it's an opportunity to buy >> jason >> northrop grunman. geopolitical issues are still a major problem. stock is down 18%. >> joe >> schlumberger is a name we own. >> we'll see you tomorrow. "the exchange" with kelly evans comes up next. i usually sit next to you, but not today. back over to you, kelly. >> thank you very much, dom. welcome to "the exchange." i'm kelly evans. ahead this hour, as you can see on your screen, stocks are under presh we are the dow down nearly 300 points and the nasdaq, dropping as fitch downgrades america's rating did the bond market sniff this out? yields on the 10 and 30-year, building on yesterday's story.

we start with the first major wall street bank to remove recession from their outlook the chief economist is standing by to make his case. and if the economy isn't deteriorating, why the downgrade, is it a warning shot to washington? we'll ask the man in charge, dan clifton is here. he warns we shouldn't see more signs of stress building and the fed may need to cut rates. and we'll bring in the ceo of summit global investments. how should investors be positioning in response? let's start with the big call from bank of america mike, thanks for your time and for rejoining us the last time we talked you had just kicked your recession call into 2024. and now it goes away entirely? >> yes so thank you for having me on, kelly. yes, i think we have seen enough, at least in the resiliency of the data, the upgrade to prior growth numbers, the solid gdp numbers.

but they're also happening in an environment where wage growth is moderating and inflation is moderating that's only happening gradually. there's enough momentum in the economy that pushed us in the direction of revisions again, and they were sufficient to take out the mild recession that was part of our prior baseline so i don't want to overplay it i think there's a fine line between a soft landing outlook and a mild recession outlook but we have come down on the side of relying and listening to that resilience argument in the face of monetary policy tightening >> yesterday, steve liesman and i were chatting about this is it because this is -- we saw housing turn down a couple of years ago and we saw manufacturing bad, we saw the numbers yesterday, but people are saying it might start to turn the corner. in other words, these things work themselves out instead of happening, you know, all the more closely together. >> that's a very good way to

characterize it, a rolling softness we think growth slows down next year, and the consumer does slow down as you mentioned, manufacturing and housing looks like they have stabilize. there's certainly evidence that fiscal spending is showing through and private sector business spending. so you could get the cyclical sectors that were weak and retrenching lastier to support the outlook and say offset some of that slowdown on the consumer level. maybe the lags are both short and long for monetary policy, but that's a good way to put it. >> well, the other -- as someone -- and listen, the leading indicators, there's so many things that are happening that still feel like -- i get the delay in the call, but what happens if we have the kind of rolling downturns, but then we have the event that's what i can't quite figure out, are we going to spin this forward in six months and look at what the senior loan officer survey was telling us, or what the other signals were warning about. >> that's right.

there are still concerns to the downside we've moved from thinking mild recession was most likely to soft landing was second, to reverse those. and so certainly you can argue how long to rebound and labor supply is going to go, so maybe labor market tightness comes back loan growth is slowing does it continue to slow, do we get a soft credit crunch next year there will be rollover risks with corporates resetting at higher rates there's still a number of things to be concerned about. given what we have sen so far this year, i just thought it was time to reassess the view. >> one more, and the el vamt in t -- elephant in the room is the downgrading. usually that's the tail wagging the dog. let me ask you about adp stronger than expected, your old colleagues say they think adp might be capturing the business cycle and the labor market better than the official jobs report

>> i would put us on the other side of that, at least in predictability of the immediate number in front of us. it just hasn't done a good job in the past. last month was a great example of that. certainly over long horizons, the two match up, and you can get similar views. i'm not saying the adp data doesn't give us any kind of information. i'm just looking at it in terms of predictive power. not something i typically look at >> we have some breaking news from the kansas city fed let's turn to steve liesman. what's happening, steve? >> kelly, thanks jeffrey smith has been named to succeed the former kansas city fed who left in january. so this process has been going on for a bit he will take the position august 21st he will be the kansas city president just before the beginning of the jackson hole

event, symposium, that begins the same week. smith is a former banker and bank examiner at the fdic for many years he ran a couple of small banks he's now the ceo of the southern university southwest school of banking foundation what that is, that's a foundation that provides ongoing education to bankers this continues a trend over time or a practice at the kansas city fed of really putting a banking regu regulator, people with that expertise as the president we don't know anything about his monetary policies. he's not a ph.d. or economist by any stretch. he's just a banker for many years. kansas city gets the vote again in 2025.

