i think the solholiday season i going to be very good for nike. >> i like jimmy the bull. >> we'll see. joey? >> crowdstrike. 52-week high. >> see you in a couple of hours. "the exchange" begins right now. ♪ ♪ >> thank you very much, scott. welcome to "the exchange." i'm kelly evans. ahead this hour, stocks are struggling to hold onto their earlier gains, even with yields down. while gold and the vix are popping. concerns about the israel-hamas war remain high into the weekend. oil up as much as 4% today. not so much that as the u.s. tightens sanctions against russia. we'll talk about all of that in a moment. and mortgage rates touching a 23-year high last week. and a former obama official says it's time for the government to

step in and curb their rise. he's here with his proposal to lower rates by a full point. the dow has been fluctuating. up 327 at the highs, up 67 right now. s&p is down 15. nasdaq is down 1%. this despite lower yields across the board. today, the ten-year down seven basis points from yesterday's close, around 4.63. as for bank earnings this morning, shares all higher on stronger than expected results, but well off the highs. jp and wells fargo a little more than 3% up. the ceo jimmy diamond noting it was overearning and he expecting that to normalize over time. pnc, shares are lower by almost 4% after missing on the top line. they beat earnings estimates, but, again, their loan loss

provisions came in at half the estimates. by the way, it wasn't just them, the big banks did this, as well. and financials are where we kick it off today. my next guest says he's bullish on the big banks, especially goldman sachs. also with us, let's bring in frances donald, w. out with a recession call today. that won't help bank shares. >> no, but i get asked all the time, do i see a recession or not? yes, we have two negative quarters of gdp and uptick in unemployment, but i don't think this recession/no recession story is going to help investors over the next six months. even though i do think there will be a recession, for the next month or two, you could have a sanguine environment. inflation coming down, the fed

backing up. >> it's fun that you can wear both hats. what has been the change for you? i know time when we've been revising up the last quarter gdp, why are you looking ahead and seeing more declines? >> it's the rates, kelly. history might not repeat this time, but it's going to rhyme. we really have trouble throwing out all of the standard economic relationships with rates move thing high, credit contracting at the speed and the magnitude that it is right now. the consumer is out of excess savings. people's delinquencies are higher, and a housing market that is effectively completely frozen. we can't get the growth to come above zero percent. but the focus needs to be not just on do you have two quarters of negative gdp. each though there might be some

disparity in recession/no recession calls, you'll find just about everyone has trouble arguing that growth will reaccelerate from this both forward. so whether you want to believe in that mathematical output or not will mean lower growth and it gets the pivot. >> charlie, let me bring you in. i know you're not a big fan of macro calls, but what's your take on what will happen here in the next six months or so? >> we think we're getting near the end of this cycle. we think the end of the tunnel is in sight, and we think inflation is heading towards the number, it's not going to get there quickly at 2%, we told you that for a long time. the fed was optimistic that it could get there, and that wasn't right. but inflation has come down, getting down to an acceptable level. at this point, with all that's going on in the world, the fed is not going to want to add to trouble. so we do think that the end is

in sight. when they signal to the market that they are done raising and the next move will be a cut, that will be perceived as very good news by the market. and we will finally get an end to this headwind that we have had. >> charlie, if i'm not mistaken, suspect there a track record for stocks to underperform when people realize okay, the recession -- have we ever had the end of a tightening cycle where we didn't have a recession onseting? >> we're hoping this is going to be that case. i think there is a very good case that if, in the next three months, we get the fed signaling that they're cutting rates, not because there is a recession, but because we have made enough progress on inflation, because they don't want to add to instability in the world. i think we could get a cut without a recession. that would be a very good environment, particularly for more typical stuff. >> frances, anything you would add to that? >> well, i'm in agreement on

that. the next couple of months, i would trade the soft landing for sure, but i wouldn't conflate the short term with the long-term with the price shock we have seen. i don't think you'll get those rate cuts unlet up employment rises. we think that happens in january and february, enough for the fed to cut by mid year. this doesn't seem like a fed that will cut without the recession. that's one reason why staying in a recession suspect the most bearish outcome. a stagflation type of environment with no growth, that's worse where you get the fed pivot. >> charlie, drill down on the banks for a moment. it's a little disappointing where we are seeing a decline or less than expected buildup in loan loss reserves. it seems imprudent. >> yeah, this has changed over

