valuation. party on. ai, the armsrace continues. 3:00 eastern, greenhouse and courtney garcia will be here. give me a final trade. >> meta. earnings expected to be up 20%. they beat the past seven quarters. >> jimmy? >> delta. that ai isn't going to fly itself. >> all right. good stuff. i'll see you on "closing bell." ♪ ♪ thank you very much, scott. and welcome to "the exchange." i'm kelly evans. and here's what's ahead. we're in the final countdown to the election next tuesday, the homestretch. so what is the bond market's behavior telling us? long-term yields keep rising, shining a light on both candidate's spending plans. we'll take a look at those plans and the implications for the economy and how our market guest is positioning because of it. this name is part of an under the radar group. if harris wins, it could drive the group lower, that's a clue. tweet me your best guess about

these mystery charts. but the analyst will join us ahead. alphabet reports a of the bell. shares still down 11% from their july highs. we'll get the trade for that one and the other mag seven names still due with results. but let's get the market action on dom chu on a mixed session. >> it's the technology stocks outperforming, seeing if they can set the tone for that big slew of magnificent seven type earnings later this week, including today. but the dow just about flat, 43,352. the s&p 500 is at 5839, up about one quarter of 1%, so outperforming on that broader level. but the nasdaq is up north of one half of 1%, to 18,685. you may recall, 18,690 for the composite index is the record intraday level. we're a stone's throw away from there, and all of this is happening ahead of that big alphabet earning's report coming

up later this afternoon. we'll get you a check on where the big stocks are. each of these five magnificent seven names are going to report earnings at one point during the course of this week. alphabet is the one we're paying close attention to, outperforming the rest of them here. just to give you an idea here, the options market is plussing in a plus or minus 6% move in shares on the heels of earnings. over the last quarters, that has been roughly the same move. so very, very much a static report that we're seeing with regard to the expectations against recent history. these all in the green right now. and a couple of trades to keep an eye on, as well. the trump trade, what some are calling this right now. we are seeing a movecurrenci cryptocurrencies, bitcoin above $70,000. some people think that the trump administration hypothetically, if it were to happen, could be

more favorable to cryptocurrent -- crypto currency. and trump media up 11% right now. just since about the middle end of september, this was a $12 stock. it's now $52.61. so it begs the question about what exactly traders are seeing right now, whether or not this is a short squeeze, other factors playing out. but something to watch, trump media and technology. back to you. >> buy crypto, buy that stock and sell bonds. that appears to be the mix. we'll talk more about that. we're just over six days away from the presidential election. today, we're taking a closer look at the impact each candidate's plans could have on the growing national deficit and the u.s. economy as a result. let's bring in our team coverage on this. eamon is looking at how much their plans will cost. steve liesman is tracking the potential impact to the economy. and eric is joining us with how

investors should be positioning, what opportunities this market may be creating. eamon, let's start with you. >> let's start with this analysis by a committee for responsible federal budget released monday. both candidate's plans will hike the national debt, but that former president trump's plans would be much worse for the federal budget. according to the group, harris' plan would increase the debt by $3.95 trillion through 2035. and former president trump's plan would increase the debt by $7.75 trillion in that same time frame. take a look at the three scenarios they lay out here. the expected trump and harris deficits and the baseline forecast under current law, there are big uncertainty ranges depending on the assumptions how they would play out. the group estimates that harris' plan would increase the debt by anywhere between $300 billion and $8.3 trillion through 2035. while president trump's plan could increase the debt by

between $1.65 and $15.55 trillion in that same time frame. the most costly elements of harris' plans are extending the trump tax cuts for those making less than $400,000, which would cost $3 trillion over that ten-year period. and also expanding the child tax credit and earned income tax credit, costing $1.4 trillion. donald trump's most expensive items are extending the full trump tax cuts, kcosting over $ trillion and exempting overtime income from taxes, that would cost $2 trillion over time. no matter who wins, it looks like the nation's fiscal health is going to be the biggest loser. >> we'll delve into that. now to steve liesman taking a look at those economic implications of deficits and the ever-rising debt. >> he just told you what could happen to the deficit depending

