they have small towers and small cell units >> josh brown? >> i don't have a position on robinhood currently. i'm watching 12.25, and it's been on a downtrend since the day it was born and literally look at a three-year chart and something has happened i think there might be a double bottom at 8.25 technically they just announced layoffs which the street likes keep an eye on it. >> see you at "the closing bell." "t "the exchange" is now. thank you very much, scott welcome to "the exchange." i'm kelly evans is the ipo market back one of our guest says yes, if so why was today's listing just delayed? we'll discuss that and whether bigger names are finally going to enter the pipeline. plus investor kyle bass had subprime mortgagees before 2008

financial crisis and now it is against office space and he's here to talk about that in a weak where the names are outperforming and if you're looking to add ai to your portfolio there are two international plays you might not have heard of, but are worth buying, one of our guest says. he'll reveal one let's start with the market first, and i'm see something green. >> the exact opposite of the color of the outfit you have on rid now. you talked about the movements in the market. you can see near session highs up 38 point for the s&p and 4367, the last trade there at the highs just 41 points to the upside and up about seven at the lows a generally positive day right now pushing back toward the 4400 mark and the industrials up 1.50% and the nasdaq composite outperforming after underperforming yesterday up 1.25%, 167, to 13,503. a couple of stocks you want to keep a close on by far is the

worst-performing stock on the s&p 500 and by far on the dow jones industrial average, walgreen's up 5% the pharmacy benefits and the retail pharmacy giant comes out with a mixed earnings report and the earnings miss and revenues come in better and they lowered their full-year profit guidance due in part to less consumer spending and less spending on things like covid vaccines and covid tests and other treatments and that sort of thing so walgreen's a big laggard in the dow and the s&p down 9% and one of the places to keep a close eye on we'll frame the discussion around commercial real estate with one stock in particular and up 4.5% right now. this is a real estate investment trust that owns a lot of office space and retail properties, new york, metro also specifically some other places and they come out and say they'll invest $1.2 billion to renovate and update two big office buildings they have right near penn station in manhattan if that were to happen it's a

big bet on the return to office on some capacity betting that one might get back to the office at some point. vornado over the last four years down 73% and you can see this is the pan demeanoric right here in the spring of 2020 it's almost like a barometer, if you will, kelly with post-pandemic with work dynamic. as we discuss the future of commercial real estate vornado is one of those real estate trusts. >> i love it we'll circle back. dom, thank. >> the especially hard-hit sub sector in commercial real estate something legendary investor seth klarman said that he thinks makes for fertile hunting ground >> we think real estate is an area that is full of so many fundamental challenges, but the fundamental challenges cause urgent selling you can see it pull back in lending and you can see the

vacancies in office, troubles in retail for years and years, and so that doesn't automatically make it interesting, but it may mean that as other people abandon it, as other people face urgent pressure, there might be opportunities to buy and invest in capital and rescue loans and we hover around looking for opportunity. >> but my next guest is not so enthusiastic he was recently quoted saying that office space is an asset class that needs to be redone and by redone he more or less means demolished joining me is kyle bass, management founder and cio good to have you back. welcome. >> kelly, great to be here i think the -- the hype of this discussion is a bit off. i literally said that in a long, two-hour bloomberg editorial crew where i think downtown office space and i referred to being very much the b and c building i'm not sure how b and c

buildings survive, but even a buildings and you show it being down 74% and i agree with seth and as you probably know, in san francisco, 350 california street just traded for, you know, $60 a square foot which you can't even come close to a building for that, but the bet is from here that at some point in time you actually get millennials to move back into the office i know it's a tough slog, but you know, there's b and c office buildings in downtown areas that have been decimated by crime and again, vacancies i think this is a decade-long problem and the a buildings will do fine. >> how would you play it if you wanted to be really opportunistic? are you interested in vornado? because they're picking a big renovation and spending in debt and all of the rest of it right next to penn station as if to say the only way there might be

hope is by getting people on mass transit really close to their destination and maybe luring them back in that way, because this is way more about the commute especially with congestion pricing that's about to happen more than anything else >> look, this goes even further into bad governance and you look at the cities that have the worst office vacancy rates and those are some of the cities that have the highest crime rates in the downtown areas and the pendulum that's swinging is the secular change in work you know, primarily driven by covid and then people's proclivities to want to stay home and then you also have governance, bad governance in many of these cities and to your point, mass transit and i wouldn't ride mass transit in many of the cities today i think it's too dangerous i think you'll have to have governance be fixed and you're going to have to have these downtown cities renovated for

