yield. >> weiss >> unitedhealthcare. 700 years of beating top line and bottom line. concerns after they beat and raised last quarter and i don't buy those concerns >> joey t. >> very happy i bought j.p. morgan on march 21st and also have a wrinkle in your pocket. >> yes i'll see you on "the closing bell." "the exchange" is now thank you very much, scott welcome to "the exchange." i'm kelly evans. it is off to a strong start, too strong says one of our guests. he'll tell us why he's so concerned and the one sector he's bullish on right now. plus the lack of listings are helping homebuilders to a near-record share of the housing market so if they have the edge, can you own them for the long run? we'll debate that and google's ceo says brace for impact.

a.i. will soon affect knowledge workers like writers, accountants and software engineers. we'll speak to two ceos who have a front-row seat to those changes, but first let's get to today's market, and a lot of red today and not for the russells. >> it's not dramatically red and call it stable to kelly's point, it is a sea of red, but it is not a massive sea of red and the dow industrials are down 0.1% and the s&p is 41.29, still 4100 and down 0.2%. it's been an up and down day and down about 13 at the low so if you have it tilting toward the low and dramatically not so in terms of the overall percentage moves and the nasdaq is the real laggard down 0.25% and 12,089 the last trade day. one place that is seeing some real green today is the continuing near-term uptrend for many of the solar stocks out there. today's is driven by enphase

energy a huge gainer in the s&p 500 after analysts at piper sandler upgraded that stock to an overweight, and saying at least the dynamic in the u.s. residential market, and they come out better than they had thought in the previous and in the past and that's how they carry the rest of the industry up and first solar up 5% and sunpower and ten and it's been a officer year and the last couple of months have been decent for those. the stocks of the day right now. the worst-performing stock of the entire s&p 500 is state street that custody bank is now down about 11% in trading right now that's a huge move lower for a bank of its size after it came out with profits and revenues that both missed analyst estimates driven in part by lower asset values and remember the asset managers used companies to charge a fee on those. those fees are down, some customer outflow, as well.

other custody banks are taking it on the chin, in sympathy, kelly. all off of state street results and northern trust doesn't report until next week and ewe'l see if they have custody results. >> dom, thank you. >> believe it or not, we've come through the earnings season in better shape than usual and by 9% an aggregate. the firm noting that large beat is unusual when the ism manufacturing index is in control below 50 as it is now and to be sure, earnings are expected to drop more than 5% for the second straight quarterly decline. so are investors too pessimistic or not pessimistic enough? this could be the beginning of the pain to come because the recession earnings typically drop by 30%. joining me now is chairman trendor and david bonsen from the bonsen group

jason, i don't mean to make you sound like such a grinch, and it's an odd season, and better than expected and it could get worse from here. what jumps out so far? >> listen, kelly, as damon runyan said the race doesn't always go to the swift or the battle to the strong, but that's the way to bet and from our perspective, you have to play the odds and the odds i would argue favor a recession later this year, and that's because the fed's tightened as aggressively as they have and also now with the banking crisis that we have or the banking problems, if you will, whatever your odds of recession were a month ago, one would have to think they were higher now but as you pointed out, back to the 1930s, earnings fall about 30% on average during a recession. the median that is about 20%, we have them down 10% for this year, and i do think i want to

see particularly some of the consumer companies and i would say some of the mid-tier banks and i want to see them report to have a better idea and the earnings are one thing, and i think the guidance is quite another especially since some of these issues really came in the tail end of the first quarter. so i don't want to laugh it away and the market's up and our view is a little bit on the defensive, but i still think if i'm playing the odds i want to be cautious here >> david, i mean -- i don't know if you have the same view or similar view, but i was struck that you said hooklook, the fed should pause and the more cuts it could be at the end of the year, right? >> i'm one that thinks the fed has had a boom/bust cycle for my entire adult life and that's exactly what will happen here. if they overtighten it simply means that they are over easy later and i'm really tired of

