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tv   The Exchange  CNBC  November 29, 2022 1:00pm-2:00pm EST

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reporting that jack ma from alibaba is living in tokyo for the past six months, which is interesting, too but what do you think about these stocks km >> i hope the news flow comes in and affirms what these stocks seem to be trading on. your guess is as good as mine as to whether the chinese government will back down the protest on the second or third day. historically, they haven't done that >> i'll see you in overtime. look forward to that "the exchange" is now. all right. thank you, scott welcome to "the exchange," everybody. i'm brian in for kelly once again. here is what is ahead. stocks struggling to bounce back, all following monday's big sell-off a lot of worries still hanging over the market including, you just heard it, china's covid lockdowns. we'll get a live report coming up fed chair jay powell looming large over the markets a big speech ahead for him tomorrow bond yields, they're way down. the last fed meeting four weeks ago, as powell is about to remind the markets about higher
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for longer and one more threat to the kmi that is a looming rail strike. the president pushing congress to end it, but if it does drag on, is there an opportunity to buy one other sector of stocks we'll talk about it, we'll name names, all of that ahead but as always, let us begin with the markets and, by the way, a very -- kudos to you, a very long day for you >> it is >> i was up early watching, you do a great job on that show, by the way. >> fantastic >> i have big shoes to fill. >> yeah, 14s >> anyway, so brian, yes, it has been a long day. a day, by the way, that started off looking like we were going to bounce a at least a little bit off of the sell-off that we saw yesterday. and those gains fizzled a little bit, but not markedly so right now, the dow industrialses at 33,788, down about 61 points. the s&p 500 right now firmly below that 3,000 mark. 3951 the last trade there. down about 12 points, just to give you an idea, again, we like
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to give you the context and ranges, at the highs of the session, we were positive by around 13 handles, 13 points you can see tilting towards the lower end of that range right now, off one third of 1% the nasdaq composite down. so down, but not panicked down one place we are seeing at least a little bit of aed by, a short-term bounce off of some longer-term down trends we've seen is in energy prices wti, 78.35, up 1.5%. remember, $73.60 was the intraday low that we saw just in yesterday's trade. we were up markedly from there, but still, very much to the downside over the longer term. energy stocks overall up about 1% the sector, halliburton and schlumberger, those two oil services companies, helping to pace the advance in that oil services sector and energy overall. keep an eye on those, api copper
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doing pretty well. and we've been talking a lot about the rebound in chinese stocks those u.s.-listed china tech names for sure one of the etfs attracts them is up 6% right now. i'm showing you a one-year chart, because, again, for context, this is a fund that has lost around 40% of its value over the course of the last 12 months, but again, this is all about the basis and where you enter trades since the lows that we've seen near-term, we are talking 53% gains off of those lows. so again, brian, very long-term downtrend. as of late, some positivity there. a long way to go to make things up but watch those chinese internet names. we'll see how long that optimism lasts. back over to you >> and it is, indeed, all about china. .com, thank you very much. so we begin there, and china, and the latest on the covid crisis there as well as the fallout that is starting to be felt once again around the world eunice yuan is live in beijing with the government's response
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to some of the protests and civil unrest you have the atlantic counsel's fred kemp here with his take on china and other major geopolitical issues. the world was seeing stuff that even some of you may not be able to see on secure social media apps, as well. is there a discussion at all about anything on an official level? >> there is some discussion, but no direct acknowledgement of these protests however, just based on what we're seeing on the ground, the security apparatus has definitely ramped up not only here in beijing, but in other cities, as well. the authorities have been also looking find those people who have been taking part in the protests the government, like i said, didn't directly acknowledge the presi protests
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however, they did -- some top officials today reiterated that the communist party's stance on social stability, saying that china must crack down on, quote, hostile forces, and illegal acts chinese university students have also been notified that they should go home, ostensibly for covid prevention reasons however, many university students had already taken part in the protests. now, the chinese bloggers recently have been ramping up their rhetoric blaming what they describe as foreign forces for these protests the hope, of course, in the wake of these covid -- this covid pushback was that we might see some sort of easing of some of the restrictions or potentially an opening so far, it looks as though beijing is going to continue to stick my its zero covid policy, with some easing on the margins of the more extreme measures that we've seen here the authorities have said that
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they were essentially blaming the implementation on the local level for some of these complaints, that they had been hearing. however, brian, the -- one good note is that they did also acknowledge that they've been able to ramp up their vaccination of the elderly no mandate, though, which is something that a lot of analysts believe we need to see ere >> and eunice, but the vaccine they're using, is that still -- that is the china-made vaccine, of which they're, i believe, and you don't have to answer this if you can't, a lot of questions about iz ets efficacy. i mean, i imagine the debate there is a little more stifled >> the efficacy is against deaths the science community here has said that the chinese-made vaccines are good at preventing deaths however, whether or not they're effective against omicron or some of these latest variables -- or variants, is still up in the air.