decades to come. >> that said, i know you and seth so do you buy vored in a owe at 17 maybe they can get to 30, maybe they can get to 40 and you want to buy the stock before you see the turnaround to some extent or maybe they're exposed to areas that will kind of come out of this maybe there are other ways to do this and someone like yourself can buy a property directly, right? or be part of some part of private credit deal. what's the play? >> given where debt costs are and where seth is a much better value investor than i am and in the icon of the space and in his book, margin of safety, he likes to create margins of safety and that example i talked about 350 california, the buyer paid $60 million for that asset asset was worth 300 million-plus just a couple of years ago and the buyer paid all cash for it and has the time line to wait it out. so what i'm thinking about how

to play an asset class like office, i think you want to buy individual properties, and i think you want to pay all cash for them and you also need to have a decade long or more time horizon, and the whole idea if you're buying it at 20, 25% replacement cost in the future, things will get back to some sense of what's deemed to be normal, and that building will be worth a lot more than $60 a foot if it ends up being worth more than $120 a foot it's worth much more >> i think taking debt costs where they are today is key to playing something like a value purchase here. >> great point, and for the investor as well to think about now tapping that debt will change the dine amynamic of who available. >> let's put that to the side and pivot and talk geopolitics to the side because we must.

i don't know if the event of the weekend are investable to you or point one way or the other to how you expect the rest of the year to play out, but what do you think should be the biggest takeaway from the coup, attempted coup that happened in russia over the weekend? >> so many people have given their opinions here. i think that the instability that we're seeing is something where you know, basically nothing is true. no one really knows what the truth is here, although you have the defense minister and prigozhin being natural enemies and now you have prigozhin moving into belarus. what worries me is lukashenko has been putin's lap dog for a long period of time and you've got wagner group in prigozhin moving to belarus at the same time that russia is moving tactical nukes the first two weeks of july. my key takeaway is i wonder why russia is putting their call it

front fighting force that they can disclaim beneficial ownership of with the group of nuclear weapons. my key takeaway is things became more unstable this weekend even if things settled back in i don't like where the global chess pieces are ending up. >> as. ic told us there is no political premium anywhere being found so it will be a headwind. final question, you've been hawkish on china for a long time and now the business community is responding and sort of in agreement with that analysis in cases where we're starting to see segmentation of china business with other u.s. and operating units. what are the implications of that is this the right move for companies to make? is it simply a protective gamut that doesn't have a whole lot of implications what does it say to you? >> i mean, if you're a pragmatist, you like to use the word hawk. i like to use the word realist

if you see china acting responsibly on the global stage, if they're not rating the pfc, and we've been asking for a crisis response line because as you probably heard, there are actual discussions being bandied about between a hot war between the u.s. and china to the extent that she follows through with his words and invades taiwan which he has been talking about since 2017 if you're a corporate investor or a fiduciary in the u.s. or europe and you have money invested in china, you've just seen what a mad man can do with putin's invasion of ukraine and unlimited partnership, and it doesn't take too much logic to figure out you need to be thinking about underwriting your risk in china because it's russia today, and it can be

china tomorrow and you might be able to sweep a couple hundred million of under the rug because you have $50, $60 billion under the rug if, in fact, xi's belligerence becomes real. i fear that we're dancing past this graveyarder or whistling while rome burns here. it's obvious if you just put the facts up on the white board that china is not our friend. that they are out for, call it, the global privacy of any cost and they're aligning themselves with the bad guys of the world it doesn't take a genius to figure that out. it just takes a pragmatist to realize that if you're a corporation doing business in china, you better start re-thinking about your supply chain, your revenues and your company and your corporate employees' livelihood, because as you know, china is detaining

many of the ex-pats and the companies that it's raided and it put into place new laws that allow it to detain and nationalize assets in the event that they call extraordinary circumstances which include war, and that's what they wrote into their new law. again, the writing's all on the wall people better start paying attention before it's too late >> maybe bearish would be a safe term how about that >> i like realist. >> dr. realist kyle, thank you very, very much delving into these topics. we appreciate it >> kyle bass exactly where we were back at the start of the year they just went up for auction at the top of the hour and rick santelli has the results from the cme. hi, rick >> that's very good. i'm impressed, kelly two-year was at 443 when we closed last year and tens were at 3.88 and interesting how it's

