s&p downgrade following moody's. we connect this with the technicals, the bounce we are having, is the s&p 500 relative to its 50-dayg average? it does make the case that we could see the bounce lost more, but it doesn't mean much because of the near down trend still in play. if it were to break above that it would be interesting to talk about. she thinks we will see a bounce moving into something more and she has been excellent over time, so let's see how it plays out. we of course have the disappointing existing home sales number. this is an affecting home stocks. homebuilding stocks. on the day they are higher and on the year rallying and huge way. it makes sense to a large degree from the standpoint that if there are not a lot of existing homes from an inventory standpoint because of rates and people are locked in at lower rates, go out and buy a new home . these stocks are on fire this year. guy: i take your point. i think that toll brothers reports after the bell so we will look forward to what it has to say. a perfect set up. let's move on and carry on the conversation about what's happening with the real est

s&p 500, 4389 is the level we're looking at on the benchmark index. we are dragged down by financials after s&p downgraded regional banks in a move that follows moody's. we have big losses and some of the retailers, and we will talk about those, but that is a weight the next. u.s. 10-year yield to coming down as investors by the bonds. 34.3181. -- 4.3181. we are up across the curve. today we are getting back some of the gains in yields as prices rise. bloomberg u.s. dollar index very little changed. we have seen this over the last few sessions relatively strong level. with high yields, more investors in the assets. nymex crude is down $.17 even as prices at the pump rise to the second highest level we have seen in recorded history seasonally. nymex crude at $80.50 a barrel. amber, what are you looking at? amber: you mention financials are a pinpoint on the s&p 500. so is retail. macy's is under huge pressure right now. sales dropping, and what are they doing in the face of that? they are resorting to discounting. investors never like to see that. they did not like what big sporting goods had to show in the latest quarter. profit plunging. they have a huge problem with that. it is one of the reasons they have had to cut forecasts. on the flipside we have shares of hasbro is one of the best-performing stocks right now. bank of america bounding the table on this one. nvidia touching a fresh all-time high. it is retreating right now. an interesting set up into what should be a big set of earnings releases tomorrow. matt: we are definitely waiting for nvidia earnings tomorrow. but we are seeing a lot of option trading already. abigail doolittle has more on that. abigail: we are seeing a lot of options trading because we have had volatility for big tech up until today on the upside. a lot of times it clears the decks for the bulls to come back

s&p in 2011 said the same thing moody did, the same concerns from the credit bureaus started in 2011 and they are continuing now into 2023 area i believe the s&p has made noises about potentially lowering the credit rating more in the future if we do not get our act together. host: lower than a aa+? guest: that is right. host: what would that mean? guest: more of the same. it is a rising level of risk, in their view, which is why they are lowering the rating a little bit. in the near term, this is probably not a real concern. there will not be a big meltdown in credit markets. this is sort of a warning signal. and it should be taken seriously. this is a signal that it might be on the horizon at some point. it could be decades. this is something the congressional budget office has told congress more than once. when the debt gets high, they raise the risk of real financial issues where they will have to start paying a lot more in interest. right now, we pay $650 billion a year just in interest costs. that is more than we spend on medicaid. it is only going to grow in the direction we are heading, because we continue to borrow and we are on trajectory to raise debt over the next 10, 15, 30 years and beyond. host: what fitch had to say in their statement about their decision to lower the rating. there has been a s deterioration and standards of governance over the last 20 s, including fiscal and debt matters, notwithstanding the june bipartisan agreement to suspendebt limit until nuary 2025. the repeated pol standoff and last-minute resolutions have eroded confiin fiscal management. lacks medium-term fiscalent ework, unlike most peers, has a complex budgeting process. these factors along with several economic shocks and new spending initiatives have contributed to excessive debt increases over the last decade. additionally, there's been limited progress in tackling medium-term challenges related to rising social security and medicare costs due to an aging population. there is a lot just in that statement. guest: to be honest, you could pick up a cbo report and see all of those things mentioned in the report. the congressional budget office, they are the budget experts who advise congress on the budget. the last five or six have all said debt is on an unsustainable path. every fed chair, at leas

the s&p in 2011 said the same thing moody did, the same concerns from the credit bureaus started in 2011 and they are continuing now into 2023 area i believe the s&p has made noises about potentially lowering the credit rating more in the future if we do not get our act together. host: lower than a aa+? guest: that is right. host: what would that mean? guest: more of the same. it is a rising level of risk, in their view, which is why they are lowering the rating a little bit. in the near term, this is probably not a real concern. there will not be a big meltdown in credit markets. this is sort of a warning signal. and it should be taken seriously. this is a signal that it might be on the horizon at some point. it could be decades. this is something the congressional budget office has told congress more than once. when the debt gets high, they raise the risk of real financial issues where they will have to start paying a lot more in interest. right now, we pay $650 billion a year just in interest costs. that is more than we spend on medicaid. it is only going to grow in the direction we are heading, because we continue to borrow and we are on tra