that cycle i think it's very unhelpful and it mostly makes people more asset rich and it's very bad for our society at large, but that is what i think they'll do and i think they'll end up overtightening and they won't be satisfied until they break something. there's no possible way they can actually believe that people losing jobs is a good thing and a necessary thing to deal with inflationary problems and at this point they're clearly, rapidly disinflating and so for them to overtighten i think it means they'll end up cutting rates and eventually we'll be heading back towards zero bound if it were to get bad enough that entire cycle of non-moderate monetary policy is completely unhealthy >> i think that's well said, jason. they don't rely enough on leading indicators and on forward-looking data points and it's all kind of rear-view mirror >> jason, one of the things i hear so much of lately is people that are dismissive of the

recession talk because this is the most telegraphed recession we've ever had so we should do something about it and that just means we've had months and months and quarters and quarters saying the fed will keep hiking. i wish that they would be more proactive in saying yeah, we're scared when we look at the yield curve, too, and yeah, we see the ism and the leading indicators and not just going, well, unemployment and inflation and we'll just be where we are >> yeah, no. it's a great point the fed is very model driven i believe it was about 25,000 employees and a thousand phds. so nothing good happens when you've got a thousand phds around looking at these things and they're from my understanding, their main focus is the philips curve which is just a fancy way of saying they look a lot at the labor markets and for them that is the leading cause of inflation and so

without any sort of meaningful weakness in the labor markets it's hard to expect them to ease very much or at least slow down. in our shop, our chief economist is that the fed should pause and because especially given that some of the developments of the banking system and just give it some time to see because of the lags in monetary approximately see are so long and they're so variable, we really don't know what the impact of the fed tightening that started a year ago is yet. >> right >> so we have a long way to go to figure out what's been done already and it wouldn't be the worst thing. there are other issues that are coming into play and we're going into an election year next year and the fed's credibility as david highlighted i think is very much in question, and so there are other concerns here, but i don't know if it would hurt anyone if they paused and waited to see a little bit

longer what the impact of their policies have been thus far. >> i don't know if you caught what janet yellen said over the weekend and it was interesting because she said all of the bank problems amounted to the kind of tightening the fed is trying to accomplish anyway. it's not the kind of language we're really hearing from powell, at least that explicitly she of all people will be very careful in making comments like that and i wonder if it was meant to be a hint and like, maybe it's okay to take a pause here >> i certainly took it that way, and i've seen other comments from guys like larry summers that i think are influential in that orbit of ph.d holding conversations and yet at the end of the day i question whether or not there is ideologically philips curve oriented as jason and i suspect there are or if it's cover for the fact that at the end of the day they go until they break something and that when -- in 2018, going into '19

when powell capitulated, was there no change in labor markets. it was purely a matter that credit markets revolted and credit markets have not revolted this time and it's one of the reasons recession calls right now are not as easy as we want to make them out to be i respect the way jason worded it and he thinks the odds are in favor of it and that could be 51% for all we know. >> why do you think we'll be cutting, david just because you think inflation will recede quickly? >> i think because it has receded quickly and if they're looking at an annualized inflation rate over the last six months instead of looking at the base effect from a year earlier and still looking at this obviously antiquated shelter number within cpi, i think they have a two-handle on headline inflation now and where there is lumpiness as food and energy go up and down that nobody in their right mind thinks that's a monetary inflation

and so the fed already doesn't have an inflationary reason to do so and the tightening >> i don't say this very often this is where secretary yellen and i agree. the banking system did a lot of the tightening for them. you've had hundreds of billions of dollars leave the deposit base to go chase yield and money market and that extracts from the lending base of the banking system and that is disinflationary and it is stagnatory and that's what the fed is supposed to be keeping their eye on and not the unemployment number. >> the added wrinkle is if jason's right and many others who are bearish and what that would do to the inflation picture. we won't get into that here. we'll leave it and we'll welcome you back we appreciate your thoughts on the market sd j.p. morgan, wells fargo had the solid earnings and revenue on friday and this morning we heard from charles schwab which is

still up on better than expected earnings despite the fall and state street is down after it missed estimates and it's down 11% and m & t bank is up 6% and that's where we begin with the rally at m & t after double-digit earnings and revenue beat and dom chu and we'll get to get trades on this banks and some previews. dom, what jumps out at you about m & t. >> in the same way we look at pnc and not similar banks, but similar in terms of the regional presence that they have. so with pnc, we wanted to see about deposits and what m & t and what they basically showed us is there hasn't been a massive deposit flight like we've seen in other west coast-based banks. m & t, that deposit number shrank 3% and there were seasonal factors and customers

