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 markets in

the northwest, in the rockies. what do you see as the opportunity here >> we love these bus trips it's, like, 12 years we try to go off the beaten path we see clients and have lunch with 100, 150 clients of ours. we go to the branches, we get to talk to our people, we sometimes have branch managers and loan officers and small business tellers and we ask them, what can we do better we give them immunity and beer we want to know. it makes us a better company we have a lot of fun we go places we haven't before we're expanding to montana, idaho, washington street, spokane, boise, it's fun to do, a great time, and we learn a lot. >> what have you learned so far this year? >> folks at cnbc, leave california, new york, come visit montana and idaho, and america is alive and well. the innovation is unbelievable the people get along it's not all about the polarization you read about.

the innovation is everywhere i met with a couple here that does monitoring of methane gas and they're doing a lot of work with all the big oil companies about how to improve emissions it's extraordinary and it's built here gibson guitars are now built here interstate cargo in boise built a big business, a russian immigrant. that's america we should be applauding the beauty of america and all the things it does and free enterprise. >> let's talk more about america, because fitch, big news today, obviously, is the downgrade of u.s. debt down to aa+. what's your take on that decision >> i'll give you a couple of quick things it doesn't really matter that much the markets decide, not the rainmakers who make the decisions. we pointed out issues, about our debt ceiling crisis and things like that. most important, this is the most prosperous nation on the planet. it's the most secure nation on

the planet there are a bunch of countries rated higher, like aaa, but they live under the american en interprize system. >> these are countries like canada and others. in terms of the actual decisionmaking behind the downgrade, it had a lot to do with political brinksmanship, the debt ceiling debacle do you agree with any of those >> those are issues -- this is the most prosperous nation on the planet, north america, we have the best military, the best economy the world has ever seen, the most innovation. the credit is sound. it should be the highest rated credit in the world. yes, there are issues that are public, yes, i agree with that we should get rid of the debt ceiling. it's always used in a way to make it very difficult we need certainty in the world and we should have more of it. >> let's talk about your

thoughts on the economy, because you've been conservative with your balance sheet for a while now. you said that a year ago, actually last june at a financial conference, that the firm was bracing itself for a hurricane, and then you noted that could be minor or superstorm sandy then you later downgraded that threat to storm clouds what's your macro meteorology telling you right now? >> i did not downgrade it. i just used different phraseology. the big picture is america is resilient, unbelievable, et cetera it's a bit of an anomaly very strong consumer, low unemployment, we're growing as a country. the consumer has more money in their checking account than pre-covid. their home prices have gone up, it's pretty good even if we go into a recession, they're going in with a very good balance sheet and businesses are in good shape the storm cloud part is still

there. i'm not worried. when i see people that are worried about this and that, i don't worry that much. you can get worried about just about anything you want. i think people do too much of that i agree with warren buffet about the resilience of america. there are two things that give me heightened concern. one is the fiscal spending and the quantitative tightening. we've never had quantitative tightening and i think that might bite at one point. and the second is ukraine. the humanitarian crisis in ukraine is extraordinary the impact on oil and gas and food and migration, it could expand its nuclear proliferation, nuclear blackmail. this is serious stuff which we have not really faced since world war ii so hopefully that will all sort out and the world will be safe again, but i hope people learn the world is not that safe it will never be that safe we have to be very careful how b we do that how that affects the economy is different. i don't know if we're going to have a soft, medium or hard

landing. i'm more concerned about the geopolitical stuff, all things being equal. >> you mentioned qt as well. you know, you've said that everyone should be prepared for rates as high as 7%. and there's a narrative out there that the softer than expected cpi print is indicative of mission accomplished, we're all good, inflation is under control. do you agree with that >> no, i think people overlook at short-term data if you dig into the data, you wouldn't put much credence to it i think you've got to look at more -- when i'm saying 7%, i'm not saying it's going to happen. i'm saying as a business person there are reasons why it might happen and you should be prepared for it. you never want to be in a position and say i didn't expect oil to go to $120 or $130 or interest rates going up 500 basis points, and therefore i'm bankrupt we should all be prepared. but there's been a sea change in capital flows around the world

