joe? >> buy the pullback in uber. >> buy the what? >> pullback in uber. >> i am buying the shares of qqqs that joe was selling and i think he owes me a pause. >> bitcoin. friday passed and d.c. circuit court of appeals didn't modify the judgment. >> good stuff, everybody. see you on "the closing bell." "the exchange" is now. thank you, scott. welcome to "the exchange." i'm kelly evans and here's what's ahead. a big drop in bond yields after the ten-day started the day above back 5% and that was enough for bill ackman to cover his bond short. is that helping to drive yields lower today? our portfolio manager says bonds can achieve equity-like returns over the next 18 months where she's seeing opportunity now. not everyone is so sure yields will drop, though. columbia's charles calamires is sounding alarm bells warning it

could overwhelm the inflation fight and get fiscal policy under control could mean a big shock for the banking system. he'll lay out the options available both to the fed and lawmakers. the co-ceo of morgan stanley's real estate arm is here to explain her strategy and how it's change in the face of higher yield as well as what opportunities she's seeing overseas. before that, for once, dom, i get to say session highs. >> yes. you can say session highs right now. that's exactly where we sit. if you look at the markets overall, with the s&p, remember on friday we talked about that kind of 200-day moving average, that longer term trend line, 4233. we are now solidly above it, but it wasn't the case earlier today. we were down as much as roughly 35 points on the s&p 500. right now as you point out, session highs, up 30. y is it's been a fairly large reversal during the course of the day, so you wonder whether or not some traders were out there looking at whether or not we could bounce off the longer

term trend line. the dow industrials up to 33,229 and the laggard if you want to call it that and the nasdaq composite very much to the upside up north of 1%, 153 points higher for the composite, 13,137. so we'll see whether that tick higher in interest rates and now backing off of that 5% level for the ten-year note could be interesting in term of the way it's driving some of the market action. on macro side of thing, cryptocurrency, as much as you want to call it a macro trade, i want to focus on the 30,000 mark because woo toe told you over t course of the last couple of weeks that we were breaking out over the medium term trend for bitcoin prices. that 30,000 mark is key and now it's up 156 and up about another 40% and there have been headlines in the last few days about bitcoin etfs and regulatory approval and whatever is happening we are moving to a higher trading range for now for bitcoin and something to keep a

close eye on. and stock of the day wise, it's a merger monday. big deal in oil and gas following up on exxon's big purchase of resources, we have chevron making an all-stock deal for hess, smaller competitors, $53 billion in size. all-stock transaction. chevron down about 3% right now. hess down about 1%. if you want to pay attention to the year to date action on the stocks. crude oil prices up 7%. chevron's actually lagged in terms of the energy sector overall. hess is up about 14%. you can kind of see the last couple of months is where the real action has been taking place. whether or not, chevron, kelly can get a bid out of this deal remains to be send, but it's a big deal in the day. i'll send things back over to you. >> huge action, dom, thanks. the ten-year yield briefly back above 5% and dropping sharply while the yield curve is almost completely uninverted. let's bring in rick santelli to help make sense of it all. rick?

>> yes. we're under ten basis points twos to tens and what's fascinating is many traders and sources that i deal with on a daily basis have a variety of reasons which all make sense as to why yields reverse. first of all, the obvious reason. psychologically, we hit a very important point at 5%. add in geopolitics and some of the nervousness and question marks regarding what's going on in the middle east and add in ukraine and russia and we look at legendary traders that reverse positions, if that makes sense. i'm a firm believer and let the market tell you what to do and to that end, let's go to the white board. after the 12th, we've set a pattern in treasury yields where we continually seem to trade above the previous day's highs and that really started to be a sideways endeavor when we had thursday and friday last week. to be sure, many traders had questions whether we even traded 5% at all and it was only on one system and that's a moot point

this morning. so what happens that the market's telling us what's going on? well, let's remove this, here's today's activity, we have a higher high than we did on friday, and we have a lower low than we did on friday and this is true for tens, 20s and 30s. this is called an outside session. higher highs, lower lows. that usually means trend reversal. so trend reversal would make sense. does that mean that what we have today, the high yield just shy of 502 is going to be a top or the top. i can't tell you that. what i can tell you is look for consolidation and give us a retest of 570 or -- excuse me, 470 to 4.75 and let the market show us if we close above that point before we get over 5%, mr. ackman will probably have a much juicier profit by the end of next month. reporting, kelly, it's all up to

you now. back to you. >> i bet it is the top because, you know, i have a piece out there talking about comparing the u.s. to the countries from europe ten years ago. so that's probably a sign of where sentiment is, rick, but it is notable to see america's bond yields are lower -- or sorry, are higher than peripheral europe's at this point. >> yes, and you know what? there are some good reasons for it for a change. europe, in many ways, doesn't have a constitution. they have an agreement which deeps deficits supposed lead in a contained measure meaning those member countries have to try to get 3% or lower. they are actually trying to tackle deficits. i'm not sure the same could be said for the u.s. as we look at revisited numbers for the budget deficit that are in the 2 trillion camp, and i still contend that as much as we all want to say this is the top, i think it's going to be a temporary consolidation. i think yield goes much higher. >> ooh, rick, thank you. for now, we appreciate it.

