we'll ticket all today bryn, what do you have for us? >> jebq. best country in the country. >> jimmy >> black rock. >> fortnet >> shake shack at $100. how do you like me now >> the nasdaq is 16,000 again. i'll see you on "closing bell. ♪ ♪ scott, thank you very much welcome to "the exchange," everybody. i'm tyler mathisen in for kelly evans. here's what's ahead this hour. nvidia proves that ai can continue powering big games. our market guest agrees with that and sees plenty of opportunity across the water front in the ai ecosystem. plus, not terrible, but not great either that's how our housing guest describes the setup for the spring selling season. he's here with what he means by that and what it means for you if you're in the market to buy

or sell this spring. and three more names on deck to report, including one our trader says checks all the boxes for a buy. that's ahead in earnings exchange but we begin with the markets and dom chu with the nvidia boosted numbers. dom? >> everything is so green. everything is so green in the marketplace right now. not everything, but you get the point. let's not bury the lead. from a macro perspective, we are at record highs for the dow industrials and the s&p 500. again, record highs. by the way, we are at session highs right now. the dow industrials up 328 points, almost a 1% gain there, 38,941 the s&p 500 is solidly north of 5,000. 5,074, up 92 points. we were up roughly 57 points at the session lows so, again, a market move higher, up nearly 2% and at 2.75% gain for the nasdaq composite, north of 16,000

we are just about a percent and change away from its own record high for the composite and about a quarter percent away from a record high for the large-cap nasdaq 100 look at the travel and leisure name royal caribbean upping its annual profit guidance they think that bookings are, again, stronger now and for all four quarters this year than they were at the same time last year royal caribbean up nearly 7% but carnival, catching a tail wind there norwegian, catching a tail wind. expedia and booking holdings, they report after the closing bell today and nvidia, it is now up nearly 15%. $775 what that does equate to right now is an almost $1.91 trillion market valuation, just in the last day tyler, this stock has gained

roughly $246 billion in market cap in one day tyler, just to put it in context, that's about just like adding an entire netflix in market value in one day alone for nvidia back over to you >> as this stock sits on the precipice of $2 trillion in market value, it was not long ago it was just $1 trillion, so it's doubled very quickly. dom chu, thank you very much our next guest says while nvidia may be the poster child of the ai boom, it is by far not the only winner this area. he sees opportunity for years to come outside of that name. kevin maun joins us. i'm going to talk about nvidia in a minute, but we have the dow at 38,000 and change is dow 40,000 next stop here >> it may be the next stop, but it may take some time to get there. some have asked me are we going to get to s&p 5400 i think so by the end of the

year, but we'll see a pullback and we'll see the fed to start cutting interest rates before we see a more broader er based ray >> that's not a big jump to get to 40,000. 1,000 points on 38,000 is not that much. so you're comforted, obviously, by nvidia's report here. >> i am. >> you think this casts a halo or a nice, warm glow across the entire artificial intelligence area explain and what will be the beneficiaries? >> sure. i found it odd that earlier this week some were suggesting that the ai boom was slowing or perhaps that the ai race was taking a detour. what we learned from nvidia last night, the poster child for artificial intelligence, if you will, as you said in your opening, is that, in fact, the ai boom is only accelerating and the ai race is only picking up steam now, as we go ahead, i would just caution investors to realize that the ai game isn't just chips and semiconductors.

yes, nvidia is getting all the attention, but if you look more broadly into the entire ai ecosystem and you consider the software, hardware companies and cybersecurity, the glue that holds the technology puzzle together, investors will find even more investment opportunities that are probably at better valuations >> at what point does that famous law of large numbers come into play with respect to nvidia, where it gets harder and harder, as dom just pointed out, they have added today the value of a netflix to their portfolio here at some point, that becomes harder and harder to do. >> it does, but then you look what happened from yesterday to today. and the games that investors missed out on are being fearful that their market cap reached too high i listened to the press conference yesterday what i was amazed by is that they have a new generation chip, the b-100, that is expected to ship later this year

