there was more to come. >> oil stance company in california -- in canada. >> tesla. buy the puts. >> microsoft. >> yesterday, we bought apollo. >> just to reiterate, right after chair powell's done, jeffrey gundlach will join me. "the exchange" is now. ♪ ♪ welcome to "the exchange." the house has a new speaker, but as the clock is ticking on a potential government shutdown again, will congress be able to come together to get anything done? the u.s. government will run out of funds in less than three weeks and another stop gap funding bill is likely. i thought that felt a little detailed about the machinations of washington. welcome to the special edition of "the exchange," everybody. i'm kelly evans with tyler mathisen. >> welcome, everybody. as we enter this final 60-minute

countdown to the central bank's decision on interest rates, a pause once again expected today, but it's jay powell comments that investors will be paying close attention to. less what they do, more than what they say. we have team coverage from the stock market to the bond market to the economy and how rising rates affect the consumer. and representative brad sherman and senator kennedy will join us to talk about the legislative challenges ahead, this as the clock once again started ticking towards that potential government showdown. >> a lot of moving pieces for the markets today. the dow up 25 points, prefed. the s&p up a third of a percent. nasdaq up a half percent. lower rates have to do with the complex. we have economic data that was largely on the dovish end of things. we'll big more into that later. look across bond yields where you can see the ten-year note is now 4.82. the two-year looked just over 5, and the 30-year is 4.985%.

>> it was here earlier in the morning, but to you he's gone to the federal reserve. let's kick it off with steve liesman. hi, steve. [ inaudible ] >> -- two steps down. the first came on a somewhat better than expected treasury announcement on refunding the debt and another on the economic data, and of course, a weaker adp payroll report. here's how the treasury responded, where they leaned a little more towards the shorter end of the coupons and suggested that there is only one more quarter of increases in coupons to come. and then the other letdown came at 10:00 with the isms coming out. here's how we go into the meeting. the probability for rate hikes, this one is zero. for upcoming meetings is very slim, just 20% for december, and around 30% for january. but that's a big change from the last meeting when there was roughly an even chance of a december hike. now you can see as we saw, just

21% down from 46%. so the big question for powell is, do two pauses equal a hold? he says yes, the -- but more likely he says maybe, but we continue to be in a wait and see mode. then there's the idea where he will say no, the committee needs to forecast a second hike, the fed needs to do more. don't expect that. look for the maybe, keeping the fed on edge. i think there's a chance fed chair powell redirects the market toward the greater possibility of another hike. the market may decide whatever powell says, it doesn't mean it's going to happen. >> and steve, to what extent is all of this overshadowed by what's happening on the supply thing of things with bond yield s? a liit little bit lighter issua. >> i don't remember a time when treasury issuance, you know,

basically was more important than what the fed may or may not say. you remember in august with that announcement, it seriously moved the market, coming off the fitch downgrade. and then the surprise on the coupons on the long end of the treasury market. and then, again, coming this morning a little bit lighter. and also the idea, kelly, that they're not going to go so much further in terms of increasing coupons into the third quarter. so there are the bullet points there. maybe a little bit lighter on that 112 in terms of the total amount coming to auction. but the more important point is that there only one more quarter of increases left. but you're right, the market is focused on these numbers from here on out. i don't think they go away. >> steve, thank you. we'll see you soon. our steve liesman. about that strong third quarter gdp number and the still tight labor market, will it force the fed to raise interest rates again today or will they pause and let the bond market do the work for them? let's have that discussion with our panel. here with us in washington, d.c.

is long-time fed watcher paul mccallie. welcome to you. currently adjunct professor at georgetown school of business. also with us here, sue is head of u.s. rate strategy. and nancy tangler is ceo and chief investment officer. welcome to all of you. paul, i'll start with you. what are your expectations and how does the market setup look? >> i think chair powell is going to say the fed is in a good place. there's lots of details about this whole thing, but the general conclusion is that the fed's in a good place. they're restrictive, una unambiguously restrictive. the path towards a soft landing or a soft normalization is proceeding pace. i think the fed's in a very good place, and i think he will say that. i think as steve was noting, he will also note that if they're not in the perfect place, it will be because they need to

