thank you for that. sarat, what have you got? >> american express with the high consumer spending. i like the stock. weiss? >> it's got a lot of upset. >> a stock you've been buying, as we said. good performance. joe t.? >> i like the e-commerce thesis, amazon, mercado libre which today's final trade. we will see what this market does and maybe we can finish positive to end the quarter and the month. see you on the bell. ♪ ♪ thank you very much, scott and welcome to "the exchange." i'm kelly evans and here's what's ahead. tengs in the middle east are reaching a fever pitch. isra israeli prime minister netanyahu saying nowhere is out of reach after extending to lebanon over the weekend. president biden insists an all-out war quote, has to be avoided. is a ceasefire now more likely? we'll discuss.

meanwhile, hurricane helene wreaking havoc here at home with more than 2 million people without power in the southeast and hundreds of road closures are making the delivery of supplies virtually impossible. we'll have the latest and the how each presidential candidate is responding to the disaster. plus, we are just hours away from the potential east coast port strike and what it could mean for inflation and the supply chain, of course, and even for your wallet ahead of the crucial holiday shopping season. before that, let's start with the market action and we'll hear from jay powell later this hour, by the way in the meantime, rafael bostic moments ago said he's open to a half-point cut if the labor market remains weak. dom chu, how are markets taking that? >> the markets are taking it relatively in stride. we're off the best levels of the session, but we're off the worst one, as well. in fact, we're pretty much flat for the major s&p 500 broader measure. again, down one point amid those comments and other comments by some fed speakers. the nasdaq composite is marginally positive, just about flat again, only up 11 points to

18,130. the s&p 500 is at 5736, pretty much flat, just down two points. we were only up five points at the highs of the session and down 14 points at the low. the dow industrials is the real underperformer down .25%, and it's good for 125 points to the down side. another place to keep a close eye on that's not been doing anything modest at all these days has been the chinese market. the shanghai composite index, that broader index, is up 8%. its best one-day gain in roughly 16 years at this point. the shenzhen composite, the tech heavier nasdaq equivalent some call it in china, it was up about 11% and that's the best one-day gain in roughly 26 years at this point. the hang seng in hong kong up 2.5%. the china large cap etf here in the u.s. down .25% and it was much higher earlier and the craneshares etf crane web is up 1 1/3% and off its best levels

of the session and yes, the trade overseas is big and the etfs that attracted them here have surged and given those back so keep an eye on those. automakers all across the world are in focus, specifically ones in the european market, stellantis, aston martin, volkswagen, all among the european carmakers that have cut their forecasts or guided things lower given the macro economic environment for cars and slowing down, the slowness in china and that sort of thing and it's carrying over to general motors down 2.4% and the auto trade, china and everything else very big in the news today, kell. i'll send things back over to you. >> those are huge declines for aston martin and stellantis down under pressure. we appreciate it, dom chu. israel is expanding over the weekend killing hezbollah leader hassan nasrallah and ramping up a ground invasion ahead of the one-year anniversary of the hamas attack.

one of my next guests says this is a tipping point and how iran responds will determine the future of the region. the other notes the assassination could be prompting some investor optimism in the region. joi joining me now is fred kemp and michelle caruso-cabrera, and both are cnbc contributors. before we talk about the market reaction, fred tell us why you think we're at such an important juncture here? >> yeah. it is a tipping point. the question is is it the tipping point? it's an important junction because israel has changed the narrative. after october 7th there were questions about israel's intelligence and the deterrence capability and all of those are blown away in the killing of nasrallah. you know, maybe as many as 80 bombs getting to him in a 60-foot bunker and one can't forget that nasrallah was in power for 30 years and he was the second most important leader in this whole conglomerate of iran and its proxies after the

leader of iran and that's a real turning point. what it is is it's a collision of two visions for the middle east. one of them is iks ran's vision with its proxies to destroy israel and to bring about revolutionary extreme form of islam and the second vision is you have a stable pre-market democratic israel that embedded in a more moderate, modernizing middle east built off the abraham accords where you've countered and you've contained iran and you've degraded and disrupted its proxy. so that's what's at stake here and can this tip the situation and it would be a long time off, but tip the situation more into the more positive outcome? >> right. one of the architects of the abraham accords jared kushner noted that it does move in the direction of isolating iran, but michelle, i don't know what your take is on that and what you're hearing in terms of the market reaction and lack there of.