and business or otherwise take the money out for the holidays and they do some more movement on that for the first quarter and that's the 3% drop the earnings beat and the revenue beat with an environment that doesn't show they're in the same deposit flight battling mode is reassuring to some investors and by the way, the reason m & t is up is because there are the regional banks that have been beaten up so much >> they were also eager to point out that they were not like silicon valley bank and the trading problems that they ran into all right, jeff, i'll turn to you and they can extend them to the regionals more broadly >> you know i have nothing but love for my guy domino, but i don't have love for m & t. this bank is 1/20 the size of bank of america and you see it down 6% and the income doubled and that was impressive to see and it's still down 36% in the last six months pip

i think you have to understand high risk, high reward it looks like there's a ton support in the 90s and i know that's $25 lower, but m & t, if you want to get into a name like this it's oversold and you will see more and more folks move their money away from a regional bank and prefer a wire house when there's more perceived safety >> all right that brings us to bank of america which reports in the morning. they're largely expecting to be a big beneficiary to a lesser extent and only down 1% so far, dom. what are the keys here >> it is very much about beyond the headline numbers, right? we'll watch for the revenues and we'll watch for the earnings per share and for bank of america it's considered the money center or so to speak wire house banks that jeff alluded to it has a banking relationship with half of america with regard to either mortgages, homes, credit cards and outright retail banking services so it touches a lot of people and it's the reason why it's

cena the bellwether. what you will watch for b of a is something that we haven't talked about as much because we're focused on deposits and it has a decent amount in terms of those and so that sales and trade will be big and it is also about whether or not consumers are shifting some of that behavior are they using different products and what about b of a's credit loss provicks and it's an indicator because they have so many banking relationships are they going to up it? by how much and will it be for the future of the economy? >> compared to j.p. morgan, j.p. is seen more focused on business, perhaps more exposure while bank of america may be arguably more consumer facing. do you like the stock here >> i do like the stock here, and i have an emotional attachment to the stock it's hard to believe, kelly, but just last february in 2022 this stock kissed $50 and here we are at $30 i think you have the ability to

be a buyer here and talk about a dividend growth and it's a 3% dividend and it's been five quarters and it continues to grow dividend by 15% and that's nine consecutive years you've seen dividend growth this is the second largest bank. i feel comfort buying it here. $33 looks like a short-term target and they'll knock the ball out of earnings just like j.p. morgan. >> come on, 30 to 33. >> 10%, kelly. >> are we sneezing at 10% now? >> no, we're not >> let's turn to goldman sachs and dig into capital markets, dom. they're only down 1% it this year with today's gain and i remember last quarters when was goldman reported the decade with the revenue drop how are they going to manage now? >> it's such a weird, bizarro-type world b of a and i'm not focused on deposits and retail banking and i'm focused more on capital markets and for goldman sachs i'm not focused on capital markets because the fixed income currency commodities are always

strong there there are trading and volatility issues that will help drive trading and sales revenues there, and i'm focused on the consumer banking, and the market's division and the ones formally known as, maybe they're not using as much anymore and it's the mea culpa from the other folks at goldman sachs what do they do with it and this is all coming out on the same day that apple just announced it's got this new savings accounts feature tied to the apple card which is all tied to guess who? goldman sachs. >> it's offering 5% and the whole model is ironic they ran into the problems just before people started searching out the highest earning places for their cash. >> so if you want to look at it from that front for b of a and goldman both and these are mega banks and for the consumer bankin banking franchisees will be something to watch for goldman, i

ironically enough. >> what would you do with goldman here >> i want to be a buyer, but i want to be a buyer in a nuanced way, and i want to be a buyer here on a stock and what does that mean, kelly >> and we look at the 50-day moving average and we're trading at $329 and it is just at $3.42 because the momentum will move the stock higher and to dom's point they're right when they retire the platform so they'll refocus and talk about the asset and wealth management piece and we don't talk enough about that. that's 30% of goldman sachs' total revenue, and i think the stock moves higher and i don't want to be a buyer here and i want to be a buyer at $3.42. >> can the whole markets and the financials move past more regional bank weakness if that is what you foresee? >> i think they can, and it will be a sentiment shift with how we

