>> sarat sethi. >> copper demand keeps going up and supply is limited and i think you have a long way to go. >> freeport getting a lot of love on the desk, lately. >> joe t., finally. freeport was my first choice and sarat took my final trade. >> good share. >> absolutely. steel dynamics and a good spot to buy it. >> i'll see you at the bell. "the exchange" is now. welcome to "the exchange." i'm jon fortt for kelly evans and here's what's a good. e con for investors to navigate and we'll tell you what it is and the names they're buying. plus the setup for big tech into earnings. we'll look at whether the recent pullback represents a buying opportunity and as israel weighs its response to the iran's unprecedented attack we'll look into geopolitics, energy and

defense and we'll start with dom chu. >> we lost a considerable amount of steam from the early morning bigger gains that we saw in the markets and the overall market is mixed with the major averages and the dow industrials is just about flat on the session, up about to four or five points and 37,987 the last trade there. the s&p 500 is almost down almost one quarter of 1% to 51.13 to give you an idea of where we were at one point during the morning up about 45 points on the s&p 500. we were down about 12 at the low and near the lows of the session. a level to keep a close eye on as we sit here at 5113 for the s&p 500 is 5115. that represents the longer, medium-term trend line and the 50-day average price on a moving basis and that's why we're seeing a little bit of this action coalesce around this particular level. the nasdaq composite, 16094 or 8% to the down side.

j jon mentioned what's happening in the middle east and hotter than expected retail sales and i know you guys will get to it in just a bit, but the ten-yield is surging to just a hair below 6.64%. benchmark crude prices, $84.69. in essence, it may be shrugging off some of the middle east conflict that's going on and gold futures are flat on the session for the safe haven trade. bitcoin is up fractionally at 0.1% and it is up one-third of 1% on the etf basis for the industry and the stock of the day, the earnings headliner is on the financial side of things and the latest big bank to report is goldman sachs. it's up 3% and $401 per change and better than expected profits and better-than-expected revenues and a rebound in equity and debt underwriting all helping out, but jon, lost steam here, as well at the highs of

the session goldman was up 6% and it's halved those gains right now and we'll see how things play out. i'll send things back over to you. >> thank you. as dom mentioned red tretai sales down lower and senior economics reporter steve liesman. it's like a game of limbo, steve, with the lowering rate cut expectation, will we fall over? >> believe you can get under that bar at any level. a stronger retail sales report this morn as jon suggested and by the way, we have upward revisions to prior months raise the outlook while reducing getting the bar down to the ground. here are the headline numbers and retail up 07. the estimate was 3 and they took january and ratcheted up to 0.9. autos, 1.1 which is measly and still pretty strong and an

estimate of 0.5 and they ratcheted it up from 0.6 to 0.3. remember amazon had the promotional week and there are also issues where easter was compared to the prior year and they were spending at bricks and mortar stores and up 1.1, bricks and mortar building materials and part of of that is price is clothing down, as well and the retail control group and that feeds into the gdp numbers and has forecasters upping its outlook for first quarter growth and the atlanta fed raising their bar from 2.8 to 2.4. barclays writing retail sales and the perpetual motion machine and they raised to 2.3 and action economics, consumption isn't slowing as fast as we thought. they raised for the full year. they're tired of using the eraser for the consumption input into the model. june was the probability that has fallen 24% this morning and now 20 for june, july under 50%.

