>> align ment. >> exactly. >> joseph? >> great to have you here. come back soon. >> i love it here. >> wine tasting and fish tacos. that's a big one. >> abbvie and the stock goes above 200. >> it is a big show. i'll see you tonight on . "the exchange" starts right now. ♪ ♪ thank you very much, melissa. welcome to "the exchange." i'm kelly evans and let's talk numbers. 48 is just about the amount of hours until one of the most consequential fed meetings in recent years where they are expected to begin cutting rates after strong jack them up to fight inflation. 50 is the size of the cut we still might get. maybe, depends on what you read and what you're thinking right now and 59 is the current odds of that happening. 59%. so it's almost 50/50 on whether they'll go 50. we'll have the latest and the potential market impact and why

our market guest is both nervous and excited about the setup. mortgage rates have been trending lower and it's a half-point cut that could turbo charge that trend and we'll look at what you need to know if you're about to jump into this housing market. we'll also look at apple, down 3% on those reports of weak demand for the new iphone 16 and the dean of valuation will weigh in on whether this tech giants is having a life cycle problem, but first, let's start with the markets and it is broadly lower, but stocks are mixed today with the dow setting a fresh intra-day record high and it is on pace for the fourth positive day in a row and it is coming off a 4% gain last week that did put it within 1% of the all-time highs and down 0.8% and down 365 for the ten-year. tech is the biggest drag and not just apple which is leading the declines and elsewhere, we see tech spider etf down .07% and look at the impact that these

concerns are having in the apple universe and they're on pace for the worst day in quite some time. the travel day is working with cruise lines solidly in the green and 2% 3% and this is an all-time high for royal caribbean after filing for a private offering of a billion dollars of senior unsecured notes and we'll take a closer look at the state of travel more broadly with the ceo of travel and leisure in just a bit. elsewhere, the homebuilders with the housing trade and they are hitting record highs including d.r. horton and pulte. we'll get the views on the ground about the broader health of housing and let's start with the countdown to the fed decision where the chance of a half-point rate cut is very much alive in the markets and i can't remember a time it was this close right down to the meeting and steve liesman is here with where we are with two days to go, steve. >> yeah and just the past couple of days, it's been from dead to even to now the odds-on choice.

kelly, there are few prizes ahead of the fed moves and someone will be wrong this time and the markets priced 80%, 90% for whatever the decision is and they're almost always right and take a look now. the fed funds probability showed the market trading 59% chance of a 50 and 41% of of a 25 and that is a sharp turnaround from last week's pricing of an 85% chance of a 25 and following the inflation reports and here ate case of 25 and those who like it are making and it's the fed's default move and default is a way of being gradual and what the fed usually does when it's not forced. in other words, there isn't big panic in the economy and the data hasn't been strong with some deterioration and of course, there are politics both internally about getting the whole committee onboard and one decision and of course, the presidential election. fed chair jay powell, however, has rejected the notion that politics plays a role in these

deliberations. why go 50? it's where the fed is going anyway, not just 50, but beyond that and the fed may be beyond the curve here and no harm since the fed is thought to be restrictive even after a 50 and it's insurance against economic weakness and that weakness is seen as the biggest risk right now. j.p. morgan writing over the weekend that a closely followed monetary policy rule, the taylor rule, is currently a full percentage point or more too restrictive and that is the fed policy and jim bullard telling me over the weekend he's looking for 25 and for the fed to lay out a dovish outlook of as much as 125 and 150. here's the trouble, markets are pricing in 250. so if you do a 50 this week and maybe you encourage not just this, but you encourage more than the 250 already priced in the fed may want to avoid that, kelly. >> steve, you talked to bullard over the weekend. is he a voting member? >> no bullard has left, as you

know, he was the former st. louis fed president. >> once i'm used to them being on the committee because i was going to say i didn't get a phone call. >> well -- [ laughter ] >> you promised me a phone call. >> oh, right. well, i did talk to him over the weekend. i should have called you, i talked to a bunch of people over the weekend. i didn't get a real sort of -- i'm still in the 25 camp because i think the chair wants to go gradually, but we have a new st. louis fed, and ex of the new york fed or exof private hedge fund and not sure where he stands on all of this, but my reading of what fed officials have said ahead of the meeting is that they want to go gradual. wallard made the most detailed peach and he was the only one to talk about the idea about how much the fed would do and the pace and he said if the data told me to go fast i will go fast and i don't see it in the