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>> yeah, so you not have access to the western vaccines? you don't have access to pfizer or moderna, correct? >> reporter: that's right. that's right, they still are not allowed here yeah >> quickly, if you test positive, do they -- what -- you're outside, you test positive at one of their testing -- what happens to you they escort you back to your apartment? are you able to go get food? how does it work or do you always have to have enough food in your papartment under fear, oh, my god, i could be locked in at any time >> reporter: the u.s. embassy actually just advised americans and chinese kind of saw this advice and started doing it themselves, that we should have about 14 days worth of food and water in our homes, in case of a quarantine or a lockdown but to answer your question about what would happen if i tested positive. i would be taken away immediately to a government medical facilities and isolated.
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and you know, that's -- it's like if you test positive, you're taken away. if you are a close contact, you're also taken away >> taken away? >> reporter: so there's been a lot of uncertainty -- yeah, you're taken away. in terms of close contacts, it's kind of up in the air. sometimes they're taken away, some of them are just locked down in their homes. the length of that is unknown. >> unbelievable -- it's not, miss yuan, please return to your apartment, it's "taken away. eunice yuan, thank you very much the anecdotal stuff is the most powerful of all. let's talk more about this it says china's covid situation may be the greatest challenge, maybe the only challenge to president xi since he took power and appears to be in power probably for the rest of his life for more on that and what the world should can want, let's bring in fred kemp, president of the atlantic council we've been talking to eunice for about three years now on this. and obviously, she's a fantastic reporter, but for me the best reporting is just her own daily life and to hear "you're taken away,"
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i mean, and we see these covid outfitted effectively cops walking through the streets, marc mar marching, if you will. what are we learning about -- not china, the people and the government are different what are we learning about the xi regime? >> so, brian, i heard a new term this week, which is, you've got to decide between freedom and xidom. and xidom is basically a doubling down on repression. it's the return of the ideological man. he really does believe in marxism and lennonism. this is the most power in a single individual in a very long period of time what's dangerous for him in these protests is that they seem to be spontaneous, they seem to be country wide. they -- it's not just about
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covid. covid is certainly what set this off, but the danger of the breaking of the social contract between the communist party and its billion-plus people, which is essentially, you're not going to be as free in the western sense, but we're going to take care of you. and economically and otherwise and people are seeing economic growth slowing they're seeing individual freedoms being ratcheted back. they've got more doubts about their future and whether they're going to have a secure future. and so the social contract, that's the biggest danger for his if people in china see the social contract as breaking down >> if you read -- and i urge all of our viewers and listeners to read a little bit about xi's childhood, about his background. initially privileged, his father was denounced by the communist party. he was taken away, i believe xi and his mother were forced to retreat. they were paraded through the town they were basically humiliated publicly he was effectively sent not to a
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work camp, but not far off in other words, it was a pretty brutal adolescenthood for xi but he also learned the power of the government the government had full control over his family. denounced his father, banished him and his mother away to a rural village. lived in a cave, literally, at one point. you just wonder, what the humanity is there. or if there is that, given what we're seeing with -- not only with covid, uighurs, muslims, work camps by the way, making all of our solar panels >> yeah, don't forget that a lot of these protests were triggered by fire in the uighur part of the country, where people died because it's believed the covid lockdown made it harder to rescue people, whether or not that's true, that's certainly what the broad belief is i'm really glad you gave some of xi jinping's history
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because i think color is everything he's a true believer he's seen the collapse of the soviet union is one of the things that motivates him the most but when you let go of power, you loosen up power, you could lose everything altogether he now has to make a decision. does he crack down, does he reach a compromise on covid and some other issues or a little of both the party is 90 million strong in a country that's well over a billion, as you know so the only way they stay in power is by carrots and sticks the carrots are giving people a better economy, which they're not doing right now, and the stick of the surveillance state, where they can watch people and they can bring people in so i think this is really going to be interesting. my guess is he's going to use some of both >> i don't see -- listen, i can't see xi -- maybe i'm wrong, what do i know i can't see xi, because i don't see really many politicians
