market can do. brynn, final grade >> i like them all >> jen >> sl green. >> rising oil, hess. >> i'll see you on "closing bell" in a couple of hours "the exchange" begins right now. ♪ ♪ hi, everybody. welcome to "the exchange." i'm kelly evans. a busy hour ahead. markets are awaiting tomorrow's cp ireport, but should it matter that much? one investor said no, and it could lead to a big mistake by the fed. and the bifurcation in banks. wall street remaining confident, but main street worried about the credit crunch. when you hear the words dividend pay, you think safety

play but the dividend stocks you might want to avoid in this market, coming up. before all that, let's get a look at today's market action. dow up 170 points at the highs we'll check in across the majors right now, which are reversing their pattern year-to-date again, this reversal the past several sessions, nasdaq is the laggard, down a quarter percent. dow right now, just off session highs, up about half a percent worst performing sectors today, and the best, here is a glance at where we stand. technology, down 1% for the laggard. energy leading the way, up more than 1%. oil up 2% today. analysts dig further into why this tech underperformance is taking place it's the big cap names amazon, some of the worst names in the s&p right now, down 2.5%. microsoft down and the best performer today,

car max. shares surging despite an earnings miss. the reason, cost cuts. the company pulling back on marketing, reducing head count and so forth but they warned about inflation and tightening lending standards. keep an eye on that. used car prices fell 9% last quarter and back to early 2022 levels again, the stock up 10% today. let's turn to the cp irei repord see if it's a red herring. one investor is calling on the fed to stop hiking and the ball is in their court to avoid a recession. with me is charlie, vice chairman of ariel investments. great to see you again let's start with why you don't put a lot into this cpi number >> well, i don't put a lot of weight on the cpi number, because it's a lag indicator

unfortunately, the fed puts a lot of weight on that number the fed is behind measuring inflation. when they try to figure out rent inflation, they call people up and the phone and say what could you rent your house for? that's a terrible way to measure rent actual rents are declining, but the fed has it increasing. the good news is, eventually, their data will catch up with reality. that's going to happen sometime over the next couple of months, and they will realize that inflation is not going back to 2%, but it's going to be something like 3% to 4% this year and that is as reasonable as we can get to after the fed messed up and flooded the market with money back two years ago so the good news is, we're not going to get to 2% in the short run, but we are moving in the right direction and even the fed will realize that over the next couple of months

>> as of yesterday, the market odds were 70%. that's pretty high what do you think would happen if they hike again >> they're likely to increase one more time at 25 basis points, and then realize, and i don't think they want to chshow panic or overconcern about the banking system, so one more time they'll raise rates. then i think they could easily be done. there's lots of evidence that bank lending is getting dangerously tight. i think there's lots of evidence that the banking system had significant withdrawals from its deposit base the fed is not naive to not realize that's a serious danger. so the most likely scenario, one time where the market is getting it right, is one more increase in rates then holding there and slightly reducing rates on the back half of the year. that sets up well for the economy and the stock market

>> i hope so but it looks like a lot of this is sealed. we see the leading indicators turning over and credit crunch yeah, maybe you're right but even jobless claims are starting to head fornorth a lite bit. >> we're having decent job growth, record low unemployment, we have that employment spread out, different demographic groups again, the consumer is 70% of the u.s. economy the consumer is in pretty good shape right now. most important, kelly, a lot of the cyclical stocks -- you say this is baked into the market, but cyclical stocks are not. the cyclical stocks are acting like we're going to have a recession. >> that's what i mean, so in other words, what's baked in -- the recession to me almost seems baked in the leading indicators are acting like it, the cyclicals are acting like it's going to happen you would be going against what