work with regional banks and you look at xlf and that is down 5% and certainly being a laggard and when you talk about the constituents you have to understand those bigger banks will prevail it may not be reality, kelly, but it will be perception that you can have safety and add a j.p. morgan and bank of america and some of those under $50 billion in market cap it will give people jitters and rightly so >> financial spdr only down 3% thank you both coming up, is home builder sentiment set to break out of the slump and is it priced interest the builder stocks? we'll ask about the builder stock up about 11% su su sundar patchai and alphabet shares are up 3.5% shares and here's a look back at the broad markets and the russell and the

big caps are the only bit of the screen and the stocks are down fractionally like dom said the ten-year almost cracking 360. we're back after this. ♪ ♪ this is "the exchange" on cnbc

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closer to positive territory diana olick with the numbers diana? >> kelly, not quite there yet thanks to headwinds still hitting the builders and building sentiment in april did rise one point on the nahp index. this is the highest since last september and the index stood at 77 last april which was of course before mortgage rates took off builders were still concerned about higher costs for materials and they did know that the recent turmoil in regional banks have not curtailed construction loans as much as they have feared of the index's three components, current sales rose two points to 51 and they increased three points to 50 this is the first time both of these are in positive territory since last june which is again when rates took off. buyer traffic, however, was unchanged at 31. the first time it has not improved this year one interesting note, the builder said one-third of housing inventory is now new construction compared to historical norms of around 10%

this is close to a record and it points more at the real shortage of existing homes for sale and not so much for construction because housing start haven't risen so much and reducing home prices continues to drop 30% reporting drop in april down from 35% at the end of last year >> thank you, diana. my next guest has a buy rating on every home builder he covers and the recent bank turmoil would be a benefit to the bigger names and let's bring in stephen kim home builder at isi. what do you mean by benefit, by the way? >> market share. diana talked about that, and we certainly see that and it's the story this year of market share gain consumers want to buy homes that they can move quickly. you can't build into the home quickly unless the builder started building it a few months ago and that's called spec building and regional banks who

are really the primary lender to private builders, they severely restrict that. they want the builder pre-sell the home before they start building and put the bank's capital at risk. the builder cannot ramp up the spec building and they can't get the homes to market that have already previously started the public builders, no problem. they have strong balance sheets and that's what they're doing, they're increasing their spec building and they will gain market share >> i guess it's two cheers, stephen. i feel bad for the small players affected like that what's the overall breakdown of the market versus the big mom and pop players? is it 50/50 or more lopsided than that? >> no, it's more lopsided. >> they have 30% market share so private builders comprise 70% of the market >> say that one more time. who is the 30 and who is the 70?

>> the builders are 30 and the 70 are private >> they're affected by the inability to build on spec that's a big blow for inventory. so if people are listening are trying to buy a house, be warned, it is about to be getting harder >> i think the stocks haven't priced in yet. i think investors are still trying to get their heads around in inflation, interest rates and then a recession looming on the other hand and what they're forgetting here is that the housing market can sort of just stay kind of where it is in this sort of tepid area and if the builders are gaining share you're going to get growth and the stock should reflect that over the course of the year. >> arguably, have the stocks already reflected that and i was looking at the chart up 11% and we look like we're above where we were moving sideways and what's that about? and what would it take for us to break out beyond that, do you think? >> kelly, i think we have to put

where they started this year into proper perspective, because as you know, mortgage rates having doubled last year the street saw this freight train coming and they got out of the way and so these stocks are trading at incredibly low valuations and in fact today even with this move that you described, the small-cap homebuilders are trading at more than a 10% discount to their current book values which is an astoundingly low valuation and those book values are about to be raised because they'll all be reporting earnings here in the next two weeks so these are valuations that started the year incredibly low and they are still incredibly low and this is the opportunity that we think investors have to get in ahead of this market share story that we see developing this year >> who are the builders best positioned on the quick move-in home, and who are the ones that can benefit the most and are those are names that you're most bullish on >> you know, if you had asked me

that question six months ago or a year ago i would have given you a list of a handful of builders and the rest of the guys sort of insist on building to order that's changed almost all of the public builders at this point have made the adjustment and they see what customers want and they are prepared to give it to them and so they all basically switched to becoming more spec building than they used to be so honestly at this point, that's one of the reasons why we don't really think that picking and choosing among the builders is nearly as important as making sure that you own some >> all right, stephen, always making the case. good to see you and thanks for your time today. >> coming up can samsung ditch google as the default search engine for bing? what it would mean for everyone's bottom line and here's a look at the dow heat map with a pretty much even split and why the dow is down 26 points today visa and unh are the worst performers while walgreen's and