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anywhere in the world say, gee, guess what, remember that whole strategy we had? turned out it didn't work, we were wrong, we apologize by the way, first politician who says that about anything, whatever the topic, has my vote, pretty much automatically. xi's going to dig in, fred he's not going to flip now and be like, yeah, remember how we locked you up for three years? yeah, sorry about that >> but if he digs in, then the economy goes further south >> i don't think he cares, does he they print their own money, they don't care about debt levels >> well, but if they're at whatever point of growth they are now, 3.5%, et cetera, and if their growth is under 6, 7% going forward. they could have more discontent. so he's got to find ways to still get some domestic growth out of this. and so cracking down entirely could be against his interests and it has been thus far there's less investment coming into the country the crackdown on the technology
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companies has hurt their ability and their strength and so, he, right now, i think he's more interested in party control than he is in growth, but can he have both can he have slow growth and continued party control? i don't think so >> yeah, he kind of -- he got back in the communist party, according to "the new york times" and others by being kind of a supercommunist. just super adhering to every facet of their belief system that's the only way he got out of that rural village and back in charge. and now he's probably going to be president for life. fred kempe of the atlantic council, we appreciate your views. thank you very much. >> great to be here. on deck, you better buckle up your next guest says there is more volatility ahead and he's got some names that might help you play a little defense. plus, we are only days away from a potential national rail strike that could cost the country billions of dollars. we'll take a look at freight, which shipper has the most to lose, and why the rails could be the big winners. "the exchange" is back after this
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all right. welcome back to "the exchange. you can see some red on the screen stocks giving up some earlier gains adding to yesterday's losses right now the s&p is down about 0.3% if you have concerns what we just talked about, that is
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china, and you have inflation, it's cooling off but still remains hot, economic growth, they all continue to weigh on the market your next guest expects more volatility ahead and says right now, it's just best to stay defensive. joining us right now is ryan kelly, chief investment officer at hennessey funds ryan, good to have you back on again. you think a name like an academy sports is a defensive company. midwestern, largely, kind of the dick's sporting goods of the midwest. what do you like about academy >> we like a few things about them number one, this is in our mid-cap portfolio. and in that portfolio, we're looking for companies that are showing year over year earnings growth, they're showing momentum in the stock they are trading at a pretty low price-to-sales ratio and this fits all of those different categories that's one of a few different retail stocks that we have in there. we also in that portfolio, this has done pretty well that year, given where the market has gone, we also like -- we have energy, as well.
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and you know, while we want to play defensive, and we want to be on the consumer staples side or utilities, also, we think energy is going to continue to go up from here, as well there's still just too much going on out there there's not enough production. we have in that fund as well, a lot of energy, which is pushing it higher. and we have an energy transition fund, as well. and that one has moved more into the traditional energy side. i know you just showed up there a couple of the names we own in that fund. and that's antero resources and schlumberger so again, volatility is just part of what the market does we are constructive over on the market, over the longer term we do think that, you know, there's going to be a lot more, as you said in your teaser, a lot more issues with inflation and what the fed is doing and the scary word of recession. that's going to cause volatility
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so, you know, some of these more, you know, defensive sectors, as well as energy, we think, are going to be a pretty good place to be right now >> and we have people that come on and they talk about some of the big dogs all the time, the chevrons of the world. nothing wrong with that. you have different names you mentioned, i believe, antero resources. antero is not a company we talk about or speak with a lot, but this is an appalachian play. it's a little bit different than texas, and it's kind of unique >> yes, it absolutely is this is one of the best pure play natural gas and natural gas liquids producer in the country. as you know, we've had this shale boom going on for many years. and throughout, i think one thing we've learned this year is that the united states and their production of natural gas, that natural gas could go anywhere in the world. you know, there is a whole lot of demand out there for natural gas.
