>> jason >> palo alto ahead of earnings >> weiss, last word. >> short lrivan. >> "the exchange" begins right now. >> thank you very much hi, everybody. i'm kelly evans. ahead this hour, is a half point rate hike in play? two fed officials making the case for it. larry summers saying it might be warranted. but one of our guests says inflation is trending lower, so he joins us with what he thinks the fed should do. and with retail heavyweight walmart and home depot on deck, we look at four names in the group to shop or drop. but first, today's market has changed its tone right now, all in the red, the

dow down 70 points broad market s&p 500 is down about 1% here. and the nasdaq is down 1.5% today. obviously, no surprise, we're seeing the most selling pressure as yields rise check out the two-year and ten-year hitting their highest level in three months today. energy, the biggest sector to the downside oil shedding more than 3% again. the dollar has been a head wind. keep an eye on this. this is not the part of the risk on story the energy side of things, take a look at nat gas, down to $2.24. the move from the highs last year has been nothing short of jaw dropping it's happening in europe, as well it's been blowing up trades where people thought this long position was a sure thing. again, a 6% drop for nat gas

the january numbers, for the most part, hotter than expected. cpi, stronger than expected. retail sales, also hot this one, and then this one, did i do it? i did it so let's back up cpi we learned -- i guess i have to call this worse home builder confidence, that surged higher this week as we know it seems like it points to things to getting better retail sales, this one much hotter than expected as we move to manufacturing data, the picture starts to look worse. industrial production, flat. the leading indicators just this morning showed another decline again, consistent with the recession, not just in the long-term but the near term. so this all has people scratching ahead about bond yields david rosenberg, looking at the

outlook, not so sure that things are going to turn out with this no landing hypothesis. she's here with steve leisman. welcome to both of you dave, let me start things with you. what do you think, i mean, if you had to assign a percentage to no landing, what percentage likelihood would you give it at this point >> i would say as close to zero as anything could be in this business of forecasting. the no landing reminds me a lot of global decoupling back in 2008 i don't think that there is a get out of jail free card for the economy in the context of the most acute fed tightening circle we just haven't seen the full brunt of the reitz shock just yet. nothing moves in a straight

line we came off back-to-back quarters last year where real private final sales were very weak they were flat in the forecast quarter. if you look at the gdp on a monthly basis, as of december, it was fractionally negative so we had a nice pop in january. it doesn't tell us much about what will happen down the road the no landing is a nice fairytale, but that's what it is >> i forgot about global decoupling until you reminded me of that. steve, on what basis do you think fed officials, not that they're voting members, but are out here talking about the need for a half point hike. do they just look at cpi and gdp and say if we extrapolate this, inflation is still high and the economy is stronger than expected >> i think a half point hike is a minority view on the fed a lot will depend on the jobs and inflation reports. perhaps it will show the inflation that david believes is

there. by the way, that's the way the market is priced, for a quarter point hike in march. the way the market is betting is more likely if there's going to be more inflation, to do another quarter in june. that's where i see something like a 60% probability of that extra quarter out there. i think the fed is aware of the ideas that david is giving us today, that i think are very important to look at the economy. but i think where they see the risk is in inflation being too high, not in the idea of the economy is too weak. they look at the job market, and they say see pretty strong job growth there and see a concern for wages and the service sector >> dave, just to zoom out, we do have china easing while we are tightening we have them reopening, coming into the economy that's why i thought the lack of response in oil is interesting, that you can obviously make the

case for being 20% higher and it's not what do you think is going on in terms of the global effect that china is having right now? >> the china effect of the market got priced in right away. it's still staring us in the face, and you would think if there is one sector outside of travel tourism, maybe gucci bags in europe, that it would be very beneficial in particular so there may just be weakness in other parts of the world, or it could be some expectations of more spr drawdowns but i would say it has been a big surprise look, besides the oil price, and even before oil prices started declining this week, wewere still down 30% from the highs. where is the inflation in oil? the baltic dry index is down 90% from its peaks it's lower to date than it was precovid the problem for me, looking at the inflation situation is that it's a lagging indicator