data right now. >> wasn't he the understudy for bullard? it is coming full circle. >> good point. >> good point. he was the director. >> even before the speech where it of us read it hey, the door is open to 50 in the front leading and the people in the days after said no, i took it as he's saying it will go 25. be that as it may. >> there was both of those interpretations out there. my read was just to take chris at his word where he said if the data tell me to go faster i'll go faster. if they say to go slower, i'll go slower and the title of the speech was the time has come. so for sure they're cutting and to the day, kelly, if they have the september 25 contract and the december contract available in the back there, but if they have either one you see the

market has built in a lot of cuts and it's built in a hundred through the end of the year and how you get there may not matter all that much as long as that's priced in. 250 baked in there if you do the math. i'll be listening for the guidance and look at the sep and does the fed lean against the market pricing because that's stimulus getting into the economy right now. >> steve, as always, thank you. we appreciate it. steve liesman reporting. >> pleasure. my next guest says a half-point cut would send the wrong message to marks and he recommends the fed taking a more cautious approach and he's acting manager of the quality etf and he owns oracle, tom, welcome. >> hi, kelly. it's good to be here. >> hi, is ellison back to being the second wealthiest man and the shares outperforming today and i don't know what the news was, maybe an upgrade, but this

has been a monster stock. >> yeah. oracle has been a great stock. they're really going through a change of narrative for the last few years, what is oracle and you think of it as a sleepy software company and no one gets on it, either. that's not what they are anymore. they're a cloud infrastructure play. so last year they had their earnings call and they also had their analyst day and oracle cloud world and they laid out some ambitious targets for growth and they're talking about mid-teens and revenue growth over a number of years now. so i think it's a little bit slow for the market to think of them quite that way and they're catching up and there's certainly a lot of momentum in the stock now. >> it's up 6% today and what is that? 25% in three months. so, you know, i half jest, but if you look at your stocks and the economy more broadly, do you think a quarter or half-point cut is more appropriate?

>> well, honestly, when we look at the stocks it's probably a little bit indifferent for most of the businesses when we're trying to play off long term secular growth trends. that said, i think 25 and 50 send very different messages. 25 sends okay, we lived inflation and now we can normalize rates and that's a very positive message whereas 50 there's more uh-oh, there's something wrong here, we're worried kind of message. it doesn't follow the normal cadence or trajectory of fed moves. it's sort of saying we know something that you may not have seen yet and whether or not that is the case, i think there would be a lot of fear with portfolio managers and investors for stocks that is assigned something and it's a little bit off and speaking for myself, i would probably rather see the lower move and we know that the next 25 basis points are coming anyway. >> i'm glad that you raised the point. i've always wondered if it's really that seriously taken as a signal to markets, but if you're

saying to you it would be. it would be a worrisome sign if they go a half-point cut and every half cut has preceded a resuggestion. and if the neutral rate is much lower than where we are right now, why not get there? >> well, i think the reason to do that is it's not so much about the rate. it's about the signal to the message and there is a little bit of self-fulfilling prophecy if you spook the market out by there being a big cut and the market sell-off then that could be a negative impact on the economy. so i think caution is not getting to if it affects the lower rate more quickly. caution is moving slowly. definitely flagging intentions before you get there. i think the hint of talks about maybe it should be 50 rather than 25 and they're coming out through the smoke signals and it's a little bit like we can't cut 30. >> the temperatures are slightly on the 25 is the way to

interpret this. >> i think they just cut rates by 60 basis points. we're cutting by 30 basis points and why not deliver the market, and this is something that i had have mentioned with steve. you've heard a trio of democratic senators to lower it by 75 basis points, john hickenlooper, would that on the margin push you and the market towards thinking okay, they'll probably not go to 75, but maybe there's pressure that they will do the bigger cut? >> i don't think that that kind of commentary will have much impact on the fed. i think that's more for a different audience than the fed. maybe they're trying to normalize a 50 basis point cut a little bit by throwing out a bigger number, but at the moment i wouldn't take any of that seriously, and if we start to see a lot of talk like that in the short term or that we're really seeing something. >> sure.