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we export it, our peak capacity right now. we immediate to create more export terminals, but antero resources we think is a good place to be in that it's the producer, natural gas prices have gone up a lot this year it's helping them. and they're in a very good area of the country as well in the marcellus and utica shales >> that's it kind of a unique company and a unique stock academy sports and antero, we'll move on to the bs next time you're on. ryan, appreciate it. >> thank you >> for more investment ideas, do not miss the second event of this week, this is cnbc pro week, by the way today at 3:00 p.m. eastern on your second screen, of course, fund strat's tom lee will join tom collin with his thoughts object market and more go to to sign up by the way, cheap plug, tomorrow at 3:00 p.m., your guest is leon cooperman. i'll be interviewing leon, taking some of your questions as
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well sign up for today, sign up for tomorrow, just sign up still ahead, elon musk is taking on tim cook and apple is he in over his head we'll explore. but steve liesman is back with part two of his series looking at the broken system for legal immigration. the startling stats you need to hear
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all right. the market's are in the red right now, not down too much dow is down 0.1% nasdaq the big loser, is down 0.7% but why don't we get a quick check on some of the megacap names, the appleses, microsofts, amazons of the world
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they're lower across the board apple is down 2% as well here's an rbi, random but interesting, thank you, a.j. amazon is on track for its fourth straight losing month that is the longest monthly losing streak for amazon since all the way back in 2006 so what is that, like, carry the one, 16 years ago. so 16-year worst trend for amazon on a monthly basis. down about 30% in that time. now let's step out of the markets get a cnbc news update with bertha coombs >> always love those rbis. here's what's happening at this hour, the national weather service is warning of what it calls a major, severe weather, and thunderstorm event it's expected today in the southeastern u.s. and they say it could generate very dangerous tornadoes. the risk is highest in central mississippi. new york city mayor eric adams has a new strategy to
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remove and treat people with severe mental illness on the city streets and voluntary hospitalizations adams says he wants to end the practice of only forces violent people to receive treatment in a hospital and the u.s. coast guard has released close-up video of the first mauna loa eruption in 38 years. officials in hawaii say the lava does not pose a threat to communities near the volcano, but boy, that is spectacular video, isn't it, brian >> first since 1984, is what you said i believe, bertha >> or as some people like to say, 11900-and-84. >> that's great. bertha, thank you very much. president biden calling on congress to act now. speaker pelosi says she will introduce a bill tomorrow, but what if that gets derailed we'll look at the potential winners and losers in that scenario, including this stock
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welcome back to "the exchange." we are just over a week away from a possibly devastating rail
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strike it could cost the economy up to $2 billion per day but that threat may have receded after president biden called on congress to intervene, saying there was, quote, no path to resolve the dispute at the bargaining table the president urging democrats who opposed the labor deal, now arguing that they cannot let their pro-union convictions, quote, hurl this nation into a devastating rail freight shutdown, end quote. congressional leadership appears to be onboard with the president, speaker pelosi saying the house will vote on a bill to resolve the dispute tomorrow and the senate minority leader mitch mcconnell has agreed to get a deal done as soon as possible. but if congress doesn't get something done before december 9th, a rail shutdown could happen and if it does happen, it could have a major impact on trucking. frank collins has the details. this is a big deal >> certainly is a big deal obviously, a strike would be disastrous for the u.s. economy. however, it is benefiting some trucking names for example, shares of xpo up
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more than 20% since december 15th the biggest beneficiaries of all of this uncertainty, less than truckload companies that put lows from multiple companies in one truck and generally focus on industrial and commodity freight that is also largely moved on rails. names like old dominion, sala and land star. most analyst believing a strike would only last hours. later, the preparations for a strike will begin. and their customers are already preparing for the very worst >> we actually got a chance to try out some of the contingencies then and we did see some of our customers, especially cpg or consumer package goods shippers starting to move some things into more of a truckload type mode >> the truckload he was referring to is when companies use the full capacity of a truck. analysts tell me the nation's largest truckload company and a