you mentioned the lei that came out tonight. the lagging indicator was up 0.2. the lei was down 0.3 what do you want to focus on service sector inflation that everybody is focused on, including the fed. so it has to be known that service sector cpi is one of the components of the index of lagging indicators everybody is gut wrenched over inflation. inflation peaked six months into the recession, and then it bottoms 15 months into the recovery if you are looking at inflation after a recession ends, you would think we're still in recession. so i don't know, i think the fed, the one number that nobody talks about that came out in the beginning of the week was the new york feds own consumer expectation survey it showed the three-year median consumer inflation expectation went from 3% in september to

2.7% in january. a hot january cpi, yet three-year consumer expectations on inflation went down to the lowest level since october 2020. and nobody talks about that. i think that tells me that the sector is looking through whatever it is we saw in january and it's more of a statistical artifact of anything that's really happening onthe inflation side, the inflation side being largely driven by the way -- after of the core cpi are imputed guess work by the dls. if you look at the things that we can see, touch, and feel, you look at the core goods cpi, which are real transaction numbers, we are entering into a very disinflationary period. >> this seems to be the big argument right now can we have a production recession without having an employment one, i can think of a time in history that's happened.

but maybe because of the pandemic this will be that time. >> well, i don't want to speak for david. he has an interesting explanation that a lot of the jobs created have been part-time jobs i guess i would respond that a lot of the jobs that were needed are part-time jobs we're still 400,000 jobs below where we should have been relative to the pandemic full-time jobs during the pandemic are up 1.8 million, although david is right, they have been flat since march of 2022 but we still have a deficit of part-time workers in the economy. maybe because they had have to bring on people to get them where they want to be. i just have a hard time looking through, even though that january report seemed way high, when i look around the economy and different data sectors, you have had jobless claims below 200,000 for five weeks even the manufacturing index,

showing contractions in manufacturing, the employment component is still expanding at 50%, just barely every nfib small business hiring component is to the plus side. it's down a bit from where they were, but still relatively elevated so there is a lot of evidence that the job market remains strong i don't know, however, if it's a sign of a strong economy or a bounceback from the pandemic >> dave, final world this remains at odds with everything else in the indicators, but we know it's not that you know usual. it gets unusual if we see this for four, five more months now >> it comes down to what you said earlier, the leading economic indicator was down 0.3, that was with the stronger stock market that's part of the lei ten months in a row. employment is not there. what is there is the workweek, and it's true what steve said

about jobless claims, but it's getting tougher to find a job. the point is, once again, nobody talked about the consumer expectation inflation, and to me i thought -- >> wasn't the one-year expectation a little up? >> yeah, it was. and david, for the record, we recorded it. >> my bad, my bad. let me just say inflation that we're all consumed with is a lagging indicator. whether we need part-time jobs or not, that's all the jobs that the economy has created in the past eight months. 1.6 million part-time jobs but zero, perhaps negative full-time jobs so people look at the employment rate like these fed officials, blindly talking about the unemployment rate at 3.4%. but you see the problem with the

unemployment rate is the numerator. when you look at employment, a part-time job is half a full-time job. so if you do the adjustment of this becoming a great economy of generating part-time employment, the unemployment rate is closer to 4% than 3.4%. the truth shall always be in the price, and wage growth is moderating by the way, the one number nobody talks about, productivity adjusted wages labor costs. steve knows this number. you know labor costs are running at 1.1% annual rate in the further quarter after 2% in the third quarter. and labor cost is ultimately the root of labor cost and inflation. it's slowing down. doesn't get enough play. >> i think david is right, and i'm just not sure when he's

