>> weiss, are you awake? you're up. >> lidos. you haven't put me to sleep yet, mel. it will get through and it's timing anyway. >> jason? >> crowdstrike, cybersecurity continues to grow. >> joe? >> thank you for being here. the industrial name paccar. >> that does it for us. "the exchange" starts right now. thanks, melissa. welcome to "the exchange." i'm jon fortt in for kelly, vans. he is betting on what he calls the underrated methodology instead. he'll be here to tell us what it is and the names to buy using it. plus, shares of alphabet higher on the report that apple is looking to license gemini ai and is that smart positioning? we will have the latest and homebuilder sentiment just turned positive for the first time since last summer.

we'll talk to one player in residential any commercial res and ask if he's feeling the same sense of optimism, but we begin with today's market and dom chu with those numbers. >> it's a bounceback from the down day that we saw on friday to kind of close out the week and we are green across the board for the major indices. the dow industrials is up 128 points and one-third of 1% and it's the underperformer for the value blue chip index and 28,243 and up 38 points and three quartes of 1% gain and to put that in context at the highs of the session we were down 58 points up 37 at the lows. so again, a very positive session, but tilting toward the lower end of the trading range so far today and the nasdaq composite currently at 16,113. that's up about 140 points or maybe just about three-quarters of 1% upside there. again, greenin technology is leading the way. jon mentioned some of that apple and alphabet dynamic because of

the bloomberg report because of a possible licensing or partnership deal and alphabet is one of the top-performing stocks and apple meanwhile, up 1.5% as well. nvidia, very much in the news and part are the mag 7 trade part of the big ai developer and the computer chip conference in silicon valley and it's down .75% and tesla getting some love from analysts again and because of a price target or rather model y price hike over at tesla so those cars are going up and helping meta platforms naming the poptop pick with miz. >> it's super micro and deckers. both of these stocks are spending day one as members of the s&p 500. they both run up a lot going into this, but now super micro giving up 10% and a bit of the sell the news type and just about flat on the session and keep an eye those two stocks, jon. i'll send it back over to you.

>> all right. two very different stocks and something in common today, dom, thank you. our next guest says the market is pricing in unrealistic earnings growth and it should stop chasing the ground and he's looking at dividend aristocrats to position in from here. let's bring in david bronson at the bronson group. david, good to see you. i guess my worry would be if we're talking dividend growth you miss out on software names. is that intentional? >> it is for us. >> we really believe that cash flow is king and the dividend growers through time and their avoidance of a lot of the burst bubbles that happen with the alternative end up doing far better and we have tons of track record to prove that, but i think that ultimately right now people have actually gotten away with this recovery trade since the 2022 meltdown. there have been some names that have come quit a bit.

i think tesla's down over 50% and -- and apple is in double digits down all the while and nvidia still just climbing vociferously. those things don't tend to end well. >> but at the same time, if you believe that this ai thing isn't just a flash in the pan, it's not the metaverse. it's not block chain and don't you allocate some portion of your portfolio to names that you think have some sustainable advantage there? >> yeah, but i would recommend doing it out of something that isn't trading at 50 times forward earnings or assuming that margins will hold when revenue is up ten times from what it is now. margins don't hold with that kind revenue growth, and so for example, there's a dividend-growing name called broadcom that we own. it's gotten expensive. we have a lower weighting and we've owned it for years now. it's very exposed to ai. ibm is exposed to ai.

texas instruments, these are dividend-growing names that have real cashflows that don't require you to buy into something that's up, you know, 250% in the blink of an eye. that's what i'm concerned about is the momentum chasing. >> outside of tech you also like amgen, johnson & johnson and jetstream etf. pick one of those for me and tell me why. >> well, i picked johnson & johnson and amgen because i wanted to be as boring as i could. johnson & johnson growing for 65 years in a row. it will leave time for us to get back into low beta and dependable cash flow growth and amgen has grown the dividend and double digits for over ten years per year. that's massive internal growth. these biotech names have become great dividend growers and mid-stream energy is absolutely a phenomenal, high income, high

