>> youtube shorts could be a juggernaut >> goldman sacks, trading at one times book i like this stock. >> good stuff. we have dan greenhouse, kevin simpson coming up on "closing bell." we'll see how the rest of the afternoon goes into the close. i'll see you then. in the meantime, "the exchange" begins right now ♪ ♪ >> thank you very much, scott. hi, everybody. welcome to "the exchange." i'm kelly evans on this very busy friday. for starters, we have the banks, of course. jpmorgan holding gains, but pnc has turned negative. also, this data divergence, we have deflation, inflation, fed speak going both ways. retail sales, production after all of that, we have a rate hike next month we'll tell you why the housing market at a tipping point.

we have the rate where home buyers are drawing the line, and a contrarian call in the travel space. back to the markets. the nasdaq underperforming, down 1% and it's the only major average now on pace to close lower for the week now to the banks and the big bank earnings. let's dig in the results were better than feared, but the regional bank etf has turned lower today let's start with jpmorgan, way better than expected that has investors feeling good. citi, its shares are up almost 4% over at wells fargo, they noted a gradual weakening, and set aside $650 million for potential losses across credit card, personal and auto loans. that stock down about half a percent. and finally, perhaps most

importantly this earnings season, pnc. the loan loss provisions drop by almost $200 million from last quarter. but investors say that contributed to a low quality earnings beat. so jpmorgan far and away the best performer on the s&p today, up 8%. and pnc shares are now trading back to levels we haven't seen since november of 2020 so are the bank problems really behind us now or not let's ask david conrad, with our very own dom chu who joins me onset. and banking reporter hugh son. david, i'll start with you the regional banks, look, if it was up 5%, we could say this is behind us, but it's not. >> pnc is probably somewhat of a decent read through going into

next week on the fundamentals, perhaps. they had pretty elevated deposit costs. i think the issue also with pnc is one of the more expensive stocks heading into the print. so it was trading north of 20% premium, largely because it's a high quality, strong management team so they're more exposed to a guide that missed expectations and brought the stock down >> hugh, what would you add to that >> i would look at it through the lens of net interest income. jpmorgan, theirs was up by nearly 50% it was a huge beat by over a billion dollars, and they guided to a $7 billion in excess of what they had said that net income would be in 2023, saying it would be $81 billion versus $74 billion.

pnc had a 3% decrease in net interest income, because as david mentioned, you know, their funding costing are higher what does that mean? they have to pay people to people their money at pnc. i think that's the issue, they don't have the kind of franchise that keeps these sticky deposits at such a low cost as jpmorgan does >> and dom, we have two problems coming to a head today we have this issue, talking about banks specifically at the same time, the fed speak is -- waller was hawkish, so we have this double whammy for those hoping for smoother sailing today. >> it's not just that. the points being brought up here are very much on point with regard to the regional bank versus big bank dynamic. the reason why we're looking so closely at pnc today is not necessarily because it's so indicative of regional banking

in general but it becomes like the appetizer to what happens next week for pnc specifically, we're talking about a super regional bank that has some of the funding cost and will have to compete with other banks to get customer deposits in, lowering net interest income. but it's also about whether or not that deposit flow is steady. what we did see from pnc is that their deposits did grow, ever so slightly it wasn't a huge growth in deposits whatsoever, but what it shows is for a bank of say a pnc size or a u.s. bank size, or one of these other superregionalstre deposits are not as flighty as say a first republic or otherwise. that's the reason people are looking at this, not because it's intdicative of those problems but a way to benchmark what other regional banks will be like. >> to that point, these are some

of the stronger super regional banks. i don't think it's going to get better as we get into the smaller areas. tell me as we spin this into next week what you think will be the pressure points for the market >> again, it's all going to be about deposits if you look at pnc, you know, their deposit costs increased about 70% relative to the fed funds increase jpmorgan only increased deposit costs 55% in a quarter so you start to get to that 70% range, it gets tough to grow the nii. so we're expecting, you know, cumulative data to be in the mid 40% range by the time we end the year so that means escalating costs over the next two to three quarters >> and that's why people are wondering about -- there's a near-term catalyst issue with deposits, then the concerns

