>> you have a great call we loved having you, always. you're always welcome, you know that al michaels, thank you so much we'll certainly talk to you soon i'll see you on "closing bell. "the exchange" is now. ♪ ♪ thank you very much. and welcome to "the exchange." i'm kelly evans. here's what's coming up this hour if the fed is expected to do a series of cuts and the risk to the labor market are do the downside, why not start with a half point cut next week it's complicated, but that point has been raised, and we will ask our guest about it one of our guests says markets aren't moving right now, this chart has a lot to do with it he joins us to make the case why it matters so much and how he's positioning. disney cuts prices while a

new distribution deal is locked in we have the late nest the streaming wars, what it means for you, and the new push for subscribers underway we could get some new max streaming numbers. we'll keep an eye on it, with shares up about 5.5% let's start with the markets and kick it off with dom chu >> green across the board here, and we are at session highs right now, kelly to that point, it's fractional but still green. working on a four-day winning streak for the s&p 500 the dow at 40,959, up about 99 points, up about one quarter of 1% the broader s&p 500 is at 5578, up 24 points, about one half of 1% gain there. again, session highs we were up 25 points just moments ago in the s&p 500 we were down 19 at the lows. there is your trading range so far. so, again, tilting towards the higher end of the range today. the nasdaq up 2/3 of 1%, 119 points on the nasdaq composite

to 17,511. one other place we are seeing i get to put a star up, because we have gold prices, gold futures right now, they get the star because we hit a record intraday level 2583 and change is that intraday high so far as you can see here, we are well above that longer term 200 day moving average and 50-day moving average. the gold trade has been a winner so far this year we'll see whether or not that continues on that glittering all over the place. and then one of the interesting stocks to watch today is a massive downside movement in the s&p 500 company, that's moderna, down 15% right now, unveiling some plans for a cost-cutting campaign over the next few years, as well as the introduction of about ten new drugs during that time span, as well on balance, though, investors not happy with what's happening right now, a 14% decline so keep an eye on moderna shares, about a third of their value has been shed.

kelly, i was just in that meeting with the cleveland fed and i can't wait to hear what she has to say about that 25 versus 50 question >> dom, thank you very much. the latest economic data is keeping some inflation fears alive. ppi was up 0.2 in august, but if you exclude and energy, the core was up 0.3, similar to cpi yesterday. and on the jobs front, the number of americans filing for unemployment looked okay again last week at a relatively historical low of about 230,000. a bit of a forecast, we're not seeing widespread layoffs yet. but we're starting to get a little bit of that in the payrolls my next guest says you could make an argument to start with a half point cut although a quarter point is more likely i'm joined by loretta mester, a cnbc contributor welcome to you >> thank you very much >> now you can talk freely, you

can tell us what you really think, that they should go 75 or two full points. what really do you sort of make of the situation right now economically >> i mean, we know that inflation has come down quite a bit. the most recent data, yeah, was not according to expectations. but it didn't take away from the fact that inflation has moved down over time, and the committee has become more confident it's on that path back to 2%. not there yet, more to do, but on the path. and the labor market has moderated. we've seen a slowing in terms of employment growth, but it isn't weak the labor market is still solid, it's just moving down. so the real question is what do you do with policy at this point? you know, they've said, and i've never seen chair powell be as explicit as he was at jackson hole, we're going to enter this new phase of bringing the funds rate down over time. >> you thought that speech was significant? >> i thought that speech was

very articulate, and more direct than you might have expected at that point >> so it was very clear that, okay, they're going to enter this cycle then the question was, do you do 25 or 50 to start with >> you thought the clarity was around the rate cutting cycle is starting so i was just thinking back to jackson hole a couple of years ago when the clarity was all about inflation. we're tackling it. the new phase is a focus on the labor market, what is it >> two things. one, it's a rate-cutting phase, but it's a rate-cutting phase from very elevated fed funds rate so i think of it as reducing the restrictiveness of monetary policy, not going immediately to a neutral stance but they're going to be informed by what's happening on the labor side of the economy now, as well as the inflation side. when we started raising rates, we had to only focus on the inflation side, because inflation was so elevated, and