the years. the banks used to be able to take big reserves as almost a way to manage earnings. and the regulators have come down hard on that. so now you really have to show trouble before you can actually take reserves. right now, they're not seeing trouble. obviously, outside of the office in some parts of commercial real estate. in terms of what is visible, this isn't trouble. the individual borrower is still making payments. we aren't seeing mortgage or corporate defaults, so they can't take big reserves, and we don't think big reserves would be justified unless we go into the kind of recession we're hoping we're not going to have. >> you're more bullish, charlie, we talked about goldman. what would you do with the big banks this morning? co-they enspice you at all, the

regionals, or just sticking with the goldman and morgan trade? >> i think you do have to be selective. there are regional banks that have big holdings with long-term bonds that they are holding in the accounts, and haven't flown through the balance sheet, and this is nerve-racking to the market. goldman and a lot of the investment banks mark those positions to mark it much more active. we do have a couple of banks. northern trust is trading at 11 times earnings. in general, we have to go name by name. you cannot buy regional banks. >> absolutely. frances, as we look at the labor market, which has lost some momentum but not nearly as much as expected. when you look to catalysts for your recession call, is it going to come from the labor market or

where else? because it looks like earnings, fourth quarter earnings, that's going to be okay. >> i wish the recession call was coming from one unique factor. then we could look at upside and downside risk to that one thing. we see a pullback in housing, in capital expenditure. yes, that consumer is already softening. look at private credit card activity. excess savings are down. gas prices are better, so that takes some heat off of the consumer. total hours worked are not as strong as they have been before. we expect the labor market to soften. a little bit of everything is going to be enough to get the gdp numbers below zero. not a major crisis call, just two quarters of negative gdp. not great, but not the worst possible outcome. we need to separate out these bearish recession calls from what the math tells us. it's not a great situation, but not the worst by any means. >> thank you both. really appreciate it today.

meantime, while the iea has yet to quantify the israel-hamas war, the oil market is fraught with uncertainty. that's proving true as crude pops 5% today after the u.s. imposed more sanctions on tankers carrying russian crude. i'm joined now by dan yergen. welcome to the program. >> thank you, kelly. >> it's almost like i don't want to ask you. i would love to hear from you what you make of all the developments in the past week and what it means for oil market. >> we already had a tight oil market to begin with. what's been hanging over it is the threat of a slower economic growth, downturn, higher interest rates. but right now what you have more is more geopolitical risk going into the price of oil. nothing has happened right now, supplies are stable. and the u.s. government is

saying it has to crack down and actually demonstrate asanctions are actually going to work. you have ukraine and the middle east at the same time. >> why is the u.s. choosing now to crack down on russian oil at a time when we have seen crude high, pushing down consumer sentiment. it's a big risk here to the u.s., one of the biggest spillover effects. is it in part because they look at the experience of iran and how much their oil output has increased and kind of figure well, okay, you have to be on this? >> i think yeah, iranian production is up 500,000 barrels a day and found ways to evade sanctions, including shipping through malaysia. there's been just this rising discussion about the fact that that price cap worked well when prices were below 60. but where they are now, russia is evading that and making a lot more money again. so remember the price cap had two purposes. keep the oil flowing, but drive

down russian -- restrict russian revenues at the same time. and the second is not happening. i think we want to say these sanctions are not theoretical, they are going to be applied. and sanctions will make people think twice about trying to evade them. >> what do you think we should expect for the supply of iranian barrels into the global market from here on out? >> i think at this point, we may well see an effort to tighten u.s. sanctions. we have seen the biden administration holding back on $6 billion. and i think that it really will depend -- there's still the unanswered question what was iran's role in this event, and how much did they directly support it? so i think at this point, oil generally continues to keep flowing, but there's going to be -- the next few weeks will be very volatile. if we have an escalating violence, it will be more questions about the flow. one thing to be said, you know, we're coming up next week to the