about profitability. to that point, wells, citi, they put up decent numbers, but more becomes about what is lurking, even jamie dimon's own comments where he's concerned about a recession, it's hard to feel great about the banks in that kind of environment. >> yeah. so in some sense, this is a sweet spot for banks, because credit costs aren't high yet they're still super low. yet they're reaping the benefits and the fact that big picture, the fed has increased interest rates by 500 basis points in the past year. so that's a very compelling combination. but then you say do i want to own banks ahead of a possible recession? how deep is that recession how bad could it get so that's certainly the case here, and we would give a lot of investors pause. >> dom, go ahead >> you brought up an excellent point, kelly, about bringing the fed dynamic into this. if you have the hawkish comments, you would expect interest rates to rise

in that way, you're battling against an economic narrative where things go bad, people will fly towards the safety of treasuries, which then pushes yields lower and if you push yields lower, you have, in essence, in some small way helped to solve the regional banking liability mismatch crisis, right because if you're giving more value to the treasury holdings that these guys have, then they're able to then better cover their liabilities down the line so there is a weird dynamic. hugh talks about a sweet spot, but we're talking about unprecedented times, because of a central bank policy we have never seen before. >> and the waller comments today came at a vulnerable time. hey, we did a little better because the treasury prices improved in the last month or two. and then this morning, investors are like we know the

implications of that dom, final comment, what do we watch for now? >> it's about for me, i'm looking so closely at the regional banks, it is very much about the deposits and whether or not they are going to show some signs that they are stabilizing right now. and for the most part, for some of the regional banks that we don't often talk about in terms of the western centric ones that are closely tied to silicon valley bank, those seem to be okay for the time being. but we'll get a lot more data points this week when you get the zions and others coming out to give their nuchlmbers. >> david, you do rating price target changes, all that sort of thing. immediately following what we referred to from some of these players, or do we need more time to know what the rightful valuations are going to be >> yeah. i mean, i think a couple of points we do try and adjust our estimates right away but to be clear, i like to

digest all of the information for the quarter and kind of stack rate the group i would point out with jpmorgan's strong corner, part of that is they contell mplate their guide the fed to cut, so it will be interesting >> yeah, that's officially baked in, yet the fed is insisting we're not going there. thank you all. david, hugh, around dom, appreciate it. despite those downturn concerns, my next guest says discretionary stocks are his biggest holding. he says panic is driving the market joining me is neil hennessy. great to see you again what do you think is going on? >> i think everybody, kelly, has to take a step back. the last segment, you talked about the banks.

the financials segment is very strong you look at the financials, and that is just proof of what the feds did two weeks ago, in the light of silicon valley bank and signature, they raised interest rates. they would not have raised if they thought the financial system was in any shape that was going to get hurt. but there's a lot of issues that are going on a lot of things being said but the bottom line, the financial system is in good shape. the consumer is in good shape. there is tons of cash on the side dish. $7 trillion in cash on the s&p 500 balance sheet. there's over $5 trillion in cash in money market funds. there's over $1 trillion in cash in personal savings accounts where did all this money come from, and where is it going to continue to come from? most of it is from everybody being employed that wants to be

employed companies are making money earnings are going to be down approximately 6% this year so what, kelly companies still have huge numbers and putting money in the bank and looking to cost savings. so i'm not sure why everybody gets panicked. but it's sort of like the pandemic's over, but it's still on the back of people's minds. so they're jumping from one thing to another when the reality, if you buy quality and hang onto it, you'll be fine through whatever crisis you think is happening out there. >> just to quote ed hyman, there's a few people really good looking at leading indicators saying this crash could be harder than expected the idea we get a soft landing, mild recession, nobody nose. we're going to tip over here i'm not saying that won't be a good opportunity to buy stocks, but i can understand why people are concerned, and i would hardly expect the fed to be ahead of that.

