week is exactly what shareholders wanted. i think the next stop is $800 for that stock. >> seems like it was just at 700 bucks. now it's at 770. i hope you'll catch me on "closing bell" today at 3:00 eastern. we'll take you through the final stretch. dow is off by 280. i'll see you then. "the exchange" is now. thank you very much, scott and welcome to "the exchange." i'm kelly evans. here's what's coming up. it's been over a month since the fed's jumbo rate cut and yet the yield on the ten-year is higher, mortgage rates are much higher, personal loan rates are all going higher and the question is why? should we expect this to last? we'll look at what's driving these moves, what it's telling us about the economy, what it means the fed might do and where you want to be in this market. plus, shares of cigna and humana

are down our guest says is the fundamental back drop for health insurers we'll talk about what it means for health care costs and the stocks from here and elon musk's million dollar giveaway, mark cuban's push for the democrats and the view from the ground in one county that could decide the election we have the stories and the potential trades to make as the final push for the white house is on. as you're looking at one under-the-radar winner if trump gets elected, up 53% tweet me if you think can you guess it let's start with today's markets and take a look at the broad landscape as we kick off what's going to be a busy week of earnings we digest higher interest rates. the dow and posch are coming off six-week win streets that's their longest stretch this year. right now the dow giving back some of that it's down almost 300 that would be its worse day in three weeks. the dow is flat and therussell small caps are dramatically underperforming, down 1.5% keep an eye on the relationship

between small caps and rates the ten-year is nearly at 418. i think it was about 3.6% when the fed cut rates. it keeps shooting higher that's going to put pressure on those small cap stocks that didn't make a lot of money the past three years when interest rates were up. a lo of the play of owning them has been on falling rates. gold also, another weird relationship, breaking out to a new record high. even with some dollar strength we've been experiencing. gold about $2700 an ounce. you see the gold miners benefiting, higher once again today. the group is on pace for eighth straight positive die. on the flip side, as you might expect, although a little counterintuitive, the home building stocks are losing they've been a big winner the past couple of years this is in part because of interest rate headwinds and worrying that rates may be longer for higher. they were also a beneficiary of higher rates they could do mortgage buydowns,

they could make their inventory more attractive than the existing home market it depends on where the path of rates goes from ere. of the 35 times the fed has cut rates in the past 30 years, the increase in the ten-year yield after this cut ranks as the third largest. thank you, bespoke for that stat what's going on here by the way, the bigger gains have been in june of 2003, in november of 2001, and just behind that in march of 2001 we also saw about a half-point back up in rates. to explain this, let's turn to cnbc senior economics reporter steve liesman. steve, when this first started happening, people said, rates are falling going into it, but now i think something more persistent is happening. >> i think it started off as a sell the news thing and now it's become the news. call it the big rate backup. the fed finally gets around to cutting interest rates after years of standing pat at a high rate and rates go the wrong way. straight up since the fed

meeting. ten-year yield is up more than 50 basis points. the two-year has risen just a little bit than that mortgage rates up 70 basis points, the smallest rise came in corporate bonds, up an average of 30 basis points that smaller rise for corporates may be a clue to what's happening. better economic data that lessens the chance of defaults as corporate come in while all rates are higher there was also a mediocre inflation report that led to more hawkish fed speak and continued large deficits that have continued to put pressure on bond yields all of which has led the fed futures market to price in less fed easing rate cuts are still the bet for november and december. but in the mid-september markets priced in the fed funds rate being at 280 or so a year from now. or 200 points lower from current rates. now it's priced at 350 or 130 basis points lower so, almost three quarter point rate cuts have been baked out of futures.

still, rates are quite a bit lower than they were a year ago. treasuries, mortgages and corporates are less of a burden on the economy so, it's not as good as it was in mid-september but rates remain better than a year ago. the fed may see if it's something it needs to address. maybe the fed feels current yields are appropriate for the rate of growth we haven't had a chance to ask them that. >> steve, stay with us as we kick this around a little bit. my next guests say short-term rates are down with fed easing but long-term rates may continue to go up for those who think inflation may be sticky. for how to bring in how to position against that, let's bring in kumar and max you've been warning about this for months now why is this taking place and what does it mean? >> the fed mismanaged the interest rate cut on september 18th, kelly. you heard me say that before