on who wins. here's what will happen even if nothing changes. interest costs will soar, which seems to be a bigger part of the budget, eclipses defense and medicare spending. no one seems to care, the economic risk of that surging interest pavements for spending reductions and other vital areas of government. that borrowing could crowd out private sector investment, and finally, the market at some point rejects the ever-increasing supply of u.s. government debt. auctions fail or buyers may start to demand a higher rate of interest. under existing law, the deficit will climb by a trillion dollars to nearly $2.8 trillion, or 122% of gdp. that's without any of the plans from either candidate. dated from our first quarter cnbc survey shows, however, concern with the deficit is low, of 14 issues we asked about in the first quarter, the deficit

was 10th, far below inflation and below china and corporate taxes. we have to take a few out to get to where the deficit was in the list. do voters not care about the deficit because politicians have not made it an issue, or do politicians not care because voters don't seem to care? they might only care when the bond market kacares, kelly. they appear to care at the moment. >> we're coming in a little bit, we had a struck seven-year auction, which is important. we're around 4.3% on the ten-year. if we stay around here, interest cost will stay bigger than medicare and national defense. so these numbers just keep adding up. >> yeah, and the key here to me is that this is not what we should be doing in good times. we're probably going to print a gdp number between 2.5% and 3.2% tomorrow. if unemployment is down to 4.1%,

this is a time we should be have shrinking deficits, not growing ones. >> it's one thing to run a $2 trillion deficit in covid or a financial chriss. but if the economy slows and needs support, we're already starting from a big number. >> you run these big deficits when you have an emergency. when you don't, that's when you want to tighten up. there's no political constituency in washington for spending cuts, not one politician who benefits by cutting everything. every dollar the federal government spends benefits somebody who will scream and yell if you take that away. so politicians don't want to deal with it, and they might pay lip service to cuts, but unless forced to, in some kind of a deal by the other party, they don't end up agreeing to much in the way of spending cuts. the way out of this historically has been periods of massive federal growth in terms of the budget due to an economy that's really rallying. we saw that in the clinton and

obama years at some points where the growth of the economy simply provided enough revenue that deficits came down over time. but otherwise, you know, you can't look to washington for political bravery where politicians are going to bravely cut spending at this point. >> both sides know, i know gary cohen and others on the trump side have said that's the way out. they might have different opinions about how you get to that faster growing economy, but they both know and understand and sense that's the get out of jail free card. >> it is, and by the way, inflation is supposed to help, too, right? because you have -- you have -- >> that's why bitcoin is going up. >> the dollar is stronger. >> you can measure it against gold, against a hard asset, so to speak, and that's the best measure we have and that's telling you it's weakening.

>> it's a measure, not necessarily the best measure. in general, it seems to me that harris has more offsets than trump does. so it seems to me that you go into this election and you say okay, one person wants to pay for some of the stuff, the other doesn't. but i don't know that they get any political currency out of that, speaking of currency, i'm saying okay, i have these ideas and how to pay for them. part of it, democrats wear the label of spenders, and republicans wear the label of being more frugal with things. but it just actually has not ended up being true over the last several presidencies. >> kelly, the thing, if you are a deficit hawk, the thing you should be rooting for in this election is a mixed outcome, right? one party controls the white house, the other party with control on capitol hill. that's the climate in washington that tends to produce political deal making, which is probably your best guess for forcing some spending cuts, and not as much in terms of tax cuts. and so ultimately, that would be

better for the deficit. >> no, but just to dwell on that excellent point, the market is currently reacting as if we're not going to get divided government. >> that's right. >> that's the only explanation you can have for bond yields. so they're either thinking a red sweep or a blue one, and based on the movement in bitcoin and other things, we can divine what they're thinking. >> it's going to be hard for democrats to take the senate. if you think trump has the momentum, that points you to at least majority control by republicans, and so markets might be right about that. >> steve? >> i wonder -- to me, there are real problems in this country to solve. i know the market likes deadlock, but when you have real problems, you've got to address the long-term social security and medicare issues. i don't know who is better to address it, through one party rule or a deadlock congress. but the deadlock doesn't seem to point to solving problems. it points to status quo and not

changing anything. >> just ask simpson bowles. thank you both. we appreciate it. our next guest is positioning himself in the short end of the yield curve. eric is joining me now. why not just stay away from the whole thing? >> you do have -- we do have to put our client's money to work, and actually, i was delighted with that conversation, because i figured this was all going to be about the election. i think that you're really addressing the perhaps more important issues, which investors should consider, whoever wins next week. and that that both candidates are talking about continuing to spend. both candidates are going to see the debt levels increase. and so a key element that we think will drive markets, certainly in 2025, will be the bond market beginning to focus on debt sustainability concerns and increase in term premium. we don't think that is fully priced yet, and so we're likely