rick santelli. let's look furth intoer bill ackman's call which is getting attention because of the reversal in bond yields. he covered the short because there is too much risk in the world that could make debt safer and push yields lower and the economy is slowing faster than recent data suggests which also means lower yields and my next guests are big fans of buying bonds here. joining me on set andy cap earn is at coriant and -- is it still ubs private wealth management? >> it is. >> just checking. angie, let me start request you because for a lot of folks thinking i've dabbled in treasurys. i've gone to treasury direct. i've maybe gone into cd, and i'm starting to now figure out tech strategy, and i'm looking at long bonds and what would you tell people to do with the yields on offer in this environment? where should they go? >> they should extend their duration? >> really? >> it's been most challenging

conversation i've had with clients recently because it is so safe to stay in cash, and 5% short term, but if you're trying to achieve, a durable, sustainable stream of income especially for our retirees, our pre-retirees, you will be blessed to live on this planet for another day, you need long-term duration or at least intermediate term duration. so some sort of a balance is really what we're after. >> i have to imagine i'm talking hold to maturity and we're not talking about market risk and for you to tell someone to go out five years, or 30 years what's the biggest pushback you're getting? ? i'm not going all in on one maturity. i'm really -- i'm creating portfolios that are balanced and even bar belling them a little bit and keeping some on the short end, but our thoughts are also that yields are going to come down, and so we feel like we're at the peak of a rate cycle and we feel like we can get equity-like returns somewhere in the eight to 12

months in the double digits if you buy bonds now. so if you have a portfolio that is highly diversified with different maturities. we like high quality, that's where we think you should be. >> andy, same for you? >> very similar position for me and the bigges of challenge investors are facing is psychology and perception of value. when the yield curve is flat and inverted the bond market is upside down. peep view similar returns in cash especially after the last two years. here's what i think they're missing. i think what they're missing is there's value in making a commitment. if you like today's yields for three months why not three years or something longer? >> do people think inflation will be so high -- i've looked at it and they've made 30 years at 5%, but you are at some point going to lose your purchasing power. >> once blurred, twice shy. i think investors are looking at mark to market returns that are negative again this year and

feeling like they want to see the safety in three months and what i'm trying to encourage them to think five to ten years. >> three years of losses in bonds which maybe has never happened before. so understandably, people are a little bit nervous. >> and we had that 2021 period of equities that was pretty rough, too. so people went from having goals to having higher yields and higher returns to just preserving capital and sitting on the sidelines and now they've reduced their expectations and they're very happy with that 5%. >> we've had these headlines about chevron and exxon and we know what some of the yields are and the energy story. i mean, ever look to send people there instead of bonds or a little bit of everything. where is the relative value? >> balanced portfolio for sure. we still like equities for the long term and we think bonds will outperform equities over

the next 12 to 18 months and we do like equities and balanced portfolios, we're favoring indices that are market weighted. so, you know, we're not necessarily high end on the high beta names, but we're also hedging. we like private equity. we like hedge funds and covered calls and structured products. we think we're back to balanced portfolios to smooth out returns over time. >> do you think, andy, we'll be in a recession? that's what bill -- they've been busy on twitter this morning. bill gross basically said q4 recession doesn't like what he's seeing in the auto bldelinquencs and the bond market. >> it is driving the next big move and the next one is the inflationary outlook and where inflationary actually is and the second is unemployment. inflation has been slowly, but surely coming down the 2% level. as long as the economy continues to make progress toward 2% and as long as we don't see any

unexpected spikes in core inflation if the fed has room to the potentially reduce them a little bit. the important one to watch is the bond market and we've been in an unnaturally tight market for labor for going on two and a half years now. the fed needs to see softening there to give themselves room and flex believity to reduce rates. those are the numbers to watch. will we see a traditional recession the way you and i normally define it. perhaps not, this is an unusual environment we're working in, and watch not so much the headline data and watch inflation unemployment. >> very quickly, before we go, angie, corporate credit. for people to look at high yield and things like that even with the potential defaults that might be coming, at some point are you compensated with where yields are? >> you know, we're not saying to over expose yourself to that market, but we are telling clients senior loans which have