going to be right. i think he's going to be right in the next couple three months. we need the housing numbers to come down. perhaps a loosening in the job market the percent of workers who are working part-time relative to -- before the pandemic, is 17.1, which is pretty much what it was before the pandemic. there's no sense out there that people are working part time because they want to be working full-time. it seems more of a choice. i think we're going to have -- because of a mathematical change, the idea you'll have these big numbers start to drop out, we are going to have, i hope, a sharp decline in the inflation rate in the next couple three months. i think the fed is going to react to that. >> it's a weird time they're reacting to the lagging, not the leading data we'll leave it there thank you both for now

yields have been soring in the past 24 hours. rick is here with more feel free to weigh in on that discussion we were just having, as well. >> yes, absolutely i'll weigh in on that discussion after i show the charts. if you look at the ten-year 24-hour chart, we hit 3.92 at 3:00 in the morning. right now, we're at 3.83, which means we're only up nine on the week now, and all treasury yields have turned southbound, meaning we are lower in yield, higher in price than yesterday that's significant if you look at two-year for the week, you can see at 3:00 in the morning, it hit 4.71 open the chart up to going back to november, you see 4.72 is the high yield close from november the fact that it failed to get there turned many traders into buyers, and you see the effects

that have occurred and fed fund futures for august have been solely listening to all the guidance we had hot jobs, hot cpi and somewhat hot ppi and there's been covert guidance based on 50 basis points which the market hasn't grappled to. however, you have captured investors' attention, because the fulcrum is making new lows now, and to weigh in on that discussion, you know, all you need to look at is consumer credit card debt many of the metrics they were talking about, not a lot of traders consider those top tier, but economists do, and they are digging into these numbers i say keep it simple there are so many asterisks out there. you look at part-time versus real-time. what we're replacing jobs we lost during covid. the fact that you have never had a tightening cycle that ended

well when you see commodity prices falling through the floor. all of these are going to come back home to roost we live in a society where everybody is glued to their cell phones ten minutes is a long time but these time lags, they're not relevant in the short term mental outlook, and when we slowly start to see the asterisks disappear, we'll see that labor was probably a lagging indicator, and the relationship with inflation is probably not as real >> rick, first, when is the last time you and rosy were on the same page? i'm just going to point that out for the one hand on the other hand, are you implying that the market is wrong in the fact that it sees fed funds going to highs here in the next couple of contracts it's saying we're listening to the fed, and yet is the market wrong in other words or does it think the fed is going to make a policy error here

>> i'll start out with the second question first. the market is never wrong, because it will write me a check based on the closing price, which is the only memorialized price that matters in life the fact is, investors make market prices, and investors look at data on the move, and they change their philosophy based on where they put their capital or take their capital out. and the fed understands that process. and it utilizes it so a little nervous going into a weekend. strong data this week. whether you believe that invasion is in the rear-view mirror, which everybody i talk to believes, it doesn't mean you're not going to tweak your positions. as far as agreeing or disagreeing with rosy, rosy is a well hp respected economist, but i rarely agree this time i agree with them on the direction of the economy, and that the federal reserve and the inverted yield curves aren't on the same page

the fed probably isn't going to tell us they're going to err on the side of overtightening, but that's what the inverted yield curves are telling us. and that's what i believe. >> thank you, rick those 30-year mortgage rates are moving, back up towards 7% that has one real estate brokerage making a big call today. diana? >> red fin is reporting that the housing recovery has hit a pause, say thing is based on demand index, which measures requests for home tours and other services it dropped this week compared to weeks before it is the first decline after months of steady increases now, it's all about this abrupt turn around in mortgage rates, which spent all of january in the low 6% range, but now headed back towards 7%. 6.8 today. another issue is worsening supply of homes for sale

supply had recovered last fall when demand dropped off, but not a surge in sellers. a year ago, we were near record lows in inventory. so it remains to be seen if sellers will wait or jump into this spring market >> 7% again is a big psychological number even as we talked about better home builder sentiment, take a look at what is going on with lumber, down 27% this month. this is a big disparity. >> yeah. and that has to do with thinking forward and what's going on right now. housing starts are still lower we have seen them drop for several straight months. when you talk about builder sentiment looking forward, that plays into the stocks. they are looking at a brighter next couple of months.