to see bond yields and certainly the term premium component continue to rise after we get through whatever resolution of the election transpires, that's going to be an important driver in 2025. bond market volatility can lead to stock market volatility. and so that volatile environment we've been in persists into next year. >> you do think it persists, because i could see a case for hey, it's gotten pretty bad in the last couple of sessions. by the time you get to the election, sit a by the results event, where the certainty of what happened, even if it's a red sweep or what have you, kind of brings the reality element in where right now people will be carried away with the what ifs? >> we do think that the markets have priced a certain outcome. at newberger, we have no insight on calling lekions, but we would characterize this as a coin toss. we're not ready to say there's a

specific outcome. betting markets have leaned into the notion of a trump victory, whether that's a red sweep or trump with a divided government. if that's the outcome, and we're building scenarios now, if that's the outcome, then we would fade a lot of the positions. if there's a harris win, there will be a lot of movement and an opportunity to buy in and add exposures to the harris basket of winners in the market. and then there's the -- what if we don't get a resolution for an extended period? that's going to be more volatility. that's where we want to have diversification. it's back to diversification versus principles. but we want to have exposure to areas like gold. >> that's exactly right. what do you make of these movements in the dollar and gold and bitcoin and all of these assets? you can even argue it's not great, but if you believe that, in some way what we're

witnessing is dollar weakness against bitcoin and against gold, the strong stock market, the nasdaq hitting a new high is also unfortunately the flip side. it is priced in dollars. sometimes the lesson purgen why stocks could be rising. >> and the dollar has been part of this basket of trump trades, that trump will lead to more inflation, higher interest rates, therefore the dollar will be more expensive. when you look at 2016, '17, the dollar did rally after the surprise win of trump in 2016, but the dollar declined in value through 2017. you know, when trump was enacting the policies that were supposedly going to be more inflationary and cause higher interest rates. so i don't think, you know, i don't think you can just play a certain playbook with the dollar, for example. especially because trump and his, you know, cohort would like to see a weaker dollar to support the american economy. so, you know, yes, the dollar may have some short term

impetus, but you can probably fade that trade if trump is elected and if trump is not elected, the dollar weakens in the shorter term. >> corporate credit has been strong, and spreads are historically tight. is that still an area you find attractive? >> we've been reducing exposure. our fixed income team is not as light on corporate credit, with a focus on high quality. they probably stay in that position if there's a trump victory, with -- using volatility to add to high quality exposures, because the fundamentals of corporate credit is great, but pricing is so tight. if you get a harris victory, you get opportunities to add to corporate credit, as well. >> eric, we'll leave it there. thank you for your time. >> thank you. there's several names across the tech media and teleco space that could see big moves depending on the outcome. one group is uber, that was our

mystery chart, and our guest says something kamala harris did in 2020 could pose risk for the sector if elected. let's bring in paul gallant. paul, welcome to you. this goes back to the classification of workers, is that right? >> right, yeah, for most of the time you get companies that existed, their drivers are classified as independent contractors, they have a lot of freedom. but it means the companies don't have to pay them as many benefits over time, minimum wage, health care benefits, what not. so the standard democratic party position is we want to shift more of the economics from the companies to the workers. and so back in 2019, kamala harris, when she ran for president, said she supported some california legislation that would basically shift some economics from the companies to the workers, from the drivers. so if she won the election and stuck with that position, it would be a bit of an issue for the gig companies. >> do you see that threat on the

horizon generally speaking? >> well, she'll get a lot of pressure from democrats in congress. i don't know whether she's going to follow through on it, or not. i doubt it because it's not near the top of her priority list. i would guess she doesn't have her labor department pursue this issue of lawsuits against the gig companies, but i know it will be something the companies are going to be on top of. you can almost say sometimes the threat of regulation is regulation. if the companies know that this is a possibility that the labor department might try to do something, companies have a way to internally adjusting and shifting some economics to the drivers. >> let's shift to some of the mag seven type names, big internet platforms report thing week. why do you think trump would be materially better for that group and saying harris would be better than biden and how can anybody be better than biden when these stocks are up hundreds of percentages?

