steve weiss? >> uso same momentum in commodities, keeps going. >> joey t. >> monday may 8, we get amd as a final trade. raise your stock, you're up 8% you should lose money on this don't turn a winner into a loser. >> thanks for joining us "the exchange" is now. ♪ ♪ i wish you could hear what dom chu just said. thank you, scott welcome to "the exchange." i'm kelly evans. here's what is ahead the fed is lacking, working from home selfish, and china invadin taiwan elon musk didn't hold back in his interview. we'll debate all of those biggest moments investors are still talking about today. plus, the ramifications and we'll run through three debt ceiling scenarios. and mortgage demand drops as

interest rates hit a two-month high could home price declines be next we'll tell you what you need to know if you're in the market to buy a home we begin with today's trading session. just one word for it, dom, wow >> wow is right. as for the comments i had off camera, kelly, we don't share them because they're not safe for work we have a nice rebound out of yesterday's down session it wasn't down by a whole heck of a lot but today it didn't rise by a lot either it's notable, because we have green across the screen and we're just about near session highs today. the dow, 33,401 the last trade there. 390 points to the upside, up north of 1%. similar percentage move for the s&p 500. still solidly now above 4100 4152 is the last trade there and just for your context here, up 43 points right now at the highs are the highs of the session, up around 43 points at the lows, still up about

four so it's been generally positive, and we are seeing some momentum right now. similar percentage move for the nasdaq composite, up 123 points, 12,466 a couple of the stocks we just want to highlight because they do have something in common. they're not in the same industry or sector. one is dr horton, up 60% over the last 12 months different move, but still both of these guys get gold stars, because both of these stocks hit record highs in the session earlier on dr horton on the housing trade again, different industry groups, but two of the stocks, the only two at one point that made record highs. if you look at the stock of the day, tesla, on the heels of that shareholder meeting and the big interview with cnbc's david faber. tesla shares up about 4% right now, seeing some momentum, trying to get out of this range that we have seen over the last couple of months but between new vehicle models

being hinted at, the cybertruck coming out later this month, elon musk pouring cold water on him possibly stepping down as tesla's ceo, and maybe even advertising to sell cars there was so much to unpack. tesla is a stock trying to find footing. it trades at around 50 times forward earnings, but we'll keep a close eye on whether or not this could be a bullish move that some investors want to see to get it up to the upside >> dom, thanks dow sup almost 400 points. tesla wasn't the only topic musk talked about he touched on the fed, on ai, and on china let's start with those comments about u.s./chinatensions which musk says should be a concern for everyone >> do you think, for example, china will make a move to take control of taiwan? >> the official policy of china is that taiwan should be

integrated one does not need to read between the lines, one needs to read the lines >> that would not be good for tesla, conceivably, or for any company in the world frankly >> yes, for any company in the world. almost no one realizes that the chinese economy and the rest of the global economy are like conjoined twins. it would be like trying to separate conjoined twins that's the severity of the situation. >> it's likely that? >> i'm saying that is their policy i think we should take their words seriously. they mean it >> so what does it mean for international stocks the ceo of zoe financial has been bullish on international stocks the same reason that musk cites for concern, the conjoined metaphor is why some people stay

constructive on u.s./china relations because they are so en intertwined. great interview, by the way, by you guys iffer going to continue to see de-globalization, that's inflationary, especially for countries like the u.s. that we're tied at the hip with supply chains for global companies that trade in the s&p 500. so i think it's hard to see on one side the idea that the fed should lower interest rates because they're looking at backwards data and then the other sides says but de-globalization is happening and will continue to happen that's inflationary. so i think u.s. stocks, the reason it has international stocks looking appealing to me is u.s. stocks valuation is not attractive right now versus historical standards, especially when interest rates are where they are now versus where they were in past years >> you know, maybe not to comment so much on what happens with the u.s. and china and what

