transformational. boeing, look, i know this has been disappointing over the last month or so. but look at the news, they think they're going to get 737 production. that's big and meaningful. >> i will see you. thanks, guys. i'll see everybody on "closing bell." "the exchange" begins right now. ♪ ♪ >> thank you very much, scott. welcome to "the exchange." i'm kelly evans, and here's what's ahead other than searching bond yields this hour. we also have two big legal cases. the first concerning the fate of sam bankman-fried, the second over cfpb. trillions could hang in the balance. details ahead. and microsoft's $9 billion ai tool, is it worth the hype? the first verdicts from users are in. what they are, what it means for the competition and why microsoft's stock is lower. and two different trades in the weight loss craze. one is a bail, the other may be

a buy. the analysts behind those calls are here. but first, the biggest story of the day is bonds. take a look at this chart, the ten--y ten-year yield. major implications here for wall street and main street. we start our drive to 5 today. what happens to housing if the yield hits 5% next. that's the road we're on. we'll update you in a moment, too. and what does it mean for stocks? we start there today with dom chu. >> well, it's decidedly negative. it was more mixed with rising yields over the past deferral days. now, even the nasdaq is getting the brunt of it, and much more so than other parts of the market. perhaps a catchup trade to the downside. the nasdaq composite, down 192 points, 13,115. again, right near session lows. the dow industrials down 336 points, and the s&p 500, 4240,

down about 48 points, north of 1% in terms of declines. even at the highs of the session, down roughly seven points, 66 at the low. so we're bouncing off the lower parts of the session. for those watching the charts now, keep an eye on that level in the s&p 500. that represents the 200 day averaging price on a rolling basis. some traders are watching that level just below where we are right now, so keep an eye on that. kelly mentioned rates. we were near session highs right now for yields on the benchmark ten-year treasury note. you can see on an intraday basis, you have to look all the way back just to put it in perspective to mid august of 2007, the last time we saw yields this high. that's how long it's been, just to put things into perspective. this sharp move higher is causing all the angst right now. and then one other place that is seeing that macro ripple effect

is in the value of the u.s. dollar. rather than putting in the dollar index, i'm going to put up an etf that shows and tracks the value of the dollar and moves upward with it. uup is up fractionally, but i put up a one-year chart. at the lows, we had fallen about 10% on that mark. and now we're up about 10%, 11% from there. so the dollar is going to be a huge story, especially as we talk about core results and earnings season coming up. many companies in the u.s. get a lot of the revenue outside the u.s. so what does that mean? we'll wait and see. >> dom, thank you very much. we appreciate it. meantime, one of the fed's voting members next year is out with new comments on the economy. let's get to steve liesman with those headlines. >> fed officials saying the interest rate is "sufficiently restrictive." that's the benchmark forged by

fed chair jay powell to determine if the fed could stop at current levels. very much in a place he told reporters earlier today where we can be patient. but the fed vice chair michael barr yesterday said the fed is at or near that level, but not quite as definitive. the comment would mark it as an outlier with several fed officials suggesting that they would favor an additional hike of 19 members forecasting one more hike this year. in fact, the probability of a final hike this year rising this morning to 31% for november, 47% for december after a strong job openings report implying continued strength in the labor market. and suggesting the fed should. hike again doesn't offer much relief. he said the feds should hold rate at current levels for a long time and well into 2024. asked about surging long-term bond yields as dom just said,

hit new 16-year highs of 4.78 right now. he said higher rates will help the fed restrain the economy with corporate debt refinancing helping to slow growth and bring down inflation. he added he doesn't believe companies were being severely impacted by higher rates now, and the main focus is a soft landing within reach. but the fed has to monitor the slowing of the economy. the next rate move, the end of next year, one quarter point cut. >> it's still significant. we have seen him approach this thinking, but this is the first time he's come out and said it. >> i think what you have is those on the committee who are worried about lags, and those who are not. one of the lags he points out is the corporate debt for financing. >> very interesting. steve, stay right there with treasury sitting at decades highs. let's talk more about the implication in the feds of market. joining us is the ceo of global

