could perhaps cause the fed to pause the good news, the consumer refuses to quit here, so far, so has business spending. bad news, the fed wants to see both softer and a softer economy. and they seem likely to keep hiking >> june 13th is the next cpi, and the fed has this data. >> yeah, i mean, here's the thing. what we know is that the fed feels it's been burned by prospective ly banking on inflation numbers. remember those big revisions in

january, wiped out the progress we thought had happened in november and december? january and february came in hotter than expected it's possible, if you are arguing for a pause, you can't rule it out. >> i want cuts >> right now, the odds are t that -- the most neutral person is powell. >> yet the market is almost discounting those remarks. steve, thank you appreciate it. the inflation doesn't appear to be coming down as fast as the fed would like could one of the problems be corporate profits? take a look at this headline mcdonald's, pepsi and gm flex their pricing power because the companies keep pushing through price hikes. so is inflation sticky because of corporate greed joining me now is isabella weber from the university of massachusetts, and michael, professor of finance at the university of maryland welcome to both of you

professor weber, you think it's corporate profits being the culprit here why? >> i think corporate profits have played a role the goal of firm is always to pursue profits but these massive costs have coordinated price hikes presenting an opportunity to increase prices and the consumer is more willing to pay the higher prices. so they were more accepting of price increases than many would have thought >> what would you say about that >> well, i would say i would just build upon what steve talked about if consumers are out there looking to spend more money and businesses are looking to engage in greater investment, there's more demand. yet we don't have sufficient supply we have labor shortages, we have

taken energy off line. so you're going to have an outcome where prices go up corporate prices do rise, but that's not an outcome, not a cause. so when prices go up, the producers are going to generate higher profits but it's important to distinguish between the cause and what is just an outcome, because if we are going to make sure things change, we go after the root causes. >> what about people say corporate profits have been increasing for 10, 20, 30 years time they go up and down in business cycles but seem to be marching higher >> first of all, we have seen corporate profit margins reach levels we haven't seen since the aftermath -- this is quite extraordinary. we have also seen profit margins in terms of the share and unit price that are around 34%, which is much higher than anything we have seen in previous decades, including the 1970s when we had

very high inflation. this is according to reporting from "the wall street journal" as of today. to the point of whether this is demand driven, you have me talk about inflation, and this is a phenomenon of prices where many corporations have been increasing prices even when volumes are going down, names like pepsi, proctor and gamble, and so on, which are all confidently saying that they have managed to increase prices as volumes were going down if prices were going up due to demand, i would expect the volume is going up, not down so clearly what corporate leaders are saying on the earnings calls is that they can take pricing, and that they have more pricing power than they thought, and that's something we should be taking seriously >> what would you build on that, professor? do you think we should see volumes rising with prices if this is demand driven inflation.

>> it depends whether it's simultaneous with the supply sho shortage if so, you'll have lower volumes and higher prices. it's important to go back to identifying when the inflation began. there was cpi numbers in march of 2021. what did that coincide with? it came with an extra $2 trillion being thrown into an already -- it was already coming out of the pandemic. so we had way too much fiscal stimulus at a time when there were supply shortages. so if you have those two things simultaneously take place, you can see volumes decline and prices still go up >> professor weber, it sounds like corporations are turning more cautious now. we are hearing restoration hardware in the past 24 hours saying we're going to have to do more price cuts.

>> they could go away, but many corporate leaders are saying that as costs are going down for energy, for transportation and so on, that this could actually for some corporations create a new -- if they can keep prices where they are, margins might go up again >> all right that's the condition we will watch for. thank you both for your time today. to a holiday weekend no less still ahead, another voice on the inflation debate, the imf, out with a new report urging the fed to remain hawkish in the fight against inflation they see the fed funds rate between 5.25% and 5.5% until late next year that's coming up in the show dow still up nrleay 300 points f getting screened ♪ ♪ for colon cancer made me queasy. ♪ ♪ but now i've found a way that's right for me. ♪