companies like apple should do but we are seeing ramifications throughout southeast asia. the philippines trying to lean into its u.s. relations and it tried kind of to grow closer to china, but it wasn't well received by the chinese or the philippine people. so would you, in a market like that, take that as a positive or not? i'm going to ask you market by market, but when you say you like international stocks, what are the implications for some of those asian regions that still depend on the chinese economy? >> yeah, look, the risk of de-globalization applies to every region i think the big difference is valuation. u.s. stocks have asymmetric risks in my opinion when it comes to what could go right or wrong versus where valuation is right now, versus the other options like cash and bonds, very international stocks and versus u.s. stocks they're at two, three standard deviations where they usually trade. so a lot of bad news is already

priced in. >> that said, i guess just to ask the question, let's say you're apple, the most valuable company in the world, or one of the most valuable companies in the world. they're trying to move some of the supply chain to india. what do you do if you're them? is this something investors need to worry about >> i think margins will be affected negatively. the globalization was all about creating efficiencies, which are great for margins. what we are seeing right now with de-globalization is about resiliency and that's not about improving mar margins. i think this whole herd margins, it won't happen over one quarter, but this is a longer term over the next couple of years. >> or maybe you can say that moving factory activity elsewhere would benefit those companies, and china's economy remains an open question on the case of chinese stocks or

their economic fortunes in the next year or two, do you have a view >> yeah, look, chinese stocks have been a value trap for well over a decade, right and they are a significant part of the em index, for instance. when you look at global and the u.s., china is a much smaller component. if you look at europe, you look at japan, which looks very interesting considering they want this inflation that they're getting, they had deflation, now they have inflation. so it's not just china when it comes to global stocks >> it's also striking that japan has the highest birthrate in all of southeast asia, or at least developed southeast asia, which is striking. and they're more open to immigration. >> they're making a lot of corporate changes, which has been one of the catalysts for the market to be up. japanese stocks are up 16%, 17% this year. >> quick final question, dow is

up 430 points. you have emphasized you think the u.s. market is overvalued. what the heck is going on here >> you mean with the treasury potential default? >> no. we're rallying again the s&p is kind of hanging onto these gains that everyone thinks are built on sand. yet the resiliency is impressive you have to call it that what do you make of it >> look, i think that capital markets are very slow to adapt to regime changes. and in my opinion, we had a regime change when it comes to inflation. and the market keeps trying to convince itself, stocks in particular, no, it's going to go back to where it was before. you can see that by where the market is pricing fed funds rate to be at the end of the year the market is expecting the fed to lower interest rates. so it will just take time for the capital markets to adjust. >> because you don't think they're going to lower >> i don't think they're going to lower when the regional banks were in trouble, i thought if things got

really bad there they might be forced to. but if it becomes more like an episodic scenario, i don't think the fed has a huge incentive to lower. their focus on inflation, not on where the stock market is going to no against. >> fascinating thank you. still remaining bullish on international. elon musk also criticized the fed's rate hike strategy we were discussing. take a listen. >> you can think of raising the fed rate as a brake pedal on the economy, frankly it makes a lot of things more expensive. certainly things that are bought with credit, but it has downstream effects on even things that aren't bought with credit so if the car payments or your home mortgage payment is absorbing more of your monthly budget, then you have less money to buy other things. so it affects everything, even things not bought on krcredit

my concern with the way they're making decisions, they're operating -- the data is somewhat stale the fed was slow to raise interest rates, and now i think they're slow -- they're going to be slow to lower them. >> too much latency. musk's comments come as higher rates are eating away at mortgage demand. applications to purchase a home are down 26% from this sim time last year. let's get more now lawrence, welcome. any signs that prices are going to drop or are they going to stay up there? >> good afternoon, kelly well, the prices arens are holdn for the most part. but there are some variation in the west, always most sensitive to the mortgage rate changes prices have come down. in san francisco, they have come down in the 10% range. but the rest of the company is