my suggestion is there is no rate cut at all. instead there was a jumbo rate cut. the fed believes when they cut the short-term rates, the long-term yields will also come down, but the basic truth and economic theory is the fed controls only the short-term rate and the long-term rate is developed by the market. number one you see equities and inflation going up and giving you some form of a safe haven if you are in bonds, you do not have a safe haven because when inflation rate goes up, the interest doesn't increase on bond yield holding bonds are much more sensitive to inflation and reacting to higher inflation expectations one other warning. neither presidential candidate is talking about how to cut the fiscal deficit, how they are going to deal with the debt in the new year after january 20th

and unless the new president does something about it very quickly, i'm looking for the ten-year to head toward 5% in other words, the increase that you have had so far is not sufficient more fed mismanagement in the form of more rate cuts in november and december as steve referred to. will only hasten the increase in long-term yields, kelly. >> yes, politics may be a big part of that but inflation expectations are up, the near term, not the forwards we were under 2, it's now 2.25 that's a decent move in the past couple of weeks. >> i'm not sure further fed rate cuts will bring down -- will cause yields to rise

i really think it's the inflation outlook and outlook from fed officials that will ultimately tell us where we're going to go. the market also has a belief, kelly, that growth is inflationary i don't believe that to be the case we've seen strong growth and strong job growth without the inflation. we'll see. i think that stubborn inflation report was part of the problem and hangover of fed officials having done the 50 they may want to pause >> normally we debate the theory of this, but can you be very pragmatic about this for a moment we heard high profile folks like druckenmiller say they are shorting bonds what is the practical advice for investors even if it just relates to, look, the stock market, other than the russells and maybe other than -- it's largely taken this in stride and shrugging it off >> first, if you are -- to the

extent you are in fixed income, you want to reduce duration of holdings rather than hold ten-year, 30-year paper, long-term corporate paper come shorter term they are going to lose less money when yields go up. that's one thing you do. second, find yourself some alternative to bonds and the current setup. in addition to equities you are looking at gold. i've been looking for gold as the ultimate currency, kelly and you referred to it earlier on in the program, even though the dollar has strengthened against the euro, think about the gold price as if gold is the currency and dollar exchange rate is given by the gold price. and that is shooting up, ets essentially telling you there is flight from currency the market is leaving the dollar, leaving the euro and seeking gold as a safe haven there will be more of it

we're at about 2730, 2750. i would see it hitting 3,000 before year-end. and more policy mismanagement will be looking for higher yields. >> let me circle back and bring max in as well gold going higher, is warning to stay out of bonds. you could argue normal stock market gains are the flip side of dollar debasement, for lack of a better word i don't want to go down that rabbit hole. are these less exciting than if they were real, in other words, if they were happening against the context of a currency that was more stable? >> thank you for having me on. yes, we've been fed watchers as well as everyone else in your panel. we think the fed is continuously making mistakes. the anticipation they want to cut it bring the fed funds rate down to a neutral rate, bring it back to whatever they call inflation, under 3, it will have a material affect. we're not so positive on bonds either we shortened our duration.

one to two-year are a good place to be. the fed has said based on their 50 basis points that they want to bring it down to a neutral rate, which implies 180. if they're going to do it, we think it's more like 12 to 18 months out we think it's a mistake to accelerate it. we think they should have done 25 and done it slower. the data that's coming in is showing that the economy is a little stronger than they anticipated. retail sales were a little stronger employment's a little stronger gdp is a little bit stronger they're talking about major interest rate cuts i just think it's a huge mistake. and i think it will be inflationary on the ten-year neither candidate or anybody is talking about deficit reduction. everyone is talking about spending more money. we see the ten-year going higher >> i'm not sure, max, to your point that neutral matters much anymore. steve, maybe that's a perfect place to bring you in. >> well, i just wonder, do both

want to enshrine an inverted yield curve? what market signal tells them that the fed should stop cutting on the short end all you would do is essentially enshrine an inverted yield curve and the two-year would remain quite a bit higher than it is. >> unless you think the ten-year is going to keep going up. >> kelly, referring back to your latest write-up and you asked a question, why is there a divergence between short and long-term rates? my answer is, and back to steve as well, this is not a question of inversion of the steep yield curve. we already have a steepening we have that going up. and if you have a situation when the two-year and ten-year yield both go up, you can still have a further steepening of the yield curve. it is a relative difference that determines the steepness of the curve. what you are going to have, again, the problem for the

housing market is the mortgage rate keeps pace with the ten-year treasury. that is where the yield is going to increase. i don't think -- >> why do you want to punish those people why do you want to punish people in the real estate market and what gain do you get - >> could they -- if the fed raised the short-term rate, could the ten-year actually drop could mortgage rates actually drop >> precisely that is the question, steve, what kelly asked if you want to ensure a lower, long-term yield, may take you, meaning the fed, maintain a policy that will keep inflation under control. the rest will take care of it. if you cut interest rates -- >> i'm sorry - >> maybe the consumer -- >> the only -- that would increase the inflation rate. it may steepen the yield curve but you're also going to have higher inflation

