Power Lunch - Preparing For AI, What’s In Store 12/19/23

Episode Date: December 19, 2023

Today we’ll highlight 2 important topics having a major impact on business: AI and retail theft.We’ll talk to NJ Governor Phil Murphy about his plans to get the Garden State ready to be a leader in Artificial Intelligence.And Sen. Mark Warner & Sen. John Kennedy will join us as they introduce a bill aimed at protecting financial markets from AI manipulation.Plus, retail theft is changing the way we shop. More items are locked away, if they’re even in stock. Is it ruining the consumer experience in-store? We’ll explore. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon, everybody, and welcome to Power Lunch alongside Kelly Evans. I'm Tyler Matheson. We have a jam-pack show for you, two topics which have had a major impact on business this year. First is generative AI. We're going to talk to New Jersey Governor Phil Murphy about his plans to get the state ready to be a leader in artificial intelligence. And Senator Warner and Kennedy will join us as they introduce a bill aimed at protecting the financial markets from AI manipulation. Plus, retail theft is changing the way we shop. As more items are locked away, is it ruining the consumer experience in store? That and a closer look at Target's decision to close some stores due to crime rates. But first to check on the markets as the Dow is once again hitting new highs.

You can see it there after crossing 37,000 for the first time. We're now more than halfway to 38. The S&P and NASDAQ also both hitting new 52-week highs today. All right, we began with the artificial intelligence boom. as U.S. States race to gain an edge in this new technology, New Jersey is establishing a new AI hub at Princeton University. It's part of an initiative to make New Jersey a national leader in AI, and it follows the state's creation of an AI task force in October to train state employees on it.

Joining us now, first on CNBC to talk about the AI push, and much more is New Jersey Governor Phil Murphy. Welcome back, Governor Murphy. Good, as always to see you. Good to be back with you, folks. Thanks for having me. Delighted that you could join us. Let's talk first about the initiative with Princeton in AI. What is it exactly? How will you and the university collaborate? And what do you hope to achieve?

Yeah, my late mother used to say you're known by the company you keep. We couldn't be keeping better company than Princeton University. This is just as you suggest, it's a generative AI hub. It will be located on or near the Princeton campus. Our economic development authority will put significant amount of capital to work. And the notion, ground zero for generative AI is overwhelmingly in the Bay Area. When you ask the folks out there, why are they there? It's because that's where the talent is.

So my fervent hope is that we can recreate a hub on the East Coast. And I'm quite confident that working with Princeton, we could do just that. And as you also mentioned, we announced a task force and some other steps a couple of months ago. Generative AI will change our society, never mind the technology in our society. It will run throughout state government society and beyond, and we want to be out ahead of it. What makes initiatives like this really take off from a standing still start is money. Where's the money? How much of an investment is being made here and who's making it?

It'll be both Princeton and the state of New Jersey through our economic development authority. The dollar amount is yet to be determined, but this is not the first hub we've done in New Jersey. We've done several of these, and we typically put $20 to $25 million to work in these sorts of hubs. I would envision something in that range from our side. I don't want to speak for Princeton, but I would guess that they'll be in for something comparable. comparable. How, you know, let's talk a little bit about the sort of the end result, if all of this goes as you would hope it would. I assume you would expect to generate jobs from this, from this initiative, either people who work in the hub or companies that come and locate in central New Jersey

or elsewhere in New Jersey, because that becomes a hub for generative AI. And it would address one of the things that has been kind of surprising to me as a resident of the state, and that is rising unemployment in the state of New Jersey. Explain why unemployment's been going up a little bit in New Jersey and how many jobs you think this hub could create ultimately. Well, let me start with the hub and the jobs that I think you're, first of all, exactly right. The economic development aspect of this could be significant.

And you're seeing companies measured, we've got one company in New Jersey already in the data center hardware system. of this industry, just did a recent round of financing, valuing them at $8 billion, and they're a relatively new startup. Sorry, my earpiece has given me trouble here. That's all right. So that's clearly a big part of this. Secondly, I think it will better inform us as it relates to regulatory and ethical issues.