oil isn't moving and saudi said they would be pumping, but where's the attention to be directed. >> there's an interesting corner of the market that's actually making a bet on the choice that fred kempe has so succinctly outlined which is if you look at the way lebanese bonds are trading today they're very actively traded and they're trading higher. lebanon defaulted on $20 million on bonds back in 2020 so they trade very distressed. last week they were trading at 5.75, and this morning they were seven or eight cents. in default to debt trading those are huge moves and think of it a deeply out of the money option, but the reason that trade is happening is because of the death of nasrallah. there is a whisker of hope that perhaps lebanon can get its act together politically and actually get out of the economic mess that has been created by hezbollah's control. >> we saw celebrations, i guess, you could say in lebanon in the

immediate aftermath of this attack suggesting that people felt as though a problem, a boot on its neck was going to be taken care of, but how much more has to happen before there is clarity on whether that will be the ultimate outcome. >> they need to do a massive debt restructuring. remember how long greece took, these things can take a very long time. greece this morning now trades better than france. >> wow! >> and that took 15 years. >> and the french have been doing quite poor. >> the thing is if you buy something at 7 cents and you have past-due interest later on it depends on how long you have to wait you can still make a lot of money even if it only goes to 30 cents on the dollar. >> absolutely. fred, a lot of international officials are cautioning israel about this response now, but most are really just watching to see what exactly its intentions are and what do you -- how much broader do you expect this to go? >> you have to watch iran here. iran is really behind a lot of

the mayhem in the region. iran, most of all, wants to survive and the state wants to survive and the revolution wants to survive. losing nasrallah is the biggest loss they could possibly have and they're not going to risk their own skins over this. if their calculation is by escalating this war they're going to endanger themselves and perhaps put them in direct battle with israel or even worse the united states and so far they're being criticized by hezbollah and hamas and others for not doing enough for them, but there are feuding factions in iran right now. the republican guards and more extreme factions would want tougher action against israel and more moderate factions and this is the new leadership are worried about iranian economy and want to rebuild some sort of relationships with the west. so i think we really need to watch iran right now and

hezbollah has not so much capability on their own and they may hit civilian centers and that may escalate things and tehran is the place to watch. >> at the same time we talk about iran's financial position and moody's downgraded israel and it could be cut to junk status and talk about no matter what the outcome is and the war is putting strain on their budget, as well. >> sovereign finances are going to struggle because you end up spending so much more on your defense as opposed to what you would be spending on it otherwise and you can spend deficits and to underline what fred was saying and with the lebanese today it suggests that iran was not going to be as active as hezbollah would like, to fred's point. >> go ahead, quick last word. >> i wouldn't mind commenting on that because that's such an interesting point. i hadn't been following the lebanese mark, but that's so fascinating because what it says is we should step in right now.

i mean, it's hard within this war, but to strengthen lebanon's institutions. it does have state institutions, but they've been undermined and weakened by hezbollah. this might be a chance not just for israel and not just for other, but a chance to a very beautiful country, with a lot of hope and a great future, this may be a time to help it. look around the rest of the middle east and look at saudi arabia and look at the united arab emirates and iraq and other parts of the region are doing fine to great. it would be great to pull lebanon into that path again. >> that's great and a potential opening. i appreciate you both. fred kempe and michelle caruso-cabrera. >> my next guest does see increase in inflation and volatility, but says they're just one of the risks that could have prices climb again. dan suzuki is here deputy cio at richard bernstein advisers. dan, just a quick response before i get your broader thoughts on the markets here?