fair enough. >> let me bring it back to major holdings. you also have names like texas instruments, thermo fisher. you basically have more or less the mag seven or the mag six, a couple of related names and stalwarts like united health and j&j. what do you say to investors? is this the kind of holding that is better for the long term or something that's better running into year end? what's the processm more broadl? >> it makes sense, and the long term is made up of a lot of short terms on the way to get there. there's nothing negative we would say about the short term, but we tend to like stocks where we can't see the immediate catalysts as everyone else sees it and then it's probably already gone. some of these companies that you mentioned do have catalysts. texas instruments just gave some really good clarity on their investment guidance going forward, and i think that's

really helping the stock and they're the government's favorite semiconductor stock and they're affecting capacity in a way that no other company is and thermo fisher is the one health care stock on that list and they have an analyst day coming up later this week where they'll be able to lay out the framework that they can achieve the durable growth that they have in the past and we'll be able to do going forward, but these are long term. >> i really have to go, but microsoft, i'm thinking whether the story is on track and they'll give an update about the co-pilot technology. is that significant to you that it's perceived by the market that -- i don't want to say a dud, but they want more. >> yeah. well, i think that is very significant because people are anxious about seeing real commercial applications from ai. so far the money that's being made is either being made by the companies like meta and alphabet who are targeting ads very successfully doing it which is a

very real and legitimate business or companies like nvidia that are getting someone else's capex and that's great and nvidia's earnings are great. other companies' earnings are great, but if that capex doesn't return value through co-pilot, we're not focused on co-pilot specifically, but it would be one data point that the market is going to look at hard just to get that what they're craving for, really which is proof of great commercial upside with artificial intelligence. >> in order to keep that narrative on track in terms of the ai story. tom, we'll leave it there for now. with gmo. mortgage rates have sunk to a 19-month low, but my next guest says whether they'll dip below the six handle this year is unclear even with a rate cut. joining us to discuss is bess friedman. bess, it's a great time to check in with you. what i've heard -- welcome, is people in the housing market home builder stocks are doing great, but a lot of the realtors are saying we're surprised

traffic hasn't picked up more thanks to the drop in rates. >> nice to see you, kelly, by the way. always great to be on the show. it unfolded gradually. over the summer we started seeing a pick up. mortgage applications have increased, but very slowly, and it's going to take time. i do think this fed cut will help. it could be beneficial, but it will unfold gradually and it will help the housing market because i think mortgage rates will continue to come down. they're now in the low 6s, and they were at 8% last year and so a lot of experts are saying that by 2025 they'll be in the 5% for a 30-year, and i think that's all positive news for people looking to buy right now. >> some advocates say if we get more rates and inventory and sellers feel that there is a way to go and you can see existing

inventory better economist where buyers have been building rates, and i don't see the people, in terms of the people showing up for listings. >> it's starting to happen, but it's very slow. it's been incremental and i think sellers are beginning to -- we're getting more listings little by little and the more we start to see mortgage rate comes down and steady and the economy is good and growing, you know, this is an optimistic gesture when the fed cuts interest rates right now. they haven't done that in four years, so i think that will inspire more sellers to put their homes on the market because when they look to buy a new home rates at 5% or 6% is not so crazy to them, and i think that we'll start to see it. it's just not going to be dramatic and people like a big, dramatic story, but it's going to take time. >> so this is so ironic because our prior market's guest says he doesn't want a dramatic half-point cut because that spooks investors, but you and