seeing mild price increases. i would say roughly half of the country on the positive territory, and half of the country on the negative territory. but only modestly. >> i guess the biggest driving factor has been household formation. people who wanted to get out of the city, take their kids to the backyard, the pandemic accelerated that how much more pent up demand is there or has it been exhausted >> 1/3 of the properties right now are getting multiple offers. so the fact that there are multiple offers means that there is insufficient supply to fully meet all of the demand now, it's principally happening on the mid-priced home or slightly before. on the upper end, luxury market, i think it's a buyer's market. buyers can get a good price negotiation. but on a starter home, expect multiple offers. other buyers competing at the same time. so it is a very interesting market dynamics. the sales activity, mortgage

applications are all down roughly 20% from one year ago. but prices are holding on and multiple offers are happening on 1/3 of the listings >> we talk about making homes more affordable, but compressing that spread with the mortgage rate and the ten-year would go a long way is it the fed's fault because they have gone extra wide and selling mortgage backed securities what would it take to get back to historical norms and how much lower would rate bs right now? >> if we had a normal spread between the ten-year treasury and the 30-year fixed rate, mortgage rates would be 5.5% mortgage rate. that will bring addition alibiers into the marketplace. now, we don't have enough supply, so we have to think about long-term solution to supply, which involves home building but in the short term, i think some policymakers should be very

creative maybe provide tax incentive for mom and pop investors to unload properties to the market and lower capital gains tax. we need to consider some strong, short-term incentive to bring more supply, because clearly there is demand out of there >> i hear from people trying to get into the market and say, you know, i would like to own a property and collect that rental income and maybe i can do quite well over time but they would worsen the dynamic that you are talking about. and there are tax incentives encouraging them to do so. >> especially designed for the short-term increase. so it can be designed specifically to say if it's the buye ers and the seller is a rel estate investor, maybe lower capital gains tax. the sales are down in housing,

but multiple offers still happening and prices still rising in half of the country. >> i think musk is right, that the fed is responding to lagging data they're doing it on the way up and down but i don't know if you would agree with that. >> yeah, i would say the fed needs to cut interest rates right now. we have a robust apartment complex. the rent is strong, heavyweight of the consumer price index component, bringing overall cpi down so knowing this, and also the economy, not very robust gdp only 1%. business spending a negative i think the fed should consider cutting rates before the year end. >> i'm nominating you. which fed seat could you take? >> well, i'm looking at the housing market, but housing market, you know, very little distressed sales, but it is in interesting times. >> lawrence, thank you for your

time today >> thank you still ahead, some controversial allegations about open ai. we'll talk about musk's comments next with the ceo of one ai unicorn. and joe biden calling yesterday's meeting on the debt ceiling productive you see markets up big today are we close to striking a deal? well, our guest lays out three scenarios and what they mean for the reitz. as we head to break, here is a look at the gains. the dow sup nearly 400 points. 1% gains for the dow, s&p and nasdaq and the russell is up 2%, and the regional banks rebound we're back after this. there are some things that go better... together. hey! like your workplace benefits... and retirement savings.

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to monetize or not to monetize ever since chatgbt came on the scene, there's been a heated debate over whether and how companies should profit from it. elon musk weighing in last night, stressing that profit was not what he had in mind when he invested some $50 million in open ai. >> it does seem weird that something can be a non-profit, open source, and somehow

transform itself into a for-profit, closed source. this would be like say you funded an organization to save the amazon company and instead they became a lumber company and chopped down the forest and sold it for money you would be like, that's the exact opposite of what i gave the money for. >> open ai does charge other companies and licenses its tech, unlike my next guest who says his company will remain open source joining me is the founder and ceo of civility.ai and we're joined by steve and diedra >> wow >> these are the ai generated images >> is that an improvement? >> run us through what is going on behind the seeps here >> we released several

generation ai last august where we had 2 billion images and squished it down, driving a lot of those avatar apps you see i think four of the top ten apps in december. but these data sets aren't good enough, and these models aren't good enough because of the data. you want to have your own cnbc model, your own portuguese model and other things this is a big part of the debate the data sets of these models, we don't know what sin side them so we wanted to push this into the open to safety and also for customizability. >> we have about a trillion questions. my first is, the most obvious is copyright. i can think of getty images saying our pixels are involved in the re-creation of these. how are you trying to get ahead of that, and can you address the business model, as well? >> this is a really fascinating thing. if you take 2 billion images,