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i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business. good afternoon welcome back to "the exchange. a military veteran who stormed the u.s. capitol with the oath keepers on january 6th was sentenced to 8 1/2 years in federal prison today jessica watkins apologized and called her actions repre reprehensible. this came one day after founder stewart rhodes was sentenced to 18 years in prison for his role in the attack. public safety officials warn california rivers fed by the massive snow melt could be especially dangerous this weekend. there was record snow pack this winter as it melts, it is leading to dangerous flooding and higher,

faster waters. already this spring, seven people have died or gone missing in the rivers out there. an ancient monument was returned to mexico today decades after it was illegally removed the monument, known as the gateway to the underworld, was taken in the 1950s experts believe it is around 2500 years old and dates back between 800 and 4,000 bc kelly, back to you >> see you soon, tyler, for our special. coming up, is the mega rally and mega cap tech sustainable? the one name that could still climb 25% from here. which one is it? back after this. (vo) if you've had thyroid eye disease for years and your eyes feel like they're getting kicked in the backside, it's not too late for another treatment option. to learn more visit treatted.com. that's treatt-e-d.com.

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absolutely. can we provide health care virtually anywhere? we can help with that. is it possible to use predictive monitoring to address operations issues? we can help with that, too. with global secure networking from comcast business. it's not just possible. it's happening. welcome back to "the exchange." nvidia hitting another all-time high today building on yesterday's 24% post earnings bump, pushing the etf to a 52-week high of its own nvidia is not even the best performer in that group, it's marvell technology, posting a big beat on the top and bottom lines. is this the week ai becomes real for the market or the week the

bubble takes off that's the subject today with diedra bosa. >> it's probably both of those thing, but it's the week when dollars and cents start to matter, when we no longer talk about the secular shift, but one that's happening in realtime right in front of us bank of america this morning writes nvidia raised the bar if your company still randomly is saying ai in conference calls with no user product and revenue road map, the market will snip you out. and marvell's numbers, it reported thatai revenue is expected to double this year to $400 million generative ai is driving demand, 29% pop now today. on the other side of that equation, we are seeing ai cost companies money, too microsoft, amazon, google, their cloud units, they need to upgrade servers and infrastructure on the back end so their customers can run their own generative ai model.

so yeah, new opportunities for them, but it's also increasing their capital expenditures at a moment when they're trying to be more profitable and disciplined. and there's the snowflakes, the ai enablers, they should be the new infrastructure allowing companies to make use of their data the models are only as good as the data, so perhaps some urgency for those names to show that they're a real part of this story, as we saw with snowflake's decline this week. the market was still looking at those disappointing numbers. i come back to this chart, this is an analogy of what happened during the mobile internet era first it was the semiconductors that benefited we're seeing that for generative ai then it was infrastructure, then samsung and apple. we don't know what the green and blue is going to be, but if this follows the same kind of model,

we will see those benefit later. we're seeing the semiconductors benefit. what's next? that's what the market is trying to figure out. >> it's fascinating a lot of the same names are expected to benefit again. this one seems to involve a lot of the same players. diedra, thank you. the nasdaq is up 23% year to date on the back of all these massive tech gains, and the tech rally still has legs says my next guest he's particularly bullish on one name in particular let's bring in mark. good to see you. so broadly speaking, why are you still bullish? do you think it's ai or a different story entirely >> thanks, kelly happy friday we call this a triple trough opportunity for amazon the stock is really un underperforming for almost 2 1/2 years now. the multiples have come down for a variety of different reason,

but largely because margins are under pressure and growth has slowed down. if you told me a few years ago it would be growing 10%, 11% in a quarter, i would have said sell everything, or at least amazon stock that's what happened so the question is, what is the next call on the stock we think there's an opportunity here for margins to rise so if the company retail and the aws side is at trough margins, there is a chance to reaccelerate, and we think the multiple will go up on the stock. there's a nice pathway to at least 20% to 30% upside. and if you want to get back to the prior multiple, you can have much more multiple than that >> their margin went from over 5% in 2019 to negative, is that right? >> that's right, last year this was the company -- i refer to this as macro squared if there was an inflationary

cost factor, it hit amazon, fuel, shipping, labor, steel so it just got way laid by all these inflationary costs the debt should rise margins, and this is a company that is probably way overbuilt, they overextrapolated from covid. as they show down and demand comes down, margins will go up >> we've seen big tech switch the narrative on a dime, witness meta and some of the others. microsoft and google have chatgbt. meta just did massive cost cuts. does amazon need to do something attention grabber to signal to