investments. welcome. so what are people saying in the pits, so to speak? >> i suppose at this point, it's just hoping not to be carded out. it's been a really repricing for the long end of the u.s. yield curve over the course of the last few weeks in particular. so not only have interest rates come up, but the yield curves steepen considerably. one way to measure this is called the term premium, which is an idea of how much over and above the expected path of fed funds, long-term bond yields are. the premium has gone negative from the middle of the year to pos positive, and that could continue to climb. s >> you think this is about growth. we saw a further move, but this was happening before that data,

no matter what the data has been like, it's been driven by real yields, and the only culprit i can find there is the deficit. >> i think that's a little bit more of a short-term item. there is a budget deficit which is wider, and is acting about $15 billion of incremental supply per month across the curve. the other thing, and this is a little understated, as the bank of japan considers relaxing its yield curve control policy, that's allowing the japanese government bond market to become more volatile, and that effectively also adds a supply of interest rate risks to the markets that has an effect. it's a little hard to measure. >> the treasury massively increased the size of its funding needs at the same time the bank of japan widened that long-term band to 1%. so these two factors both contributed to what's been -- we

should emphasize, it's not just a u.s. selloff in bonds, it's been global. >> it's more dramatic here. >> but i think the supply and demand balance is coming into focus, david. one of the interesting questions is, do you buy bonds here? do you buy them hand over fist, and put the money away and not have to worry about it, or is it quite the opposite? are people concerned because 60/40 portfolios are down the past few months? >> i think that's a great question. in our sense, i think you have a position, your equity positions more defensively. minus utilities. i think staples and others are where you want to be with these yields and you need to pick up some of these bonds. today, we're purchasing a 6.6, one-year out yield. that's phenomenal. so i think there is definite hi value in the market, but also in the stock market.

>> you caught steve's attention. >> six muni, is that new york? >> that's a good question, steve. we can manage your money after. david, just as well for one more moment on what you think people should do. yes, bonds are attractive here, but people who bought even munis a year ago, i mean, there's a lot of people who bought bonds who said if i waited i would have gotten a better yield. so they might feel a little confused now, as well. >> i think that's understandable. in general, helping investors be in the right place at the right time is important. so talking about dynamic etfs where they can help you get in the right space and right time is very helpful. i would consider staples, look at farm and biotech, consumer services. but be very picky what companies

you purchase in this space. some are very expensive. >> a little bit of what michael over at piper sandler has been talking about, the only thing that matters is covering your interest costs. i don't care what kind of company you are at this point -- steve, go ahead. >> well, i think if you are really going to get into it and roll up your sleeves, you need to really examine the balance sheet of these companies. and there are going to be companies that will be dramatically affected by this interest rate cut and those less affected. there will be declines in equities that will correctly reflect this added cost and sell pathetic declines in similar equities that won't correctly reflect it. others may not have that -- it might take time. but then you also have to look at the bond part of it. the debt side of the balance

sheet. and you'll find that there are some pretty amazing -- rick reeder told me that he was buying aaa rated commercial paper from some of these other banks out there yielding more than 6% over one-year terms. now, obviously you're taking something of a default risk on this. but if you're going to take a default risk, i would think this would be a place to do that. >> regional banks was getting notice a moment ago. that's not what rick is talking about. he's talking about playing the flip side of this. you can see the components, the

>> reporter: he said he listened to a rogan podcast. they're going to have to live in a bubble for six weeks. they cannot google this, talk to anybody about this or google the judge. he said you're going to have to live in a bubble. the list of juror questions, do you have a negative opinion about cryptocurrency? if a crypto company were to fail, do you feel that only the owners are to blame? and do you have any negative opinions about amassing wealth to give away to charity? it also mentions sam bankman-fried having adhd. they planned to say raise your hand if you had any personal or professional experience with adhd and could affect some of sam bankman-fried's body language in the courtroom. sam bankman-fried has pled not guilty to seven counts of fraud and conspiracy over the collapse of what was once a $32 billion crypto company. he has been in custody since