all lining up, isn't it? we 43 billion five-year note which was part of the package that treasurys are putting forth to auction in the three-day period and today's five year came through it at 4.019 and just a whisker shy of 4.2% and the problem was that the one issue market was trading much closer to 4.01 so it tailed a bit and that's an important factor so c-plus is the grade, but the metrix were very solid and that really is at the heart of this discussion solid metrics yesterday and a super duper strong two-year note action, and today sloppy pricing and all of the bidders, direct or indirect and it means many of these participants even though they lost money overnight on the two year because they believe central banks have gone too far

and it's very close to the end especially and that dynamic will continue to play out as they monitored the seven-year note auction. kelly, back to you >> thank you very much 7.034. after an ice cold 2022, the shares are starting to draw, and shares of kava, that we've had lately and that seems to be offering in more offerings nine are expectinging a billion and that includes jen restaurant debut which is set to behere tomorrow and eddie's class, and valuevilleable are all coming back this week is the freeze over and can bigger names be on the way along with our very own bob pisani >> does the fact that we're

focusing on jen restaurant group which is relatively small still tell you how desperate we are for big-time listings. >> essentially $33 million and anything below 100 million barely gets people's attention, but we had an ipo drought that's gone on for a few exceptions it came with a bang last week and $42 was an amazing number when it was priced at 22 and what happened there, it's hard to believe that the book runners fundamentally mispriced the deal and there was an enormous demand for the ipo, and in addition to kava being a brand name. this is indicative of a demand out there for ipos >> indicative of demand and supply to see the big banner names are relatively small. >> actually, some of them are big, if not bigger than kava in terms of size. big insurer.

and there's a thrift store operator which is gas and oil company. what's important to me about each of them and bob talked about the $100 million threshold and these are all offerings designed to raise more than $100 million for companies that were valued for more than a billion this is an interesting week because if they do well priced with the range we have a lot of well-known names that will come to market >> obviously, we're all curious about the stripes and the insta carts and any b to b players that would have your attention anything coming this way over the summer how much longer is the wind owe, really >> the window to me -- labor day is the mark and you might see something come over the summer and very few companies will probably want to try to price into the end of july and early august when people are on vacation they'll probably aim for the

post-labor day market. you mentioned them insta cart is a big one. people talk about data bricks and churros and the airbnb to cars and they've had internal issues that had nothing to do with ipo >> maybe the fact that we have a bankruptcy isn't doing a lot to help bankruptcy and enthusiasm for new listings right now >> i would take issue with that nothing happens in july and august and we've had a backlog for a year and a half and panera bread, strike and impossible foods and fanatics and the karina arm is out there, and you may see -- look, what does it take to get an ipo going you need a strong market you need stable interest rates that's a little bit iffy and you want to keep that more stable and that may or may not happen in the next couple of weeks and then you have decent pricing and

certainly kava provided some encouragement along that front my question here is, if not now, when the cynical thing is to say well, these are specialty companies that are going this weekend. it's true, but they're $200 and $300 billion deals and that's not trivial and that's how they open with niche players coming out and then you request be cynical, where are the big unicorns and the stripes and the reddits. they could have said it in private a little longer. i think the question is there. if not now, when you really want to wait until september or october if the conditions are right >> i think there's the chance that you'll get surprised in august who knows? >> i shouldn't downplay because i'm a huge fan of korean barbecue that may be one of the niche opportunities in the market and there seem to be a bunch of them in the restaurant space right now. >> it's worth noting as bob said at the beginning,

normally we wouldn't notice and we'd raise 30-some-odd million dollars and there's been a bun of those called the small-cap companies that have been coming out recently and there's been kind of a steady flow. so the real question right now is will the big ons pop? if jen does well, it would give more influence >> our own dan klemack and our very own bob pisani. >> the ai claims including this game called quadruple. if you think you know what it is tweet me @kelly atcnbc shares are up almost 9% this year and still above the 2017 highs. the ceo of edison is with us next as they sweep the country as we head to break here's a look at the markets and the s&p

is up 1% today and both the nasdaq and the russell are up nearly 1.5%. go figure. the ten-year yield is up 376 we're back after this. ♪ ♪ ♪business this is the exchange on cnbc i'll get a second opinion. all these walls gotta go! ah ah ah! i'd love a second opinion. no. i'm going to get a second opinion. with innovation refunds, there's no upfront cost to find out. so why not check like i did for my small business? take the first step to see if your small business qualifies for the erc.