people would love a big, dramatic half-point rate cut. >> i think we'll take whatever we can get. it's hard to say, but like what milton friedman says, when fed changes policy it's like turning on a water tap and it doesn't begin to run for six months or a year. it's going to take time so it's a positive aspect that the fed is going to cut rates and it will be good for cars, credit cards, for borrowing, for small businesses. it's just good news. it's optimistic because the economy has been doing very well and so for the fed to do this sends positive messages particularly in the housing market. >> last question for people who have been stymied trying to buy a home and trying to figure how long these current conditions will last. we hear anecdotally for places where they seem softer, evenex tex. what do you think will happen in the next six months and kind of into the spring selling season

here. >> think there will be so much of what we're seeing overall. it will take time. inventory is a challenge in area like miami, palm beach and connecticut, and i think that's going to take time for sellers to get into the market again, but they will do that as the economy picks up, if there's growth and if rate comes down. you know, those challenges, all real estate is very local and it just depends. for example, in new york city we have ample supply, and you know, it takes team for people to feel comfortable to get into the market and those areas have been stymied by lack of inventory, and so that will take time for it to change, but i do believe, you know, the next year or so we'll see a different housing market. >> a little more buyer friendly, perhaps. bess, thanks for your team. bess friedman with brown harris stephens. don't miss our special coverage of that decision at 1:00 p.m. eastern speaking with gary gensler as well as senator

warren who is calling for the basis point cut and senator kennedy. it all begins wednesday at 1:00 p.m., as i said. coming up, apple having its worst day since early august as they warn of sluggish demand for the iphone 16 and the shares are now track to post their first month in a year. after the break we'll ask professor aswath damodaran. his warning and advice to investors is next. plus new risks to the business models could threaten amazon's low-price competitors and even the dollar stores here at home. we'll explain that aadn hehe o"t exchange." into the night. it's all the things that keep this world turning. it's the go-tos that keep us going. the places we cheer. trust.

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apple shares are lower after reports of softer initial orders for the iphone 16. shares are down about 3%. our next guest is focused on corporate life cycles and he saw the iphone as a rare rebirth for apple in the 2000s, but now he sees them taking a different tech in the face of slower demand. here withmore on apple and a few other companies is aswath ramdaran. >> many people said yes, they went through this rebirth and

once they get iphones in everyone's hand, what's a billion install base and massive buybacks and what could go wrong? talk a little bit about what you think has been going on. >> apple has been a great company for over a decade. once we got people out of flip phones into smartphones it became a question of hitting middle single-digit growth and you get these puts and updates and it's been a middle-aged company and i think the smartphone business seems to be running out of juice. i'm stuck with the iphone 12 and i don't have the slightest desire to even look at the iphone 16 because not enough is different about each version of this, and apple gets about 75% of its value from the iphone now. it's become heavily invested in the iphone and the subsequent updates which means you will live through these update, through update and recorrections. it doesn't surprise me that people are a little bit

disappointed and looking long term, what is the smart phone itself will start to decline. >> we can argue it already has and the bulls would say it's all about services and subscriptions and stock buybacks, but not to put too fine a point on it, what do you think the stock is worth here? >> i don't think the stock is massively overvalued in any way, but i do think that all of those things are good and they're trying to fill a good space. you can add the services business and the amount of money that apple makes is so immense that making up for it it will not be easy even with three new businesses. so the services business and the ecosystem they have has to be dramatically large for it to make up for the iphone and that's always going to be a concern to invest in apple and as for the buybacks and it's just a return of cash and apple has been very good about returning cash with much of the last decade. i think clktiollectively, apple returned in cash, which makes it

the greatest cash machine in history. so i like the company as a cash machine and not the growth engine. >> i think even at 188, you're saying yes, it's at 215 now and we're in the neighborhood of fairly valued and not dramatically under and i thought it was interesting that berkshire sold half of their position. you sit on it forever. i think it was their intension. does that sale tell you there's anything else in the margin that could really go wrong? >> i think apple was overvalued and the 30% of the portfolio was apple and i think it's a concentration issue if you have a portfolio trapped in one company it's a very dangerous place for anybody to be. so the pruning reflects the over concentration. >> i hear you, but i hear munger's words echoing in my ears when he says you don't want to spread your eggs in different bank baskets and you want to put