>> the only thing that really stood out -- i'm sorry >> if you look at this market, we're all pontificating what the fed is going to do the fed is telling us they're going to do it they may be slower, they may be faster than we want, but i'm operating on what the fed is telling us whether or not i want it or not doesn't matter where should the investor be we think an alternative, we think they should be focused on creating more cash flow. we don't think you should go into the bond market in the long term, stay short term. we'll telling -- the economy is stronger than people think maybe the fed pauses a little bit. maybe it gets aggressive towards the end of the year, next year either way, the fed is telling you what they're going to do they may slow it down because the data may be stronger but they're telling you. i'm not going to fight the fed here i'm just going to manage the money in the portfolio according to the guidelines we see it. but we see consequences for this and we see it down the road. i think in the short term, the

fed's going to bring it down whether i want them to or not. if that's the case, you have to look to the market, where you can benefit from it. >> you're threading a needle because you want to look for low interest beneficiaries but where are interest rates potentially going to be lower is the question we'll give it time to play out steve, a last word >> only that the bulk of the inflation we seem to have is in housing. that seems to be more of a quirk in the data. when i say inflation, obviously i mean the rate of price growth, not the level of prices. so -- >> even last month >> look, if -- yeah, even last month. if the fed ought to stop and probably not cut rates if we do have an inflation problem. i just make separation between having growth and having employment growth and having inflation. those three are, perhaps, related but they're not joined at the hip in all cases.

>> a quick final word before we go >> yeah, the final word is, jumbo rate cut has happened, kelly, they cannot reverse it at this stage i think what powell should do at the press conference on the 7th is explain there's going to be a long delay in further rate cut no rate cut in november. no rate cut in december. and then go back to the person who he says he follows, which is paul volcker, actually follow him. do not follow the policies, which are cheering the stock market, which is what this chairman wants to do. >> the data we'll get between now and then could be weaker than normal because of the hurricane. so, that's not going to help, i think, maybe that case gentlemen, thank you so much for a really good debate we appreciate it coming up, we're kicking off the 2024 your money, your road trip in the battleground state of pennsylvania. a main street look at the candidates' final push there and

what wall street is saying about the names most exposed to each one's policies first, what health care strategist says the fundamentals for the big health insurers are more challenged than they've ever been? when we come back, we'll look at where the opportunities might be with centene hitting the lowest in four years. at ameriprise financial our advice is personalized based on your goals, whatever they may be.

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welcome back shares of cigna and humana are both lower as they resume merger talks waved off last year. investors don't seem thrilled with cigna down 4% the move comes at what our next calls a challenged time for health insurance stocks. shedding 20% of their market cap. cvs because of similar issues, down 17. joining me for more is health care equity strategist at mizuho jared, what started all of this? >> hey, kelly, thanks for having me i think it's a confluence of a much higher utilization environment and a mismatch in terms of financial modeling that's been more challenging than the industry thought and investors when we look at, you know, the price action with the stocks over the past three to six months really for the better part of the year and so this has turned into one of the more volatile earnings sessions and it's just one week

in there's a lot more in store probably >> from a top level point of view, the health insurance companies are doing poorly because people are using them more >> yeah, essentially i think when you really take a look at this big picture, the procedure volume environment has been high for a long period of time there are several factors driving that at the end of the day when you look at these health care insurance stocks, what you really want is low utilization, pat patients using the system less so companies earn more what we're going through is the exact opposite of that scenario. >> is that because of weight loss drugs some have speculated when it's easier to get in shape for that procedure you're going to do it or it's pent-up demand still post-man does anybody have a convincing explanation for this and how long it might persist? >> no one really does. it's a combination of things you mentioned the pandemic and covid and patients that were a