growth of income story. >> do you think about international in this environment? i'm looking at some of these india etfs looking at the growth of the youth population and the big nationwide adoption of digital and payments technology and wondering, its had quite a run, too, but the demographics don't seem to be slowing down. >> yeah, we view the international story as a macro look. companies that are based there or companies that are perhaps based in the u.s., u.s. accounting and u.s. governance and u.s. maturity and sophistication with capital marks, but nevertheless, 50, 60% of sales coming from these markets. so there's a very global story with a lot of u.s.-based companies and india is doing great locally, but you have to translate that to a bottom-up story. you can't go buy an etf from minnesota. you can't buy an etf for texas,

but there are companies in minnesota, companies in texas and we view it the same way with international markets. >> okay. so back to your call here that you've got to avoid investing strategies that simply buy the stocks that go up. are you at all betting that stocks are going to go down and is there a thought about what is going to be the catalyst that drives that moment for the markets? >> yeah. no, we're not betting anything. i don't want to bet against the market going higher because nvidia could go up multiples from here. >> yeah. i just know how it ends. i know how these trades end. we've seen it over and over again. i've tried to devote much of my adult life to study bubbles that burst, and i really believe that good companies can get into a bubble. we own cisco now and i bought it at $18 and it's in the 50s. cisco right now is 30% lower than it was 25 years ago and 25 years ago it's not like its

business deteriorated and revenue, earnings, it's a great company. what's the problem? it was just too expensive. i'm a child of the late '90s. i grew up professionally managing money there and i see in nvidia some of the same risks that played out there, john. that's the story for us. >> all right. david, appreciate you joining us here on "the exchange." let's talk energy now, oil prices up 20% with brent crude hitting had the $86 mark for the first time since november and this comes as s&p global kicks off its energy conference and let's head down to houston, texas, where our brian sullivan is standing by there. brian? >> again, jon, thank you very much. in fact, i mean, thbis is reall the epicenter of energy of the world right now and welcome in shoal ceo sewell.

it's nvidia and they have a huge conference and jim cramer will be sitting down with the ceo and i bring nvidia up because ai is everything, and all i ever hear is that ai is going to drive all this demand for electricity. we get most of our electricity from natural gas if you happen to produce a lot of natural gas is there an ai discussion to be had around shale or am i completely out of my mind? >> no, there is a big discussion to be had about just energy demand growth in general, whether it's crypto related, ai-related or the other population growth in companies like china and beyond, around the world. so when you currently have is a significant pool on more and more electricity coming in as well as energy and totality. companies like shale are the biggest players in lng, but we also have a lot of production

which we also sell to the grid. i think we are going have a bigger and bigger role both in terms of supplying that energy, but of course, also using a lot of the ai ourselves given that we still serve in the subsurface for the gulf of mexico and those are all great opportunities to become much more productive in the way we work. >> when we think about energy and that's what we talk about is energy and this oil and gas and we talk about the need for this and ten years ago it is all about the transition and now we're talking about energy scarity and energy security and we want to build the data centers and make sure people have light, heat and places like india and these other developing markets. when i look at lng's forecast, you see 50% growth over the next 15 years. where is that coming from? >> three key areas i'd point to. one is continued growth in lng that is substituting our core that plays out in areas like india, areas like china and beyond. secondly, you have a few countries, many countries, actually, that have the

infrastructure for gas because they depended on domestic gas production. with time, they no longer have those resources. so they're having to import lng to be able to use the infrastructure to keep powers in the home and then thirdly, it's energy security. the realities of what happened in europe after the russian invasion of ukraine is that now we need to be able to bring lng from afar. those three key drivers are critical ingredients to be able to see that 50% bump up in lng between now. >> you're a global company. before this as a ceo you ran the lng business in qatar and worldwide in the middle east. we just announced a pause in u.s. lng exports. we are still planning to double the exports with products currently underway. from shale's perch s that going to hurt the u.s.' competitiveness in supplying the world with lng? >> i think in the short to medium term there isn't a specific issue to be worried

about. this has been a 20-year project. >> it's not a short, medium-term issue and my bigger concern, however is that lng from the u.s. and lng from qatar, those are the two biggest sources of lng, anything that undermines confidence in those supplies will always create some nervousness in the markets, and therefore, what i worry more about is the softer elements of the pause to a market that i think needs confidence and comfort into the long term and not just in the short and medium term. and so we hope that this gets resolved over the coming months and giving the sort of clarity that i think the market will very much value. >> it's funny. people that don't come to this conference, say see oil and gas and now it's renewables and we're interviewing next yeara for tonight, as well. they don't realize that the climate and climate change is a huge topic of discussion. i read a headline in cnbc. you might have heard of cnbc