they overreact one way or the other. they are never ahead of the ball >> i can see that. but if you look back a couple of years ago, everybody was, i guess, hoping that the feds were going to keep interest rates at zero everybody knew at some point in time they were going to go up. you look at silicon valley bank, signature, those were mismanaged but the crisis we had in 2008 and '9, if you look at it, kelly, did anybody have a problem cashing a check? anybody getting cash out of a bank have a problem? did your debit card not work come on. so when everybody is focused on this banking issue, when it isn't an issue but if you focus in, and one thing i have always said, kelly, if you buy high quality companies, and most likely if they're boring, sort of like a coin operated laundry mat,

because you've never seen one of them go out of business, those companies tend to perform, over time, little by little, and they make the end user a lot of money. >> let me ask you something, neil dick's sporting goods, others, financials you have almost no exposure to. why? >> well, we have two funds specifically targeting the financials run by dave ellison, the longest tenured person in the banking industry so that's something completely different. part of it has to do with price-to-sales that's one of our leading indicators, kelly, instead of price earnings i would rather look at sales, because that's a truer number than earnings. you can manipulate your earnings by write offs or gains or whatever sales are sales. >> so financials are tough to evaluate from that point of view or just expensive? >> like our mid cap 30 fund is

quantitative so you're going to have to fall within that category of a low price of sales, higher earnings. and so when you look at the banking system, they didn't make it into that quantitative model. so when i look at companies, and what am i trying to do, and what i'm trying to do is not beat the indexes but make the shareholder money at the end of the day. at the end of the day, by beating an index because you lost 10% of the money doesn't matter >> and you guys have done that since the pandemic neil, great to have you. thank you for your time today. >> thank you, kelly. >> neil hennessy take a look at the dow map jpmorgan leading the way seven names in the green today the biggest drag is boeing, down nearly 6% after warning an iuess with parts could cause delays for 737 max deliveries

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welcome back shares of boeing down almost 6% on fresh news of delays for the 737 max. while shares of systems are down 20%. phil, investors seem super frustrated by this >> because they don't know how

much of an impact this will have on boeing's cash flow and earnings, and the rest of this year that's the primary issue for investors. related to that is the question of how long will it take to fully identify and then figure out and fix how many 737 maxes are impacted by this issue while they are figuring this out, boeing has said they will pause deliveries of some 737 maxes. for example, the most popular max, the dash nine model, it's not impacted so deliveries will continue, but all models other than the dash nine, they will have to inspect them that means those in production as well as in inventory. fuselage parts provided by arrow systems, will need to be identified and potentially replaced again, this is not a safety -- flight safety issue. i had this question all day long if it's an issue with the fuselage, is it still safe to fly? yes, the faa says the ones in

service will continue to be in service. but it will impact deliveries. when you look at the 737 max, boeing has been increasing production and delivery. the estimate right now, for full-year deliveries this year, 445. but i have heard from a couple of analysts saying we're going to have to bring down our estimate depending how long it takes to identify this this is video of spirit arrow systems, located in wichita, kansas they have said there is a particular issue with two parts at the aft part of the fuselage where it connects with the tail fin. you have a situation where they have to inspect these planes and fix them spirit arrow systems, by the way, will be reporting its q2 results on may 3rd i haven't been able to find out when it was down 20% in a day. but this is one of the biggest single day losses for spirit in

a long time. when you look at shares of boeing under pressure, because it may have fewer deliveries this year. remember that its shareholder meeting is next tuesday. it will be interesting to see if they make any comment regarding this issue and then on the 26th, they report their q1 results. back to you. >> phil, thank you very much that is weighing on the dow today. demand for planes and travel in general seem to be strong still. it has names like bookings holding up 30% this year my next guest says don't get too carried about for booking.com right now, although for a different reason joining me now is richard clarke welcome. >> thank you >> this mark share here may be facing some competitive pressures. what are they? >> so i suppose what we see is the numbers have been good and supportive of the stock, and they have benefitted from some of the actions of their biggest