move up a little bit more. but i don't think he's going to show any urgency whatsoever about getting off the good place and embrace the notion that the market is not fighting him any more. >> the market is doing some of his work. >> exactly. they've been fighting him for the last 18 months. we inverted the curve over a year ago, and the market not fighting the fed makes the fed's job easier. >> he's not going to say, we're done. but he might use code that says we're done. what would those code words be? >> there's a line in the statement that we've had for the last seven, eight months that he could change a little bit when effectively he says that, you know, we'll be -- as we evaluate the need to tighten some more, we'll be looking at this, this, and this. but, you know, the presumption is the next move would be a tightening. so in the statement, he could effectively soften that

presumption that the next move will still be in the up direction. >> words like sufficientry restrictive. >> oh, man, that's the big phrase. i don't think they will stay that in the statement. but he's going to get asked that at the conference, sir, are you sufficiently restrictive? i doubt that they would say that, very much doubt they would say that. >> sue, he has a track record, or the fed does of the market kind of taking the initial decision in stride and to paul's point, seeing more of the selloff or the risk-off move happen during the chair's comments at those press conferences. >> yeah. we don't know much about his statement. i think you're probably going to hear chair powell talk about proceeding carefully from here on. but for the most part, i think falling on the heels of the ecb bank of canada, the focus is going to be on delivering a

hawkish pause, and keeping their options open to hike more if needed. i mean, we had very strong data thus far. today's data was a little weak. manufacturing has been on the weaker side. employment remains strong. inflation is coming down ever so gradually towards, you know, perhaps 3% at the end of the year, 2.5% by the middle of next year. and that sort of context, i think it's a little bit too soon for the fed to guide the markets toward any sort of a pause, even though the rise in long-end yields is doing the work for them. >> let me just jump on that manufacturing part, which wasn't supposed to be the scene stealer today. but it was really bad. it had been improving the last couple of months, we thought maybe it would go back into expansion territory above 50, but fell back to 46. this is consistent with a recession, aren't they? shouldn't we be making more of this? >> yeah, absolutely.

if you look at the data in aggregate, manufacturing has been weak for a while now. so we've been in a manufacturing recession for quite some time now. it's a question of when this is going to go over to the services side. when the consumer is going to be retrenching from this pending, you know, splurge that it had during the summer months. i think that's going to come in the fourth quarter, because the consumer is come under an increasing amount of pressure. student loan moratorium is expiring, as well as the higher gas prices. they're all eating into disposable income. so the fourth quarter, you'll see the consumer start to pull back. >> nancy, not with standing those numbers on manufacturing, the economy has been remarkably resilient. so why has the economy been as resilient as it has been in the face of a fed that has been very persistent in raising interest rates? why hasn't it slowed more?

>> yeah, tyler, i think this is the first time in my career where we've had a fed and fiscal policy at odds. you've got the federal government spending a tremendous amount of money, and the fiscal thrust continues. so that's provided economic growth that -- maybe the wrong way, but economic growth nonetheless. and i would argue that although the consumer may indeed pull back at the low end, in my experience over the last four decades, individuals spend -- u.s. consumers spend out of net worth. we are at above prepandemic highs, so we're at $175 trillion, half of that is the baby boomers at $77 trillion. so this is a cohort that for the most part doesn't have mortgages and they have time and they're spending. and i think that surprised a lot of investors. happily, we've been increasing our exposure to consumer discretionary. but the trick is to know when to decrease it.

i think it continues a while, defying those who think we may pull back. >> i thought nancy's comparison to the 1990s was interesting. what would you say about that, paul? >> the baby boom is doing very well. i agree with her very much on that. >> said the baby boomer. >> but i think in a more narrow sense is that the household sector and the corporate sector locked in generationally low interest rates in '20 and '21. to put it differently, they shorted the bond market. the household sector shorted the bond market. so essentially, they're sitting there, you know, with mortgages that have a market value of 57 c -- 75 cents on the dollar. so they haven't been bitten by what the fed is doing. >> and the liquidity picture is

much better. >> absolutely. so essentially, the bite of monetary policy is for the bottom half of the income distribution, and for the younger half of the distribution. i think that's a key reason the economy has been so strong, the household sector sitting in a short position in bonds effectively or put differently, the household sector has got a rent controlled apartment. >> very well put. sue, what would you add to that? especially as we turn our attention to the details of this decision? and when the first cut might be? >> yeah. i think we believe the fed is done. you know, especially given you much yields have risen. we believe the long end rising as much as it has, has effectively delivered a 25 or 50

