always have. >> shannon? >> utilities. somehow both offense and defense in this market. >> all right. apple, $200 for the first-time ever. hope you'll join me on "closing bell." "the exchange" begins right now. ♪ ♪ >> great stuff, scott. thank you so much. i'm kelly evans. welcome to "the exchange." here's what's ahead this hour. recession probabilities are at the lowest level in over two years. but one part of the labor market might be suggesting otherwise. and that's one of the reasons our guest says we're not out of the woods yet. he's back to make his case. markets may be hitting highs, but there's stocks that were punished unfairly so says our guest. we'll get to that. barkleys capping apple's wwc

un underwhelming. and elon musk says apple's openai partnership is an unstoppable security threat. is it? apple shares are up 6% to $205 today, helping the dow. before that, we start with the markets. bob has more on these numbers. >> good to see you. it we have been struggling to get into positive territory, not happening right now here. let's look at the major indexes. the s&p 500 has been negative throughout the day here. it's hard to do that, get positive when the only thing moving is technology stocks. about 70% of the s&p is negative today. the dow, home depot, apple, in the green. financials very weak. i noticed this earlier, jpmorgan, goldman sacks, all weighing on that. mega cap tech in general is trading down today. it is apple, and let's put up apple. there's your stock of the day, maybe of the year. we passed 100 million shares,

trading. people kept asking me why today, why did it rocket today? all i can tell you the first 20 minutes, huge volume here. a lot of funds wanted to buy in. maybe because now they realize there's the potential for an upgrade cycle. a lot of buying right at the open, and that created a lot of momentum in the stocks. it's not translating into other stocks. other more speculative stocks not doing much. tesla, robin hood, roku, none of them are moving well. i want to mention banks. i talked about them this morning. they've been week for the last couple of weeks. goldman has been weighing on the dow, as is jpmorgan. they've been weak recently. even regional banks have been notably weak in the last few weeks and couple of days.

yesterday, huntington bank lowered their net. let me show you the kde, the big bank index that we watch. this hit -- was at recent highs about three weeks about. that's a 10% decline in about three weeks. so we're talking about a real trend here. as for why it's happening, there is some concern about potential lower loan growth there. huntington bank shares mentioned this yesterday. i think there's a reduced chance of rate cuts. more noise about commercial real estate. and some people are using it as a source of funds to buy technology. any rate, kelly, keep an eye on the bank stocks. >> bob, thank you very much. we appreciate it. as the fed kicks off its two-day meeting on rates, the latest survey shows the economy is gradually weakening. let's get to steve liesman with those results now. steve, what i do they tell us? >> good afternoon.

respondents to the survey see growth gradually weakening over the course of this year. but they've given up on predicting that the economy would approach or near stall speed. here are the numbers for the next several numbers. 2% in q2, up from the q1 we have so far. and down q3 and 4, and 2025 at one point, 3%. while those numbers show this gradual weakening, it's worth remembering, a year ago, all the next four quarters were forecast to be just barely above zero. the economy, of course, as we know, has showed surprising resilience. here are the numbers for the cpi, 3.4% currently. looking for 3 for the full year. 2.6 for 2025. cpi runs about a half a point above. unemployment rate ticking higher to 4.4%. it had been a low of 3.5%. and the recession, kelly gave it away earlier, down 31%

probability. that's the lowest since 2022. soft landing probability, 50%. no rate cut is priced in until december in the survey, with a september rate cut just below 50%. so a more hawkish outlook is seen going along with an economy that only weakens modestly over the course of the year. doesn't crash, kelly. >> steve, stay right there. we appreciate it. before we dive deeper into what's going on there, we want to go to the ten-year bond auction that was just happening. we saw again a little weaker bond auction yesterday, this one of super importance. rick santelli is standing by. rick, what do you need to tell us? >> unlike yesterday's three-year note, which tailed a basis point, this was in the screws by two basis points, meaning the one issued market was 4.457. and the auction went off at a yield of 4.438. lower yield, higher price. this auction defines a solid

auction. i gave it an "a." let's go through the details. it's reopening, so it's a nine-year, 11 month technically. it's $39 billion, and the yield 4.438, as i said. a as in apple. not only is pricing significant benchmarked against the one-issued market, which was super solid. if you look at the 2.67 bid to cover, the best since february of '22. indirect bidders, a whopping 74.6, the best since february of '23. the one fly in the ointment was direct bidders like pension funds, insurance companies. they were 13.8, the least amount they've taken at a ten-year since august of '21. it would have been an a plus if not for that. and the dealers taking 11.6. that's the smallest amount since august of '23. the smaller amount the dealers take, the bigger amount the pain