rivals they it's decided to try and become more of a focus on loyalty we think those actions have helped booking, but eventually, it will be back to the market and there are some designs with the loyalty program, make some investments in ai -- >> so you see expedia coming back in, in a big way. what about google? >> what we see is that they are losing shares. so booking is gaining from expedia's losses, and they're losing shares. one of the biggest drivers is google continues to it rate how it deals with travel based searches

it is sending more traffic to the hotels and websites. so that's certainly having an impact on the aggregate position >> i like your point here. a lot of people have been looking back to the playbook from the financial crisis to say where were some areas where we could ride it out. booking was one of those areas why don't you think that's going to be the case this time around? >> there are two factors our thesis is not that travel is about to fall off a cliff. every year for three years we keep hearing travel is going to fall off a cliff in september. we don't really believe that but if it does, where are the places to hide we don't think otas are necessarily the right place. in 2009, the vast majority of hotels were not on otas and came on to them in that period. they're the best priced discovery tools for consumers.

we would argue that other platforms like google, can find better prices for the consumer in the next potential downturn >> richard, before i let you go, it's not often you see a name like this get rated underperform how would you explain your thoughts on the stock more broadly? >> i'm -- in that respect, the fundamentals of booking are par for the course of selling travel high margmargins, high cash generation you can get that elsewhere i guess i just see with booking more competitive pressures, slightly less defensibility in terms of the customer base than

we see elsewhere >> all right airbnb shares up 32% richard, appreciate your time today. >> thank you what if i told you that power bar was a top pick on the street today people naming its parent company as a top pick with the shares at 33% so far this year and they also own the popular protein drinks and powders bastk phillip morris, lower today but closing out a third straight week up back in a moment here on "the exchange."

welcome back to "the exchange." just off session lows, but

again, very different tone than what we saw this morning dow down 229 right now, with boeing and unh also putting pressure s&p 500 down 0.6%. coming up, a tipping point for home buyers. the mortgage rates refuse to go over what this line in the sand could be as the spring housing market heats up "the exchange" is back in a "the exchange" is back in a momentd. well protected. asking the right question "the exchange" is back in a momentd. well protected. can greatly impact your future. - are, are you qualified to do this? - what? - especially when it comes to your finances. - are you a certified financial planner™? - i'm a cfp® professional. - cfp® professionals are committed to acting in your best interest. that's why it's gotta be a cfp®. we planned well for retirement, but i wish we had more cash. you think those two have any idea? that they can sell their life insurance policy for cash? so they're

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good day, everybody. welcome back to "the exchange. here is your cnbc news update at this hour. the air national guardsman arrested in connection with the leak of classified documents appeared in court today learning his charges. a judge told 21-year-old jack teixeira he's being charged with possessing classified documents pertaining to national security and possessing national defense materials. the charges carry a maximum of ten years behind bars. his next court appearance is set for wednesday. members of congress are reacting to the document leak and arrest, and some are defending the suspected leaker

repres represent representative margorie taylor greene claimed the biden administration is the real enemy. former representative liz cheney said greene should lose her security clearance and she cannot be trusted. and the maker of the pill used for medical abortion is joining with the justice department now to ask the supreme court to block a ruling that curbs access to the medication the laboratory said if the decision to revoke the drug goes into effect, they would beer replayerably harmed. >> cpi, ppi both easing retail sales missed. headline consumer sentiment was beat this morning, but expectations shot higher industrial production climbed.