15th anniversary of the oil embargo from 1973. the arab exporters in the gulf have no interest in reducing supply for political reasons. >> can you explain that for a moment? they could choose to seize this moment, again, depending on what happens with gaza and so forth, to say -- to respond globally and really exact more pain in developed countries likethe u.s. >> well, i think if -- the difference is in 1973, the u.s. was on its way to being the world's largest importer. now it's the largest producer. it would be very disruptive in the relationship with the united states. clearly, it will be under pressure as it goes on. but obviously they have already cut back supplies for other reasons. but i don't think that they would have any interest in disrupting a relationship with the united states right now, which is very important to them. >> is there anything else the u.s. can do? we're already going pretty much

flat out levels amongst the highest production numbers we have ever seen. we just had the exxon pioneer deal. what other options do we have if we wanted to upset the loss of iranian and russian barrels to the global market? >> i think that the exxon pioneer deal will need more supply because they're going to apply technology on an even bigger scale to increase recovery. at the end of the day, there's not a lot that can be done. there's still the strategic petroleum reserve, but it's depleted right now. the other thing is, kelly, you're pointing to this, gas prices go up in the united states, that becomes a domestic political problem. there aren't a lot of good choices here, and number one hope is that with all of the efforts the u.s. is making and others are making to avoid see thing situation escalate from where it is right now. >> any last points or places you could be watching into the

weekend, maybe the next couple of week it is we remain at this sort of very tight supply situation globally? >> well, i think first of all, people do not want to go into this weekend short. that's reflected in the price of oil. i think the thing to keep your eye on is what happens to infrastructure. didn't get much attention, but there was sabotage on the natural gas pipeline between finland and estonia. so probably russian, probably connected to the ukraine war. so one thing to keep your eye on is in addition to what happens in the middle east is this other war that's going on that faded from the front pages. >> what a headache that would be. dan, thank you so much for joining us today. appreciate it. let's get to the late nest the israel-hamas war now. israel ordering the evacuation of more than a million gazans overnight. the u.n. warning that will only increase the risk for civilians. raf sanchez is on the ground in

israel. raf? >> reporter: hey there. in just the last hour, the israeli military announcing it has had boots on the ground inside gaza covertly. israel's military saying small groups of what appear to be special forces were operating on the other side of the gaza fence. they say that they engaged in firefights with hamas terrorists inside of gaza, but that this was also a mission designed to find evidence about where these roughly 150 hostages are. we don't know where these israeli commandos were operating. we don't know what kind of evidence they were gathering. but we know that these hostages are just unbelievable valuable bargaining chips in the eyes of hamas. the widespread assumption is they are being kept in the elaborate network of tums underneath gaza city and other locations across gaza --

tunnels. >> this small-scale incursion likely a precursor to a much, much larger traditional ground offensive by israeli tanks, artillery, and massed infantry. all eyes are on that midnight deadline four hours from now, which israel has given civilians in the northern half of gaza to evacuate to the southern end of the strip. now, israel says the northern half of gaza is full of hamas military targets, which they will be striking. but it is home to more than a million civilians, and the united nations is looking at this forced evacuation in horror, pleading with israel to back down, say thing is simply no way that you can ask a million people to move at such short notice without incurring a massive humanitarian disaster. israeli strikes continuing on gaza. there have been more rockets out

of gaza into israel today, but at a lower rate. >> any record from egypt, which shares a board we are gaza and would seem to be the more sympathetic place to take in palestinians trying to flee from israel. >> reporter: there is no indication at all that egypt is interested in taking a large-scale flow of refugees from gaza. there's no indication palestinians want to leave gaza into egypt. that's burn one of the deep, de fears of many palestinians being displaced from their own land. from the egyptian perspective, a big flow of refugees into the sinai, potentially very destabilizing in an area of egypt that has already had a problem with jihadists, insurgents fighting against the egyptian military there. egypt's top priority is to try to somehow stabilize the situation, try to stop a large-scale flow of palestinians out of gaza.

that's why you are seeing that the rafa crossing, which connects egypt to gaza, is basically closed to all but a very small handful of palestinians with very specific permissions to cross. >> raf, thank you so much for your reporting tonight. coming up, house republicans lost their first nominee for speaker, but another member is throwing his hat into the ring. we'll get the latest and look at the policy implications for aid, a potential shutdown and the deficit. and is it time for t.a.r.p. 2.0? what is the path forward for financials? and here is a look at the markets. the dow hanging on to an 11-point game. ten-year yield, back up towards $4.64. back after this.