that's going to add additional revenue in earnings potential, and perhaps these three consecutive quarter of significant earnings beats will extend to five, six quarters so don't be wary of companies, but consider a diversified approach >> you mentioned some of the areas, the software companies, the data centers, the cloud companies, security companies. are there names in that ecosystem that are attractive to right now? >> i consider the hardware companies, if you will look at even tesla, which has come back significantly this year apple, which has fallen out of the magnificent seven, if you will >> you consider those ai companies? >> i consider them employers of ai in the hardware space the ecosystem suspect just chips and semiconductors who is going to amass and process all this data? we know nvidia has a big and growing data center business but what about other companies

like digital realty? and then on the software side, i still believe microsoft will be the ultimate winner the ai race, but there will be more than one winner and there's other companies that will use and deploy ai and grow their revenues, too. >> stick around, kevin we'll pivot a little bit while the market has been banking on rate cuts coming soon, it seems based on the fed meeting from a couple of weeks ago that the fed is united on keeping rates higher for longer. steve liesman is here to explain. hi, steve. >> hey, tyler, the outlook for rate cuts this year continues to sink today after the fed vice chair suggested that the central bank may deliver tepid easing at best phil jefferson saying it's likely appropriate to reduce the restraint later this year. the policy he says is well into restrictive territory. but then he praised the 1995 easing cycle i'm going to tell you what that

may mean he quoted his predecessor from the '90s, who described in a "wall street journal" op-ed the 1995 episode as the perfect soft landing. that year, the fed only did a single quarter point cut, followed by five months later of two more quarter point cuts and remaining on hold for 14 months. jefferson didn't explicitly say that's the model, but made positive comments about it, suggesting he's thinking about a very tentative easing cycle, at least to start he also mentioned these risks to consumer spending could be more resilient, employment weakening and geopolitical risks remaining elevated together with the minutes we got yesterday, jefferson's comments suggests little dovish sentiment on this committee and remarkable unity around later and more cautious rate cuts, tyler. >> did those minutes surprise

you, steve >> yeah. i thought there was -- look, i kind of take my cue of what's happening on wall street there's people who think the fed ought to remain tighter for longer and folks who say the fed should be easing and easing right now. that's fine. i didn't see that in the minutes. very, very few dovish comments, very little discussion it seemed to me of the risk of recession i thinkwhat kevin was saying i interesting that his outlook depends on those rate cuts happening. i just wonder the extent to which economic growth depends on those rate cuts happening sooner rather than later. i think there is concern, the risks are -- the fed says risks are balanced, tyler, but they sure don't act that way. >> let's see what kevin says in response to what you just raised there. thank you very much, steve liesman. what do you say to what steve points out >> steve makes a very good point. the fed is trying to thread a needle, but there is precedent

the last time the fed cut interest rates prior to the inflation rate getting closer to 2%, and what happened? double digit inflation paul volcker stepped in, killed inflation but brought on a recession. so the fed is weighing against not cutting too long the fed is forecasting economic growth to slow to 1.4% this year >> the stock market has been very comfortable with the idea that it's real question nice to think about when interest rate cuts might happen. they're going to cut, they're going to cut but then when they do, my question is, is that the moment where the party is over? then you've got the prize of the rate cuts, and is that the moment where everybody goes, well, now, hmm >> we think back to november of

last year, right, when the market became comfortable, that we reached the end of this rate hike cycle stocks rallied nearly 10% in that month i think we'll get that type of euphoria with the first rate cut. but that's just one of many to come the fed is forecasting 250 basis points in cuts over the next three years. it will take the full magnitude after all of those cuts to lift the rest of the stocks beyond the magnificent seven to rally in a similar fashion >> does the current economic environment argue for a kind of classic portfolio allocation of 60 stocks, 40 bonds? >> i believe it does i know that's arbitrary, 60/40 may not be appropriate for everyone but if you think about the outlook for rates coming down, who benefits the most from rates coming down? bonds, and the stocks that haven't fully recovered just yet. we saw that take place in november of last year when the