little bit reticent during the peak of that situation to get any major surgery. those have come out of the woodwork it has to be other factors i think the economy being strong, employment being strong overall is a driving factor. you know, you're seeing some evolution or migration away from hospitals and into surgery centers where it's a little easier to get procedures done in an environment that patients want more. and potentially on the glp-1s, but it's been only a year really since both lilly and novo's drugs have been approved i think it's a little early for that but it certainly could be a factor >> it's just a situation where many users are frustrated by the experience of their health coverage and yet stocks are struggling it seems like there should be a winner and then you get to what's happening on the medicare front and medicare advantage and humana stock is down 41% this

year bertha coombs has been doing some great reporting on this what's going on on that front as this is the time of re-enrollment? are they being overused as well? are they going away? what's happening >> yeah, i think they're being overused so much has to do with medicare advantage rates and how that translates into numbers. and in terms of financial modeling and with when we look at the procedure volume effect, you know, that we talked about earlier, the medicare markets have not been this challenged in quite a long time. you've seen humana reassess or recalibrate its earnings several times already this year and so i think there's a lack of visibility we know utilization trends are high maybe medicare advantage rates increase over the coming years when you look at the effect of a

higher procedure back drop, the stars rating, which indicate how much companies are going to be reimbursed on the medicare side for their individual plans, it just seems like the visibility for humana has never been poorer. >> cigna must see something we don't because they're going as a relative beneficiary from not having that exposure to reportedly pursuing that exposure once again. on that note leave us with what are your recommendations for investors who might have this exposure are we thinking about ways to maybe play the space >> well, yeah, it's certainly tricky i think united health care has some offsets to some of the things we're talking about being a larger, more all-encompassing network might be the best way to play it over the short term. i think investors have really like cigna but the overhang a potential deal i think there is valuing in humana, but you have to take a long-term approach, which could

be what cigna is doing in renewing talks. >> we'll leave it there for now. thanks for your time. >> thanks. coming up, microsoft is rolling out some new features for businesses to create their own a.i. agents. in fact, the word agent could become the next big buzz word this earnings season, although microsoft is under pressure, people feeling underwhelmed by their copilot. we'll tell youbo aut the next battle brewing between salesforce and microsoft with a! that's right craig. pulling in the perfect team to get the job done. i'm just here for the internets. at&t, it's super-fast! you locked us out?! and when thrown a curveball... arrggghh! ahhhh! [crashing sounds] we had everything we needed. is the internet out? don't worry, we have at&t internet back-up. the next level network for small business. ♪♪ i sold a pillow! - [narrator] we just signed the lease on our third shop.

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i'm tyler mathisen with your cnbc news update u.s. officials are investigating the apparent leak of two top secret u.s. documents about israel's plans to strike iran that were posted on the social media app telegram last week white house spokesperson john kirby said the u.s. has been in communication with israeli counterparts about the intelligence leak and it seems no additional documents where compromised. cuba's widespread blackouts have stretched into a fourth day as hurricane oscar made landfall on the island's eastern coast with winds and heavy rain. cuba has had four electric grid

collapses since friday, plunging the country into darkness. the country's energy minister warned on sunday the country will continue to have blackouts as it grapples with a lack of fuel. and the girl scouts of america voted over the weekend to raise membership prices by 160% over the next two years membership fees will go up to $45 in 2026 and then to $65 in '27. the organization said without the price hike, it would have needed to make, quote, dramatic cuts kelly, back to you >> did you say the price of belonging to the girl scouts or the price of cookies >> i think that's the price of belonging, joining the girl scouts i don't think they'll charge $65 for the thin mints. >> the rate we're going, maybe next year. >> maybe. >> see you soon. thanks. microsoft is announcing a new suite of enterprise a.i. tools today. businesses will soon have access to ten autonomous agents to help with tasks like sales, customer service and accounting we turn to deirdre bosa for more

in today's "techcheck" in the likely next battleground for corporate a.i. >> you know, at least in enterprise agent is the new buzz word the evolution of chatbots to agents that can act on your behalf everyone wants in. microsoft's announcement coming days before salesforce's very similar agent force is going to be widely available. instead of customer chatbot that works alongside, customer service agents can do things like remember your past orders and complete a return or exchange without ever having to ask permission or check in with a human. so that's the idea over the next few months, as they're tested, customers and investors will be looking for better returns on their investments perhaps where copilot and other earlier a.i. products fell short or did not deliver. salesforce ceo marc benioff has been comparing microsoft's first again a.i. product, there he is, to clippy.