customers take. it was a solid auction. we don't complete this trifecta, which totaled 119 billion. threes, tens, and 30s tomorrow, because tomorrow is fed decision day. we'll take the last leg, 30-year bonds to the tune of $22 billion on thursday. kelly, back to you. >> rick, thank you very much. rick santelli. steve, that's got to be a sigh of relief. >> well, you know, i breathe a sigh of relief every time the government places this auction. i gave almost every auction an a, because i think it's incredible they're sell thing amount of bonds to begin with. it a es a little cynical, but here's the thing, i don't know, maybe rick can come back, but are we smelling a top here? i don't want to make too much of any single auction, but we seem to be, i don't know, hovering this 450 range, tseems to be th top for the moment here.

i would like to see if we can cap these rates right here in terms of the outlook for the fed and the outlook for inflation. >> rick, i think you're right there. have we put a cap in it for 50? i don't know, yields usually fall in a weakening economy. rick, what are your thoughts on the technical levels here? >> with respect to this ten-year, i would be fibbing if i didn't tell you all the pressure was probably out there between the fed, the treasury, dealers to definitely keep this one a solid auction. as much as they can. i'm not saying any rules were broken. i'm just saying that if you're going to make an auction look good with cpi tomorrow and the situation our federal reserve is in after other central banks, this is an auction you want to go well. and tomorrow's 30-year -- or wednesday, thursday's 30-year is important. but the ten-year is a benchmark is significant. as for how this fits into the economy at large, i continue to say there's strange behavior in

the labor market. the economy is slowing but not super fast. i still contend that every single auction is somewhat unique, and it's not poisoning the entire well when they go poorly. but it isn't making everything smell like roses when you get one that goes well, because every auction is going to continue to be a canary in the coal mine to the psyche of investors to the unbelievable amount of money the united states is borrowing. i'll tell you something else, the united states, in 1974, signed a pet row dollar agreement with saudi arabia. 50 years later was sunday, and i haven't read anything that stopped the expiration of that, meaning the saudis can now sell oil without the dollar being the denominating currency. think reserve currency here. there's a lot of moving parts. that story should be bidding more coverage, unless i missed something, it was not resigned. >> fair enough, but people think

that being the currency of choice is a problem for the u.s. more than a benefit. but we can dive into that -- >> that's what you say when you're about ready to lose the reserve status in an election year. >> rick, thank you. we appreciate it. rick santelli. let's brick in michael darden. michael, great to see you. you don't have a view on the dollar amidst all of this, do you? strong, weak, that's just the tail on the dog, right? >> yeah, i think it is, kelly. look, what we have to worry about is if there's some kind of drastic movement that imparts a business cycle shock and doesn't look like that's a threat at the moment for me. >> so in other words, if we had a crisis and a super strong dollar, something to that effect. we heard some anecdotes from steve's reporting about this discussion about the ten-year, michael. you're sticking with this idea that the slowdown is coming.

why? >> yeah. i think the data points in that direction. i mean, look, credit, where credit is due. we have been in a soft landing essentially for the last year. so the economy has outperformed expectations. the s&p 500 has just been an absolute tear, so credit to the bulls. the question is, you know, where do we go from here? and what wet're starting to see is signs of a late cycle environment where growth begins to slip below trend. that's what you tend to see just before a recession starts. now, maybe it's different this time. maybe the data is distorted. maybe we'll see big revisions in the future. but we have the unemployment rate up 0.6 from the cycle lows. if you go back throughhistory, you don't see a movement like that unless you're in the tail end of a business cycle expansion or early innings of a recession. >> got it. quickly to put a pin on that, because some are watching for

the rule to be triggered when the unemployment rate is up half a point. but you're saying we're up 0.6 from the lows and regardless, that's not a great sign. can you just explain to me, i do find it quite amazing and astonishing, for all the liquidity that's been sucked out of the system, why is the economy -- and gdp is fairly strong. real gdp 1%, okay. but even ngdp has been fairly strong. what do you make of that? >> very strong. so i think that all speaks to an environment where the neutral interest rate has been much higher in this cycle than it was in the last cycle. so the last cycle, after the financial crisis with deleveraging pressures, the fed had all it could do to keep the business cycle going. it's been just the opposite with the super rapid v-shaped recovery and high inflation and households having this access of excess savings, which is essentially gone now. so in this environment, the