august and has argued he didn't know about some of the financial issues going on at ftx. prosecutors need to prove intent on the side of bankman-fried. that is key. four of his top lieutenants have pled guilty which legal experts say makes this case especially challenging for the defense team, at least three of those executives do plan to testify. kelly? >> kate rooney, nbc news and msnbc legal analyst danny cevallos is standing by. it could be an imposing sentence if it is what is imposed. >> reporter: the statutory maximum is a gigantic number. you add up the maxs and run them consecutive. it's not the likely sentence. in a case like this under the federal sentencing guidelines,

t the loss amount can send it into the stratosphere. he will be able to point to likely millions of dollars that would drive that recommended sentence way up there into the many decades. you might get a good percentage of the way there. ultimately sentencing guidelines, ever since the supreme court decision over a decade ago are just advisory, so the judge can go below the recommended sentence, but make no mistake about it, it is the loss amount if bankman-fried is convict that had will really hurt him when it comes to sentencing. >> for now, danny, thanks. we appreciate your time today. coming up, we're kicking off the drive to five with the ten-year yield only about 20 basis points below that level. up next, we'll look at the fallout already on mortgage rates and the housing market plus the fate of the cfpb is hanging in the balance as the supreme court weighs in on the

watchdog agency. what exactly is on the docket and the ripple effects the decision could have. as we head to break, a look at the market, dow down 1.1% right now just off session lows. the s&p down 1.25%. the nasdaq 1.7%. russell is 1.5%. just two bips below 4.80. not much move after the comments from bostic. to duckduckgo on all your devie

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join the millions of people taking back their privacy by downloading duckduckgo on all your devices today. welcome back. as the yield on the ten year gets closer to 5%, we're seeing the impact in different areas of the economy, housing is one of them because the ten year is the benchmark for mortgage rates. we're seeing it play out as mortgage rates jumped to a new long-term high. diana olick, andy walden, on the impact this will have. welcome to both of you. diana, what are the headlines? >> the average rate on the 30-year hit 7.72%. that according to mortgage news daily. mortgage rates follow loosely the yield on the ten-year treasury that has been climbing on strong nick data. rates have not been this high

since the end of 2000. today the j.o.l.t.s. report is pushing things higher. hitting both the new and existing markets while builders from the tight supply, higher mortgage rates are a major concern now. now to put these rates in perspective for a borrower buying a $400,000 home, the monthly payment today is about $930 more than it was when rates were at 3% during the height of the pandemic, that is real money and is having a very chilling effect. >> andy, i turn to you because a lot of people have said maybe the hope for rebound is now evacuating after the latest round of housing data. >> it was red-hot coming into

august. we're 2.5% above last year. that headline number was effectively flat in may and was ready to push higher. buying power is down rough ly 6 so it could take steam out of a hot housing market heading into the fall. >> so far the market has been frozen, the fed hikes, inventories shrunk. the prices have stabilized and started to rise. do you throw that out the window now? >> a little bit. when you look at the demand side, it's affecting it as you would expect, its lowest point in the pandemic the last three weeks constraining the market. it is driving down demand pulling down supply.

70% of markets are down and so it is causing that gridlock in the market. the big question when it comes to how will the market react is what is the inventory going to do? will we see any inventory building the next few months? it could cool prices down. >> diana? >> we saw prices pull down when mortgage rates were lower. prices then started rising when mortgage rates were rising, which is not the way the housing market usually works. when is that dynamic going to change? if so, how much do you think prices can come down? >> there's the potential to be a lot. it comes back to inventory. if you look at home

affordability and what it would take to normalize the market today is a 35% correction in price or a 4% decline in rates or a 55% growth in income. some combination of those. those are massive movements and none will happen in a vacuum and there's a big potential for movement, this view that housing is overvalued. we just haven't seen that inventory build. the last few years this late above seasonal average growth in inventory. do we see what we saw in late 2021, you started to see the inventory build and prices soften. we'll be watching that data closely because that will tell us where home prices are going.