them all in one basket and watch it carefully. >> it's a benefit, almost. >> to charlie on that note, i remember when he said that at his meeting. would you take 30% off your money now and buy any one stock no matter how great it is? and we have two sets of investments, ones to make and the ones already made and you have to be consistent. >> he's a loner in so that and so many names i wish i could run through. intel, walgreens, starbucks. walgreens, the funds they're receiving from the government and it's an important that we replace chinese ships and navy chips and sorry for the rhyme, what would you say about the company's valuation and prospects here? >> i think intel and all three companies are aging companies, but what makes intel different is the business it's in is

growing. look at nvidia, same business. intel's problem was too much meat and too big a bet. so foundry, the next tsmc in ai chips and they've spent immense amounts trying to be the next nvidia. i think they lost on both counts because they are way ahead of them in each of those markets and the path to rebirth exists and it's got to be less ambitious and they said wooe not going to be number one anymore and it's okay to be number three and number four and if they can do that there's a path way back and i bought at 1898 or whatever it was for $19. it's in my portfolio and so is nvidia. you have two ends of the same industry group with my portfolio for very different reasons. >> i thought we can't, but if i could, intel, walgreen's and starbucks, and i think i'll go with starbucks because i'm that big of a fan. get rid of a fan girl and i want

to hear it from you straight. tell me, is he going to make a difference there? >> the story line for starbucks was the coffee shop experience where people would come in and hang out and get cappuccinos and talk to each other and that was the original howard schulze and now you walk into a starbucks and you see 20 people waiting for online orders and three people sitting around in the coffee shop. it's a little depressing, actually. >> it is. >> the market senses that the story is broken. so the test now is can they discover a new storyline? i'm addicted to my starbucks caramel macchiato, but that's not going to carry them forward because i think they've lost their storyline and until they get a new story line they're going to struggle. >> i'll be listening to see if you can come up with one. he's kind of taking them back to basics and the original concept. can me do that or is the moment pass past, do you think? >> i think it's tough because

it's a saturated market. what can starbucks do that they haven't done already and i think the test is to get back to growth, but it's going to be a tough call. i mean, i don't envy him because, you know, howard schulze being looking over his shoulder and second guessing himself. you're never quite free to make the choices you have to because you feel you're being watched. >> like you said, it's a very difficult one to try and solve starting from scratch. aswath damodoran from nyu. >> it is down 2% today and new regulations do threat tone limit china's access to chipmakers like nvidia. we have that ahead in tech check.

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released today of the confrontation. the martin county sheriff's office published the video on facebook less than 24 hours after the incident near trump's florida golf course where the former president had been playing. a neighborhood in the houston suburb of porte is being evacuated as a pipeline exploded and the microphone fell. >> tyler, i can finish it out. the firefighters were battling a giant plum of that fire that shot upwards and it sparked grass fires and burned power poles and the cause is still under investigation and in reno, the murdoch family arrived in court as their succession plays out. it will consider whether news corp. owner rupert murdoch was acting in good faith that he would keep it under control of his son lachlan murdoch. we are all excited to see just

exactly how it pans out and tyler, i'll see you in just a little bit. >> temu prices can climb 20% as the biden administration targets the e-commerce giant's link to china, but the crackdown could have unintended consequences for u.s. retailers. we'll bring you those details next. that, jen. ♪ (suspenseful music) ♪ why not? did you forget something? ♪ (suspenseful music) ♪ my protein shake. the future isn't scary. not investing in it is. you're so dramatic amelia. bye jen. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com.

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leadershipable sit to always be grateful, always be mindful and inclusive of people's views. ♪ ♪ welcome back. chinese sellers to u.s. consumers are bracing for tough times after the white house issued new rules that make it harder to import products from china duty-free and without inspection. eunice yun takes a look. >> he's been selling $1400 on temu and shein, but now -- the business model could disappear, he says. he and other vendors here sell at super bargain prices to americans thanks in part to the new way these models connect chinese factories to u.s. consumers by shipping small packages directly from china. >> this manufacturer is one of the many in china supplied to shein and temu at the very low priced end of the e-commerce market in the u.s. >> one reason this worked, they