that shale had recently watered down your climate goals, going from 15% to 20% from a hard 20. have you watered them down? >> no, you haven't. and we have been very clear and committed to the 2050 target of netzero. >> in 2030, we allow the shareholders to know what we're doing. what we have done in the net carbon intensity. strategically, we are shifting from selling power to homes, an area we have tried to do, but haven't been successful in and we sold out of in particular in europe. so we are reducing the growth and the power sales we have anticipated which is why we are par course correcting. b we also, by the way, added a new ambition, an ambition to reduce the oil product sales over the next six years by 2030. >> if you're still committed

netzero 2050. >> very much so. with interim targets allow us to get there and we're going to do it in a way to focus on the areas where we have competitive strengths and we are going to make sure that we are focused and not betting too many different plays and focus on the four or five that we have the differentiated ability. >> i have the pleasure of going on the huge hydrogen facility in rotterdam and the netherlands which is unbelievable, by the way. hydrogen is huge and a little bit of a controversial topic and a lot of people say it will never be economic. a lot of people say it's the future and i'm not going to ask you to dive into u.s. politics. what is the role of hydrogen in the united states? is there a role of hydrogen in the united states? >> i think there is a massive footprint of hydrogen in the u.s. and that will over time get it and we recall cleaner

hydrogen. so that rule is going to continue to be there. i think there's a lot of views that are trying to polarize a discussion between is there or isn't there a role. the role 8 grow over time. the more we have solar and renewables and wind, as well, the more you will have access to available electrons which they can feed into an electrolyzer that produces the hydrogen. i don't think it is a question of if hydrogen will play a role, the question is when it will become materiel and the answer is 2030s if not 2040s. >> 2030s if not 2040s and i know it's being investeded in aby yo guys wael sawan. have a successful conference. we're not done here. tonight we have nextera and senator joe manchin and we'll talk energy policy and ryan lance of conoco philips and mike

wirth. tonight live on "last call" as well as tomorrow and jon, did you see how i did that? i wove in nvidia, we're contractually obligated to say nvidia in every segment. i got that in. >> it was like crochet. you were weaving in nvidia and environment and all kinds of things and that's not all. you'll be back tomorrow with the ceo of slb, the company formerly known as schlumberger it will be at 1:00 p.m. eastern on "the exchange." google might be the king of digital ads, but meta is coming for the throat. those shares are up 40% so far this year, but he's going to tell us why he still sees meta climbing another 25% from here. plus home builder sentiment turning positive for the first time in nearly a year, but affordability remains a headwind. later on, we will get a c suite view from one real estate developer. "the exchange" is back after

this. this is "the exchange" on cnbc. welcome to ameriprise. i'm sam morrison. my brother max recommended you. so, my best friend sophie says you've been a huge help. at ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us. our neighbors, the garcía's, love working with you. because the advice we give is personalized, -hey, john reese, jr. -how's your father doing? to help reach your goals with confidence. my sister's told me so much about you. that's why it's more than advice worth listening to. it's advice worth talking about.

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welcome back to "the exchange." shares of apple and alphabet both higher today on a report that apple's in talks to put google's gemini ai system into iphones. deirdre bosa joining us now for today's tech check. a lot of people out there are framing this as a sign of apple's weakness that they don't have their own ai ready to play,

but if apple can make hundreds of millions or billions of dollars off of google, just placing them here, i don't see the down side. >> i wonder, jon, do you think that's enough? hundreds of billions of dollars when we're talking trillions here? when we've seen the rise of nvidia? yes, it sounds like a lot, but i've also heard some people say that if you're not actually leading the way and developing your own ai, you're kind of just call calling it in and is that going to be enough with the platform shift. we don't exactly know how this is going to roll out. maybe apple is leaning on google's gemini while it had its own large language model and able to handle a lot of us. we don't know, but i agree with you. a lot of folks here especially in san francisco don't think that apple is just going to sit this out. >> we've seen this before. apple at first used google for maps and then did apple maps and built that out in a pretty impressive way to the point where now the features are