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trucker for walmart are both expected to benefit from that ramp-up in volume and get added pricing power. the company is expected to be negatively impacted are j.b. hunt and schneider these are companies that get a major portion of revenue from inter intermodal or taper shipping >> and are there ones, frank, that you think are more exposed than others, or also, can the trucks, can they absorb -- let's say all the freight rails go off the rails. there's no way there's enough trucks to -- >> number one, great turn of phrase but if it goes quote/unquote, off the rails, you can't take all the freight from the rails the rails are 30 to 35% of the freight capacity here in the united states, north american markets. all of it can't be absorbed, and certainly not in the same time frame. you hear the ceo mention that consumer package goods would be the first place to find a home you have to get more toilet paper in, more paper towels -- >> yes, you do >> more paper towels and soap,
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people need those things all the time those are the first to be replenished in a supermarket the harder fit will be things like grains that can fit into a rail car and be moved, it's not as time sensitive. >> the specialty rail cars you see with the coal in them or grains or liquids. it's not like there are trucks waiting around -- >> precisely not just a lot of trucks waiting around to haul grain they move from those specialized containers, that's called intein intermodal if the rails are shut down, that backs everything up. grain shipments increased 8% year over year on the last week of data, as you would expect a lot of people are trying to move grain before a potential rail strike. but a lot of people are doubtful that it would actually happen. a lot of people believe that congress would step in >> congress is at least in process. let's see where we go. i love how you put the toilet paper before the food. >> it might be -- it might work the other way a little better. >> it's inverted >> frank collin, thank you very
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much >> brian, thank you very much. your next guest says that there are a couple of segments particularly vulnerable to a rail shutdown, especially if it lasts longer than a week let's bring in donald broughton. good to have you back on, although i wish it was under better circumstances first off, congress is in motion it seems like a bipartisan thing. no political party should want to strike. are you handicapping the possibility of a strike here, don? >> yeah, and i really don't believe -- good to be on with you, brian i really don't believe there's going to be a strike what's happening is simple you played rugby for virginia tech, right? >> i did, not well >> that's all right. my boys will watch you and your boys at virginia tech were going out, and they're basically having a scrum that's what's happening between the management teams and the union leadership that's what it's about that doesn't mean that they're not still going toesktively complete the game and anything
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will happen. it's just that we're in the part of the process of we're having a good old-fashioned scrum in essence, they've been given very, very great packages and memberships are in basic agreement as to what's fair and what will work it's just matter of selling it to the membership. >> by the way, i played rugby for wash u for one game. i wore the green and red for the bears when half their team didn't turn up for their tournament who's going to win assuming there is no strike, who's going to win >> well, things will go on as planned. the winner would be, they'll continue to perform. the winners will be people like covenant logistics group who have a large group of teen
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drivers. that's where the demand really would go, through the roof, if you had an interruption. it's two things. one, is there going to be one, and how long does it last if it did happen if it did happen, you had guys like u.p.s. and fedex were dependent upon that domestic intermodal service of rails to move parcel. especially u.p.s.. >> hunt is certainly a name we're watching as well i spent a lot of time with my buddy who runs a truck brokering business for land star i know he's been very, very, very busy. i talk to him all time he's not seeing any indication of a macro academic slowdown are you from where you sit with the numbers? >> nop i'll tell you what we're seeing growth is not happening at the
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base it was. there are those who are saying, it's the second derivative growth was happening so fast, it was not a pace that we could sustain. so we're seeing less growth overall. the exception is international air freight, asia pacific air freight, sfrins. that's a problem, because it bleeds over to the places, you can't tell whether that's a result of china's enforcement of shutdowns. but when you look at domestic freight in the u.s., everywhere you look, it looks and says recession, what recession? what are you talking about it looks very different than what the news headlineswould have you believe >> and that's fascinating, because the transports are a leading indicator. you've been doing transports for a couple of decades now, don and --
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>> more than a minute. >> we appreciate you coming on hope you're right about your projections >> go bears, by the way. still ahead, it is day two in our special series on america's big problems with legal immigration. yesterday, steve liesman laid out the issues today, he takes a look at the industries most impacted and why it's not just a matter of dolls stutotarlo b pential lives lost and if you have both medicare and medicaid, i have some really encouraging news that you'll definitely want to hear. depending on the plan you choose, you may be eligible to get extra benefits with a humana medicare advantage dual-eligible special needs plan. all of these plans include a healthy options allowance. depending on the plans available in your area, you could get up to $1800 a year to help pay for essentials like eligible groceries, utilities, rent, pet care and over-the-counter items. like vitamins, pain