neutral interest rate is higher, so the fed has to do more to slow the economy down. so the rate hikes they did, even though it was historic, you've got to go back four decades to see a movement like that in policy rates, has succeeded in slowing growth, nominal growth is slowing, inflation is coming down, although we had a few disappointing months. but we didn't see the bottom fall out of the economy or some kind of epic, sudden crash. so the neutral interest rate has been higher. the question going forward is, can the fed thread the needle here? obviously, the risk is that if they wait too long to start easing, then you have a recession. if they ease too soon or too much, there's an inflationary mess to clean up on the other side. there is a super high, maybe epic and historic level of confidence that the fed is going to get this just right, because the last year essentially has been a soft landing. and history shouldn't give us that much confidence in that regard.

>> sure. steve, do you want to jump in here? >> well, you know, i think what's interesting here is, i kind of agree with mike in the sense that i don't know if he would agree with this characterization, but i'm a technical cutter, which is sort of an insurance cutter. i think the fed can take some off the top and still be restrictive. whatever new neutral rate mike was talking about, it isn't 5.40. i think that's pretty clear. i think that if you do have concern, and i think mike's point about the unemployment rate is a good one, i mean, it is worth pointing out that this economy has outrun the inverted yield curve rule, and it might yet outrun the sam rule, but it's worth noting that the insurance -- i'm sorry, the unemployment rate has gone like this, and the inflation rate has gone like that. what's really interesting to me, i love mike's comment on this,

the fed forecast core pce for this year at 2.6%. it is now 2.75%. why is all of our hair, such as it remains, on fire over 0.15 miss on the year-end forecast, mike? >> great point, steve. look, i think the reason for that is that we had a ten-quarter inflation overshoot. so for temporary and transitory, that's quite a long period of time. and so i think because of that, because of that forecast error, the fed is reluctant to get going here in terms of -- i think what you described is like a mid cycle adjustment, where the policy rate is deemed to be restrictive. i think we can make that case. and so, you know, why not have the fed be preemptive and forward looking at get out there in front and make an adjustment

and hopefully preserve the business cycle? that's much easier to do if you haven't had a 2.5 year inflation overshoot. >> fair enough. >> that puts us unfortunately -- >> mike, i just wouldn't blow the soft landing for 15 basis points on the bce core. >> i agree with that. you and me both. if we were running the fed, maybe it would be a different story. but i don't envy the position e powell is in. he wants to reattain the inflation target. so they understand that if they wait too long to cut, you have a recession, and if they do it too soon, there's an inflation problem. their calculus is probably a bit better to wait too long than to get going too soon. that means we have some cycle risk with quite high equity valuations. i think that should put investors in a more conservative and cautious posture.

look, that's been my view for a while and it's not been playing out. we have this huge serve in equities and comm services. but maybe something boring like the utility sector, which hasn't done so well this year, would be a good place to hedge this bet if the fed ends up overstaying their welcome on a restrictive policy rate and we end up with a downturn before the end of the year. >> interesting. we've got to get you on the mock fed, mike. so you would be in the cutting camp for tomorrow, but the expectation is no cut now until september, december? >> our survey -- let me give you a fresh quote here. you're just at 54% -- sorry, i need my glasses, i apologize. you're at 51% for september in the market. our survey was 46%. but let me add one very quick fact. 66% of our respondents think the

biggest risk here, the most likely outcome, is the fed cuts too late. so that is the risk right now that is most on the minds of our respondents to the survey. >> gentlemen, a pleasure. thank you both. next hour on "power lunch" don't miss the debut decision of our mock board. we'll speak with six of these seven names next hour. the market may be at all-time highs, but there are a handful of companies punished. my next guest says it wasn't warranted in all cases. he has three names with attractive entry points, including lows. that was our history chart. david cat >> the ceo at matrix asset advisers. david, before i dive into lowe's, most people think the fed will cut too late, ie, the economy is slowing and they need to get ahead of that.