what is that is that fair use or not? so that's leading the legal side these are questions we have to answer so we opted out, unlike everyone else we had 169 million images opted out of our data center so that's the reasonable and right thing to do. whereas a lot of other companies are just trading on whatever, and you don't know what's going on inside and you don't know what's going out of it >> a lot of them start out with people using it the first couple of times and then they lose some of their edge. go ahead, diedra >> this whole discussion between an open and closed model is interesting. some of the questions is how stable are some of the open sourced models there's a back end development how many ai researchers or engineers does stability ai employ and how many are contracted? >> so we have got about 78 full-time ai engineers doing

language, image, audio, everything so we do all the different modalities then we have a separate chab ra - collaboration with 200 universities >> so the majority of the organization, so how do businesses -- how can they be confident that your model is reliable, and it's not going to change based on the turnover or whims of an engineering force you don't necessarily employ or control? >> our team builds a series of stable models, that's what is going on amazon's new service. everything that is measured is only built by our team the other 200 are stimulating academic innovation. those are not commercial models. >> maybe last one for me i know based on that too, some of the clarity who is with the organization, who isn't, there's been claims of a lack of clarity

on stability's ai ip can you clear those up >> we said, stability models have 100% stability, and the other stuff we kind of fund. you want to have full stability. open models are required with regulated data so we want to make that very clear. >> before i bring in steve, are you a business is there revenue or is this an academic exercise? >> we are a business we have an eight-digit revenue we announced the bedrock service. we take our open models to your cloud and then we have a degree with amazon where we participate on the upside. >> what would you response be?

i'm confused to being a profitable business, which musk seems unhappy about, and being open source. can you address that >> open ai came at a time when it was difficult to have these models right now, you're seeing -- cnbc, for example, you can't send all of your data to microsoft. but you can use our models because you'll own them. open ai is no longer open source they open source other models. we think open is required for private data there's a business model amazing for that >> eve, i'm struggling to keep up here. >> i was on capitol hill yesterday listening to sam altman's testimony one of the things that came up was not necessarily open source but transparency, meaning the

idea that you would disclose how you're training your models and so forth we know that open ai and microsoft keep that locked down, as does google how are these models being trained? are you being open and transparent about how your models are trained and what data sets you're using? that seems to be a big key for you regulators think about ai. >> we each our models open and next week we're having open training so we'll show how these models are intraining because transparency is required these models are be the biggest impact and how can you have black boxes in that? >> does that mean open ai and google, are they making a mistake by keeping their data sets locked down >> you have some things closed that will be amazing

and other people will want open or just want models for their private data so you have the stuff in the cloud and the stuff you use outside of the cloud >> if video is next, i think do we have the gardening images deep fakes, this came up on capitol hill yesterday, this idea of how will we know if something is an ai generated image, is it a representation of a fact that doesn't exist? >> is that you >> that's me is video next? >> video is coming audio, you have perfect audio, video images the next few years, you can generate hollywood level movies live so we need standards around it national models, national

standards. so we think the open side can be a million different types or standardize it that's what we're doing. it's a different type to the rest of the market, and it's only possible now. >> quick last question we hope to continue this many times. after the hearing yesterday, what do you think is the direction the policy is going to go >> it will move towards a regulated entity but this is a case of how do you balance innovation and regulation this will transform industries but then there are some real risks, where you have a six-month window now to have better practices to curb some of these really dangerous things that could happen. >> they are pretty good. they have gotten spookily good thank you so much for your time

today. steve and diedra, thank you both the actual people for the time being. give it six months speaking of ai, nvidia and announcing a new partnership both ceos will be on "closing bell" at 4:00 p.m. eastern time. don't miss that. still ahead, target shares are higher, despite fairly growing sales. what does it bode for walmart? and here is a look at the regional banks pacwest and western alliance are leading the day on a day when everybody is in the green, and zion's co-america are all meeting the s&p. up08 4 "the exchange" is back after this at adp, we understand business today looks nothing like it did yesterday. while it's more unpredictable, its possibilities are endless. from paying your people from anywhere