been doing extremely well over the last 18 months to two years. credit for credit, we like high yield. we're saying take your profits and go into high yield. we're not saying, expose more. >> people are getting nervous with floating those things. by the way, since we last talked the insurance problems are only getting worse. >> i know. i don't know if there's any further rush by the clients that you deal with to say i'm coming up with different strategies to deal with this cost of living shock. >> do you want me to talk about that? >> give me a few suceconds. i'm curious. >> for those clients who will self-insure now they're running a risk to they won't be picked up. because the insurance companies don't like people to flip the switch on and off. so, just something to be careful of because it's so popular right now to self-insure. >> that's a great point. i forgot about that. all right. guys, thank you both for joining me today.

appreciate it. angie newman and kapyrin. retail investors have chocked up a pretty good track record and that's according to "the wall street journal." sent 2014 the average stock portfolio is up 150%, in pack, beating the s&p 500 which is up just high of 140% over the same period. the data seems to challenge a conventional wall street belief that the so-called dumb money and with the movie of the same name, retail investors do remain active purchasers of etfs and stocks and that continues to top pre-pandemic levels and as a result, everyday investors are continuing to move as important movers and shakers in the stock market. coming up, who's the pig now? it could be the u.s. as the country faces the risk of government debt and deficit to keep inflation low. why we can't tack ake a page ou

europe's 2012 playbook. that's next. and wall street's biggest concern and the morgan stanley real estate business says the worst is yet to come. she'll tell us where she sees the biggest risks and opportunities and as we head to break here's a quick look at the marketses that have been fluctuating all over the place as the dow has the narrative. from a high of over 5% just this morning. that drop has helped move stocks higher. the nasdaq is up 1% and half a point for the s&p and we're back after this. ♪ ♪ >> this is "the exchange" on cnbc. this is spring semester at fairfield-suisun unified.

they switched to google tools for education because there's never been a reported ransomware attack on a chromebook. now they're focused on learning knowing that their data is secure. ( ♪♪ ) ♪ is it possible to fall in love with your home... ...before you even step inside? ♪ discover the magnolia home james hardie collection. available now in siding colors, styles and textures. curated by joanna gaines. new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today.

here's why you should switch fo to duckduckgo on all your devie duckduckgo comes with a built n engine like google, but it's pi and doesn't spy on your searchs and duckduckgo lets you browse like chrome, but it blocks cooi and creepy ads that follow youa from google and other companie. and there's no catch, it's fre.

we make money from ads, but they don't follow you aroud join the millions of people taking back their privacy by downloading duckduckgo on all your devices today. ♪ ♪ welcome back to "the exchange." as the dow threatens to move lower again it was down triple digits when bond yields were up 5% and we've seen a reversal that is reversing yet again and the ten-year around 4.83 and the s&p 500 at 4243, up half a percent today, but just a hair above its 200-day moving average after breaking and closing beneath that level on friday for the first time since march. 4235 is the number to watch there. the dow and russell are both still trading below their 200-day moving averages and could the nasdaq be next? that's hovering near its 200-day

moving average 12,742 and it hasn't broken below there since march about 400 points above it now. let's count up now with the house of representatives eclipsing 19 days and 20 hours without a speaker. over to emily wilkins on the hill for more on the gop's protracted path to a new leader. emily? >> hey, kelly. we might see that number get much higher in coming days. republicans are essentially back to square one now. jim jordan was a nominee last week, but he stepped down on friday. so now nine republicans have thrown their hat into the ring to be the next speaker. they've been working the phones all weekend trying to approximately support and they'll have a candidate later tonight where they will be giving their pitch to members answering questions and then tomorrow morning the republican conference will begin to vote in a secret ballot behind closed doo doors and it might take several rounds to decide who the nominee will be and then to the house floor.

tom emer is currently the number three republican in the house. he had to win his election to become majority whip and he is someone who has a lot of momentum and he was backed by kevin mccarthy. obviously, he's worked with a number of different fashions within house republicans and they do not vote to overturn some of the state results for the 2020 election and there are some questions about how well he gets along with trump and whether some of the members who are more supportive of trump could ultimately support him and you have other members of leadership who are running and mike johnson who is the vice chair of the conference and the chair of the policy committee and both have won elections before. you have kevin hearn, one of the biggest groups within the republican conference and then you also have folks like byron donalds who is considered a rising star even though he has not been in conference for that long. the big question, can any of these folks get to choose 17 and kelly, at this point that's just not clear that can happen and