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>> welcome back to "the exchange." the dow's gain is now more than 200 points and we're sitting at session highs with the s&p back up to 4372 and the nasdaq up 1.5% here are some of the movers this hour as we check across the markets to see what's driving the price action carnival rebounding from its worst day since november after the near-term guidance came in more conservative than expected. the stocks up 8% and still up 40% in june and tracking for its best month in over two years also generac on pace since 2021. this one, extreme weather spreading across the country the ceo toldous friday and the shares are down 50% from the covid high, but they're having a nice comeback up 9% today. let's get to some show and tell where we show you the chart and tell the story and delta is not the only one hated at the moment given all of the delays across the country. having an investor day and hitting a 14-month high and forecasting full-year earnings at the high end of the range and apparently they doubled or rose

50% with the cash flow forecast and the stock is off the pre-pandemic high and here's what ceo ed bastion told our phil lebeau this morning >> our stock was $6 a share in 2009 we got to $60 a share in 2019 right before the pandemic hit, a tenfold increase so we've done it before and we'll do it better this time because of the balance sheet and the quality of the brand and the investments we're making digital. that's all going to make certain that we have a more durable outcome for the future. >> from 6 to 60 for delta. meantime, texas dealing with an extreme heat wave. temps expected to top 100 degrees in houston and dallas all week long. it's putting pressure on the power grid most are down in the last week cons constellation, sempra. my next guest runs the largest

electric utilities which is california based and he has had to deal with what sempra is facing pedro pizarro is here. welcome. >> thanks, kelly >> there's nothing you can do about texas because they have their own grid they do. they have connections to the rest of the country, but they're single they're experiencing what we're all experiencing to some extent. we're seeing the impact of climate change and extreme weather whether it's heat, whether it's cold or wildfires that we have in the west and we're working to harden the grid across the nation. >> are the price tags over i remember the stories up 35% and we saw nat gas prices up a couple of years and people were just reeling is that all behind us now? >> you know, you have to watch market, right? we'll have to watch what markets do with lots of global events as well we continue to have a diverse

set of resources and we've had a focus using renewables to compliment gas and resources at the end of the day, i think we need a balanced set of resources that will be cleaner and more efficient and important for our customers that are reliable and affordable >> it is as much of a risk as geopolitical events and you've had exforbe you ares from past wildfires. >> there's smoke in chicago and we in new york seem to be more prevalent and i don't know if we're advancing it all and figure out how to prevent and fight them what do we need to do in order to stop it from becoming a chronic problem. two things the climate change adaptation and the hardest thing that we've done with the system to deal with the wildfire risk is one example of that is the chime at change mitigation because the reality is that we're seeing these implants and we see them in canada and california and australia has felt this for a while and so we need to continue making progress to clean up the

power supply as quickly as we can come order to help do our part toward mitigating the impact of climate change but if we look at what happened in california over the last five years, we have hardened our grid we have the plane while flying it and the group estimates that our actions replacing bare wire and adding monitoring equipment and the tree trimming, et cetera, that has reduced the risk of our infrastructure starting a catastrophic fire by 75% to 80% >> a 75% to 80% reduction from things like hardening the wires and brush clearing when will be the test? is this summer the test of whether that strategy is paying off? >> well, we've already had a test 2019, '20 and '21, those two risks had awful, risky fire weather in california and the reality is that we did not see any catastrophic fires in that

time, and with conditions that were just as bad as in 2017 and 2018 when we did so we're seeing this working we're seeing that we have not ha circuits where you have the wire we have not seen a single admission yet from the pauses that that wire was meant to deal with >> you have to tell the insurance companies. maybe if you were right i would feel more comfortable writing these approximately sees let me ask you a final question of where the composition of where your power comes from. how clean is it and who is funding the investments and the states and the federal government >> today we're about 45% carbon-free and 35% plus and that is renewables we are headed to 60% renewables by 2030 and 100% renewables at the retail level by 2045 who's funding that for the most part our customers,

right? because these costs get passed through the rate and however, the federal government has been helping and the ira will have a big impact in reducing costs for our customers. all those tax credits get passed through the rate through customer bottom line, and it would have the cost of the clean energy position. >> many are with the proactive power cuts and they're other issues in the next, two, three, four, five years, will we be relying more on the preemptive, forts? what should consumers be prepared for in terms of the app. i know my father lives north of los angeles and experiences these roll being blackouts all the time >> we're using those less and less and less, and as we look at the last few years we shared with the investors the risk reduction that has come from the public safety power shutoffs and