labor markets were very tight. >> so tight. what did they use to call it, the great resignation. where have we lived through a period where workers were calling the shots entirely >> at that point, it made sense to put the focus on the inflation part what's happened over time, and the fed has been clear about saying this, those risks and the two parts of the mandate are coming into better balance now it's very, very important that they do start really focusing on the labor side of the economy as inflation has come down. they're not done yet inflation is not back to 2% yet. but significant progress has been made and, over time, i think it is on path to 2%. now it's about is the labor market continuing to moderate or weakening? that's where the focus will be, and why the fed will be starting this new phase of bringing the funds rate down. 25 versus 50 i could make a case for 50 if i wanted to, but i think it's going to be hard to communicate that kind of case given where

the markets are. but also more importantly is, do you signal as a fed policymaker, do you start with 50, right, maybe the economy is worse than the average person thinks, or two, you believe you're behind the curve and maybe that builds in expectations for even more quickly rate cuts, and they're already in the market. so that's such a hard case to communicate, and there's no reason to do it, right stay away from the complication and signal we're entering a new phase. it's not a one and done, right there's going to be a path here, and we'll be very attune to not only where we think the fed -- the economy is going, but also the risk around that forecast. >> right and number three, i was going to say you could argue there's a political layer, as well which i know many say it's not political, but because we're so close to a very close election going 25 or 50 could have big rm fi case -- ramifications

just by nature of both candidates being asked about it, and inflation being the number one topic in terms of the campaign trail >> i'm going to reject the political part of it, because that will notinfluence what th fed does >> but there's sort of this sense -- it's like what you said with number one and two. they want to be perceived as doing from a consensus point of view that is almost, i would say, ho hum. don't you feel like when we raised rates in that first 75 basis point raise in june of 2022, the survey came out, inflation expectations were higher than expected, the cpi was very hot, there were reports we could go 735. now it's almost the opposite it feels as though the fed doesn't want to do anything too big or bold, just saying we're starting the adjustment, but it doesn't seem like we're cutting at all the way we began hiking >> i think that is a reflection

of the fact that policy is very well positioned right now, given where the economy is, and give wherein the expectations of where the economy is going given there's risks for both the labor market side -- >> it's not clear, in other words? >> in other words, it's well positioned to let's start the cycle, bring down the level of restrictiveness of policy, but be flexible enough that if things don't manifest the way you expect, like suppose the labor market weakens more than what we think, then they're in a good position. they could end up doing bigger cuts or bringing the funds rate down much sooner or let's suppose that, you know, maybe the read on inflation is a little bit off and things are built in maybe more stickiness i don't think that's the case. that's not my baseline, but then they could say we're going to go a little slower than we might have anticipated that's why it's crucially important in this phase to make

sure that policy stays really well calibrated to the outlook that also being cognizant of the risks. >> too quick final questions which aren't quick the first is just reflecting back on the past couple of years. was there anything going back that you could say the fed could have done to catch more quickly the inflation wave that happened and is there any sense that the fed contributed to its existence? >> so, that's not a quick question very difficult in this period, not only was the demand side of the economy moving, the supply side of the economy was moving, as well. and that's unusual in a business cycle. usually the supply side is more stable over long periods of time it can change, and it's demand moving around and you set policy to try to mitigate some of that. this time it was both things moving, and i think that contributed to the fact that, you know, the inflation forecast

took a while to catch up to where the economy was going, and it took a while for the committee to convince that they needed to move when they started moving, of course, they signalled a move before they did the first funds rate increase. >> that's what i'm curious about, i'm obsessed with this gap between kind of the financial market data and then when it hits the real economy. is there any way the fed could be a little more reactive to prevent episodes both on the up and downside >> i think we have to be attuned better to the risks, and build in more scenario analysis into policymaking making sure that you understand you might have a very strong prior about how the economy is going to behave, and you could be wrong and therefore, what are the plausible alternatives if that is the focus, that keeps you balanced on how far off you can be >> david russellbrook is working on a scenario like that.