47% now was 51%. the january 2025 contract which tells you what the market expects from the full year from the fed and the weekend's geopolitical events have had lasting impact and the big move from last week that priced out a cut after the hotter inflation number that remains in place. that's the big cliff that you see there on the left side of the graph there. still reading reports of an expected slowdown in consumer spending and it's coming, it's coming and it's not going to be coming and that could be the case in coming quarters. consumers are spending in the malls and they're also spending online and no such thing as a perpetual motion and it's challenging basic laws of finance, jon, and of physics. >> so there is talk of fear of what breaks if the feddoesn't cut. if they wait too long to cut, but what burns if they do cut too soon? it seems like you have to worry. because the consumer does keep

spending and the economy does look pretty hot. the reasons to cut seem harder and harder to find. >> they are -- there are a couple of reasons. first of all, there are risks around this consumer spending number. savings rates have gone down. it does appear as if there's some additional spending on debt and credit spending. the costs of carrying that credit is going up, as well. i think the reason to cut is because the fed is above the neutral rate by a considerable amount and there's room to provide some relief to people without ostensibly really sparking the economy, but you're right, that is an abiding concern. >> people still employed. steve, thanks. >> sure. dom mentioned the big banks as well at the top of the show. take a look at the etf since the turmoil at the end of january, but my next two guests are turning to the regionals for opportunity. they call fears around that

trade overblown. let's bring in dory wiley, president and ceo of common streetholdings and christopher maronak director of research and regional bank expert at janet montgomery scott. guys, welcome. dory, is this an issue where regionals in general are sort of underpriced because of unwarranted fear? >> well, it's regionals in general and specific stocks. this fear trade manifests itself for different fears. it could be company specific, industry, the economy or geopolitical and any of those go wrong the bank stocks get hammered. so what you've got to do as a stock investor and go which one of those fears are playing into my stock and is it fundamentally wrong or misplaced? for example, something happens over in china and you have a community bank in texas sell

off, that may create a buying opportunity. >> okay, so, chris, if i recall, the kre was down in the high mid-30s at one point, bounced back to 50+ and now it's in the mid-40s. so where does it deserve to be? because it seems like things got overheated for a while and we've still got some lingering fears around office out there. >> i think the stock should be back to 50+ on the kre and i don't think there's a reason why we can't get back to 55. i know that sounds like a big move for monday. i think we'll see the earnings and cash flow in terms of operating cash flow for the banks as still quite strong. we think the deterioration of the credit quality is modest as we go quarter to quarter each year so the stocks can handle some deterioration and the market is just afraid of what it doesn't know and the banks are incredibly open and investors

simply have to read and listen to disclosure and understand that the banks have this issue covered. it's just going to take a while for to fully play out. >> dory, you specifically like huntington and you like enterprise financial services. what are the things about those in particular that you like that you would maybe screen other banks for, as well? >> me? i'm sorry. repeat the question real quick. >> yeah. a couple of names that i see that you like here, huntington bank, enterprise financial services and what is it about those in particular that you like that you might screen other regionals to, as well? >> sure. first, huntington are outperforming their peers and the broker deposits are less reliant and they're coming down. they are managing the margin better and i expect that to be flatter coming in to this earnings season and we'll see which should be positive and the exposure to office space is below their peers and they're

expanding in the market with south carolina and texas, and i think this fear of office space which they have less than 1.5% exposure to all their loans and plus, they have higher allowance for loan loss for their peers and that's what i'm looking for and at the end of the day as an investor they're growing by double digits and very few banks can do that. they've expanded by 56 basis points and are performing very well. >> and they get paid a dividend in each of them, a nice dividend while i wait for bank stocks to be in favor. >> you like fifth-third and win trust among others. what are the features that you find most attractive? >> sure. fifth third can handle any interest rate environment and folks are set up more with interest rates falling and fifth third can navigate good and bad

market and a big reserve that gives them flexibility. the company is the leading bank in chicago. it has an excellent premium finance business which is changing with the sale to private equity in the past two months. the company has, i think, a very good handle on core deposit and credit quality and being able to address credit risks well in advance. >> how do you feel about tesla? it has not been performing this year and stuck. >> neutral is the nice way of putting it with the 12-month chart. elon musk announced in a staff mome memo and is it a demand issue here? >> it's both. he has a demand issue and an employment issue, as well. tesla, i love the heck out of elon musk and what he does. he's such a visionary, but that stock has such a cult following.