basis point rate hike. so it's a matter of when, not a matter of if the economy is going to slow down. but to paul's point, you know, for sure delinquency rates are rising in credit cards, as well as auto loans for the lower income cohorts, as well as the younger population of the u.s. consumer. and, you know, given that sort of haves and have-nots economy, the fed is going to proceed carefully from here on, and especially when it comes to hikes. as steve was pointing out earlier, the market is not really priced for the fed to hike again, you know, in the next meeting or the next couple of meetings, and the market is starting to price in more cuts for next year. >> so nancy, you say that technology is the new defense. these names are the new defensive names. why do you say that? am i going to need defense over the next year? >> well, tyler, i think the

economy is definitely slowing, and that is a time when you want unreliable earners. we talked about last october, we were adding technology names back into our portfolio. but also, they've been -- they have held up pretty well this year. if you look at some of the names we like, like service now, they beat, beat, and raised this last quarter, just as they did last year, by the way. they got punished in the near term. that's when you want to take advantage of, you know, the price of the stock being on sale and step in and add to your holdings. because the secular tail wind behind technology, look at the jolts numbers. we've got a lack of labor. when we have had a tight labor market historically, spending on technology went up and the technology stocks rose. and the last thing i'll say, as an analog to the '90s, which is my thesis, you know, we were in an environment that was very similar. we had a recession, we had a geopolitical shock, we had a war, higher interest rates.

they hovered between 4% and 8% and averaged 5% to 6% the whole decade. and we had inflation above 3%. yet, the nasdaq was up 800%. we know what followed that, but i think we're in a different position. the nasdaq was up 800% during that decade, says the baby boomer, and all the other two entities were above 400%. so 800%, 400%. i think stocks can continue to perform, companies can continue to deliver earnings, and a higher rate regime. and this is really not out of line with those of us who -- and in fact, i think paul and i worked together in the '90s. but those of us who have been at this for a long time know that, that you can make money in stocks and in technology, which have historically been long duration, but are now companies providing more defensive posture in a slowing economic environment. >> and we haven't even gotten to the geopolitical situation around the world yet.

that's for another part of today's conversation. that is an issue that is lurking there, one way or the other, it's going to affect psyches and investments around the globe. but thank you. paul, you're going to be around for a while. >> stay put. >> sounds good. we're just getting started on "the exchange" and power lunch. >> coming up, a look at the rising shutdown risk on capitol hill. we'll speak with representative brad sherman about that and more after the break. plus, will the housing market be the biggest casualty of higher rates? we'll look at the impact on the mortgage market and perspective home buyers. >> and tracking on what's on the agenda in washington with senator john kennedy and dan clifton will tell us how to position for any policy scenario. a quick look at the markets. dow high was up 228, only up 70 right now. it's the underperformer of the major three. but the russell 2,000 continues to be the laggard. it's down half a percent.

the ten-year note around 4.81. back after this. ♪♪ we have great benefits from principal. so i know i'm taken care of. and not just me. but the ones who matter most to me. ♪♪ in the u.s. we see millions of cyber threats each year. that rate is increasing as more and more businesses move to the cloud. - so, the question is... - cyber attack! as cyber criminals expand their toolkit, we must expand as well. we need to rethink... next level moments, need the next level network. [speaker continues in the background] the network with 24/7 built-in security. chip? at&t business.

welcome back to "the exchange," everybody. the house has a new speaker, but as the clock ticks down on a potential government showdown again mid month, this as funding for ukraine and israel could hit a snag over its hit to the deficit. joining us to discuss that issue and more is representative brad sherman. he also sits on the house financial services committee, as well as the foreign affairs committee. welcome back, congressman. >> good to be here. >> let's start with your view of the american economy. it is quite hot, actually, if you looked at the last quarter, 4.9% gdp growth. i don't worry about the folks in your district, malibu, and other places. how do you see the u.s. economy?

>> most of my folks are in the san fernando valley, which is not the same. but the actors strike is a problem in our area, but you know, people are not satisfied and they're often not satisfied. prices are higher and you notice it. it's nice to say that wages are up, but they're only up if you have gotten a raise. >> let's talk about what's going on in congress and switch gears. we didn't talk about geopolitics, and there's plenty to talk about there. i guess you have a new speaker. you have a speaker who has made it clear that he's not particularly in favor of funding additional moneys for ukraine. you have a package that may be put forth, maybe it already is, to fund israel's war effort, ukraine's war effort, and maybe border security. what's going to happen here, and how does the speaker get his caucus to come along? >> well, not the way he's doing it. he's got for the first time