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welcome back. it's been ten days since kevin mccarthy's historic ousting as speaker of the house, and leadership remains up in the air. house republicans voted 113-99 to nominate majority leader steve scalise to the role. but his run was short-lived. he withdrew from the race last night after failing to get enough support to win a floor vote where he would need 217 votes. so what's next? emily will kins is on capitol hill with the latest. emily? >> reporter: hi, kelly. a lot of fast-moving news here today. house republicans are meeting now, just behind me, to hear from the two candidates who are currently run for speaker. one sounds familiar, jim jordan, still running for speaker.

he does think he can get that magical number of 217. but we also had another candidate announce just a little bit ago. congressman austin scott of georgia. his name doesn't sound familiar because he's not currently in leadership. he doesn't have any major role within the conference. he told us that he did not know when he woke up this morning that he would be throwing his hat into the ring for speaker. he said that the reason he's doing so isn't because he necessarily wants the job. he told me headed into the room that if republicans are going to have the majority, that they need to do the right things the right way, and they're not doing that right now. of course, jordan still has a lot of support. congresswoman nicole chatted with us earlier. she said while it feels like ground hog day around here with all of these nominees, she is optimistic the party can come together as long as members get out of their own way. >> it took five ballots to elect

the last pope, and, you know, we're only going to our second ballot. i urge fellow republicans, let's look at the larger picture here. this is not about one individual or just about your petty feelings, either. this is about unite thing conference so we can get back to work. >> reporter: after the candidate forum, we expect house republicans to take a vote on the nominees. at that point, we'll have a better sense of how much support jim jordan has, and if he can get to that 217 number on the house floor. republicans tell me they're still considering other alternatives like naming patrick mcremhenry and giving him a temporary power. kelly, there's a lot going on, and it's just unclear at this point when we will see a new speaker. >> i do wonder if mchenry is going to be the thing. emily, thank you. let's ask our next guest, is

there a chance republicans can't get a speaker elected ahead of the november shutdown deadline? our guest says it could take quite some time. brian gardner is here, chief washington policy strategist at steeple. good to see you again, brian. i know it changes hour by hour, but can jordan do it? >> he's going to win the nomination today, but i am skeptical and am going to remain skeptical until proven otherwise, that he can get to 217. no matter who republicans nominate at this point, there is going to be a core group that will say no on the house floor. you have to get a majority on the floor. that's the number that matters. and i don't think they're there yet. so yeah, i think jordan's number is going to be fairly impressive coming out of the republican conference. again, that kcore group, they ae enough to block jordan or somebody else on the floor.

so through the weekend without a speaker at least. >> yes. is the blockage now if the candidate is jordan, is it coming from moderate republicans? if it is the moderates, does that serve them? de facto mchenry is the leader? >> so here's the thing. when you have a group of noes against mccarthy, they were united in their anger against mccarthy. the no group is now morphing and change. and i don't know what their strategic goals are, other than they're mad, they're pissed off at their colleagues, and they're going to get some kind of retaliation against them for putting them through the whole conference through this before. and there are those you alluded to, kelly. those centrists that don't want jim jordan as speaker of the house, who don'twant to have to

go into a re-election campaign with jordan. he's very popular with conservatives, but he's very polarizing to others. so you have a bunch of different influences and factors that are driving the noes, and their motivations are different. >> how much gets done if mchenry is given some power to pass bills, for instance, vis-a-vie israel, does that make november 17th a relevant deadline still in >> i think there is a mail-in consensus, even among those who didn't like the continuing resolution the last time. that continuing resolution is going to be necessary. there is no way, no practical way that congress is going to finish the unfinished spending bill. so they will have to have another short-term spending bill and maybe looking at a longer term omnibus at year end. this is what they rebelled against with mccarthy. there is another cr coming in

the short term. a mchenry dead temporary leadership could do a resolution on israel. but that's about it. it's to keep the lights on and would have to be done in a very bipartisan, consensus driven fashion. again, another irony of the whole thing, because the conservatives who booted kevin mccarthy were upset any time mccarthy worked with the democrats. debt ceiling, other things. what they have now done is construct a new leadership that is totally dependent on working with the democrats. so the strategic thinking here is kind of lacking. >> and now it's almost emwhether m -- emblematic to have the sands of the senate in the democrats. >> brian, thank ou. brian gardner of steeple. still ahead, the fcc has until midnight tonight to decide if they want to keep fighting against a bitcoin etf.