finally, raphael bostic yesterday, an inspector general said might have violated some fed rules about trading. we've seen this before with fed members no longer on the committee. he's currently a voting member i imagine you're relieved not to be asked the question what the fed should do about this, but what do you think they should do about this >> you know, everyone on the committee is very, very careful about the financial rules. you know, they've changed over time i think that's what you have to do is be careful, but also understand that sometimes things can happen you're not aware of so i think it's a difficult situation, but everyone is very attuned to them, and no one is trying to evade. everyone is trying to be very compliant with the rules >> that meeting is next wednesday. if you were there, you would be for 25, even if you could make the case for 50? >> i would go into the room

thinking about what everyone is saying about the table, and that would inform my view but i think a series of 25s, if that's the vmessage coming out, could be on board with that. >> thank you for your time today. nice to have you here. 30-year bonds are up for auction. let's get out to rick santelli who is tracking the results. >> well, this is the last of the auctions we had the 30-year bond at 22 billion. unlike the three-year, and the ten-year, this auction, i gave it a krfx. the yield was 4.015. the issue is chrissing, because the one issued market was trading at 4%. so it tailed 1.5 basis points. the other two auctions were the opposite they did better with respect to pricing. and as you look at the chart, you could see that we've been moving up in yield pretty much after all the numbers, and shea

should, because ppi, we could say what we want about inflation, how much wonderful profits we made, but it's not where it needs to be if you put a two-day chart in there, we're building momentum to the upside of yield, above yesterday's high yields. and if you open the chart up a little more, we're hovering at the highest yields on a closing basis for 2024 but the metrics os of this acti direct bidders were on the light side, domestic, mutual funds, insurance companies, something we want to keep a close eye on kelly, back to you >> right on the nose, around 4% for that 30-year rick, thank you very much. my next guest says while we may get a typical election pullback, early indicators for the next bull cycle are just picking up i'm joined by my guest great to see you again so you're expecting -- why do we

all get this rockiness around the election, the markets just don't like uncertaintisome >> around the election, we typically get a pullback, and just to be clear, that only happens in close elections for the last 20 years. so elections have been close, it applies to all of them it's simply the market buying protection for volatility around the actual election. sotypically, you see the markets starting the first of october, so a month ahead, basically pulled back 4% to 5% and typically bottoms with the election, maybe a day before, and as long as you get a clean result and uncertainty is resolved, you get a strong rally. >> that's what i was going to say, there are people wondering if we don't know election night what happens and this drags out for days or weeks, it would be natural to expect the market to be unhappy about that. >> yeah, i think, you know, there will be volatility there's not a lot of historical examples of when we had a hung

election but we do have one >> what happened with the market during that time that would have also been near peak of the dot com boom, before the nasdaq crash >> i was just going to say, you have to keep in mind what the trend in the market has been, and the trend is coming from the business cycle so that's bush/gore, we were in the midst of a down trend in the market we dipped down a little bit more so i'm just saying the patterns still held we dipped down a little more relative to that trend when we didn't get the resolution, we dripped a lot more below that trend. >> i misspoke, it was march of 2000 that the nasdaq peaked. so we were already down significantly by the fall, and therefore, it was a pretty big head wind. >> i was referring to the bush/gore election and so, once we -- it looked like we were going to get a

resolution from the supreme court, but just before basically we got the results, we did see a market rally of course, you know, after that, the down trend continued >> having a sample size of one is never anyone's favorite to extrapolate from >> it does conform to the same principle, so you have to be mindful of trend the trend has obviously been very positive so far, even though we have just had basically two back-to-back pullbacks. >> what is going on in the business cycle we just heard from loretta mester talking about how it's a little less clear how to balance inflation and the labor market right now. >> what i would say is that -- we have had this issue because of the me pa -- take an example