so the fed seems to be, as well. steve liesman is here to explain. steve? >> can i just say after a week like this, thank god it's friday what a week. we ended up with dovish comments from a new fed president this morning. better inflation data, softer retail sales this morning. it prompted bond markets to do the opposite of what you would expect they are pricing in more fed tightening at this hour. future markets now nearly fully pricing in a quarter point rate hike coming in may that would bring the rate to 5.13 so they are just about most of the way there. and the expectations for that year end that we looked at for the january '24 prcontract, they're up 4.5 so the retail numbers showed a

bigger drop than expected, and that quarter was still strong because of the big january spending number. and it came stwhile the new chicago fed president austan goolsbee was suggesting the fed should be cautious about future hikes. >> let's just be mindful that we have raised a lot. it takes time to work its way through the system and you -- with this retail sales number, you may see a little bit of that lag, and if you add financial stress on top of that, let's not be too aggressive >> so offsetting his comments were hawkish remarks from the fed governor chris waller at about the same time. waller saying "because financial conditions have not significantly tightened, the labor market is strong and quite tight, and inflation is far above target, so monetary policy needs to be tightened furtherer. he said tightening conditions

could offset the need for tightening by the fed but added that tightening would have to be "significant" and that he would be looking for "abrupt adjustments, not more than what is in the works. so the data is a bit dovish, but waller and most other fed speakespeak ers lean hawkish, swaying the markets where we are right now >> let's bring in my next guest. no one else brings it all together, peter, the macro, the banks data, and maybe the most stubborn data price, gasoline prices are50 cents a gallon. so energy prices are kind of structurally stubbornly high, let's call them. >> i think that's going to be a major swing factor one of the things that came out today was the oil rig counts

the lowest level since last june so opec cutting production, u.s. shale is not stepping up, and you could get oil prices to rise, particularly the raise stops raising rates. just in april alone, oil is up double digits. so whatever moderation we might have seen in march and cpi, ppi, import prices, that will reverse and we will see the april data next month >> and you can have oil prices rising even during a recession during the recession in 2008, oil climbed to $150. >> that could be a difficult situation. i'm not sure how the fed would respond, because they know that they wouldn't necessarily be able to directly cap energy prices, but it would still filter through in an inflationary way >> i don't want to take us too far down a hypothetical. what do you think is most

significant about today? >> going into today, we were still about 65%, call it, so waller's comments pushes that further, but we still have a couple weeks left of data. i don't think that austan goolsbee's opinion is going to be solely to him a lot of the things waller said was classic rear-view mirror thinking the labor market is strong, the jobless claims, talking about sticky inflation once rent kicks in, that will disappear. so i think he is really looking in the past, not in the future, and coming from someone who is focused on inflation, and has been, i think he's making a classic central bank mistake >> steve, final word here. it's interesting to see, although there's more data to come, we're largely in another hike camp. >> yeah. it's hard for me to see, and if

i don't mind, maybe give peter the final word in that i don't see what else is going to change the fed's opinion here i think the market was maybe kind of in this holding back, making a final call on this. now i think all of the data is in i think unless there is data that show the banks pulling back much more, or going to the window much more than they thought, or that is currently the case, i think the writing is on the wall, and there's not much else that will be out there to sway the fed, maybe some huge rise in jobless claims could give them pause. i don't think that there's much else here. and the way it broke, kelly, inflation was down, but the idea that what really fell on inflation this week was the headline number. what you were just talking about, i think that will weigh on the fed, which is a forward looking indicator. >> maybe the jobless claims become the most -- if this is a

head fake and they go back down, fine but once claims bottomed, stock prices have topped so there is a lot at stake here. >> for sure. and it's the highest frequency data we're going to get. maybe there's not enough data to pull them back we'll hear a lot from corporate america and what they have to say about the landscape. even the wells fargo cfo talked about moderation in spending they saw march 9th was a big change we have two economies this year, pre-march 9th and post-march 9th. because of svb so i want to hear what companies have to say about their business post march 9th rather than up until march 9th. >> got to go steve, i love you. ten seconds. >> that's what really separates