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welcome back to "the exchange," everybody a lot more focus on health care and biotech especially after the deal making we've seen lately. here's the call in that vain wells fargo initiating coverage with an overweight and a $46 price target and that's an 80% upside and that price target doesn't even make them on the street they're up about 40% over the past year and clinical trial results from the thyroid eye disease treatment are expected in the second half of this year and bied way, the analysts who cover the stock, every single

one of them has a buy rating if for more you can head over to cnbc.com/pro for the story let's welcome back courtney reagan >> a minnesota court of appeals upheld derek chauvin, his attorney said legal and procedural errors deprived chauvin of a fair trial and he is serving a 22 1/2 year sentence for the murder of george floyd. lynn tracy visited wall street journal reporter after he was detained for espionage gershkovich is in good health and remains strong and calls for his immediate release. the philadelphia eagles and jalen hurts came, with a $255 million price tag which would make hurts the highest paid player in nfl history. he is not hurting with that one. kelly, back over to you.

>> court, thank you very much. courtney reagan. >> is corporate america ready for the a.i. revolution and sundar pichai says no. which white-collar jobs are most at risk? we'll find out next.

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welcome back to "the exchange." a.i. back in the spotlight after a warning from sundar pichai on "60 minutes" last night. he said society should brace for impact and he specifically spoke about corporate america and white collar jobs. >> this is going to impact every product across every company and so that's why i think it's a very, very profound technology, and so we are just in the early days. >> every product in every company? >> that's right. >> ai will impact everything >> i am joined now by two ceos with a front-row seat to those changes. companies and their workforces can be facing let's bring in steve adman and are you having conversations with companies about how to deploy or use or worry about ai >> oh, yeah. the conference board members are

all over this, and everybody is dabbling in it, but you know, this concept of ai is a really huge spectrum. you've got everything from quantum computing with advanced autonomous thinking to essentially what is evolved and so artificial intelligence is a tough term most of our members are dealing with it in terms of an evolved search engine either through chatgps or bing, but that still has a whole lot of issues with it and everything from security to privacy to ip issues to how people are using this. it's great for a rough draft if you're putting something together it's great for, you know, behind the scenes, but it still takes a lot of care taking from human beings in order to make this applicable and something that you put right in front of your customers. >> jack, the analogy often made is microsoft excel was invented

in the 1980s, i think it was people warned that swaths of book keepers and it was a profession for females and they'll all be put out of work and they'll never find something to do and of course, excel just unlocked tons and tons of new jobs and industries and different ways of working and those of us and others who are more bullish on it, say you can't, quote, unquote stop it would say let's remember, we can't really foresee how this could help us create all types of new work. >> yeah. it's a super interesting question, and on some level what this will come down to is do you believe what ai will fundamentally do is allow us to do the same things we currently do, but to replace the jobs that exist today to do it or do you think that ai is going to bring sort of super human productivity to the people doing jobs rather than reducing or e lum liminatid

we'll do things that weren't possible it's an open question and it's sort of field by field sort of like what steve was alluding to. we don't know exactly what will happen in terms of the way the technology itself was going to develop, but as an optimist about technology and its impact on humanity i tend to believe that in more cases than not what will end up happening is that people will have incredibly increased ability to produce things and we will do humans do things that weren't previously possible and it could be an incredibly spectacular moment for us >> anything that you would add, and often periods of recession are times when corporations do want to make big productivity enhancements and maybe they're more open to, we'll invest in a new piece of technology because we have to figure out how to get through this macro event or is it way too early stages? >> it's early stages and it's an interesting moment in time because we simultaneously are coming off the heels of several quarters of challenging macro