60/40 had their best month since january of 1991. better days are ahead for stocks and bounds and that type of balanced approach once the fed cuts remember, even if the fed cuts three times this year by 75 basis points as the chart suggests, interest rates will still be at a 17-year high. >> if i'm interested in bulking up the portion of my portfolio that is in bonds, where do i do that >> you lean into the investment grade area of the market with this -- look at investment grade corporate bonds and preferred securities as well that are still trading at significant discounts. >> thank you very much coming up, we've got every angle, every angle of real estate cover trd the latest home sales numbers to the spring selling season then we'll talk to the owner of the empire state building for his read on commercial real estate in manhattan.

it might surprise you what it is plus, nvidia earnings may be this the market's rear-view mirror, but there are names on deck with results. they have the trade on live nation block and warner brothers discovery ahead in the earnings exchange before we head to break, check out shares of baidu, and posting on x that shares should trade to nearly 210, and that baidu remains the most underappreciated name in ai. shares are up 3% on that we are back after this break personalized financial advice from ameriprise can do more than help you reach your goals. -you can make this work. -we can make this work. it can help you reach them with confidence. no wonder more than 9 out of 10 of our clients are likely to recommend us. ameriprise financial. advice worth talking about. [disconcerting stomach gurgle] not again.

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welcome back to "the exchange," everybody mortgage rates began the year below 7%, getting some buyers back into the market diana has the details. >> yeah, we saw it in the january sales numbers that we got out this morning from the realtors sales of existing homes rose just over 3% in january. still down 1.7%, but the highest sales pace since august of last year now, this count is based on closings, so it's contracts likely signed in november and december, when rates dropped down off that 8% october high. and hit a low of 6.6% by mid december today, of course, they're back over 7%. inventory in january did go up,

up just over 3% year over year but still at a low three-month supply six months is considered balanced between a buyer and seller that's where we're seeing pressure on home prices. the median existing home price was $379,701, up 5% from one year ago, an all-time high for the month of january but to me, here's the headline of the report. we saw a major jump in all-cash sales to 32% that's up from 29% in both december and a year ago. it's usually around 20%. that is the highest cash share in a decade. interesting, because the share of investors, and these are folks who usually use cash, that didn't change much so these are regular buyers using cash i spoke to an agent that told me buyers and sellers are having to get more creative in this higher rate environment buyers need to find that cash while some sellers are now offering incentives, like buying down the mortgage rates to get

the homes sold but that might keep some sellers away from the market, tyler. >> how is this affecting affordability and first-time buyers >> it's rough, no question we saw the share of first-time buyers drop back below 30% they should be around 40%. that's a historical share of first timers but they can't get into this market when you see the high share of all cash, first-time buyers don't generally have cash. they are mortgage dependant. unless they're borrowing from parents or they're getting a rate buydown, they're just not going to be able to crack into this market. that's why we continue to see more of this renter nation a lot of demand for rentals. relates are coming down a little, but we're seeing so much new supply come on the market, it's not so much the demand side we'll see that demand from renters move higher as affordability just sits where it is >> diana, thank you very much. despite the rise in existing home sales, our next guest believes the spring selling

season will be mixed not terrible, not great. he says the jump in mortgage rates back above 7% has come at an inopportune time. joining us is ryan mckevney. why is this an inopportune time for rates to be moving in the direction they are, is it because you don't want that at the start of a spring buying season >> yeah, thank you, tyler. it's nice to be here that's exactly the point the movements in mortgage rates do matter a lot. i think your colleague, diana, framed it nicely the january existing home sales data, it was a good number, up from december. it was the best since august when we look at the go forward trends, when we see what's happening realtime, whether it's some of the survey work we do, what it's the data we analyze, we have seen a bit of a showdown in pending contracts in the month of january, and into february so while that headline for

january was quite good, we do expect a bit of fading as we go into february and march. and at the end of the day, movements and rates going from 6.5% up above 7%, it does matter and it will matter for that monthly cadence on transactions. >> to just pin point it here, because the january numbers were based on closings that took place in that month on transactions that were probably initiated when mortgages had come off the boil a little bit, right? >> that's exactly right. mortgage rates hit up close to 8% in october, dropped down to about 6.5% in december, and that's when we saw the big push. we saw a nice pending home sale activity in december that's what flowed through into the home sale number today but, again, as we moved into january and even more so in february, mortgage rates moved back up. that has corresponded with a bit of a fading.