>> steve, thank you very much. steve liesman calling in with that news. mike, i guess unfairly to him, the question comes down to is he still a hawk or is he going to have the voice we typically see from the regional bank presidents in that direction >> i would say history suggests yes, we will we really don't know about his monetary policy intuition. but coming from the bank regulator background, that's where prior presidents of the kansas city fed came from. it has a history of being more of a hawkish regional fed on monetary policy and regulation i would expect that to continue, but certainly have an open mind to listen to his views and see what he's saying >> michael, thank you for joining us today >> thank you, kelly. fitch downgrading the u.s. credit rating to aa, citing

fiscal deterioration, including tax cuts, increased spending and continued 11th hour deals to raise the debt limit in response to today's move, janet yellen called it arbitrary and based on outdated data my next guest warns this should be taken seriously joining me now is dan clifton, head of policy research. it's great to see you, dan listen, everyone seems to be focusing on the fact that we are not going to default because we have a printing press. but we just had another debt ceiling showdown of course we should expect this could happen in the future it keeps coming up time and again. >> that's right. let me start off by saying in 2011, investors took it seriously. turned out to be a one-time warning shop people are trying to compare that today we are in a different environment today than we were in 2011. then we had low inflation, low

interest rates we had significant savings it was clear the u.s. debt-to-gdp trajectory was on much better footing. today, it's very different we're in a high interest rate, high inflation environment what that is doing is ballooning the interest costs of the debt so now we have a net interest cost that's rising for the first time in 35 years when that goes up, it begins to squeeze out other domestic spending programs, and investors begin to get worried about what can start to get paid back we have a printing press with a reserve currency we can get a lot more than other countries can. but this is a very significant inflection point we are at as you know, kelly, once you hit 14% of tax revenues for your interest, historically the u.s. has moved into a period of austerity. we're right at that 14% today. janet yellen said when you get to about 3% of gdp in interest

costs, you enter the danger zone we'll be there by the end of the year so i view this not as a political event but as a warning shot that we need to get our fiscal house in order at these level of high interest rates if we don't, the fed is probably going to have to come in and help the treasury out, to be able to get those interest costs lower, because we are not on a sustainable pattern right now. >> i highlighted this before, that the public in 2011 was much more outraged about the debt and deficit situation, which is worse today but is meant with a shrug. what do you think the market is telling us we saw bond yields jumping yesterday. it was a head scratcher. the economic data had been mixed to weak. and yet everyone is starting to focus on the issue on the long end. i'm not sure i'm always persuaded by issuance arguments, but maybe this time is different. >> yeah, just look at the gymnastics that treasury is

doing to buy debt. treasury is going to spend -- or issue another $800 billion of t-bills on top of the $1 trillion, at a 5.4% rate to finance the government operations they can easily go out on the ten-year and do it at 3.5% they're worried about the liquidity impact and solvency issues these are the first signs. it's just not normal i'm not predicting an implosion or that stocks should sell off because of this. but what i'm trying to say, what is happening is very reminiscent of what happens when your net interest cost begins to surge, and there are problems bubbling underneath the surface so the republicans are going to see this fitch rating, and they're going to say oh, we want to hold up on that government funding for october 1. i think this raises the probability we're likely going to have a government shutdown on

october 1. it is going to raise the pressure on the fed to become more accommodating than they have been for two years. >> you're right, it will act to galvanize public attention on this issue, which maybe wasn't there six months ago so most people go okay, whatever the fed does, it's going to -- the yields will react. you're making the argument from the other direction, when you look at the yields, you think the fed might need to cut here to help treasury out explain that >> i think we'll get there, but yields have been moving in perfect proportion since the debt ceiling so yields have gone up, so that's what we would expect. same thing with the dollar strengthening. what's going to happen is there will be a forward look if you think about 2011, we raised the debt ceiling 12 years ago today, which is an interesting data point what happened was, it took maybe six, seven, eight weeks before the fed began to really step in and they started operation