>> sort of a but for. the way i think about it is trump is deregulatory instinctively. for years, the big internet companies are pushing a narrative in washington that you want strong national champions like amazon, apple, facebook, google, et cetera, to beat china. just recently, former president trump seemed to embrace that view. he was asked whether we should break up google, which is something the current doj is pushing for. he said no, we need a strong google to beat china. i put some weight on that statement, because we know that china is a big issue for president trump, because he views these five or six big u.s. tech companies as allies of his against china that really changes how he treats them in washington. i think that was a pretty meaningful, positive set of comments from trump. >> sure. others would say these stocks compared to 2021, their performance has been less outstanding with the exception of nvidia. are the risks similar or

opportunities similar for stocks like nvidia regardless of the win? >> this is a tricky area to predict for me than the internet companies because it's so personality driven. again, as we have seen, at least with trump, it's very transactional, the way he uses the different international policy levers like export controls. years ago, he put a big chinese company on the enemy's list to do a trade deal and took them off the list when china did what he wanted. i think the key thing, if trump wins, he will have people around him that are going to say biden did a decent effort at doing export controls to slow down china on ai, but he didn't do enough. there's a hume ge gray market a we need to do more. that will affect the market, stocks, but it would give us a little more power over china. so he's going to have a tough call to make if back in the

white house. >> we should go, paul, but it's 10:00 p.m. on election night and you're sitting at your screens at home, and you see the outcome or the way things are going. is there an immediate gut move on your -- the space that you cover? if it's harris, trump, or unclear? >> i really think trump has separated himself on the mega cap tech companies from harris. if she wins, i just feel a lot better for those companies over the next four or five years. investors are going to have to get comfortable with random tweets and statements that sound bad about some of these companies, but the policy ins instincts are to be as protective of them as possible. >> paul, thank you so much for joining us. appreciate your time today. paul gallant. coming up, consumer confidence just saw its biggest jump in nearly four years. and stock market optimism, hold your breath for this, it's at its highest level since reagan

was in office. but there are signs of weakness in a few battleground states. all the details and what it means for the market, next. and the busiest week of earnings season rolls on with a third of the s&p and dow on deck to report. we have the action and trade for amd, visa and alphabet coming up. stay with us. >> this is "the exchange" on cnbc.

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welcome back. consumers just got more confident ahead of the election to a level of 108.7, the highest reading since january, and that was the biggest monthly gain since march of 2021, optimism about jobs also lifted the outlook this month. the rosy view is in contrast to the number of job openings, which fell to less than 7.5 million, below estimates. here with the breakdown is president and ceo of the conference board and cnbc contributor. steve, so much to run through. welcome. what are some of the standouts for you? this labor market stuff is great. >> well, it is, because the consumer confidence index basically asks people how are you feeling? and there's a big correlation with how they're feeling about their jobs. this means that consumers are pretty satisfied and confident that they're going to be able to keep their jobs and continue to move real pay, real wages upwards, and increase their buying power. so that's all very positive.

this is towards the upper end of the range that we have seen in the post covid era, but it's still relatively a tight range. the bad news in this is that you still have inflation, lots of worries about inflation. they don't believe that it's been cured. the fed has come down, as we know, a little bit. but that still isn't enough, and we're projecting a conference board that's going to take another year before consumers really see the effects of the fed rate cuts in consumer debt levels. so this is the problem right now. so you're in this -- they're in this feeling good range because of real earnings, but not so good about the cost of borrowing. >> is it true also that there are inflation expectations ticking up? 5.3 from 5.2. not the end of the world, but is that a significant data point as far as the fed is concerned? >> well, they still think there's going to be inflation. they're really outweighed by the

inflation in groceries, because this is where normal, everyday americans are getting really whacked in the pot ecketbook. they have traded down everywhere they can. all these parking lots are full. so you see this situation where they're worried about grocery prices. gas prices have come down a little bit, they feel a little better about that, but a lot of their pocketbook is going to just plain eating. >> you did a poll of the battleground states, what did you find? have you done this before or was this a special one off for the lek snun -- election? >> two of the battle ground states are michigan and pennsylvania. ironically, michigan looks pretty good, consumers are confident, it's sitting in a stable range over this period of time, not a lot of movement. and it's been trendsing with the national numbers. pennsylvania is just the opposite. pennsylvania has been in the