And thirdly, you know, our hope is that we can deliver government services in a hyper-efficient, responsible way, and I think this hub could impact all three of those. I'm not terribly worried about the unemployment rate. We are a little bit above the national average, although we're suffering what a lot of states are suffering, which is a mismatch. So we're desperate for folks to go in, for instance, to education and health care, nursing in particular. But coming out of the pandemic, we were a little bit slower to achieve our lowest levels of unemployment, but we did. In fact, we led the nation for a period of time.

I would suspect that this is a temporary lead lag. We're doing an enormous amount to try to get that pipeline of educators and health care workers as vibrant and as full as possible. The only thing I wonder, Governor, apologies, I hope you can hear us okay, but the only thing I wonder is, is the cost of living? is that an area where it's harder for New Jersey to fill and attract some of those positions that are lower paying than obviously the jobs in New York, Manhattan, or some of the high value finance areas that obviously make the state a little bit more affordable for people? Yeah, I'd say a couple of things. It's a good question. First of all, our economy, this is back a little bit to AI.

We are an innovation economy. So we are biopharmal, life sciences, tech, telecom, fintech. So we are hyper. innovative in our economy. Secondly, cost of living matters a lot to us. That's why I'm finishing up my sixth year. We've had 20 separate tax cuts for the middle class and seniors, none more importantly than a huge program directed at property taxes. So making sure that the deal, if you will, in New Jersey for a worker or a family is a fair one. That is a huge priority for us and it will continue to be. I guess if we could turn now a little bit to what's going on We'd love your thoughts on the early race that's shaping, not that early. Iowa's a couple weeks away in terms of what's going to happen on the Republican side. What do you make of President Biden's fitness for office, his energy level? I think he's the right person to be leading Democrats to another term here. Yeah, I have no doubt about his fitness. He's 81, obviously, but he's sharp as attack, and you can see that. We've known him for a long time. And I have no issues at all about that. I was just encouraged to see a poll that I just, I believe just came out from New York Times,

Sienna that has him up two points against Trump in a head-to-head. And I think it was of likely voters. I think you're going to see connecting the unemployment question with the president's popularity. I really believe there's a lead lag here where the macro data is clearly getting better. Inflation is coming down. It's come down without having blown up unemployment. on the one hand. It hasn't hit, you know, if you're in a grocery store or a gas station or getting a mortgage right now, you haven't felt it yet for sure. But I believe it's only a matter of time. And with

that, I believe the president's support will solidify. And this poll, I think, is maybe an early sign of that. But there certainly hasn't been, the administration has not received much, if any, credit for the economy. That's number one. And in this morning's New York Times, there was a strong sense that the population does not approve of his handling of the U.S. relations with respect to Israel and Gaza and that he does not score well there. Let me ask the question just simply and directly, Governor. Would the Democratic Party be better off if Joe Biden were not the candidate? No, and I say that emphatically. He has, I believe, an extraordinarily strong record to run on. This is not a question, are we speculating what kind of president

he would be? This is not a hypothetical. And I think you're right, especially on the point in the economy, and I think it's that lead lag factor that I referred to a minute ago. I believe it's only a matter of time until he does get that credit when that reduction in interest rates and inflation hits the so-called man of the street. You're seeing early signs of that, for instance, at the gas pump, where gas prices have come down meaningfully. You've got markets that are strong, and they usually are a precursor to the underlying realities. You've got another good day in the market today.

So I really believe it's only a matter of time, and I believe he has got an exceptional record to run on, and I'm looking forward to doing everything I can to help him. Governor, one more. You know, Princeton has been slightly swept up in the drama among higher education institutions lately. You're a Harvard and a pen guy yourself. Are you satisfied with some of the changes in leadership we've seen at those institutions, or do you think more needs to be done?

I'm not close enough to, I'm not like I used to be when I was either going there or involved on boards, but genocide does not need context. We don't need to ever equivocate about rape or sexual violence. There's no question who started this thing, and that is Hamas. and those are all clear, Isabel, facts. I pray, I pray, pray, pray that innocence on both sides of this war are protected as much as possible. You saw a brutal, barbaric invasion on October 7, and you've seen now many, many thousands of innocent folks on both sides of this paying an enormous price. I pray for peace. I pray that Israel, in this case, and Hamas, by the way, he uses humans as shields,

we all know that, that we can do everything we can to protect the innocence on both sides of this. May I conclude by pulling us back to domestic politics and New Jersey politics, Senator Menendez is under indictment. You've called for his resignation. Your wife has declared her candidacy to run in a primary for his seat. Where do things stand there? And I don't know what question to ask because I know it's obviously coming right into your household there, and it's a tough one for you to answer. But obviously you would prefer to see Mr. Menendez resign, and I assume you would prefer to see your wife in the Senate.