twist. so that's down the path where you will see it if these problems continue. but today's refunding announcement is saying we need more break and there's more strains on issuing that debt that means the interest cost will continue to go higher on the federal government, and congress is going to be passing budgets to pay interest. at some point, that will be financial markets pressuring austerity and political pressure the biden administration would love to deal with this in 2025 hopefully they can get through to 2025. but my sense here is, pressure will come a lot sooner than that >> have we seen any point -- my guess is no, because the deficit keeps going up, so we're not making hard charges about funding other programs or paying interest but at what point do we start squeezing that out or what point can the budget not increase by more when do we hit more resistance >> yeah. so right now, congress wants to do a business and individual income tax cut before the

election, and it has to be paid for. that's a first sign. you have all of the trump tax cuts expiring in 2025. so that will have a major impact how we can do this let me just give you one other major point here in terms of how we're thinking about this. once you get into 2024, congress is going to have to deal with sequestration on april 30th. if that happens, you can see broader 1% cut reduction some of the companies that are benefiting from this government spending right now would be hurt by that. that includes the infrastructure and clean energy names that have really benefited here. if you remember, the economy is getting stronger a lot of people think it's because of the deficit so there's positives and negatives to what's happening, but you are moving into a more negative environment in 2024 >> near-term stimulative but more pressure down the road. i think it's worth noting that fitch is highlighting that dan, thanks for your time.

>> thanks, kelly bond yields have moved higher, even in light of weaker economic data earlier this week. the 10 and 30-year at their highest, the t-bill rate is even higher let's talk to my next guest. joining me now is the ceo and chief investment officer at summit global investments. what was your gut reaction to this, david? >> i thought it was very interesting. i think it plays into the idea that investors this year have really turned towards managing their risk and being active in that managing risk this plays right into that same type of scenario so i think that the timing may be what it is, and people may be susceptible there or worried about it but the reality is, what they say is somewhat true our debt is high we have complications with the inability, the prudent governance they talked about,

and the size of the debt so i think it's worrying in a lot of minds, but if you go back to 2011, i think there was much more pride in individuals. so they were mad, they didn't want that to happen. this was america, so to speak. you're seeing the shrug, because it is a little different political environment we're in so i think right now, people need to position their portfolios to understand what their risk is. the fed is still the driver, no doubt about that they're the catalyst they know what's going on. it gives bears, i think fuel to their fire look, the vix is up, and that's good but the capitulation, we're not there yet. we need to see that vix above 20 even above 40 to have the capitulation we had in 2011. >> it would be fun to unpack the psyche of the public over the past 12 years. maybe we'll just unpack the psyche of the markets here what does it mean for stocks and bonds? >> i think for bonds, they stay

right where they're at and continue on this trend you are seeing, very high yields i think the fed is going to be pressured a little more, to be a little more accommodative. i really like bonds right now. i think there's a good space for them in your portfolio on stocks, it's time to look at the risk you have to look at the risk, this magnificent seven that have went through the oof, and take some of those profits. i think you need to take some of the risk off the table that some of these areas have, and look a little defensive this is the biggest spread we have had between utilities and tech in nearly 35 years. when is that going to unwind so i think it's really important to take a look at the risk you have in your portfolio, reposition some of those, and where you feel comfortable let's face it, there is good data about this soft landing the fed has done a great job where do you feel comfortable? use that as specific buying opportunities to get into specific names

names that you feel very comfortable with high quality earnings here is what i would favor high yields, the oil looks very good conocophillips was mentioned earlier. some of the big tech names like microsoft, very good play here so you need to be very specific. >> you say microsoft, adobe, bu which ones are safe? it sounds like there's both a warning about the whole sector, but just doesn't extend to the best performers. >> you do need to look at the names individually, as yes, we have had the magnificent seven we have had this amazing run if you look at individual names, there's still more upside i believe in microsoft and adobe particularly if you have to consolidate the seven to two, those would be my