were able to slip in, nearly duty and scrutiny-free under an $800 value exemption, but the biden administration is introducing a rule to shut it down. >> without the exemption, the costs will be higher, he says. products might have to be priced for temu closer to amazon. yin says he can sell a $3 pill box at five bucks because temu offers to pay all of the logistics cost once his item arrives at a company warehouse in china. fellow seller jackie wu who sells on temu and shein, it sells for 42% more on amazon. with amazon, i also have to pay for logistics, advertising, operations and storage, he says. both shein and temu say their growth doesn't depend on the u.s. ekz collusion. temu and shein have been pushing sellers to handle their own delivery costs. yin has been shipping his

products if bulk to u.s. warehouses and distributing from there. right now it's the only way the platforms can make it, he says. and this all likely adds up to higher prices for the products on his platforms, kelly? >> eunice is this already going into effect? this feels like it will change fundamentally the attraction a lot of u.s. consumers have found with these platforms because if you do, let's just say prices double to $5 or $10 that probably could lead to a lot of demand destruction. >> yeah. so far we don't have a whole lot of detail on this exact rule that the biden administration is going put in force, however, it will have a ripple effect. the u.s. customs exemption has been a really big part of the company's success for both of them and without that exemption, it's likely going to have two effects and one is what we are already seeing which is that there will be a greater trend

for suppliers to take on more responsibility for deliveries and in that way that's actually good for the platforms because it could lighten their financial burden, but on the other hand, it will really undermind one of the key selling point which is is you go to temu and shein because you want to get super cheap stuff. there will be a question if americans will continue shopping on these sites. >> i don't know if there's another way around it on the supplier side or just some other creative way of getting around the rules and people try, but for now it seems like a big change for those platforms. eunice, thanks very much. eunice yun, we appreciate it. closing this loophole creates an opportunity to gain market share for u.s. retailers. you see them right there. let's bring in cory tarlow of discount and specialty retailers. walmart wins again, corey. welcome. >> thank you for having me, kelly. what exactly do you see or

foresee playing out here? >> so the biden administration has put in this provision to restrict the ability for temu and shein to ship to the u.s. more easily, and if you think about the number of units that have been shipped under this diminimus provision it's grown quite substantially over the last several years. we're looking at 400 million units in 2018 or fiscal 18 to now a billion units as of fiscal '23, and i think that if this change is put into effect it could really present as you alluded to, opportunity for the likes of walmart and target and abercrombie. and how do we know this? we conducted a survey. we surveyed over 600 u.s. consumers to gauge what the threat of temu and shein could actually be and what we found was that 70% have tried at least

one of those platforms, but i think the beauty in walmart and target in their business models is that while they were identified as shared donors to the growth of shein and temu, they have very broad assortments and they have free and fast shipping offerings that could limit any impact from the growth that you're seeing here and i'll just give you an example of walmart because i actually just met with an executive from their marketplace division last week and this is a really powerful stat. so we know temu and shein as a pain point is that it takes sometimes weeks to get your items, but with will mart they have a $70 billion of the e-commerce business. of that 70 billion half is shipped from stores and half is shipped from fulfillment centers. of that half that is shippeded from stores, a third of that is actually express delivery. so what that tells you is that people are prioritizing value

and convenience and actually paying up for it. >> although the users of these platforms that i know love it for the fashiony leggings and earrings and you know, tops. males and females, there are a lot of people that like the fashion that's on there, so even if they have to raise prices i wonder if it's like uber and the millennials have to get used to, it starts out super cheap and as it matures it gets more expensive and could that be the case with temu and shein? >> it's certainly possible. they've grown very substantially over the last several years. we've cited the number of packages that we've seen under the diminimus provision. you've seen reports that cite billions and billion of dollars of revenue for these companies. however, and we publisheded this in our research, if there's any sort of change in this diminimus provision that it really could impact the growth going forward