ever, he's going to make israel a partisan issue, and that may be in his short-term political interest, but it's really a disaster. i've been a pro-israel activist for 60 years. >> what do you mean he's making it a political issue? >> instead of just having us vote on foreign policy or perhaps just on aid to israel, he's marrying with it a cut to the irs positions -- >> that was only to fund that, to make -- >> it doesn't fund it. cbo says it costs more money. >> but the intent was not because that was the goal, but to get the package passed without increasing the deficit. >> i think his intent was to split and say democrats are voting against israel. he's not funding it because the congressional budget office says it makes it cost more when you cut irs positions, you cut revenue. i think it's because every time a billionaire cheating on his taxes, a member of the republican caucus earns his wings. they hate irs enforcement,

because they know that wage earners have to pay, and business people have more complexity and without an irs, they don't have to pay. >> as i understand it, the president has put forward a proposal that would marry aid for ukraine and israel. is that likely to carry? >> yes. i think they both carry separately, or they carry together. there will be a smaller number of votes from the republicans for ukraine than israel, but in general, there's support for meeting our responsibilities. >> because it raises this question about the deficit. this isn't the time and place to probably kind of fight that battle, that aid obviously needs to happen. if it's not passed, we'll probably need more down the road. but on the question of balancing this deficit, which now seems to be persistently with us, how is that effort going to at least

get started? >> not a penny will be spent that the republicans in the house don't vote for, and the speaker doesn't vote for. and if they have ideas on how to cut spending, that's the place to do it. likewise, and republicans won't go for this, we need to collect revenue. and some of the cuts that trump had in his first year have to be rolled back. and then you have to actually enforce taxation, particularly our enforcement on multinational corporations is very weak. >> so i just want to circle back. you believe that one way or another, aid for israel's war effort and aid for ukraine's war effort will be passed by congress this year? >> probably. because while they each would pass together or separately on the floor of the house, it's up to mike johnson to determine whether we get to vote on the floor of the house. >> you've been an astute observer of, and sometimes

critic of cryptocurrency. is it being used to finance hamas? >> yes. >> what's your proof? >> well, hamas solicits contributions. there's over -- they have collected over $100 million, not so much from donations from individuals as transfers from some iran and others. and crypto, if it ever really becomes a currency -- look, it's not a currency. you have sandwiches downstairs, you can't buy a sandwich there. but if it ever becomes a currency, it will be much more effective. because it says right in the name, crypto currency literally means hidden money. the rules that ply to banking accounts don't apply. >> let's talk about the possibility of a government shutdown. it would seem odd to me, but there's a lot of things that are odd to me that a new speaker would want one of the first things to happen on his watch to

be a government shutdown. is that likely to happen or not? >> more likely than not. we will have a shutdown, and the last speaker first tried to pass a highly partisan bill and couldn't pass it to just keep government going. and then the last thing that that kevin did was pass a bipartisan bill, just to keep the government going through the 17th of november, and that's what cost him the speakership. >> so you expect there will be? >> it's a 60%-er. i would like to think otherwise. at the last minute, we might be able to keep the government open into december or january. >> does it matter to your constituents? >> oh, yeah. >> how if >> it matters to people watching this show. the s.e.c. stops all ipos if there's a government shutdown. and not just the smaller

companies but a lot of the additional offerings of stocks and bodiy bonds by the major companies. >> congressman sherman, thank you very much for being here. coming up, it's no secret that mortgage rates have skyrocketed as the fed has raised rates. >> but our next guest says the housing market will be the biggest casualty. mark zandi joins us after the break. ou34 minutes until the fed decision. help. because the right information, at the right time, may make all the difference. at humana, we know that's especially true when you're looking for a medicare supplement insurance plan. that's why we're offering "seven things every medicare supplement should have". it's yours free, just for calling the number on your screen. and when you call, a knowledgeable, licensed agent-producer can answer any questions you have and help you choose the plan that's right for you. the

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call humana now at the number on your screen for this free guide. it's just one of the ways that humana is making healthcare simpler. and when you call, a knowledgeable, licensed agent-producer can answer any questions you have and help you choose the plan that's right for you. the call is free, and there's no obligation. you know medicare won't cover all your medical costs. so, call now and see why a medicare supplement plan from a company like humana just might be the answer. welcome back to our special fed coverage. from what you pay for your car loan to the apr on your credit card, consumers have been hit

hard by rising rates. but the biggest casualty of the rate hike cycle so far has been the housing market. everyone knows the rate on the 30-year mortgage is 7.9%, four points higher the week before the fed's first post pandemic hike in march of 2022. here for more is chief economist mark zazandi and diana olig. home stocks are rallying, now there's some worry that is being snuffed out. >> rates dropped back a little bit in the 6% range, and people came flooding back into the market. there was more inventory coming on and home prices bottomed out in january. people thought that's more reasonable. when we got that eight handle on the 30-year fixed, and you talk about the difference between a 3% and 8% rate, you're talking