times and people worried about sort of ongoing recession mixed with this incredibly new technology that is coming into the future and we're in this crux moment in time with both of those going on and it's hard to say at the moment. >> is everyone just quitting their job, steve is the ceo saying, forget it i don't want to deal with it i'm just joking, but the numbers, i think the last time we saw a spike was right before the pandemic hit >> jack's right on this. this is going to automate the ordinary stuff which allows human beings to take a step up and do stuff that's more extraordinary which means innovation and it means productivity and the last time we saw this kind of evolution was through the introduction was through the basics and personal computing and we saw a 1 hun-basis point impact through gdp with productivity gains and that's what we're looking at as the possibility with ai. as it relates to ceos, i think

we're at a period in time in february when we had the highest ceo turnover in years, and you look at the stats and it's basically people who have been in hospitals, and tech and financials and areas of stress, first of all, with the pandemic and with the banking so forth what is interesting to look at is that the tenure is even longer than normal so you're seeing nine to ten years versus six to seven which means these ceos have been held in place longer. >> steve, do you think some stayed on to guide their companies? did the pandemic actually stop the leadership turnover? >> i think that's just it, kelly, i think they've been through multiple crises and the boards and ceos said we have to maintain our leadership in place and we have to get through this and now there's a pause. there's a bit of a gap in the action and people are taking the opportunity to move to the next generation which is great because you're seeing a higher proportion of women and internal

candidates finally get their chance, so i think it's very positive, but i think it has been because people have been hanging on trying to get through these crises. >> quick word, jack? >> i think that's right and a lot of what we're feeling with ceos is it's just an unbelievably different environment than we were working in 20 or 24 months ago and tons of reasons whether because the field is playing out and what the company needs from them and there has been so much change that we're seeing a lot of that pent-up stability that existed during the pandemic is sort of unlocking now and we're see ing that throughout and we're seeing it locally >> suddenly there's turnover steve and jack, thank you both for your time today. appreciate it. good to see you guys both. coming up, from the threat of losing search engine market share to the regulatory in

europe and shares are off their lows and we'll talk about it don't miss cnbc's newest show "last call" with brian sullivan. catch it wknhteeigs at 7:00 p.m. eastern here on cnbc we're back after this.

welcome back, everybody. shares of alphabet sinking today. they were down nearly 4% earlier on a report that samsung has considered replacing google as the search engine on its devices. billions of dollars are at stake and that's the subject of today's tech check with our own deirdre bosa good to see you, deirdre is this being considered is it considered what do we know? >> it was considered and samsung didn't go ahead with it, and even the idea that they could consider such a thought, kicking google out for a bing and that was enough to create panic inside of google because google has spent billions and billions over the years and spends it

each year to have this insurmountable moat,this moat that gives them 90% of the search market. they pay samsung, they pay apple for that privilege to be the default search engine. so we get back to this narrative, google versus microsoft, chatgpt versus baird and could microsoft be disrupting one of the best business models the world has ever seen and that's why alphabet stock was down more than 4%. >> is it here in the u.s. or in europe where regulators are looking at the search business and that's why this timing is so ironic maybe it's because of the regulatory probe, but if the parties are all -- and apple, of course, and safari is the primary one. so whether or not they entered into these contracts because they were mutually beneficial in the past, maybe now there is a somewhat viable, and the irony, and we know that the bing data that they haven't been gaining

share. people would try it out and then they go back to google and -- i don't know maybe why the shares is are up off the lows. >> and earlier this morning we were saying let's go back to the beginning of the year when this narrative emerged that microsoft could de-throne google eventually or hurt that business model. that has aren't played out and we're still in very early stages and they're both up 19% and net-net, that has aren't changed the story much and there was a note from morgan stanley saying chatgpt and bard will be good for business, and because google search has been such this fantastic business and so lucrative the margins are incredible and the idea that it may behindered somewhat or encroached about by a employ coe cocompetitor like microsoft ai has captured the imagination more so than a google that has spent years on this and call themselves an ai company first

again t has to do with the rollout and the potential going forward. investors are looking at this and referring to the new york times article and they're panicked on something google has been working on and what does it mean if the future and how will it play out in the future years? >> do you think it was entirely self-serving to give "60 minutes" this interview and warn about the dangers of society when it's in their own self-interest for the other competitors to slow down ai. or to put it differently, every time we see an open letter from people worried about it, is it just sour grapes because they're not the ones out in front with this technology? >> many would argue that the fears and the caution is well placed it is very real. this is moving so, so quickly we don't yet know the ramifications and we know what happened when we moved quickly, it takes so long for regulation to catch up with all of these unintended consequences so yeah, it is in sundar pichai's interest to give an