Yeah, you're innocent until proven guilty in America, and that always must be the case. But when you take into account the broader interests here, from the moment this indictment came down, I ask for Senator Menendez to step down for the broader interests. so he could focus on defending himself. And by the way, as a former U.S. ambassador, this now appears also to include accusations

of foreign agency, and that's just too much for the market to bear, as it were. Completely separately, my wife had never thought about this for a moment before that indictment came out. I'm incredibly proud of her. She declared just over a month ago, she's running like heck. She's had a great record to run on as a full-time volunteer. First Lady over the past six years, whether it's infinite mortality, climate education. We're the only state in America that teaches, embeds climate education into K through 12,

defending reproductive freedoms and right to abortion, climate more broadly. In baseball terms, she's a five-tool athlete. I could not be more proud of her. And she's out there trying to earn every single vote in every corner of the state. Governor Murphy, always good to see you. Thank you very much. Thank you for having me, folks. We appreciate it.

And wouldn't it be nice to have an AI hub here in New Jersey? Think of the jobs. Coming up, we'll have more on artificial intelligence with two senators sponsoring a bipartisan bill to protect financial markets from AI manipulation. We'll want the details on that. But first, if you haven't gotten all your shopping done by now, you're probably going to have to hit the stores in the next few days. We'll tell you what to expect in that experience.

Power Lunch will be right back. All right, welcome back to, excuse me, Power Lunch, everybody. There are only five days left until Christmas. Oh, my goodness. Which means if you haven't already ordered it online, a trip to the store, may be your best option, Tyler. But many shoppers are unhappy with the in-store experience. Our senior retail reporter, Courtney Reagan, joins us now with more. Cort.

You know, Tyler, as you mentioned, stores are probably going to be pretty crowded this weekend. You're running out of time for online orders. They actually call Saturday Super Saturday, as it turns out, expected to be the second. busiest day actually in-store for in-store shopping because, of course, you're out of time for Christmas. It's always the last Saturday, very busy for retailers, of course, because of the timing of the calendar. And that's going to be the same this year as well, according to Sensormatic. But lately, in-store shopping, it's not always a great experience. Retail store employees are being asked to do more. They're fulfilling online orders, but from store inventory. They're unlocking

cases so shoppers can get to even basic items in some cases. And while some retailers have called out theft as an issue, none of quantified lost sales or traffic from honest but frustrated shoppers as a result of locking up goods. Though social media is full of examples if you take a look. So we asked bizarre voice to conduct a national survey for us at the end of November asking consumers about the in-store experience now compared to pre-COVID. So this exclusive data shows while the majority of customers like the additional security cameras or entrance or exit alert sensors, 42% feel product availability in the store's gotten worse. 41% think the ease of accessing those products are worse since before the pandemic.

72% notice the lack of available associates when they need help. And while there's debate about whether theft is actually worsening in retail, 42% of consumers report having had an experience with customer theft, meaning they saw it happen, I've seen it happen. It's pretty startling, especially when you're with your kids. Were you in the city when this happened? I feel like I'm living in a bubble because I don't experience any of these stores. I was. The one experience I'm thinking of right away, I was in the city and it was fairly brazen.

Donnell had a book bag. He took it off. He looked around briefly and then just put a bunch of stuff in his book bag. I quietly went over and told one of the associates. And she kind of said, thank you, but didn't do anything as I expected. But it felt like my citizen's duty to say something. And he just walked away. You're braver than me. I'm not even sure I want to say anything. Courtney, stay right there. For more, let's talk about the store experience with our next guest, the impact on the consumer this holiday season. Let's bring in Sandra Campos. She's founder of fashion launch pad and a CNBC contributor. So Sandra, I'm with Tyler.