governments have to sell more debt than ever before, all governments, including the united states. deficits are not down from pre-covid. they're selling more debt, interest rates have gone up, central banks are selling, they were big buyers and now they have to sell we've never had qt before. and then also this new economy of ours, the green economy, the ira, chips act, militaries around the world, every almost country is beefing up their military these things may be a sea change when you sea capital demand. i think there's a good chance that in six months or nine months you're going to be talking about crowding out we'll find out the ten-year bond just went to 4.10%. don't be afraid. just be prepared. >> how do you see that playing out? because you mentioned the fiscal spending side of it. that's concurrent with qt. they're kind of running counter. >> yeah, they're contradictions,

and they're taking liquidity out. the natural curve one day might be 3.5% on the short end and 5% on the ten-year end. what it leads to in the short economy, i don't know. i think some of these things could have real problems down the road if we don't deal with them today it's better to deal with them today than letting them get worse over time. >> to your point, the consumer has been more resilient than expected >> because we spent $5 trillion over two years of covid. that is extraordinary money that went into the hands of consumers and small businesses the government did the right thing to get us out of covid unemployment went from 4% to 15% in three months. but if we continue spending and continue qt for too long, we're paying the price and hopefully it won't be too big a price. >> what do you think the price will be? >> it will be higher interest rates and i don't know what it will do to the economy. >> in terms of the consumer, do you think they've fully absorbed

the stimulus and the period of low interest rates will we ultimately start to see the effect of that when the tide rolls in >> that's what i'm talking about, storm clouds down the road, fiscal spending, qt, higher rates we don't had the full effect i don't know what that's going to do. i don't want to guess. i think people spend their time forecasting, they're mostly wasting their time. >> do you think the fed has done a good job >> i think they did a good job early on i think it's obvious -- it wasn't just their job. fiscal spending and monetary spending, i think they took too long they kind of said that and caught up by going to 5% they paused for a while. we're going to see they may have to go higher i have enormous respect for jay powell. >> let's talk about the fed in terms of regulations last week we saw the end game, some people call it increasing capital standards for especially

the largest banks. >> if there's some way someone could quiet the group down over there. sorry. >> is that a metaphor? >> i don't know. maybe we can't >> higher capital requirements, what do you think is the overall impact from these new rules that have been proposed >> first of all, i just want to be blunt, it's hugely disappointing. i think these rules -- i mean, i've always thought it was a joke, now we have operational risk capital, which i think is bad based on models that make no sense to me. if i was a fed i would be careful saying the models are perfect. they didn't know inflation and they didn't show 5% interest rates. they lack transparency i don't know what they want the outcome to be, but i think they should be saying here is what we want the outcome to be we have the best financial system in the world. i don't think there's a lot of calibration. we have hundreds of rules, very little calibration, and it can

have a real effect -- if they want to push all mortgages and small businesses, so be it they should tell the american public that. it will have a real effect on consumers. i'm going to say just mortgages. the way i've read it so far, and more detail to come, it's going to make it much harder to make a small mortgage and a mortgage to a lower fico person and i think that's a huge mistake. if that's what they want, so be it they should tell the american public, when we do that it's going to raise mortgage affordability. i could say the same thing about small business and a bunch of other impacts. we're going to adjust to it. i'm not sure it's the right thing for america and we're reading all the details. it's 1,000 pages long. i also want to point out it's ten years after the crisis this has been going on for a long time. we need certainty, policy, the stress test clearly didn't work. we do 100 weeks and they do one