investors, it's hat this inflection point, it knows how to drive result, and if so, what is that? >> kelly, i think probably the single biggest thing that the market is going to want to see out of amazon is this rexael ration in aws -- reacceleration in aws margins look,celerating more than anyone would have thought can it start reaccelerated we're going through this optimization cycle, where a lot of companies probably overbought cloud, so those new contracts are being renegotiated, and then there is the ai workloads. if ai is taking off, generative ai and language models become common place or broadly disseminated across digital companies and fiscal companies, too, that will be stored

somewhere and powered somewhere. the compute power and the storage cape babilitcapabilitie real shot of being one of the big winners for that we should see this reacceleration, and that's what the market is waiting for. >> i want to ask about netflix yesterday, the stock was under pressure, and the word on the street was that the password sharing crackdown is a huge problem, or not going well today, the stock sup 6%. year-to-date, up 28% what if anything do we know at this point about its crackdown and how that might be going? >> two things. i'm sorry, password crackdown is essentially a price increase i have three dependants from college and boarding school that are using my netflix password. so i'm either going to have to cut them off or pay more, and i think there are other people like me out there.

so for us, it is a price increase that's where you're going to see the impact you'll see more of these password sharers or borrowers pay for their opwn accounts. you'll see 20% to 30% of those borrowers sign up for their own accounts, because it's a compelling value proposition, especially as netflix is charging $6.99 a month, the charge for one large latte so we'll see the subads sort of accelerate, and i think investors anticipate getting beyond that. >> it's a noticeable pop today my small coffee is approaching $6 so i don't even finish it. mark, thank you so much. appreciate it. >> thanks, kelly still ahead, the u.s. will

avoid a recession and the fed can't back down in the inflation flight those two big headlines coming out of the new imf report. that's coming up in a moment stay with us ready to take your business to the next level? scale it with the commerce platform, made for entrepreneurs. shopify is specially designed to help you grow your business. with easy, customizable themes that let you build your brand. marketing tools that get your products out there. yeah, way out there. shipping solutions that actually save you time. and that's just the beginning. from start ups to scale ups. online, in person and on the go. shopify, your all in one commerce platform.

welcome back the imf just out with a new report on the u.s. economy urging the fed to stay hawkish in its fight against inflation a press conference was just wrapped up on this report, and we're joined now with youer our guests sarah? >> thank you christina, thank you for joining us this afternoon. >> great to be with you. >> i'm going through the report, hot off the press. feels like one big headline here is that you say the u.s. will manage to avoid recession, and i'm just curious how you get to that conclusion, given all of the tightening we've had so far from the fed >> well, what we have seen from the data is that consumer demand is resilient, it is now being boosted by what comes from the strong labor market, and it is

increasing income. this, of course, excellent for households this is the foundation for which we protect fourth quarter to fourth quarter growth in '23, 1.2% we expect this growth momentum to continue in '24, providing risks are well managed now, the flip side of this positive story is that inflation is stubborn, it is way too high, and that in our view the fed will have to keep interest rates higher for longer, all the way into 2024. we think that interest rates around 5.25% to 5.5% is what will be needed to cool down inflation and put it on the

desired track to target. >> so it sounds like not only do you recommend those rates stay high for longer, but it sounds like you think they're not done raising rates, that there's more work to do here? >> well, that is what we see, that the picture, including what we got today in our data, is that it might be necessary to get higher and stay a little longer than we initially projected to bring inflation down what you should also pay attention to is our projection of unemployment it will slowly go up to 4.5%. that is still a very strong labor market and that is why we come up with this duality of messaging growth is good but rates need to

stay higher for longer >> your view on the fed path is a little different than the market in part, the market sees inflation coming down faster than what we are getting from some of these companies. it is moderating sharply, even the housing companies talk about house prices comin it is moderating sharply even if the housing prices are coming down and the worry about the back stress and credit tightening the market appears more worried about overtightening than undertightening and you're worried about the opposite. >> i would be thrilled if the markets are right. so far they have gone into this expectation that we won the fight against inflation a couple times and that's not really quite happened yet what we are looking into is the strength of consumer demand fueled by two things