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welcome back to "the exchange." we're near session highs with the dow up 412 points. enthusiasm about a resolution on the debt ceiling seems to be driving this we're getting breakthroughs and we'll bring to you. the nasdaq is up over 1% the dow is back in positive territory this year. the break even for the year is 33,147 so we're comfortably above that. let's get to tyler mathisen for our cnbc news update >> thank you very much here is your cnbc news update, up to the minute the supreme court declined to block an illinois law that bans assault style weapons. the legislature enacted the measure in the wake of a july

4th shooting last year that killed seven people. the ban does not affect people who already own firearms impacted by the ban. eight people killed and thousands evacuated as flooding struck a northern region of italy. this prompted officials to call for a national plan to combat climate change induced flooding. formula 1 captured this weekend's grand prix to avoid the extra burden on emergency crews. house republicans are expected to send a resolution to expel congressman george santos. they will vote this evening. the ethics committee may defer this to the justice department, which indicted santos last week on 13 counts, including wire fraud, money laundering, and stealing public funds. kelly, back to you >> tyler, thank you. still ahead, elon musk railing against the notion of work from home in his interview

last night on cnbc >> the laptop class is living in lala land. you're going to make people that make your food, they can't work from home? the people that come fix your house, they can't work from home but you can? does that seem morally right >> more on that next hour. in the meantime, what does work from home doing to the reits we'll dig into all those risks next on "the exchange. ahhh! icy hot pro starts working instantly. with two max-strength pain relievers, so you can rise from pain like a pro. icy hot pro.

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welcome back to "the exchange." with less than two weeks to go before the june 1st deadline laid out by the treasury secretary yellen in terms of a debt default, the white house and congress appear optimistic about getting a deal done. here's what joe biden and house speaker mccarthy said earlier today. >> now we have a structure to find a way to come to conclusion the timeline is very tight, but we're going to make sure we're in the room and get this done. >> i'm confident that we'll get the agreement on the budget, that america will not default. and every leader in the room understands the consequences if

we fail to pay our bills, and it would be catastrophic for the american economy and the american people if we didn't pay our bills. >> so while we await an actual decision, our next guest has a look at an extension, a copyright and a default. joining me now is ron camden good to see you again. >> great thanks for having me >> a lot of people might not realize there's a reits angle here to the debt ceiling if we get a default, let's talk with the most severe scenario, what would that imply? >> it's an interesting thought topic here, because at the end of the day, the good news is that out of 160 reits in the index, there's probably less than 10% that have direct exposure to the government and if you have a scenario where you have a default, we think you could see consumer spending go down, somewhere in the 10% plus range. and if you think about consumer spending going down, that

impacts really the lower quality retail and the lodging reits that are directly exposed to that avenue. >> right am i correct that -- are these some of the names you're talking about? just explain that. >> yeah, sure. so the direct exposure in the reits phase in the government comes in two forms the first are some of the office reits that have government agencies as tenants. the second, to your point, the health care reits have exposure to skilled nursing facilities that rely on medicare and medicaid payments for reimbursements so while they have some exposure, the biggest exposure are names like ohi, omega, nhi, national health, and ctre. those are the names that have the biggest sort of exposure to that sector. >> maybe the way to turn this on its head because markets are in a good mood to say if is a deal

is reached, those deals should flourish under a compromise, what is the play for reits that you envision >> yeah. it's a good question i think the -- you're precisely right, that the sectors that have faced the biggest overhang on this news will be the ones that will see the relief rally, and then some of the defensive sectors like the triple reits space that have outperformed prior to this will be the one to get left behind. >> and we have the kicking the can scenario, where maybe a mix of all the angles that you described. then it also puts just fundamental questions about office back to the forum that's the biggest worry spot, unless the retail gets worse in a big way quickly for reits. would you say that trumps anything that could happen out of washington, in some ways elon musk's comments are more important if we start to see people really called back to the office in a big way? >> yeah, i think that's right.