looks like the weight of history that is playing out in front of our eyes >> well, the weight of history says the way to make money in the market is to buy what others are selling. right now, that is set up for cyclicals. you're right, the market is acting like a recession is very probable, maybe even a severe one. i think it's 50-50 whether he will have one at all but the point is, the names right now that are expensive are defensive names, technology names that are viewed as being less tied to the economy whereas what is cheap is what is performing well today by the way. so names like mohawk that i talk to you all about, the automotive supplier, apache, the oil industry, they are trading for less than ten times earnings because people are worried about a recession. and if we don't get one, they're going to do very well. >> you bring up something that i was talking to other investors

about, is the stock market, are stocks in general too expensive? maybe warren buffett is buying shares of japanese trading houses, but the lack of buying of a lot of u.s. equities, doesn't that tell you something? they're doing a lot in the energy space, but even when i talk to bank investors, these stocks are not bargains here, even after the re-rating that we have seen. so it seems like most value oriented investors like yourself are saying this market is not a bargain my any stretch >> the key phrase is "this market." you can't look at the s&p 500 and say it's cheap but the s&p 500 is dominated by large-cap tech names which are not cheap. but value stocks in certain industries are cheap goldman sachs is trading at book value. that is historically cheap

it rarely does, and when it has in history, it's been a wonderful time to buy goldman sachs. apache, there has not been enough money spent in the oil sector, and we're going to need oil and galss for the next ten years. so the market is not cheap, but cyclicals and consumer discretionary and certain financial industry stocks are very attractive. >> quick final word. when you look at the growth, you know, what do we call it, levitation for this year, maybe it's coming to a halt right now. perhaps people say that's all because we're now pricing in fed cuts but i don't know i know to someone like yourself, that's a countertrend. but would you offer any comment about it is there a sea change taking place here

>> i think you have to watch one thing. growth stocks, tech stocks, do very well when interest rates come down, because their earnings are all in the distant future so reduction in the distown rate is very helpful to those tech stocks remember, long-term rates have fallen this year the ten-year is down to 3.4% that's very good for tech and growth stocks. my prediction, is as we get on the other side of these recession nar fears, long-term rate also go above 4%. and that will not be good for tech stocks. >> all right we'll leave it there, charlie. thank you for your time. >> thanks, kelly let's szero in on the commodities. so far in april, aluminum is down 4%. gold up the 2% bitcoin surging 6% what is this, is it a classic recession trade?

let's take a look with carter, good to see you again. welcome. >> likewise. >> what do you divine? >> so many moving parts. things that are dormant, come to life, bitcoin. we know in the beginning of the year, the most popular, embraced area of the market was financials and banks too bad. we know that tech was hated. look at that, off to the races it is always that circumstance the market is churning, it's not progressing. we are at a major inflection point. it's usually the fundamentals that come along and form the pattern. it will be earnings. we shall see my bias is that there is little to no upside, while unknown but perspective, lots of downside. >> i remember when we talked in december about your concern for the s&p 500. now we have seen this big liftoff, at least for the nasdaq

since january 1. just before you join me here today, you put on another note saying grab your hard hats, s&p 500. so why do you continue to look at these formations and say, they are telling you there's more downside than upside? >> sure. so remember, the weak form of analysis is to stare at the chart of the s&p 500, the whole comprises the parts. we study the parts as any good analyst would do we look at the charts one at a time we have a bifurcated market. we have tech and telecommunications up 20%. financials are down 6%, 7% that's what rotation is. but the problem is, we put out a note about the face of fear. is it good technique when one is concerned about perspective weakness in the economy, to move into large, id ioidiosyndemocra

names. it's almost like this, it's saying i'm so worried, i was so concerned. let me just give all my money to john rockefeller and andrew carnegie which is to say, you have my money, it's the safest place to be i don't think that's a bullish thing particularly to me, it's defensive. >> the only thing i would say, look at tesla, look at draft kings and some of the most speculative stocks you know, we saw other high multiple tech trades, and not just big cap tech. i am curious how much more upside you have in bitcoin and gold, so the largest thing we have here, do you stick with