doldrums here. they got a little bump this month, but they're not feeling as confident as the rest of the country, and it could be, you know, this pressure again on inflation and the economy. but that is worrisome, because that state is probably the state that's going to determine the election, and you wish that consumer confidence would be higher for an incumbent, but it does -- it does lean that they are not as highly confident as the rest of the country. >> we're all just eager for the data point on what's going on this these key states. one that jumped out to me is people's opinion about the stock market. sit true that this confidence is the highest since 1987? and is that a coincidence, because we know what happened in october of that year, or is that just when the data started? >> no, that's when it started, but this is really high. we're sitting within 1% of an all-time high. they're feeling good about their 401(k)s and their pensions. they see that. not everybody holds stocks, of

course, but you see nit the retirement funds. you have a lot of boomers going into the retirement years and they're watching it more closely than any time in the last 30 years. so that's a really good thing, because, again, it gives you the confidence that they can spend. that's an important part of holding gdp growth up. >> i think a near term data point to be cautious about, but stocks have risen since 1987. steve, thank you for bringing this to us. steve will be back with us on election night. k cnbc will have results as they come in. it all starts at 7:00 p.m. eastern from the new york stock exchange and we're going all night long with the results. plus, the action in oversees market. "squawkbox" will start an hour earlier at 5:00 a.m. eastern. stay with cnbc all night. coming up, regulators and reorganizations threaten to

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welcome back to "the exchange." i'm pippa stevens with your cnbc news update. joe biden is set to visit baltimore's main port later today, where he will announce a $3 billion grant to reduce carbon emissions at u.s. ports. white house officials say it will improve and electrify infrastructure at 55 ports across 25 states and territories. the grants are funded by biden's climate bill that was approved in 2022. the plan for ozempic and wegovy have within cited for quality issues. a mark inspection report found the danish drugmaker did not have enough information to show the water they used was properly controlled for microorganisms. and a new electronic health record powered by ai by oracle. it will allow providers to pull up information they need about their patients by asking

questions with their voices, which oracle says will give doctors more time to care for patients. shares are up about 1% today. kelly? >> pippa, thank you very much. coming up, we're tackling the biggest week of earnings season with three names. the numbers and narratives to know for amd, visa and alphabet with coming up in "earnings chgeexan."

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welcome back. a big week of earnings rolls on with servers spending and search after the bell. we're looking at amdz, visa and alphabet. joining me now is my next guest. tim, is it drums? >> drummers, singers, wherever you rock 'n' roll. >> i want to chant sometimes, maybe when life settles down. >> it would be an honor and the cnbc honor would like that, as well. >> let's get to amd, which is running in place the last six months and 25% below its all-time highs. investors are hoping to offset

pc weakness. what do you do with the shares here, tim? >> we heard some news that chatgpt is also using amd chips with nvidia. for a stock that, you know, kind of 2019 to the beginning of this year had really outperformed the sector that it outperformed. amd, the fact that it's up small year-to-date says something. i think the gpu commentary is what everyone will be looking at, because we know they're taking market share from intel on cpu and computing and even data center. but i think gpu expected to be a $10 billion business next year. i think you're going to see that kind of 100% growth. and i think the mi-300 is a chip that is holding serve right now relative to nvidia. that's the story. i think you've got a peer

multiple at 28 times forward. i don't think it's crazy experience and it's all relative. i like amd here. i am long, i think the bar is relatively low. i know it's crazy to say that in semiconductors. >> it's true. it's been an underperformer. i don't think that's a controversial point to make. maybe the bar is low, certainly lower than for nvidia. you're long here, it's not really a bellwether, just a story about its own problems or opportunities. lisa su will be on cnbc storm at 9:00 a.m. eastern. and move on to visa, which is just off its september all-time highs. ubs says they can weather a down turn because of the diversified consumer exposure, but still a lot of focus on the company being able to maintain. are you a buyer here? >> i'm in the neutral camp. what i love about where visa is,