interview saying that we have to be cautious and precautionary, and that is very real and that's something that microsoft has struck to its advantage or disadvantage, satya nadella said he wants to make google dance. he is maybe more brash, but he would argue that the opportunity is so great that you don't want to slow down on that either. th are taking that opportunity and all the good things that generative a.i. is going to provide to society it's this push and pull. google is being genuine when they say there's responsibility and cautionary issues to look at here that is the narrative they are giving out here and whether or not it's working for them, when we look at the stock price, they've been neck and neck over the longer run. >> i thought sam had interesting proposals today. we have him tomorrow and we'll talk about it. re-set or restart on a.i people opt in for their data thank you very much. we appreciate it deirdre bosa with "techcheck." investors continue to yank money out of muni bonds but my next

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welcome back to "the exchange. muni funds have seen eight straight weeks of withdraws but my next guest says there are opportunities and she has two sectors she's watching closely joining me jennifer johnson, franklin templeton director of muni bond research welcome. >> thanks for having me. >> why is everyone fleeing out of muni bonds? what gives >> that's a great question obviously, with the way the market is performing we've outperformed treasuries and so we're kind of wondering why everybody is sitting on the sideline not trying to get in. >> are they yield hungry is it concerns about the quality of the munis concerns about rates moving higher or just think, why be involved in munis when i can get 4% on apple's product or whatever >> yeah. i think there's actually a lot of things factoring into it. part of it being some concerns around the banking crisis and what impact that could have, as well as the fact that, you know,

rates have been rising and inflation has been up and a target of what the fed is trying to do, so all those factors i think are keeping people on the sidelines. it's going to be an interesting week this week, in fact. we have a very large supply hitting the muni market this week, about 12.5 billion, the biggest week of the year, so we'll see how that all gets digested. >> where would you say are -- we kind of mentioned a couple places you would tell people to look what are those sfplaces >> a couple sectors we're. one of the things we say when you have a strong research staff like we do, we enjoy digging in deep into these credits and really trying to understand the nuance between them. as we come off of covid, which was really an outstanding period of time from a fundamental perspective, credits across the muni spectrum are doing better than prepandemic, federal covid aid is a large reason why that is the case. it helped cities and states and

counties and transit all different types of issuers get through the pandemic, regardless of, you know, ridership trends or whatever, and allowed them to avoid default and really focus on trying to get essential workers where they wanted to go. that aid is starting to -- about to ween themselves off of that and the two sectors we're watching closely are nonprofit health care and transportation i'll take nonprofit health care first. obviously, this was, you know, a central and extremely important sector as we went through covid, and that is, you know, nothing to, you know, be upset about, but the pressures from inflation and the strong labor market make it very difficult to get enough workers to work and so hospitals have to go to agency or traveling nurses as many people may know them as, and that's expensive. it's been eating into margins.

we continue to watch that sector and see how ther fre a regional perspective so they can ween themselves off the - >> i can't imagine people are saying let me load up on new york city subway debt or whoever the provide is is that true across the board? >> it's not true across the board. we're seeing a lot of regional differences and in terms of ridership, ridership for mass transit has not come back and that's pretty much across the board, but we're seeing it exacerbated in certain communi communities that have seen adjustments returning to office versus work from home. we hear about commercial real estate trying to get riders has been a challenge and now that covid aid is starting to expire, it's up to these transit agencies to figure out how they're going to balance their budget, whether service cuts. >> great point. >> attacks revenue or more state and local aid. >> speaker mccarthy saying he

wants to see people return unspent covid aid. now i understand why muni investors are nervous. there's more going on than nonprofit hospitals and transit. appreciate the granularity thanks for your time today thank you for having me. >> jennifer johnson joining us from franklin templeton. that does it for "the exchange." on "power lunch," netflix bombing the second date with the live event what would happen if they tried to stream live sports. he's in with ty. we'll see you after this quick break. i struggled with cpap every night. but now that i got the inspire implant

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