>> yeah, i think, listen, we're not geopolitically focused firm, but any time you have geopolitics flare up, there are two immediate impacts for the marks. one of them is inflationary. both potential risks to supply chains and commodity supplies and then also obviously, what we're seeing is market volatility on the back of it. so i think the way to protect yourself from that is to own the beneficiaries of that inflation or that volatility and one way is to own commodities or commodity producers here will give you protection against the geopolitical and the secular theme of deglobalization, kelly. >> now you have the easier trade, as well with china. how much do you buy into chinese beneficiaries into the measures they continue to announce. >> obviously, as far as the trade goes, the trade has been working out well and the trade is reflecting sort of this

moment where approximpolicymake china are starting to panic and as my colleagues in the past, and markets start panicking, i think it remains to be seen whether this will have followthrough and it's going to be one in a string of moments where this is the beginning of a bah zdouc b bazooka and it will turn into the difficult thing for china is we think that with china, their profits have been accelerating for now eight quarters and it's probably closer to the end of the profit cycle unless you get a major move of stimulus than it is at the beginning of the profit cycle. that's an interesting cautionary point, and i love that line about panicking. more broadly, you will hear from powell later this hour and we heard from bostic if labor weak know weakens and we'll get the big jobs report on friday.

how do you think about this? >> i don't think it will be a matter of how much the fed cuts the next meeting or the meeting after that. i mean, when you take a step back from the bigger picture over the next six months the market has 150 basis points of further easing. i think that's a tall order given that i'm not as bearish on both the inflation or the growth outlook here. ultimately, you'll see probably inflation come in higher than what's priced into the market and growth come in better. i don't think it's collapsing. i don't think we're at the -- in the midst of a huge growth spurt, but i just don't think it's slowing as fast as the market seems to be pricing in here. >> very quickly, i'll mention the headline of austin goolsbee where rateses have to come dow lot over the in, year and what the economy and what the bond market is pricing in seems to be adodds and the bond market is saying rates are coming way down and others are looking around and saying i don't see how. >> it's tough. if you look at a world where the

fed is the only source of liquidity then you're looking at a world that's very tight and you could argue that the fed does have a lot of easing to do, but when you step back from it and you look at financial conditions you see that the liquidity is quite rampant and abundant and so i don't think you need the level of easing that goolsbee is talking about and in fact, if you start a massive easing policy here with inflation at 2.5%, 3%, and into a tight economy that puts a lot of upside pressure to inflation at a time when we have geopolitical concerns and potential terrorists and potentially china starting to stimulate. these are things that you have to worrythat might put that easing outlook at risk. >> you're sticking with the small caps and the deep cyclicals and other emerging markets looking for commodities and inflation trades to benefit in this panorama. dan for now, thanks. we appreciate your time today. >>, that, kelly. >> dan suzuki.

we are more than 11 hours away from a port strike, and we'll tell you what's at stake and how long it could last, but first, recovery efforts are under way after hurricane helene swept across the southwestern u.s. -- southeastern u.s. more than a hundred are dead and tens of billions of damages could just be e githbenning and we'll look at the widespread fallout next on "the exchange." this is "the exchange" on cnbc. welcome to ameriprise. i'm sam morrison. my brother max recommended you. so, my best friend sophie says you've been a huge help.

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welcome back. recovery efforts are under way in the wake of hurricane helene's devastating path along the southeastern u.s. contessa brewer is here to tell us about the impact. what can you tell us? >> this i have to put into context because we know there are people still missing and the death toll has been rising, but accuweather just significantly raised its already eye-popping damage of economic losses from hurricane helene $145 billion to $160 billion in damage. the estimates that we expect from moody's and varis likely will take several more days, but look, we're seeing a video that's painting a grim picture. recordbreaking storm surges along florida's west coast including densely populated areas around tampa, flooding throughout south carolina and georgia, rainfall shattering

records in tennessee and north carolina and then producing mud slides and landslides. north carolina's transportation department has restricted travel throughout the western part of the state. you see that part in red? you can't travel around there because of all of the road closures and outages, and in all of those states risk and re insurance specialist guy carpenter points out that extreme intrfrastructure has happened. dams are damaged, including interstate interstate 26 and i-40. nearly 35 million people without power at the peak and that's the most we have seen since hurricane irma in 2017 and more than 4500 cellular sites and that's the most of any hurricane since records started to be kept in 2017 and largely, we're looking at a flooding event here, kelly. that could be the crushing difference between what gets paid and what doesn't for property owners because, of course, property insurance does