again, it's pulling that optimism forward in the stocks still, the actual price is lower. >> which is the most leading indicator type of discussion diana, thank you coming up, my next guest takes the opposite position. he said if you're questioning the recent rally, don't. if you are in the camp of waiting to buy the dip, do plus, retail on deck in a big way next week. three buys and a bail. we'll do a little shop or drop with these names as here is a look at the markets. dow down 20 points right now the ten-year yield is at 3.84. the nasdaq down 1.25%. back after this. ♪

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welcome back stocks have been showing resilience amid higher rates, though down a little today yields on the ten-year and two-year treasuries back to their highest since november my next guest says you can be a buyer of it. let's welcome in david katz. great to see you, david. i don't know if you caught david rosenberg's arguments. would you response be that the

market has priced it in, each if he's right >> that's right. we think the market has priced in a deeper recession. at the market lows, it was down 23% for the s&p and for the nasdaq, down 35% to 40%. so it's priced a lot of those things in. we think the economy is not great, but you probably have a modest recession or might be able to have a soft landing. we think stocks could be nicely higher 9 to 12 months out. >> wouldn't be unusual to bottom b before the recession ends? >> usually that's the case, but a lot of times the market will sell off about nine months after the economy peaks, and then starts to recover. in this case, the economy peaked about 13, 14 months ago. so from that calendar, it makes sense that the market bottomed out last winter and is starting to do better and in hindsight, the economy

did have some negative periods or very weak periods a quarter or two ago, or a few months ago. so it will be a lot clearer six to nine months after the fact, usually bear markets bottom. you have a significant rally everybody is scratching their head and it doesn't seem to make sense. six, nine months later, you say okay, now i understand it. >> would you change your tune if you saw payrolls go negative or jobless claims rise? >> we think that last month's number was an outlier. we don't think the economy is in as robust a shape as it was last month. you had two or three more numbers like that, we would be concerned over the shorter term. but we do think that inflation is breaking. you just went through earnings season, and all companies that we speak with said they feel much better about inflation slowing down or going down in the upcoming period. and they do think that the economy is still muddling along. so with the -- the best information that we have right

now is that inflation breaks, the economy is okay, maybe a modest recession, and we think stock also continue to do better we're buying the dips. >> you are one of the buyers of google here on this ai scare >> yes we think that they have also spent tens of billions on this they will get it right in terms of artificial intelligence we think last week was a temporary setback. but they'll continue to be a player their stock is at 60.5 times earnings it has a very attractive price, so we would be buying into this scare. >> when you see technology more broadly, would it be a value-ish technology >> the value-ish technology. a lot of the great businesses that got shellacked, all of a sudden we have an interest in

them paypal is down from about 200, we have been buying it under the $90 level. they upped guidance for the year that sells at 15 times earnings. that's what we like, and think it's a really attractive buy qualcomm, they're doing very well in a horrible environment they are where you want to be in terms of wireless communications, whether it's for phones, automobiles or industrials. >> we'll leave it there. david, thank you for your time good to see you again. >> have a great weekend. >> david cat was matrix. amon >> this is the first on the record response to this week's new allegations that were contained in a legal battle over the dealings with sex offender jeffrey epstein. attorneys for the u.s. virgin islands wrote that jpmorgan's

banking relationship with epstein was known at the highest levels of the bank they released an email in which a banker says of epstein's account, i can't imagine it will stay, pending diamond review that's a reference to jpmorgan officer jamie dimon, that he was going to review the epstein accounts in 2008 epstein remained a client until 2013 but a spokesperson for jpmorgan said we have not seen any evidence of such a review. a source familiar with the bank says the 2008 email that surfaced was sent by a jpmorgan banker, but we don't know why they said this a source has not asked jamie dimon if he remembers reviewing epstein's account and at the time, in 2008, epstein had been sent to jail and registered as a sex offender but that's not something we