s&p in 2011 said the same thing moody did, the same concerns from the credit bureaus started in 2011 and they are continuing now into 2023 area i believe the s&p has made noises about potentially lowering the credit rating more in the future if we do not get our act together. host: lower than a aa+? guest: that is right. host: what would that mean? guest: more of the same. it is a rising level of risk, in their view, which is why they are lowering the rating a little bit. in the near term, this is probably not a real concern. there will not be a big meltdown in credit markets. this is sort of a warning signal. and it should be taken seriously. this is a signal that it might be on the horizon at some point. it could be decades. this is something the congressional budget office has told congress more than once. when the debt gets high, they raise the risk of real financial issues where they will have to start paying a lot more in interest. right now, we pay $650 billion a year just in interest costs. that is more than we spend on medicaid. it is only going to grow in the direction we are heading, because we continue to borrow and we are on trajectory to raise debt over the next 10, 15, 30 years and beyond. host: what fitch had to say in decision to lower the credit rating. there has been a steady deterioration and standards of ance over the last 20 years, including fiscal and debt matters, notwithstanding the june bipartisan ent to suspend the debt limit until january 2025. the repeated political standoff eroded confidence in fiscal have management. in addition, the government lacks medium-term fiscal framework, unlike most peers, and has a complex budgeting process. these factors along with several economic shocks and new spending initiatives have contributed to excessive debt increases over e last decade. additionally, there's been limited ogress in tackling medium-term challenges related to rising social security and medicare costs due to an aging population. there is a lot just in that statement. guest: to be honest, you could pick up a cbo report and see all of those things mentioned in the report. the congressional budget office, they are the budget experts who advise congress on the budget. the last five or six have all said debt is on an unsustainable path. every fed chair, at least for five fed chair's all characterize the growth in debt as unsustainable. in a sense, this is not news. just articulating some of the things others have been saying for a long time. it sounds awful and it is awful, but it is not a crisis that is looming in the next year or two, but it is somewhere down the road and there are consequences to this. there are lots of little side effects of having this debt continually go up and we are not dealing with it. host: from the statement, i want to pull out this one part. the government lacks a medium-term fiscal framework unlike most peers and has a complex budgeting process. what is it getting at? guest: they are getting at a plan. even when i was director, we were suggesting to congress at least privately that they need to think of a debt target. debt right now is about $32 trillion. think of a debt target and plan on lowering the borrowing level over time to some sort of target level, that is just a medium-term plan. other countries have done that. not all of the countries, but some of them responsible and some not. we have seen what they would have to do to get this done. you see it year after year. they do not get anything done by deadlines, they run it down to the end with no agreement. the budget process is just a real mess and it is a problem of lack of cooperation. whoever is in power on the budget completely runs the show and the minority party has no input in the formulation of the annual budget. you cannot get enough votes easily to pass the budget because you do not have participation from minority party. host: fitch calls it a complex budgeting process, you seem to be describing it as dysfunctional. what is the difference? guest: if they followed it, it would be complex. it has got lots of pieces to it. they set out a plan. the president is supposed to submit a budget, congress is supposed to evaluate and create their own plan. once they publish the plan, they sit down and work out the details. here are a dozen appropriations bills, here is how we are going to spend money over the next years in detail. what i just said is supposed to be done by april 15. we have not done it yet, we did not do it last year by april 15. the bills did not have to get passed by congress, sent to the president, then it has to become law. there are a lot of steps. they certainly could simplify it. in my view, it is complicated. the real core problem is congress has set up deadlines and a process that they do not follow. they have people making up their own rules and they do not follow the rules they have made up. host: you are describing discretionar spending, so reminder for viewers, determined on an annual basis by congress and the president, 12 separate appropriations bills are supposed to move annually through congress by appropriations committees. defense represents more than half of all discretionary spending. other major spending is homeland security, food safety, science and space programs, disaster assistance, public housing and federal law enforcement. that is discretionary. what about mandatory spending? medicare, medicaid, social security, federal retirement programs, veterans programs. how does that play into what you are talking about? guest: that is the problem. all the mandatory programs are not part of the annual budget process, they work on automatic. those discretionary settings -- things, that's only about 27% of the budget. 73% of the budget is on automatic. social security is collected and paid out, medicare is collected and paid out. that is the part that is going to become a real challenge as the population ages. the mandatory spending, which they do not talk about, is way more than discretionary spending. host: 73%, i want to repeat that for viewers who are listening. 