i think the kicking the can scenario is a difficult one, because you have this significant overhang weighing on the reit space and on the businesses when you think about how long that could go for, it can certainly impact leasing activity, it could impact business decisions, creating an air pocket for the reits what's important also is the context. this is happening at a time where the reits are facing financing head winds as conditions tighten so to add this could be quite challenging for the sector >> all right, ron, thank you for your time today. >> great thanks for having me still ahead, lumber deflation, and organized crime, just a few head winds retailers have reported this earnings season we'll dig into those results and preview the next round on deck t dow up 424 points (whistles) yeek. not cryin', are ya? let's tighten that. (fabric ripping) ooh. - wait, wh- wh- what was that?

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welcome book "the exchange." we're now firmly entrenched in the retail portion of the end season home depot up almost 4%. tjx is fractionally lower. wall that's right reports tomorrow this is a lot of extra, you know, focus i guess we should say on the consumer. we get all these reports, credit card spending didn't go down, delinquencies are creeping up. >> it is tricky to discern some of that. we're seeing some strong spending in discretionary categories but like target, said no, we're not. it's been very soft for us one thing we have seen through some of these big guys, home has been really soft across the category tjx owns home goods and those were down 7% so that could be lower

discretionary spending so that's one theme that we can pull out i think that retailers are expressing caution because that's what consumers are expressing i think that tjx with strong results play suppose that narrative. that is largely known as sort of where you go treasure hunting and bigging through the racks for those good discounts yes, target is also known as sort of a value player, but sometimes you see a divergence in the performance of a target versus a tjx in moments of consumer weakness. >> that's a great point. if we were at one of these major turning points already, maybe this would be the time when we start to see them breaking out one way or the other and home depot with all of its struggles, the stock hasn't been that bad i know it's an odd way to put it but the loss of bed, bath and maybe it's too soon to feel that impact, is not benefiting the existing players more as the

consumer shifts. >> i was thinking about that, too. but obviously that is still ongoing, this unwinding of bed, bath, and beyond i think you're going to see a lot of players take a little bit of that share, whether it's a walmart, amazon, target. and i think they've been doing it for a while so i'm not sure you're going to see it in some big swath move, but i think that's a really interesting point. and to your point about home depot shares, so many smart investors recognize that home depot is a good operator this was a rare miss of a quarter. it's hard to know yet this is a trend. there are a lot of macro head winds. you mentioned lumber deflation they said there's 220 basis points, and bad weather took out 200 basis points from their sales, because if it's raining or cold, you're not going to plant flowers or buy that patio set. that does make sense, even though it seems like an excuse we heard it from tractor supply, too. >> and we get lows next week,

walmart in the morning what is the expectation into that report? >> walmart has a really big percentage of its sales in groceries, something like 55%, 56%. so that drives trips and walmart has been doing a lot to recapture other spend from that consumer that comes in for dpr groceries. the emergency snap benefit allotment expired in april walmart warned it will likely temperature april sales. but if consumers are still concerned about inflation and food and otherwise, they will likely pick up some consumer traffic there. so it could be an offset i think we'll see some kind of an impact from the snap benefit. >> maybe keep an eye on foot locker today what is a barometer, nike itself there is a lot of different areas that it hits, but it's kind of its own -- it's up

almost 5% today. >> i think it's a good follow through for some of those brands like nike. they focus on more going direct to the consumer. are people still going to the foot locker to buy those brands or shifting more direct to consumer and what does that mean going forward? >> it does some if there is any theme lately, it's the triumph of brick and mortar. the direct-to-consumer really is not a great business model what would have thought this could be the conclusion? >> target reported negative digital comparable sales for the second quarter in a row. >> wow >> i asked the ceo if he thinks this is an inflection point in so far as they have hit their maximum percentage of sales online versus in store he tried to point more to saying no, it's just we have seen this in the discretionary categories and we sell a lot online so he doesn't think that digital growth is over, but it's been two quarters of negative

comparable sales those are the only two negative quarters i have seen >> thank you we'll see what walmart says tomorrow coming up, not just retailers seeing signs of a slowdown, credit might have peaked in the muni market. ey have sector's the recovery a. th have the best position to weather that uncertainty the dow is up 451. stay with us with two max-strength pain relievers, so you can rise from pain like a pro. icy hot pro.