there are still republicans who are waiting in the wings with that plan to empower speaker mchenry, and it didn't get enough support last week and as time goes on, as we get closer and closer to some of the key funding deadlines that idea might begin to gain some more speed. >> for now, emily, thanks. emily wilkins, we appreciate it. >> turning to the health of the commercial real estate sector which continue to mount with many seeing it as a top risk for banks and broader financial stability. three-quarters of respondents to the fed's latest financial stability report it's a prominent near-term risk compared to half who thought so back in may and while they've been limited so far, my next guest saysthe worst is yet to come and joining me now for an exclusive interview is morgan, welcome to you. >> thank you. >> what's this been like in a nutshell? pretty dramatic, i must imagine. >> absolutely, but it really depends what and where.

so commercial real estate, contrary to all of the headline out there is not one thing and therefore it's not one answer. certain thing affects all assets, credit cost to capital, credit con trants, et cetera. there is a lot of divergence and outcome. operating performance across asset classes very different within and across sectors, markets, et cetera. >> it has everything from senior living to data centers and it's not just office and we often do use commercial as a proxy for what we really mean with office although lately we see multi-family because the banks have had to pull back. where is the opportunity? where do you xeel excited to put capital to work? >> sure. there's a lot of distress out there certainly with office and other spaces. for us, we are much more focused not on distressed assets, but distressed capital stacks and they're overlevered with short duration debt. >> some of those might be from a

few years ago. we've seen some of the headlines and the people that have to hand back the keys and that's the situation where you come in. >> look, when your debt matures and you have to refi at half the proceeds and double the rate, something's got to give, and so we're there focused on providing very flexible, rescue equity valuation and sometimes buying assets. >> what are the ones you want to buy versus should some that you say that's not going to work. >> it's misunderstood just how good fundamentals are on the ground. vacancy at tight levels and certain mega trends are propelling demand. what do we look at? we look at the orientation and where the goods are manufactured, we look at housing shortage and aging population. so all of these things we think ultimately will grow long-term demand regardless of cycles. >> although none of that sounds to me like you're scooping up office properties right now, and

we know that a lot of the best buildings are kind of in a different situation than a lot of the ones that aren't so great, but what do you think of office in general? it's going to get worse before it gets better or case by case? >> look, there are two things that the headlines are really missing. first, we manage a global business and invest all around the world, and you know, i think people misunderstand just how different it is. so people in san francisco, they may not want to go back to the office which is why you see 42% utilization, but let me tell you, people in seoul and tokyo, they are back and they are not coffee badging. so difference by geography and secondly, i'd say in the u.s. regular way office which really is the toughest spot, the problems precede covid. so work from home. that's a convenient excuse and certainly crushes demand, but office is so capital consumptive that the spread between your nominal cap rate and your true cash yield is a gulf apart. >> look at the buildings that

have gone up in the past decade and they're boasting about their offerings and they're these beautiful glass structure ands h have everything to offer to employees and they're successful in bringing the capital back in. what's a developer to do? >> the best of the best, even in san francisco that i just picked on, even there because we own the best of the best, the rents we're signing today are above pre-covid. >> wow. you mentioned international and one of the interesting quirks has been that the u.s. seems to have a much higher share of work from home than other countries. i don't know if you know why that is, but it sounds like international are safer at least for office. >> yeah, look, i think a couple of things, right? commuting trends, frankly, culture, a whole host of reasons that i think work from home is different, but i think in the u.s. we focus on the best of the best and we continue to invest in office a bit in places like tokyo. >> yeah. so there's -- like you said,

much more normal trends there in some cases and certainly overseas could be an option. stepping back and looking at the impact of higher rates, do you think this rate shock has been priced in now to this space in are you with partners and competing for credit funds for those opportunities? are we at the distressed phase now or do we still have to wait? >> it's a bit of both, right? there's this misconception that interest rates -- high interest rates are game over for commercial real estate, and absolutely it will be game over for guys that financed to perfection when rates were 0%, but the reality is there are certain types of real estate that i think can actually perform in a high-rate, high-inflation environment particularly if the high inflation is coming from strong economic growth. >> all right. maybe it is and maybe it isn't, but say it is, as a parting recommendation, what would those areas be? >> we continue to like warehouses. we continue to like senior housing. we like places where you can

really push income growth well in excess of rate expansion. >> all right. lauren, thanks. lauren hochfelder with morgan stanley. ing come up, big tech earnings kicking off this week with four mega-cap names. how soon before rising rates begin to hurt their bottom lines? we'll discuss that with the stocks rallying today. communications services and tech are leading the way as bond yields reverse lower and energy is the biggest laggard down 1.5% despite the chevron deal as wti crude also backs off to nearly $95 a barrel. "the exchange" is back after this.