where i live in the equity markets, you think about the s&p 500 sales, given the peculiar nature of the recovery, 10% inflation, gdp growth, we have s&p 500 sales growing at 26% year on year >> at the peak >> at the peak >> wow >> then they continued to slow at an unsustainable pace for two years. if you have something very elevated and it's slowing for two years, it is very natural to extrapolate or be at least concerned that we're going to go right through. i still get plenty of inquish inquishryes when we talk about the negative sales growth of the s&p 500. >> you've been bullish about that whole period. >> the s&p 500 sales growth laland

ed five to six quarters, it's back in the prepandemic range, slightly above average, so there's nothing wrong with it. and i went to this example, so you do the same and think about the labor market the same way, two different measures so what everybody tends to focus on is, you know, the actual employment numbers so if you take private payrolls, and we are after the trend here. so if you look at a very slow-moving measure, which is the year on year growth rate, it looks kind of similar, not in timing, but very similar to the s&p 500 sales growth >> when you tell me that -- >> we came down, and what i would say for the last seven months, the labor market in terms of employment looks like it already landed at 1.4%, give or take second decimals. >> meaning it bottomed and could be improving >> it's going sideways unemployment is in the va icini

of 4%. so to us, it looks like the labor market already landed. and so when you think about the future, and yes, there are risks, but i think -- >> i hear this and think maybe the fed shouldn't go 50. in other words -- >> i would agree >> can you use that as a proxy -- liquidity in the economy still seems to your point a little higher than previous trend >> yeah, i would just add also the labor market to look at it completely differently, because it's labor input, which would be total hours. if you look at what total hours are doing, we're growing a channel through 2018 and 2019, we collapsed, we came back, we're growing the same channel so both things strongly suggest the picture is the labor market has landed

yes, you know, it's not growing as strongly, so i think the issue, the interpretation is that those numbers were too high these numbers are reasonable >> fascinating >> and the 25 versus 50, it's all of that. so to the extent that we are cutting rates or the fed is cutting rates because disinflation has proceeded well, or maybe a little better than expected perhaps, that's very positive for the equity markets. >> all right >> if they're cutting because we're concerned about growth that's very bad. >> and you can see the market trying to figure it out. that's interesting 5750 or so thank you for explaining it to us it's been a difficult one to figure out thank you. appreciate your time >> my pleasure coming up, we'll get some new numbers from bank of america on the consumer, which shows they're starting to tap the brakes on spending what it means for credit and the

overall health of the economy in a moment here on "the exchange." that's why i'm chief technology officer but all you did was plug it in, you didn't do anything neither did you exactly exactly exactly exactly impressed? honestly, a little exactly (slurp)

the moment i met him i knew he was my soulmate. "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs]

a home router should never be a home wrecker. oo this is a good book title. welcome back ally financial is down more than 16% this week after a warning about consumer credit challenges, and a report from the bank of america is echoing those concerns surrounding auto

d delinquencies. here to make sense of it all is my next guest. maybe you can de-mystify for it. we've heard about weakness with the low-income consumer and in autos, but others seem to be doing quite well what is going on >> the overall picture is positive what we see in our latest checkpoint is the consumer is normalizing, not deteriorating significantly. and it's still a services story on the spending front, and part particularly, in your previous show, i was talking about no shortage of rock stars touring over the next few years. you know, a lot of the experience that tourism has been part of the consumer story this summer >> one interesting area lately has been some weakness in the hotel space. we spoke about this, bookings, holdings, where the analyst didn't want to call it a recession yet, but he's looking ahead a year or two and wondering how strong the

services demand might be if that catchup trade does start to normalize, what's left to keep driving the consumer spending more broadly? >> that's a good question. so the labor market, although it is softening, looks positive wage growth, in fact, in our data, we see the wages going into people's accounts that's rising for the lower end about 4% year on year. so the risk behind the sales of all consumers, i think services broadly, perhaps over time the tourism angle will normalize away a little bit. but there is broad-based strength in services, too. >> what you said on the low end is fascinating, because we get asked and we hear about the low-income consumer being under pressure, while at the same time, companies like mastercard saying that subprime is outperforming prime, and mastercard saying there is no deterioration in that segment. so it doesn't appear to be across the board, which makes me

think it's more execution specific and a story about competitive pressures and where people are shopping. >> that's interesting, because what we see in our data, is this trading down story the lower income, younger consumers, thinking of value apparel in this space, they're increasing their shares, their spend share in that area really significantly. i think it's up about 10% for lower income consumers from 2019 so some of the divergence is where there's winners and losers in the corporate space >> you mentioned 4% after tax wage gains, what would you say is going on with the middle to upper income consumeer >> the middle is around free from memory. the interesting thing is it was in the doldrums last year, but it's picking up in our data, which is quite curious up to about 1% year on year.