what's been working or not the correlation between crypto and the nasdaq has broken down significantly this year. so i'm trying to figure out what the next play is >> a good technique in principal, momentum is powerful. you want to generally respect it unless and until it gets to be the definition of a crowded trade. that's the circumstance you have the s&p 500 technology sector is right now trying to finally recoup all of its relative losses since the dot com peak. so if you look at an rs line of the tech sector, it is yet to recoup all of its losses relative to the s&p since march of 2000. it just shows how bad it is when you buy something at the wrong moment bitcoin, this is the most volatile thing there is. it's up 100% that's quite bullish

another way to say it, bitcoin, recently down as much as 77% from it's all-time high, is now down only 56%. >> in other words, you're still bearish on bitcoin >> it's come a long way. >> how much downside by the way for the s&p 500? >> you have to assume -- talking about reports, it's got to be something meaningful so you have 8%, 10% downside at a minimum. whereas gold is the place to be. >> final question then, we have seen some high yield inflows first time in seven weeks, largest inflows this week, seen as this classic signs of risk taking maybe corroborate the kinds of things we were talking about in tech and all the rest of it. is this a signal you put a lot of credence into

>> what's interesting, if you look at an overlay and you can do it with a high grade investment versus junk, there it is on the screen they're almost identical so right now, there is no real warning in the chart of the hyg or the jnk >> carter, 8% to 10% downside for the s&p. no one wants to hear it, right >> right >> do you still have an explanation why we had this countertrend rally the past three months >> again, suspect it just the reciprocal -- the equal weight of the s&p is barely up on the year it's all in a handful of names >> thank you for joining us. still ahead, the oracle is joining down on japan's trading houses saying buffet is buying at the

top. we'll reveal the emerging markets. and earnings seasons kicks off on friday. as we head to break, here is a look at the markets. the dow up 145, outperforming the s&p and the nasdaq the russell 2000 continues to be a strong performer, up 1% today. "the exchange" will be back after this lomita feed is 101 years old this year and counting. i'm bill lockwood, current caretaker and owner. when covid hit, we had some challenges like a lot of businesses did. i heard about the payroll tax refund, it allowed us to keep the amount of people that we needed and the people that have been here taking care of us. see if your business may qualify. go to getrefunds.com.

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welcome back to "the exchange." warren buffett getting bullish on japan boosting his stake in five japanese trading houses and may buy more shares of the companies up more than 2% on the news. my next guest warns buffet can be buying at the top and he's sticking to emerging markets and opportunities. joining me now is mark, good to see you again. welcome back >> thank you good to be back. >> we should mention this isn't a one off by buffet. this is a big play for him why do you think that is the >> the pe ratios of these japanese trading companies are low, single digits so that's the number one

atracktant number two, they do pay dividends. as we look at these charts, wow. these are up about 100% plus so it looks like he's buying at the top, but i think he's got bigger fish to fry i think he's got plans for something else he's planning some big deal, which may need the help of these japanese trading companies so i think that's another complex aspect to look at. also, he's floating yen bonds for berkshire hathaway, which may impact what he's doing on the stock market so it's a number of things happening here, but i would not buy these companies. the return on capital is not high i thought the pe was low, but

the prices have just gone up too much, i believe. >> is it possible that they make sense as a commodities play, as we know he's bullish energy is one of the only places in the u.s. he's pretty active right now. >> yes, very good point. remember, these companies are not only in commodities, they are all over the world consumer products and manufacturing, all kinds of things so yeah, there may be something to do with commodities, but it's probably some fraction of what they actually are doing in their businesses >> sure. let me turn from japan, which is, as you said, not part of your appetite. i know you're looking at the emerging markets brazil has been a disappointment i do know overall, i think emerging markets have been trailing to some extent the u.s. market so far year-to-date