would close people's accounts over and felons are allowed to keep bank accounts. as for a wire that epstein sent to a woman with an eastern european name after a conversation with then jpmorgan executive jeff staley, a wire transfer like that is not necessarily something that the bank would be looking for under its anti-money laundering protocols. in a filing in this case earlier this month, jpmorgan wrote -- >> kelly, back to you. >> is there a next shoe to drop now? >> we haven't heard from jeff staley on this in quite some time, now that these new emails have surfaced which show that

jeff staley emailing directly with jeffy epstein, staying at jeffrey epstein's private island emailing pictures of young women back and forth with epstein at the time you would want to hear from him. he left jpmorgan and went on to barclay's, and then left there since then we have been reaching out to him this week but haven't heard from him. that's another shoe to drop. the big question is what is going to happen in these legal filings regarding jamie dimon himself? did he conduct that review what jpmorgan is saying, they have looked through the emails, documents, all that, and they have not found any evidence that jamie dimon reviewed that account back in 2008, despite an indication from the email that at least somebody inside jpmorgan thought he was going to review the accounts. so does jamie dimon remember reviewing epstein's accounts what will he say when asked directly about that?

that's one piece that will be in court filings still to come. >> jpmorgan shares down about 1.25% today. coming up, one industry is struggling to find workers we'll tell you what it means for the stocks in that space and take a look at the dow's map, with health care seeing the biggest games with merck leading the way, while chevron and intel are your biggest decliners "the exchange" is back after this for businesses of all sizes, there are a lot of choices when it comes to your internet and technology needs. when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose a next generation 10g network that's always improving, getting faster; more reliable; and more intelligent to keep you ready for today and tomorrow. the choice is clear: make your business future ready with the network from the most innovative company. comcast business. powering possibilities™.

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electric f-150 lightning pickup trucks earlier this month, the automaker asked some owners to have parts replaced to prevent performance degradation of the truck's batteries. ford says the issue affected only 100 vehicles and is not believed to be connected to the fire but it is part of a pattern of problems that ford and other automakers are experiencing as they do introduce electric vehicles airport workers in seven german cities staginge iing a 2 strike for higher wages, threatening a summer of chaos if there is no settlement in venice, an unusually low tide is grounding boats and gondolas boats are used to get around the city low and dry right now, kelly, in venice back to you. >> grab a bicycle. coming up, next week is a huge week. walmart, target and others, each

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welcome back, everybody. the state of the consumer, dominated headlines already this week but we'll get a whole lot more with these retail earnings on deck walmart, home depot, lowe's and target in a segment we call "shop or drop. should you pick up shares or leave them in your cart? joining us now to discuss, simeon gutman and melissa is here, as well. welcome to both of you simeon, walmart shares up 2.5% this year, outperforming staples, broadly speaking. you would stick with them. why aren't you more concerned with some risks creeping up? >> first, i would say we shop, so we do like them the biggest risk is in the market rotating cyclically we think the outlook for earnings next year is decent the biggest risk is if they

decide to lean into the price. this has not been their posture four the last year or so as costs have been rising that is the biggest risk they've been gaining high income consumers. and there's a lot of catalysts along the way for the story. >> so things are going back to real aggressive price cuts, kind of a tesla strategy. melissa, was it last quarter that these came out and shocked markets to the downside, or am i imagining things >> walmart has been talking a lot about its first restatements, and then also leanil leaning into alter net revenue streams. so walmart's grocery strength has helped it, and they have picked up a lot of higher income consumers because of the lowerg. >> is there a risk that they