i would say one month doesn't make a trend we do want to see that momentum building into the spring selling season it's when the most activity happens. but at the same time, if we have mortgage rates peak out here and move lower, we think eventually that occurs. it's very dependant on inflation. our view today is existing home sales for '24 will be up a few percent from '23 so moving in the right direction. not a b-shaped snapback this year, but we have likely hit the trough in the latter part of 2023 >> are you surprised that prices have continued to go up, even in the face of high interest rates? i suppose the reason for that is that inventory is still relatively low so if you don't have supply, that creates a floor under prices and maybe makes them go up but the basic question is, you might expect with high or rising interest rates that prices would be much more restrained than

they are, and they have continued to be. so basically, pretty healthy gain >> yeah, tyler i would say in 2023, one of the strongest points of upside to all of the housing metrics we forecast was, in fact, home prices it is the dynamic you referenced we've seen very low levels of transactions, but we have also seen very constrained inventory levels so you haven't seen the large mismatch between demand relative to that supply and that has fueled ongoing strength in pricing as diana mentioned. affordability is very stretched. you have to go quite a ways back to see this level of affordability in a bad way, unfortunately. but price continues to move higher as we think about things going forward, we see inventory picking up this month, it was up 3% year over year, we think it continues to build through the year eventually, all the buyers out there have a bit more to choose from we think eventually that helps lessen the rate of price growth

eventually but in the moment today, prices remain strong and continue to move up. >> are there any anomalies in the housing market region by region that you can point us to? in other words, is south florida still blazing hot and the upper midwest still cool or vice versa, whatever? >> i would say that there are a lot of market by market differences, even within south florida. some areas remain hot. some have cooled down a bit. i would say most recently, the checks we have done around the country, the areas that stood out most positive to me were on the west coast seattle, very strong the bay area very strong i heard a guest of yours make a similar point today. and that's what we're seeing, as well so areas of strength for the moment appear to be shifting out to the west coast. >> very interesting. ryan, thank you very much. have a good year we'll be talking to you throughout it, i'm sure. let's switch to commercial

real estate now. according to the latest data from castle, office occupancy levels came in at just over 50% last yeweek, and it was lower i new york city at 43% but the next guest says it's not the case at his properties with its manhattan offices almost 90% occupied. joining us now is tony malkin, chairman and ceo of empire state realty, openers of the empire state building how are you beating the market here with an occupancy rate at 90% on your properties when the broader numbers are much lower in new york and nationally for office properties? >> tyler, thanks for having me look, we've got continued demand, at least nearly a million square feet in 2023. i think what we have proved quarter after quarter, it's the flight to quality. and it's flight to quality in

property, in balance sheet, locations, amenities we did the work and invested over a billion dollars in portfolio upgrades with modernization, energy efficiency, indoor environmental quality to make our properties future ready and the results are very strong. the empire state building, our lease percentage increased 720 basis points year over year. so it's about top of tier, it's about your price point and about delivering a product and a confidence for the people who want to bring their folks back to the office. >> are these commercial properties that you have -- i was looking at a lest of your properties, the biggest ones in new york it was very interesting, because it was not just office -- linked in is your biggest tenant, am i right on that? >> linked in is our largest tenant it's not just office we have four different drivers in our portfolio office is only 60% of net

operating income the observatory is next at 25% retail is about 10%, and residential into which we have begun to go, is at 5%. so look, new york city, we're a pure new york city play, and then at the same time, you have four different drivers very well capitalized, great balance sheet, modernized and amentized. and the fact is, tenants like us, for all the things we bring, and investors like us a lot, as well >> you know, i'm guessing, i don't know whether this is true or not, that if we turned back the clock to this time in 2020, or maybe march, april of 2020, the peak of the pandemic, that you might have been quite nervous about office properties. were you then, and have you been surprised that your properties and the office market in new york has held up as well as it has? >> you know, it's funny, because