>> yeah, recently, there have been periods when emerging markets have outperformed. now you're going to see a performance as a result of china. when we look at emerging markets, we look at the index, and the index now moving ahead and is beginning to track the s&p, as you can see from this chart, and mainly because of what's happening in china. >> explain that, because most people have concerns about what's happening in china. grant it, it's the only place where we see m2 expanding, but their inflation data was surprisingly soft. that doesn't point to an economy with a lot of pent up demand >> you look at the chinese statistics, you have to take it all with a grain of salt the figures according to the policies of the communist party,

you have to be careful on that front. but it's clear that the chinese are determined to boost the economy. they are moving very, very aggressively to attract foreign business, and the local market is doing very well the local investors are a big factor in that market, as well so putting that all together, i believe that china will do a lot better than many of these other markets. and that as a result of the 30% of the emerging markets index, will boost the index and will attract a lot of attention >> sure. quick final question on taiwan, where i know you're enthusiastic about some of the investment in technology success they have had, but is overshadowed by china. what would you say to investors about the opportunities and the risks there? >> there is an interplay between taiwan and china

there is a tremendous amount of trade between these two areas. a lot of taiwan companies are successful in china. the biggest soft drink manufacturers are taiwanese. and in the tech area, china has been very independent on taiwan. so i think that's going to happen very soon in terms of downturn in trade between these two countries. of course, because of the u.s. sanctions, taiwan will have to be very careful of what it ships and gives to chin ai -- china >> is it true that taiwan is your biggest holding, about 20% of the portfolio, is that just the strength of the semiconductor name >> that's right. because we believe that the so-called fabulous companies, companies that do the software for the large manufacturers like

tsmc, are going to do very well moving forward they're very cheap now they're growing at a tremendous rate, and they have tremendous potential going forward. >> in that sense, you grow with the tech community here in the u.s. mark, thank you for your time today. good to see you. >> thank you and don't miss that special "squawk box" event tomorrow morning. warren buffett will join live from japan starting at 6:00 a.m. eastern. we look forward to seeing that here on cnbc still ahead here, 2023 could be all about rezoglobalization. one strategist says the supply chain will be a boom for some foreign economies. at home, small business optimism is sitting at recession levels and here is the dow map.

30 names there with microsoft lagging and caterpillar leading the way today. "the exchange" is back after this ooh. - wait, wh- wh- what was that? - huh? what, that? no, don't worry about that. here we go. - asking the right question can greatly impact your future. - are, are you qualified to do this? - what? - especially when it comes to your finances. - yeehaw! - do you have a question? - are you a certified financial planner™? - yes. i'm a cfp® professional. - cfp® professionals are committed to acting in your best interest. that's why it's gotta be a cfp®. find your cfp® professional at letsmakeaplan.org.

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an upgrade to buy. it's up almost 6% today. recession fears and earnings slowdown are already priced in and further bearishness is overly exaggerated and profit margins should improve as material and labor costs get back to normal and shares of ww, weight watchers, soaring another 51% today after closing that weight close acquisition deal weight loss prescriptions are the next way for companies to gain business. now to tyler mathisen for a cnbc news update >> thank you very much here is your update at this hour new details from the leaked classified pentagon documents show that ukrainian agents have pursued drone attacks inside belarus and russia, contrary to u.s. and western wishes. two documents show ukraine launching operations inside

other countries, which may cause some allies to reconsider their support for kyiv president zelenskyy's office did not respond to a request for comment. elizabeth holmes has been ordered to report to prison. the disgraced founding and ceo of theranos was found guilty of fraud in january of 2022 and sentenced to 11 years in prison back in january. she recently gave birth to her second child and is expected to report to a minimum security facility on april 27th and the fda's commissioner robert callus telling cnbc that health misinformation is lowering u.s. life expectancy. there is a need, he says, for better regulation to root out misinformation and he's made it a top priority back to you. >> tyler, thank you. chicago fed president austin