$1,000 difference on a monthly payment of a $400,000 home. >> it was striking to hear paul mccallie make the point that it's almost as if homeowners are living in a giant rent controlled apartment, because most of them locked in low rates for the life of that mortgage and they have not been directly hit yet. >> absolutely. i think the average interest rate on existing mortgages is about 3.5%. so that's obviously pretty low. homeowners were very aggressive in refinancing down their mortgages when interest rates were at rock bottom, so they're sitting at a good spot right now. i think over time, people have to move, right? life happens. you've got a job change, you've got children, divorce, death. i think we have a lot of -- people aren't moving, even though increasing the home they live in isn't exactly what they need, it's not consistent with

their -- they're changing their living circumstances. once they start to move, these mortgage rates, even if they come down a little bit, i think we'll see some house price declines. so far, house prices have not fallen significantly nationwide, but i think that's ultimately going to happen. >> diana, under normal circumstances, you kind of think, one would think that as interest rates rise, prices would stabilize or even fall to compensate for the higher payments. >> historically that's how it works. >> why not this time? >> supply. lack of supply. this is just a crazy strange housing market. i hate to get too clinical on you, but in most markets, you see that happen. we not only were underbuilding well before the pandemic before the great recession, builders went up to their historical levels of production. then the pandemic hits, and everyone wants to move and buy and you're buying with a 3% mortgage rate.

and then you have -- >> there was nothing else to do. >> there was nothing else to do. >> it was a pandemic, i was stuck in my home. >> i'm curious, mark, because he talks about people have to move. but we are seeing a lot of people now who are selling their homes and renting single family homes. that single family rental market is taking off. mark, do you think that's going to be a product of this, people who say i have to sell but i don't want to buy at 8%? >> that's a strategy, but i don't think that's for most people. that takes a lot of energy -- >> the builders think it is. build for rent is huge right now. >> well, in the grand scheme of things it's small in terms of the housing stock. but you're right, that's one of the amazing things. builders, others in the industry and homeowners are incredibly creative and they'll try to figure out ways around having to drop the price. but the builders, they have dropped price. one of the ways they have kept

their sales up relative to the existing market is the interest rate buydowns, which is effectively a price cut. so they have effectively cut price, one reason why they have been able to keep sales up as high as they have. at the end of the day, you know, i don't think people renting their homes is going to be -- is going to stop the house price declines that might have to come. >> let me ask both of you this. mark, what is the interest rate at which sellers will start to say, i'm ready to move, i'm going to put my house on the market, which more supply comes on and buyers get motivated. what is that rate and when might we get there? >> 6%. that feels like the threshold, we have had a natural experiment here over the last 6, 12, 18 months, interest rates got up to 7%, back down to 6%, now we're at 8%. you can feel it in the marketplace. once you get down to 6%, south of 6%, the light comes back into the housing market and people

start to move, home sales begin to happen. i think that's the number we need to see. and in the long run, you know, extracting from the business cycle, in the long run, fixed mortgage rates should be similar between 5% to 6%. >> what is your over-under on this? i go lower than 6%. >> john burns who koefrs the buildings, he says it's 5%, 5.5%. and that's where the builders are buying the rates down to, down to 5.5%. that's where buyers are getting in. so i think they need more than 6%, especially because home prices are up 2.6% year over year. >> there's a lot of life pent up, and then after a long enough period of time, that is certainly true. guys, thank you so much. we appreciate it today. still ahead, today marks 595 days, i know you've been

counting, right? every single day since the fed enacted the first of what would be 11 consecutive rate hikes since early '22. this that time, the dow -- excuse me, the s&p is down only about 1%. what will happen if they cause today? we'll look at at athround some of the biggest movers of the day, after the break. ended you. so my best friend sophie says you've been a huge help. at ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us. our neighbors, the garcias, love working with you. because the advice we give is personalized, hey, john reese, jr. how's your father doing? to help reach your goals with confidence. my sister has told me so much about you. that's why it's more than advice worth listening to. it's advice worth talking about. ameriprise financial.