in the u.s. we see millions of cyber threats each year. that rate is increasing as more and more businesses move to the cloud. - so, the question is... - cyber attack! as cyber criminals expand their toolkit, we must expand as well. we need to rethink... next level moments, need the next level network. [speaker continues in the background] the network with 24/7 built-in security. chip? at&t business. here in hawaii there is always time. there's time to spend with family, time to enjoy with friends. there's always time to listen or lend a helping hand. here we have all the time in the world, but no time to waste. you founded your kayak company because you love the ocean- not spreadsheets. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description.

visit indeed.com/hire hey you, with the small business... ...whoa... you've got all kinds of bright ideas, that your customers need to know about. constant contact makes it easy. with everything from managing your social posts, and events, to email and sms marketing. constant contact delivers all the tools you need to help your business grow. get started today at constantcontact.com constant contact. helping the small stand tall. ♪ ♪ ♪

welcome back. let's get to tyler matheson for a cnbc news update as the dow moves lower by 17 points. tyler in. >> thank you very much. an off-duty alaska airlines pilot was charged with over 80 counts of attempted murder. the pilot allegedly attempted to shut off the plane's engine mid-flight while sitting in the jump seat. the plane took off from washington state and was scheduled to land in san francisco. the flight diverted to portland where the pilot was arrested. no injuries were reported. the white house announced it is creating 31 technology hubs to improve competition in the technology sector. the hubs will compete for grants from $40 million to $75 million. they will focus on technology areas including ai, clean energy and biotechnology with the goal of improving economic growth, job security and job creation. meantime, marvel's

"spider-man 2" broke the record for the the fastest selling game in 24 hours. more than 2.5 million copies were sold. the game is exclusive to playstation 5 users and the standard version sold for just under $70. big day for spider-man. kelly, back to you. >> thank you, tyler. and a good week for it, too. see you soon. the coming up, the co-ceo of morgan stanley's real estate arm and we just heard her say it was changing in the face of higher yields and we'll talk about whether you can translate that to other sectors and as we head to break, take a look at the dow heat map with the dow winners on a split average. chevron is the worst performer on the acquisition of sshe and it is an all-stock deal. "the exchange" is back right after this. ♪ ♪

♪ be ready for any market with a liquid etf. get in and out with dia. there's challenges, and i love overcoming challenges. ♪ when better money habits® content first started coming out, it expanded what i could do for special olympics athletes with developmental needs. thousands of bank of america employees like scott spend countless hours volunteering to teach people how to reach their financial goals. it felt good. it felt like i could take on the whole world.

♪ ♪ welcome back to "the exchange." dow's turned negative while the s&p is hanging on to a half percent gain and the 2 hun-day and the nasdaq is positive by nearly 1%. tech stocks going from worst lately to first, check out some of the names having the biggest point impact on the nasdaq 100 and microsoft, nvidia, amazon, meta, gains across the board and in nvidia's case up 1.5%.

the recent climb has big implications for the sector and with the mega-cap names on deck to report this week we'll look at what the rate shock we've been through means for cpaomnies big and small back, next.e had sell their life insurance policy for cash? so they're basically sitting on a goldmine? i don't think they have a clue. that's crazy! well, not everyone knows coventry's helped thousands of people sell their policies for cash. even term policies. i can't believe they're just sitting up there! sitting on all this cash. if you own a life insurance policy of $100,000 or more, you can sell all or part of it to coventry. even a term policy. for cash, or a combination of cash and coverage, with no future premiums. someone needs to tell them, that they're sitting on a goldmine, and you have no idea! hey, guys! you're sitting on a goldmine! come on, guys! do you hear that? i don't hear anything anymore. find out if you're

sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com. ♪ ♪ every day, businesses everywhere are asking: is it possible? with comcast business... it is. is it possible to help keep our online platform safe from cyberthreats? absolutely. can we provide health care virtually anywhere? we can help with that. is it possible to use predictive monitoring to address operations issues? we can help with that, too. with the advanced connectivity and intelligence of global secure networking from comcast business. it's not just possible. it's happening. across the globe, industries are transforming and businesses need to navigate the changing landscape to stay ahead. when you partner with barclays, every change leads to a bold possibility. you have the vision. we have the insights,

financial solutions and global perspectives to help you make it real. barclays corporate and investment bank powering possible. when you think of investment risk, do you consider climate risk? changing weather patterns are impacting the way we live and the value of businesses large and small. this can mean disruption to supply chains, changing demand for products and shifting regulation. what does this mean for your business, your clients, and your investments? ice offers data and markets that can provide critical insight. manage your climate risk with ice.