do you broadly share that concern or not? >> we're less concerned what month they cut more focused that the next move will be a cut. rates will go lower, and the economy and businesses are doing good. that's a good environment for stocks and for bonds. we just wouldn't get obsessed on the exact month they cut. >> so you're a little more bullish in your analysis of the economy. so just that might underpin this discussion. talk to me about a couple of the stocks that got hurt in the first quarter, and you think undeservedly so. >> what happened in aggregate, companies that people their expectations, stocks went up a lot like nvidia. but a number of companies like lowe's, zimmer, all had get quarters, but the market wanted more. a lot ofthe companies i just mentioned are selling below 15 times earnings, paying pretty

good yields. the outlook over the next 6 to 12 months are good. so we think it's much easier to buy a really good company, and if you do that, 6 to 12 months from now, those stock also be higher. >> because you're so good at answering anything that i can ask you, what is going on with apple today? this is extraordinary. so they have their event yesterday. so much anticipation, perceived in the moment as, i don't want to call it a dud, but it was, you know, it wasn't one of these whiz bang moments, but the stock today is making this huge one-day move, up 6% as people digest everything apple has debuted. it's one of the few things working in this market. what would you do here? >> so we think today makes a little more sense than yesterday. we were scratching our head yesterday that people were selling on a relatively good announcement. we think apple will be a beneficiary of the new ai

product they will have in their various devices. so we shouldn't chase apple today. but if it pulls back to the $190 level, it's an attractive entry point. we don't think this is going to be a new environment where apple is up 50% in the next year, but we like the stock from current levels. >> so that leads me to other areas of the ai ecosystem that would benefit. i don't know if we can draw a direct line to nvidia, but are you interested in that stock still? what about the rest of kind of the ai picks and shovels? >> so nvidia is a great company, but there's a tremendous amount of positive expectations. one of the companies we just talked about is cisco. they are a second or third derivative beneficiary of ai. to date, their stock has done nothing with that. at some point, all of this additional ai will create additional band width.

you'll need cisco to lay that out. stock also be a beneficiary of 13 times earnings and pays a good yield. another one that has done quite well is qualcomm. we think that has a new business cycle in terms of phones. also, they're going to be in pcs with ai. so that's an exciting company, not nearly as highly priced as nvidia, but the procspects are good, not great. >> david, thank you. appreciate your time. coming up, as we mentioned, apple hitting a new all-time high and flirtding with its best day in a year and a half after unveiling new ai offerings, but some, clip udzing elon musk, are raising concerns about privacy and curt. that's next. one luxury real estate developer in downtown san francisco is looking at opportunities on the other side

of the country. he'll join us with what he's seeing in the market and what's happening in commercial real estate. "the exchange" is back after this. >> this is "the exchange" on cnbc. to start a business, you need an idea. it's a pillow with a speaker in it! that's right craig. a team that's highly competent. i'm just here for the internets. at&t it's super-fast. reliable. you locked us out?! arrggghh! ahhhh! solution-oriented. [jenna screams] and most importantly... is the internet out? don't worry, we have at&t internet back-up. the next level network. i sold a pillow!

welcome back. apple hits an all-time intraday high, up to $205 a share now on a 6% jump after initially mixed reactions to its ai announcements.

citi said it was the best wwdc ever. and perhaps the strongest reaction actually came from elon musk. the tesla ceo called apple's implementation an unacceptable security violation. this after microsoft came under fire for security around its ai recall feature. how risky are these features really? let's ask david kennedy from binary defense. david, great to see you again. i'm going to ask you to be as wonky as possible. are they opening up new opportunities for taking information and doing perhaps me fair -- nefarious things with it? >> we're going to see a lot of things gained. apple is releasing two different models. they have their own apple ai, and also partnering with openai on their siri platform. the big question is, recall for example, essentially taking backup and snapshots every few

seconds of your machine and storing that, that's a huge privacy concern for us. i understand what microsoft is trying to do, but it opens up a whole can of worms. >> why? >> for elon musk specifically, he's concerned about his intellectual property. spacex, tesla, rocket ships, these models learn off of your data. the more you talk it to, the more it builds off of that. so the potential for intellectual property theft is there. >> i watched this live stream yesterday. they spent a very long period of time with a little lock symbol talking about how they were able to kind of -- again, i don't understand the semantics here, but they were able to take in your data without storing it or something to that effect. what is the nuance here? what is it that these by allowing these apps to talk to each other, what is apple opening up exactly? >> yeah. so apple is saying the same