it doesn't trade on fundamentals and it's been overvalued for a long time and i tend to avoid it. i think they've got things in focus that i have to work on, and i have to avoid mag seven and that's the one i would avoid for right now. >> all right. dory, chris, thank you. >> banks and a little tesla. >> coming up, a look at the setup for big-cap tech going into earnings and one out of consensus call. you're looking at the chart. we will ask our guest what makes him so bullish on this name and his other top pick ahead of the print. plus, it's a risk on world for energy and while oil is lower now following the initial spike after iran's attack, traders are bracing for what's next. we've got the latest. "the exchange" is back after this. ♪ ♪ this is "the exchange" on cnbc. , turn off alarm. amelia, weather. 70 degrees and sunny today. amelia, unlock the door. i'm afraid i can't do that, jen.

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hi, mark. >> hi, jon. >> i want to start out with expedia because that's the chart we were showing before and on the one hand you see some potential here. on the other hand it is in line quarter with more downside than upside risk. i mean, do you like it or not? >> okay. thanks for putting me on the spot. yes, i like the stock. it's a number two pick on the large cap and there may be a margin issue with the first quarter. valuation here is sitting on trough levels and around ten times next year's earnings so the bar is low. i think leisure travel as a whole is holding up relatively well this year. the company has two product cycles in terms of a one-key customer loyalty program and the replatforming of the verbo business and then you do have new management and that hopefully will be much more aggressive. [ no audio ]

>> well, we are going to work on mark's mike there and come right back. coming up, israel is vowing to exact a price for iran's large-scale aerial attack this weekend. the timing and scale of that retaliation still remains a que question. two experts will tell us what's at stake next. bitcoin is hovering near the 55,000 level after following 8% on the iran-israel conflict. our kate rooney will give us the details when "the exchange" returns. (grandpa) i'm the richest guy in the world. (man 1) i have time to give. (man 2) i have people i can count on. (grandma) and a million stories to share. (vo) the key to being rich is knowing what counts.

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but he is an “i can solve this in 4 different ways” person. you need clem. clem needs benefits. work with principal so we can help you with a plan that's right for him. you know what i'm saying? let our expertise round out yours. welcome back to "the exchange." markets right now fractionally lower. the high on the dow was up 404. the low down 26, well, it's down 58 now, i guess. getting worse in the lows of the session. the s&p and the nasdaq also negative and the russell faring worst of all down almost a percent. here are some of the movers this hour. salesforce sliding 5% today after "the wall street journal" reported the company is in advanced talks to acquire multi-cloud software provider informatica, the biggest loser on the dow. trump media losing as the company files to issue millions of additional shares. djt's market cap fell by more

than $6 billion on the dip leaving it at around $3.7 billion and finally reddit, shares down 4% as a newly public stock seeing another round of coverage initiations. baird and goldman giving it a neutral rating citing macro risks while bernstein says there are too many questions beyond 2024 rating reddit underperform. now to tyler matheson for a cnbc news update. >> jon, thank you very much. prosecutors in donald trump's hush money trial have asked the judge to fine trump $3,000 for social media posts about key witnesses. prosecutors say he violated the gag order from commenting on people related the trial. adult film actors stormy daniels two sleaze bags who lied. israel is deliberating how to respond to iran's aerial assault over the weekend without

angering its international allies, that's according to "the washington post" citing that target options would be locations that would, quote, send a message without causing casualties and colorado could be the next state to ban the sale of automatic guns. ten other states including california, new york, illinois have passed similar limits on semiautomatic weapons. jon, back to you. >> thank you. coming up, oil prices falling 1% as israel vows to retaliate against iran's attack. our brian sullivan will tell us what more the energy market can expect next. and there's still time to register for the inaugural cnbc changemakers event in new york city on april 18th. you will hear from some of the women transforming business including commerce secretary gina raymundo go to cnbc change

makers.com. we'll be right back.