and act like that's the stress i'm far more worried about china and cyber than the stress test we should be having conversations about what we're worried about, what they're worried about. there's almost none of that. it's lack of transparency and lack of conversation with real practitioners. there are a lot of opinions and they've been in the real world i would like to see them get in the boxing ring one day. >> speaking of the recent tur royal, you said to your letter in shareholders, the current crisis is not over, and even when it is behind us there will be repercussions from it for years to come. do you think that these new regulations solve that >> no, to some of these folks, that's what this is. a lot of these folks are using every issue that takes place to justify what they already thought. the best advice i heard was use your brains to figure out the truth, not to justify what you already think. this will sort out

i don't think it's the way to run the railroad, but we have no choice they do it there should be a cost/benefit analysis they're required to do that. none of that took place. none of this calibration so i wish we did it, i think we would have a healthier banking system and i thouink this is way beyond that. >> what do you think are the repercussions? there are reports that you were directly involved in the banc of california/pacwest deal that was announced. you personally received regular briefings as it came together according to reports you advised banc of california in what some have called the rescue takeover of pacwest you're buying about $2 million of mortgages to facilitate the deal, private equity infusion here is this the playbook for the potential stress >> no, i called it a mini crisis only so many banks are affected.

these were inkrcented by regulators we were quite clear, we thought first republic was the last domino, a few others may sort out. pacwest, it's good for them, i'm fw glad they did a public-type of transaction. it's over for now. we're the biggest bank, the community banks and regional banks, i support them. most of them did okay. they earned money, they've got plenty of capital. they're preparing, it looks like, for potentially higher rates or higher real estate loss it's a sound system. you're going to have failure we should learn from every failure. and i think there are a lot of things we could have learned and done differently and they're not in the new regs. they're something that should have been done differently, maybe other potential requirements. >> they did lower the threshold

to those with $100 billion in assets, more long the lines of a mid-sized bank. >> i'm not sure that would have made any difference for silicon valley bank. >> you don't think so? >> i don't think so. >> what would have made a difference >> you stress multiple things and that you look at other things, you create liquidity liquidity is great in so many ways we have so many liquidity. when things get bad i cannot use it because of the rules. i think there are ways things can be set up and i won't bore you with credit facilities and stuff like that. credit facilities with the fhlb or the federal reserve, where every bank actually has all the liquidity they need to back up a major bank so there are things to fix it. they are not in these new rules. and obviously the costs are higher when you see the run. >> so margins for the industry are under pressure as well >> some of that is -- >> sem >> temporary >> no, the earnings to the

customers, that's a normal thing. that isn't because of the crisis >> i see you mentioned first republic, and part of the bus tour is actually meeting different first republic legacy places how is the integration going >> excellent pete and jen and mary ann are doing it the most important thing, they did a lot of great stuff, we were just all over bozeman and all over the place, a lot of great customers. they did some things very well but the integration itself, the systems technology, the auto compliance, i am going to a branch later today, first republic branch, they've got some great people and we were able to assimilate it, help the people save a lot of jobs and hedge, literally, within two days or three days all the interest rate exposure we didn't add to our balance sheet by doing that. the system is safer. we saved those jobs and hopefully we'll do a great job

for the clients. >> do you have an appetite to do more deals >> not really. they don't want big banks to do other deals. this goes back to the regulations, but i also don't think -- the public should know we pay for fdic. it's a mutual insurance thing. silicon valley bank is probably going to cost us $2.5 to $3 billion. so whatever happens when the next bank comes, i want it to be a reasonable bid, and not where $10 billion extra is being given to a small bank. that is not fair to anybody. so i think they need clear rules about the resolution and recovery, and i also think we made huge mistakes on silicon valley bank and i hope the regulators will be looking at that we created a crisis and we created something that maybe didn't have to happen. >> what do you think needs to be assessed from a regulatory standpoint >> i'm not going to go through it but they should be asking questions of themselves. whenever we make a mistake, i spend a lot of time on the most more item, what did we do wrong,