I might have to be hitting the stores in person Saturday for some desperate last minute shopping. And do you think that stores are kind of putting themselves out of business? I mean, this jibes perfectly with Steve Leasman's Consumer Survey last hour that found, you know, it's all about online. It's more and more we're heading that way. More and more we're heading that way. But, you know, loss prevention and customer experience really have gone hand in hand. There's when you talk about what the crappy experience is, there's some retailers like Uniclo, this is actually having a positive self-service experience in 90% of their stores are having self-service

options. I love those checkouts, by the way, the RFID. Can we get those in every grocery store and every place in America? Yeah, and then you have Walmart as an example bringing more staff back to cash registers. So you're seeing a very different type of approach right now, but we definitely have sales teams that are being stressed. And as you said, they have to be more proactive, identifying some of those potential issues and trying to mitigate losses. But you know, you mentioned some of the issues and the theft issues that you've actually seen in person, but some of the external

theft really is about 35 to 45 percent of the shrink. But internal theft actually accounts for 30, 40 percent of it as well. So, you know, products being locked and gated, but we've also come out of a couple of years of some challenging supply chain deliveries. And we've had in the past year a real reduction in terms of what the inventory is in stores right now, because retailers are challenged to be more profitable. So they have to get the right amount of goods in the stores and not have too much. Are we just going to have to get used to the idea over the next generation that merchandise is going to be locked up because of theft? Or is there, is the solution? stricter enforcement of the law within the stores or stores going to have to hire off-duty

police officers to arrest people? What's the solution here? Well, there's definitely, that's a million-dollar question, isn't it? Or the $10 million question. But the reality is that there do have to be changes on both sides. Laws definitely have to be impacting because at this point, if you can walk into a store and be brazen enough to grab an entire rack and walk out the store with it, you have no consequences. You're not worried about it. So that's been a lot of what's been happening. On the other hand, obviously, stores do have less sales staff in the stores. And that's because they're trying to have profitability. They're lowering their operating expenses, which in turn relates to having fewer

staff in the stores. So we have to have a balance. Definitely technology is going to be playing some impact there. There's a company, UBIC, that's actually helping to be able to reinforce and help the salespeople, rather, work with more customers instead of spending more time on the administrative aspects of it. They're also helping them try to mitigate some of those losses by predicting and being able to really be on top of some of that potential theft in stores. But it's challenging. This is not easy. It's not easy for people working in stores. It's not easy for management to try to determine what that solution actually is. Court, I guess, I guess I don't know what to pretend to speak for most people. But I think an awful lot of shoppers who go to stores would say,

well, if somebody take something, they ought to have a consequence. They ought to be arrested. They ought to get a citation for that. They ought to have some consequence. You shouldn't just be able to do that and ruin a business, ruin the experience of honest shoppers because they're afraid to go into a store because of theft bandits, bands of thieves and so forth. I mean, I think that is probably true in a lot of cases. Whenever we talk about this, it does sort of turn into a political chess master.

for lack of a better word, because different municipalities enforce this in different ways. And frankly, the facts do bear out that the higher the felony threshold is often more, you will see more theft in those areas. The criminals understand, as Sandra was saying. The felony threshold is, in other words, it's not a felony if the value of the goods taken is not more than $1,000. Exactly. So they'll walk out with $950, and the next day they'll do it again.

So there is a piece of legislation that has been proposed, but it has not gone through committee that would try to impose a federal standard that aggregates the stolen good value to $5,000 over the course of any 12-month period. And then that could be a felony that a local prosecutor could seek to levy. So a lot of this does unfortunately become very political, and it happens, it has to do with enforcement. But yeah, when you see it, especially when you're with your kids, it's pretty startling. You know, none of us want to have to deal with locked-up cases.

What are the stores say? What are the targets, the Walmarts, the Coles, the Macy's, what do they say about it? What do they want to see done? So almost everyone that we've talked to from the retail side say that they're doing what they can, but they acknowledge that there's only so much they can do and that they believe that they also need help from local law enforcement and beyond. And at the same time, the local law enforcement say the same thing from the retailers. In a lot of cases, retailers will start to give information to law enforcement about criminals that are sort of repeat criminals so that law enforcement can begin to build a case. complicated and they take a really long time. All right, got to leave it there. Courtney Reagan,

Sandra Campos. Thank you very much. We appreciate it. And speaking of retail Target initially blamed theft and violence when it closed nine of its stores earlier this year. But a new CNBC investigation revealed the reasoning ran much, much deeper than that. We will explain when Power Lunch returned. All right, welcome back to Power Launch, everybody. In September, Target announced it would close nine stores. The reason given to prioritize worker and shopper safety. CNBC.com retail reporter Gabrielle Fon Rouge has done a deep dive looking at the stores target closed and the ones it chose to keep open. And Gabby is here on set with us now. What did you find?