top two to consolidate but the sector as a whole, tec has run more than anything else. it's done phenomenal year to date so you are seeing a rebalance. tech is the biggest selloff today with the defensive names doing well, even many names positive today so i think that you need to look at it as the overall positioning from an asset allocation stand point. >> going to be tough to sell people on that there's not a sexy etf for that yet, but there will be after the big run. david, thank you for your time today and reactions. appreciate it. >> thank you as he mentioned, oil just posted its strongest month in a year and a half. we'll debate how the fed might react. and robin hood, warner brothers, discovery and paypal on deck with results we'll get the story and the trades ahead and here is a look across the markets with the nasdaq the

worst performer, down 2% today in the face of yes, higher rates. the russell's second worst, down 1.3%, the s&p down to 4125, and the dow down stick around next hour, an interview with jpmorgan chase chairman and ceo jamie dimon around 2:15 eastern. "the exchange" is back after this i did have hearing aids from another company... i was just frustrated... i almost gave up. with miracle ear it's all about service. they're personable... they're friendly. i'm very happy with them. we provide you with a free lifetime of aftercare. meaning free checkups, cleanings, and adjustments. i see someone new... someone happy... it's really made a difference. call miracle ear at 1-800-miracle and schedule your free,

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welcome back to "the exchange." oil back below $80 a barrel today after closing at the highest level since last april on monday. the surge in prices has pushed gasoline sharply higher. the national average for gasoline is sitting about $3.80 a gallon, 26 cents higher than this time a month ago. but is it just a blip or could prices go up from here let's bring in bob mcnaturally bob, welcome this one caught people by surprise, because we had heard forecasts for so long it was going higher and it didn't but then all of a sudden it did. >> hi, kell. you're right, we have gotten this sharp $10 a barrel rally that i and others were expecting. what is surprising is it took a

little while to get going. today was odd, we had the largest ever crude oil stock draw in the united states, but crude oil prices are off today but stepping back, and to the point about washington and joe biden, oil settling above $80 a barrel, gasoline retail pump prices hitting $3.78, the alarm bells are going off. investors and policymaker also have to reckon with what we have been saying for a while, we'll have a sharp oil price rally in the second half of this year >> why is that, what do you see in the numbers >> so it is not gang buster demand, but decent demand growth 1.9 million barrels a day. a lot of fear about china. the chinese oil data are not weak, and china is hoarding. they are building their strategic reserves, pulling in well over a million barrels a day and putting it in the ground

because they fear a war next year the united states demand is not too bad at all india is smoking hot so you need to see strong demand is the second thing. and then you have these huge opec and saudi supply cuts going into effect this month the saudis voluntarily cutting by a million barrels a day, and russia fulfilling promises to cut their crude exports. we are seeing that that is something you can watch. so supply cuts, plus decent demand growth will equal large deficits and inventory declines. and those should get crude oil prices headed higher >> china stockpiling because they expect a war next year? >> no question xi jinping is very concerned that the relationship with the united states is off the rails

structurally, and if he can't sell growth and linkages to the united states and leading the western economy in decarbonization and all that, if he can't make that the basis of his legitimacy, he has to go back to snatching taiwan you have the japanese, south koreans. we are starting to form up and protect ourselves against chinese militarism, really so he sees the writing on the wall when china gets worried, they start to hoard all commodities, not just oil >> do you think the national average is going back above $4 >> no question the only question is when. we are in the foothills of a multiyear boom cycle so joe biden can have a recession or low oil prices, but not both if the economy is going to be healthy, in my view, we are certainly going back up above $4 a gallon in gasoline prices. we should just hope we can do that while having a growing

economy. but we are not investing in producing enough to meet demand in the world at current prices, no way >> quick last question you mentioned china has been stockpiling. what is our status >> yeah. so we have been draining our reserves we're going the other way. we drained it in half, and joe biden really dumped it last year so we are at 40-year lows, 370 million barrels, so 40-year low. now, look, yesterday, the d.o.e. said we're going to stop filling up the reserves. each the biden d.o.e. is concerned the strategic reserve is too low however, they're only going to take in 6 million barrels. now the question becomes, will joe biden resist further drawing down the strategic reserves if oil prices continue to march higher that we'll have to see

>> everything with the economy and the price of oil, normally, it's high pressure but when you go into a re-election year, the stakes are that much higher bob, thank you >> thank you, kelly. coming up, a chipmaker whose valuation is practically worth an arm and leg the big name investors that are backing it and take a look at the dow map, with intel, microsoft and boeing all the worst performers today, while walgreen's is up 2.5%. even as its competitor warns about profits next year. "the exchange" is back after this hi, i'm katie. i live in flagstaff, arizona. i'm an older student. i'm getting my doctorate in clinical psychology. i do a lot of hiking and kayaking. i needed something to help me gain clarity. so i was in the pharmacy and i saw a display of prevagen and i asked the pharmacist about it. i started taking prevagen and i noticed that i had more cognitive clarity. memory is better.