not cover flooding and what we know is that in the hardest-hit places, fewer than 1% have flood insurance. all of the beige parts that you're seeing there is where the reuptick for flood insurance is less than 2%. again, that map compileded by guy carpenter based on the national flood insurance program. also interesting, guy carpenter said there are multiple reports of fires because of the battery exposure to water. they have electric vehicles in the country after california and that's just one more risk of what we've been seeing happening and unfolding since the hurricane made landfall. >> and that's one that people didn't have to previously have to contend with. that's fascinating. what's the number in terms of the damage, the dollar amount? >> as much as $160 billion. not just in damage, but also in lost economic output. so accuweather is combining that all. what you will see is that the

insurers and the insurance industry is going to come out with what were the insured losses? and that will have an impact on say allstate where if your car gets flooded and you have a comprehensive policy your car insurance policy kicks in and allstate could see a rush of claims for that point. usaa told me they're getting claims from as far away as ohio and already surpassed hurricane ian in just the first four days. remember, a lot of people can't make claims yet because they have no cell service, no power, no way even to contact the outside world. >> great point. "60 minutes" did that big piece on insurance companies so they'll be under a lot of scrutiny, i think, in terms of what their payouts are this time around in particular. contessa, thanks. contessa brewer at the nyse. the aftermath of helene and the import strike are both likely to strike major retailers. the storm could benefit one

category in the short term, the home improvement store like lowe's and home depot and let's bring in laura. what do you know from the data that you collect as to how effective your coverage area currently is. >> thanks for having me, kelly. obviously the storm is awful and hit some places in the carolinas, for example, that aren't used to this kind of damage or this kind of an impact from a storm so it's going to be a while for the cleanup and it does seem like the damages might be more than ian. in terms of actual store's ability to get back up and running and serving customers, we are not hearing about stores that are damaged beyond recognition and most we cover are getting the stores back up and running and lowe's based on north carolina has the most exposure and because they have stocking distribution centers they're usually pretty good at

meeting the immediate term demands of the customers in these marks. >> and lowe's, if i'm not mistaken was trading at a 52-week high or close to an all-time high and what accounts for that? we spoke with anthony jacumba loop, once we start to get a consumer cycle restartingwhich is what it feels like a little bit like right now, some of the early beneficiaries are home improvement stores and then it moves on to general retailers and so forth. so i don't know why you're seeing such a positive moment for these companies in terms of the share price. >> luckily, anthony is a colleague here at loop and we both cover retail together and he's obviously, i think he's right that you see a quick reaction in these consumer discretionary stocks and the bigger picture benefit especially for companies like home depot and lowe's is a loosening rate cycle which

should benefit next year, not this year, and it's late for next year and we do see a recovery and that's why you've seen lowe's and home depot bounce and they've been underperforming the markets and now they're in line for the year with lowe's doing better and that bounce has come directly from the interest rate cuts. >> with the port strike looming, look, it's the east coast port and not the west coast ones. according to reporting, walmart, home depot, samsung, automakers and auto suppliers and are the companies that could have products most affected. is that what you're tracking, as well? >> it is, and i think some consumables which might touch what we cover in costco, for example, but you probably will see some pressure on costs overall. also, i don't put it past the container companies to raise prices no matter where the disruptions are and we have containers coming from china inflating on the red sea crisis which doesn't mike intuitive sense, but wherever there is

backup, it does tend to impact the global supply chain particularly on the cost side, so it's something to be aware of. it's our take and loops that this crisis would be resolved quickly given that biden's got some power to clean it up as these are essential parts of our economy and that's likely to happen in front of an election in our view. >> samsung, they do a lot through the newer ports. should shoppers expect it see price hikes or shortages as a result of this her does it depend on how long it goes on? >> the good news for us is we have a buy rating on whirlpool which is the homegrown domestic appliance company which is larger than lg and samsung and major appliances and produces a lot of components here on this continent. so you might see a market share shift. what happens in terms of pricing so demand, as i mentioned is very weak in the back half of this year for big ticket. i think that most of the manufacturers have learned that