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and frankly, the brains to know the grid is gonna let you down sometimes. that's why when the rest of the block is lighting candles and looking for flashlights, you're ready to rock and roll. it's not just a generator. it's a power move. request a free quote today. welcome back. bitcoin on pace for its worst week in two months, though still up 60% since january 1. the s.e.c. is now debating whether to keep fighting against a bitcoin etf. bob has more details. bob? >> hello, kelly. it is crunchtime for the s.e.c. the s.e.c. has until midnight tonight to decide if it wants to appeal the d.c. circuit court's

ruling that the s.e.c. was wrong to reject an application from gray skill investments to create a spot bitcoin etf. the court ruled the s.e.c. allowed a futures bitcoin to trade already. that a spot and futures bitcoin were the same products. they were life products. so the court said you approved one, you have to approve the other one. so the s.e.c. is in a pickle. they are allowed to request a rehearing on this, but the federal rules of appellate procedure states that the s.e.c. would have to convince the court that they have overlooked something or misapprehended the facts in the case. that's a high bar. given the ruling against the s.e.c. was unanimous, it's tough to imagine the s.e.c. can come up with some new and novel reasons to turn gray skill down that hasn't been heard by the court before. so it's a problem. should they decide not to appeal, then there they will

likely be forced to convert the bitcoin eft. and it's possible they will approve all the other bitcoin applications, as well. there are eight other applicants in line. so we'll be talking with cathie wood on monday, talking about the new company she just bought into in europe. she'll give us her opinion on this bitcoin etf. but one thing i would note here is bitcoin has been sideways for several months, including the futures. it's interesting that word that this is likely going to be approved now on the s.e.c. is not really moving bitcoin that much, and a lot of people are wondering why. a year ago, this would have been big, big news and would have moved it a lot. but as of now, i don't see a lot of tremendous enthusiasm, although this would open up a new class of investors. kelly? >> bob, thank you for bringing

that to us. let's get to tyler mathisen now for a cnbc news update. tyler? >> thank you very much. the first u.s. organized charter flight departed israel for europe today. the government is helping americans who are looking to leave the country. an airline official told reuters the flight departed from tel aviv for athens. a white house spokesperson john kirby said more flights are planned over the next few days. republicans are meeting again today to nominate a new candidate for speaker after steve scalise withdrew his name. representative austin scott from georgia has jumped into the race, along with judiciary chairman jim jordan. it is unlikely a speaker vote will be called on the floor today, as the republicans are still divided. but democratic leaders have asked members to stay in washington in case a vote takes place this weekend. the u.s. supreme court extended its temporary pause on the biden administration's ability to encourage social media companies to remove

information from their platforms, including content about elections and covid-19. friday's decision maintained a ruling imposed by lower courts that justice alito issued the ruling, pending the administration's appeal to the supreme court. kelly, back to you. >> see you soon, tyler. coming up, as rates rise and paper losses grow for the financials, one veteran banker says it's time to take a page out of the 2008 playbook. he joins me next to make his case.

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welcome back, everybody. that move in the 30-year treasury yield yesterday was the biggest since the pandemic hit. and one of the largest ever according to deutsche bank. the surging yields all year long have resulted in big losses for banks holding treasuries on their balance sheets. as of the second quarter, even before the latest runup, unrealized losses on securities were nearly $560 billion. bank of america took over $100 billion hit on its bond portfolio last quarter. as this continues, some are baying we need to think about what a government relief program would look like. that includes my next guest, calling for t.a.r.p. 2.0. let's bring in paul graham, with aaron klein from the brookings institution. welcome to you both. paul, go ahead and right now it's kind of calm out there in

bank land. but what do you foresee? >> well, kelly, i see that because these unrealized losses are on the bank's balance sheet, they are constricted in terms of their ability to lend. they need to take steps to reduce expenses, and they're challenged on liquidity. they're borrowing from the fed, the federal home loan banks at high rates. and they need to have some relief there. >> all right. so aaron, let me bring you in for some context. i know you're not a big fan of this argument, but make the case why we would be heading to the point where something like this is being discussed. are these unrealized losses going to become very material over the next couple of years or can banks eas earn their way ou them? >> i commend paul for publishing

a provocative piece, and he's right a lot of bankers made a lot of bad choices by buying in a low interest rate environment and a lot of them are using this as a back doorway to get some money and some liquidity. the biggest borrowers were svb and first republic. but other banks, jpmorgan, citibank, they have all reported positive earnings. so what you have is some banks made bad bets and they should suffer the consequences, or as paul said, bail out the people that made mistakes and reward the people that did well. when you make a mistake, i don't think you should ask uncle sam to bail you out. >> the banks took the bait, if i can quote the former kansas city fed president.