>> thank you both on an eye-popping day for the housing market. still to come, can microsoft's latest ai tool live up to the hype or will companies have to rein in i.t. spending? the shares at session lows down 2.7%. hi, my name is damion clark. and if you have both medicare and medicaid, i have some really encouraging news that you'll definitely want to hear. depending on the plans available in your area, you may be eligible to get extra benefits with a humana medicare advantage dual-eligible special needs plan. all of these plans include a healthy options allowance. a monthly allowance to help pay for eligible groceries, utilities, rent, and over-the-counter

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his job. a defiant mccarthy scheduled it after matt gaetz filed a motion to oust him last night. if five republicans vote to remove mccarthy, that would be enough, assuming all democrats vote against him, too, which is party tradition. in a letter to his kcaucus hakem jeffries said they will vote against jefferies. donald trump says he plans to take the stand in his fraud case. he is named as a potential witness by his own lawyers and by attorney general la titia james. and chipotle may have an automated assembly line developed with kitchen technology company. this is not the first time chipotle has shown an interest in robots and unveiled a robot

with a robot that fries tortilla chips. >> i would love one in my kitchen at home. >> chippy. >> tyler, i'll see you soon. thank you very much. tyler mathisen. coming up, the future of the consumer protection bureau is hanging in the balance. we have the details next. check out shares of molson coors. they were down about 1.5% into that. we'll monitor the meeting and bring you any developments as hee stock reopens for trading. "t exchange" is back after this with the dow down almost 400 points.

welcome back to "the exchange." the past work of the cfpb could be thrown in today the mraf here is a group representing payday lenders that have been a target. they say the fact the agency's funding comes from the fed and not congress is unconstitutional. a ruling against the cfpb could raise doubts by others including the fed itself. here to discuss senior adviser at the kato institute and former director of the agency and nbc news and msnbc legal analyst danny cevallos is back. i feel like the doomsdays never

come to pass, but this is one of three rulings that could strike at the heart of a lot of these agencies. >> kelly, that's right. i don't want to dismiss -- i think right now it's still an open after hearing today's discussion at the court, a wide range of outcomes. there is a small probability. i don't want to dismiss that. i think the odds of that are quite low. maybe a 20% chance they come up with a ruling for the federal reserve or fdic. as we saw in the case they looked at removal powers, the court crafted a narrow solution. my money is on a 60% chance this will be narrowly decided. >> what's more broadly at stake,

danny? >> it could affect other similarly -- and i use that word carefully -- similarly funded agencies. as mark pointed out, this is an agency uniquely funded. there doesn't appear to be other agencies funded this way. executive branch and the legislative branch -- excuse me, i meant the executive branch primarily, cannot get money unless it's appropriated and if not, they can't have the money. what the 5th circuit, the lower court, the appeals court, this agency essentially has perpetual funding without any control by congress, and that's why there's a strong probability this will be a narrow decision striking down only the funding of the cfpb. >> mark, some have suggested its past rulings could then be dismantled. any work it's currently doing

and changing things with credit cards. could potentially be up for grabs. does it undermine the legitimacy of the entire agency? >> the really big change was in 2020 when the court made the director removable. if the white house calls the cfpb director and says your budget will be "x" or else we want to see your resignation, then it has to be "x." so it's already lost a considerable amount of independence because the director can be removed by the president. you've had a statute of limitations. anything out there five or six years or more will be fine. we ran into the same issue in 2020. i expect some litigation but for the most part the agency will

have the ability if this is a narrow decision to bless everything it's done. there has to be litigation, a transparency period. cfpb will go into the congressional appropriations process and we have the securities exchange commission, so we have a number of financial regulators who are in the appropriations process. there's a possibility if the court gives a stay where they say, okay, congress, you have six months to fix this, that's not an impossibility. the court is very aware about let's not disrupt the marketplace. this is why i very much agree with danny. i believe we'll get a narrow decision. the cfpb is so unique you can craft a decision that only applies to the cfpb. >> that's fascinating, danny, you think this agency could change dramatically.

its ability to impose future rules at its discretion. >> if the agency is funded in an unconstitutional manner, it could be the end of the agency as we know it today. arguably it is forever unconstitutional. if it can fund itself without any oversight from congress. it cannot continue to exist if it violates the kings. try to narrow this decision and give it an opportunity to be properly appropriated. this sort of exists in a neter region that is not fully struck

down until now. the 5th circuit did find it constitutionally unconstitutional. with this supreme court composed as it is. >> whatever happens here, it's one of three and could be a year the supreme court pushes back on the so-called administrative state. mark calabria and danny cevallos. yields jump once again, and microsoft is the biggest drag shaving off 33 points. only one is making a $9 billion bet on an ai tool. a look at microsoft's co-pilot next. the dow jones industrial average down 411 points just off the session lows o45f 0.