if they promote more they're not selling more, so i would expect pricing to stay fairly high going through the end of this year. we need remodeling to get a boost which happens in the back half of next year to drive the whole industry. >> in a weird way that could make a strike now good timing and it might almost give those on strike more leverage if there will not be a major reaction from consumers and retailers, but we'll see. laura, thanks for your time. i appreciate it. laura champe with loop. governor newsom vetoing a safety bill. we'll tell you what that could look like and who he's working with to develop it. "the exchange" is back after this. the enemy is always adapting... deepfake: hey handsome. ♪♪ [inner monologue] ...always iterating. ♪♪

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♪ ♪ good afternoon, everybody. welcome back to "the exchange." i'm tyler mathisen with your news update. the u.s. is sending an additional few thousand troops to the middle east to boost security and to be prepared to defend israel if necessary. the pentagon said the additional forces will come from several fighter jet squadrons and it comes as a u.s. official tells reuters israeli troop positioning suggests a ground operation in lebanon could be

imminent. the man accused of plotting to kill former president donald trump at his florida golf course earlier this month pleaded not guilty today to attempting to assassinate a major presidential candidate. ma wesley routh faces a maximum sentence of life in prison. and the "rust" movie armorer will remain on appeal. it upheld her conviction of involuntary manslaughter even though the judge determined the prosecution suppressed evidence in the case against the movie star's producer alec baldwin. reid's attorney told nbc news they will appeal. kelly, back to you. >> tyler, i will see you soon. thank you very much. tyler mathisen. coming up, thousands of east and gulfport workers are set to strike at midnight if ey th

cannot reach an agreement with the maritime alliance. it would be the first dock strike in more than 50 years. after the break we'll tell you what's at stake and how long it could last. so how do you invest in gold? sandstorm gold royalties is a publicly traded company offering a diversified portfolio of mining royalties in one simple investment. learn more about a brighter way to invest in gold at sandstormgold.com. welcome to the now way to network... they switched to juniper's ai-native network. so they can take their game to a whole new level... that's the now way to network at work— with real ai— letting you rise above it all.

welcome back. we could be less than 11 hours away from the long shoreman's association strike on the east coast in nearly 50 years. among 50,000 port workers are expected to strike around the east and gulf coast shutting down 36 ports and holding billions in shipments. the era of permanent volatility is upon us. for more on that and what the strike could mean for the u.s. economy, let's talk to lisa deknight, newmark's managing director of industrial research and steve is the ceo of the conference board and cnbc contributor, great to have you both here. lisa, what are the implications and how long is this expected to last? thanks for having me on today. the implications are rather short lived, i'd say. if this drags on it has cascading impacts throughout the

economy and not just the u.s. economy. the unpredictability of the issue is at play and has the magnitude to throw a giant wrench and how long do they expect it to last and what would be the minor disruption and something more substantial? >> a minor disruption of even a couple of days has significant implications for certain industries of pharmaceuticals, and auto and manufacturing, but a couple of days in net would not have terrible impacts or long-term impacts. if we look past a week or two weeks that would require months of recovery andthere is a substantial difference. >> hyundai, continental and

potentially who could be most effective and how should we expect them to respond and deal with this? >> you've got people who have built inventories in anticipation of this and there's only so much. lisa is right. they're saying every day is a week's recovery, but what happens then is the prices go up and you would see big impact on inflation and that would happen right away irregardless of what happens to supply and that would be the ripple effect and we're sitting here on the next fed decision, if the fed sees this and you have layoffs going on and if you have plant shutdowns and so forth. remember, if you can't complete an item out of thousands of parts and you see that and borrowing costs start to go up and you say wait a minute, you see inflation coming back up and then you see the net effect of

the stock market reaction and the president has said that he'll not invoke taft-hartley which would give an 808-day period and the two parties are way, way apart and the shippers are offering half of what the union is asking. so this is not close and this is not an 11th-hour thing and this could be up to a month and if you have a situation, and i would get right involved and try to help negotiate it and i understand the taft-hartley thing and if they can negotiate a settlement, if they don't, you throw the nation into some level of economic chaos going right interest an important election. >> right as many people are saying, hey, the economy is in great shape. do you think every week it could cost the economy $4 billion.