ghoulsby making remarks on the economy. steve liesman has more >> the new chicago fed president who just took office making some of his first comments on the economy and the recent banking problems, saying the fed should take financial stress into account when setting monetary policy goolsbee will say it calls for peru dance and patience. he goes on to cite private sector analysis that show it could be the equivalent of 75 basis points financial stress can have a real impact on the economy, and workers, businesses, and consumers can suffer immense harm if these banking problems turn into a financial chriss he says the fed needs to be on

the watch for the real possibility of tighter credit conditions it doesn't seem like he's saying the feds should. hike rates given how uncertainty abounds where these financial head winds are going, we need to be cautious we should gather further data and be careful about raising rates too adrggressively until e see how much work the head winds are doing for us in getting down inflation. he says the main way to handle financial stress could be supervisory and regulatory tools that the fed has the situation is better than the great financial crisis and says that times of financial stress are a terrible time to default on the nation's debt so kelly, not a slam dunk. i have to say he's one of the most dovish comments yet, or

maybe not quite alarmist, but concerned comments yet about the recent banking problems, leading to financial stress, and maybe one of the first to link it very closely to what should be done with monetary policy >> steve, dow is still unchanged around that plus 1.50 point of view williams seemed to down play that somewhat, and people were surprised. and here he seems to be making more of a logical argument >> i guess i describe it this way, a visual thing. williams has an arms length distance with the financial problems we have he said we need to watch the problems over there, but it's not really a very big problem. of course, you did see that big decline in lending that we got in the fed's report friday afternoon.

lending remains relatively high. compared to before the pandemic. but it was one of the biggest two-week declines that we've had since 2009 on a percentage basis. goolsbee feels that financial stress is a little closer and a little more worried about it, and likely to say it could have an effect on monetary policy i can't read what he's saying, kelly, and say he would vote against a rate hike. he is a voter at the may meeting. but i guess if we see continued weeks of banking pullback, of banks pulling back in lending, as well as some attenuation in the inflation rate, it sounds like austin may be one of those people who could be convinced not to vote for a rate hike at the may meeting. >> thanks for bringing that to us steve liesman there. dow still up about 150

coming up, a make or break moment for netflix ey have an earnings report just over a week away. that's after the break stay with us here on "the exchange." you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible] wow! yeah! it's time to take control of your investing education. cut through the noise with best-in-class education resources that match your preferred style of learning. learn your way. not theirs. td ameritrade. where smart investors get smarter℠. there are some things that go better... together. burger and fries... soup and salad. like your workplace benefits and retirement savings. with voya, considering all your financial choices together can help you make smarter decisions. voya. well planned. well invested. well protected.

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welcome back big banks are set to kick off earnings this friday while there's only one celebrating on the street among these names, my next guest is trimming his allocation to just slightly above the s&p 500's weighting. joining me now is the chief investment strategist at oppenheimier john, good to see you again. let's talk about the financials. what is your thesis going into this earnings season >> first, thanks for having me on the show, kelly great to be on cnbc with you going into this season, we've got the journal over the weekend says that the consensus is looking for a little over 6% negative on the earnings for the quarter overall for the s&p 500. we're thinking when it comes to the financials, it will be very much an idiosyncratic that we're

going to be going through. we'll see some winners, and others not so much winners but we downgraded financials in the s&p 500 moving from an overweight to just a market perform. so it's not a severe downgrade our thoughts were, saessentiall you have a market subject to day-to-day news items. bears are ready to grab any catalyst to sell anything lower. so why be overexposed to the financials right now but you have to own the financials because everything runs on credit >> i was going to ask if you got caught by the same thing everyone else did, financials should have a great year because of rising interest rates, or maybe not, because this is the flip side of the coin. so i suppose to put it differently, why keep them at sector weight? why not go to underweight?