thing twice. they have two separate things going on. they have their private compute model, which is going to be their private cloud. the problem is, that your device isn't powerful enough, at least in today's technology, to essentially power ai, right? so when it does things like looking at your latest recipes or trying to figure out what you're trying to ask it, it needs to off loads that. i just want to emphasize, apple has been one of the leading folks out there around privacy, data, consumer data. they've really led the charge on that versus google which is much more open with gemini and everything else. the problem you're running into is that the second part that you have is the partnership with openai. openai, the way that their models work is that once you use that data, it's consumed into their models and can be used again for other people. it may not have your customer or your personal information on there, but the data that's in there can be used by other folks, which can be potentially

intellectual property. >> so am migpple -- >> so what ends up happening, think of i-message for example, writ's encrypted end-to-end. same thing in this case in a private compute model. your sees would be used with a private server that's allocated to you, spun up as needed. that data would be encrypted in their private cloud, so no sharing of information, those models wouldn't be used to train other models. it's your own private model, which is the first we have seen of this technology and security. it's a great privacy feature. what's happening is everybody was really caught off guard with the progress openai has made, so you look at the debarkle with bard, now gemini. with co-pilot, they had to partner with openai just to get it. so everybody is playing catchup. so it's a catchup piece right now. >> that brings us to the second

part. now when you ask siri a question, if you can't answer it, she can say maybe chatgbt can answer it. so you're inputting information into the system, is elon musk concerned that chatgbt is going to take trade secrets from x or tesla or what have you? >> that's correct. his big concern is specifically the integrate with siri and use of openai, which can be shared with other models. so that part right there, while the data may be not to an individual person, the type of data you're inputting is used collectively across millions of people that are using openai. so it's not really privacy centric in that case, with that type of data. so if someone is looking up what's the next generation gpu processor for nvidia that can be used with tesla? that gives an idea of what tesla will be using for a next generation of a processor. >> does openai have an answer as to how that information is

protected, or does it have that capability yet? >> well, there are certain things that you can do if you purchase premium subscriptions to openai, that the data isn't used for those models. in this case specifically, it's how openai gets better. it needs data from all sources to get more refined and more accurate. so this is by design whereby apple feeding in information through siri to openai, it gets better how it responds, its reactions with human beings from a generative ai respect. so how these language models work is learning off other people. >> so people are say thing is a self-serving by musk who himself has been collecting user data at tesla. do you think his concerns are valid, and does openai either need to come up with a way to address this for enterprises broadly, because i don't think apple wants companies saying no one can bring an iphone to work.

>> apple has done a great job for privacy. so i would assume that they're going to continue down that track. i think there's a lot of bad blood between elon and sam and openai originally being one of the co-founders of openai. so a lot is just bad blood between the two. his concerns are correct in the sense of the sharing of data and the potential implications, but it's overblown as far as banning everybody from being able to use it. the chances of somebody using siri for intellectual property to then the model share with somebody else seems like a wide edge case. it's still there, but it seems to be an overreaction from my perspective. >> david, great to check in with you. thank you. >> thank you, appreciate it. coming up, new legislation on capitol hill could hit hotels' bottom line ahead of the summer travel season. we have those details ahead. don't go anywhere.

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welcome back to "the exchange," everybody. i'm tyler mathisen with your news update at this hour. manhattan district attorney

alvin bragg will appear before congress after donald trump's sentencing in his trial in july. that is according to sources who spoke with nbc news. bragg will face the house judiciary commitly with a former justice department official who led the trump investigation. the hearing will likely be hostile. the chairman, jim jordan of ohio has accused the man of "politically persecuting the former president." the u.s. lifted a ban that prevented controversial ukrainian military using american weapons. the decade long restriction was on the azov brigade which has neonazi origins. african el famtephants call other by specific names. the names are part of the elephant's low rumbles that can be heard over long distances. the researchers say they

recognize and react to a call meant for them ignoring calls addressed to others. kelly, back to you. >> tyler, thank you very much. tyler mathisen. still to come, luxury real estate developer michael shvo joins me after t bakhere. "the exchange" is back in a moment.