73% of the budget on the mandatory side. guest: most of them are funded by trust funds. make the payroll taxes, they put into a trust fund and hold it. you pay in, the fund gets filled up and they pay it off. the problem is the aging population sees more and more people are going to start receiving benefits, social security and medicare. the fund is now being depleted. the fund is going to run out completely in 10 years. when 10 years hits, that fund will be down to zero. according to current law, they cannot pay social security benefits unless they have the money. they will have to reduce benefits for 23% unless congress decides to go ahead and fund anyway. in a sense, we have a potential crisis in about 10 years with mandatory spending, which is not part of the annual budget process. nobody talks about enough during the annual budget process. host: fitch puts in the statement, there has been limited progress in tackling medium-term challenges related to rising social security and medicare costs due to the aging population. they put this as part of the rationale for lowering the u.s. credit rating. if the government waits until the last minute, what will happen over the next 10 years? guest: the longer they wait, the more ciccone and a measure they will have to take. if you wait 10 years to deal with this, you will have to have a significant decline in benefits. you will have to have a significant rise in either borrowing or taxes to pay for this. if you start to deal with it now , it is like any of the rest of us planning our budgets. if you plan and adjust things over time, it is easier to deal with. if you wait until the crisis, you run the risk of disruption and credit markets, the economy. if we did not pay off the full social security benefits in 10 years, we would probably go into a recession and all these recipients would have a drop in their income and they would slow down their spending significantly. you have to plan ahead, not just wait until there is a crisis than try to deal with the crisis. host: i want to invite viewers to join in on this conversation, we are talking about the drivers of debt. one of the reasons why the credit rating downgraded the u.s. credit rating, we want to get your thoughts. republicans (202) 748-8001, democrats (202) 748-8000 an independents (202) 748-8002. you can text with your first name, city and state to (202) 748-8003. let us go to robert in texas, independent. robert is up first, go ahead. caller: good morning to both of you. i am listening right now to this mandatory spending and social security dilemma and medicare dilemma coming forth by 2034, i believe it is. it seems to me the simple solution on this, instead of worrying about whether or not the population is aging, why don't we just lift the cap significantly on all earnings above the cap great, which today i believe is somewhere around $130,000? after 130 thousand dollars, you pay 3% on all additional income. problem solved. host: is it problem solved? guest: unfortunately, no. that has been a solution that his been offered quite a lot. the congressional produces a publication called options to reduce the debt, where we talk about here are the things to do to reduce the debt. that is one of them, that will help some. but it is nowhere nearly big enough to solve the problem. you need way more than that. you need to do that and lots of other things, unfortunately. host: debbie in maryland, republican. caller: i just wanted to talk to you about medicare. i am on it and i have five bills in the mail -- this is not a bill. i was charged five times for covid tests, it was $96. medicare paid that and all the way to chicago. five different addresses. i called medicare, i reported this as fraud because i never had a covid test. i called my girlfriend because i was curious, i was talking to her and she got the same thing. it was all from chicago, five different tests. it was $96 each that medicare had paid, she did not have the test. one of them was two days, one day than the following day. host: waste fraud and abuse. guest: that is an issue with lots of government programs. something like medicare, it is a really big program. the program has lots of controls, they have price control. they set prices, they do not get charged whenever hospitals want to charge. prices are set. they should have controls on waste and fraud. that is sort of another issue. is the government doing enough to deal with the waste and fraud problem? it is not clear how big the problem is. the core problem -- we constantly overspend revenue. that is a problem that is big, but nowhere nearly as big as the overspending problem. we are overspending revenue by 30% every year. this year so far, we've borrowed $1.6 trillion. not all of that is medicare fraud. i think that is a concern. there are lots of concerns. host: in florida, democratic caller. welcome to the conversation. caller: i hear an awful lot of talk about overspending and i agree we are overspending our revenue. i also hear that we have a spending problem, not a revenue problem. when i did some research about what the united states takes in as a revenue, as a percent of gdp, we are way out of line with other developing countries. 10% of our tax revenue comes from individual income taxes, whereas most countries are in the 35 to 45% range. if you take all of the taxes, corporate, capital gains, individual income, we are at about 26%. this is still so much less then what other developing countries taken. we are trying to fund our government with not enough revenue. we've had this revenue shortage since the reagan era, were tax cuts were the name of the game. when bush got in, more tax cuts. when trump got in, more tax cuts. all for the wealthy. i am not saying we need to raise taxes on people that cannot afford it, but we have an income distribution problem where the rich are getting wealthier all the time and it is because of our tax system where we are not generating enough revenue. host: in the fitch statement about downgrading the u.s. government, they mention tax cuts and new spending initiatives. guest: the big surge in borrowing over the last 15 years primarily increases spending. there are two ways to solve this problem. there have been times where a democrat member would come down to me and say you are saying debt is a real problem, we need to raise taxes. minutes later, a republican would come down into say that is a real problem, we need to lower spending. even if they recognize the problem with debt, they have different views of the solution. raise taxes or lower spending or both. if you want to solve this problem, you have to lower the borrowing level. the tax rate is below a lot of other developed countries. but the tax revenue last year was the sick and highest level since world war ii. we borrowed $1.5 trillion with historically high tax revenue. there are a lot of options, raising revenue and lowering spending. host: after the pandemic, now that it is over, did