Was it true what they say? In other words, they were trying to prioritize worker and shopper safety or was it something else that was behind the closures? Tyler, if Target was trying to prioritize worker and, you know, customer safety, they would have closed the stores that are still open. What my investigation found is that the stores that Target chose to keep open in nearby low. locations actually had way higher crime incidents than the ones that they closed. So what we did is I pulled public records from all the police departments that saw store closures that was going to be in Seattle, Portland, New York City, and San Francisco Bay Area. And so what you'll see is that the stores that were closest to the ones that it closed

had higher crime incidents in all but one case. So we have data on 21 stores. Only one store that closed had higher crime than the one that it kept open nearby. So why were the ones that didn't? didn't have the highest crime, the ones that got closed. So there's a lot of factors that could be at play here. And, you know, what's important to point out... Were they just underperformers?

That's what it looks like. You know, some of these stores were in, had less foot traffic than other ones. Like the San Francisco store is a really great example. The one that they kept open was in the heart of San Francisco's tourist and shopping district right there in Union Square. It's packed. And then the one that they closed was downtown near a highway. Homeless encampments had set up nearby. It had way less foot traffic.

It was just a quieter part of town. And you can see that in different parts. And there was also some cannibalization. But it wasn't that it had higher theft. It didn't have higher theft. It didn't have higher theft. The one in Union Square had higher theft. Exactly.

Higher foot traffic, more people, higher theft, compared with the one in the relative backwater where there was more homelessness where there was less foot traffic. Exactly. And the reason why this is a story, I mean, a retailer can close this. There's a whole lot of business reasons why a retailer may close a store. But when Target made this announcement, first of all, it's not news when a retailer closes nine stores, especially one of Target size. They do this every single year. But they sent out a big press release saying that organized retail crime was threatening the safety of guests and employees. And for that

reason, they couldn't keep the stores open anymore. And if that was really the case, then they would have closed the other stores because those appeared to be a lot more dangerous. I suppose if our them, I could say, well, in some locations, maybe the crime is more of a threat because the locations are inherently more unsafe like you described a little bit more off the beaten path. And the other thing is if they're less profitable stores than the theft, you know, theft per sales per square foot or something might look a little bit different than just overall levels, you know, blanket levels. Yeah, that's absolutely true, Kelly. And also it's important to point out that my data doesn't show the full picture. We know that theft often goes, you know,

crime overall, it often goes undetected and unreported. But without Target's own internal data, which they refuse to share with us, that's the only picture that we have. And it shows a very clear trend. All right. Gabby, thanks. Gabrielle Fon Rouge. Let's get over to Kate Rooney now for a CNBC news update. Kate. Hi there, Kelly. Ukraine's military wants to mobilize up to 500,000 more troops to fight Russia's

invasion. But President Vladimir Zelensky says he's asking military officials to spell out their plans in detail before approving the ask, according to Zelensky. That kind of mobilization would cost about $3.13.4 billion. Russia currently far out numbers. Kiev's forces. The governor of New York signed a bill into law today that forms a commission to study possible reparations to address the state's history of slavery and racism. This marks the second state in the nation to form a task force on the issue after California launched its own

commission this summer the group in New York has been given a year to deliver that report. And Alabama Senator Tommy Tuberville says that he may drop the rest of his holds on military nominations, a move that would end his protest to a Pentagon abortion access policy. He dropped hundreds of holds earlier this month, but kept nearly a dozen on four-star generals in place. Senator Tuberville told Politico he will now let them through. Senate Majority Leader Chuck Schumer says he'll bring the promotions up for a vote this week. Kelly, back over to you. All right, Kate, thank you very much. Ahead on power lunch manipulation situation. The rise of AI leading to concerns over bad actors using it to disrupt financial markets.