pretty competitive. if they do build gemini into the iphone apple still gets a lot of data on exactly how people are using the aquarius through and it could help them build their own while they're getting paid by google, could it not? >> exactly. that's what i'm hearing, as well is that this is a temporary solution. jim cramer this pointing pointed out on the best buy earnings call, how they said that the samsung galaxy, ai-enabled phone, the demand was materielly more than they expected and it is potentially that apple is saying we need a solution right now, but apple is never the first mover, right? it tends to perfect the technology? maybe this will follow the same thing. however, you know, we have a lot coming up in the next few months. i know you're watching closely, jon. i know i showed this chart early in the day and it's apple versus microsoft versus google over the last month and the perceived winners and losers in this ai

race in the market are changing spots with each other with alphabet's huge move today. it was up 7% at one point and surpassed microsoft in terms of performance over the last month and when you look at what is coming up over the next few months and you have microsoft build and google io and apple's dub, dub, dc and there are catalysts that can once again change the calculouses. >> it is not always equalling reality. let's pivot from ai to ads when it comes to the digital advertising space, our next guest says meta raised his price target on meta by $73 because of that. for more here let's bring in ken gorowski, he is the equity analyst and adviser at wells fargo securities. ken, does this possible apple deal change the calculous on google and possibilities for ai revenue for you? >> yeah. thanks so much for having me. >> so we don't think it changes

our overall look in terms of the preference for meta versus google. this is the sentiment positive for google where i would say posted gemini release the sentiment remained weak. i don't think there's question that google has leading ai technology and they've attracted and retained some of the best engineers in the world and we see on the outside i real potential for meta continue to outperform google. >> what is the driver for meta now and the ios tracking changes and the resulting crumbling of the direct to consumer flywheel over customer acquisition where it looked to some people that meta was in trouble. what's driving the progress now that the methodology for the companies and how they use meta's facebooks and instagram ads have changed?

>> you're absolutely right. there was a period of time in 2021 and '22 where a signal was degraded in that ecosystem and google was a net beneficiary at that time relative to meta. what we've seen in the last cup of years and this manifests itself in the back half of '23 and continuing to 24 where meta has rebuilt its signal, one. so it's the best in terms of its ability to target users and to tricon try conversions on the massive audiences and they've done a tremendous job there and second here and maybe this is underappreciated is the engagement games and during '21 and '22 tiktok was gaining engagement and was gaining share of engagement and it was a real driver of social users and user

base engagement and advertising. and those share gains have stopped. meta has fought back with its real -- short video product and the interesting thing is this has become a real content. i think meta's less of a social network and more of a content recommendation engine at this point. >> here's my question about the longer term call on meta. if you do get apple building gemini into the iphone. if you do get google through android becoming one of the main conduits of ai-based search and thus, ai-based signal in what people are interested in, does meta with llama and with its existing platforms, but without a mobile device have enough advantage to keep google passing it? >> i would say meta has more platforms with more than a billion users and that includes two messaging platforms that

have relatively limited modernization at this point and a ton of signal, right? i think there is nobody that is better positioned than meta from data and user behavior and we know that meta is building its own solutions and has recently released some ibots that are garnering early interest. >> is the metaverse spend going to come back as an issue or has the performance been so strong that investors can forget about that and not worry about it? >> yeah. so i think you're correct in the assessment that the core business performance has been really impressive and not only from a cost and margin efficiency, but also from a revenue performance. in terms of the overall costs and the operating losses and at the reality lapse division, we expect them to peak in '24, although we don't see a

meaningful decrease. we do think that they will continue to push along this effort. if you saw mark zuckerberg's interview post the recent apple police, he seemed to be in a fighting mood for me. >> he writes literally and metaphorically. thank you for your perspective. thank you. >> thank you. ? still ahead, we'll go live to the nvidia next developer conference with the ai machnology, whether it's record dend can continue. "the exchange" is back after this. (vo) what does it mean to be rich? maybe rich is less about reaching a magic number... and more about discovering magic. rich is being able to keep your loved ones close. and also send them away. rich is living life your way.