fitch and other companies take into consideration spending should go down after? the pandemic? guest: yes, this is their talk about continuing deficits. you go through something like the pandemic, we spend date tremendous amount, trillions of dollars to work through the pandemic. once it was done, the next year, we still borrowed another $1.5 trillion. no pandemic, no recession. we used to never borrow that much. this year, no recession. the economy is doing ok. yet we borrowed 1.6 trillion this year already so far. host: for what? guest: it is increased spending. this year, we have a drop in revenue. not from the change in tax rates , but revenues are coming in slower than they have before. there is always an issue, tax revenues will go up and down based on the economy. it is hard to know what is causing until you have to look back a year or two. i am not sure why revenues have been so slow this year. it is a little bit of a concern -- it can be an indication the economy is struggling, under a threat of recession. sometimes revenues go down in advance of that, but i do not know that is the case. if you are going to borrow money during recession and pandemics, why not pay it back when it is done? this is a medium-term complaint that fitch has about the federal government budget. host: bruce in chicago, republican. you were up next. caller: i would like to leave a couple of thoughts with your viewers. everybody has got a solution to the credit problem or budget problem and the deficit problem. it goes back to the fact they want to tax someone else. ben franklin had this saying text the guy behind the treat. the bottom half of americans pay no federal income tax and the tax burden is on the shoulders of upper income people. you can only text people so far, then you tax them out of existence. the other thought i have is corporate's -- everyone is going to tax corporations. corporations are not taxpayers, they are tax collectors. the consumer ends up paying it. guest: i do not want to offer too much of an opinion on this. the congressional budget office tries to not offer opinions on anything but the technical issues. if you want to raise taxes, you can raise taxes. you have to think about where you could raise them. you have a really progressive tax system, it may not be progressive enough for you. wealthier folks in the united states pay more than a lower income folks. again, i keep pointing this out, 120 ways to live with the deficit. it actually has a number estimate, it tells you how much the different actions will reduce the deficit, so you can see if you raise the income tax rate on the wealthiest folks, how much money can you make from that? it points out how difficult it is to solve this problem with one or two things, you need a constellation of acts. what fitch is complaining about, first recognize the problem then come up with a goal to lower borrowing over time, then have political discourse on how you're going to do that. congress is committing itself and the president to lowering borrowing overtime, then we can have a political debate on how we do that. host: here is a viewer with a post on x, how will the credit rating be affected when the adults in the room cannot stop republicans or magas from shutting down the government? how does a possible government shutdown or previous ones play into the rationale here? guest: it is part of the broken process, part of the idea congress cannot i even get an annual budget together every year. we ran into this issue with the current administration, ran into it with the previous administration, with the administration before that. it has been years and years since we had a budget process that was followed. whoever is in power does not cooperate, they do not get cooperation, they do not have consensus on budgets. so the winner takes all and tries to force the budget through without enough votes because the minority party is not included and does not participate. host: the republican freedom caucus held a news conference where they demanded reduction in federal spending. here is what bob good of virginia had to say about the possibility of a government shutdown. [video clip] >> we should not fear a government shutdown. must've what we do appear as bad anyway, most of what we do hurts the american people. when we do stuff to the american people promising to do things for the american people, essential operations continue. most of the american people will not even miss if the government shutdown temporarily. our speaker has the opportunity to be a transformational historical speaker that stared down the democrats and the free spenders, stared down the president and said no, we are doing with the american people elected us to do in the house is going to say no. we will pass a good republican bill out of the house and force the senate and white house to accepted, or we will not move forward. what would happen if republican stared down democrats and were the ones who refused to cave and betrayed the american people and the trust they put in us? we do not fear a government shutdown. host: no big deal? i was repeating what he had to say, no big deal is essentially what he had to say. guest: i disagree with that. this is the partisan dysfunction for is talking about. before the congressional budget office, i headed an agency during the great recession. managing a large agency with 3000 federal employees and in october, i do not have a budget. the government shuts down, they have a resolution where they keep it going. i went most of the year with no budget for my agency. you want me to be efficient, i do not have a budget to work with. it makes it hard for the government to be efficient and effective if there is this constant uncertainty. i understand the notion they try to use it as leverage to get what they want. but it is a costly piece of leverage is all i can say. it made it hard for me to do my job. host: keith hall is our guest this morning, he was the head of the congressional until 2019, he was the chief economist of the u.s. international trade commission before that. the 13th commissioner of the bureau of labor statistics. from 2005 to 2008, he served as the chief economist for the george w. bush administration. ron in michigan, independent. good morning. caller: good morning. i am 83 years old, obviously collecting social security so on and so forth. i would like to have you go through a scenario as to what with the social security be like within seven to 10 years, that would