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welcome back to "the exchange." iran's attack on israel over the weekend further escalating tensions in an already precarious middle east and while 99% of the more than 300 missiles and drones iran launched were intercepted, israeli officials said they will respond. let's get to eamon javers in washington. >> you're right. in washington this afternoon secretary of state antony blinken continued to urge restraint in response to the iranian attacks on israel over the weekend. >> in the 36 hours since we have been coordinating a diplomatic response to seek to prevent escalation. strength and wisdom need to be the same sides -- different sides of the same coin. i've been in close communication with counterparts in the region and we will continue to do so in the hours and days ahead? those remarks came just hours after prime minister benjamin netanyahu convened his war

cabinet in jerusalem as israeli officials deliberated about how exactly they flplan to respond. most of the work was handled by the israeli antiballistic missile system and the u.s. patriot missile battery also participated in the defense of israel over the weekend. because they were able to destroy most of the cruise missiles that were fired by the iranians, casualties were limited to one, a 10-year-old girl injured by shrapnel. iran and israel are in direct middle east conflict at a time when the united states has been urging a ceasefire in the gaza strip. president biden for his part urged house speaker mike johnson to pass a military aid bill this week to support israel and ukraine, but the speaker was publicly non-committal in a media appearance on sunday on that topic and unclear what his

plan will be later in the week. we are expecting a press briefing at the white house momentarily. so we will update you with any information that comes from that, jon. back over to you. >> eamon, i'm seeing a headline here that israel's military chief of staff is saying there will be a response to iran's launching of so many missiles and drones toward the territory. because they were intercepted and there was reduced casualties, tragically this 10-year-old girl injured, it seems like there's a need on multiple sides to save face here, but also trying to keep escalation from happening. that's a delicate dance, i imagine. >> absolutely. you can see antony blinken in the sound bite we just played urging restraint saying that strength and wisdom need to be flip sides of the same coin. clearly, the united states does not want escalation from either side here, but the united states also committed to the defense of

israel here and participating in knocking down some of that incoming over the weekend. the united states here in a bit of an awkward position and israel needs to decide how much farther up the escalation ladder it wants to climb and risk getting into a hot war with iran that breaks out on multiple fronts. so far it's been attack, response, attack, response, but a wider war could throw all of that out the window, jon and there's uncertainty as to how israel will respond and how they're going to respond and what that might look like. >> eamon, thank you. we'll dig further into israel's potential response. joining me now is danielle pletka, fellow at the enterprise institute along with dan dresdner professor of international politics. welcome to both of you. danielle, there is a limited supply of these sorts of

defensive measures that were used to intercept this iranian attack. so if iran were able to do and were to do something of this scale again the result wouldn't be guaranteed to be the same. how much of this is the israel's need to show iran that it can't get away with doing something like this and how much is this potentially tipping into something far more dangerous in the next round? >> i think that's really -- it's an excellent question, but one that's very hard to answer. for the israelis there's no question. i think they're going to respond. the only question is when and how. they need to -- we are all using these escalation ladder restore deterrence and at a certain point you sound like you're in grad school and not in the real world. the israelis performed admirably with the americans, the french, the brits and the arabs this weekend, but seven missiles got

through. they weren't targeting cities. if they been targeting cities we could have imagined a very different outcome. the israelis need to remind the iranians that there are consequences to them of these kinds of actions. how they're going to do that is an excellent question. >> dan, where is the escape hatch here whether it's diplomatic and i don't know, where countries get to still look strong and also pull back from what could tip into something very, very dangerous. >> right. it's worth remembering to place the context of iran's attack, recall that this is in response to the israeli attack on the iranian consulate in damascus killing multiple iran yans. you can argue that i run's response in terms of all of the missiles and you're talking about it as a spectacular, but not deadly attack.