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included, forts to ramp up human tearian aid to gaza. half of gaza's 2.2 million residents face catastrophic levels of hunger. the call was their first conversation in more than a month. newly reminted as russia's president, vladimir putin warned nato if it intervened in the war in ukraine it would mean nuclear war and only he could determine peace in ukraine. he won a virtually guaranteed vote over the weekend with over 90% of those votes in favor of him. environmental protection agency announced a ban on asbestos which is still used in brake pads and chlorine bleach and kill thousands of americans annually. the ban is a major expansion of the bpa regulations under the 2016 law that tightened regulations of toxic chemicals found in everyday products. jon, back to you. >> tyler, thank you. now coming up can office to

housing conversion solve the affordability crisis? we will look at the numbers and talk to a developer leading the larger conversion project in the larger conversion project in the country next. tssk, tssk, not so fast. what, why? did you forget marcus? forget what? your chem exam? uggh? flashcard time! the atomic weight of boron. the future isn't scary, not investing in it is. 100 innovative companies, one etf. before investing, carefully read and consider fund investment objectives, risks, charges expenses and more in prospectus at invesco.com.

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welcome back to "the exchange." the spdr home builder etf ticker xhb is slightly positive today despite sentiment increasing to an eight-month high. diana olick joins me now to look into the data. diana? >> jon, homebuilders are calling demand brisk in march and that's why builder sentiment rose to the highest level since last july finally crossing back into positive territory at 51 on the national association of homebuilders index. that is the fourth consecutive monthly gain and 50, of course, is a line between positive and negative. of the index's three components, current sales conditions rose four points to 56 and sales expectation rose two points to 62 and buyer traffic increased two points to 34. regionally on a three-month moving average, sentiment rose most in the midwest and west. the report also said fewer builders are resorting to price cuts in order to boost sales. in march, 24% of builders cut

prices and that's down from 36% in december and the lowest share since july and the average price cut remains the same around 6%. they are, however, still using sales incentives like buying down mortgage rates and while builders are feeling better about demand they cite a lack of buildable lots and labor as well as codes that increase builder costs and material prices are also rising due to more demand especially lumber. >> jon? >> diana, how sustainable are those incentives given that it looks like we'll have higher rates for longer so the relief's not going to come from that side and the costs don't seem to be going down much from here. >> you know, it's shrinking margins for the homebuilders and we spoke to the chairman of lennar recently about this and he said you r to buy down the mortgage rates because he believes that the demand is there and as long as you can get them in the door at an affordable price or an affordable payment then they will buy and he thinks demand is going to increase as we get into

the summer months, as well. so again, it's a question of affordability and what the builders can handle and how much they can cut off their own earnings in order to cut down their own prices or incentives and specifically buying down the mortgage rates. >> i guess the best operators will be okay. diane a thanks. >> let's stick with housing and drill down on the multi-family space. supply/demand mismatch has created what some are calling the forever renter. older, more affluent and looking for quality and joining me now is the ceo of post brothers and michael, you have the biggest office to residential conversion in the country going on right now in the d.c. area, i believe, right? the risk, it seems to me in those projects would be-- do you end up with the department that's too small and looks like an office and is it too high because of labor. have those things come into balance with the market? and thank you for having me.

in general, the best conversion opportunities are really not about the existing structure. it's about demand. housing crisis have gotten very high because of a lack of developable land and the areas where people want to live the most. so the most interesting part of this office conversion opportunity set is not really the structure itself. it's the land value and the ability to get land in these otherwise undevelopable locations. so if you're able to buy the building favorably which is a significant discount, and call it a third of what their cost was, then you are able to invest enough in the building to overcome all of those challenges you talk about by putting your skin on the building and by not being married to plumbing like hbc. we've done, coincidentally

enough, when we started 18 years ago office conversion was our focus and now they're back. we've done over 3,000 apartments from converted structures and if you're in those apartments you wouldn't say they're less good in any way than purpose built. >> so when you get them at the right cost basis you can make dramatic changes. so are you looking at the trouble in office because of post-pandemic people are not coming back to the office because i hear that it's not in the newer construction. it's in those older buildings. i'm not sure those are in the locations where you want to build housing or are they? >> they are. they are. if you look at -- cities are all different. we're doing a lot of washington, d.c. and we're in northwest washington and the golden triangle neighborhood. here in manhattan, there are opportunities certainly on in very high demand areas and it is the older buildings, like you