put me around 90, 91. the thing we're looking at his god gives and takes away, it seems they're playing their own game. i would like to see people like you stay in office forever. you have a handle on the economy to some degree and the budget, and you perhaps have a better handle to tell these people what they are doing wrong and what they should be doing right. if you could give me an idea -- right now in my social security, i pay more in taxes on social security than i do in state retirement. by quite a bit. if you could go through that scenario, use me as an example, i would appreciate it. they should keep people like you in office instead of changing all the time. you know what you are doing. have a good weekend. guest: if they do not do anything, there would be regular benefits paid, the trust fund will start to decline. probably credit agencies might start to make noise again that we are getting near the depletion of these trust funds with no plan in place. once the trust funds become depleted, there will be some money to spend. congress and the president would have to decide how to fund it or how to lower benefits. they resist lowering benefits to current recipients. it affects younger folks. social security is going to go forward -- if they do not do anything, you will have benefits and it will get down to a point where congress has to do something. there is a second aspect we have not talked about. this will be a huge debt to younger generations. there is a real concern over climate change causing real changes that future generations have to struggle with severe climate change. the way it is looking right now, they will have to struggle with federal debt. in 30 years, federal debt will be at an unheard-of level. it could be 180, 200% of gdp. i will not have to pay it back, some future generation will have to deal with that. we have lower incomes because of all this debt hanging over our heads. my kids and grandkids, they do not think social security will be here for them. they are the ones who potentially going to really get hurt by the lack of attention. host: tina is in north carolina on the democratic line. caller: good morning. money is owed back into social security. you pay out other debts you, put the money back. it is owed. we've got to pay for the immigrants that come here from different places, pay for them, put the money back into social security. that is a debt that needs to be paid back. not only that, people getting social security, getting it for alcoholics, drugs. those people need to be tested to make sure they are not on alcohol or not on drugs. if they are, cut them off. the purpose of them getting that is to get help. they are not getting no help, they are getting free money to continue to do drugs. host: mary is in virginia, republican. good morning. mary in virginia, are you there? one last call. moving onto fred in denver, democratic caller. caller: just have a crazy question. if the government offered the wealthy to prepay their taxes ahead with the benefit of perhaps giving them a program to get a discount on taxes, would that not stimulate investments and with that not lower the debt by prepayment of taxes? guest: i have not heard of that proposal. this is one of the issues a little bit that we always have to deal with. sometimes the actual effect of proposals are complicated. difficulty is in the details. how many people would be involved? it would take an analysis to get some idea on what the impact would be on something like that. but let me just say, the federal government is borrowing a lot of money. they are getting savings from individuals and corporations, they are saving money by buying u.s. bonds. that competes with the private sector, private companies who also borrow money. there is something called crowding out where if the government is borrowing a lot of money, they can make it more difficult for corporations to borrow money so they can invest in factories to raise productivity. if that happens, cbo thinks that will happen going forward, we will get a dragon economic growth and we will have slower economic growth because the federal government is borrowing money and taking away from private investment. you may get lower incomes in the future. that is what cbo estimates. because of this death drag from actual borrowing. it is not trivial the government is borrowing, and has other effects that are slower and potentially more important. host: cnn is reporting that moody is warning it could cut credit ratings of six big u.s. banks. how does that play out in the conversation we are having? any impact? guest: this is not necessarily talking about federal borrowing. we are already struggling with high interest rates. the federal reserve has raised interest rates and now we have a broader rise in interest rates in the country, we are all paying more. all of this is intertwined with federal borrowing, to be honest. it is not helping the situation at all. host: in ohio, republican. hello. caller: really great conversations going on here, maybe we can solve some real problems. good luck. one thing that comes to mind is, how do we loan money to other countries when we are broke? if you have a family budget and say i have to cut here and there , how do we send this money? some countries are better off than we are and we are sending them money. the other thing on the debt having an effect on us, young homebuyers within one year could have a payment may be $500, buy a house and be qualified. within the year, the payment may go up to $1500. they cannot carry the loan. same with car payments. the good news about that is people then become aware of the $1.6 trillion cuts spent and we do not know what it is spent for. it got spent to get bad programs in. we have new approaches to things that could make a big difference. if the average people, not everyone, took care of their health as best they could, we could save millions of dollars. some people would not make it as average, but on average we could make a dent in the bill if that was what we went after. if we put drones on or drones with water bottles to spot these forest fires when they are small , we could knock them out. if we catch them small, they are not growing at 100 were 300 times the size. thank you. guest: the first thing you touched on something i would like to mention. the federal government borrows money by issuing bonds. anybody can buy a bond. foreign countries by the bonds. the accumulated debt from the federal government, that $32 