these ports do about a quarter of international trade on the east coast including 87% of commodities which i think is interesting. lisa, if this does blow up in the next couple of weeks and become quite a nuisance, will the ramifications then last into the christmas shopping season? >> for sure. yes. now, i will say a lot of shippers saw this coming and have brought in goods ahead of time. there's been a lot of diverging to west coast ports already. we've seen very strong import growth year to date. in fact, the third largest volumes of import growth year to date of any period of time. so i do see nice cushions in business inventories. that being said, there's only so much you can bring in ahead of time and then when you talk about specific things like perishables, you really can't front load perishables, ban an

as, for example, i was eating my morning banana and thinking lots of banana and you can't front load bananas and urban bananas and so there are specific implications that could come down even on an individual commodity level. luckily, a lot of goods have been brought in ahead of time especially if the duration is relatively short. we shouldn't see much of an impact to the holidays. >> here i thought bananas would have been a west coast import. i have to do checks on the global supply chain and get up to speed there. thanks to both of you. we'll see what happens tonight and in the days and weeks to come if this does go forward with the two sides being far apart as you mentioned they are. thank you. we appreciate your time. let's turn now on how the potential strike could impact the white house and five weeks to the election and megan cassella is in washington. what can you tell us? >> hey, kelly, the clock is ticking and the difficulty of the politics here can't be

oversay theed for the democrats. a strike would cost the u.s. economy $3 to $5 billion per day as you were talking about and once supply chain starts getting back up consumers will feel this in every industry and that could push up prices which then would pose trouble for kamala harris and she's centered on making life more affordable and now it would move in the other direction. president biden can invoke emergency powers to force striking workers back to work. so far he would not do that and intervening would seen as crossing the picket line and it would hit the economy which would impact a much broader share of voters. now that senior officials spent the weekend urge the maritime alliance to come to an agreement quote fairly and quickly. neither trump nor harris has commented on the struck, but president harold daggett in july said he met with president trump late last year and they spoke about automation.

daggett said trump, quote, promised to support in his opposition to automated terminals. kell, i should note with the vote up for brag grabs, they have not endorsed either candidate this time around sort of underscoring just how dicey things could get here. >> oh, sure. this issue of automated terminals is at the heart of these concerns. the workers say they haven't gotten a proportionate raise in a long, long time and the two sides seem quite far apart if they are not going to invoke taft-hartley, we have to hope that the negotiations bring them together. >> take the outside perspective and outside stance and saying we're trying to get the two sides closer together, but we're not intervening. as soon as this starts going on you heard lisa talk about how this there's this compounding effect and compounding impact and i talked to analysts who think that the white house that president biden will change his stance firly quickly because if you think about not just the u.s. or the global economy and

think about the swing state economies and georgia has the port of savannah that could be impacted here and michigan has a huge automotive industry and that's where the biden administration and the harris campaign really don't want to see things start to escalate, but that's where they could the most. >> that's a great point and they think he's just going to invoke that and be a cooling off period and punt this toward the election and that would make a lot of sense. appreciate the reporting, megan cassella. vigan newsom what would be the most up-to-date. what's next to safe guard artificial intelligence. we will explore that next.

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we're constantly engineering new ways to get the entertainment you love to you faster and easier than ever. that's what i do. is that love island? the controversial ai safety bill vetoed by california gavin newsom this weekend would have been one of the first moves towards oversight of the new tech, but is it too late for regulation to catch up. deidre bosa is here. what i heard is it was overbroad and they had to consider the effects on humanity or something? explain. >> always have to consider the effects on humanity, but yu right. in this case it was too broad and let me explain that governor