welcome back. it's a big week for tech earnings with microsoft, amazon, meta and alphabet all on deck and with rates near 16-year highs, the street will be watching for the impact of those rising yields. deirdre bosa joins us to discuss how they've been hitting or not hitting the sector. >> yeah. i think more like not hitting at leasta the mega-cap side. the mega-cap tech companies have become defensive plays. they have the huge cash piles that are earning yield as rates go higher. they're growth at a reasonable price. they're relatively safe in this kind of environment, but at the very other end of the spectrum is the start-up world and it's undergoing a sea change at the

moment. funding has come down and really they're hit by interest rates because once valuations come down because of the current value of the future cash flows and that's worth less when rates are higher and at the same time their borrowing costs are increasing and that is a double w whammy to this part of tech and that is leading to more start-ups shutting down. it's a company that helps startups manage equity and they've found that nearly 550 start-ups have closed shop this year. that's more than the 467 for all of last year and basically it c concludes that has been the most difficult year for early stage company in at least a decade. kelly, i was talking to a ceo who is the ceo of angel list and he sees similar debt and he says it could get worse before it gets better because of those interest rate dynamics. >> i loved the way you summarized it. you know, big companies can shrug it off and not necessarily the stock prices, granted, but they can largely shrug it off,

but for start-ups, this is say real game changer. >> it is, and i want to mention one start-up that is one of the highest profile examples so far. it's called convoy. it's a trucking start-up that is backed by jeff bezos and a few other very, very high profile investors just 18 months ago. it raised $216 million in a nearly $4 billion valuation and on track to bring in a billion dollars in revenue annually and it completely went under after rounds of layoffs, the ceo essentially told his staff that their strategic buyer couldn't do it anymore, and that's an indication, too of how even if you can't raise money and you have to deal with a strategic acquisition and more and more the acquirers, and the formula doesn't make sense to acquire money-losing company because they can earn more by losing relatively risk-free treasurys. this has major implications for the silicon valley and the private equity industry and so much more. also interesting to point out

that we are seeing this historic collapse in the freight market that is not helping matters right now and nor is it a great sign for the economy. very quickly, you're speaking of making more by doing nothing. a lot of big tech now benefits from that situation, as well. >> isn't it kind of amazing how that whole sort of complex has shifted. when rates were near zero it was seen as a liability that they were holding all of this cash and weren't doing anything with it or yielding very much, but now look at those cash piles and apple is sitting on $167 billion in cash and investments as of last quarter and alphabet $150 billion, and let me put it this way. if that cash is yaeling 4% at a minimum in a relatively risk-free treasury market that's $7 billion coming in the door before it sells a single iphone. it's just bringing in money, but what we could see is more calls to distribute that cash to shareholders who are looking at

those cash piles saying, hold on. that could be a topic this earnings season. ? deirdre bosa reporting. still to come, coca-cola has missed on revenue only once in the past five years. gm is postponing an ev plant expansion amid slowing sales and mid-term options of spotify imply a 11% move on either direction and we'll debate the action and the trade on all three of those names about to report in earnings exchange next apn don't miss the owner of sn-oat 6:00 p.m. eastern, nicholas pinchuk. we're back in a moment. tech check is sponsored by comcast business, powering possibilities.

the power goes out and we still have wifi to do our homework. and that's a good thing? great in my book! who are you? no power? no problem. introducing storm-ready wifi. now you can stay reliably connected through power outages with unlimited cellular data and up to 4 hours of battery back-up to keep you online. only from xfinity. home of the xfinity 10g network.

♪ ♪ welcome back. the u.s. deficit soaring to $ 1.7 trillion a 23% jump from 2022 thanks to titlement costs and interest payments on the federal did not. my next guest says the biggest problem facing the u.s. is known as fiscal dominance where both the debt and deficits climb so fast they overwhelm the fed's ability to keep inflation low and that could keep the fed and

lawmakers with some uncomf uncomfortable choices. joining me now is professor calamides. >> i'll call you professor. >> it's a pleasure. >> we have bill ackman saying the rise in long-term bond yields is done now. for those who think they are probably going lower here on slower growth, is there any word of caution you might sound? >> yes. one of the possibilities is driving the long-term bond yields higher is concerns about inflation risk related to the cumulative effect of government debt. we don't know why exact leet long-term bond yields have gone up and certainly that's one of the possibilities that people are talking about and that's related to this concept of fiscal dominance that you mentioned. the possibility that the cumulative effect of deficits will cause money printing to result from the unwillingness of