it's well less than half of what it is today. i'll be honest with you, kelly, those are the most extreme conditions, but already the impact to the customers is small compareded to years ago. >> i remember asking how is thanksgiving >> he can't turn on his microwave. >> it was painful for our customers. we don't like turning the power off, but we know that we save lives by having taken that measure. >> pedro pizarro, thank you for joining us it's good that you're check income and we hope you're right about positive developments in that areas. >> ed ro pizarro with edison international. ll> a pair of big banks she's buish on despite forecasting two more rate hikes thisiary "theec change" is back after this with the dow at session highs.

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call 1-800-miracle and schedule your free hearing evaluation datoy. welcome back to the exchange i'm seem modi with your cnbc news update. hyundai and kia vehicleses in a letter seen by nbc news the national highway traffic administration said it did not issue a recall they lack engine immobilizers. state officials say they have caused at least eight deaths >> recently post-partem workers take, spekt today and the specifics are not clear just yet. the new law affect accommodation requirement for 15 employees and

federal guidance is expected to come out later this year to detail exactly what it entailed and examples could include more flexible working hours and longer breaks and time off for medical appointments ryan seacrest is about to add wheel of fortune host to his resume and he is set to replace pat sajak earlier this month after four decades on the job. seacrest signed a multi-year contract to start hosting in 2024 and he will serve as a producer for sony pictures >> this is not going down well in my family's whatsapp? >> he's so bubbly. you need to be a little sass we that position, don't you think >> he can learn. >> he has proven to be quite flexible i will agree to that seem modi. >> one neck and neck with nvidia this year they're both up 180% since jan 1 and our mystery stock is still beating at 2% to 1% over the past year and 'sit 200% since last summer and i've

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and the norwegian tech company into the web browser solutions and how do you know about this their shares are up 180% this year rivalling nvidia. all of these plays do come with a warning. i'm ginned by kevin walsh on set with me. looking for ai names that weren't already bid up and this one does as well as nvidia. >> ai is the new hot dot on wall street, but much like that dotcom craze back in the 2000s, investors should be very leary and do their own due diligence before jumping into the, merging yet transformative technology. within our own smart trust technology, revolution trust, two names met our selection criteria that are am bracing ai for their own unique solutions. >> what is the criteria which is weeding out anything super expensive or maybe not. >> we look at valuations and we look at cash on their balance

sheet and low levels of debt and a history of growing their earnings a lot of these transformative early stage technology don't have revenues. we want those that actually have revenues and have sustainability so the two names that we like. nice limited as you just mentioned earlier. both adrs so they're international names allowing them to give diversification to your u.s. stock portfolio. >> let's talk about opera first. tell me a norwegian browser. what do they do? >> they're a smaller cap name and 1.7 in market cap and they provide a native web browser focused on ai and it's called aria how appropriate for an opera to have a product named aria. >> they do paint an attractive balance sheet and we believe that this is the very same type of capabilities that baidu is developing with their earning bot solution

>> what about, for instance, when chrome starts to integrate this or obviously what microsoft and bing have done most people say i want to play ai through those names because if something goes wrong and if the market isn't -- they can't mediate themselves so we'll just stick with these platform companies. >> the only thing i would say, kelly is there will be more than one winner in the ai race. certainly microsoft has a head start and tons of cash in the balance sheet and their multidollar investment in chatgpt, but don't forget about ibm either they have a yield of over 5% they just announced that acquisition earlier this week, $4.6 billion of cash on hand and they continue to transform themselves into a provider of ai solutions. >> stephanie link liked that deal and ibm has been a turnaround play lately the other name you brought sus nice the $13 billion company and what is the ai here >> they're using ai in their own

unique solutions around the financial climb and compliance solutions. so very nichy, of course, but dedicated to ai and strong balance sheet and yet another example of a company using ai to grow their revenues and we think compete and provide sustainability >> do you hedge fx so that you don't have the risk of strengthening dollar or does that multiply the risk factor? >> those are depository risks associated with them, and i have to suggest to all of the investors watching right now for those that are concerned that u.s. stocks are rich right here, maybe start diversifying overseas and take advantage of the weak dollar. >> what else when you look toward the back half of the year are you chasing the areas that have performed well so far or are you seeing them being a little more defensive? >> think you have to be very wary of what the fed does next i do believe if they were to stop right here and raise rates no more.