But a new proposed bill in the Senate is aiming to prevent that. We'll get the key details when Power Lunch returns. Welcome back to Power Lunch, continued investor optimism. The Fed will pivot and start cutting rates next year. Pushing up the broader indexes today. Both the Dow and NASDAQ 100 hit their record intraday highs. And while our next guest expects the rally in stocks to continue, she cautions that the markets are a little bit too optimistic about when and how

many times the central bank will lower rates over the next year. Joining us for more is Anne Milletti, head of active equity at Allspring Global Investments. Anne, welcome. Nice to have you with us. Thank you for having me. So you say the market is just sort of anticipating a little more than the Fed is likely to give. How much more is it anticipating than you think the Fed is likely to provide? Yeah, it's a million-dollar question. It's hard to say, Tyler, but I think the market is anticipating at least six cuts as we head into 2024. And to me, it's pretty hard to have it both ways. It's pretty hard to have a economy that, you know, looks to be pretty stable and strong and still pricing in six cuts for next year. It feels like if we're going to get six cuts,

the economy has to weaken in a significant way or the job market has to look much more weak than it does. So if the market doesn't get the six cuts that it is pricing in or anticipating, then what is the effect on the market, which as we just pointed out, you're seeing all-time highs on the Dow and close to it on a couple of the other barometers. What is the market reaction likely to be? What does it mean for, for example, the magnificent seven stocks that have led the way this year? That's a great question, Tyler. I mean, I think what makes me a little uncomfortable is the multiple expansion we're getting off the excitement. Now, I understand it.

As soon as Powell came out and kind of confirmed that right cuts are next and kind of became a little bit more dubbish than he was just 12 days prior, it did signal to the market that, you know, the Fed put his back again. And so that is not a surprising reaction. What does make me more uncomfortable

is that multiple expansion that you get immediately, without fundamentals first coming. And so areas like the Meg 7, which did have good earnings in 2023, but also appreciated due to multiple expansion, it's gonna be much more difficult for them in 2024 to continue to grow earnings at the same right they did in 2020. So what we're doing is looking more broadly

across the markets at areas that didn't participate in 2023, those areas have much better risk return in 2024, areas like health care. Well, the only thing, Ann, is that that's kind of the consensus right now. So we go back to a year ago and obviously the consensus was recession. That didn't happen. So at what point if we get into 2024, if the MAG 7 are up 10%, do you change the playbook? Yeah. I mean, Kelly, like, look, I think the playbook and consensus was very different probably two weeks ago than it is today. Everybody is very, very bullish. And, you know, I don't think,

market has turned away from the Meg 7. I think there is still a belief that there's still good earnings growth there. We just really are hesitant to believe that the earnings growth can be as good. And if you look at relative earnings growth, I think health care shows earnings growth of 20% or more, probably the best earnings growth of all the sectors in the S&P and across some other indices as well in 2024. We think if that's achievable,

you're going to get multiple expansion on top of that, leaving much better risk reward in sectors like that where, yes, you've seen some appreciation, but you haven't seen it driven by both earnings and multiple expansion. So, again, we're looking much more actively at areas of the market that just haven't been pushed up all on multiple. Right, absolutely. No, believe me, I get it.

It makes sense. And thanks very much for joining us. Appreciate it today. Thank you. Anne Mulletti, joining us with Allspring. And still to come, AI and the financial markets. A proposed bill is aiming to help avoid manipulation of the financial system by bad actors using AI. We'll speak with the two senators of behind the bipartisan back proposal, two of them.

Power Lunch will be right back. Stay with us. Welcome back to Power Lunch. Senators John Kennedy and Mark Warner are out with new bipartisan legislation today dubbed the Financial Artificial Intelligence Risk Reduction Act. The bill would require the Financial Stability Oversight Council, or FSOC, to lead its member agencies in responding to AI manipulation of financial markets. Let's dive deeper into the legislation now with Senator John Kennedy and Senator Mark Warner. Pleased to have both of you join us. Welcome. Thank you.