they are innocencentivized to b these. but paul, let me turn to you. some say that the banks had a bailout, because the fed is accepting a lot of this stuff at par. in the past, it would be forcing a discount. so respect they already being given a bit of a bailout here? >> well, kelly, if you look at what the banks are paying on this debt that they're taking out to meet their liquidity needs, you know, deposits flowing out of the bank for a variety of reasons, their need to continue to fund loans. against what they're earning on those assets, there's probably a 300 basis point difference between there. so they're essentially losing money by borrowing from the fed in order to maintain liquidity. and in looking at sort of what the banks did in terms of their investments, this is not a short-term problem.

if you look at the maturities of some of these available for sale securities, they're extending out ten years or longer. and to aaron's point, this really isn't a wall street problem. this is a wall street and main street problem. there's a large number of smaller, mid-sized banks that are in this situation. they have fewer options than the larger banks in terms of how to work their way out of it. >> aaron, the other dirty little secret of this whole affair is that the government needs banks to hold treasuries. so whatever it's going to do here, it's got to find a buyer for more treasury bonds than it's ever had to find a buyer for at a time when the central bank has stepped back. if not banks, then who? >> well, look, interest rates have to be set by the market and deficits have consequences. it's not just treasuries. a lot was mortgage backed

securities, fed by the federal reserve, we're buying mortgage securities in the name of covid relief for a very long time after it was necessary. a lot of these problems, you know, involved the federal reserve and their regulatory failures at svb and other places who were loaded up on mortgage backed securities than on securities. but for paul's point, the bankers are great at playing possum, oh, we're in trouble, the economy will suffer unless you bail us out. but don't touch our bonuses, don't reduce our dividends, all in paul's proposal, just help us out. and you know, i'm sorry, but we're not going to get you out of this, you made the mistake, figure out your own way. >> paul, quick last word. if nothing is done, and what do you think the ultimate problem could become here if we fast forward the clock? >> well, i think we can see some banks going under.

and whether it's, you know, one large bank or, you know, a number of smaller banks, you know, we could see them go under and lending is going to be restricted. and it's just going to -- if we go into a recession, you know, the bank's ability to lend helps us get out of that. >> absolutely. gentlemen, we'll leave it there. with this controversial idea for our audience to ponder. paul, thanks for joining us, and aaron thank you as always. coming up, sam altman revealing open ai's revenue to staff. we'll bring you the eye popping numbers. can you guess what they're earning? and how is the technology revealing ancient secrets? and check out dollar general, popping on the announcement that the former ceo is coming back. he will retake the help.

shares up a little less than 2%. we'll be right back. based on y, whatever they may be. all that planning has paid off. looks like you can make this work. we can make this work. and the feeling of confidence that comes from our advice? i can make this work. that seems to be universal. i can make this work. i can make this work. no wonder more than 9 out of 10 clients are likely to recommend us. because advice worth listening to is advice worth talking about. ameriprise financial. (swords clashing) -had enough? -no... arthritis. here. aspercreme arthritis. full prescription-strength? reduces inflammation? thank the gods. don't thank them too soon. kick pain in the aspercreme. at humana, we believe your healthcare should evolve with you, and part of that evolution means choosing the right medicare plan for you. humana can help. hi, my name is sam davis and i'm going to tell you about medicare

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around open ai. the startup behind chatgbt, including new numbers, showing massive sales growth. diedra, what are we learning? >> so kelly, this is reported by the information, but what it tells us is that open ai sort of the darling of the generative ai space koptcontinues to grow andw and put the numbers behind that growth at a potential valuation up to $90 billion. so the late zest that it's on track to achieve revenue this year of $1.3 billion. let me put this in context. last year, revenue was $28 million. so that's a growth of more than 4500%. it's just explosive. we haven't seen this from a software company or anyone in a very long time which explains a lot of the excitement behind it. the question, though, kelly, in a conversation i'm having here in the bay area is what is the actual application?