there's no question that they are solidly positioned here. i'm thinking the numbers are going to be you're targeting high single digits, low double digits in terms of the guidance, all about the guidance, it's gotten relatively solid updates on the consumer. the best thing for visa is the breakout we're seeing in the broader financial sector. it's not just money in the bank, what you are seeing in payments and across mortgage and insurance and i think that continues. i think visa is kind of along for the ride, even though i would be neutral of all the names we're talking about today. >> look at the financials, up 50% this year. we're talking to steeple about this. they're on a run, much of the s space is. what about alphabet? shares are still 12% below their all-time highs. they have ai development, changes in surge market share. do you like this one? >> i like it, i'm long. i think both multiple gives some

investors a good feeling to believe defensive on the downside here. they have a multiple that is on the cheaper side of its historics, somewhere around 19 times forward. i think the guide and the expectations on search and 11, 12% on consensus. youtube, 12%, which has the ability to upside. i think the youtube business overall is starting to gain more momentum, and i think it should. i think the dynamic around some of the headlines, i think some of that falls into the background. i understand google and maybe why it's underperforming, and some of the existential concerns around search and where they sit in ai. i think the stock, every time people start to press those concerns is when the stock starts to outperform. of all the mega cap techs, it will be interesting to see what

they talk about in terms of cap ex, as it relates to ai will be fascinating. ag >> i dare say you love it, but we'll see how it does after earnings. time tim, thank you. sticking with google, those results could be a bellwether for the rest of big tech reporting this week when it comes to spending, as tim was just discussing. let's bring in deidre bosa. deidre, what is the expectation in "tech check" today? >> something to keep an eye on for all the hyperscalers, that is these tech companies with big cloud businesses, that's the question, is cap ex becoming a double edge sword for them? higher spending signals confidence in future demand and a readiness to cash in on the ai wave. investors are expecting returns on those investments. an ideally strong margin growth as ai scales. so more spending without the returns to show for it can make investors skittish. but here's the flipside.

if google, microsoft scaled back on cap ex to focus on those better returns, that could signal to the market that their demand for their ai isn't as strong as expect, causing jitters. spend big, investors worry about returns. scale back, investors fear that demand is falling. in that sense, meta could be the most interesting. it's not a cloud provider like the others, but still a major buyer of gpus for its own services, kelly. and it's expected to spend as much on cap ex next year as aws or nearly as much as the other hyperscalers. so in this sense, meta's cap ex spending is more about internally. it would be the first hyperscaler to report tonight and set the tone for the group and understand how investors are feeling about this balancing act at the moment. last quarter, the ceo said that the risk of underinvesting is

greater than the risk of overinvesting. so really it's an interesting balancing act. >> i do feel like they're a bellwether, deservedly or not. they set the tone and the stock reaction for earnings season and everybody else's results pile on top of each other. >> it's a good indicator of enterprise software demand. one of the questions we've been asking for a few years, does ai spend supplement or replace other enterprise spending? so that's why they're so important and just a barometer of how other businesses are feeling about ai and the temperature of their demand, as well. >> nice outfit. deidre, thank you for your time. >> you, too. coming up, the home construction etf itb is on pace for its worst day in more than two years as rates keep rising. the mortgage rate is near 7% again. dr horton also had earnings, down more than 8% after missing

on the top and bottom line. all the others selling off in sympathy, as well. chon today's other big movers is next.

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welcome back to "the exchange." i'll give this a blue star today fordom, because the nasdaq hit a fresh all-time high. so 18,700, we were above or a couple point bes low that level right now. the s&p is higher by 13, the dow lower by 90 points. the ten-year broke out above 4.3%, but after that better auction of the seven-year, we are seeing it come back down. some of the other movers include the software and services etf, ticker xfw. for all that's been said about ai disrupting this space, it's at its highest level since november of 2021.

names like cadence giving the boost today. commvault soaring more than 20% after raising its guidance and beating estimates. you know what else is above 22% today? vp corps, after slowing past est veits. the company's best day. coming up, higher tax rates, are they better for investors? there's one asset class that gets more attractive when tax brackets go up. that's a mteysry sector, i bet you can guess it. we'll talk about it, next. you have... the fearless investor. the type a cpa. the bootstrapper. the bootmaker. yeehaw [narrator] but many do have something in common. we all trust schwab with our wealth. [narrator] thanks to our award-winning service, low costs and transparent advice. every day, over a million multi-millionares trust schwab