welcome back. i'm bertha coombs. the house of representatives is scheduled to hold a vote today on whether to expel congressman george santos. the republican admitted to lying about his background and has been indicted on federal fraud charges. santos' new york colleagues back the resolution, but they will need at least 2/3 of house lawmakers to support that effort. at least 340 foreign passport holders crossed into egypt in the first round of evacuations. they left gaza today on six buses. about 500 foreigners and dual nationals have been cleared to leave the region, with more evacuations expected in the coming days. drought at the panama canal is disrupting global trade.

there's not enough water to transport the ships through the canal. officials have had to slash the number of ships allowed to pass. experts warn the problems would get worse. this could cause shipping costs to jump, cut panama's annual revenue, and increase greenhouse gas emissions due to longer shipping routes. tyler, not to mention the fact that we're already seeing the impact on produce here. have you looked at blueberries lately, like $10 a pint. >> if you can find them. >> it's crazy. thanks, bertha. yields lower today, but the ten-year hovering near multiyear highs, sparking concern about the growing concern of servicing the country's debt as the government continues to spend. here's what was said this morning on "squawkbox." >> precovid, we were spending 20% -- the federal government was 20% of gdp in spending. it's now 25% of gdp.

as outlined in "the wall street journal" editorial this morning, my father told me if you're in the hole, stop digging, stan. >> that fight over spending is what has america facing the threat of a government shutdown yet again. >> joining us now to discuss is senator john kennedy, republican from louisiana. he serves on the committees for appropriations, budget, banking and judiciary. welcome back. >> good to be here. >> same question i asked representative sherman a few moments ago. from where you sit, representing louisiana, home of the new speaker, by the way. how do you grade or assess the economy? obviously, inflation is coming down, but prices are still higher than they were two or three years ago. the economy seems to be growing nicely, 4.9% in the most recent quarter. how do you see it? >> i give it a d, and -- >> a d? >> yeah. i'll tell you why. i look at more than gdp growth.

gdp growth has been okay. inflation has not. and if you look at all of america with that grade, you have to consider all americans. and many americans, many people in my state, have to sell blood plasma in order to go to the grocery store. yes, inflation has fallen, but we both know that's disinflation, that just means it's going up less rapidly. prices have not fallen. >> fair point. >> unless we have a recession, a fairly serious recession, these high prices are going to be with us for the rest of our natural lives. >> employment, however, is very strong. by any standard. >> very strong. >> you cannot give that a "d." >> and if you look at history going back to the '50s, the ten

periods of disinflation that we have had since then, based on history, unemployment ought to be minimum 6%, 7%. it's obviously not. and that's a good thing. but i think what has skewed that was the pandemic, and there was a lot of slack in the labor market that has been absorbed. but let me say that again, i give it a "d" because the economy serves the american people, not vice versa. and the personamerican people, e of inflation, are hurting badly and even those that have received pay raises have not received raises higher than inflation. >> if we turn to washington, foreign aid obviously one of the issues. we were just talking to congressman sherman about how that's going to happen. not clear if these irs cuts are the right way to youoffset that

spending. >> i'm glad to see somebody is talking about offsetting spending and not just borrowing more money. there are two major issues right now, number one, the biggest domestic issue is inflation. and the president does not have a plan to deal with inflation. >> the fed does. >> the fed does, but you can't get inflation under control aless you attack it on the monetary side by the fed and the fiscal side by congress. and the reason that the president doesn't have a plan for inflation is because it would require him to spend less. number two, the biggest national -- international issue, obviously is parts of the world are on fire. and it is clear to me that china, iran, russia are working together. their goal is to have china dominate the indo-pacific and

subsa haren africa. have russia dominate europe and iran dominate the middle east. that is not a world safe for america. and we have to address it. >> so let's talk about the question of sending military aid to ukraine and to israel at the same time to fight hamas. do you expect that those two items will move together through congress, move separately through congress, and where specifically are you on sending more military aid to ukraine, a, and aid to israel? >> good question, as usual. right now, present company excluded, most members of the media on capitol hill are interested in talking about process, because process is sexy. who's mad at who? who's up, who's down, who's got a leg up? i'm more interested in substance. we don't know what's in this bill. we know it covers taiwan,