so i guess, you know, the labor market is softening, so those thing also eventually cool off but they look positive >> remember when we talked about the high colored recession, the tech layoffs we were experiencing but the fact that it's stabilizing or increasing is perhaps a bit of a glimmer of hope for the soft landing. >> you know, there's nothing on the consumer data that we see that is not pointing to normalization and, you know, a soft landing >> david, thanks for bringing it to us. we've got a news alert on openai kate rooney, what's the story? >> so openai just announcing an improved model, that are ai model has better reasoning this has been reportedly called strawberry, so a lot of buzz around it. the big takeaway is it's got better reasoning, they're calling it openai 01, better at

science, coding, they're releasing a preview of this version and say it's helpful for ph.d. students and performs as well as ph.d. students on some challenging benchmark tests like chemistry and biology, that is not like browsing the web. they say chatgbt is actually better for most normal use cases. it also represents a new level of ai capability, and part of this is developing new safety training approaches as part of this model improving these models, a big part of openai's value proposition, they have to justify that price tag they are raising new capital, between $5 billion and a $150 billion valuation. >> this model is meant to be a smaller one that can still complete certain tasks >> smaller, more niche, but it hints at going after enterprises, tailored towards

universities, ph.d. students but they have had to go after the enterprise customer and expand beyond the chat bot, which has been the knock against them and getting better reasoning and some of these complex math tasks at a better level sort of hims at what they're going for. just your average consumer, you and i making -- >> any way kate, thank you very much. our kate rooney reporting. coming up, u.s. officials are meeting with big tech execs to discuss ai energy and data centers. nvidia's ceo was also in attendance and spoke exclusive with cnbc after that meeting when we come back, we'll tell you what he's saying about tariffs, regulation, the election and more. before we head to break, shares of unit fi software are popping 12% after they will scrap the

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hello, everyone. i'm tyler mathisen with your cnbc news update ukrainian president volodymyr zelenskyy confirmed that russia has launched a counterattack where ukraine launched a surprise incursion last month. russia claims it's recaptured ten settlements, but zelenskyy says everything is going according to ukraine's plan. data forecasts holiday sale also grow about $1.6 trillion, the slowest growth pace in six years, down from growth of more than 4% last year. we shall see and more than 405,000 visitors visited taylor swift's custom link to register to vote, according to the general services administration, which oversees the website that the custom link directs. her social media post, where she endorsed kamala harris for

president, had a custom url to vote dot gov which helps visitors to vote in their state. kelly, back to you >> she's got some power. tyler, thank you very much the ai boom is putting a big strain on the u.s. power grid, and the white house is tapping america's biggest ai players to discuss how to move forward. meeting today with leaders from openai anthropic, google, microsoft and nvidia's ceo let's bring in deidre bosa with more details deidre >> hey, kelly. we know the government moves slow, and ai is moving faster than anyone anticipated, so big tech has done a bunch of deals in the energy space. oracle making progress on a data center that will require over a giga watt of electricity, or enough to power 750,000 homes. amazon mpaid ad 650 million for

nuclear power facility so big tech is scouring the country for electricity supply, and the white house has certainly taken note megan stopped the nvidia ceo, who acknowledged the huge amounts of energy needed to continue to develop ai, but also talked about the solutions that ai could help pioneer. have a listen. >> although artificial intelligence consumes a lot of energy to train, it also saves a lot of energy when you consume it because ultimately, it's not about training the model, it's about using the model. whether it's in health care or climate technology or just running the power grid, ai has the opportunity to really save a ton of energy. and so i think people are grappling with the scale of the opportunity ahead, of course, the scale of the challenges ahead. so it's going to require public and private collaboration. >> so here he's referring to