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>> nowhere are the problems of america's broken and antiquated legal immigration system felt more acutely than the nation's health care system foreign doctors and nurses play a critical role in staffing hospitals and doctor's offices the estimated shortfall in legal immigration of 1.6 million workers, together with an aging population means the nation is fast approaching a health care worker crisis, with life-or-death consequences >> it takes longer to see a physician, especially in those smaller, rural communities because they may have to drive a few hours to see a physician those are the areas that we have the most trouble recruiting physicians too and that's really where the internationally trained physicians have helped out over the years. >> for americans throughout country, a shortage of health care with a 24% increase in wait times, but in rural and poor communities, we're up to a third of health care workers can be foreign born, the shortage results in hospital closures and patients driving hours for care or not getting it at all >> we absolutely know it's
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costing lives. every delay in the ability to have a person to see a special to get an exam done costs human lives and can be measured in that way >> and so, i don't think it's an exaggeration to say that the failure of the federal government and the state government is to get health care immigration right is a matter of life and death for millions of americans. >> to enter the u.s., foreign health care workers must go into the same low-odds lottery as all specialized workers, a lottery that gives access to just 85,000 workers against 484,000 applications what's more, hundreds of thousands of foreign health care workers already in the u.s. can't work in their trained field because of licensing and training restrictions. beyond health care, the immigration shortage shows up in engineering and math the u.s. has no choice but to seek foreign workers for these so-called s.t.e.m. jobs. according to the u.s.
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semiconductor industry, 72% of the u.s. graduate students in computer sciences and information are foreign nationals. >> there's this gap that even if every single american who was employed had the skills that an employer was looking for or the interests in the jobs that they have open or even just were located in the right area, that even if those matched perfectly, there would still be this gap of 4 to 5 million jobs that are unable to be filled by the american unemployed population >> as a result, some of the world's best and brightest are going elsewhere. the number of indian students attending canadian colleges and universities increased 182% between 2016 and 2019. it declined during the same period in graduate level programs in science and engineering at u.s. universities, further reducing the pool of potential workers. >> so america has a choice, experts say. reform the legal immigration system in the u.s. or cede the field to other countries in the competition for the best and the brightest. >> and you and i were just
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chatting, the definition of a skill is crazy >> it doesn't include nurses so the nurses apparently can't get in through the h1v visa program. it was deemed it doesn't require a bachelor's degree. >> who deemed that >> some of these rules are 10, 20, 30 years old and they haven't been reformed in years >> you know what we need, we need a re-deemer somebody to deem smarter a nurse is a skilled position. >> apparently the labor secretary is able to do this and so far i think he's made some changes, but not the ones that people are calling for thursday, we'll be back and tomorrow this time, i believe, we'll be talking about chair powell and his speech. on thursday, we're coming back with the final part of this series, looking at solutions and guess what the problem is? >> what is this, "jeopardy!" >> gridlock in washington. >> oh! you know, it's amazing, i could argue that certain members of congress are not skilled positions. >> yes
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do you need a college education to be in congress? >> apparently you don't need anything because is nothing is getting done the fact that a nurse is not considered a, quote, skilled job is just dumb >> and as i'm sure you heard in the piece, there are many, many, many skilled medical workers here in the united states that have their training overseas that can't work here in the united states because of licensing requirements this is a problem at the state level and at the federal level >> steve liesman, we'll be back on thursday for this tomorrow, you've got mr. powell. >> chair powell. >> what time is that >> 1:30 we'll be talking about that >> get an advanced look? will he send you the transcript or something >> i don't know. i've got to give him a ring. >> whatever works. steve liesman, thank you very much still ahead, the aforementioned j. powell rocked markets with his hawkish speech back at jackson hole in august, with stocks on a tear the last two months, the dow is up more than 15% since that speech, will powell's talk tomorrow bring another round of pain or joy
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we'll discuss. probably should haveald ouitith steve, but we'll talk about it with somebody else, apparently what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.