how can we do better we know we're going to make mistakes i don't think we should treat every mistake like a violation of morality, but i think they should be doing a little soul searching. >> do you think there is an appear site among regulators and an appetite among the c suite to do more consolidation in the industry >> i think some companies need to again, i hear consolidate, et cetera it's a dynamic system. it's not static. there are a lot of big companies that have gotten smaller because they didn't do a good job. there are companies, markets, paypal, apple basically is a bank today i just drove by a bank here, i'm sure it's a start-up bank and some middle size and smaller banks want to merge so they can diversify. it's a dynamic system. let it happen. it's a great system. america has the best financial system in the world. i really do mean this, hedge

funds and private equity are dancing in the streets because they're going to pick up a lot of business. we do have the best system in the world, including private equity, hedge funds, venture capital. it's extraordinary that strength is part of the strength of america. and part of what america free enterprise, the most important part, it's not the money it's the people starting things and growing things and moving places and having dreams and being allowed to further those dreams, which has risk we want to make some risky loans. we want to help people accomplish goals and sometimes we make a mistake. >> what do you think they'll be dancing to that is the big criticism of increasing capital requirements, it's going to send business to the non-bank financials, the unregulated sector of the economy. >> that's not always bad i'm not against competition. but the mortgage business is now 80% outside of banks and i don't know what it's going to do with the rest of that it makes it hard to do small

business loans and some risky loans, and obviously a lot of that is going to go to the non-banking system that may not be all bad, but people should be analyzing the consequences and saying we want that to happen because it's better for america and the citizens of america. i've never heard that statement. i think a lot of these things are done without any forethought about the ultimate consequences and very little calibration. we need to be thoughtful about how we're doing things the banking system, this has been going for 15 years, and maybe we should take a deep breath and analyze if you look at our regulatory system, i have this chart i was going to show you. i made this chart and people made fun of me about our regulatory system for banks. i don't know if you can see it up close there are so many people involved, no one is really responsible. i'm not showing this because of banks. i'm showing this because we're

doing this for building bridges, opening schools, building roads, starting companies, starting small businesses we shouldn't be crippling america. we don't recalibrate regulations all the time what we should be doing is what's the best thing that works, making modifications. we don't do it and i believe some of this stuff slows down the growth of america. i wrote in my letter for 20 years we've been at 1.7% had we gone to 3%, we would have 15,000 more per person gdp, which, by the way, is the gdp per person of china. ours is 80, theirs is 15 we would have been 95 today are we done stuff. i think the stuff has really slowed it down bad policy making, bad regulations. it's easy to pile more stuff on people george mcgovern wrote an op-ed in the wall street journal after he ran for president and he bought a small inn somewhere and i think it was entitled, if i

had only known how much these hurt my ability, and he spoke about osha and regulation and the inability to hire kids people should ask that question, what do i need to know to understand the impact of these things on america. and the reason you want to grow america is because it is the foundation of helping the lower paid citizens, too i think we should do a better job taking care of lower paid individuals. i would double the income tax credit a healthy economy is the foundation of everything, including a stronger military. i think we need to spend more time, how do we grow the economy and make it better for everybody. unfortunately, the policy issues in dc, people look at jpmorgan chase, we're not the reason inner city schools are failing people should think about what do they want to accomplish, inner city schools, kids should graduate with a livelihood, paying $55,000 a year. if you change the tax credit,

you can fix america. that's exactly what we should be doing. >> i think some people wonder, is policymaker jamie in the cards for the future >> no. i think companies should be involved in policy making and we do a lot of things to lift up society. but getting policy right in dc is more important than individual corporate efforts education, immigration, regulation, health care, affordable housing, mortgages. if we get those policies right, that will lift up society far more than one company can do. >> what about the overall picture for deal making right now? a >> i could care less about that. those things kind of -- they're like accord yens, they open and close, sentiment, people, opportunities, regulations, the ftc. it will be fine in the long run. companies will find a million ways to grow and expand. it's better today than six months ago we don't run the company that way. we know there's going to be bad