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related or not to the pressure on the stock? >> not related. this is not coming up for another month or so. like you said, kelly, all year everyone has been asking can it be meaningful sales from this ai boom we're experiencing. microsoft is about to try with the launch of its new ai assistant co-pilot for its business customers $30 per month. double what companies are waying for a microsoft 365 that includes apps like word. is it worth that steep price? microsoft has had some testing an early version of co-pilot. i caught up with the ceo of lumen technologies and 300 of her employees have been using co-pilot. >> i see the potential for breakthrough productivity. i feel with the pace of the

fusion of ai it's now or never. you wait, you're going to get left behind. >> i spoke with a lumen employee who said co-pilot allowed him to be be in two places at once and even catch up on missed meetings. >> before i was using co-pilot, it would have taken me a couple hours. it took me three minutes to interact with co-pilot in a teams meeting and bring that information current. >> the pressure is on microsoft to sell to the more than 300 million users. especially as companies are tightening their i.t. spending. i caught up with jared spataro. >> we don't say think of this as an addition in your span but of revamping all of your processes in your company. most are interested in

productivity gains, interested in what it can do to create value. we'll start there. >> we'll start seeing what happens here. microsoft has said not to expect meaningful sales until the middle of next year. like you were saying in the tease to break, 300 million usersish and assuming they take on this subscription that's $9 billion in revenue a month. that's the addressable market. >> a lot was priced into the stock. a get hub study, microsoft owns them, and their co-pilot has had major take-up. >> it is developed to developers and coders and the like and these tools, chat gpt, talk to any coder in the world, they have it book marked because it helps them writing code. this helps with email, meetings. the ceo was able to make a power point he said would have taken

hours to make, feed it the documentation and it spits it out getting you 80% of the way there. >> all of our fortunes depend on it. steve, thank you very much. we appreciate it. the dow is down 414. demand for weight loss drugs like ozempic showing no signs of slowing down. a potential loser in the pavement price. the analyst is here to make his case next. icy hot. ice works fast. ♪♪ heat makes it last. feel the power of contrast therapy. ♪♪ so you can rise from pain.

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treatments in particular are overblown. welcome to both of you. dan, we'll start with you. toast really think could be toast from this? >> yeah. thank you for having me again. i think it's -- i think the weight loss drugs are going to make toast lose weight, right? and we did some work in conjunction with our device analyst anthony pa troen, we used a lot of very sophisticated studies about weight loss. what we found out is that this will be a 25 to $30 billion drag on the u.s. restaurant industry by 2025. there's like 130 million people between obese people in america and type ii diabetes that could be as much as 130 million people that have that diagnosis. 15% use that, this is 25 to $30 billion drag on the u.s. restaurant industry and potentially mid single digit drag on volumes on toast because they're 100% exposed to

restaurants. >> shares down 6% today. it's incredible to have something have this much impact. we're talking about huge, huge money that is potentially going to be lost as a result of this. >> correct. and like people pushing -- people are pushing back saying it's only upper east side, upper west side. i think the cfo of walmart said something about this recently about that they're seeing trends at walmart in terms of food consumptions. this is widespread, this is across all of america. it's not just new york city or upper east side. >> is there additional pressure in toast on a market day like because of fintech business model in general being a question mark? how much of its losses are because of weight loss? and how much is just because of yields popping and this not being very profitable company yet? >> it's a great question. so this is a long-term drag, like '24/'25. we see near-term issues. they have trouble getting into the enterprise. we see that in numbers.