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xfinity customers, on us. so you get more of the speed you need for day and night streaming. more speed you need when you're work from homeing. and more speed you need as your family keeps growing. check in on your current speed through the xfinity app today. well, we fell in love through gaming. but now the internet lags and it throws the whole thing off. when did you first discover this lag? i signed us up for t-mobile home internet. ugh! but, we found other interests. i guess we have. [both] finch! let's go! oh yeah! it's not the same. what could you do to solve the problem? we could get xfinity? that's actually super adult of you to suggest. i can't wait to squad up. i love it when you talk nerdy to me. guy, guys, guys, we're still in session. and i don't know what the heck you're talking about. welcome back to "the exchange." we want to bring your attention
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to something in the bond market that has not happened in about 30 years a spread between two years and the ten-years is the most inverted it's been since the 1980s. and bonds have rallied since the last fed meeting, but jay powell, as we just noted, set to speak tomorrow afternoon, and you might remember that hawkish jackson hole speak back in august the dow fell 1,000 points. nasdaq dropped by 4% although we have recovered that and more so, what should we expect tomorrow let's bring in jeff kilburg, kkm financial founder and ceo and cnbc contributor we just talked to steve, jeff, about the set-up you're the reaction guy. if we get a hawkish powell, he just hits us back over the head with the hawk hammer, what happens? >> well, sully, i think a lot of wounds are still healing from that eight-minute brief speech he had in jackson hole i don't think tomorrow is going to be in the same stratosphere however, i think he'll be
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consistent with a very hawkish message. to your point, i think the last time we saw this historic inversion of 73 basis points between the two-year and ten-year, i think we were watching magnum pi, sully. if you put a mustache on yourself, you look like a younge this is deliberate this is by design. and what does that high front end of the curve mean? with the two-year, the one-year above 4 1/2% that means that the cost of capital is higher right now and it's going to continue to be higher so i think the fed is being very deliberate in keeping this inversion. i think we are going to see is this move into 2023 back to some form of normalcy but i think the fed is using the curve in a very interesting way. i know you travel a lot, sully when you're driving on highways you typically see a runaway ramp, a truck runaway ramp why do we have those runaway ramps? those are typically when you see -- either they lose brakes, lose control to prevent a crash. i think that's exactly what fed chairman powell is utilizing right now by having this inversion at 73 basis points
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he's deliberately trying to slow growth and of course that's impairing some of the tech names but nonetheless this is working. and once they have conviction that we do see inflation going to their unachievable target of 2%, i think that is when you're going to see this pause. and i think that's going be to be more represented in the numbers. because this is a big week, sully. we have pce, we have jobs data and of course the speech we're going to be focused on every single word. >> it's just funny you mention "magnum p.i.," by the way. in the show his name was thomas sullivan magnum. that's random but interesting. that is my middle name and last name and my dad's name >> i love it >> why are you booking profits at duke? i don't mean the university. i mean the utility >> owning duke energy has been a safe haven if you look at utilities by and large, xlu is the proxy for the etf we like to use to understand utilities. it's been about even as the s&p 500 is down about 15%. duke energy's a name that really has seen some exiting. we're booking profits. i'm not selling this we own this. reducing exposure, sully
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but i think as you see the front end of the curve we're seeing more and more clients wanting to own three-month, six-month, one-year notes that are paying 4.75%. so that's why i'm not down on duke it's been a great name to hide in in 2022 but i think it makes a ton of sense as i do envision the treasury curve as well as yields coming down. >> and buying amazon >> buying amazon it's funny we talk about bonds right? they're going to be launching their multitranche bond deal back in april, sully they sold $12.75 billion of debt this is for general purposes tech certainly been hammered with the rise in interest rates. the 10-year started in january at 1.5, went up to 4.5%. but i want to own amazon i own amazon i'm adding to amazon as i think the consumer is still in a very good spot. i know the inversion typically precedes a recession or at least has 100% accuracy but there's also been times this treasury curve inversion has not preceded a recession. i think that puts us in a different cycle right now and the consumer, the household
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strength of the u.s. economy is different. owning amazon, i continue to buy amazon i have a sore thumb using amazon sometimes, sully amazon makes a ton of sense. has been beaten up, kind of forgotten about. it's the broad swath faang stock but i think amsson more consumer discretionary in my opinion than it is the true growth tech stock it was inest year year. >> good coverage on the federal reserve. i love it. booking profits in utilities or at least duke. buying amazon and for some reason using your thumb to hit the enter key. but you do you, killburg jeff kylburg, thank you very much >> see you, pal. >> still ahead elon musk accusing apple of threatening to remove the twitter app from its store and calling apple's app store fees a, quote, secret tax. is it secret would actually apple agree with anything musk is saying? is this a musk v. apple fight? use your thumb or your index finger butusstk jt icaround steve kovac has that story next.