>> because the s&p 500 is the large caps it's the big ones. within that sector itself, you have not just pure banks, but banks that are very much diversified in terms of whether it's investment banking or it's training, what have you. they really offer a diversified approach to financials we didn't get caught up as much in the regionals, because while we had exposure and indices, we didn't extend ourselves in regionals. we were concerned they were going to have trouble, with interest rates rising to a point where mortgage -- people needed mortgages were likely to back away before move foring forward. we were surprised to the extent that regulators had taken their

eyes off apparently svb. >> let me ask you about utilities, which is the only place you have a lower weighting than the broad market. why is that? >> related to this, we think you still have an opportunity here to see the fed raise further we don't belong to the camp for the fed to either pause or cut rates this year. at least for the first half, we expect them to tweak higher, so long as the inflation rate remains concerning to them longer term, we don't know if they're going to go to this 2% we can only remember that many economists were actually complaining that 2% inflation was not enough to really see an economy the size of the u.s.

grow that's like be careful what you wish for >> right, right. so you're still 75% in stocks, 15% in fixed income, a little bit of cash and real estate, a little bit of commodities. is this a portfolio allocation that would work better in 2019 than 2023, or why don't you have bigger shifts towards some of these, you know, some of the things that people say like other types of asset classes might perform better just curious about that. >> at the beginning of the year, everybody was down playing what was going on with technology we were very well exposed to technology from the lows last year on october 12th, a lot of people were predicting the death of stocks and growth, and we maintained growthier value

we've done quite well with it. we think equities, when we look at it, for intermediate to longer term investors, especially in a world where people are investing for retirement and looking towards a retirement that may last much longer than they might have expected, equities are an essential place to be. so that's why we're not day traders. if we were trading on a trading floor, a trading room or dyi investors at home for the excitement, we might very well be moving around more actively but this is just the end of free money. that's what the fed is saying. it's a good thing. it immediates bond issuers have to pay for the privilege of borrowing money, and people who buy bonds get something back historically, i've been in this business 40 years and a few weeks, but interest rates are actually close to double digits

and equities were moving higher. >> wouldn't that be nice maybe. i don't know john, appreciate your time thank you for bringing your perspective today. >> thank you now, wall street may think the worst is over for the banks, but it's different for small business right now this comes as the optimism index slipped again and remained at recessionary levels for a year kate rogers has the details. >> monthly read on optimism for march is out, that shows a dip to 90.1. the group calls these recession levels where these lovered for over a year. those small business owners wait for a downturn while inflation and labor are still key issues and the outlook remains quite low. commentary really stuck out this morning in mention of banking concerns weighing on owners, saying, there are major

uncertainties ahead, most immediate is concern that a banking crisis could develop all this weighs heavily on small business owners, almost all of whom who see deteriorating business conditions and poor prospects for sales. the number of owners borrowing, 9% reported that their last loan was harder to get than prior attempts, up four points that's noteworthy and something we'll be monitoring. one bright spot, the group says consumer spending is keeping main street afloat for now that being said, the economic prospects are good for small business but mentioned the recession has yet to appear. so that banking crisis line, not something that you see all the time >> it's one of the most important data points, because small business has been 90% of the job openings a slowdown here is worth watching kate, thank you. still ahead, not just the

big banks, we have big tech getting ready to report and netflix will kick it off we have the details, next.

welcome back it's time for today's edition of "tech check" and we're talking netflix. the stock is up a nice 60% over the last six months, more than doubling off the 52-week low and now only about 10% of their recent highs with the next earnings report due out a week from today, analysts are debating how the crackdown on sharing is going. julia has more >> this is a topic of debate there are four analyst notes out today, wakie weighing in on the netflix crackdown of password