and where that market share could shift to. so if you do see costs rise. >> yeah. >> then it's possible that for that same $10 legging that you cited maybe i would, instead of going into shein or particular emu i would go into abercrombie where it's more slightly incrementally expensive at the division. >> you're right. it will narrow the gap and maybe then they'll look and say i can get it more quickly and a little more trustworthy or i can return it if i need to or what have you. corey, it's a great point. fedex was pushing against the changes because it benefits once it ships in the u.s. corey tarlowe joining us from jefferies. speaking of trade, as the u.s. is trying to keep china to advance ai chips and they keep finding creative ways to get around the restrictions. seema modi has that in today's

tech check. seema? >> the hiunger for nvidia chips is, from smuggling chips to using cloud-based providers like microsoft and amazon. keep in mind the current export controls only apply to the transfer of physical chips. however according to source familiar, the administration is looking into further restrictions that could ask those cloud-based providers to identify the location of the customer. the commerce department saying they are exploring enhanced measures to safeguard u.s. technology. we reached out to amazon and microsoft for comment. regulation has weight on the semiconductor sales to china in reesence years and revenue falling to 25% to sales of 2019 to around 29% today. minerva policy advisers, expect sales to be acknowledged by further regulation with both mentioning chips in the last debate. nvidia is reportedly launching a customized chip with the export ban and a potential export

battle against changing rules and regulations from washington, kelly. >> seema, just to be clear, this is about continuing to gain access to these advanced -- is it the leading edge chips or the one level down? >> it is deleting chips and they're accessing and using the workarounds kelly to get access to the chips where they can still build out ai models and from washington's perspective, their biggest concern is that china is using these ai models to service their military, and that's why they're not writing whether the export controls are effective and whether they're needed. >> 100%. seema, thank you very much. seema modi. as we head to break, take a look at shares of elf after a price target cut at piper sandler. they slashed it from 260 to 162 while the shares are currently at 112 lagging softening

near-term trends and something we've heard more of in the beauty industry. "the exchange" is back in a minute. minute. stay with us. boom! at&t internet that's why i'm chief technology officer but all you did was plug it in, you didn't do anything neither did you impressed? honestly, a little exactly (slurp) you'll find them in cities, towns and suburbs all across america. millions of americans who have medicare and medicaid but may be missing benefits they could really use. extra benefits they may be eligible to receive at no extra cost. and if you have medicare and medicaid, you may be able to get extra benefits, too, through a humana

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♪ ♪ ♪ welcome back. we've got breaking news on amazon. kate rooney with the story. kate? >> so amazon is going to be bringing their employees back to the office five days a week. ceo andy jassy in a letter to employees taking aim at some of the bureaucracy he calls out at amazon at this point. the first headline, as i mentioned, people are going to be back in the office five days a week. he says in the note they're going to be returning to being in the office the way they were before the onset of covid. they're going to be bringing back things like assigned desk arrangements in locations that

were previously organized that way. you think of their locations and headquarters. they've got two at this point. that's going to go into effect as of january, 2025. then on to the bureaucracy point, jassy asking the c-suite at amazon to increase the ratio of individual contributors to managers by 15% by the end 2025 or first quarter of 2025. it will remove layers, flatten the organizations more than they are at this point. this is interesting -- you might not have heard this before -- a bureaucracy mailbox, he's going to set that up. where people see bureaucracy or unnecessary processes that may have crept in in and they can, quote, root out. he says "our culture is unique." he says, it's been one of the most critical parts of our success in the first 29 years. but keeping your culture strong is not a birth right. he says you have to work at it all the time. final note, he does say that they are continued to make progress on cost structure and

operating margins, as well at the business. stock was up slightly this news. >> this is fascinating number for a number of reasons. is what you're talking about code words for layoffs? i'm hearing bring people back, which probably will involve employee attrition, and flattening the torsion, as you put it, the ratio between workers and managers. but that sounds like it could be a way of calling people. >> it could be some writing on the wall. you've seen other tech companies do this, say if you're not okay with this, you should just leave at your own volition. sort of not necessarily layoffs but forcing those out who might not want to be in the office. it's been a mechanism and sort of a precursor to layoffs in some points. they did not mention layoffs in the ceo letter here from jassy. it's often a sort of wait around that to say if you're not on board with the culture shift, be more intense, be back in the office five days a week, this might not be the place for you. it's known as a cut-throat culture in some ways. you talk to employees who it is