microsoft's paperclip shaped assistant. it gained a reputation for being intrusive and annoying, not particularly useful. benioff saying his is an agent force. the announcement from microsoft is a major acknowledgment it wants to be seen in the agent space and move beyond copilots both of them are grouping themselves with the kingmaker in gen a.i., nvidia about a week ago on a podcast, jensen huang envisioned nvidia as a 50,000 employee company with 100 million a.i. agents as we get into tech earnings, look out for mentions of agents. benioff mentioned the word more than 60 times on the last conference call. that may be the start of the trend. to be clear, though, agents are not new. we've been talking about this since we saw -- before we saw new features from devices from apple and google and pixel and

samsung, but they may be the new wrapper for enterprise. >> the posch is up 22% year-to-date and microsoft shares are up less than 11%. >> they have to do something different. agent could be it. >> thank you. coming up, 15 days away from election day and both candidates are getting a boost from billionaires in the home stretch. we'll have more on that after the break. here's your last look at our mystery chart. a couple people have already guessed it a name wolf research says stands to benefit if trump wins the white house back it's not djt, that's too obvious. the reveal after this. what the biggest companies deliver is exceptional customer experience. what makes it possible is unmatched connectivity and 5g solutions from t-mobile for business. t-mobile connects 100,000 delta airlines employees.

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welcome back to "the exchange." with a little more than two weeks until election day, both candidates are on a campaign blitz. vice president harris is stopping in pennsylvania, michigan and wisconsin, part of the so-called blue wall. after stops in michigan and georgia over the weekend president trump there in his mcdonald's in pennsylvania, he's

also heading to north carolina after a busy few days that included the quick stint working the fry machine and selecting preselected customers in a mcdonald's we have team coverage. kicking off in the keystone state itself with brian sullivan looking at one city undergoing economic change that could determine how change happens in the white house. eamon javers has details on elon musk's bold and is it legally dubious sweepstakes for pennsylvania voters, and we will explain what it means for your money. brian, kick things off what's the buzz on the ground? >> reporter: you're probably going to wonder why we're in this giant, abandoned warehouse, i'll get to that in a moment we're in erie, pennsylvania. there are actually swing counties, battleground cities. this may be one of the crucial ones in one of the most crucial states, pennsylvania erie, pennsylvania

why do we say that it's not our opinion proof is in the pudding, or proof is in the voting going back to 1980, erie and erie county have correctly elected -- correctly predicted and voted with the winner of the election every time except for one. that was 1988. they went -- they were bush, then obama, then they went trump and then they went back to biden. the question, of course, is what happens in 15 days i'll get to the warehouse in a second this is a city and a warehouse in transition, evolution, maybe not revolution but close to it we had a chance to speak with a small business owner, owns lake erie woodworkshop. pretty much across the street from where i am now. he kind of explained the evolution of erie. >> we had paper mills, all kinds of those typical large industry, rust belt town things. now it's had to pivot. small businesses are coming in,

filling up all the empty warehouses new restaurants, tech businesses anything that we can sort of innovate in a new economy. >> so, this location, which was the erie mailable ironworks, it's been abandoned for decades. we didn't break into a building. we would have but we didn't have to this building is being redone under an economic development corporation plan, federal money, state money, imagine artisans over here, maybe some food vendors or a brew pub over there. that's the vision. we'll see if it gets done. and they're redoing it if projects like this are seen as benefiting a community that's been decimated, look at the population 130 to 90,000 or so shlgts lost a lot of people, and this is the most distressing thing, kelly, 24% poverty rate staggering, 1 in 4 people in the city of erie not the county

the city are under the poverty line if they view projects like this as helping their community to helping their own economy, then that may determine a long way to the way they vote. whether or not that is the current administration or the former, which hopes to be the next one, time will tell but these types of projects and these types of buildings are endemic. you walk in here and it's like you can remember 50 years ago. a lot of people making a living, a hard living but a living off a place like this and maybe some day they will again. by the way, we're in erie. we drive tomorrow, grand rapids, michigan a lot of money in grand rapids on thursday, we drive to kenosha, wisconsin hitting three swing counties in five days on the election road trip in our chrysler pacifica rented mini van. >> it's remarkable they went from bush to obama to trump to biden in erie