if i was israel i would respond with a deadly, but unspectacular attack. the thing you the to be sure is israel's response might cause costs to iran, but not so public to require an additional response by iran, otherwise you are leading up the escalation ladder and we are leaving the grad school seminar and entering the real world where you would have a much wider middle east war which would be extremely dangerous on all sides. >> all of this takes on a different tint given netanyahu's political fragility and the election season that we're getting deeper in the united states. nobody wants to be perceive as being weak. how do you expect to see them navigate this? >> well, i don't think that nobody wants to be perceived as being seen as weak. frankly, the white house has been perceived as weak by the israelis, on the one hand for -- for urging constantly urging caution for telling them they

can't go into southern gaza to rescue their hostages and finish out hamas and you can deal with the left plank of the democratic party. you're right, of course, that politics are intervening here. the israelis can't play on two fields at the same time. they cannot play in american white house politics and defend their nation, deal with hamas and deal with the iranians. so they are focusing, i think, correctly on their own national security threats and letting the white house walk this tightrope rather inexpertly. ? dan, i'm not sure what an expert walk would be in this space station situation and she's pretty upset how it will play out in gaza, and in feet facing

an attack from an arab neighbor. >> first of all all, i run's bet message from the biden administration. i believe over the weekend the biden administration made it clear it would not support an attack on iran making it clear it wants what's going on to be de-escalated. it's also worth noting that the one area where the u.s. does have deterrence has been in response to the october hamas attack after iran's proxies launched a number of attacks on u.s. soldiers throughout the region. the u.s. responded in force and that caused the iranians to have to sort of tell their proxies to stand down. >> i think to some expert, the problem is i gray with danny to come distress. i think the message want to

communicate, israel rushed in to, what it would probably want israel to do is to take its time in terms of thinking how to respond to iran in a way such that iran pays a price and you don't move up the escalatory ladder. >> dan, danielle, thank you. >> thanks. >> let's turn to the impact on the energy sector and oil prices spiking over the weekend and retreating today. brian sullivan joins me now with what is next. >> i think it follows up exactly with the conversation that you just had with dan and danielle, and i think it's all in israel's hands right now and the white house is tied up a bit, and i'll go from the geopolitical side you just talked about to the energy side, jon, which is on one hand you've got an iranian regime that was muching out 2 million barrels of oil a day a

couple of years ago and e believe iffively selling one ship per day on the open market and sanctions were being enforced more dramatically than they have been in the last couple of years and iran is back with 3.4 million barrels per day and they're selling five to six ship of oil per day and much of that is china. much of it was relied on iks ran and not just the calculous that the white house would have to make when speaking with israel and israel will do what it wants, ultimately. what the white house doesn't want is some direct attack on iranian oil facilities where that volume might come off the global market. we're still in the mid-80s and if we see even a part of those iranian barrels come off the market it would be easy to conceive of $100 a barrel oil and $5 gas, not just in california, but nationwide and

the economic aspect of this and i think there's something coming up in november as well that you may be familiar with that will play a part in the calculous of how the u.s. might like israel or even the u.s. itself to respond. >> and yet, if you're looking for targets that don't represent a huge loss of life, but would also exact some toll on iran, i think israel would be looking at that. >> i can give you an easier target. money. iran currency reserves have come back up. the more oil they sell the more money they make. if you can somehow sanction the money vis-a-vis the oil, iranian foreign currency reserves will go back down which simply gives them less money to buy drones from china. china supplying these engines or the drones. go after the money and potentially try to sanction

iranian oil in a more stringent way, but could you do that without spiking the price of oil? there is one way to do that which would probably go to opec maybe to the saudis who have 2 million barrels alone in spare capacity and try to get them to add more oil to the market. this is truly the most global of all economic discussions because a barrel of oil here is effectively the same as a barrel of oil there. it's extremely complicated and it will take a lot of nuance. >> yeah. i have a hard time imagining responding to drones and missiles with just sanctions. >> cut off the money so they can't buy any more. >> right. >> if you can't afford the drones to send to israel that's probably a good start. >> it makes sense, but so little about the situation does. brian, thank you. >> thank you. well, was there a report last week that the white house -- well, we'll put that aside. coming up, oil prices ran up

following iran's attack on israel, but it was a different story for bitcoin taking a sharp downturn on the news and still off the 70,000 level we saw last week. well, geopolitical risk might not be the only thing driving prices lower. that is next. encore energy, america's clean energy company, now in production in south texas. energizing america with reliable and affordable uranium for nuclear energy fuel from our environmentally friendly extraction process. encore energy. we really don't want people to think of feeding food