they could engineer a relatively soft landing if they do commit to two more rate hikes by the end of this year, this could be a deeper recession that you want top play more defensive. >> what about those that say another quarter-point cut. what does that really matter. >> i would take the flip side, why not even raise it? we have seen the rate hikes just yet and i think they've done enough. >> kevin, great to have you here from hennian and walsh asset management >> ai hopes that they attract the magnificent stocks higher up 7% in the second quarter and while ai has been good for stocks we'll hear from google about the impact it could have the 2024 election. could that be a risk we'll dive into it next. let's check out shares of ubs. the bank reportedly preparing to cut more than half of the credit suisse workforce e ubs take over officially closed two weeks ago and get this the shares are only up about

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indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire i was told my small business wouldn't qualify for an erc tax refund. you should get a second opinion from innovation refunds at no upfront cost. sometimes you need a second opinion. [coughs] good to go. yeah, i think i'll get a second opinion. all these walls gotta go! ah ah ah! i'd love a second opinion. no. i'm going to get a second opinion. with innovation refunds, there's no upfront cost to find out. so why not check like i did for my small business? take the first step to see if your small business qualifies for the erc. welcome back the upcoming election will be the first where artificial intelligence could play a big

factor and experts are already sounding alarms for the misinformation that people can generate with these new tools. our very own deirdre bosa joins us with this from the aspen ideas festival where this has been a hot topic. >> it has certainly been a hot topic and i moderated a panel on the ethic of ai and i asked speakers who are deeply involved in this space, if they were more worried or less worried about the impact of generative ai on elections than they were a few years ago. have a listen. >> i'm the same worried. the mid-journey stuff looks clunky as you're seeing there was a canadian example and the person had three arms that was in the ad -- >> a bad photoshop >> the reason i'm less worried is because two years ago we weren't having these conversations at the scale of which we're having them today and in one sense that's a good thing because people will be a little more weary -- a little

leery of what they see and what is true or not true and on the other hand, that's pretty sad that we have to question everything that we see and i don't know if in the end it comes back to recommending watermarking and it's still a technology that's not fully developed. >> next year is a particularly intense election cycle at many places so i think -- i think it's probably a little bit more heightened next year because of that >> so, kelly, that was sort of optimistic and encouraging they weren't more worried. there are risks on the horizon, but it wasn't the same throughout the aspen ideas festival we heard from the former google ceo earlier in the day and he said it will be a huge problem for the 2024 elections generative ai and misinformation is basically a mess and he is worried about it as many other people are, and this is the first that we'll be talking about this in the lead-up kelly.

>> was there anything else that people were -- or is it really just ai, full stop, everything about it >> at the aspen ideasfest? >> this is filled with policy makers, with academic. >> there are all kinds of things, social issues and technology and ai has been this underlying threat even if you see a panel with rainn wilson and he's talking about the impact of ai on the creative industry it's amazing that just seven months ago we weren't talking about this and this when chatgpt exploded on to the scene it's generative ai and specifically harnessing the benefits so here is a place where we can talk about the risks or the benefits or the place like san francisco, kelly, where i am all of the time and this desire to only talk about the benefits and opportunities because there are so many technologists that, and

you can imagine the bookers. did they have a plan a and then scratch that they always have a great lineup. deirdre, thank you very much we appreciate it >> still ahead, we're in the final trading days of the year see what will ivdre the s&p toward their year-en >> announcer: tech check is sponsored by comcast business, powering possibilities at if your with ibm and red hat, use a hybrid cloud solution to connect data across clouds, then analyze all that data with watson. okay, but this needs to meet our... security standards? yup. compliance standards? mm-hmm. so they get the insights they need... yup. in real time... check. ...to make quick decisions? check. aaaand check. that's the solution ibm and a global bank created. what will you create? ibm. let's create.