high level, they want top performers there. they do sort of cull the bottom 5% or 10% of employees every year. they're known for that. this speaks to it. interesting that jassy is not a founder. he's been at the company almost 30 years. the fact that he says culture is not a birth right, you got to stay on it and make updates. but this is interesting, we haven't heard this letter from jassy in his three years of leading amazon. >> and post pandemic a lot of companies in tech are probably feeling symptomatic of this. they've had their work force sort of his dissipated, the culture perhaps has gotten chaotic and still has some of the pandemic bloat. sounds like looking to streamline things. and that as you said may be why we're seeing the shares perking up somewhat on that news. kate rooney. last week bank of america's david tinsley told us the travel was a bright spot in their latest consumer checkpoint. my next guest company travel and leisure has a large foo.

in one area in particular -- footprint in one area in particular, time shares. that is one area jpmorgan chase pointed to as an area of concern after the last earnings report as delinquencies among lower and timeshare owners were on the rise. for an update on what he's seeing now, mike brown is president and ceo after travel and leisure. great to see you again. do you guys have a bureaucracy mailbox? i don't know if you heard that amazon news. this sounds like something that potentially a lot of employees or companies might enjoy. >> well, yeah, i did just listen to your last segment there. and what we like to think is we are constantly retooling the organization as we launch new brands like "sports illustrated" and a core vacation club. we also keep an eye on cost discipline. so we're lining up where our growth areas are to our cost equations. i don't say we have those mailboxes, but we are intensely focused on our culture and cost management at all times. >> are you in the office five days a week?

>> no. what we changed coming out of the pandemic in late 2020 was we created more work-from-home positions, as well as hybrid positions which is three days a week. we found that the early move to those changes has really proved very well for our organization. we still have the same policy today as we did in late 2020, and we have no plans to change. work from home works for a lot of people, especially in a rising cost environment. the hybrid-type environment allows people to manage both those work-from-home needs, family needs, as well as being in the office for critical meetings and critical face-to-face meetings to avoid that bureaucracy. >> amen. i love it. had hope it stays around forever. say there's an amazon employee who has a tough decision to make, maybe they should be loolook looking your company up. are you hiring? >> we are, and we have launched two new brands.

and that comes with growth potential for 2025 and beyond. given the fact that we believe that leisure travel remains healthy and robust for the fourth quarter, that means we're supporting our core business of wyndham, margaritaville, and many more as well as growing into new businesses. so all are welcome here in orlando, florida, where our corporate headquarters are. >> would you acknowledge waning in the lower end consumer here amongst sort of timeshare clientele? any concerns there as the macro starts to turn? >> so i would acknowledge that as the second quarter began, ended in the third quarter, continued, what you saw was a different way the consumer traveled. you saw more weakness in the lower fifth of the consumer, and i don't think that that abated early in the summertime. but what we've noticed as the quarter is progressed, consumer sentiment has seemed to rise.

for our particular consumer, our average fico is 730 to 740, well aware from the lower consumer. that consumer's held up extremely strong, and we're continuing to see that through the normal operation but also for bookings into the fourth quarter. >> you say hawaii, virgin islands remain popular. have you opened the college sports clubs? is that the "sports illustrated" one, or the college campus is something different? >> no, that's exactly it. "sports illustrated," we're in the entitlement process and plan to break ground next year. to your earlier comment about the caribbean and hawaii, both have been particularly strong destinations as people in the summertime have wanted to get to beach locations, not only in the caribbean but in florida coastlines. so our summer demand has really reflected beach travelers and an ability to get on a plane. >> back to the future. good to hear from you, mike, on a number of levels. look forward to more as more

money and college sports is the ever-growing trend. appreciate your time. mike brown with travel and leisure. that's it for "the exchange." tyler is getting ready for tyler is getting ready for "power lunch."eakthroughs are often paused. citi's seamlessly connected banking, markets and services businesses, deliver global financial solutions. ur client can keep investing in innovations for patients around the world. without pause. for the love of moving our clients forward. for the love of progress.

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