people to continue to bear increasing amounts of government debt which forces the fed to step in and purchase the debt that is effectively printing money. >> you have a great piece for the st. louis fed if people want to read more about this, but a couple of things to watch out before entering this period is for instance, a failed government bond auction. there is some yield at which they might say we don't really want to go at these rates and it's probably not 5% and maybe it's 7, 10 or 20, but i don't know what that number is and i don't know if there's speculation about what that number is. >> well, i'd say -- let me stay what was already agreed upon. if you read the february treasury department report they already recognize that current planned deficits based on entitlements and other planned expenditures are already putting us in an unsustainable situation which means that there's no interest rate at which we can sustain those deficits going

forward. so it's really not a question of what the interest rate's going to be, but at some point people will recognize that at no interest rate will they be willing to accept further government debt issues, and at that point you have, as you pointed out, some kind of failure of the bond auction. this has only happened a couple of times that i'm aware of in american history and what it means is that people sort of realize that we've hit this point. it's not an easily forecastable threshold, economists can't tell you exactly where it is, but we know that if we don't do something and here's what's absolutely agreed upon. if we don't do something about the cumulative deficits that are being forecasted based on our entitlement programs, we will hit that point and that will lead to some sort of convulsion in the bond market followed by a very big increase in inflation.

? yes. because the only real options at that point have turned to the central bank and there is -- the bank would have to start paying interest on reserves and at the same time increase rerequirements and that would be a big profit shock? yes. >> what a lot of people might not realize is this stealth monetization of the debt. it might come across as something much more mundane. giving him a second. i like the pensive face. it looked like he was agreeing. if you want to read more about the points he was making about fiscal dominance the st. louis research paper is online right now. let's turn to the busiest week of earnings season with 30% of the s&p reporting and we'll look at three consumer names out before the bell. coke, gm and spotify. here with the trades is jeff kilberg, kkf financials and ceo. how are you? >> hi, kelly.

how are you today? >> let's sneak in a chat about the markets on a pretty wild day for bond yields and let's start with coke which reports after the bell tomorrow, coming off the fifth straight month of losses and consumers showing signs of weakness and line. they also noted declining domest ic need for. you think they might sell into stock. >> you could even buy lower. you never want to fade warren buffett, the oracle, the oracle owns 400 million shares. that's about 8% of the company. if you look at this, it hasn't done much. it's been a decade long conversation or debate about coke or pepsi. pepsi has outperformed on the one year, three year, five year metric. that's 10% lower. if you don't have a position, i would be a seller, taking profits just to see what they

talk about. that forward guidance to your point is really important. the chain about 22 forward pe ratio versus pepsi up around 27. >> do you think the declines in pepsi and coke are because of, if it's kind of the hype around weight loss drugs, that might be an easy entrance point for long term investors, but if it's because of high rates and underlying concerns about the economy, tat feels a little more troubling story. >> yeah, and it may be. i don't think it's the ozempic story. there's a myopic view in the united states. you talk about coca-cola. they're in 200 different countries. their products are well diversified. i think it's overall consumer, and there's other products out there. i see my teenage kids, they're drinking prime. we got prime, we got prime. that's the song they like to talk about. they're moving away from the traditional products. >> let's move away ourselves then and talk about general

motors. the uaw strike hitting both share price and production with gm down an estimated 20,000 vehicles since the start of the strike. the stock is down 12% during that period. deutsche bank thinks we'll see resilient demand, it could even prop up pricing. what are you thinking here? >> i'm an owner. it has been rough to your point the last few months, down over 22%. and they really have to thread the needle on this earnings call, when they're going to talk about the q3 report, they can't oversell it, if you will, because that's going to hurt them and work against them in any type of negotiation. this uaw situation is bigger than we think. it may be priced in, but i do want to be a buyer here. you talk about gm, their ev ambitions, their delivery on that. i want to own it for longer term, but it may be a little volatile. >> do you think there's any -- i don't want to quite put it this way, but they sandbagged the quarter so they appear weaker in union negotiations? >> you know, they can't do that.

th they have a fiduciary responsibility to their shareholders. they're chasing ford, ford has outperformed. they're going to be responsible in their reply, but by no means will they oversell. >> they're trading at four times earnings. four. is it going to go to zero? >> it can't. gm is a name that i think you want to own. you talk about it, some of these blue chip names. that's an essential name. i own it in our essential 40 portfolio. it's a boring name, but until they get back to where they were, you have to remember, this was trading at a 52-week high at $43. it's really come down, an opportunity to your point at four times. you have to buy here, i think, and hold it, but you have to be willing to get through the earnings call because it's going to be volatile. you may see it go up or down 5% on how negotiations may perceive the forward guidance.