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♪ welcome back to "the exchange." stocks having an incredibly strong first half of the year, especially tech seeing the biggest gains. the dow up 2%. not that great, better than expected the s&p up 12% but the nasdaq, get this, up 27% since jan 1 my next guest sees more gains in the back half. 8% more upside from here she also expects a couple more rate hikes by year end thanks to inflation. joining us now with how to position, sara malek great to see you again, sara. >> nice to see you. >> you had that highs price target all year, right >> yeah. we came out with that price target in our outlook in december, 2022, for year end

'23. we had been more concerned early in the year recession that may clear the decks. right now we're seeing delayed recession. investors are wait and see mode worried about three factors, which is inflation, central bank movements and the is economy i think there's an opportunity cost of keeping money in cash when you can earn greater returns still now in areas such as high quality, high yield on the fixed income side, real asset such as infrastructure and balanced portfolio not only for tech stocks more tail winds than artificial intelligence. >> you know, if you told people back in december and tried to, which was basically you know, hey, if we're going to have a recession, we get to rebound 4,700 and now i guess if we don't, we could get -- a strange mix of events where it's -- it seems like everywhere you look it points to up. i just don't know how long that's sustainable >> yeah. i mean, this is the most talked about recession that so far hasn't happened.

everybody had been expecting it and waiting on the sidelines now what we're looking at is probably one to two more rate hikes and then a fed pause if you look at histories eq equities and fixed income tend to strength when fed pauses. i think these tail winds of moderating inflation, artificial intelligence, people weren't really talking as much about late last year will continue to be strong for the markets. that's why there's likely more upside from here as we get into q2 earnings. also, we'll be watching for companies how much they can maintain price versus lowering price to take market share but with moderating inflation, that might be helpful to their margins. >> what do you do with tech? is it a case of lean into the strength, go with it or are you looking elsewhere or just not matter, is this a case of the s&p will protect you no matter what? >> technicals when the nasdaq is up this strong in the first half of the year, majority of the time it will be -- continue to be strong in the second half but

not to this degree beyond just artificial intelligence which was a tail wind for tech earlier this year, also tail winds for tech, moderating inflation is positive for long duration stocks lower yields will also be positive for technology. and if the economy slows but doesn't go into recession, we'll be looking to own those companies that are less dependent on economic growth that's positive for tech it puts them in the sweet spot look at tech valuations they're not cheap but they have a lot of positives going for them beyond tech, a lot of other areas haven't caught up. other areas of market look cheap. transports catching up as the market starts to believe that economic growth is going to remain fairly stable. >> what about the banks where you've got a couple of specific ones here we have been talking more generally, morgan stanley and img are on this list, why? >> so, generally we have been negative on the banks for quite a long time now and that's because we think beyond the mini banking price we saw, more competition for deposits and more regulation. we're sticking to high quality

banks that are in well diversified businesses such as morgan stanley and img had less banking issues than the u.s. had. overall not positive on the sector 4,700 price target, what we would really like to see in order for the markets to get to that level is broader participation beyond technology. we're happy to see small caps start to play catchup, transports starting to hit new highs, all of that is positive we want more market participation for the markets to climb higher. >> makes me laugh. we have been talking so much about one versus the other big tech or small caps nasdaq and russell are both up 1.5%. >> saira, thank you so much. we appreciate it. >> thank you for having me that does it for us, everybody. more analysis on markets and the economy, we talked about this recession issue. sign up for my newsletter in one easy step, cnbc/newsletters.

next on "power lunch," more injuries to more fashion lines, pickle ball is having a huge impact on companies industries all the ramifications. jon fortt is in for tyler and i'll join him on the other side of this break. (sirens) [due at target in 5!] copy that. make a hard left down the alley. network's got you covered. [please confirm requesting back-up.] -changing route. -go. roadblock ahead. ...back up, back up... reverse! reverse! next level moments, we're 30 seconds out. need the next level network. [north corridor, hurry!] -coming through! -or 3, let's go. the network more businesses choose. transplant received. at&t business. i remember being on aau trips,

high school games. my mom would always say, "you need to fuel the body and you need salt." i'm like, "why do i need salt? like, who is going to do that?" she literally would make me rip open a pack of salt, pour it in my hand, and i would, like, lick my hand. sure enough, i would always be the kid not cramping, i would always be the kid energized, ready to go. fast forward 20 years and i go from eating salt out of my palm to a drinking lmnt.

♪ welcome to "power lunch. alongside kelly evans, i'm jon fortt. coming up, another downgrade for alphabet is the ai hike leading the market reality we'll discuss that and other tech topics. plus, first and secretary of states, now the treasury secretary, janet yellen reportedly heading to china next month. we'll talk about what she'll try to accomplish. but first, thank you, jon. let's get a check on these markets. and stocks are right around session highs pretty much the dow is up 227 points and it's the laggard today s&p up 50, 4378 and nasdaq leading the charge up