ukraine, israel, the border, and a whole bunch more domestic spending. but we don't know the details. and i had a -- this is a supplemental, and i had a conversation with mitch, with senator mcconnell before i came over here. i said mitch, we've got to saddle up and ride. we need some language that everybody can look at so we can look at the substance. forget the process for a second, okay? that's what a lot of people want to talk about, has the house gotten the edge over the senate? i don't care. i mean, i'm interested in the substance. >> don't the dollar figures tell you the substance? it doesn't sound like there's that much in the shadows if it's for israel, taiwan, ukraine, the board e. what's the holdup? >> it's how they spend the money. i have seen plenty of money go to presidents for border security. well, define border security. some presidents define it as

securing the border. others define it as buying more welcome mats. how much of the money for israel, for example, is going to go to humanitarian aid? i'm not against helping innocent people. i want to help innocent people. but i want to know how much money europe's putting up? how much money the arab league is putting up? how much money the eu is putting up. how much money the u.n. is putting up. i want to see what the assurances are that the money we give for humanitarian aid doesn't go into the pockets of hamas. that's just one example of about 100 questions i have. again, while the process is cool to talk about, and i get it, it's important, but the substance is a hell of a lot more important. >> do you see yourself and the majority of the republican caucus in the senate voting in favor of additional military aid for ukraine? >> conceptually, the answer is

yes. and i say that conceptually, because tyler, we haven't seen the details. and the border security is important. it's going to impact that vote, as well. you can talk theoretically, metaphysically all you want about do we want ukraine or putin to win? obviously, we want ukraine to win. but it's what else is in the bill, and how it's all tied together. >> will you be able with the new speaker? >> mike's a great guy. he's -- i'm delighted, he's whip smart, he's -- he's humble. he's consistent while being self-confident. >> can he do -- >> he does great impersonations. [ laughter ] and let me tell you something,

he's a nice guy. if you don't like mike johnson, you don't like border collies or golden retrievers. he's just a really nice guy. >> can he do business with joe biden and vice versa? >> i don't know. it's not just president biden but his people. if i were joe biden, what i'd do on this bill, i would help negotiate a border security bill, and if i were president biden, and after i did that, i would bear hug it and french kiss it. >> all right. >> i would say -- because he's in trouble on the border. he needs to show the american people that he doesn't believe in open boarders. but i don't know what the white house will do. >> we have to leave it there. senator, always a joy. >> can i say french kiss on the air? >> you're did and we're happy you did. thank you, senator john kennedy of louisiana. appreciate it. >> thank you. a quick check on stocks which are losing some steam. dom chu has a look. >> the s&p up 1/3 of 1%.

4243 is that 200-day moving average. the dow up about 0.1 of 1%. and the nasdaq up one half of 1%. ten-year yields, we are still below that 5% level. we kicked just above that, 4.812% there. the bank stocks, they're always in focus on a fed interest day. jpmorgan, morgan stanley, all these showing some signs of weakness, except morgan stanley. and to cap it off, check out what's happening with big technology stocks. watch all these, all posting gains right now and nvidia is back, kelly, tyler, above the $1 trillion market cap mark. back over to you. >> dom, thanks. minutes away from the fed's decision on rates today. what are markets pricing in? both investors and policymakers

have to adjust to a new framework and they have not. dan clifton is here, head of policy research. dan, welcome. is this your preference to the '80s? >> if you just take the three headlines, the treasury borrowing advisory committee, ukraine/israel aid, and the fed decision, they're all linked. once the berlin wall went down the framework changed in washington, low interest rates, low debt servicing cost. all of that is thrown out the window right now and the dividend we received from the berlin wall falling is starting to reverse itself. we have high inflation, higher interest rates, higher debt servicing cost and the people who don't like america are challenging us geopolitical cli and stress us out while the budget is strained. so you have the squabbles, how do we fund israel?

should we pay for it? we have treasury borrowing estimates today. it doesn't include $100 billion for ukraine and israel. >> you know what's interesting about this -- >> as the demands come in we have to adjust. >> so well said but one of the interesting wrinkles is the reason why treasury wants the higher than normal cash balance is because of the government shutdowns and the debt ceiling. >> yes. >> it's because of the deficit but also baudsecause they need higher reserves. if we can get to the idea of no more shutdowns and debt they could do that and actually take pressure off the market right now. >> if we have a geopolitical crisis i want that cushion, a covid-like event i want the cushion there. they should have a cushion, the question is, though, should we be running $2 trillion deficits with 3.5% unemployment rate. federal spending is 24% of gdp. we have to see that come down because we'll never have enough