lose that trade down, that high income consumer who says now i don't have to shop at walmart, i can trade back up. >> yeah, we're not that nervous about that happening we'll see what happens but it feels like the consumer could get a little weaker. it show it is they picked up the higher income consumers, that could make them more sticky. we think this environment is right for them, because they can pull share from the high, even from the low >> home depot, the increase in mortgage rates, falling with existing home sales, all softening expectations you're a little more positive. why is that, simeon? >> i would say that this is a structural shot for us tactically, it is going to be a tricky setup first, home improvement, a great sector, great industry home depot, one of the best

retailers in the world the question is what happens to improvement demand there is a well known correlation between existing home sales, as well as home price appreciation, which should also slow. home prices started to slow about six to seven months ago. if you look at the letter, you're probably in the next one to two months going to see a more precipitous slowing we're seeing it in the retail sales data, where sales are growing in the single digits so we know this, we know in about the next couple of quarters, we will see some tougher comps. the question is, what we have been willing to do is look around the corner because we think the landing is going to be somewhat soft. >> absolutely. we're about $40 off the 52-week highs. for one of the biggest pandemic winners, it's jenerac.

>> the upside is potentially they still shop at home depot to fix up the home they're in instead of moving. >> lumber prices are down. their competitors are also on deck the stock up more than 5% this year this one, i am curious what declining lumber prices, you know, as i mentioned with what is going on with generac why isn't there more of a sustained tail wind for these names here >> i put lowe's in the same bucket, they're prone to the macro. lowe's has a lower pe multiple and lower margin that could explain the relative outperformance and lowe's demonstrated in december that they are willing to protect the bottom line with

more confidence than they have ever shown during a down cycle so the market took that as a sign of confidence that durability of earnings may be a little better should we see a more pronounced cycle. >> they're trying to hold the line, melissa. >> if sales do slow, it's one thing they can point to and say the marnlen margeins look healtr >> you mentioned target, those shares up 15% this year. about a third off their highs. you might be forced to choose here, simeon >> how about window shopping we're interested in buying it to the long side. they have demonstrated great accumen. they had some setback last year,

the market contracted down 3%. we think there's a snapback, but there is some hesitancy. there's a lot of inventory amazon is taking incremental share again. these are head winds that could prevent the recapture of that margin in a quick time frame we think the stock is pricing in somewhat of this recapture already. >> it's amazing that these giant companies can run on razor thin margins. 3%, no wonder. even 6%. to think that people would cheer that >> exactly it's a very different type of business and it's been a tough past year for target it became a poster child for the excess inventory dynamic, and also of the same margins so it really is in a position where it needs to put up good results, and give a guidance that gives investors a little

more encouragement about the year ahead because it's been such a rough road. >> all right so window shopping for target. a buy for the rest of them we'll look forward to what they say next week. thank you to you both. still ahead, shares of chipotle are up. restaurants are still facing big labor head winds some warnings from industry execs, next. albermarle, 11% decline. the economy is still under pressure it's not just nat gas and oil piece days "the exchange" will be right back

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all across the country, people are working hard to build a better future. so we're hard at work, helping them achieve financial freedom. we're providing greater access to investing, with low-cost options to help maximize savings. from the plains to the coasts, we help americans invest for their future. and help communities thrive. if you're wondering where the strength still is in this labor market, look no further than the restaurants

pippa stevens is here with the numbers on where these jobs are. >> so many industries are laying off workers, but restaurants can find enough workers. restaurants have added jobs in each of the last 25 months, but still more than 150,000 workers below prepandemic levels at the end of 2022, there were 500,000 open jobs across the state. this has been an ongoing problem in efforts to attract and retain workers has eaten into restaurant margins companies have offered incentives like signing bonuses, and they've also raised wages. in 2021 to 2022, annual wage increases were above 9%, according to the national restaurant association, comparing to between 2% to 3% per year on average during the prior decade we heard from executives, including mcdonald's, chipotle and starbucks, that things are