Senator Warner, I'll start with you. Why start here in this realm of the financial markets in what is kind of yet to be fully defined as a threat when we know that we've resisted kind of broader moves by the post? and others in this country to come up with comprehensive AI regulation. Why start here? Well, I've been surprised there's not been more tension focused on this. I mean, the two areas where AI right now could have the most dramatic effect is undermining faith in our public elections and faith in our public markets. And John and I worked together on a lot of these topics said, let's not try to boil the ocean. Let's go out with some specific legislation to make sure, without adding a whole lot of new laws that we both enhance the ability for the F-Soc,

which frankly has had a mixed record over the last 10-plus years, but give them the responsibility on a broad look and also put in place some additional penalties if some of these AI tools are used to manipulate the markets. Senator Kennedy, why aren't the existing laws sufficient to go after any sort of bad actors here? And what kind of problems do you envision? Well, the existing laws are not sufficient because AI is relatively new. And I would make three quick points. Number one, this is a personal opinion.

I think artificial intelligence will make our lives better if it doesn't kill us first. Number two, the point of this bill is to try to make our lives better. Point three, I do not believe that Congress is ready to pass a comprehensive. comprehensive artificial intelligence bill. So we ought to break it up into bite-sized pieces and start with financial fraud and the Financial Stability Oversight Council, F-Soc, as we call it, is the best group to advise Congress. And that's what this bill does. It turns F-Soclose and says, come up with recommendations and give them to us and let us respond. And I think it'll work. Why Senator Kennedy and then Senator Warner, if you would, why do you think the FSOC is the right

organization to be at the tip of the spear on this, given Senator Warner what you just said is a somewhat checkered history over the past decade? Senator Kennedy, why don't you take a first whack and then Senator Warner? Well, what I like about FSOC is that all of the mob families are represented. You've got Treasury, you've got Federal Reserve. you've got the SEC, you've got the CFPB, all of the main financial regulators are there. And while we may like some and not like some personally, I think the entity is the right entity to advise us. And let me build on what John said.

You know, as somebody who was very involved in Dodd-Frank and helping create F-Sock, we thought there are certain problems that rise above the individual, you know, cylinder approach. AI, with all its potential for good and bad, clearly meets that criteria. Again, I think the FSOC's record has been a little bit checkered. So we are saying, all right, this is a new problem. Go after it. And I'd also just point out, it's not like we're talking about a new law. Market manipulation is already illegal.

What we're saying, though, AI tools can have that market manipulation with such speed and scale, we've got to step back and say, this could really undermine confidence. So give FSOC the ability put in place. you know, within existing rules, the ability to have higher level of damages if you create, and put some level of responsibility for those who create these AI models, that if their tools are misused, they would bear some responsibility as well. You know, I want to switch topics just briefly when we come back to AI in a moment, but I will point out one of the things that frightens me is the idea that a deep fake could get

perpetrated in the financial markets. You could have someone pose as Elon Musk and tank, Tesla stock, a short seller could do that. It would be a very easy thing to do. And it's sort of the same thing that we fear in the political market. But let me turn, if I might, to the question of additional military aid to Ukraine and to Israel. And what it will it take to achieve progress or a breakthrough in that area? It seems as though progress on border security is the linchpin here.

Let me ask each of you that question, what will it take? Do you believe that both Ukraine and Israel need and deserve more U.S. military aid, money that actually gets spent in the United States on American weapons for the most part? Do you agree that that's needed and what will it take to get that? Senator Kennedy, why don't you go first? Well, seven weeks ago when the president sent us the bill, my answer would have been different. But here's my answer today. It's up to President Biden. It's clearly up to him.

This bill's not going to pass the Senate unless there's a meaningful change to border security. And that's not going to happen. I don't think my Democratic friends will vote for it unless President Biden says to vote for it. And I have no idea what he's going to do. It comes down to this, Tyler, is border security or lack thereof. more important to him than Ukraine, Israel, and Taiwan. That's what it balls down to. But the longer we wait, the harder it's going to get.

Senator, it's not, Senator Warner, it's nice to see a Republican and Democrat together here on screen. Why don't you speak back to Senator Kennedy there? No, let me just tell me. Go ahead. I actually think, well, first of all, we've got to remember. When we don't do Ukraine, the one-world figure that gains the most out of that is Vladimir Putin. And Vladimir Putin has said for ages, I'm chairman of the Intelligence Committee, we can just outweighed America, outweight the West. I hope and pray that doesn't prove to be the case.