trillion, about 30% is held by japan and china. it is great for them to loan us the money, it adds another element of risk going forward. now, we owe so much money and a lot of it is in japan and china. there is a real concern that those countries have leverage on the united states because they are holding so much of our debt. if china got upset and dumped u.s. debt, that could have repercussions for our financial markets because so much of it is the federal debt. it is another risk. some of the other countries barred a tremendous amount of money. all they are borrowing is domestic. they have borrowed from japanese companies, the u.s. has taken an international approach. that is perhaps a concern going forward with the geopolitical aspect of borrowing so much from other countries. that is one of the unknowns in all of this forecasting, how will productivity go forward? productivity gains are an important part of gdp growth and income growth going forward and that is hard to predict. the federal government soaking up so much of the investment money, companies cannot invest like they would like to to keep things going forward. that might be a challenge. host: thank >> c-span's "washing" discussing the latest issues and government, politics and public policy. from washington and across the country. thursday morning, concerned veterans for america discuss biden administration military and veterans policy. then the atlanta journal-constitution senior reporter talks about the fulton county georgia investigation and possible 2020 election interference by former president trump. 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s&p global downgraded and cut the outlook for smaller and midsized u.s. banks. the decision comes two weeks after moody's lowered credit ratings for 10 u.s. banks. s&p says deposit decline in these banks have squeezed liquidity intern pushing stock values lower and it comes as clients move funds into accounts with higher interest rates elsewhere. meanwhile charles schwab is planning to cut jobs and offices to achieve $500 million in annual cost savings as the brokerage response to pressure. the company says redundancy and other costs will amount to four to 500 million dollars. schwab said earlier this month it is expecting -- experiencing temporarily lower inflows of client money as it sees attrition of some assets while it integrates te deum air to into its business. and elsewhere sbb, the center of sweden's commercial property crisis has been downgraded five notches by which ratings with a warning that more cuts could be on the way. the move to be minus puts sbb into junk status and follows a downgrade by sast month. fitch noted sbb's deteriorating cash position stemming from insufficient progress on asset sales as well as unfavorable real estate conditions. now chip designer arm has filed for an ipo on the nasdaq taking a step towards what is set to become the biggest u.s. offering of the year. we will have more details with bloomberg's alex webb. he joins me in the studio. just how big a deal is this? >> on several different levels, of course we have the political element. the concern in the u.k. that are biggest tech company is going to be listing in the u.s.. >> it is an embarrassment really. >> that is one way of looking at it not if you are arm itself. the other way of looking at it is the ipo market more broadly, there are plenty companies out there, not the least of one's owned by private equity firms that are looking for annexes. this will be a big test of whether it can open again, particularly given some of the appetite towards ai applications. there are lots of other companie

s&p and dow jones ending in negative territory. we also saw some pretty significant action in the banks. shares of several u.s. banks fell a day after ratings agency s&p global followed moody's. a risk area we've been highlighting many times throughout the year. now, in the retail space, macy's shares plunged 4% as the retailer warned they'll be cautious the rest of the year. year-on-year revenue fell and left its trimmed annual forecast unchanged. joumanna, i think for me yesterday, the news we got out of the u.s. retailers was most notable. you heard there what we heard from macy's, essentially warning that the consumer is looking weak. they're expecting a weak holiday season and perhaps most interestingly, they're seeing a faster than expected rise in credit card payment delays. so clearly they are seeing some impact from the higher interest rate environment. >> the other phenomenon i thought was quite interesting coming out of the u.s. retail season was the lost inventory, what they call shrink. shrink is essentially theft. so when you have inventory, you leave your retail without it being paid for, i. echlt, theft. it's a pinch some consumers are feeling and it became a big t topic on many of the earnings calls. levels of theft have been elevated. dick's sporting goods traded less on the same phenomenon. it's having an impact on all the retailers. beneath the service at the headline level, the retail services are strong, but if you dig below the surface, you see the theft and rise in credit card payments, it's a rise in discretionary. >> i think it's spot on. the numbers have been spot on. if you look at macy's, the stock plunged 14%. it was about the guidance and the discouraging outlook that the ceo put forward. the other thing that's come out through retail reporting this season is the focus on cost-cutting. that's how a lot of these companies have preserved margins and preserved operating performance. target, they've seen inventory efficiencies low. dick's talking about job cuts. but the stock lost a quarter of its value yesterday. >> it's remarkable, the reaction from dick's. it's definitely quite telling when we think about the state of the u.s. economy and the fact that the macro data is holding up. but, again, there are warning signs beneath the surface. speaking of warning signs, i just want to also flagabout a c with germany. the mood on the ground is actually a lot more negative than what these numbers are describing at the moment. there's a lot of concern in germany about the fast finances deteriorating, insolvency rising. these are all indices that we track. so thank you for writing in. these are, of course, topics that we talk about a lot on the show. if any of you else want to get involved, you can tweet us. you can tweet us on the platform x, formerly known as twitter. >>> and also coming up on "street signs," nvidia shares the climb from the record-high, but traders still expect an outsized move of the stock in either direction as the chipmaker gears up to discuss second quarter earnings. we'll discuss more after the break. featuring built-in absorbency that washes easily in the machine. they're great for periods and light bladder leaks. so make the switch at knix.com when we started selling my health products online our shipping process was painfully slow. then we found shipstation. now we're shipping out orders 5 times faster and we're saving a ton. go to shipstation.com /tv and get 2 months free. ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com. >>> welcome back to the show. well, there is one stock and one stock only we're all watching out for today, and that is nv nvidia. the shares of the semiconductor fell from their record-high amid market weakness, but they're still bullish as it brieprepare discuss its second quarter earnings today. revenue is expected to jump 67% year on year, according to definitive estimates boosted by demand for ai chips, and wall street is expecting the company to forecast higher revenue growth in the third quarter. it just feels, arjun, like so much optimism is already baked into the stock after what we had the last quarter. >> expectations are massive. the market is expecting it to jump 300% year on year. it's not just about the june quarter but about the forecast, which has become critical to the tech companies. the market is expecting revenue to double in the second quarter, eps to more than quadruple in september. when we're talking about expectations, they are high. this is a stock that's traded very high. any kind of miss, any kind of whiff of potential disappointment ahead, any kind of roadblocks in terms of supply con extracts or the ai boom not being as boomy as we thought could really set this stock back, but also nvidia could be seen and taken as a broader, i guess, bellwether, on the semiconductor space and tech space. so any downside of nvidia could actually ripple through to the nasdaq as well. >> the destiny of the other stocks in this space is pretty tied to nvidia at this point. >> i think so. to a large extent, any kind of hit around the confidence of nvidia could flow through. that's because the expectations are high. there are notes of what the markets are looking at. the data center business is going to be the biggest business this quarter. the markets expecting the revenue to double year on year to 7.69. this is where nvidia is gaining a big foothold where they're using the graphics processing units in the data center, able to train the massive ai models and chat gpt. >> it used to be the gaming companies. >> it began with the high-endgaming companies. up 17.5% as well, which is not bad given the fact that the broader pc market has slowed down. the gaming market is seeing some headwind. the gaming and data center business are going to be two of the closely watched businesses this quarter. >> cement. arj, thank you. >>> stay with us. i've got one other story to ask you about. there are concerns over companies in china. four different funds are sounding the alarm. one quarter of the revenue comes from china warning that it's particularly susceptible to economic risks. arm is expected to list at 60 to $70 billion. you were here yesterday talking about arm's listing and we raised the issue of whether investors were concerned about the china exposure. is there anything new that investors have gleaned from this ipo filing that's come to light in the last 24 hours? >> i've had a bit more time to read this several-hundred-page prospectus. first, arm takes in about a quarter of its revenue from china. it's an independent company. arm has no direct oversight of it, and the company has also said it has had issues in the past of obtaining timely info from arm china, of late payments from arm china. those are a couple of risks. thirdly i would say the geopolitics, the continuing u.s./china rivalry, export provisions, rivalry from homegrown companies in china, and increasing fragmentation as apartment puts it of the semiconductor space given the geopolitical aspects, those are the terms that arm has on the exposure from china. >> it seems hike they're going to have quite a difficult time trying to convince people that that exposure is manageable given the state of the tension between the u.s. and china right now. >> it's a broader one for the chip sector as well. if we look at nvidia, that's a company that has exposure to china. it feels like given the ipo and prospectus has opinion given. >> arjun, we'll leave it there. thank you so much for joining us. >>> also coming up from "street signs," we'll bring you the latest pulse check on the economy in the uk. that's coming up next. i love my knix, i could not live without them. having period underwear makes life so much easier. i don't think i could ever go back to just using pads and tampons. just throw them in the laundry, it's super easy. k-n-i-x, knix. my name is ashley cortez and i'm the founder of the stay beautiful foundation when i started in 2016 i would go to the post office and literally fill out each person's name on a label and now with shipstation we are shipping 500 beauty boxes a month it takes less than 5 minutes for me to get all of my labels and get beauty in the hands of women who are battling cancer so much quicker shipstation the #1 choice of online sellers go to shipstation.com/tv and get 2 months free it's hard to run a business on your own. with shopify, you have everything you need to setup your online store, to connect with customers, and to bring your dream business to life. because when we work together, the future is bright. these days, your customers are not just down the hall. they're all over the world. so cute. it doesn't have to be lonely at the top. join the millions to finding success on their own terms. start your journey with a free trial today. >>> welcome back to "street signs." u i'm julianna tatelbaum. >> and i'm joumanna bercetche, and these are your headlines. >>> the contraction in european business activity deepens even further in august, falling at its fastest pace in over three years. >>> the 10 year treasury yield nears a 1-year high as resilience has investors bracing for a rare hawkish message from jerome powell ahead of this week's jackson hole summit. >>> the swiss maker publishes try data for a cancer truck. >>> and options traders are eyeing potential double-digit moves in either direction on its highly anticipated earnings report later today. >>> today is a big day in terms of the data. we have flash pmis coming through for the month of august, a forward looking indication of economic activity. the eurozone numbers that we got just a little while ago, very disappointing. now, we've got the uk numbers coming in, and we've got a slightly stronger perfect in some ways. you've got the composite pmi coming in at 47.9. that's down from 50.8 in july. so we've gone into contraction territory. the flash services pmi, 48.7 also in con stracz territory, 51.5. the manufacturing sector, even weaker, 42.5. let me correct myself in saying they look a little better. they also look quite weak. we're looking at contraction across the economy. 