businesses are jumping on this generative ai train, but what do we see for companies for a company worth $90 billion and even the public companies getting a boost, there has to be more to it than chat bots. so there was an article that discussed how google product employees are questioning the utility of its own chat bot and the resources that are going into generative ai. one thing that i keep hearing is we may not know exactly the use cases yet. there's a story you were looking at that could be an interesting use case for generative ai. so on the surface, it seems kind of fun, but it has real implications, that is the ancient scroll, right? >> exactly. this is a big breakthrough. >> yes. what do you call people who love the color purple? i loved this for the first time today.

paparolojist. there's this pride that you can decode ancient texts, and in this case, researchers used generative ai to independently uncover the greek word for purple a.i. to uncover the word purple on a scroll. it's a competition, but this does have implications. the idea that a.i. can help us understand texts from the past is something that could have real-world implications. >> exactly. it represents one of many, i think, new lines of it. deirdre, thank you very much. appreciate it today. mortgage rates touching their highest levels since 2000 last week, and the spread in medical deng.t ganls and the ten-year is wini david stevens thinks it's time

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home builders are taking a beating, at least they were yesterday. the etf for the home construction, the itb hitting a four-month low. among the top performing builders. it all comes as rates on the

30-year fixed rose to a 23-year high, and that's prompting some home buyers to back off. in other words, compared with two years ago when rates were down to 3%, the average monthly mortgage payment at current rates is around $960 more for a $400,000 home. should the government step in to address this fooaffordability crisis? let's bring in david stephens. great to have you here. you've got a proposal that i think is going to be the first of many of how to lower mortgage rates. what would yours do? >> it started off as a proposal from people like me. in the last couple of days we've seen a joint trade letter from the mortgage bankers association the national association of home builders, realtors, and then today the independent community bankers association joined in with the community home lenders. seems like everybody's talking about the same concern, which is this -- what credited hyperinflation were three basic

items. one was the cares act passed in 2020 which brought almost $20 trillion of stimulus in the economy. the second was the largest quantitative easing in the history of the economy, which drove interests down to the low 2 % range for mortgages. and third were supply chain issues. this hyperinflation is the result of an unexpected kind of overcorrection to the covid pandemic, which just brought too much stimulus into the economy, and now we're all paying the price with the federal reserve completely changing gears, creating a vacuum where they once were the largest buyer of mortgage backed securities to not buying any, and that has resulted in a supply and demand imbalance, and that's what's driven rates up to nearly 8% today. and what's unique about today's market is that the spread between mortgages and the

ten-year treasury, which is what we normally look at to shadow and view where mortgage rates should be, is much wider than it traditionally is. it's about 100 basis points wide. the proposal is simple. the mba home builder letter says the fed should at minimum state it's done with quantitative tightening, and that it should make it clear that it's over and not just that they're going to keep looking forward at new economic changes. the second proposal suggests that we should do something further, that in past economic cycles, we've seen gscs, freddy mac or fanny mae, they would buy up excess supply during times like this or the fed. but just pick up the slack, not go back to quantitative easing. >> let me just jump in for a second. whether or not the fed can do more is a question that relates

back to the economy and also to whether people are going to now blame them for partly causing this problem in the first place by buying so much. so that leaves franny and freddy. wouldn't we have to change their structure? they're in conservatorship, this raises the question of being able to take them out of it. having these discussions i feel like i'm in 2006 all over again. >> it is complicated. the excess is only $2 billion a day. which sound like a lot to the average listener. think about the fed brought $1.7 trillion between 2020 and 2022, $2 billion a day to take out the excess capacity would be incredibly impactful to rates in the short run. not to where they were, but back to 100 basis points lower than they are today. >> let me ask a silly question as well. how many people are buying a home right now compared with the past? is this really a crisis?

>> well, it's really a crisis because we've also had a shortage of supply, which drove home prices up, and we have one of the largest demographic waves of millennials all coming into their early 30s that the nation has ever seen, so the supply and demand problem is critical. and it's not affecting wealthy americans. they may not want to pay a percent, but they can pay cash. they can afford it. >> exactly. >> first-time home buyers' dreams are being dashed here. that's the challenge. >> well said. as i said, i think this is the beginning of what's to come. this is the space to watch. dave, we hope we can have you back. appreciate it. that does it for "the exchange". tyler's getting ready r fo another busy hour of power lunch. i'll join him on the other side of this break.

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