say, but for cities that have been built out for 40+ years they're in great locations and the opportunities are not as interesting in newer cities like sunbelt areas. >> in those older cities are you seeing capitulation yet with the previous owners saying okay. go ahead, take it off my hands at a third of the price i paid, or are there still holdouts that think somehow we can make it work? >> it's very slowgoing and us and the rest of the industry would have expected to see more transactions right now. the report released by msci which is a big data service reported in "the wall street journal" that only 3% of sales last year were distress sales. >> why is that? why haven't they buckeled? >> a few things are determined, it's different by the lender. if the lender is really in con terrell. the lender doesn't want to foreclose and they're not in the business of owning real estate

so they're doing what in the industry calls, tending pretending. ? on the other part, the data doesn't capture the transfers that are going on. when a borrower or sponsor of a building has fully capitulated or written down their equity to zero and effectively handed the keys to the lender and it hasn't traded yet and they're ready to take up the discount so there's a fair amount of that going on so it's taking longer. >> you only lose money when you sell it so you try to avoid that for as long as possible. quickly, is there a triggering moment that will cause some of these lenders to have to sell what's in their portfolio, and it would take a downturn in the economy overall and perhaps in employment. >> great question, what's more likely to happen is an upturn than the lender seeing an opportunity set. the capital markets is relatively slow moving right you in. all of these lenders and non-bank financial institutions.

they're in the business of lending money and they want to be doing business, and i think when they see the opportunity set to lend more, that's actually going to motivate them to get these old loans off their books because they have to replace it with more interesting opportunities. >> okay. we'll see if that happens, and i know you're waiting in the wings. michael, thank you so much? coming up, it's been a volatile month for nvidia. they're up 12% and up next, we'll -- hoose look dubbed theier of ai and theig b announcementses to in. we'll be right back.

welcome back to "the exchange." shares of nvidia fractionally higher today paring earlier gains as its a iconi conference

started in california. kristina partsinevelos joins us. kristina. >> a two-hour keynote and it's finally getting busy and people are lining up on both sides and we have protesters and a marching band. there's been such a run-up on the stock and we saw volatility like you mentioned in the share price. four out of the five trading sessions and the stock was down, but today and it was up earlier, above 2%, but investors have so much riding in this, and so much expectation. specifically more so with nvidia's chip the h b100 and i've seen estimates between 40,000 to $50,000 for this chip and it means there will be more expenses and it can also hurt demand. other things we'll want to hear about other product launches from cpus to software.

we will also want to hear about demand that goes beyond hyperscalers to include government and sovereign wealth funds and jensen wong talked about finance and all theseth sectors and collaborations with other companies, for example, oracle. oracle did arc lewd to a certain collaboration which is why you see a share price up today ahead of the event and micron, since they make high-powered memory chips and even if they aren't the primary chip provider for those memory chips and just a shout out on stage could help the stock ahead of its earnings that are out on wednesday. you can see the share price is up ever so slightly up a half a percent and you have the ai chip which could see the threat. nvidia is also likely to emphasize the capabilities which will mean headlines like arista networks and you could see volatility out there, and there are rumors that maybintel is

getting an nvidia deal and it could bode confidence in intel's foundry, and we know on wednesday, biden, i confirmed that will be at intel. so there's a lot of other players that could move on this big event behind me. bottom line, though. today is going to be about nvidia's sustained division, which it is in the early innings. >> there is a term that ai investors need to be getting inferencing and getting behind the training of the models and the art fibl intelligence models to what actually happens once people start using them and jensen has been make the case that they will continue to get a significant amount of business and there will be a lot more usage than there is training, right? >> right. >> because the last earnings report we actually were surprised by the inferencing demand and it was about 40% of total data centered revenue which was higher than anyone

anticipated. the concern was that companies would shift away from nvidia when they were using the chips for trading and then go elsewhere from inferencing. the 40% number bodes quite well from the sustainability of demand and it doesn't bode well for amd because it is seen as the likely competitor, and also a lot of these inhouse chips from amazon, google, meta and they'll be big competitors in the near-term, but i can assure you that will be a topic that jensen wong will be speaking about on stage and that will add to that theme that hey, even if you spend money on the trading and large language models and that's what we're expecting here just based off of the last earnings report. >> even the apple/google story especially if the ai calculations are done on device and apple's devices don't use nvidia chips anymore and we'll see how that plays out. kristina, thanks. >> speaking of nvidia, jim