42.5 in the manufacturing sector. that is low. in comparison to germany, slightly higher, 39, but still extremely low. in terms of the detail here, we are seeing the fight against inflation that's carrying a herb cost in terms of heightened recession risks. that's what chris williamson had to say. he was on the program about a half hour ago talking about the eurozone. companies are reducing orders as there's a demand for higher interest rates, economic concerns. as we look at the figure, it looks pretty downbeat to e. >> one statistic that's looking pretty shocking, these are the lowest numbers since january 2021. you know where we were in january 2021? right in the middle of lockdown, not able to come to work. this is how bad the situation was. then there was a reason because, you know, people were effectively not able to go to theirs a soffices, to factori produce things. this was a reason the economy was expecting so many headwinds. now you fast forward it on 2 1/ years later and it's shocking that these numbers are still muted. >> shocking also that we're still in a rate hiking cycle, and i think you've highlighted this point so many times which seems to me the crucial point for the bank of england. yes, the economy looks like it's becoming more and more stressed, but wage growth is still exceptionally high and extremely problematic. so are they going to be continuing to hike into a recession? arecessionary environment? >> yes. with data like this, you've got to think numbers may be surprising to the downside. definitely something to keep an eye out for. we're seeing a reaction with the pound today as well. >>> well, on to spain, the conservative opposition people's party has been given the first chance to form a government after last month's inconclusive election. if he does not secede in two months, he'll be given

s&p, what about moo munis. >> i think you got that exactly right it hasn't had an impact on the economy and likely you can still find lots of aaa rated treasuries from moody's and save as much impact and honestly the most import part is the fact there is no plan that the president said explicitly when i said social security and medicare and try to get everyone in the congress to pledge not to touch those those desperately need to be reformed the broker to go bankrupt in the next ten years and that's not how americans want the government to run they want programs they can rely on and make retirement plans around we need to get serious of a plan to take care of the programs and more. >> remember those people vote, it is political and social security and medicare back to boats enough to go against his people they are just not. >> we really do have to deal with the fiscal problem, politically there has to come a day hopefully in the near future where you're more likely to lose your job if you promise to touch the security then you promise not to touch it. someone who is 55 years old does not know what they're going to get from the social security system and that's no

s&p, following moody's and cutting their outlook, citing a tough climate for lenders. the s&p lowering their grades for comerica. this might sound familiar. the decline in deposits has squeeze liquidity for many banks, while the value of their securities has fallen. you could have written that in march. you could have written it in february for that as well -- for that matter as well. lisa: in them a march people were wondering, does this mean they are going to stop lending altogether? and we are going to face a credit crisis? the answer was no, didn't happen. and now you have so raise questions around profitability. it is a different question than a question round ability to lend, leanness to land, and something that matters to the economy on a broader scale. jonathan: if you have those first two stories things would sound terrible. and then you hear about this. softbank's arm filing what would be the largest tech offering since alibaba in 2014. what does that tell you? things sound terrible when you talk about the banks, about china, about restrictive monetary policy, and then we are staring down the barrel of one of the biggest ipos in the past decade. lisa: anything that has to do with the tech sector especially, people expecting to be enthusiastic. this is a company that nvidia had wanted to buy before softbank. softbank is retaining a bigger than expected chunk of it. does this say something about the ipo market or tech or both? how much are we trying to parse through two the narratives -- two narratives with hopes and dreams fueling the sense that ever

the s&p in 2011 said the same thing moody did, the same concerns from the credit bureaus started in 2011 and they are continuing now into 2023 area i believe the sas made noises about potentially lowering the credit rating more in the future if we do not get our act together. host: lower than a aa+? guest: that is right. host: what would that mean? guest: more of the same. it is a rising level of risk, in their view, which is why they are lowering the rating a little bit. in the near term, this is probably not a real concern. there will not be a big meltdown in credit markets. this is sort of a warning signal. and it should be taken seriously. this is a signal that it might be on the horizon at some point. it could be decades. this is something the congressional budget office has told congress more than once. when the debt gets high, they raise the risk of real financial issues where they will have to start paying a lot more in interest. right now, we pay $650 billion a year just in interest costs. that is more than we spend on medicaid. it is only going to grow in the direction we are heading, because we continue to borrow and we are on traject