weather, we know there's going to be mild recessions, hard recessions i call that the weather. we try to run the company and serve those clients day in and day out regardless of the weather. we want to be a fortress for you, including nbcuniversal and comcast. that's what we try to do earnings go up and down. >> i have to ask you because there have been headlines recently regarding jeffrey epstein and the ongoing litigation has it impacted your brandic wit at all >> a little sometimes, but we banked with jeffrey epstein and i wish we hadn't had we known today, we obviously wouldn't have. >> have you changed the vetting of potential clients >> yes, because we have to be very careful we don't kick out people based on allegations. yes, i think we do more, particularly around a whole lot of things. the banking system sets the highest standards of, a, know your customer, protecting

people we make terrible mistakes sometimes and we apologize for it. >> i want to ask you about artificial intelligence because going back to the letter, you said you already have three use cases in production today for the firm, and your chief information officer said ai delivered over $320 million in benefits, deepening client relationships. are you positive about this technology are you worried about some of the unintended consequences that could arise with such a powerful technology >> first of all, we put a person on the management committee reporting to daniel and me who does data, analytics that is a game-changer we don't think it's going to change tomorrow. it can do wonderful things we also, we have an ai ethics department, and we explain it to regulators, political leaders, and there's machine learning, ai, we do all those various things it is a game-changer

yes, it needs to be done right, and it's going to be hard to regulate i worry about it because bad guys are going to use it, too. you have people like henry kissinger and eric sh chmidt saying it could be bad you have pharmaceuticals, airplanes, but you live longer and have a better live we went from working six and a half days a week to five now my view is in 30 years your kids will probably be working three and a half days a week, they'll probably live until 100 and won't have cancer. technology drives that that's fabulous. if it causes too much job loss and stuff like that, then we, society, will step in with relocation, retraining, income assistance, all those various things there are a lot of solutions, if we get policy right. >> jamie dimon, thank you so much for sitting down, wide-ranging discussion today. an important day for the markets, the economy, the banking industry as a whole.

we really appreciate it. >> thank you everyone out there keep the faith. this is a wonderful country. support free enterprise. >> back to you. >> thank you very much our leslie picker. an extraordinary interview with jamie dimon. take a quick look at the markets. we are at fresh session lows right now with the dow down about 308 points the s&p is down 57 its first decline of more than 1% or move of 1% in either direction in quite a while the nasdaq is down about 2%. let's bring in brookings fellow, and fellow covering banks with oppenheimer and policy analyst and cnbc contributor. welcome, everybody to you first, let's start with what you heard jamie dimon say about the importance or lack thereof of fitch's downgrading of the u.s. credit >> look, i think he's right. i mean, credit rating agencies are overly relied on by

investors, by government, by regulators they're just folks offering opinions this kind of comes out of left field and i don't think it has much value when i was at the treasury department in 2011 we got downgraded and s&p and treasuries rallied that same day. i think his optimism about the economy was my big takeaway. >> will there be implications from the downgrade that we're missing for, for instance, the major u.s. banks >> i don't think so. i think that's silly we're the world's reserve currency still, so the risk of default is not really there in my opinion. >> so, jimmy, i turn to you because, as i said, a very optimistic or upbeat, i guess i should say, discussion there with probably the mostimportan bank ceo in the country, telling

us the downgrade doesn't matter and so on. and not to make too much of it, but the markets are sinking to session lows as we speak didn't quite get at least the immediate lift that some might have hoped >> well, first of all, i like the jamie dimon theory that if america is not aaa, then basically no one is, since they all depend on us for everything. their defense, innovation, that's kind of an interesting point. i think it's always a good time, whether from a rating agency or anybody else, to remind the american public, to remiernd policymakers that we are on an unsustainable debt path and there's no plan from democrats or republicans to do anything about it it's not fun, it's not as fun as talking about an ai productivity boom or anything like that, but it's still the reality and i'm glad fitch reminded us, i hope other rating agencies remind us and policymakers remind us. >> i like the three and a half day workweek, the cancer