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♪ ♪ welcome back to "the exchange." the dow, s&p and nasdaq all down at session lows. the nasdaq down almost a percent and a half. bitcoin's price taking a hit, as well following iran's attack on israel. kate rooney joins me now. kate? >> hi there, jon. bitcoin's weekend sell-off was driven in part by the geopolitical risks, but there was also some tax reasons, but that 10% drop you mentioned, jon, it did come as a response

to news for the drone and missile attacks and the cryptocurrency headed into the weekend around $68,000 and it fell sharply below $60,000 and bitcoin is one of the only liquid assets that trades over the weekend. you have stocks closed and investors who feared any sort of escalation in the middle east likely sold bitcoin to ratchet down their risk exposure. there are crypto bulls out there who have long argued for bitcoin comparing it to digital gold. in this case, did not hold up as any safe haven this weekend and it was more prf oof that for no it would trade, and those that i talked to say they're allocating in small percentages and they still do very much view it as a risky tech play. another reason it sold off, jon, tax day. here in the u.s. fund strat announced traders could be selling bitcoin to meet tax obligations and some could be taking profits in what has been

one of the best performing asset classes and bitcoin roughly doubled since a year ago. it is bouncing back a bit and there were positive headlines that were more crypto specific that are helping sentiment and hong kong approved the first bitcoin and ethereum-based etfs and we saw what happened in the u.s. when the similar event happened and then there is a market event that's meant to reduce the supply of bitcoin coming up this week could be attributing to some of the optimism here. back over to you. >> yeah. i guess if you're looking at it as a ceiling on new supply then that's good for the price, but the escalating geopolitical tensions which we would have thought five years ago would also support the price of bitcoin don't seem to be, i can't figure out why i keep switching back and forth when people are saying this asset is behaving like. >> it's interesting, jon. somebody used the example of looking at bitcoin through a

prism. you might be a bitcoin bull looking at it saying, yes being it's absolutely a store value with inflation in certain parts of the world and it's got this cap on the value. other people look at it as a risk asset and the majority of traders at this point are viewing it that way. if you think of the market as a voting machine, traders are voting at this point that it's ing to be a high-beta, risky play. so there are both sides of it, but until the majority of investors treat it like a store value it will not trade that way, and we haven't seen that really prauf out quite yet. >> yeah. it certainly has been on quite a run since the beginning of the year. let's see, i'm looking at this beginning of the year. it was in the low 40,000s and it's now 63, 64. i gues are feeling vindicated, but i wonder if you heard much about the newcomers and people adding to it at this level and what

they're convincing themselves of. >> yeah, you see different reasons in terms of the long-term holders who bought in the at the beginning who had no reason to sell or saw their wealth grow on paper and these people have conviction that this is a store value. institutions, i mentioned the bitcoin etf proved those investors say we're allocating 2% or less. we see it as something we don't necessarily want to miss out on. there's a little bit of fomo when you're watching the price go up. those are the folks who say we'll put 2% of our clients' assets in there, but they're not looking at it as a performer. we don't want to miss out, but not betting the farm on bitcoin. it depends on who you ask and it's quite a divisive asset and the you are getting the more

institutional wall street crowd involved at this point, but they have different perspectives. >> eventually it becomes the netflix show that you have to watch so at the cocktail party you know what everyone is talking about and you don't look like a loser. >> exactly. >> hey, it can work. kate rooney, thank you. >> it's worked so far. >> yeah. >> except when it doesn't. >> coming up, netflix could hit a thousand bucks a share. speaking of in 2026 according to morgan stanley. so what's got them so bullish ahead of earnings this thursday? that's next.