tax revenue to meet that. that's the challenge. and for 25 years we've been able to cut taxes, increase spending, everybody was happy and now we're having the debate. the candy has to be offset with the spinach and it's hard to do politically. we call it budget trench warfare the house is going to pass a bill, the senate then has the option to do what they want to do. and then they have to sit in the room and get together. that's the way we've done it. there's the fear the house is going to do this, we're all over the place. we will get it don't. it won't be easy, it'll be ugly but we'll get it done. >> like lay government shutdown in the middle of month. >> i don't think there will be a shutdown december 17th. we had a house of representatives shutdown for 22 days. that was our show. now we're going to go out and say do we extend continuing resolution. we'll have a debate whether it's

december, january, april. if the republicans are unified in the house, kick it to april, line it up to the cuts -- >> that's a big if. for some of them the fight over the speaker was the fight over the crs, instead of going through the bills one by one. >> exactly they need time to pass the appropriations. they want to build in time, not be jammed up, but the last 36 hours there's a view building we'll waste so much of the new speaker's political capital on israel, ukraine, and then the southern border. each fight in itself is going to be a fight. and we have to resolve and work through this. >> dan, thank you very much. we appreciate your time. >> thank you for having me. we're less than ten minutes, seven or so minutes away from the fed's decision, chair powell's press conree fencis

after that at 2:30 eastern time. that's more kconsequential. our team coverage picks up after this break. at ameriprise financial, our advice is personalized, based on your goals, 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. sofi is helping me get my money right to achieve my ambitions. with sofi checking and savings, i pay no account fees, and earn a competitive apy. (♪♪)

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welcome back to our special coverage of the fed decision i'm tyler mathisen with kelly evans here in washington. just a few hours away from the release of the fed's decision on interest rates, about four minutes to be precise. >> let's check the market set up. the dow hanging on to .2% gain. the s&p up .4%. and the nasdaq up .6% today. the nasdaq on the nose at 480 dipped below that this morning after some data, especially the week manufacturing data. the adp employment report was light on private sector hiring. the jolt also showed strength. 480 as we get ready to hear from the fed. let's here from david kelly,

kristen bitterly, jim stanley and paul mccauley. welcome to all of you. david kelly, what's your take? >> the federal reserve will ch change as little as possible in the statement. my version of fed statement b bi bingo, they upgrade one word with regard to economic strength and get rid of the clause how the market is weakened. but overall looking at an economy that's strong and not necessarily hot. there's no evidence that inflation is picking up again here. we think the economy will slow down in the up coming quarters. i think they're done. i don't think there's reason to push rates or their luck higher here. >> kristen, why don't we hear from you. i guess you think the same, no more, david says they're done, what do you think? >> i agree with david on this. i think it's going to be a

hawkish pause in terms of leaving some of their optionality open but at the end of the day looking at the overall economic data, yes, it's hot but there are signs of some cracks and weakness. the ism report we saw earlier this morning. but the most interesting part of today is the press conference. digging into how they're viewing inflation and the trajectory for longer term rates. >> jim karen one of the fascinating things about the last meeting the chair was hawkish and then the minutes came out and was dovish and the beige book came out and was more dovish. >> i think the fed is likely not to do anything at this meeting but they want to leave the door open for the future. the latest run of data that we wit have had, i know it's momentum into the fourth quarter but the third quarter data was strong. it's a question of are things

cooling fast enough, do things get down to the levels they need to. headline cpi was printing a hot 3.7%. target for the fed is around 2. still running above those levels. so the question for me is, do they use this model -- sorry, do they use this meeting today to actually suggest that they may hike rates possibly in december. i don't think that they will. but i think there is a risk that the fed comes out a big more hawkish just given the data. >> paul we have one minute as the giants proved last week a lot can happen in a minute not all of it good. is this one of those times doing nothing is doing something? >> absolutely. we're at five and three eighths for the fed's fund raise the entire yield curve is below that level. the fed is tight and if the inflation is not as disinflationary as they want, there's room for the marketplace to do the fed's work.

the fed is in a good place. >> the fed chief is probably happy that bond yields are higher? >> yes. >> he's quite content with that? >> he likes the fact the market is not fighting with him anymore. >> we'll have you stick around as we get ready now for the decision from the fed, widely thought there will be no change. widely thought that, well, the door might be left open. let's go to steve. >> reporter: unchanged federal reserve leaving the interest rate unchanged at 5.25 to 5.5%. fed on hold first time since early 2022. the fed is still determining the extent of additional policy firming suggesting there's still a hiking bias in the statement among the committee members. the committee saying it remains atentative to the inflation risk, likely from the previous statement. the economy was updated a bit. saying now i