>> i like jamie dimon, the futurist that's great. >> jimmy, i'm surprised to hear your level of concern. frankly, there's not a lot of voices out there taking this quite seriously. we did speak to dan clifton highlighting some of the dynamics what's is the forefront in your mind >> no one is interested in it. the two probable presidential candidates have no interest in reforming medicare and social security it's not even on the table so there is no plan. and if we don't want to wait to the point where markets -- not the ratings agencies, but when markets say, guess what, your time is up, then it really is up we should have had plans in the works and they're not in the works and they're not close. we're going to have to wait until there's a market shock where washington really reacts. >> aaron, do you want to respond? >> the republican party has structurally become the party of tax cuts for every purpose the only plan the republican

party has had really now, since the last fiscally responsible republican president, which was bush 41, has just been cutting taxes solves everything. there's a little bit of a harsh reality where you have a political situation where large ma majorities of the american public want wealthy people to pay their fair share and you have one political party that's entrenched and you begin to understand where fitch and other rating agencies come from. but the reality, and i thought dimon was very strong on this, the models have done a poor job of predicting where things would happen the fact that the markets have taken a huge amount of debt that has been issued by this country for a long time was very, very low rates, it's not something that the textbooks said would have happened 30 years ago. >> jimmy, i'll let you respond >> i'm sorry, what is the biden entitlement reform plan, what is the medicare reform plan, what is the social security reform

plan i think both parties have zero interest maybe that's because voters at the moment have zero interest in it this is a bipartisan abdication of responsibility, full stop. >> with those fighting words, everybody stick around we're going to sneak in a quick break. we'll come back and discuss more from the jamie dimon interview on the other side of this quick break here on "power lunch." mlb chooses t-mobile for business for 5g solutions... ...to not only enhance the fan experience, but to advance how the game is played. now's the time to see what america's largest 5g network can do for your business.

welcome back to "power lunch. just wrapping up our exclusive interview with jamie dimon if you didn't watch it, here was his reaction when asked about fitch's downgrade of the u.s. credit rating. listen in just a moment let's turn back to the panel chris, let me start with you as we turn to the nitty-gritty about the banks. he had a lot of sharp comments to make about these proposed capital requirements, really trying to tell regulators they could do more harm than good what would you say could be the fallout if we do move forward with this economically speaking? >> i totally agree with him on this, and in addition to covering the banks, i covered the alternative asset managers,

and if you go back to 2006, between them, the companies i covered had about $10 billion of credit assets. today that number is over a trillion most of those assets used to live in the banking system the regulations, the proposal that came out last week basically just pulls that that capital lever again. if you think about it, the regulators always had the thing they called the capital, ethic, quality, management, earnings, liquidity and sensitivities to securities risks if you think about silicon valley, what happened was the liquidity and the sensitivity to securities risks so apparently the answer is, oh, and it was a small bank, so instead we're going to come out with a rules proposal that raises the capital, that pulls

the lever one more time for the big banks. i think he's right again, i covered the alternatives they're all very happy they're all getting increased opportunities from this. >> chris, at some point would they face increased execute knee and scrutiny as well >> it's hard because if you think about who goes into these credit vehicles, generally the institutional investors who have their own teams of lawyers and so on and so forth voluntarily in an arm's length transaction giving money to blackstone to manage for them. it's an arm's length transaction among sophisticated parties, for the most part. at some point there are regulations, but i'm not sure exactly what angle they would take to get into the middle of

all of that. >> aaron, this has big implications are we moving in the right direction or wrong one in terms of credit availability to the economy and those who might be most vulnerable? >> don't forget about the m, management, the management at silicon valley bank was totally mistaken and there was structural conflicts of interest with their ceo on the board of the san francisco fed, who regulated them i thought jamie dimon was spot on when he showed that chart we have way too many bank regulators i've moved on taking it out of the federal reserve, let them focus on monetary, so i think you have too many regulators fighting amongst each other, often trying to solve for the last crisis and not looking forward. dimon was right that the ramifications of the silicon valley bank bailout and the other bailouts from march reverberated through the entire banking industry, but more than that, the banks passed them on to customers