(♪♪) at enterprise mobility, our experts always see another road. because when there's no limit to how far mobility can go, there's no limit to how far businesses can go. (♪♪)

welcome back to "the exchange." ratings firms have been sounding the alarms on commercial real estate. moody's told us yesterday high exposure to these loans pose a risk to regional banks and put eight on review for downgrade. fitch says office performance are projecting dling wen -- delinquencies to jump 10%. joining me is michael shvo. welcome back. >> good to see you. >> you were close to opening the transamerica project in san francisco, is that right? >> that's correct, september of this year we will be opening the $250 million renovation, totally repositioning the most famous asset in san francisco. >> is that office? >> it is office. it's office and retail.

it's continuing to operate in office. we they have shut it down, but we have transformed and elevated the entire building. so norman foster has redone all the public spaces with the intent to obviously elevate the building and replace some low-paying tenants with super high-paying tentenants. >> it's not new york, but i still see distopian images of what's going on in san francisco's downtown. how much can you get on a building to work and people to come back to the office and how much do you need the city to share in welcoming this renaissance? >> so the office market today is a tale of two markets. the super prime market, which is the only thing that we focus on, is doing extremely well. record relates and record occupancy. that is because there's a massive flight to quality post covid. in san francisco, which is a market that traditionally now we have seen in the last few years a strong downturn, we are seeing

rents that are 2.5 times precovid. >> really? >> absolutely. if you look at the announcements from apple, with the focus on ai, it's a massive driver in san francisco. 50% of all money invested in ai is in san francisco. this is a huge data point that is driving office occupancy. we're seeing ai companies, we're the benefactor of the top of the market, the d.c.s and companies oh of that nature that are ai in nature. but there is something happening in san francisco and you're feeling it of these ai companies moving the market. so i'm optimistic on san francisco. i was here a few months ago. i'm as optimistic more today than the last time we saw each other. >> meanwhile in new york, how would you characterize the similarities or differences? >> we're seeing in new york top of the market rents at all-time

highs. new york has seening iover $300 foot, highest rent in the country. on 5th avenue, there is no inventory. and recently one of our large tenants left the building, they were paying rents between $40 to $70, now we have rented that between $120 and $180 a foot. we're talking office. the top of the market has been doing really well. it's the cross markets. we operate in miami, chicago, beverly hills. the market is at an all-time high. >> if i'm a regional bank with exposure to the worst parts of the office market, it is what it is. so you're stay thing this part of the country -- in parts of the country and the market that you're confident that will continue to do well. the only question is, if we do enter into a downturn in the

next six to 12 months, which could happen, but you always have to plan for that, i guess. >> yeah, so look, we have a fed meeting happening today and tomorrow. i can't guess, you know, what's going on in the fed's mind as far as where interest rates are going. but what's important is how do you protect the downside, how do you protect the unknowns of where the fed is going? in today's world, when you talk about the regional banks, there is a fear of what's going to happen with all the dleenelinquy delinquencies. you have to take it at land value and they will be recycled. it's the nature of the beast and it's inevidencetable. if you don't have refinancing eminent, you don't have much to worry because you don't have a financing event. rents are still doing well, and at the peak of the market, they're at all-time highs. so regional banks are concerned

because they have a lot of properties, and that's where the blood is right now. >> michael, great to check in with you. we look forward to see how it does in september. i appreciate you joining me today. thanks for your time. >> it's a pleasure >> michael shvo. coming up, congress is looking to end more junk fees. that's nt "e chgeexonthexan." ♪ ♪ ♪ ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ ♪ [thunder rumbles] ♪ ♪

welcome back. lawmakers are not just targeting junk fees on credit cards, they're going after hotels and online travel agencies in a bill set for a vote this week. emily wilkins has the details. emily, what's the time frame sh >> just a couple hours now is when we expect the house to be doing this vote. this is involving hidden fees when booking hotel rooms. the hope is that could be a thing of the past. it's a bipartisan bill in the house and senate. lawmakers are planning to use

this expedited process to get this bill done. it would require hotels and other lodging companies to make sure any advertised price includes the price of mandatory fees. these fees are anywhere from $20 to $50. adding them to a bill catches travelers off guard. about 37% of all travelers have found unexpected fees after receiving a hotel bill according to a consumer report survey. those fees add up. hotels raked in an estimated $2.9 billion in fees in 2018, the last year that data is available. the american hotel and lodging association has defended the fees, but they also have endorsed this bill as a way to level the playing field as ensure that consumers can more accurately compare nightly rates. >> lodging consumers we know look and book across a range of platforms. so ensuring that you have the standard that transparent fee display, that's why we're so supportive of this. >> this federal bill comes as

the ftc has proposed a rule that fees are disclosed up front and what they are for. the idea is to have a national standard and think this bill can get it done. >> it's happened to all of us. . emily, thank you very much. emily wilkins. coming up, investor risk appetite is climbing in the muni market. one fund manager says to buy now. "the exchange" will be right back. but it's not the critic who counts. with every swing and block, your game plan never changed. ♪♪ some still call it luck. let them. because you know what it's always been. inevitable. ♪♪ ♪♪