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welcome back to the exchange. the fmo c meeting starts tomorrow and rates are widely expected to hold steady this time around with the market seeing the first cut coming maybe in june. joining me now to discuss what this means for his witness is brooke, ceo of john hancock. a part of canada's life financial and one of the largest life insurance -- insurers here in the u.s. now, longevity insurance. life insurance. what is the difference? is that a better way of saying it so we think about living longer instead of dying? >> thanks, john. yes. for the longest time our

industry -- hundreds of years, would issue coverage on people and say i hope you live a long and healthy life because that's a good thing for us and good for you too. for those who don't know, we make money and a simple way. you pay as premiums, we invest those premiums. the longer you do that and the longer we make money. it occurred to us that it is profoundly odd that we never tried to help our customers live a longer, healthier life. several years ago we introduced a new program called john hancock vitality and we actively partner with our customers now providing with education tools and incentives and rewards, discounts goodies and things, taking steps to live a longer, healthier life promoting their own longevity. >> what is the impact of a higher rate environment than on your business? >> generally speaking, higher rates are good for the insurance industry. we live through a long period of time. i can remember the post financial crisis we would sit

around in meetings and say when interest rates go back up we will do x, y, and see. after two or three years of that we stopped having meetings talking about that. we don't spend a lot of time think about what we are going to do when they come back down but it looks as though things will be fairly uneventful this week with the fed with perhaps some action heating up in june and beyond. it does seem clear, i think, that certainly higher rates, somewhat higher rates are here to stay for a bit even if they took down some and as i said, that is generally a positive for the industry. >> what is the relationship between gas prices and insurance? >> this was quite fascinating. a couple of interesting things happened during covid. i'm always looking for the silver lining. covid was an awful time in our history and for many of us personally but it did spur a lot of demand for life insurance, go figure? global pandemic, things can happen, what happens if

something happened to me and i did not have the protection of life insurance? we saw demand really shoot up during covid for life insurance. interestingly, when inflation started to take up we started noticing that applications for life insurance below a certain size dropped quickly. i had somebody on the team lot the retail price of gas at the pump with life insurance applications below say, $500,000 death benefit amounts and you will never seea chart more perfectly correlated. it makes sense, right? middle america, you say, geez, i need life insurance, i want life insurance but if it cost 30% more the grocery store are 40% more the pump it becomes a nice to have rather than have to have. >> got to get this question to you before we have to close and that is about artificial intelligence. it seems to me like the insurance industry is a prime candidate to do well if they can harness this correctly, no? >> 100% and serve our customers better too. i was talking about is playing this unique role in our customers lives were retried to

help them live a longer, healthier life and we are doing that in the u.s. with john hancock and our parent company manual life globally and you think about what ai could do there as it relates to interventions, that's a strong term but if we notice something go along with a client, less physically active, digital nudges and things like that and using ai to say, geez, we should prompt brooks to do acts. we spent a lot of time and energy doing what we call underwriting people. someone applies for insurance and we look at their history, medical history and otherwise and decide what rate is appropriate. you can imagine ai playing an important role in improving the efficiency there. quite excited. we are being cautious, as many are and prudent but we want to do it in a way that serves our customers well. an enormous opportunity. >> i like the idea of having those prompts that are good for everybody. a lot of times you think about insurance companies wanting to know too much but if you can make correlations that actually help everybody out that is better. thank you. >> great.

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[both] because i said cologuard®! -hey there! -where did he come from? -yup, with me you can screen at home. just talk to your provider. [both] we'll screen with cologuard and do it my way. cologuard is a one-of-a-kind way to screen for colon cancer that's effective and non-invasive. it's for people 45+ at average risk, not high risk. false positive and negative results may occur. ask your provider for me, cologuard. welcome to power lunch, everybody. i'm glad you could join us. the markets this week waiting to hear from two big names. one, nvidia ceo and jay powell. which one has greater market moving potential