stabilizing. things are looking better for quick service restaurants, but the full-service industry is struggling when it comes to recruitment and tension. and commodity costs go up and down, but labor never goes back down >> can i ask why is ligt yes, ma'am down so much? are we going to talk about that next hour? >> perhaps big tease for next hour. >> why is it down so much? >> you have to look at how much it was you can say there's been a dramatic decline, but look at the over 800% increase over the past two years then we have softness in the ev market and china >> i was wondering about that. >> we did see china start to retreat from the highs from last year, wondering is there really going to be that much demand as we were talking about, data remains all over the place these things are so hard to predict. >> i just have to find out

before we move on. pippa, thank you very much, pippa stevens, everybody munis were hot and high yield was not. where the money is flowing and the tax-free areas to buy now is next boost your team's productivity with samsung's fastest processor yet. switch and save up to $1000 on the new galaxy s23 ultra. now that's epic. on the network america relies on.

welcome back to "the exchange." the ten-year yield hitting its high let's track where the money is going. february 15th, investment grade bonds saw inflous. these have all had a pretty strong start to the year after a dismal 2022. what will the next move bring? let's bring in nisha patel, managing director and portfolio director at parametric even though it's risk on for stocks, are we starting to see risk off in the bond landscape >> i think it's important to note this past january from a performance standpoint was e treemly strong munis came roaring back, second-baste january of performance. that was really a result of a lot of money that left the market last year coming in,

giving very higher yields and cheaper valuations now we're just this week starting to see a little bit of a correction in the market treasury rates, as you mentioned earlier, have moved up pretty significantly after last week's jobs number, a lot more optimistic data being priced in. munis are finally catching up. yields have gone up about 25 or 30 basis points in just this week. >> wow >> so i do think over the next few weeks we're anticipating actually the flows to slightly turn negative. with the combination of higher supply being anticipated in the market, it could put a little further pressure i think the opportunity really comes in for catch a lot of clients have been waiting for the right opportunity to light into the market context of yields, we're looking at about 4% tax-free yield in the 15-year part of the curve

which is almost 6.5% taxable -- >> exactly it felt like almost prior to this week, people were saying muni, you can't get value there anymore, yields are do so much to your point, literally just this week they've jumped again we know all the economics are strong for now i worry in a little bit , in a couple years, by the time the downturn catches up. i don't want to get into something i'm going to regret in a couple years' time. >> high-end are attractive in the short end of the curve particularly i think given the selloff we've experienced this week, no reason to take on the risk. the bottom line is municipalities in general are a strong standing. it's important to mention that most states are going into, let's just say the upcoming recession or slowdown or whatever you call it, with

almost two times the amount of liquidity going into the pandemic and three times as much as they were going into the financial crisis a lot of the federal aid that's unuse frd from the pandemic funi still sitting there. there will be drops in revenues. states and cities are balancing as they always have been, but i think the liquidity situation certainly works in their favor i think the investment grade space is offering a lot of opportunity that clients don't have to take on additional risk. >> right, exactly. you do see -- even with the muni fund flows, maybe it's partly the attractiveness of the yields i do wonder if people are thinking, maybe i'd rather be here forthe next leg down if there's going to be a leg down here >> exactly here is the biggest thing we're always coming across in this environment. you take a look at one-year treasury yields, very

attractive no doubt about it. clients and especially high-tax clients are wondering, if i can get 4.6, 4.7 in a short-end treasury, does it make sense for me to go into another market we're kind of using this opportunity to say, look, munis are very high quality. you're finding very strong aaa, aa-rated bonds with the backup in yields, you're able to lock in for a longer period of time the attractive, 6.5% yields. we're not even accounting for state taxes there. you look at 7%, 7.5% for california and new york investors where things get pretty juicy. >> nisha, thank you very much. good to see you. coming up on "power lunch," autos, ag and influenza. the trends in auto deere and moderna.

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