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♪ ♪ welcome back to "the exchange." according to data from infin tiff, last week marked the 12th straight week they pulled out of muni funds and while munis could be a potential casualty in a prolonged government shutdown that's not the biggest headwind the market is facing joining me is jennifer johnson director of muni bond research good to see you again. welcome. >> thanks for having me. is work from home the biggest headwind i feel that's the team today yes, that's definitely going to be one of the themes that we're watching and it's definitely regional we'll have some areas that we expect to perform well that are seeing a lot of growth and a lot of migration and we'll have a lot of areas where we think

there will be some weakness and probably some turnover in some of the commercial and particularly office buildings and the question is what is the impact both direct and indirect on the local municipal credits in that region >> do you think that's why people are pulling out of munis? i used to be in munis because it was tax-adjusted and now i can go to t-bills, and it still feels good to get 5% instead of 3.5% >> we still feel pretty confident that each if there is a slowdown or recession of any type, we still expect the municipal sector to perform well we have historically lower default rates and higher credit quality that many of the corporate indices that we're often compared to and we still feel like this is still a safer, less risky area of the market to invest in. >> were there any lessons from 2011 or kind of the age of austerity for munis and i tend to think of them as more state

versus federal >> yes i think there have been lessons that are learned and i thought we saw during the pandemic when there was so much uncertainty, a lot of really prudent financial decisions making, of course, helped by the significan federal aid and it allowed a lot of municipalities and mass transit and all different types of sectors to try to sock away money and take advantage of the money that was flowing in so that they would be prepared for the rainy day and that might be what we're about to see. so they've performed well. let's see if they continue with that good governance and financial decision making. >> how distressed are munis for areas exposed from major work from home shifts like new york subway and bonds and i think they delayed an offering although i think that was a yield thing, timing thing and what are the yields like there and is that a place that you think investors can go out on a limb and ride it out or should they stay away >> sure.

we think there can still be opportunities within pretty much any sector in any region and it's really important to kind of peel away the onion and see what actually what backs the bonds that you're interested in purchasing sometimes you're not actually exposed to the direct revenues of fair boxes, as an example for the tickets that you buy to ride mass transit and recognize that there could still be opportunities to invest in something that maybe has a tax repayment stream or state and federal aid. >> people say health care, that's recession proof and in muni speak that has you concerned because it would allow the federal covid aid. >> exactly that's another area we're looking at and they just like all of us in their personal lives are impacted by higher costs and inflation and for health care they're quite strongly at the employee level and it is very difficult to find employees particularly nurses

and so hospitals are having to tap into contract agency-type of employees and essentially traveling nurses and that's far more expensive than having someone on your own payroll and so they've done that to meet the needs of their community, but it's definitely eaten away at operating margins, and we are waiting to see hiring approved and getting a little bit less reliant on this contract date. >> i don't know what's the word, selective with some of these areas that look a little bit more challenged and maybe that's the key term >> absolutely. i think that's key, and our research prides itself on being able to go in and find those opportunities and even in these sectors that are maybe being talked about as an area to stay away from. we want to find the opportunities that we do think that there are bright spots. >> you have to convince the people panicking out of munis. thank you for your time today and it's good to see you again >> thanks, you too >> jennifer johnson with

franklin templeton up next on "power lunch" we'll dig further into the elon musk interview and we'll look into the valuable historical document ever sold at atiucon tyler getting ready, and i'll join him on the other side of this break

♪ ♪ welcome to "power lunch," everybody. along with kelly evan, i'm tyler matheson we'll see the musk-see tv interview on cnbc last night tesla's ceo elon musk says there could be a reckoning for u.s. companies doing business in china doing work from home with a word we can't say on tv and he'll keep saying whatever he wants on twitter even if it costs him money. >> before we dive