members of the fed is how concerned they are what happened march 9th with austan goolsbee more concerned others are saying we have it solved >> exactly >> eight, nine, ten. >> and that's what makes him so good at his day job and night job thank you, steve liesman there is a line in the sand for home buyers, and it has to do with mortgage rates what number do they refuse to go over diana olig is here to explain. >> for most buyers, the mortgage rate determines what they can afford you buy the house not based on the price but the monthly payments and the payment is all about the rate but a new study found a majority, 71% of borrowers, said the highest rate they would accept is 5.5% that apparently is the tipping point. it didn't matter the age of the buyer either as in the older

com consumers who may have had a higher rate years ago. just so you know, the current rate is about 6.4%, and of course, we've been talking about these higher rates since they shot up last summer. historically, the 30-year fixed rate in the united states averaged 7.75%, from 1971 all the way to 2023, reaching an all-time high of 18% and a record low of 2.65% in january of 2021, the height of the pandemic it's only been since the great recession and quantitative easing that rates went below 5%, and then went historically low in that 2%, 3% range now, the ultralow rates, they were the thing that lit the fire under home prices. so in surprise, 63% of current homeowners think homes are overpriced as do 83% of renters >> is there anything more to follow than the housing market

peter, 5.5% might feel better, but the market is resilient, even with rates where they are right now. >> from a pricing perspective, absolutely i'm still hearing about bidding wars that's because the inventory to diana's point, 90% of the mortgages outstanding are below 5% i think about 70% are below 4% so you have a lot of these people that are trapped in their houses, whether they want to or not, because they don't want to give that up as we get through the spring selling s ing season, it will be interesting to see how it plays out. >> andy has made this point as well if we see mortgage rates fall below 4%, 5% even, that could suddenly see lower prices and spur some moving activity. >> absolutely.

inventory is the key right now, that's the problem new listings are down from a year ago there's just nothing on the market if it is on the market, it's priced incorrectly, and that's why it's sitting about a quarter of all home purchases right now are all cash so no mortgage rate involved that is historically high for the market usually it's below 20% investors are moving out of the market because prices are so high and yet that all-cash number hasn't pulled back people have so much capital that they're sitting on, maybe in a home they already have, but they are putting it in because they don't want a mortgage. >> thank you both. still ahead, solar companies boosted by the act "inflation reduction act", but what about the mom and pop shops? how small business could benefit, next. and shares of resume

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welcome back small businesses have been feeling like we're in recession for over a year now. but for some, their business has gotten them a much-needed boost from the government's "inflation reduction act. let's get to kate rogers with that story kate >> while it may be too soon to tell how many benefitted from some of the provisions, the bulk of what we are hearing about is in the energy space. companies that install solar systems for other small businesses and residential spaces are seeing an uptick in businesses as owners look to take advantage of a 30% tack credit for switching over to solar. >> we are expecting to double or triple our business.

and the ten-year growth horizon is -- the sky is the limit, the increase projections for solar are running 20% a year, which is a huge growth trajectory, and we want to be a big part of that. >> others who own construction companies are benefitting from a lower inflation rate and hope to see price stability moving ahead. >> it's also affecting my decision making, so if i had unpredictability of being able to form a contract and make a profit, i am running a business that allows me to be more effective in my pricing structure. it's going to benefit the customer and increase the predictability of the outcomes for my company >> he also plans to take advantage of a separate tax credit in the ira for buying a clean vehicle for his business so the energy portion seems to

be the key benefit so far for these small business owners. back to you. >> any signs otherwise beyond those who would ben fight from the ira directly, that they see things turning the corner for the better or not? >> you know, i think if inflation continues to come down and the supply chain woes we have been talking about, aside from those issues, small business owners will start to feel better. but as we are talking about it, another big concern here is what the credit market looks like moving ahead, if there's stability around capital, the ability to get a loan. you were just talking about what that looks like moving ahead so there's a lot of focus there. but if inflation continues to cool, that is a benefit for small business >> kate, thank you still ahead, united health beating estimates, hiking guidance today, but shares are falling. we'll talk about what is driving the stock lower and why it might

not be as bad as investors think. the ceo of pnc will join "squawk on the street" next wednesday morning. looking forward to it, as their shares have been a bellwether today. today. back after this. new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get shortlist indeed you do. of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today. ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're