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♪ welcome back to "the exchange." mun-i bond demand is heating up. inflows to mutual funds were $11 billion last week. with more than half going into high-yield funds specifically. and between high yield and more high grade, our next guest says there's plenty tuptd throughout. joining me with his key sectors is dan close. great to have you here. welcome. >> thank you for having me, kelly. >> can we paint the picture for munis. they suffered as the fed began jacking rates up. everything had to get reset in terms of yields that could entice investors. where are we now? >> yeah. munis had a difficult year so

far this year. it's primarily two factors. one is rates. back up 50 bases points in the 10-year treasury impacted munis and all fixed income. munis certainly been affected. we had something very unique to munis. 40% higher than we were may of last year. >> ow. >> we had two back-to-back months of more than 40 billion in april and may. so the market has had some trouble really digesting all the supply that we've seen. it's just issuers trying to get in front of the election, go in and issue back in 2016, there was a number of issuers that waited, waited, didn't like the outcome. now we're talking to underwriters, to bankers, to issuers and trying to get in front of it. i think it sets us up nicely for the second half of the year but it's been tougher so far. >> that's interesting. 40 billion a month, very high ore only by recent historical standards. >> very high by recent standards and historically.

given month we don't see 40 billion. we are seeing confluence of issuance right now. i think that's part of the calendar getting pulled up. issuers trying to avoid any uncertainty with respect to what the issuance might be with the election. >> i want to 9.25 tax equivalent yield, what exposure am i getting? where would you point people if they wanted something that wasn't going to -- they wanted to sleep at night? >> right, right. 9.25 on a tax equivalent yield is where our high yield fund is right now. that is going in and buying primarily non-rated paper. certainly still essential service monopoly. but these are more non-rated double b, single b type issuances. >> such as? any examples? what kinds of projects or pieces of infrastructure or whatever? >> all of these are for infrastructure. but right now, in our high-yield fund, for instance, we have a lot of what are called dirt deals. you're putting in streets,

potable water but then getting repaid over time by going in and paying an assessment. >> is that a risky endeavor? it would seem over time that would be a pretty good one. >> certainly, certainly. taking a lot more risk up front, but over time it turns into essentially a local general obligation bond. there is some more risk up front. but if we're wrong in our analysis, off lot of value to lean, an ability to have a mortgage. so these types of credits are in the high yield fund. charter schools in the high yield fund. >> really? >> different types of credits that are more nontraditional. >> on more of the high end, high grade, whatever -- on the luxury side, where would you be looking in that space if you said, okay, maybe i don't need 9.25, but take something over 5 for a pretty reliable backer? >> right. right now on the entire municipal yield curve no matter where you are, aaa rated bonds, yielded more than 5% on the taxable equivalent yield. that's why we have seen so many flows come in. we're looking more on the high

grade side, water and sewer, backed by local property taxes and airport debt being issued, too. start to see airports go in and go a little more away from building just runways and gates, we're seeing more amenities come in for shopping, for retail outlets for other things that come up. and we're seeing that. >> i don't know why mu-nis get -- i think this is fascinating. the election thing you mentioned as well. dan, thank you for your time today. we'll follow up and see especially as the election grows near how that's affecting investors. >> thank you for having me. >> dan close. that's it for "the exchange." tyler is getting ready for "power lunch." we'll hear from our mock fed. don't go anywhere.

♪ welcome, everybody, to "power lunch." alongside kelly evans, i'm tyler math sen. glad you could join us. we're 24 hours from the fed's decision on interest rates. we've created our own version of the fed to discuss what they would do on rates. not what they think the fed is going to do, what they would do. more on that coming up. >> looking forward to it. but first a check on the market. about 24 hours away from that fed decision and the dow, while it's down by half a percent, apple is helping it by 70 points. the s&p, by the way,