>> yeah. by the way, it was a huge swing. biden had a -- obama had a huge win in 2008 and 2012 then a massive -- i think it was 18.5-point shift to donald trump in 2016. and then another big shift to biden. but the margins of victory were like this. not like this. like this. >> brian, thank you very much. when i watch -- ai'll be -- whoever has the big map, now i know erie will be an important one on election night. we really appreciate it. sticking in pennsylvania, tesla ceo and trump supporter elon musk holding a contest to give away $1 million a day up until election day to voters who sign his america pac petition fellow billionaire and harris supporter mark cuban weighing in on that move on "squawk box" this morning >> it's innovative and desperate. you only do that because you think you have to, but using a sweepstakes is not a bad idea.

whether or not it will work is a whole other thing. you don't know until you try. >> let's turn to eamon javers for the details and legality musk says he's asking people to sign if they agree with the constitution others say it my be coercion i might enjoy the musk/cuban battle as much as i am the one for president. >> that's a fun one but the department of justice is declining to comment on nbc news on whether or not it's examining the legality of musk's million dollar a day give away p pennsylvania's governor josh shapiro called it deeply concerning and said law enforcement should take a look at it. the law is pretty clear. a federal statute says simply, whoever pays or offers to pay or accepts payment either for registration to vote or for voting shall be fined not more than $10,000 or imprisoned not more than five years or both the nuance will be whether or not this trips that legal

language the practical question is, with two weeks remaining until election day if courts could take action before voting wraps up the move and publicity it's generated may have already had the effect it's associating trump with prosperity and wealth in voters' minds and that's a key element of his campaign. musk's move comes amid an election cycle breaking records for campaign spending by billionaires with campaign finance reports last week showing the super rich giving hundreds of millions of dollars to presidential election efforts. that's a sea change in american politics ever since that citizens united supreme court decision, we have seen a gusher of money coming into federal elections now with this elon musk giant check, we see it again. >> given what's at stake, often people have remarked they're surprised it's not more being spent on this outcome. eamon, thanks. our next guest says the odds have flipped from a marginal harris victory to a marginal trump win in the past week

while he's not banking on a winner just yet, he says the race is far closer than the betting markets imply. one of his names that could benefit from a trump win, as many of you guessed, hca holdings that was our mystery chart lease talk to tobin marcus, from wolf welcome. why hca? >> well, i think -- we were indicating that was on the short side of the trade. within managed care i think the names leveraged to medicare advantage stand to benefit under trump. the rates announced this cycle have been adverse that we think the expectation of rate relief under trump makes sense. as we're heading into next year, this tax cut we have at the end of next year, the names in managed care, more exposure to medicare and affordable care act changes are more at risk. >> let's back it up for a

second and talk about -- people think that the phrase i've heard over the weekend is a harris win would be bad for stocks but a trump win would be bad for bonds. we're certainly seeing that play out with long-term rates right now, aren't we >> certainly we should expect a trump victory to put pressure on the long end of the yield curve. there's a deficit piece of that story. also tariffs tariffs is one of the things he's most likely to do frankly, i think deficits are going up in either of these scenarios. even if harris wins, we're looking at a bipartisan tax deal next year that will extend most but not all the expiring tax cuts that's going to have a hefty price tag in the $2 to $3 trillion range, if not more. i think the memory of the first trump administration is going to make people remember trump is bullish for equity markets i think it's going to be more

sector by sector clear winners, financials foremost among those market wide i think a trump win or harris with divided government are pretty benign outcomes for markets if we get the less likely blue sweep, that's -- >> the charter i've heard is the opposite it looks so likely based on the math that the gop -- that the senate goes to the gop that some are concerned about a trump more or less unified government even when david tepper was on a month or so ago, he said i'm not too concerned about the outcome. it will be a divided government one way or the other what if trump wins and the senate is gop controlled, and a lot of these get enacted >> we always thought a trump win would likely come with a red sweep. i think there's been a lot of folks in d.c. assuming even if trump wins, probably democrats will flip the house and you'll

be looking at a divided government one way or another. we never thought that was analytically supported the models are pointing to very similar odds of a republican house or republican presidential win. if trump wins, i think the expectations should be that that comes with a red sweep in that case, you know, we need to take seriously everything that's in the kind of republican agenda what they want to do proactively on taxes, some could be helpful and partial i.r.a. roll back, those are doable if they have the will. >> quickly to put a button on it, red sweep stocks that would benefit or likely market outcomes that you expect would be >> in a red sweep i think financials are the sort of clearest winners traditional energy looks good. crypto looks good. losers, i think you have to be worried about clean energy we do think there's some risk to some parts of i.r.a. industrial and consumer names that exposed to tariffs also --