newsom is trying to strike a very tricky balance. opponents of the bill including open ai, meta, google, they will applaud this veto. they called its standards ill-defined and they argue it could ultimately stifle innovation. newsom seems to be trying to appease thresearch community which largely supported the bill by bringing in high-profile researchers like fefe lee to work on a more comprehensive set of guardrails. he calls it the god mother of ai. he told me the veto was another example of profits trumping safety. he says he hasn't heard from newsom or been asked to work on the committee setting out these new guardrails, but if he was asked he would do it. newsom rejected the bill in its current form saying it applied only to the largest and most expensive ai models. he argues that other smaller ai systems, they can be deployed in high-risk environments or

involved critical decision making or the use of sensitive data and they wouldn't be covered by models while smaller ai systems they might be used for ai forecasting to manage electricity grids where the stakes are much higher and this is a point highway quickly the state is developing. tech moves faster than the lawmakers can and guardrails get pushed out further or doesn't sufficiently address the most pressing concerns. in his letter vetoing the bill newsom acknowledges this, he says, quote, let me be clear. we cannot afford to wait for a major qcatastrophe to occur to protect the public. a kill switch got vetoed, this idea that companies developed the models that they need to incorporate a switch to turn off ai before it gets more advanced to your point about humanity.

>> i find it very hard to look around the corner and foresee what the biggest problem with new technology is going to be. in the era of social media teen mental health became something that was apparent five, ten years down the road, maybe longer. so what is the specific harm they're most concerned about with ai that right now they're confident they could avoid. >> i don't think anyone's very confident that they can avoid it, but there's this balance of letting the companies specifically here in california which has the majority of generative ai companies develop and innovate and not stifling that innovation, but what the bill that was veto wanted to was hold them accountable for some of those impacts that we don't yet know what will be. so basically giving the government the ability to sue companies if they don't comply, if they don't have third parties to go in and check. if they don't build the kill switch and if they don't have certain protections around whistle blowers and that's sort of the problem and that's why a lot of these companies said that the standards were ill defined,

kelly, because we don't know. that's the problem with regulating and you don't know until the problem develops so you leaveit up to the industries themselves to self-police, social media was not good at that. ai, open question. maybe they will be. there are robust safety teams at a lot of the companies developing these models, but also some problem, too. you look at open ai that has lost a lot of their prominent safety people. >> yeah, and i'm trying to think, if the governor's right and he supports this in a slightly tweaked form time will tell whether that's the case or not. do you do something with the board, for instance? i don't know. again, i think these questions -- >> and are these companies ever going to want to be held accountable or will they keep saying they will do it themselves? for sure. they love to self-police. deidres abouta. don't miss, by the way, cnbc's ai opportunity event in new york city tomorrow where we'll talk about issues like this and

you'll hear from industries about how ai is transforming businesses. to register scan the qr code on die street and that's it for us enng early today so that "power lunch q" can pick up jay powell's speech and i'll

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a busy day to start the week. welcome to "power lunch." i'm, tyler, matt son. glad you could join us. at 2:00 this hour fed chairman jay powell to speak in a few minutes at the national association of business economics in nashville expected to hit topics around the economy, inflation and much more. >> we've heard from other fed officials already today. on the dovish side goolsbee in the last few minutes talking about how rates need to come down significantly. before that bostic saying he would be in favor of a half point cut in the labor market market continues to weaken and we get the jobs report this friday. the markets aretrading lower but closing out a month that has buff the recent convention and been stronger than expected. the s&p fractionally lower same with the nasdaq. our senior markets comment stater mike santoli for more on this, mike. and we look at what the markets are saying, they're saying shaking off september, you know, kind of shaking off the hard landing concerns and what do you make of it?

>> well, exactly, kelly. we front-loaded those hard landing concerns in the initial eight trading days of september and since then, including when we got the fed rate cut, mostly reassuring data. i wouldn't say universally across the board but the move billed as being proactive and we're doing this because we don't want to be too restrictive, not because we think the economy is falling apart and gdp revisions and jobless claims, retail sales, suggest that that was plausible. i think that's why the markets have not seen fit to rethink the initial positive response to what the fed did. in fact, the s&p, though, trading exactly where it was at the highs the day after the fed decision that was on a week ago thursday. >> so i mean really what you're saying there is that the data from the start of the month has been relatively benign and the market, which typically can have some hiccups during the month of september, really hasn't. >> right. we went down 4.5% at the start of september.