sharing. notes were issued maintaining their hold ratings jpmorgan defending its overweight rainirating the rollout of pay sharing has been slower than the company much priced in for execution risks, saying we believe netflix will need other growth drivers such as advertising and gaming to start contributing soon meanwhile, jpmorgan, a little bit more bullish writing, we continue to view the paid sharing rollout in conjunction with advertising as a major part of the near-term bull thesis looking ahead to earnings a week from today, this is the first quarter for which netflix has not shared a subscriber forecast, so we'll have to see how much this quarter's results follow the typical trend of netflix having a seasonally weak first quarter when it comes to subscribers. last year's q1 the first time in years that netflix had lost subs

kelly? >> now, even when i read recent data from bernstein's internet survey, they say netflix has react sell rated momentum in terms of downloads and streaming and that data seems to point to the renewed momentum they're thing. >> seems like renewed momentum i was reviewing the quarterly subscriber numbers from last year and it was the first half of last year that was weak the company lost over a million subscribers, but in the second half of the year, things accelerated. so the question is now, what kind of growth they see in terms of the ad business, the fact that they do have the ad supported option out there now, whether that helped them and how many people were subscribers, are so drawn to the content that even if they're borrowing a subscription, maybe they could get some of the people borrowing to start paying for their own subscription or the people paying and lending out their subscription to pay for maybe a bigger, more expensive option. >> exactly thank you very much. we appreciate it today

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welcome back to "the exchange," everybody dividend payers are on a red hot run. they paid out a record nearly $150 billion last quarter, but with slowdown fears persisting should people pile in. one of my next guests says not necessarily. joining me at cnbc headquarters is chad, senior portfolio manager with washington crossing advisors gina sanchez, chief market strategist and a cnbc contributor. welcome to both of you gina, pound the table on dvz for me i'm hearing a lot of talk and why it's the right strategy for a market like this. >> look, the challenge to dividends is they're going up against they're going up against higher interest rates. if you pick the right stocks, you also have upside to the stock as well, so it's not just a pure dividend play we think quality is important, and there are parts of the

dividend universe that are really expensive, different but expensive, we call them, but we're looking at the cross section of really great companies who make tremendous revenues, profitable, and whose dividends are growing in the health care sector we think there's definitely places where you can identify still cheap stocks, great outlooks and everything that goes with that. >> j&j, abbott, bristol-myers, j&j more controversial 3.5% we're talking about i don't know if that sets off alarm bells. when you pile into dividends don't look for the highest yield on the street. what are the thresholds and things to look for to know your dividend payer will be safe? >> not all dividend payers are the same high dividend payers, more likely, are similar to junk bonds. many of the high dividend paying stocks have a large amount of debt on their balance sheet, poor returns on their investment when they reinvest that into their business and they may have erratic earnings and revenue

growth hence the reason why you want to stay away from the low quality, high dividend payers. >> do you think they use the dividend as a way to basically say this is all we have to offer? >> pretty much you have low returns on invested capital. you reinvest into your business and don't earn the dollar you reinvested back into your business hence the reason why we've done research, you want to be in rising dividend companies that are quality, quality is different for everyone our definition of quality. >> if i had to put you on spot and say what dividend payout do you get nervous, 5%, 10? anything below i know that's not how you process it, generally speaking >> around 25 or 35% is a healthy dividend payout? >> terms of income but in terms of the dividend yield? >> you should focus on dividend yields below 2.5%. you're looking for companies that have high revenue growth, high returns on their invested capital and little or no debt on their balance sheet. you stay there, you can get a

fair return with much less volatility. >> okay. gina, i'll give you a last word here these companies would be a little above that threshold but do you feel comfortable with them >> we agree that high quality is absolutely important, it's core to our strategy, and we are looking for that and there are places like utilities and, you know, like staples where that is the case, where you're getting below the 2.5% the reason we're highlighting health care, it's one of the few places you can get high quality, strong balance sheet, strong financials and a yield that's competitive. >> we did it all in two minutes but thank you so much today. i appreciate it. gina sanchez and chad morgan such an important topic. everyone talking about dividends. "power lunch" is coming up right after this break there's tyler getting ready. i i'll see you in a print.