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welcome back as always, i want to get one more thing before we go, and that is the fight that elon musk seems to be intent on picking a fight with apple firing off kind of a series of accusatory tweets. steve kovac joining us now with the story here is this really like musk v. apple, steve >> in a way, yeah. or at least it's musk vs. apple and apple's not responding and saying anything. let me break down what's going on elon musk was claiming yesterday in a tweet that apple threatened to remove twitter from the app store. look, this is not how apple operates i've been speaking to developers about this for years and apple never threatens app removal. what they do instead is they might ask for changes in an app to get an update or approval for a brand new app. and ma seems to be really going on here, brian, is it's likely apple gave twitter some of that feedback in a regular review but the app is still in the store and apple's approved updates even since musk took over the app. look, here's another way to look at it. a couple years ago twitter rival
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parler was moved around the january 6th riots not because of the bad content. there was plenty of that same bad content on twitter that day. it's actually because parler by design said it didn't have moderation so it was kicked off by apple and allowed to return after adding those moderation tools. twitter was allowed that whole time to stay because it was moderating as required by app store rules for social apps. so how all this started yesterday, musk was complaining apple cut its ad spend on twitter and that kind of devolved into a series of other attacks against the company. but based on how apple has removed apps in the past, musk would have to purposefully violate the app store rules in order for apple to take action such as removing the blocking feature to prevent trolls. but look, he hasn't done that, brian, and for now elon musk is still saying twitter will be moderated and that's all apple needs to see at this point based on its rules >> you said something in the middle there that apple was cutting its ad spend on twitter. i wonder do we know is that a unique thing to twitter or is
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there a risk that apple is cutting its ad spend with everybody and maybe musk overreacted? >> it's unclear. first of all, we know people are cutting ad budgets left and right across all social apps we've heard this during the earnings from facebook and so forth. but at the same time apple is hardly the only brand since musk's takeover to either pause or reduce spending because look, they're afraid of brand safety they're afraid of their ads appearing next to hateful speech or unsafe speech and for now a lot of brands are saying we're going to take a step back, look at what elon does with the company, how the platform manages itself over the next couple months, and then see if we want to start advertising again. obviously musk is not happy with that, though >> no. and he's been kind of on a roll lately i don't know how the guy does it he's running like eight companies. he's got like nine kids. he must not sleep. >> that we know of >> we don't sleep a lot on tv but that guy puts us to shame. he's been kind of on a roll lately like testy musk, right >> yeah, exactly and look, in my view what he's kind of doing here is look for a bogey man to blame for all these
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problems we see plaguing twitter. for example, he's calling out apple and some other brands saying they don't like free speech because they won't pay for the ads. >> although remember that time long ago when everyone was like oh, twitter's going to shut down tomorrow remember that? >> still going >> it was like three weeks ago it's all over, and still here. nobody said sorry. steve, thank you appreciate it. that does it for "the exchange." "power lunch" with seema mody and some other guy starts right now. welcome to "power lunch. i'm seema mody here's what's ahead. the bounceback china-related stocks and commodities rally. from steel to oil to copper. and emerging markets, this despite the ongoing protests but how much exposure to that country should you have in your portfolio? we will discuss. plus waning confidence the outlook gloomy the likelihood of a recession elevated the head of the conference board, he's here to discuss


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