you have some tape on cnbc from me back in that time, and a little time after. my view has been very much positive new york city is an international world capital, number one number two, you can't rely on those castle numbers only a few of our buildings even use castle the data to me that they produce is not really all that relevant. what we see is that collaboration to be in the workplace, if you look at our tenants and their own comments about what we do and what they do and how that fits together, they want good collaborative spaces for their folks to come back to work and we have tenants who expand with us. over 2.6 million square feet of expansion since we went public and post pandemic, a major component of what those expansions have been is tenants have said, our people in your buildings show up at a greater percentage than our people in

other locations. we want to consolidate and take more space with you. >> very interesting. i am intrigued, fascinated by the enduring appeal of the empire state building and its observatory. you had revenues there that grew, if i'm correct, at 13 pe13%, i was amazing year over year >> our observatory is back to precovid levels. tourism continues to improve we have built exceptional brand awareness. according to trip adviser, we're the number one destination attraction in the united states for two years running now. and it is about that iconic brand. it's also about how we work the brand. it's also about how we get the word out there we had 422 billion media impressions in 2023. nearly $800 million of advertising equivalency. that's celebrity visits, brand

partnerships, the way we do our light shows. and we have gone to our reservations only model. that has created better cost control from our perspective we know when people will show up it's gotten rid of the lines and created a much better experience for people so we poll number one amongst all the different attraction obs observatories in new york city our brand awareness is second to disneyland so it's quite impressive >> tony, thank you very much appreciate your time >> thanks for having me. all right. coming up, we have got the read on real estate, but how is main street feeling about the economy? the results of cnbc's latest small business survey might surprise you that's ahead stay with us the dow up 378 trading at schwab is now powered by ameritrade, giving traders even more ways to sharpen their skills with tailored education. get an expanding library filled with new online videos, webcasts, articles, courses, and more -

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personalized financial advice from ameriprise can do more than help you reach your goals. i can make this work. it can help you reach them with confidence. no wonder more than 9 out of 10 of our clients are likely to recommend us. ameriprise financial. advice worth talking about. there is the dow, really near session highs it briefly dipped over 39,000 for the first time ever just moments ago. there you see it right on the

doorstep there it is, 39,000. i asked for it, and it delivered right there. it knows it knows what to do when tyler's talking to you let's go to kate rogers for a cnbc news update how did you like that, kate? >> incredible. good to see you. the medical report on russian opposition leader alexei navalny's cause of death was listed ed as "natural" accordino a spokesperson for the navalny family, who said his mother relayed the information. his mother also said that she was secretly taken to the morning to see her son's body and was being blackmailed by the russian government to have a secret funeral for him the u.s. supreme court has allowed a $2.4 billion settlement between the boy scouts of america and victims of sex abuse to move forward. this lifted a temporary pause that froze the settlement to give the time to request from

victims. a container ship crashed into a bridge in china early today, causing a part of the bridge to fall into the river, leaving two people dead. authorities are looking into the cause of that crash. tyler, back over to you. >> amazing kate, thank you. coming up, we'll talk thin tech and big media in the earnings exchange. the numbers and narratives to know ahead of live nation block and warner brothers discoveries results. and during february, we celebrate black heritage here is jetblue corporate vp of social responsibility sharing her story. ♪ ♪ >> our contributions to the world are significant, and you don't know where you're going unless you can look back and see where you come from. and so celebrating black history month allows everybody to understand, celebrate the rich

contribution that is african americans from made in the united states, and that black people in general have made to the world. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.

welcome back earnings season continues, and we've got content, concerts, and cash on the docket right now we're going to look at warner brothers discovery, live nation and block. here with our trades, clint, welcome. let's start off with warner brothers shares down nearly 40% over the last year. deutsche bank watching content on both the big and small screens as the company looks to grow max subscribers and catch in at the box office the street also listening for details on the launch of its sports streaming venture with fox and espn but you are not impressed here you're a seller. why? >> yeah, good to see you thanks for having me back. this one is tough. it looked like a trap. on all accounts, this would be an attractive stock to us, playing 0.5 book and sales they're looking to return to profitability with $2 billion in

crash. but the price action stinks. it can't seem to get out of its open way as an investor, you can identify the fundamentals they might be attracted here, but you have to wait for a catalyst. the street expecting a loss of 11 cents on $10 billion in revenue. if they have an upside surprise and the stock turns around, there's no rush. then you can go back in and take a position ahead of these earnings, i would not tiouch this name >> this is the sports app they're trying to generate here with fox and others, is that a game changer for them, or do you think not? >> it could be all the above. even dune. i love a good movie, right so all of this, and you look at this and the fundamentals and say why is this stock trading where it is? so something -- i always will respect the price action so i have to do that so at this stage, again, i don't know what seems to be wrong with the stock, but something's up. and it's not the stock