one, the fact that we have some increase in income and so the pent up demand from covid may be exhausted, but there's new fuel coming from the markets and how they impact wages. two, we are -- while we're seeing some cooling of the property market, because the majority of current homeowners have rates that are fixed, this is not pushing down consumer demand as it would have done if we were in a world of flexible rates. buyers are less eager to step forward, but the existing homeowners are still enjoying the privilege of low interest rates. that, of course, very often is a

big determinant as to what people decide to spend they're employed income is going up they're not too pressed with mortgage payments. >> i was going to literally ask what sarah just asked. that answer was helpful for those concerned about the hard landing. i wanted to ask a question about inflation in europe. why is food inflation so bad we're talking 20% over the past year some say it's corporate greed. some say it's fertilizer prices. when is it going away? are you going to tighten in response to something that's not macro? >> well, there are three reasons why europe is in terms of inflation where it is. one, ecb has stepped up rate increase later than the fed. here we're benefitting from quite sometime of the fed bringing interest rates up

two, europe was hammered by the impact of russia's invasion of ukraine much more severely, especially in terms of energy. this is not the case for the united states. and, three, what we see in europe is a higher impact of food prices. we are still unpacking why is that so, but it is potentially linked to the impact of energy prices, gas prices, fertilizers and from there on agricultural production we have in europe in many countries increasing wages when inflation picks up so not in all countries, but quite a number of countries in europe this is the case. very different from the united states. >> you're releasing this big report on the u.s. when we're on

pins and needles waiting for a debt ceiling, unfortunately, going down to the wire we hope for a deal in case there isn't, what does that look like for the u.s. bond market, the dollar, the global economy? what's the worst-case scenario >> i fall in the category of those who think that in the 12th hour a solution will be found. also, in the category of those who would say we have enough problems as it is, this is completely self-inflicted. why don't we take it away? for the world economy, we're in un unchartered territory. this is an anchor to the whole global financial system. you deanchor the global economy, you push this ship on which we are into not only choppy waters,

but unchartered waters and the implications are going to be dramatic they will be dramatic also for the united states. i made tampa point from our report, which is the u.s. should get rid of this artificial problem that needs to be solved. it is logical to have a appropriations, once approved, defining how much the u.s. should borrow on the basis of this approval. so, hopefully at some point people would say, we are in a world of more shocks, more problems, let's check one of these problems off. >> the other think we're wondering -- there's about to be an ai special on cnbc. what the implications are going to be for ai on the u.s. economy, on the labor force, on

productivity have you begin wondering about that people are wondering if that helps us escape a recession. we've seen that help the market. >> we're looking into that and like everybody else we're saying this thing is moving so fast that there's risk to fall behind we're analyzing the positive impact that is going to create advancements in so many areas of the economy. we are also looking at the risks. our broad conclusion is that we need to be much more proactive in defining how we are tapping into opportunities and managing the risks. at this point in time, this is left in the hand of a small number of companies and these are good people. they are -- they mean well for the world, but it shouldn't be

just that small group defining our collective future. you know that the fears are gigantic you also know that the expectations for benefits are huge and everything in between we are looking systematically into positives and negatives. >> we look forward to that report when it's out thank you for the time today >> thank you >> kelly, back to you. >> really appreciate it. quick check of the markets dow is just up 287 points. a two-day rally puts us in a better position. 1% gain for the blue chips the s&p is at 4,200. the nasdaq, by the way, up 2% on what continues to be a strong ai and tech-led rally that does it for "the exchange."

you want more analysis on the markets, sign up for my news letter next on "power lunch," it's a fun one. the whole hour is focussed on artificial intelligence. the industry is already being disrupted, those who could be next, how it's affecting markets. any question youan wt answered, tyler is getting ready now i'll join him on the other side of this break.

good afternoon welcome to "power lunch," everybody. today we have a special hour of "power lunch" planned. focused on artificial intelligence and the impact it's having on business, the markets and society. >> ai is what everyone is talking about in board rooms and living rooms everyone wants to know if microsoft or