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welcome back to "the exchange." we're in a holding pattern after the declines initiated by fitch's u.s. downgrade last night. the dow down 242 the nasdaq is below 14,000 and vaneck semiconductor, 52% gain since jan 1, but taking a pause today. and cvs, looking ahead to 2024, they just said they're adjusted target of $9 is no longer a reasonable starting point. uncertainty in medicare advantage, a recession maybe, along with reduced contributions from covid and plans to accelerate the health clinics will all weigh on the bottom line they're also throwing out their 2025 eps guidance of $10 pretty remarkable. shares down 30% from their pandemic high about 18 months

ago. but maybe investors like the reset. today, up nearly 4%. over to steve now for a cnbc news update. new york city officials are hoping college students can help control the growing migrant crisis they will help the asylum seekers file claims. hundreds of migrants have been sleeps on the streets in manhattan as they await processing and the mayor saying there is not enough space to house them nearly 100,000 migrants have arrived in new york in the past 18 months. northwestern university is facing a hazing lawsuit. a former football player says he was hazed and mocked for his mexican heritage from 2005 to twalgt he is the latest athlete to sue the university since the firing of the football head coach, and a day after the university tapped former attorney general loretta lynch to investigate the

athletic department. and prime minister justin trudeau announcing he and his wife, sophie, are separating they married in 2005 and have three children together. they asked for privacy out of respect for their kids kelly? >> that's too bad. thank you. coming up, if mean stocks are back, is robin hood benefitting from that? shares are all lower today, down by 4%. the numbers and narratives to know are next in earnings exchange ♪ (upbeat music) ♪

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welcome back the biggest week of evenings continues. we had fitch and everything else going on, jobs friday. let's get straight to the story and the trade on three more names on deck to report, starting with paypal, they're on deck to report after the bell. the stock is down today, pairing some of the steep losses last quarter. key things to watch are transactions for paypal and venmo and comments on credit exposure founder and ceo jeff killburg has our trades today good to see you, jeff. what would you do with paypal?

>> i want to be a buyer of paypal just two years ago, you saw the price of it, you know, above $300 so it's dramatic to see that big of a move down but expectations for growth are $7.72 million. but you have to understand that who owns this stock, who is betting that this stock is going to come back it's institutions. it has a high concentration of institutional ownership. and when you talk about what paypal was, going back to the x on top of the san francisco building, x.com was the precursor to paypal. i want to own paypal here. i think the technicals are lining up. >> i'm not even going to go in the direction of -- it is fun to trade -- the ecosystem from the paypal launch, this one is up

2%, but that is a good point about institutional ownership. kind of the flip side of robin hood, also reporting after the bell jowl was the best month ever for the stock, up 52% year-to-date, but down about 70% from that ipo price. we'll see how consumers traded equities, and crypto, as both resisted the threat of major downturns. and lower volatility environment. what do you think about hood, jeff >> back in chicago, we talk about selling. this is a sell, and i don't like robinhood. the largest fine ever was delivered to robinhood of $70 million. prior to that, they had fines for misleading, outages, tens of billions the s.e.c. was a $65 million fine so robinhood, we can applaud the fact that it is up 52%, but it's

$30 off from where it was the ipo at $38 so you see a move here, but if you look at the relative strength index in july, it was overbought you'll see it pull back, but i would suggest staying away from this i'm even afraid to trade it. >> very good point so let's move on now to what i'm just going to call barbie. i think we're going to rare about that warner brothers are staving off their december lows. we'll see if they're helped by yes, the barbie box office boost. and what those potential strike issues might mean for the content pipeline do you like warner here? >> i do. my daughter wanted me to wear all pink today for the segment but it's far away enough from the 52-week high there's just a lot of technical strength it's about to have a breakout, so i think there's momentum. people are talking about