34% of people have student loan debts, of them, 80% say they're going to pear back their consumptions at restaurants. there's idiosyncratic drags on toast near term and long-term big deal is ozempic in my view. >> the point for people, as they looking at buying opportunities, the sell-off deepens, this is not necessarily one of them. i know there are some you do like. we'll come back to that. thank you for that. medical device names have also been expected to take a hit as weight loss could lead to less demand for new hips and knees in the future. and the need for insulin would also seem to go way down. but my next guest says the selloff shares down 44% in the past three months is overdone and upgrading the stock now. matthew taylor is the analyst behind this note. matt, bring us up tospeed. welcome. >> thanks, kelly. thank you for having me. yeah, so as you said, the stock has been down over 40% since the select data came out. and we did analysis with

physicians and survey work to show that long-term opportunity shouldn't be crimped too much by glp-1. it can coexist with diabetes tech, whether it's cgm or pump are still very underpenetrated in the type ii market. when you think about pod and insulin pumps, most of their use historically has been in type i which is relatively unimpacted by glp-1. >> even if overall insulin demand comes down somewhat, that the technology that they're involved with could still grow market share and therefore lead to gains? >> absolutely. if you want to think about it simply, the penetration in type ii, for insulin pumps is only about 5% today for intensive type ii. so even if you think glp-1s will cut off ten years from now, the forforma penetration is still very low. so there's a significant unmet need here still for insulin

pumps. >> you have $240 price target mfl a lot of people are looking for traditional parts of the market like healthcare can be more defensive when things go belly up. medical devices have been in the eye of the storm over the glp-drugs. do you think it's unwarranted for the entire class or just for these particular -- this particular little corner of it. >> well, it's probably even less warranted for the rest of the class. meaning that things like hips and knees could actually benefit from glp-1s. if you think about knee surgery, for example, there's about 10% of patients who are contraindicated for knee surgery because they're too heavy or doctors don't want to operate on them because their outcomes could be bad. losing weight could be more people into the funnel versus dropping them down to the bottom of it. >> i heard people, friends, family who said i need to lose weight so i can have this surgery. so your price target for inselet is $240.

that would be pretty significant upside. do you think there's significant upside across the class here? >> we love the group here actually because it's been under pressure given utilization fears and glp-1 pressure that we think is unfounded. but our upside on pod is about 50%. that's going to be more than average for sure in our coverage. and we think that investors can take advantage of this dislocation whether in pod or dex come. story turns around and we see them both growing really strongly. over time we think some of the overhang from glp-1s will dissipate. >> very interesting. couple names down big but you think this is opportunity. matt, thank you for joining us to talk about it. we appreciate it today. >> great. thanks so much. >> matthew taylor with jeffries. and before we go, don't forget, we look poised to see the largest healthcare worker strike in u.s. history tomorrow. 75,000 workers are prepared to walk out at 6:00 a.m. local for three days to protest staffing issues at kaiser permanente.

kaiser said a strike was not justified. we understand and share the frustration the burnout and the exhaustion, but we will absolutely do the right thing for our employees to support them, reward and do the right thing and also stressing the need to keep care affordable. as for the union, its head joined us last friday gave us a statement saying the union remains to be bargained up until the scheduled strike time. negotiations are reportedly still under way. that does it for "the exchange." as we hit session lows across the board in the equity markets, dow is down 462 points. tyler is gearing up and i will join him for "power lunch" on the other side of this break.

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♪ well, the dow is diving, folks, but "power lunch" must carry on. welcome alongside kelly evans,

i'm tyler mathison. coming up, there is no stopping that sharp rise in bond yields. new high today around 4.8. we haven't seen that level in 16 years. and it is having, as you will see momentarily, a big impact on stocks. plus, the trial of sam bankman-fried begins today. the man began the face and hair of crypto corruption is accused of defrauding ftx customers and investors out of $8 billion. we'll get the latest, kelly, from the courthouse. first a check on the markets as tyler mentioned diving lower, the dow down 468 points now 1.4%. fresh session lows here. we hit just in the past half hour or so. the s&p is down 1.5% to 4223 and the nasdaq is down 2%. the 10-year yield continues to climb today. it was before the economic data. the jolt showed more job openings. it continued afterwards. it's continued in spite of relatively dovish comments