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it powers big jobs and small ones too. from hospitals to hospitality, people rely on propane-an energy source that's affordable, plentiful, and environmentally friendly for everyone. get the facts at propane.com/now. welcome back to macv exchange. my next guest is sticking with the bullish trend. boosting his price target to $700 per share. join me as the head of research at morgan stanley. why is netflix performing so much better than its peers? >> thank you for having me,

john. when we look at netflix, it has won the streaming battle. a business with impressive growth, returns, and regeneration. when you compare it to its competitors today, that is a different profile than what we are seeing across most of the industry. we see 25-30 earnings grow. these are the kind of characteristics i can generate a lot of value. >> what if netflix was to say, because companies do, okay, we will start spending more to press our advantage in the situation. you know, investing in the future. our investors prepared for that? is that unlikely given the position that netflix has right now? >> i think part of why we are

still bullish is that we expect them to continue to invest in the business. they could go into more of a harvest mode if they chose. they have done a good job of balancing topline growth to reinvested back into the business to drive margins. if we look out at the view, if you are recommending the stock, you are thinking they will have success in things like advertising. in gains and to build out international programming. the key is that they can grow revenues faster and that drives the leverage. >> you think this could hit $1000 per share in 2.5 years. which one of those factors, if it is advertising, expansion, maybe even doing more in sports, which is most important

to getting there? >> that is a good question, they are all important. it is to generate 25 million per year and consistently drive revenue per user growth. they need to have elements of success in all of those areas. we think that sports is really interesting for the company. we think that advertising is a way to drive revenue while keeping consumer prices lower. games, they are only two years in. they are still early. if you look at americans that spend time and money on video games, they spend four times more than what the average television viewer does. if they can penetrate video games within the netflix sub plate, there is more opportunities there. >> how is it linked to consumer

spending? if people are giving up streaming services, they will give up netflix last. how much of an impact will that have on the stock? >> over the years we have been following the media space, video entertainment services are pretty sticky and a softer economy. they are not immune. for those consumers that are price-sensitive, at least in 12 big markets around the world, there is a cheaper option. i can mitigate some of the pressure we see for the consumer. >> that make sense. thank you. u.s. defense stocks ising because of rising tensions in the middle east. >> the market is near recession lows when we see headlines

regarding israel. defense stocks are higher right now. rtx, lockheed martin, which also got an upgrade this morning, all rallying on the geopolitical situation we are seeing play out in real time. the key question for investors, does this sentiment mean this is a shift? they underperformed the s&p over the last 12 months, this will be a key thing from the investor standpoint. the prime contractors have already been ramping production. they have increased spending on missile defense, munitions, thanks to ukraine and surging demand for u.s. allies. these have been on display in the last couple of days. margins have struggled to grow as sales have rebounded notably

over the past year. ongoing supply chain issues. three things to watch in the near term as an investor in defense, can the situation in the middle east de-escalate? how does israel respond to the unprecedented attack launched from inside of iran? we know that the u.s. reaffirms commitment to israel. how does this now play out as we get these headlines crossed? do lawmakers come together on the spending supplemental. maybe some signs that it does. topline defense budget is up this year. it is expected to grow 1%. earnings for the defense companies will kick off next week. contractors have signaled that margin growth can happen here in a more meaningful way.

right now, the focus is on geopolitics, the middle east. >> you mentioned supply chain issues. >> that has been the issue for demand outpacing supply. the u.s. has drawn down on stock piles to arm what is needed in these conflicts in the middle east. there are some sticky points and those can be worked through this year. billions of dollars going into those production lines to do that. >> all right, we will continue to watch that on overtime. same room, different desk. power lunch is up next after this quick break.

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good afternoon, everyone, welcome to power lunch. we begin this hour with a check on the market. stocks have turned lower. the nasdaq is now down 1.5%. oil is down too. not seeing the spike many have expected. the implications of ron's attack