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welcome back to "the exchange." want to get in one more thing before we go despite reporting better than expected earnings and boosting full year guidance, shares of you entitled health are lower today after the initial premarket pop. bertha coombs is here to dig into this. what do you think caused this turn around? >> a little bit of worry about a change coming from cms united health group's the first of the big medicare players to report since the centers for medicare and medicaid issued new rules for medicare advantage plans that start next year united health reporting earnings of $6.26 a share on $92 billion in revenue, that's up 15% from a year ago on the insurance side, united healthcare saw 13% revenue growth on the services side, opt is growing twice as fast, overall topping $54 billion, up 25% from a year ago optum health, physician practices and clinics, up more

than 37% optum insight, analytics, acquisition, up 40% over year. the optum rx pharmacy up 14.5% last week, cms issued new rules to try to tamp down on so-called upcoding in medicare advantage plans. which essentially means, you know, offering higher reim reimbursement for managing sicker patients. some of the add-on condition codes are fazed out. the ceo says he thinks united will be able to adjust without impacting growth or profits. >> given our established capability and our ability to focus on cost management as well as the broad portfolio of value-based services, clinics, in-house activities provided by optum, we feel super confident to manage the evolving landscape. >> all of the medicare players are preparing their 2024 rates now so they have to really

jigger not all of them have the same scale in terms of those services that united health does so they may not be able to manage it quite as well. remember, like cvs' aetna, they were under pressure to offer more services to be more competitive. >> unh from the 14th biggest company to the 6th as of the end of last year i remember talking about it. when i see the names, you know when we're dealing with insurance, it is the last thing -- last phone call you want to make, showing it on the screen is like giving me trauma. let's bring in john ransom of raymond james now, on "power lunch" a few days ago to preview the results. i was joking i was going to jinx the results and they didn't miss, but why do you think the stock is struggling today? >> yeah, kelly if you pull up a chart of the past three months, the stock went up when cms and bertha was talking about it, when cms decided to faze in the rules over three years versus one year and what united has been telling

the street, hey, if it is one year, it is a material hit to our optum health that was the important message fazing it in over three years is even better. and just to explain one quick thing, united and humana are the only vertically integrated ma plans, meaning they have large physician groups and so what they do is they'll take 14,000 for medicare, earn their 15% margin in the insurance company, and luckily if they got a patient in their physician network, they send that $12,000 to their physician network and if that doctor can provide the all-in care for the patient or $10,000, then they're making $4,000 of gross profit versus $2,000 if they're caring for that patient and the insurance company. so united and humana are way down the road with this, you know, kind of vertically integrated strategy. that's why cvs, they're trying to play catch-up

the big news here is the big plans, humana and united, are lengthening their share and market share and they have this vertically integrated strategy. >> is there a read through into the cost or price of healthcare services for the rest of us from these results? >> that's a good question. it is a complicated quarter because you had a prior period reverve, which mean you overaccrued last year. that reduces the medical cost ratio. an omicron comparison and then you had -- so all in, medical costs are up about 40 basis points if you ignore the prior development. but, yeah, i think even with a lot of omicron spending, medical costs were up this quarter and i don't know if that's an inflation thing as much it is a utilization thing, we'reseeing patients get back to the scans they're getting good news they're getting x-rays and mris and mammograms and we think there was a little jump in

surgery this quarter we think there was a bit of a catch-up trade in surgeries this quarter. all our surveys were coming in a little bit hot on medical costs this quarter. >> still think the stock is at 630, strong buy. thank you for joining us that was john ransom joining us from raymond james that's it for us on "the exchange." tyler mathisen getting ready for "power lunch" next hour. we'll pick up the market coverage with the dow off the coverage with the dow off the lows, but still down and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. i'll see you right after this. . and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade ♪♪♪ there's no going back.

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