>> we're going to hear from spotify. they're up 90%, but well off the 2021 highs. the market doesn't like unprofitable companies in this market. new ai personalization features, audio books to encourage premium subscription growth. what do you do here? >> look, i think you have to take profits here. i don't want to be a seller but at the end of the day, up 95% year to date, you have to consider where this has been halved. you go back two years it was trading above $350. you talk about volatility, and gm, whoa, we'll have volatility in spotify. when you peel back the onion, investors and all of the advisers i work with, they're going back and reverting to companies that make money. spotify doesn't make money yet. that question marb over the profitability and when it's going to come, that's going to hit some investors. that may incite profit taking and you could see a dip here. >> we also mentioned near term

options imply about a 11% move. does that entice you or make you want to stay away? >> as a trader, you could consider selling some put spreads, defining your risk, but when i taukt owning it for a long term investment, i don't get too excited. yes, we're up 95% year to date, but down 50% in a 24-month view. this is nearly a two beta, so you have to understand what you own and what your exposure is, versing owning it for the long term. >> let me put you on the spot for a couple other things. we're going to hear from a few of the builders. those that were trading four times earnings if you go back a year ago, they ran up, they were hugely loved. they became a crowded trade. they have since corrected. do you stay away or re-enter? >> i think if you own it, you hold on to it. you consider re-entering this position. it's up 53% year to date. the home builder association, about 25%.

so it has out performed. when you take a step back, you have to understand the supply and demand issue. if you look across the country, there are considerate supply issues. i know they're only delivering 7,000 homes for 2023, but i think this is a space you want to own, and they have outperformed. i know they're small, about half the size of dr horton, but they have kicked the you know what out of dr horton. we get excited about owning this, but there could be a better entry after the earnings. >> horton was the favorite name from our deutsche bank analyst last year. >> all right, so now the big reveal, as it were. what do you make of the moves in the ten-ye bond yield today. rick santelli called it an outside day that could be a sign of a trend reversal. >> i think bill ackman was watching our segment last year. i talked about the ten-year note going lower, sure enough, we're 20 basis points lower on the day. we talk about an overcrowded trade, we talk about the

expectations. this was all in the wake of chairman powell's last rhetoric he talked about, when he pushed the market and let the market do the work for him, he was able to achieve the goal that maybe he doesn't need to raise the rates in november or december. i think you'll see a lot of trade cover and also expectations on the market moving lower. that's why i think the ten-year is going down to 4.5% and that will be the relief rally or ignite the santa claus rally. >> we'll see who responds now. jeff, thanks so much for your time. good to have you. >> see you soon. >> want to get you a quick check on the travel stocks before we go. hsbc initiated coverage on several travel and leisure names. hilton, marriott, hyatt, and host, which are nicely higher today. on the travel side, they like booking holdings, royal caribbean, mgm, and wynn, green across the board with mgm leading the way, and don't miss cnbc's evolve global summit on november 2nd, gathering leaders

and innovators for provocative conversations, strategies and tactics to innovate and transform in this new era of business. that does it for the exchange. thanks for your time today. if you want that newsletter, sign up in one easy step, or scan that qr code on your screen. next on "power lunch," we're talking broker backlash, digging into a new law that will change how hundreds of millions of dollars are paid out in real leiste transactions. tyr getting ready. i'll join him on the other side of the break. [phone: starting route.] technology helps us navigate to work. [phone: go straight.] but, to navigate the complexities of modern work... [phone: turn left.] ...you need more than technology. you need cdw. [phone: you have arrived.] so we'll implement cloud based

microsoft modern work solutions like microsoft 365, teams and azure, so your teams can collaborate with zero trust security anywhere. [phone: destination ahead.] microsoft makes modern work possible. cdw makes it powerful. 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 basically sitting on a goldmine? i don't think they have a clue. that's crazy! well, not everyone knows coventry's helped thousands of people sell their policies for cash. even term policies. i can't believe they're just sitting up there! sitting on all this cash. if you own a life insurance policy of $100,000 or more, you can sell all or part of it to coventry. even a term policy. for cash, or a combination of cash and coverage, with no future premiums. someone needs to tell them, that they're sitting on a goldmine, and you have no idea! hey, guys! you're sitting on a goldmine!

come on, guys! do you hear that? i don't hear anything anymore. find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com. good afternoon, everyone. welcome to "power lunch." alongside kelly evans, i'm tyler mathdson. coming up, stocks mostly higher today. the ten-year yield pulling back after hitting 5%. we're examine this frisky relationship between stocks and yields and whether