>> right. >> and bounced from it. you could argue there has been the seasonal chop in volatility. the other thing to keep in mind in august and september it was that first week of the month where the market started to get cold feet, sort of worry about isms and the monthly jobs report. that's the week we're in right now. maybe it's too cute to expect it to be the same path three months in a row, though. >> we'll get, obviously, a jobs number on friday, i guess, so we'll have a little -- one more data point. i think the fed is, obviously, looking at two main areas, one is employment concerns, and whether the employment market is slowing and on the other hand inflation slowing. mike, thanks very much. we're going to go i guess chairman powell is starting his remarks and we're going to go to steve liesman here. let's go to steve liesman who has an early look at the draft of the remarks. >> fed chair jerome powell will tell the conference expected policy will move to a more new tram stance. he says we're not in a preset

course. we're going to go meeting by meeting here. the economy in solid shape and intend to use our tools to keep it there, and he says the economy is strong overall and we made progress toward achieving the dual mandate. he goes on to say the labor market is solid but cooling and inflation has eased. further comments, we do not need to see further cooling in the labor market to achieve the inflation target. disinflation has been broad-based, core service inflation close to the prepandemic level, and he sees housing inflation coming down and continuing to decline, however sluggishly. finally he says risk to the employment and inflation mandates are roughly in balance. a short speech he makes, right about now, so we can go to the fed chairman for the actual remarks. >> i do have some brief comments on the economy and monetary policy and then like forward to

our discussion. our economy is strong overall and has made significant progress over the past two years toward achieving our dual mandate goals of maximum employment and stable prices. labor market conditions are solid, having cooled from their previously overheated state. inflation has eased in my fomc colleagues, and i have greater confidence it is on a sustainable path back to 2%. at our meeting earlier this month we reduced the level of policy restraint lowering the target range for the federal funds rate by half a percentage point. that decision reflects our growing confidence that with an appropriate recaply bration of our policy stance, strength in the labor market can be maintained in an environment of moderate economic growth and inflation moving sustainably down to our objective. during the labor market briefly, many indicators show that labor market is solid, to mention just a few, the employment rate is

well within the range of estimates of its natural rate, layoffs are low, participation rate of prime age workers is near its historic high and the prime aged women's participation rate has continued to reach all-time highs. real wages are increasing at a solid pace, broadly in line with gains in productivity. the ratio of job openings to unemployed workers has moved down steadily but remains just above 1, so that there are still more open positions than there are people seeking work. prior to 2019, that was rarely the case. still, labor markets have clearly cooled over the past year. workers now view jobs as somewhat less available than they were in 2019. the moderation in job growth and the increase in labor supply have led the employment rate to increase to 4.2%, still low by historical standards. we do not believe that we need to see further cooling in labor market conditions to achieve 2%

inflation. turning to inflation, over the most recent 12 months headline and core inflation were 2.2% and 2.7% respectively. recent data indicate further progress toward a sustained return to 2%. core goods prices have fallen a half percent over the past year, close to their prepandemic pace, as supply bottlenecks have eased. outside of housing services core services inflation is close to its prepandemic pace. housing services inflation continues to decline, but sluggishly. the growth in rate -- growth rate in rents charged to new tenants remains low, as long as that remains the case, housing services inflation will continue to decline. broader economic conditions also set the table for further disinflation. the labor market is now roughly in balance, longer run inflation

expectations remain well anchored. turning to monetary policy. over the past year s we have continued to see solid growth and healthy gains in the labor force and in productivity. our goal all along has been to restore price stability without the kind of painful rise in unemployment that has frequently accompanied efforts to bring down high inflation. that would be a highly desirable result for the communities, families and businesses we serve. while that task is not complete, we have made a good deal of progress toward that outcome. for much of the past three years inflation ran well above our goal and the labor market was extremely tight. appropriately our focus was on bringing down inflation. by keeping monetary policy restrictive, we helped restore the balance between overall supply and demand in the economy. that patient approach has paid