>> or something's down, and that would be the stock live nation, shares of that ticketing platform up 20% over the past year. growth its venue, ownership business and the results of the ongoing doj probe into potentially anti-competitive practices with live nation what would you do here >> you threw out some good ones today. live nation is interesting i can wear two hats with this one. in the investor camp, i can't touch it $6 billion in debt a hangover from covid. it's just not for me but it looks interesting for a trade. the stock's trading at about 40 times forward earnings, but those earnings are growing at about 36%, 37% more's the kicker, if this catches a spark, it's about 10% of the short float you can get long in this name with a stop at 87. as far as an investment for me, i have to be a debt guy, and it has just too much debt on the

balance sheet. >> we should point out that we have an interview with live nation's ceo right here on "the exchange" tomorrow that's at 1:00 michael rapinoe will join us let's move on to block shares down 7% in a tough year that included a two-day outage and a scathing short seller report jeffrey is hoping it's sell now, pay later can work what is your trade on block? they have a lot of cash. >> this one i like i'm a buy on this name it checks all the boxes for us we have little to no bet $6 billion in cash their forward estimates, if they hit them, it trades at a multiple of 21 that would be about 60% in growth ultimately, it's an unloved stock. in this environment, it's hard to find stocks that have attractive fundos, they're set up well, and they're not already run. this one is checking all the boxes. so i like this name.

it's the buy on our list today >> i want to get your reaction to the dow crossing 39,000 for the first time 40,000 in its sights, up a thousand points in 31 days happy? >> it's fantastic, right we work with retail investors every day. they speak dow even though we all care about the s&p, they speak dow. and i think when it crosses 40,000, they're going to take notice in my opinion, still the most hated bull market i've seen in a very, very long time $7 trillion on the sidelines in money market people are just super scared of chasing the indexes, but they have to look under thehood other interest rate sensitive areas are not as stressed as the mag seven. so if we get a subtle down tick in rates, the other areas could take off, and that's what we like here. the opportunity for this bull to spread its wings to other areas and keep going >> all right quint, thank you

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welcome back to "the exchange." cnbc and survey monkey out with the latest reading on main street's sentiment for the first quarter of the year and things are looking up kate romgers has more. our small business confidence index shows owners are feeling more optimistic with confidence hitting 47 out of 100, up one point from last quarter, just below the all-time high hit back in 2020. it's the highest reading since biden took office.

we surveyed more than 3,000 small business owners for this poll the number of owners who describe the economy as excellent or good also hit its highest level since we began asking that question two years ago at 28% that's up 10% year on year inflation, though, still a stubborn issue for owners. nearly a third of owners say it's their biggest risk to business, more than double the amount who cite consumer demand, interest rates, labor shortages and supply chain sis rupgs disr. 60% of all small business owners said inflation and interest rates were top issues when deciding to vote for back over to you >> it's an election year, kate, as you may have noticed. how do owners view the president's performance as a steward of the economy >> 33% say they approve of the

job joe biden is doing, slightly higher, but 2/3 say they disapprove it's just fascinating as we watch this positive economic data coming out but joe biden not getting credit for it. so we'll be watching that in november >> kate, thank you very much coming up, shares of this financial services company climbing nearly 13% over the past year. it's the mystery chart but it's jupdz performing its peers. the street worried late fees will take a chunk out. we'll explore that, next (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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as we close and on the top of the hour let's get a check on the market. it has been an eventful hour. the dow and the s&p are at record highs right now. the dow, over 39,000 for the first time ever. nasdaq, it is having its best day in more than a year. as you see it is up nearly 3%. the ten year note a 4.32 yield moving up. there are the industrial up