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oh my gosh. - this year's book is a testament to your accomplishments and how they have impacted all of us. - getting my high school diploma made me feel like i can do anything. now i can help the kids in my community achieve their dreams. - when you graduate, they graduate. visit finishyourdiploma.org to find free and supportive adult education centers near you. welcome back. no matter who wins the 2024 election, tax reform will be on the table. those 2017 tax cuts expire at the end of next year if nothing happens between now and then. and if tax brackets go up, that would make one area of the market even more attractive, according to my next guest. joining me now is senior portfolio manager at all spring, head of the muni team. great to have you here. i'm sure your audience could guess muni is one area people would look to. they've been selling off. >> they absolutely have.

there's two big weights on the mun-i market right now. the first is the sell off in treasuries and fixed income in general. the other is supply. supply in the muni world is very, very high, higher than it has been for much of the year and part is driven by the fact that for the last two years mun-i issuers haven't had to issue debt. they had stimulus money, covid cash. that money is running out. they're rushing to the market. >> does the election matter? >> certainly it does. right? because it presents uncertainty and volatility in the mu-n-i world we don't like volatility. we are sexy in our consistency, if you will. but in this instance, they were trying to play the low rate game when just ten minutes ago seemed like the 10-year was at 380. >> i see. now they're looking at it, going we have to issue now or better issue now. does that ultimately help muni investors? they'll have plenty to pick from at reasonable yields if they are concerned about tax brackets in

a few month's time. >> it certainly provides an incredible entry point from my perspective. fundamentally, munis look strong. and then to the extent that the election pushes tax brackets even higher, the value of the tax exemption goes up pretty materially. >> can you give me some examples of areas where i don't know what the stated or tax equivalent yield would be. >> yeah. it's not uncommon to find a 20-year aa rated muni yielding in excess of 4%. if you're a 37% taxpayer, that grosses up to about 6.5. >> wow. >> that's fantastic. that's worth doing a cart wheel for. the potential for equity-like returns in an asset class that is high quality, low volatility, sort of sleep easy at night. that's interesting. >> as the concerns board told us a while ago, americans are the most optimistic they have been

about stocks in literally 40 years. nothing can compete with the stock market right now it seems. >> and haven't been able to for quite some time at this point. i think ultimately you can't ignore what's happening in the equity markets. but, munis and fixed income in general for the first time in quite a while can represent a meaningful part of your asset allocation and provide you kind of portfolio diversification. >> are there any areas you would stay away from? you look at the highest yields, wait a minute, don't do anything too dodgey. places where there might be underlying macro problems or regions or types of issuers you might say, listen, maybe not that one. >> look, spreads are tight. investors do need to be aware of that dynamic. but the interesting thing about munis is triple b rated munis default less frequently than aaa rated corporates. it's more likely that apple will default than the chicago board of education.

that sounds insane, but we have decades and decades -- >> you picked an interesting example. you sure with the chicago board of education. >> something with that kind of headline risk, historically has done better from a default perspective than even the highest rated corporates. so, there are opportunities for investors to take some risk in ushs n-i-s and pick up yield. >> there's no ticking time bomb, the covid cash has run out. now they're going to tap the markets. other way to read that, their becoming a bit more stretched these finances. >> they certainly are. but munis unlike the federal government are required to balance their budget. they hit you and i for money any way they can get it, but that puts them in a much better fiscal position than the u.s. government sitting on $36 trillion of debt. >> fascinating, nick. thank you for joining us to talk about it. we appreciate it. >> absolutely. thank you. before we go, want to

quickly shout out the twitter or x users who got today's mystery chart right. katie gonzalez, scott al-ler and iwc capital named it with uber. nice job, everybody. that does it for "the exchange" today. we have a special guest host on "power lunch." i'll see you on the other side of this break.

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and welcome to "power lunch," alongside kelly evans, i'm dominic chu. joining us for the entire hour that guy over there, chris, chief market strategist over at mai capital. stocks are rising again today. nasdaq hitting a new record high above the 18,700 mark at this point. that's ahead of five of the so-called magnificent seven stocks reporting in the next three days alone. alphabet is on deck going first after the closing bell today, kelly. >> you know, our friend chris can be a bit of a contrarian. the nasdaq is on a seven-week win streak. you got to be shorting or something. >> well, it is troubling that there are no clouds in the sky, kelly. i am worried about that, but we live for this week every quarter. it's half the companies in the s&p are reporting and we're very excited. >> all right. >> consequential. speaking of earnings, we're waiting for am-d. company trails nvidia up 186%