"barbie," and they have international scale and growth capabilities we're talking about barbie going to india "oppenheimier," and others so i want to be a buyer here still, longer metric, it has some distance to make up here. so you can catch that as you go to barbie for the second and third time, like i'm probably going to get dragged to. >> i'm looking at the stock under $13 and wondering if it will take something much more strategic to get it going. the fact that it's under $13, even after this incredible box office run, again, you just wonder, can this pure play small-scale streamer survive next to netflix? >> netflix is having a great year, as well. when you look at those, they're complementary. i'm a numbers guy. instead of looking at "barbie"

going up to a billion dollars in box sales, the important number is where the trending is lining up you catch shorts offside and you can have that rally, back up to that 52-week high. when you see momentum come back in like that >> all right we have a ceo tomorrow that i want to ask, and if i'm not mistaken, did we talk about this before, mr. chicago? >> and i like buying at that, and how many beef sandwiches do you think i've eaten in my day i think you're going to find out tomorrow in that interview, but they have their ducks in a row and that expansion will be the template for their success i know it's a very small market cap, so be careful on this name. but you have to take a bite of portillos. >> i asked if there is going to

be demand for heavy foods like this, and this weather will put that to the test >> no doubt about that but i think you talk about comfort food, we're always looking for options, at least for us i call myself huskie, at least i was called that growing up but this offers a great opportunity. >> a lot of viewers wrote to me saying i live in florida and they're like, that's not for me. jeff, thanks so much still ahead, softbank's semiconductor unit is eyeing an ipo as early as next month but could cost investors an arm and leg. details are next o create a competitive advantage. ♪ it's raising capital to help companies change the world. ♪ opportunity is making the dream of home ownership

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is targeting a $60 billion to $70 billion valuation for a september ipo. they design chips to customers, including nvidia and microsoft i'm getting old, diedra. to me, it's still -- this stock was all the rage before so softbank but what's happened in the meantime is the question >> it's been a roller coaster. if it were to go out tomorrow, the conditions would be pretty good you think about the beginning of the year by the way, this is a company that wasn't going to necessarily wait for the ipo window to open. it's going to open it itself if it can grow successfully but reports are saying that arm is looking for valuation between $60 and $70 billion. that's a lot when you compare it to the industry. but the excitement is there. at the beginning of the year,

there was a chip glut and demand for electronics using arm chips. that was weak. now we're in this whole generative ai cycle where companies need more chips. arm occupies a unique spot, as well it works with a lot of the mega caps like apple and amazon and meta and microsoft to pioneer their open ai chip so it's an interesting proposition. but kelly, as i said earlier, a lot can happen between now and a month. you look at the nasdaq, down 2% today, you have to worry if this momentum in the tech comeback is going to last forearm to get out successfully >> softbank had so many things blow up. in 2016, they bought arm for $32 billion. if they're going to double that over seven years, it's not great, it's okay >> compare it to the nasdaq, right. and then you already consider that they have missed out on

this huge nvidia boom. they sold their stake earlier, and they've been selling down alibaba. the point is that they want to make some more big bets in generative ai and they need liquidity to do so right now, it is really hard for private equity to raise money. you read every week about funds not reaching their target, taking longer than expected. >> i love how hard i am. that's not a good enough return. as if i could do better. >> you're supposed to be a tech investor, so the stakes are high >> diedra, thank you very much still ahead, just two weeks ago, goldman reported that big drop in profits last quarter but that's not the only headwind there is an exodus of talent underway