this idea that the ai models are going to become so advanced that they will provide solutions. they're going to make energy the way that we develop it, the way that we use it, generate it more efficiently in the future. he mentioned a publish/private collaboration. tech giants are pushing forward with new data centers, straining the national power grid and complicating their own emissions goals, which could complicate the administration's transition to clean energy. certainly a positive development, but they are going to be working together and having these conversations but the hard work is going to be ahead. >> it shows how top level the concern is deidre, thanks deidre bosa. coming up, disney slashing prices for its streaming platform ahead of next month's planned price increase tt signals about the streaming price car wars is next when it comes to amgen's life-changing medical breakthroughs, every second counts.

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welcome back it's not just mcdonald's lately turning to value to entice customers. disney is cutting prices of its ad supported tier, at least temporarily.

julia? >> well, kelly, disney is cracking down on password sharing, and if that getting underway, it's slashing prices to draw those people who had been free loading borrowing passwords. disney's offering disney plus basic with ads for $1.99 a month for three months that's compared to $8 a month it costs, and disney is raising prices to $10 a month. that price goes into effect starting in october. disney is offering this cut price $2 a month plan just until the 27th of this month pushing some subscribers to lock in for three months before those price hikes go into effect now, as part of this new deal, disney is offering subscribers perks around discounts on merchandise and access to sweep stakes, looking to drive consumers to its lowest priced ad supported app that gives disney the advantage of dual revenue streams. disney's price cuts and password

sharing crackdown come after the major streamers raised prices in the past year. in june, paramount and max raised prices while peacock's $2 per month price increase went into effect in july, just ahead of the start of the olympics and analysts expect netflix, which raised prices in october, to announce another hike by the end of this year all of the streamers are under pressure to grow profits, but consumers have so many choices it makes sense that disney is turning not just to price cuts but perks to lock fans in. werner discovery is looking to its renewed and expanded partnership with charter to grow its streaming subscriber base. the ceo is right now speaking at the goldman sachs communicopia conference, saying max expects to add 6 million new subscribers this quarter subscribers will get access to a tier of max at no extra charge as a result of that new deal they just announced.

kelly? >> is 6 million good or bad? the shares are up 8% >> it's good because it shows that -- right now, disney and directv are in a standoff. this shows that warner brothers discovery is willing to do a deal to get ahead of that kind of a blackout, and they're partnering with charter to make sure they're expanding their streaming base yes, it's bringing in the streaming component as part of that this echos what we saw from disney and charter about a year ago. >> let's bring in mountain ceo mark douglas to share his thoughts on these streaming wars, and ultimately this big transition that is happening from linear to streaming are these smaller players going to stand a chance to catch up with netflix for instance? >> i think they can survive. they're probably, you know, not going to catch up to netflix and disney but what disney is doing right here, the key thing that julia

said was the dual revenue streams. so when you pay $1.99, they'll make more money on advertising, probably early on a few dollars month, but that will increase over time to as much as $10 a month. so getting lots of people on board now for all of these streamers makes sense once the ad revenue kicks in. >> you know, it's sort of like, great, if you can make money both ways, why not do that i guess broadly speaking, how much budget the consumer has for all of these streaming channels, and what it tells us that disney might be looking to lean into now to a value offering, as a time when this directv thing has really gone sour >> yeah, the way to think about it is basically let's call it two years from now even though you're getting price increases when it's not ad supported, you're going to probably get price stabilization, maybe even essentially disney at least for

the first three months is doing a price decrease so for consumers who right now don't want to pay a lot of money for different -- a lot of different streaming networks, the big ones will still get subscription dollars, but all the rest will get ad revenue it's like back to cable, where -- >> don't get me started on how much this whole thing -- if cable had just put in a better interface, we could have avoided a lot of this drama. you think a lot of these networks will come out with higher gross than in the recent years, that it could be a difficult quarter, but even a buying opportunity like netflix had in 2022. that's a bold statement. >> yeah, so i think what's going to happen, we're in this big transition every network now has a senior vice president, executive vice president of digital advertising for the streaming networks they now make more money at higher prices on the streaming