1.04% there. joseph financial a mystery chart up nearly 15% over the past year. underperforming the likes of capital one, visa, and mastercard. deutsche bank attributes that two concerns in the cfpb's intending changes to credit card leafy rules. it says investors are overstating the long term impact those would have on synchrony's revenue, a case for a 45% potential upside. mark to freeze is a analysts that deutsche bank. mark, welcome, good to have you here. >> good to be here. >> this proposed rules that would limit late fees goes back to when? what would it precisely do? >> the proposal came out of the cfpb early february of last year. what they are seeking to do, amongst other things, the headline is effectively drop the maximum lay fee a credit card issuer can charge from $41

to $8. they suggest, just given the averages, that that will reduce total leafy charge by the industry from 12 billion dollars to $9 million a year. this would impact some credit card issuers, depending on the nature of their car business. synchrony, as a private label credit card issuer, is one of the more affected with roughly 15% of their revenues coming from leafy income. which is why it has become, of all the credit card issuers, the one the most impacted by this proposed rule. >> so, these are material numbers for the likes of synchrony and others in their credit card business? let me ask a philosophical question here. i'm curious why the government should get into pricetag like this. that is what it is. >> it is a good question. i think it is part of a broader

initiative by the biden administration to eliminate what they consider junk fees in the credit card industry. this is one of the last remaining substantial fees that are charged to consumers. from a devils advocate perspective it plays a very important role of trying to keep consumers current. but the cfpb is taking a different rule on it. i think their intent is to get the feet cut of much as possible to match what the cost is to these critic are providers. >> $41 for the field does feel a little steep to me if you are two days later with your payment because you forgot it. usually if you call the car company and appeal it they will often say, okay, we will waive it. just don't do it again. just a slap on the wrist. but for the government to say, okay, you have to kind of the $8. i don't know. it seems a little curious to me.

let's talk about some of the countervailing things should some of the rules go into effect that the critic are companies can do to blunt the impact. >> sure. one thing synchrony has at their disposal, which a lot of issues don't, they have contractual agreements with the retail partners. almost all of their lending is done as a partner to retailers like amazon, lows, and others. they share economics. half of the fees will actually be borne by the retailer. there are other things they can seek to do outside of that double offset it. a couple of them are more near term and have a more immediate impact. one of the things they may do is actually had fees for paper billing statements for people who choose to not just receive digital notification. i think that something we can expect them to do. they can also provide promotional financing on some of their lending in may look to increase the rate on that. also, they could consider what is called trailing interest.

charging people for the period between their due date, the end of the billing cycle and their due date. the bigger, longer term solution is going to be for the borrowers who are most at risk of being delinquent, incurring these fees, increasing the apr. in other words, the rain that you pay on your revolving violence. i think that is what, at the end of the day, is going to get synchrony most of the way we're covering all the revenue they stand to lose in the reduction of the leafy. in your coverage universe, which talks do you like the best right here today? i would love to get your thoughts on the deal between discover and capital one. >> synchrony and amex are the two we are recommending for very different reasons. synchrony it is because this, our view that the market is underestimating their offsets once it becomes clear to the market that they in the next

couple of years should be able to fully offset it, the multiple rate back to levels consisting trader and longer term. that is why you get so much upside to our price target. m x is a very different story. it is a high quality issuer. still relatively uncertain time in the cycle where you are seeing credit at a number of issues like capital on, discover, and even synchrony deteriorating despite relatively low unemployment. >> capital one and discover, quick thought on that. 30 seconds. >> we are a hold on both of those. in part because we think the market is telling us that there is a high probability this deal does not get approved. it is a risk to discover trading back down to where it was prior to the deal. also for capital one there will be very limited accretion from a gap perspective over the next several years. we think even if the deal gets approved, it will take time for that one to work. >> gotta leave it there. mark to freeze, thank you very

much. we appreciated. that'll do it for the exchange. i'll be back, caught on is with you on the other side of this break. , the award-winning trading platforms. bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. tailor the platforms to your unique needs with nearly endless customization. and track market trends with up-to-the-minute news and insights. trade brilliantly with schwab.

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