that's something that hasn't been priced in yet because it's complicated and a lot of questions about what trump will do but we think there's some serious risk there. >> thanks for now. appreciate your time meantime, palo alto networks is hitting an all-time high after morgan stanley hiked its price target up to 446 from 376. they're calling it one of their most preferred cyber security names. bullish on-ramping product cycle and a.i.-driven efficiencies we'll check on some of today's other big movers next. do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate cash payment. call coventry direct to learn more. we thought we had planned carefully for our retirement. but we quickly realized we needed a way to

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here to discuss the portfolio and unloved names it's holding is jeff killberg founder and ceo and a cnbc contributor ticker, jeff >> esn sun in i day my co-portfolio manager, very exciting day to be trading live on the nasdaq. >> congratulations do you think the etf revolution -- there's no debate anymore, is there, about etfs versus mutual funds? >> there's not there's still a place for mutual funds. i think if you look at the last 15 years the continued growth of etfs at the close of 2023, kelly, we saw about $20 trillion worth with a capital "t" in mutual fund but seeing about $8 trillion a little more at the end of 2023 for etfs this trend speaks to the volume and what investors want and need and i think when you look at the inherent tax efficiency in an etf compared to a mutual fund that's what resonates and why we convert our mutual fund to an

etf. if you think in 2022 when the market was down, if a long time investor in mutual fund would have sold that holding and created captain gains distribution where all shareholders had to participate in paying the tax man. structurally the ability in the etf has in this in kind creation redemption process, a little in the weeds, but if you can understand the tax efficiency it separates it and generally most often etfs pay a lot less in capital gains. that's important when you talk about compounding and taxable accounts and why you're seeing the trend continue to move towards etfs and that's exactly why kkm financial moved the essential mutual fund into the etf. >> that's well said and explained and a core part of why etf have been attractive one of the -- speaking of core insights i remember reading a while ago you only need 20 or 30 names to be diefersers have fide and joked a family can pick a 20

dow jones. we can't, you can. what's in your 40? are they market cap weighted or how do you pick or put weights on how much you like them? what's the biggest difference between that and the dow, for instance >> that is the biggest common denominator we have which is different than the market. if you look at the top ten holdings of the market weighted s&p 500 nearly at 35%, we own seven of those ten top holdings but our portfolio is equal weighted may be familiar with rsp, invesco's s&p 500 etf but that holds 500 names. we try to have a modern day version of the u.s. economy and if you think of these names, kelly, these aren't necessarily names that you like and are popular, but these are names you need this is what u.s. economy and the american way of life is dependent upon boring names one of the best names in the portfolio oracle, doesn't get a lot of conversation. you look at 3m, lockhead martin,

cme or costco, names we don't talk a lot on cnbc about, we want to talk about the mag seven but these are names when you do see turmoil come into markets, distress come into markets we haven't seen with the record highs, but those are important and why if you think about peter lynch in the 1980s, his theme, buy what you know. essential 40 portfolio, etf, is buy what you use these are names that we deem critical to the u.s. economy and american way of sglif thought about that with netflix and the way it's rebound made changes as well boeing and intel, bringing it in at the very bottom. >> look, we have to understand, why we get considered on the annual balance and new constituents and exiting a couple constituents, but intel and boeing names we still deem critical think about nvidia, kind of touches everything from google to microsoft to meta, those are names we also own. you have to be understanding on what you ownand i think it's time to diversify, but equal weighted, morgan stanley has

been talking about equal weather this portfolio is equal weighted >> congrats. >> thank you. >> that's it for "the exchange." i'll see you next hour with, tyler, for "power lunch. don't go anywhere.

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and follow the life of a loan from origination right through its pricing in the capital markets, our data science capabilities can provide a deep level of insight. at ice we have extensive data sets, especially around three pillars. the property, the mortgage and mortgage performance. this trifecta of data and its history is a bit of a data scientist's holy grail. ♪♪ personalized financial advice from ameriprise can do more than help you reach your goals. i can make this work. it can help you reach them with confidence. no wonder more than 9 out of 10 of our clients are likely to recommend us. ameriprise financial. advice worth talking about. good afternoon welcome to "power lunch. alongside kelly evans i'm tyler mathisen the nasdaq has popped into the green by the