particularly research shows lower income customers who are a little less rate sensitive, shop a little less, and i have real concerns when you get regulation wrong the fallout and consequences are on essentially the people who ought to bear the least. >> i've seen research that says things like the loan officer survey, the closely watched metric don't matter as much as they used to because so much of the credit extension is happening in the private space >> i sense what jamie dimon was saying is that for regulators it is always october of 2008, and they are not concerned enough about tradeoffs and unexpected consequences, like moving this money into a different sector. i thought that was a great point he made that, you know, listen, better policy means a wealthier america. if we tamp down the risk too much, we get less growth

he said we could be at 95,000 per capita instead of 87,000 per capita that makes a difference and you need regulators to think about tradeoffs and consequences >> again, he tried to bat down any idea that he, himself, might enter the policy race. gentlemen, thank you for your time today aaron, chris, jim, we appreciate it bond yield are moving higher after fitch's downgrade of the u.s. ouherarsreayg in abt that next. from august 7th to the 13th. now is the time to partner with our experts. get started today with verizon business. it's your business. it's your verizon.

welcome back stocks are falling today, in fact the dow down 331 points, right around session lows, as we've seen renewed selling pressure this afternoon after fitch downgraded the united states debt rating bond yields are high, let's get to rick santelli in chicago with more hi, rick. >> hi, kelly yes, there are a lot of moving parts in the marketplace today look at that 24-hour chart 8:15 eastern, adp better than expected, we see rates climb and, of course, when you pointed out the ten-year, it needs to close above $4.07 to be the highest yield since november

technicians aren't worried about 23, they're worried about 4.25 from october crude oil, another influence that takes me back to the old days treasurys like to pay attention to higher energy crisis, that's another reason to make sure you pay attention. now, let's remember we had a record by volume drop in inventory. that's significant let's find a trader. hey, dave. >> my man. >> let's talk about the issues of the day we had strong adp, friday is jobs, jobs, jobs what do you think, how are the markets acting, considering we've seen such a huge drop in crude? >> well, years ago it was all about that, and now they're caring again it's a big deal. >> could it be something that reversing the fed from the standpoint that you have some who continue to talk that we need more evidence before we

truly advertise we're done do you think they're ever going to truly advertise they're done? >> they have an agenda they don't care about anything, they don't care about numbers. they have an agenda. it's whatever fits their agenda. that's what they're going to do. they might telegraph, play along. they have an agenda. >> why do you think stocks are down today it's almost a question i'm embarrassed to ask because they've been on a tear to the upside. >> what do you think did you see the fitch report? this is a big deal it's a big deal. >> what's been the talk about the fitch downgrade? i remember 2011 when barack obama was in office, and of course we saw s&p downgraded a notch. now another administration of democrats that like to spend and i'm not saying it's a horrible thing sometimes they spend it on good things, sometimes they don't but it is about spending because they're spending other people's money. >> it's a waste. any time the government is in

charge, it's a waste >> do you think traders believe the impact of fitch, unlike 2011, which it was hardly noticeable, do you think it's having an effect >> i think it's a big deal i really do. >> one thing i can say is we're all boiling frogs and in the end i'm not going to comment about why they've downgraded or how all the emperor's men are saying what a great wardrobe the naked emperor has. if you have kids and grandkids, we have too much debt. our economy is rusting they need to do something about it. >> preach on you're 100% spot on. and where is moody's >> you're the fourth person that asked me that today. >> exactly. >> kelly, back to you. >> we'll see if they follow suit everyone is fired up out there, rick thank you. that's the bond market take. how are stock investors dealing with the downgrade news? that's next with the dow down 332 points

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the dow near session lows, the nasdaq down 2% we turn to cnbc contributor, michael farr michael, it's good to see you. do you think the market is overreacting or underreacting? >> i

there's a problem, right the debt is increasing, and the cost of servicing that debt is going higher it doesn't take a rocket scientist or harvard mba to say that's probably not sustainable.