content than they do on the linear content so they are catching up to the consumer first, the advertisers had to catch up to the consumer where they want to place the dollars now the networks are catching up to the advertisers so a few networks might have some bad quarters. j just double down, because everyone is going to come out higher, and it's a buying opportunity. >> so bold i think there's a lot of people, i don't know if i would go that far. julia, put a pin in this for us. >> here's what i would say mark just talked about how advertise willing be such an essential part of the streaming wars that's why disney and these other platforms are pushing consumers to the lowest priced option consumers are less likely to drop the services, so it's better for the platforms because they have that dual revenue stream, and the other thing

that's very similar to the cable business is the return of the bundle the ceo talked about the rebundling and said it's better together he said it's not a bundle, it's better together. he's talking about these new packages of apps like max and disney how they're being offered together to keep people subscribed to say maybe we're going to cut price it is you pay for these three apps together, with the hope you'll be less likely to drop the service once your favorite show is over, because now you have all these shows that you're watching as part of the bundle you're paying for. so ads bundling sounding like cable tv just fewer channels >> a slight tweak to the interface. in any case, appreciate it today. hexcngone back after this "t ehae. ) (♪♪)

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. welcome back with stocks staging a huge turn around yesterday, my next guest is giving most of the credit to positive comments from nvidia's

c ee at a tech conference should it get all the praise let's ask the cofounder of data trek research. why are we unpacking yesterday because it has a baring on what the market is all about the fed and rate cuts. >> we have a tug of war market some days we get good news, some other days are worrisome it's a classic tension they think the tension is going to be more volatile tu over the next couple months >> we talked about how the dow was down 700 points. and as odds of a half point cut diminished, the market sold off. then it turned around and looked so much better, but nvidia was popping 8% in part after these comments that wong made. so what does it tell you about the significance of size of next

week's rate cut? >> it tells me that the markets expect 25 and that's the right approach if you look back in history, 1990 to present, whenever the feds cut can 50 basis points as a first cut, we have had a recession. whenever it's been 25, we haven't had a recession. so 25 is the right kind of move. i think the market understands that it doesn't make the tension between a slowing economy any easier >> that's a really interesting data point let me flip it around and say, okay, if they hadn't spoken yesterday, if we were down 800, i think in some ways, ai is quite obviously trying to rescue and lengthen the business cycle. maybe in a microcomp, that's what's going on. as long as it's continuing this investment cycle, the fed probably can go 25 and everything is okay >> one hopes for sure, but we still have to worry about the

labor market particularly. if you look back at the classic signal of a recession, it's been two consecutive months of job losses we haven't gotten there yet, butt job numbers have been wonky that it's hard to tell if we are seeing negative. so we saw informational issues >> you are talking about whether you buy tech names or maybe some that are under the radar what do you are the best opportunities here >> it's away from the semis. and semis outperformed by deviations over 100 days versus software software is out perform over the next 100 days. it's at better play right now. >> you also like small caps.

>> sort of look at some of the recent momentum. they are really poised to do well and others yetd saying you don't want exposure until 2025, where are you on exposure to small caps >> i think small caps will work at the end of the year they really benefit from lower interest rates because about 40% of the russell is unprofitable these companies need access to low-priced capital, which is the debt market. so as rates come down, they will get incremental capital and that should help, but they have just been this heartbreak kid group where they have had a huge fallback and another huge rip and now we're in no man's land again. so if we get more volatility, that's a group to add. >> you're buying the financials. you'll buy more on the markets if they jump to higher levels. we'll keep an eye on wong. thank you so much for your time. that's it for "the change. we are getting ready for "power

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switch to shopify so you can build it better, scale it faster and sell more. much more. take your business to the next stage when you switch to shopify. good day, everybody. welcome to "power lunch. glad you could join us there's lots of b's on the menu. star starting with burgers as mcdonald's extends its $5 meal promotion. i guess i would say wh