But I also, we are where we are. And I would agree with John, we've got to do border security as well. Personally, as somebody who's been not in the room, I wish I'd been in the room, but have been trying to nudge people along. It took too long for both the president and his team to get in the room, and it took too long for minority leader McConnell to get in the room as well. everybody's in the room at this moment. I think meaningful progress has been made. I wish it had been done this week. Chances are it's going to get into the new year before it's done.

But I'm frankly more optimistic today than I was a week ago. And the good news is we've got one final tranche of Ukraine military aid that will still come before the end of the year. So Senator Kennedy, what would meaningful progress on border security look like, I guess is my question. What would the constituents of that of a package that attempted to do that be? Every senator has got to decide that for himself or herself. I deal with the reality. Reality is that the border is an open, bleeding wound. Since President Biden has been present, we've had 8.4 million people come in.

Most of them, we don't have the slightest idea who they are. That's four Nebraska's. The president sent us a bill. It included border security. So I don't think he should be surprised that we want to talk about border security. But he is going to have to, the posture of the negotiations are such that nobody's going to move until President Biden says, this is what, if anything, I am willing to do on the border. And I don't care what anybody else tells you.

That's what this hinges. on. And President Biden has not told us yet. Senator Warner, I'll give you a quick final word. Well, my quick final word is, I got an independent vote. I'm going to vote my conscience on this. I think the president put forward weeks

ago, $14 billion on the border. There have been previous approaches on money. Sometimes Republican colleagues didn't vote for that. But I think we need to do more. I think what you will see, if there's an agreement made, it's going to make folks on both ends of the political agenda mad, but

There will be not only money, but meaningful reforms to staunch the flow of people coming across the border. Into the day, and James Langford, who's been the lead Republican legislator, has said this for a long time. This compromise that will also include Ukraine, Israel, humanitarian aid, and Taiwan, we're probably going to lose a number of Democrats and a number of Republicans. But if we don't do that, I think we shirk our responsibility on the world stage. Senators Kennedy and Warner, thank you very much for your time today. We wish you the best for the holidays in the new year. Thanks for joining us.

Thank you. We appreciate it. All right, speaking of AI, which we were speaking about there at the beginning of that conversation. Coming up, we'll reveal the results of our latest CNBC SurveyMonkey Workforce Poll Power Lunch is back in two. All right, welcome back to Power Lunch, everybody. Let's focus now on AI's impact on the way we work. One of the biggest worries people have about AI is take our jobs. Sharon Epperson joins us now with the results of a news.

CNBC Survey Monkey Workforce Survey. Hi, Sharon. Hi, Tyler. You know, artificial intelligence tools are becoming more common in the workplace as employers aim to increase productivity. But a new survey conducted earlier this month of nearly 8,000 workers' fines. About a third of workers say they've used AI tools at work. 72% of them have used AI and say that it's made them more productive, while 28% who've used AI tools say it's made them less productive. Younger workers have more experience. Gen Z is most likely to have used artificial intelligence tools with 37% saying they use them at work, followed by 35% of millennials, a quarter of Gen X, and just 17% of baby boomers. Some workers are worried about job security, though. Four out of 10 surveyed are concerned about AI's impact on their jobs with workers of color, individual contributors, and lower-saried employees most concerned. And people who already use AI at work are nearly twice.

is likely to be concerned about its impact on the job than those who don't. But even as the use of AI tools in the workplace is increasing, employees are looking for human input on a range of issues as well. More than half of respondents say it's important for their employer to take a stance on social and political issues. Women and younger workers are more likely to have this view than men and older workers. It's interesting to me that the people who've worked with AI seem more concerned about its risks than those who haven't.

I guess it's, I've seen what it can do and I'm worried about it. Exactly. They've seen what it can do and they're worried about it. They're also, you know, not just concerned about AI taking their job. They're also focused on what is the company doing for me now? What benefits are, am I getting that I most need? And what's surprising is those companies, and many of them do this, offering a 401K matching contribution, that's not the drawing card anymore.

What employees are saying that they want in terms of financial benefits is number of number one pay the full freight for health insurance premiums, then the 401k match, and that's equal to paying for a health or gym membership. So that's what people are looking for right now. Got to leave it there. Sharon, thanks very much. And thank you for watching Power Lunch. Closing bell starts right now.