>> not as big of a market impact, but also not usually that -- or maybe i'm misremembering i node from brian reynolds this morning he thinks a lot of institutions are chasing this market higher, and as they continue, you could see stocks generally move to the upside. >> path of least yeance -- financial is sound, house sergeant sound, the consumer may be running out of wallet, vis-a-vis inflation, but the inflation is begin to go moderate there's signs of a soft landing. you are to have carb, companies are still earn money we're not in a crisis, but we shouldn't ignore it. we've got to pay attention to this, kelly. we can't deet racking up the debt on and on without a plan here it seems like lost sides of the

aisle are intent upon doing that. >> they'll be the new bench dismarks michael, thank you so much meanwhile, losing its edge, weak guidance thanks to canceled orders and elevated inventory. why is the u.s. lasor market so weak right now we have the details, next. rk. [phone: go straight.] but, to navigate the complexities of modern work... [phone: turn left.] ...you need more than technology. you need cdw. [phone: you have arrived.] so we'll implement cloud based microsoft modern work solutions like microsoft 365, teams and azure, so your teams can collaborate with zero trust security anywhere. [phone: destination ahead.] microsoft makes modern work possible. cdw makes it powerful.

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welcome back pippa stevens has more of the details on weak u.s. solar market what's going on? >> the shares at the lowest since october. today's drop is thanks to the q3 revenue guidance which missed estimates. the company is the latest to warn about weakness in the u.s. market cfo telling me, quote, in the u.s. there's a real slowdown the u.s. market is now growing this year. i don't see any resolution next year he says the picture is better in europe while distributors are pulling back as they work through excess supply, it's not look the u.s. the slowdown is partly because of higher rates which increases the payback period that system while about 60% is domestic, and

i was told the market has changed quickly, saying last year it was not about enough supply, while this year there's not enough demand. but utility scaled projects are less sensitive, so demand is still robust in those markets. the turnaround has been very fast and steep >> close things out with me, while you're here. we have about three minutes left, starting with ford seeing the u.s. sales jump nearly 6% in july from a year earlier f-series trucks were up, but the lightning down 28% that unit is expected to lose $4.5 billion as he ramp up heavily no next year they say part of the decline was a temporary shutdown in production lines, but we know there's bigger sures

i think that there are still issues with consumers. we still have range anxiety, so people are still woirkd about that, but also the prices, if you're more sensitive with your spending, are you going to shell out? >> absolutely. another headwind for forte have you heard about this? the nation of iran is instituting a two-day shutdown as they grapple with unprecedented heat government offices, schools, banks will be closed under friday they have seen a triple-digit heat wave for days maybe phoenix is next, a week-long shutdown i hope there's no more of these. >> and the greater concern, this is becoming more and more of an economic issue 470 million hours were lost in 2021 because of the climate. >> and the bills are adding up i see people complaining about how their cooling costs will be

$400, $500 a month, and it could be way worse china, finally, is trying to do what millions parents have failed at. they're considering a two-hour per day limit for people under the age of 18 on, what do we call this, technology -- social media? smart phones have to have a minor mode now if this becomes law, it's bad news for which of china's own biggest companies. and to me this is pretty shocking. >> i think it's a big statement. i think there's a lot of issues on how you enforce it. maybe some content limit from foreign nations? >> yes. >> but i think a lot of parents are interested in how you actually do this pippa, you turned out pretty well what was the pippa stevens household approach i don't think you were a big video gamer. >> i was a big cartoon network

watcher. you know, i think they helped me along the way. that's how i learned socialization, i think, from looney tunes tyler is back tomorrow thanks for watching "power lunch," everybody. "closing bell" starts right now. welcome to closing bell. this make-or-break hourstarts with some turbulence as high are bond yield, and more helps indexes toward their worst day in months. s&p 4511 was the low of the day. the nasdaq has the underperformer leading to the down side, about 80% of all volume is negative today on the new york stock exchange take a look at treasuries. that's part of the story as