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treasury secretary janet yellen making more comments about the fitch down grade to the u.s. credit rating emily wilkins with the details. >> these are yellen's first remarks since the downgrade, she is speaking today reiterating that she strongly disagrees with the u.s. going from a aa rating to a aa+ she's calling it puzzling, saying the data is flawed and that the rating change is unwarranted. yellen is continuing her defense of the biden administration. she has pointed to a number of economic factors that have recently come out showing that the economy is strong. that includes low unemployment, inflation being down, and recent bipartisan efforts to reduce the deficit. yellen's initial speech was focused on the irs modernization project, which could reduce the deficit by ensuring the irs has more tools for enforcement

yellen's remarks have been reiterated and echoed by lots of democrats, saying that the rating that fitch put forward really does not apply to them, but should be blamed on the trump administration and it's become a bit political in dc, even while it remains a question how much impact this will have on the markets. >> thank you very much meanwhile, goldman sachs shares down another 2% today the bank just reported its worst earnings in years, including a 60% drop in profit last month. that's just one thing they've got to worry about the other is a talent exodus 90 partners have currently left under the bank's current ceo we've spoken with former partners about what's driving the departures you've been following the saga for quite some time. >> i have. it's great to be with you. i would place the exodus of talent in sort of three buckets. the first bucket is sort of business as usual. you've got to know the context

there are 400 partners at any given time every two years they're adding roughly 75 new partners. the ceo wants a dynamic partnership in which people are in cented to kill themselves, work really hard to get into the partnership, and as a result, some people leave. the second reason is strategic shifts we focus a lot on the show about the consumer mess and how that was sort of something that was unearned on their part when you look at the asset management business, we don't really talk about that enough. when solomon joined, there were about five or six different buckets of individual pockets of investing for their own balance sheet funds. solomon shows up and says this is kind of insane, i need to consolidate, raise third-party funds. if we do so, we're going to look a lot more like blackstone, get a better valuation because this is a steady fee generating business you do that and cause a lot of upheaval there were a lot of folks who made a lot of money in the

business who have left in that shift. finally, and this speaks to something we've talked a lot about, solomon, sort of the chaos he's generated he's created three different reorganizations in goldman sachs. >> he has? >> yes, within his five-year tenure he's elevated people to head asset management in one re-org and the next he denotes them and they leave julian is one of the folks we've highlighted that's left. between the three, you have roughly 90 partners who have left, at least 90 who have left in five years. not a shocking amount, but what is more alarming is the heads of some of these businesses have left. >> you have to wonder, especially in a relationship-driven business like asset management, departures probably are a pretty big deal and can be hard to overcome if the client is used to working with certain people who are now no longer there. >> these were the stars, the faces of the business.

julian, we've had meetings with him. what goldman has said, the people who were picking the investments, there is low turnover there it's important to say that while there is -- it's fair to say there's a bit of disarray in asset management, they're also meeting or ahead on targets for raising third-party funds or raising fees for management of assets as well. >> we know the last quarter was almost so bad, it's good for those who kind of widely acknowledge the firm has been through some problems, are they seeing a brighter future now or not? that, to me, is a little unclear. >> goldman is so tethered to the whims of wall street, there is a sense that investment banking has reached, but if they get wind in their sales in terms of ipos, equity issuances, i think the stock is going to recover. ultimately at the end of the day, that's the report card that david solomon really cares

about. >> and the report card comparing them with morgan traditionally, that's a tough one. >> bad comparison for goldman sachs. >> exactly it certainly favors what morgan brennan morgan stanley has done. we'll hear from jamie dimon soon as well. it seems like goldman is in more of the hot seat. hugh, thanks very much that does it for "the exchange." for more analysis on the markets, you can always sign up for my newsletter by using the qr code on your screen. coming up next on "power lunch," the big interview of the day, with jamie dimon. we'll get his reaction to the credit downgrade, the general state of the economy much morisome cing up on the other side of this quick break

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welcome to "power lunch. i'm kelly evans. coming up, we've got a discussion with jamie dimon, in montana, touring bank branches we'll talk to him about the economy, the fed, and of course the big downgrade of the united states debt by fitch that's one major reason that stocks have been lower all session long the dow down about 287 points, so we're heading back toward session lows the s&p, by the way, down 1.3%, is on pace for its first down move in either direction in 47 sessions so notable there the nasdaq down 2%, falling the hardest. its biggest down day since february let's get out to bozeman where jamie dimon is standing by with our correspondent, lessee ticker >> thank you so much thank you, jamie, for being here so you've got a big bus behind you. you are here on your annual bus tour this year it comprises what you have dubbed expansion rks